preliminary placement document not for circulation … · 2015-12-17 · preliminary placement...

Preliminary Placement Document

Not for Circulation

Serial Number [●] Strictly Confidential

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SOMANY CERAMICS LIMITED

(Incorporated in the Republic of India as a company under the Companies Act, 1956 with corporate identity number L40200DL1968PLC005169)

Registered Office: 82/19, Bhakerwara Road, Mundka, New Delhi - 110 041;Corporate Office:F-36, Sector -6, Noida, Uttar Pradesh-201301 Telephone: + 91 12 7622 3300, Fax: +91 12 7624 1011; Email: [email protected]; Website: www.somanyceramics.com

Somany Ceramics Limited (the “Company”) is issuing up to [●] equity shares of face value Rs. 2 each, (the “Equity Shares”) at a price of Rs. [●] per Equity Share, including a premium of Rs. [●] per Equity Share, aggregating up to Rs. [●] crores (the “Issue”).

ISSUE IN RELIANCE UPON SECTION 42 OF THE COMPANIES ACT, 2013, READ WITH RULE 14 OF THE COMPANIES (PROSPECTUS AND

ALLOTMENT OF SECURITIES) RULES, 2014, AND CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF

CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009

THE ISSUE AND THE DISTRIBUTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IS BEING MADE TO QUALIFIED INSTITUTIONAL BUYERS

(“QIB”) AS DEFINED UNDER THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)

REGULATIONS, 2009 (THE “SEBI REGULATIONS”) IN RELIANCE UPON SECTION 42 OF THE COMPANIES ACT, 2013, READ WITH RULE 14 OF THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014, AND CHAPTER VIII OF THE SEBI REGULATIONS. THIS

PRELIMINARY PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR AND DOES NOT CONSTITUTE AN OFFER OR

INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTORS WITHIN OR OUTSIDE

INDIA OTHER THAN QIBs. THIS PRELIMINARY PLACEMENT DOCUMENT WILL BE CIRULATED ONLY TO SUCH QIBs WHOSE NAMES ARE

RECORDED BY OUR COMPANY PRIOR TO MAKING AN INVITATION TO SUBSCRIBE TO EQUITY SHARES.

YOU ARE NOT AUTHORISED TO AND MAY NOT (1) DELIVER THIS PRELIMINARY PLACEMENT DOCUMENT TO ANY OTHER PERSON; (2)

REPRODUCE THIS PRELIMINARY PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER; OR (3) RELEASE ANY PUBLIC ADVERTISMENT OR

UTILIZE ANY MEDIA, MARKETING OR DISTRIBUTION CHANNELS OR AGENTS TO INFORM THE PUBLIC AT LARGE ABOUT THE ISSUE. ANY

DISTRIBUTION OR REPRODUCTION OF THIS PRELIMINARY PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO

COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND

OTHER JURISDICTIONS.

INVESTMENTS IN EQUITY AND EQUITY-RELATED SECURITIES INVOLVE A HIGH DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD

NOT INVEST ANY AMOUNT IN THE ISSUE UNLESS THEY ARE PREPARED TO BEAR THE RISK OF LOSING ANY PART OR ALL OF THE AMOUNT

INVESTED BY THEM. PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY READ “RISK FACTORS” BEFORE MAKING AN INVESTMENT DECISION RELATING TO THE ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS ADVISORS ABOUT THE PARTICULAR

CONSEQUENCES OF AN INVESTMENT IN THE EQUITY SHARES BEING ISSUED PURSUANT TO THIS PRELIMINARY PLACEMENT DOCUMENT.

All of our Company’s outstanding Equity Shares, are listed on the BSE Limited (the “BSE”) and the National Stock Exchange of India Limited (the “NSE”, and together with the BSE, the “Stock Exchanges”). The closing price of the outstanding Equity Shares on the BSE and the NSE on December 16, 2015 was Rs. 333.20 and Rs. 335.40 per Equity Share, respectively. In-principle approvals under Regulation 28(1) of the Listing Regulations (as defined hereinafter) for listing of the Equity Shares have been received from both the BSE and the NSE on December 17, 2015. Applications will be made to the Stock Exchanges for obtaining final listing and trading approvals for the Equity Shares offered through the Issue. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Equity Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of the business of our Company or the Equity Shares.

A copy of this Preliminary Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter) has been delivered to the Stock Exchanges. This Preliminary Placement Document has not been reviewed by the Securities and Exchange Board of India (the “SEBI”), the Reserve Bank of India (the “RBI”), the Stock Exchanges or any other regulatory or listing authority and is intended only for use by QIBs. A copy of the Placement Document (which will include disclosures prescribed under Form PAS-4) will be filed with the Stock Exchanges in accordance with the SEBI Regulations. Our Company shall make the requisite filings with the Registrar of Companies, Delhi & Haryana, (the “RoC”) and the SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended. This Preliminary Placement Document has not been and will not be registered as a prospectus with the RoC, and will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. The Issue is meant only for QIBs by way of a private placement and is not an offer to the public or to any other class of investors. This Preliminary Placement Document has been prepared by our Company solely for providing information in connection with the Issue.

Invitations, offers and sales of the Equity Shares shall only be made pursuant to this Preliminary Placement Document together with the respective Application Form (defined hereinafter) and the CAN (as defined hereinafter). The distribution of this Preliminary Placement Document or the disclosure of its contents to any person, other than QIBs and persons retained by QIBs to advise them with respect to their purchase of the Equity Shares, is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to observe the foregoing restrictions and make no copies of this Preliminary Placement Document or any documents referred to in this Preliminary Placement Document. See “Issue Procedure”.

The information contained in this Preliminary Placement Document is not complete and may be changed. The information on our Company’s website or any website directly or indirectly linked to our Company’s website does not form part of this Preliminary Placement Document and prospective investors should not rely on such information contained in, or available through, such websites.

The Equity Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and they may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of

the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to

persons who are qualified institutional buyers (as defined in Rule 144A under the U.S. Securities Act) (a “U.S. QIB”) pursuant to Section 4(a)(2) or any

other available exemption from registration under the U.S. Securities Act, and (b) outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act (“Regulation S”) and the applicable laws of the jurisdictions where those offers and sales occur. For a description of these and certain further restrictions on offers, sales and transfers of the Equity Shares and distribution of this Preliminary Placement Document, see sections titled “Notice to Investors”, “Distribution and Solicitation Restrictions” and “Transfer Restrictions” in this Preliminary Placement Document.

This Preliminary Placement Document is dated December 17, 2015.

BOOK RUNNING LEAD MANAGER

mailto:[email protected]

http://www.somanyceramics.com/

TABLE OF CONTENTS

NOTICE TO INVESTORS .................................................................................................................................................. 1 REPRESENTATIONS BY INVESTORS ............................................................................................................................ 4 OFFSHORE DERIVATIVE INSTRUMENTS .................................................................................................................... 9 DISCLAIMER CLAUSE OF THE STOCK EXCHANGES .............................................................................................. 10 PRESENTATION OF FINANCIAL AND OTHER INFORMATION .............................................................................. 11 INDUSTRY AND MARKET DATA ................................................................................................................................. 13 FORWARD-LOOKING STATEMENTS .......................................................................................................................... 14 ENFORCEMENT OF CIVIL LIABILITIES ..................................................................................................................... 15 EXCHANGE RATE INFORMATION .............................................................................................................................. 16 CERTAIN DEFINITIONS AND ABBREVIATIONS ....................................................................................................... 17 SUMMARY OF THE ISSUE ............................................................................................................................................. 22 DISCLOSURE REQUIREMENTS UNDER THE COMPANIES ACT, 2013 .................................................................. 24 SUMMARY OF BUSINESS .............................................................................................................................................. 26 SUMMARY FINANCIAL INFORMATION .................................................................................................................... 30 RECENT DEVELOPMENTS ............................................................................................................................................ 31 RISK FACTORS ................................................................................................................................................................ 32 MARKET PRICE INFORMATION .................................................................................................................................. 56 USE OF PROCEEDS ......................................................................................................................................................... 59 CAPITALIZATION ........................................................................................................................................................... 60 DIVIDENDS ...................................................................................................................................................................... 61 CAPITAL STRUCTURE ................................................................................................................................................... 62 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................................................................................................................................................................... 64 INDUSTRY OVERVIEW .................................................................................................................................................. 83 BUSINESS ......................................................................................................................................................................... 88 BOARD OF DIRECTORS AND SENIOR MANAGEMENT......................................................................................... 101 PRINCIPAL SHAREHOLDERS AND OTHER INFORMATION ................................................................................. 106 REGULATIONS AND POLICIES .................................................................................................................................. 109 ISSUE PROCEDURE ...................................................................................................................................................... 112 PLACEMENT .................................................................................................................................................................. 122 DISTRIBUTION AND SOLICITATION RESTRICTIONS ........................................................................................... 124 TRANSFER RESTRICTIONS ......................................................................................................................................... 130 SECURITIES MARKET OF INDIA ................................................................................................................................ 133 DESCRIPTION OF EQUITY SHARES .......................................................................................................................... 136 TAXATION ...................................................................................................................................................................... 140 INDEPENDENT AUDITORS ......................................................................................................................................... 151 LEGAL PROCEEDINGS ................................................................................................................................................. 152 GENERAL INFORMATION ........................................................................................................................................... 154 FINANCIAL STATEMENTS .......................................................................................................................................... 155 DECLARATION .............................................................................................................................................................. 156

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NOTICE TO INVESTORS

Our Company has furnished and accepts full responsibility for all of the information contained in this Preliminary Placement Document and having made all reasonable enquiries, confirms, to the best of its knowledge and belief, that this Preliminary Placement Document contains all information with respect to our Company and the Equity Shares, which is material in the context of the Issue. The statements contained in this Preliminary Placement Document relating to our Company and the Equity Shares are, in all material respects, true and accurate and not misleading. The opinions and intentions expressed in this Preliminary Placement Document with regard to our Company and the Equity Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to our Company and are based on reasonable assumptions. There are no other facts in relation to our Company and the Equity Shares, the omission of which would, in the context of the Issue, make any statement in this Preliminary Placement Document misleading in any material respect. Further, all reasonable enquiries have been made by our Company to ascertain such facts and to verify the accuracy of all such information and statements. The Book Running Lead Manager has not separately verified all the information (financial, legal or otherwise) contained in this Preliminary Placement Document. Accordingly, neither the Book Running Lead Manager nor any of its respective shareholders, employees, legal counsels, officers, directors, representatives, agents or affiliates makes any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted by the Book Running Lead Manager or its shareholders, employees, legal counsels, officers, directors, representatives, agents or affiliates as to the accuracy or completeness of the information contained in this Preliminary Placement Document or any other information supplied in connection with the Issue or their distribution. Each person receiving this Preliminary Placement Document acknowledges that such person has neither relied on the Book Running Lead Manager nor on any of its shareholders, employees, legal counsels, officers, directors, representatives, agents or affiliates in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of our Company and the merits and risks involved in investing in the Equity Shares. Any prospective investor should not construe anything in this Preliminary Placement Document as legal, business, tax, accounting or investment advice. No person is authorized to give any information or to make any representation not contained in this Preliminary Placement Document and any information or representation not so contained must not be relied upon as having been authorized by or on behalf of our Company or by or on behalf of the Book Running Lead Manager. The delivery of this Preliminary Placement Document at any time does not imply that the information contained in it is correct as at any time subsequent to its date. The distribution of this Preliminary Placement Document or the disclosure of its contents without the prior consent of our Company to any person, other than QIBs whose names are recorded by our Company prior to the invitation to subscribe to the Issue (in consultation with the Book Running Lead Manager or its representatives) and those retained by QIBs to advise them with respect to their purchase of the Equity Shares is unauthorized and prohibited. Each prospective investor, by accepting delivery of this Preliminary Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Preliminary Placement Document or any documents referred to in this Preliminary Placement Document. The Equity Shares have not been approved, disapproved or recommended by any regulatory authority in any

jurisdiction including the U.S. Securities and Exchange Commission, any state securities commission in the U.S.

or the securities commission of any non-U.S. jurisdiction or any other U.S. or non-U.S. regulatory authority. No

authority has passed on or endorsed the merits of this Issue or the accuracy or adequacy of this Preliminary

Placement Document. Any representation to the contrary is a criminal offense in the United States and may be a

criminal offense in other jurisdictions.

The Equity Shares have not been recommended by any foreign federal or state securities commission or regulatory authority. The distribution of this Preliminary Placement Document and the issue of the Equity Shares may be restricted in certain jurisdictions by law. As such, this Preliminary Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by the Company and the Book Running Lead Manager which would permit an issue of the Equity Shares or distribution of this Preliminary Placement Document in any jurisdiction, other than India, where action for that purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any other Issue-related materials in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction, except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction.

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The Equity Shares in the Issue have not been and will not be registered under the U.S Securities Act of 1933, as amended (“Securities Act”), and unless so registered may not be offered or sold within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons who are qualified institutional buyers (as defined in Rule 144A under the U.S. Securities Act) (a “U.S. QIB”) pursuant to Section 4(a)(2) or any other available exemption from registration under the U.S. Securities Act, and (b) outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act (“Regulation S”) and the applicable laws of the jurisdictions where those offers and sales occur. The Equity Shares are transferable only in accordance with the restrictions described in the sections titled "Distribution and Solicitation Restrictions" and "Transfer

Restrictions" of this Preliminary Placement Document. Subscribers of the Equity Shares will be deemed to make the representations set forth in the sections titled "Representations by Investors" and "Transfer Restrictions" of this Preliminary Placement Document. The information contained in this Preliminary Placement Document has been provided by the Company and other sources identified herein. Distribution of this Preliminary Placement Document to any person other than the investor specified by the Book Running Lead Manager or its representatives, and those persons, if any, retained to advise such investor with respect thereto, is unauthorized, and any disclosure of its contents, without prior written consent of the Company, is prohibited. Any reproduction or distribution of this Preliminary Placement Document, in whole or in part, and any disclosure of its contents to any other person is prohibited. The distribution of this Preliminary Placement Document and the issue of the Equity Shares in certain jurisdictions may be restricted by law. As such, this Preliminary Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by our Company or the Book Running Lead Manager, which would permit an Issue of the Equity Shares or distribution of this Preliminary Placement Document in any jurisdiction, other than India. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and neither this Preliminary Placement Document nor any Issue-related materials in connection with the Equity Shares may be distributed or published in or from any country or jurisdiction that would require registration of the Equity Shares in such country or jurisdiction. In making an investment decision, investors must rely on their own examination of the Company and the terms of the Issue, including the merits and risks involved. Investors should not construe the contents of this Preliminary Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, investment, legal, tax, accounting and related matters concerning this Issue. In addition, neither the Company nor the Book Running Lead Manager is making any representation to any investor, or subscriber or purchaser of the Equity Shares regarding the legality of an investment in the Equity Shares by such offeree or purchaser under applicable legal, investment or similar laws or regulations. Each purchaser of the Equity Shares is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Chapter VIII of the SEBI Regulations and is not prohibited by SEBI or any other regulatory authority from buying, selling or dealing in securities. Each purchaser of the Equity Shares also acknowledges that it has been afforded an opportunity to request from our Company and review information pertaining to our Company and the Equity Shares. Each subscriber of the Equity Shares in the Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Indian law, including Section 42 of the Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations and that they are not prohibited by the SEBI or any other statutory authority from buying, selling or dealing in securities including the Equity Shares. The information on our Company’s website or any website directly or indirectly linked to our Company’s website or the website of the Book Running Lead Manager, does not constitute or form part of this Preliminary Placement Document. Prospective investors should not rely on the information contained in, or available through such websites. This Preliminary Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such documents. All references herein to “you” or “your” are to the prospective investors in the Issue.

NOTICE TO INVESTORS IN CERTAIN OTHER JURISDICTIONS

For information for investors in certain other jurisdictions see the sections titled "Distribution and Solicitation

Restrictions" and "Transfer Restrictions" in this Preliminary Placement Document.

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NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES (“RSA 421 B”) WITH THE STATE OF NEW HAMPSHIRE, NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE, CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT, NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION, MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIRE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT, ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

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REPRESENTATIONS BY INVESTORS

All references to “you” or “your” in this section are to the prospective investors in this Issue. By bidding for and subscribing to any of the Equity Shares under this Issue, you are deemed to have represented, warranted, acknowledged and agreed to us and the Book Running Lead Manager as follows: 1. you are a “QIB” as defined in Regulation 2(1)(zd) of the SEBI Regulations and not excluded pursuant to

Regulation 86 of the SEBI Regulations, having a valid and existing registration under the applicable laws and regulations of India and undertake to acquire, hold, manage or dispose of any Equity Shares that are Allocated (as defined hereinafter) to you for the purposes of your business in accordance with Chapter VIII of the SEBI Regulations;

2. if you are not a resident of India, but are a QIB (other than a multilateral and bilateral development financial

institution), you are an FII (as defined hereinafter) (including a sub-account other than a sub-account which is a foreign corporate or a foreign individual) or an Eligible FPI (as defined hereinafter) or an FVCI (as defined hereinafter), and have a valid and existing registration with the SEBI under the applicable laws in India and you are eligible to invest in India under applicable law, including the FEMA Regulations (as defined hereinafter) and any notifications, circulars or clarifications issued thereunder, and have not been prohibited by the SEBI or any other regulatory authority, from buying, selling or dealing in securities;

3. you will make all necessary filings with appropriate regulatory authorities, including RBI, as required pursuant

to applicable laws;

4. if you are Allotted (as defined hereinafter) Equity Shares, you shall not, for a period of one year from the date of Allotment (as defined hereinafter), sell the Equity Shares so acquired except on the the Stock Exchanges;

5. you have made, or are deemed to have made, as applicable, the representations set forth under the sections titled "Distribution and Solicitation Restrictions" and "Transfer Restrictions", respectively of this Preliminary Placement Document;

6. you are aware that the Equity Shares have not been and will not be registered through a prospectus under the

Companies Act, the SEBI Regulations or under any other law in force in India. This Preliminary Placement Document has not been verified or affirmed by the RBI, the SEBI, the RoC, the Stock Exchanges or any other regulatory or listing authority and is intended only for use by QIBs. This Preliminary Placement Document has been filed with the Stock Exchanges for record purposes only and has been displayed on the websites of our Company and the Stock Exchanges. Our Company is required to make the requisite filings with the RoC and the SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014;

7. you have fully observed such laws and obtained all such governmental and other consents in each case which

may be required thereunder and complied with all necessary formalities; 8. you are aware that additional requirements would be applicable if you are in jurisdictions other than India, as set

forth under the sections titled “Distribution and Solicitation Restrictions” and “Transfer Restrictions” of this Preliminary Placement Document. You are entitled to subscribe for and acquire the Equity Shares under the laws of all relevant jurisdictions that apply to you and that you have fully observed such laws and you have necessary capacity, have obtained all necessary consents, government or otherwise, and authorizations and compiled with all necessary formalities, to enable you to commit to participation in the Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorities to agree to the terms set out or referred to in this Preliminary Placement Document) and will honour such obligations;

9. you confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by

our Company or its agents (“Company’s Presentations”) with regard to our Company; or (ii) if you have participated in or attended any Company’s Presentations: (a) you understand and acknowledge that the Book Running Lead Manager may not have knowledge of any information, answers, materials, documents and statements that our Company or its agents may have made at such Company’s Presentations and are therefore unable to determine whether the information provided to you at such Company’s Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the Book Running Lead Manager has no liability with respect to any information that was provided to you at such Company’s

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Presentations, and (b) confirm that, to the best of your knowledge, you have not been provided any material information that was not publicly available;

10. neither our Company nor the Book Running Lead Manager nor any of its shareholders, directors, officers,

employees, legal counsels, representatives, agents or affiliates is making any recommendations to you, advising you regarding the suitability of an investment in the Equity Shares offered in the Issue and that participation in the Issue is on the basis that you are not and will not, up to the Allotment, be a client of the Book Running Lead Manager and that the Book Running Lead Manager or any of its shareholders, employees, counsels, officers, directors, representatives, agents or affiliates have no duties or responsibilities to you for providing the protection afforded to their clients or for providing advice in relation to the Issue and are in no way acting in a fiduciary capacity to you;

11. you are aware that if you are an Allottee, our Company is required to disclose details such as your name, address

and the number of Equity Shares Allotted to the RoC and the SEBI and you consent to such disclosures. Further, if you are one of the top ten shareholders, our Company will be required to make a filing with the RoC within 15 days of the change as per Section 93 of the Companies Act, 2013;

12. you are aware that if you are Allotted more than 5% of the Equity Shares in the Issue, our Company shall be required to disclose your name and the number of Equity Shares Allotted to you to the Stock Exchanges, and they will make the same available on their website and you consent to such disclosures;

13. all statements other than statements of historical fact included in this Preliminary Placement Document,

including, without limitation, those regarding our Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our Company’s business), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our Company’s present and future business strategies and environment in which our Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Preliminary Placement Document. Our Company and the Book Running Lead Manager assume no responsibility to update any of the forward-looking statements contained in this Preliminary Placement Document;

14. you have been provided a serially numbered copy of this Preliminary Placement Document and have read this

Preliminary Placement Document in its entirety, including, in particular, the section titled “Risk Factors” in this Preliminary Placement Document;

15. you are aware and understand that the Equity Shares are being offered only to QIBs and are not being offered to

the general public and the Allotment of the same shall be on a discretionary basis;

16. in making your investment decision, (i) you have relied on your own examination of our Company and the terms of the Issue, including the merits and risks involved, (ii) made and will continue to make your own assessment of the Company, the Equity Shares and the terms of this Issue based solely on the information contained in this Preliminary Placement Document and no other disclosure or representation by the Company or any other party, (iii) consulted your own independent counsel and advisors or otherwise have satisfied yourself concerning, without limitation, the effects of local laws, (iv) you have received all information that you believe is necessary or appropriate in order to make an investment decision in respect of our Company and the Equity Shares, and (v) relied upon your own investigation and resources in deciding to invest in this Issue;

17. you are a sophisticated investor and have such knowledge and experience in financial investment and business

matters as to be capable of evaluating the merits and risks of the investment in the Equity Shares. You and any accounts for which you are subscribing the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares; (ii) will not look to our Company and/or the Book Running Lead Manager or any of their shareholders, employees, counsel, officers, directors, representatives, agents or affiliates for all or part of any such loss or losses that may be suffered; (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares and and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Equity Shares. You acknowledge that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. You are seeking to subscribe to the Equity Shares in this Issue for your own investment

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and not with a view to resell or distribute;

18. you understand that our Company or the Book Running Lead Manager or any of its shareholders, directors, officers, employees, legal counsels, representatives, agents or affiliates have not provided you with any tax advice or otherwise made any representations regarding the tax consequences of subscription, ownership or disposal of the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Equity Shares). You will obtain your own independent tax advice and will not rely on the Book Running Lead Manager or any of their shareholders, employees, legal counsels, officers, directors, representatives, agents or affiliates or our Company when evaluating the tax consequences in relation to the Equity Shares (including but not limited to the Issue and the use of the proceeds from the Issue). You waive and agree not to assert any claim against the Book Running Lead Manager or any of its shareholders, employees, counsels, officers, directors, representatives, agents or affiliates or our Company with respect to the tax aspects of the Equity Shares or as a result of any tax audits by tax authorities, wherever situated;

19. when you are acquiring the Equity Shares for one or more managed accounts, you represent and warrant that

you are authorised in writing by each such managed account to acquire the Equity Shares for each managed account; and to make (and you hereby make) the representations, acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “you” to include such accounts;

20. you are not a “Promoter” (as defined under the SEBI Regulations) and are not a person related to the

“Promoter”, either directly or indirectly and your Application does not directly or indirectly represent the Promoters or promoter group (as defined under the SEBI Regulations) of our Company;

21. you have no rights under a shareholders’ agreement or voting agreement with the Promoter or persons related to

the “Promoter”, no veto rights or right to appoint any nominee director on the Board of Directors other than the rights acquired in the capacity of a lender which shall not be deemed to be a person related to the “Promoter”;

22. you have no right to withdraw your Application after the Bid/Issue Closing Date (as defined hereinafter);

23. you are eligible, including without limitation under applicable law, to apply for and hold the Equity Shares so

Allotted and together with any securities of our Company held by you prior to the Issue. You further confirm that your aggregate holding upon the issue and Allotment shall not exceed the level permissible as per any regulation applicable to you;

24. the Application Form submitted by you would not at any stage directly or indirectly result in triggering a

requirement to make public announcement to acquire Equity Shares in accordance with the Takeover Code (as defined hereinafter);

25. to the best of your knowledge and belief, your aggregate holding together with other Allottees that belong to the

same group or are under common control as you, pursuant to the Allotment shall not exceed 50% of the Issue Size (as defined hereinafter). For the purposes of this representation:

the expression ‘belongs to the same group’ shall derive meaning from the concept of ‘companies under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956.

‘control’ shall have the same meaning as is assigned to it by clause 1 (e) of Regulation 2 of the Takeover Code.

26. you are aware that (i) applications for in-principle approval, in terms of Regulation 28(1) of the Listing

Regulations (as defined hereinafter), for listing and admission of the Equity Shares and for trading on the Stock Exchanges, were made and such approval has been received from the Stock Exchanges, and (ii) the application for the final listing and trading approval will be made only after Allotment. There can be no assurance that the final approvals for listing of the Equity Shares will be obtained in time or at all. Our Company shall not be responsible for any delay or non-receipt of such final approvals or any loss arising from such delay or non-receipt;

27. you shall not undertake any trade in the Equity Shares credited to your beneficiary account until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges;

28. you are aware and understand that the Book Running Lead Manager has entered into a Placement Agreement

7

with our Company whereby the Book Running Lead Manager has, subject to the satisfaction of certain conditions set out therein, undertaken to use its reasonable endeavours to seek to procure subscription for the Equity Shares on the terms and conditions set forth therein;

29. you understand that the contents of this Preliminary Placement Document are exclusively the responsibility of

our Company and that neither the Book Running Lead Manager nor any person acting on its behalf has or shall have any liability for any information, representation or statement contained in this Preliminary Placement Document or any information previously published by or on behalf of our Company and will not be liable for your decision to participate in the Issue based on any information, representation or statement contained in this Preliminary Placement Document or otherwise. By participating in the Issue, you agree to the same and confirm that the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire the Equity Shares is contained in this Preliminary Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Equity Shares and you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Book Running Lead Manager or our Company or any other person and neither the Book Running Lead Manager nor our Company nor any other person will be liable for your decision to participate in the Issue based on any other information, representation, warranty or statement that you may have obtained or received;

30. you understand that the Book Running Lead Manager do not have any obligation to purchase or acquire all or

any part of the Equity Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or incurred by you for any reason whatsoever in connection with the Issue, including non-performance by us of any of our respective obligations or any breach of any representations or warranties by us, whether to you or otherwise;

31. you are able to purchase the Equity Shares in accordance with the restrictions described in “Distribution and Soliciation Restrictions” and “Transfer Restrictions”;

32. you understand and agree that the Equity Shares are transferable only in accordance with the restrictions described in “Transfer Restrictions” and you warrant that you will comply with those restrictions;

33. any dispute arising in connection with the Issue will be governed by and construed in accordance with the laws

of the Republic of India and the courts at Delhi, India shall have exclusive jurisdiction to settle any disputes that may arise out of or in connection with this Preliminary Placement Document;

34. you agree to indemnify and hold the Company and the Book Running Lead Manager harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, undertakings, and agreements in this section. You agree that the indemnity set forth in this section shall survive the resale of the Equity Shares by or on behalf of the managed accounts;

35. if you are within the United States, you are a U.S. QIB who is, or are acquiring the Equity Shares for your own

account or for the account of an institutional investor who also meets the requirement of a U.S. QIB, for investment purposes only and not with a view to, or for resale in connection with, the distribution (within the meaning of any United States securities laws) thereof, in whole or in part and are not our affiliate or a person acting on behalf of such an affiliate;

36. if you are outside the United States, you are purchasing the Equity Shares in an offshore transaction within the meaning of Regulation S under the U.S. Securities Act, and are not our affiliate or a person acting on behalf of such an affiliate;

37. you are not acquiring or subscribing for the Equity Shares as a result of any general solicitation or general advertising (as those terms are defined in Regulation D under the U.S. Securities Act) or directed selling efforts (as defined in Regulation S) and you understand and agree that offers and sales are being made in reliance on an exemption to the registration requirements of the U.S. Securities Act provided by Section 4(a)(2) under the U.S. Securities Act or Regulation S or another available exemption from registration under the U.S. Securities Act and the Equity Shares may not be eligible for resales under Rule 144A thereunder;

38. you understand that the Equity Shares have not been and will not be registered under the U.S. Securities Act or registered, listed or otherwise qualified in any other jurisdiction outside India and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration

8

requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons who are qualified institutional buyers (as defined in Rule 144A under the U.S. Securities Act) pursuant to Section 4(a)(2) or another available exemption from registration under the U.S. Securities Act, and (b) outside the United States in offshore transactions in reliance on Regulation S and the applicable laws of the jurisdictions where those offers and sales occur;

39. each of the representations, warranties, acknowledgements and agreements set forth above shall continue to be true and accurate at all times up to and including the Allotment, listing and trading of the Equity Shares in the Issue; and

40. you understand that our Company, the Book Running Lead Manager, its respective affiliates and others will rely on the truth and accuracy of the foregoing representations, agreements, warranties, acknowledgements and undertakings, which are given to the Book Running Lead Manager on their own behalf and on behalf of our Company and are irrevocable.

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OFFSHORE DERIVATIVE INSTRUMENTS

Subject to compliance with all applicable Indian laws, rules, regulations, guidelines and approvals in terms of Regulation 22 of the FPI Regulations, FPIs (other than Category III FPIs and unregulated broad based funds, which are classified as Category II FPIs (as defined in the FPI Regulations) by virtue of their investment manager being appropriately regulated unless such FPIs have entered into an offshore derivative instrument with an FII prior to January 7, 2014 or were registered as clients of an FII prior to January 7, 2014), including the affiliates of the Book Running Lead Manager, may issue or otherwise deal in offshore derivative instruments such as participatory notes, equity-linked notes or any other similar instruments against underlying securities, listed or proposed to be listed on any recognized stock exchange in India, such as the Equity Shares (all such offshore derivative instruments are referred to herein as “P-Notes”), for which they may receive compensation from the purchasers of such instruments. P-Notes may be issued only in favor of those entities which are regulated by any appropriate foreign regulatory authorities in the countries of their incorporation or establishment subject to compliance with “know your client” requirements. An FPI shall also ensure that further issue or transfer of any P-Note issued by or on behalf of it, is made only to persons who are regulated by appropriate foreign regulatory authorities. P-Notes have not been and are not being offered or sold pursuant to this Preliminary Placement Document. This Preliminary Placement Document does not contain any information concerning P-Notes, including, without limitation, any information regarding any risk factors relating thereto. Any P-Notes that may be issued are not securities of our Company and do not constitute any obligation of, claims on or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to the P-Notes. Any P-Notes that may be offered are issued by, and are the sole obligations of, third parties that are unrelated to our Company. Our Company and the Book Running Lead Manager does not make any recommendation as to any investment in P-Notes and does not accept any responsibility whatsoever in connection with the P-Notes. Any P-Notes that may be issued are not securities of the Book Running Lead Manager and do not constitute any obligations of or claims on the Book Running Lead Manager. FII of FPI affiliates of the Book Running Lead Manager may purchase, the Equity Shares to the extent permissible under law and may issue P-Notes in respect thereof. Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures

as to the issuers of such P-Notes and the terms and conditions of any such P-Notes. Neither the SEBI nor any

other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective

investors are urged to consult their own financial, legal, accounting and tax advisors regarding any contemplated

investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations.

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DISCLAIMER CLAUSE OF THE STOCK EXCHANGES

Disclaimer Clause of the Stock Exchanges As required, a copy of this Preliminary Placement Document has been submitted to the Stock Exchanges. The Stock Exchanges do not in any manner: 1. warrant, certify or endorse the correctness or completeness of any of the contents of this Preliminary Placement

Document; 2. warrant that the Equity Shares will be listed or will continue to be listed on the Stock Exchanges; or 3. take any responsibility for the financial or other soundness of our Company, its Promoters, its management or

any scheme or project of our Company; and it should not for any reason be deemed or construed to mean that this Preliminary Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any Equity Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition, whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Conventions In this Preliminary Placement Document, unless otherwise specified or the context otherwise indicates or implies, references to “you”, “your”, “offeree”, “purchaser”, “subscriber”, “recipient”, “investors”, “prospective investors” and “potential investor” are to the prospective investors of Equity Shares in the Issue and references to the “Issuer”, “our Company” or “SCL”, are to the Somany Ceramics Limited, and references to “we”, “us”, or “our”, or similar terms are to Somany Ceramics Limited and its Subsidiaries unless the context otherwise requires. References in this Preliminary Placement Document to “India” are to the Republic of India and its territories and possessions and the “Government” or the “central government” or the “state government” are to the Government of India, central or state, as applicable. All references herein to the “U.S.” or the “United States” are to the United States of America and its territories and possessions. References to the singular also refer to the plural and one gender also refers to any other gender, wherever applicable. Financial and Other Information

The Reformatted Consolidated Financial Statements for the fiscal years 2015, 2014 and 2013 (collectively, the “Audited

Consolidated Financial Statements”), have been included in this Preliminary Placement Document. See “Financial Statements”. Pursuant to a meeting of its Board of Directors on October 26, 2015, our Company has adopted and filed with the Stock Exchanges the unaudited standalone financial results for the quarter and six months ended September 30, 2015 in accordance with the provisions of Clause 41 of the Equity Listing Agreement with the Stock Exchanges (the “Unaudited

Standalone Interim Financial Information”). Our statutory auditors have conducted a limited review of the Unaudited Standalone Interim Financial Information. The Unaudited Standalone Interim Financial Information are also included in this Preliminary Placement Document. For further information, please refer to the Unaudited Standalone Interim Financial Information included in“Financial Statements” in this Preliminary Placement Document.The Unaudited Standalone Interim Financial Information is presented in a form specified under the requirements of Clause 41 of the Equity Listing Agreement with the Stock Exchanges and is not comparable to the presentation of our Reformatted Consolidated Financial Statements for fiscal 2013, 2014 and 2015 included elsewhere in this Preliminary Placement Document. Accordingly, investors are cautioned against placing undue reliance on the Unaudited Standalone Interim Financial Information for its investment decision. Unaudited Standalone Interim Financial Information together with the Audited Consolidated Financial Statements referred to herein as the “Financial Statements”) Our Company has prepared its Financial Statements in Rupees in accordance with Indian GAAP, the Companies Act and the guidelines issued by the RBI, as applicable and have been audited or reviewed, as applicable, by the Auditors in accordance with the applicable generally accepted auditing standards in India prescribed by the ICAI. The Financial Statements prepared in accordance with Indian GAAP differ in certain important aspects from U.S. GAAP and other accounting principles with which prospective investors may be familiar in other countries. We have not attempted to quantify the impact of U.S. GAAP on the financial data included in this Preliminary Placement Document, nor do we provide a reconciliation of our Financial Statements to those of U.S. GAAP. Accordingly, the degree to which the Financial Statements prepared in accordance with Indian GAAP included in this Preliminary Placement Document will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian GAAP. Any reliance by persons not familiar with Indian GAAP on the financial disclosures presented in this Preliminary Placement Document should accordingly be limited. In this Preliminary Placement Document, references to “US$” and “U.S. dollars” are to the legal currency of the United States and references to, “Rs.” and “Rupees” are to the legal currency of India. The financial information relating to our Company herein have been converted from crores, lakhs or thousands, as the case may be, into millions and shown to the nearest two decimal places.References to “lakhs” and “crores” in this Preliminary Placement Document are to the following:

one lakh represents 100,000 (one hundred thousand); and

one crore represents 10,000,000 (ten million).

