letter of offer final - securities and exchange board of india · 2018-08-16 · letter of offer...

LETTER OF OFFER (Private & Confidential)

For Equity Shareholders of the Company Only

(The Company was originally incorporated on 30th November 1993 under the Companies Act, 1956 as “Camlicon Consultants Pvt. Ltd." vide certificate of incorporation issued by the Registrar of Companies, Maharashtra, Mumbai. The name of Company was subsequently changed to “Camlin Fine Chemicals Pvt. Ltd” on 1st June 2006 vide fresh certificate of incorporation. The Company was converted into Public Limited Company and the name of the Company was further changed to “Camlin Fine Chemicals Ltd. with effect from 11th August 2006.)

Registered Office : Plot No. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai – 400 093 Tel: 91-022-4020 1000/67001000; Fax: 91-022-2832 4404 Website: www.camlinfinechem.com Email: [email protected] Contact person: Mr. Narayan R. Joshi, Company Secretary and Compliance Officer (for details regarding changes in registered office of the Company in the past please refer Page No.16)

ISSUE OF 34,88,688 EQUITY SHARES OF RS. 10/- EACH AT A PREMIUM OF RS. 5.75 PER SHARE (ISSUE PRICE OF RS. 15.75) AGGREGATING RS. 549.47 LACS ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF 3 EQUITY SHARE FOR EVERY 5 EQUITY SHARES (I.E. [3:5) HELD ON MONDAY 2ND AUGUST 2010 (RECORD DATE).

THE ISSUE PRICE IS 1.575 TIMES THE FACE VALUE THE PROMOTER OF THE COMPANY IS MR. ASHISH DANDEKAR

GENERAL RISKS Investment in equity and equity related securities involve a degree of risk and investors should not invest any funds in this issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the issuer and the issue including the risks involved. The securities being offered in the issue have not been recommended or approved by Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this document.

The attention of investors is drawn to the statement of Risk Factors beginning on page no. vi of this Letter of Offer. ISSUER’S ABSOLUTE RESPONSIBILITY

The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this letter of offer contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the letter of offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING The existing Equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE). The Company has received in-principle approval from BSE vide their letter no. DCS/PREF/JA/IP-RT/1717/09-10 dated March 9, 2010 for listing of the equity shares being issued in terms of this Letter of Offer.

LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE

KEYNOTE CORPORATE SERVICES LIMITED 4th Floor, Balmer Lawrie Building, 5, J. N. Heredia Marg, Ballard Estate, Mumbai - 400001 Tel : +91-022-30266000-3; Fax: + 91-022-22694323 E-mail: [email protected] Website: www.keynoteindia.net SEBI Regn. No.: INM 000003606 AMBI Regn No: AMBI/040

SHAREPRO SERVICES (INDIA) PVT. LTD. 13AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Off Andheri Kurla Road, Sakinaka, Andheri East, Mumbai 400 072 Tel : +91-022-28215168; Fax: + 91-022-28375646 E-mail: [email protected] Website: www.shareproservices.com SEBI Regn. No.: INR000001476

ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING

REQUESTS FOR SPLIT FORMS ISSUE CLOSES ON

Tuesday, 10th August, 2010 Tuesday, 17th August, 2010 Tuesday, 24th August,2010

I. TABLE OF CONTENTS

SECTION CONTENTS Page Nos.

Definitions and Abbreviations i Certain Conventions; Use of Market Data iv Forward Looking Statements v I RISK FACTORS vi

PART I II INTRODUCTION Summary 1 General Information 16 Capital Structure of the Company 21 Objects of the Issue 28 Basis for Issue Price 32 Statement of Tax Benefits 34

III ABOUT THE COMPANY Industry Overview 44 Business Overview 52 Regulations and Policies 59 History 64 Management 72 Promoters 83 Subsidiaries /Group Companies 84

PART II IV FINANCIAL INFORMATION

Auditors’ Report 98 Stock Market Data 144 Management’s Discussion and Analysis 145

V LEGAL AND OTHER INFORMATION Outstanding Litigations and Defaults 150 Material Developments 152 Government Approvals 153

VI REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue 155 Prohibition by SEBI 155 Disclaimer Clause of SEBI 155 Filing 159

VII OFFERING INFORMATION 162 VIII MAIN PROVISIONS OF ARTICLES OF ASSOCIATION 186 IX OTHER INFORMATION

Material Contracts and Documents for Inspections 208 PART III

Declarations 210

Camlin Fine Chemicals Limited ___________________________________________________________________________________________________________________________________________________________________________________________

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DEFINITIONS/ABBREVIATIONS CONVENTIONAL / GENERAL TERMS

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

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

ISSUE RELATED TERMS

Term Description Articles Articles of Association of Camlin Fine Chemicals Ltd. ASBA Application Supported by Blocked Amount Board Board of Directors, of Camlin Fine Chemicals Ltd. CAF Composite Application Form Directors Directors on the Board of Camlin Fine Chemicals Ltd. Equity Shareholders Equity Shareholders of the Company whose name appear as:

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

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

Equity Shares Equity Shares of the Company of Rs.10/- each Lead Manager/ LM Lead Manager to the Issue i.e. Keynote Corporate Services Ltd. Issue/ Rights Issue The issue of 34,88,688 Equity Shares of Rs.10/- each for cash at a

premium of Rs. 5.75 per equity share (Issue Price Rs. 15.75) per Equity Share on rights basis to existing Equity Shareholders of the Company in the ratio of 3 Equity Share for every 5 Equity Shares held on Monday 2nd August, 2010 (Record Date) aggregating Rs. 549.47 lacs as per this Letter of Offer.

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

Issuer/ Company/ CFCL Camlin Fine Chemicals Ltd. Letter of Offer/ LOO/ Offer Document

This Letter of Offer dated 29th July 2010 circulated to the Equity Shareholders and filed with the Stock Exchange containing inter alia the Issue price and the number of equity shares to be issued and other incidental information.

BSE Bombay Stock Exchange Limited Scheme/ Scheme of Arrangement

Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956 between Camlin Limited and Camlin Fine Chemicals Limited (formerly known as: Camlicon Consultants Private Limited) and their respective shareholders as sanctioned by the Hon’ble High Court of Judicature at Bombay on 17th November 2006.

SCSB Self Certified Syndicate Banks


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COMPANY/INDUSTRY RELATED TERMS

Term Description BHA Butylated Hydroxy Anisole TBHQ Tertiary Butyl Hydroquinone FCCV Food Chemical Codex FAO Food And Agriculture Organization EEC European Economic Community HACCP Hazard Analysis of Critical Control Points BP British Pharmacopoeia USP United States Pharmacopoeia EP European Pharmacopoeia WHO World Health Organisation WTO World Trade Organisation ISO International Organization of Standardization LLC Limited Liability Company FDA Food and Drug Administration

ABBREVIATIONS

Abbreviations Full Form AGM Annual General Meeting CAGR Compounded Annual Growth Rate CDSL Central Depository Services (India) Limited CLB Company Law Board DP Depository Participant EBITDA Earnings Before Interest Tax Depreciation and Amortisation EGM Extraordinary General Meeting EPS Earnings Per Share FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 read with rules and

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

applicable laws. GDP Gross Domestic Product GIR Number General Index Registry Number GOI Government of India SEBI (ICDR) Regulations, 2009 Securities and Exchange Board of India (Issues and Capital

Disclosure Requirements) Regulations, 2009 NA Not Applicable NAV Net Asset Value NPA Non Performing Assets NR Non Resident NRE Account Non Resident External Account NRI(s) Non Resident Indians NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited MOU Memorandum of Understanding PAN Permanent Account Number


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Abbreviations Full Form PAT Profit After Tax PBDT Profit Before Depreciation and Tax PBIDT Profit Before Interest Depreciation and Tax PBT Profit Before Tax P/E Ratio Price/Earnings Ratio ROC Registrar of Companies ROI Return on Investment RBI The Reserve Bank of India SCRR Securities Contracts (Regulations) Rules, 1957 as amended from time

to time. SEBI Securities and Exchange Board of India


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

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


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FORWARD-LOOKING STATEMENTS Statements included in this Letter of Offer which contain words or phrases such as “will”, “aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of such expressions, that are “forward-looking statements”. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with the Company’s expectations with respect to, but not limited to, the Company’s ability to successfully implement its strategy, its growth and expansion, technological changes, its exposure to market risks, general economic and political conditions in India which have an impact on its business activities or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry. For further discussion of factors that could cause the Company’s actual results to differ, see the section entitled “Risk Factors” beginning on page no. vi of this Letter of Offer. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. In accordance with SEBI requirements, the Company will ensure that investors are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges for the equity shares being issued. Use of Market Data Unless stated otherwise, macroeconomic and industry data used throughout this Letter of Offer has been obtained from publications prepared by Government sources, industry sources and data generally available in the public domain. Such publications generally state that the information contained therein has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believe that industry data used in this Letter of Offer is reliable, it has not been independently verified.


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SECTION I - RISK FACTORS An investment in equity shares involves a high degree of risk. The investors shall carefully consider all of the information in this Letter of Offer, in evaluating the Company and its business, including the risks and uncertainties described below, before making any investment decision. If any of the following risks actually occur, the business, financial condition and results of operations could suffer, the trading price of the Equity Shares could decline, and the investors may lose all or part of their investment. Unless specified or quantified in the relevant risk factors below, the financial or other implications of any of the risks described in this section cannot be quantified: LITIGATIONS 1. Outstanding Litigations/disputes/cases pending against the Company/ Promoter / Directors and

Group companies :

I. Litigations against the company, the promoters and directors of the company. There are no cases filed, prosecuted or pending against the Company and its Promoters / Directors, save and except that there has been one matter pending since more than 15 years bearing Case No. ST CC No. 527/94 in the Court of the Judicial Magistrate First Class, Sinnar District, Nasik filed by the Government of Maharashtra through the FDA in relation to an alleged violation involving manufacture of amoxicillin capsules (I.P.), not conforming to ‘Standard Quality’ on account of leakage of drug powder in the blister pack under the Drugs and Cosmetics Act, 1940. This case has been launched against Messrs. Liva Pharma Ltd. (now known as: Liva Health Care Limited) (Liva) as well as Messrs. Camlin Limited (Camlin) and all the Directors of both these companies including Mr. Ashish Dandekar who is currently the Managing Director of the Company and Mr. Dilip Dandekar who is the non-executive Chairman of the Company (CFCL). However, Liva which was part of the Camlin group earlier has been disassociated since the year 2007. Further, Camlin itself has also been disassociated from the Company. Hence, both Liva and Camlin are no longer part of the Promoter Group of CFCL and aforesaid proceeding is pending against Mr. Ashish S. Dandekar then Director of Liva Pharma Ltd. and Mr. Dilip D. Dandekar the then Joint Managing Director of Camlin Limited. Other than the case mentioned above, there are no other cases pending against Mr. Ashish S. Dandekar and Mr. Dilip D. Dandekar. For reasons of disassociation of Mr. Dilip D Dandekar with CFCL please refer page no. 70 of the letter of offer.

2. Contingent liabilities

Contingent Liabilities not provided for based on the audited figures as on 31/03/2010, are as follows:

Sr. no. Description Amount (Rs. in lacs) 1. Bills of Exchange* 1898.81 2. Bank Guarantee** 366.65 3. Corporate Guarantee to subsidiary viz;

Chemolutions Chemicals Limited*** 500.00

TOTAL 2765.46 *Bills of Exchange are the bills of overseas customers discounted/negotiated with the banks under the Foreign bills facilities sanctioned by the Banks.


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**Bank Guarantees has been given to Sales Tax, Customs, Central Excise Authorities and Maharashtra Pollution Control Board (MPCB) in the normal course of business. ***Corporate Guarantee to Subsidiary Company viz. Chemolutions Chemicals Limited is given for availing working capital facilities from IDBI Bank Ltd. to the extent of Rs.500.00 lacs on the terms and conditions of the bank. The Holding Company has not taken any loan from the bank for the above purpose. In the event such contingent liabilities materialize it may have an adverse effect on the financial condition and future financial performance of the company.

3. The subsidiaries/ group companies of the company have incurred losses in the past.

The subsidiaries/ group companies of the company have incurred losses as on 31st March as mentioned below.

(Rs. in lacs)

Name of the company

Amount of loss 2007-08 2008-09 2009-10

Subsidiary Sangam Laboratories Ltd.+ 27.83 35.31 113.00 Chemolutions Chemicals Ltd. -- 27.66 132.06 Fine Lifestyle Brands Ltd.** -- 7.19 33.59 Fine Renewable Energy Ltd*** -- -- 13.49 Fine Lifestyle Solutions Ltd**** -- -- 5.37 Dulcette Technologies LLC 23.65 27.26 22.61

Group company Abana Medisys Pvt. Ltd. 2.93 4.35 9.95 Vibha Agencies Pvt. Ltd. -- 3.66 45.05 Focussed Event Management Pvt. Ltd. 18.09 -- -- Cafco Consultants Ltd. -- -- -- Camart Industries Ltd. 11.27 -- --

+The company became the subsidiary of the company since the year 2008. ** The Company was incorporated on 1st September, 2008 and the figures are till 31st March, 2009 and therafter.

*** The company was incorporated on 28th January 2009 and the figures are till 31st March 2010. * ***The Company is the step down subsidiary of Camlin Fine Chemicals Ltd in which Fine Lifestyle Brands Ltd, a subsidiary of Camlin Fine Chemicals Ltd holds 75% Equity Shares.

4. The object of the issue i.e capital expenditure to be financed through rights issue; is not appraised by any Bank or Financial Institution.

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The proposed object i.e. capital expenditure, for which the funds are being raised has not been appraised by any Bank or Financial Institution and the fund requirements are based primarily on Management’s estimates. There is no guarantee that the estimates will prove to be accurate, the company do not foresee any significant deviation in the estimates which would adversely impact the operations and impact sustainability of the Company in spite of the absence of any independent monitoring agency. The proceeds of the issue are at the sole discretion of the management of CFCL and no independent monitoring agency has been appointed to monitor the proceeds of the issue though company would ensure the use of funds for its stated purpose. However, as per Clause 5A of Clause 49 (II)(D) of the Listing Agreement, the Audit Committee will review with the management, the statement of uses/ application of funds raised through the rights issue, the statement of funds utilized for purposes other than those stated in the letter of offer and make appropriate recommendations to the Board to take up appropriate steps in this matter.


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5. Delay in placing orders for Machinery and balancing equipments may adversely affect the business plans of the company which may consequently affect the profitability of the company. The company is yet to place firm orders for machinery aggregating Rs. 500 lacs for which the present rights issue is proposed. Any delay in placement of orders for the entire requirement of balancing equipments/ and machinery may lead to time and cost over run in the project

6. There are no supply agreements for the raw materials required for manufacturing of the products of the company. Volatility in the prices of the raw materials may have an adverse impact on the business and financial operations.

The company imports 2 major raw materials viz; Hydroquinone and Tertiary Butyl Alcohol which constitute more than 60% of the total purchase. These raw materials are purchased against the supply agreements on quarterly basis. The company also procures solvents like N-Hexane and methanol etc. that are purchased on monthly basis and also have a price revision on 1st day of the month. The prices of these raw materials have impact on profitability of the company and there are factors affecting raw material prices which are beyond the control of the company. Though the company covers purchases to a certain extent in anticipation of any price increases, the company is still exposed to and will have to absorb any fluctuations in the prices of these raw materials, which may adversely affect financials of the company.

7. The company does not have any long term contracts with customers and typically operates on the basis of purchase orders, which could adversely impact the revenues and profitability.

Company presently has some long term supply contracts with key customers globally, for supply of the products manufactured by the company. The company’s strategy for the future is to have continued long term supply contracts with the key customers and also at the same time be not bound by terms of exclusivity to operate globally. The business of the company is dependent on the decisions and actions of its customers, and there are number of factors relating to the customers that are outside the control that might result in the termination of contract or the loss of any customer. Any of these factors could adversely affect the business operations and in turn adversely affect the financial operations.

8. The premises of the registered office of the company are not owned by the company. The company has entered into the agreement of leave and license with M/s. Texport Industries Pvt. Ltd. for industrial purpose for setting up office and research and development center by the company and offices by its associate firms and subsidiary/ associate companies, for an initial period of sixty months. This agreement was entered into on 22/09/2009 and the company has to pay a sum of Rs.7.50 lacs per month plus service tax for the first 60 months with 2 year option to renew and an increase of 15% after the completion of initial three years and thereafter the same is increased by 5% every year plus service tax.

9. The company has entered into loan agreements with banks. There are restrictive covenants in

these agreements relating to restrictions on change in capital structure, undertaking new projects, entering into the borrowing agreements, declaring dividend and change in board of directors, etc. The company’s indebtness and the conditions and restrictions imposed by the financing agreements could restrict the ability to conduct its business operations.

There are certain restrictive covenants in the agreements the company has entered into with certain banks and financial institutions for short term and long term borrowings and secured and unsecured loans. Terms loans from banks are secured by mortgage/ hypothecation of related immovable/ movable assets of the company, both present and future.


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Cash credits from the banks are secured by hypothecation of stocks and book debts ranking pari-passu between them as mortgage/ hypothecation of specified immovable and movable fixed assets of the entities ranking pari passu by way of second charge. There are loans amounting to the extent of Rs. 665.95 lacs guaranteed by respective directors of the Companies. In case the Company is not able to pay its dues in time, the same could adversely impact its operations. The salient restrictive covenants include amongst others restrictions on change in capital structure, undertaking new projects, entering into the borrowing agreements, declaring dividend and change in board of directors. The company has obtained No Objection Certificates from the bankers to the company for the present rights issue. For details of the restrictive covenants please refer page no. 69 of the letter of offer.

10. The company’s ability to implement its business plans may be restricted by availability of the

required funds at an appropriate time and on acceptable terms. The company may require additional capital in the future to implement its business plans, including for expansion and business development. If the company fails to generate sufficient cash through product sales or from other sources of revenue, it may need to raise additional capital from equity or debt sources to fund any such expansion or development. The company may not be able to obtain financing on terms acceptable or at all and therefore may be forced to curtail planned expansions and business development initiative, which would have a material adverse effect on the company’s business, financial condition and results of operations. In addition, any capital raising activities could, in the case of debt, increase the company’s interest payment obligations, subject the company to additional lender restrictions and impact its ability to service the existing indebtness. Additional equity issuance could result in significant dilution to the existing shareholders.

11. All the manufacturing facilities of the company are geographically located in one area.

All of the company’s manufacturing units are based in Boisar, Tarapur in District Thane, Maharashtra. As a result, any localized social unrest, natural disaster or breakdown of services and utilities in Tarapur could have material adverse effect on the business, financial position and results of operations of the company. Further, continuous addition of industries in and around Tarapur without commensurate growth of its infrastructural facilities may put pressure on the existing infrastructure in Tarapur, which may affect our business. Further, spiraling cost of living in Tarapur may push the company’s manpower cost in the upward direction, which may reduce the margin and cost competitiveness.

12. There could be an adverse effect if the company fails to keep pace with the technical and technological developments/ research and developments in the chemical sector.

To meet the need of the clients’, the company must regularly update the existing technology and acquire or develop new products on a continuous basis. In addition, rapid and frequent technology and market demand changes can often render existing technologies and equipments obsolete, requiring substantial new capital expenditure and/ or written-down value of assets. The failure to anticipate or to respond adequately to changing technical, market demand and/ or client requirements could adversely affect the business and financial results of the company. Management Proposal: The Company has a strong Research and Development backbone, which is constantly innovating the manufacturing process, improving yield and ingredients to reduce the costs and be competitive. The manufacturing team is focussed on reducing the costs by bringing in the modern


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techniques and machines to reduce labour and power cost. In view of this the Company is well prepared and has established benchmarking parameter for its different business process to be globally competitive. The Company has the prestigious HACCP Certificate (Hazard Analysis of Critical Control Points), which is a confirmation of its strong R&D and Quality Control. The consistent performance and growth of Research and Development of the Company has provided innovations in developing products & improving manufacturing processes and yields. The company’s manufacturing strength has various quality certifications like ISO 22000:5000, HACCP and FAMI-QS, which are mandatory world-wide and critical for ensuring food safety and quality standards. The company has a strong customer relationship and enjoys long term supply chain contracts in view of the consistent quality of products and customer service.

13. The promoters and promoter group will continue to retain majority control in the company after the issue, which will enable them to influence the outcome of matters submitted to shareholders for approval.

After completion of the issue, the promoters and promoter group will continue to hold approximately 51% of post-issue paid up share capital. So long as the promoters and the promoter group holds a majority of the company’s equity shares, they will be able to control most matters affecting the company, including the appointment and removal of directors, business strategy and policies, any determinations with respect to mergers, business combinations and acquisitions, dividend payout and financing. Further, the extent of promoters and promoter group shareholding may result in delay or prevention of a change of management or control of the company, even if such a transaction may be beneficial to the other shareholders.

14. Attracting and Retaining Key personnel

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

EXTERNAL RISK FACTORS 1. A slowdown in economic growth in India could cause the Company’s business to suffer

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


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2. Political instability or changes in the government could delay the liberalization of the Indian economy and adversely affect economic conditions in India generally, which could impact financial results and prospects of the company.

Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector and the current Indian Government has implemented policies and undertaken initiatives that continue the economic liberalization policies pursued by previous Indian Governments. However, the roles of the Indian Government and the State Governments in the Indian economy as producers, consumers and regulators have remained significant and there can be no assurance that liberalization policies will continue in the future. Any significant change in such liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our results of operations and financial condition in particular. Management Proposal:

We are mainly in food ingredients and food anti-oxidants business apart from recent introduction of few more products in other anti-anti-oxidants area such as industrial use mainly with international customers for export market and some more developments in domestic market. As such any changes in local taxes would not impact substantially for our margins in view of our major business with transnational customers in food oxidants.

3. Any downgrading of India’s debt rating by an independent agency may harm the company’s ability to raise debt financing

Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect its ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on its capital expenditure plans, business and financial performance.

PROMINENT NOTES 1. The Networth of the company as on March 31, 2010 is Rs. 3330.80 lacs (on standalone basis), Rs.

2913.21 lacs (on consolidated basis). 2. The book value per share as on March 31, 2010 is Rs.57.28 (on standalone basis), Rs.50.10 (on

consolidated basis).

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

4. The aggregate value of the related party transactions for the past 3 financial years are as mentioned below:

(Rupees in lacs) RELATED PARTIES 2009-2010 2008-09 2007-08 Subsidiaries and Associates (Standalone) 787.44 429.30 460.20 Key Management personnel and relatives (Standalone) 56.57 50.21 530.68 TOTAL 844.01 479.51 990.88 Subsidiaries and Associates (Consolidated) 56.10 40.42 402.34 Key Management personnel and relatives (Consolidated)

115.62 95.81 547.01

TOTAL 171.72 136.23 949.35


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For details on Related party disclosures refer page no.127 (on standalone basis) and 140 (on consolidated basis) of this Letter of Offer.

• Names of related parties as on 30/09/2009 include Camlin Ltd, Mr. Dilip D. Dandekar and their

associates. However Camlin Ltd., Mr. Dilip D. Dandekar and entities belonging to them have dis-associated from Camlin Fine Chemicals Ltd. (the issuer company) with effect from 15/12/2009.

5. There has been no financing arrangement whereby the promoter group, the directors of the

company and there relatives have financed the purchase by any other person of securities of the company during the period of six months immediately preceding the date of filing of the draft letter of offer with SEBI.

6. All information shall be made available by the LM and the Company to the public and investors

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

7. The Company was originally incorporated on 30th November 1993 under the name Camlicon

Consultants Pvt Ltd. The name was subsequently changed to Camlin Fine Chemicals Pvt Limited on 1st June 2006. With its conversion into public ltd company the name was finally changed to Camlin Fine Chemicals Ltd from 11th August 2006. The change of name was effected to bring in line with the companies activities of manufacturing and selling fine chemicals comprising of food ingredients, active pharmaceuticals ingredients, bulk drugs and industrial products and also for reflecting its status as a Public Ltd company.

8. The fine chemical division of Camlin Ltd. was de-merged into CFCL, the issuer company, in

terms of scheme of arrangement sanctioned by the Hon’ble Bombay High Court on 17/11/2006. Pursuant to the said scheme of arrangement, each member/shareholder of Camlin Ltd. holding 1 fully paid up equity share of Camlin Ltd. was allotted 1 fully paid up equity share of CFCL. CFCL is managed under the control of Shri Ashish Dandekar as the Managing Director & majority shareholder of CFCL. Shri Dilip D. Dandekar, the Chairman (Non-Executive) of the company alongwith his family members and companies controlled by him including Camlin Ltd. have decided to disassociate as promoter/promoter group of Camlin Fine Chemicals Ltd. (CFCL) vide their undertaking /confirmation document dated 15th December 2009. In terms of the aforesaid scheme of arrangement, CFCL is allowed to use word “Camlin” in the name of the Company. Thus presently besides the use of word ‘Camlin’ in the name of CFCL, there has been no other relation of CFCL with Camlin Limited.

9. Investors are free to contact the Lead Manager for any complaints/ information/ clarification

pertaining to this issue. For contact details of the Lead Manager, please refer to the cover page of this offer document.

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

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


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PART I SECTION II - INTRODUCTION

The Industry information presented in this section has been extracted from publicly available documents from various sources, including officially prepared materials and has not been prepared or independently verified by the Issuer or the Lead Manager. Camlin Fine Chemicals Ltd. (CFCL) is mainly in the business of manufacture of food ingredients which are in the area of shelf life enhancement of food products which contains fats and oils and synthetic antioxidants. The company also manufactures applications for bio-diesel, printing inks, plastics and polymers etc. The company falls into the category of fine and specialty chemicals industry. For detailed description of industry segment in which company operates please refer to page no. 52 of the letter of offer. INDIAN CHEMICAL INDUSTRY SUMMARY Chemical industry is one of the oldest industries in India. The industry, including petrochemicals, and alcohol-based chemicals, has grown at a pace outperforming the overall growth of the industry. The Chemicals Industry comprises both small and large scale units. The fiscal concessions granted to small sector in mid-eighties led to establishment of large number of units in the Small Scale Industry (SSI) sector. Currently, the Indian Chemical Industry is in the midst of major restructuring and consolidation phase. With the shift in emphasis on product innovation, brand building and environmental friendliness, this industry is increasingly moving towards greater customer-orientation. Even though India enjoys an abundant supply of basic raw materials, it will have to build upon technical services and marketing capabilities to face global competition and increase its share of exports. Chemical fertilizers and pesticides played an important role in the "Green Revolution" during the 1960s and 1970s. The consumption of pesticides in India is low in comparison to other countries. Indian exports of agrochemicals have shown an impressive growth over the last five years. The key export destination markets are USA, UK, France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore. The chemical industry which includes, as per National Industrial Classification, basic chemicals and its products, petrochemicals, fertilizers, paints and varnishes, gases, soaps, perfumes and toiletries and pharmaceuticals is one of the most diversified of all industrial sectors covering thousands of commercial products. Its contribution to the GDP of the country is around 3 per cent. Source(http://www.cci.in/pdf/surveys_reports/chemical-petrochemical-industry.pdf)

CURRENT SCENARIO GLOBAL The global chemical industry, estimated at US$ 2.4 trillion, is one of the fastest growing sectors of the manufacturing industry. Despite the challenges of escalating crude oil prices and demanding international environmental protection standards now adopted globally, the chemicals industry has still grown at a rate higher than the overall-manufacturing segment. As per industry reports the pharmaceutical segment contributes approximately 26% of the total industry output and approx. 35-40% is dominated by the petrochemical segment. Commodity chemicals is the largest segment in the chemicals market with an approx. size of $ 750 billion while the specialty and fine chemicals segment accounts for $ 500 billion. The global Specialty chemicals industry accounted for sales of US$ 510 billion in 2008. Forty business segments in North America, Western Europe and Japan, with a combined market size of about US$ 382.5 billion, represented about 75% of total world Specialty chemicals sales in 2008. In that year, the world's five largest industries - active pharmaceutical ingredients & intermediates, pesticides, specialty polymers, electronic chemicals, oil field chemicals and construction chemicals had a market share of about 43%. The ten largest segments accounted for 62% of total annual Specialty chemicals sales.


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Some of the major markets for chemicals are North America, Western Europe, Japan and emerging economies in Asia and Latin America. The US consumes approximately one-fifth of the global chemical consumption whereas Europe is the largest consumer with approx. half the consumption. The US is the largest consumer of commodity chemicals whereas Asia Pacific is the largest consumer of agrochemicals and fertilizers. INDIAN Chemical Industry is one of the oldest industries in India, which contributes significantly towards industrial and economic growth of the nation. It is highly science based and provides valuable chemicals for various end products such as textiles, paper, paints and varnishes, leather etc., which are required in almost all walks of life. The Indian Chemical Industry forms the backbone of the industrial and agricultural development of India and provides building blocks for downstream industries. Chemical Industry is an important constituent of the Indian economy. Its size is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India's GDP. The total investment in Indian Chemical Sector is approx. US$ 60 billion and total employment generated is about 1 million. The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports of the country. In terms of volume, it is 12th largest in the world and 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Over the last decade, the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of specialty chemicals, fine chemicals and pharmaceuticals. Source(http://chemicals.nic.in/chem1.htm)

INDUSTRY STRUCTURE & SEGMENTS Industry Segments The wide and diverse spectrum of products can be broken down into a number of categories, including inorganic and organic chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals, and fertilizers. Petrochemicals The petrochemical industry of India is less than 40 years old. Petrochemicals cover basic chemicals like Ethylene, Propylene, Benzene and Xylene. The other major components are the intermediates like MEG, PAN and LAB etc, Synthetic fibres like Nylon, PSF and PFY, Polymers like LDPE/HDPE, PVC, Polyester and PET etc and Synthetic rubber like SBR, PBR. The sector has a significant growth potential. Although the current per capita consumption of petrochemicals products is low, the demand for the same is growing: The major players in this field include Reliance, Indian Petrochemicals Limited (IPCL), National Organic Chemical Industry Ltd (NOCIL) and Gas Authority of India Ltd (GAIL) etc. Basic Inorganic and Organic Chemical Industry The Basic inorganic chemical and organic chemical industry constitutes a major segment of the country's economy. Important chemicals in this category are Soda Ash, Caustic Soda, Liquid Chlorine, Calcium Carbide, Acetic Acid. Methanol, Formaldehyde, Phenol, Acetone. These are raw materials for industries like detergents, toothpaste, plastics, drugs, petroleum refining, etc. 10 per cent of the Chlor-Caustic Plants use Membrane Cell Technology, which will find higher usage, as no new capacities are allowed for the mercury cell process. Agrochemicals Agrochemicals are mainly used for plant protection and improving crop yields. The Indian Agrochemicals industry has grown from mere Rs.400 crores (US$ 0.9 billion) in the 70's to about


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Rs.7000 crore (US$ 1.36 billion). Indian Agrochemicals Industry is the 3rd largest manufacturer of agrochemicals in Asia and 4th largest in the world after USA, Japan and China. The industry derives about 50% of its revenue from exports. The average yield per hectare in India is much lower to the developed countries for almost all the crops. Around Rs. 1, 00,000 crore of agricultural output is lost due to pests. The Agrochemicals industry can be broadly classified into Insecticides, Fungicides, Weedicides / Herbicides and Rodenticides. Drugs & Pharmaceuticals The Indian Pharmaceutical Industry is the largest in the developing world. The industry currently produces a wide range of bulk drugs. In fact, India is currently a world leader in manufacture and export of basic drugs such as ethambutol and ibuprofen. 300 bulk drugs & formulation based on them are manufactured in the country. There are 10,000 manufacturing units, of which 290 units are in the large-scale sector, 45 Multi- National Companies (MNCs) have manufacturing bases here. India is emerging as one of the largest and cheapest producers of pharmaceuticals in the world, accounting for nearly 8.5per cent of the world's drug requirements in terms of volume, and ranks amongst the top 15 drug manufacturing countries in the world. India being a signatory to the GATT accord, (and the TRIPs agreement therein) patent protection will be provided under the treaty obligations. Fine & Specialty Chemicals The applications of Specialty chemicals vary enormously. These are used as cosmetic additives, water treatment products, dyes, sanitation agents, plasticizers, paints, adhesives, flavors and fragrances, paper, additives and industrial cleaners. About 70% of the Fine Chemicals produced in India find their way into the Pharmaceutical and Agrochemical sectors. Performance chemicals geared to customer need are being developed locally particularly since there is growing demand for Specialty chemicals like Sunscreens, Antioxidants, Biocides, etc. Manufacturers of Fine Chemicals and specialties have major strengths in basic research facilities available with CSIR laboratories such as NCL, IICT & RRls as also corporate R & D centers. This ensures that development of process know-how; plant process design and engineers, detailed engineering design, commissioning assistance and even consultancy for re-engineering are available at low cost. This segment is also highly segmented with large number of players. Major Indian players are ION Exchange, Balmer Lawrie, Dai Ichi Karkaria. etc. The multinationals like Ciba, Hoechst, Foseco, Nalco Chemicals, Clariant, ICI etc too have significant share in the fast growing market. Chemical Industry contributes significantly towards industrial and economic growth of the nation. It is highly science based and provides valuable chemicals for various end products. India produces a large number of fine and specialty chemicals, Dyestuff, Chemical fertilizers and pesticides, The key export destination markets are USA, U.K., France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore. India is one of the most dynamic generic pesticide manufacturers in the world with more than 60 technical grade pesticides being manufactured indigenously by 125 producers consisting of large and medium scale enterprises (including about 10 multinational companies) and more than 500 pesticide formulators spread over the country. Source: (http://www.assocham.org/arb/aep/AEP_Demand_scenario_acroiss_sectors.pdf)


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COMPANY SUMMARY Business Summary of the Company Camlin Fine Chemicals Limited (formerly known as Camlicon Consultants Private Limited) was incorporated in the year 1993 and presently its Registered office is situated at Plot No. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai – 400 093. The main object of the Company is to carry on activities relating to manufacturing, selling, distributing, exporting, importing and otherwise dealing in all kinds of Chemicals including fine chemicals and intermediates, bulk drugs food additives, food supplements, antioxidants and active pharmaceutical ingredients. The “Fine Chemical Division” of Camlin Limited was de-merged into CFCL in terms of the scheme of arrangement sanctioned by the Hon’ble High Court, Bombay vide their order dated 17/11/2006. CFCL was a non-operating Company with its share capital being held by the promoters of Camlin Limited. Rationale for Scheme of Arrangement was as follows : Camlin Limited is engaged in the business of manufacturing range of stationary and hobby products including colours, writing instruments, geometry instruments & adhesives in consumer products division while “Fine Chemical Division” of Camlin Limited was engaged in the manufacturing of specialty chemicals, anti-oxidants, bulk drugs and active pharmaceuticals ingredients. It was considered necessary to provide focused attention to each of the businesses which are distinct from each other. The said scheme was aimed at having administrative convenience of both the entities carrying out separate businesses. The scheme was aimed at having following advantages to both the entities.

Separate business would be carried out in independent entities.

Enhanced management focus to the respective businesses to result in synergies of operations.

Resultant structure to facilitate independent growth of the separate business.

Scope for independent Collaboration & Expansion. For salient features of Scheme of Arrangement, please refer page no.64 of this Letter of Offer. CFCL issued and allotted equity shares to every member of Camlin Limited holding fully paid up equity shares in Camlin Limited and whose name appeared in the register of members, on the record date, in the ratio of one (1) Equity Share of the face value of Rs. 10/- (Rupees Ten only) each fully paid-up of CFCL for every one (1) equity share fully paid up and held in Camlin Limited. Such Shares ranked pari passu in all respects with the existing shares of the Company. Accordingly the process of scheme of arrangement was completed as sanctioned by the Hon’ble High Court, Bombay and the effective date for the scheme was 19/12/2006. The equity shares of CFCL were listed on Bombay Stock Exchange Ltd. (BSE) w.e.f. 30th March 2007 on completion of all the process relating to the implementation of the said scheme of arrangement. CFCL made a preferential allotment of 9,50,000 equity shares of Rs.10/- each at a price of Rs.52.00/- per share to the promoter group of the company pursuant to which an open offer in terms of SEBI (SAST), 1997 Regulation was made by the promoter and promoter group. The said offer opened for subscription on 12/03/2008 and closed on 31/03/2008.


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Pursuant to the completion of the said open offer, the promoter/ promoter group acquired 7,50,265 equity shares of Rs.10/- each and accordingly the shareholding of the promoter/ promoter group increased to 63.24% of the equity share capital. Presently the shareholding of the promoter/ promoter group in the company is 50.80%. For details of disassociation please refer to page no. 70 of the letter of offer. COMPETITIVE STRENGTHS The company has the following strengths:

• Strong research and development team: The Company has a strong Research and Development backbone, which is constantly innovating the manufacturing process, improving yield and ingredients to reduce the costs and be competitive.

• Experienced Management and Employees: The Company is managed and run by a team of experienced professionals which in turn increase the profitability of the Company.

• Established Reputation for Quality Products: The Company has obtained various certifications which are mandatory worldwide and critical for ensuring food safety and quality standards.

• Standardized and documented internal processes: The company is in continuous process industry and the production is carried out in batches for which batch manufacturing records are maintained. There are standard operating procedures for manufacturing, quality control and quality assurance for the products manufactured. The company also has preventive maintenance plans for smooth manufacturing operations.

Under the guidance of the highly skilled management, the company documented its internal processes and methodologies which ensures that each department and each employee of the company are aware of their respective roles and obligations, and each activity of construction and development is as per the standards of quality that has been set. This also ensures uniformity in all the processes. The products offered by company are: A} Food Ingredients i) Antox TBHQ (HACCP Certified) FCC V / FAO / WHO (Tertiary Butyl Hydroquinone) ii) Antox BHA (HACCP Certified) FCC V / FAO / WHO / EEC ( Butylated Hydroxy Anisole) B} SWEETENER Sucralose FCC V C} ACTIVE PHARMACEUTICAL INGREDIENTS End users of the products The company is a multiproduct manufacturing and marketing Company, having customer base spread across 45 countries worldwide including India and products having applications in processed foods, edible oils, paints, polymers, alternative fuels (biodiesel), rubber, health and pharmaceuticals. Issue Details Issue of 34,88,688 Equity Shares of Rs. 10/- each at a premium of Rs. 5.75 per equity share (Issue Price of Rs. 15.75) aggregating Rs. 549.47 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of 3 Equity Share for every 5 Equity Share held on 2nd August 2010 (Record Date). The face value of the Equity Shares is Rs. 10/- per share and the Issue Price is 1.575 times the face value.


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SUMMARY OF FINANCIAL DATA Please read the following data in conjunction with the detailed Auditors’ Report commencing on page no. 98 under the heading ‘FINANCIAL INFORMATION’

STATEMENT OF ASSETS AND LIABILITIES (STANDALONE) (RUPEES IN LACS)

PARTICULARS AS AT 31ST MARCH

2010 2009 2008 2007 2006

A Fixes Assets Gross Block 6,252.61 5,293.61 4,928.81 4,603.80 - Less- Depreciation 2,323.69 1,912.99 1,525.86 1,185.00 - Net Block 3,928.92 3,380.62 3,402.95 3,418.80 - Less-Revaluation Reserve - - - - -

Net Block after adjustment of Revaluation Reserve

3,928.92 3,380.62 3,402.95 3,418.80 -

B Investments 339.88 184.88 61.96 0.25 -

C Current Assets,Loans and Advances Inventories 2,252.51 2,490.03 1,304.14 928.68 - Sundry Debtors 3,295.76 1,996.87 1,251.37 843.12 - Cash and Bank Balances 292.35 152.39 64.79 41.02 0.87 Loans and Advances 936.36 535.81 549.19 543.97 - Other Current Assets - - - - - Total 6,776.98 5,175.10 3,169.49 2,356.79 0.87

D Liabilities and Provisions Secured Loans 4,036.95 2,619.62 1,983.21 2,081.57 - Unsecured Loans - - 100.00 - - Current Liabilities and Provisions 3,347.56 2,781.20 1,501.29 1,561.87 0.07 Deferred Tax Liability 330.47 315.65 265.05 136.69 - Total 7,714.98 5,716.47 3,849.55 3,780.13 0.07

E Net Worth 3,330.80 3,024.13 2,784.85 1,995.71 0.80

F Represented by

Share Capital 581.45 580.00 580.00 485.00 1.00

Share Warrant - 80.60 80.60 - -

Employee Stock Option 7.96 2.59 - - -

Reserves 2,741.39 2,360.94 2,124.25 1,510.71 (0.20)

Less-Revaluation Reserve - - - - -

Reserves (Net of revaluation reserves)

2,741.39 2,360.94 2,124.25 1,510.71 (0.20)

TOTAL 3,330.80 3,024.13 2,784.85 1,995.71 0.80

G Misc. expenditure to the extent not - - - - -

written of or adjusted

H NET WORTH (F-G) 3,330.80 3,024.13 2,784.85 1,995.71 0.80


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Notes: -

i) In accordance with the Scheme of Arrangement which was approved by the Hon’ble High Court of Bombay on November 17, 2006, the business undertaking of Fine Chemical Division of Camlin Limited; (herein after referred to as demerged undertaking) has been demerged and vested in the Company with effect from the appointed date i.e. July 1, 2006. The Scheme has accordingly been given effect to in these accounts.

ii) The demerged undertaking is engaged in carrying on the business of manufacture and sale of fine chemicals and related activities.

iii) In terms of the scheme, all the assets and liabilities of the demerged undertaking have been accounted for at their carrying amounts as on July 1, 2006. As per the Scheme and in consideration of the above, the Company has issued 48 Lacs equity shares of Rs.10 each aggregating to Rs.480 Lacs. These shares have been issued in the ratio of one equity share for every one equity share held by the shareholders of Camlin Limited.

iv) Consequent upon giving effect to the Scheme of Arrangement and as required by the Scheme, an amount of Rs.1,693.27 Lacs being difference between the net book value of assets and liabilities of the demerged undertaking as on July 1, 2006 and the value of equity shares allotted, has been disclosed under “General Reserve”.

v) Since the scheme of arrangement entered into by the Company is not in the nature of amalgamation as specified in Accounting Standard – 14 ‘Accounting for Amalgamation’ issued by ICAI, the said AS is not applicable to the aforesaid scheme.

vi) In view of the aforesaid demerger with effect from July 1, 2006 the figures for the year ended 31st March 2010, for the year ended 31st March 2009, 31st March 2008 and 31st March 2007 are not comparable with that for the year ended 31st March 2006 .


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STATEMENT OF PROFIT AND LOSS ACCOUNT (STANDALONE) (RUPEES IN LACS)

PARTICULARS YEAR ENDED 31ST MARCH

2010 2009 2008 2007 2006 INCOME Sales- of products manufactured 11,685.70 9,746.11 7,823.51 4,544.26 - of products traded 659.71 304.14 290.33 158.86 - Total 12,345.41 10,050.25 8,113.84 4,703.12 - Other Operational Income 176.62 14.23 14.19 86.06 - Other Income 111.91 42.93 57.92 85.21 - (Increase)/decrease in inventories 190.71 (1,206.08) (214.63) (117.49) - 12,443.23 11,313.49 8,400.58 4,991.88 - Expenditure Raw Material Consumed 7,344.37 6,517.43 4,857.70 3,301.35 - Staff Cost 652.35 541.64 432.99 232.04 - Other Manufacturing expenses 1,390.82 1,064.25 746.40 384.41 - Administrative expenses 826.52 1,169.51 571.11 452.29 0.09 Selling and distribution expenses 524.30 545.55 498.36 400.04 -

Earning Before Depreciation, Interest & Tax

1,704.87 1,475.11 1,294.02 221.75 (0.09)

Depreciation 442.59 401.13 379.76 208.44 - Interest 603.78 553.46 497.70 221.72 -

Net Profit Before Tax and Extraordinary Items

658.50 520.52 416.56 (208.41) (0.09)

Taxation Current Tax 215.00 131.44 13.93 12.17 - Deferred Tax 14.82 50.60 125.59 (62.01) - Net profit before extraordinary items 428.68 338.48 277.04 (158.57) (0.09) Extraordinary items(net of tax) - - - 23.79 - Net Profit after Extraordinary Items 428.68 338.48 277.04 (182.36) (0.09)

Notes: -





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STATEMENT OF CASH FLOW (STANDALONE) (RUPEES IN LACS)

Particulars Year Ended 31st March

2010 2009 2008 2007 2006 Cash Flow from Operating Activities Net Profit before Taxation 658.50 520.52 416.56 (232.20) (0.09) Adjustments for: Depreciation 442.59 401.13 379.76 208.44 -

Deferred Employee Compensation expenses amortised

6.79 2.59 - - -

Loss/(profit) on sale of Fixed Assets (2.32) 4.58 20.45 - - Provision for doubtful debts (net) 18.90 (118.42) 33.79 80.00 - Provision for leave encashments 7.55 5.61 10.10 - - Interest/ Dividend Income (32.51) (10.14) (1.71) (3.65) - Preliminary expenses written off - - - - - Interest Paid 603.78 553.46 497.70 221.72 - Exchange Gain (33.14) 55.45 1.35 - -

Operating Profit before Working Capital Changes

1,670.14 1,414.78 1,358.00 274.31 (0.09)

Adjustments for: Change in Trade and Other Receivables (1,718.35) (672.35) (400.77) 354.49 - Change in Inventories 237.52 (1,185.89) (375.46) (91.38) - Change in Trade Payable 525.87 1,275.53 (321.15) 780.29 0.05 Change in Other Payable (31.50) (104.30) 165.94 (12.79) - Income-taxes paid (147.20) (61.00) (35.13) (12.17) - Prior Period Expenditure - - - - - Net Cash Flow from Operating Activities 536.48 666.77 391.43 1,292.75 (0.04) Cash Flow from Investing Activities Purchase of Fixed Assets (1,088.22) (389.92) (394.62) (912.45) - Sale of Fixed Assets 99.65 6.54 10.26 - - Investments Purchased (155.00) (122.92) (61.71) - Interest Received 32.46 10.04 0.92 3.65 - Dividend Received 0.05 0.10 0.79 - - Net Cash Flow used in Investing Activities (1,111.06) (496.16) (444.36) (908.80) - Cash Flow from Financing Activities

Proceeds from Borrowings (Net of repayments)

1,417.34 536.41 1.64 (134.58) -

Proceeds from Issuance of Capital 7.24 - 574.60 3.99 - Interest Paid (608.25) (552.58) (499.54) (213.72) - Dividend Paid (101.79) (66.84) - - - Net Cash Flow used in Financing Activities 714.54 (83.01) 76.70 (344.31) -

Net increase/ (decrease) in cash and cash equivalents

139.96 87.60 23.77 39.64 (0.04)

Cash and Cash Equivalents (Opening Bal.) 152.39 64.79 41.02 0.88 0.92

Cash and Cash Equivalents received on merger

- - - 0.50 -

Cash and Cash Equivalents (Closing Bal.) 292.35 152.39 64.79 41.02 0.88


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Notes: -






vi) In view of the aforesaid demerger with effect from July 1, 2006 the figures for the year ended 31st March 2010, for the year ended 31st March 2009, 31st March 2008 and 31st March 2007 are not comparable with that for the year ended 31st March 2006.


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STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES

(Rs. in Lakhs) Sr. No. Particulars As at 31st March

2010 2009 2008 2007 2006 A. Fixed Assets Gross block 6,463.21 5,484.16 5,047.22 4,603.80 - Less Depreciation 2,425.18 1,982.42 1,588.80 1,185.00 - Net Block 4,038.03 3,501.74 3,458.42 3,418.80 - Less: Revaluation Reserve - - Net Block after adjustment for

Revaluation Reserve 4,038.03 3,501.74 3,458.42 3,418.80 -

B Goodwill (Net of Amortization) - - 26.60 - - C Investments 0.50 0.50 0.50 0.25 - D Current Assets, Loans and

Advances Inventories 2,620.95 2,935.61 1,333.00 928.68 - Sundry Debtors 4,245.47 2,217.93 1,276.42 843.12 - Cash and Bank Balances 353.05 189.10 88.36 41.02 0.87 Loans and Advances 732.44 489.73 554.83 543.97 - Total 7,951.91 5,832.37 3,252.61 2,356.79 0.87 E Liabilities and Provisions: Secured Loans 4,648.78 2,832.14 2,020.00 2,081.57 - Unsecured Loans 13.23 5.99 105.99 - - Current Liabilities and Provisions 4,085.55 3,253.91 1,548.48 1,561.87 0.07 Deferred Tax Liability 318.39 306.66 268.62 136.69 Total 9,065.95 6,398.70 3,943.09 3,780.13 0.07 F Minority Interest 11.28 21.78 11.87 - - G Net Worth ( A+B+C+D-E-F ) 2,913.21 2,914.13 2,783.17 1,995.71 0.80 H Represented by Share Capital 581.45 580.00 580.00 485.00 1.00 Reserves 2,323.80 2,250.94 2,108.12 1,510.71 (0.20) Less Revaluation Reserve - - - - - Reserves(Net of Revaluation

Reserves) 2,323.80 2,250.94 2,108.12 1,510.71 (0.20)

Share Warrant - 80.60 95.05 - - Share Application Money - - - - - Employee Stock Option

Outstanding 7.96 2.59 - - -

Total 2,913.21 2,914.13 2,783.17 1,995.71 0.80 I Misc. Expenditure to the extent not

written off or adjusted - - - - J Net Worth ( H-I ) 2,913.21 2,914.13 2,783.17 1,995.71 0.80


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STATEMENT OF CONSOLIDATED PROFIT AND LOSS

(Rs. in Lakhs)

Particulars Year Ended March 31

2010 2009 2008 2007 2006 Income Sales: Of Products manufactured by the Company

13,367.98 10,107.04 7,836.05 4,544.26 -

Of Products traded in by the Company 660.20 304.14 290.33 158.86 - 14,028.18 10,411.18 8,126.38 4,703.12 - Other Operational Income 112.25 28.23 14.19 86.06 - Other Income 112.49 23.23 57.69 85.21 - Increase(Decrease in Inventories) (154.18) 1,441.91 214.22 117.49 - 14,098.74 11,904.55 8,412.48 4,991.88 - Expenditure Raw Materials Consumed 8,775.03 6,966.21 4,867.03 3,301.35 - Staff Costs 776.71 621.49 433.79 232.04 - Other Manufacturing Expenses 1,464.39 1,080.44 741.85 384.41 - Administration Expenses 1,023.96 1,241.61 588.46 452.29 0.09 Selling & Distribution Expenses 579.15 599.53 511.63 400.04 - Amortization of Goodwill - 26.60 2.96 - Earning Before Depreciation Interest & Tax

1,479.50 1,368.67 1,266.76 221.75 (0.09)

Depreciation 466.99 407.62 380.37 208.44 - Interest 677.77 575.53 498.59 221.72 - Net Profit before tax and Extraordinary items

334.74 385.52 387.80 (208.41) (0.09)

Taxation Current tax 215.00 133.18 14.11 12.17 - Deferred tax 11.73 38.03 125.11 (62.01) -

Net Profit before Extraordinary Items 108.01 214.31 248.58 (158.57) (0.09) Extraordinary items - - - - - Net Profit after Extraordinary Items 108.01 214.31 248.58 (182.36) (0.09) Adjustment on account of Prior Period Expenses - - - - - Adjusted Profit 108.01 214.31 248.58 (182.36) (0.09) Minority Interest (13.07) (30.31) (12.33) - - Net Profit after Minority Interest 121.08 244.62 260.91 (182.36) (0.09)


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STATEMENT OF CONSOLIDATED CASH FLOWS

(Rs. in Lakhs)

Particulars

Year Ended 31st March 2010 2009 2008 2007 2006

Cash Flows from Operating Activities Net Profit before Taxation 334.74 385.52 387.80 (232.20) (0.09) Adjustments for: Depreciation 466.99 407.62 380.37 208.44 - Deferred Employee Compensation expenses amortized

6.79 2.59 - - -

Misc Exp Written Off - - 0.14 - - Loss on sale of Fixed Assets (1.45) 4.58 20.45 - - Provision for doubtful debts (net) 21.53 (118.42) 34.65 80.00 - Provision for leave encashments 7.55 5.61 10.10 - - Interest/ Dividend Income (8.71) (2.49) (1.48) (3.65) - Amortization of Goodwill 26.60 2.96 - - Interest Paid 677.77 575.53 498.59 221.72 - Exchange Gain 65.10 56.42 1.35 - - Operating Profit before Working Capital Changes

1,570.31 1,343.56 1,334.93 274.31 (0.09)

Adjustments for: Change in Trade and Other Receivables (2,392.02) (817.80) (412.20) 354.49 - Change in Inventories 314.66 (1,602.61) (381.56) (91.38) - Change in Trade Payable 690.57 1,683.68 (317.03) 780.29 0.05 Change in Other Payable 72.59 (66.38) 190.83 (12.79) - Income-taxes paid (147.96) (61.31) (35.19) (12.79) - Prior Period Expenditure - - - - - Net Cash Flow from Operating Activities 108.16 479.14 379.78 1,292.13 (0.04) Cash Flow from Investing Activities Purchase of Fixed Assets (1,101.85) (462.06) (401.68) (912.45) - Sale of Fixed Assets 100.02 6.54 10.26 - - Interest Received 8.57 2.34 0.69 3.65 - Dividend Received 0.14 0.15 0.79 - - Net Cash Flow used in Investing Activities (993.12) (453.03) (389.94) (908.80) - Cash Flows from Financing Activities Proceeds from Borrowings (Net of repayments)

1,823.88 712.14 (52.87) (134.58) -

Proceeds from Issuance of Capital 7.25 (14.45) 608.95 3.99 - Interest Paid (682.24) (574.65) (500.43) (213.72) - Dividend Paid (101.79) (66.84) - - - Increase in Minority Interest 1.79 18.43 - - - Net Cash Flows used in Financing Activities

1,048.89 74.63 55.65 (344.31) -


163.93 100.74 45.49 39.64 (0.04)

Cash and Cash Equivalents (Opening Balance)

189.10 88.36 41.02 0.88 0.92


- - 1.85 0.50

Cash and Cash Equivalents (Closing Balance)

353.05 189.10 88.36 41.02 0.88


15

THE ISSUE

Type of Issue Type of

Instrument No. of equity

shares Face Value

(Rs.) Issue Price

(Rs.) Consideration

Rights Issue Equity Shares 34,88,688 10/- 15.75 Cash

ISSUE BREAK-UP

Particulars

No. of Equity Shares

Equity Shares offered (Issue Size) 34,88,688 Equity Shares Entitlement Ratio The Equity Shares are being offered on rights basis to

the existing Equity Shareholders of the Company in the ratio of 3 Equity Share for every 5 Equity Share held as on the Record Date (3:5).