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In this Preliminary Placement Document, certain monetary thresholds have been subjected to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them. The fiscal year of our Company commences on April 1 of each calendar year and ends on March 31 of the succeeding calendar year. Unless otherwise stated, references in this Preliminary Placement Document to a particular year are to the calendar year ended on December 31, and to a particular “fiscal year” or “financial year” are to the 12 months ended on March 31.

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INDUSTRY AND MARKET DATA

Information regarding market position, growth rates, other industry data and certain industry forecasts pertaining to the businesses of our Company contained in this Preliminary Placement Document consists of estimates based on data reports compiled by government bodies, data reports compiled by professional organisations and analysts, data from other external sources and knowledge of the markets in which we compete. Unless stated otherwise, the statistical information included in this Preliminary Placement Document relating to the industry in which we operate has been reproduced from various trade, industry and government publications and websites. This data is subject to change and cannot be verified with certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. Neither our Company nor the Book Running Lead Manager has independently verified this data and do not make any representation regarding accuracy or completeness of such data. Our Company takes responsibility for accurately reproducing such information but accept no further responsibility in respect of such information and data. In many cases, there is no readily available external information (whether from trade or industry associations, government bodies or other organizations) to validate market-related analyses and estimates, so our Company has relied on internally developed estimates. The information and publications used to prepare the Industry section in this Preliminary Placement Document is based on information as of a specific date and may no longer be current or reflect current trends. Finally, the sources and publications used to prepare this information may also base their information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly, investors should not place undue reliance on, or base their investment decision on, any such information included in the Preliminary Placement Document.

The extent to which the market and industry data used in this Preliminary Placement Document is meaningful

depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.

AVAILABLE INFORMATION Our Company has agreed that, for so long as any Equity Shares are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, our Company will, during any period in which it is neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended, nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, provide to any holder or beneficial owner of such restricted securities or to any prospective purchaser of such restricted securities designated by such holder or beneficial owner, upon the request of such holder, beneficial owner or prospective purchaser, the information required to be provided by Rule 144A(d)(4) under the Securities Act, subject to compliance with the applicable provisions of Indian law.

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FORWARD-LOOKING STATEMENTS

All statements contained in this Preliminary Placement Document that are not statements of historical fact constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by terminology such as ‘aim’, ‘anticipate’, ‘are likely’ ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘expected to’, ‘intend’, ‘is likely’, ‘may’, ‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘will achieve’, ‘will continue’, ‘wi ll likely result’, ‘would’, or other words or phrases of similar import. Similarly, statements that describe the strategies, objectives, plans or goals of our Company are also forward-looking statements. However, these are not the exclusive means of identifying forward-looking statements. All statements regarding our Company’s expected financial conditions, results of operations, business plans and prospects are forward-looking statements. These forward-looking statements include statements as to our Company’s business strategy, planned projects, revenue and profitability (including, without limitation, any financial or operating projections or forecasts), new business and other matters discussed in this Preliminary Placement Document that are not historical facts. These forward-looking statements contained in this Preliminary Placement Document (whether made by our Company or any third party), are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause the actual results, performances and achievements of our Company to be materially different from any of the forward-looking statements include, among others:

general, political, social and economic conditions in India and elsewhere;

our ability to manage growth effectively;

volatility in cost of raw materials;

loss, shutdown or slowdown of operations;

our dependence on our associates and joint ventures;

our ability to compete effectively;

significant dependence on dealers or customers;

performance of the various industries in which our products are used;

capacity utilization and operating efficiencies;

interest rates;

competition;

changes in laws and regulations and governmental policies; and

our dependence on, and ability to retain, our senior management team. Additional factors that could cause actual results, performance or achievements of our Company to differ materially include, but are not limited to, those discussed under “Risk Factors”, “Industry Overview”, “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The forward-looking statements contained in this Preliminary Placement Document are based on the beliefs of the management, as well as the assumptions made by, and information currently available to, the management of our Company. Although our Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. In any event, these statements speak only as of the date of this Preliminary Placement Document or the respective dates indicated in this Preliminary Placement Document, and our Company undertakes no obligation to update or revise any of them, whether as a result of new information, future events or otherwise. If any of these risks and uncertainties materialize, or if any of our Company’s underlying assumptions prove to be incorrect, the actual results of operations or financial condition of our Company could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our Company are expressly qualified in their entirety by reference to these cautionary statements.

15

ENFORCEMENT OF CIVIL LIABILITIES

Our Company is a limited liability public company incorporated under the laws of India. All of our Company’s Directors and key managerial personnel are residents of India and all of the assets of our Company and a substantial portion of the assets of such persons are located in India. As a result, it may not be possible for investors to affect service of process upon our Company or such persons in India, or to enforce judgments obtained against such parties in courts outside of India. Recognition and enforcement of foreign judgments are provided for under Section 13 and Section 44A of the Civil Code (as defined hereinafter) on a statutory basis. Section 13 of the Civil Code provides that foreign judgments shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except: a) where it has not been pronounced by a court of competent jurisdiction; b) where it has not been given on the merits of the case; c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to

recognize the law of India in cases in which such law is applicable; d) where the proceedings in which the judgment was obtained are opposed to natural justice; e) where it has been obtained by fraud; and f) where it sustains a claim founded on a breach of any law in force in India. Under the Civil Code, a court in India shall presume, upon the production of any document purporting to be a certified copy of a foreign judgment, that such judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on the record; but such presumption may be displaced by proving want of jurisdiction. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court, within the meaning of that Section, in any country or territory outside India which the Government has by notification declared to be a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty and does not include arbitration awards. The United Kingdom, Singapore and Hong Kong, amongst others have been declared by the Government to be a “reciprocating territory” for the purposes of Section 44A of the Civil Code, but the United States of America has not been so declared. A judgment of a court of a country, which is not a reciprocating territory, may be enforced only by a fresh suit upon the judgment and not by proceedings in execution. Such a suit has to be filed in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. A judgment of a superior court of a country, which is a reciprocating territory, may be enforced by proceedings in execution, and a judgment not of a superior court, by a fresh suit resulting in a judgment or order. The latter suit has to be filed in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action were to be brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court was of the view that the amount of damages awarded was excessive or inconsistent with public policy, and is uncertain whether an Indian court would enforce foreign judgments that would contravene or violate Indian law. Further, any judgment or award in a foreign currency would be converted into Rupees on the date of such judgment or award and not on the date of payment. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered, and any such amount may be subject to income tax in accordance with applicable laws. Our Company cannot predict whether a suit brought in an Indian court will be disposed of in a timely manner or be subject to considerable delays.

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EXCHANGE RATE INFORMATION

Fluctuations in the exchange rate between the Rupees and the U.S. dollar will affect the U.S. dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. dollar of any cash dividends paid in Rupees on the Equity Shares. The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rates released by the Reserve Bank of India. No representation is made that the Rupees amounts actually represent such amounts in U.S. dollar or could have been or could be converted into U.S. dollars at the rates indicated, any other rates, or at all.

(Rs. Per USD 1.00)

Source: www.rbi.org.in

*Note: High, low and average are based on RBI reference rate

The exchange rate on December 16, 2015 was Rs. 66.85 per USD 1.00.

Fiscal Year Period End Average* High* Low*

2015 62.59 61.15 63.75 58.43

2014 60.10 60.50 68.36 53.74

2013 54.39 54.45 57.22 50.56

Month Ended Period End Average* High* Low*

November 30, 2015 66.81 66.12 66.81 65.45

October 31, 2015 65.22 65.06 65.55 64.73

September 30, 2015 65.74 66.22 66.74 65.63

August 31, 2015 66.31 65.07 66.71 63.76

July 31, 2015 64.01 63.63 64.03 63.37

June 30, 2015 63.75 63.86 64.18 63.51

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CERTAIN DEFINITIONS AND ABBREVIATIONS

Our Company has prepared this Preliminary Placement Document using certain definitions and abbreviations which you should consider when reading the information contained herein. The following list of certain capitalized terms used in this Preliminary Placement Document is intended for the convenience of the reader/prospective investor only and is not exhaustive. The terms defined in this Preliminary Placement Document shall have the meaning set forth in this section, unless specified otherwise in the context thereof, and references to any statute or regulations or policies shall include amendments thereto, from time to time. Company Related Terms

Term Description

Articles The articles of association of our Company.

Auditors The statutory auditors of our Company being, M/s. Lodha & Co., Chartered Accountants

Associates Our Associate Companies namely, (i) Vintage Tiles Private Limited, (ii) Commander Vitrified Private Limited, (iii) Acer Granito Private Limited, and (iv) Vicon Ceramic Private Limited.

Board / Board of Directors The board of directors of our Company or any duly constituted committee thereof.

Company / Issuer / our Company / Somany Ceramics Limited / or SCL

Somany Ceramics Limited, a public limited company incorporated under the Companies, Act, 1956 and having its registered office at 82/19, Bhakerwara Road, Mundka, New Delhi – 110041, on an unconsolidated basis. It is clarified that references to “us”, “we” or “our” are to our Company, together with its Subsidiaries, on a consolidated basis.

Directors The directors of our Company.

Equity Shares The equity shares of of our Company of face value of Rs.2 each.

Financial Statements The Unaudited Standalone Interim Financial Information together with the Audited Consolidated Financial Statements.

Joint Venture Somany Keraben Private Limited

Memorandum or MoA The memorandum of association of our Company.

Promoters The promoters of our Company are Hiralall Somany; Shreekant Somany; Abhishek Somany; Shrivatsa Somany; Anjana Somany; Minal Somany; Anushree Chopra; Bhilwara Holdings Limited; Sarvottam Vanijya Limited and Scope Vinimoy Private Limited.

Audited Consolidated Financial Statements / Reformatted Consolidated Financial Statements

The statement of reformatted consolidated assets and liabilities of the Company as of and for the financial years ended March 31, 2013, 2014 and 2015 and the related statement of reformatted consolidated statement of profit and loss and the related statement of reformatted consolidated cash flow for the financial years ended March 31, 2013, 2014 and 2015.

Registered Office The registered office of our Company located at 82/19, Bhakerwara Road, Mundka, New Delhi – 110041.

Subsidiaries The subsidiaries of our Company as on date of this Preliminary Placement Document are as listed below: 1. SR Continental Limited;

2. Somany Global Limited;

3. Amora Tiles Private Limited; 4. Somany Fine Vitrified Private Limited; 5. Somany Sanitaryware Private Limited; and 6. Somany Excel Vitrified Private Limited.

Unaudited Standalone Interim Financial Information

The unaudited standalone financial results for the quarter and six months ended September 30, 2015adopted by our Company pursuant to a meeting of its Board of Directors on October 26, 2015and filed with the Stock Exchanges.

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Issue Related Terms

Term Description

Allocated /Allocation The allocation of the Equity Shares following the determination of the Issue Price to QIBs on the basis of the Application Forms submitted by them, in consultation with the Book Running Lead Manager and in compliance with Chapter VIII of the SEBI Regulations.

Allot/Allotted/Allotment The issue and allotment of the Equity Shares to the QIBs pursuant to the Issue.

Allottees QIBs to whom the Equity Shares are issued and Allotted.

Bid-Cum Application Form / Application Form

The form (including any revisions thereof) pursuant to which a QIB shall submit a Bid for the Equity Shares in the Issue.

Application An offer by a QIB pursuant to the Application Form for subscription of the Equity Shares under the Issue.

Bid(s) Indication of interest of a Bidder, including all revisions and modifications thereto, as provided in the Application Form, to subscribe for the Equity Shares in the Issue.

Bid/Issue Closing Date December [●], 2015 which is the last date up to which the Application Forms shall be accepted.

Bid/Issue Opening Date December 17, 2015

Bid/Issue Period The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both dates, during which the Bidder can submit their Bids.

Bidder/s Any QIB that makes a Bid by submitting an Application Form in accordance with the provisions of this Preliminary Placement Document.

Book Running Lead Manager / BRLM

Emkay Global Financial Services Limited

Confirmation of Allocation Note / CAN

The note or advice or intimation sent only to QIBs confirming the Allocation to such QIBs after discovery of the Issue Price and requesting payment for the entire applicable Issue Price for the Equity Shares Allocated to such QIBs.

Closing Date The date on which Allotment shall be made, i.e. on or about [●], 2015. Cut-off Price The minimum price at which the Issue Price shall be determined by our

Company in consultation with the Book Running Lead Manager.

Designated Date The date of credit of the Equity Shares to the QIB’s demat account, as applicable to the respective QIBs.

Escrow Account

A special bank account entitled “SCL- QIP Escrow Account” opened by our Company with the Escrow Collection Bank in terms of the Escrow Agreement into which the application monies payable by the Bidders in connection with subscription to the Equity Shares shall be deposited.

Escrow Agreement The escrow agreement dated December 17, 2015 executed between our Company, the Book Running Lead Manager and the Escrow Collection Bank in relation to the Issue.

Escrow Collection Bank Axis Bank Limited.

Floor Price The floor price for the Issue calculated on the basis of Chapter VIII of the SEBI Regulations is Rs. 357.24 per Equity Share with reference to December 17, 2015 as the Relevant Date. In terms of the SEBI Regulations, the Issue Price cannot be lower than the Floor Price subject that our Company may offer a discount of not more than 5% on the Floor Price in accordance with Regulation 85 of the SEBI Regulations.

Issue The offer and placement of [●] Equity Shares to QIBs, pursuant to Section 42 of Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations which are outside of the United States acquiring Equity Shares in an offshore transaction in reliance on Regulation S.

Issue Price Rs. [●] per Equity Share. Issue Size The issue of up to [●] Equity Shares aggregating up to Rs. [●] crores.

Mutual Fund A mutual fund registered with the SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.

Pay-in Date The last date specified in the CAN sent to the Bidders, by which the Issue Price for the Equity Shares Allocated has to be paid.

Placement Agreement The placement agreement dated December 17, 2015 between our Company and

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Term Description

the Book Running Lead Manager.

Placement Document / PD The placement document to be issued by our Company in accordance with the provisions of Section 42 of Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations.

Preliminary Placement Document / PPD

This preliminary placement document dated December 17, 2015 issued by our Company in accordance with the provisions of Section 42 of Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations.

QIB A qualified institutional buyer as defined under Regulation 2(1)(zd) of the SEBI Regulations and not excluded pursuant to Regulation 86(1)(b) of the SEBI Regulations.

QIP Qualified institutions placement under chapter VIII of the SEBI Regulations.

Qualified Purchaser A qualified purchaser as defined in Section 2(a)(51) of the Investment Company Act.

Relevant Date December 17, 2015, being the date of the meeting in which the Board, or any committee duly authorised by the Board, decides to open the Issue.

Stock Exchanges The BSE and the NSE.

Technical and Industry Related Terms/Abbreviations

Term/Abbreviation Description

EWC European Water Closet

GVT Glazed Vitrified Tiles

PVT Polished Vitrified Tiles

ICCTAS Indian Council of Ceramic Tiles and Sanitaryware

Conventional and General Terms/Abbreviations


AGM An annual general meeting of the shareholders.

AIF Alternative investment funds as defined in the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012.

AS The accounting standards issued by the Institute of Chartered Accountants of India.

AY An assessment year.

BOLT BSE On-line Trading.

BSE BSE Limited.

Category III FPIs A FPI registered as a category III foreign portfolio investor under the FPI Regulations.

Civil Code The Code of Civil Procedure, 1908.

CIN Corporate Identity Number.

CIBIL The Credit Information Bureau (India) Limited.

Code United States Internal Revenue Code of 1986, as amended.

Companies Act / Act The Companies Act, 1956 and/or the Companies Act, 2013, as applicable.

Companies Act, 1956 The Companies Act, 1956, as amended (without reference to the provisions thereof that have ceased to have effect upon the notification of the Notified Sections) and the rules made thereunder.

Companies Act, 2013 The Companies Act, 2013, to the extent in force pursuant to the notification of the Notified Sections, and the rules made thereunder.

Depositories Act The Depositories Act, 1996.

Depository A depository registered with the SEBI under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996.

Depository Participant A depository participant as defined under the Depositories Act, 1996.

EGM An extraordinary general meeting of the shareholders.

Eligible FPIs FPIs that are eligible to participate in the Issue and does not include Category III FPIs who are not allowed to participate in the Issue.

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Equity Listing Agreement The erstwhile listing agreement as had previously been entered into by our Company with each of the Stock Exchanges for the listing of the Equity Shares. In accordance with the requirements of Regulation 109 of the Listing Regulations, a listed entity which has previously entered into agreement(s) with recognised stock exchange(s)to list its securities is required to execute the Uniform Listing Agreement with such stock exchange(s) within six months of the date of notification of the Listing Regulations.

FDI Foreign direct investment.

FEMA The Foreign Exchange Management Act, 1999 and the rules, regulations, notifications and circulars issued thereunder.

FEMA Regulations The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.

FII A foreign institutional investor who is registered under the SEBI FII Regulations.

Fiscal year / Financial Year The period commencing on April 1 of a calendar year and ending on March 31 of the following calendar year.

FPI(s) A person who satisfies the eligibility criteria prescribed under Regulation 4 of the FPI Regulations and has been registered under Chapter II of the FPI Regulations, which shall be deemed to be an intermediary in terms of the provisions of the SEBI Act. Provided that any foreign institutional investor or qualified foreign investor who holds a valid certificate of registration shall be deemed to be a FPI till the expiry of the block of three years for which fees have been paid as per the SEBI FII Regulations.

FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014.

Form PAS-4 The Form PAS-4 prescribed under the Companies (Prospectus and Allotment of Securities) Rules, 2014.

FVCI A foreign venture capital investor as defined and registered with the SEBI under the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000 registered with the SEBI under the applicable laws in India.

GAAP Generally accepted accounting principles.

GDP Gross domestic product.

Government The Government of India, unless otherwise specified.

ICAI The Institution of Chartered Accountants of India.

IFRS International Financial Reporting Standards of the International Accounting Standards Board.

IND AS Indian Accounting Standards (Ind AS) 101 “First-time Adoption of Indian Accounting Standards” as notified by the Ministry of Corporate Affairs, Government of India, on February 25, 2011.

India The Republic of India.

Indian GAAP The generally accepted accounting principles followed in India.

Insider Trading Regulations The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.

ISIN International Securities Identification Number.

IT Act The Income Tax Act, 1961.

Listing Regulations The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as notified by the SEBI, on September 2, 2015.

Notified Sections The sections of the Companies Act, 2013 that have been notified by the Government of India.

NRI Non Resident Indian.

NSE National Stock Exchange of India Limited.

p.a. Per annum.

P/E Ratio Price/Earnings Ratio.

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PAN Permanent Account Number.

PMLA The Prevention of Money Laundering Act, 2002.

RBI The Reserve Bank of India.

RBI Act The Reserve Bank of India Act, 1934.

Regulation S Regulation S under the Securities Act.

RoC The Registrar of Companies, Delhi & Haryana

Rs./Rupees The legal currency of India.

RTGS Real-Time Gross Settlement.

SARFAESI Act The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Shareholders The registered holders of the Equity Shares.

SC Supreme Court of India.

SCRA The Securities Contracts (Regulation) Act, 1956.

SCRR The Securities Contracts (Regulation) Rules, 1957.

SCR (SECC) Rules The Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012.

SEBI The Securities and Exchange Board of India.

SEBI Act The Securities and Exchange Board of India Act, 1992.

SEBI FII Regulations The Securities and Exchange Board of India (Foreign Institutional Investors), Regulations, 1995.

SEBI Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.

Securities Act U.S. Securities Act of 1933, as amended.

STT Securities transaction tax.

Takeover Code The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Uniform Listing Agreement The uniform listing agreement as notified by the SEBI, on October 13, 2015. Our Company has entered into the uniform listing agreement for continuing the listing of its Equity Shares with each of the Stock Exchanges pursuant to requirements of Regulation 109 of the Listing Regulations.

US$/U.S.dollar United States Dollars.

U.S. GAAP Generally accepted accounting principles in the United States of America.

U.S. Holder Has the meaning given to that term in “Taxation – U.S. Taxation”.

VCF A Venture Capital Fund as defined and registered with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 or the erstwhile Securities and Exchange Board of India (Venture Capital Fund) Regulations, 1996, as the case may be.

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SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is

qualified in its entirety by, the more detailed information appearing elsewhere in this Preliminary Placement Document,

including under the sections titled “Risk Factors”, “Use of Proceeds”, "Issue Procedure", "Description of the Equity Shares" and "Placement". The information contained in “Description of the Equity Shares” shall prevail in the event of any inconsistency with the terms set out in this section.

Issuer Somany Ceramics Limited

Issue Size Issue of up to [●] Equity Shares aggregating up to Rs.[●] crores.

Issue Price Rs.[●] per Equity Share.

Face Value Rs.2 per Equity Share.

Floor Price The Floor Price calculated on the basis of Chapter VIII of the SEBI Regulations is Rs. 357.24 per Equity Share with reference to December 17, 2015 as the Relevant Date. In terms of the SEBI Regulations, the Issue Price cannot be lower than the Floor Price, provided our Company may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85 of the SEBI Regulations.

Authority for the Issue The Issue was authorised and approved by the Board on March 24, 2015 and approved by the Shareholders through a special resolution passed by way of a postal ballot pursuant to a postal ballot notice issued on March 27, 2015 the results of which were announced on May 2, 2015 for an issue size of up to Rs. 150 crores.

Eligible investors A qualified institutional buyer as defined in Regulation 2(1)(zd) of the SEBI Regulations and not excluded pursuant to Regulation 86(1)(b) of the SEBI Regulations.

Equity Shares issued and

outstanding immediately prior to

the Issue

3,88,44,826 Equity Shares.

Equity Shares issued and

outstanding immediately after

the Issue

[●] Equity Shares.

Dividend For more information, see “Description of the Equity Shares”, “Dividends” and “Taxation”.

Indian Taxation For more information, see “Taxation”.

Issue Procedure The Issue is being made only to QIBs in reliance upon Section 42 of the Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations. See “Issue Procedure”.

Listing Our Company has obtained in-principle approvals for the listing of the Equity Shares issued pursuant to the Issue in terms of Regulation 28(1) of the Listing Regulations, from the Stock Exchanges. Our Company shall apply to the Stock Exchanges for the listing approvals and the final listing and trading approvals, after the Allotment and after the credit of the Equity Shares to the beneficiary accounts of the QIBs with the Depository Participants, respectively.

Transfer Restrictions The Equity Shares being Allotted shall not be sold for a period of one year from the date of Allotment except on the floor of the Stock Exchanges. The Equity Shares are subject to certain distribution, solicitation and transfer restrictions. For details, see “Distribution and Solicitation Restrictions” and “Transfer Restrictions”.

Pay-in Date Last date specified in the CAN sent to the QIBs, by which the consideration for the Equity Shares has to be paid.

Closing Date The date on which Allotment shall be made, i.e. on or about [●], 2015.

Ranking The Equity Shares being issued shall be subject to the provisions of the Memorandum and Articles and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The Shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by our Company after the date of Issue. For details, see “Description of

the Equity Shares”.

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Lock-up For details, see “Placement - Lock up”.

Use of Proceeds The total proceeds of the Issue will be Rs. [●] crores. After deducting the issue expenses, the net proceeds of the Issue will be approximately Rs. [●] crores. For further details, see “Use of Proceeds”.

Risk Factors Prior to making an investment decision, QIBs should consider carefully the matters discussed under “Risk Factors”.

Security Codes for the Equity Shares:

ISIN INE355A01028

BSE Code 531548

NSE Symbol SOMANYCERA

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DISCLOSURE REQUIREMENTS UNDER THE COMPANIES ACT, 2013

The table below sets out the disclosure requirements as provided in Form PAS-4 under the PAS Rules and the relevant

pages in this Preliminary Placement Document where these disclosures, to the extent applicable, have been provided.

# Disclosure Requirement

Relevant page of this

Preliminary Placement

Document

1. GENERAL INFORMATION

a. Name, address, website and other contact details of the company indicating both registered office and corporate office;

Cover Page, 158

b. Date of incorporation of the company; 154

c. Business carried on by the company and its subsidiaries with the details of branches or units, if any;

88 - 100

d. Brief particulars of the management of the company; 101 - 108

e. Names, addresses, DIN and occupations of the directors; 101- 102

f. Management’s perception of risk factors; 32 - 55

g. Details of default, if any, including therein the amount involved, duration of default and present status, in repayment of –

(i) statutory dues; 153

(ii) debentures and interest thereon; 153

(iii) deposits and interest thereon; 153

(iv) loan from any bank or financial institution and interest thereon. 153

h. Names, designation, address and phone number, email ID of the nodal / compliance officer of the company, if any, for the private placement offer process;

158

2. PARTICULARS OF THE OFFER

a. Date of passing of board resolution; 154

b. Date of passing of resolution in the general meeting, authorizing the offer of securities;

154

c. Kinds of securities offered (i.e. whether share or debenture) and class of security; Cover, 22 - 23

d. Price at which the security is being offered including the premium, if any, along with justification of the price;

Cover, 22 - 23

e. Name and address of the valuer who performed valuation of the security offered;

Not Applicable

f. Amount which the company intends to raise by way of securities; Cover, 22 - 23, 154

g. Terms of raising of securities:

(i) Duration, if applicable; Not Applicable

(ii) Rate of dividend; or Not Applicable

(iii) Rate of interest; Not Applicable

(iv) Mode of payment; and 120

(v) Repayment; Not Applicable

h. Proposed time schedule for which the offer letter is valid; 22 - 23

i. Purposes and objects of the offer; 59

j. Contribution being made by the promoters or directors either as part of the offer or separately in furtherance of such objects;

59

k. Principle terms of assets charged as security, if applicable; Not Applicable

3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION ETC.

i. Any financial or other material interest of the directors, promoters or key managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons.

105

ii. Details of any litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of the offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action shall be disclosed.

153

iii. Remuneration of directors (during the current year and last three financial years). 102

25

# Disclosure Requirement

Relevant page of this

Preliminary Placement

Document

iv. Related party transactions entered during the last three financial years immediately preceding the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided.

79

v. Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark.

153

vi. Details of any inquiry, inspections or investigations initiated or conducted under the Companies Act, 2013 or any previous company law in the last three years immediately preceding the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of the offer letter and if so, section- wise details thereof for the company and all of its subsidiaries.

153

vii. Details of acts of material frauds committed against the company in the last three years, if any, and if so, the action taken by the company.

153

4. FINANCIAL POSITION OF THE COMPANY

a. the capital structure of the company in the following manner in a tabular form-

(i)(a) the authorized, issued, subscribed and paid up capital (number of securities, description and aggregate nominal value);

62 - 63

(b) size of the present offer; 62 - 63

(c) paid up capital: 62 - 63

(A) after the offer; 62 - 63

(B) after conversion of convertible instruments (if applicable). Not Applicable

(d) share premium account (before and after the offer). 62 - 63

(ii) the details of the existing share capital of the issuer company in a tabular form, indicating therein with regard to each allotment, the date of allotment, the number of shares allotted, the face value of the shares allotted, the price and the form of consideration.

62 - 63

Provided that the issuer company shall also disclose the number and price at which each of the allotments were made in the last one year preceding the date of the offer letter separately indicating the allotments made for considerations other than cash and the details of the consideration in each case.

63

b. Profits of the company, before and after making provision for tax, for the three financial years immediately preceding the date of circulation of offer letter.

71

c. Dividends declared by the company in respect of the said three financial years; interest coverage ratio for last three years (Cash profit after tax plus interest paid/interest paid).

61

d. A summary of the financial position of the company as in the three audited balance sheets immediately preceding the date of circulation of offer letter.

30

e. Audited Cash Flow Statement for the three years immediately preceding the date of circulation of offer letter.

154

f. Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company.

79

5. A DECLARATION BY THE DIRECTORS THAT

a. the company has complied with the provisions of the Act and the rules made thereunder.

156

b. the compliance with the Act and the rules does not imply that payment of dividend or interest or repayment of debentures, if applicable, is guaranteed by the Central Government.

156

c. the monies received under the offer shall be used only for the purposes and objects indicated in the Offer letter.

156

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SUMMARY OF BUSINESS Overview

We are one of the leading manufacturers in the tile industry in India with a diverse product catalogue including tiles, sanitary ware and bath fittings. Incorporated in 1968, we believe that we have established a strong brand name in the tile industry in India and also developed strong relationships with our dealers and customers over the years. Our business operations are broadly divided into five product segments: ceramic tiles, polished vitrified tiles, glazed vitrified tiles, sanitary ware and bath fittings: ● Ceramic Tiles

Ceramic tiles are flat slabs manufactured from ceramic materials such as clay, feldspar and quartz and certain other additives. These tiles are used in a range of applications, including flooring, as countertops, for roofing and as wall coverings. Ceramic tiles are our major products and account for substantial portion of our total revenue.

● Polished Vitrified Tiles

Polished vitrified tiles are flat slabs manufactured from ceramic materials such as clay, feldspar and quartz and certain additives. These tiles are fired at high temperatures to ensure high strength and low water absorption, and after such firing these tiles are polished with several series of abrasives to produce an excellent glossy exterior.

● Glazed Vitrified Tiles

Glazed vitrified tiles are flat slabs manufactured from ceramic materials such as clay, feldspar and quartz and other additives and fired at high temperatures to ensure high strength and low water absorption. These tiles are coated with glaze materials prior to the firing process.

● Sanitary Ware Products

We market and manufacture a range of sanitary ware products including a range of EWCs, pans, cisterns, wash basins and urinals. These sanitary ware products are typically procured by us from third party suppliers in India and are also manufactured by one of our subsidiaries, namely, Somany Sanitaryware Private Limited. We also import certain varieties of high-end sanitary ware products.

● Bath Fittings

We market a range of bath fittings including single lever technology, spouts, pillar taps, bib taps, basin mixers, multi-flow showers, ultra slim rain showers, sensor taps, flush valves, flush cocks, faucets, as well as waste coupling cisterns. In addition, our range of bath fittings includes accessories such as soap dishes, shower trays, and shaving mirrors.

We own two tile manufacturing facilities in India which are located at Kassar (Haryana) and Kadi (Gujarat). In addition to these, two of our subsidiaries have tile manufacturing facilities and another subsidiary has sanitary ware manufacturing facility at Morbi, Gujarat. Further, four of our associate companies have tile manufacturing facilities in Morbi, Gujarat. We have over the years developed a wide distribution network with a pan-India presence. As of September 30, 2015, our distribution network included 1,471 active dealers each of them further having sub dealers, 19 sales depots as well as a representative office in China. We primarily sell our products through a dealer and sub-dealer network, as well as, directly to customers. We have developed long-term relationships with many of our dealers. We focus our research and development efforts on developing innovative and environmentally-friendly products. We received a patent for our abrasion resistant tiles sold under the brand “VC Shield” and were awarded the Corporate Technical Achievement Award - by the American Ceramic Society in 2014 for this product. Our stringent quality management and marketing efforts have created a strong business reputation and high brand awareness as demonstrated by our Company receiving recognition as Asia’s Most Promising Brand in 2013 and 2014. We are also one of few ceramic tile manufacturers to have received the ISO 14001 certification for environment friendly manufacturing and certification by the Indian Green Building Council for eco-friendly products.

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In fiscal 2013, 2014 and 2015, our total income was Rs. 1,05,795.35 lakhs, Rs. 1,26,784.59 lakhs and Rs. 1,55,078.80 lakhs, respectively, while our profit after tax in such periods was Rs. 3,200.66 lakhs, Rs. 2,887.02 lakhs and Rs. 4,638.75 lakhs, respectively.

Our Strengths

We believe that a number of factors have contributed to, and will continue to drive, our growth, including the following:

Established Brand

“Somany” has developed as an established brand name in the tiles industry in India for over four decades. The brand has been positioned as a brand for luxury and premium products, innovation and quality. Our brand has been further strengthened by the quality of our products, competitive prices, our expansive pan-India network of dealers and sub-dealers, and the intensive, strategic marketing initiatives implemented by us to grow our brand awareness among our customers. Our sustained marketing efforts have included the print, electronic and other advertisement media, exhibitions and outdoor promotions directed at retail and institutional customers, our dealers and sub-dealers and key influencers as well as training sessions for masons under our “Tile Master” program. We believe that the implementation of our marketing and branding strategy over the past few years have enabled us to develop a strong brand in our industry segment and is a key competitive strength that we continue to leverage in implementing our product diversification strategy.

Pan-India Sales and Distribution Network

Our product offerings are targeted at a wide range of customers, including institutional and retail consumers. Our institutional customers include builders, corporate customers, government departments as well as construction contractors. We have developed a wide distribution network with a pan-India presence. As of September 30, 2015, our distribution network included 1,471 active dealers, each affiliated with a number of sub-dealers. We have also established 19 sales depots across India as well as a representative office in China. In order to facilitate our distribution network, we have also established marketing offices and managed display centres that are strategically located in various cities of India. In addition, our sales and marketing initiatives are supplemented by our extensive customer service network.

Wide Range of Products Across Various Price Segments

We offer a wide range of products across different price segments which are used in commercial and home applications. Our wide range of ceramic tiles, polished vitrified tiles, glazed vitrified tiles, sanitary ware and bath fittings enable us to effectively address the diverse requirements of our end customers and enable our dealers and distributors to source most of their product requirements from us. We have over the years leveraged our product design, development and manufacturing capabilities to develop a diversified range of such products across various price segments. In addition, our extensive distribution network enables us to identify and meet the requirements of various segments of our target markets and customer preferences in major cities as well as in tier II and tier III cities and towns.

R&D, Innovation and Product Quality

We have set up a R&D facility at our Kassar plant and we continue to make investments in R&D capabilities. As of September 30, 2015, there were 13 employees in our R&D and design and technology facilities. These facilities have enabled us to manufacture our wide range of innovative products including our patented product “V.C.Shield” and our anti-skid floor tiles “Slip Shield” for which we have applied for a patent. We continue to develop and introduce new and improved products into our markets. Through continuous product innovation and research and development, we have over the years developed a wide range of tiles and related solutions as well as certain products that are new to the market and innovative in nature. We have received a patent for our abrasion resistant tiles sold under the brand “VC Shield”. We were also awarded the Corporate Technical Achievement Award - by the American Ceramic Society in 2014 for this product.

Dealer Relationships

We strive to develop and maintain strong relationships with our dealers. As of September 30, 2015, our distribution network included 1,471 active dealers, each with a number of sub-dealers. We believe that our product development initiatives have enabled us to establish strong relationships with dealers and their customers. Our quality standards and

28

varied range of products also enable us to effectively address the requirements of our end customers across different industries and develop and maintain our relationships with such end customers. Our institutional customers include large number of leading real estate developers, corporates and government departments & contractors, who purchase our products from us or our dealers.

Experienced Management Team

Our management team has significant experience in the tiles and sanitary ware industry, and has developed extensive technical knowledge in the manufacturing process for our products. Our management team also have strong designing, customer relationship, marketing, sales, strategic sourcing and supply chain management capabilities. Our Chairman and Managing Director, and our Managing Director have approximately four decades and two decades of experience, respectively, in the ceramics industry. Our experienced management enables us to identify and address new market opportunities and introduce new products to capitalize on the significant growth opportunities in the tiles, sanitary ware and bath fittings segments.

Our Strategies

Growth through Asset-Light Model

While some of our products are manufactured in our own manufacturing facilities, we source a significant proportion of our products from third party manufacturers, particularly in Morbi, Gujarat. In recent years, we have increased our focus on this asset-light outsourced model and have entered into arrangements with several third party manufacturers, including through making minority or majority equity investments in such entities, particularly greenfield projects. Following such strategy, we have acquired equity shareholding in six companies for tile manufacturing as well as one company for sanitary ware manufacturing, all of which are located at Morbi, Gujarat. In addition, we continue to source tiles from several other manufacturers in Morbi, Gujarat. We believe that our asset-light model enables us to maximize return on capital deployed and increase our manufacturing capabilities in an efficient manner.

Further Strengthen our Brand and Sales Force

We believe our brand is well established in the tiles industry over four decades, and we intend to further strengthen our brand through intensive marketing and distribution initiatives. We continue to make investments to increase our brand visibility including print, television, digital and social media advertisements, and by increasing our focus on value-added tiles within each product segment including ceramics tiles, polished vitrified tiles and glazed vitrified tiles. As of September 30, 2015, we had 1,639 permanent employees, of which our sales, marketing and distribution team included 476 employees. We continue to focus on improving the skills of our sales, marketing and distribution personnel through a series of defined training modules at various levels. These training modules focus on product training for our internal marketing personnel as well as sales personnel at multi-brand outlets.

Continue to Expand our Geographical Coverage and Customer Base

We intend to further grow our business by adding new dealers and customers in existing and new markets. In addition, we also intend to leverage our distribution network and existing relationships to be able to increase our revenues. As of September 30, 2015, our distribution network included 1,471 active dealers, each with a number of sub-dealers. We have also set up 19 sales depots which act as warehouses for distribution. We intend to further expand our geographical presence across India by commencing operations in certain under-penetrated regions across India. We believe that our strong marketing capabilities, wide distribution network and established relationships with our dealers and customers as well as our wide product range at various price segments will enable us to rapidly expand our dealer and customer base and provide a competitive advantage. In addition, we believe that our dealership network and proximity to dealers and markets will enable us to further improve our distribution reach and increase our brand visibility. Our export sales were Rs. 6,434.35 lakhs and accounted for 4.03% of our gross sales in fiscal 2015. We continue to focus on further growing our export sales.

Develop Innovative Products and Designs

We continue to focus on developing and introducing new value added products into our markets. Through constant product innovation and research and development, we not only offer a diverse range of tiling solutions but also products that are new to the market and innovative in nature. We intend to continue to innovate on products and designs and

29

maintain existing market leadership. We also continue to explore opportunities to collaborate with global players to augment the positioning of our products, enhance our manufacturing capabilities, upgrade our technological processes and offer new and diversified range of products to our customers.

Improve Operational Efficiencies

We have implemented adequate operational processes to ensure that our manufacturing operations are efficiently managed. This enables us to identify areas for improvement in our internal operational efficiencies and reduce costs. We continue to introduce new manufacturing processes and undertake debottlenecking exercises to reduce operating costs. All our tile manufacturing subsidiaries and associate companies have their manufacturing facilities located in Morbi, Gujarat, which is a ceramic manufacturing cluster, and offers us logistical and sourcing advantages. We continue to identify and improve operational efficiencies in terms of better utilisation of resources and improvement in processes and productivity.

Expansion Through Mergers, Acquisitions And Strategic Alliances

We may seek to further increase our market position through select acquisitions or joint ventures. We believe that we have sufficient expertise to find and acquire suitable ceramic production facilities and/or companies to increase our scale and geographic diversification.

30

SUMMARY FINANCIAL INFORMATION The following selected financial information is extracted from and should be read in conjunction with, the Audited Consolidated Financial Statements and notes thereto as at, and for the, fiscal years ended March 31, 2015, 2014 and 2013 and the Unaudited Standalone Interim Financial Information as at, and for the quarter and six months ended September 30, 2015, prepared in accordance with Indian GAAP, included elsewhere in this Preliminary Placement Document. You should refer to the section titled “Management's Discussion and Analysis of Financial Condition and Results of

Operations” in this Preliminary Placement Document for further discussion and analysis of the Audited Consolidated Financial Statements and the Unaudited Standalone Interim Financial Information. The financial information included in this Preliminary Placement Document does not reflect our Company’s results of operations, financial position and cash flows for the future and its past operating results are no guarantee of its future operating performance.

Summary Reformatted Consolidated Balance Sheet as at March 31, 2015, 2014 and 2013

Rupees in lacs

As At 31 March

Particulars 2015 2014 2013

EQUITY AND LIABILITIES

Shareholders' funds

Share Capital

776.90

776.90

689.94

Reserves & Surplus

25,023.73

21,569.46

14,614.85

Sub-total

25,800.63

22,346.36

15,304.79

Minority Interest

531.06

444.46

-

Non- current Liabilities

Long term Borrowings

7,677.95

7,079.48

6,157.84

Deferred Tax Liabilities (Net)

2,874.27

2,837.97

2,619.09

Other Long-term Liabilities

1,918.80

1,784.33

1,421.11

Long-term Provisions

333.78

305.51

249.27

Sub-total

12,804.80

12,007.29

10,447.31

Current Liabilities

Short-term Borrowings

8,485.95

7,644.83

8,015.86

Trade Payables

20,787.34

17,826.64

16,123.73

Other Current Liabilities

8,971.52

6,966.57

6,348.70

Short-term Provisions

9,173.69

7,471.67

5,869.67

Sub-total

47,418.50

39,909.71

36,357.96

Total

86,554.99

74,707.82

62,110.06

ASSETS

Non-current Assets

Fixed Assets

Tangible Assets

26,209.08

23,884.52

19,905.40

Intangible Assets

169.24

170.09

80.80

Capital work-in-Progress

81.43

292.78

937.97

Non-current Investments

1,980.43

1,765.39

867.05

Long-term Loans and Advances

1,825.39

1,589.17

414.59

Other non-current Assets 250.93 - -

Sub-total

30,516.50

27,701.95

22,205.81

Current Assets

Current Investment

2,681.01

3,710.00

-

Inventories

13,644.66

9,061.70

12,049.81

Trade Receivables

25.909.89

21,492.67

17,474.99

Cash and Bank Balances

1,537.26

3,456.24

2,580.15

Short-Term Loans and Advances

12,006.90

9,079.54

7,717.71

Other Current Assets

258.77

205.72

81.59

Sub-total

56,038.49

47,005.87

39,904.25

Total

86,554.99

74,707.82

62,110.06

0.01

S-1

Summary Reformatted Consolidated Statement of Profit and Loss for the years ended March 31,2015,

2014 and 2013

Rupees in lacs

For the year ended 31 March

Particulars 2015 2014 2013

Revenue from Operations

154,312.48

126,476.35

105,536.59

Other Income

766.32

308.24

258.76

Total Revenue

155,078.80

126,784.59

105,795.35

Expenses:

Cost of Materials Consumed

20.346.08

17,159.62

16,463.60

Purchases of Stock-in-Trade

77,425.25

58,132.17

47,237.94

C Change in Inventories of Finished Goods,Work-in-progress and Stock-inTrade

(3,918.27)

2,666.85

(1,602.92)

Employee Benefit Expense

10,135.31

8,319.60

7,457.31

Finance Costs

2,053.90

1,852.20

1,997.49

Depreciation and Amortization Expense

2,659.11

2,242.54

2,050.46

Other Expenses

39,567.38

32,059.72

27,409.28

Total Expenses

148,268.76

122,432.70

101,013.16

Profit Before Exceptional and Extraordinary Items and Tax

6,810.04

4,351.89

4,782.19

Exceptional items (Net)

-

-

-

Profit before tax

6,810.04

4,351.89

4,782.19

Extraordinary Items

-

-

-

Profit before tax

6,810.04

4,351.89

4,782.19

Tax Expense:

(1) Current tax

2,089.62

1,479.60

1,439.50

(2) Deferred tax charges/credit

115.64

218.88

81.38

(3) Tax for Earlier Year

12.35

1.29

3.64

Profit After Tax

4,592.43

2,652.12

3,257.67

Share in Profit of Associate

132.92 169.76

(57.01)

Profit after tax (including associate)

4,725.35

2,821.88

3,200.66

Minority Interest

86.60

(65.14)

-

Profit after tax and minority Interest

4,638.75

2,887.02

3,200.66

Earnings per Equity Share (Rs.)

Basic

11.94

8.25

9.28

Diluted

11.94

8.25

9.28

S-2

Particulars

2015 2014 2013

A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT / ( LOSS ) BEFORE TAX & EXCEPTIONAL ITEMS 6,810.04 4,351.89 4782.19

I. ADJUSTMENT FOR

Depreciation & Amortisation Expense 2,659.11 2,242.54 2050.46

Interest and Finance Charges 2,053.90 1,852.20 1997.49

Interest Income (464.91) (215.01) (156.71)

Dividend Income (Rs.125/-) (0.00) (0.07) (4.80)

Unrealized Foreign Exchange Loss (Net) 3.56 11.94 (18.93)

Profit on Sale of Investment (Net) (186.90) (41.07) (2.75)

Diminution in the value of Investment writen back (net) (2.95) 0.79 -

Provision for Doubtful Debts (written Off) (net) 5.50 26.16 (0.43)

Bad Debts 28.21 0.63 0.43

Liabilities no longer required written back (net) - (9.70) (94.53)

Sundry Balances written off / (back) (net) 87.91 (15.22) 9.46

(Profit)/ Loss on sale / Discard of Fixed Assets/ Assets written off (net) 125.43 185.04 50.50

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 11,118.90 8,390.12 8,612.38

II. ADJUSTED FOR :

Trade & Other Receivable (6,574.30) (5,089.68) (3,490.74)

Inventories (4,582.97) 2,988.11 (1,993.24)

Trade & Other Payable 4,673.84 2,436.60 5494.80

Cash Generated from Operation 4,635.47 8,725.15 8,623.20

Income Taxes Refund /(paid) (2,127.88) (1,340.53) (1,551.88)

NET CASH FLOW FROM OPERATING ACTIVITIES (A) 2,507.59 7,384.62 7,071.32

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (5,177.95) (5,992.64) (3,812.49)

Sale of Fixed Assets 99.59 98.31 42.41

Purchase of Short Term Investment (22,301.72) (5,075.80) -

Purchase of Long Term Investment (271.51) (817.76) (328.10)

Sale of Short Term Investment 23,514.08 1,349.32 -

Sale of Long Term Investment 103.43 100.82 3.11

Share Application Advance (162.40) (137.60) -

Interest Received 435.01 109.41 143.43

TDS on Interest (27.35) (22.06) (12.83)

Dividend Received 0.00 0.07 4.80

NET CASH OUTFLOW IN INVESTING ACTIVITIES (B) (3,788.82) (10,387.93) (3,959.67)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Long Term Borrowings 4,164.25 3,285.75 1827.69

Repayment of Long Term Borrowings (2,913.88) (2,309.42) (1,936.73)

Proceeds from issue of Share Capital - 596.56 0

Security Premium (Net of Share Issue Expenses) - 4,767.10 0

Short Term Loans Borrowings (net) 834.63 (138.64) (305.70)

Interest Paid (2,046.01) (1,841.68) (2,021.98)

Dividend Paid (including corporate dividend tax) (676.74) (480.27) (317.74)

NET CASH INFLOW FROM FINANCING ACTIVITIES (C) (637.75) 3,879.40 (2,754.46)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (1,918.98) 876.09 357.19

CASH AND CASH EQUIVALENTS

Opening

Cash & Cash Equivalent 2,869.50 1,750.44 1448.57

Other Bank Balances 586.74 829.71 774.39

3,456.24 2,580.15 2,222.96

Closing



1,537.26 3,456.24 2,580.15

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (1,918.98) 876.09 357.19

SUMMARY REFORMATTED CONSOLIDATED STATEMENT OF CASH FLOW


S-3

Summary Unaudited Standalone Interim Financial Information

Rupees in lacs

Particulars Half year ended 30 September

2015 2014


79,918

70,713

Other Income

296

284

Total Revenue

80,214

70,997

Expenses:


7,829

8,492


44,739

38,136

C Change in Inventories of Finished Goods,Work-in-progress and Stock-inTrade

(1,069)

(2,747)


5,302

4,802

Finance Costs

888

743


964

1,065

Other Expenses

17,925

17,650

Total Expenses

76,578

68,141

Profit Before Exceptional and Extraordinary Items and Tax

3,636

2,856

Exceptional items (Net)

383

-

Profit before tax

3,253

2,856

Extraordinary Items

-

-

Profit before tax

3,253

2,856

Tax Expenses

1,139 999

Profit After Tax

2,114

1,857

S-4

31

RECENT DEVELOPMENTS Unaudited Standalone Interim Financial Information

Pursuant to a meeting of its Board of Directors on October 26, 2015, our Company has adopted and filed with the Stock Exchanges our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015, in accordance with the provisions of Clause 41 of the Listing Agreement. For further information, please refer to the Unaudited Standalone Interim Financial Information included in “Financial Information” in this Preliminary Placement Document. The Unaudited Standalone Interim Financial Information are not presented in a manner that is comparable to the form in which the Reformatted Consolidated Financial Statements have been presented. Accordingly, investors are cautioned against placing undue reliance on the Unaudited Standalone Interim Financial Information for its investment decision. Acquisition and/or subscription of Additional Equity Interest in Somany Fine Vitrified Limited and Somany Sanitaryware

Private Limited

Pursuant to our subscription to shares in Somany Fine Vitrified Limited (“SFVL”) in May 2015 and an acquisition and subscription to shares in Somany Sanitaryware Private Limited (“SSWPL”) in May 2015, June 2015 and August 2015, these companies have become our subsidiaries. As of September 30, 2015, we hold 51% equity interest in SFVL and SSWPL. The Unaudited Standalone Interim Financial Information do not show the effect of our increases in shareholding in SFVL and SSWPL. Further, as a result of these increases in shareholding in SFVL and SSWPL our future consolidated financial statements may not be comparable to our historical Reformatted Consolidated Financial Statements included in this Preliminary Placement Document.

Settlement of demand notice received from GAIL (India) Limited

Our Company has been settled demand notices from GAIL (India) Limited (“GAIL”) during this year for Rs.382.81 lakh. Under our existing long term gas supply agreement (“GSAs”) with GAIL, there were underdrawn quantities of re-liquefied natural gas (“RLNG”) for the calendar year 2014. As our Company was subject to “take or pay” obligations under this agreement, we had received demand notices from GAIL aggregating to Rs. 2,276.51 lakhs.

32

RISK FACTORS

This section describes the risks that we currently believe may materially affect our business and operations. You should

carefully consider the following, in addition to any forward-looking statements and the cautionary statements in this

Preliminary Placement Document and the other information contained in this Preliminary Placement Document, before

making any investment decision relating to the Equity Shares. Prospective investors should read this section in

conjunction with the sections “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as other financial and statistical information contained in this Preliminary Placement Document. Prospective investors should carefully consider the risks and uncertainties described below, in addition to the

other information contained in this Preliminary Placement Document before making any investment decision relating to

our Equity Shares. The occurrence of any of the following events, or the occurrence of other risks that are not currently

known or are now deemed immaterial, could cause our business, results of operations, cash flows, financial condition

and prospects to suffer and could cause the market price of our Equity Shares to decline or fall significantly and you may

lose all or part of your investment.

The risks described below are not the only ones relevant to us or the Equity Shares. Additional risks that may be

unknown to us and some risks that we do not currently believe to be material could subsequently turn out to be material.

Although we seek to mitigate or minimize these risks, one or more of a combination of these risks could materially and

adversely impact our business, financial condition and results of operations. Investors should pay particular attention to

the fact that our Company is an Indian company and is subject to a legal and regulatory regime which in some respects

may be different from that applicable in other countries. Investors should consult tax, financial and legal advisors about

the particular consequences of an investment in the Issue.

In this section, unless the context otherwise requires, any reference to “we”, “us” or “our” refers to SCL and its subsidiaries on a consolidated basis, and any reference to the “Company” refers to SCL on a standalone basis.

Unless otherwise indicated, all financial information included in this section has been derived from our Reformatted

Consolidated Financial Statements for fiscals 2013, 2014 and 2015 and the Unaudited Standalone Interim Financial

Information for the quarter and six months ended September 30, 2015, included elsewhere in this Preliminary Placement

Document.

Pursuant to our subscription to shares in Somany Fine Vitrified Limited (“SFVL”) in May 2015 and an acquisition and

subscription to shares in Somany Sanitaryware Private Limited (“SSWPL”) in May 2015, June 2015 and August 2015,

these companies have become our subsidiaries. As of September 30, 2015, we hold 51% equity interest in SFVL and

SSWPL. As we have presented unaudited standalone financial statements for the six months ended September 30, 2015,

the effect of these acquisitions and the consolidation of SFVL and SSWPL, or the consolidation of our other existing

subsidiaries, is not reflected in such financial statements. Additionally, this Preliminary Placement Document does not

include any proforma financial information to show the effect of the consolidation of SFVL and SSWPL.

Risks relating to our Business Operations

Our business and operations may be subject to various risks relating to our recent subscription to shares in SFVL

and an acquisition and subscription to shares in SSWPL, including the integration of their operations into our

existing operations, which could adversely impact our business strategy, results of operations and financial

condition.

Pursuant to our subscription to shares in SFVL in May 2015 and an acquisition and subscription to shares in SSWPL in May 2015 and August 2015, these companies have become our Subsidiaries. As of September 30, 2015, we hold 51% equity interest in SFVL and SSWPL. We may not be successful in integrating the business and operations of SFVL and SSWPL with our existing operations or achieve the anticipated benefits of such acquisition. While we believe that these acquisitions will likely result in increased operational synergies resulting from the expansion of our manufacturing capacities, there can be no assurance that we will be able to successfully integrate these businesses into our existing manufacturing operations or distribution network or otherwise achieve the synergies and other benefits we expect from such acquisition. In addition, we face the risk of unforeseen complications in the integration of our manufacturing operations and distribution infrastructure and the deployment of integrated product offerings, and there can be no assurance that our estimate of the necessary capital expenditure and other resources to offer such integrated product offerings will not be exceeded. Any difficulties encountered in integrating and/or managing the acquired businesses could result in increased costs and adversely affect our operating margins and results of operations.

33

The information relied on by us with respect to the business and operations of SFVL and SSWPL may be incomplete or inaccurate, and we may be subject to unforeseen risks, liabilities and obligations. In particular, SFVL and SSWPL were privately owned unlisted companies until our recent increases in their shareholding, and were not subject to operational controls, financial reporting procedures and corporate governance processes that are comparable to the controls and processes applicable to us as a publicly listed entity. There may be infirmities or irregularities in the operational and financial reporting procedures or in compliance with regulatory and other requirements by such entities, and we may be subject to unforeseen risks, liabilities and obligations in this regard. We may also be required to expend significant management and other resources to ensure that the operational and financial reporting standards followed by these entities are integrated to those followed in our existing operations. In addition, we may not have any recourse against the entities from which we have acquired our shareholding in these entities in connection with any loss that may arise out of such acquisitions. In addition, we may require additional capital for the successful expansion of the manufacturing operations and distribution network required for the acquired businesses and the integration of these businesses and operations with our existing operations. We expect to incur further expenditure to acquire additional equipment and the expansion of our manufacturing facilities in connection with the expansion of SFVL and SSWPL business. An inability to raise adequate finances in a timely manner and on commercially acceptable terms for the expansion of these businesses and the integration of the business and operations of these entities with our existing operations could materially and adversely affect our business, results of operations and financial condition. No independent valuation was obtained at the time of our subscription to shares in SFVL or at the time of our acquisition and subscription to shares in SSWPL. There can be no assurance that current valuations will be reflective of future valuations in these businesses or that such current valuations are comparable to that of listed companies in such industry.

Our results of operations and financial condition following the recent acquisition of SFVL and SSWPL will not be

comparable to those prior to such acquisitions. We have included in this Preliminary Placement Document our Reformatted Consolidated Financial Statements for fiscal 2013, 2014 and 2015 and our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015, that have been subjected to a limited review by our statutory auditors. Since the subscription to shares in SFVL in May 2015 and the acquisition and subscription to shares in SSWPL in May 2015 and August 2015, our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015 included in this Preliminary Placement Document does not reflect the effect of consolidation of these entities, or the consolidation of our other existing subsidiaries. This Preliminary Placement Document does not include any proforma profit and loss statement or balance sheet prepared in accordance with the laws and regulations of the United States of America or any other jurisdiction, which would have shown the effect of the acquisitions on our historical results of operations and financial condition, assuming that the subscription to shares in SFVL and the acquisition and subscription to shares in SSWPL had occurred at the beginning of the relevant reporting period. Investors are cautioned that they will therefore need to base their assessment of our consolidated results of operations and financial condition subsequent to the acquisitions on the basis of our historical Reformatted Consolidated Financial Statements for fiscal 2013, 2014 and 2015 and the limited financial information for SFVL and SSWPL and other information with respect to SFVL and SSWPL included in this Preliminary Placement Document and the management’s discussions with respect to the effects of such acquisitions on our business, results and of operations and financial condition included in “Management’s Discussion and Analysis of Results of Operations and Financial Condition – Principal Factors affecting Results of Operations and Financial Condition”.

Our business is dependent on the performance of the real estate, infrastructure and other related industries where

our tiles, sanitary ware and bath fittings products are utilized. Our tiles, sanitary ware and bath fittings products are primarily used in the real estate, infrastructure and related sectors. The performance of these sectors, and consequently the demand for our products in these sectors, are dependent on economic and other factors such as government policies, regulations and budgetary allocations as well as investments made in these industries and sectors. The financial performance of the end users of our products and any adverse developments that affect the tile, sanitary ware and bath fittings industry and the real estate, infrastructure and related sectors where our products are used may adversely affect our business, results of operations and financial condition.

34

The loss, shutdown or slowdown of operations at any of our manufacturing facilities (including those of our

associates) or underutilisation of our manufacturing capacities may have a material adverse effect on our results of

operations.

We have two manufacturing facilities for our tile business located at Kadi, Gujarat and Kassar, Haryana. In addition to these, one of our subsidiaries has a tile manufacturing facility and another subsidiary has a sanitary ware facility, both of which are located at Morbi, Gujarat. As of September 30, 2015, four of our associate companies have tile manufacturing facilities in Morbi, Gujarat. In addition, one of our subsidiaries, namely Somany Fine Vitrified Private Limited, has setup a plant to manufacture polished vitrified tiles at Morbi, Gujarat in October, 2015. Our manufacturing facilities are subject to various operating risks, including the breakdown or failure of equipment, performance below expected levels of output or efficiency, facility obsolescence or disrepair, labour disputes, natural disasters and industrial accidents. Although we take precautions to minimize the risk of any significant operational issues at our manufacturing facilities, the occurrence of any of these risks could adversely affect our operations by causing production at one or more of our facilities to cease or slow down. Utilization rates at our manufacturing facilities are subject to various factors including availability of raw materials, power, water, fuel, efficient working of machinery and equipment and optimal production planning and prevailing market conditions. An inability to utilize our manufacturing facilities to their full or optimal capacity or non-utilization of such capacities may adversely affect our results of operations and financial condition. An inability to address changing industry standards and consumer trends may adversely affect our business, results of

operations and financial condition. The future success of our business will depend in part on our ability to respond to technological advances, consumer preferences (including in designs) and emerging industry standards and practices in a cost-effective and timely manner. The development and implementation of such new technology entails technical and business risks. We may have to incur substantial capital investment to upgrade our equipment and manufacturing facilities. While we continue to invest in various product development initiatives, introduction of new designs and new technologies and processes for the development of new products, we are subject to general risks associated with introduction and implementation of new products including the lack of market acceptance and delays in product development. There can be no assurance that we will be able to successfully develop new products or that such new products will receive market acceptance or adapt our manufacturing processes to incorporate new technologies or address changing consumer trends or emerging industry standards. Any rapid change in the expectations of our dealers and end customers in our business on account of changes in technology or introduction of new alternate products could adversely affect our business, results of operations and financial condition. Information relating to the estimated manufacturing capacities and capacity utilization rates of our manufacturing

facilities (including those of our associate companies) included in this Preliminary Placement Document is based on

various assumptions and estimates. Actual production and future capacity utilization rates may vary from such

estimated manufacturing capacity information and historical capacity utilization rates. The information relating to the estimated manufacturing capacities and utilization rates of our manufacturing facilities included in this Preliminary Placement Document is based on various assumptions and estimates of our management, including proposed operations, assumptions relating to availability and quality of raw materials and assumptions relating to potential plant utilization levels and potential operational efficiencies. Capacity additions to our manufacturing facilities have been made on an incremental basis, including through expansion of our manufacturing facilities, improving material handling and other operational efficiencies in the manufacturing process and addition of equipment or production lines from time to time. Actual production levels and future capacity utilization rates may differ significantly from the estimated manufacturing capacities of our manufacturing facilities and historical capacity utilization rates. In addition, capacity utilization is calculated differently in different countries, industries and for the different kinds of products we manufacture. Undue reliance should therefore not be placed on the manufacturing capacity information for our existing manufacturing facilities and any proposed additional capacity information or the historical capacity utilization rate information included in this Preliminary Placement Document. We may not be successful in implementing our business strategies, expanding our dealer and customer base or

product portfolio, which could adversely affect our business, results of operations and financial condition. The success of our business depends largely on our ability to effectively implement our business strategies. Successful execution of our business strategies in the past does not provide assurance that we will be able to execute our strategies on time and within the estimated budget in the future or that we will meet the expectations of our targeted dealers and customers.

35

We expect the implementation of our business strategies to place significant demands on our management and other resources and require us to continue developing and improving our operational, financial and internal efficiencies. Our inability to effectively manage our business strategies could have an adverse effect on our business, results of operations and financial condition.

In order to achieve future growth, we need to effectively manage our product portfolio, and dealer and customer base, assess new markets, acquire new dealers and customers, obtain sufficient financing for our expected capital expenditures, contain our input cost and fixed costs, maintain sufficient operational and financial controls and make additional capital investments to take advantage of anticipated market conditions. We may not be able to achieve growth in revenues and profits or maintain such rate of growth in the future. If we are unable to execute our strategies effectively, our business, results of operations and financial condition will be adversely affected. For further information, please refer to section “Business” in this Preliminary Placement Document.

Our business does not involve long term purchase arrangements. Our business does not involve long-term agreements and we rely on purchase orders that determine the terms of sales of our products. However, purchase orders may be amended or cancelled prior to finalization, and in such event, an amendment or cancellation may take place, and we may be unable to seek compensation for any surplus unpurchased products that we manufacture or traded in. In addition, in cases where we have entered into agreements with dealers or customers, such contracts do not bind them to provide us with a specific volume of business and can be terminated by them with or without cause and without compensation. Consequently, there is no firm commitment on part of our dealers or customers to continue to pass on new purchase orders to us and as a result, our sales from period to period may fluctuate significantly as a result of changes in our dealers’ and customers’ vendor preferences. Additionally, any failure to meet our dealers’ and customers’ expectation could result in the cancellation or non-renewal of purchase orders. There are also a number of factors other than our performance that are beyond our control and that could cause the loss of a dealer or customer. Dealers or customers may demand price reductions, set-off any payment obligations, require indemnification for them, change their outsourcing strategy, or replace their existing products with alternative products, any of which may have an adverse effect on our business, results of operations and financial condition. An inability to expand or manage our distribution network for business or the loss of any significant dealer may

adversely affect our business.

We primarily sell our products to retail customers through our large distribution network of dealers and sub-dealers across India. The competition for dealers and sub-dealers is intense in our industry and many of our competitors continue to expand their distribution networks. There can be no assurance that we will be able tosuccessfully expand, maintain or manage our large distribution network and strengthen our relationship with our significant dealers in the future. If we lose any of our significant dealers or sub-dealers to competitors, we may lose someor all favorable arrangements with such dealer or sub-dealer, which could result in weakening or termination of our relationships with other dealers and sub-dealers. We may also not be able to effectively manage our dealers and sub-dealers, and the cost of any consolidation or further expansion of our distribution network may exceed the additional revenue generated from such efforts. Furthermore, the performance of our dealers and sub-dealers and their ability to sell our products, strengthen our brand and expand their businesses and their sales network are crucial for the future growth of our business and would directly affect our sales volume and profitability. Our business is dependent on maintaining a continuing relationship with our most significant dealers as a significant portion of our revenues in our business is generated by a limited number of key dealers. While our top ten dealers are not necessarily the same in every fiscal year or reporting period, our key dealers contribute a significant proportion of our total revenues. An inability to develop and maintain our relationship with key dealers by providing new and quality products, effective branding and marketing for such products, attractive commercial arrangements, or effective training and network support for dealers, may result in the loss of key dealers. There can be no assurance that we will be able to maintain or increase the historic levels of business from our key dealers, or that we will be able to immediately and successfully replace these key dealers at terms acceptable to us, should we lose any or all of them. Any loss of such key dealers may adversely affect our business, results of operations and financial condition.

36

Industry information and related statistics included in this Preliminary Placement Document may not be accurate or

complete and its reliability cannot be assured. Any undue reliance placed by an investor on such information for

making a decision to invest in our Equity Shares may result in the loss of all or part of such investment. Industry information and related statistics included in this Preliminary Placement Document is derived from publicly available sources including publications by government and research organizations. None of the Company, the BRLM or any other person connected with the Issue has independently verified this information. There can be no assurance that such industry information and related statistics included in this Preliminary Placement Document is either accurate or complete or that any reliance can be laid on such information. The information and publications used to prepare the Industry section in this Preliminary Placement Document is based on information as of a specific date and may no longer be current or reflect current trends. Finally, the sources and publications used to prepare this information may also base their information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly, investors should not place undue reliance on, or base their investment decision on, any such information included in the Preliminary Placement Document.

We are exposed to fluctuations in prices of raw materials, power and fuel, and spares and stores and other input

materials and an inability to pass on increased costs to our customers may adversely affect our profitability. We are exposed to fluctuations in prices of raw materials, power and fuel, bought-outs and other input materials. Cost increases could result from a rise in (i) transportation cost of key raw materials such as clay and frits (ii) prices of key inputs like clay, frits, colours, inks, packing material etc. (iii) prices of power and fuel (primarily natural gas). Raw material costs and power and fuel cost accounts for a significant percentage of our cost of operations, and in the aggregate represented 27.44% of our total expenditure in fiscal 2015. Although we generally attempt to pass on increases in raw material, energy and fuel-related costs to our customers, our ability to do so is dependent upon the rate and magnitude of any increased, competitive pressures and market conditions for our products. There have been in the past, and may be in the future, periods of time during which increases in these costs cannot be recovered. During such periods of time, our business may be materially adversely affected. Additionally, any increase in the sales price of our products will usually be effective for purchase orders received after negotiations and compensation for cost increases incurred prior to such negotiations is unlikely to be covered. In such circumstances, the price increases may not have a compensating effect for the corresponding period in which the costs increased. This may have an adverse effect on our business prospects, results of operations and financial condition.

We have entered into, and in the future may enter into joint ventures and arrangements with subsidiaries, associates

and others for outsourcing of products and / or otherwise which may not always be successful and the performance of

these entities may adversely affect our results of operations. We continue to source a significant proportion of our products from third party manufacturers and also enter into joint ventures and arrangements with such entities in connection with our business and operations. As part of our asset-light business strategy, we may also either dispose off or acquire additional shareholding interest in a joint venture, subsidiary or associate entity. Such investments may, under certain circumstances, involve risks as these entities may fail to meet their financial, commercial or other obligations in respect of such arrangements with them. Further the business operations and financial performance of these entities may have an adverse effect on our results of operations and financial condition. Our joint venture entity, Somany Keraben Private Limited (“SKPL”), has generated losses during the past several years, and its net worth as on March 31, 2015 was completely eroded. Consequently, the statutory auditors of SKPL have qualified their audit report for fiscal 2015, 2014 and 2013 to the extent that the accounts of SKPL are being prepared on a going concern assumption despite its negative net worth.