Market Lot

The market lot for the Equity Shares in dematerialised mode is one. In case of physical certificates, the Company would issue one certificate for the Equity Shares allotted to one folio (“Consolidated Certificate”).

Equity shares outstanding prior to the Issue 58,14,480 Equity Shares Equity shares outstanding after the issue 93,03,168 Equity Shares

Use of proceeds:

Please see section titled “Objects of the Issue” on page 28 of this Offer Document

BOOK CLOSURE & OTHER DETAILS

PARTICULARS DATE(S) Record Date Monday 2nd August 2010 Purpose Rights Entitlement (3:5) Ex- right 30/07/2010

ISSUE SCHEDULE

ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS FOR SPLIT FORMS

ISSUE CLOSES ON

Tuesday, 10th August, 2010 Tuesday, 17th August, 2010 Tuesday, 24th August, 2010


16

GENERAL INFORMATION Dear shareholder(s), The Board of Directors of the Company at their meeting held on 1st December 2009 decided to make the offer to the existing shareholders of the Company on Rights basis aggregating about Rs.550.00 lacs. The ratio and price per equity share was to be decided by the Rights issue Committee/ Board prior to the issue at the appropriate time. The Rights Issue Committee at their meeting held on 12th July 2010 decided to make the following offer to the existing shareholders of the company: Issue of 34,88,688 Equity Shares of Rs. 10/- each at a premium of Rs. 5.75 per equity share (Issue Price of Rs. 15.75) aggregating about Rs. 549.47 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of 3 Equity Share for every 5 Equity Share held on Monday 2nd August 2010 (Record Date). The face value of the Equity Shares is Rs. 10/- per share and the Issue Price is 1.575 times the face value.

Name of the Company : Camlin Fine Chemicals Ltd.

Registered Office : Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road Andheri (East), Mumbai – 400 093 Tel: 91-022-4020 1000/67001000; Fax: 91-022-2832 4404 Email: [email protected]

Factory : D-2/3, MIDC Area, Boisar, Tarapur, Dist. Thane, Maharashtra – 401 506

Corporate Identity Number : L74100MH1993PLC075361 Contact person: : Mr. Narayan R. Joshi,

Company Secretary and Compliance Officer Registrar of Companies : Everest Building, 100

Marine Drive, Mumbai 400 002 IMPORTANT

1. This Issue is applicable to such Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company at the close of business hours on Monday 2nd August 2010 (Record Date)

2. Your attention is drawn to the section on risk factors starting from page no. vi of this Letter of Offer.

3. Please ensure that you have received the CAF with this Letter of Offer.

4. Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAFs. The instructions contained in the CAF are an integral part of this Letter of Offer and must be carefully followed. An application is liable to be rejected for any non compliance of the Letter of Offer or the CAF.

5. All enquiries in connection with this Letter of Offer or CAFs should be addressed to the Registrar to the Issue, quoting the Registered Folio number/ DP and Client ID number and the CAF numbers as mentioned in the CAFs.

6. The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI.


17

7. All the legal requirements as applicable till the filing of the Letter of Offer with the Designated Stock Exchange have been complied with.

BOARD OF DIRECTORS The Board of Directors of the Company comprises of:

Name of the Director Designation Status Mr. Dilip D. Dandekar Non-Executive Chairman Non-executive Director Mr. Ashish S. Dandekar Managing Director Executive Director Mr. Pramod M. Sapre Independent Director Non-executive Director Mr. Sharad M. Kulkarni Independent Director Non-executive Director Mr. Abeezar E. Faizullabhoy Independent Director Non-executive Director Mr. Bhargav A. Patel Independent Director Non-executive Director

For further details of the Board of Directors of our Company, please refer to the chapter titled “Management” on page. 72 of this Letter of Offer. ISSUE MANAGEMENT TEAM Chief Financial Officer

Company Secretary and Compliance Officer

Mr. D. R. Puranik Camlin Fine Chemicals Limited Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East) Mumbai 400 093 Tel: (022) 40201000/67001000 Fax : (022) 28324404 E-Mail : [email protected]

Mr. N.R. Joshi Camlin Fine Chemicals Limited Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East) Mumbai 400 093 Tel: (022) 40201000/67001000 Fax : (022) 28324404 E-Mail : [email protected]

Auditors to the Company

Legal Advisors to the Issue

M/s B.K. Khare & Co. Chartered Accountants 706/708, Sharda Chambers, New Marine Lines, Mumbai- 400 020 Tel: (022) 22000607/ 7318/ 6360 Fax: (022) 22003476 E-mail: [email protected] Membership No.47942 Firm no : 105102W

Israni Law Chambers Advocates and Solicitors 8/39, Grant Bldg., 2nd Floor, Strand Cinema Road, Colaba Mumbai - 400005 Tel: (022-66347342,022-22810249) E-Mail: [email protected]

Bankers to the Company IDBI Bank Nariman Point Branch, 161, 16th Floor, C Wing, Mittal Court, Nariman Point, Mumbai – 400 021 Tel: (022) 22029245 Fax: (022) 22831021

The HongKong and Shanghai Banking Corporation Ltd. India Area Management Office, 52/60 Mahatma Gandhi Road, P.O. Box 128, Mumbai – 400 001 Tel: (022) 2267 4921 Fax: (022) 2265 8309


18

Lead Manager to the Issue

Registrar to the Issue

KEYNOTE CORPORATE SERVICES LIMITED 4th Floor, Balmer Lawrie Building, 5, J. N. Heredia Marg, Ballard Estate, Mumbai – 400 001 SEBI Regn No: INM 000003606 Tel : +91 022 30266000-3; Fax: + 91 022 22694323 Website: www.keynoteindia.net E-mail: [email protected] Contact Person: Ms. Swati Sinha

Sharepro Services (India) Pvt. Ltd. 13AB, Samhita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane, Off Andheri Kurla Road, Sakinaka, Andheri East, Mumbai 400 072 Tel : +91-022-67720300/400; Fax: + 91-022-28591568/28508927 E-mail: [email protected] Website: www.shareproservices.com SEBI Regn. No.: INR000001476 Contact Person: Mr. Prakash Khare/ Mr. Anand Moolya

Bankers to the Issue

HDFC Bank Ltd FIG – OPS Department, Lodha, I Think Techno Campus, O-3, Level, Next to Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai 400 042 Tel no.: +91-02230752928 Fax no: +91-02225799801 Contact Person: Mr. Deepak Rane Email id: [email protected] Website: www.hdfcbank.com SEBI Regn No: INBI00000063

IDBI Bank Ltd Unit No.2, Corporate Park, Near Swastik Chambers Sion Trombay Road, Chembur, Mumbai 400 071 Tel no.:+91-02266908402 Fax no: +91-02266908424 Contact Person: Mr. M. N. Kamat Email id: [email protected] Website: www.idbi.com SEBI Regn No: INBI00000076

Self Certified Syndicate Banks As on date following banks are registered with SEBI for collection of ASBA forms:

1. Axis Bank Ltd 17. Andhra Bank 2. State Bank of Hyderabad 18. HSBC Ltd. 3. Corporation Bank 19. Kotak Mahindra Bank Ltd. 4. State Bank of Travencore 20. Bank of India 5. IDBI Bank Ltd. 21. CITI Bank 6. State Bank of Bikaner and Jaipur 22. IndusInd Bank 7. YES Bank Ltd. 23. Allahabad Bank 8. Punjab National Bank 24. Karur Vysya Bank Ltd. 9. Deutsche Bank 25. The Federal Bank 10. Union Bank of India 26. Indian Bank 11. HDFC Bank Ltd. 27. Central Bank of India 12. Bank of Baroda 28. Oriental Bank of Commerce 13. ICICI Bank Ltd 29. Standard Chartered Bank 14. Vijaya Bank 30. J P Morgan Chase Bank, N.A. 15. Bank of Maharashtra 31. Nutan Nagrik Sahakari Bank Ltd. 16. State Bank of India 32 UCO Bank


19

For the details of list of controlling banks along with its branches for ASBA please visit the website of SEBI and BSE at www.sebi.gov.in and www.bseindia.com respectively. INTER SE ALLOCATION OF RESPONSIBILITIES Keynote Corporate Services Limited is the sole Lead Manager to this issue, however the list of major responsibilities of Keynote Corporate Services Limited inter alia, is as follows:

Sr. No.

Activity

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

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

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

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

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

CREDIT RATING/DEBENTURE TRUSTEE This being Rights Issue of equity shares, no Credit Rating or appointment of Debenture Trustee is required. MONITORING AGENCY Not Applicable APPRAISING ENTITY Not Applicable MINIMUM SUBSCRIPTION

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

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

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


20

IMPERSONATION Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: “Any person who- (a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any

shares therein, or (b) otherwise induces a Company to allot or register any transfer of shares therein to him, or any

other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years.”

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


21

CAPITAL STRUCTURE OF THE COMPANY The share capital of the Company as on the date of filing of this Letter of Offer with SEBI is as set forth below:

Details as on the date of this Offer Document Aggregate Nominal Value (Rs. in lacs)

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

1000.00

B. Issued, Subscribed & Paid-up Capital 58,14,480 Equity Shares of Rs. 10/- each, fully paid – up

581.45

C. Present Rights Issue 34,88,688 Equity shares of Rs. 10/- each for cash at a premium of Rs. 5.75 per share

549.47

D. Post Issue Capital 93,03,168 Equity shares of Rs. 10/- each

930.31

E. Share Premium Account

Before the offer After the offer

406.22 606.82

Notes to Capital Structure:

1. Changes in the Authorised Capital of the Company:

Sr. No.

Details of increase in Authorised share capital Date of Resolution

1 Incorporation Rs. 5.00 lacs divided into 5,000 equity shares of Rs.100/- each Subdivision of the face value of equity shares from Rs.100/- each to Rs.10/-

each leading to Authorised capital of Rs. 5.00 lacs sub-divided into 50,000 equity shares of Rs. 10/- each

26/04/2006

2 Increased to Rs. 500.00 lacs divided into 50,00,000 equity shares of Rs. 10/- each

26/04/2006

3 Increased to Rs. 1,000.00 lacs divided into 1,00,00,000 equity shares of Rs. 10/- each

25/07/2007

2. Details of increase in the paid-up Equity Share capital are as follows:

Date of

Allotment No. of Shares

Face Value (Rs.)

Issue Price (Rs.)

Cumulative No. of shares

Nature of allotment

Consideration

12/11/1993 3 100.00 100.00 3 Subscribers to MOA

Cash

07/12/2002 1,000 100.00 100.00 1,003 Further Allotment

Cash

Sub-division of the face value from Rs.100/- to Rs.10/- each


22

Date of Allotment

No. of Shares

Face Value (Rs.)

Issue Price (Rs.)

Cumulative No. of shares

Nature of allotment

Consideration

- 10,030 10.00 - 10,030 - - 09/06/2006 39,970 10.00 10.00 50,000 Further

Allotment Cash

22/02/2007 48,00,000 10.00 10.00 48,50,000 Other than Cash#

Issuance of equity shares pursuant to

the scheme of arrangement

21/12/2007 9,50,000 10.00 52.00 58,00,000 Further Allotment

Cash

23/10/2009 6,200 10.00 50.00 58,06,200 ESOP Allotment Cash 21/01/2010 5,090 10.00 50.00 58,11,290 ESOP Allotment Cash 25/03/2010 3,190 10.00 50.00 58,14,480 ESOP Allotment Cash

TOTAL 58,14,480 #Pursuant to the Scheme of demerger “Fine Chemical” division of Camlin Ltd. is demerged into CFCL. In terms of the said scheme, shareholders of Camlin Ltd. have been allotted one equity share of CFCL in lieu of one equity shares held in Camlin Ltd.

3. Promoters’ Contribution and Lock-in The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable. There are 9,50,000 equity shares of the company belonging to promoter/promoter group entities which are under lock-in. The details of equity shares presently under lock-in are as follows:

Sr. no.

Name of the shareholder No. of shares

Locked in shares as a % of total no. of

shares

Locked in upto Reason for lock-in

1 Mr. Vivek A. Dandekar 4,75,000 8.17 21/12/2010 Preferential issue 2 Ms. Abha A. Dandekar 4,75,000 8.17 21/12/2010

Total 9,50,000 16.34

4. Present Rights Issue :

Type of

Instrument Ratio Face Value

(Rs.) No. of shares

Issue Price (Rs.)

Consideration

Equity Shares 3:5 (Three Shares for every Five shares held)

10/- 34,88,688 15.75 Cash

5. Pre & Post issue shareholding pattern of the Company assuming full subscription in the rights issue is given

below:-


23

Category of Shareholder

No. of shareholders

(Pre issue)

Pre-issue

Post-issue

Number of Shares

% Number of Shares

%

(A) Shareholding of Promoter and Promoter Group

1 Indian (a) Individuals/ Hindu Undivided Family 13 25,04,395 43.07 4007032 43.07 (b) Central Government/ State Government(s) - - - - -(c) Bodies Corporate 3 3,75,926 6.47 6,01,482 6.47(d) Financial Institutions/ Banks - - - - - (e) Any other (specify) - - - - -

Sub- Total (A)(1) 16 28,80,321 49.54 4608514 49.542 Foreign

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

1 73,300 1.26 1,17,280 1.26

(c) Bodies Corporate - - - - - (d) Institutions - - - - - (e) Any other (specify) - - - - -

Sub-Total (A)(2) 1 73,300 1.26 1,17,280 1.26 Total Shareholding of Promoter and

Promoter Group (A)= (A)(1)+(A)(2) 17 29,53,621 50.80 4725794 50.80

(B) Public shareholding 1 Institutions

(a) Mutual Funds/ UTI - - - - - (b) Financial Institutions/ Banks 4 450 0.01 720 0.01(c) Central Government/ State Government(s) - - - - - (d) Venture Capital Funds - - - - - (e) Insurance Companies - - - - - (f) Foreign Institutional Investors - - - - - (g) Foreign Venture Capital Investors - - - - - (h) Any Other (Specify) - - - - -

Sub-Total (B)(1) 4 450 0.01 720 0.012 Non-institutions

(a) Bodies Corporate 170 4,59,338 7.90 7,34,931 7.90(b) Individuals-

16,57,555

28.52

26,52,088

28.52 i. Individual shareholders holding nominal

share capital up to Rs. 1 lakh. 5,091

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

19 7,20,410 12.39 11,49,499 12.39

(c) Non-Resident (Non-Rep) Non-Resident (Rep) Trust

13 16 1

2,641 19,665

800

0.05 0.34 0.01

3,424 31,408 1,280

0.05 0.34 0.01

Sub-Total (B)(2) 5,310 28,60,409 49.19 45,76,654 49.21 Total public shareholding (B)=

(B)(1)+(B)(2) 5,314 28,60,859 49.20 45,77374 49.22

TOTAL (A)+(B) 5,331 58,14,480 100.00 9303168 100.00I Shares held by Custodians and against

which Depository Receipts have been issued

- - -

GRAND TOTAL (A)+(B)+(C) 5,331 58,14,480 100.00 9303168 100.00 The total number of shareholders as on date in the company is 5,331.


24

6. The shareholding pattern of the promoter/ promoter group as on date is as detailed below:

Particulars

Present Post Rights No. of equity shares of Rs.

10/- each

% of present capital

No. of equity shares of Rs.

10/- each

% of post issue

capital a) Promoter

Mr. Ashish S. Dandekar 10,18,935 17.53 1630296 17.53 SUB – TOTAL 10,18,935 17.53 1630296 17.53

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

Mr. Vivek Dandekar 4,75,000 8.17 7,60,000 8.17Ms. Abha Dandekar 4,75,000 8.17 7,60,000 8.17Ms. Leena A. Dandekar 3,57,660 6.15 5,72,256 6.15D P Dandekar (HUF) 31,500 0.54 50,400 0.54Mr. Subhash D. Dandekar 53,000 0.91 84,800 0.91S D Dandekar (HUF) 60,500 1.04 96,800 1.04Ms. Rajini S. Dandekar 32,800 0.56 52,480 0.56Ms. Anagha Dandekar 73,300 1.26 1,17,280 1.26

SUB – TOTAL 15,58,760 26.80 24,94,016 26.80c) Company in which 10% or more of the share

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

M/s Camart Agencies Ltd. 1,66,230 2.86 265968 2.86M/s Vibha Agencies Pvt. Ltd. 1,62,896 2.80 260633 2.80M/s Cafco Consultants Ltd. 46,800 0.81 74880 0.81

SUB – TOTAL 3,75,926 6.47 601481 6.47d) Company in which the Company mentioned in

© above holds 10% or more of the share capital - - - -

SUB – TOTAL - - - -

e) HUF in which aggregate share of the promoter and his immediate relatives is equal or more than 10% of the total.

- - - -

SUB – TOTAL - - - - Persons Acting in Concert

GRAND TOTAL 29,53,621 50.80 4725793 50.80

The promoters/ promoter group collectively intend to subscribe to their rights entitlement as well as the undersubscribed portion of the present rights issue from other shareholders, if any, at least to the extent of 90% in this rights issue.

Presuming no subscription is received from other shareholders and the promoters/ promoter group subscribing to the extent of 90% of the present issue, their shareholding shall increase to 68.05 % of the post rights issue capital of the company. Presuming no subscription is received from other shareholders and the promoters/promoter group subscribing to the entire unsubscribed portion (i.e. entire rights issue), their shareholding shall increase to 69.25% of the post rights issue equity capital of the Company. Such acquisition by promoters will not result in the public shareholding of the company falling below the requisite levels prescribed under Clause 40A of the Listing Agreement. The Company confirms that it will be in compliance with Clause 40 A of the Listing Agreement on a continuous basis.


25

As a result of this subscription and consequent allotment, the promoters/promoter group may acquire shares over and above their entitlement to such an extent that atleast minimum subscription to the extent of 90% of the proposed issue amount is received. This subscription and acquisition of additional equity shares by the Promoter/promoter group, if any, will not result in change of control of the management of the Company and shall be exempt from the requirements of making a public offer in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

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

7. The Company has not issued any warrant, option, convertible loan, debenture or any other securities convertible at a later date into equity, which would entitle the holders to acquire further equity shares of the Company except for Employee Stock Option Plans (ESOPs) aggregating to 2,00,720 options in force (for details please see point no 16 on page no. 26 and 81 of the letter of offer.

8. There are no shares acquired by promoters and promoter group in the last six months immediately preceding the date of filing the letter of offer with the designated stock exchange

9. a) The ten largest shareholders two years prior to the date of filing of this Letter of Offer with Stock Exchanges are as follows:

Sr. No. Name of the Shareholders No. of Equity Shares % of total issued

equity share capital 1. Ashish S. Dandekar 10,13,453 17.47 2. Abha A Dandekar (minor) 4,75,000 8.19 3. Vivek A Dandekar (minor) 4,75,000 8.19 4. Leena A. Dandekar 3,57,660 6.17 5. Camart Agencies ltd 3,32,460 5.73 6. Nirmal Vinod Momaya 2,08,521 3.60 7. Vibha Agencies Pvt Ltd 1,62,896 2.81 8. Subhash D Dandekar 1,45,000 2.50 9. Sanjay S. Sathye 1,36,000 2.34 10. Dilip D. Dandekar 1,20,920 2.08 TOTAL 34,26,910 59.08

8.b) The ten largest shareholders 10 days prior to the date of filing of the Letter of Offer with Stock Exchanges are as follows:

Serial No. Name of the Shareholders No. of Equity Shares

% of total issued equity share capital

1. Ashish S. Dandekar 10,18,935 17.53 2. Vivek A Dandekar (minor) 4,75,000 8.17 3. Abha A Dandekar (minor) 4,75,000 8.17 4. Leena A Dandekar 3,57,660 6.15 5. Camart Agencies Ltd 3,32,460 5.72 6. Nirmal V Momaya 2,08,621 3.59 7. Vibha Agencies Pvt Ltd 1,62,896 2.80 8. Subhash D Dandekar 1,45,000 2.50 9. Sanjay S Sathye 1,36,000 2.34 10. Dilip D Dandekar 1,20,920 2.08

Total 34,32,492 59.07


26

8.c) The ten largest shareholders as on the date of filing of the Letter of Offer with Stock Exchanges are as follows:

Serial No. Name of the Shareholders No. of Equity

Shares

% of total issued equity share capital

1. Ashish S Dandekar 10,18,935 17.53 2. Vivek A Dandekar (minor) 4,75,000 8.17 3. Abha A Dandekar (minor) 4,75,000 8.17 4. Leena A Dandekar 3,57,660 6.15 5. Camart Agencies Ltd 3,32,460 5.72 6. Nirmal V Momaya 2,08,621 3.59 7. Vibha Agencies Pvt Ltd 1,62,896 2.80 8. Subhash D Dandekar 1,45,000 2.50 9. Sanjay S Sathye 1,36,000 2.34 10. Dilip D Dandekar 1,20,920 2.08

Total 34,32,492 59.07 10. The Company/Promoters/Directors/Lead Manager has not entered into buy back or similar

arrangements for purchase of securities issued by our Company. 11. No shares of the company are pledged as on the date of the letter of offer. 12. The entire issue price is to be paid on application hence there will be no partly paid up shares arising

out of this issue. 13. The equity shares of our company are of face value of Rs.10/- and marketable lot is 1 (one) for Demat

shares. At any given time there shall be only one denomination for the shares of the Company and the disclosures and accounting norms specified by SEBI from time to time will be complied with. The shares of the Company are being traded compulsorily in dematerialised mode.

14. The company shall not make any further issue of capital whether by way of issue of bonus shares,

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

15. Further, presently the company does not have any proposal, intention, negotiation or consideration to

alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present Issue. However, if business needs of our Company so require, we may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities whether in India or abroad during the period of six months from the date of listing of the Equity Shares issued under this Letter of Offer or from the date the application moneys are refunded on account of failure of the Issue, after seeking and obtaining all the approvals which may be required for such alteration.


27

16. The company has implemented Employee Stock Options Scheme and the details of the same are as mentioned below:

The Company has implemented Employee Stock Option Scheme (ESOPs) approved by their shareholders in the Annual General Meeting held on 8th August 2008 , and in their Compensation Committee Meeting held on 9th August 2008

Particulars 2009-2010 a Options granted 2,43,000

b Exercise Price Rs.50/- plus applicable taxes, as may be levied on the company

c Options Vested 18,350

d Options Exercised 14,480 e Total no. of shares arising as result of exercise of

Options 14,480

f Options lapsed * 27,800

g Variation in terms of Options Nil

h Money realized by exercise of Options Rs. 7,24,000

i Total number of options in force 2,00,720

*Lapsed options include options forfeited and options cancelled / lapsed

j Employee wise details of options granted to:

Senior Managerial Personnel

Name of Key Managerial Personnel

No of Options granted under

ESOP 2008 Mr. D.R. Puranik 10,000 Mr. S.P. Padhya 10,000

Mr. P.K. Dhotre 10,000 Mr. A.V. Dukane 10,000 Mr. P.M Sapre 10,000 Mr. S. M. Kulkarni 10,000 Mr. A.E. Faizullabhoy 10,000 Mr. B. A. Patel 10,000

- any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year

Nil

- employees who were granted option, during any one

year, equal to or exceeding 1% of the issued capital (excluding warrants and conversions) of the company

at the time of grant

Nil

k Weighted average exercise price of Options granted

during the year whose:

(a) Exercise price equals market price NA (b) Exercise price is greater than market price NA (c) Exercise price is less than market price 50/-

The employees exercising their options prior to Record Date and who have been allotted equity shares before the Record Date fixed for the purpose of determining entitlement for the present rights issue, would be eligible for the shares being offered on rights basis.


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OBJECTS OF THE ISSUE The object of the issue is to raise funds to meet;

1) The capital expenditure for development of plant processing & de-bottle necking. 2) Expenses of the issue.

The main object clause of the Memorandum and Articles of Association of our Company enables the company to undertake the existing activities and the activities for which the funds are being raised through the present issue. Cost of project

(Rs. In Lacs) Capital Expenditure 500.00 Meeting the expenses of the Issue 50.00

Total 550.00 Means of Finance

(Rs. In Lacs) Proceeds of the Rights Issue 549.47 Internal Accruals 0.53

Total 550.00 Capital Expenditure The company has laid out a growth strategy for the coming years based on enhancing the market share of existing core products, expanding the range of products to cater to wider areas of the Food, Health and Alternative energy segments and also focusing on the development of technology for specialty chemicals with specialized applications with In-house R&D and Technology support. New product development efforts through our state of the art R&D facility and on going product development efforts through internal technology team at the process plant will enable the company to launch more than 3 products in the current year. All these products have already passed through the trial runs and technology transfer at the plant level and some of them have also passed through the test of customer approvals and commercialization. The entire activity of additional capacity creation has been done with minimum capital expenditure. The enhanced capacity creation at the plant is already in place and is being put to operation in the current financial year. The resultant increase in capacity by about 60% over previous year is available through our internal process development team with minimum of capital expenditure in the last year and this has enabled us to be cost effective. The company has its bandwidth in terms of products, facility and technological support to take the output to 5000 tonnes per annum for all the existing and new products during current year. The path followed in growth and development of plant comprises of ;

• Process improvements/ de-bottle necking of process steps • Yield improvements by suitable process modifications and process re-engineering • Freeing the capacities at some plant location in view of process improvements • Resultant increase in capacities The existing capacity of the company includes 8 plants and a distillation facility. The following additional machines would be added to the existing plant to enhance the productivity of the company from the existing 3500 tonnes per annum to 5000 tonnes per annum. The company has undertaken the process re-engineering initiatives and proposes to install additional balancing equipments in the form of Reactors, Agitated Nutsche Filter and Dryer, Vapor Absorption Machines, Boilers etc.


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The details of proposed capital expenditure to be incurred on installing balancing equipments/ machineries are as follows:

(Rs. in Lacs) Sr. No. Particulars of Machineries to be installed Estimated Cost

1 Up-gradation and up-rating of Effluent Treatment Plant (ETP) 150.00 2 Agitated Nutsche Filter & Dryer (ANFD) 120.00 3 High capacity crystallizer and dissolution reactor 88.00 4 DG set and other power related equipments for power 1500 KVA 70.00 5 Briquettes fired boiler 32.00 6 Glass Line Reactor (GLR) 20.00 7 Utility and other equipments for steam/ chilling/ temperature

control etc. 20.00

TOTAL 500.00 The above balancing equipments and machineries would be used to fill the gaps in capacities mismatched at any stage of continuous manufacturing processes. Installation of the above equipment would take care of such gaps in multiple steps manufacturing.

To support the enhanced capacities, CFCL requires additional “utilities” support such as

a. Up-gradation and up-rating of Effluent Treatment Plant (ETP):

The Company would be utilizing approx. Rs.150.00 lacs towards upgrading and up-rating the ETP for clean environment to support capacity requirement. The capacity enhancement from 90 cubic meters to 250 cubic meters is planned in view of the present capital expenditure which would remove the bottlenecks in achieving the desired output in the coming years. Besides, the effluent treatment plant is being designed by taking into account economy, maximum gravity flow, hydraulics and energy conservation. ETP is a crucial treatment plant of any big size plant handling chemical reactions and hence steps taken by the company are towards achieving better environmental control norms and clean environment for maintaining good manufacturing practices. The up-gradation involves designing, documentation, installation of machinery and use of certain advanced technologies for achieving the desired results. The good set up would facilitate better recoveries from the material by using certain separation techniques and technologies which otherwise would be a waste.

b. Agitated Nutsche Filter and Dryer (ANFD):

ANFD for pressure and/ or vacuum operation which significantly reduces production time, improves product quality and minimizes environmental exposure. It allows filtering and washing of solids as well as drying in single unit which results in higher yield with no operator contact. Presently there is a requirement of 4nos. of these kinds of dryers and filters which would cost approx. Rs. 120.00 lacs. These ANFDs would be installed at plant no. 4 and plant no. 8.

c. High Capacity crystallizer and dissolution reactor:

4 nos. of high capacity crystallizer and dissolution reactors of stainless steel are required for dissolution of TBHQ-I and crystallizer for crystallization in 2nd stage of TBHQ to add the capacity or to remove the bottleneck in the intermediate stage for reaching the desired column level of final product. The estimated cost of the crystallizer and dissolution reactors is approx. Rs.88.00 lacs.


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d. DG sets and other power related equipments:

There is a requirement of additional DG sets of 1500 KVA to tide power shortages and to do away with hired DG sets.

e. Briquettes Fired Boiler:

The boilers would take care of additional load on existing briquettes boiler as a part of cost optimization drive by fuel switch over project. It will take care of continuous production without any intermittent stoppages.

f. Glass Line Reactor (GLR):

Glass lined reactors are mainly to carry out production of certain items where company is required to monitor the corrosive reactions in the plant and achieve better yield, higher production and reduce the inefficient production.

g. Utility and other equipments for steam/ chilling/ temperature control, etc.:

The proposed expansion plan includes installation of chilling plants of higher size to support some of the existing as well as new products. These equipments would also add on to R & D and product development efforts by providing controlled temperature, enabling the researchers to carry out various reactions at the plant in reactors with desired temperatures ranging between minus to higher temperatures.

All the above equipments/machineries are to be put in place to support the enhanced capacities already achieved during the last 1 and half years of process re-engineering activities and product development efforts at the plant. The company is in the process of finalizing the details and obtaining quotations for the supply and installation of above machineries and is expected to install the same within a period of 9-12 months.

Meeting the expenses of the issue

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

Activity Amount Fees to the intermediaries 18.00 Advertisement 16.00 Printing & Stationery and Postage expenses 6.00 Legal and Auditors Expenses 6.50 Miscellaneous Expenses 2.69 Fees to SEBI & Stock Exchange 0.81 Total estimated Issue expenses 50.00

SOURCES AND DEPLOYMENT OF FUNDS

As per certificate given by M/s. B.K. Khare & Co, Chartered Accountants dated 14/07/2010; an amount of Rs. 3.55 lacs has been spent on issue expenses on 14/07/2010. The details of which are as follows:

Sources of funds (Rs. in Lacs)

Particulars Amount Internal accruals 3.55 TOTAL 3.55


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Deployment of funds:

Amount (Rs. in lacs) Fees to intermediaries 2.75 Fees to regulatory authorities 0.80 TOTAL 3.55

BRIDGE LOAN The company has not raised any bridge loan which will be repaid from the issue proceeds. INTERIM USE OF FUNDS Pending utilization for the purposes described in “objects of the issue” above, we intend to temporarily invest the funds in high quality interest or dividend bearing liquid instruments including deposits with banks for the necessary duration. Such investments would be in accordance with any investment criteria approved by our Board of Directors from time to time. MONITORING OF UTILIZATION OF FUNDS

The management of the Company will monitor the utilization of funds raised through this rights issue. As per Clause 5A of Clause 49 (II)(D) of the Listing Agreement, the Audit Committee will review with the management, the statement of uses/ application of funds raised through the rights issue, the statement of funds utilized for purposes other than those stated in the letter of offer and make appropriate recommendations to the Board to take up appropriate steps in this matter. Our Company shall on quarterly basis disclose to the Audit Committee the Applications of the proceeds of the Issue. On an annual basis, our Company shall prepare a statement of funds utilized for purposes other than stated in this Letter of Offer (if any) and place it before the Audit Committee. Such disclosures shall be made only until such time that all the proceeds of the Issue have been utilized in full. The statement will be certified by the Statutory Auditors of our Company. Our Company shall be required to inform the material deviations in the utilisation of the issue proceeds to the Stock Exchanges and shall also be required to simultaneously make the material deviation/ adverse comments of the Audit Committee public through advertisement in newspaper. BASIC TERMS OF THE ISSUE The Equity shares being offered are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles of Association of the Company, the terms of this Letter of Offer and other terms and conditions as may be incorporated in the Allotment advice and other documents /certificates that may be executed in respect of the issue. The Equity shares shall also be subjected to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, GOI, RBI, ROC and/or other authorities as in force on the date of issue and to the extent applicable NO FIRM ARRANGEMENT OF FINANCE The Company has not made any firm arrangement of finance through verifiable means of finance apart from the amount to be raised through proposed issue and existing identifiable internal accruals.


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BASIS FOR ISSUE PRICE QUALITATIVE FACTOR

• Strong research and development team: The Company has a strong Research and Development backbone, which is constantly innovating the manufacturing process, improving yield and ingredients to reduce the costs and be competitive.

• The company has quality certifications from HACCP, KOSHER 2009, HALAL 2009, ISO 22000, ISO 9001 which are mandatory worldwide and critical for ensuring food safety and quality standards.

• Experienced Management and Employees: The Company is managed and run by a team of

experienced professionals which in turn increase the profitability of the Company.

• Established Reputation for Quality Products: The Company has obtained various certifications which are mandatory worldwide and critical for ensuring food safety and quality standards.

• Standardized and documented internal processes: The Company is in continuous process industry and the production is carried out in batches for which batch manufacturing records are maintained. There are standard operating procedures for manufacturing, quality control and quality assurance for the products manufactured. The company also has preventive maintenance plans for smooth manufacturing operations.

QUANTITATIVE FACTORS Information presented in this section is derived from the Audited financial statements of the Company for years ended March 31, 2010, 2009, 2008. (a) Earnings Per Share (EPS)

Year Ended Weights Standalone EPS (Rs.) Consolidated EPS (Rs.) Basic Diluted Basic Diluted

31/03/2008 1 5.42 5.38 5.10 5.06 31/03/2009 2 5.84 5.84 4.22 4.22 31/03/2010 3 7.39 7.30 2.09 2.06

Weighted Average EPS 6.55 6.49 3.30 3.28

(b) Price Earning Ratio (PE)

Particulars Offer Price of Rs. 15.75 per share

P/E (based on Basic EPS of the FY 2009-10) - Standalone EPS of Rs.7.39 - Consolidated EPS of Rs. 2.09

2.13 7.54

P/E (based on Basic Weighted Average EPS) - Standalone EPS of Rs.6.55 - Consolidated EPS of Rs.3.30

2.40 4.77

(c) Return on Net Worth (RONW)

Year Ended

Weights

Standalone RONW (%)

Consolidated RONW (%)

31/03/2008 1 9.95 8.93 31/03/2009 2 11.19 7.35 31/03/2010 3 12.87 3.71

Weighted Average RONW 11.82 5.79


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(d) Minimum Return on increased Net Worth required to maintain pre-issue EPS:

Based on Standalone EPS for FY 2009-10 is Rs.17.72 Based on Consolidated EPS for FY 2009-10 is Rs.5.61

(e) Net Asset Value (NAV)

Sr. no. Particulars Rs. 1 On Standalone Basis as at March 31, 2010 (Rs.) 57.02 2 On Consolidated Basis as at March 31, 2010 (Rs.) 52.74 3 On a standalone basis at a price of Rs.15.75 (Rs.) (Post –Issue) 41.72 4 On a consolidated basis at a price of Rs.15.75 (Rs.) (Post –Issue) 37.23 5 Issue Price (Rs.) 15.75

(f) Industry P/E Ratio

Highest (Chembond Chemicals Limited) 22.02 Lowest (Oriental Carbon & Chemicals Limited) 5.32 Industry Composite 14.70 Source: Capital Market Issue July 12-25 , 2010; Segment - Chemicals

Comparison of key ratios with the companies in the same industry group

Company Name

Equity (Rs. in

Cr.)

Face

Value

Book Value

31/03/2010 (Rs.)

Sales for the year ended 31/03/2010 (Rs in Cr.)

EPS (Rs.)

Market price as on 15/07/2010

P/E Ratio at

the market price

Alkyl Amines Chemicals Limited 10.20 10.00 68.30 215.00 10.40 94.45 9.08 Chembond Chemicals Limited (Unaudited) 3.36 10.00 45.40 114.60 8.10 178.35 22.02 Excel Industries Limited 5.45 5.00 93.70 235.10 4.40 92.25 20.97 Oriental Carbon & Chemicals Ltd 10.31 10.00 69.20 125.70 28.60 152.10 5.32 Transpek Industry Limited 5.59 10.00 95.80 113.40 9.20 97.95 10.65

Source: Capital Market Issue July 12-25, 2010; Segment - Chemicals & www.bseindia.com Camlin Fine Chemicals Ltd.* 5.81 10.00 57.28 123.45 7.39 128.10 17.33

* The products manufactured by the company may not necessarily be comparable to the products manufactured by the other companies mentioned above. The company has no listed competitors and hence cannot be compared with any listed entity.

The Issue Price of Rs. 15.75 per share is 1.575 times the Face Value of Rs.10/- per share of the Equity Shares.

Considering the above qualitative and quantitative factors, the issue price of Rs. 15.75 per equity share (i.e; at a premium of Rs. 5.75 per equity share) is justified.


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STATEMENT OF TAX BENEFITS

To, The Board of Directors, Camlin Fine Chemicals Ltd Mumbai. Dear Sirs, We hereby report that the enclosed annexure states the possible tax benefits available to Camlin Fine Chemicals Limited (the “Company”) and its shareholders under the current tax laws in force in India as amended by the Finance Act, 2010. The benefits as stated are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions. The benefits discussed in the enclosed annexure are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their investment in the shares of the company. We do not express any opinion or provide any assurance as to whether: • the Company or its shareholders will continue to obtain these benefits in future; or • the conditions prescribed for availing the benefits have been/would be met with. The contents of this annexure are based on the information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and our interpretation of current laws as amended by the Finance Act, 2009. For B. K. Khare & Co. Chartered Accountants Firm no: 105102W Sd/- Santosh Parab Partner Membership No.: 47942 Dated: 14/07/2010 Place: Mumbai


35

ANNEXURE TO STATEMENT OF TAX BENEFITS 1. Special Tax benefits available to company

No special tax benefits are available to company.

2. General tax benefits available to the company under the Income Tax Act, 1961 (‘the Act’)

These benefits are available to all companies or to the shareholders of any company after fulfilling certain conditions as required in the respective Acts.

1. Business Income

i) Depreciation In accordance with and subject to the provisions of section 32 of the Act, the Company is entitled to claim depreciation on specified tangible and intangible assets owned by it and used for the purpose of its business as per the rates specified. In case of new plant and machinery that will be acquired and installed by the Company, it will be entitled to a further sum equal to 20% of the actual cost of such plant or machinery subject to conditions specified in section 32(1)(iia)of the act. Unabsorbed depreciation if any, for an Assessment Year (AY) can be carried forward and set off against any source of income in subsequent AYs, as per section 32(2) of the Act, subject to the (2) of section 72 and sub-section (3) of section 73 of the Act. ii) Preliminary Expenditure In accordance with and subject to the provisions of section 35D of the Act, the Company will be entitled to amortise, over a period of five years, all expenditure in connection with the proposed public issue subject to the overall limit specified in the said section. iii) Expenditure on Scientific Research As per section 35, the company is eligible for deduction in respect of any expenditure (not being expenditure on acquisition of land) on scientific research related to the business subject to conditions specified in that section. The company is also entitled under section 35(2AB) to weighted deduction of 150% of in-house research & development expenses. iv) Carry forward of business loss Business losses, if any, for any AY can be carried forward and set off against business profits for eight subsequent AYs. v) MAT Credit As per section 115JAA(1A), the Company is eligible to claim credit for Minimum Alternate Tax (“MAT”) paid under sub-section (1) of section 115JB for any AY commencing on or after April 1, 2006 against normal income tax payable in subsequent AYs. The amount of MAT credit that will be allowed under sub-section (1A), shall be the difference of the tax paid for any assessment year under sub-section (1) of section 115JB and the amount of tax payable by the assessee on his total income computed in accordance with the other provisions of this Act.


36

The amount of tax credit determined shall be carried forward and set off up to 10 (Ten) AYs immediately succeeding the assessment year in which tax credit becomes allowable.

2. Capital Gain

Capital assets are to be categorized into short-term capital assets and long-term capital assets based on the period of holding. All capital assets except shares held in a company or any other security listed in a recognised stock exchange in India or units of Unit Trust of India (‘UTI’) or Mutual Fund units specified under section 10(23D) of the Act or zero coupon bonds are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or UTI or Mutual Fund units specified under section 10(23D) of the Act or zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months. As per the provisions of section 10(38) of the Act, long term capital gain arising to the Company from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to Securities Transaction Tax (‘STT’). As per the provisions of section 112 of the Act, long-term capital gains other than those covered under section 10(38) of the Act are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains other than those covered under section 10(38) of the Act arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess. However, from Assessment Year 2007-2008, such long-term capital gains will be included while computing book profits for the purpose of payment of Minimum Alternate Tax (“MAT”) under the provisions of section 115JB of the Act. As per provisions of section 111A of the Act, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable at the rate of 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT. Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition/improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition / improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition / improvement by a cost inflation index as prescribed from time to time. As per the provisions of section 54EC of the Act and subject to the conditions specified therein capital gains arising to a company on transfer of a long-term capital asset other than those covered under section 10(38) of the Act shall not be chargeable to tax to the extent such capital gains are invested in National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced. The Act has restricted the maximum investment in such bonds up to Rs 50 Lacs per assessee during any financial year, if such investment made on or after 1st April, 2007.

Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier


37

would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. As per section 71 read with section 74, Short-term capital loss arising during a year is allowed to be set-off against short-term as well as long-term capital gains of the said year. Balance loss, if any, should be carried forward and set-off against short-term as well as long-term capital gains for subsequent 8 years.

As per section 71 read with section 74, Long-term capital loss arising during a year is allowed to be set-off only against long-term capital gains. Balance loss, if any, should be carried forward and set-off against subsequent year’s long-term capital gains for subsequent 8 years.

3. Income from other sources

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

In terms of section 10(35) of the Act, any income received from units of a Mutual Fund specified under section 10(23D) of the Act is exempt from tax, subject to such income not arising from the transfer of units in such Mutual Fund.

3. Special Tax Benefits available to the members of the Company No special tax benefits are available to the members of the company.

4. General Tax benefits available to the Shareholders of the company A. Resident Shareholders i) Dividend Income

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

ii) Capital Gains

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

As per the provisions of section 48 of the Act, the amount of capital gain shall be computed by deducting from the sale consideration, the cost of acquisition and expenses incurred in connection with the transfer of a capital asset. However, in respect of long-term capital gains arising to a resident shareholder, a benefit is permitted to substitute the cost of acquisition/ improvement with the indexed cost of acquisition/ improvement. The indexed cost of acquisition/ improvement, adjusts the cost of acquisition/ improvement by a cost inflation index, as prescribed from time to time.

As per the provisions of section 10(38) of the Act, long term capital gain arising to a resident shareholder from transfer of a long term capital asset being an equity share in a company listed on


38

a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT.

As per the provisions of section 112 of the Act, long-term capital gains [other than those covered under section 10(38) of the Act] are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains [other than those covered under section 10(38) of the Act] arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess).

As per provisions of section 111A of the Act, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable @ 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT. As per the provisions of section 54EC of the Act and subject to the conditions specified therein capital gains arising to a resident shareholder on transfer of a long-term capital asset other than those covered under section 10(38) of the Act shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced.

However, if the resident shareholder transfers or converts the notified bonds into money (as stipulated therein) within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. The bonds specified for this section are bonds issued on or after April 1, 2006 by NHAI and REC. The Act has restricted the maximum investment in such bonds up to Rs 50 Lacs per assessee during any financial year, if such investment made on or after 1st April, 2007.

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

However, if the resident shareholder transfers the residential house property within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. iii) Clubbing of income Any income of minor children (Maximum two children) clubbed with the total income of the parent under section 64(1A) of the Income Tax Act 1961, will be exempt from tax to the extent of Rs. 1500 per minor child under section 10(32) of the Income Tax Act 1961. B. Non-Resident Shareholder i) Dividend Income Dividend (whether interim or final) received by a resident shareholder from its investment in shares of a domestic company would be exempt in the hands of the resident shareholder as per the provisions of section 10(34) read with section 115-O of the Act.


39

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

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

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

As per the provisions of section 112 of the Act, long-term capital gains (other than those covered under section 10(38) of the Act) are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains [other than those covered second proviso to section 48 and under section 10(38) of the Act] arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess.

As per provisions of section 111A of the Act, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable @ 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT. b) Exemption of capital gain from income-tax As per the provisions of section 54EC of the Act and subject to the conditions specified therein capital gains arising to a non-resident shareholder on transfer of a long-term capital asset (other than those covered under section 10(38) of the Act) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced.

However, if the non-resident shareholder transfers or converts the notified bonds into money (as stipulated therein) within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. The bonds specified for this


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section are bonds issued on or after April 1, 2006 by NHAI and REC. The Act has restricted the maximum investment in such bonds up to Rs 50 Lacs per assessee during any financial year.

Further, as per the provisions of section 54F of the Act and subject to conditions specified therein, long-term capital gains (other than a capital gains arising on sale of resident house and those covered under section 10(38) of the Act) arising to an individual or HUF on transfer of shares of the company will be exempted from capital gains tax, if the net consideration from such shares are used for either purchase of residential house property (subject to prior approval from Reserve Bank of India) within a period of one year before or two years after the date on which the transfer took place, or for construction of residential house property within a period of three years after the date of transfer. c) Non-Resident Taxation Under section 115-I of the Act, the non-resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the Act viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows:

Under section 115E of the Act, where the total income of non-resident Indian, includes – a) Any income from long term capital gain of an asset other than a specified asset taxed @ 20 % b) Income by way of long term capital gains taxed @ 10%.

Under provisions of section 115F of the Act, long-term capital gains [in cases not covered under section 10(38) of the Act] arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible foreign exchange will be exempt from income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption will be proportionately reduced. However the amount so exempted will be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition. In accordance with the provisions of Section 115G of the Income Tax Act 1961, Non Resident Indians are not obliged to file a return of income under Section 139(1) of the Income Tax Act 1961 if their only source of income is income from investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Income Tax Act 1961.

In accordance with the provisions of Section 115H of the Income Tax Act 1961, when a Non Resident Indian become assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for that year under Section 139 of the Income Tax Act 1961 to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. As per the provisions of section 115 I of the I.T. Act, a Non-Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that year under Section 139 of the Income Tax Act 1961, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Income Tax Act 1961.

d) Tax Treaty Benefits

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


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iii) Clubbing Provisions Any income of minor children (Maximum two children) clubbed with the total income of the parent under Section 64(1A) of the Income Tax Act 1961 will be exempt from tax to the extent of Rs. 1,500 per minor child per year in accordance with the provisions of section 10(32) of the Income Tax Act 1961. C. Benefits to Foreign Institutional Investors (‘FII’)

i) Dividends Income

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

ii) Capital gains

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

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

Rate of tax

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

* Plus applicable surcharge and cess

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

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

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

iii) Tax Treaty Benefits

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


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D. Benefits to the Mutual Funds

As per the provisions of section 10(23D) of the Act, any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 (‘SEBI’) or regulations made there under, Mutual Funds set up by public sector banks or public financial institutions or Mutual Funds authorised by the Reserve Bank of India, would be exempt from income tax, subject to the prescribed conditions.

E. Benefits to the Venture Capital Companies / Funds

As per the provisions of section 10(23FB) of the Act, income of:

• Venture Capital Company which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette; and

• Venture Capital Fund, operating under a registered trust deed or a venture capital scheme made by Unit Trust of India, which has been granted a certificate of registration under the Securities and Exchange Board of India Act, 1992 and notified as such in the Official Gazette set up for raising funds for investment in a Venture Capital Undertaking,

- is exempt from income tax. However, the income distributed by the Venture Capital companies/funds to its investors would be taxable in the hands of the recipients.