Our Reformatted Consolidated Financial Statements include financial statements of certain of our associate

companies and our joint venture that have not been audited. Our Reformatted Consolidated Financial Statements for fiscal 2013, 2014 and 2015, include financial information of two of our associate companies, namely Commander Vitrified Private Limited and Vintage Tiles Private Limited, that have not undergone any audit or review process for fiscal 2013 and are based solely on the unaudited financial statements as certified by the management of such companies for fiscal 2013. In addition, our Reformatted Consolidated Financial Statements as of and for fiscal 2013 and fiscal 2014, include financial information of our joint venture Somany Keraben Private Limited that have not undergone any audit or review process and are based solely on the unaudited financial statements as certified by the management of such company. The audit report on our audited consolidated financial statements for fiscal 2013, 2014 and 2015, and the examination report on our Reformatted Consolidated Financial Statements for fiscal 2013, 2014 and 2015 therefore draws attention to this as a matter of emphasis. In the event that such

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financial statements of Commander Vitrified Private Limited and Vintage Tiles Private Limited and those of Somany Keraben Private Limited are inaccurate, it may have a significant impact on the results of operations and financial condition of our Company on a consolidated basis. Accordingly, prospective investors should take this into account when placing reliance on our Reformatted Consolidated Financial Statements included in this Preliminary Placement Document. For further information, please refer to section “Financial Statements” in this Preliminary Placement Document.

Business operations carried on through our subsidiaries and associate companies may not be synergistic and we may

not be able to achieve economies of scale in such operations. We have entered into agreements with our subsidiaries and associates to augment our manufacturing capacity. A large portion of our business is operated through our subsidiaries and associate companies which may not necessarily be synergistic in nature and we may not be able to achieve economies of scale across all of them. There can be no assurance that we will be able to renew such arrangements with our subsidiaries or associate companies or other third party manufacturers on commercially reasonable terms, or that our counterparties will perform their obligations in a timely manner. We may not be able to successfully negotiate these third party arrangements or find suitable joint venture partners, subsidiaries and associates in the future. Any of these arrangements may not be available on commercially reasonable terms. Additionally, our joint venture partners, subsidiaries and associates may make important marketing and other commercialization decisions with respect to products we develop without our input. As a result, many of the variables that may affect our business, prospects, results of operations and financial condition are not exclusively within our control when we enter into such arrangements. Any deficiency in the quality of our products may expose us to product liability claims. We are subject to laws and regulations relating to product liability arising from the manufacture and sale of our products. If any of the products sold by us fails to comply with applicable quality standards, it may result in dealer and customer dissatisfaction, which may have an adverse effect on our business, sales and results of operations. From time to time, due to human or operational error, orders may not meet the specifications required by those customers and may therefore be rejected by customers. Any ongoing issues with products not meeting required specifications could reduce our revenue and impact negatively upon our reputation and financial performance. In addition, we may incur liability for defective products, product recalls, and delays in delivery or fulfilling contracts. Although we have not experienced any major product liability claims in the past, there can be no assurance that our dealers, customers or end-users of our products or unrelated third parties will not make claims against us in the future that may result in adverse publicity. In case of any such product liability claims in the future, there can be no assurance that any product liability insurance we may obtain will be sufficient to indemnify us against such liabilities. In addition, any such adverse publicity, in relation to product liability claims or otherwise, may impact the prices of Equity Shares. Our company has entered into long term gas supply agreements with various suppliers for the procurement of natural

gas. Any under-utilization of the quantities of natural gas may trigger the ‘take or pay’ provisions contained in such agreements which may have an adverse impact on our financial condition. Natural gas is the primary fuel for our manufacturing facilities and we source such fuel requirements through gas supply agreements (“GSAs”) with certain natural gas suppliers. Any under-utilization of natural gas than the contracted quantities may attract the ‘take or pay’ obligations as stipulated in such GSAs, requiring us to pay for the quantity under drawn. Although we may procure the equivalent quantity of natural gas paid for pursuant to the aforementioned claims during the remaining validity period of the GSAs subject to the seller’s operational flexibility and any price adjustments, there can be no assurance that we will be able to profitably utilize such quantities of natural gas. Such claims or any future claims under these GSAs may adversely impact our cash flows, the results of our operations and financial position. Further, our subsidiaries and associates have also entered into similar agreements in relation to their gas supply requirements. Consequently, any ‘take or pay’ claims that may arise as a result of such arrangements with gas suppliers may adversely impact our subsidiaries and/or associates and may adversely impact our cash flows, the results of our operations and financial position. We are obligated to purchase certain agreed quantities of products from our third party manufacturers under

supply agreements entered with them. We enter into long-term supply agreements with third-party manufacturers for the supply of materials and components for our products. Under these agreements, we purchase agreed quantities from them from time to time. Should we agree to purchase quantities that are in excess of demand, it could cause us to hold larger than expected quantities of inventory on hand, and at pre-determined prices that could be above market rates in the future that could cause us to incur losses on the sale of our products.

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Our business operations involve substantial capital expenditure and working capital and an inability to organize

such additional financing, could have an adverse effect on our results of operations and financial condition. Our business is capital intensive as we have expanded and upgraded our existing production facilities to meet customer requirements. Although we intend to incur certain capital expenditures, the actual amount and timing of our future capital requirements may differ from estimates as a result of, among other factors, unforeseen delays or cost overruns, unanticipated expenses, regulatory changes, economic conditions, design changes, weather related delays, technological changes and additional market developments and new opportunities in the ceramic industry. Our sources of additional financing, where required to meet our capital expenditure plans or working capital needs, may include the incurrence of debt or the further issuance of equity or debt securities or a combination of both. If we decide to raise additional funds through the incurrence of debt, our interest and debt repayment obligations may increase, and could have a significant effect on our profitability and cash flows and we may also be subject to additional covenants, which could limit our ability to access cash flows from operations. Any further issuance of equity, on the other hand, would result in a dilution of your shareholding. Further, in the event the credit terms entered into are not strictly adhered to by the dealers and customers, such delay/ non-payment of outstanding dues may result in the availment of additional working capital by us which may have an adverse impact on our financial condition and results of operations. In the ordinary course of our business, we do require working capital to finance the purchase of materials and for our manufacturing operations before payment is received from customers. Our working capital requirements may increase if the payment terms in our agreements include reduced advance payments or longer payment schedules. Further, our inventories may also increase due to a variety of internal and external reasons. These factors may result, or have resulted, in increases in the amount of our receivables, inventories and short-term borrowings. Continued increases in our working capital requirements may have an adverse effect on our financial condition and results of operations.

An inability to compete effectively in our industry may result in loss of customers or require us to incur substantial

expenditures which may adversely affect our business prospects, results of operations and financial condition. We compete with multinational as well as Indian companies in our industry and procure new businesses from our dealers and customers. An inability to procure new businesses or to retain or increase our existing businesses may adversely affect our financial performance. In addition, there can be no assurance that we will remain competitive with respect to the technology, design and quality of our products. Some of our competitors may have certain operational advantages, including greater financial resources, technology, research and development capability, greater market penetration and operations in diversified geographies and product portfolios, which may enable our competitors to better respond to customer demands. We may incur significant expenses in preparing to meet anticipated customer requirements which may not be recovered. Our business may face competition from market players that are larger and have substantially greater resources than we do. Any major expansion of business and/or technological upgradation by our competitors may require us to incur additional expenditure to keep pace with the growing competition and to meet dealer and customer requirements.

We are dependent on third party transporters for the timely supply of raw materials to our facilities and delivery of

our products to our dealers and customers, which are subject to uncertainties and risks.

We use third-party transportation services for the supply of raw materials to our manufacturing facilities. Disruptions of transportation services because of various reasons such as weather-related problems, strikes by Indian truckers’ unions, lock-outs, inadequacies in the road infrastructure and port facilities, or other events could impair our ability to source raw materials and our ability to supply our products to our dealers or customers in a timely manner. In addition, some of our raw materials and products are imported and therefore subject to risks associated with transhipment of such material and products. There can be no assurance that such disruptions will not take place in the future. In addition, significant increases in transportation costs due to various reasons such as increase in crude oil prices may adversely impact our profitability and results of operations. There are outstanding legal proceedings against our Company which if determined adversely, could affect our

business, results of operations and financial condition.

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There are certain outstanding legal proceedings initiated against us. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. In addition, there are certain show-cause notices issued against us which may be regarded as potential legal proceedings and the same may culminate into disputed claims in the future. The amounts claimed in these proceedings have been disclosed to the extent ascertainable as on date of this Preliminary Placement Document and include amounts claimed jointly and severally from us and other parties. Should there be any new developments, such as any change in applicable laws or any rulings against us by appellate courts or tribunals, we may need to make provisions in our financial statements that could increase expenses and current liabilities. There can be no assurance that these proceedings will not be determined adversely to us or that penal or other action will not be taken against us. Any adverse decision in such proceedings may have an adverse effect on our business, results of operations and financial condition. For further information, along with the disclosures including, inter alia, the amount involved, period for which such demands or claims are outstanding, financial implications and the status of the cases, see the section titled “Legal Proceedings” of this Preliminary Placement Document. Our success depends on our senior management and skilled personnel and, hence, an inability to attract and retain

key personnel may have an adverse effect on our business prospects. Our experienced senior management and executive directors have made significant contribution to the growth of our business, and our future success is dependent on the continued service of our senior management team and our skilled personnel. An inability to retain any senior management personnel may have an adverse effect on our operations. Our ability to successfully grow our business, and our ability to successfully integrate and manage our operations depends on our ability to attract, train, motivate and retain highly skilled professionals. The loss of any of the members of our senior management team, our whole time directors or other key personnel or an inability to manage the attrition levels in different employee categories may materially and adversely impact our business, results of operations, financial condition and growth prospects.

Our results of operations could be adversely affected by strikes, work stoppages or increased wage demands by our

employees. While we have not experienced any significant employee related issues in the past, there can be no assurance that we will not in the future experience any strikes, work stoppages or other industrial actions or that these situations will not disrupt our business and operations. A majority of our employees are also members of trade unions and in the past we have faced labour unrest including strikes. In the event that we are unable to manage any employee related issues or negotiate any settlement with our workers on acceptable terms, it could result in strikes, work stoppages or increased operating costs as a result of higher than anticipated wages or benefits. In addition, such industrial disruptions or work stoppages may result in production losses and delays in delivery of products, which may adversely affect our business prospects, reputation, and results of operations.

Our insurance coverage may not adequately protect us against certain operating hazards and this may have a material

adverse effect on our business. Our business involves many risks and hazards which may adversely affect our profitability, including natural calamities, breakdowns, failure or substandard performance of equipment, third party liability claims, labour disturbances, employee fraud and infrastructure failure. Our Company cannot assure you that the operation of our business will not be affected by any of the incidents and hazards listed above. In addition, our insurance may not provide adequate coverage in such circumstances including those involving claims by third parties and is subject to certain deductibles, exclusions and limits on coverage. If our arrangements for insurance or indemnification are not adequate to cover claims, including those exceeding policy aggregate limitations or exceeding the resources of the indemnifying party, our Company may be required to make substantial payments and our results of operations and financial condition may be adversely affected.

Our indebtedness and the restrictive covenants imposed upon us in certain debt facilities could restrict our ability to

conduct our business and grow our operations, which would adversely affect our financial condition and results of

operations.

As of March 31, 2015, our Company had outstanding loans aggregating up to an amount of Rs. 19,124.74 lakhs out of which secured loans amount to Rs. 18,895.89 lakhs and unsecured loans amount to Rs. 228.85 lakhs on a consolidated basis.We may in the future incur additional indebtedness in connection with our operations. Our indebtedness could have several important consequences on our future financial results and business prospects, including but not limited to the following:

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

our ability to obtain additional financing in the future or renegotiate or refinance our existing indebtedness on terms favorable to us may be limited;

fluctuations in market interest rates will affect the cost of our borrowings;

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

we may have difficulty satisfying payment and other obligations under our existing financing arrangements and an inability to comply with these requirements could result in an event of default, acceleration of our repayment obligations and enforcement of related security interests over our assets; and

we may be restricted from making dividend payments to our shareholders under certain circumstances. There are certain restrictive covenants in the arrangements we have entered into with the banks. Under the terms of certain of our Company’s debt agreements, we are required to send an intimation to our lenders for creating, assuming or incurring any additional long-term indebtedness. Specifically, under some of our financing agreements, we require, and may be unable to obtain, consents from the relevant lenders for, among others, the following matters: (i) effect any major changes in the shareholding pattern, management control, or make any investments in any fixed assets, in associates/group companies except to the extent projected in the data submitted to the Bank; (ii) effect change in the capital structure; (iii) formulate any scheme of amalgamation or reconstruction; (iv) implement any major scheme of expansion; (v) invest by way of share capital in or lend advance funds to or place deposits with any other concern; (vi) enter into additional borrowing arrangements (including securitization of receivables or provide escrow facilities), either secured or unsecured, with any bank, financial institutions, company/firm or otherwise other than the limits disclosed; (vii) undertake guarantee obligations on behalf of any other company/firm etc; (viii) allow the promoters/directors to alienate, transfer, dispose or dilute their shareholding; (ix) create any further charge, lien or encumbrance over the assets or properties of the Company already charged to any lender in favour of any other lenders, companies firm or person; and (x) declare or pay dividend for any year except out of profits for the year and after meeting the bank’s obligations. Further, we intend to utilize a portion of the Net Proceeds for repayment/pre-payment of certain identified outstanding loans. Any prepayment of our loans may require us to receive consents from some of our lenders, which may be subject to payment of prepayment charges or other charges, as applicable.

There can be no assurance that we have , or will, at all times, complied with all of the terms of the said financing documents. Any failure to service our Company’s indebtedness and/or to comply with all of the terms of the said financing documents could have an adverse effect on our results of operations and/or profitability.

Any downgrade in our credit ratings may increase interest rates for refinancing our outstanding debt, which would

increase our financing costs, and adversely affect our future issuances of debt and our ability to borrow on a

competitive basis. We have received ‘CRISIL A/Stable’ credit rating by Credit Rating Information Services of India Limited (“CRISIL”) for some of our long-term debt facilities. We also have ‘CRISIL A1’ rating for short-term debt facilities from CRISIL. These ratings indicate adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. Any downgrade in our credit ratings may increase interest rates for refinancing our outstanding debt, which would increase our financing costs, and adversely affect our future issuances of debt and our ability to borrow on a competitive basis, which may adversely affect our business, financial condition, results of operations and cash flows.

We may be unable to obtain future financing to fund our operations, expected capital expenditure and working

capital requirements on favorable terms, or at all.

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Our business requires funding for capital expenditure and working capital requirements. The actual amount and timing of future capital expenditure may depend on several factors, among others, new opportunities, regulatory changes, economic conditions, technological changes and market developments in our industry. Our sources of additional funding, if required, to meet our capital expenditure may include the incurrence of debt or the issue of equity or debt securities or a combination of both. If we decide to raise additional funds through the incurrence of debt, our interest and debt repayment obligations will increase, and could have a significant effect on our profitability and cash flows and we may be subject to additional covenants, which could limit our ability to access cash flows from operations. In case there is insufficient cash flows to meet our working capital requirement or we are unable to arrange the same from other sources or there is delay in disbursement of arranged funds, or there is any increase in interest rate on our borrowings, it may adversely affect our operations and profitability. These factors may result in an increased amount of short-term borrowings. Continuous increase of our working capital requirements may have an adverse effect on our results of operations and financial condition. Further our ability to arrange for additional funds on acceptable terms is subject to a variety of uncertainties, including future results of operations, financial condition and cash flows; economic, political conditions and market scenario for our products; costs of financing, liquidity and overall condition of financial and capital markets in India; issuance of necessary business/government licenses, approvals and other risks associated with our businesses; and limitations on our ability to raise capital in capital markets and conditions of the Indian and other capital markets in which we may seek to raise funds. Any such inability to raise sufficient funds could have a material adverse effect on our business and results of operations. An inability to effectively manage our growth could disrupt our business and results of operations. We have experienced significant growth in recent years and expect our business to grow significantly as a result of our expanded operations. In addition, following our increases in shareholding in SFVL and SSWPL, we have further expanded our operations. We expect this growth to place significant demands on us requiring us to expand and improve our operational, financial and internal controls. In particular, we may face increased challenges in:

maintaining high levels of customer, distributor and dealer satisfaction;

potential assumption of unanticipated liabilities and contingencies, including claims from current or former creditors, customers, suppliers, employees and other third parties;

recruiting, training and retaining sufficient skilled management, technical, execution and marketing personnel;

adhering to health, safety and environment and quality and process execution standards;

coordinating and interacting with local representatives and counterparties to fully understand local business and regulatory requirements;

unforeseen difficulties in extending disclosure and other internal controls and procedures over financial and other reporting and in performing the required assessment and remediation at the newly acquired business;

preserving a uniform culture, values and work environment across our operations;

developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems.

Our ability to successfully implement our business strategies also requires adequate information systems and resources and supervision from senior management. An inability to effectively manage our growth may have an adverse effect on our business and results of operations.

Our research and development efforts may not result in marketable products.

Our R&D team develops products which we have identified as having good potential in the market. There is no

assurance that we will not experience delays in future product developments. There is also no assurance that the products

which we are currently developing or may develop in the future will be successful or that we will be able to market these

new products to its customers successfully. If our new products are unable to gain the acceptance of our customers or

potential customers, we will not be able to generate future sales from our investment in R&D.

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Our manufacturing activities are dependent upon availability of skilled and unskilled labor, a deficiency of which

could result in a reduction in profits.

Our manufacturing activities are relatively labor intensive and dependent on availability of skilled and unskilled labor in

large numbers. Large labor intensive operations call for good monitoring and maintenance of cordial relations. Non-

availability of labor and/or any disputes between the labor and the management may result in a reduction in profits.

Further, we rely on contractors who engage on-site laborers for performance of many of its unskilled operations. The

scarcity or unavailability of contract laborers may affect our operations and financial performance.

We could face increased competition as the result of reduction in import duties on the products we market and

manufacture. We can also be negatively impacted by an increase in import duties on the raw materials,finished goods

and capital goods that we import from other countries.

Indian law currently imposes an import duty on ceramic tiles imported from countries outside of India. India may change

laws to stimulate competition from manufacturers of our products from other countries. Should India eliminate or adjust

import duties and other restrictions on the trade of products that we market and manufacture, it could increase

competition and that can have an adverse effect on our results of operations and financial condition.

Additionally, we are required to pay import duties on our certain raw materials finished goods and capital goods that we import from other countries. Any significant increase in import duties in the future could increase our costs. To the extent we cannot pass these costs on to our customers, our financial results will be negatively impacted.

Our Company has not been able to trace certain corporate secretarial records, including records relating to the

allotment of Equity Shares.

We have been unable to locate the copies of certain of our secretarial records, i.e. prescribed forms filed by us with the Registrar of Companies, including, among others, in respect of the allotment of Equity Shares made between the period starting January 9, 1968 until December 1, 1989 and the allotment of Equity Shares made pursuant to a bonus issue on January 1, 1996. We have not been able to obtain copies of these documents. We cannot assure you that we will not be subject to any adverse action by a competent regulatory authority in this regard.

Increases in interest rates may materially impact our results of operations. Interest rates for borrowings have been volatile in India in recent periods. Our operations are funded to a significant extent by debt and increases in interest expense may have an adverse effect on our results of operations and financial condition. Our current debt facilities carry interest at variable rates as well as fixed rates. Although we may engage in interest rate hedging transactions or exercise any right available to us under our financing arrangements to terminate the existing debt financing arrangement on the respective reset dates and enter into new financing arrangements, there can be no assurance that we will be able to do so on commercially reasonable terms, that our counterparties will perform their obligations, or that these agreements, if entered into, will protect us adequately against interest rate risks.

We have significant energy requirements and any disruption to these energy sources could increase our production

costs and adversely affect our results of operations.

We have substantial requirement of energy for our manufacturing facilities, and energy costs represent a significant portion of the production costs for our operations. Energy costs mainly comprise of power and fuel (mainly natural gas). We source the power requirements for our manufacturing facilities mainly from state electricity boards and power trading. If power supply is not available for any reason, we rely on alternative sources, for example, gas/ diesel generator sets which may not be able to consistently meet our requirements. The cost of power so generated in-house may however be significantly higher, thereby adversely affecting our cost of production and profitability. We source our fuel requirements, mainly natural gas, under long term gas supply agreements with suppliers/ transporters of natural gas. If fuel supply is not available for any reason, we will need to rely on alternative sources, for example, LPG, Propane etc. which may not be able to consistently meet our requirements. The cost of fuel from the aforementioned alternate sources may however be significantly higher, thereby adversely affecting our cost of production and profitability.

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Further, if for any reason such energy is not available, we may need to shut down our plants until an adequate supply of energy is restored. Interruptions of energy supply can also result in production shutdowns, increased costs associated with restarting production and the loss of production in progress. If energy costs were to rise, or if energy supplies or supply arrangements were disrupted, our profitability could decline.

We are subject to risks arising from foreign exchange rate fluctuations, which could adversely affect our results of

operations. Changes in currency exchange rates affect our exports, imports and certain expenses. A portion of our expenses, including cost of any imported raw materials, natural gas, products, freight costs, and other operating expenses in connection with our operations outside India, as well as certain of our capital expenditure on equipment imported, are denominated in currencies other than Indian Rupee. Depreciation of the Indian Rupee against the U.S. dollar and other foreign currencies may adversely affect our results of operations by increasing the cost of financing any debt denominated in foreign currency that we may enter into in the future or any proposed capital and/or revenue expenditure in foreign currencies. Our foreign currency exchange risks therefore arise from the mismatch between our financial reporting currencies, currency of some of our revenue and the currency of a substantial part of our expenses and our indebtedness, as well as timing differences between receipts and payments which could result in an increase of any such mismatch. Although we may selectively enter into hedging transactions to minimize our currency exchange risks, there can be no assurance that such measures will enable us to avoid the effect of any adverse fluctuations in the value of the Indian Rupee against the other relevant foreign currencies.

Our intellectual property rights may not be adequately protected against third party infringement. We are the registered owners of certain trademarks and patents. We have also applied for registration of various trademarks in relation to our products. We cannot assure you that we will continue to have the uninterrupted use and enjoyment of these trademarks or logos and our other intellectual property rights. Also there can be no assurance that we will be granted the registration for such trademarks and logos we have applied for and until such time any infringement of such mark may adversely affect our business. Further, we may not be able to protect our intellectual property rights against third party infringement and unauthorized use of our intellectual property including the usage of our brand on products which are not manufactured or marketed by us and which are of inferior quality, and which may adversely affect our brand value and consequently our business. Further, the use of trade names or trademarks by third parties which are similar to our trade names or trademarks may result in confusion among dealers and customers and loss of business. In addition, any adverse experience of the customers of such third party products, or negative publicity attracted by such third party products could adversely affect our reputation and brand and business prospects. We may also be susceptible to claims from third parties asserting infringement and other similar claims relating to trademarks and brands under which we sell our products. Any such claim could adversely affect our relationship with existing or potential dealers and customers, result in costly litigation and divert management’s attention and resources. An adverse ruling arising out of any intellectual property dispute could subject us to liability for damages and could adversely affect our business, results of operations and financial condition.

Any failure in our information technology systems may adversely affect our business, results of operations and

financial condition.

Our information technology systems are a critical part of our business and enable us to manage key business processes such as product design and development, customer and dealer relationship management and transaction processing, as well as our financial reporting system. Any delay in implementing critical upgrades to our information management systems or technical failures associated with our information technology systems, including those caused by power failures, computer viruses or unauthorized tampering of our information technology systems, may adversely affect our ability to plan, track, record and analyse work in progress and sales, process, financial information, manage our creditors and debtors, or otherwise conduct our normal business operations, which may increase our costs and otherwise adversely affect our business, results of operations and financial condition. We may undertake strategic acquisitions, investments or divestitures, which may prove to be difficult to integrate and

manage or may not be successful, and may affect our financial condition.

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As part of our strategy for growth, we may consider making strategic acquisitions of companies whose resources, capabilities and strategies are complementary to and are likely to increase our product portfolio, expand our distribution network and/or develop new customers. We may also enter into strategic alliances or joint ventures to explore such opportunities or make significant investments in entities that we do not control to capitalize on such business opportunities, and there can be no assurance that such strategic alliances, joint ventures or investments will be successful. It is possible that we may not be able to identify suitable acquisition or investment opportunities or that in the event we do so, we may not be able to complete those transactions on commercially acceptable terms, which may adversely affect our competitiveness or our growth prospects. If we acquire another company we could face difficulty in integrating the acquired operations. These difficulties could disrupt our ongoing business, distract our management and employees and increase our expenses. There can also be no assurance that we will be able to achieve the strategic purpose of such acquisition or operational integration or our targeted return on investment. In addition, we may also pursue divestitures which may not be completed or, if completed, may not be ultimately beneficial to us, and may have an adverse effect on our financial results and business operations. For example, we recently acquired a majority shareholding in SFVL and SSWPL. There can be no assurance that these recently acquired businesses will be successfully integrated into our existing business operations, and that such acquisitions will result in an increase in our revenues or profit. Our business may be adversely affected by environmental, health, safety and other regulations to which we are subject to and we require certain approvals and licenses in the ordinary course of business, and the failure to obtain

or renew them in a timely manner may adversely affect business, prospects, financial condition and results of

operations.

Our operations are subject to various environmental, health and safety laws including industry specific regulations, including stringent regulations that apply to our products used across various industries, including those governing the generation, handling, storage, use, management, transportation and disposal of, or exposure to, environmental pollutants or hazardous materials resulting from our manufacturing processes. We also require certain approvals in order to operate our manufacturing facilities in India. Our operations, facilities and properties outside India are also subject to local environmental and occupational health and safety laws and regulations. While we believe that we are in compliance with applicable environmental laws and regulations, we may be subject to additional requirements due to changing governmental policies. We could also incur additional costs and liabilities related to compliance with these laws and regulations. Further regulatory permits required for our operations may also be subject to periodic renewal and, in certain circumstances, modification or revocation. We may have to obtain approvals from various state government and other statutory authorities for any proposed expansion plans which may result into delay in execution of any such expansion and also result into certain financial implications. There can be no assurance that the relevant authorities will issue or renew any such permits or approvals in time or at all. Any failure or delay in obtaining approvals or failure by us to obtain, maintain or renew the requisite permits or approvals within applicable time or at all may result in interruption of our operations. Any of the above factors, including any failure to comply with safety requirements and standards may result in non-compliance with government regulations, property damage, environmental damage and personal injury may result in penal action against us, restraining our operations, imposing fines or civil and criminal penalties or initiating legal proceedings, thereby adversely affecting our business, results of operations and financial condition.

We appoint contract labour for carrying out certain operations and we may be held responsible for paying the wages

of such workers, if the independent contractors through whom such workers are hired default on their obligations,

and such obligations could have an adverse effect on our results of operations and financial condition.

In order to retain flexibility and control costs, we appoint independent contractors who in turn engage on-site contract labour. Although we do not engage these labourers directly, we may be held responsible for any wage payments to be made to such labourers in the event of default by such independent contractor. Any requirement to fund their wage requirements may have an adverse impact on our results of operations and financial condition. In addition, under the Contract Labour (Regulation and Abolition) Act, 1970, as amended, we may be required to absorb a number of such contract labourers as permanent employees. Thus, any such order from a regulatory body or court may have an adverse effect on our business, results of operations and financial condition.

Our Promoters and Promoter Group will continue to retain significant control in our Company after the Issue, which

will allow them to influence the outcome of matters submitted to shareholders for approval.

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Prior of this Issue, our Promoters and Promoter Group hold approximately 56.22% of our paid up equity share capital. As a result, our Promoter group will continue to have the ability to exercise significant influence over the matters requiring shareholders’ approval, including the election of Directors and approval of significant corporate transactions. The Promoter group will also be in a position to influence the result of any shareholders’ action or approval requiring a majority vote. Such a concentration of ownership may also have the effect of delaying, preventing or deterring a change in control and this could have an adverse effect on our operations and business conditions.

Our Company and our Promoters are subject to certain restrictive covenants pursuant to an Investment Agreement

entered into amongst our Company, Latinia Limited and Creador II LLC.

Our Company and Promoters have entered into an Investment Agreement with Latinia Limited and Creador II LLC in connection with the acquisition of 4,347,826 Equity Shares of our Company by Latinia Limited. Pursuant to the aforementioned agreement, we are subject to various obligations or restrictions such as restrictions on the transfer / sale of shares by the Promoters and restriction on venturing in any new areas of business. Further, pursuant to the aforementioned agreement, Latinia Limited also has the right to nominate one director on our Board of Directors. These provisions may, as the case may be, prevent the Company or its Promoters from disposing or acquiring shares, or force the Company to sell or acquire shares in the subject entities against its better judgment.

Our financial condition may be adversely affected if any of our contingent liabilities materialize. Our contingent liabilities as of March 31, 2015, as disclosed in the notes to our Reformatted Consolidated Financial Statements included in this Preliminary Placement Document are as follows:

Particulars Amount

(Rs. in lakhs)

A) (i) Estimated amount of contracts remaining to be executed on capital account and not provided for net of advances

131.07

(ii) Contingent liabilities not provided for in respect of:

a) Claims and other demands against the Company not acknowledged as debts. 288.76

b) Sales tax and purchase tax demands, among others against which the Company has preferred appeals. 226.29

c) Excise and custom duty (excluding interest and penalty) and service tax demands and show-cause notices issued against which the Company/Department has preferred appeals/filed replies.

426.59

d) Disputed income tax and wealth tax demand (excluding penalty if any) 93.69

e) Against the imposition of Local Area Development Tax (LADT) levied by Haryana Government ,the Hon’ble Supreme Court of India vide its order dated 10th May, 2006 has accepted the Company’s application for stay. Further, Hon’ble Supreme Court vide their order dated 30th October, 2009 stated the assessees to file the LADT returns; however, no recovery of tax will be made till further order. In the meantime, the Haryana Government has repealed the LADT Act and introduced another Act by the name of ‘Entry Tax’ on the same line, which was also been held ultra vires by the Hon’ble Punjab and Haryana High court. Pending the final Order of the Hon’ble Supreme Court on the above matter And there is no Act either LADT / Entry Tax prevalent in Haryana, no provision for the same is considered necessary by the Company for the period from 1st April, 2006.

676.07

f) Demand notice from ESIC 15.41

iii) Bond executed in favour of sales tax/custom authorities. 12.50

B) Outstanding Corporate Guarantee to banks in respect of various fund/non fund based facilities extended to other body corporates.

944.00

C) Bank Guarantee outstanding 317.05

Further, any pending assessments, reassessments, appeals under various direct and indirect tax laws may give rise to certain disputes, demands and financial liabilities which may adversely impact our financial position, profitability and cash-flows. Further, any delay in receipt or non-receipt of concessional sales tax / VAT forms from our customers may result into the imposition of the resultant differential tax liability upon our Company.

Some of our subsidiaries and joint ventures have incurred losses in the past and may incur losses in the future. Some of our subsidiaries and joint ventures have incurred losses in the past. Our subsidiaries, SR Continental Limited incurred losses of Rs. 38.46 lakhs and Rs. 40.90 lakhs in fiscal 2014 and 2015 respectively and, Amora Tiles Private Limited incurred losses of Rs. 132.95 lakhs in fiscal 2014. Further, our joint venture Somany Keraben Private Limited incurred losses of Rs. 9.70 lakhs, Rs. 3.27 lakhs and Rs. 0.35 lakhs in fiscal 2013, 2014 and 2015, respectively. In the event of continuation of such losses in the future, our consolidated results of operations and financial condition will be materially and adversely affected.

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Our ability to pay dividends in the future will depend upon future earnings, financial condition, cash flows, working

capital requirements, capital expenditures and restrictive covenants in our financing arrangements. The amount of our future dividend payments, if any, will depend upon various factors including our future earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants in our financing arrangements. There can be no assurance that we will be able to declare dividends. Any future determination as to the declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on various factors. Accordingly, realization of a gain on shareholder investments will depend on the appreciation of the price of the Equity Shares. There is no assurance that the Equity Shares will appreciate in value. We have entered into certain transactions with related parties in the past and may continue to do so in future. These

transactions or any future transactions with our related parties could potentially involve conflicts of interest. We have entered into certain transactions with related parties, including our Promoters and may continue to do so in future. While we believe that all such transactions have been conducted on an arms-length basis and contain commercial terms, there can be no assurance that we could not have achieved more favorable terms had such transactions not been entered into with related parties. Furthermore, it is likely that we will enter into related party transactions in the future. There can be no assurance that such transactions, individually or in the aggregate, will not have an adverse effect on our results of operations and financial condition. For further information, see section titled “Financial Statements” of this Preliminary Placement Document.

Certain other ventures promoted by our Promoters are authorized to engage in a similar line of business. Any conflict

of interest which may occur between our business and the business of the members of our Promoter Group, could

adversely affect our business, prospects, results of operations and financial condition.

Certain entities within our Promoter Group are authorized under their constitutional documents to engage in a similar line of business as us. We cannot assure you that our Promoters will not favor the interests of the members of our Promoter Group over our interests. Such other members of our Promoter Group, including those in a similar line of business, may dilute our Promoters’ attention to our business, which could adversely affect our business, prospects, financial condition and results of operations.

We have not entered into any non-solicitation or non-compete agreement with any member of our Promoter Group. While such members of our Promoter Group are not currently carrying on any business in conflict with our Company, there is no assurance that such a conflict will not arise in the future, or that we will be able to suitably resolve any such conflict without an adverse effect on our business or operations. There can be no assurance that our Promoters or members of our Promoter Group will not provide comparable services, expand their presence, solicit our employees or acquire interests in competing ventures in the locations or segments in which we operate. A conflict of interest may occur between our business and the business of the members of our Promoter Group, which could have an adverse effect on our business, prospects, results of operations and financial condition.

Our Company has provided security for certain loans availed by certain subsidiaries and a group company. These

arrangements may result in potential conflicts of interest.

Our Company has provided corporate guarantees for an amount aggregating to Rs. 3,434.00 lakhs in connection with certain loans availed by one of our subsidiaries, namely Amora Tiles Private Limited and one of our group companies namely, Schablona India Limited. In the event that any of the guarantees are invoked, the lenders for such facilities may demand repayment of amounts outstanding under such facilities. Further, we have provided a letter of comfort in relation to the financial assistance/credit facilities availed by one of our subsidiaries, namely Somany Fine Vitrified Limited. Depending on business requirement we may continue to provide corporate guarantee, letter of comfort and any other security in the future. Delays or defaults in payments by our dealers and/or any direct customers could adversely affect our results of

operations. We may be subject to working capital risks due to delays or defaults in payment by our dealers and/or any direct customers we sell our products to, which may restrict our ability to procure raw materials and make payments when due. Such defaults or delays by our dealers or customers in meeting their payment obligations to us may have a material adverse effect on our business, results of operations and financial condition.

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Our revenues are subject to a significant number of tax regimes and changes in legislation governing the rules

implementing them could adversely affect our results of operations. Taxes and other levies imposed by the Government of India or state governments in India that affect our industry include import duties on raw materials and finished goods, excise duty on the manufacture of our products, central and state sales tax and other levies, income tax, value added tax, octroi tax and entry tax, service tax and other new or special taxes and surcharges introduced on a permanent or temporary basis from time to time. Since some of our operations are also located outside of India, we may be subject to other tax authorities and regimes. The revenues recorded and income earned in various jurisdictions are taxed on differing bases, including net income actually earned, net income deemed earned and revenue-based tax withholding. The final determination of our tax liabilities involves the interpretation of local tax laws, tax treaties and related authorities in each jurisdiction as well as the ‘significant use of estimates and assumptions regarding the scope of future operations and results achieved and the timing and nature of income earned and expenditures incurred. These tax liabilities and tax regimes also involve the assessment of transfer pricing arrangements among our Company and its subsidiaries in different tax jurisdictions, and although we enter into arms-length transactions with respect to the supply of products and raw materials among our Company and its subsidiaries, there can be no assurance that regulatory and tax authorities in the various jurisdictions that we operate in will not disagree with our assessment of such transactions. Changes in the operating environment, including changes in tax law and currency/repatriation controls, including on a retroactive basis, could impact the determination of our tax liabilities for any given tax year.

Investments by Foreign Portfolio Investors (“FPIs”) and Non-Resident Indians (“NRIs”) beyond certain limits as specified under the Foreign Exchange Management Act, 1999 (“FEMA”) and the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, require prior approval of the

Reserve Bank of India (RBI). In terms of the SEBI (FPI) Regulations, the issue of equity shares to a single FPI or an investor group (which means the same set of ultimate beneficial owner(s) investing through multiple entities) is not permitted to be 10.00% or above of the post-issue equity share capital of the company. Further, in terms of the FEMA 20, the total holding by each FPI shall be below 10.00% of the total paid-up equity share capital and the total holdings of all FPIs put together shall not exceed 24.00% of our paid-up equity share capital. The RBI shall caution list the company on FPI investment in the company reaching 22% (“Cut-off Point”) of paid up capital of the company. In the event the aggregate net purchases of equity shares of the company by FPIs reaches the Cut-off Point, the RBI cautions all designated bank branches not to purchase any more equity shares of the respective company on behalf of FPIs without prior approval of the RBI. The aggregate limit of 24.00% may be increased up to the sectoral cap by way of a resolution passed by the Board of Directors followed by a special resolution passed by the shareholders. On March 24, 2015 our Board of Directors passed resolutions for increasing the FII/FPI limit from 24% to 40% and increase in NRI limit to 5% of the paid up equity share capital of our Company. On March 27, 2015 our Company issued notice of postal ballot to the shareholders for considering the proposed increase of the said aggregate limit. The aforementioned increase in aggregate investment limits was approved by our shareholders vide resolution dated May 2, 2015 and was notified by the RBI vide press release dated May 22, 2015. For further details please see “Issue Procedure”. Any damages caused by fraud, theft or other misconduct by our employees could adversely affect our profitability,

results of operations and cash flows. We are exposed to operational risk arising from inadequacy or failure of internal processes or systems or from fraud or theft. We are susceptible to fraud or misappropriation by our employees or outsiders. Our management information systems and internal control procedures are designed to monitor our operations and overall compliance. However, they may not be able to identify non-compliance and/or suspicious transactions in a timely manner or at all. As a result, we may suffer monetary losses, which may not be covered by our insurance and may thereby adversely affect our profitability, results of operations and cash flows. Such a result may also adversely affect our reputation.

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Risks Relating to India

A slowdown in economic growth in India could cause our business to suffer.

Our results of operations are dependent on, and have been adversely affected by, economic and market conditions in India. The Indian market and the Indian economy are influenced by economic and market conditions in other countries, including, but not limited to, the conditions in the United States of America, in Europe and in certain emerging economies in Asia. Financial turmoil in Asia and elsewhere in the world in recent years has affected the Indian economy. Any worldwide financial instability may cause increased volatility in the Indian financial markets and, directly or indirectly, adversely affect the Indian economy and financial services sector and its business, which could adversely affect our business, results of operations and cash flows. Increases in the prices of crude oil could adversely affect the Indian economy, which could adversely affect our

business,financial condition, results of operations and cash flows.

India imports a substantial portion of its crude oil requirement. While oil prices have declined from their peak levels, any sharp increase in oil prices and the pass-through of such increases to Indian consumers could have a material negative impact on the Indian economy and on the Indian financial system in particular, including through a rise in inflation and market interest rates and a higher trade deficit, which could adversely affect our business, financial condition, results of operations and cash flows.

A significant change in the Government of India’s economic liberalization and deregulation policies could disrupt our business.

We are incorporated in India and derive all of our revenues from India. Consequently, our performance and liquidity of the Equity Shares is affected by changes in exchange rates and controls, interest rates, government policies, taxation, social and ethnic instability and other political and economic developments affecting India.

The Government of India has traditionally exercised and continues to exercise a dominant influence over many aspects of the economy. Our business and the market price and liquidity of the Equity Shares may be affected by changes in exchange rates and controls, interest rates, changes in government policy, taxation, social and civil unrest and political, economic or other developments in or affecting India. In recent years, India has been following a course of economic liberalization and our business could be significantly influenced by economic policies followed by the government. Further, our businesses are also impacted by regulation and conditions in the various states in India where we operate. On May 17, 2014, the Indian Election Commission released the results of the 2014 General Election and the new government holds a majority of seats in the Lok Sabha, Parliament’s lower house. There can be no assurance as to the policies the new government will follow or that it will continue the policies of the outgoing government. The rate of economic liberalization could change, and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investment in India could change as well. A significant change in India’s economic liberalization and deregulation policies, in particular, those relating to our business, could disrupt business and economic conditions in India generally and our business in particular.

If acts of terrorism and other similar threats to security, communal disturbances or riots erupt in India, or if regional

hostilities increase, this would adversely affect the Indian economy, and our business, results of operations and cash

flows.

India has experienced communal disturbances, terrorist attacks and riots in the past. If such events recur, our operational and marketing activities may be adversely affected, resulting in a decline in our income. The Asian region has from time to time experienced instances of civil unrest and hostilities among neighbouring countries, including those between India and Pakistan. Hostilities and tensions may occur in the future and on a wider scale. Military activity or terrorist attacks in India, as well as other acts of violence or war could influence the Indian economy by creating a perception that investments in India involve higher degrees of risk. Events of this nature in the future, as well as social and civil unrest within other countries in Asia, could influence the Indian economy and could have an adverse effect on the market for securities of Indian companies, including our Equity Shares.

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India’s trade deficits could have a negative effect on our business.

India’s trade relationships with other countries and its trade deficit, driven to a major extent by global crude oil prices, may adversely affect Indian economic conditions. For the calendar year 2014, the merchandise trade deficit was U.S.$ 137.45 compared to U.S.$162.6 billion for the calendar year 2013. This large merchandise trade deficit neutralizes the surpluses of U.S.$ 115.2 billion for the calendar year 2014 in India’s invisibles, which are comprised of international trade in services, income from financial assets, labour and property and cross border transfers of mainly workers’ remittances in the current account, resulting in a current account deficit. If India’s trade deficits increase or become unmanageable, the Indian economy, and therefore our business, results of operations and cash flows could be adversely affected.

Natural disasters and other calamities could have a negative impact on the Indian economy and could cause our

business to suffer and the trading price of our Equity Shares to decline. India has experienced natural disasters like earthquakes, floods, tsunamis and drought in recent years. The extent and severity of these natural disasters determine their impact on the Indian economy. Health epidemics could also disrupt our business, including the most highly pathogenic strains of avian and swine influenza, H5N1 and H1N1. Certain countries in Southeast Asia have reported cases of bird to human transmission of avian and swine influenza resulting in numerous human deaths. Moreover, certain areas of India have experienced outbreaks of H5N1 among livestock. The World Health Organization and other agencies have issued warnings on a potential avian or swine influenza pandemic if there is sustained human to human transmission. Future outbreaks of avian or swine influenza or a similar contagious disease could adversely affect the Indian economy and economic activity in the region. As a result, any present or future outbreak of avian or swine influenza or other contagious disease could adversely affect our business.

A decline in India’s foreign exchange reserves may affect liquidity and interest rates in the Indian economy, which

could adversely impact us. A rapid decrease in reserves would also create risk of higher interest rates and a

consequent slowdown in growth. As of December 4, 2015, India’s foreign exchange reserves were U.S.$ 352.09 billion, according to the RBI. Flows to foreign exchange reserves can be volatile, and past declines may have adversely affected the valuation of the Indian Rupee. There can be no assurance that India’s foreign exchange reserves will not decrease in the future. Further, a decline in foreign exchange reserves, as well as other factors, could adversely affect the valuation of the Indian Rupee and could result in reduced liquidity and higher interest rates, which could adversely affect our business, financial condition, results of operations and cash flows.

Any downgrade of credit ratings of India or Indian companies may adversely affect our ability to raise debt financing.

India’s sovereign foreign currency long-term debt is currently rated (a) “BBB-” (negative) by Standard & Poor’s, (b) “BBB-” (stable) by Fitch, and (c) “Baa3” (stable) by Moody’s. These ratings reflect an assessment of the government’s overall financial capacity to pay its obligations and its ability or willingness to meet its financial commitments as they become due. In the recent past, India’s credit ratings have been downgraded due to structural challenges such as corruption, the absence or inadequacy of domestic reforms, and slow economic growth combined with elevated inflation. No assurance can be given that Standard & Poor’s, Fitch, Moody’s or any other statistical rating organization will not downgrade the credit ratings of India. Any such downgrade would result in India’s sovereign debt rating being rated speculative grade, which could adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our business, financial condition, results of operations and cash flows.

Significant differences exist between Indian GAAP and other accounting principles, such as U.S. GAAP and IFRS,

which investors may be more familiar with and may consider material to their assessment of our financial condition,

cash flows and results of operations.

Our financial statements, including the financial statements included in this Preliminary Placement Document, were prepared in accordance with Indian GAAP. No attempt has been made to reconcile any of the information given in this Preliminary Placement Document to any other principles or to base it on any other standards. Indian GAAP differs in certain significant respects from IFRS, U.S. GAAP and other accounting principles with which prospective investors may be familiar in other countries.

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If our financial statements were to be prepared in accordance with such other accounting principles, our results of operations, cash flows and financial position may be substantially different. Prospective investors should review the accounting policies applied in the preparation of our financial statements, and consult their own professional advisers for an understanding of the differences between these accounting principles and those with which they may be more familiar. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Preliminary Placement Document should accordingly be limited. In making an investment decision, investors must rely upon their own examination of us, the terms of this Issue and the financial information contained in this Preliminary Placement Document.

Certain companies in India, including us, may be required to prepare financial statements under IFRS or a variation

thereof, IND-AS. We may be adversely affected by the transition to IFRS or IND-AS in India. Ministry of Corporate Affairs, Government of India (the “MCA”) on February 16, 2015 notified the Companies (Indian Accounting Standards) Rules, 2015, (the “Rules”) laying down the road map for the implementation of IND-AS in a phased manner. However, the MCA vide the Rules has granted an exemption to non-banking finance companies, amongst others, from applying IND-AS while preparing their respective financial statements. In the future, we may be required to prepare annual and interim financial statements under IND-AS, if the aforesaid exemption is no longer available. We have not determined with any degree of certainty the impact that such adoption IND-AS, if the aforesaid exemption is lifted, will have on our financial reporting. The new accounting standards may change, among other things, our methodology for estimating allowances for probable loan losses and for classifying and valuing our investment portfolio and our revenue recognition policy. For estimation of probable loan losses, the new accounting standards may require us to calculate the present value of the expected future cash flows realisable from our advances, including the possible liquidation of collateral (discounted at the loan’s effective interest rate). This may result in us recognizing allowances for probable loan losses in the future which may be higher or lower than under current Indian GAAP. Therefore, there can be no assurance that our financial condition, results of operations, cash flows or changes in shareholders’ equity will not appear materially worse under IND-AS than under Indian GAAP. In our transition to IND-AS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. Moreover, there is increasing competition for the small number of IFRS-experienced accounting personnel available as more Indian companies begin to prepare IND-AS financial statements. Further, there is no significant body of established practice on which to draw in forming judgments regarding the new system’s implementation and application. There can be no assurance that our adoption of IND-AS, if mandated by law, will not adversely affect our reported results of operations or financial condition and any failure to successfully adopt IND-AS could adversely affect our financial condition, results of operations and cash flows.

Financial difficulty and other problems in certain long-term lending institutions and investment institutions in India

could have a negative impact on our business.

We are exposed to the risks of the Indian financial system which may be affected by the financial difficulties faced by certain Indian financial institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. This risk, which is referred to as “systemic risk,” may adversely affect financial intermediaries, such as clearing agencies, banks, securities firms and exchanges with whom we interact on a daily basis. Our transactions with these financial institutions expose us to credit risk in the event of default by the counter party, which can be exacerbated during periods of market illiquidity. As the Indian financial system operates within an emerging market, we face risks of a nature and extent not typically faced in more developed economies, including the risk of deposit runs notwithstanding the existence of a national deposit insurance scheme. The problems faced by individual Indian financial institutions and any instability in or difficulties faced by the Indian financial system generally could create adverse market perception about Indian financial institutions and banks. This in turn could adversely affect our business, financial condition, results of operations and cash flows.

Companies operating in India are subject to a variety of central and state government taxes and surcharges.

Tax and other levies imposed by the central and state governments in India that affect our tax liability include central and state taxes and other levies, income tax, value added tax, turnover tax, service tax, stamp duty, tax on dividends and other special taxes and surcharges which are introduced on a temporary or permanent basis from time to time. Moreover, the central and state tax scheme in India is extensive and subject to change from time to time. The central or state government may in the future increase the corporate income tax it imposes. Any such future increases or amendments may affect the overall tax efficiency of companies operating in India and may result in significant additional taxes becoming payable. Additional tax exposure could adversely affect our business, cash flows and results of operations.

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The proposed new taxation system in India could adversely affect our business and the trading price of the Equity

Shares. The Government of India had proposed three major reforms in Indian tax laws, namely the goods and services tax, the direct taxes code and provisions relating to the General Anti-Avoidance Rules (“GAAR”). The goods and services tax would replace the indirect taxes on goods and services such as central excise duty, service tax, customs duty, central sales tax, octroi and entry tax, purchase tax, luxury tax, state VAT, surcharge and excise currently being collected by the central and state governments. In the Union Budget of India for the financial year 2016 (the “Budget”) it was reaffirmed that the goods and services tax will be implemented from April 1, 2016.

The direct taxes code (the “Code”) was aimed to replace the IT Act and other direct tax legislations like the Wealth Tax Act, 1957. However, it was announced in the Budget that there was no merit in continuing with the same as most of the provisions of the Code had been already included under the IT Act and that the jurisprudence under the same is sufficiently evolved.

As regards GAAR, the provisions have been introduced in the Finance Act, 2012 and were scheduled to come into effect from April 1, 2015. However, it was announced in the Budget, that the applicability of GAAR has been deferred by a period of two years and consequently, will apply prospectively to investments made on or after April 1, 2017. The GAAR provisions intend to catch arrangements declared as “impermissible avoidance arrangements”, which is any arrangement, the main purpose or one of the main purposes of which is to obtain a tax benefit and which satisfy at least one of the following tests (a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm’s length; (b) results, directly or indirectly, in misuse, or abuse, of the provisions of the Income Tax Act, 1961; (c) lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or (d) is entered into, or carried out, by means, or in a manner, which are not ordinarily employed for bona fide purposes. If GAAR provisions are invoked, then the tax authorities have wide powers, including denial of tax benefit or of benefit under a tax treaty.

As the taxation system is intended to undergo significant overhaul, its consequent effects on the financial system cannot be determined at present and there can be no assurance that such effects would not adversely affect our business, results of operations and cash flows. The Companies Act, 2013 has effected significant changes to the existing Indian company law framework, which may

subject us to higher compliance requirements and increase our compliance costs. A majority of the provisions and rules under the Companies Act, 2013 have recently been notified and have come into effect from the date of their respective notifications, resulting in the corresponding provisions of the Companies Act, 1956 ceasing to have effect. The Companies Act, 2013 has brought into effect significant changes to the Indian company law framework, such as the provisions related to issue of capital, disclosures, corporate governance norms, audit matters, and related party transactions. Further, the Companies Act, 2013 has also introduced additional requirements which do not have corresponding equivalents under the Companies Act, 1956, including the introduction of a provision allowing the initiation of class action suits in India against companies by shareholders or depositors, a restriction on investment by an Indian company through more than two layers of subsidiary investment companies (subject to certain permitted exceptions), and prohibitions on advances to directors. The Companies Act, 2013, also mandates that the directors’ responsibility statement inter alia includes that the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively. We are also required to spend 2.0% of our average net profits during three immediately preceding financial years on corporate social responsibility activities. Further, the Companies Act, 2013 imposes greater monetary and other liability on us, Directors and officers in default, for any non-compliance. To ensure compliance with the requirements of the Companies Act, 2013, we may need to allocate additional resources, which may increase our regulatory compliance costs and divert management attention.

We may face challenges in anticipating the changes required by, interpreting and complying with such provisions due to limited jurisprudence on them. In the event, our interpretation of such provisions of the Companies Act, 2013 differs from, or contradicts with, any judicial pronouncements or clarifications issued by the Government in the future, we may face regulatory actions or we may be required to undertake remedial steps. Additionally, some of the provisions of the Companies Act, 2013 overlap with other existing laws and regulations (such as the corporate governance norms and insider trading regulations).

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We may face difficulties in complying with any such overlapping requirements. Recently, the SEBI issued revised corporate governance guidelines which are effective from October 1, 2014, with a few provisions to be applicable from April 1, 2015. Pursuant to the revised guidelines, we will be required to, amongst other things, ensure that there is at least one woman director on our Board at all times establish a vigilance mechanism for directors and employees and reconstitute certain committees in accordance with the revised guidelines (which we have complied with). Further, we cannot currently determine the impact of provisions of the Companies Act, 2013 which are yet to come in force. Any increase in our compliance requirements or in our compliance costs may have an adverse effect on our business, results of operations and cash flows. On May 25, 2015, the Companies (Amendment) Act, 2015 (the “Amendment Act”), received the assent of the President. The Amendment Act provides for, inter alia, relaxation from the requirement of a special resolution for the approval of related party transactions, reporting of fraud by the auditor to the Central Government, empowerment of the audit committee to give omnibus approvals for related party transactions on an annual basis and for specific punishment for deposits accepted in violation of the provisions of the Companies Act, 2013.

Additionally, we may face challenges in interpreting and complying with such provisions due to limited jurisprudence on them. In the event, our interpretation of such provisions of the Bill differs from, or contradicts with, any judicial pronouncements or clarifications issued by the Government in the future, we may face regulatory actions or we may be required to undertake remedial steps.

Our ability to raise foreign capital may be constrained by Indian law, which may adversely affect our business,

financial condition, cash flows and results of operations.

As an Indian company, we are subject to exchange controls that regulate borrowing in foreign currencies. Such regulatory restrictions limit our financing sources and hence could constrain our ability to obtain financing on competitive terms and refinance existing indebtedness. In addition, we cannot assure you that the required approvals will be granted to us without onerous conditions, if at all. Limitations on raising foreign debt may have an adverse effect on our business, financial condition, cash flows and results of operations.

Investors in the Equity Shares may not be able to enforce a judgment of a foreign court against us, our directors or

executive officers.

We are a limited liability company incorporated under the laws of India. All of our Directors and key managerial personnel are residents of India and all of our assets and such persons are located in India. As a result, it may not be possible for investors to effect service of process upon us or such persons outside India, or to enforce judgments obtained against such parties in courts outside of India.

Furthermore, it is unlikely that an Indian court would enforce foreign judgments if that court were of the view that the amount of damages awarded was excessive or inconsistent with public policy. For details, see “Enforcement of Civil Liabilities”. A party seeking to enforce a foreign judgment in India is required to obtain approval from RBI to execute such a judgment or to repatriate outside India any amount recovered. It is uncertain as to whether an Indian court would enforce foreign judgments that would contravene or violate Indian law. A third party could be prevented from acquiring control of us because of anti-takeover provisions under Indian law. Indian law and regulations applicable to us may delay, deter or prevent a future takeover or change in control of us, even if a change in control would result in the purchase of your Equity Shares at a premium to the market price or would otherwise be beneficial to you. These provisions may discourage or prevent certain types of transactions involving actual or threatened change in control of us. Under the Takeover Code, an acquirer has been defined as any person who, directly or indirectly, acquires or agrees to acquire shares or voting rights or control over a company, whether individually or acting in concert with others. Although these provisions have been formulated to ensure that interests of investors/shareholders are protected, these provisions may also discourage a third party from attempting to take control of us. Consequently, even if a potential takeover of us would result in the purchase of our Equity Shares at a premium to their market price or would otherwise be beneficial to its stakeholders, it is possible that such a takeover would not be attempted or consummated because of Indian takeover regulations. For more information, see “The Securities Market of

India”.

Rights of shareholders under Indian law may be more limited than under the laws of other jurisdictions.

53

Our Articles, the instructions issued by the RBI and Indian law govern our corporate affairs. Legal principles relating to these matters and the validity of corporate procedures, Directors’ fiduciary duties and liabilities, and shareholders’ rights may differ from those that would apply to a financial institution or corporate entity in another jurisdiction. Shareholders’ rights under Indian law may not be as extensive as shareholders’ rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights as one of our shareholders than as a shareholder of a financial institution or corporate entity in another jurisdiction.

Risks Relating to the Issue We cannot guarantee that our Equity Shares issued pursuant to the Issue will be listed on the Stock Exchanges in a

timely manner, or at all. In accordance with Indian law and practice, permission for listing and trading of the Equity Shares issued pursuant to this Issue will not be granted until after the Equity Shares have been issued and allotted. Approval for listing and trading will require all relevant documents authorising the issuing of the Equity Shares to be submitted. There could be a failure or delay in obtaining these approvals from the Stock Exchanges, which in turn could delay the listing of our Equity Shares on the Stock Exchanges. Any failure or delay in obtaining these approvals would restrict an investor’s ability to dispose of the Equity Shares. An investor will not be able to sell any of the Equity Shares subscribed in this Issue other than on a recognised Indian

stock exchange for a period of 12 months from the date of the issue of the Equity Shares. The Equity Shares in this Issue are subject to restrictions on transfers. Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of Equity Shares in the Issue, QIBs subscribing to the Equity Shares in the Issue may only sell their Equity Shares on the Stock Exchanges and may not enter into any off market trading in respect of these Equity Shares. We cannot be certain that these restrictions will not have an impact on the price of the Equity Shares. Further, allotments made to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable to each of them respectively, including in relation to lock-in requirements. This may affect the liquidity of the Equity Shares purchased by investors and it is uncertain whether these restrictions will adversely impact the market price of the Equity Shares purchased by investors.

After this Issue, the price of our Equity Shares may be volatile. The Issue Price will be determined by us in consultation with the Book Running Lead Manager, based on Bids received in compliance with Chapter VIII of the SEBI Regulations, and it may not necessarily be indicative of the market price of the Equity Shares after this Issue is completed.

The trading price of our Equity Shares may fluctuate after this Issue due to a variety of factors, including our results of operations and the performance of our business, competitive conditions, general economic, political and social factors, the performance of the Indian and global economy and significant developments in India’s fiscal regime, volatility in the Indian and global securities market, performance of our competitors, the Indian financial services industry and the perception in the market about investments in the financial services industry, changes in the estimates of our performance or recommendations by financial analysts and announcements by us or others regarding contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments. In addition, if the stock markets in general experience a loss of investor confidence, the trading price of our Equity Shares could decline for reasons unrelated to our business, financial condition or operating results. The trading price of our Equity Shares might also decline in reaction to events that affect other companies in our industry even if these events do not directly affect us. Each of these factors, among others, could adversely affect the price of our Equity Shares.

There can be no assurance that an active trading market for the Equity Shares will be sustained after this Issue, or that the price at which the Equity Shares have historically traded will correspond to the price at which the Equity Shares are offered in this Issue or the price at which the Equity Shares will trade in the market subsequent to this Issue. Fluctuations in the exchange rate between the Indian Rupee and other currencies could have an adverse effect on the

value of our Equity Shares in those currencies, independent of our operating results.

54

Our Equity Shares are quoted in Rupees on the Stock Exchanges. Any dividends in respect of our Equity Shares will be paid in Rupees. Any adverse movement in currency exchange rates during the time it takes to undertake such conversion may reduce the net dividend to investors. In addition, any adverse movement in currency exchange rates during a delay in repatriating the proceeds from a sale of Equity Shares outside India, for example, because of a delay in regulatory approvals that may be required for the sale of Equity Shares, may reduce the net proceeds received by investors. The exchange rate between the Indian Rupee and other currencies (such as, the U.S. dollar, the Euro, the pound sterling and the Singapore dollar) has changed substantially in the last two decades and could fluctuate substantially in the future, which may have an adverse effect on the value of our Equity Shares and returns from our Equity Shares in foreign currency terms, independent of our operating results. Any future issuance of the Equity Shares by us or sales of the Equity Shares by any of our significant shareholders

may adversely affect the trading price of the Equity Shares.

Under the Companies Act, a company incorporated in India must offer its holders of equity shares pre-emptive rights to subscribe and pay for a proportionate number of shares to maintain their existing percentage ownership before the issuance of any new equity shares, unless their pre-emptive rights have been waived by adoption of a special resolution by holders of three-quarters of the shares who have voted on the resolution.

Except for the customary lock-up on the Company’s ability to issue equity or equity linked securities discussed in “Placement”, there is no restriction on our ability to issue Equity Shares or our major shareholders’ ability to dispose of their Equity Shares, and we cannot assure you that we will not issue Equity Shares or that any major shareholder will not dispose of, encumber, or pledge, its Equity Shares. Future issuances of Equity Shares may dilute your shareholding and may adversely affect the trading price of our Equity Shares. Such securities may also be issued at prices below the then current trading price of our Equity Shares. Sales of Equity Shares by our major shareholders may also adversely affect the trading price of our Equity Shares. For details, see “Capitalization Statement”.

Investors may be subject to Indian taxes arising out of capital gains on the sale of our Equity Shares. Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax (“STT”) has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which the Equity Shares are sold. Any gain realised on the sale of equity shares held for more than 12 months to an Indian resident, which are sold other than on a recognised stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Further, any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from taxation in India in cases where the exemption from taxation in India is provided under a treaty between India and the country of which the seller is resident. Generally, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a result, residents of other countries may be liable for tax in India as well as in their own jurisdiction on a gain upon the sale of the Equity Shares. Foreign investors are subject to foreign investment restrictions under Indian laws that limit our ability to attract

foreign investors, which may adversely impact the market price of the Equity Shares.

Under the foreign exchange regulations currently in force in India, transfers of the Equity Shares between non-residents and residents are freely permitted (subject to certain exceptions) if they comply with the pricing guidelines and reporting requirements specified by the RBI. If the transfer of the Equity Shares is not in compliance with such pricing guidelines or reporting requirements and does not fall under any of the specified exceptions, then the prior approval of the RBI will be required. Additionally, shareholders who seek to convert the Indian Rupee proceeds from a sale of the Equity Shares in India into foreign currency and repatriate that foreign currency from India will require a no-objection or a tax clearance certificate from the income tax authority. We cannot assure you that any required approval from the RBI or any other government agency can be obtained on any particular terms or at all.

These foreign investment restrictions may adversely affect the liquidity and free transferability of the Equity Shares and could result in an adverse effect on the price of the Equity Shares. Conditions in the Stock Exchanges may affect the price and liquidity of the Equity Shares.

55

Indian stock exchanges are smaller than stock markets in developed economies and have in the past experienced substantial fluctuations in the prices of listed securities. Indian stock exchanges have also experienced problems that have affected the market price and liquidity of the securities of Indian companies. These problems have included temporary closure of the stock exchanges to manage extreme market volatility, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of Indian stock exchanges have from time to time restricted securities from trading, limited price movements and imposed margin requirements. For more information on the securities market of India, see “The Securities Market of India”.

There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect a

shareholder’s ability to sell, or the price at which it can sell the Equity Shares at a particular point in time. We are subject to a daily “circuit breaker” imposed by the Stock Exchanges, which does not allow transactions beyond certain specified increases or decreases in the price of the Equity Shares. This circuit breaker operates independently of the index-based market-wide circuit breaker generally imposed by the SEBI on Indian stock exchanges. The maximum movement allowed in the price of the Equity Shares before the circuit breaker is triggered is determined by the Stock Exchanges based on the historical volatility in the price and trading volume of the Equity Shares. The Stock Exchanges will inform us of the triggering point of the circuit breaker in effect from time to time, but it may change without our knowledge. This circuit break will limit the upward and downward movements in the price of the Equity Shares. As a result of this circuit breaker, there can be no assurance that shareholders will be able to sell the Equity Shares at their preferred price or at all at any particular point in time. Applicants to the Issue are not allowed to withdraw their Bids after the Bid/Issue Closing Date. In terms of the SEBI Regulations, applicants in the Issue are not allowed to withdraw their Bids after the Bid/Issue Closing Date. The Allotment of the Equity Shares in this Issue and the credit of such Equity Shares to the applicant’s demat account with depository participant could take approximately seven days and up to 10 days from the Bid/Issue Closing Date. However, there is no assurance that material adverse changes in the international or national monetary, financial, political or economic conditions or other events in the nature of force majeure, material adverse changes in our business, results of operation or financial condition, or other events affecting the applicant’s decision to invest in the Equity Shares, would not arise between the Bid/Issue Closing Date and the date of Allotment of Equity Shares in the Issue. Occurrence of any such events after the Bid/Issue Closing Date could also impact the market price of the Equity Shares. The applicants shall not have the right to withdraw their Bids in the event of any such occurrence. We may complete the Allotment of the Equity Shares even if such events may limit the applicants’ ability to sell the Equity Shares after the Issue or cause the trading price of the Equity Shares to decline.

Investors will be subject to market risks until the Equity Shares credited to the investor’s demat account are listed and permitted to trade. Investors can start trading the Equity Shares allotted to them only after they have been credited to an investor’s demat account, are listed and permitted to trade. Since the Equity Shares are currently traded on the Stock Exchanges, investors will be subject to market risk from the date they pay for the Equity Shares to the date when trading approval is granted for the same. Further, there can be no assurance that the Equity Shares allocated to an investor will be credited to the investor’s demat account or that trading in the Equity Shares will commence in a timely manner.