5. Benefits under the Wealth Tax Act, 1957

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

6. Benefits under the Gift Tax Act

As no Gift tax is leviable in respect of gifts made on or after October 1, 1998, but before April 1, 2006. As per amended section 56 (2) (vi) any gift received in money, the aggregate value of which exceeds Rs. 50,000/- is received without consideration, the whole of the aggregate value of such sum will be chargeable to tax. As per newly inserted section 56 (2) (vii) value of sum of money / immovable property/ movable property received without consideration or for inadequate consideration is in exceed of Rs. 50,000/- than the whole of the aggregate value of such sum will be chargeable to tax with effect from 01.10.2009.

7. Securities Transaction Tax

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

The non-delivery based sale transactions are liable to tax @ 0.025% of the value payable by the seller.

8. Characterization of the Income of the Investor It may be noted that there are contradicting judicial rulings on characterization of income of an investor or shareholder regularly trading in shares and securities in India. Taxability of income on regular trading of securities either as ‘income from business’ or ‘income from capital gains’ will depend on facts and circumstances of each case. If trading in securities is carried out without obtaining delivery of


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securities, such transactions would be deemed to be speculative transactions and consequentially, gains are taxed as ‘speculative income’ whereas losses are allowed to be set off only against speculative gains.

9. Notes 1. All the above benefits are as per the current tax laws as amended by the Finance Act, 2009 and

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

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

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

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

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

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

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


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SECTION III – ABOUT COMPANY

The Industry information presented in this section has been extracted from publicly available documents, which have not been prepared or independently verified by the Company, the Lead Manager or any of their respective affiliates or advisors or the sources referred to herein. In this Section, we have relied on and referred to information regarding the industry and competitors from market research reports, and other publicly available sources. Although we believe that this information is reliable, we have not independently `verified the accuracy and completeness of the information.

Camlin Fine Chemicals Ltd. (CFCL) is mainly in the business of manufacture of food ingredients which are in the area of shelf life enhancement of food products which contains fats and oils and synthetic antioxidants. The company also manufactures applications for bio-diesel, printing inks, plastics and polymers etc. The company falls into the category of fine and specialty chemicals industry.

INDIAN CHEMICAL INDUSTRY INTRODUCTION Chemical industry is one of the oldest industries in India. The industry, including petrochemicals, and alcohol-based chemicals, has grown at a pace outperforming the overall growth of the industry. The Chemicals Industry comprises both small and large scale units. The fiscal concessions granted to small sector in mid-eighties led to establishment of large number of units in the Small Scale Industry (SSI) sector. Currently, the Indian Chemical Industry is in the midst of major restructuring and consolidation phase. With the shift in emphasis on product innovation, brand building and environmental friendliness, this industry is increasingly moving towards greater customer-orientation. Even though India enjoys an abundant supply of basic raw materials, it will have to build upon technical services and marketing capabilities to face global competition and increase its share of exports. Chemical fertilizers and pesticides played an important role in the "Green Revolution" during the 1960s and 1970s. The consumption of pesticides in India is low in comparison to other countries. Indian exports of agrochemicals have shown an impressive growth over the last five years. The key export destination markets are USA, UK, France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore. The Government is promoting research on the use of alternative and unharmful pesticides using neem seeds. A country programme entitled "Development and Production of Neem Products as Environment Friendly Pesticides" is being undertaken by the Department of Chemicals & Petrochemicals with the financial assistance of United Nations Development Programme (UNDP)/ United Nations Industrial Development Organization (UNIDO). The project is being implemented at two locations viz., Nimpith in West Bengal and Nagpur in Maharashtra to promote production, processing and use of neem-based products, thereby aiding wasteland development, generating rural employment and providing farmers with eco-friendly/biodegradable pesticides. Petrochemical industry is a cyclical industry. Globally the petrochemical industry is characterized by sluggish demand and volatile feedstock prices. In India, consumption of petrochemical products is still one of the lowest in the world. For example in case of polyester, India's per capita consumption is 1.4 kg compared to 6.6 kg for China and 3.3 kg for the world. In case of polymers, per capita consumption of India is 4 kg and is about a fifth of the world. Demand for the petrochemicals products has grown in double digits for a long period. The chemical industry which includes, as per National Industrial Classification, basic chemicals and its products, petrochemicals, fertilizers, paints and varnishes, gases, soaps, perfumes and toiletries and pharmaceuticals is one of the most diversified of all industrial sectors covering thousands of commercial products. Its contribution to the GDP of the country is around 3 per cent. Source(http://www.cci.in/pdf/surveys_reports/chemical-petrochemical-industry.pdf)


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CURRENT SENARIO GLOBAL The global chemical industry, estimated at US$ 2.4 trillion, is one of the fastest growing sectors of the manufacturing industry. Despite the challenges of escalating crude oil prices and demanding international environmental protection standards now adopted globally, the chemicals industry has still grown at a rate higher than the overall-manufacturing segment. As per industry reports the pharmaceutical segment contributes approximately 26% of the total industry output and approx. 35-40% is dominated by the petrochemical segment. Commodity chemicals is the largest segment in the chemicals market with an approx. size of $ 750 billion while the specialty and fine chemicals segment accounts for $ 500 billion. The global Specialty chemicals industry accounted for sales of US$ 510 billion in 2008. Forty business segments in North America, Western Europe and Japan, with a combined market size of about US$ 382.5 billion, represented about 75% of total world Specialty chemicals sales in 2008. In that year, the world's five largest industries - active pharmaceutical ingredients & intermediates, pesticides, specialty polymers, electronic chemicals, oil field chemicals and construction chemicals had a market share of about 43%. The ten largest segments accounted for 62% of total annual Specialty chemicals sales. Some of the major markets for chemicals are North America, Western Europe, Japan and emerging economies in Asia and Latin America. The US consumes approximately one-fifth of the global chemical consumption whereas Europe is the largest consumer with approx. half the consumption. The US is the largest consumer of commodity chemicals whereas Asia Pacific is the largest consumer of agrochemicals and fertilizers. INDIAN Chemical Industry is one of the oldest industries in India, which contributes significantly towards industrial and economic growth of the nation. It is highly science based and provides valuable chemicals for various end products such as textiles, paper, paints and varnishes, leather etc., which are required in almost all walks of life. The Indian Chemical Industry forms the backbone of the industrial and agricultural development of India and provides building blocks for downstream industries. Chemical Industry is an important constituent of the Indian economy. Its size is estimated at around US$ 35 billion approx., which is equivalent to about 3% of India's GDP. The total investment in Indian Chemical Sector is approx. US$ 60 billion and total employment generated is about 1 million. The Indian Chemical sector accounts for 13-14% of total exports and 8-9% of total imports of the country. In terms of volume, it is 12th largest in the world and 3rd largest in Asia. Currently, per capita consumption of products of chemical industry in India is about 1/10th of the world average. Over the last decade, the Indian Chemical industry has evolved from being a basic chemical producer to becoming an innovative industry. With investments in R&D, the industry is registering significant growth in the knowledge sector comprising of specialty chemicals, fine chemicals and pharmaceuticals. Source(http://chemicals.nic.in/chem1.htm)

INDUSTRY STRUCTURE & SEGMENTS Industry Segments The wide and diverse spectrum of products can be broken down into a number of categories, including inorganic and organic chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals, and fertilizers.


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Petrochemicals The petrochemical industry of India is less than 40 years old. Petrochemicals cover basic chemicals like Ethylene, Propylene, Benzene and Xylene. The other major components are the intermediates like MEG, PAN and LAB etc, Synthetic fibres like Nylon, PSF and PFY, Polymers like LDPE/HDPE, PVC, Polyester and PET etc and Synthetic rubber like SBR, PBR. The sector has a significant growth potential. Although the current per capita consumption of petrochemicals products is low, the demand for the same is growing: The major players in this field include Reliance, Indian Petrochemicals Limited (IPCL), National Organic Chemical Industry Ltd (NOCIL) and Gas Authority of India Ltd (GAIL) etc. Basic Inorganic and Organic Chemical Industry The Basic inorganic chemical and organic chemical industry constitutes a major segment of the country's economy. Important chemicals in this category are Soda Ash, Caustic Soda, Liquid Chlorine, Calcium Carbide, Acetic Acid. Methanol, Formaldehyde, Phenol, Acetone. These are raw materials for industries like detergents, toothpaste, plastics, drugs, petroleum refining, etc. 10 per cent of the Chlor-Caustic Plants use Membrane Cell Technology, which will find higher usage, as no new capacities are allowed for the mercury cell process. Agrochemicals Agrochemicals are mainly used for plant protection and improving crop yields. The Indian Agrochemicals industry has grown from mere Rs.400 crores (US$ 0.9 billion) in the 70's to about Rs.7000 crore (US$ 1.36 billion). Indian Agrochemicals Industry is the 3rd largest manufacturer of agrochemicals in Asia and 4th largest in the world after USA, Japan and China. The industry derives about 50% of its revenue from exports. The average yield per hectare in India is much lower to the developed countries for almost all the crops. Around Rs. 1, 00,000 crore of agricultural output is lost due to pests. The Agrochemicals industry can be broadly classified into Insecticides, Fungicides, Weedicides / Herbicides and Rodenticides. Drugs & Pharmaceuticals The Indian Pharmaceutical Industry is the largest in the developing world. The industry currently produces a wide range of bulk drugs. In fact, India is currently a world leader in manufacture and export of basic drugs such as ethambutol and ibuprofen. 300 bulk drugs & formulation based on them are manufactured in the country. There are 10,000 manufacturing units, of which 290 units are in the large-scale sector, 45 Multi- National Companies (MNCs) have manufacturing bases here. India is emerging as one of the largest and cheapest producers of pharmaceuticals in the world, accounting for nearly 8.5per cent of the world's drug requirements in terms of volume, and ranks amongst the top 15


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drug manufacturing countries in the world. India being a signatory to the GATT accord, (and the TRIPs agreement therein) patent protection will be provided under the treaty obligations. Fine & Specialty Chemicals The applications of Specialty chemicals vary enormously. These are used as cosmetic additives, water treatment products, dyes, sanitation agents, plasticizers, paints, adhesives, flavors and fragrances, paper, additives and industrial cleaners. About 70% of the Fine Chemicals produced in India find their way into the Pharmaceutical and Agrochemical sectors. Performance chemicals geared to customer need are being developed locally particularly since there is growing demand for Specialty chemicals like Sunscreens, Antioxidants, Biocides, etc. Manufacturers of Fine Chemicals and specialties have major strengths in basic research facilities available with CSIR laboratories such as NCL, IICT & RRls as also corporate R & D centers. This ensures that development of process know-how; plant process design and engineers, detailed engineering design, commissioning assistance and even consultancy for re-engineering are available at low cost. This segment is also highly segmented with large number of players. Major Indian players are ION Exchange, Balmer Lawrie, Dai Ichi Karkaria. etc. The multinationals like Ciba, Hoechst, Foseco, Nalco Chemicals, Clariant, ICI etc too have significant share in the fast growing market. COMPETITIVE ANALYSIS STRENGTH

(a) A diversified manufacturing base having a capacity to produce quality chemicals from World class plants.

(b) Strong presence in the export market in sub segments such as Dyes, Pharma and agrochemicals. (c) Major raw material component sources within the country (d) Good R&D base and quality human resources (e) Globally competitive Dyestuff industry catering to nearly 95% of the domestic demand of Dyes. (f) Utilizes renewable agro resources like molasses for Alcohol to produce key Chemicals and reduces

dependence on Petrochemicals WEAKNESS

(a) Cost of Power: Very high cost of power, unreliability of supply and frequent interruption. Transmission and distribution losses are very high.

(b) Cost of Finance: Chemical Industry is highly capital intensive, cost of finance in India is very high, interest rates are 14% - 15% p.a. as compared to 2% to 6% prevailing in developed countries.

(c) Infrastructure: India ranked 55th in infrastructure development in the global competitiveness report 1999. Infrastructure facilities are not of world class. Transport and communications are complex resulting in delays and slow movement of goods. In-adequate port facilities result in high demurrage costs

(d) Multiplicity of Taxes: Indian exporters at present are placed at a considerable disadvantage vis-a-vis their foreign competitors on account of multiple levies like sales tax, turnover tax, Octroi, service tax, electricity duty and cross subsidies, etc.

(e) Labour Laws: Labour & Industrial relation laws at present do not allow flexibility in deployment of labour. This discourages modernization and investment in technological changes.

COMPETITIVE ADVANTAGE FOR INDIA

• One of the largest resources of scientific and technical manpower in the world. • Large Domestic Market for various sectors of chemicals. • Long coast Line and abundant availability of salt.


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• Tropical Region - sunlight for 9 months in most part of the country facilitating open storage for bulk chemicals.

• A developed financial market comprising regulated stock exchanges, all types of money instruments and capable of transacting business at a very fast speed.

• Largest English Speaking population in the World and rapid growth in Information Technology can provide competitive access to the rich European and American market.

DEMAND-SUPPLY SCENARIO Demand generators

• The chemicals sector bucked the trend by witnessing highest growth in demand to the tune of 50 per cent.

• The gross sales grew to Rs. 8.26 thousand crore in October to December 2008 from Rs.5 thousand crore in third quarter 2007. The data was based on 49 chemical companies dealing in chemicals such as agrochemicals, calcium fluoride, lithium fluoride, magnesium fluoride, ammonium hydrogen, powder coatings and synthetic resins.

• By the year 2020 about 50% of the chemicals and materials consuming markets will be in Asia. • There is a pronounced shift in the global chemical industry from a capital intensive to a

knowledge-intensive one. Historically, chemical industry has not been appreciated by the financial markets as a knowledge-intensive industry with commensurable implications on the value of the chemical companies’ stock.

Domestic Production

Chemical Industry contributes significantly towards industrial and economic growth of the nation. It is highly science based and provides valuable chemicals for various end products. India produces a large number of fine and specialty chemicals, Dyestuff, Chemical fertilizers and pesticides, The key export destination markets are USA, U.K., France, Netherlands, Belgium, Spain, South Africa, Bangladesh, Malaysia and Singapore. India is one of the most dynamic generic pesticide manufacturers in the world with more than 60 technical grade pesticides being manufactured indigenously by 125 producers consisting of large and medium scale enterprises (including about 10 multinational companies) and more than 500 pesticide formulators spread over the country. Source: (http://www.assocham.org/arb/aep/AEP_Demand_scenario_acroiss_sectors.pdf) EXPORT-IMPORT Trade in chemicals to and from India in the recent years has increased substantially. Though earlier the exports were to countries of South East Asia, Africa, this is now changing. Indian Chemicals have


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markets in countries such as USA, UK, Germany, France, Japan, etc. WTO regime has brought structural changes in external trade. There has been reduction in tariff. However, non-tariff barriers like environmental issues, child labour, pesticide residuals in agriculture produce etc are still used to influence imports into the developed countries. EXPORTS -IMPORT OF CHEMICAL During 2001-06, there has been an annual growth of 23per cent in exports of all chemicals as against 21.6per cent in total exports. On the other hand, imports of all chemicals registered a growth of 23.5 per cent against 28.1 per cent growth in total imports of the country. During this period share of chemicals in total exports increased from 12.9per cent in 2001-02 to 13.5per cent in 2005-06 whereas in case of imports it declined from 9.9per cent to 8.6per cent during the said period. It may be noted that there has been a positive trade balance in chemicals since 2001-02 and it stood at Rs 4972 crore in 2005-06 registering an annual growth of 17.6 % during 2001-06. With initiation of economic reforms in 1991, industrial policy has been liberalized and except for few sectors, licensing has been discontinued. From August 1991 to June 2006, 66071 proposals amounting to Rs 2119427 crore have been filed. The share of chemical sector in total proposed investment is 11.85 per cent and the Basic chemicals and petrochemicals account for 14.66per cent of the total proposed investment. COMBINED EXPORT-IMPORT OF CHEMICALS AND PETROCHEMICALS EXPORT The growth in exports of chemicals and petrochemicals during April,08- Feb,09 was 23.81% over the corresponding period of last year which is quite impressive, given the overall global economic slowdown and depreciation of rupee vis-à-vis US dollar. However, the growth in imports during the corresponding period was higher at 40.07%. IMPORT The share of imports of Chemical and Petrochemicals in the total national imports ebbed from 9.0% to 6.7% during the period 2002-03 to 2008-09 (Feb, 09) whereas the share of Exports declined marginally from 11.2% to 10.9% during the corresponding period shown in the given table


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Source: (http://chemicals.nic.in/Annual%20Report2008-09.pdf) REGULATIONS/STANDARDS In Chemical Sector, 100% FDI is permissible. Manufacture of most chemical products inter-alia covering organic / inorganic, dyestuffs & Pesticides is delicensed. The entrepreneurs need to submit only IEM with the Department of Industrial Policy & Promotion provided no locational angle is applicable. Only the following items are covered in the compulsory licensing list because of their hazardous nature. 1. Hydrocyanic acid & its derivatives. 2. Phosgene & its derivatives. 3. Isocynates & di-isocynates of hydrocarbons. DUTY STRUCTURE Customs Duty 1. The peak rate of Customs Duty on most Chemicals is 7.5%. 2. On basic raw materials like acid grade fluorspar, sulphur, rock phosphate, natural borates is 5%. 3. On most building blocks & feedstock the duty is 5% (ethylene, propylene, crude, naptha, benzene,

toluene, xylene, ethylbenzene). Excise Duty

1. On almost all chemicals the excise duty is 16%.

OUTLOOK Indian chemical industry has come a long way. Today, India has significant presence in production of basic organic and inorganic chemicals, pesticides, paints, dyestuffs and intermediates, petrochemicals, fine and specialty chemicals, cosmetic and toiletry product segments. Thus, by virtue of its diversity,


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the chemical industry bears a close correlation not only with the quantum of overall economic growth but also with the contents and quality of growth. In the years to come, various new avenues are likely to arise in the Indian chemical industry like structural shifts, strategic marketing alliances for domestic sales and exports, strategic marketing alliance with multinationals and trading companies, stricter enforcement of good manufacturing practices, opportunity for value addition using contract manufacturing or contract research. The International Council of Chemical Associations (ICCA), an association representing 80% of the world manufacturers of chemicals has reiterated its support for a new round of multilateral trade negotiations in the World Trade Organization. ICCA’s priorities include elimination of chemical tariffs by the year 2010, harmonization of anti-dumping practices, simplification of customs procedures and full implementation of TRIPs agreement. While the harmonization of antidumping practices would benefit developing countries like India, the tariff-free world would pose stiff competition.


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BUSINESS OVERVIEW

Camlin Fine Chemicals Ltd. is one of the country’s leading manufacturers and exporters of Bulk Drugs, Fine Chemicals and Food Grade products in India. The registered office of the company is located at Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093. The main object of the Company is to carry on activities relating to manufacturing, selling, distributing, exporting, importing and otherwise dealing in all kinds of Chemicals including fine chemicals and intermediates, bulk drugs food additives, food supplements, antioxidants and active pharmaceutical ingredients. Camlin Limited the corporate group was established in 1931 and is a pioneer in art & stationery material in India. Camlin Limited diversified into Pharmaceuticals and Fine Chemicals two decades ago. The entire fine chemicals business of Camlin Ltd. was demerged into Camlin Fine Chemicals Ltd. Presently Camlin Fine Chemicals is the one of the world’s largest manufacturer and marketer of food grade antioxidants TBHQ and BHA. The facilities of the company are HACCP and ISO 9001: 2000 certified. The products offered by company are:

A} Food Ingredients i) Antox TBHQ (HACCP Certified) FCC V / FAO / WHO (Tertiary Butyl Hydroquinone)

Salient features of TBHQ include the following:

• ANTOX (TBHQ) gives excellent antioxidant potency to edible oils and fats. • Minimizes nutritional losses in edible oils. • Maintains freshness and quality of crude oils during long distance transportation. • Broadens the range of oils in food processing. • Offers carry through protection to fried foods, thus enhancing their storage life and freshness. • Facilitates use of saturated oils, thus preventing excess levels of cholesterol in oils and fats.

ii) Antox BHA (HACCP Certified) FCC V / FAO / WHO / EEC ( Butylated Hydroxy Anisole) Salient Features of Antox BHA

• The most effective antioxidant, imparting excellent stability for an array of food products, fats, shortenings, vitamins, pet foods, cosmetics pharmaceutical products and packaging materials.

• ANTOX BHA, reduces the oxidative deterioration of edible oils and fats, loss of flavour, colour and nutritive value of foods.

• ANTOX BHA, the better antioxidant: BHA normally is a mixture of 2 isomers, 2 tert butyl and 3 tert butyl isomers 3 tert butyl isomer has better antioxidant property.

• White free flowing crystalline Flakes. • Stable to heat and mildly alkaline conditions. • 20% colorless solution in propylene glycol remains colorless even when heated at 1940F for 1hr. • ANTOX BHA synergistic effect: ANTOX BHA gives greater synergistic effect with TBHQ,

BHT and propyl gallate than that which might be expected from contribution of each individual antioxidant.

B} SWEETENER Sucralose FCC V Salient Features of Sucralose

• Sucralose is made from sugar, is approximately 600 times sweeter than sugar. Sucralose is extremely stable, and maintains its sweetness even when exposed to high temperature food processing such as pasteurization, sterilization, UHT processing and baking.


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• Sucralose remains stable in food products throughout extended periods of storage, even at low pH.

• The excellent stability of Sucralose in combination with its high quality sweetness means that is a versatile sweetener that can be used in a broad range of product categories.

C} ACTIVE PHARMACEUTICAL INGREDIENTS i) Miconazole Nitrate B.P. / USP ii) Clotrimazole B.P. / USP iii) Amlodipine Besilate E.P iv) Amlodipine Salts v) Advance intermediate of Amlodipine vi) Intermediate of Miconazole Nitrate End users of the products The company is a multiproduct manufacturing and marketing Company, having customer base spread across 45 countries worldwide including India and products having applications in processed foods, edible oils, paints, polymers, alternative fuels (biodiesel), rubber, health and pharmaceuticals. Details of competition The company presently faces competition from Eastman Chemicals (USA), Rhodia (France), Nikki (Japan), Aroma Chemical (South Africa), Panaroma (Mumbai), K.K.Poonja (Mumbai), Ratnagiri Chemicals (Mumbai), Yasho Industries (Vapi). Focus & Future Outlook In view of strong R&D support with experienced product development team and continuous focus on process development/process re-engineering for improvement in yields the company has charted out a robust future business plan with enhanced basket of new products. These new products have passed through the technology transfer phase and are ready for commercialization in the coming years. With these technological support and product innovations being the main strategy for growth, the Company is poised for achieving higher volumes not only in existing products but also by introduction of new products in the coming years. As stated earlier, while on one hand the Company focuses continuously on cost reduction and quality enhancement of its existing products to meet the challenges of international competition, on the other hand, it continuously strives to develop new products with high demand in the international market and good margins. Voluntary Initiative for generation of thermal energy from renewable bio-mass resources instead of furnace oil (Clean Development Mechanism (CDM)/ Fuel switch over project) The company has taken a voluntary initiative for generation of thermal energy from renewable biomass resources. The proposed CDM project activity is thermal energy generation project from renewable biomass and displacement of fossil fuel use. The project aims at strong sustainable cause for the society and environment at large by the use of the biomass, apart from cost optimization. Company has considered the opportunity of Carbon Credits generation from this project and is in the process of developing documentation for qualification as a CDM project. In this process, the Company has appointed reputed consultant for this project. As soon as the project receives the necessary regulatory approvals, the Project Design Document (PDD) and Project Concept Note (PCN) will be


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submitted to the National CDM Authority (NCDMA) for requisite consideration towards Host Country Approval (HCA). This project has resulted into a substantial saving in steam generation cost because of substitution of furnace oil with bio-mass resources. COMPETITIVE ANALYSIS OF COMPANY Camlin Fine Chemicals Limited is a multiproduct manufacturing and marketing Company, having customer base spread across 45 countries worldwide including India and products having applications in processed foods, edible oils, paints, polymers, alternative fuels (biodiesel), rubber, health and pharmaceuticals. The Company has consistently grown at an average rate of over 25% in the past two years and in the financial year 2009-10, it has registered a growth of 25.00% in spite of global recession and fluctuation in foreign currency. STRENGTHS Strong research and development: The Company has a strong Research and Development backbone, which is constantly innovating the manufacturing process, improving yield and ingredients to reduce the costs and be competitive. The manufacturing team is focused on reducing the costs by bringing in the modern techniques and machines to reduce labor and power cost. The Company has the prestigious HACCP Certificate (Hazard Analysis of Critical Control Points), which is a confirmation of its strong R&D and Quality Control. Consistent Performance: The Company has consistently grown at an average rate of over 25% in the past two years and in the financial year 2009-10, it has registered a growth of 25.00% in spite of global recession and fluctuation in foreign currency. Strong foundation of Research and Development of the Company which has provided the innovations in developing products & improving manufacturing processes and yields. Quality Certifications: HACCP, KOSHER 2009, HALAL 2009, ISO 22000, ISO 9001 certifications have been obtained which are mandatory worldwide and critical for ensuring food safety and quality standards.

Strong customer relationship and growth strategy: The strong customer relationships and long term supply chain contracts in view of the consistent quality of products and customer service. The Company has laid out a growth strategy for the coming years based on enhancing the market share of existing core products, expanding the range of products to cater to wider areas of the food, Health and Alternative energy segments and also focusing on the development of technology for specialty chemicals with specialized applications with In-house R&D and Technology support. WEAKNESSESS Changing policies of the Government regarding the change in the duty structure and international trade regulations and other regulations by the legislature, puts constraints on the Company’s ability to adapt rapidly to the changes. Cheap quality material as in this sector also has unorganized small players strategies to produce material at low cost which puts constraints on the Company’s ability. However the Company has kept itself proactive to keep changing according to the dynamism of the market and industry by adopting the strong technology support, and through R&D and conserving the input resources to its advantage.


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OPPORTUNITIES Growth in the industries related to the industrial users Growth in manufacture of food products, cattle and poultry feed, oil refining and increase in incidence of diabetics, are expected to result in significant growth in demand for its products. With strong R&D efforts, the Company is poised to meet the challenges of competitive prices and falling margins and is geared to take the advantage of growth in demand. Further, in strategy for FY 2009-10, the Company has emphasized on the new opportunities in the business segments such as Industrial Antioxidants, Biodiesel Additives, Natural Shelf life Enhancers and Nutraceuticals. Demand among end users Increasing literacy in society people are tending towards the packaged food and preserved food and also the increase in the working population demand for packaged food has increased which subsequently increase the demand for the product and also the company is focused in continuous R&D in this segment. So, the company is exploring further opportunities in this area which will be in benefit of the company. APPROACH TO MARKETING & EXPANSION Agreement for joint venture The Company has entered into an agreement on 13/03/2007 with Viachem Company LLC, USA to incorporate a joint venture company Dulcette Technologies LLC, U.S.A. for marketing of company’s products in international markets. The total investment in this joint venture is to the tune of US $ 3, 00,000 with Camlin Fine Chemicals Ltd’s share of 51%. Chemolutions Chemicals Limited (CCL): A subsidiary of the Company has been formed along with a German national, who has over 25 years of experience in marketing specialty chemicals. CCL through partnership with the Innovator Companies works towards forming long term relationship for product development, delivery and filing the process patents for the products developed through their own technological inputs in the form of development through CCL or elsewhere. The Company has developed advanced intermediates/ innovative products for specific customers in USA and Europe and these demands are met from manufacturing facilities in India, by entering in to long terms contracts with these innovators. The Company has signed a contract for manufacturing a specialty chemical for a European Company, through the process developed by the Company’s Research and Development. Sangam Laboratories Ltd. (SLL): Sangam Laboratories, a subsidiary of the company, manufactures nutraceuticals like glucosamine and its salts. This is an important supplement in bone management in conditions like osteoarthritis and is being used extensively in USA, Europe and Japan. These markets alone account for a volume of 200 metric tonnes. The company has entered these markets by providing glucosamine in its basic form and also in finished formulations like tablets and sachets. Trading House: The Company has an excellent network with suppliers of varied chemicals and India being a hub for world-wide chemical manufacturing requirements, the infrastructure has been set up to exploit the opportunity to supply chemicals and chemical products to the chemical industry and this would be one


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of the volume drivers for Company’s growth in the coming years apart from the Company’s core product strength. Infrastructural facilities: There are 8 plants and 1 distillation facility located at Tarapur in the area of 28,077 sq. meters. These plants have been accredited with many of the international certifications. This unit is a 100% export oriented unit. Raw Material: The major component of materials consumption is that of imported material and their share is 72% in FY 2007-08, 2008-09 and 2009-10. The key imported raw materials are Hydroquinone, Tertiary Butyl Alcohol which contribute major imports and rest are in small proportion and balance portion of materials consumption was that of domestic raw material. The suppliers of the company are mainly located in China, Japan and USA. Water: The continuous water requirements of the factory are met by MIDC’s water resources. Electricity: The electricity is required for the purpose of manufacturing, processing and general office purpose. The consumption of electricity at the factory is met by MSEB and at the registered office of the company is by Tata Power. The electricity board has sanctioned a maximum demand load of 1,400 KVA for power supply at Tarapur. The rest of the requirement at Tarapur plant is fulfilled through in house power generation plant. Export Possibilities and Obligations: CFCL is 100% Export Oriented Unit (EOU). Intellectual Property Rights The Company owns the following patents and the same have been registered with the Controller of Patents, Patent Office, Mumbai.

Sr. No. Name of our Product for

which Patent filed

Ref. No./Application

Type

Application No. Title/Remarks

1 BHA PCT National phase application

1760/MUMNP/2007 Improvement in synthesis of BHA from TBHQ

2 SUCRALOSE PCT National phase application

1146/MUMNP/2008 Process to prepare sucralose

3 NANOFRESH ordinary application

1605/MUM/2009 Preservatives from chitin derivatives

BUSINESS STRATEGY The company’s business strategy is growth and expansion in all the core products segments strengthening the infrastructure base and keep company remain technologically advanced and ahead by investing in R&D. The Company has laid out a growth strategy for the coming years based on


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expanding the market share of existing core products, expanding the range of products to cater to wider areas of the food, Health and Alternative energy segments and also focusing on the development of technology for specialty chemicals with specialized applications with In-House R & D and Technology support. FUTURE PROSPECTS The Company has charted out a robust future business plan with enhanced basket of new products. These new products have passed through the technology transfer phase and are ready for commercialization in the coming years. With these technological support and product innovations being our main strategy for growth, the Company is poised for achieving higher volumes not only in existing products but also by introduction of new products in the coming years. CAPACITY Presently the company has licensed capacity of 5130 tonnes per annum with installed capacity of 2549 tonnes per annum. Pursuant to the additional installation of the plant and machinery and due to process re-engineering the enhanced capacity would go upto 4000 tonnes per annum. LAND:

Address of the Property

Nature of Right

Particulars of Agreement

Duration of the

Agreement

Date Amount

Plot No. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (E), Mumbai – 400 093.

Leave and License

Leave & License Agreement for licensed premises admeasuring about 750 sq. mtrs. with building admeasuring about 13650 sq. ft. standing thereon and open space in the remaining area of the plot.

60 months

22/09/2009 Monthly licence fee of Rs. 7,50,000/- for a period of first 36 months plus service tax as applicable. The licence fee shall increase by 15% after the completion of initial three years and thereafter the same shall be increased by 5% every year plus service tax as applicable.

Plot D-2/3, MIDC Area, Boisar, Taluka Palghar, District Thane – Tarapur 401 506, Maharashtra.

Lease Lease Deed dated 13th December, 1984 between MIDC & Camlin Ltd. for a period of 60 years, assigned to Camlin Fine Chemicals Ltd. on 5th March, 2009.

60 years 05/03/2009

Gala No. 107, 108 & 109, Gayatri Commercial Complex, Behind Mittal Indl. Estate, Sakinaka, Mumbai 400 072.

Ownership i) Gala No. 107 – admeasuring 90.15 sq. mtrs. ii) Gala No. 108 – admeasuring 121.84 sq. mtrs. iii) Gala no. 109 – admeasuring 109.11 sq. mtrs.

---- 01/12/2005 i) Gala No. 107 – Rs. 40,57,275/- ii) Gala No. 108 – Rs. 54,81,375/- iii) Gala No. 109 – Rs. 49,10,325/-


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Address of the Property

Nature of Right

Particulars of Agreement

Duration of the

Agreement

Date Amount

Survey No. 134/10 & 135/3, At & Post: Rasal, Khopoli – Pali Road, Taluka: Sudhagad, District: Raigad, Pin Code: 410 205.

Ownership Purchase of land to start a factory in Sudhagad Tahasil in Raigad District.

---- 19/10/2007 Rs. 1,90,,37,822/-


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REGULATIONS AND POLICIES The following description is a summary of the relevant regulations and policies as prescribed by the central / state governments that are applicable to our Company in India. The information detailed in this chapter has been obtained from publications available in the public domain. The regulations set out below are not exhaustive, and are only intended to provide general information to the investors and are neither designed nor intended to be a substitute for professional legal advice. The Companies Act, 1956

The Act deals with laws relating to companies and certain other associations. It was enacted by the parliament in 1956. The Companies Act primarily regulates the formation, financing, functioning and winding up of companies. The Act prescribes regulatory mechanism regarding all relevant aspects including organizational, financial and managerial aspects of companies. Regulation of the financial and management aspects constitutes the main focus of the Act. In the functioning of the corporate sector, although freedom of companies is important, protection of the investors and shareholders, on whose funds they flourish, is equally important. The Companies Act plays the balancing role between these two competing factors, namely, management autonomy and investor protection. Environment Regulation Manufacturing projects must also ensure compliance with environmental legislation such as the Water (Prevention and Control of Pollution) Act 1974 (“WPA”), the Air (Prevention and Control of Pollution) Act, 1981 (“APA”) and the Environment Protection Act, 1986 (“EPA”). The WPA aims to prevent and control water pollution. This legislation provides for the constitution of a Central Pollution Control Board and State Pollution Control Boards. The functions of the Central Board include coordination of activities of the State Boards, collecting data relating to water pollution and the measures for the prevention and control of water pollution and prescription of standards for streams or wells. The State Pollution Control Boards are responsible for the planning for programmes for prevention and control of pollution of streams and wells, collecting and disseminating information relating to water pollution and its prevention and control; inspection of sewage or trade effluents, works and plants for their treatment and to review the specifications and data relating to plants set up for treatment and purification of water; laying down or annulling the effluent standards for trade effluents and for the quality of the receiving waters; and laying down standards for treatment of trade effluents to be discharged. This legislation debars any person from establishing any industry, operation or process or any treatment and disposal system, which is likely to discharge trade effluent into a stream, well or sewer without taking prior consent of the State Pollution Control Board. The Central and State Pollution Control Boards constituted under the WPA are also to perform functions as per the APA for the prevention and control of air pollution. The APA aims for the prevention, control and abatement of air pollution. It is mandated under this Act that no person can, without the previous consent of the State Board, establish or operate any industrial plant in an air pollution control area. The EPA has been enacted for the protection and improvement of the environment. The Act empowers the Central Government to take measures to protect and improve the environment such as by laying down standards for emission or discharge of pollutants, providing for restrictions regarding areas where industries may operate and so on. The Central Government may make rules for regulating environmental pollution. The Indian Stamp Act, 1899 There is a direct link between the Registration Act and the Indian Stamp Act, 1899 (‘Stamp Act’). Stamp duty needs to be paid on all documents specified under the Stamp Act and at the rates specified in the Schedules thereunder. The rate of stamp duty varies from state to state. The stamp duty is payable on


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instruments at the rates specified in Schedule I of the said Act. The applicable rates for stamp duty on these instruments, including those relating to conveyance, are prescribed by state legislation. Instruments chargeable to duty under the Stamp Act which are not duly stamped are incapable of being admitted in court as evidence of the transaction contained therein. The Stamp Act also provides for impounding of instruments which are not sufficiently stamped or not stamped at all. Income-tax Act, 1961

The Income Tax Act, 1961 deals with the taxation of individuals, corporates, partnership firms and others. As per the provisions of this Act the rates at which they are required to pay tax is calculated on the income declared by them or assessed by the authorities, after availing the deductions and concessions accorded under the Act. The maintenance of Books of Accounts and relevant supporting documents and registers are mandatory under the Act. Filing of returns of Income is compulsory for all assesses.

Service Tax

Chapter V of the Finance Act 1994 (as amended), and Chapter V-A of the Finance Act 2003 requires that where provision of certain listed services, whole taxable services exceeds Rs. 400,000, a service tax with respect to the same must be paid. Every person who is liable to pay service tax must register himself for the same

Central Sales Tax Act (CST)

The main object of this act is to formulate principles for determining (a) when a sale or purchase takes place in the course of trade or commerce (b) When a sale or purchase takes place outside a State (c) When a sale or purchase takes place in the course of imports into or export from India, to provide for levy, collection and distribution of taxes on sales of goods in the course of trade or commerce, to declare certain goods to be of special importance trade or commerce and specify the restrictions and conditions to which State laws imposing taxes on sale or purchase of such goods of special importance (called as declared goods) shall be subject. CST Act imposes the tax on inter state sales and states the principles and restrictions as per the powers conferred by Constitution.

Standards of Weights and Measures Act, 1976

This legislation and the rules made there under apply to any packaged commodity that is sold or distributed. It provides for standardization of packages in specified quantities or numbers in which the manufacturer, packer or distributor shall sell, distribute or deliver some specified commodity to avoid undue proliferation of weights, measures or number in which such commodities may be packed. Any person intending to pre-pack or import any commodity for sale, distribution or delivery has to make an application to the Director of Legal Metrology for registration.

Standards of Weights and Measures Enforcement Act, 1985

The Standards of Weights and Measures Enforcement Act, 1985 regulates the classes of weights and measures manufactured, sold, distributed, marketed, transferred, repaired or used and the classes of users of weights and measures. The Act was passed with a view to regulating and modernizing the standards used in India based on the metric system. The units of weight which are sought to be used in day to day trade are required to be periodically inspected and certified by the designated authorities under this act for their accuracy. Electricity Act, 2003

The Electricity Act, 2003 has been recently introduced with a view to rationalise electricity tariff, and to bring about transparent policies in the sector. The Act provides for private sector participation in


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generation, transmission and distribution of electricity, and provides for the corporatisation of the state electricity boards. The related Electricity Regulatory Commissions Act, 1998 has been enacted with a view to confer on these statutory Commissions the responsibility of regulating this sector.

Value Added Tax (“VAT”)

VAT is a system of multi-point levy on each of the purchases in the supply chain with the facility of set-off input tax on sales whereby tax is paid at the stage of purchase of goods by a trader and on purchase of raw materials by a manufacturer. VAT is based on the value addition of goods, and the related VAT liability of the dealer is calculated by deducting input tax credit for tax collected on the sales during a particular period. VAT is a consumption tax applicable to all commercial activities involving the production and distribution of goods and the provisions of services, and each state that has introduced VAT has its own VAT Act, under which, persons liable to pay VAT must register and obtain a registration number from Sales Tax Officer of the respective State.

Approvals from Local Authorities

Setting up of a Factory or Manufacturing/Housing unit entails the requisite Planning approvals to be obtained from the relevant Local Panchayat(s) outside the city limits and appropriate Metropolitan Development Authority with in the city limits. Consents from the state Pollution Control Board(s), the relevant state Electricity Board(s), the State Excise Authorities, Sales Tax, are required to be obtained before commencing the building of a factory or the start of manufacturing operations.

Industrial (Development and Regulation) Act, 1955

The Industrial (Development and Regulation) Act, 1951 has been liberalized under the New Industrial Policy dated July 24, 1991, and all industrial undertakings are exempt from licensing except for certain industries such as distillation and brewing of alcoholic drinks, cigars and cigarettes of tobacco and manufactured tobacco substitutes, all types of electronic aerospace and defense equipment, industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and matches and hazardous chemicals and those reserved for the small scale sector. An industrial undertaking, which is exempt from licensing, is required to file an Industrial Entrepreneurs Memorandum ("IEM") with the Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, and no further approvals are required.

Foreign Trade (Development and Regulation) Act, 1992

This statute seeks to increase foreign trade by regulating the imports and exports to and from India. This legislation read with the Indian Foreign Trade Policy provides that no export or import can be made by a person or company without an importer exporter code number unless such person or company is specifically exempt. An application for an importer exporter code number has to be made to the office of the Joint Director General of Foreign Trade, Ministry of Commerce. An importer-exporter code number allotted to an applicant is valid for all its branches, divisions, units and factories.

The Factories Act, 1948

The Factories Act, 1948 is a social legislation which has been enacted to regulate the occupational safety, health and welfare of workers at work places. This legislation is being enforced by the Government through officers appointed under the Act i.e. Inspectors of Factories, Deputy Chief Inspectors of Factories who work under the control of the Chief Inspector of Factories and overall control of the Labour Commissioner. The ambit of operation of this Act includes the approval of Factory Building Plans before construction/extension, investigation of complaints with regard to health, safety, welfare and working conditions of the workers employed in a factory, the maintenance of registers and the submission of yearly and half-yearly returns.


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Payment of Wages Act, 1936 ("Wages Act")

Wages Act applies to the persons employed in the factories and to persons employed in industrial or other establishments where the monthly wages payable to such persons is less than Rs 10,000/-. The Act confers on the person(s) responsible for payment of wages certain obligations with respect to the maintenance of registers and the display in such factory/establishment, of the abstracts of this Act and Rules made there under.

The Minimum Wages Act, 1948 ("Minimum Wages Act")

Minimum Wages Act was enacted to provide for minimum wages in certain employments. Under this Act, the Central and the State Governments are the authorities to stipulate the scheduled employment and to fix minimum wages. The Act contains list of Agricultural and Non Agricultural employment where the prescribed minimum rate of wages is to be paid to the workers. The minimum wages are calculated and fixed based on the basic requirement of food, clothing, housing required by an average Indian adult.

Employees (Provident Fund and Miscellaneous Provisions) Act, 1952

The Act is applicable to factories employing more that 20 employees and may also apply to such establishments and industrial undertakings as notified by the Government from time to time. All the establishments under the Act are required to be registered with the Provident Fund Commissioners of the State. Also, in accordance with the provisions of the Act the employers are required to contribute to the Employees' Provident Fund the prescribed percentage of the basic wages, dearness allowances and remaining allowance (if any) payable to the employees. The employee shall also be required to make the equal contribution to the fund. As per the provision of the Act, employers are to contribute 12% of the basic wages, dearness allowances and remaining allowances (if any) payable for the time being to the employees. A monthly return in Form 12 A is required to be submitted to the commissioner in addition to the maintenance of registers by the employers.

Payment of Gratuity Act, 1972

A terminal lump sum benefit paid to a worker when he or she leaves employment after having worked for the employer for a prescribed minimum number of years is referred to as "gratuity". The provisions of the Act are applicable to all the factories. The Act provides that within 30 days of opening of the establishment, it has to notify the controlling authority in Form A and thereafter whenever there is any change in the name, address or change in the nature of the business of the establishment a notice in Form B has to be filed with the authority. The Employer is also required to display an abstract of the Act and the rules made there-under in Form U to be affixed at the or near the main entrance. Further, every employer has to obtain insurance for his liability towards gratuity payment to be made under Payment of Gratuity Act 1972, with Life Insurance Corporation or any other approved insurance fund.

Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965 is applicable to every establishment employing 20 or more employees. The said Act provides for payment of the minimum bonus to the employees specified under the Act. It further requires the maintenance of certain books and registers such as the register showing computation of the allocable surplus; the register showing the set on & set off of the allocable surplus and register showing the details of the amount of Bonus due to the employees. Further it also require for the submission of Annual Return in the prescribed form (FORM D) to be submitted by the employer within 30 days of payment of the bonus to the Inspector appointed under the Act.


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Contract Labour (Regulation and Abolition) Act, 1970

The purpose of Contract Labour (Regulation and Abolition) Act 1970, is to regulate the employment and protect the interests of the workers who are hired on the basis of individual contracts in certain establishments. In the event that any activity is outsourced, and is carried out by labourers hired on contractual basis, then compliance with the Contract Labour (Regulation and Abolition) Act, including registration will be necessary and the principal employer will be held liable in the event of default by the contractor to make requisite payments towards provident fund etc.

Employment (Standing Orders) Act, 1950

The Industrial Employment (standing orders) Act requires employers in industrial establishments to formally define conditions of employment under them. It applies to every industrial establishment wherein 100 (reduced to 50 by the Central Government in respect of the establishments for which it is the Appropriate Government) or more workmen are employed. The Act calls for the submission of such conditions of work to the relevant authorities for their approval.

The Equal Remuneration Act, 1976 ("Equal Remuneration Act") and Equal Remuneration Rules, 1976

The Constitution of India provides for equal pay for equal work for both men and women. To give effect to this provision, the Equal Remuneration Act, 1976 was implemented. The Act provides that no discrimination shall be shown on the basis of sex for performing similar works and that equal remuneration shall be paid to both men and women when the same work is being done.

Employees State Insurance Act, 1948

All the establishments to which the Employees State Insurance (ESI) Act applies are required to be registered under the Act with the Employees State Insurance Corporation. The Act applies to those establishments where 20 or more persons are employed. The Act requires all the employees of the factories and establishments to which the Act applies to be insured in the manner provided under the Act. Further, employer and employees both are required to make contribution to the fund. The return of the contribution made is required to be filed with the ESI department.

The Maternity Benefit Act, 1961 ("Maternity Act")

The purpose of Maternity Act 1961 is to regulate the employment of pregnant women and to ensure that they get paid leave for a specified period during and after their pregnancy. It provides, inter-alia for payment of maternity benefits, medical bonus and enacts prohibition on dismissal, reduction of wages paid to pregnant women etc.


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HISTORY The company was originally incorporated on 30/11/1993 under the Companies Act, 1956 as Camlicon Consultants Pvt. Ltd. The name of the company was changed to Camlin Fine Chemicals Pvt. Ltd. (CFCPL) on 01/06/2006. The status of the company was changed to public limited company on 11/08/2006 and consequently the name was changed to Camlin Fine Chemicals Limited (CFCL). The main object of the Company is to carry on activities relating to manufacturing, selling, distributing, exporting, importing and otherwise dealing in all kinds of Chemicals including fine chemicals and intermediates, bulk drugs food additives, food supplements, antioxidants and active pharmaceutical ingredients. The “Fine Chemical Division” of Camlin Limited was de-merged into CFCL in terms of the scheme of arrangement sanctioned by the Hon’ble High Court, Bombay vide their order dated 17/11/2006. CFCL was a non-operating Company with its share capital being held by the promoters of Camlin Limited. Thereafter CFCL became 100% subsidiary of Camlin Limited. Rationale for Scheme of Arrangement was as follows : Camlin Limited is engaged in the business of manufacturing range of stationary and hobby products including colours, writing instruments, geometry instruments & adhesives in consumer products division while “Fine Chemical Division” of Camlin Limited was engaged in the manufacturing of specialty chemicals, anti-oxidants, bulk drugs and active pharmaceuticals ingredients. It was considered necessary to provide focused attention to each of the businesses which are distinct from each other. The said scheme was aimed at having administrative convenience of both the entities carrying out separate businesses. The scheme was aimed at having following advantages to both the entities.

Separate business would be carried out in independent entities.

Enhanced management focus to the respective businesses to result in synergies of operations.

Resultant structure to facilitate independent growth of the separate business.

Scope for independent Collaboration & Expansion. For salient features of Scheme of Arrangement, please refer page no.64 of this Letter of Offer. CFCL issued and allotted equity shares to every member of Camlin Limited holding fully paid up equity shares in Camlin Limited and whose name appeared in the register of members, on the record date, in the ratio of one (1) Equity Share of the face value of Rs. 10/- (Rupees Ten only) each fully paid-up of CFCL for every one (1) equity share fully paid up and held in Camlin Limited. Such Shares ranked pari passu in all respects with the existing shares of the Company. Accordingly the process of scheme of arrangement was completed as sanctioned by the Hon’ble High Court, Bombay and the effective date for the scheme was 19/12/2006. The equity shares of CFCL were listed on Bombay Stock Exchange Ltd. (BSE) w.e.f. 30th March 2007 on completion of all the process relating to the implementation of the said scheme of arrangement. CFCL made a preferential allotment of equity shares on 21st December 2007 to the promoter group of the company. The preferential allotment was made for 9,50,000 equity shares of Rs.10/- each at a price of Rs. 52/- (including a share premium of Rs.42/- per share) aggregating to Rs. 494.00 lacs. Pursuant to the abovementioned preferential allotment made, the promoter and promoter group made an open offer in terms of SEBI (SAST) Regulation. The said offer opened for subscription on 12/03/2008 and


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closed on 31/03/2008. Pursuant to the completion of the said open offer, the promoter/ promoter group acquired 7,50,265 equity shares of Rs.10/- each and accordingly the shareholding of the promoter/ promoter group increased to 63.24% of the equity share capital. Presently the shareholding of the promoter/ promoter group in the company is 50.80%. For further details of disassociation please refer to page no. 70 of the letter of offer. Presently CFCL is one of the largest manufacturers of food grade anti oxidants viz. Tertiary Butyl Hydroquinone (TBHQ) and Butylated Hydroxy Anisole (BHA). The company has structured its business units based on the market segment and product category to bring in sharper focus for growth and development. The business units formed by the company comprises of Food Antioxidants, Industrial Antioxidants, Sweetener, Biodiesel Additives, Trading House, Natural Shelf life Enhancers, Nutraceuticals etc. Further, company has established an excellent network with suppliers of varied chemicals which enable the company to supply chemical and chemical products to the industry through trading.

Company has also forayed into renewable energy in the form of windmills, solar panels, micro hydro, bio-mass and other renewable resources through its subsidiary. The company also intends to launch distribution/retail business of life style brand products in India through another subsidiary. Salient features of Scheme of Arrangement

All assets (whether movable or immovable, real or personal, corporeal or incorporeal, present, future, contingent, tangible or intangible) pertaining to the Fine Chemicals Division of Camlin Limited be transferred to and vested in and/or deemed to be transferred to and vested in CFCL as a going concern including but without being limited to plant and machinery, buildings and structures, offices, residential and other premises, capital work in progress, furniture, fixtures, office equipment, appliances, accessories, vehicles, deposits, all stocks, assets, cash balances with banks, contingent rights or benefits belonging to or in the ownership, power, possession or the control of or vested in or granted in favour of or held for the benefit of or enjoyed by the Fine Chemicals Division, whether in India or abroad;

All deposits, advances, loans, receivables, funds, staff advances, advance payments to regulatory

authorities, cash, bank balances, accounts and all earnest money and/or deposits including security deposits made/paid by Camlin Limited in connection with or relating to the Fine Chemicals Division be transferred to and vested in and/or deemed to be transferred to and vested in CFCL as a going concern.

All necessary records, files, papers, process information, computer programmes, drawings,

manuals, data, catalogues, quotations, sales and advertising materials, lists of present and former customers and suppliers, customer credit information, customer pricing information and other record whether in physical or electronic form in connection with or relating to the Fine Chemicals Division of Camlin Limited be transferred to and vested in and/or deemed to be transferred to and vested in CFCL as a going concern.

Without prejudice to the generality of the foregoing, it is clarified that all consents, permissions,

licenses, certificates, authorities relating to the Fine Chemicals Division shall stand transferred to CFCL as if the same were originally given by, issued to or executed in favour of CFCL, and the rights and benefits under the same shall be available to CFCL.

Without prejudice to the generality of the above, all benefits or incentives including income tax,

excise, sales tax (including deferment of sales tax) and any other direct or indirect taxes, benefits in respect of the Fine Chemicals Division for which Camlin Limited is entitled to in terms of the various statutes and/or schemes of Union and State Governments, shall be available to and vest in CFCL.


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Without prejudice to the generality of the above, the following brand, trademark or tradename shall be transferred to CFCL;

Antox It is further clarified that all other brands, trademarks, tradenames etc. including but not limited to ‘Camlin’ and ‘Camel’ shall continue to be property of Camlin Limited and that CFCL shall be allowed to use the word ‘Camlin’ in its name only.

All liabilities pertaining to /arising out of the activities or operations of the Fine Chemicals Division be transferred to CFCL.

All employees, staff and workers of Camlin Limited employed in the Fine Chemicals Division, as

identified by the Board of Directors of Camlin Limited be transferred to CFCL as a going concern.

All the regulatory requirements pertaining to the demerger of Camlin Fine Chemicals Ltd. from Camlin Limited have been complied with. Major events of the company

Year Milestone achieved 1993 Camlicon Consultants Pvt. Ltd. was incorporated on 30/11/1993 2006 Camlin Fine Chemicals Pvt. Ltd. became 100% subsidiary of Camlin Ltd. w.e.f.

09/06/2006 2006 Change in the status of the company from private limited to a public limited company 2007 Fine Chemicals division of Camlin Ltd. was demerged into the company 2007 Camlin Fine Chemicals Ltd. acquired M/s. Sangam Laboratories Ltd. 2008 Camlin Fine Chemicals Ltd promoted M/s. Chemolutions Chemicals Ltd. and M/s. Fine

Lifestyle Brands Ltd as the subsidiary Companies 2009 Camlin Fine Chemicals Ltd promoted M/s. Fine Renewable Energy Ltd as a subsidiary Awards and certifications

Since Standard/Award received 2001 Certification for ISO 9001 : 2000 2004 Certification for HACCP System for the factory location d-2/1/1, MIDC Area,

Boisar, Tarapur, Dist. Tarapur, Maharashtra. 2007 Certification for ISO 22000: 2005 for food safety management 2007 FAMI – QS (BHA) 2007 BRC Certification (British Retail Consortium)

Many years HALAL and KOSHER The company also has HALAL (an Arabic term designating nay object or an action which is permissible to use of engage in, according to Islamic Law) and KOSHER (Conformance with the rules of Jewish dietary laws) certifications.

Changes in Registered Office of the Company

Date of change Address Changed From To

1st December 2009 ICC Chambers, 3rd Floor, Saki Vihar Road,

Powai, Mumbai 400 072

Plot No. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate,

Central Road, Andheri (East), Mumbai 400 093 MAIN OBJECTS OF THE COMPANY The main objects of the company to be pursued by the company are as follows:


67

*To research, develop, improve, process, manufacture, import, export and deal in all kinds of chemicals including fine chemicals and intermediates, bulk drugs and intermediates, food additives, food supplements, antioxidants, active pharmaceutical ingredients, organic chemicals, acids, alkalies, and other preparations, formulations, compounds and ingredients. (*Amended vide Special Resolution passed on 26th April, 2006) CHANGES IN MEMORANDUM Dates on which some of the main clauses of the Memorandum of Association of the Company has been altered citing the details of Amendment as under: Date of Approval Clause Amendment

26th April, 2006 1 Main Object Clause amended vide Special Resolution 26th April, 2006 2 Clause 2 of “Objects Incidental or Ancillary to the Attainment of the

Main Objects” amended vide Special Resolution 26th April, 2006 3 Clause 3 of “Objects Incidental or Ancillary to the Attainment of the

Main Objects” amended vide Special Resolution 4th December, 2006 41 New clause inserted in the “Other Objects”. 25th July, 2007 V Capital Clause amended vide Ordinary Resolution 27th February, 2009 42 New clause inserted in the “Other Objects”. SUBSIDIARIES OF THE COMPANY

There are 5 subsidiaries of the company. Details of the same are on page no.84. 1. Chemolutions Chemicals Ltd. (CCL)

2. Sangam Laboratories Ltd. (SLL) 3. Fine Renewable Energy Ltd. (FREL) 4. Fine Lifestyle Brands Ltd. (FLBL)

• Fine Lifestyle Solutions Ltd. (FLSL) (subsidiary of FLBL) 5. Dulcette Technologies, LLC.

For details of the subsidiaries please refer to page 84 of the offer document SHAREHOLDERS’ AGREEMENTS

The company has entered into the following shareholders agreements:

Sr. No.

Parties to the Agreement Main Features of the Agreement Date of the Agreement

1. Camlin Fine Chemicals Ltd. & Mr. Christopher Bluemel

Joint Venture Agreement for creating a joint venture company to carry on the business of catering to and developing the domestic and international markets for Specialty Chemicals.

17th February, 2008

2. Camlin Fine Chemicals Ltd. & Mr. Shrikant M. Parchure & Mr.

Vidyadhar S. Sawant & Sangam Laboratories Pvt. Ltd.

Shareholders Agreement for acquiring 60% stake in Sangam Laboratories Pvt. Ltd.

28th January, 2008


68

Sr. No.

Parties to the Agreement Main Features of the Agreement Date of the Agreement

3. Camlin Fine Chemicals Ltd. & Pagoda Advisory Services Pvt. Ltd. & Mr.

Manoj Jain

Shareholders Agreement for creating a joint venture company to carry on the business of wholesalers, retailers, importers, exporters, & distributors of lifestyle, branded, luxury, designer and fashionable articles and goods including apparels, ready made garments, perfumes, cosmetics, leather goods, jewellery articles, watches, etc.

22nd August, 2008

4. Camlin Fine Chemicals Ltd. and Viachem Ltd.

Operating Agreement for creating a joint venture company and setting forth the rights and obligations vis-à-vis the joint venture company.

13th March, 2007

None of the above mentioned agreements contain covenants which are restrictive in nature in respect of the management, control or ownership of the Company. STRATEGIC AND FINANCIAL PARTNERS At present the company has no strategic and financial partners. OTHER AGREEMENTS The company has entered into the supply agreement as mentioned below:

Sr. No. Parties to the Agreement Main Features of the Agreement Date of the Agreement

1. Camlin Fine Chemicals Limited and Viachem LLC and Dulcette Technologies LLC.

Agreement for the supply of sucralose to Dulcette Technologies LLC.

13th March, 2007

The company has also entered into the service agreements with the promoter director of the company as mentioned below:

Sr. No. Parties to the Agreement Main Features of the Agreement Date of the Agreement

1. Camlin Fine Chemicals Ltd. & Ashish S. Dandekar

Appointment of Mr. Ashish S. Dandekar as the Managing Director for a period of 3 years with effect from 1st September 2007 to 31st August, 2010 and to perform such powers, duties and functions as may be laid down from time to time by the Board of Directors of the Company on a Remuneration of Rs. 2,30,000/- per month plus HRA and Commission subject to the overall limits laid down under sections 198 & 309 of the Act.

16th August, 2007

The company has entered into a remuneration agreement dated 09/08/2008 with Mr. Dilip D. Dandekar Chairman and Non-Executive Director for a period of three years w.e.f. 01/09/2008 to


69

31/08/2011 for remuneration upto Rs.12.00 lacs per annum for a period of 3 years with liberty to the Board of Directors/ Remuneration Committee to decide yearly quantum and periodicity of remuneration. RESTRICTIVE COVENANTS : The company has entered into loan agreements with Hong Kong and Shanghai Banking Corporation Ltd., IDBI Bank and Exim Bank. The salient restrictive covenants are as follows:

• IDBI Bank During the currency of IDBI’s credit facilities, Company shall not, without the prior approval of IDBI in writing 1. Effect any change in their capital structure: 2. Formulate any scheme of amalgamation or reconstruction: 3. Undertake any new project scheme without obtaining IDBI’s prior consent therefore unless the

expenditure on such expansion etc. is covered by the company’s net cash accruals after providing for dividends, investments etc., or from long terms funds received for financing such new projects or expansion:

4. Invest by way of share capital in or advance funds to or place deposits with any other concern. Normal trade credit or security deposit in the usual course of business or advances to employees etc. are, however, not covered by this covenant.

5. Enter into borrowing arrangement either secured or unsecured with any other financial institution, company or otherwise, save and except the working capital facilities granted/to be granted by other consortium member under consortium arrangement with IDBI:

6. Undertake guarantee obligations on behalf of the companies: and 7. Declare dividends for any year except out of profits relating to that year.

• EXIM BANK 1. CFCL shall not declare dividend for any year except out of profits relating to that year after making

all due and necessary provisions and provided further that no default had occurred in any repayment obligation to Exim bank. Any deviation shall require prior written approval of Exim Bank.

2. Any material change in the composition of the Board of directors, management structure, or equity pattern of CFCL shall require the prior written approval of Exim bank.

3. CFCL shall not resort to double financing either in foreign currency or in Indian rupees for funding the project activities covered by the Exim term loan.

4. CFCL shall not save with the prior written approval of Exim Bank and the approval of CFCL’s Board of Directors, extend to its subsidiary(ies) /associate companies any loans and advances which are either free of interest or which carry a rate of interest lower than the rate of interest applicable on the captioned loan form Exim bank/other banks/FIs.

5. Any material change in the equity pattern of CFCL shall require the prior written approval of Exim bank.

6. CFCL shall not utilize Exim Bank’s loan for subscription to or purchase of share/debenture or for repayment of dues of promoters/associate concerns / intercorporate deposits etc.

• Hong Kong and Shanghai Banking Corporation Limited

1. Any change in the capital structure, scheme of amalgamation/re-construction must be agreed by

the bank prior to being undertaken. 2. The borrower will seek bank’s prior permission for the following;

• Declaration of dividend, in case the operating profits(earning before interest less depreciation and taxes) fall below the audited value of the previous year and/or if this results in a breach of the stipulated financial covenants.


70

• Capital expenditure (to the extent not included in the projections submitted by the borrower) resulting in an increase in the gross block / capital work – in – progress by more than 15pct vis-à-vis the last audited figures.

• Any increase in exposure (in the form of investments, loans, advances, guarantees. Etc.) to related companies, to the extent not factored in the projections. This clause will not cover normal trade credit or advance to employees incurred in the normal course of business.

• If the existing unsecured loans and advances from promoters / directors are proposed to be repaid.

• If the borrower wishes to avail any fresh term borrowings not included in the projections or working capital borrowings outside the maximum permissible bank finance from any other bank/lender. In case of any change in the borrowing arrangement (which does not require prior permission), the Borrower needs to immediately advise the bank of the change.

3. The borrower should keep the bank promptly informed about any material adverse even (or any event which is likely to result in a material adverse change) affecting the conditions of the borrower or its subsidiaries, including but not limited to litigation and disputes with government /regulatory bodies.

The company has obtained the No-Objection Certificates from the banks for the present rights issue. Disassociation

The fine chemical division of Camlin Ltd. was de-merged into CFCL, the resultant company in terms of scheme of arrangement sanctioned by the Hon’ble Bombay High Court on 17/11/2006. Pursuant to the said scheme of arrangement, each member/shareholder of Camlin Ltd. holding 1 fully paid up equity share of Camlin Ltd. was allotted 1 fully paid up equity share of CFCL. CFCL is managed under the control of Mr. Ashish S. Dandekar as the Managing Director & majority shareholder of CFCL. Mr. Dilip D Dandekar has been the Chairman of Camlin Limited and when Camlin Fine Chemicals Limited came into existence as a result of the demerger, he continued to be the Non-Executive Chairman of CFCL. At the time of issuance of equity shares on implementing the scheme of de-merger Mr. Dilip D Dandekar alongwith his family members, companies/ entities controlled by him was allotted 6,05,750 equity shares of Rs.10/- each in CFCL. The total share holding of Mr. Dilip D. Dandekar and his family as well as the companies controlled by him is 10.25 % of the total share capital of the company. The company is managed by Mr. Ashish Dandekar as the Managing director under the supervision and control of the board. The company is fully under the control of Mr. Ashish Dandekar who alongwith his family and others in the promoter group hold 50.80% of the equity share capital of the company. Mr. Dilip D. Dandekar, the Chairman (Non-Executive) of the company alongwith his family members and companies controlled by him have decided to disassociate as promoter/promoter group of Camlin Fine Chemicals Ltd. (CFCL) vide their undertaking /confirmation document dated 15th December 2009. On account of de-merger the businesses have been separated and management has been restructured to facilitate independent operations and growth of the entities. The circumstances have lead to disassociation by Mr. Dilip D. Dandekar and the entities belonging to him as promoter/promoter group of CFCL. In terms of aforesaid letter /undertaking dated 15th December 2009, Mr. Dilip D. Dandekar alongwith his family members and companies controlled by him have decided to disassociate which will actualize the real situation and lead to administrative convenience of both the entities viz. Camlin Ltd. and CFCL into independent entities carrying out separate businesses.


71

In view of long standing association of Mr. Dilip D. Dandekar with the erstwhile fine chemical division of Camlin Ltd., he has consented to continue as non executive Chairman of CFCL. There has been no role played by him in day to day management of CFCL. However pursuant to the remuneration agreement dated 09/08/2008 entered into by the company with Mr. Dilip D. Dandekar Non- Executive Chairman of the company for a period of 3 years is continuing in terms of the said agreement remuneration for a period of 3 years between 01/09/2008 and 31/08/2011 is paid/ payable with the liberty to the Board of Directors/ Remuneration Committee to decide yearly quantum and periodicity of remuneration.


72

MANAGEMENT

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

Name, Age, Designation, Son of, Address,

Occupation and DIN

Date of Appointment/

re-appointment (Term period)

Qualification No of shares held

Experience, Remu-neration

Other Directorships

Mr. Dilip D.Dandekar (58 Years) Non Executive Chairman S/o. Mr. Digambar D. Dandekar Address: 6, Govind Sadan, Shivaji Park Road No. 4, Dadar, Mumbai- 400 028 Occupation: Business DIN: 00846901

03/06/2006 Appointed as

an Additional

director and confirmed at

the AGM held on 25th

July 2007 Appointment

through rotation

Government Commercial Diploma (G.C.D.)

89,420 39 yrs Rs.6.00 lacs p.a.

1. American Scholar Stationery (I) Pvt. Ltd.

2. CAFCO Consultants Ltd. 3. Camart Industries Ltd. 4. Camlin Alphakids Ltd. 5. Camlin International Ltd. 6. Camlin Ltd. 7. Camlin North America

Inc. 8. Chemolutions Chemicals

Ltd. 9. Colart Camlin Canvas Pvt.

Ltd. 10. DDI Consultants Pvt. Ltd. 11. Federation of Indian

Chambers of Commerce and Industry Ltd.

12. Indo Schottie Auto Parts Pvt. Ltd.

13. Nilmac Packaging Industries Ltd.

14. Triveni Pencils Ltd.

Mr. Ashish S. Dandekar (46 Years) Managing Director S/o. Mr. Subhash D. Dandekar Address: 13S, Regency Terrace, Plot No. 504, Junction of 17th Road, Khar (West), Mumbai- 400 052 Occupation: Business DIN: 01077379


an Additional Director on

and confirmed at

the AGM held on

25th July 2007

B.A. Economics and M.B.A

10,18,935 23 yrs Rs.44.12 lacs p.a.

1. Abana Medisys Pvt. Ltd. 2. Camart Industries Ltd. 3. Camlin International Ltd. 4. Camlin Ltd. 5. Chemolutions Chemicals

Ltd. 6. Fine Lifestyle Brands Ltd. 7. Fine Lifestyle Solutions

Ltd. 8. Fine Renewable Energy

Ltd. 9. Focussed Event

Management Pvt. Ltd. 10. Sangam Laboratories Ltd. 11. Vibha Agencies Pvt. Ltd.

Mr. Pramod M. Sapre (71 Years) Independent Director S/o. Mr. Madhav Sapre Address: 401 – Vaishali Aprt. 15/21, Janaki Kutir, Juhu,


an Additional


the AGM

B.Sc. Diploma in Marketing

2,100 46 yrs NIL


73

Name, Age, Designation, Son of, Address,

Occupation and DIN

Date of Appointment/

re-appointment (Term period)

Qualification No of shares held

Experience, Remu-neration

Other Directorships

Mumbai- 400 049 Occupation: Management Consultant DIN: 01972457

held on 25th July 2007

Appointment through rotation

Mr. Sharad M. Kulkarni (71 Years) Independent Director S/o. Mr. Madhav Kulkarni Address: Twin Towers, Prabhadevi, Mumbai- 400 025 Occupation: Management Consultant DIN: 00003640


an Additional




through rotation

B. E., Fellow of Institute of Management and Directors, U.K.

1000 43 yrs 1. Bayer CropScience Ltd. 2. Hindustan Construction

Co. Ltd. 3. JM Financial Trustee

Company Pvt. Ltd. 4. KEC International Ltd. 5. Ineos ABS (India) Ltd. 6. Lavasa Corporation Ltd. 7. Navin Fluorine

International Ltd. 8. Raychem RPG Ltd. 9. RPG Enterprises Ltd. 10. HCC Real Estate Ltd

Mr. Abeezar E. Faizullabhoy (45 Years) Independent Director S/o. Mr. E. A. Faizullabhoy Address: 41, Mereweather Road, Jaiji Mansion, Gr. Floor, Mumbai – 400 039 Occupation: Solicitor DIN: 00264422


an Additional




through rotation

B. Com. L.L.B.

1000 24 yrs 1. Messe Frankfurt Trade Fairs India Pvt. Ltd.

2. Panoramic Universal Ltd. 3. SOGEFI MNR Filtration

India Pvt Ltd 4. EMW Environmental

Technologies Pvt. Ltd. 5. NSA Security (India) Pvt

Ltd 6. Gravitational Network

Advisors (P) Ltd.

Mr. Bhargav A. Patel (46 Years) Independent Director S/o. Mr. Anilkumar P. Patel Address: Nariman Bldg. 1st Floor, M K Road, Nariman Point, Mumbai- 400 021 Occupation: Business DIN: 00318051


an Additional


the AGM held on 21st August 2009 Appointment

through rotation

Basic Degree (MBA from university of WashingtonD.C., USA)

NA 25 yrs 1. Peass Industrial Engineers Limited

2. Peass Export Limited 3. Peass Automation Limited 4. Peass Infrastructure

Private Limited 5. ARNO Enterprises Private

Limited 6. Poloroid Investments

Private Limited


74

The Brief details about the directors of CFCL are as follows: Mr. Dilip D. Dandekar, aged 58 years is Non- Executive Chairman of the Company since June 2006. He has done Government Commercial Diploma (GCD). He has an experience of 39 years in the field of marketing, administration and management. Mr. Ashish S. Dandekar, aged 46 years is Managing Director of the Company since 11th January 2007. He has done his Bachelors in Arts in Economics from India and Management Studies from Temple University, Philadelphia USA. He has an experience of 23 years in the field of pharmaceutical and fine chemical products of the Company including business planning, information system, research and development, product development, marketing and export. Mr. Pramod M. Sapre, aged 71 years is an Independent Director of the Company. He has done his Bachelor of Science from Bombay University. He is a consultant by profession and has over 46 years of experience in the field of sales and marketing of pharmaceutical products. In the past he was associated with Lupin Laboratories Ltd. for around 17 years. He is currently working as a Management Consultant to Kusum Healthcare Pvt. Ltd. Mr. Sharad M. Kulkarni, aged 71 years is an Independent Director of the Company. He has done Bachelor in engineering from University of Pune. He is a fellow of Institution of Management and Fellow of Institute of Directors, UK. He is a member of the American Society of Civil Engineers. He is also a member of Asia Pacific Advisory Board of Johnson Diversey Inc of USA. He is past president and current member of the Governing Board of Maharashtra Economic Development Corporation – MEDC an economic research and analysis wing created by various Chambers of Commerce in Mumbai. He has over 43 years of experience in Business Management. Mr. Abeezar E. Faizullabhoy, aged 45 years is an Independent Director of the Company. He is bachelor of Law from University of Mumbai and a solicitor from Bombay incorporated law society. He is currently a partner in J Sagar & Associates and his area of practice includes infrastructure & regulatory practice, Corporate commercial, litigation, alternate dispute resolution including arbitration and mergers and acquisitions. Mr. Bhargav A. Patel, aged 46 years, is an Independent Director of the Company. He is a MBA from Washington D.C. University, USA. He has an experience of 25 years in the field of engineering, textile machinery and leather industry. RELATIONSHIP AMONG DIRECTORS/ PROMOTER Mr. Dilip D. Dandekar is uncle of Mr. Ashish S. Dandekar. CHANGES IN BOARD OF DIRECTORS DURING THE LAST THREE YEARS The changes in the Board of Directors of the Company in the last three year are as under :

Name of Director Date of Appointment

Date of Cessation / Resignation

Mr. Ashish S. Dandekar 03/06/2006 -- Mr. Pramod M. Sapre 03/06/2006 -- Mr. Dilip D. Dandekar 03/06/2006 -- Mr. Deepak M. Dandekar 27/11/2006 10/01/2008 Mr. Shriram S. Dandekar 27/11/2006 21/01/2008 Mr. Abeezar E. Faizullabhoy 27/11/2006 -- Mr. Sharad M. Kulkarni 27/11/2006 -- Mr. Bhargav A Patel 08/01/2009 --


75

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

Compensation to Chairman and Managing Director: Mr. Dilip Dandekar is the Chairman of the Company and he is being paid salary of Rs. 6.00 lacs per annum pursuant to the Agreement dated August 09, 2008.

Mr. Ashish S. Dandekar is the Managing Director of the Company. He is being paid remuneration pursuant to the Agreement dated August 16, 2007 which is as follows:

Salary : Rs. 2,30,000 per month

HRA : 20% of monthly salary or rent free unfurnished accommodation

Perquisites and Allowances

: Perquisites and allowances such as gas, electricity, water, furnishings and repairs, medical reimbursement, leave travel concession for himself and his family, club fees, provision of car with driver, telephone/ fax facilities and benefits of personal accident insurance scheme and other perquisites and allowances in accordance with the Rules of the Company or as may be agreed by the Remuneration Committee/ Board of Directors payable to him and subject to the ceiling of Rs. 1.50 lacs per annum.

Commission : Commission will be paid in addition to Salary, HRA and perquisites and allowances with reference to the 5% of the net profit of the Company for a particular financial year subject to overall ceilings laid down under the provisions of section 198 and 309 of the Companies Act 1956.

Others : Provident Fund, Superannuation (if any) and Gratuity Fund payable to him as per the Rules of the Company

There are no service contracts entered into by the directors with CFCL providing for benefits upon termination of employment except with Mr. Ashish S. Dandekar and Mr. Dilip Dandekar. DETAILS OF BORROWING POWER Borrowing Power of the Board of Directors is Rs.200.00 Crores u/s 293 (1)(d) as per resolution passed by the members at the 17th Annual General Meeting of the Company held on 1st July 2010. INTEREST OF DIRECTORS All the Directors of the company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board and reimbursement of expenses. All the directors may also be deemed to be interested to the extent of equity shares, if any, already held by them and /or by their friends /relatives in the Company that may be subscribed for or allotted to them in the present offer and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares. All the directors may also be deemed to be interested to the extent of normal transactions, if any, with the company. The Directors may also be regarded as interested in the equity shares, if any, held or that may be allotted to the companies, firms and trust in which they are interested as directors, members, partners and or trustees. COMPENSATION OF THE DIRECTOR Remuneration is paid to Mr. Ashish S. Dandekar, Managing Director and Mr. Dilip D. Dandekar, Non Executive Director. No Remuneration is paid to any of the Non Executive Independent Directors.

Qualification shares There are no qualification shares.


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MANAGEMENT ORGANISATION STRUCTURE

Board of Directors

Mr. Ashish Dandekar

Managing Director

Mr. D. R. Puranik

Chief Financial Officer

Mr. Pradeep Dhotre

GM – Materials

Mr. Saumil Padhya

GM – Sales & Mktg.

Mr. Narayan Joshi

GM – Legal Company Secretary

Mr. Suren Adhikari

GM – Business Dvlpt.

Mr. Arjun Dukane

GM – Works

Mr. Mangesh Pandit

GM –Finance & A/c’s

Mrs. Leena Dandekar GM ‐ Systems

Mr. Gautam Satpute

GM – Sales & Mktg.(Industrial

Products)


77

CORPORATE GOVERNANCE The Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the listing agreement and circular no. SEBI/CFD/DIL/CG/2004/12/10 dated October 29, 2004 issued by Securities and Exchange Board of India (SEBI.) Company’s Philosophy and Code of Conduct for Corporate Governance: The Company’s philosophy of Corporate Governance is to conduct its business on the basis of ethical business value and maximize its value to all its stakeholders. The Company has inculcated a culture of transparency, accountability and integrity. The Company has already put in place systems and procedures and has complied with the revised Clause 49 of the Listing Agreement. Composition of Board of Directors: The Board of CFCL consists of six directors consisting of Non- Executive Chairman and four Independent Directors and a non- Independent Managing Director. The composition of various committees formed for the purpose of corporate governance is given below:- Audit Committee Constitution of Audit Committee The audit committee was constituted on 27/11/2006 and reconstituted on 08/01/2009. The audit committee consists of four non – executive directors as members. All the members of the Committee are Independent Directors.

Name of the Director Designation Status (Independent/Non-Independent& Executive/Non Executive

Mr. Sharad M. Kulkarni Chairman Independent & Non Executive Director Mr. Pramod M. Sapre Member Independent & Non Executive Director Mr. Abeezar E. Faizullabhoy Member Independent & Non Executive Director Mr. Bhargav A. Patel Member Independent & Non Executive Director

Terms of Reference

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

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

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

• To review the findings of the internal investigation and periodic audit reports. • To hold discussions with the external auditors about the scope of audit. • To recommend appointment/removal of statutory auditors and fixing their remuneration.


78

• To review all issues which are required to be reviewed by the audit committee pursuant to the listing agreement with the stock exchanges and the Companies Act, 1956 with the management and the internal and external auditors.

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

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

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

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

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

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

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

Agreement

Meetings of the Committee During the financial year 2009-2010, five meetings of the Audit Committee were held on the 13th April, 2009, 1st June, 2009, 29th July, 2009, 23rd October, 2009, and 21st January, 2010. Remuneration Committee Constitution of Committee The remuneration committee was constituted on 27/11/2006 and reconstituted on 08/01/2009. The remuneration committee consists of four non – executive directors as members. All the members of the Committee are Independent Directors.


Mr. Pramod M. Sapre Chairman Independent & Non Executive Director Mr. Sharad M. Kulkarni Member Independent & Non Executive Director Mr. Abeezar E. Faizullabhoy Member Independent & Non Executive Director Mr. Bhargav A. Patel Member Independent & Non Executive Director

Role of the Committee:- The main term of reference of the Committee is to approve the fixation/revision of remuneration of the Managing Director/Whole Time Director of the Company and while approving:


79

• To take into account the financial position of the Company, trend in the industry, appointee’s qualification, experience, past performance, past remuneration etc.

• To bring out objectivity in determining the remuneration package while striking a balance between the interest of the Company and the Shareholders.

Meetings of the Committee No meeting was held during the financial year 2009-2010. Shareholders/ Investor Grievance Committee: The Shareholders/Investors Grievance Committee was constituted on 27th November, 2006 and reconstituted on 21st January 2008. The shareholders/ investor grievance committee consists of three non – executive directors and an executive director as members.


Mr. Abeezar E. Faizullabhoy Chairman Independent & Non Executive Director Mr. Dilip D. Dandekar Member Non- Independent & Non Executive Director Mr. Ashish S. Dandekar Member Non- Independent & Executive Director

The Board has designated Mr. N. R. Joshi, Company Secretary as the Compliance Officer. Complaints received and redressed by the Company during the financial year During the year under review, sixteen complaints of general nature were received from the shareholders which were attended promptly and replied / resolved to the satisfaction of the concerned shareholders. There were no pending complaints at the close of the financial year. Role of the Committee:- The main role of the Shareholders/Investors Grievance committee is to look into the redressal of Shareholders and Investors complaints concerning transfer of shares, non receipt of Annual Reports, and non receipt of Dividend etc. Meetings of the Committee During the financial year 2009-2010, four meetings were held on 1st June, 2009, 21st August, 2009, 23rd October, 2009 and 21st January, 2010.


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DETAILS OF KEY MANAGERIAL PERSONNEL

Our Company is managed by Board of Directors, assisted by qualified employees/professionals, with vast experience in the field of production/research & development/engineering/distribution/marketing/finance and corporate laws. Following are the key functionaries in different functions of our Company excluding the promoters/directors of the Company: Sr. No.

Name & Designation Age (Year

s)

Date of

appointment

Qualifications Number of shares held

Experience in the Company

and (Total Experience)

Previous Companies

1. Mr. Dattatraya Puranik Chief Financial Officer

57 19-06-2008 B.Com. /FICWA /

CMA (Australia) /

MBA -Finance (JBIMS)

1000 1.3 years (29 years)

Calyx Chemicals & Pharmaceuticals Ltd.

2. Mr. Saumil Padhya General Manager - Sales & Marketing

41 21-01-1997 M. Pharm. / P.G. D.B.M.

1500 12.7 years (15 years)

Camlin Limited

3. Mr. Pradeep Dhotre General Manager - Materials

56 02-10-1997 B. Com. / P.G. D.B.M.

1100 12 years (39 years)

Hico Products Limited

4. Mr. Narayan Joshi Company Secretary General Manager - Legal

53 05-02-2007 B. Com. LL.B / A. C. S.


Indoco Remedies Ltd.

5. Mr. Mangesh Pandit General Manager – Accounts & Finance

48 21-05-1984 B. Com. 600 25.4 years (26 years)

Camlin Ltd

6 Mr. Suren Adhikari General Manager – Business Development

49 12-06-2007 B.Com./D.SM & DMM


Blueshield Pvt Ltd

7 Mrs. Leena Dandekar General Manager – Systems

40 01-07-2009 B.A. / M.M.S. (Finance)

357660 0.5 years (22 years)

Liva Pharma Limited

8 Mr. Arjun Dukane GM-Works

44 01/02/2006 Dipl. In chemical Engg.

1000 3.10 years (22 years)

Sunshield Chemicals ltd

9 Mr. Gautam Satpute General Manager - Sales & Marketing

39 08/03/2010 D.B.M/B.E -- 4 months (10 years)

SABIC (Saudia Arabia), SPAN OVERSEAS (Pune)

All the above mentioned key managerial personnel are permanent employees of our Company. The remuneration of each of key managerial personnel includes salary, Ex-Gratia, Company’s contribution to Provident Fund, Leave Travel Allowance/Concession, Medical Expenses and value of other facilities inclusive of accommodation as may be applicable in each case. Our Company has not offered any profit sharing plan to its Key Managerial Personnel.


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As on date there are 196 employees in the company. RELATIONSHIP AMONG THE KEY MANAGERIAL PERSONNEL

Mrs. Leena A Dandekar is related to Mr. Ashish S Dandekar as his wife. There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any of the key managerial personnel, was selected as a director or member of senior management.

There is no compensation paid pursuant to a bonus or profit sharing plan, upon which the key management personnel participate in the plan.

PAYMENT OR BENEFIT (NON-SALARY RELATED) TO OFFICERS OF OUR COMPANY Except as stated in this Letter of Offer, no amount or benefit has been paid or given or is intended to be paid or given during the preceding two years to any of its officers except for the normal remuneration paid to officers or employees since the incorporation of our Company.

CHANGES IN KEY MANAGERIAL PERSONNEL IN THE LAST THREE YEARS

Name Date of Appointment

Date of resignation

Mr. D.R. Puranik 19-06-2008 -- Mr. Narayan Joshi 05-02-2007 -- Mr. Suren Adhikari 12-06-2007 -- Ms. Leena Dandekar 01-07-2009 -- Mr. Gautam Satpute 08-03-2010 -- Mr. Arun Kumar Sharma - 20/11/2007 Mr .M. N. Rajadhyaksha - 29/02/2008 Mr. Pankaj Aggarwal - 08/07/2008 Mr. A. S. Shirwaikar - 20/10/2008 (Retired) Mr. Amar Jadhavrao - 31/12/2008

EMPLOYEE STOCK OPTION SCHEMES

The company introduced Employees Stock Option Scheme/Employee Stock Purchase Scheme and the details of the same are as follows: At the 15th Annual General Meeting of the Company held on 8th August 2008, members had accorded approval for introduction of ESOP Scheme to the Employees/Directors of the Company under the CAMLIN FINE CHEMICALS EMPLOYEES’ STOCK OPTION SCHEME, 2008” ESOP 2008). The options were granted to the employees/directors in accordance with the Securities and Exchange Board of India(Employees’ Stock Option Scheme and Employees’ Stock Purchase Scheme) Guidelines 1999 (“the SEBI Guidelines”).

The salient features of the Scheme are follows:

1. Total number of options granted

: 2,90,000 Equity shares of Rs.10/- each

2. Eligibility : All permanent employees of the Company and its subsidiary Companies including directors but excluding promoters of the Company would be entitled to be granted stock options under the ESOP 2008 Scheme.


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3. Transferability : The stock options granted to the employees/directors will not be transferred to any person etc

4. Vesting period : The options would vest not earlier than one year but not later than five years from the date of grant of options. 1st Year after the grant of options 10% 2nd Year after the grant of options 15% 3rd Year after the grant of options 20% 4th Year after the grant of options 25% 5th Year after the grant of options 30%


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PROMOTERS

Mr. Ashish S. Dandekar, aged 46 years is Managing Director of the Company since 2007. He has done his Bachelors in Arts in Economics from India and Management Studies from Temple University, Philadelphia, USA. He has an experience of 23 years in the field of pharmaceutical and fine chemical products of the Company including business planning, information system, research and development, product development, marketing and export. Driving License MH02 200900005009

Voter Identification Number MT/08/036/000484 We confirm that the Permanent Account Number, Bank Account Number, Passport Number have been submitted to the Stock Exchange at the time of filing of the Draft Letter of Offer. Further, the Promoters have not been detained as wilful defaulters by the Reserve Bank of India or any other Government authority and there are no violations of securities laws committed by the Promoters in the past or any such proceedings are pending against the Promoters. COMMON PURSUITS The Associate Companies are carrying on separate businesses and there is no conflict of interest situation except certain related party transaction mentioned on page no. 127 and page no. 140. INTEREST OF DIRECTORS All the Directors may be deemed to be interested to the extent of Remuneration and reimbursement of expenses, if any, payable to them. The Directors may also be deemed to be interested to the extent of the shares, if any, held by them or by the relatives or by firms or companies of which any of them is a partner and a Director/ Member respectively and the shares if any, out of the present Offer that may be subscribed for and allotted to them or their relatives or any Company in which they are Directors / members or firms in which they are partners. PAYMENT OF BENEFIT TO PROMOTER Other than the salary and remuneration of our Promoter, dividend, if any declared by the Company on shares held by him, there are no payment or benefit to promoter of the Company.


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SUBSIDIARIES /GROUP COMPANIES

SUBSIDIARIES 1. CHEMOLUTIONS CHEMICALS LIMITED (CCL)

Chemolutions Chemicals Limited was incorporated on 24th March 2008 with Registrar of Companies; Maharashtra - Mumbai. The registered office of the company is at Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093India. Registration No. of the company is 180376 and the CIN Number U24100MH2008PLC180376. The Company is engaged into the business of manufacturing, outsourcing, selling, importing, exporting and dealing in all types of chemicals including drugs, drug intermediates, specialty and fine chemicals.

Board of Directors 1. Mr. Dilip D. Dandekar 2. Mr. Ashish S. Dandekar 3. Mr. Christopher G. Bluemel 4. Mr. Nirmal V. Momaya 5. Mr. Bhargav A. Patel 6. Mr. Jayant H. Ranade

The Shareholding pattern of CCL as on 30th June 2010 is as follows:

Sr. No

Category No. of shares held of Rs. 10/- each

% of total share capital

1 Camlin Fine Chemicals Ltd 2,55,000 68.00 2 Vibha Agencies Pvt. Ltd. 70,000 18.67 3 Pagoda Advisors Pvt. Ltd 50,000 13.33 Grand Total 3,75,000 100.00

Audited Financials

(Rs. In Lacs.) Particulars Financial Year

ended 31/03/10 (12months)

2008-09* (3 months)

Equity Share Capital 37.50 37.50 Income 1626.83 137.36 Other Income 31.09 0.67 Total Income 1657.92 138.03 Profit After Tax (132.06) (27.66) Earnings Per Share (Rs.) (Face ValueRs.10) (35.21) (11.90) Net Asset Value (NAV) (Rs.) NA 2.62

*Note: The figures are from March 24, 2008 to March 31, 2009 Chemolutions Chemicals Ltd has not made any public issue in the past. CCL is not a Sick Industrial Company within the meaning of the SICA.


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2. SANGAM LABORATORIES LIMITED (SLL)

Sangam Laboratories Limited was originally incorporated on 20th January 1994 as Sangam Laboratories Private Limited under the Companies Act, 1956; the name of the company was changed to Sangam Laboratories Limited vide certificate dated 22nd February 2008 issued by Registrar of Companies, Maharashtra - Mumbai.

The registered office of the company is at Sangam Laboratories Limited, Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093, India. Registration No. of the company is 076168 and the CIN Number U24230MH1994PLC076168.

The Company is engaged in business of manufacture , refine, import, export, buy, sell and deal in basic drugs, drugs intermediates, any other drugs, medicines and chemicals, pharma-ceuticals, herbal, bacteriological and biological products.

Board of Directors 1. Mr. Ashish S. Dandekar 2. Mr. Jayant H Ranade 3. Mr. Shrikant M Parchure 4. Mr. Vidyadhar S Sawant 5. Mr. Surendar S. Adhikari

The Shareholding pattern of SLL as on 30th June 2010 is as follows:

Sr. No



1 Camlin Fine Chemicals Ltd 25,10,000 91.28 2 Shrikant M Parchure 1,20,000 4.36 3 Vidyadhar S Sawant 1,20,000 4.36 Grand Total 27,50,000 100.00

Audited Financials (Rs. In Lacs.)

Particulars Financial Year Ended 31st March 2009-10 2008-09 2007-08

Equity Share Capital 275.00 120.00 60.00 Share application money - - 14.45 Income 110.00 187.42 96.68 Processing charges 7.34 14.00 17.05 Other Income 2.74 0.54 0.04 Total Income 120.08 201.96 113.77 Profit After Tax (113.00) (35.31) (27.83) Earnings Per Share (Rs.) (Face Value Rs.10)

(8.51) (4.30) (13.97)

Net Asset Value (NAV) (Rs.) 2.75 2.8 1.48 SLL has not made any public issue in the past. SLL is not a Sick Industrial Company within the meaning of the SICA.

3. FINE LIFESTYLE BRANDS LIMITED (FLBL)

Fine Lifestyle Brands Limited was incorporated on 01 September, 2008 with Registrar of Companies, Maharashtra - Mumbai. The Registration No. of the company is 186375 and the CIN Number U51311MH2008PLC186375.


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The registered office is situated at Fine Lifestyle Brands Limited, Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093, India. The Company is engaged in business of wholesalers, retailers, agents, importers, exporters, dealers & distribution of branded, lifestyle, luxury, designer and fashionable articles and goods including apparels, readymade garments, textile products, perfumes, cosmetics, leather goods, jewelry, jewelry articles and watches and other luxury goods, products & services and to appoint franchisees and also undertake online and catalogue sale.

Board of Directors 1. Mr. Ashish S. Dandekar 2. Mr. Nirmal V Momaya 3. Mr. Manoj Jain

The Shareholding pattern of FLBL as on 30th June 2010 is as follows:

Sr. No



1 Camlin Fine Chemicals Ltd 2,55,000 51.00 2 Manoj Jain 1,22,500 24.50 3 Pagoda Advisors Pvt. Ltd. 1,22,500 24.50 Grand Total 5,00,000 100.00


Particulars Financial Year ended 31/03/10

(12months)

2008-09* (6 months)

Equity Share Capital 50.00 37.75 Income 4.65 Nil Other Income 0.75 Nil Total Income 5.40 Nil Profit After Tax (33.59) 7.19 Earnings Per Share (Rs.) (Face value Rs.10) (8.89) (1.9) Net Asset Value (NAV) (Rs.) 1.84 8.09 * Note: The figures are from September 01, 2008 to March 31, 2009

FLBL has not made any public issue in the past. FLBL is not a Sick Industrial Company within the meaning of the SICA.

4. FINE LIFESTYLE SOLUTIONS LIMITED (FLSL)

Fine Lifestyle Solutions Limited was incorporated on 1st June 2009 with Registrar of Companies, Maharashtra - Mumbai. Registration No. of the company is 192894 and the CIN Number is U31401MH2009PLC192894. The Company is the subsidiary of FLBL. The registered office situated at Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093. FLSL is involved in the business of manufacturer, trader and dealer in all types of consumer durables including electronic goods, electrical and bathroom fitting and wall papers etc.


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Board of Directors Mr. Ashish S Dandekar Mr.Nirmal Momaya Mr.Manoj Jain Mr.Sunil Subramaniam

The Shareholding pattern of FLSL as on 30th June 2010 is as follows:

Sr. No



1 Fine Lifestyle Brands Limited 37,500 75.00 2 Sunil Subramanian 12,500 25.00 Grand Total 50,000 100.00


Particulars 2009-10* Equity Share Capital 5.00 Income 6.15 Other Income 0.04 Total Income 6.19 Profit After Tax (5.37) Earnings Per Share (Rs.) (Face valueRs.10) (10.73) Net Asset Value (NAV) (Rs.) NA

* Note: The figures are from June 01, 2009 to March 31, 2010 FLSL has not made any capital issue during last three years. FLSL is not a Sick Industrial Company within the meaning of the SICA.

5. FINE RENEWABLE ENERGY LIMITED (FREL)

Fine Renewable Energy Limited was incorporated on 28th January 2009 with the Registrar of Companies, Maharashtra - Mumbai with Registration number as U31400MH2009PLC189936. FREL has its registered office situated at Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093. The Company is the subsidiary of CFCL. FREL is involved in the business of renewable energy generated through windmills, solar panels, micro hydro, Bio-mass and other renewable resources etc.

Board of Directors 1. Mr. Ashish S. Dandekar 2. Mr. Nirmal V Momaya 3. Mr. Vidyadhar K Joshi 4. Mr. D. R. Puranik

The Shareholding pattern of FREL as on 30th June 2010 is as follows:

Sr. No



1 Camlin Fine Chemicals Ltd 51,000 77.27 2 Pagoda Advisors Pvt. Ltd. 15,000 22.63 Grand Total 66,000 100.00


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Particulars 2009-10* Equity Share Capital 6.60 Income 50.98 Other Income 0.30 Total Income 51.28 Profit After Tax (13.49) Earnings Per Share (Rs.) (Face ValueRs.10)

(20.43)

Net Asset Value (NAV) (Rs.) NA * Note: The figures are from January 28, 2009 to March 31, 2010. The company has not drawn financials for year ended 31/03/2009 as there was no business activity during the period since incorporation.

FREL has not made any public issue during the past. FREL is not a Sick Industrial Company within the meaning of the SICA.

6. Dulcette Technologies LLC (DLT)

Dulcette Technologies LLC was incorporated on 13th March, 2007 in USA. The company is engaged in the business of marketing and selling Sucralose and other sweeteners, both natural and synthetic and any other combinations of sweeteners with or without Sucralose. The initial capital contribution of the company is USD 3,00,000. The place of business of the company is at c/o Moritt Hock Hamroff & Horowitz, LLP, 400 Garden City Plaza, Garden City , New York - 11530 The Managers of the company are:

Managers 1. Mr. Ashish S. Dandekar 2. Mr. Mel Blum

The Shareholding pattern of DLT as on 30th June 2010 is as follows:

Sr. No

Category Member’s share in Initial Capital

Contribution held (Amount in USD) each


1 M/s. Camlin Fine Chemicals Ltd. 1,53,000 51.00 2 M/s. Viachem Ltd. 1,47,000 49.00 Grand Total 3,00,000 100.00

Audited Financials (Rs.In Lacs.)


Share Capital 52.43 52.43 40.61 Income 25.28 36.15 1.04 Other Income 0.00 0.00 0.00 Total Income 25.28 36.15 1.04


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Profit for the year (22.61) (27.26) (23.65) Earnings Per Share (Rs.) (Face ValueRs.10)

NA NA NA

Net Asset Value (NAV) (Rs.) NA NA NA Financial figures are mentioned in Indian Rupees on conversion at applicable rate for United States dollar in terms of Indian Accounting Standard 11.

DLT has not made any public issue in the past. DLT is not a Sick Industrial Company within the meaning of the SICA.


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GROUP COMPANIES 7. ABANA MEDISYS PRIVATE LIMITED (AMPL) Abana Medisys Private Limited was incorporated on 26 September, 2007 with Registrar of Companies Maharashtra - Mumbai. Registration No. of the company is 174524 and the CIN Number U33100MH2007PTC174524. The registered office is situated at Abana Medisys Private Limited, Plot no. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Central Road, Andheri (East), Mumbai 400 093, India. The Company is engaged in business of manufacturers, producers, processors, exporters, importers, distributors, traders, merchants, dealers, representatives, buyers, sellers, wholesalers, retailers, suppliers, stockiest and otherwise dealers in all kinds of medical equipments, machineries, consumables and spares, medical apparatuses and all medicinal products.

Board of Directors 1. Mr. Ashish S. Dandekar

2. Mr. Nirmal Vinod Momaya The Shareholding pattern of AMPL as on 30th June 2010 is as follows:

Sr. No



1 Mr. Ashish S. Dandekar 9,000 90.00 2 Mr. Nirmal Vinod Momaya 1,000 10.00 Grand Total 10,000 100.00



Equity Share Capital 1.00 1.00 1.00 Share application money - - 0.35 Income Nil Nil Nil Other Income Nil Nil Nil Total Income Nil Nil Nil Profit After Tax (9.94) (4.34) (2.93) Earnings Per Share (Rs.) (Face value Rs.10) (99.41) (43.50) (29.33) Net Asset Value (NAV) (Rs.) NA NA NA

AMPL has not made any public issue during the past. AMPL is not a Sick Industrial Company within the meaning of the SICA.

8. VIBHA AGENCIES PRIVATE LIMITED (VAPL)

Vibha Agencies Private Limited was incorporated on 27 February, 1997 with Registrar of Companies, Maharashtra - Mumbai. The registration No. of the company is 106193 and the CIN Number U51900MH1997PTC106193. The registered office is situated at 13S Regency Terraces, Junction of 17th Road, Off Chitrakar Dhurandhar Marg, Khar West Mumbai 400050.


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The Company is engaged in business of agency and manufacturer’s representatives, to act as agents of sellers, importers, exporters, general traders, and to act as selling and purchasing agents, commission agents, brokers’, intermediaries for any government, semi-government or autonomous body or any organization in the private or public sector in India or any part of world.

Board of Directors 1. Mr. Ashish S. Dandekar 2. Mrs. Leena A. Dandekar

The Shareholding pattern of VAPL as on 30th June 2010 is as follows:

Sr. No



1 Mr. Ashish Dandekar 10,020 83.22 2 Ms. Leena Dandekar 20 0.16 3 Ms. Abha Dandekar 1,000 8.31 4 Mr. Vivek Dandekar 1,000 8.31 Grand Total 12,040 100.00

Audited Financials

(In Lacs.) Particulars Financial Year Ended 31st March

2009-10 2008-09 2007-08 Equity Share Capital 1.20 1.20 1.20 Reserves & Surplus 670.95 716.00 719.66 Sales and other income 16.62 21.70 877.04 Total Income 16.62 21.70 877.04 Profit After Tax (45.04) (3.66) 692.50 Earnings Per Share (Rs.) (Face Value Rs.10) (374.16) (30.37) 5751.69 Net Asset Value (NAV) (Rs.) 5582.68 5956.86 5987.23

VAPL has not made any public issue in the past. VAPL is not a Sick Industrial Company within the meaning of the SICA.

9. FOCUSSED EVENT MANAGEMENT PRIVATE LIMITED (FEMPL)

Focussed Event Management Private Limited was incorporated on 31 March 2005 with Registrar of Companies, Maharashtra - Mumbai. Registration No. of the company is 152311 and the CIN Number U92140MH2005PTC152311. The Company is engaged in business of managing, holding and arranging all kinds of commercial, industrial, culture, social and household exhibitions, conferences, seminars and road shows in India and abroad, to publish directories, souvenirs and magazines in relation thereto, undertake decoration, furnishing, arrangements and make all necessary arrangements and provide services in connection thereto. The registered office is situated at 3/303, Garden Estate, Off. Pokhran Road No. 2, Kapurbawdi, Thane 400 601.

Board of Directors 1. Mr. Ashish S. Dandekar 2. Mr. Sameerkumar Sharad Khedkar


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The Shareholding pattern of FEMPL as on 30th June 2010 is as follows:

Sr. No



1 M/s.Vibha Agencies Pvt. Ltd. 9,000 45.00 2 Mr. Sameer Khedkar 10,000 50.00 3 Mr. Ashish S. Dandekar 1,000 5.00 Grand Total 20,000 100.00

Audited Financials (In Lacs.)


Equity Share Capital 2.00 2.00 2.00 Reserves & Surplus 7.20 0.89 (24.37) Income 78.81 105.35 - Other Income 2.72 5.06 0.23 Total Income 81.53 110.41 0.23 Profit After Tax 6.30 25.27 (18.09) Earnings Per Share (Rs.) (Face Value Rs.10) 31.51 126.35 (90.46) Net Asset Value (NAV) (Rs.) 46.00 14.49 (111.86)

FEMPL has not made any public issue in the past. FEMPL is not a Sick Industrial Company within the meaning of the SICA.

10. CAFCO CONSULTANTS LIMITED (Cafco)

Company was initially incorporated on 20th March, 1987 by the name Camlin (Art) Investments & Finance Company Private Limited with the Registrar of Companies, Maharashtra – Mumbai. The CIN of the company is U67120MH1987PLC042944. The name of the Company was changed to Cafco Consultants Private Limited by Certificate of Incorporation dated 2nd March, 2001. The name of the Company was further changed to Cafco Consultants Limited vide Certificate of Incorporation dated 28th February, 2002. The registered office is situated at Hilton House, Central Road, Andheri East Mumbai -400093. The company is engaged in the business of clearing and forwarding Agents, Licensing Agents, Commission Agents and all types of Agency business.