56

MARKET PRICE INFORMATION The Equity Shares have been listed on the NSE since November 22, 1995 and on the BSE since March 27, 1996.As of the date of this Preliminary Placement Document, 3,88,44,826 Equity Shares are issued, subscribed and paid up. As the Equity Shares are traded on the Stock Exchanges, the stock market data has been given separately for each of these stock exchanges. The following tables set forth, for the period indicated, the reported high, low and average of closing market prices of the Equity Shares on the Stock Exchanges and the number of Equity Shares traded on the days such high and low prices were recorded, for the fiscal years 2013, 2014 and 2015. a. BSE

Fiscal

Year

High*

(Rs.) Date of High

Number of

Equity

Shares

traded on

date of high

Volume on

date of high

(Rs. In

Lakhs)

Low*

(Rs.) Date of Low

Number of

Equity

Shares

traded on

date of low

Volume on

date of low

(Rs. In

Lakhs)

Average

price for

the period

(Rs.)**

Total

Number of

Equity

Shares

traded in

the period

Total

Volume of

Equity

Shares

traded in

the period

(Rs. In

Lakhs)

2015 412.10 March 3, 2015 2,12,737 845.80 165.50 April 1, 2014 3,229 5.21 288.80 19,02,836 6,165.01

2014 180.00 March 25, 2014 41,607 74.78 67.05 August 5,

2013 1,758 1.17 95.86 24,51,481 2,972.28

2013 113.50 January 10, 2013 10,486 11.79 39.80 April 2, 2012 4,024 1.62 63.76 31,45,650 2,342.62

Source: www.bseindia.com * High and low are of closing prices ** Average of the daily closing prices

In case the price is the same on 2 dates then the date on which the volume is higher has been considered.

b. NSE

Fiscal

Year

High*

(Rs.) Date of High

Number of

Equity

Shares

traded on

date of high

Volume on

date of high

(Rs. In

Lakhs)

Low*

(Rs.) Date of Low

Number of

Equity

Shares

traded on

date of low

Volume on

date of low

(Rs. In

Lakhs)

Average

price for

the period

(Rs.)**

Total Number

of Equity

Shares traded

in the period

Total

Volume of

Equity

Shares

traded in the

period

(Rs. In

Lakhs)

2015 411.05 March 3, 2015 2,48,527 993.62 166.10 April 1, 2014 22,839 36.75 288.94 56,23,072 17,328.92

2014 180.05 March 25, 2014 94,532 169.94 67.25 August 2,

2013 7,763 5.35 95.63 60,93,760 7,707.81

2013 112.25 January 10, 2013 11,756 13.17 39.65 April 2, 2012 24,299 9.69 63.54 44,57,169 3,302.73

Source: www.nseindia.com * High and low are of closing prices

57

** Average of the daily closing prices


The following tables set forth, for the period indicated, the reported high, low and average of closing market prices of the Equity Shares on the Stock Exchanges and the number of Equity Shares traded on the days such high and low prices were recorded, in each month during the six months preceding the date of filing of this Preliminary Placement Document: c. BSE

Month, Year High*

(Rs.) Date of High

Number of

Equity

Shares

traded on

date of high

Volume on

date of high

(Rs. In

Lakhs)

Low*

(Rs.) Date of Low

Number of

Equity

Shares

traded on

date of low

Volume

on date of

low

(Rs. In

Lakhs)

Average

price for the

period

(Rs.)**

Total

Number of

Equity

Shares

traded in the

period

Total

Volume of

Equity

Shares

traded in the

period

(Rs. In

Lakhs)

November, 2015 383.10 30-Nov-15 1,913 7.35 328.50 2-Nov-15 2,463 8.09 345.20 178,637 613.39

October, 2015 392.80 October 21,

2015 2,116 8.31 327.90

October 30, 2015

1,830 6.02 359.95 5,39,846 1,889.34

September, 2015 363.20 September 11,

2015 960 3.46 334.60

September 28, 2015

366 1.24 348.96 2,69,961 908.52

August, 2015 372.00 August 6,

2015 2,298 8.48 323.90

August 26, 2015

2,009 6.48 356.09 32,270 113.69

July, 2015 422.10 July 15, 2015 6,869 29.01 374.10 July 24, 2015 3,935 14.81 389.12 50,193 199.04

June, 2015 386.80 June 30, 2015 1,069 4.04 338.00 June 12, 2015 404 1.36 363.75 26,837 97.93

Source: www.bseindia.com * High and low are of closing prices ** Average of the daily closing prices


d. NSE

Month, Year High*

(Rs.) Date of High

Number of

Equity

Shares

traded on

date of high

Volume on

date of high

(Rs. In

Lakhs)

Low*

(Rs.) Date of Low

Number of

Equity

Shares

traded on

date of low

Volume on

date of low

(Rs. In

Lakhs)

Average

price for the

period

(Rs.)**

Total

Number of

Equity

Shares

traded in the

period

Total

Volume of

Equity

Shares

traded in

the period

(Rs. In

Lakhs)

November, 2015

385.90 30-Nov-15 15,975 61.47 327.05 2-Nov-15 41,858 136.10 345.27 226,516 796.04

58

Month, Year High*

(Rs.) Date of High

Number of

Equity

Shares

traded on

date of high

Volume on

date of high

(Rs. In

Lakhs)

Low*

(Rs.) Date of Low

Number of

Equity

Shares

traded on

date of low

Volume on

date of low

(Rs. In

Lakhs)

Average

price for the

period

(Rs.)**

Total

Number of

Equity

Shares

traded in the

period

Total

Volume of

Equity

Shares

traded in

the period

(Rs. In

Lakhs)

October, 2015 391.75 October 21,

2015 17,357 68.14 324.90 October 30,

2015 10,858 35.64 360.36 2,20,901 802.24

September, 2015

362.85 September 11,

2015 6,546 23.60 334.65

September 28, 2015

6,780 23.08 349.58 2,33,963 803.23

August, 2015 373.25 August 3, 2015 7,311 27.35 322.75 August 25,

2015 9,928 31.93 356.35 1,42,474 506.22

July, 2015 422.40 July 15, 2015 36,958 156.24 373.65 July 24, 2015 16,741 63.15 389.75 3,66,033 1,448.98

June, 2015 383.30 June 30, 2015 11,766 44.72 338.40 June 12, 2015 5,726 19.43 363.38 1,40,572 515.60 Source: www.nseindia.com

* High and low are of closing prices ** Average of the daily closing prices


The following table sets forth, the market price of the Equity Shares on the Stock Exchanges on March 25, 2015, the trading day immediately following the day on which the Board approved the Issue:

e. BSE

Open

(Rs.)

High

(Rs.)

Low

(Rs.)

Close

(Rs.) Number of Equity Shares traded

Volume

(Rs. In Lakhs)

359.90 361.00 346.50 350.90 2,185 7.77

Source: www.bseindia.com

f. NSE

Open

(Rs.)

High

(Rs.)

Low

(Rs.)

Close

(Rs.) Number of Equity Shares traded

Volume

(Rs. In Lakhs)

355.00 362.75 345.00 348.30 541 32.66

Source: www.nseindia.com

59

USE OF PROCEEDS

The total proceeds of the Issue will be Rs. [●] lakhs. After deducting the Issue expenses of approximately Rs. [●] lakhs, the net proceeds of the Issue will be approximately Rs. [●] lakhs. Subject to compliance with applicable laws and regulations, we intend to use the net proceeds of the Issue towards capital expenditure and working capital requirements, funding growth opportunities including investing in existing and proposed business ventures, reduction in debts and general corporate purposes and for such other purposes as may be permitted by applicable laws. As on date of this Preliminary Placement Document, neither the Promoters nor our Directors are making any contribution either as part of the Issue or separately in furtherance of the objects of the Issue.

60

CAPITALIZATION The following table sets forth our consolidated capitalization which has been extracted from the Financial Statements

and as adjusted to give effect to the receipt of the gross proceeds of the Issue and the application thereof. This

capitalization table should be read together with the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Statements” in the Preliminary Placement Document.

(Rs. in lakhs)

Particulars As of March 31, 2015 As Adjusted#

Short term debt:

Secured 8,485.95 [●] Unsecured - [●]

Long term debt:

Secured 7,449.10 [●] Unsecured 228.85 [●]

Current Maturities of Long Term Debt

Secured 2,960.84 [●] Unsecured - -

Total debt (A) 19,124.74 [●]

Shareholders’ Funds:

Share capital 776.90 [●] Securities premium 4,767.10 [●]*

Reserves and surplus excluding securities premium** 20,256.63 [●] Total shareholders’ funds (B) 25,800.63 [●]

Total Capitalization (A+B) 44,925.37 [●] # As adjusted to show the number of Equity Shares issued in the Issue

*The securities premium is calculated on the basis of gross proceeds from the Issue.

** Reserves and surplus excluding securities premium is net of adjustments for estimated Issue expenses of approximately Rs. [●]

61

DIVIDENDS

The declaration and payment of dividends by our Company will be recommended by our Board and approved by our Shareholders at their discretion, subject to the provisions of the Articles of Association and the Companies Act. The recommendation, declaration and payment of dividends will depend on a number of factors, including but not limited to our Company’s profits, capital requirements and overall financial condition. The Board may also from time to time pay interim dividends. The table below sets out the details of the dividends declared by our Company on its Equity Shares during the last three fiscal years:

Fiscal Year Dividend per Equity

Share (Rs.)

Total amount of Dividend (Rs in lakhs)

Total Dividend on Equity

Shares

Dividend Distribution Tax

2015 2.00 776.90 158.16

2014 1.50 582.67 99.03

2013 1.20 413.96 70.35

Our Company has no stated dividend policy. The amounts paid as dividends in the past are not necessarily indicative of our dividend amounts, if any, in the future. There is no guarantee that any future dividends will be declared or paid or that the amount thereof will not be decreased.

62

CAPITAL STRUCTURE The Equity Share capital of our Company as on the date of this Preliminary Placement Document is set forth below:

(Rs. in lakhs, except share data)

Aggregate Value at Face Value

A AUTHORISED SHARE CAPITAL

12,50,00,000 Equity Shares of Rs. 2 each 2,500.00

B ISSUED SUBSCRIBED AND PAID-UP CAPITAL BEFORE THE

ISSUE

3,88,44,826 Equity Shares of Rs. 2 each 776.90

Total 776.90

C PRESENT ISSUE IN TERMS OF THIS PRELIMINARY

PLACEMENT DOCUMENT(a)

Up to [●] Equity Shares aggregating to Rs. [●] lakhs [●]

D PAID-UP CAPITAL AFTER THE ISSUE

[●] Equity Shares [●]

E SECURITIES PREMIUM ACCOUNT

Before the Issue 4,767.10

After the Issue(b) [●]

Notes:

(a) The Issue was authorized and approved by the Board on March 24, 2015 and approved by the Shareholders through

a special resolution passed by way of a postal ballot pursuant to a postal ballot notice issued on March 27, 2015 the

results of which were announced on May 2, 2015.

(b) The Securities Premium Account after the Issue is calculated net of adjustments for estimated issue expenses of

approximately Rs. [●].

Equity Share Capital History of our Company The history of the Equity Share capital of our Company is set forth below:

Date of Allotment

No. of

Equity

Shares

Allotted

Cumulative

paid-up

capital after

the Issue

Face

Value

(Rs.)

Issue

price per

Equity

Share

(Rs.)

Nature Consideration

January 22, 1968 7,000 7,000 10 10 Subscription to Memorandum

Cash

April 6, 1968

5,000 12,000 10 10 Issue of Shares Cash

September 29, 1969

78,000 90,000 10 10 Preferential Allotment

Cash

December 29, 1969 1,01,200

1,91,200 10 10

Preferential Allotment

Cash

March 12, 1970 1,08,800 3,00,000 10 10 Initial Public

Offering Cash

March 24, 1972 (150) 2,99,850 10 - Forfeited -

September 25, 1974 100 2,99,950 10 N.A. Re-issue of Forfeited

Cash

63

Date of Allotment

No. of

Equity

Shares

Allotted

Cumulative

paid-up

capital after

the Issue

Face

Value

(Rs.)

Issue

price per

Equity

Share

(Rs.)

Nature Consideration

Shares

February 5, 1977 2,99,950 5,99,900 10 N.A. Bonus Issue (Ratio 1:1)

Other than Cash

July 19, 1984 2,99,950 8,99,850 10 N.A. Bonus Issue (Ratio 1:2)

Other than Cash

January 18, 1988 50 8,99,900 10 N.A. Re-issue of Forfeited

Shares Cash

December 1, 1989 8,99,900 17,99,800 10 N.A. Bonus Issue (Ratio 1:1)

Other than Cash

January 3, 1994 3,32,950 21,32,750 10 100 Rights Issue Cash

January 3, 1994 1,67,050 22,99,800 10 100 Public Issue Cash

January 1, 1996 45,99,600 68,99,400 10 N.A. Bonus Issue (Ratio 2:1)

Other than Cash

October 30, 2010 - 3,44,97,000 2 N.A.

Split of Equity shares from a face value of

Rs. 10 each to Rs. 2 each

-

February 19, 2014 43,47,826 3,88,44,826 2 115 Private

Placement Cash

In the last one year preceding the date of this Preliminary Placement Document, our Company has not issued any Equity Shares for consideration other than cash.

64

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Some of the information contained in the following discussion, including information with respect to our plans and

strategies, contain forward-looking statements that involve risks and uncertainties. You should read the section

“Forward-Looking Statements” for a discussion of the risks and uncertainties related to those statements and also the

section “Risk Factors” for a discussion of certain factors that may affect our business, results of operations or financial condition. Our actual results may differ materially from those expressed in or implied by these forward-looking

statements. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the twelve

months ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to “we”, “us” or “our” refers to SCL and its subsidiaries on a consolidated basis, and any reference to the “Company” refers to SCL on a standalone basis.

Pursuant to our subscription to shares in Somany Fine Vitrified Limited (“SFVL”) in May 2015 and an acquisition and subscription to shares in Somany Sanitaryware Private Limited (“SSWPL”) in May 2015, June 2015 and August 2015,


SSWPL. As we have presented unaudited standalone financial statements for the six months ended September 30, 2015,

the effect of these acquisitions, or the consolidation of our other existing subsidiaries, is not reflected in our financial

statements included in this Preliminary Placement Document. Additionally, this Preliminary Placement Document does

not include any proforma financial information to show the effect of the consolidation of SFVL and SSWPL.

Unless otherwise indicated, all financial information included in this section has been derived from our Reformatted

Consolidated Financial Statements for fiscals 2013, 2014 and 2015 and the Unaudited Standalone Interim Financial

Information for the quarter and six months ended September 30, 2015, included elsewhere in this Preliminary Placement

Document.

Overview









65

● Bath Fittings




Recent Developments

Unaudited Standalone Interim Financial Information

Pursuant to a meeting of its Board of Directors on October 26, 2015, our Company has adopted and filed with the Stock Exchanges our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015, in accordance with the provisions of Clause 41 of the Listing Agreement. For further information, please refer to the Unaudited Standalone Interim Financial Information included in “Financial Information” in this Preliminary Placement Document. The Unaudited Standalone Interim Financial Information are not presented in a manner that is comparable to the form in which the Reformatted Consolidated Financial Statements have been presented. Accordingly, investors are cautioned against placing undue reliance on the Unaudited Standalone Interim Financial Information for its investment decision. Acquisition and/or subscription of Additional Equity Interest in Somany Fine Vitrified Limited and Somany Sanitaryware

Private Limited

Pursuant to our subscription to shares in Somany Fine Vitrified Limited (“SFVL”) in May 2015 and an acquisition and subscription to shares in Somany Sanitaryware Private Limited (“SSWPL”) in May 2015, June 2015 and August 2015, these companies have become our subsidiaries. As of September 30, 2015, we hold 51% equity interest in SFVL and SSWPL. The Unaudited Standalone Interim Financial Information do not show the effect of our increases in shareholding in SFVL and SSWPL. Further, as a result of these increases in shareholding in SFVL and SSWPL our future consolidated financial statements may not be comparable to our historical Reformatted Consolidated Financial Statements included in this Preliminary Placement Document.

Settlement of demand notice received from GAIL (India) Limited

Our Company has been settled demand notices from GAIL (India) Limited (“GAIL”) during this year for Rs.382.81 lakh. Under our existing long term gas supply agreement (“GSAs”) with GAIL, there were underdrawn quantities of re-liquefied natural gas (“RLNG”) for the calendar year 2014. As our Company was subject to “take or pay” obligations under this agreement, we had received demand notices from GAIL aggregating to Rs. 2,276.51 lakhs.

66

Presentation of Financial Information

We have included in this Preliminary Placement Document our Reformatted Consolidated Financial Statements for fiscal 2013, 2014 and 2015 along with our management’s discussion on those financial statements. For comparative analysis, previous years’ figures have been reclassified to correspond with the classification criteria followed for the financial year ended March 31, 2015.

In fiscal 2014, consequent to our investment in Amora Tiles Private Limited, it became our subsidiary. Further, in fiscal 2014, consequent to our investments in Acer Granito Private Limited and Vicon Ceramic Private Limited, these companies became our associate companies. Accordingly, the amounts reported in our financial statements for fiscals 2015 and 2014 may not be directly comparable to the amounts reported in our financial statements for fiscal 2013 to such extent.

Principal Factors Affecting our Results of Operations and Financial Condition

Our business, results of operations and financial condition are affected by a number of factors, including:

Performance of the various industries in which our products are used

Our revenue and profit depend significantly on the overall performance of the building products and real estate industry. These industries are influenced by consumer confidence, spending for durable goods, interest rates, turnover in housing, the condition of the residential and commercial construction industries and the overall strength of the economy. The rapid growth for tiles, sanitary ware and bath fittings in India will also be driven by population growth, population urbanization and an increasing standard of living. The financial performance of our dealers and customers in these industries will also have a direct impact on our business, results of operations and financial condition. In addition, our business is also dependent on the evolving nature of consumer preferences and industry practices in these sectors in India and internationally.

Number of dealers and continued relationship with dealers

We believe our total dealer relationships are a key indicator of our market penetration, growth and future revenues. We have invested in and intend to continue to invest in our dealer relationships. As of September 30, 2015, our distribution network included 1,471 active dealers, each of them further having sub-dealers. We currently derive, and believe that we will continue to derive, a significant portion of our revenue from our dealers. In order for us to continue to grow our business, it is important to generate additional revenue from existing and new dealer relationships and as such we intend to grow our business by adding new dealers in existing and new markets.

Price of raw materials

Raw materials costs represent a significant proportion of our total expenses. In the event of an increase in the price of raw materials we may be required to source materials from other sources at prices that are less favourable to us, resulting in an increase in our operating costs. Commodity prices are also influenced by changes in global economic conditions, related industry cycles, demand-supply dynamics, attempts by individual producers to capture market share and by speculation in the market. Any volatility in the prices of raw materials could also affect our ability to price our products competitively.

Power and fuel expenses

Our manufacturing facilities require substantial amounts of power and fuel. Natural gas is the primary fuel for our manufacturing facilities. We procure the natural gas required for our operations from a variety of suppliers. Any disruption in the supply or any under utilization or over utilization over the contracted quantities of natural gas or any adverse changes in the prices thereof, may adversely impact the results of our operations and our financial condition. In addition, we depend on power supplied by the State electricity boards, as well as power generated through power generators. Any major power interruptions that could occur in the future as a result of any natural calamity, technical fault or power shortages beyond our control may have an effect on our results of operations. Further, in the event that electricity supplied by the State electricity boards and from generators is insufficient to meet our requirements or we are unable to procure adequate and uninterrupted power supply in the future at a reasonable cost, our results of operations may be adversely affected. In addition, power and fuel prices are also influenced by changes in global economic conditions which will also have an effect on our results of our operations.

Capacity utilization and operating efficiencies

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Higher capacity utilization results in greater production volumes and higher sales, and enables us to spread our fixed costs over a higher number of units sold, thereby increasing our profit margins. Production in our manufacturing facilities is also affected by factors like the number of lost days due to scheduled and unscheduled plant shutdowns. We continue to focus on improving our operational efficiencies and reducing operating costs. We continue to upgrade the quality and functionality of our products to address specific customer requirements and market segments.

Interest rates

Our business involves a lengthy working capital cycle, and any significant change in the level of inventory, debtors’ recovery and credit period offered by our suppliers can impact our working capital cycle. In the past our liquidity position has been affected owing to the weak liquidity position of certain sectors our products are sold in. Our inventory levels depend upon existing orders, anticipated orders, delivery period and the expected price of raw material. Any delay in liquidation of inventories may also impact our working capital cycle. We finance our operations primarily through working capital borrowings mostly at floating rates of interest. Our cost of servicing such debt may increase depending upon several economic factors, thereby adversely impacting our results of operations and cash flows. Our profits may also be impacted by interest rate variation.

Competition

We sell our products in highly competitive markets. Certain competitors may be larger than us and may have significantly greater financial resources than us. As a result, to remain competitive in our markets, we continuously strive to reduce our costs of production, transportation and distribution and improve our operating efficiencies. The ceramic tiles and allied products industry is to an extent, localised, fragmented and unorganised and therefore we compete with other manufactures in both the organised as well as the unorganised sector. Competition is primarily based on availability of product, product range, quality, price, reputation, customer service and customer convenience. There are limited entry barriers in our industry and increase in capacity of our competition is likely to further intensify competition.

Significant Accounting Policies

A summary of the significant accounting policies applied in the preparation of our consolidated financial statements is set out in the notes to the Reformatted Consolidated Financial Statements, included elsewhere in this Preliminary Placement Document. While we believe that all aspects of our financial statements should be read and understood in assessing our financial condition, we believe that the following critical accounting policies applied in the preparation of our consolidated financial statements are relevant and specific to our business and operations.

Principles of Consolidation

Our Reformatted Consolidated Financial Statements have been prepared on the basis of a line by line consolidation of our Company’s and its subsidiaries’ book values of like items of assets, liabilities, income and expenses following elimination of intra-group balances and intra-group transactions resulting in unrealized profits or losses, if any, as per Accounting Standard-21 “Consolidated Financial Statements”. Our Company’s interest in the assets, liabilities, income and expenditure of our joint venture have been consolidated using proportionate consolidation method, and intra-group balances, transactions and unrealized profits/losses have been eliminated to the extent of our Company’s proportionate shares as per Accounting Standard-27 Financial Reporting of Interests in Joint Ventures. Investments in associate companies and the share in profits/losses in associate companies are reflected following elimination of intra-group transactions resulting in unrealized profits or losses if any, as per Accounting Standard-23 Accounting for Investment in Associates in Consolidated Financial Statement.

The Reformatted Consolidated Financial Statements include the accounts of SCL, its subsidiaries, joint venture entity and associates companies as indicated below:

Name Nature Country of

Incorporation

Percentage of Shareholding

Fiscal

2015 2014 2013

SR Continental Limited Subsidiary India 100.00% 100.00% 100.00%

Somany Global Limited Subsidiary India 100.00% 100.00% 100.00%

Amora Tiles Private Limited Subsidiary India 51.00% 51.00% -

Somany Keraben Private Limited Joint Venture India 50.00% 50.00% 50.00%

Somany Sanitaryware Private # Limited (Formerly Sonec Sanitary

Associate India 44.61% - -

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Incorporation

Percentage of Shareholding

Fiscal

2015 2014 2013

Ware Private Limited)

Somany Fine Vitrified Private # Limited (Formerly Fine Vitrified

Private Limited) Associate India 26.67% - -

Vintage Tiles Private Limited Associate India 26.00% 26.00% 26.00%

Commander Vitrified Private Limited

Associate India 26.00% 26.00% 26.00%

Vicon Ceramic Private Limited Associate India 26.00% 26.00% -

Acer Granito Private Limited Associate India 26.00% 26.00% -

# Pursuant to our subscription to shares in Somany Fine Vitrified Limited (“SFVL”) in May 2015 and an acquisition and subscription to shares in Somany Sanitaryware Private Limited (“SSWPL”) in May 2015, June 2015 and August 2015,


SSWPL. - All intra group balances and intra group transactions resulting into material unrealized profits/ losses are eliminated

in full on consolidation.

The financial statements have been prepared under the historical cost convention on accrual basis in compliance with applicable accounting standards as prescribed under Section 133 of the Companies Act, 2013 (“Act‟) read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Act. The Company follows the mercantile system of accounting and recognizes income and expenditure on accrual basis except where otherwise stated.

The preparation of financial statements is in conformity with generally accepted accounting principles requires the management to make estimates and assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ from these estimates.

Revenue Recognition

Revenue is recognised when significant risks and reward of ownership have been passed to buyer and there is no uncertainty exists to its realization or collection.

Fixed Assets

i Fixed assets are shown at cost of acquisition and/or construction less accumulated depreciation and impairment losses.

ii Intangible assets are stated at cost less amortisation. iii Pre-operative expenditure during the construction/erection period is included under capital work-in-progress and is

allocated to the respective fixed assets on completion of construction/erection.

Depreciation, Amortisation and Impairment Loss

i Fixed assets are depreciated using written down value method except fixed assets of the floor tile unit (including MTP & GVT plant) and addition made after 1st April, 1995 to plant and machinery of wall tile units, where depreciation is provided on a straight line method, considering the estimated useful lives as specified in Schedule II of the Companies Act, 2013 except in case of vehicles, press punches / die boxes and hand pallet truck where useful lives are taken as 5, 8 and 3 years respectively. Continuous process plants as defined in Schedule II have been considered on technical evaluation. Impaired assets are amortised over the estimated balance useful life.

ii In case of indication of impairment of the carrying amount of the Company’s assets, an asset recoverable amount is estimated. Impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Reversal of impairment loss recognised in prior periods is recorded when there is an indication that the impairment losses recognised for the assets no longer exist or have decreased. Post impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

iii Leasehold land is amortised over the period of lease.

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Intangible assets are being recognised if the future economic benefits attributable to the assets are expected to flow to the Company and cost of the assets can be measured reliably. The same are being amortised over the expected duration of benefits. Intangible assets being computer software is amortised over a period of five years.

Investments

Long-term investments are stated at cost less provision for diminution in the value other than temporary. Current investments are stated at cost or market value whichever is lower.

Inventories

Inventories are valued at lower of cost and net realisable value except waste/scrap which is valued at net realisable value. Cost of raw materials and stores and spare parts is computed on weighted average basis. Cost of finished goods and stock in process is determined by taking material, labour and related overheads. Cost of finished goods includes excise duty.

Research & Development Expenses

Revenue expenditure on research and development is charged to statement of profit and loss and capital expenditure is added to fixed assets.

Interest on Borrowings

Interest on borrowings is charged to the statement of profit and loss for the year in which it is incurred except interest on borrowings for qualifying fixed assets which is capitalised till the date of commercial use of the asset.

Employee Benefits

i Defined Contribution Plan: Employee benefits in the form of Provident Fund (with Government Authorities) and Employees‟ pension Scheme are defined as contribution plan and charged as expenses during the period in which the employees perform the services.

ii Defined Benefit Plan: Retirement benefits in the form of gratuity, long-term compensated leaves; other long-term employee benefit and provident fund (multi-employer plan) are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation, using the projected unit credit method, according to the date of the Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit & Loss.

iii Short-term employee benefit: Short-term benefits are charged off at the undiscounted amount in the year in which the related services rendered.

Leases

Operating lease payments are recognized as expenditure in the Statement of Profit and Loss on straight line basis, over the lease period.

Provision for Current and Deferred Tax

Provision for current tax liability of the Company is estimated considering the provisions of the Income Tax Act, 1961. Deferred tax is recognised subject to the consideration of timing, differences being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.

Contingent Liability, Contingent Assets and Provision

Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognised or disclosed in the financial statement, a provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle obligation(s), in respect to which an estimate can be made for the amount of obligation.

Principal Components of Income and Expenditure

Income

Our income consists of income from operations and other income.

Income from operations

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Income from operations comprises revenue from the sale of products and other operating income. Gross income from operations is adjusted for excise duty to present net income from operations.

Sales of products represent revenue from sale of manufactured and traded goods including ceramic tiles, vitrified tiles, sanitary ware and bath fittings.

Other operating income, which varies from period to period, includes revenue from scrap sales, write back of liabilities no longer required (net), write back of sundry balance (net), write back of provisions for doubtful debt, certain income from services provided in connection with our products and proceeds from insurance claims, if any.

Other Income

Other income includes interest received on deposits and current investments, dividend on long term investments, rent and lease rent received, profit on disposal of fixed assets, profit on disposal of short term and long term investments and any miscellaneous receipts.

Expenses

Our expenses include cost of materials consumed, purchase of stock-in-trade as adjusted for any changes in inventories of finished goods, work-in-progress and stock-in-trade, employee benefit expenses, finance costs, depreciation and amortization expenses and other expenses.


Cost of materials consumed represents the cost of the raw material and packaging material consumed. The raw materials consumed primarily include various kinds of ball clay, minerals, chemicals, frits, ceramic colours and inks as well as packaging material.

Purchase of Stock-in-Trade

Purchase of stock-in-trade includes primarily tiles, sanitary ware, bath fittings, adhesives, tile laying tools and cassetties sourced from third party manufacturers and sold under our brand.

Changes in Inventories of Finished Goods, Work in Progress and Stock-in-Trade

The changes in inventories of finished goods, work in progress and stock-in-trade represent the adjustment of the opening and closing stock of finished goods (as adjusted for excise duty), stock-in-trade and work in progress at the end of the fiscal period to arrive at the net change in inventories of finished goods, work in progress and stock-in-trade.

Employee Benefits Expenses

Employee benefit expenses include salaries, wages and bonuses, contributions to provident and other funds and workmen and staff welfare expenses, etc.

Depreciation and Amortisation Expense

Depreciation represents depreciation on our tangible assets and intangible assets.

Finance Cost

The finance costs incurred by us primarily include interest on fixed period loans, working capital loans, buyers’ credits, other borrowing costs and forward premium on foreign currency transactions.

Other Expenses

Our other expenses primarily include the cost of stores and spares consumed, power and fuel, expenses incurred on the repair and maintenance of buildings, plant and machinery and others, rent, rates and taxes, insurance, travelling and conveyance expenses, any loss on account of foreign exchange fluctuation, directors’ sitting fees, any commission paid to non-executive directors, selling and distribution expenses, discounts, freight and handling charges, advertisement and sales promotion expenses, commission to agents, provision for doubtful debts, bad debts written off, provision for diminution in value of long term investment, any prior period adjustment, sundry balances written off, legal and professional expenses, corporate social responsibility related expenses, loss incurred on the sale of fixed assets and fixed assets discarded / written off, etc.

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Taxation

Provision for taxation comprises current tax, provision of tax in earlier years and deferred tax.

Results of Operations

The following table sets forth certain information relating to our consolidated results of operations in fiscal 2015, 2014

and 2013:

Particulars

Fiscal 2015 Fiscal 2014 Fiscal 2013

(Rs. Lakhs)

Percentage of

Total Revenue

(%)

(Rs. Lakhs)

Percentage of

Total Revenue

(%)

(Rs. Lakhs)

Percentage of

Total Revenue

(%)

(on a consolidated basis)

Income


154,312.48 99.51 126,476.35 99.76 105,536.59 99.76

Other Income 766.32 0.49 308.24 0.24 258.76 0.24

Total Revenue 155,078.80 100.00 126,784.59 100.00 105,795.35 100.00

Expenses


20,346.08 13.12 17,159.62 13.53 16,463.60 15.56


77,425.25 49.93 58,132.17 45.85 47,237.94 44.65

Change in Inventories of Finished Goods, Work-in-progress and Stock-in-Trade (Increase) /

Decrease

(3,918.27) (2.53) 2,666.85 2.10 (1,602.92) (1.52)


10,135.31 6.54 8,319.60 6.56 7,457.31 7.05

Finance Costs 2,053.90 1.32 1,852.20 1.46 1,997.49 1.89


2,659.11 1.71 2,242.54 1.77 2,050.46 1.94

Other Expenses 39,567.38 25.51 32,059.72 25.29 27,409.28 25.91

Total Expenses 148,268.76 95.60 122,432.70 96.56 101,013.16 95.48

Profit before tax 6,810.04 4.40 4,351.89 3.44 4,782.19 4.52

Tax Expense

Current tax 2,089.62 1.35 1,479.60 1.17 1,439.50 1.36

Deferred tax charges/credit

115.64 0.08 218.88 0.17 81.38 0.08

Income Tax for Earlier Year

12.35 0.01 1.29 - 3.64 -

Profit After Tax 4,592.43 2.96 2,652.12 2.10 3,257.67 3.08

Share in Profit of Associate

132.92 0.09 169.76 0.13 (57.01) -0.05

Profit after tax

(including

associate)

4,725.35 3.05 2,821.88 2.23 3,200.66 3.03

Minority Interest 86.60 0.06 (65.14) -0.05 - -

Profit after tax

and minority

Interest

4,638.75 2.99 2,887.02 2.28 3,200.66 3.03

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Fiscal 2015 compared to Fiscal 2014

Income Total revenue increased by 22.32% from Rs. 1,26,784.59 lakhs in fiscal 2014 to Rs. 1,55,078.80 lakhs in fiscal 2015, reflecting the growth in our operations and demand for our products.


Revenue from operations increased by 22.01% from Rs. 126,476.35 lakhs in fiscal 2014 to Rs. 154,312.48 lakhs in fiscal 2015. This was primarily due to an increase in the sales of traded goods and body clay as well as an increase in other operating revenue. Revenue from the sales of traded goods increased by 42.66% from Rs.68,552.20 lakhs in fiscal 2014 to Rs. 97,793.84 lakhs in fiscal 2015. Other operating revenue increased by 91.55% from Rs.415.89 lakhs in fiscal 2014 to Rs. 796.64 lakhs in fiscal 2015, primarily on account of income from services and gain on foreign exchange fluctuation. Other Income

Other income increased by 148.61% from Rs. 308.24 lakhs in fiscal 2014 to Rs. 766.32 lakhs in fiscal 2015. This was primarily due to an increase in interest received, miscellaneous receipts and profit from the sale of short term investment. Revenue from interest received increased by 116.23% from Rs.215.01 lakhs in fiscal 2014 to Rs. 464.91 lakhs in fiscal 2015 while miscellaneous receipts increased by 273.94% from Rs.17.61 lakhs in fiscal 2014 to Rs. 65.85 lakhs in fiscal 2015. Expenses Total expenses increased by 21.10% from Rs.122,432.70 lakhs in fiscal 2014 to Rs. 148,268.76 lakhs in fiscal 2015. Cost of Materials Consumed

Cost of materials consumed increased by 18.57% from Rs.17,159.62 lakhs in fiscal 2014 to Rs. 20,346.08 lakhs in fiscal 2015 primarily due to the increase in production volumes which can be attributed to the newly constructed manufacturing facility owned by our subsidiary, Amora Tiles Private Limited which became operational for full year in fiscal 2015.


Purchases of stock-in-trade increased by 33.19% from Rs.58,132.17 lakhs in fiscal 2014 to Rs. 77,425.25 lakhs in fiscal 2015 reflecting our growing business operations and additional products sourced from third party manufacturers in larger volumes. Change in Inventories of Finished Goods, Work-in-progress and Stock-in-Trade

There was a an increase in the inventories of finished goods, work-in-progress and stock-in-trade of Rs. 3,918.27 lakhs in fiscal 2015 as compared to a decrease in the inventories of finished goods, work-in-progress and stock-in-trade of Rs. 2,666.85 lakhs in fiscal 2014, primarily on account of our efforts to ensure that a large collection of designs are available across various locations. Employee Benefit Expense

Employee benefit expense increased by 21.82% from Rs.8,319.60 lakhs in fiscal 2014 to Rs. 10,135.31 lakhs in fiscal 2015, primarily due to an increase in employee costs as a result of annual increments to our employees as well as an increase in the total number of our employees. Finance Costs

Finance costs increased by 10.89% from Rs.1,852.20 lakhs in fiscal 2014 to Rs. 2,053.90 lakhs in fiscal 2015 primarily on account of the interest costs in relation to a term loan availed by our subsidiary Amora Tiles Private Limited for the establishment of its new manufacturing facility.

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Depreciation and amortization expenses increased by 18.58% from Rs.2,242.54 lakhs in fiscal 2014 to Rs. 2,659.11 lakhs in fiscal 2015 primarily because of our subsidiary Amora Tiles Private Limited, which accounted for depreciation on the new manufacturing facility for the full year in fiscal year 2015 as compared to less than one month in fiscal year 2014. Other Expenses

Other expenses increased by 23.42% from Rs.32,059.72 lakhs in fiscal 2014 to Rs. 39,567.38 lakhs in fiscal 2015. Expenses on power and fuel increased by 21.92% from Rs.16,679.40 lakhs in fiscal 2014 to Rs. 20,335.36 lakhs in fiscal 2015 primarily reflecting the growth in our manufacturing operations, which were undertaken by our subsidiary Amora Tiles Private Limited, and an increase in cost of natural gas. Stores and spare parts costs increased by 21.62% from Rs.2,309.03 lakhs in fiscal 2014 to Rs. 2,808.25 lakhs in fiscal 2015 reflecting an increase in our manufacturing operations. Advertisement and sales promotion expenses increased by 47.45% from Rs.1,961.01 lakhs in fiscal 2014 to Rs. 2,891.46 lakhs in fiscal 2015 as we undertook significant branding and marketing initiatives primarily for T.V. Commercials. As a result of increase in market operations, our selling and distribution expenses increased by 25.50% from Rs.2,508.89 lakhs in fiscal 2014 to Rs. 3,148.68 lakhs in fiscal 2015, commission to agents increased by 10.54% from Rs.305.74 lakhs in fiscal 2014 to Rs. 337.95 lakhs in fiscal 2015, and discounts extended increased by 32.86% from Rs.1,367.26 lakhs in fiscal 2014 to Rs. 1,816.50 lakhs in fiscal 2015. Freight outward and handling charges increased by 16.79% from Rs.2,848.27 lakhs in fiscal 2014 to Rs. 3,326.46 lakhs in fiscal 2015 reflecting our growing operations and expanding network across India. Profit before Tax Profit before tax increased by 56.48% from Rs.4,351.89 lakhs in fiscal 2014 to Rs. 6,810.04 lakhs in fiscal 2015 primarily on account of the increase in our business operations, increased outsourcing to third party manufacturers as well as our increased focus on a higher margin product mix. Tax Expenses Tax expenses (as adjusted for earlier years and deferred tax) increased by 30.47% from Rs.1,699.77 lakhs in fiscal 2014 to Rs. 2,217.61 lakhs in fiscal 2015. Profit after Tax Profit after tax increased by 73.16% from Rs.2,652.12 lakhs in fiscal 2014 to Rs. 4,592.43 lakhs in fiscal 2015.

Profit after Tax (including associate) Profit after tax (including associate) increased by 67.45% from Rs.2,821.88 lakhs in fiscal 2014 to Rs. 4,725.35 lakhs in fiscal 2015. Our share in profit of associates amounted to Rs. 132.92 lakhs in fiscal 2015 as compared to a share in the profit of associates of Rs. 169.76 lakhs in fiscal 2014.

Profit after Tax and Minority Interest On account of the reasons discussed above, our profit after tax and minority interest increased by 60.68% from Rs.2,887.02 lakhs in fiscal 2014 to Rs. 4,638.75 lakhs in fiscal 2015.

Fiscal 2014 compared to Fiscal 2013

Income Total revenue increased by 19.84% from Rs. 105,795.35 lakhs in fiscal 2013 to Rs. 126,784.59 lakhs in fiscal 2014 reflecting the growth in our operations and demand for our products.

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Revenue from operations increased by 19.84% from Rs. 1,05,536.59 lakhs in fiscal 2013 to Rs. 1,26,476.35 lakhs in fiscal 2014. Revenue from the sales of manufactured goods increased by 13.18% from Rs. 56,879.15 lakhs in fiscal 2013 to Rs. 64,377.45 lakhs in fiscal 2014 and revenue from the sales of traded goods increased by 25.75% from Rs. 54,515.01 lakhs in fiscal 2013 to Rs. 68,552.20 lakhs in fiscal 2014 as a result of increase in our outsourcing to third party manufacturers. Other operating revenue increased by 31.26% from Rs. 316.84 lakhs in fiscal 2013 to Rs. 415.89 lakhs in fiscal 2014 primarily on account of technical know-how fees received from associate companies.

Other Income

Other income increased by 19.12% from Rs. 258.76 lakhs in fiscal 2013 to Rs. 308.24 lakhs in fiscal 2014. This was primarily due to an increase in interest received and gain from the sale of fixed assets. Revenue from interest received increased by 37.20% from Rs.156.71 lakhs in fiscal 2013 to Rs. 215.01 lakhs in fiscal 2014. While there was a decrease in miscellaneous receipts, other income such as profit from sale of fixed assets and profit from the sale of short term and long term investments increased in fiscal 2014 compared to fiscal 2013.

Expenses

Total expenses increased by 21.20% from Rs. 101,013.16 lakhs in fiscal 2013 to Rs. 122,432.70 lakhs in fiscal 2014.


Cost of materials consumed increased by 4.23% from Rs. 16,463.60 lakhs in fiscal 2013 to Rs. 17,159.62 lakhs in fiscal 2014 primarily due to the increase in production volumes.


Purchases of stock-in-trade increased by 23.06% from Rs. 47,237.94 lakhs in fiscal 2013 to Rs. 58,132.17 lakhs in fiscal 2014, reflecting our growing business operations and additional products sourced from third party manufacturers in larger volumes. Change in Inventories of Finished Goods, Work-in-progress and Stock-in-Trade

There was a decrease in the inventories of finished goods, work-in-progress and stock-in-trade of Rs. 2,666.85 lakhs in fiscal 2014 as compared to an increase in the inventories of finished goods, work-in-progress and stock-in-trade of Rs. 1,602.92 lakhs in fiscal 2013 due to supply constraints from third party manufacturers which resulted in liquidation of our inventories. Employee Benefit Expense

Employee benefit expense increased by 11.56% from Rs. 7,457.31 lakhs in fiscal 2013 to Rs. 8,319.60 lakhs in fiscal 2014 primarily due to an increase in employee costs as a result of increments to our employees. Finance Costs

Finance costs decreased by 7.27% from Rs. 1,997.49 lakhs in fiscal 2013 to Rs. 1,852.20 lakhs in fiscal 2014 primarily due to a decrease in interest costs.There was a decrease in interest on term loans as well as our working capital facilities by 6.18% from Rs. 1,866.80 lakhs as of March 31, 2013 to Rs. 1,751.49 lakhs as of March 31, 2014 due to a reduction in interest rates as well as decreased utilization of working capital facilities. Depreciation and Amortization Expense

Depreciation and amortization expense increased by 9.37% from Rs. 2,050.46 lakhs in fiscal 2013 to Rs. 2,242.54 lakhs in fiscal 2014 mainly on account of addition and upgradation to buildings and plant and machinery. Other Expenses

Other expenses increased by 16.97% from Rs. 27,409.28 lakhs in fiscal 2013 to Rs. 32,059.72 lakhs in fiscal 2014.

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Expenses on power and fuel increased by 27.27% from Rs. 13,105.67 lakhs in fiscal 2013 to Rs. 16,679.40 lakhs in fiscal 2014, primarily reflecting the growth in our manufacturing operations and an increase in cost of natural gas. Travelling and conveyance expenses increased by 28.44% from Rs. 869.86 lakhs in fiscal 2013 to Rs. 1,117.22 lakhs in fiscal 2014. Similarly, advertisement and sales promotion expense increased by 29.08% from Rs. 1,519.23 lakhs in fiscal 2013 to Rs. 1,961.01 lakhs in fiscal 2014 as we undertook significant branding and marketing initiatives commensurate with the increase in market operations and commission to agents increased by 54.37% from Rs. 198.06 lakhs in fiscal 2013 to Rs. 305.74 lakhs in fiscal 2014, reflecting the increase in sales. Further, exchange rate difference (net) increased by 599.96% from Rs. 27.78 lakhs in fiscal 2013 to Rs. 194.45 lakhs in fiscal 2014. Discounts increased by 24.30% from Rs. 1,099.98 lakhs in fiscal 2013 to Rs. 1,367.26 lakhs in fiscal 2014. Fixed assets discarded/written off increased by 360.82% from Rs. 36.04 lakhs in fiscal 2013 to Rs. 166.08 lakhs in fiscal 2014. These increases were partially offset by decreases such as stores and spare parts consumed, which decreased marginally by 3.34% from Rs. 2,388.76 lakhs in fiscal 2013 to Rs. 2,309.03 lakhs in fiscal 2014, while selling and distribution expenses decreased by 10.50% from Rs. 2,803.33 lakhs in fiscal 2013 to Rs. 2,508.89 lakhs in fiscal 2014. Profit before Tax

Profit before tax decreased by 9.00% from Rs. 4,782.19 lakhs in fiscal 2013 to Rs. 4,351.89 lakhs in fiscal 2014 due to our limited ability to pass on the escalation in costs to our customers and as a result our overall expenses increased at a higher rate in fiscal 2014 corresponding to the rate of increase in overall revenues. Tax Expenses Although our profit before tax decreased by 9.00% from fiscal 2013 to fiscal 2014, our tax expenses (as adjusted for earlier years and deferred tax) increased by 11.50% from Rs. 1524.52 lakhs in fiscal 2013 to Rs. 1699.77 lakhs in fiscal 2014 due to the disallowance of certain items for income tax deductions which increased our effective tax rate in fiscal 2014. Profit after Tax Commensurate with our decrease in profit before tax, our profit after tax decreased by 18.59% from Rs. 3,257.67 lakhs in fiscal 2013 to Rs. 2,652.12 lakhs in fiscal 2014.

Profit after Tax (including associate) For the reasons stated above, our profit after tax (including associate) decreased by 11.83% from Rs.3,200.66 lakhs in fiscal 2013 to Rs.2,821.88 lakhs in fiscal 2014. This decrease in profit after tax was partially offset by an increase in share in profit of associates. There was an increase in the share in profit of associate of Rs. 169.76 lakhs in fiscal 2014 compared to a share in the loss of associate of Rs. 57.01 lakhs in fiscal 2013. This increase in share in profit of associate was due to an increase in the number of associates as well as an improvement in their financial performance.

Profit after Tax and Minority Interest

For the reasons stated above, profit after tax and minority interest decreased by 9.80% from Rs. 3,200.66 lakhs in fiscal 2013 to Rs. 2,887.02 lakhs in fiscal 2014.

Liquidity and Capital Resources

Historically, our primary liquidity requirements have been to finance our working capital needs and our capital

expenditures. To fund these requirements we have relied on short-term and long-term borrowings and cash flows from

operations.

The following table sets forth cash flows with respect to operating activities, investing activities and financing activities for the periods indicated:

(Rs. in lakhs)

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Particulars Fiscal

2015 2014 2013

Net cash from / (used in) operating activities 2,507.59 7,384.62 7,071.32

Net cash from / (used in) investing activities (3,788.82) (10,387.93) (3,959.67)

Net cash from / (used in) financing activities (637.75) 3,879.40 (2,754.46)

Net increase / (decrease) in cash and cash equivalents (1,918.98) 876.09 357.19

Operating Activities

Net cash flows from operating activities for fiscal 2015 consisted of net profit before tax and exceptional items of Rs. 6,810.04 lakhs as (i) adjusted for non-cash items namely depreciation and amortization of Rs. 2,659.11 lakhs, (ii) increased by interest and finance charges of Rs. 2,053.90 lakhs, unrealized foreign exchange loss of Rs. 3.56 lakhs, provision for doubtful debts of Rs. 5.50 lakhs, bad debts written off of Rs. 28.21 lakhs ,sundry balances written off Rs.87.91 lakhs and loss on the sale of fixed assets of Rs. 125.43 lakhs, (iii) decreased by interest income of Rs. 464.91 lakhs, profit on sale of investments of Rs. 186.90 lakhs, diminution in value of investment written back of Rs. 2.95 lakhs and (iv) further adjusted for changes in working capital amounting to Rs. 6,483.43 lakhs and decreased by direct taxes paid amounting to Rs. 2,127.88 lakhs. Net cash flows from operating activities for fiscal 2014 consisted of net profit before tax and exceptional items of Rs. 4,351.89 lakhs as (i) adjusted for non-cash items namely depreciation and amortization of Rs. 2,242.54 lakhs, (ii) increased by interest and finance charges of Rs. 1,852.20 lakhs, unrealized foreign exchange loss of Rs. 11.94 lakhs, diminution in value of investment of Rs. 0.79 lakhs, provision for doubtful debts of Rs. 26.16 lakhs, bad debts written off of Rs. 0.63 lakhs and loss on the sale of fixed assets of Rs. 185.04 lakhs, (iii) decreased by interest income of Rs. 215.01 lakhs, dividend income of Rs. 0.07 lakhs, profit on sale of investments of Rs. 41.07 lakhs, liabilities no longer required written back of Rs. 9.70 lakhs, sundry balances written back of Rs. 15.22 lakhs and (iv) further reduced for changes in working capital amounting to Rs. 335.03 lakhs and decreased by direct taxes paid amounting to Rs. 1,340.53 lakhs. Net cash flows from operating activities for fiscal 2013 consisted of net profit before tax and exceptional items of Rs. 4,782.19 lakhs as (i) adjusted for non-cash items namely depreciation and amortization of Rs. 2,050.46 lakhs, (ii) increased by interest and finance charges of Rs. 1,997.49 lakhs, bad debts of Rs. 0.43 lakhs, sundry balances written off of Rs. 9.46 lakhs and loss on the sale of fixed assets of Rs. 50.50 lakhs, (iii) decreased by interest income of Rs. 156.71 lakhs, dividend income of Rs. 4.80 lakhs, unrealized foreign exchange gain of Rs. 18.93 lakhs, profit on sale of investments of Rs. 2.75 lakhs, provision for doubtful debts written back of Rs. 0.43 lakhs, liabilities no longer required written back of Rs. 94.53 lakhs, and (iv) further reduced for changes in working capital amounting to Rs. 10.82 lakhs and decreased by direct taxes paid amounting to Rs. 1,551.88 lakhs.

Investing Activities Net cash flows from investing activities for fiscal 2015 consisted of outflows in the form of purchase of fixed assets of Rs. 5,177.95 lakhs, purchase of short term investment of Rs. 22,301.72 lakhs, purchase of long term investment of Rs. 271.51 lakhs, share application advance of Rs. 162.40 lakhs and TDS on interest of Rs. 27.35 lakhs. Inflows from investing activities included proceeds from sale of fixed assets of Rs. 99.59 lakhs, sale of short term investment of Rs. 23,514.08 lakhs, sale of long term investment of Rs. 103.43 lakhs and interest income of Rs. 435.01 lakhs. Net cash flows from investing activities for fiscal 2014 consisted of outflows in the form of purchase of fixed assets of Rs. 5,992.64 lakhs, purchase of short term investment of Rs. 5,075.80 lakhs, purchase of long term investment of Rs. 817.76 lakhs, share application advance of Rs. 137.60 lakhs and TDS on interest of Rs. 22.06 lakhs. Inflows from investing activities included proceeds from sale of fixed assets of Rs. 98.31 lakhs, sale of short term investment of Rs. 1,349.32 lakhs, sale of long term investment of Rs. 100.82 lakhs, interest income of Rs. 109.41 lakhs and dividend income of Rs. 0.07 lakhs. Net cash flows from investing activities for fiscal 2013 consisted of outflows in the form of purchase of fixed assets of Rs. 3,812.49 lakhs, purchase of investment of Rs. 328.10 lakhs and TDS on interest of Rs. 12.83 lakhs. Inflows from investing activities included proceeds from sale of fixed assets of Rs. 42.41 lakhs, sale of investment of Rs. 3.11 lakhs, interest income of Rs. 143.43 lakhs and dividend income of Rs. 4.80 lakhs.

Financing Activities Net cash flows from financing activities for fiscal 2015 consisted of outflows in the form of repayment of long term loans of Rs. 2,913.88 lakhs, interest paid of Rs. 2,046.01 lakhs and dividend paid of Rs. 676.74 lakhs. Inflows from

77

financing activities included long term loans raised during the year of Rs. 4,164.25 lakhs and increase in short term loans of Rs. 834.63 lakhs. Net cash flows from financing activities for fiscal 2014 consisted of outflows in the form of repayment of long term loans of Rs. 2,309.42 lakhs, decrease in short term loans of Rs. 138.64 lakhs, interest paid of Rs. 1,841.68 lakhs, dividend paid of Rs. 480.27 lakhs. Inflows from financing activities included long term loans raised during the year of Rs. 3,285.75 lakhs, proceeds from the issue of share capital of Rs. 596.56 lakhs and security premium of Rs. 4,767.10 lakhs. Net cash flows from financing activities for fiscal 2013 consisted of outflows in the form of repayment of long term loans of Rs. 1,936.73 lakhs, decrease in short term loans of Rs. 305.70 lakhs, interest paid of Rs. 2,021.98 lakhs, dividend paid of Rs. 317.74 lakhs. Inflows from financing activities included long term loans raised during the year of Rs. 1,827.69 lakhs.

Fixed Assets

Our tangible assets are comprised of (i) owned assets that include land, buildings, plants and equipment, furniture and fixtures, office equipment and vehicles and (ii) leased assets, which include land, plants and equipment. Our intangible assets are comprised of computer software. As of March 31, 2015, we had tangible assets of Rs. 26,209.08 lakhs, intangible assets of Rs. 169.24 lakhs and capital work in progress of Rs. 81.43 lakhs, respectively.

Indebtedness As of March 31, 2015, we had long term borrowings (including current maturities) of Rs. 10,638.79 lakhs and short term borrowings of Rs. 8,485.95 lakhs. The following table sets forth certain information relating to our outstanding indebtedness as of March 31, 2015, and our repayment obligations in the periods indicated:

(Rs. in lakhs)

Particulars Total Less than 1 year More than 1 years

Long Term Borrowings

Secured 10,409.94 2,960.84 7,449.10

Unsecured 228.85 - 228.85

Total * 10,638.79 2,960.84 7,677.95

Short Term Borrowings

Secured 8,485.95 8,485.95 -

Unsecured - - -

Total 8,485.95 8,485.95 -

*including current maturities

Most of our long term borrowings are secured by way of first charge on moveable fixed assets and second charge on current assets both present and future. Short term borrowings are secured by way of first charge on current assets and second charge on fixed assets both present and future. Many of our financing agreements include various conditions and covenants restricting certain activities and certain transactions. Specifically, we may require, and may be unable to obtain, lender consents to sell or dispose assets charged, effect any major change in capital structure, undertake guarantee obligations, undertake new project or expansion, effecting any consolidations or mergers, make any significant change in management and permit any transfer of controlling interest. Any failure to comply with the requirement to obtain a consent, or other condition or covenant under our financing agreements that is not waived by our lenders or is not otherwise cured by us, may lead to a termination of our credit facilities, acceleration of all amounts due under such facilities and trigger cross default provisions under certain of our other financing agreements and may adversely affect our ability to conduct our business and operations or implement our business plans. Failure to meet our obligations under the debt financing arrangements could have an adverse effect on our cash flows, business and results of operations. Contingent Liabilities The following table sets forth certain information relating to our contingent liabilities as of March 31, 2015:

(Rs. in lakhs)

Particulars Amount

A) (i) Estimated amount of contracts remaining to be executed on capital account and not provided 131.07

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Particulars Amount

for net of advances


a) Claims and other demands against the Company not acknowledged as debts. 288.76

b) Sales tax and purchase tax demands, among others against which the Company has preferred appeals.

226.29

c) Excise and custom duty (excluding interest and penalty) and service tax demands and show-cause notices issued against which the Company/Department has preferred appeals/filed replies.

426.59

d) Disputed income tax and wealth tax demand (excluding penalty if any) 93.69

e) Against the imposition of Local Area Development Tax (LADT) levied by Haryana Government, the Hon’ble Supreme Court of India vide its order dated 10th May, 2006 has accepted the Company’s application for stay. Further, Hon’ble Supreme Court vide their order dated 30th October, 2009 stated the assessees to file the LADT returns; however, no recovery of tax will be made till further order. In the meantime, the Haryana Government has repealed the LADT Act and introduced another Act by the name of ‘Entry Tax’ on the same line, which was also been held ultra vires by the Hon’ble Punjab and Haryana High court. Pending the final Order of the Hon’ble Supreme Court on the above matter And there is no Act either LADT / Entry Tax prevalent in Haryana, no provision for the same is considered necessary by the Company for the period from 1st April, 2006.

676.07

f) Demand notice from ESIC 15.41

iii) Bond executed in favour of sales tax/custom authorities. 12.50

B) Outstanding Corporate Guarantee to banks in respect of various fund/non fund based facilities extended to other body corporates.

944.00

C) Bank Guarantee outstanding 317.05

Other Notes

i During the financial year 2012-13, a demand of Rs. 925.65 lakhs (including interest of Rs. 97.41 lakhs) for difference between market rate (“Non-APM”) and contracted price (“APM”) of gas for the period from July 1, 2005 to March 31, 2010 has been raised by GAIL (India) Limited (“GAIL”). After considering further debit notes on account of interest / bank charges for the past periods, the total demand increased to Rs. 1,218.56 lakhs (including interest of Rs. 390.32 lakhs) as on March 31, 2015. The Company along with others filed a special civil application which was admitted by the Honourable High Court of Gujarat on submission of bank guarantee of Rs. 118 lakhs. On August 4, 2014, Honourable Supreme Court of India passed an order to transfer the case to this Court on the basis of transfer petition filed by GAIL. Pending decision / further direction, no provision in this regard is considered necessary by the Company.

ii In terms of long term gas supply agreements (“GSAs”) with GAIL (India) Limited and Indian Oil Corporation Limited (jointly the “Sellers”) which are valid till period ending April 2028 and December 2016 respectively, there are underdrawn quantities of re-liquefied natural gas (“RLNG”) equivalent to Rs. 6,090.94 lakhs for the calendar year 2014. Against this the Company has received demand notices from the Sellers aggregating to Rs. 2,415.45 lakhs only representing an aggregate under drawn quantity of 2,42,490 MMBTU. If these demands are paid, the same will be treated as advance in accounts as the Company will be eligible to take under drawn quantities of RLNG including that for calendar year 2014 in subsequent contract years, subject to the Sellers’ operational flexibility and price adjustments. The Company has also represented to Sellers for reducing the said amounts demanded which is pending resolution. Further, in view of the proposed increase in production capacity by 4 million square meters per annum at the Kassar unit and also, generally a decreasing trend in prices of the said RLNG in recent months, the management is confident about utilization of under drawn RLNG as above in subsequent contract years. Accordingly, pending resolution and in view of the proposed use of RLNG in the future as stated above, no effect of the same has been given in these accounts.

iii Other long-term liabilities include encashment of bank guarantee in earlier years amounting to Rs. 202.50 lakhs (previous year Rs. 202.50 lakhs) provided by the supplier of machinery. The supplier of machinery has challenged the encashment of bank guarantee and the case is pending before Honourable High Courts of Delhi and Kolkata. Pending final decision, no adjustment has been carried out in accounts and the above amount is shown under long term liabilities.

iv Out of Rs. 5,000.00 lakhs raised through private placement of equity shares in February, 2014, the Company has so far utilized Rs. 2,650.00 lakhs (including issue expenses of Rs. 145.94 lakhs) for the purposes for which the same were raised. The balance Rs. 2,350.00 lakhs remain temporarily invested in the bonds / debt schemes of mutual

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funds.

Off-Balance Sheet Arrangements and Financial Instruments The Company does not have any off balance sheet arrangements and financial instruments.

Related Party Transactions

We enter into various transactions with related parties. Primarily these transactions include purchase of goods or assets, sale of goods or assets, rent received, interest income, managerial remuneration, rental payments, receipt towards loan given and deposits given. For further information relating to our related party transactions, see our Reformatted Consolidated Financial Statements included elsewhere in this Preliminary Placement Document. Changes in Accounting Policies

There have been no changes in accounting policies of our Company or Group in fiscal 2013, 2014 and 2015 or in any subsequent period to date. However, during fiscal 2015, we computed depreciation based on useful life of the fixed assets as specified under Schedule II of the Companies Act, 2013. The carrying value of the fixed assets which have completed their useful lives as on April 1, 2014 was charged against the balance in general reserve amounting to Rs. 154.08 lakhs (net of deferred tax Rs. 79.34 lakhs). If there had not been any change in the useful life of the fixed assets, depreciation would have been higher by Rs. 216.47 lakhs for fiscal 2015 and our profit in fiscal 2015 would have been lower to such extent. Interest Service Coverage Ratio

Our interest coverage ratio (defined as cash profit after tax plus interest paid divided by interest paid) as of March 31, 2013, 2014 and 2015 was as follows:

Particulars For the year ended March 31,

2015 2014 2013

Interest Coverage Ratio 4.55 3.77 3.63

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk Interest rates for borrowings have been volatile in India in recent periods. Our operations are funded to a significant extent by debt and increases in interest expense may have an adverse effect on our results of operations and financial condition. Our current debt facilities carry interest at variable rates as well as fixed rates. Although we may in the future engage in interest rate hedging transactions or exercise any right available to us under our financing arrangements to terminate the existing debt financing arrangement on the respective reset dates and enter into new financing arrangements, there can be no assurance that we will be able to do so on commercially reasonable terms, that our counterparties will perform their obligations, or that these agreements, if entered into, will protect us adequately against interest rate risks. Credit Risk

We are exposed to credit risk on amounts owed to us by our distributors or customers. If they do not pay us promptly, or at all, it may impact our working capital cycle and/or we may have to make provisions for or write-off on such amounts. Commodity Price Risk

We are exposed to the price risk associated with purchasing our key raw materials. We generally do not enter into long-term firm price contracts for the supply of our key raw materials. Therefore fluctuations in the price and availability of these raw materials may adversely affect our business and results of operations. Unusual or Infrequent Events or Transactions

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Except as described in this Preliminary Placement Document, there have been no other events or transactions to the best of our knowledge which may be described as ‘unusual’ or ‘infrequent’. Future Relationship between Cost and Income

Except as described in the sections titled “Risk Factors”, “Our Business” and this section, to the best of our knowledge there are no known factors that will have a material adverse impact on our operations and finances. Seasonality of Business

Although we do not consider our business to be seasonal, our revenues are typically lower in the first quarter and highest in the fourth quarter of the financial year, consequent to our receivables typically being the highest in the fourth quarter on account of the inventory build-up by our distributors or customers.

Significant Developments after March 31, 2015 that May Affect our Future Results of Operations Other than disclosed herein below and elsewhere in this Preliminary Placement Document, there has not arisen, since March 31, 2015, any circumstances that materially and adversely affect the profitability or the value of our assets or our ability to pay our liabilities within the next 12 months. Pursuant to our subscription to shares in Somany Fine Vitrified Limited (“SFVL”) in May 2015 and an acquisition and subscription to shares in Somany Sanitaryware Private Limited (“SSWPL”) in May 2015, June 2015 and August 2015, these companies have become our Subsidiaries. As of September 30, 2015, we hold 51% equity interest in SFVL and SSWPL. The Unaudited Standalone Interim Financial Information do not show the effect of these acquisitions or other existing subsidiaries. Further, our future consolidated financial statements may not be comparable to our historical Reformatted Consolidated Financial Statements included in this Preliminary Placement Document. Statement of Unaudited Standalone Interim Financial Information

Pursuant to a meeting of its Board of Directors on October 26, 2015, our Company has adopted and filed with the Stock Exchanges our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015, in accordance with the provisions of Clause 41 of the Listing Agreement. For further information, please refer to the Unaudited Standalone Interim Financial Information included in “Financial Information” in this Preliminary Placement Document. The following discussion of our results of operations should be read in conjunction with the Unaudited Standalone Interim Financial Information for the quarter and six months ended September 30, 2015, prepared in accordance with the provisions of Clause 41 of the Listing Agreement and filed with the Stock Exchanges, included in “Financial Information” in this Preliminary Placement Document. The Unaudited Standalone Interim Financial Information are not presented in a manner that is comparable to the form in which the Reformatted Consolidated Financial Statements have been presented. Accordingly, investors are cautioned against placing undue reliance on the Unaudited Standalone Interim Financial Information for its investment decision.

Particulars

Half year ended September 2015 Half year ended September 2014

(Rs.

Lakhs)

Percentage of Total

Revenue (%) (Rs. Lakhs)

Percentage of Total

Revenue (%)

Income

Revenue from Operations 79,918 99.63 70,713 99.60

Other Income 296 0.37 284 0.40

Total Revenue 80,214 100.00 70,997 100.00

Expenses

Cost of Materials Consumed 7,829 9.76 8,492 11.96

Purchases of Stock-in-Trade 44,739 55.77 38,136 53.71

81

Particulars

Half year ended September 2015 Half year ended September 2014

(Rs.

Lakhs)

Percentage of Total

Revenue (%) (Rs. Lakhs)

Percentage of Total

Revenue (%)

Change in Inventories of Finished Goods, Work-in-progress and Stock-in-Trade (Increase) /

Decrease

(1,069) (1.33) (2,747) (3.87)

Employee Benefit Expense 5,302 6.61 4,802 6.76

Finance Costs 888 1.11 743 1.05


964 1.20 1,065 1.50

Other Expenses 17,925 22.35 17,650 24.86

Total Expenses 76,578 95.47 68,141 95.97

Profit from ordinary activities 3,636 4.53 2,856 4.03

Exceptional item 383 0.48 - -

Profit Before Tax 3,253 4.05 2,856 4.03

Tax Expenses 1,139 1.42 999 1.41

Profit After Tax 2,114 2.63 1,857 2.62

Total Income

Total Income from operations

Total income from operations increased by 13.02% from Rs. 70,713 lakhs in the six months ended September 30, 2014 to Rs. 79,918 lakhs in the six months ended September 30, 2015. Gross sales increased by 12.65% from Rs. 73,458 lakhs in the six months ended September 30, 2014 to Rs. 82,748 lakhs in the six months ended September 30, 2015. Our net sales increased by 13.16% from Rs. 70,239 lakhs in the six months ended September 30, 2014 to Rs. 79,479 lakhs in the six months ended September 30, 2015. Other operating income decreased by 7.38% from Rs. 474 lakhs in the six months ended September 30, 2014 to Rs. 439 lakhs in the six months ended September 30, 2015. Other Income

Other income increased by 4.23% from Rs. 284 lakhs in the six months ended September 30, 2014 to Rs. 296 lakhs in the six months ended September 30, 2015.

Expenses

Total expenses increased by 12.30% from Rs.67,398 lakhs in the six months ended September 30, 2014 to Rs. 75,690 lakhs in the six months ended September 30, 2015.

Particulars

Six months ended September 30,

2015


2014

(Rs. lakh) (Rs. lakh)

Consumption of Raw Material and Packing Material

7,829 8,492

Purchases of stock-in-trade 44,739 38,136

Changes in inventories of finished goods, work-in-progress, and stock-in-trade(Increase) / Decrease

(1,069) (2,747)

Employees Cost 5,302 4,802

Depreciation 964 1,065

Stores and Spare Parts 1,260 1,284

Power & Fuel 8,552 8,722

82

Particulars


2015


2014

(Rs. lakh) (Rs. lakh)

Other Expenses 8,113 7,644

Total Expenses 75,690 67,398

Consumption of Raw Material and Packing Material

Consumption of raw material and packing material decreased by 7.87% from Rs.8,492 lakhs in the six months ended September 30, 2014 to Rs. 7,829 lakhs in the six months ended September 30, 2015 primarily on account of cost optimisation measures and marginal decrease in production. Purchases of Stock-in-Trade

Purchases of stock-in-trade increased by 17.31% from Rs.38,136 lakhs in the six months ended September 30, 2014 to Rs.44,739 lakhs in the six months ended September 30, 2015. Change in Inventories of Finished Goods, Work-in-progress and Stock-in-Trade

There was an increase in the inventories of finished goods, work-in-progress and stock-in-trade of Rs. 1,069 lakhs in the six months ended September 30, 2015 as compared to an increase in the inventories of finished goods, work-in-progress and stock-in-trade of Rs. 2,747 lakhs in the six months ended September 30, 2014.

Employee Cost

Employee benefit expense increased by 10.41% from Rs.4,802 lakhs in the six months ended September 30, 2014 to Rs. 5,302 lakhs in the six months ended September 30, 2015 primarily due to an increase in employee costs as a result of increments to our employees. Depreciation and Amortization Expense

Depreciation and amortization expense decreased by 9.48% from Rs.1,065 lakhs in the six months ended September 30, 2014 to Rs. 964 lakhs in the six months ended September 30, 2015, primarily on account of change in accounting policy in compliance with Schedule II of the Companies Act, 2013 which resulted in revision of useful life of the fixed assets.

Other Expenses

Other expenses increased by 6.14% from Rs.7,644 lakhs in the six months ended September 30, 2014 to Rs. 8,113 lakhs in the six months ended September 30, 2015.

Finance Costs

Finance costs increased by 19.52% from Rs.743 lakhs in the six months ended September 30, 2014 to Rs. 888 lakhs in the six months ended September 30, 2015, primarily on account of increase in working capital resulting from an increase in market operations and interest on term loan taken for the expansion of our manufacturing plant in Kadi (Gujarat). Profit from ordinary activities before tax

Profit from ordinary activities before tax increased by 13.90% from Rs.2,856 lakhs in the six months ended September 30, 2014 to Rs. 3,253 lakhs in the six months ended September 30, 2015.

Tax Expenses Tax expenses (including deferred tax) increased by 14.01% from Rs.999 lakhs in the six months ended September 30, 2014 to Rs.1,139 lakhs in the six months ended September 30, 2015.

Net profit Net profit increased by 13.84% from Rs.1,857 lakhs in the six months ended September 30, 2014 to Rs. 2,114 lakhs in the six months ended September 30, 2015.

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INDUSTRY OVERVIEW The information in this section includes extracts from publicly available information, data and statistics and has been

derived from various government publications and industry sources such as the ICCTAS. Neither the Company, nor the

BRLM or any other person connected with the Issue has independently verified this information. Industry sources and

publications generally state that the information contained therein has been obtained from sources believed to be

reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be

assured. Industry sources and publications are also prepared based on information as of specific dates and may no

longer be current or reflect current trends. Industry sources and publications may also base their information on

estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly, investors should not place

undue reliance on, or base their investment decision on this information.