Board of Directors 1. Mr. Subhash D Dandekar

2. Mr. Dilip Digambar Dandekar 3. Mr. Chandrashekar Trimbak Dandekar


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The Shareholding pattern of Cafco as on 30th June 2010 is as follows:

Name of the shareholder No. of shares of

Rs.100/- each % Mr. S.D.Dandekar 502 7.56 Mr. D. D. Dandekar 960 14.45 Mrs. R S Dandekar 300 4.52 Mr. A. S. Dandekar 261 3.93 Ms. Anagha Dandekar 52 0.78 Mr. D. D. Dandekar (HUF) 720 10.84 Ms. K. D. Dandekar 11 0.17 Ms. A.D.Dandekar 11 0.17 Mr. R.D.Dandekar 1613 24.28 Mr. S. D. Dandekar (Mr. Digambar P Dandekar -HUF) 10 0.15 Mr. S. D. Dandekar (Mr. Subhash D Dandekar-HUF) 200 3.01 Ms. Leena A Dandekar 2002 30.14

TOTAL 6642 100.00 Audited Financials

(Rs. in lacs) Particulars Financial Year Ended 31st March

2009-10 2008-09 2007-08 Capital 6.64 6.64 6.64 Reserves 19.99 18.26 16.19 Total Assets 26.63 24.90 22.83 Total Liabilities 26.63 24.90 22.83 Details of Investments 11.73 11.73 12.24 Turnover (Other Income) 6.34 4.76 3.53 Profit/ (Loss) Before Taxation 5.91 4.54 3.01 Provision For Taxation 0.30 0.14 NIL Profit/ (Loss) After Taxation 5.61 4.40 3.01 Proposed Dividend 3.32 1.99 1.66

Cafco has not made any capital issue during last three years. Cafco is not a Sick Industrial Company within the meaning of the SICA.

11. CAMART INDUSTRIES LTD. (Camart)

The Company was originally incorporated on 17th August, 1992 by the name Camart Investments Limited with Registrar of Companies, Maharashtra – Mumbai. The CIN of the company is U67120MH1992PLC068181. The name of the Company was changed from Camart Investments Limited to Camart Agencies Limited vide fresh Certificate of Incorporation dated 29th December, 1999. The name of the Company was further changed from Camart Agencies Limited to Camart Industries Limited vide Certificate of Incorporation dated 12th April, 2007. The company is engaged in the business of carrying on work on job work basis.


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The registered office is situated at Hilton House, Central Road, Andheri East Mumbai 400093.

Board of Directors 1. Mr. Ashish S Dandekar 2. Mr. Dilip D Dandekar 3. Mr. Chandrashekar T Dandekar 4. Mr. Narendra G Kane

Shareholding pattern

The Shareholding pattern of Camart as on 30th June 2010 is as follows:

Name of the shareholder No. of shares of

Rs.100/- each % Mr. S.D.Dandekar 551 5.50 Mr. D. D. Dandekar 4101 40.98 Mrs. R S Dandekar 1151 11.50 Mr. A. S. Dandekar 1061 10.60 Ms. Anagha Dandekar 670 6.70 Ms. K. D. Dandekar 10 0.10 Ms. A.D.Dandekar 10 0.10 Mr. R.D.Dandekar 31 0.31 Mr. S. D. Dandekar (Mr. Digambar P Dandekar -HUF) 500 5.00 Mr. S. D. Dandekar (Mr. Subhash D Dandekar-HUF) 700 7.00 Ms. Leena A Dandekar 621 6.20 M/s.DDI Consultants Pvt Ltd 600 6.00 Mr. J .H. Ranade 1 0.01 TOTAL 10007 100.00

Audited Financials (Rs. in lacs)


Capital 10.01 10.01 10.01 Reserves 164.74 151.23 125.25 Total Assets 177.53 169.36 140.52 Total Liabilities 177.53 169.36 140.52 Details of Investments 103.75 103.49 103.76 Turnover 32.84 51.43 45.14 Profit/ (Loss) Before Taxation 22.14 35.62 24.42 Prior Year Adjustment 0.62 - - Provision For Taxation 2.15 6.13 35.68 Profit/ (Loss) After Taxation 19.37 29.49 (11.27) Proposed Dividend 5.00 3.00 NIL Camart has not made any public issue in the past. Camart is not a Sick Industrial Company within the meaning of the SICA.


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Litigation There are no outstanding litigations against subsidiaries/ group companies as on date of the offer document. COMPANY/FIRM FROM WHICH THE PROMOTERS HAVE DISASSOCIATED THEMSELVES DURING PRECEDING THREE YEARS The fine chemical division of Camlin Ltd. was de-merged into CFCL, the resultant company in terms of scheme of arrangement sanctioned by the Hon’ble Bombay High Court on 17/11/2006. Pursuant to the said scheme of arrangement, each member/shareholder of Camlin Ltd. holding 1 fully paid up equity share of Camlin Ltd. was allotted 1 fully paid up equity share of CFCL. CFCL is managed under the control of Mr. Ashish S. Dandekar as the Managing Director & majority shareholder of CFCL. Mr. Dilip D Dandekar has been the Chairman of Camlin Limited and when Camlin Fine Chemicals Limited came into existence as a result of the demerger, he continued to be the Non-Executive Chairman of CFCL. At the time of issuance of equity shares on implementing the scheme of de-merger Mr. Dilip D Dandekar alongwith his family members, companies/ entities controlled by him was allotted 6,05,750 equity shares of Rs.10/- each in CFCL. The total share holding of Mr. Dilip D. Dandekar and his family as well as the companies controlled by him is 10.25 % of the total share capital of the company. The company is managed by Mr. Ashish Dandekar as the Managing director under the supervision and control of the board. The company is fully under the control of Mr. Ashish Dandekar who alongwith his family and others in the promoter group hold 50.80% of the equity share capital of the company. Mr. Dilip D. Dandekar, the Chairman (Non-Executive) of the company alongwith his family members and companies controlled by him have decided to disassociate as promoter/promoter group of Camlin Fine Chemicals Ltd. (CFCL) vide their undertaking /confirmation document dated 15th December 2009. On account of de-merger the businesses have been separated and management has been restructured to facilitate independent operations and growth of the entities. The circumstances have lead to disassociation by Mr. Dilip D. Dandekar and the entities belonging to him as promoter/promoter group of CFCL. In terms of aforesaid letter /undertaking dated 15th December 2009, Mr. Dilip D. Dandekar alongwith his family members and companies controlled by him have decided to disassociate which will actualize the real situation and lead to administrative convenience of both the entities viz. Camlin Ltd. and CFCL into independent entities carrying out separate businesses. In view of long standing association of Mr. Dilip D. Dandekar with the erstwhile fine chemical division of Camlin Ltd., he has consented to continue as non executive Chairman of CFCL. There has been no role played by him in day to day management of CFCL. However pursuant to the remuneration agreement dated 09/08/2008 entered into by the company with Mr. Dilip D. Dandekar Non- Executive Chairman of the company for a period of 3 years is continuing in terms of the said agreement remuneration for a period of 3 years between 01/09/2008 and 31/08/2011


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is paid/ payable with the liberty to the Board of Directors/ Remuneration Committee to decide yearly quantum and periodicity of remuneration. RELATED PARTY TRANSACTIONS For details of Related Party Transaction please refer to details given under the section titled “Related Party Transactions” on page 127 on (standalone basis) and page 140 on (consolidated basis) of this Letter of Offer.

DEFUNCT GROUP COMPANIES None of the group companies are defunct.


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DIVIDEND POLICY

The declaration and payment of Dividends will be recommended by the Board of Directors and shall be approved by the shareholders at their discretion and will depend on a number of factors including but not limited to profits, capital requirement and overall financial condition. The Board may also from time to time declare and pay interim dividends. The Company has declared dividend for the last 3 years and the details of the same are as under:

Financial Year Dividend paid 2010 20% 2009 15% 2008 10%


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PART II SECTION IV - FINANCIAL INFORMATION

AUDITORS’ REPORT

Auditors’ Report as required by Part II of Schedule II of the Companies Act, 1956

_____________________________________________________________________________________ To, The Board of Directors, Camlin Fine Chemicals Limited Plot no. F 11 - 12 WICEL, Opp. SEEPZ Main Gate Central Road, Andheri (E) Mumbai Dear Sirs,

1. We have examined the Financial Information of CAMLIN FINE CHEMICALS LIMITED (the Company) annexed to this report for the purpose of inclusion in the Letter of Offer. The said Financial Information has been prepared by the Company in accordance with the requirements of paragraph B (1) of Part-II of Schedule II to the Companies Act, 1956 (‘the Act’), the Securities and Exchange Board of India (“SEBI”) - (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended from time to time, issued by the Securities and Exchange Board of India in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992 and related clarification and in accordance with the terms of our engagement letter dated 03/12/2009 issued in connection with its Proposed Rights Issue of equity shares. The Financial Information has been prepared by the Company and approved by the Board of Directors.

2. Financial Information as per the Audited Financial Statements a) We have examined the attached ‘Statement of Assets and Liabilities’ of the Company as at 31st March 2010, 31st March 2009, 31st March 2008, 31st March 2007 and 31st March 2006 (Annexure I), ‘Statement of Profits and Losses’ (Annexure II) and ‘Statement of Cash Flows’ for the financial year ended on 31st March 2010, 31st March 2009, 31st March 2008, 31st March 2007 and 31st March 2006 (Annexure III) together referred to as ‘Summary Statements’. These Summary Statements have been extracted from the financial statements for the year ended 31st March 2010 and each of the years ended 31st March 2009, 31st March 2008, 31st March 2007 and 31st March 2006 adopted by the Board of Directors for those respective years. Audit for the financial year ended 31st March 2006 was conducted by previous auditors, M.S.Kshirsagar & Co, and accordingly reliance has been placed on the financial information examined by them for the said years. The financial report included for the financial year 31st March 2006 is based solely on the report submitted by them and relied upon by us. The Financial statements of the Company for the year ended 31st March 2010 have been approved by the Board of Directors of the Company, adopted by the shareholders of the Company and audited by us. The financial statements and details included in this report are based on Audited Accounts of the company for the purpose of disclosure in the Letter of offer being issued by the Company in connection with the Proposed Issue of Equity Shares on a Rights Basis. b) Based on our examination of these Summary Statements, we state that:


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i) The ‘Summary Statements’ have to be read in conjunction with the Significant Accounting Polices and Notes to Accounts given in Annexure IV ii) The profits have been arrived at after charging all expenses including depreciation and after making such adjustment and regroupings as in our opinion are appropriate in the year to which they relate. iii) The accounts as given in the enclosed statements do not require any restatement since:

1. There have been no adjustments for the changes in accounting polices retrospectively in respective financial years.

2. There have been no adjustments for the material amounts in the respective financial years to which they relate.

iv) The Profit & Loss account as given in the enclosed statements have been re-stated only in respect of financial year 31/03/2007 on account of extra ordinary items as mentioned at item no (iv) of Notes to Accounts forming part of Annexure IV during the said financial year. The extra ordinary item is disclosed separately in the summary profits & loss statement.

3. Other Financial Information We have examined the following information as at and for the year ended 31st March 2010, 31st March 2009, 31st March 2008, 31st March 2007 and 31st March 2006 of the Company, proposed to be included in the Letter of Offer as approved by the Board of Directors and annexed to this report: a) Annexure V contains details of Secured Loans b) Annexure VI contains details of Unsecured Loans c) Annexure VII contains details of Debtors d) Annexure VIII contains details of Loans and Advances e) Annexure IX contains statement of Investments f) Annexure X contains statement of Other Income g) Annexure XI contains details of Dividend paid h) Annexure XII contains statement of Tax Shelter i) Annexure XIII contains statement of Accounting Ratios j) Annexure XIV contains statement of Capitalisation k) Annexure XV contains statement of Related Party Transactions l) Annexure XVI Consolidated Summary Statement of Assets and Liabilities m) Annexure XVII Consolidated Summary Statement of Profit and Losses n) Annexure XVIII Consolidated Cash Flow Statement o) Annexure XIX Significant Accounting Policies and the Notes on the Consolidated Financial Information

4. In our opinion, the ‘Financial Information as per Audited Financial Statements’ and ‘Other Financial Information’ mentioned above read with Significant Accounting Policies and Notes to Accounts appearing in Annexure IV as at and for each of the years ended 31st March 2010, 31st March 2009, 31st March 2008, 31st March 2007 and 31st March 2006 and have been prepared in accordance with Part II of schedule II of the Act, SEBI Regulations and Accounting Standards issued by ICAI and Indian GAAPs.

5. The consolidated financial statements of the Company include the separate audited financial

statements of all the subsidiaries of the company in the respective years.


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6. This report should, in any way, neither be construed as a re-issuance nor re-dating of any of the previous audit reports by us nor should this be construed as a new opinion on any of the Financial Statements referred to herein. This report is intended solely for your information and for inclusion in the Letter of Offer in connection with the proposed Rights Issue of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.

8. We confirm that our firm B.K. Khare & Co. has been subjected to Peer Review Process of Institute of Chartered Accountants of India (ICAI) and firm holds a valid certificate no. 004515 dated 11/06/2010 issued by “Peer Review Board” of ICAI. Yours Faithfully For B.K.Khare & Co. Chartered Accountants Firm no: 105102W Sd/- Santosh Parab Partner Membership No. : 47942 Place : Mumbai Date : July 14, 2010


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ANNEXURE I

STATEMENT OF ASSETS AND LIABILITIES (RUPEES IN LACS)

PARTICULARS AS AT 31ST MARCH

2010 2009 2008 2007 2006

A Fixes Assets Gross Block 6,252.61 5,293.61 4,928.81 4,603.80 - Less- Depreciation 2,323.69 1,912.99 1,525.86 1,185.00 - Net Block 3,928.92 3,380.62 3,402.95 3,418.80 - Less-Revaluation Reserve - - - - -

Net Block after adjustment of Revaluation Reserve

3,928.92 3,380.62 3,402.95 3,418.80 -

B Investments 339.88 184.88 61.96 0.25 -

C Current Assets,Loans and Advances Inventories 2,252.51 2,490.03 1,304.14 928.68 - Sundry Debtors 3,295.76 1,996.87 1,251.37 843.12 - Cash and Bank Balances 292.35 152.39 64.79 41.02 0.87 Loans and Advances 936.36 535.81 549.19 543.97 - Other Current Assets - - - - - Total 6,776.98 5,175.10 3,169.49 2,356.79 0.87

D Liabilities and Provisions Secured Loans 4,036.95 2,619.62 1,983.21 2,081.57 - Unsecured Loans - - 100.00 - - Current Liabilities and Provisions 3,347.56 2,781.20 1,501.29 1,561.87 0.07 Deferred Tax Liability 330.47 315.65 265.05 136.69 - Total 7,714.98 5,716.47 3,849.55 3,780.13 0.07

E Net Worth 3,330.80 3,024.13 2,784.85 1,995.71 0.80

F Represented by

Share Capital 581.45 580.00 580.00 485.00 1.00

Share Warrant - 80.60 80.60 - -

Employee Stock Option 7.96 2.59 - - -

Reserves 2,741.39 2,360.94 2,124.25 1,510.71 (0.20)

Less-Revaluation Reserve - - - - -

Reserves (Net of revaluation reserves)

2,741.39 2,360.94 2,124.25 1,510.71 (0.20)

TOTAL 3,330.80 3,024.13 2,784.85 1,995.71 0.80

G Misc. expenditure to the extent not - - - - -

written of or adjusted

H NET WORTH (F-G) 3,330.80 3,024.13 2,784.85 1,995.71 0.80


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Notes: -








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ANNEXURE II STATEMENT OF PROFIT AND LOSS ACCOUNT (RUPEES IN LACS)

PARTICULARS YEAR ENDED 31ST MARCH

2010 2009 2008 2007 2006 INCOME Sales- of products manufactured 11,685.70 9,746.11 7,823.51 4,544.26 - of products traded 659.71 304.14 290.33 158.86 - Total 12,345.41 10,050.25 8,113.84 4,703.12 - Other Operational Income 176.62 14.23 14.19 86.06 - Other Income 111.91 42.93 57.92 85.21 - (Increase)/decrease in inventories 190.71 (1,206.08) (214.63) (117.49) - 12,443.23 11,313.49 8,400.58 4,991.88 - Expenditure Raw Material Consumed 7,344.37 6,517.43 4,857.70 3,301.35 - Staff Cost 652.35 541.64 432.99 232.04 - Other Manufacturing expenses 1,390.82 1,064.25 746.40 384.41 - Administrative expenses 826.52 1,169.51 571.11 452.29 0.09 Selling and distribution expenses 524.30 545.55 498.36 400.04 -

Earning Before Depreciation, Interest & Tax

1,704.87 1,475.11 1,294.02 221.75 (0.09)

Depreciation 442.59 401.13 379.76 208.44 - Interest 603.78 553.46 497.70 221.72 -

Net Profit Before Tax and Extraordinary Items

658.50 520.52 416.56 (208.41) (0.09)

Taxation Current Tax 215.00 131.44 13.93 12.17 - Deferred Tax 14.82 50.60 125.59 (62.01) - Net profit before extraordinary items 428.68 338.48 277.04 (158.57) (0.09) Extraordinary items(net of tax) - - - 23.79 - Net Profit after Extraordinary Items 428.68 338.48 277.04 (182.36) (0.09)

Notes: -




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ANNEXURE III

STATEMENT OF CASH FLOW (RUPEES IN LACS)


2010 2009 2008 2007 2006 Cash Flow from Operating Activities Net Profit before Taxation 658.50 520.52 416.56 (232.20) (0.09) Adjustments for: Depreciation 442.59 401.13 379.76 208.44 -

Deferred Employee Compensation expenses amortised

6.79 2.59 - - -

Loss/(profit) on sale of Fixed Assets (2.32) 4.58 20.45 - - Provision for doubtful debts (net) 18.90 (118.42) 33.79 80.00 - Provision for leave encashments 7.55 5.61 10.10 - - Interest/ Dividend Income (32.51) (10.14) (1.71) (3.65) - Preliminary expenses written off - - - - - Interest Paid 603.78 553.46 497.70 221.72 - Exchange Gain (33.14) 55.45 1.35 - -

Operating Profit before Working Capital Changes

1,670.14 1,414.78 1,358.00 274.31 (0.09)

Adjustments for: Change in Trade and Other Receivables (1,718.35) (672.35) (400.77) 354.49 - Change in Inventories 237.52 (1,185.89) (375.46) (91.38) - Change in Trade Payable 525.87 1,275.53 (321.15) 780.29 0.05 Change in Other Payable (31.50) (104.30) 165.94 (12.79) - Income-taxes paid (147.20) (61.00) (35.13) (12.17) - Prior Period Expenditure - - - - - Net Cash Flow from Operating Activities 536.48 666.77 391.43 1,292.75 (0.04) Cash Flow from Investing Activities Purchase of Fixed Assets (1,088.22) (389.92) (394.62) (912.45) - Sale of Fixed Assets 99.65 6.54 10.26 - - Investments Purchased (155.00) (122.92) (61.71) - Interest Received 32.46 10.04 0.92 3.65 - Dividend Received 0.05 0.10 0.79 - - Net Cash Flow used in Investing Activities (1,111.06) (496.16) (444.36) (908.80) - Cash Flow from Financing Activities

Proceeds from Borrowings (Net of repayments)

1,417.34 536.41 1.64 (134.58) -

Proceeds from Issuance of Capital 7.24 - 574.60 3.99 - Interest Paid (608.25) (552.58) (499.54) (213.72) - Dividend Paid (101.79) (66.84) - - - Net Cash Flow used in Financing Activities 714.54 (83.01) 76.70 (344.31) -


139.96 87.60 23.77 39.64 (0.04)

Cash and Cash Equivalents (Opening Bal.) 152.39 64.79 41.02 0.88 0.92


- - - 0.50 -

Cash and Cash Equivalents (Closing Bal.) 292.35 152.39 64.79 41.02 0.88


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Notes: -






vi) In view of the aforesaid demerger with effect from July 1, 2006 the figures for the year ended 31st March 2010, for the year ended 31st March 2009, 31st March 2008 and 31st March 2007 are not comparable with that for the year ended 31st March 2006.


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ANNEXURE IV

SIGNIFICANT ACCOUNTING POLICIES AND NOTES (STANDALONE) i) BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The financial statements are prepared under the historical cost convention on an accrual basis and are in conformity with mandatory accounting standards.

ii) FIXED ASSETS

a) Fixed assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of CENVAT and VAT). All direct expenses attributable to acquisition of Fixed Assets are capitalised.

b) Capitalised hardware/software costs of Enterprise Resource Planning (ERP) System

includes design software cost, which provides significant future economic benefits over an extended period. The cost comprises licence fee, cost of system integration and initial customisation. The costs are capitalised in the year in which the relevant system is ready for the intended use. The up gradation/enhancements are also capitalised and assimilated with the initial capitalisation cost.

iii) IMPAIRMENT OF ASSETS :

The carrying amount of Cash Generating Units/Assets is reviewed at Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated at the higher of net selling price and value in use. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount.

iv) DEPRECIATION

a) Depreciation on all assets of the Company except leasehold land is provided on Straight-Line basis as applicable under the Companies Act, 1956.

b) Leasehold land is amortised over respective period of lease.

c) Capitalised ERP Hardware/Software is amortised over the estimated useful economic life not exceeding five years.

v) INVESTMENTS

Long term investments are stated at cost. Provision, if any, is made for permanent diminution in the value of investments. Current investments are stated at cost or fair value whichever is lower.

vi) VALUATION OF INVENTORIES

A Raw Material and Packing Materials. At weighted average cost B Work in progress and finished

goods. At Cost or Net Realisable Value whichever is lower. Cost includes cost of materials, labour and appropriate manufacturing overheads.


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vii) EXCISE DUTY

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year-end stocks in bonded warehouse, wherever applicable. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant inputs and booking of the invoices in respect thereof.

viii) FOREIGN CURRENCY TRANSACTIONS

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on

the date of transaction. Foreign currency monetary assets and liabilities are translated at year-end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

b) In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract.

c) Gains or losses on cancellation / settlement of forward exchange contracts are

recognised as income or expense. ix) RESEARCH AND DEVELOPMENT

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account of the year. Capital expenditure on Research & Development is accounted as Fixed Assets.

x) EMPLOYEE STOCK OPTION SCHEME

Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised over the vesting period of the option on a straight line basis.

xi) RETIREMENT BENEFITS

a. Short Term Employee benefits All short term employee benefit plans such as salaries, wages, bonus, special awards and medical benefits which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such benefits are recognised on an undiscounted basis and charged to the profit & loss account.

b. Defined Contribution Plan The Company has a statutory scheme of Provident Fund with the Regional Provident Fund Commissioner and contribution of the company is charged to the profit & loss account on accrual basis.


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The Company has a scheme of Superannuation with LIC of India and contribution of the company is charged to the profit & loss account on accrual basis

c. Defined Benefit Plan

The Company’s liability towards gratuity to its employees is covered by a group gratuity policy with an insurance company. The contribution paid / payable to insurance company is debited to Profit & Loss Account on accrual basis. Liability towards gratuity is provided on the basis of an actuarial valuation using the Projected Unit Credit method and debited to Profit & Loss Account on accrual basis. Charge to the Profit and Loss Account includes premium paid, current service cost, interest cost, expected return on plan assets and gain/loss in actuarial valuation during the year net of fund value of plan asset as on the balance sheet date.

d. Other long-term benefits Liability towards leave salary is provided on actuarial basis using the Projected Unit Credit method and it is unfunded.

xii) REVENUE / EXPENSE RECOGNITION

a) Revenue from the sale of products is recognised when title and the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding collectability of the amount due, associated costs or the possible return of goods.

b) Revenue in respect of overdue interest, insurance claim, export benefits, etc is recognised to the extent the company is reasonably certain of its ultimate realisation.

c) Expenses are accounted for on accrual basis except medical reimbursement and LTA for employees, which are accounted for on cash basis.

d) Provisions are recognised when a present legal or constructive obligation exist and the payment is probable and can be reliably estimated.

xiii) CONTINGENT LIABILITIES

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that may probably not require cash outflow.

xiv) ACCOUNTING FOR TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

xv) EARNING PER SHARE

Basic earning per equity share is computed by dividing net profit by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity


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share is computed by dividing net income by the weighted average number of equity shares outstanding adjusted for the effects of all dilutive potential equity shares.

xvi) BORROWING COSTS

Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

xvii) LEASE HOLD IMPROVEMENTS

Expenditure incurred on improvements to leasehold premises is classified into Capital and Revenue. Additions of assets are capitalised under Fixed Assets and balance expenditure, if any, is recognised as expenditure in Profit and Loss Account.

xviii) CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash flows from regular revenue generating, investing and financing activities of the Company are segregated.

xix) LEASE

Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalised. If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease item, capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss account on a straight-line basis over the lease term.

NOTES TO ACCOUNTS

i) Scheme of Arrangement:

In accordance with the Scheme of Arrangement which was approved by the Hon’ble High Court of Bombay on November 17, 2006, the business undertaking of Fine Chemical Division of Camlin Limited; (herein after referred to as demerged undertaking) was demerged and vested in the Company with effect from the


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appointed date i.e. July 1, 2006. The Scheme was accordingly given effect to in accounts.

The demerged undertaking is engaged in carrying on the business of manufacture and sale of fine chemicals and related activities.

As per the scheme, all the assets and liabilities of the demerged undertaking were accounted for at their carrying amounts as on July 1, 2006. As per the Scheme and in consideration of the above, the Company had issued 48 Lacs equity shares of Rs.10 each aggregating to Rs.480 Lacs. These shares were issued in the ratio of one equity share for every one equity share held by the shareholders of Camlin Limited.

Consequent upon giving effect to the Scheme of Arrangement and as required by the Scheme, an amount of Rs.1,693.27 Lacs being difference between the net book value of assets and liabilities of the demerged undertaking as on July 1, 2006 and the value of equity shares allotted, was disclosed under “General Reserve”. Since the scheme of arrangement entered into by the Company is not in the nature of amalgamation as specified in Accounting Standard – 14 ‘Accounting for Amalgamation’ issued by ICAI, the said AS is not applicable to the aforesaid scheme.

ii) On April 26, 2006, Company had subdivided each equity share of the face value of

Rs.100 each into 10 equity shares of Rs.10 each. Accordingly, 1,003 equity shares of Rs.100 each being the issued capital as on April 26, 2006 were sub-divided into 10,030 equity shares of Rs.10 each.

iii) Camlin Ltd became the Holding Company pursuant to its purchase of entire shares

as on 9th June 2006. It remained Holding Company till the appointed date of July 1, 2006 under the Scheme of Arrangement. During the year, Company has issued 39,970 equity shares of Rs.10 each to the then Holding Company, Camlin Limited.

iv) On December 7, 2006, due to fire at Tarapur works of the Company, there was loss of

Inventory to the tune of Rs.35.49 Lacs. Company has further carried out Repairs to the damaged machinery and equipments amounting to Rs.80.58 Lacs. The total loss due to fire net of insurance claim receivable of Rs. 92.28 Lacs has been disclosed as extra ordinary item. The net effect of the aforesaid extra-ordinary items to the extent of Rs.23.79 lacs have been shown separately in the re-stated profit & loss account for the year ended 31/03/2007.

v) Commitments:

a) Value of contracts (net of advance) remaining to be executed on capital account not provided for Rs. 25.40 Lacs.

b) The Company has entered into an agreement on March 13,2007 with Viachem Company LLC, USA to incorporate a joint venture company Dulcette Technologies LLC, USA for marketing of company’s products in international markets. The total investment in this joint venture is expected to be to the tune of USD 3,00,000 with Camlin Fine Chemicals Ltd’s share of 51%. Total capital contribution of the company is US $ 76,000 equivalent to Rs. 32.53 Lacs.

vi) Sundry Debtors include Rs. 220.53 Lacs in respect of which legal proceeding are instituted. In the opinion of the management, though these dues are fully recoverable under the due process of law, the legal process involved will entail


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considerable expenditure impairing the recoverable amount. Hence, the management, with a conservative view, has provided a sum of Rs. 62.07 Lacs against this debtor.

vii) Preferential Allotment

Pursuant to the preferential issue to promoter group made in financial year ended March 31, 2008, certain relatives of Promoters and entities belonging to ‘Promoter Group’ were issued 15,50,000 warrants, each of which was entitled to one ordinary share of the Company against payment of cash. As per the SEBI Guidelines, an amount equivalent to 10% of the price that is Rs.5.20 per warrant had been received from the concerned individuals / entities on allotment of these warrants. These warrants were exercisable at Rs.52 each on or before June 20, 2009. The concerned promoters and entities have not exercised the option on these warrants by the stipulated date and hence the options have lapsed. As per the SEBI Guidelines and terms of the issue, the advance paid against these warrants of Rs.80.60 Lacs has been forfeited by the Company and transferred to the Capital Reserve

viii) During the year, the Company's Research and Development team has developed a process of recovering finished goods from the waste generated in the manufacturing process. Though, the Company accumulated this waste over last several years, it did not value it as it did not have any realisable value. With the successful testing of the recovery process, the company has valued this waste, including the waste generated in earlier years and lying in stock, at cost based on the current year's cost in absence of reliable records of generation of waste in earlier years. Consequently, the value of closing work-in-progress include Rs.175.92 Lacs which pertains to waste generated in earlier years and lying in stock and Rs.66.00 Lacs pertaining to waste generated during the year.

ix) Employee Stock Option Scheme

x)

The Company has Employee Stock Option Scheme called “Camlin Fine Chemicals Employees’ Stock Option Scheme, 2008” which was approved by the members on 8th August 2008. The scheme is an employee share based payment plan administered through Employee Stock Option. Each option under the scheme will entitle one fully paid up equity share of Rs.10/- each of the Company.

The details of Employee Stock Option Scheme are : Particulars Tranche I Tranche II Tranche III Grant Date 9th August 2008 13th October 2008 23rd October 2009 Number of Options granted 1,94,100 16,700 32,200 Contractual Life Options will lapse if not exercised within 6 years from the

date of grant Exercise Price (per share) Rs.50 Rs.50 Rs.50 Method of settlement By issue of Shares at Exercise Price Vesting Conditions 10 % On expiry of 12 months from the date of grant; 15 % On expiry of 24 months from the date of grant; 20 % On expiry of 36 months from the date of grant; 25 % On expiry of 48 months from the date of grant; 30 % On expiry of 60 months from the date of grant;


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Details of Stock options are as follows: Summary of Stock Options No. of Stock Options Tranche I Tranche II Tranche III Options outstanding on 1st April, 2009 1,94,100 16,700 0 Option granted during the year Nil Nil 32,200 Options forfeited / lapsed during the year 16,800 11,000 Nil Options exercised during the year 14,230 250 Nil Options outstanding on 31st March, 2010 1,63,070 5,450 32,200 Options vested but not exercised on 31st March, 2010

3,500 320 Nil

Details of prices of the options: Per Equity Share Tranche I Tranche II Tranche III Average Share Price * Rs.57.25 Rs.48.63 Rs.61.31 Exercise / Grant Price ** Rs.50.00 Rs.50.00 Rs.50.00 Market Price *** Rs.60.00 Rs.45.00 Rs.58.50 * Being, the average share price at the Recognized Stock Exchange on the date of exercise of the option. ** Exercise price is the price payable by employee for exercising the option granted. ***Market price is the latest available closing price, prior to the date of the meeting of board of directors in which options are granted. The Company has adopted intrinsic value method in accounting for employee cost on account of ESOS. The intrinsic value of the shares is based on the latest available closing market price, prior to the date of meeting of the board of directors in which the options were granted, on the stock exchange in which the shares of the company are listed. The difference between the intrinsic value and the exercise price is being amortised as employee compensation cost over the vesting period. The details thereof are : Particulars Tranche I Tranche II Tranche III Opening unamortised amount 16,82,000 Nil N.A. Total amount to be amortised over the vesting period

Nil Nil 2,73,700

Charge to Profit and Loss Account for the year 629,043 Nil 49,836 ESOP Lapsed 1,68,000 Nil - Unamortised amount carried forward 8,84,597 Nil 2,23,864 Accordingly, during the year, 14,480 Equity Shares of Rs.10/- each have been issued under the ESOS Scheme. Correspondingly, the share premium related to these shares amounting to Rs.7,21,500 has been accounted.

xi) Term Loans from Banks are secured by mortgage/hypothecation of related immovable/movable assets of the Company, both present and future.

Cash Credits from Banks are secured by hypothecation of stocks and book debts ranking pari-passu between them as also mortgage/hypothecation of specified Immovable and Movable Fixed Assets of the Company ranking pari passu by way of second charge.


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Vehicle Loans are secured by hypothecation of related vehicles.

During the year the Company has registered the aforesaid charges with the concerned authorities.

Loans amounting to Rs 660.11 Lacs are guaranteed by Managing Director.

Loan against Leased Assets are secured by furniture & fixtures taken on lease.

xii) The Company has transferred Investments in Equity Shares of Saraswat Co-operative

Bank Ltd. in its name.

xiii) Details of Loans and Advances in the nature of Loans to Subsidiaries and Associates.

Particulars Balance at the year end

Maximum amount outstanding during the year

Sangam Laboratories Ltd. Nil 155.00 (64.77) (124.00) Chemolutions Chemicals Ltd. 272.00 272.00 (46.45) (200.00) Fine Renewable Energy Ltd. 25.99 25.99 (Nil) (Nil) Fine Lifestyle Brands Ltd. 51.08 51.08 (Nil) (Nil)

Figures for previous year are Nil except for those applicable, specified in brackets.

xiv) Since, the company operates in a single business segment namely, ‘Fine Chemicals’, the

segment-wise disclosure is not required. Further, in the opinion of the management, there is no reportable geographical segment.

xv) Foreign Currency Transactions:

Exchange variation (Net) arising on translation of Foreign Currency transactions credited to the Profit & Loss Account is Rs. 104.63Lacs (Previous Year loss of Rs.384.84 Lacs). The unhedged exposure of foreign currency transactions as on 31.03.2010 is as follows:

(Rs.in Lacs)

31.03.10 31.03.09

(a) Sundry Debtors (USD) 23.91 Nil (EURO) 32.03 4.12

(b) Sundry Creditors (USD) 33.51 33.85


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xvi) Retirement Benefits:

Defined Contribution Plans Company’s Contribution paid/payable during the year to Provident Fund, Superannuation Fund are charged to the Profit & Loss Account.

Defined Benefit Plans

i) Gratuity as per Actuarial valuation (Rs. Lacs)

No. Particulars 31.03.10

I Expense recognised in the Statement of Profit and Loss Account 1 Current Service Cost 5.70 2 Interest 6.23 3 Expected Return on plan assets (7.29) 4 Actuarial (Gain)/Loss 9.00 5 Total expense 13.65

II Net Asset/(Liability) recognised in the Balance Sheet 1 Present Value of Defined Benefit Obligation at end of the year 84.89 2 Fair Value of plan assets at the end of the year 87.64 3 Funded status [Surplus/(Deficit)] 2.75 4 Net Asset/(Liability) at the end of the year 2.75

III Change in the obligation during the year 1 Present Value of Defined Benefit Obligation at the beginning of the

year 77.31

2 Current Service Cost 5.70 3 Interest Cost 6.23 4 Actuarial (Gain)/Loss 0.89 5 Benefit payments (5.25) 6 Present Value of Defined Benefit Obligation at the end of the year 84.89

IV Change in Fair Value of Assets during the year ended 1 Fair Value of plan assets at the beginning of the year 81.45 2 Expected return on plan assets 7.28 3 Contributions by employer 12.27 4 Actual benefits paid (5.25) 5 Actuarial Gain/(Loss) on Plan Assets (8.11) 6 Fair Value of plan assets at the end of the year 87.64

V The major categories of plan assets as a percentage of total plan Funded with LIC 100%

VI Actuarial assumptions


116

1 Discount Rate 7.5% 2 Expected rate of return on plan assets 8%

ii) Leave Encashment: The accumulated balance of Leave Encashment (Unfunded) provided in the books as at 31’st March 2010 Rs.50.99 Lacs , determined on actuarial basis using projected unit credit method.

xvii) Leases

Particulars Finance Lease 2010 2009

Total Minimum Lease Payments at the year end 22.53 - Less: - Amount Representing finance charges 10.49 - Present Value of Minimum Lease payments (Rate of Interest 12.00% p.a.)

12.04 -

Minimum Lease Payments: Not later than one year [For finance lease : Present value Rs. 31.59 Lacs as on 31.03.2010 (Rs. Nil as on 31.03.2009)]

54.77 -

Later than one year but not later than five years [For finance lease : Present value Rs. 154.75 Lacs as on 31.03.2010 (Rs. Nil as on 31.03.2009)]

196.55 -

Later than five years [For finance lease : Present value Rs. Nil as on 31.03.2010 (Rs. Nil as on 31.03.2009)

- -

xviii) Based on the information available with the company, no creditors have been

identified as ‘supplier’ within the meaning of Micro, Small & Medium Enterprises Development Act, 2006 as on 31st March 2010.

xix) The figures are rounded off to the nearest Lacs and have been recast/regrouped

wherever necessary

NOTES FORMING PART OF ACCOUNTS 1. Contingent Liabilities

(Rs. in Lakhs)

Particulars Year Ended March 31 2010 2009 2008 2007 2006

Bills of Exchange 1,898.81 1,738.24 1,407.26 1,199.10 - Bank Guarantees 366.65 285.99 306.67 - - Corporate Bank Guarantee 500.00 500.00 - - -

TOTAL 2,765.46 2,524.23 1,713.93 1,199.10 -

2. Debts due to SSI (Rs. in Lakhs)


Due to Small Scale Industrial Undertakings

- - 10.28 13.42 -


117

3. Managerial Remuneration

(Rs. in Lakhs)


Remuneration to Managing Director

44.12 44.91 34.73 13.54 -

4. Auditors Remuneration

(Rs. in Lakhs)


Auditor's Remuneration (Net of Service Tax)

11.88 8.34 8.25 5.04 0.01

5. Deferred Tax Liabilities

(Rs. in Lakhs)


2010 2009 2008 2007 2006 Deferred Tax Liabilities

Depreciation 355.67 335.59 354.52 299.20

- Retirement Benefits 0.93 2.46 8.79 5.05 -

Lease Payments 2.76 - - - - Total 329.36 338.05 363.31 304.25 - Deferred Tax Liabilities Unabsorbed Depreciation/ Business Loss

- - 34.63 120.82 -

Provision for Doubtful debts

9.27 2.85 43.10 27.19 -

Leave Encashments 17.33 14.70 12.83 9.43 - Taxes, Duties and other sums (Net)

- 0.28 0.84 1.42 -

Demerger Expenses 2.29 4.57 6.86 8.70 - Total 28.89 22.40 98.26 167.56 - Net Deferred Tax Assets / (Liability)

(330.47) (315.65) (265.05) (136.69) -

6. Foreign Exchange Earning and Outgo

(Rs. in Lakhs)


2010 2009 2008 2007 2006 Earnings (Export sales) 9,686.52 8,222.74 7,014.99 4,362.83 - Out go (Capital goods, Raw material, Finished goods, Traveling exp.)

5,586.35 5,072.72 3,658.47 2,229.35 -


118

Total 15,272.87 13,295.46 10,673.46 6,592.18 - C.I.F Value of Imports 5,365.97 4,904.21 3,530.82 2,157.09 -

7. (i) The quantitative details of opening stock, purchases, turnover and closing stock of Goods

manufactured. Chemical Products

Particulars

Year Ended March 31 2010 2009 2008 2007 2006

Qty Value (Rs.) Qty Value (Rs.) Qty Value

(Rs.) Qty Value (Rs.) Qty Value (Rs.)

Licensed Capacity in Tons#

5,130 - 5,130 - 5,130 - 5,130 - - -

Installed Capacity in Tons

3,500 - 2,548 - 2,476 - 1,636 - - -

Opening Stock 0.56 244.77 0.31 157.90 0.09 87.52 0.09 85.14 - - Purchases/ Production

25.76 - 17.61 - 16.99 - 8.19 - -

Turnover 26.18 11,685.21 17.37 9,746.11 16.77 7,823.51 8.19 4,703.81 - - Closing Stock 0.14 47.55 0.56 244.77 0.31 157.90 0.09 87.52 - -

# As certified by the management and relied upon by the Auditors, being a technical matters.

(ii) The quantitative details of opening stock, purchases, turnover and closing stock of Goods traded Chemical Products

Particulars

Year Ended March 31 2010 2009 2008 2007 2006

Qty Value (Rs.) Qty

Value (Rs.) Qty

Value (Rs.) Qty

Value (Rs.) Qty

Value (Rs.)

Licensed Capacity in Tons#

N.A. - N.A. - N.A. - N.A. - N.A. -

Installed Capacity in Tons

N.A. - N.A. - N.A. - N.A. - N.A. -

Opening Stock - 146.54

- 0.80 - 1.05 - 0.80 - -

Purchases/ Production

- 639.44 - 420.99 - 104.46 - 130.70 - -

Turnover - 660.20 - 304.14 - 290.33 - 158.86 - -

Closing Stock - 2.93 - 146.54 - 0.80 - 1.05 - - # As certified by the management and relied upon by the Auditors, being a technical matters.


119

8. (i) Raw Material Consumed

Particulars

Year Ended March 31 2010 2009 2008 2007 2006

Qty Value (Rs.) Qty Value

(Rs.) Qty Value (Rs.) Qty Value (Rs.) Qty Value

(Rs.) Hydroquinone 24.23 3,762.85 17.39 3,020.15 17.85 2,804.27 9.08 1,664.32 - - Other Raw Material *

- 3,581.52 - 3,497.28 - 2,053.43 - 1,672.50 - -

(None of the items individually exceed 10% of the total value of Raw Materials Consumed) * Includes resale of material (ii) Value & Percentage of Consumption of Raw Materials and Stores

Particulars

Year Ended March 31 2010 2009 2008 2007 2006

% Value (Rs.) % Value (Rs.) % Value (Rs.) % Value (Rs.) % Value

(Rs.) Indigenous 29 2,140.79 27 1,767.49 27 1,333.83 33 1,092.18 - - Imported (Landed Cost) - Raw Material

71 5,203.58 73 4,749.94 73 3,523.87 67 2,244.66 - -

Total 100.00 7,344.37 100 6,517.43 100 4,857.70 100 3,336.84 - -


120

ANNEXURE V SCHEDULE OF SECURED LOANS

(Rs. in Lakhs)

Sr. No

Name of the Lender

Amount

Sanctioned

Principal Outstanding as on

31st March, 2010 (Rs. in Lacs)

Rate of Interest

(%)

Repayment Schedule

Details of Security (if applicable)

Term Loans from Banks 1 IDBI BANK LTD. 750 263.36 11.50% 4 Years EMI

of Rs.19.76 lacs monthly commencing from August 1,2007

a) First pari passu charge on all the fixed assets of the Company, both present and future. b) Second charge on immovable property of the co. by way of equitable mortgage.

2 EXIM BANK-TERM LOAN 1

900 396.75 13% 13 equal quarterly installments commencing from July 20,2008

a) First pari passu charge on all the fixed assets of the Company, both present and future, including the projected assets to be part financed by Exim Bank, so as to maintain a minimum Fixed Assets Coverage Ratio of 1.25 times during the currency of EXIM Bank's Loan

EXIM BANK-TERM LOAN 2

1600 1005.05 12% 28 equal quarterly installments commencing after a moratorium period of one year for the date of first disbursement commencing from May,13 2010

a) First pari passu charge on all the fixed assets of the Company, both present and future, including the projected assets to be part financed by Exim Bank, so as to maintain a minimum Fixed Assets Coverage Ratio of 1.25 times during the currency of EXIM Bank's Loan

3 HDFC BANK 21.95 12.71 12.5% 60 installments commencing from December 2, 2007

hypothecation of related vehicles

HDFC BANK 5.5 3.52 12.5% 60 installments commencing from April 5, 2008



121

Sr. No

Name of the Lender

Amount

Sanctioned

Principal Outstanding as on

31st March, 2010 (Rs. in Lacs)

Rate of Interest

(%)

Repayment Schedule

Details of Security (if applicable)

4 ICICI BANK 8.6 2.69 12.5% 60 installments commencing from August 5, 2008


5 MAHINDRA KOTAK BANK

17.73 5.40 12.5% 36 instalments commencing from February 2008


Total 3303.78 1689.48

Term Loans from Others

L&T FINANCE LTD.

200 186.58 12.0% 60 instalments commencing from 30th October 2009

hypothecation of related furniture & fixture.

GRAND TOTAL 3503.78 1876.06

Cash Credit Facilities: 1 IDBI BANK

LTD.- CC/PC/PCFC

2200 1519.85 11.75% 12 months Primary Security - Hypothecation of RM,PM,WIP FG Goods & Debtors. Collateral Security a) Equitable Mortgage of factory land & building at Tarapur MIDC, Boisar by way of second charge. B) Second charge by way hypothecation of plant & machinery at factory at Tarapur MIDC, Boisar.

HSBC LTD-PC 700 641.04 5.75% 90 Days Primary Security - Hypothecation of RM,PM,WIP FG Goods & Debtors. Collateral Security a) Equitable Mortgage of factory land & building at Tarapur MIDC, Boisar by way of second charge. B) Second charge by way hypothecation of plant 7 machinery at factory at Tarapur MIDC,Boisar.

Total 2900 2160.89 Hire Purchase Loans Grand Total 6203.78 4036.95


122

ANNEXURE VI SCHEDULE OF UNSECURED LOANS (Rs. in Lakhs)

Particulars As on 31st March

2010 2009 2008 2007 2006 Fixed Deposits From Directors - - - - - From Others - 100.00 - - Trade Deposit Total - - - - -


123

ANNEXURE VII SCHEDULE OF SUNDRY DEBTORS (Rs. in Lakhs)

Particulars As on 31st March 2010 2009 2008 2007 2006

(Unsecured, considered doubtful) - Outstanding for a period less than six months

- - - - -

- Outstanding for a period Exceeding six months

27.28 8.38 126.80 93.01 -

(Unsecured, considered good) - Outstanding for a period less than six months

2,876.26 1,806.41 1,086.73 642.45 -

- Outstanding for a period Exceeding six months

419.50 190.46 164.64 200.67 -

3,323.04 2,005.25 1,378.17 936.13 - Less: - Provision for Doubtful Debts 27.28 8.38 126.80 93.01 -

TOTAL 3,295.76 1,996.87 1,251.37 843.12 - The main reason for increase in debtors as on 31st March, 2010 is due to substantially higher sales at Rs. 2028.50 lacs which has impacted in receivables as on that date. Though in terms of days, the same are at 95 days as against 71 days in the previous year, overall the higher sale in last quarter of 2010 has been reflected in value as well as in days terms. ANNEXURE VIII SCHEDULE OF LOANS AND ADVANCES (Rs. in Lakhs)

Particulars As on 31st March 2010 2009 2008 2007 2006

Balance with Excise Authorities

52.02 54.84 155.45 - -

Advances recoverable in cash or in kind or for the value to be received

400.30 326.98 296.18 499.88 -

Loans and Advances to Subsidiaries

349.07 111.23 16.81 - -

Deposits 134.97 42.76 37.71 44.09 - MAT Credit Entitlement - - 43.04 - -

TOTAL 936.36 535.81 549.19 543.97 -


124

ANNEXURE IX SCHEDULE OF INVESTMENTS (Rs. in Lakhs)

PARTICULARS As on 31st March 2010 2009 2008 2007 2006

EQUITY SHARES QUOTED - - - - - UNQUOTED 339.88 184.88 61.96 0.25 -

TOTAL 339.88 184.88 61.96 0.25 - ANNEXURE X SCHEDULE OF OTHER INCOME (Rs. in Lakhs)


2010 2009 2008 2007 2006 Interest on FDRs/Others 32.46 10.04 0.92 3.65 - Miscellaneous Income 79.40 30.05 56.21 81.56 - Dividend Received 0.05 0.10 0.79 - - Commission Received - 2.74 Insurance Claim - - - - - Total 111.91 42.93 57.92 85.21 - The Company is having sharing of profit arrangement with one of its international client. Under the said contract, profits generated from sale of products of advanced formulation developed by the client by using key material supplied by the company is shared between the client and the company. The increase in miscellaneous income is due to recognition of company's profit share attributable to such contract. ANNEXURE XI SCHEDULE OF DIVIDEND PAID (Rs. in Lakhs)


2010 2009 2008 2007 2006 Class of Shares Equity - Interim - - - - - - Final 116.29 87.00 58.00 - - TOTAL 116.29 87.00 58.00 - - Rate of Dividend paid 20% 15% 10%


125

ANNEXURE XII STATEMENT OF TAX SHELTER (Rs. in Lakhs)


2010 2009 2008 2007 2006 Tax Rate Including Surcharge 33.99 33.99 33.99 33.66 33.66 Profit Before Tax 658.50 520.52 416.56 (232.20) (0.09) Tax Rate at MAT 16.99 11.33 11.33 11.22 8.42 Tax at Notional Rate 223.82 176.92 141.59 - - Adjustments: (a) Permanent Differences Land Amortisation - - 0.02 0.02 - Share issue exp - 5.87 4.70 4.94 - Penalty - - 9.82 - - Income 9.52 Total 6.79 (b)Timing Differences (52.35) Difference between Tax Depreciation and Book Depreciation

0.10

Other Adjustments (0.05) (36.52) (36.85) - - Unabsorbed Depreciation (35.99) (30.65) (22.31) 4.96 - Total Total Adjustment (23.71) 56.76 159.41) (224.17) - Tax Expense / (Saving) Thereon 9.10 (104.00) 33.27 95.95 - Tax Adjustments - (113.00) (268.12) 355.46 - Total Taxation (14.61) (160.24) (394.26) 227.24 - Excess of MAT over Normal Tax (50.60) (190.89) (416.57) 232.20 - Deferred Tax (17.20) (64.88) (141.59) 78.16 - Fringe Benefit Tax Wealth Tax 214.93 112.04 (0.00) 78.16 - Tax Expense - - (43.04) - -


126

ANNEXURE XIII ACCOUNTING RATIOS

Particulars


Earnings per share (Rs.) Basic 7.39 5.84 5.42 (4.96) (0.95) Diluted 7.30 5.84 5.38 (4.96) (0.95) Net Asset value per share (in Rs.) 57.39 52.14 54.47 54.32 8.00 Return on Net Worth (%) 12.87 11.19 9.95 (9.13) (11.25) Weighted average number of equity shares in the period (in Nos.)

For Basic EPS 5,803,715 5,800,000 5,112,887 3,674,431 10,030 For Diluted EPS 5,875,702 5,800,000 5,153,125 3,674,431 10,030 In accordance with the Scheme of Arrangement which was approved by the Hon’ble High Court of Bombay on November 17, 2006, the business undertaking of Fine Chemical Division of Camlin Limited; (herein after referred to as demerged undertaking) has been demerged and vested in the Company with effect from the appointed date i.e. July 1, 2006. The Scheme has accordingly been given effect to in these accounts. In view of the aforesaid demerger with effect from July 1, 2006 the figures for the year ended 31st Mar 2010, for the year ended 31st March 2009, 31st March 2008 and 31st March 2007 are not comparable with that of the year ended 31st March 2006. FORMULAS: 1. Earnings Per Share (Rs.) = Net profit attributable to equity shareholders/Weighted average number of equity shares outstanding during the period

2. Net Asset Value Per Share (Rs.) = Net Worth excluding revaluation reserve at the end of the period or year/ Weighted average number of equity shares outstanding

during the period 3. Return on Net Worth (%) = Net Profit attributable to equity shareholders / Net Worth excluding

revaluation reserves as at the end of the period or year

The Calculation of Net profit attributable to equity shareholders, Weighted average number of equity shares outstanding during the year, basic earnings per share and diluted earnings per share is in compliance with Accounting Standard 20 "Earnings per share" issued by Institute of Chartered Accountants of India.


127

ANNEXURE XIV STATEMENT OF CAPITALISATION

(Rs. in Lakhs)

PARTICULARS Pre-Issue as at 31st March, 2010

Post-Issue as at 31st March, 2010

Borrowings : Short-term Debt** (A) 2815.01 2815.01 Long-term Debt (B) 1221.94 1221.94 Total Debt (A+B=C) 4036.95 4036.95 Shareholders' funds: Share Capital 581.45 930.32 Reserves 2741.39 2941.99 Employee Stock Option Outstanding 7.96 7.96 Share Application Money - - Total Shareholders' Funds ( D) 3330.80 3880.27 Total Capitalization Long-term Debt/Equity ratio (B/D) 0.37:1 0.31:1 Total Debt/Equity ratio (C/D) 1.21:1 1.04:1

** Short-term Debts are debts maturing within the next one year from the date of above statement. ANNEXURE XV STATEMENT OF RELATED PARTY TRANSACTION Related Party Disclosure Sr. No. Particulars

A) Subsidiary companies 1 Chemolutions Chemicals Ltd 2 Dulcette Technologies LLC,USA (Joint Venture

with Viachem LLC with 51%stake) 3 Sangam Laboratories Ltd. 4 Fine Lifestyle Brands Limited 5 Fine Renewable Energy Limited 6 Fine Lifestyle Solutions Limited (Step down

Subsidary co.) B) HUF

1 Ashish Dandekar (HUF) C) Associate Companies

1 Camlin Limited (till 14th Dec.2009) 2 Focussed Event Management Pvt.Ltd. 3 Vibha Agencies Pvt.Ltd. 4 Abana Medisys Pvt.Ltd.


128

D) Key Management Personnel 1 Mr. A.S.Dandekar 2 Mrs. Leena A. Dandekar 3 Mr. S.D.Dandekar 4 Mr. D.D.Dandekar 5 Vivek A.Dandekar 6 Abha A.Dandekar

Details of Related Party Transactions

Subsidiary and Associates (Rs. in Lakhs)

Sr. No.

Nature of the Transaction

Year Ended 31st March

2010 2009 2008 2007 2006 1 Purchases Goods 8.04 14.85 - - - Job Charges - 5.82 - - - Fixed Assets - - - 1.32 - Services - - - - - 2 Sales Goods 141.12 47.28 - 4.96 - Fixed Assets 2.83 5.00 - - - Rendering of services 72.24 - - - - Rent Received 21.05 - - 3.79 - 3 Investments Purchases 155.00 122.92 61.71 - - 4 Finance ICD Given 349.08 156.74 15.00 - - ICD Taken - - 350.00 - - Interest Received 24.64 7.71 0.23 3.51 - Interest Paid - 6.75 11.65 - - 5 Other Transactions Advance Given - - 1.58 - - Reimbursement received from parties 13.44 54.10 3.66 - - Reimbursement made to parties - 8.13 16.37 - - 6 Outstanding Payable 5.41 5.41 - 24.97 - Receivable 257.57 141.71 40.65 49.24 - ICD Loans given 349.08 - 15.00 - - ICD loans Taken - - 100.00 - - 7 Equity Contribution - - - 3.99 -


129

Key Management Personnel and Relatives (Rs. in Lakhs)

Sr. No.

Nature of the Transaction Year Ended 31st March

2010 2009 2008 2007 2006 1 Purchases

Services 8.40 5.30 1.80 - - Salaries 4.05 - - - -

2 Outstanding Payable - - 0.15 -

3 Managerial Remuneration 44.12 44.91 34.73 13.54

4 Equity Contribution - - 494.00 -


130

ANNEXURE XVI STATEMENT OF CONSOLIDATED ASSETS AND LIABILITIES

(Rs. in Lakhs) Sr. No. Particulars As at 31st March

2010 2009 2008 2007 2006 A. Fixed Assets Gross block 6,463.21 5,484.16 5,047.22 4,603.80 - Less Depreciation 2,425.18 1,982.42 1,588.80 1,185.00 - Net Block 4,038.03 3,501.74 3,458.42 3,418.80 - Less: Revaluation Reserve - - Net Block after adjustment for

Revaluation Reserve 4,038.03 3,501.74 3,458.42 3,418.80 -

B Goodwill (Net of Amortization)

- - 26.60 - -

C Investments 0.50 0.50 0.50 0.25 - D Current Assets, Loans and

Advances Inventories 2,620.95 2,935.61 1,333.00 928.68 - Sundry Debtors 4,245.47 2,217.93 1,276.42 843.12 - Cash and Bank Balances 353.05 189.10 88.36 41.02 0.87 Loans and Advances 732.44 489.73 554.83 543.97 - Total 7,951.91 5,832.37 3,252.61 2,356.79 0.87 E Liabilities and Provisions: Secured Loans 4,648.78 2,832.14 2,020.00 2,081.57 - Unsecured Loans 13.23 5.99 105.99 - - Current Liabilities and Provisions 4,085.55 3,253.91 1,548.48 1,561.87 0.07 Deferred Tax Liability 318.39 306.66 268.62 136.69 Total 9,065.95 6,398.70 3,943.09 3,780.13 0.07 F Minority Interest 11.28 21.78 11.87 - - G Net Worth ( A+B+C+D-E-F ) 2,913.21 2,914.13 2,783.17 1,995.71 0.80 H Represented by Share Capital 581.45 580.00 580.00 485.00 1.00 Reserves 2,323.80 2,250.94 2,108.12 1,510.71 (0.20) Less Revaluation Reserve - - - - - Reserves(Net of Revaluation

Reserves) 2,323.80 2,250.94 2,108.12 1,510.71 (0.20)

Share Warrant - 80.60 95.05 - - Share Application Money - - - - - Employee Stock Option

Outstanding 7.96 2.59 - - -

Total 2,913.21 2,914.13 2,783.17 1,995.71 0.80 I Misc. Expenditure to the extent not

written off or adjusted - - - - J Net Worth ( H-I ) 2,913.21 2,914.13 2,783.17 1,995.71 0.80


131

ANNEXURE XVII STATEMENT OF CONSOLIDATED PROFIT AND LOSS

(Rs. in Lakhs)


2010 2009 2008 2007 2006 Income Sales: Of Products manufactured by the Company 13,367.98 10,107.04 7,836.05 4,544.26 - Of Products traded in by the Company 660.20 304.14 290.33 158.86 - 14,028.18 10,411.18 8,126.38 4,703.12 - Other Operational Income 112.25 28.23 14.19 86.06 - Other Income 112.49 23.23 57.69 85.21 - Increase(Decrease in Inventories) (154.18) 1,441.91 214.22 117.49 - 14,098.74 11,904.55 8,412.48 4,991.88 - Expenditure Raw Materials Consumed 8,775.03 6,966.21 4,867.03 3,301.35 - Staff Costs 776.71 621.49 433.79 232.04 - Other Manufacturing Expenses 1,464.39 1,080.44 741.85 384.41 - Administration Expenses 1,023.96 1,241.61 588.46 452.29 0.09 Selling & Distribution Expenses 579.15 599.53 511.63 400.04 - Amortization of Goodwill - 26.60 2.96 - Earning Before Depreciation Interest & Tax

1,479.50 1,368.67 1,266.76 221.75 (0.09)

Depreciation 466.99 407.62 380.37 208.44 - Interest 677.77 575.53 498.59 221.72 - Net Profit before tax and Extraordinary items

334.74 385.52 387.80 (208.41) (0.09)

Taxation Current tax 215.00 133.18 14.11 12.17 - Deferred tax 11.73 38.03 125.11 (62.01) -

Net Profit before Extraordinary Items 108.01 214.31 248.58 (158.57) (0.09) Extraordinary items - - - 23.79 - Net Profit after Extraordinary Items 108.01 214.31 248.58 (182.36) (0.09) Adjustment on account of Prior Period Expenses - - - - - Adjusted Profit 108.01 214.31 248.58 (182.36) (0.09) Minority Interest (13.07) (30.31) (12.33) - - Net Profit after Minority Interest 121.08 244.62 260.91 (182.36) (0.09)


132

ANNEXURE XVIII STATEMENT OF CONSOLIDATED CASH FLOWS

(Rs. in Lakhs)

Particulars


Cash Flows from Operating Activities Net Profit before Taxation 334.74 385.52 387.80 (232.20) (0.09) Adjustments for: Depreciation 466.99 407.62 380.37 208.44 - Deferred Employee Compensation expenses amortized

6.79 2.59 - - -

Misc Exp Written Off - - 0.14 - - Loss on sale of Fixed Assets (1.45) 4.58 20.45 - - Provision for doubtful debts (net) 21.53 (118.42) 34.65 80.00 - Provision for leave encashments 7.55 5.61 10.10 - - Interest/ Dividend Income (8.71) (2.49) (1.48) (3.65) - Amortization of Goodwill 26.60 2.96 - - Interest Paid 677.77 575.53 498.59 221.72 - Exchange Gain 65.10 56.42 1.35 - - Operating Profit before Working Capital Changes

1,570.31 1,343.56 1,334.93 274.31 (0.09)

Adjustments for: Change in Trade and Other Receivables (2,392.02) (817.80) (412.20) 354.49 - Change in Inventories 314.66 (1,602.61) (381.56) (91.38) - Change in Trade Payable 690.57 1,683.68 (317.03) 780.29 0.05 Change in Other Payable 72.59 (66.38) 190.83 (12.79) - Income-taxes paid (147.96) (61.31) (35.19) (12.79) - Prior Period Expenditure - - - - - Net Cash Flow from Operating Activities 108.16 479.14 379.78 1,292.13 (0.04) Cash Flow from Investing Activities Purchase of Fixed Assets (1,101.85) (462.06) (401.68) (912.45) - Sale of Fixed Assets 100.02 6.54 10.26 - - Interest Received 8.57 2.34 0.69 3.65 - Dividend Received 0.14 0.15 0.79 - - Net Cash Flow used in Investing Activities (993.12) (453.03) (389.94) (908.80) - Cash Flows from Financing Activities Proceeds from Borrowings (Net of repayments) 1,823.88 712.14 (52.87) (134.58) - Proceeds from Issuance of Capital 7.25 (14.45) 608.95 3.99 - Interest Paid (682.24) (574.65) (500.43) (213.72) - Dividend Paid (101.79) (66.84) - - - Increase in Minority Interest 1.79 18.43 - - - Net Cash Flows used in Financing Activities 1,048.89 74.63 55.65 (344.31) - Net increase/ (decrease) in cash and cash equivalents

163.93 100.74 45.49 39.64 (0.04)

Cash and Cash Equivalents (Opening Balance) 189.10 88.36 41.02 0.88 0.92 Cash and Cash Equivalents received on merger - - 1.85 0.50 Cash and Cash Equivalents (Closing Balance) 353.05 189.10 88.36 41.02 0.88


133

Annexure XIX

Camlin Fine Chemicals Limited (Consolidated) Significant Accounting Policies xx) FIXED ASSETS

a) Fixed assets are recorded at cost of acquisition or construction and they are stated at historical cost (net of CENVAT and VAT). All direct expenses attributable to acquisition of Fixed Assets are capitalised.

b) Capitalised hardware/software costs of Enterprise Resource Planning (ERP) System includes

design software cost, which provides significant future economic benefits over an extended period. The cost comprises licence fee, cost of system integration and initial customisation. The costs are capitalised in the year in which the relevant system is ready for the intended use. The upgradation/enhancements are also capitalised and assimilated with the initial capitalisation cost.

xxi) IMPAIRMENT OF ASSETS :

The carrying amount of Cash Generating Units/Assets is reviewed at Balance Sheet date to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount is estimated at the higher of net selling price and value in use. Impairment loss is recognised wherever carrying amount exceeds the recoverable amount.

xxii) DEPRECIATION

c) Depreciation on all assets of the Entities except leasehold land is provided on Straight-Line basis as applicable under the Companies Act, 1956.

d) Leasehold land is amortised over respective period of lease. e) Capitalised ERP Hardware/Software is amortised over the estimated useful economic life not

exceeding five years. xxiii) INTANGIBLE ASSET – PRODUCT DEVELOPMENT & AMORTISATION

Expenditure incurred on development of products are recognised as intangible assets, and are recorded at cost. These assets are amortised over straight line basis over a period of three years from the date of completion of development.

xxiv) INVESTMENTS

Long term investments are stated at cost. Provision, if any, is made for permanent diminution in the value of investments. Current investments are stated at cost or fair value whichever is lower.

xxv) VALUATION OF INVENTORIES

A Raw Material and Packing Materials. At weighted average cost B Work in process and finished goods. At Cost or Net Realisable Value

whichever is lower. Cost includes cost of materials, labour and appropriate manufacturing overheads.


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xxvi) EXCISE DUTY

Excise duty on finished goods manufactured is accounted on clearance of goods from the factory premises and also in respect of year-end stocks in bonded warehouse, wherever applicable. CENVAT credit is accounted by adjustment against cost immediately upon receipt of the relevant inputs and booking of the invoices in respect thereof.

xxvii) FOREIGN CURRENCY TRANSACTIONS

a) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Foreign currency monetary assets and liabilities are translated at year-end exchange rates. Exchange difference arising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which they arise.

b) In respect of forward exchange contracts the difference between the forward rate and the exchange rate at the inception of the contract is recognised as income or expense over the period of the contract.

c) Gains or losses on cancellation / settlement of forward exchange contracts are recognised as

income or expense. xxviii) RESEARCH AND DEVELOPMENT

Revenue expenditure incurred on Research and Development is charged to Profit & Loss Account of the year. Capital expenditure on Research & Development is accounted as Fixed Assets. Development cost including legal expenses and/or in relation to patent/trade marks relating to the new and improved product and/or process development is recognised as an intangible asset to the extent that it is expected that such asset will generate future economical benefits. Other Research & Development cost is expected as incurred.

xxix) EMPLOYEE STOCK OPTION SCHEME

Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting for Employee Share-based Payments, issued by ICAI. The Company measures compensation cost relating to employee stock options using the intrinsic value method. Compensation expense is amortised over the vesting period of the option on a straight line basis.

xxx) RETIREMENT BENEFITS

a. Short Term Employee benefits All short term employee benefit plans such as salaries, wages, bonus, special awards and medical benefits which fall due within 12 months of the period in which the employee renders the related services which entitles him to avail such benefits are recognised on an undiscounted basis and charged to the profit & loss account.

b. Defined Contribution Plan Camlin Fine Chemicals Ltd. has a statutory scheme of Provident Fund with the Regional Provident Fund Commissioner and contribution of the company is charged to the profit & loss account on accrual basis.


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The Company has a scheme of Superannuation with LIC of India and contribution of the company is charged to the profit & loss account on accrual basis

c. Defined Benefit Plan The Company’s liability towards gratuity to its employees is covered by a group gratuity policy with an insurance company. The contribution paid / payable to insurance company is debited to Profit & Loss Account on accrual basis. Liability towards gratuity is provided on the basis of an actuarial valuation using the Projected Unit Credit method and debited to Profit & Loss Account on accrual basis. Charge to the Profit and Loss Account includes premium paid, current service cost, interest cost, expected return on plan assets and gain/loss in actuarial valuation during the year net of fund value of plan asset as on the balance sheet date.

d. Other long-term benefits Liability towards leave salary is provided on actuarial basis using the Projected Unit Credit method and it is unfunded.

xxxi) REVENUE / EXPENSE RECOGNITION

xx) Revenue from the sale of products is recognised when title and the significant risks and

rewards of ownership have been transferred to the buyer. No revenue is recognised if there are significant uncertainties regarding collectability of the amount due, associated costs or the possible return of goods.

xxi) Revenue in respect of overdue interest, insurance claim, export benefits, etc is recognised

to the extent the entities are reasonably certain of its ultimate realisation.

xxii) Expenses are accounted for on accrual basis except medical reimbursement and LTA for employees, which are accounted for on cash basis.

xxiii) Provisions are recognised when a present legal or constructive obligation exist and the

payment is probable and can be reliably estimated. xxxii) CONTINGENT LIABILITIES

Liabilities are disclosed by way of Notes appended to the Balance Sheet in case there is an obligation that may probably not require cash outflow.

xxxiii) ACCOUNTING FOR TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income for the period. Deferred tax is recognised, subject to the consideration of prudence in respect of deferred tax assets, on timing differences, being the differences between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

xxxiv) EARNING PER SHARE

Basic earning per equity share is computed by dividing net profit by the weighted average number of equity shares outstanding for the period. Diluted earnings per equity share is computed by dividing net income by the weighted average number of equity shares outstanding adjusted for the effects of all dilutive potential equity shares.


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xxxv) BORROWING COSTS Borrowing costs that are attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of cost of such asset till such time as the asset is ready for its intended use. A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred.

xxxvi) LEASE HOLD IMPROVEMENTS Expenditure incurred on improvements to leasehold premises is classified into Capital and Revenue. Additions of assets are capitalised under Fixed Assets and balance expenditure, if any, is recognised as expenditure in Profit and Loss Account.

xxxvii) CASH FLOW STATEMENTS

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The Cash flows from regular revenue generating, investing and financing activities of the Company are segregated.

xxxviii) LEASE

Finance leases, where substantially all the risks and benefits incidental to ownership of the leased item, are transferred to the Company, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease term and disclosed as leased assets. Lease payments are apportioned between finance charges and reduction of the lease liability based on the implicit rate of return. Finance charges are charged to income. Lease management fees, legal charges and other initial direct costs are capitalised. If there is no reasonable certainty that the Company will obtain the ownership by the end of the lease item, capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term, are classified as operating leases. Operating lease payments are recognised as an expense in the Profit and Loss account on a straight-line basis over the lease term.

NOTES TO ACCOUNTS For year ended 31st March 2008

1. The Consolidated Financial Statements (CFS) comprises the financial statements of Camlin Fine Chemicals Limited and its subsidiaries as at 31.03.2008, which are as under:

Name of the Company Country of Incorporation

% Shareholding

Sangam Laboratories Limited India 60% Chemolution Chemicals Limited India 100% Dulcette Technologies LLC USA 51%

2. The statutory accounting year of Dulcette Technologies LLC is January to December every

year, which is different from that of Camlin Fine Chemicals Limited. However, for the purpose of consolidation Dulecette Technologies LLC has prepared financial statements for the year ended March 31, 2008.


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3. Chemolution Chemicals Limited was incorporated on 25th March 2008 and did not commence business operations till 31st March 2008. The audited financial statements as on the even date are prepared by the management based on the information available with them.

For year ended 31st March 2009

1. The Consolidated Financial Statements (CFS) comprises the financial statements of Camlin Fine Chemicals Limited and its subsidiaries as at 31st March 2009 are as under: -

2. During the year Camlin Fine Chemicals Ltd. has made additional investments in

subsidiaries namely Sangam Laboratories Limited, Chemolution Chemicals Limited, Dulcette Technologies LLC, resulting in change in the share holding percentage, and also promoted new entities namely Fine Lifestyle Brands Limited and Fine Renewable Energy Limited with controlling interest.



4. Two of the above subsidiaries namely Fine Lifestyle Brands Limited and Fine Renewable

Energy Limited were incorporated on 1st September 2008 and 28th January 2009 respectively and did not commence business operations till 31st March 2009. The audited financial statements of these two entities as on the even date are prepared by the management based on the information available with them.

For the year ended 31st March 2010

1. The Consolidated Financial Statements (CFS) comprises the financial statements of Camlin Fine Chemicals Limited and its subsidiaries as at 31.03.2010, which are as under:

Name of the Entities Country of Incorporation

% Shareholding

31.03.09

% Shareholding

31.03.08 Sangam Laboratories Limited India 80% 60% Chemolution Chemicals Limited India 68% 100% Fine Lifestyle Brands Limited India 68% NA Fine Renewable Energy Limited India 77% NA Dulcette Technologies LLC USA 61% 51%


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2. During the year Camlin Fine Chemicals Ltd. has made additional investments in

subsidiary namely Sangam Laboratories Limited, resulting in change in the share holding percentage.



4. The financial statements of the parent company and its subsidiaries have been

consolidated on a line-byline basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and the unrealised profits / losses on intra-group transactions, and are presented to the extent possible, in the same manner as the Company's separate financial statements

5. Notes on Accounts of the financial statement of the Company and all the subsidiaries are

set out in their respective financial statement.

6. Minority interest in the net assets of consolidated subsidiaries consist of i) Amount of equity attributable at the date on which investment in subsidiaries is made

and ii) The minorities share of movements in equity since the date the parent subsidiary

relationship comes into existence.

7. Contingent Liabilities: a) In respect of Bills of Exchange / cheque discounted with the Bankers Rs.1,898.81 Lacs . (Previous year Rs. 1,738.24 Lacs) b) In respect of bank guarantees aggregating to Rs. 366.65 Lacs issued to VAT and Customs authorities. (Previous year Rs. 285.99Lacs ) c) In respect of corporate bank guarantee amounting to Rs. 500 Lacs (Previous year Rs.500 Lacs) issued against the borrowings of Chemolutions Chemicals Ltd, a subsidiary of company.

8. Commitments:

a) Value of contracts (net of advance) remaining to be executed on capital account not provided for Rs. 25.40 Lacs. (Previous year Rs.179.50 Lacs)

9. Preferential Allotment

Pursuant to the preferential issue to promoter group made in financial year ended March 31, 2008, certain relatives of Promoters and entities belonging to ‘Promoter Group’ were

Name of the Entities Country of Incorporation

% Shareholding 31.03.10

% Shareholding 31.03.09

Sangam Laboratories Limited India 91.28% 80% Chemolution Chemicals Limited India 68% 68% Fine Lifestyle Brands Limited India 51% 68% Fine Renewable Energy Limited India 77% 77% Dulcette Technologies LLC USA 61% 61% Fine Lifestyle Solutions Ltd (Step subsidiary)

India 75% Held by Fine Lifestyle Brands Ltd.

Nil


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issued 15,50,000 warrants, each of which was entitled to one ordinary share of the company against payment of cash. As per the SEBI Guidelines, an amount equivalent to 10% of the price that is Rs.5.20 per warrant had been received from the concerned individuals / entities on allotment of these warrants. These warrants were exercisable at Rs.52 each on or before June 20, 2009. The concerned promoters and entities have not exercised the option on these warrants by the stipulated date and hence the options have lapsed. As per the SEBI Guidelines and terms of the issue, the advance paid against these warrants of Rs.80.60 lacs has been forfeited by the Company and transferred to the Capital Reserve

10. Term Loans from Banks are secured by mortgage/hypothecation of related

immovable/movable assets of the Entities both present and future.

Cash Credits from Banks are secured by hypothecation of stocks and book debts ranking pari-passu between them as also mortgage/hypothecation of specified Immovable and Movable Fixed Assets of the Entities ranking pari passu by way of second charge. Vehicle Loans are secured by hypothecation of related vehicles. During the year the Company has registered the aforesaid charges with the concerned authorities. Loans amounting to Rs 665.95 Lacs (Previous Year Rs. 1131.88 Lacs) are guaranteed by respective Directors of the companies. Loan against leased Assets are secured by furniture & fixtures taken on lease.

11. The Company has transferred Investments in equity shares of Saraswat Co-operative Bank

Ltd. in its name. 12. On December 07, 2006, due to fire at Tarapur works of the Company, there was loss of

inventory to the tune of Rs.35.49 lacs. Company has further carried out repairs to the damaged machinery and equipments amounting to Rs.80.58 lacs. The total loss due to fire net of insurance claim receivable of Rs.92.28 lacs has been disclosed as extra ordinary item. The net effect of the aforesaid extra-ordinary items to the extent of Rs.23.79 lacs have been shown separately in the re-stated profit & loss account for the year ended 31/03/2007.

13. Disclosures pursuant to the requirements of Accounting Standards:

i) Foreign Currency Transactions:

Exchange variation (Net) arising on translation of Foreign Currency transactions credited to the Profit & Loss Account is Rs. 40.44 Lacs (Previous Year loss of Rs.384.40 Lacs). The unhedged exposure of foreign currency transactions as on 31.03.2010 is as follows: (Rs. in Lacs)

31.03.10 (a) Sundry Debtors (USD) 23.91

(EURO) 76.33 (b) Sundry Creditors (USD) 33.51 (EURO) 1.62


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ii) The business activity reflected in the consolidated financial statement comprise primary of the business of “Fine Chemicals”. The other business segments namely windmills and brand retails do not constitute in aggregate more than 10% of consolidated income, result of operation and capital employed. Accordingly, there are no reportable segments as per AS-17.

iii) Related Party Disclosures

a) Associate Companies

Name of the Related Party Nature Of Relationship Camlin Ltd.(Till 14th December 2009) Associate Company Focussed Event Management Pvt.Ltd. Associate Company Vibha Agencies Pvt. Ltd. Associate Company Abana Medisys Pvt.Ltd. Associate Company Shrividhya Enterprises Associate Company Pavan Energy Systems Associate Entity Pagoda Advisors Pvt.Ltd Associate Company Mantra Exim Pvt. Ltd. Associate Company

b)

Key Management Personnel & their relatives

Name of the Person Nature of Relationship Mr. A. S. Dandekar Managing Director, Camlin Fine Chemicals Ltd. Mr. S. D. Dandekar Management Consultant Mr. D.D.Dandekar Chairman Mrs.L.A.Dandekar Promoter Group, Camlin Fine Chemicals Ltd. Vivek A. Dandekar Promoter Group, Camlin Fine Chemicals Ltd. Abha A. Dandekar Promoter Group ,Camlin Fine Chemicals Ltd. Mr.S.M.Parchure Executive Director, Sangam Laboratories Ltd. Mr. V.S.Sawant Executive Director, Sangam Laboratories Ltd. Mr. Christopher Blumel Director & CEO, Chemolutions Chemicals Ltd.


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c) Transactions with Related Parties (Rs. Lacs)

Sr.No Nature of Transactions Associate Companies

Key Management Personnel & their Relatives

1. Purchases : I Goods 49.55 Nil (28.95) (Nil) Iii Services Nil 8.40 (Nil) (5.30) Iiii Salaries Nil 4.05 (Nil) (Nil) 2 Sales I Goods Nil Nil (0.16) (Nil) Ii Interest Paid 1.37 Nil (6.75) (Nil) 4 Other Transactions : Ii Reimbursement received from p 5.18 Nil (4.56) (Nil) 5. Outstanding: I Payable 18.62 Nil (1.32) (Nil) Ii Receivable 5.18 (10.23) (Nil) 6 Equity Contributions 12.25 (Nil) (Nil) 7 Managerial Remuneration : Nil 90.92 (Nil) (90.51)

Figures for Previous Year are Nil, except for those applicable, specified in brackets.

d) Significant Transactions with Related Parties

(Rs. Lacs) Particulars 2009-10 2008-09 Associate Companies

i Purchases Shrividya Enterprises 16.18 Nil Pavan Energy Systems 26.58 Nil

ii) Finance : Interest Paid Vibha Agencies Pvt Ltd. Nil 6.75


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iii) Payable Camlin Ltd. 0.10 Nil Pavan Energy Systems 17.02 Nil iii) Receivable Camlin Ltd. Nil 9.55 Key Management Personnel i) Managerial Remuneration Mr.A.S.Dandekar 44.12 44.91 Mr.S.M.Parchure 3.60 4.80 Mr.V.S.Sawant 3.60 4.80 Mr.Christopher Bluemel 39.60 36.00

iv) Earnings Per Share (Basic and Diluted)

Particulars 2009-10 Basic Net Profit/(Loss) After Tax as per profit and loss account available for equity shareholders (Rs. Lacs) 121.09 Equity Shares for calculation of earnings per shares (Nos.) 58,03,715 – Basic Earnings per Share (Rs.) 2.09 Diluted Net Profit/(Loss) After Tax as per profit and loss account available for equity shareholders (Rs. Lacs) 121.09 Equity Shares for calculation of earnings per shares (Nos.) 58,75,702 – Diluted Earnings per Share (Rs.) 2.06

v) Major items of Deferred Tax assets and Deferred Tax Liabilities:

(Rs. in Lacs)

Particulars Closing Balance as on 31.03.2010

Closing Balance as on 31.03.2009

LIABILITES Depreciation 373.27 356.28 Retirement Benefits 0.93 2.46 Lease Payments 2.75 0.00 Sub Total 376.96 358.74 ASSETS Unabsorbed Depreciation/Business Loss

29.68 29.68

Provision for doubtful debts 9.27 2.84 Leave Encashment 17.33 14.70 Taxes ,Duties and other sums (Net) 0.00 0.28 Demerger Expenses 2.29 4.57 Sub Total 58.57 52.07 Net Deferred Tax Asset / ( Liability) (318.39) (306.67)


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vi) Leases

Particulars Finance Lease 2010 2009

Total Minimum Lease Payments at the year end 22.53 - Less: - Amount Representing finance charges 10.49 - Present Value of Minimum Lease payments (Rate of Interest 12.00% p.a.)

12.04 -

Minimum Lease Payments: Not later than one year [For finance lease : Present value Rs. 31.59 Lacs as on 31.03.2010 (Rs. Nil as on 31.03.2009)]

54.77 -

Later than one year but not later than five years [For finance lease : Present value Rs. 154.75 Lacs as on 31.03.2010 (Rs. Nil as on 31.03.2009)]

196.55 -

Later than five years [For finance lease : Present value Rs. Nil as on 31.03.2010 (Rs. Nil as on 31.03.2009)

- -

14. Based on the information available with the Company, no Creditors have been identified

as ‘Supplier’ within the meaning of Micro, Small & Medium Enterprises Development Act, 2006 as on 31st March, 2010.

15. Previous Years’ figures are recast/regrouped wherever necessary.

16. Figures pertaining to the subsidiary entities have been reclassified wherever necessary to

bring them in line with the Company’s financial statements.


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CHANGES IN ACCOUNTING POLICIES

There has been no change in accounting policies since past three years.

STOCK MARKET DATA FOR SHARES OF THE COMPANY

The equity shares of the company are listed on The Bombay Stock Exchange Ltd. (BSE).

The stock market data for the equity shares on the BSE are as follows

Preceding 3 Years

Year High (Rs.) Low (Rs.) Average price (Rs.)

Total volume (no. of shares)

High (Rs.)

Date Volume on date of high

(no. of shares)

Low (Rs.)

Date Volume on date of low

(no. of shares)

2007 88.10 27/12/2007 91100 40.00 07/09/2007 1612 64.05 9161743 17/10/2007 4820 2008 71.85 04/01/2008 26315 32.40 02/12/2008 15 52.13 751760 2009 118.90 31/12/2009 28580 29.05 24/02/2009 5847 73.28 1107991

6 Months

Months High (Rs.) Low (Rs.) Average Price (Rs.)

Total Volume (No. of shares)

High (Rs.)

Date Volume on date of High (No. of shares)

Low (Rs.)

Date Volume on date of low

(No. of shares)

Jan 10 120.80 04/01/2010 7041 90.00 29/01/2010 2095 105.40 117292 Feb 10 99.80 04/02/2010 1984 85.30 25/02/2010 451 92.55 41104 March 10 93.75 23/03/2010 1916 85.00 30/03/2010 4901 89.38 98790 Apr 10 117.75 29/04/2010 18741 87.00 08/04/2010 821 102.38 120668 May 10 110.40 18/05/2010 13883 88.00 25/05/2010 787 99.20 65469 Jun 10 106.90 24/06/2010 14278 73.15 17/06/2010 369 90.03 71608

Week end price of equity Shares of Camlin Fine Chemicals Limited on the BSE.

Week ended Price (Rs) 02/07/2010 98.70 09/07/2010 102.15 16/07/2010 131.95 23/07/2010 129.80

• The market price of the equity shares of the Company at BSE as on 01/12/2009, the date on which Board of Directors decided to make the current offer was Rs. 94.85.

• The market price of the equity shares of the Company at BSE as on 12/07/2010, the date on which Committee of Directors decided the ratio & the price in respect of proposed rights issue was Rs. 106.60.

• The closing price of the shares of the Company as on 29/07/2010, the date of approval of final letter of offer on BSE is Rs. 134.85.

• The equity shares of the Company will be traded on “Ex- Rights” basis on BSE w.e.f. 30/07/2010.

The issue price of Rs. 15.75 has been arrived at in consultation between the company and the lead manager to the issue.


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MANAGEMENT’S DISCUSSION AND ANALYSIS

Management’s Discussion and Analysis of Financial Condition and Results of Operations as Reflected in the Financial Statements

a. Overview of our Business:

Camlin Fine Chemicals Limited (formerly known as Camlicon Consultants Private Limited) was incorporated in the year 1993. The main object of the Company is to carry on activities relating to manufacturing, selling, distributing, exporting, importing and otherwise dealing in all kinds of Chemicals including fine chemicals and intermediates, bulk drugs food additives, food supplements, antioxidants and active pharmaceutical ingredients. The fine chemical division of Camlin Ltd. was de-merged into CFCL, in terms of scheme of arrangement sanctioned by the Hon’ble Bombay High Court on 17th November 2006. For the year ended 31st March 2007 the company has achieved a sales turnover of Rs.4703.81 lacs which has increased to Rs.12345.41 lacs for the year ended 31st March 2010 registering a growth of about 162.45% during the past 3 financials. The sharp variance in sales from 2007-2010 is attributed to achieving operational efficiencies, control over overheads and rise in production levels during the financial year ended 31st March 2008. The same was further enhanced on account of higher sales and introduction of new range of food antioxidants during the financial year ended 31st March 2009 coupled with growth in sales as per planned increase in capacities through process development and efforts and installation of new assets alongwith productivity improvements in the processes during the financial year 31st March 2010. The other operative income to the extent of Rs.176.62 lacs for the year ended 31st March 2010 consists of gain on foreign exchange fluctuation and processing charges.

b. Significant Development Subsequent to Last Financial Period

The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in this Offer Document which materially or adversely affect or is likely to affect the manufacturing or profitability of our company, or the value of our assets, or our ability to pay liabilities within next twelve months.

c. Factors that may affect Results of Operations

Except as otherwise stated in this Offer Document, the Risk Factors given in this Offer Document, following factors could cause actual results to differ materially from the expectations include, among others:

• General economic and business conditions; As a company operating in India, we are affected by the general economic conditions in the country. The Indian economy has grown steadily over the past several years. This improved performance was propelled by the growth in industrial activity and robust services sector. The overall economic growth will therefore impact the results of operations. The growth prospects of the business of the Company and its ability to implement the strategies will be influenced by macroeconomic growth.

• Our ability to successfully implement strategy and its growth and expansion plans; Our growth plans are considerable and would put significant demands on our management team and other resources. Any delay in implementation of its strategy and its growth and


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expansion plans could impact the Company’s roll out schedules and may cause cost and time over runs.

• Factors affecting industrial activity; There are no specific factors that would impact the continuation of manufacturing activities of the company.

• Increasing competition in the industry;

Our competitors in the domestic market are, Ratnagiri Chemicals, Yasho Pharma, KK Punjo, etc. We are facing competition from these entities which is normal in nature.

• Cyclical or seasonal fluctuations in the operating results;

There are no cyclical or seasonal fluctuations which affect the operations of the Company may affect the enduring financial performance at large.

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

There are some laws and regulations applicable to the industry in which we operate, which we have to comply/ follow. In case of a failure to comply with these laws and regulations or to obtain or renew the necessary permits and approvals our business may be affected.

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

External factors such as potential terrorist attacks, acts of war or geopolitical and social turmoil in many parts of the world could constrain our ability to do business, increase the costs and negatively affect our financial performance.

• Social or civil unrest or hostilities with neighboring countries or acts of international

terrorism; Factors such as potential terrorist attacks, acts of war or geopolitical and social turmoil in many parts of the world could constrain our ability to do business, increase the costs and negatively affect our performance. These geopolitical, social and economic conditions could result in increased volatility in India and worldwide financial markets and economy, and such volatility could constrain our ability to do business.

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

Any change in the foreign exchange control regulation, mainly interest rates and tax laws pertaining to India affects the liquidity of cash in the market which in turn affects the purchasing power of the economy.

d. Overview of Our Results of Operations

The following discussion of the financial condition and results of operations for the financial year ending March 31, 2010, 2009, & 2008 respectively including the notes thereto and the reports thereon which appear in this Offer Document gives overview pf our operations in past 3 years..


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The Audited Financial Statements are prepared in accordance with the Indian Accounting Standards

(Rs. in Lacs)

Particulars

For the year ended

31/03/2010

For the year ended 31/03/2009



INCOME Sales- of products manufactured 11685.70 9,746.11 7,823.51 4,544.26 of products traded 659.71 304.14 290.33 158.86 Total 12345.41 10,050.25 8,113.84 4,703.12 Other Operational Income 176.62 14.23 14.19 86.06 Other Income 111.91 42.93 57.92 177.49 (Increase)/decrease in inventories 190.71 (1,206.08) (214.63) (117.49) 12443.23 11,313.49 8,400.58 5,084.16 Expenditure Raw Material Consumed 7344.37 6,517.43 4,857.70 3,336.84 Staff Cost 652.35 541.64 432.99 232.04 Other Manufacturing expenses 1390.82 1,064.25 746.40 464.99 Administrative expenses 826.52 1,169.51 571.11 452.29 Selling and distribution expenses 524.30 545.55 498.36 400.04 Total Expenditure 10738.36 9838.38 7106.56 4886.20 Earning Before Depreciation, Interest & Tax 1704.87 1,475.11 1,294.02 197.96 Depreciation 442.59 401.13 379.76 208.44 Interest 603.78 553.46 497.70 221.72 Net Profit Before Tax and Extraordinary Items 658.50 520.52 416.56 (232.20) Taxation Current Tax 215.00 131.44 13.93 12.17 Deferred Tax 14.82 50.60 125.59 (62.01) Net profit after tax 428.68 338.48 277.04 (182.36)

Note: Figures have been regrouped wherever necessary to make the data comparable Comparison of Financial Results of 31/03/2009 and 31/03/2010 Total Sales: The Company achieved a sales turnover of Rs. 12,345.41 lacs for the financial year 2009-10 as against Rs. 10,050.25 lacs in the previous financial year 2008-09. This growth in sales is as per the planned increase in capacities through process development efforts and installation of new assets alongwith productivity improvements in the processes. Total Expenditure: Total expenditure increased from Rs. 9838.38 lacs in the financial year 2008-09 to Rs. 10738.36 lacs in the financial year 2009-10. The increase over previous year was due to increase in manufacturing cost of the company. Profit before Tax: Profit Before Tax for the financial year 2009-10 was Rs. 428.68 lacs as compared to Rs. 338.48 lacs for the previous financial year 2008-09. The increase of was on account of various measures taken by the company for improvements in yields, process re-engineering and other cost optimization efforts.


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Comparison of Financial Results of 31/03/2009 and 31/03/2008 Total Sales: The Company achieved a sales turnover of Rs. 10,050.25 lacs for the financial year 2008-09 as against Rs. 8,113.84 lacs in the previous financial year 2007-08. The Company registered an increase of 23.86% which was on account of higher sales and introduction of new range of food antioxidants. Total Expenditure: Total expenditure increased by about 38.44% from Rs. 7,106.56 lacs in the financial year 2007-08 to Rs. 9,838.38 lacs in the financial year 2008-09. The increase over previous year was due to increase in manufacturing cost of the company. Profit Before Tax: Profit Before Tax for the financial year 2008-09 was Rs. 520.52 lacs as compared to Rs. 416.56 lacs for the previous financial year 2007-08. The increase of 24.96% was on account of various measures taken by the company for improvements in yields, process re-engineering and other cost optimization efforts in spite of rise in fuel prices globally during FY 2008-09. Comparison of Financial Results of 31/03/2008 and 31/03/2007 Total Income: The Company achieved a sales turnover of Rs. 8,113.84 lacs for the financial year 2007-08 as against Rs. 4,703.12 lacs in the previous financial year 2006-07. The Company registered an increase of 29.83% on annualized basis which was on account of operational efficiencies, control over the overheads and rise in production levels. Total Expenditure: For the reasons stated above, the total expenditure for FY 2006-07 is for 9 months period from 1st July, 2006 to 31st March, 2007 and hence the amount in absolute terms cannot be compared with 12 months of FY 2007-08. In view of this reason, the increase in total expenditure during 2007-08 over 2006-07 is around 15% on annualized basis. Profit Before Tax: Profit Before Tax for the financial year 2007-08 was Rs. 416.56 lacs as compared to loss of Rs. 232.20 lacs for the previous financial year 2006-07. The higher profit at Rs. 416.56 lacs during FY 2007-08 was on account of better efficiencies in operations at higher utilization of capacities, cost reduction efforts undertaken during the year and improvement in yields. An analysis of reasons for the changes in significant items of income and expenditure is given hereunder: 1. Unusual or infrequent events or transactions

There have been no events, other than as described in this Offer Document, which may be called “unusual” or “infrequent”.

2. Significant economic changes that materially affected or are likely to affect income from

continuing operations

Any slowdown in the growth of Indian economy or future volatility in global commodity prices, could affect the business, including the future financial performance, shareholders’ funds and ability to implement strategy and the price of the Equity Shares.

3. Known trends or Uncertainties that have had or are expected to have a material adverse

impact on sales, revenue or income from continuing operations

There are no known trends or uncertainties that may have material adverse impact on the income, costs and profits of the company from continuing operations.


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4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known

There are no known material changes in between costs and revenues in future. 5. The extent to which material increases in net sales or revenue are due to increased sales

volume, introduction of new products or services or increased sales prices

There is no material increase in the net sales or revenues due to increased sales volume, introduction of new products or services or increased sales prices.

6. Total turnover of each major industry segment in which the Company operated

The Company operates significantly in only one Industry Segment i.e. food antioxidants.

7. Status of any publicly announced new product We have not publicly announced any new products.

8. The extent to which the business is Seasonal

Our business is not seasonal and no major cyclical trends are observed in this industry. 9. Competitive conditions

Our competitors in the domestic market are, Ratnagiri Chemicals, Yasho Pharma, KK Punjo, etc. We are facing competition from these entities which is normal in nature.

WORKING RESULTS Information relating to the Company sales, gross profit etc., as required by the Ministry of Finance vide circular No.F2/5/SE/76 dated February 5, 1977 read with the amendments of even No. dated March 8, 1977 as under: The unaudited working results of the Company for the period from 01/04/2010 to 30/06/2010 are given hereunder: (Rs. in lacs)

Particulars

For 3 months period ended

30/06/2010 Net Income from Operations 3093.28 Other Income 60.52 Total Income 3153.80 Total Expenditure 2760.61 Interest 149.83 Depreciation 126.23 Profit/(loss)before tax 117.13 Provision for tax 38.47 Net Profit/Loss 78.66 Paid up Equity Share Capital 581.45


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SECTION V - LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATIONS AND DEFAULTS I. Contingent liabilities not provided for:

Contingent Liabilities not provided for as on 31/03/2010 are as follows:

Sr. no. Description Amount (Rs. in lacs) 1. Bills of Exchange* 1898.81 2. Bank Guarantee** 366.65 3. Corporate Guarantee to subsidiary viz;

Chemolutions Chemicals Limited*** 500.00

TOTAL 2765.46 *Bills of Exchange are the bills of overseas customers discounted/negotiated with the banks under the Foreign bills facilities sanctioned by the Banks. **Bank Guarantees has been given to Sales Tax, Customs, Central Excise Authorities and Maharashtra Pollution Control Board (MPCB) in the normal course of business. ***Corporate Guarantee to Subsidiary Company viz. Chemolutions Chemicals Limited is given for availing working capital facilities from IDBI Bank Ltd. to the extent of Rs.500.00 lacs on the terms and conditions of the bank. The Holding Company has not taken any loan from the bank for the above purpose. In the event such contingent liabilities materialize it may have an adverse effect on the financial condition and future financial performance of the company.

II. Outstanding Litigations involving Camlin Fine Chemicals Limited and/or promoters/ directors of the company:

The Issuer Company certifies that except as stated herein there are no:

• Pending litigations against the company.

• Outstanding litigations, defaults etc pertaining to matter likely to affect operations and finances of the company including prosecution under the Companies Act 1956 (1 of 1956).

• Such cases of pending litigations, defaults etc in respect of Companies/firms/ventures with which the promoters were associated in the past but are no longer associated, and their names continue to be associated with particular litigation.

• Disciplinary action/ investigation taken by Securities and Exchange Board of India(SEBI)/ Stock Exchanges against the Company, its directors , promoters and their other business ventures (irrespective of the fact whether or not they fall under the purview of section 370(1B) of the Companies Act 1956.

• Pending litigation, disputes, defaults, non-payment of statutory dues, proceedings initiated for offences (including past cases and irrespective of whether specified in paragraph (i) of part 1 of Schedule XIII of the Companies Act, 1956) against the promoters and other business ventures.

• Pending litigations, defaults, non payment of Statutory dues, proceedings initiated for economic offences/civil offences, any disciplinary action taken by the Board /Stock Exchanges against the Company/Promoter and their business ventures/Directors other than those mentioned in this offer document and that no litigations have arisen and the Company


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and its Directors take full responsibility of the information mentioned in this Offer Document.

a. Litigations involving Camlin Fine Chemicals Limited

There are no litigations involving Camlin Fine Chemicals Ltd. as on the date of filing of the offer document.

b. Outstanding Litigations involving Promoter/ Directors of Company

There are no cases filed, prosecuted or pending against the Company and its Promoters / Directors, save and except that there has been one matter pending since more than 15 years bearing Case No. ST CC No. 527/94 in the Court of the Judicial Magistrate First Class, Sinnar District, Nasik filed by the Government of Maharashtra through the FDA in relation to an alleged violation involving manufacture of amoxicillin capsules (I.P.), not conforming to ‘Standard Quality’ on account of leakage of drug powder in the blister pack under the Drugs and Cosmetics Act, 1940. This case has been launched against Messrs. Liva Pharma Limited (now known as: Liva Health Care Limited) (Liva) as well as Messrs. Camlin Limited (Camlin) and all the Directors of both these companies including Mr. Ashish Dandekar who is currently the Managing Director of the Company and Mr. Dilip Dandekar who is the non-executive Chairman of the Company (CFCL). However, Liva which was part of the Camlin group earlier has been disassociated since the year 2007. Further, Camlin itself has also been disassociated from the Company. Hence, both Liva and Camlin are no longer part of the Promoter Group of CFCL and aforesaid proceeding is pending against Mr. Ashish S. Dandekar then Director of Liva Pharma Ltd. and Mr. Dilip D. Dandekar the then Joint Managing Director of Camlin Limited. Other than the case mentioned above, there are no other cases pending against Mr. Ashish S. Dandekar and Mr. Dilip D. Dandekar.

c. Outstanding Litigations involving Promoter and Group Companies:

There are no outstanding litigation, disputes, non-payment of statutory dues, overdues to banks / financial institutions, defaults against banks / financial institutions, defaults in dues towards instrument holders like debenture holders, fixed deposits, and arrears on cumulative preference shares issued, defaults in creation of full security as per terms of issue, other liabilities, proceedings initiated for economic / civil / any other offences (including past cases where penalties may or may not have been awarded and irrespective of whether they are specified under paragraph (i) of Part I of Schedule XIII of the Companies Act, 1956) against the promoter group companies.


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MATERIAL DEVELOPMENTS AFTER THE DATE OF THE LAST BALANCE SHEET There is no material development after the date of the last financial statements disclosed in the Letter of Offer which is likely to materially and adversely affect or is likely to affect the trading or profitability of the Company or the value of its assets, or its ability to pay its liabilities within the next twelve months


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GOVERNMENT APPROVALS

On the basis of the indicative list of approvals below, we are permitted to carry on business activities and no further approvals from any Government authorities/RBI are required by us to undertake the business of the Company. It must be distinctly understood that, in granting these licenses, the Government of India and/or RBI does not take any responsibility for Company’s financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf. We have obtained necessary approvals and registrations from various authorities in relation to our business activities; which include:

Sr. No Statutory/Regulatory Act License

Name License

No. Validity Name of Authority

01

The Factories Act,1948 ( Amended 1987 & 2001) Factory License 093557

31/12/2010.

Jt.Director of DISH, Vasai

02

Drugs and Cosmetic Rules , 1945

License of Manufacture for sale(or for Distribution) of Drugs Other than those specified in schedules C,C(1), X

25-937

10/08/2011

F.D.A. Thane

03

Industrial Entrepreneurs' Memorandum (IEM) for the manufacture of items acknowledged by Government of India, Ministry of Commerce and Industry, Secretarial for Industrial Assistance ,Public Relation and Complaints Section

Industrial Entrepreneurs' Memorandum (IEM)

680/SIA/IMO/ 2007

For new Products

Government of India, Ministry of Commerce &

Industry, New Delhi

04

The Maharashtra Prevention of Food Adulteration Rules , 1962

Prevention of Food Adulteration – TBHQ,BHA,ASCORBYL PALMITATE & SUCRALOSE

M/P/W/64/756/97

31/12/2012

F.D.A. Thane

05

Water( Prevention and control of Pollution) Act , 1974 and Air ( Prevention and control of Pollution) Act,1981 Hazardous waste Rule.1989 & Amendment Rules 2003.

M.P.C.B.Consent

BO/RO.Thane/PCI-

I/EIC-1142/R/C

C-658

30/11/2010

MPCB Mumbai


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Sr. No Statutory/Regulatory Act License

Name License

No. Validity Name of Authority

06

Hazardous Waste Rule.1989 & Amendment Rules 2003.

Membership Certificate of Mumbai Waste Management Limited for safe & secure disposal of Hazardous Waste

MWML-HzW-TAR-

2543 31/03/2014

Mumbai Waste Management Limited,

Mumbai

07 Water( Prevention and control of Pollution) Cess Act , 1977

Water Cess --- Quarterly MPCB Mumbai

08

Petroleum Act ,1934 Petroleum class A&C

storage of 96,000 Lts. (Bulk)

P/HQ/MH/15

/2086/(P7374)

31/12/2012 Deputy Chief Controller of explosives New Mumbai.

09 Maharashtra solvent, raffinate and slop (licensing) Order 2007

Solvent License under Solvent Order 2007

Palghar 26 2007 08/07/2012 Add.Collector,Jawhar

10 The Factories Act,1948 ( Amended 1987 & 2001)

Stability Certificate - 30/06/2013 Competent Authority

11 Weights and Measurement Act,1956

Storage Tanks Calibration and standard weights

- 22/03/2011 Inspector of Legal Metrology, Konkan Bhavan

12 Indian Boiler Act,1923

Certificate for the use of Boiler MR/14770 10/02/2011 Inspectorate of Boiler,

Mumbai.

13 Indian Boiler Act,1923

Certificate for the use of Boiler MR/13441 26/04/2011 Inspectorate of Boiler,

Mumbai.


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SECTION VI – OTHER REGULATORY AND STATUTORY DISCLOSURES

AUTHORITY FOR THE PRESENT ISSUE

The Board of Directors of the Company in their meeting held on 1st December 2009 decided to make the rights issue of equity shares to the extent of about Rs.550.00 lacs and accordingly the draft letter of offer was approved by the Rights Issue Committee of the company. The Rights issue committee of the company held on 12th July 2010 decided to make the following offer to the existing shareholders of the company: Issue of 34,88,688 Equity Shares of Rs. 10/- each at a premium of Rs. 5.75 per equity share (Issue Price of Rs. 15.75) aggregating Rs. 549.47 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of 3 (three) Equity Shares for every 5 (Five) Equity Shares held on Monday 2nd August 2010 (Record Date). PROHIBITION BY SEBI The Company, its Promoters, Directors or any of the Company’s associates or group companies with which the Directors of the Company are associated as Directors or Promoters have not been prohibited from accessing the capital market or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. ELIGIBILITY FOR THE ISSUE Camlin Fine Chemicals Limited is an existing listed Company. It is eligible to offer this Rights Issue in terms of Chapter IV of ICDR Regulations 2009. The promoters, their relatives, The Company, Group companies are not detained as willful defaulters by RBI/Government authorities and there are no violations of securities laws committed by them in the past or pending against them. DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THIS LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). “IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF OFFER DOCUMENT TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE OFFER DOCUMENT. LEAD MANAGER, KEYNOTE CORPORATE SERVICES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE OFFER DOCUMENT ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN OFFER DOCUMENT, LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER KEYNOTE CORPORATE SERVICES LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED 23/02/2010 WHICH READS AS FOLLOWS :


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1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO

LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE LETTER OF OFFER PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:

a) THE LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY WITH THE

DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; b) ALL THE LEGAL REQUIREMENTS TO THE SAID ISSUE AS ALSO THE REGULATIONS

GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

c) THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE TRUE, FAIR AND

ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.

3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE

LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID.

4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS TO

FULFIL THEIR UNDERWRITING COMMITMENTS – THIS ISSUE IS NOT BEING UNDERWRITTEN AND HENCE THE SAME IS NOT APPLICABLE.

5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR

INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE OFFER DOCUMENT WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE OFFER DOCUMENT. – THIS IS NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.

6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF

INDIA (ISSUES OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE OFFER DOCUMENT. – THIS IS NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.

7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C ) AND

(D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’


157

CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE.- THIS IS NOT APPLICABLE AS THE PRESENT ISSUE IS RIGHTS ISSUE.

8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE FUNDS

ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE “MAIN OBJECTS” LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.

9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT

THE MONIES RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FORM ALL THE STOCK EXCHANGES MENTIONED IN THE OFFER DOCUMENT. WE FURHTER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.

10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE OFFER DOCUMENT THAT

THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.

11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN SECURITIES AND

EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN THE ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.

12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE LETTER

OF OFFER:

a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY AND

b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH

DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.

13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO THE

ADVERTISMENT IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.

14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS BEEN

EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUISNESS STANDS, THE RISK FACTORS, PROMOTERS’ EXPERIENCE, ETC.

15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATIONWISE COMPLIANCE WITH THE

APPLICABLE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF


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CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE OFFER DOCUMENT WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.

THE FILING OF THE OFFER DOCUMENT DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY IRRREGULARITIES OR LAPSES IN OFFER DOCUMENT”. CAUTION STATEMENT / DISCLAIMER CLAUSE OF THE ISSUER AND THE LEAD MANAGER The Issuer Company and the Lead Manager accept no responsibility for statements made otherwise than in this Offer Document or in the advertisement or in any other material issued by or at the instance of the Company and the Lead Manager and any one placing reliance on any other source of information would be doing so at his/her/their own risks. IMPERSONATION Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: "Any person who- (a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any

shares therein, or (b) otherwise induces a Company to allot or register any transfer of shares therein to him, or any other

person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years."

DISCLAIMER IN RESPECT OF JURISDICTION This offer is being made in India to persons resident in India (including Indian nationals resident in India who are majors, Hindu Undivided Families, companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, or any other Trust law and who are authorised under their constitution to hold and invest in shares), Foreign Collaborators and to NRIs, OCBs and FIIs as defined under the Indian laws. This Offer Document does not, however, constitute an offer to sell or an invitation to subscribe to securities issued hereby in any jurisdiction other than India. Any person into whose possession this Offer Document comes is required to inform himself about and to observe any such restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) in Mumbai, State of Maharashtra, India only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Offer Document has been submitted to the SEBI. Accordingly, the equity shares represented thereby may not be offered or sold, directly or indirectly, and this Offer Document may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of Offer Document nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Camlin Fine Chemicals Ltd. since the date hereof or that the information contained herein is correct as of any time subsequent to this date.


159

DISCLAIMER CLAUSE OF THE BOMBAY STOCK EXCHANGE LTD. (BSE) Bombay Stock Exchange Limited (the Exchange) has given vide its letter letter no. DCS/PREF/JA/IP-RT/1717/09-10 dated March 9, 2010, permission to this Company to use the Exchange’s name in this Letter of Offer as one of the Stock Exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized this letter of offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Company. The Exchange does not in any manner: (i) Warrant, certify or endorse the correctness or completeness of any of the contents of this letter of

offer; or (ii) Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or

Take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company;

And it should not for any reason be deemed or construed that this letter of offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein for any other reason whatsoever. FILING A copy of this Letter of Offer has been filed with SEBI, SEBI Bhavan, C-4-A, G Block, Bandra Kurla Complex, Bandra (E), Mumbai – 400051 , and with Bombay Stock Exchange Ltd., Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai – 400 001 LISTING Presently the Equity shares of CFCL are listed at Bombay Stock Exchange Ltd. (BSE) (Designated Stock Exchange), The Company has received in-principle approvals from BSE vide its letter no. letter no. DCS/PREF/JA/IP-RT/1717/09-10 dated March 9, 2010 for listing of the equity shares being issued in terms of this Letter of Offer. If the permissions to deal in and for an official quotation of the equity shares are not granted by the stock exchange, the Company shall forthwith repay, without interest, all monies received from the applicants. In case of delay interest shall be paid in accordance with the provisions of Section 73 of the Act.

CONSENTS

Consents in writing of: (a) the Directors, the Company Secretary and Compliance Officer, the Auditors, Bankers to the Company and Bankers to this Issue; and (b) Lead Manager to this Issue, Registrar to this Issue and legal advisors to the Issue to act in their respective capacities have been obtained and filed with Stock Exchanges at the time of filing this Letter of Offer and such consents have not been withdrawn up to the time of delivery of the Letter of Offer for registration with the stock exchanges. The Auditors of the Company have given their written consent for the inclusion of their Report in the form and content as appearing in this Offer Document and also the tax benefits accruing to the Company and its members and such consents and reports have not been withdrawn up to the time of delivery of the Letter of Offer for registration with the Stock Exchanges. EXPERT OPINION Except as stated elsewhere in this Offer Document, the Company has not obtained any expert opinions.


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EXPENSES OF THE ISSUE

The total expenses of the issue are estimated to be around Rs. 50.00 Lacs. All expenses with respect to the issue would be met out of the proceeds of the issue. The split of issue expenses is as under: -

(Rs. in Lacs)

Activity Amount % of Issue Expenses

% of Issue Size

Fees to the intermediaries 18.00 36.00 3.27 Fees to SEBI and Stock Exchange 0.81 1.62 0.14 Printing & Stationery and Postage expenses 6.00 12.00 1.09 Advertisement 16.00 32.00 2.90 Legal and auditor Expenses 6.50 13.00 1.18 Miscellaneous Expenses 2.69 5.38 0.48 Total 50.00 100.00 9.06

Fees payable to Lead Manager to the Issue

The total fees payable to the Lead Manager will be as per the Memorandum of Understanding signed amongst the company and the Lead Manager, a copy of which is available for inspection at the registered office of CFCL.

Fees payable to Registrar to the Issue

The total fees payable to the Registrar to the issue will be as per the Memorandum of Understanding signed amongst the company and the Registrar to the issue, a copy of which is available for inspection at the registered office of CFCL. UNDERWRITING COMMISSION, BROKERAGE AND SELLING COMMISSION No Underwriting, Brokerage and selling Commission will be payable for this issue. PREVIOUS ISSUE DETAILS

The company has not made any public/rights issue of its equity shares during the last five years. ISSUES OTHERWISE THAN FOR CASH

The Company has not made any issue otherwise than for cash except as to shares issued to the shareholders of Camlin Ltd under the Scheme of Arrangement duly approved by High Court Bombay. The shareholders of Camlin Ltd. were issued shares of Camlin Fine Chemicals Ltd. in the ratio of 1 equity share of Rs.10/- each for every 1 equity share of Rs.10/- each held in the company. COMMISSION AND BROKERAGE ON PREVIOUS ISSUES

The Company has not made any Public / Rights Issue during last five years, hence any commission or brokerage has not been paid. PREVIOUS ISSUES There has been no issue of capital made by the company or other listed group – companies/ subsidiaries/ associates during last 3 years PROMISE VIS-À-VIS PERFORMANCE The company has not made any public issues in the past. OUTSTANDING DEBENTURES OR BONDS

As on the date of filing of this Letter of Offer, CFCL does not have any outstanding Debentures or Bonds.


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OUTSTANDING PREFERENCE SHARES

As on the date of filing of this Letter of Offer, there are no outstanding preference shares issued by the company. INVESTOR GRIEVANCE REDRESSAL SYSTEM The investor grievances arising against the Company out of this issue will be handled by the Registrars and Transfer Agent in consultation with the secretarial department of the Company. To handle the grievances received, the Company has appointed Mr. Narayan R. Joshi, as the Compliance Officer. He will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrars to the Rights Issue and ensure timely settlement. All grievances related to the offer may be addressed to the Registrar to the Rights Issue quoting the application No. (Including prefix), Number of equity shares applied for, amount paid on application, date, Bank and branch/ Collection center where application was submitted. The normal time taken by CFCL for redressal of investor grievance is given below:-

S.No Type of Request Normal Time Taken (No of Days)

1 Issue of Duplicate Share Certificate 30 days 2 Transfer of shares 30 days 3 Transmission of shares 30 days 4 Demat/remat of shares Not applicable as of now 5 Non receipt of dividend 1 week 6 Non receipt of Annual Report Immediate 7 Change of residential address/ Bank mandate Within 2 days 8 Consolidation/split of share certificates 30 days

There are no Pending investor Complaints against the company

CHANGE IN AUDITORS DURING THE LAST THREE YEARS

The changes in the Auditors of the Company in the last three year are as under :

Audit FIrm Date of Appointment

Date of Cessation / Resignation

M/s. Milind S. Kshirsagar & Co. 08/02/2002 4/12/2006 M/s. B.K. Khare, Chartered Accountants 04/12/2006 --

CAPITALISATION OF RESERVES OR PROFITS

The company has not capitalized its reserves or profit during the last five years. REVALUATION OF ASSETS The company has not revalued its asset during the last five years.


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SECTION VII - OFFERING INFORMATION

A. TERMS OF THE ISSUE The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this Letter of Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advice or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time, the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above such terms and conditions, the Equity Shares shall also be subject to applicable laws, guidelines, notifications and regulations relating to issue of capital and listing of securities issued from time to time by SEBI, the Government of India, RBI and or other authorities. Ranking of equity shares The new Equity Shares proposed to be issued in the issue shall be pari passu with the existing fully paid up Equity Shares in all respects including dividends. Mode of payment of dividend The dividend is paid to all the eligible shareholders as per the provisions of Companies Act. Face value & issue price The Face Value of Equity Shares of the company is Rs.10/-. The Equity Shares of Rs. 10/- each are being issued at a premium of Rs. 5.75 each i.e. at a price of Rs. 15.75 per share in the present rights issue. Rights of equity shareholders The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when issued. Further, the rights of the above and other holders of shares are subject to the provisions of the Companies Act, 1956, the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer and other laws as applicable from time to time. Market lot The market lot for the Equity Shares held in the demat mode is one share. In case of physical certificate, the Company would issue one certificate for the Equity Shares allotted to one person (“Consolidated Certificate”). In respect of consolidated certificate, the Company will, only upon request from the equity shareholder, split & return such consolidated certificate into smaller denomination within 7 days time in conformity with the clause 3 of the Listing Agreement. No fee would be charged by the Company for splitting the consolidated certificate. Nomination In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity


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Shareholder(s), shall be entitled to the same rights to which he would be entitled if he/she were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale/disposal of the Equity Share by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold the Equity Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the office of the Company located at Camlin Fine Chem House, Plot No. F/11 & F/12, WICEL, Opp. SEEPZ Main Gate, Andheri (East), Mumbai 400 093 or such other place at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion in the CAF. Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the nomination with the Company, no further nomination need to be made for Equity Shares to be allotted in this Issue under the same folio. In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depository Participant of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform their respective Depository Participant. Minimum subscription i) If the Company does not receive the minimum subscription of 90% of the issue, the entire

subscription shall be refunded to the applicants within fifteen days from the date of closure of the Issue.

ii) If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), the Company shall pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.

Disposal of odd lots The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder. Restrictions on transfer and transmission of shares and on their consolidation/ splitting

There are no restrictions on transfer and transmission and on their consolidation/splitting of shares issued pursuant to this issue. New Financial Instruments The company has not issued any new financial instruments like Deep Discount Bonds, Debentures with warrants, Secured Premium Notes etc.


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B. ISSUE PROCEDURE

BASIS OF THE OFFER The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company in respect of Equity Shares held in the physical form at the close of business hours on the Record Date. The Company has in consultation with the Designated Stock Exchange fixed the Record Date for determining the shareholders who are entitled to receive this offer for Equity Shares on a rights basis. The Equity Shares are being offered for subscription in the ratio of 3 (Three) Equity Shares for every 5 (Five) Equity Shares held by the Equity Shareholders. The shareholders whose names appear as beneficial owners as per the list furnished by the depositories in respect of the Equity Shares held in electronic form and on the register of members of the Company in respect of the shares held in physical form on Monday 2nd August 2010 at the close of business hours shall be entitled to the Equity Shares on the Rights basis in the ratio of 3 (Three) Equity Shares for every 5 (Five) equity shares held by them. OPTION TO SUBSCRIBE Applicants to the Equity Shares of the Company issued through this Rights Issue shall be allotted the securities in dematerialized (electronic) form at the option of the applicant. The Company has signed a tripartite agreement with National Securities Depository Limited (NSDL) and Sharepro Services (India) Pvt. Ltd. on 19/02/2007 and with Central Depository Services (India) Limited (CDSL) and Sharepro Services (India) Pvt. Ltd. on 23/03/2007, which enables the Investors to hold and trade in securities in a dematerialised form, instead of holding the securities in the form of physical certificates. RIGHTS ENTITLEMENT As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the register of members as an equity shareholder of the Company on the Record Date, you are entitled to this Rights Offer. The number of Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF and as shown in part A of the enclosed CAF. FRACTIONAL ENTITLEMENT Fractional entitlement if any will be rounded off to the next higher integer and the share required for the same to be adjusted from one of the promoter’s entitlement. JOINT-HOLDERS Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed (so far as the company is concerned) to hold the same as joint-holders with benefits of survivorship subject to provisions contained in the Articles. OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/ APPLICANTS Applications received from NRIs and other NR shareholders for allotment of Equity Shares shall be, inter alia, subject to the conditions imposed from time to time by the RBI under the FEMA in the matter of refund of application moneys, allotment of Equity Shares, issue of Letter of Allotment / share certificates, payment of interest, dividends, etc. General permission has been granted to any person resident outside India to apply shares offered on rights basis by an Indian Company in terms of FEMA and the rules and regulations thereunder. Vide notification dated June 18, 2003, bearing number FEMA 94/2003, RBI has granted general permission to Indian companies to issue rights/bonus shares to existing non-resident shareholders. The existing non-resident shareholders may apply for issue of additional shares and the Company may allot the same subject to the condition that the overall issue of shares to non-residents in


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the total paid up capital does not exceed the sectoral cap. In other words, non-residents may subscribe for additional shares over and above shares offered on rights basis by the company and renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribe for additional shares over and above the shares offered on rights basis by the Company and also renounce the shares offered either in full or part thereof in favour of a person named by them. The Equity Shares issued under the Rights Issue and purchased by NR shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the previously held Equity Shares against which Equity Shares under the Rights Issue are issued. However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued by the RBI), such shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the Rights Issue. Accordingly, shareholders/ applicants who are OCBs and wishing to participate in the Rights Issue would be required to submit approvals in relation thereto from the FIPB and the RBI. The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Equity Shares, payment of dividend etc. to the Equity Shareholders who are NR. OVERSEAS SHAREHOLDERS

The company is issuing equity shares on a rights basis to the equity shareholders of the company and will dispatch the Letter of Offer/Abridged Letter of Offer and Composite Application Form (“CAF”) to all the shareholders who have an Indian address and to those existing overseas shareholders having foreign addresses. Persons receiving a copy of this Letter of Offer/ Abridged Letter of Offer should not, in connection with the issue of the Equity Shares or the Rights Entitlements, distribute or send this Letter of Offer/ Abridged Letter of Offer in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. NOTICES All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and/or, will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time. ISSUE OF DUPLICATE EQUITY SHARE CERTIFICATES If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible. If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued. OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDERS The Equity Shareholders will be having the following five options: • Apply for his entitlement in part • Apply for his entitlement in part and renounce the other part • Renounce his entire entitlement • Apply for his entitlement in full • Apply for his entitlement in full and apply for additional Equity Shares


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IMPERSONATION Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below:

"Any person who-

a. makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or

b. otherwise induces a Company to allot or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years." HOW TO APPLY For Resident Indian Shareholders Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Manager or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. Payment should be made in cash (not more than Rs.20,000/-) or by cheque/bank draft/ drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the bankers clearing house located at the centre where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected. For Non-Resident Shareholders Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of letters of allotment/certificates/ payment of dividends etc. Letter of Offer and CAF shall be dispatched to non-resident Equity Shareholders in India only. For Mutual Fund Shareholders A separate application can be made in respect of rights entitlement if any for each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:- The Issue of Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the Company.


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Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. NRI Investors should note that applications by ineligible non-residents (including on account of restriction or prohibition under applicable local laws) and where a registered address in India has not been provided are liable to be rejected. For applicants residing at places other than designated Bank collecting branches. Applicants residing at places other than the cities where the Bank collection centres have been opened should send their completed CAF by registered post/speed post to the Registrars to the Issue, Sharepro Services Pvt. Ltd. Limited alongwith demand drafts, net of demand draft and postal charges, payable to the Company at Mumbai in favour of “CFCL - Rights Issue” crossed “A/c Payee only” so that the same are received on or before closure of the Issue i.e Tuesday 24th August 2010. The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned below. All application forms duly completed together with cash/cheque/demand draft for the application money must be submitted before the close of the subscription list to the Bankers to the Issue named herein or to any of its branches mentioned on the reverse of the CAF. The CAF alongwith application money must not be sent to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The applications are required to strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected by the Company, the Lead Manager and the Registrar not having any liabilities to such applicants. The CAF consists of four parts: Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares Part B: Form for renunciation Part C: Form for application for renouncees Part D: Form for request for split application forms You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed CAF: Sr. No

Options available Action Required

1. Accept whole or part of the Equity Shares offered to you without renouncing the balance

Fill in and sign Part A indicating in Block III of Part A the number of Equity Shares accepted. If you accept all the equity share offered in Block II of Part A you may apply for additional Equity Shares. Indicate in Block IV the additional Equity Shares applied for.

2. Renounce all the Equity Shares offered to you to one person (joint renouncees are deemed as one person) without your applying for any of the Equity Shares offered to you.

Fill in and sign Part B indicating the number of Equity Shares renounced in Block VII and handover the ENTIRE FORM to the renouncee. The renouncee/ joint renouncee(s) must fill in and sign Part C of CAF.

3. Accept a part of your entitlement and renounce the balance or part of it to one or more Renouncee(s).

Fill in and sign Part D for the Split Form and send the ENTIRE CAF to the Registrar to the Issue.

OR On receipt of Split Forms :


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Sr. No

Options available Action Required

4. Renounce your entitlement or part of it to one or more persons (joint renouncees are deemed as one person).

a b

For the Equity Shares you are accepting, fill in and sign Part A. For the Equity Shares you are renouncing fill in and sign Part B indicating the number of Equity Shares renounced in Block VII. Each of the renouncees should fill in and sign Part C.

Note: If application is made jointly with any other person(s) who is/are not already joint holders or change in the sequence of names of joint holders, it will amount to renunciation and the procedure mentioned in (2) above will have to be followed. Acceptance of Offer You may accept the Offer and apply for the Equity Shares offered, either in full or in part by filling Block III of Part A of the enclosed CAF and submit the same along with the application money payable to the bankers to the Issue or any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the demand draft, net of demand draft and postal charges, payable to the Company at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. You may apply for the Equity Shares offered wholly or in part by filling in the enclosed CAF and submitting the same along with the application money to the Bankers to the Issue or its designated branches on or before the closure of the subscription list. The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF. The CAF should not be detached under any circumstances, otherwise the application(s) will be rejected forthwith. Application for additional Equity Shares You are also eligible to apply for additional Equity Shares over and above the number of Equity Shares offered to you provided you have applied for all the shares offered to you without renouncing them in full or in part. However, the additional Equity Shares cannot be renounced in full or in part, in favour of any other person(s). If you desire to apply for additional Equity Shares, you may fill in the number of additional Equity Shares in Part A of the CAF. The allotment of additional Equity Shares will be at the sole discretion of the Board on an equitable basis with reference to the number of Equity Shares held by you on the Record Date in consultation with The Designated Stock Exchange. In the case of requests for additional Equity Shares by Non Residents, the allotment will be subject to the approval of Reserve Bank of India. The Board may reject any application for additional Equity Shares without assigning any reasons thereof. The renounces can also make an application for additional shares. Renunciation You may renounce all or any of the Equity Shares, you are entitled to in favour of any individual, limited companies, or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders, trust or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust laws and is authorised under its constitution to hold shares in a company), OCBs, minors (unless acting through natural or legal guardians), Partnership Firms, or their nominees, or any of them will not be accepted.


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Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining requisite approval(s) of the Reserve Bank of India (RBI) and the said permission must be attached to the CAF. Procedure for renunciation (i) To Renounce in WHOLE If you wish to renounce this offer in whole, please complete PART 'B' of the CAF enclosed with the Letter of Offer for the number of Equity Shares renounced and deliver the CAF duly signed to the person(s) in whose favour the Equity Shares are so renounced. All joint holders must sign as per specimen signatures recorded with the Company at the place provided for the purpose and in the same order. The person(s), in whose favour the offer has been renounced (renouncees) should complete and sign PART C of the CAF. In case of joint renouncees, all joint renouncees must sign. (ii) To Renounce in PART If you wish to either accept this offer in part and renounce the balance of this offer the CAF must first be split into the requisite number of forms, by applying to the Registrar to the Issue. Please indicate your requirement of split forms in the space provided for this purpose in PART D of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on or before the last date for receiving requests for split forms i.e. Tuesday 17th August 2010. If you wish to apply for Equity Shares jointly with any person(s) who is/are not already joint holder(s) with you, then it would amount to renunciation and the procedure of renunciation as mentioned above shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure as stated above shall have to be followed. Further, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute and unqualified discretion to reject any such request for allotment of Equity Shares from renouncee(s) without assigning any reason thereof save where the Equity Shares have been renounced in favour of a person who is already a member of the Company. Please note that:

a) Part A of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid.

b) Only the person to whom this Letter of Offer has been addressed and NOT the renouncees shall be entitled to split forms. Forms once split cannot be resplit.

Request for spilt forms: • Request for Split Forms should be addressed to the Registrar to the Issue so as to reach them on or

before the last date for receiving of request for split forms by filling in PART D of the CAF. • Requests for Split Forms will be entertained only once. Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within 15 days from the Issue Opening Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found


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subsequently. If the applicant violates any of these requirements, he / she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Rights Issue on plain paper, along with a Demand Draft payable to the Company at Mumbai which should be drawn in favour of ”CFCL- Rights Issue” crossed A/c Payee Only and send the same by registered post directly to the Registrar to the Issue. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date (i.e; Tuesday 24th August 2010) and should contain the following particulars:

Name of Issuer, being Camlin Fine Chemicals Limited. Name and address of the Equity Shareholder including joint holders Registered Folio Number/ DP and Client ID no. Number of shares held as on Monday 2nd August 2010 (Record Date). Certificate numbers and distinctive numbers, if held in physical form Number of Rights Equity Shares entitled Number of Rights Equity Shares applied for out of entitlement Number of additional Equity Shares applied for, if any Total number of Equity Shares applied for Total amount paid at the rate of Rs. 10/-per Equity Share Particulars of cheque/draft Savings/Current Account Number and name and address of the Bank where the Equity

Shareholder will be depositing the refund order Each of the applicant should mention his/her Permanent Account Number (PAN) allotted under

the IT Act. In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the

bank and branch. Signature of Equity Shareholders to appear in the same sequence and order as they appear in the

records of the Company Payment in such cases, should be through a demand draft, net of demand draft and postal

charges, payable to the Company at Mumbai be drawn in favour of “CFCL - Rights Issue” crossed “A/c Payee only”.

Please note that those who are making the application on plain paper shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications. The Company shall refund such application amount to the applicant without any interest thereon. Quoting of PAN/GIR no. in the application forms Pursuant to the circular MRD/DoP/Circ-05/2007 dated April 27, 2007, SEBI has mandated Permanent Account Number (PAN) to be the sole identification number for all participants transacting in the securities market, irrespective of the amount of the transaction with effect from July 2, 2007. Each of the applicants should mention his/her PAN allotted under the IT Act. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN, as the Bid is liable to be rejected on this ground.


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Last date for submission of CAF The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is Tuesday 24th August 2010. If the relevant CAF together with amount payable thereunder is not received by the Bankers/Registrar to the Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose of the Equity Shares hereby offered as provided under "Basis of Allotment". Incomplete application CAFs which are not complete or are not accompanied with the application money amount payable are liable to be rejected. TERMS OF PAYMENT The entire amount of Rs. 15.75 per share is payable on application by all shareholders/applicants. MODE OF PAYMENT For Resident Shareholders/Applicants Payment(s) must be made by cheque/demand draft and drawn on any bank (including a co-operative bank) which is situated at and is a member or a sub-member of the Bankers' Clearing House located at the centre where the CAF is submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments will be rejected. Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications but not having collection centers should send their application by Registered Post, ONLY to the Registrar to the Issue enclosing a demand draft drawn on a clearing Bank and payable to the Company at Mumbai ONLY net of bank charges and postal charges, before the closure of the issue. Such cheque/drafts should be payable to "CFCL - RIGHTS ISSUE". All cheques/ drafts must be crossed 'A/c Payee only’. No receipt will be issued for the application money received. However, the Collection Centre receiving the application will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal delay/ loss in transit on this account. For Non-Resident Shareholders/Applicants As regards the application by non-resident equity shareholders, the following further conditions shall apply: Application with repatriation benefits Payment by NRIs/ FIIs/ foreign investors must be made by demand draft/cheque payable to the Company at Mumbai or funds remitted from abroad in any of the following ways: • By Indian Rupee drafts purchased from abroad and payable to the Company at Mumbai or funds

remitted from abroad (submitted along with Foreign Inward Remittance Certificate); or • By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in

Mumbai; or


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• By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Mumbai; or

• FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. All cheques/drafts submitted by non-residents applying on repatriable basis should be drawn in favour of "CFCL - RIGHTS ISSUE - NR" payable to the Company at Mumbai and crossed ‘A/c Payee only’ for the amount payable. A separate cheque or bank draft must accompany each application form. Applicants may note that where payment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/FCNR account should be enclosed with the CAF. In the absence of the above the application shall be considered incomplete and is liable to be rejected. In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds and other disbursements, if any shall be credited to such account details of which should be furnished in the appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian Rupee Drafts from abroad, refunds and other disbursements, if any will be made in US Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers. Application without repatriation benefits As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques/drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of "CFCL - RIGHTS ISSUE” payable at Mumbai and must be crossed ‘A/c Payee only’ for the amount payable. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is liable to be rejected. New demat account shall be opened for holders who have had a change in status from resident Indian to NRI. “Non-resident Indian Applicants may please note that only such application as are accompanied by payment in free foreign exchange shall be considered for allotment. The non-resident Indians who intend to make payment through Non- Resident Ordinary (NRO) accounts shall mention the details of the Bank Account from their payment is being made.” Note: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the

investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to Income Tax Act, 1961.

• In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.


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• The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.

• In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.

PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of Equity Shareholders proposing to subscribe to the Issue through the ASBA Process. The Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Letter of Offer. Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and ensure that the number of Equity Shares applied for by such Shareholders do not exceed the applicable limits under laws or regulations. Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on application as stated in the CAF will be blocked by the SCSB. The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on www.sebi.gov.in. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI website. ASBA Process Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Equity Shares in the Issue through the ASBA Process is only available to Shareholders of the Company on the Record Date and who:

Is holding Equity Shares in dematerialized form and has applied for entitlements or additional Securities in the Issue in dematerialized form;

Has not renounced his/her entitlements in full or in part; Has not split the CAF; Is not making an application on plain paper; Is not a Renouncee to the Issue; Applies through a bank account with one of the SCSBs.

As per SEBI press release no.386/2009 dated December 10, 2009 the reach of ASBA has been extended to all categories of investors. The applicants applying through ASBA facility shall be herein after called ASBA applicants which shall include retail individual investors, High Networth investors and corporate investors. CAF The Registrar will despatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF only. The method of applying under ASBA process will not be available for Investors applying on plain paper. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB.


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Acceptance of the Issue You may accept the Issue and apply for the Equity Shares offered, either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Mode of payment The Shareholder applying under the ASBA Process agrees to block the entire amount payable on application (including for additional Equity Shares, if any) with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrars. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Shareholder in the CAF. This amount will be transferred in terms of the SEBI Guidelines, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalization of the basis of allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB. The Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, the Company would have a right to reject the application only on technical grounds. Options available to the Shareholder applying under the ASBA Process

The summary of options available to the Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the respective CAFs received from Registrar:

Option Available

Action Required

1. Accept whole or part of your entitlement without renouncing the balance.

Fill in and sign Part A of the CAF (All joint holders must sign)

2. Accept your entitlement in full and apply for

additional Equity Shares Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)

The Shareholder applying under the ASBA Process will need to select the ASBA option process in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option


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and SCSB blocks the requisite amount, then that CAF would be treated as if the Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled too, provided that (i) you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under the section entitled ‘Basis of Allotment’ on page 181 of this Letter of Offer. If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Renunciation under the ASBA Process

Renouncees cannot participate in the ASBA Process. Application on Plain Paper Applications on plain paper cannot be made by Equity Shareholders availing of the ASBA Process. Last date of Application The last date for submission of the duly filled in CAF is Tuesday 24th August 2010. The Issue will be kept open for a minimum of 15 (fifteen) days and the Board or any committee thereof will have the right to extend the said date for such period as it may determine from time to time but not exceeding 30 (thirty) days from the Issue Opening Date. If the CAF together with the amount payable is not received by the Banker to the Issue/Registrar to the Issue or if the CAF is not received by the SCSB on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/Committee of Directors, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board/Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under “Basis of Allotment”.

Option to receive Securities in Dematerialized Form SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE. General instructions for Shareholders applying under the ASBA Process (a) Please read the instructions printed on the respective CAF carefully. (b) Application should be made on the printed CAF only and should be completed in all respects.

The CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected. The CAF must be filled in English.

(c) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and

whose bank account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to the Company or Registrar or Lead Manager to the Issue.


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(d) All applicants, and in the case of application in joint names, each of the joint applicants, should mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.

(e) All payments will be made by blocking the amount in the bank account maintained with the

SCSB. Cash payment is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.

(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth

Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company/or Depositories.

(g) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order

and as per the specimen signature(s) recorded with the Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.

(h) All communication in connection with application for the Equity Shares, including any change in

address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.

(i) Only the person or persons to whom Securities have been offered and not renouncee(s) shall be

eligible to participate under the ASBA process. Do’s: a. Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are

filled in. b. Ensure that you submit your application in physical mode only. Electronic mode is only

available with certain SCSBs and not all SCSBs and you should ensure that your SCSB offers such facility to you.

c. Ensure that the details about your Depository Participant and beneficiary account are correct and the beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only.

d. Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided in the CAF.

e. Ensure that you have mentioned the correct bank account number in the CAF. f. Ensure that there are sufficient funds (equal to {number of Equity Shares applied for} X {Issue

Price}] available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.

g. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.

h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.

i. Each applicant should mention their Permanent Account Number (“PAN”) allotted under the I. T. Act.

j. Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint


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names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.

k. Ensure that the Demographic Details are updated, true and correct, in all respects. Don'ts: 1) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the

SCSB. 2) Do not pay the amount payable on application in cash, by money order or by postal order. 3) Do not send your physical CAFs to the Lead Manager to Issue / Registrar / Collecting Banks

(assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.

4) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground.

5) Do not instruct their respective banks to release the funds blocked under the ASBA Process.

Grounds for Technical Rejection for ASBA Process: CAF in addition to the “Grounds of Technical Rejection” mentioned under page 179 can be rejected on following additional grounds: a) Application on plain paper or on spilt form. b) Application for entitlements or additional shares in physical form. c) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available

with the Registrar. d) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank

is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company. e) Renouncee applying under the ASBA Process. f) Insufficient funds are available with the SCSB for blocking the amount. g) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen

pursuant to regulatory orders. h) Account holder not signing the CAF or declaration mentioned therein. Depository account and bank details for Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Shareholders applying under the ASBA Process should note that on the basis of Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Shareholders such as address, bank account details and occupation (“Demographic Details”). Hence, Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF.

These Demographic Details would be used for all correspondence with such Shareholders including mailing of the letters intimating unblock of bank account of the respective Shareholder. The Demographic Details given by Shareholders in the CAF would not be used for any other purposes by the Registrar.


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Hence, Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating allotment and unblocking would be mailed at the address of the Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of bank account. Note that any such delay shall be at the sole risk of the Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the Shareholder applying under the ASBA Process for any losses caused to such Shareholder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that match three parameters, namely, name(s) of the Shareholder(s) (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected. Application will not be accepted by the Lead Manager or by the Company. Note on cash payment (section 269 SS) Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank drafts, if the amount payable is Rs. 20,000/- or more. In case payment is effected in contravention of this provision, the application is liable to be rejected. FORFEITURE The allotment shall be made only on receipt of full application money as mentioned in “Terms of Payment”. As such there will be no partly paid-up shares emerging from this issue and hence no requirement of any forfeiture. APPLICATION UNDER POWER OF ATTORNEY In case of applications under Power of Attorney or by Limited Companies or Bodies Corporate or Societies registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may be, must be lodged separately by registered post at the office of the Registrar to the Issue simultaneously with the submission of the CAF, indicating the serial number of the CAF and the name of the bank and the branch office where the application is submitted within 10 days of closure of the offer, failing which the application is liable to be rejected. In case the Power of Attorney is already registered with the Company, then the same need not be furnished again. However, the serial number of the Registration under which the Power of Attorney has been registered with the Company must be mentioned below the signature of the Applicant. BANK DETAILS OF THE APPLICANT The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current Account Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print the said details in the Refund Orders, if any, after the name of the payees. Please note


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that provision of Bank Account details has now been made mandatory and applications not containing such details are liable to be rejected. APPLICATION NUMBER ON THE CHEQUE/DEMAND DRAFT To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first applicant on the reverse of the cheque / demand draft. GROUNDS FOR TECHNICAL REJECTIONS Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:

Amount paid does not tally with the amount payable for; Bank account details (for refund) are not given / or incomplete / or incorrect; Age of first applicant not given in case of renouncee(s); PAN not stated or copy of GIR number furnished instead of PAN. See the section titled “Issue

Procedure – Permanent Account Number or PAN/ GIR; Cash applications for an amount exceeding Rs.20,000/-; In case of Application under power of attorney or by limited companies, corporate, trust, etc.,

relevant documents are not submitted; If the signature of the existing shareholder does not match with the one given on the Application

Form and for renouncees if the signature does not match with the records available with their depositories;

If the Applicant desires to have shares in electronic form, but the CAF does not have the Applicant’s depository account details;

CAFs are not submitted by the Applicants within the time prescribed as per the CAF and the Letter of Offer;

Applications not duly signed by the sole/joint Applicants; Applications by OCBs unless accompanied by specific approval from the RBI permitting the OCBs to

invest in the Issue; In case no corresponding record is available with the Depositories that matches three parameters,

namely, names of the Applicants (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;

Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided;

Multiple applications. GENERAL (a) All applications should be made on the printed CAF provided by the Company and should be

complete in all respects. Applications which are not complete in all respects or are made otherwise than as herein provided or not accompanied by proper application money in respect thereof will be refunded without interest.

(b) Please read the instructions in the enclosed CAF carefully. (c) ALL COMMUNICATIONS IN CONNECTION WITH YOUR APPLICATION FOR THE EQUITY

SHARES INCLUDING ANY CHANGE IN YOUR REGISTERED ADDRESS SHOULD BE ADDRESSED TO THE REGISTRAR TO THE ISSUE.

(d) Application Forms must be filled in ENGLISH in BLOCK LETTERS. (e) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule to

the Constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal.

(f) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order and as per the specimen signatures recorded with the Company.


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(g) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on the application form and all communications will be addressed to him/her. To prevent any fraudulent encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account number and the name of the bank and its branch with whom such account is held in the space provided in the CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without this information are liable to be rejected.

(h) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A,B,C and D of the Application Form(s) is /are detached or separated, such application will forthwith be rejected.

(i) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned elsewhere in this Letter of Offer and not to the Company, the Registrar or the Lead Manager.

(j) Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any matter or thing herein contained and claimed by either party against the other shall be instituted or adjudicated upon or decided solely by the appropriate Court where Registered Office of the Company is situated.

(k) The last date for receipt of CAF alongwith the amount payable is Tuesday 24th August 2010. However, the Board will have the right to extend the same for such period as it may determine from time to time, but not exceeding 60 days from the date of opening of the subscription list. If the CAF together with the amount payable thereunder is not received by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as may be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose the Rights hereby offered.

For further instructions please read CAF carefully. DEMATERIALISATION As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized form i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. The Company has entered into a tripartite agreement dated 19/02/2007 with the National Securities Depository Ltd. (NSDL) and Sharepro Services (India) Pvt. Ltd. for dematerialisation of the equity shares of the Company. The Company has also entered into a tripartite agreement dated 23/03/2007 with the Central Depository Services Limited (CDSL) and Sharepro Services (India) Pvt. Ltd. for dematerialisation of the equity shares of the Company. The ISIN No. granted to the equity shares of the Company is INE 052I01016. An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat mode must have atleast one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s ID Number) appearing under the head “Request for shares in electronic form” in the CAF. Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the total number of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form and the balance, if any, will be allotted in physical form. Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository. No separate application for demat and physical shares is to be made. If such applications are made the application for physical shares will be treated as multiple applications and rejected accordingly. It may be noted that electronic shares can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL.


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Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue The applicant is responsible for the correctness of the applicants demographic details given in the share application form vis-à-vis those with his/her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary Account. DISPOSAL OF APPLICATION AND APPLICATION MONEY The Board reserves the right to reject applications in case the application concerned is not made in terms of this Letter of Offer. In case an application is rejected in full the whole of the application money received will be refunded to the first named applicant and where an application is rejected in part, the excess application money will be refunded to the first named applicant within 6 weeks from the date of closure of the subscription list in accordance with Section 73 of the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay (i.e. forty-two days after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed under sub-Section (2) and (2A) of Section 73 of the Act. The subscription monies received in respect of this Issue will be kept in a separate bank account and the Company will not have access to nor appropriate the funds until it has satisfied the Stock Exchange with suitable documentary evidence that minimum subscription of 90% of the application money for the Issue has been received. No acknowledgment will be issued for the application monies received by the Company. However, the Bankers to the Issue at its collection branches to the Issue receiving the CAF as applicable as per the terms of this Letter of Offer, will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. Except for the reasons stated under “Grounds for Technical Rejections” on page 177 and 179 of this Letter of Offer and subject to valid application, acknowledgement of receipt of application money given by the collection agent shall be valid and binding on issuer and other persons connected with the Issue. BASIS OF ALLOTMENT In the event of the issue being oversubscribed, the basis of allotment will be made only within the overall size of the Rights Issue, as stated in the Letter of Offer and the Board will proceed to allot the Equity Shares in consultation with the designated stock exchange in the following order of priority: 1. Full allotment to the Shareholders who have applied for their Rights entitlement, either in full or in

part and also the renouncee(s) who have applied for Equity Shares renounced in their favour either in full or in part (subject to the other provisions contained under the paragraph titled “Renunciation”).

2. Allotment to the shareholders who have applied for additional Equity Shares provided that they

have applied for all the Equity Shares offered to them, provided there is a surplus after making full allotment under (1) above. The allotment of such additional Equity Shares will be made as far as possible on the basis of the Equity Shares held as on the Record Date.

3. Allotment to the renouncees who have applied for all the Equity Shares renounced in their favour

and have applied for additional Equity Shares, as the Board may in its absolute discretion deem fit, provided there is a surplus after making full allotment (1) and (2) above.

4. Allotment to any other person as the Board may in their absolute discretion deem fit, provided there

is a surplus after making full allotment under (1), (2), (3) above.


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The issue will become undersubscribed after considering the number of shares applied as per the entitlement plus additional shares. The undersubscribed portion can be applied for only after the close of the Issue. Presuming no subscription is received from other shareholders and the promoters/ promoter group subscribing to the extent of 90% of the present issue, their shareholding shall increase to 68.05 % of the post rights issue capital of the company. Presuming no subscription is received from other shareholders and the promoters/promoter group subscribing to the entire unsubscribed portion (i.e. entire rights issue), their shareholding shall increase to 69.25% of the post rights issue equity capital of the Company. Such acquisition by promoters will not result in the public shareholding of the company falling below the requisite levels prescribed under Clause 40A of the Listing Agreement. The Company confirms that it will be in compliance with Clause 40 A of the Listing Agreement on a continuous basis. As a result of this subscription and consequent allotment, the promoters/promoter group may acquire shares over and above their entitlement to such an extent that atleast minimum subscription to the extent of 90% of the proposed issue amount is received. This subscription and acquisition of additional equity shares by the Promoter/promoter group, if any, will not result in change of control of the management of the Company and shall be exempt from the requirements of making a public offer in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997. In the event the entities belonging to the Promoter/Promoter Group mentioned above subscribe to the unsubscribed portion over and above their entitlement the allotment to them shall be done in compliance with the Listing Agreement and other applicable laws prevailing at that time relating to continuous Listing requirements. LETTERS OF ALLOTMENT OR REFUND ORDERS Company shall ensure despatch of refund orders, if any, by under the Certificate of Posting or registered post or speed post or through modes as mentioned in section, Terms of the Issue clause “Mode of Payment” as stated below, as applicable, only at the sole or First Applicant’s sole risk within 15 days of closure of the Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the issuer. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialized form by electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. Allotment of Equity Shares to non-residents and the issue of letters of allotment/share certificates to nonresidents shall be subject to the approval received from RBI. For Non-Resident Applicants, refunds, if any, will be made as under:

Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at Mumbai, India, refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange at the rate of exchange, which is prevailing on the date of refund. The exchange rate risk on such refunds shall be borne by the concerned applicant and the Company shall not bear any part of the risk.

Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be

credited to NRE/FCNR/NRO accounts respectively, on which such cheques are drawn and details of which are provided in the CAF.


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MODE OF PAYMENT OF REFUND Applicants should note that on the basis of name of the applicant, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Composite Application Form, the Registrar to the Issue will obtain from the depositories the applicant’s bank account details including nine digit MICR code. Hence, applicants are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to applicant at the applicant’s sole risk and neither the Lead Manager nor the Company shall have any responsibility and undertake any liability for the same. The payment of refund, if any, shall be undertaken in any of the following manners: 1. NECS – Payment of refund would be done through NECS for applicants having an account at any of

the 68 centres notified by SEBI, where clearing houses for ECS are managed by the RBI. This mode of payment of refunds would be subject to availability of complete bank account details including the nine-digit MICR code as appearing on a cheque leaf from the Depository. The payment of refund through NECS is mandatory for applicants having a bank account at any of the sixty eight (68) centres notified by SEBI, except where the applicant is otherwise disclosed as eligible to receive refunds through direct credit or RTGS.

2. NEFT: Payment of refund shall be undertaken through National Electronic Fund Transfer (NEFT)

wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (MICR) , if any, available to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the applicants have registered their nine digit MICR number and their bank account number while opening and operating the Demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the applicants through this method.

3. ECS - Payment of refund shall be undertaken through ECS for applicants having an account at any

of the following 68 centers: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram (managed by RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur, Jodhpur, Gwalior, Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Pondicherry, Hubli, Shimla (Non-MICR), Tirupur, Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra, Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur, Gorakpur and Jammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore); Pune, Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by Andhra Bank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank of Baroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank of Commerce); Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed by State Bank of Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur). This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. One of the methods for payment of refund is through ECS for applicants having a bank account at any of the abovementioned 68 centers.

4. Direct Credit: Applicants having bank accounts with the Banker(s) to the Issue / Refund Banker(s),as

appointed by the company shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by the Issuer.


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5. RTGS: Applicants having a bank account at any of the abovementioned fifteen centres and whose refund amount exceeds Rs. 5 million, have the option to receive refund through RTGS. Such eligible applicants who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by such applicant opting for RTGS as a mode of refund. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.

6. For all other applicants, including those who have not updated their bank particulars with the MICR

code, the refund orders shall be dispatched under Certificate of Posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the refund banker as appointed by the company, and payable at par.

INTEREST IN CASE OF DELAY IN ALLOTMENT / DESPATCH

Company shall ensure dispatch of refund orders, if any, by under the Certificate of Posting or registered post or speed post or through modes as mentioned in section, Terms of the Issue clause “Mode of Payment” as stated below, as applicable, only at the sole or First Applicant’s sole risk within 15 days of closure of the Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the issuer. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialized form by electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. UNDERTAKING The Company undertakes that:

i) The complaints received in respect of the Issue shall be attended to by the issuer company expeditiously and satisfactorily.

ii) All steps for completion of the necessary formalities for listing and commencement of trading at all

stock exchanges where the securities are to be listed are taken within seven working days of finalization of basis of allotment.

iii) Funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the issue by the issuer.

iv) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant after closure of the issue, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund;

v) Adequate arrangements shall be made to collect all Applications Supported by Blocked Amount

(ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment.

vi) At any given time there shall be only one denomination for the shares of the Company vii) It shall comply with such disclosure and accounting norms specified by SEBI from time to time.

The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes till the listing and trading commences.


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UTILISATION OF ISSUE PROCEEDS The Board of Directors declares that: (i) all monies received out of issue of shares or specified securities to public shall be transferred to

separate bank account; (ii) details of all monies utilized out of the issue referred to in sub-item(i) shall be disclosed under an

appropriate separate head in the balance sheet of the issuer company indicating the purpose for which such monies had been utilized; and

(iii) details of all unutilized monies out of the issue of specified securities referred to in clause (i) shall

be disclosed under an appropriate separate head in the balance sheet of the issuer indicating the form, if any, referred to in sub-item (i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the form in which such monies have been invested.

Utilization of funds raised in rights issue

The Company shall utilize the funds collected in rights issues after the finalization of the basis of allotment. The promoters/ directors of Camlin Fine Chemicals Limited, Mr. Dilip Dandekar, Mr. Ashish S. Dandekar, Mr. Pramod Sapre, Mr. Sharad Kulkarni, Mr. Abeezar E. Faizullabhoy and Mr. Bhargav Patel confirm that no information/material likely to have a bearing on the decision of investors in respect of the shares offered in terms of this letter of offer has been suppressed withheld and / or incorporated in the manner that would amount to mis-statement/misrepresentation and in the event of its transpiring at any point in time till allotment/refund, as the case may be, that any information/material has been uppressed/withheld and/ or amounts to a mis-statement/ misrepresentation, the promoters/directors undertake to refund the entire application monies to all subscribers within 7 days thereafter without prejudice to the provisions of section 63 of the companies act.


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SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION Clause III CAPITAL AND INCREASE AND REDUCTION OF CAPITAL

3 *The Authorized Share Capital of the Company is Rs.10,00,00,000/-(Rupees Ten Crores

only) divided into 100,00,000 (One Crore) Equity Shares of Rs. 10/-(Rupees Ten) each with power for the Company to increase or reduce its capital, and to issue any part of the capital, original or increased with or without any preference, priority or special privilege or subject to any postponement of rights to any conditions or restrictions. *Amended vide Special Resolution Passed by the Members at its Annual General Meeting held on 25th July 2007.

Increase of Capital 4 The Company in General Meeting, may from time to time, increase its capital by the creation of

new shares, such increase to be of such aggregate amount and to be divided into shares of such amounts as the resolution shall prescribe. Subject to the provision of the Act, any shares of the original or increased capital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto, as the General Meeting resolving upon the creation thereof shall prescribe and if no direction be given, as the Directors shall determine and in particular, such shares may be issued with a preferential or qualified right to dividends, and in the distribution of assets of the Company and with a right of voting at General Meeting of the Company, in conformity with Section 87 and 88 of the Act. Whenever, the Capital of the Company has been increased under the provisions of these Articles, the Directors, shall comply with the provisions of Section 97 of the Act.

Reduction / Buy-Back of Capital 10 The Company may (subject to the provisions of Section 78, 80, 100 to 105 inclusive, of the Act)

from time to time, by Special Resolution, reduce its capital and any Capital Redemption Reserve Account or Share Premium Account in any manner for the time being authorised by law, and in particular, capital may be paid off on the footing that it may be called up again or otherwise. This Article is not to derogate from any power of the Company would have if it were omitted.

11 The Company is also permitted to purchase its own shares or other specific Securities in accordance with the provisions of Sections 77A, 77AA and 77B of the Act, and such Regulations or Guidelines framed by the Securities and Exchange Board of India or any other appropriate authority.

Sub-Division And Consolidation Of Shares 12 Subject to the provisions of Section 94 of the Act, the Company in General Meeting may

from time to time, sub-divide or consolidate its shares, or any of them and the resolution whereby any share is sub-divided, may determine that, as between the holders of the shares resulting from such sub-divisions one or more of such share shall have some preference or special advantage as regards dividend, capital of otherwise over or as compared with the other or others. Subject as aforesaid the Company in General Meeting may also cancel shares which have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of shares so cancelled. The cancellation of shares in pursuance of this Article shall not be deemed to be a reduction of the share capital.

Modification Of Rights Attached To Shares


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13 Whenever the capital, by reason of the issue of Preference Shares or otherwise is divided into different classes of shares, all or any of the rights and privileges attached to the shares of each class may, subject to the provisions of Section 106 and 107 of the Act, be modified, commuted, affected or abrogated, or dealt with by an Agreement between the Company and any person purporting to contract or behalf of that class provided such agreement is ratified in writing by holders of at least three-fourths in nominal value of the issued shares of the class or is confirmed by a special resolution passed at a separate General Meeting of the holders of shares of that class.

IV SHARES AND CERTIFICATES

Register And Index of Members 14 (a) The Company shall cause to be kept a Register and Index of Members in

accordance with Sections 150 and 151 of the Act and the Depositories Act. The details of shares held in material and dematerialised forms may be maintained in a media as permitted by law including in any form of electronic media. The Register and Index of beneficial owner maintained by a depository under Section 11 of the Depositories Act shall be deemed to be the Register and Index of Members for the purposes of the Act and these Articles.

(b) Notwithstanding anything herein contained a person whose name is at anytime

entered into the Register of Members of the Company as the holder of a share in the Company, but who does not hold the beneficial interest in such share, shall within such time and in such form as may be prescribed, make a declaration to the Company specifying the name and other particulars of the person or persons who hold the beneficial interest in such share in the manner provided in Section 187C of the Act.

(c) A person who holds a beneficial interest in a share or a class of shares of the Company

shall within the time prescribed, after his becoming such beneficial owner, make a declaration to the Company specifying the nature of his interest, particulars of the person in whose name the shares stand in the Register of Members of the Company and such other particulars as may be prescribed as provided in Section 187 C of the Act.

(d) Whenever there is a change in the beneficial interest in a share referred to above, the

beneficial owner shall, within the time prescribed from the date of such change make a declaration to the Company in such form and containing such particulars as may be prescribed as provided in Section 187 C of the Act.

(e) where any declaration referred to above is made to the Company, the Company shall

make a note of such declaration in the Register of Members and file within the time prescribed from the date of receipt of the declaration a return in the prescribed form with the Registrar with regard to such declaration.

Numbering And Sub- Division of Shares 15 The Shares in the capital of the Company shall be numbered progressively according to their

several denominations, and except in the manner hereinbefore mentioned, no share shall be sub-divided. Every forfeited or surrendered share shall continue to bear the number by which the same was originally distinguished. Provided however that the provision relating to progressive numbering of shares shall not apply to the shares of the Company which are dematerialised or may be dematerialised in future or issued in future in dematerialised form.


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Restrictions on Allotment 16 oard shall observe the restrictions as to allotment of shares to the public contained in

Section 69 and 70 of the Act, and shall cause to be made the returns as to allotment provided for in Section 75 of the Act.

Issue of Right Shares 17 (a) where at anytime it is proposed to increase the Subscribed Capital of the

Company, by allotment of further shares, whether out of un-issued share capital or out of increased share capital, then such further share shall be offered to the persons who, at the date of the offer, are holder of the equity shares of the Company, in proportion, as nearly as circumstances admit, to the capital paid up on these shares at that date Such offer shall be made by a notice specifying the number of share offered and limiting a time not being less than fifteen days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined. After the expiry of the time specified in the notice aforesaid or on receipt of earlier intimation from the person whom such notice is given that he declines to accept the shares offered the Board may dispose off them in such a manner as they think most beneficial to the Company.

(b) Notwithstanding anything contained in sub-clause (a) above, but subject, however,

to Section 81(3) of the Act, the Company may increase its subscribed capital on exercise of an option attached to the debentures issued or loans raised by the Company to convert such debentures or loans into shares, or to subscribe for shares in the Company.

Shares at the Disposal Of Directors 18 Subject to the provisions of these Articles and the Act, the shares in the capital of the

Company for the time being (including any shares forming part of an increased capital of the Company) shall be under the control of the Directors who may issue, allot or otherwise dispose off the same or any one of them to such person in such proportion and on such terms and conditions and either at a premium or at par or (subject to compliance with the provisions of the Act) at a discount and at such times as they may from time to time think fit and proper and with the sanction of the Company in General Meeting to give to any person the option to call for or be allotted shares of any class of the Company either at par or at premium or subjects aforesaid at a discount during such time and for such consideration and such option being exercisable at such times as the Directors think fit, and any shares which may be so allotted may be issued, as fully paid-up shares and if so issued shall be deemed to be fully paid-up shares. The Board shall cause to be filed the returns as to allotment provided for in Section 75 of the Act. Notwithstanding anything contained in the Act or these Articles, the Board of Directors are empowered without any prior sanction of the members to dematerialise and rematerialise the Securities of the Company and issue/allot fresh securities in dematerialised form. The Board of Directors is also empowered to determine the terms and conditions thereof pursuant to the provisions of the Depositories Act, and rules framed thereunder.

Liability Of Members 21 Every member, or his heirs, executors, administrators or other representatives, shall pay to

the Company the portion of the Capital represented by his share or shares, which may, for the time being, remain unpaid thereon, in such amounts, at such time or times, and in such manner as the Directors shall, from time to time, in accordance with the Company's regulations require or fix for the payment thereof.


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Share Certificates 22 (a) Every Member or allottee of shares shall be entitled without payment, to receive one

certificate specifying the name of the person in whose favour it is issued, the shares to which it relates and the amount paid up thereon. Such certificate shall be issued only in pursuance of a resolution passed by the Board and on surrender to the Company of its letter of allotment or its fractional coupons of requisite value, save in cases of issue against letters of acceptance or of renunciation, or in cases of issue of Bonus Shares. Every such certificate shall be issued under the seal of the Company and signed in accordance with Article 168. Particulars of every share certificate issued shall be entered in the Register of Members against the name of the person to whom it he been issued, indicating the date of issue.

(b) Any two or more joint allottees of a share shall, for the purpose of this Article, be

treated as a single Member, and the certificate of any share which may be the subject of joint ownership, may be delivered to anyone of such joint owners on behalf of all of them. For any further certificate the Board shall be entitled but shall not be bound, to prescribe a charge not exceeding Rupee One. The Company shall comply with the provisions of Section 113 of the Act.

(c) A Director may sign a share certificate by affixing his signature thereon by means of

any machine, equipment or other mechanical means, such as, engraving in metal or lithography, but not by means of a rubber stamp, provided that the Director shall be responsible for the safe custody of such machine, equipment or other material used for the purpose.

(d) Notwithstanding anything contained herein, the Company shall be entitled to

dematerialise its securities, rematerialise its securities held in the depositories and/or to offer its fresh securities in a dematerialise form pursuant to the Depositories Act, and the rules framed thereunder if any.

(e) Notwithstanding anything contained in sub-section (1) of Section 113 of the Act,

where the securities are dealt with in a Depository, the Company shall intimate the details thereof to the Depository immediately on allotment of such securities as far as practicable. On receipt of such information the depository shall enter in its records the name of the allottee as the beneficial owner of that security.

(f) Every person subscribing to the securities offered by the Company shall have the

option to receive security certificates or to hold the securities with a depository. Such a person who is the beneficial owner of the Securities can at any time opt out of a depository if permitted by law in respect of any security in the manner provided by the Depositories Act, and the Company shall, in the manner and with the time prescribed, issue to the beneficial owner the required certificates of securities.

(g) All securities held by a depository shall be dematerialised and be in fungible form. (h) Nothing contained in Sections 153, 187C and 372A of the Act, shall apply to a

depository in respect of the securities held by it on behalf of the beneficial owners. (i) Nothing contained in the Act or these Articles regarding the necessity of having

distinctive numbers for securities issued by the Company shall apply to securities


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held by a Depository. No certificate shall be issued for the securities held by a Depository.

Liability of Joint Holders 24 If any share stands in the names of two or more persons all the joint holder of the share

shall be severally as well as jointly liable for the payment of all deposit installments, and calls due in respect of such shares, and for all incidents there of according to the Company's regulations, but the person first named in the Register shall, as regards receipt of dividend or bonus or service of notice, and all or any other matters connected with the Company, except voting at meetings and the transfer of the shares, and any other matter by the said Act or herein otherwise provided, be deemed the sole holder thereof.

VI INTEREST OUT OF CAPITAL

Interest May Be Paid Out Of Capital 29 Where any shares are issued for the purpose of raising money to defray the expenses of

the construction of any work or building, or the provision of any plant, which cannot be made profitable for a lengthy period, the Company may pay interest on so much of that share capital as is for the time being paid-up, for the period, at the rate and subject to the condition and restrictions provided by Section 208 of the Act, and may charge the same to capital as part of the cost of construction of the work or building, or the provision of plant.

VII CALLS

Director May Make Calls 30 The Board may from time to time, subject to the terms on which any shares may have been

issued and subject to the conditions of allotment, by a resolution passed at a meeting of the Board (and not by circular resolution) make such call as it thinks fit upon the Members in respect of all moneys unpaid on the share held by them respectively and each member shall pay the amount of every call so made on him to the person or persons and at the time and place appointed by the Board. A call may be made payable by installments.

Notice of Calls 31 Thirty day's notice in writing of any call shall be given by the Company specifying the time

and place of payment, and the person or persons to whom such call shall be made

Calls To Date From Resolution 32 A call shall be deemed to have been made at the time when the resolution authorising such

call was passed at a meeting of the Board.

Call May Be Revoked 33 A call may be revoked or postponed at the discretion of the Board. Liability Of Joint Holders 34 A joint -holder of a share shall be jointly and severally liable to pay all calls in respect

thereof. Director May Extend Time 35 The Board may, from time to time at its discretion, extend the time fixed for payment of any

call, and may extend such time as to all or any of the members who from residence at a


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distance or other cause, the Board may deem fairly entitled to such extension save as a matter of grace and favour.

Overdue Calls To Carry Interest 36 If any member fails to pay any call due from him on the day appointed for payment

thereof, or any such extension thereof as aforesaid, he shall be liable to pay interest on the same from the day appointed for the payment thereof to the time of actual payment at such rate as shall from time to time be fixed by the Board but nothing in this Article shall render it obligatory for the Board to demand or recover any interest from any such member and the Board shall be at liberty to waive payment of such interest either wholly or in part.

Sums Deemed To Be Calls 37 Any sum, which by the terms of issue of a share become payable on allotment or at any fixed

date, whether on account of the nominal value of the share or by way of premium shall for the purpose of these Articles be deemed to be a call duly made and payable on the date on which by the terms of issue of the same becomes payable, and in the case of non-payment all the relevant provision of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

Part Payment On Account Of Call Etc. Not To Preclude Forfeiture 38 Neither a judgement not a decree in favour of the Company for calls or other moneys

due in respect of any shares nor any part-payment or satisfaction thereunder not the receipt by the Company of a portion of any money which shall from time to time be due from any Member to the Company in respect of his shares, either by way of principal or interest, nor any indulgence granted by the Company in respect of payment of any such money, shall preclude the Company from thereafter proceeding to enforce a forfeiture of such shares as hereinafter provided.

Proof On Trial Or Suit For Money On Shares 39 On the trial or hearing of any action or suit brought by the Company against any

member or his legal representative to recover any moneys claimed to be due to the Company for any call or other sum in respect of his shares, it shall be sufficient to prove. (a) that the name of the Member, in respect of whose shares the money is sought to

be recovered, appears entered on the Register of Members as the holder, or one of the holders, at or subsequent to the date at which the money sought to be recovered is alleged to have become due, on the said shares;

(b) that the resolution making the call is duly recorded in the minute book, and (c) that notice of such call was duly given to the member or his legal representatives

issued in pursuance of these Articles; and that it shall not be necessary to prove the appointment of the Directors who made such call, nor that a quorum of Directors was present at the Board at which such call was made, nor that the meeting at which such call was made was duly convened or constituted, nor any other matter whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt, and the same shall be recovered by the Company against the member or his representative from whom it is sought to be recovered, unless it shall be proved, on behalf of such member or his representatives against the Company that the name of such member was improperly inserted in the Register, or that the money sought to be recovered has


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actually been paid.

Payment Of Un-Paid Share Capital In Advance

40 (a) The Board may, if it thinks fit, subject to the provisions of the Act, agree to and receive from any Member willing to advance the same, either in money or moneys worth the whole or any part of the amount remaining unpaid on the shares held by him beyond the sum actually called up and upon the moneys so paid or satisfied in advance, or so much thereof, as from time to time and at any time thereafter exceeds the amount of the calls then made upon and due in respect of the shares on account of which such advances have been made, the Board may pay or allow interest at such rate as the Member paying such advance and the Board agree upon ; provided always that if at any time after the payment of any such money the rate of interest so agreed to be paid to any such Member appears to the Board to be excessive, it shall be lawful for the Board from time to time to repay to such Member so much of such money as shall then exceed the amount of the calls made upon such shares, unless there be an express agreement to the contrary; and after such repayment such member shall be liable to pay, and such shares shall be charged with the payment of all future calls if no such advance had been made; provided also that if at any time after the payment of any money so paid in advance, the Company shall go into liquidation, either voluntary or otherwise, before the full amount of the money so advanced shall have become due by the members to the Company, on installments or calls, or in any other manner, the maker of such advance shall be entitled (as between himself and the other Members) to receive back from the Company the full balance of such moneys rightly due to him by the Company in priority to any payment to members on account of capital.

(b) No member paying any such sum in advance shall be entitled to any voting rights,

dividend or right to participate in profits in respect of the moneys so advanced by him until the same would but for such payment become presently payable.

VIII FORFEITURE AND SURRENDER OF AND LIEN ON SHARES

Notice To Member 41 If any Member fails to pay any call or installment of call on or before the day appointed

for the payment of the same or any such extension thereof as aforesaid, the Board may, at any time thereafter, during such time as the call or installment remains unpaid, give notice to him requiring him to pay the same together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment.

Terms of Notice 42 The notice shall name a day (not being less than thirty days from the date of notice) and a

place or places on and at which such call or installment and such interest thereon at such rate as the Directors shall determine from the day on which such call or installment ought to have been paid and expenses as aforesaid are to be paid. The notice shall also state that, in the event of the non-payment at or before the time and the place appointed, the shares in respect of which the call was made or installment is payable will be liable to be forfeited.

Grounds Of Forfeiture 43 If the requirements of any such notice as aforesaid are not complied with, every or any


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share in respect of which such notice has been given, may at any time thereafter, but before payment of all calls or installments, interest and expenses due in respect thereof, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends and bonuses declared in respect of the forfeited shares and not actually paid before the forfeiture.

Notice of Forfeiture 44 When any share shall have been so forfeited, notice of the forfeiture shall be given to

the Member in whose name it stood immediately prior to the forfeiture or to any of his legal representatives, or to any of the persons entitled to the shares by transmission and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register of Members, but no forfeiture, shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid.

Forfeited shares to become property of the company and may be sold etc. 45 Any share so forfeited shall be deemed to be the property of the Company and may be

sold, re-allotted or otherwise disposed off, either to the original holder thereof or to any other person, upon such terms and in such manner as the Board shall think fit.

Members still liable to pay money sue notwithstanding the forfeiture 46 Any member whose shares have been forfeited shall, notwithstanding the forfeiture, be

liable to pay, and shall forthwith pay to the Company on demand all calls, amounts, installments, interest and expenses owing upon or in respect of such shares at the time of the forfeiture, together with interest thereon from the time of the forfeiture until payment, at such rate as the Board may determine and the Board may enforce the payment thereof if it thinks fit.

Effects Of Forfeiture 47 The forfeiture of a share shall involve extinction, at the time of the forfeiture, of all interest

in and of all claims and demands against the Company, in respect of the share, and all other rights incidental to the share, except only such of those rights as by these Articles are expressly saved.

Surrender Of Shares 48 The Directors may subject to the provisions of the Act, accept a surrender of any shares from

or by any Member desirous of surrendering them on such terms as they think fit.

Evidence Of Forfeiture 49 A declaration in writing that the declarant is a Director or Secretary of the Company and

that a share in the Company has been duly forfeited in accordance with these Articles on the date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share.

Company’s Lien on Shares 50 The Company shall have a first and paramount lien upon all the shares, not being fully paid-

up shares, registered in the name of each Member (whether solely or jointly with another or others), and upon the proceeds of sale thereof, for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares and no equitable interest in any share shall be created except upon the footing and condition that Article 25 hereof is to have full effect. Any such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as a waiver of the Company's lien if any, on such shares. The Board of Directors may at any


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time declare any shares to be exempt, wholly or partially from the provisions of this Article.

IX TRANSFER AND TRANSMISSION OF SHARES AND DEBENTURES

Register Of Transfers 56 (a) The Company shall keep a "Register of Transfers" and therein shall be fairly and

distinctly entered the particulars of every transfer or transmission of any share. (b) Notwithstanding anything contained in the Act or these Articles, where securities are

held by a Depository, the records of the beneficial ownership may be served by such Depository on the Company by means of electronic mode or by delivery of floppies on discs or any such other means.

(c) Every Depository shall maintain a Register and an Index of beneficial owner provided

in Sections 150, 151 and 152 of the Act. (d) The Company shall not be required to maintain Register of Transfers for entering

particulars of transfers and transmissions of securities in dematerialised form.

Form Of Transfer 57 Shares in the Company shall be transferred by an instrument in writing in such form as is

prescribed under Section 108 of the Companies Act, 1956 or under rules made thereunder from time to time.

To Be Executed By Transferor And Transferee 58 (a) The Instrument of Transfer duly stamped and executed by the Transferor and the

Transferee shall be delivered to the Company in accordance with the provisions of the Act. The Instrument of Transfer shall be accompanied by such evidence as the Board may require to prove the title of the Transferor and his right to transfer the shares and every registered instrument of Transfer shall remain in the custody of the Company until destroyed by an order of the Board. The Transferor shall be deemed to be the holder of such shares until the name of the Transferee shall have been entered in the Register of Members in respect thereof. Before the registration of a Transfer the certificate or certificates of the shares must be delivered to the Company.

(b) Nothing contained in Section 108 of the Act or the Articles which are inconsistent

with the provisions of Depositories Act, shall apply to a transfer of shares effected by a transferor or transferee both of who are entered as beneficial owners in the records of a depository.

(c) Every depository shall, on receipt of intimation from a participant, register the

transfer of security in the name of the transferee. (d) Notwithstanding anything contained in these Articles, in the case of transfer or

transmission of securities where the Company has not issued any certificates and where such securities are being held in an electronic and fungible form by a Depository, the provisions of the Depositories Act, shall apply.

Transfer Books When Closed 59 The Board shall have power on giving not less than seven days previous notice by

advertisement in a newspaper circulating in the city in which the Registered Office of the Company is situate, to close the transfer books, Register of Members or Register of


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Debenture-holders at such time or times and for such period or periods, not exceeding thirty days at a time and not exceeding in the aggregate forty five days in each year, as to it may seem expedient.

Directors May Refuse To Register Transfers 60 Subject to the provisions of Section 111 of the Act, the Board, may at its own absolute

and uncontrolled discretion, decline to register or acknowledge any transfer of shares whether fully paid or not, (notwithstanding that the proposed transferee be already a Member), but in such cases it shall, within two months from the date on which the instrument of transfer was lodged with the Company, send to the transferee and the transferor notice giving reasons for such refusal to register such transfer. Provided that registration of a transfer shall not be refused on the ground that the transferor being either alone or jointly with any other person or person indebted to the Company on any account whatsoever except a lien on shares.

Notice Of Application When To Be Given 61 Where, in the case of partly paid shares, an application for registration is made by the transferor

the Company shall give notice of the application to the transferee in accordance with the provisions of Section 110 of the Act.

Death Of One Or More Joint Holders Of Shares 62 In case of the death of any one or more of the persons named in the Register of Members as the

joint holders of any share the survivor or survivors shall be the only persons recognised by the Company as having any title to or interest in such share, but nothing herein contained shall be taken to release the estate of a deceased joint-holder for any liability on shares held by him jointly with any other person.

Title To Shares / Debentures Of Deceased Member And Nomination By Shareholders/ Debenture holders Etc.

63 (a) The executors or administrators or holders of a Succession Certificate or the legal representatives of a deceased Member (not being one of two or more joint-holders) shall be the only person recognised by company as having any title to the shares registered in the name of such Member, and the Company shall not be bound to recognise such executors or administrators or holders of a Succession Certificate or the legal representatives unless such executors or administrators or legal representatives shall have first obtained Probate or Letter of Administration or Succession Certificate, as the case may be, from a duly constituted court in the Union of India, provided that in case where the Board in its absolute discretion think fit, the Board may dispense with production of Probate or Letters of Administration or Succession Certificate, upon such terms as to indemnity or otherwise as the Board in its absolute discretion may think necessary and under Article 61 register the name of any person who claims to be absolutely entitled to shares standing in the name of a deceased Member, as a Member.

(b) On the death of a shareholder/debenture holder of the Company, the Company shall

confer the shares/debentures or interest of the deceased shareholder / debentureholder to a person or persons nominated by the shareholders/debentureholders in accordance with the Rules framed by the Board of Directors or if no such person is nominated as may appear to the Board of Directors, to the heir, legal representative of the deceased Shareholder / Debentureholder. Provided that such nominee or heir or legal representative of the deceased as the case' may be is or duly admitted as a shareholder /debentureholder of this Company. All transfers and payments duly made by


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the Company in accordance with the provisions herein contained shall be valid and effective against any demand made upon the Company by any other person. Nomination and Transmission of shares and debentures will be governed by the provisions of Section 109-A and 109-B of the Act as amended from time to time.

No Transfer To Insolvent Etc. 64 No share shall, in any circumstances, be transferred to any insolvent or person of

unsound mind.

Registration Of Persons Entitled To Shares Otherwise Than By Transfer 65 Subject to the provisions of the Act and Article 62 & 63 any person becoming entitled to

shares in consequences of death, lunacy, bankruptcy or insolvency of any Member, or by any lawful means other than by a transfer in accordance with these Articles, may with the consent of the Board for which it shall not be under any obligation to give) upon producing such evidence that he sustains the character in respect of which he proposes to Act under this Article, or of his title, as the Board thinks sufficient, either be registered himself as the holder of the shares or elect to have some persons nominated by him and approved by the Board, registered as such holders provided nevertheless, that if such person shall elect to have his nominee registered, he shall testify the election by executing in favour of his nominee an instrument of transfer in accordance with the provisions herein contained, and until he does so he shall not be freed from any liability in respect of the shares.

Person Entitled May Receive Dividends Without Being Registered As Members. 66 A person entitled to a share by transmission shall, subject to the right of the Directors to

retain such dividends or moneys as hereinafter provided be entitled to receive, and may give a discharge for any dividends or other moneys payable in respect of the shares.

The Company Not Liable For Disregard Of A Notice Prohibiting Registration Of A Transfer 67 The Company shall incur no liability or responsibility whatever in consequence of its

registering or giving effect to any transfer of shares made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the Register of Members) to the prejudice of a person or persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have any notice of such equitable right, title or interest or notice prohibiting registration of such transfer and may have entered such notice, or referred thereto, in any book of the Company, and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable right, title or interest, or be under any liability whatsoever for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company, but the Company shall nevertheless be at liberty to regard and attend to any such notice, and give effect thereto if the Board shall so think fit.

XI BORROWING POWERS

Power To Borrow 69 Subject to the provisions of Section 58A, 292 and 293 of the Act and of these Articles, the

Board may, from time to time at its discretion, by a resolution passed at a Meeting of the Board, accept deposits from Members, either in advance of calls or otherwise, and generally raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. Provided, however, where the moneys to be borrowed together with the moneys already borrowed (apart from temporary loans obtained from the Company's bankers in the ordinary course of business) exceed the aggregate of the paid up capital of the company


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and its free reserves (that is to say, reserves not set apart for any specific purpose) the Board shall not borrow such moneys without the consent of the Company in General Meeting.

The Payment Or Repayment Of Money Borrowed 70 The payment or repayment of moneys borrowed as aforesaid may be secured in such

manner and upon such terms and conditions in all respects as the Board may think fit, and in particular by a resolution passed at a meeting of the Board (and not by Circular Resolution) by the issue of debentures of the Company, charged upon all or any part of the property of the Company (both present and future) including its uncalled capital for the time being, and debentures, and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued.

Terms Of Issue Of Debentures 71 Any debentures, debenture-stock or other securities may be issued at a discount,

premium or otherwise and may be issued on condition that they or any part of them shall be convertible into shares of any denomination, and with any privilege and conditions as to redemption, surrender, drawing, allotment of shares and attending (but not voting at) General Meetings, appointment of Directors am otherwise. Debentures with a right to conversion or allotment of shares shall be issued only with the consent of the Company in General Meeting.

Register Of Mortgages Etc. To Be Kept 72 The Board shall cause a proper register to be kept in accordance with the provisions of

Section 143 of the Act of all mortgages, debentures and charge specifically affecting the property of the Company and shall cause the requirement of Section 118, 125 and 127 to 144 (both inclusive) of the Act, in that behalf to be duly complied with (within the time prescribed by the said sections or such extension thereof as may be permitted by the Company Law Board or the Court or the Registrar as the case may be) so far as they fail to be complied with by the Board.

Register And Index Of Debenture holders 73 The Company shall, if any time it issues debentures, keep a Register and index of

Debenture holders in accordance with Section 152 of the Act. The Company shall have the power to keep in any state or country outside India a branch Register of Debenture-holders resident in that State or country. The Register and Index of beneficial owners maintained by a depository under Section 11 of the Depositors Act shall be deemed to be the Register and Index of Debenture holders for the purposes of the Act and these Articles.

XIII CONVERSION OF SHARE INTO STOCK AND RECONVERSION

Share May Be Converted In To Stock 78 The Company in General Meeting may convert any paid-up share into stock and when any

shares have been converted into stock, the several holders of such stock may henceforth transfer their respective interest therein, or any part of such interest, in the said manner and subject to the same regulations as, and subject to which shares from which the stock arose might have been transferred, if no such conversion had taken place, or as near thereto as circumstances will admit. The Company may at any time reconvert any stock into paid-up shares of any denomination.


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Register Of Stockholders 79 The holders of stock shall, according to the amount of stock held by them, have the same

rights, privileges and advantages as regards dividends voting at meetings of the Company, and other matters, as if they held the shares from which the stock arose, but no such privilege or advantage (except participation in the dividends and profits of the Company and in the assets on winding-up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage.

XIV MEETINGS OF MEMBERS

Annual General Meeting 81 The Company shall in each year hold a General Meeting as its Annual General Meeting in

addition to any other meetings in that year. All General Meetings other than Annual General Meetings shall be called Extra Ordinary General Meeting. Not more than fifteen months shall elapse between the date of one Annual General Meeting and that of the next. Nothing contained in the foregoing provisions shall be taken as affecting the right conferred upon the Registrar under the provisions of Section 166 (1) of the Act to extend the time within which any Annual General Meeting may be held. Every Annual General Meeting shall be called at a time during business hours on a day that is not a public holiday, and shall be held at the Registered Office of the Company or at some other place within the city in which the Registered Office is situate, as the Board may determine and the Notice calling the meeting shall name it as the Annual General Meeting. The Company may in any one Annual General Meeting fix the time for its subsequent Annual General Meetings Every member of the Company shall be entitled to attend either in person or by proxy and the Auditor of the Company shall have the right to attend and to be heard at the General Meeting which he attends on any part of the business which concerns him as Auditor. At every Annual General Meeting of the Company there shall be laid on the table Directors' Report and Audited statement of Accounts, Auditors' Report (if not already incorporated in the Audited Statement of Accounts), the Proxy Register with proxies and the Register of Directors' shareholdings of which the latter Register shall remain open and accessible during the continuance of the meeting. The Board shall cause to be prepared the Annual list of Members, Summary of the Share Capital, Balance Sheet and Profit and Loss Account and forward the same to the Registrar in accordance with Section 159,161 and 220 of the Act.

Extraordinary General Meeting 81 The Board may, whenever it thinks fit, call an Extra-ordinary General Meeting and it

shall do so upon a requisition in writing by any Member or Members holding in the aggregate not less than one tenth of such of the paid-up capital, as at that date carried the right of voting in regard to the matter in respect of which the requisition has been made.

XV VOTE OF MEMBERS

Members in arrears not to vote 100 No member shall be entitled to vote either to vote either personally or by proxy at any

General Meeting or meeting of a class of shareholders either upon a show of hands or upon a poll in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has, and has exercised, any right of lien.

Number Of Votes To Which Member Entitled


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101 Subject to the provisions of these Articles and without prejudice to any special privileges or restrictions as to voting for the time being attached to any class of shares for the time being forming part of the capital of the Company, every member, not disqualified by the last preceding Article shall be entitled to be present and to speak and vote at such meeting, and on a show of hands every member present in person shall have one vote and upon a poll the voting rights of every member whether present in person or by proxy, _shall be in proportion to his share of the paid-up equity capital of the Company. Provided, however, if any preference shareholder be present at any meeting of the Company, save as provided in Clause (b) of the Sub-Section (2) of Section 87 of the Act, he shall have a right to vote only on resolutions placed before the meeting which directly affect the rights attached to his preference shares.

Casting Of Votes By A Member Entitled To More Than One Vote. 102 On a poll taken at a meeting of the Company, a member entitled to more than one vote, or his

proxy, or other person entitled to vote for him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes he uses.

Voting When Member is Of Unsound Mind Or Minor. 103 A member of unsound mind or in respect of whom an order has been made by any court having

jurisdiction in lunacy may vote, whether on a show of hand or on a poll, by his committee or other legal guardian, and any such committee or guardian may, on a poll vote by proxy. If any member be a minor, the votes in respect of his share or shares shall be by his guardian, or any one of his guardians, if more than one, to be elected in case of dispute by the Chairman of the meeting.

Vote Of Joint Members 104 If there be joint registered holders of any shares, any one of such persons may vote at any

meeting or may appoint another person (whether a member or not) as his proxy in respect of such shares as if he were solely entitled therein but the proxy so appointed shall not have any right to speak at the meeting and, if more 0than one of such joint-holders be present at any meeting, that one of the said person so present whose name stands higher on the Register shall alone be entitled to speak and to vote in respect of such shares, but the other or others of the joint-holders shall be entitled to be present at the meeting, several executors or administrators of a deceased member in whose names share shall stand for the purpose of these articles be deemed joint holders thereof.

Postal Ballot 105 Notwithstanding anything contained in the Articles of Association of the Company, the

Company adopt the mode of passing a Resolution by its members by means of Postal Ballot (including voting by electronic mode) and/or other ways as may be prescribed by the Central Government in this behalf and in respect of matters relating to such business as the Central Government may by notification declare to be conducted only by Postal Ballot instead of transacting such business in the General Meeting of the Company. The Company shall comply with the procedure for such Postal Ballot and/or other ways prescribed by the Central Government in this regard from time to time.

Voting In Person Or By Proxy 106 Subject to the provisions of these Articles votes may be given either personally or by proxy. A

body corporate being a member may vote either by a proxy or by a representative duly authorised in accordance with Section 187 of the Act and such representative shall be entitled to exercise the same rights and powers (including the right to vote by proxy) on behalf of the body corporate which he represents as that body could exercise if it were an individual member.


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Vote In Respect Of Shares Of Deceased Or Insolvent Members 107 Any person entitled under Article 65 to transfer any shares may vote at any general meeting in

respect thereof in the same manner as if he were the registered holder of such shares, provided that 48 hours, at least, before the time of holding the meeting or adjourned meeting as the case may be at which he proposes to vote he shall satisfy the Directors of his right to transfer such shares and give such indemnity (if any) as the Directors may require or the Directors shall have previously admitted his right to vote at such meeting in respect thereof.

Appointment Of Proxy 108 Every proxy (whether a member or not) shall be appointed in writing under the hand of the

appointer or his attorney, or if such appointer is a corporation under the common seal of such corporation, or be signed by an officer or an attorney duly authorised by it and any committee or guardian may appoint such proxy. The proxy so appointed shall not have any right to speak at the meeting.

Proxy Either For Specified Meeting Or For Specified Period 109 An instrument of proxy may appoint a proxy either for purposes of a particular meeting

specified in the instrument and any adjournment thereof or it may appoint for the purposes of every meeting of the Company, or of every meeting to be held before the date specified in the instrument and any adjournment of any such meeting.

No Proxy Except For A Body Corporate To Vote On A Show Of Hands 110 A member present by proxy shall be entitled to vote only on a poll unless such member is a

body corporate present by a representative in which case such proxy shall have a vote on the show of hands as if he were a member.

Deposit Of Instrument Of Appointment 111 The instrument appointing a proxy and the Power of Attorney or other authority (if any),

under which it is signed or a notarially certified copy of that power or authority shall be deposited at the office not later than forty eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote, and in default the instrument of proxy shall not be treated as valid. No instrument appointing a proxy shall be valid after the expiration of twelve months from the date of its execution.

Form Of Proxy 112 Every instrument of proxy whether for a specified meeting or otherwise shall, as nearly as

circumstances will admit, be in any of the forms set out in Schedule IX of the Act.

Validity Of Votes Given By Proxy Notwithstanding Death Of Member 113 A vote given in accordance with the terms of an instrument of proxy shall be valid

notwithstanding the previous death or insanity of the Principal, or revocation of the proxy or of any power of attorney under which such proxy was signed, or the transfer of the share in respect of which the vote is given, provided that no intimation in writing of the death or insanity, revocation or transfer shall have been received at the office before the meeting.

Time For Objection To Vote 114 No objection shall be made to the validity of any vote, except at any meeting or poll at which

such vote shall be tendered and every vote, whether given personally or by proxy, not disallowed at such meeting or poll shall be deemed valid for all purposes of such meeting or poll whatsoever.


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Chairman Of Any Meeting To Be Judge Of Validity Of Votes 115 The Chairman of any meeting shall be the sole judge of the validity of every vote tendered at

such meeting. The chairman present at the taking of a poll shall be the sole judge of the validity of every vote tendered at such poll.

Minutes Of General Meeting And Inspection Thereof By Members 116 (a) The Company shall cause minutes of all proceedings of every General Meeting to be

kept by making within thirty days of the conclusion of every such meeting concerned, entries thereof in books kept for that purpose with their pages consecutively numbered.

(b) Each page of every such book shall be initialed or signed and the last page of the

record of proceedings of each meeting in such book she be dated and signed by the Chairman of the same meeting within the aforesaid period of thirty days or in the event of the death or inability of that Chairman within that period, by a Director duly authorised by the Board for the purpose.

(c) In no case shall the minutes of proceedings of a meeting be attached to any such

books as aforesaid by pasting or otherwise. (d) The minutes of each meeting shall contain a fair and correct summary of the

proceedings thereat. (e) All appointments of Officers made at any meeting aforesaid shall be included in

the minutes of the meeting. (f) Nothing herein contained shall require or be deemed to require the inclusion in any

such minute of any matter which in the opinion of the Chairman of the meeting (a) is, or could reasonably be regarded as defamatory of any person, or (b) is irrelevant or immaterial to the proceeding, or (c) is detrimental to the interests of the Company. The Chairman of the meeting shall exercise an absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the aforesaid grounds.

(g) Any such minutes shall be evidence of the proceedings recorded therein. (h) The book containing the minutes of proceedings of General Meeting; shall be kept

at the Office of the Company and shall be open, during business hours for such periods not being less in the aggregate that two hours in each day as the Directors determine, to the inspection of any Member without charges.

XVI DIRECTORS

Number Of Directors 117 Until otherwise determined by the Company in a General Meeting and subject to the

Provisions of Section 252 of the Act, the number of Directors (excluding Debenture Directors and Directors appointed under Article 119 hereof and Alternate Director) shall not be less than three not more than fifteen.

Remuneration Of Directors 125 (a) Subject to the provisions of the Act, Managing Director or Directors who are in the

wholetime employment of the Company may be paid remuneration either by way of a monthly payment or at a specified percentage of the net profits of the Company or


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partly by one way and partly by the other. (b) Subject to the provisions of the Act, a Director who is neither in wholetime employment

nor a Managing Director may be paid remuneration either:

i. by way of monthly, quarterly or annual payment with the approval of the Central Government

ii. by way of commission if the Company by special resolution authorises such payment.

(c) The fees payable to a Director for attending a meeting of the Board of Directors or a

Committee thereof shall be decided by the Board of Director from time to time, within the ceilings laid down under the applicable provisions of the Companies Act, 1956.

Disclosure Of Interest 131 A Director of the Company who is in any way, whether directly or indirectly concerned

or interested in a contract or arrangement or proposed contract or arrangement entered into or to be entered into by or on behalf of the Company, shall disclose the nature of his concern or interest at a meeting of the Board in the manner provided in Section 299 (2) of the Act; Provided that it shall not be necessary for a Director to disclose his concern or interest in any contract or arrangement entered into or to be entered into with any other company where any of the directors of one Company or two or more of them together holds or hold not more than two percent of the paid up share capital in any such other Company.

Notice Of Board Meeting 152 Notice of every meeting of the Board shall be given in writing to every Director for the

time being in India, and at his address in India, to every other Director.

Secretary 167 The Directors shall from time to time appoint a Secretary and at their discretion, remove any

such Secretary, to perform any function, which by the Act are to be performed by the Secretary, and to execute any other ministerial or administrative duties, which may from time to time be assigned to the Secretary by the Director. The Directors may also at any time appoint any person or persons (who need not be the Secretary) to keep the registers required to be kept by the Company.

The Seal, Its Custody And Use 168 (a) The Board shall provide a Common Seal for the purposes of the Company, and shall

have power from time to time to destroy the same and substitute a new Seal in lieu thereof, and the Board shall provide for the safe custody of the Seal for the time being, and the Seal shall never be used except by the authority of the Board or a Committee of the Board previously given.

(b) The Company shall also be at liberty to have an official Seal in accordance with Section

50 of the Act, for use in any territory, district or place outside India.

Division Of Profits 170 The Profits of the Company, subject to any special rights relating thereto created or authorised

to be created by these Articles, shall be divisible among the Members in proportion to the amount of capital paid-up or credited as paid-up and to the period during the year for which the capital is paid-up on the shares held by them respectively.


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The Company In General Meeting May Declare Dividends 171 The Company in General Meeting may declare dividends, to be paid to its Members

according to their respective rights but no dividends shall exceed the amount recommended by the Board, but the Company in General Meeting may declare a smaller dividend.

Conditions Of Declaration Of Dividends 172 No dividend shall be declared or paid otherwise by the Company for any financial year out

of profits for that year arrived at after providing for depreciation in accordance with the provisions of Section 205 of the Act, except after the transfer to the reserves of the Company of such percentage of its profits of the Company for any previous financial year or years, arrived at after providing for depreciation in accordance with these provisions and remaining undistributed or out of both Provided that:

a. If the Company has not provided for depreciation for any previous financial year or years it shall before declaring or paying a dividend for any financial year provide for such depreciation out of the profits of that financial year or out of the profits of any other previous financial year or years.

b. If the Company has incurred any loss in any previous financial year or years the amount of the loss or an amount which is equal to the amount provided for depreciation for that year or those years whichever is less, shall be set off against the profit of the Company for the year for which the dividend is proposed to be declared or paid or against the profits of the Company for any previous financial year or years arrived at in both cases after providing for depreciation in accordance with the provisions of sub-section (2) of Section 205 of the Act or against both.

c. Provided further that no dividend shall be declared or paid for any financial year out of the profits of the Company for that year arrived at after providing for depreciation as above, except, after the transfer to the Reserve of the Company of such percentage of its profits for that year as may be prescribed in accordance with Section 205 of the Act or such higher percentage of its profits as may be allowed in accordance with that Section.

Interim Dividend 173 The Board may, from time to time, pay to the members such interim dividend as in

their judgement the position of the Company justifies.

Transfer Of Shares Must Be Registered 179 A transfer of shares shall not pass the right to any dividend declared thereon before the

registration of the transfer.

Unclaimed Dividends, Deposits Etc. To Be Remitted To Investor Education And Protection Fund

181 (a) If the Company has declared a dividend but which has not been paid or claimed within 30 days from the date of declaration to any shareholders entitled to the payment of the dividend the Company shall within 7 days from the date of expiry of the said period of 30 days open a special account in that behalf in any scheduled bank called "the unpaid dividend account of CAMLIN FINE CHEMICALS LIMITED."

(b) The Company shall not forfeit :

i. amounts in the unpaid dividend account of the Company;


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ii. the application moneys received by the Company for allotment of any securities and due for refund;

iii. matured deposits with the Company; iv. matured debentures/bonds with the Company; v. the interest accrued on the amounts referred to in clauses (a) to (d); and such

amounts which remain unpaid/unclaimed for ( period of seven years from the date they become due for payment, shall be credited to the Investor Education & Protection Fund, constituted by the Central Government under Section 205C of the Act.

Interest On Dividend 182 No unpaid dividend shall bear interest as against the Company. No un claimed

dividend shall be forfeited by the Board unless the claim thereto become barred by law and the Company shall comply with all the provisions of Section 205A of the Act in respect of unpaid or unclaimed dividend.

Capitalisation 184 (a) The Company in General Meeting may resolve that any moneys, investments or other

assets forming part of the undivided profits of the Company standing to the credit of the Reserve Fund or Capital Redemption Reserve Account, or in the hands of the Company and available for dividend (or representing premiums received on the issue of shares and standing to the credit of the Share Premium Accounts) be capitalised and distributed amongst such of the shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such shareholders in paying up in full either at par or at such premium as the resolution may provide, any unissued shares of the Company which shall be distributed accordingly or in or towards payment of the uncalled liability on any issued share or debentures or debenture-stock and that such distribution or payment shall be accepted by such shareholders in full satisfaction of their interest in the said capitalised sum. Provided that a share premium account and a Capital Redemption Reserve Account may, for the purposes of this Article, only be applied in the paying up of unissued shares to be issued to Members of the Company as fully paid bonus shares.

(b) A General Meeting may resolve that any surplus moneys arising from the realisation of

any capital assets of the Company, or any investments representing the same, or any other undistributed profits of the Company not subject to charge for income tax, be distributed among the Members on the footing that they receive the same as capital.

(c) For the purpose of giving effect to any resolution under the preceding clauses of this

Article the Board may settle any difficulty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates, and may fix the value for distribution of any specific assets, and may determine that such cash payments shall be made to any members upon the footing of the value so fixed or that fractions of less value than Rs. 10/- may be disregarded in order to adjust the rights of all parties, and may vest any such cash or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalised fund as may seem expedient to the Board. Where requisite, a proper contract shall be delivered to the Registrar for registration in accordance with Section 75 of the Act, and the Board may appoint any persons to sign such contract on behalf of the persons entitled to the dividend or capitalised fund, and such appointment shall be effective.


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XIX ACCOUNTS

Directors To Keep True Accounts 185 The Company shall keep at the office or at such other place in India as the Board thinks

fit, proper books or accounts in accordance with Section 209 of the Act /with respect of – (a) all sums of moneys received and expended by the Company and the matters in

respect of which the receipt and expenditure take place. (b) all sales and purchases of goods by the Company; and (c) the assets and liabilities of the Company. When the Board decides to keep all or any of the books of account at any place other than the office of the Company, the Company, shall within seven days of the decision file with the Registrar a notice in writing giving the full address of that other place. The Company shall preserve in good order the books of account relating to a period of not less than eight years preceding the current year together with the vouchers relevant to any entry in such books of account. Where the Company has a branch office, whether in or outside India, the Company shall be deemed to have complied with this Article if proper Books of Account relating to the transactions effected at the branch office are kept at the branch office and proper summarised returns, made upto date at intervals of not more than three months, are sent by branch office to the Company at its office or other place in India, at which the Company’s books of Accounts are kept as aforesaid The Books of Account shall give a true and fair view of the state of the affairs of the Company or branch office, as the case may be, and explain its transactions and shall be open to inspection by any Director during business hours.

As To Inspection Of Accounts Or Books By Members. 186 The Board shall from time to time determine whether and to what extent and at what times

and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Director, and no Member (not being a Director) shall have any right of inspecting any account or book or documents of the Company except as conferred by law or authorised by the Board.

Statement Of Accounts To Be Furnished To General Meeting 187 The Directors shall from time to time, in accordance with Sections 210, 211,212,215,216 and

217 of the Act, cause to be prepared and to be laid before the Company in General Meeting, such Balance Sheets, Profit and Loss Accounts and Reports as are required by these Sections.

Copies To Be Sent To Each Member 188 A copy of every such Profit and Loss Account and Balance Sheet (including the Auditors'

Report and every other document required by law to be annexed or attached to the Balance Sheet) shall at least twenty-one days before the meeting at which the same are to be laid before the Members, be sent to the members of the Company and to other persons entitled thereof in accordance with Sub-Section 1 of Section 219 of the Act, provided that it shall be sufficient if the copies of the aforesaid documents are made available by the Company for inspection at its Registered Office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents aforesaid, as the Company


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may deem fit, is sent to every member of the Company and to every other person entitled thereto in accordance with Sub-section 1 of Section 219 of the Act, not less than twenty-one days before the date of the meeting. Provided that any member or Debenture holder and any person from whom the company has accepted a sum of money by way of deposit shall, on demand, be entitled to be furnished free of cost, with a copy of the last Balance Sheet of the Company and of every document required by law to be annexed or attached thereto, including the profit and loss account and the auditors' report.

XXII. WINDING - UP

Distribution of Assets 199 The Liquidator on any winding-up (whether voluntary, and supervision or compulsory)

may with the sanction of a special Resolution, but subject to the rights attached to any preference share capital, divide among the contributors in specie any part of the assets of the Company and may, with the like sanction, vest any part of the assets of the Company in trustees upon such trusts for the benefits of the contributors as the liquidator with the like sanction shall think fit.

XXIII INDEMNITY AND RESPONSIBILITY

Officers And Officers Right To Indemnity

200 Every officer or agent for the time being of the Company shall be indemnified out of the assets of the Company against all liability incurred by him in relation to the business of the Company in defending any proceeding whether civil or criminal in which judgement is given in his favour or in which he is acquitted or in connection with any application under Section 633 of the Act in which relief is granted to him by the court.

Directors Managers Etc. Not Liable For Acts Of Others

201 Subject to provisions of Section 201 of the Act, no Director, Manager or other Officer of the Company shall be liable for the act, receipts neglects of any other Director or Officer or for Joining in any receipt or other act for conformity or for any loss or expenses happening to the Company through the insufficiency or deficiency of title to any property acquired by order of the Directors, for and on behalf of the Company or for the insufficiency or deficiency of any security in or upon which any of the moneys of the Company shall be invested or for any loss or damage arising From the bankruptcy, insolvency or tortuous act of any person with whom any moneys, securities, or effects shall be deposited or for any loss occasioned by an error of judgment or oversight on his part, or for any other loss, damage or misfortunes whatever which shall happen in the execution of the duties of this officer or in relation thereto unless the same happen through his own dishonesty.

XXIV SECRECY CLAUSE

202 (a) Every Director, Manager, Auditor, Treasurer, Trustee, Member of a Committee, Officer, Servant, Agent, Accountant or other person employed in the business of the Company shall, if so required by the Directors, before entering upon his duties, sign a declaration pledging himself to observe a strict secrecy respecting all transactions and affairs of the Company with the customers and the state of accounts with


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individuals and in matters relating thereto, and shall by such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required so to do by the Director or by law or by the person to whom such matters relate and except so far as may be necessary in order to comply with any of the provisions in these presents contained.

(b) No member shall be entitled to visit or inspect any works of the Company without the permission of the Directors or to require discovery of or any information respecting any details of the Company's trading or any matter which is or may be in the nature of a trade secret, mystery of trade or secret process or any other matter which may relate to the conduct of the business of the Company and which in the opinion of the Board it would be inexpedient in the interest of the Company to disclose.


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SECTION IX - OTHER INFORMATION

MATERIAL CONTRACTS AND DOCUMENTS The following are the Contracts referred to in para (A) below have been entered into by the Company (not being contracts entered into in the ordinary course of the business carried on by the Company which are or may be deemed material). The contracts together with the documents referred to in paragraph (B) below, copies of which may be inspected at the Registered Office of the Company between 11.00 a.m. - 4.00 p.m. on any working day from the date of filing of this Letter of Offer until the closing of the subscription list. A. MATERIAL CONTRACTS 1. Copy of Memorandum of Understanding dated 14/01/2010 between CFCL and Keynote Corporate

Services Limited, Lead Manager to the Issue. 2. Copy of Memorandum of Understanding dated 13/01/2010 between CFCL and Sharepro Services (I)

Pvt. Ltd., Registrar to the Issue. 3. Copy of tripartite agreement dated 19/02/2007 between CFCL, National Securities Depository

Limited (NSDL) and Sharepro Services (I) Pvt. Ltd. 4. Copy of tripartite agreement dated 23/03/2007 between CFCL, Central Depository Services (India)

Limited (CDSL) and Sharepro Services (I) Pvt. Ltd. B. DOCUMENTS FOR INSPECTION 1. Copy of Memorandum of Articles and Articles of Association of CFCL.

2. Copies of Annual report of CFCL for the years ended, 31/03/2006, 31/03/2007, 31/03/2008,

31/03/2009 and 31/03/2010. 3. Copy of Board resolution dated 01/12/2009 recommending the rights issue and copy of

Board/Rights Issue Committee resolution dated 12/07/2010 recommending the ratio, record date and issue price.

4. Copy of certificate dated 14/07/2010 issued by M/s. B.K. Khare & Co., Chartered Accountants &

Statutory Auditors of the Company reporting financials of the company in terms of Part II Schedule II of the Companies Act, 1956.

5. Copy of letter dated 14/07/2010 received from M/s. B.K. Khare & Co, Chartered Accountant,

regarding tax benefits accruing to the company and its shareholders. 6. Copy of certificate dated 14/07/2010 received from M/s. B.K. Khare & Co, Chartered Accountant,

regarding the Sources and Deployment of funds towards the objects of the present issue. 7. Legal Due Diligence report dated 29/01/2010 by M/s. Israni Law Chambers, Advocates & Solicitors

alongwith certificate dated 29/01/2010 in respect of the Draft Letter of Offer. 8. Copy of the Scheme of Arrangement sanctioned by the Hon’ble High Court, Bombay vide their order

dated 17/11/2006. 9. Consent letter from the Directors Lead Manager to the issue, Statutory Auditors of the Company,

Legal Advisors to the issue, Registrar to the Issue, Company Secretary and Compliance Officer,


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Bankers to the Company and Bankers to the issue to act in their respective capacities and for inclusion of their names in the letter of offer.

10. Due diligence certificate dated 23/02/2010 by Keynote Corporate Services Limited, Lead Manager to

the issue submitted to SEBI. 11. Copy of in-principle approval received from Bombay Stock Exchange Ltd. vide letter no. letter no.

DCS/PREF/JA/IP-RT/1717/09-10 dated March 9, 2010. 12. Copy of SEBI observation letter no. CFD/DIL/SM/10862/2010 dated July 02, 2010 and compliance

thereof.


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PART III

DECLARATION All the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of India or the regulations issued by Securities and Exchange Board of India, established under Section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Letter of Offer is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules made thereunder or regulations issued, as the case may be. We further certify that all statements in this Letter of Offer are true and correct. Sd/- Dilip D. Dandekar Director

Sd/- Ashish S. Dandekar Managing Director

Sd/- Pramod M. Sapre Director

Sd/- Sharad M. Kulkarni Director

Sd/- Abeezar E. Faizullabhoy Director

Sd/- Bhargav A. Patel Director

Sd/- Dattatraya R. Puranik Chief Financial Officer

Sd/- Narayan R. Joshi Company Secretary

Place: Mumbai Date: July 29, 2010