Overview of the Indian Economy

India is the fourth largest economy in the world, after the United States of America, European Union and China. (Source:

CIA World Factbook, 2015 - https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html). As per the Advance Estimates released by the Central Statistics Office, the Indian economy is estimated to register a growth rate of 7.4 per cent in 2014-15, as compared to a growth of 5.1 per cent and 6.9 per cent respectively in 2012-13 and 2013-14. (Source: Macro-Economic Framework Statement, 20115-16, http://indiabudget.nic.in/ub2015-

16/frbm/frbm1.pdf). Fiscal 2015 has witnessed key policy reforms, aimed at aiding growth revival and surmounting the structural constraints in the economy. In the recent past, the economy faced testing times with issues like lower growth, high levels of inflation and widening current account deficit; escalated by an unsupportive external environment. Growth is back, with its desirable concomitants of mild inflation and manageable current account balance with stable rupee and rising foreign exchange reserves, signaling improvements in macro-economic stability. The growth rate of the economy, measured by the growth in GDP at constant (2011-12) market prices, improved from 5.1 per cent in 2012-13 to 6.9 per cent in 2013-14. (Source: Macro-Economic Framework Statement, 2015-16, http://indiabudget.nic.in/ub2015-

16/frbm/frbm1.pdf)

Demographic Dividend

India’s population at 1.21 billion in 2012 is expected to grow at a CAGR of 1.1% to 1.33 billion in 2020 and become the most populous country in the world, replacing China. In terms of its demographic profile, birth rates have significantly fallen from 23.2 during 2001 to 2005 to 19.6 during 2011 to 2015, and are further expected to fall to 18 per 1,000 during by 2016 to 2020, as per the Census of India estimates. The expected decline in death rates from 7.2 per 1,000 during 2011 to 2015 to 7.1 per 1,000 births and improvement in overall life expectancy is expected to provide a larger pool of workforce in the near future. India’s ratio of working age population is set to increase in the coming years, enabling India to enjoy a demographic dividend. Demographic dividend is defined by The Ministry of Skill Development & Entrepreneurship as the benefits derived from a rise in ratio of working age population (usually 15 to 59 years) to the dependent or non-working population (below 15 years and above 60 years). Over the next 20 years, India’s labor force is estimated to increase by 32% (Source: Ministry of Skill Development and Entrepreneurship, Government of India). India is expected to continue to enjoy demographic bonus till 2040 (Source: World Bank, 2012), overtaking China by 2030. A combination of one of the world’s youngest population and a large pool of English-speaking people is working in India’s favour. By 2022, the average age of Indians will be 29, much lower than 37 for China and the United States of America (USA), and 45 for Western Europe1. It will also have 28% of the world’s workforce. Thus, India can not only fulfil its own manpower needs but also address the demand of other nations. There is an expectation of growth in employable population. Labour Force Participation Rate (LFPR), is expected to increase by 24.5 million in 15 years and above age group, from 477.9 million in 2011 to 502.4 million by the end of 2017. With the focus of policy makers on raising the gross enrolment ratio in secondary and higher education, the number of people entering the labour force is expected to rise substantially. While the absolute number of people entering the workforce is expected to increase, the proportion of population (15 years and above), is expected to fall from 56.3 % in 2011 to 51.2% in 2017 as in consistent with the development stages of a growth economy. World Ceramic Tile Industry

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html

http://indiabudget.nic.in/ub2015-16/frbm/frbm1.pdf




84

The world ceramic tiles production has been growing at a healthy rate of 8.5% CAGR over 2009 to 2013 and is estimated to have reached 11,913 msm in the year 2013. China with about 47% share in the total world ceramic tiles production,continues to remain the world’s largest ceramic tiles producer, consumer and exporter. Brazil is the second largest producer with production capacity of 871 msm, followed by India at 750 msm. (Source: ICCTAS)

In terms of exports, China is a clear leader followed by Spain and Italy. These top-three countries together contribute close to 66% to the overall world ceramic tiles exports. (Source: ICCTAS)

Indian Ceramic Tile Industry

Overview

With a production and consumption CAGR of about 11% over 2009 to 2013, India remains one of the fastest growing ceramic tiles market in the world. India’s share in the global ceramic tiles production is continuously increasing and has reached 6.3% in 2013 from 5.7% in 2009. (Source: ICCTAS) Also in the year 2013 where the world’s production has increased by 6.7%, India’s production has grown at 8.5% in value terms the Indian tile industry has grown at a CAGR of more than 15% over 2009 to 2013 and is estimated to have reached Rs. 215 billion in 2013. The growth has been 10.3% over the previous year 2012. The industry was earlier highly dominated by the unorganized players based out in Gujarat. But with stringent pollution control norms by the Gujarat Pollution Control Board the industry in getting more organized, the unorganized players have started to enter into JVs with the organized players assisting them in manufacturing activities. Also India is currently witnessing a change in preference towards high end polished vitrified tiles which is leading to higher demand growth for the organized players. India has not grown much in terms of exports of ceramic tiles and currently consists of

85

less than 0.5% of the global market. As per ICCTAS, in the year 2014 India has exported ceramic tiles of around US$441 million. India exports ceramics to markets across Europe, Asia, US and Africa and the key export markets are UAE, Saudi Arabia and Malaysia. (Source: ICCTAS)

Industry Challenges

To compete internationally, India’s manufacturing plants must be geared up to large units currently operating in China and Turkey and which are driven by economies of scale. These will also help Indian companies lowering our cost of production significantly. Also, infrastructural support is a key factor that determines the speed of growth. Better infrastructure will bring in better growth in terms of consistency and sustenance. Freight, supply of power and gas remains the key cost-related issues impacting the industry. Availability, consistent supply and reasonable rates are extremely important for the growth of the ceramic tile industry. (Source: ICCTAS)

Industry Status

The ceramic tiles industry in India has followed similar trends internationally which have been characterized by excess capacities and falling margins. Countries like Malaysia, Thailand, Indonesia, Sri Lanka and Vietnam are setting up their own plants. China has emerged as a major competitor. Producers from Spain and Italy have the advantage of lower transportation costs while exporting to USA and Germany. In India, the per capita consumption is as low as 0.50 square meters per person compared to China (2.6 square meters per person), Europe (5 to 6 square meters per person) or Brazil (3.4 square meters per person). Rising disposable incomes of the growing middle class and 40 million units of housing shortage hold out a great potential. (Source: ICCTAS) A major change that took over the ceramic tiles industry was the introduction of vitrified and porcelain tiles. These new entrant product types are said to be the tiles of the future. Internationally these tiles are already the major sellers. These category of products account for almost 50% of total tile sales by value in this industry. These new products and the conventional wall & floor tiles have together made the organized industry grow to a formidable Rs.7,200 crores industry. This coupled with a spate of expansions by many players make the industry look very promising in the future. (Source:

ICCTAS) The Indian Industry has developed an export market although at the lower end. In volume it constitutes less than half a percent of the global market. Presently India does not figure in the list of major exporting countries. But this could change as Indian exports are rising at growing annually. The top-end of the global export market is presently dominated by China (36.8%) and Italy (15.1%). (Source: ICCTAS)

Building Products Industry in India With the steady growth in the construction sector in India over the past few years, there has been an increase in the use of various products, utilized either directly in the construction process or ancillary to it. However, the low per capita usage of key materials used in construction points towards the fact that the intensity of construction in India is still relatively low as compared to the other nations.

Ceramic Tiles Industry

The Indian tiles industry is one of the largest in the world, both in terms of production and consumption. While the industry has been growing, Vitrified Tiles segment (both polished and glazed) has been witnessing much faster growth than the ceramic tiles. Further, the branded segment of industry is understood to be growing at a faster rate than the unbranded one. Due to industry being dominated by unbranded players in terms of volumes, the tile industry in India is subject to price competition making it difficult to pass on to the customers, the increase in input, manufacturing, selling and distribution costs. Clearly the way forward for industry players is to continue to go up the value chain.

Premium Segment Tiles Market in India

The urban population is increasingly showing inclination in favour of high value products like polished / glazed vitrified tiles available in the market on account of their increasing purchasing power which is influencing customers to shift from the basic or standard products to premium and luxury products. There is also growth in sales of premium level products due to growing per capita income and rising disposable incomes. The growth in the economy has caused an increasing trend in the purchasing power of individuals and with increased incomes available at one’s disposal, the consumer has a tendency to move to a superior quality product in the higher price range.

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Organized and Unorganized Markets in India

Every market can essentially be divided into two segments, the organised segment as well as the unorganised segment. The organised segment comprises of the large manufacturers and retailers. Mostly, an individual player in the organized segment has a larger scale of production as compared to an individual player in the unorganized segment. However, since there are larger numbers of manufacturers in the unorganized segment, the prices of the products offered by them is much lower/cheaper than the prices offered by their counterparts in the organised segment. These manufacturers play on volume rather than values. Normally, it is seen that it is the price that proves to be the most important element in the purchase process of the individuals.

Growth Drivers

● Increasing Urbanization

With modernization, there is a growth in the demand for sanitation and housing because of the increase in the system of nuclear families. Government’s increased focus on sanitation has assisted the growth of the ceramics industry. The increasing share of pucca houses (i.e. of solid and durable construction; typically of concrete, brick, stone or timber) in India and the growing share of tiles used as flooring material has contributed to the growth. The share of pucca households is expected to increase from 63% in 2011 to 79% in 2021. The share of tiles used in floor material has increased from 7% in 2001 to over 10% in 2011, and is expected to reach 16% by 202110. The interest in premium segment tiles has also witnessed an upward trend with the increase in the purchasing power of the consumers. The increased demand is majorly a consequence of new projects and an after effect of replacement market as well. Also, the growth in the housing sector with increased incomes, has also resulted in a growth in sanitary ware market.

● Increasing Disposable Income/ Purchasing Power Parity

There has been an improvement in the standard of living of the people due to the growth in the disposable income in India.

● Growth in Housing Sector

The growth in the residential real estate market in India has been on account of various factors including, inter alia, rise in disposable income, rapidly growing middle class, low interest rates, fiscal incentives, payments for housing loans, increasing urbanization, and nuclear family concept. The growth in the real estate sector has also been on account of various government initiatives. Few of the government initiatives include liberalization of foreign direct investment norms of 2005 as well as the introduction of laws for Special Economic Zones and allowing of private equity funds in the real estate sector. All these developments in the real estate sector are on account of the rising demands of multinational corporations (MNCs) and foreign investors. These developments are causing changes in the housing sector.

● Growth in Hospitality Industry/Commercial Sector

One of the important growth drivers for the commercial real estate sector still remains the information technology (IT) sector. It is expected that the real estate sector will grow further with the setting up of offices of a large number of IT based companies across the country. Further the Special Economic Zones (SEZs) are also expected to boost the development process. SEZs offer tax benefits which are attractive and lucrative for both the developers as well the occupiers. The demand for commercial space in the country is also likely to be driven by other sectors like banking and insurance, biotechnology and research and development. In addition, there are other factors which have a significant impact in the growth of commercial sector like technological advancement, changing lifestyle of people, and a growing middle class. With the advent of newer technologies in designing and printing of tiles and also huge exposure to electronic, digital and social media, the tiles have now become a lifestyle product instead of just being a hygiene product.

● New Government Initiatives

Some of the initiatives of the new government such as ‘Swach Bharat Abhiyan’, Housing for All, construction of smart cities and new freight corridors etc. are likely to drive new demand and also the replacement demand for the tiles.

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● Increasing acceptability of Tiles as a flooring option as compared with other traditional options

On the premium segment, tiles are much easier and faster to lay and also cheaper than the stones such as marble and granite. This is why it is a preferred choice of individuals, builders and contractors etc. Further on the value segment, tiles provide a better value proposition as compared to traditional flooring options like cemented or mosaic flooring. This has resulted in better acceptability of tiles as a flooring option across price segments.

Challenges

One of the key challenges in the tile market segment of India is the lack of awareness of the importance of sanitation, especially in view of the fact that majority of India’s population live in rural areas. Thus, the overall sanitation condition of the country remains very low. However, sanitation conditions are expected to improve in view of the increase in Government’s initiatives and hence overcome the challenge for the sanitary ware industry.

Sanitary Ware and Bath Fittings The sanitary-ware and bathroom fittings industry in India together is estimated to be valued around INR 60 billion. The sanitary-ware segment is estimated to have been worth approximately INR 20 billion while the bathroom fittings segment is estimated at approximately INR 40 billion in 2012. The Indian sanitary-ware market accounts for 8% of the global production and ranks second in terms of volume in the Asia-Pacific region. In the past few years, the sanitary ware and bath fittings market in India has experienced a growth which is expected to continue in the coming years. The driving force in the growth of the sanitary ware and bath fittings market can be attributed to several factors including overall growth of the economy, increasing urbanization, improved levels of awareness, and the increasing initiatives taken by the government. In addition, the growth of the real estate sector in India has further expedited the growth process in the sanitary ware and bath fittings market. India has also witnessed the increased focus of major foreign sanitary ware and bath fittings brands, thus making the sanitary ware and bath fittings market more attractive. Additionally, it can be expected that exports from India will likely improve for sanitary ware and bath fittings products. The expanding urbanization, growing awareness about sanitation needs along with various initiatives and support by the Government to enhance sanitary conditions is also driving the domestic demand and sales of sanitary ware and bath fittings products in India. Companies, today, are able to manufacture quality products with accurate standards along with top machinery and quality measures.

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BUSINESS Overview









● Bath Fittings



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Our Strengths

We believe that a number of factors have contributed to, and will continue to drive, our growth, including the following:

Established Brand

“Somany” has developed as an established brand name in the tiles industry in India for over four decades. The brand has been positioned as a brand for luxury and premium products, innovation and quality. Our brand has been further strengthened by the quality of our products, competitive prices, our expansive pan-India network of dealers and sub-dealers, and the intensive, strategic marketing initiatives implemented by us to grow our brand awareness among our customers. Our sustained marketing efforts have included the print, electronic and other advertisement media, exhibitions and outdoor promotions directed at retail and institutional customers, our dealers and sub-dealers and key influencers as well as training sessions for masons under our “Tile Master” program. We believe that the implementation of our marketing and branding strategy over the past few years have enabled us to develop a strong brand in our industry segment and is a key competitive strength that we continue to leverage in implementing our product diversification strategy.

Pan-India Sales and Distribution Network

Our product offerings are targeted at a wide range of customers, including institutional and retail consumers. Our institutional customers include builders, corporate customers, government departments as well as construction contractors. We have developed a wide distribution network with a pan-India presence. As of September 30, 2015, our distribution network included 1,471 active dealers, each affiliated with a number of sub-dealers. We have also established 19 sales depots across India as well as a representative office in China. In order to facilitate our distribution network, we have also established marketing offices and managed display centres that are strategically located in various cities of India. In addition, our sales and marketing initiatives are supplemented by our extensive customer service network.

Wide Range of Products Across Various Price Segments

We offer a wide range of products across different price segments which are used in commercial and home applications. Our wide range of ceramic tiles, polished vitrified tiles, glazed vitrified tiles, sanitary ware and bath fittings enable us to effectively address the diverse requirements of our end customers and enable our dealers and distributors to source most of their product requirements from us. We have over the years leveraged our product design, development and manufacturing capabilities to develop a diversified range of such products across various price segments. In addition, our extensive distribution network enables us to identify and meet the requirements of various segments of our target markets and customer preferences in major cities as well as in tier II and tier III cities and towns.

R&D, Innovation and Product Quality

We have set up a R&D facility at our Kassar plant and we continue to make investments in R&D capabilities. As of September 30, 2015, there were 13 employees in our R&D and design and technology facilities. These facilities have enabled us to manufacture our wide range of innovative products including our patented product “V.C.Shield” and our anti-skid floor tiles “Slip Shield” for which we have applied for a patent. We continue to develop and introduce new and improved products into our markets. Through continuous product innovation and research and development, we have over the years developed a wide range of tiles and related solutions as well as certain products that are new to the market and innovative in nature. We have received a patent for our abrasion resistant tiles sold under the brand “VC Shield”. We were also awarded the Corporate Technical Achievement Award - by the American Ceramic Society in 2014 for this product.

Dealer Relationships

We strive to develop and maintain strong relationships with our dealers. As of September 30, 2015, our distribution network included 1,471 active dealers, each with a number of sub-dealers. We believe that our product development initiatives have enabled us to establish strong relationships with dealers and their customers. Our quality standards and

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varied range of products also enable us to effectively address the requirements of our end customers across different industries and develop and maintain our relationships with such end customers. Our institutional customers include large number of leading real estate developers, corporates and government departments & contractors, who purchase our products from us or our dealers.

Experienced Management Team

Our management team has significant experience in the tiles and sanitary ware industry, and has developed extensive technical knowledge in the manufacturing process for our products. Our management team also have strong designing, customer relationship, marketing, sales, strategic sourcing and supply chain management capabilities. Our Chairman and Managing Director, and our Managing Director have approximately four decades and two decades of experience, respectively, in the ceramics industry. Our experienced management enables us to identify and address new market opportunities and introduce new products to capitalize on the significant growth opportunities in the tiles, sanitary ware and bath fittings segments.

Our Strategies

Growth through Asset-Light Model

While some of our products are manufactured in our own manufacturing facilities, we source a significant proportion of our products from third party manufacturers, particularly in Morbi, Gujarat. In recent years, we have increased our focus on this asset-light outsourced model and have entered into arrangements with several third party manufacturers, including through making minority or majority equity investments in such entities, particularly greenfield projects. Following such strategy, we have acquired equity shareholding in six companies for tile manufacturing as well as one company for sanitary ware manufacturing, all of which are located at Morbi, Gujarat. In addition, we continue to source tiles from several other manufacturers in Morbi, Gujarat. We believe that our asset-light model enables us to maximize return on capital deployed and increase our manufacturing capabilities in an efficient manner.

Further Strengthen our Brand and Sales Force

We believe our brand is well established in the tiles industry over four decades, and we intend to further strengthen our brand through intensive marketing and distribution initiatives. We continue to make investments to increase our brand visibility including print, television, digital and social media advertisements, and by increasing our focus on value-added tiles within each product segment including ceramics tiles, polished vitrified tiles and glazed vitrified tiles. As of September 30, 2015, we had 1,639 permanent employees, of which our sales, marketing and distribution team included 476 employees. We continue to focus on improving the skills of our sales, marketing and distribution personnel through a series of defined training modules at various levels. These training modules focus on product training for our internal marketing personnel as well as sales personnel at multi-brand outlets.

Continue to Expand our Geographical Coverage and Customer Base

We intend to further grow our business by adding new dealers and customers in existing and new markets. In addition, we also intend to leverage our distribution network and existing relationships to be able to increase our revenues. As of September 30, 2015, our distribution network included 1,471 active dealers, each with a number of sub-dealers. We have also set up 19 sales depots which act as warehouses for distribution. We intend to further expand our geographical presence across India by commencing operations in certain under-penetrated regions across India. We believe that our strong marketing capabilities, wide distribution network and established relationships with our dealers and customers as well as our wide product range at various price segments will enable us to rapidly expand our dealer and customer base and provide a competitive advantage. In addition, we believe that our dealership network and proximity to dealers and markets will enable us to further improve our distribution reach and increase our brand visibility. Our export sales were Rs. 6,434.35 lakhs and accounted for 4.03% of our gross sales in fiscal 2015. We continue to focus on further growing our export sales.

Develop Innovative Products and Designs

We continue to focus on developing and introducing new value added products into our markets. Through constant product innovation and research and development, we not only offer a diverse range of tiling solutions but also products that are new to the market and innovative in nature. We intend to continue to innovate on products and designs and

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maintain existing market leadership. We also continue to explore opportunities to collaborate with global players to augment the positioning of our products, enhance our manufacturing capabilities, upgrade our technological processes and offer new and diversified range of products to our customers.

Improve Operational Efficiencies

We have implemented adequate operational processes to ensure that our manufacturing operations are efficiently managed. This enables us to identify areas for improvement in our internal operational efficiencies and reduce costs. We continue to introduce new manufacturing processes and undertake debottlenecking exercises to reduce operating costs. All our tile manufacturing subsidiaries and associate companies have their manufacturing facilities located in Morbi, Gujarat, which is a ceramic manufacturing cluster, and offers us logistical and sourcing advantages. We continue to identify and improve operational efficiencies in terms of better utilisation of resources and improvement in processes and productivity.

Expansion Through Mergers, Acquisitions And Strategic Alliances

We may seek to further increase our market position through select acquisitions or joint ventures. We believe that we have sufficient expertise to find and acquire suitable ceramic production facilities and/or companies to increase our scale and geographic diversification.

Our Products

Ceramic Tiles Ceramic tiles are flat slabs manufactured from ceramic materials including clay, feldspar and quartz and certain additional synthetic raw materials. These tiles are used in a range of applications, including for flooring, as countertops, for roofing and as wall coverings. Ceramic glazed wall tiles have certain water absorption capabilities and are low to medium strength tiles. These tiles are typically used for indoor and outdoor wall covers. These tiles are low maintenance and have relatively higher hygiene levels. Ceramic glazed floor tiles have lower water absorption capabilities than the ceramic glazed wall tiles and are medium strength tiles. These tiles are also stain resistant. Polished Vitrified Tiles Polished vitrified tiles are flat slabs manufactured from ceramic materials including clay, feldspar and quartz and certain additional synthetic raw materials. These tiles are fired at extremely high temperatures in the furnace, and after such firing are polished with several abrasives to produce the glossy exterior. Due to the extremely high firing temperature, such tiles are typically high strength tiles. Polished vitrified tiles can be used in a range of applications, including for all kinds of floorings and as countertops. These tiles are typically used in low traffic residential and commercial areas.

Glazed Vitrified Tiles

Ceramic glazed vitrified tiles are flat slabs manufactured from ceramic materials such as clay, feldspar and quartz and certain additional synthetic raw materials and fired at high temperatures to ensure high strength and lower water absorption. These tiles are coated with glaze materials prior to the firing process. Following the completion of the glazing process and prior to firing, the designs of such tiles are printed on the glazed surface. These tiles are used in a range of applications, including for all kinds of floorings as well as countertops. These tiles are typically marketed in large sizes and are typically used in medium to high traffic residential and commercial areas. Sanitary Ware Products

We market and manufacture a range of sanitary ware products including a range of EWCs, pans, cisterns and urinals.

These sanitary ware products are typically procured by us from third party suppliers in India. We also import certain varieties of high-end sanitary ware products. Somany Sanitaryware Private Limited which became a subsidiary of our Company in fiscal 2016 has a manufacturing facility for sanitary ware with an installed capacity of 3.03 lakhs pieces per annum, located in Morbi, Gujarat.

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Bath Fittings

Our range of bath fittings include single lever technology, spouts, pillar taps, bib taps, basin mixers, multi-flow showers, ultra slim rain showers, sensor taps, flush valves, flush cocks, health faucets, as well as waste coupling cisterns. In addition, our range of bath fittings includes accessories such as soap dishes, shower trays, and shaving mirrors.

Manufacturing Process of Tiles

Ceramic Tiles

The following chart sets forth certain information relating to the manufacturing process of ceramic tiles:

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Polished Vitrified Tiles

The following charts set forth certain information relating to the production process of polished vitrified tiles:

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Glazed Vitrified Tiles

The following chart sets forth certain information relating to the production process of glazed vitrified tiles:

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Sanitary ware

The following chart sets forth certain information relating to the production process of sanitary ware:

Manufacturing Facilities

The following table sets forth certain information relating to manufacturing facilities owned by our Company:

Sr.

No.

Location Area (in

Sq. Meters)

Products

Manufactured

Owned/Leased ISO, OHSAS and

other

Certification

1.

Kadi Works, G.I.D.C. Industrial Estate, Distt. Mehsana, Kadi, Gujarat – 382 715

91,723.48 Ceramic Wall Tiles and Ceramic Floor

Tiles

Leasehold land ISO 9001:2008 ISO 14001: 2004 ISO 22000: 2005

BS OHSAS 18001: 2007

2. Kassar Works P.O. – Kassar , Bahadurgarh (Haryana)-124507

2,32,163 Ceramic Wall Tiles, Ceramic Floor Tile

and Glazed Vitrified Tiles

Freehold Land ISO 9001:2008 ISO 14001: 2004 ISO 22000: 2005

BS OHSAS 18001: 2007

The following table sets forth certain information relating to manufacturing facilities owned by our subsidiaries and associate companies and our shareholding interest in our subsidiaries and associate company as on September 30, 2015:

Sr.

No.

Name Associate /

Subsidiary

Shareholding of

our Company

Location Products

Manufactured

1. Amora Tiles Private Limited Subsidiary 51.00% Morbi Ceramic Tiles

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Sr.

No.

Name Associate /

Subsidiary

Shareholding of

our Company

Location Products

Manufactured

2. Somany Fine Vitrified Private Limited*

Subsidiary 51.00% Morbi -

3. Somany Sanitaryware Private Limited

Subsidiary 51.00% Morbi Sanitary Ware

4. Acer Granito Private Limited Associate 26.00% Morbi Polished Vitrified Tiles

5. Commander Vitrified Private Limited

Associate 26.00% Morbi Polished Vitrified Tiles

and Glazed Vitrified Tiles

6. Vintage Tiles Private Limited Associate 26.00% Morbi Polished Vitrified Tiles

7. Vicon Ceramic Private Limited Associate 26.00% Morbi Ceramic Tiles and Vitrified

Tiles

* Somany Fine Vitrified Private Limited is currently in the process of setting up a plant at Morbi, Gujarat, with a

proposed installed capacity of approximately 12,000 square meters per day to manufacture Polished Vitrified Tiles.

The following table sets forth certain information relating to the respective manufacturing capacities of the manufacturing facilities owned by our Company, and the historical capacity utilization of these facilities for fiscal 2015 and the six months ended September 30, 2015:

Sr

.

N

o.

Locatio

n

Produc

t

Annualise

d Installed

Capacity

(Per

Annum)

(in

million

square

meters)

Capacity Utilization for Fiscal 2015 Capacity Utilization for the Six Months

period ended September 30, 2015

Availabili

ty during

the

reporting

period (in

months)

Proportiona

te Capacity

Available

during the

period (in

million

square

meters)

Actual

Production

(in million

square

meters)

Utilisatio

n (%)

Availabilit

y during

the

reporting

period (in

months)

Proport

ionate

Capacit

y

Availab

le

during

the

period

(in

million

square

meters)

Actual

Production

(in

million

square

meters)

Utilisation

(%)

1.

Kassar

Unit

Ceramic Tiles/ Glazed Vitrified Tiles

13.13 12 months

13.13 13.10 99.77% 6 months 6.56 6.00 91.46%

2.

Kadi

Unit

Ceramic Tiles

8.42* 12/1.5 months*

6.32 6.45 102.06%

6 months 4.21 3.46 82.19%

Overall Capacity

and Utilization

21.55 19.45 19.55 100.51

%

10.77 9.46 87.84%

*out of this, annualised capacity of 2.40 msm was available for 1.5 months only.

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The following table sets forth certain information relating to the respective manufacturing capacities of the tile manufacturing facilities owned by our subsidiaries and associate companies, and the capacity utilization of these facilities for fiscal 2015: Sr.

No.

Name of

Associate /

Subsidiary

Product Location Annualized

Installed

Capacity (in

(million

square meters

(“msm”))

Capacity Utilization for Fiscal 2015

Availability

during the

reporting

period

(in months /

days)

Proportionate

capacity

available

during the

period

(in msm)

Capacity

Utilization as

on March 31,

2015

(in million

square

meters)

Utilization (%)

1. Amora Tiles

Private Limited

Ceramic

Tiles

Morbi 2.14 12 months 2.14 NA NA

Ceramic

Tiles

Morbi 2.44 124 days 0.83 NA NA

Overall Capacity

and Utilization

4.58 -- 2.97 2.53 85.19%

2. Acer Granito

Private Limited

Polished

Vitrified

Tiles

Morbi 2.04 12 months 2.04 2.14 104.90%

Polished

Vitrified

Tiles

Morbi 3.06 164 days 1.37 0.87 63.50%

Overall Capacity

and Utilization

5.10 3.41 3.01 88.27%

3. Commander

Vitrified Private

Limited

Polished /

Glazed

Vitrified

Tiles

Morbi 4.76 12 months 4.76 4.82 101.26%

4. Vintage Tiles

Private Limited

Polished

Vitrified

Tiles

Morbi 2.99 12 months 2.99 2.80 93.65%

5. Vicon Ceramic

Private Limited

Ceramics

/

Unglazed

Vitrified

Tiles

Morbi 3.98 12 months 3.98 2.68 67.34%

6. Somany

Sanitaryware

Private Limited

Sanitary

Ware

Morbi 3.03 lacs pcs 12 months 3.03 lacs pcs 2.35 lacs pcs 77.46%

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The following table sets forth certain information relating to the respective manufacturing capacities of the tile manufacturing facilities owned by our subsidiaries and associate companies, and the capacity utilization of these facilities for the six month period ended September 30, 2015: Sr. No. Name of

Associate /

Subsidiary

Product Location Annualized

Installed

Capacity (in

(million

square

meters

(“msm”))

Capacity Utilization for the Six Months Period ended September

30, 2015

Availability

during the

reporting

period

(in months /

days)

Proportionate

capacity

available

during the

period

(in msm)

Capacity

Utilization as

on September

30, 2015

(in million

square

meters)

Utilization

(%)

1. Amora Tiles

Private Limited

Ceramic

Tiles

Morbi 4.58 6 months 2.29 1.71 74.67%

2. Acer Granito

Private Limited

Polished

Vitrified

Tiles

Morbi 5.10 6 months 2.55 2.18 85.49%

3. Commander

Vitrified

Private Limited

Polished /

Glazed

Vitrified

Tiles

Morbi 4.76 6 months 2.38 2.24 94.12%

4. Vintage Tiles

Private Limited

Polished

Vitrified

Tiles

Morbi 2.99 6 months 1.49 1.31 87.63%

5. Vicon Ceramic

Private Limited

Ceramics

/

Unglazed

Vitrified

Tiles

Morbi 3.98 6 months 1.99 1.86 93.47%

6. Somany

Sanitaryware

Private Limited

Sanitary

Ware

Morbi 3.03 lacs pcs 6 months 1.52 lacs pcs 1.21 lacs pcs 79.61%

Materials

We source a majority of our raw materials and packing material for manufacturing tiles from a number of vendors. While the body raw material is sourced mainly from Rajasthan and Uttar Pradesh, the glaze raw material is sourced mainly from Gujarat, Rajasthan, Karnataka, Madhya Pradesh and Maharashtra. Packing material is sourced mainly from Haryana, Gujarat and Uttar Pradesh. Our vendors are selected by our purchasing department and are assessed on criteria such as the quality of materials supplied, duration of their business relationship with us, pricing, delivery reliability and response time to orders placed by us. The prices of major raw materials are generally negotiated with the vendors at the time of placing orders. We have an inventory management system for raw materials, consumables and spares. We have personnel and systems to monitor inventory and reorder levels of key items on selective basis.

Power and Fuel

Our manufacturing facilities require substantial amounts of power and fuel. Natural gas is the primary fuel for our manufacturing operations. We have entered into gas supply agreements with certain public sector undertakings for our Kassar (Haryana) and Kadi (Gujarat) facilities. In addition, for electric power, we depend on State electricity boards, power generators and power sourced through power trading. Distribution and Marketing

We have a wide distribution network with a pan-India presence. As of September 30, 2015, our distribution network included 1,471 active dealers each of them further having sub-dealers. We also have 19 sales depots and one representative office in China. To facilitate our distribution network, we have marketing offices and managed display centres that are strategically located in various cities of India. Further, our sales and marketing is supplemented by our customer service network.

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Quality Assurance

We are committed of maintaining quality standards in our products and manufacturing processes. Our products are passed through quality tests, and our quality assurance team monitors our processes at various stages of the manufacturing process and performs finished product inspections to ensure the quality of our products. Our quality control team analyses any non-conformity in the process and the quality of the product. Our quality assurance team also continues to improve our manufacturing processes through improvisation through research and development and reduction of internal rejection through comprehensive process audits and control. As a result of our quality assurance efforts, we have been awarded with ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certifications for our manufacturing facility at Kassar (Haryana) and Kadi (Gujarat) in relation to best practices in the manufacturing of ceramic and vitrified tiles and also our dedication towards maintaining effective environment management system and demonstrate sound occupational health and safety performance.

Insurance

We maintain insurance cover for our assets to cover all normal risks associated with operations of our business, including fire, accidents and other natural disasters. We typically maintain standard fire and special perils insurance policies for our plants and machineries and buildings at our manufacturing facilities to cover risks such as fire and other ancillary perils. These insurance policies are generally valid for a year and are renewed annually. Our operations are subject to hazards inherent in our industry and other force majeure events. This includes hazards that may cause injury and loss of life, damage and destruction of property, equipment and environmental damage. Not all risks associated with our business and operations may be insurable, on commercially reasonable terms, or at all. Although we believe that the amount of insurance currently maintained by us represents an appropriate level of coverage required to insure our business and operations, and is in accordance with industry standards in India, such insurance may not provide adequate coverage in certain circumstances and is subject to certain deductibles, exclusions and limits on coverage.

Intellectual Property We own certain trademarks and service marks under which our products are sold, including “SOMANY”, “EDGECUT”, “VC SHIELD”, “DURAGRES”, “EXPRESS”, “VITRO”, “SLIP SHIELD”, “STRIKER” and “TILE MASTER”. Other significant trademarks applied for but being used by us include “DURASTONE”, “NEOTECH”, “VITRO”, “AQUAWARE” and “EZYFIX”. We have received a patent for our abrasion resistant tiles sold under the brand “VC Shield”. We were also awarded the Corporate Technical Achievement Award - by the American Ceramic Society in 2014 for this product. We have also applied for the registration of a patent for slip resistant tiles branded as “Slip Shield” in 2013. These trade and service marks, and patents are integral to our business, and the loss of any of these intellectual property rights may have a material adverse effect on our business. Also from time to time, we may encounter disputes over rights and obligations concerning intellectual property and there can be no assurance that we will prevail in any such intellectual property disputes and oppositions. Environment, Health and Safety

We are committed to protecting the environment in the course of our operations. We have established procedures to ensure that our operations comply with applicable environmental regulations. We are committed to the occupational health and safety of our employees. We have implemented health and safety targets to reduce risk of harm to employees and visitors to our manufacturing facilities. We maintain occupational health and safety management systems that provide standards for occupational health and safety performance. Appropriate safety equipment is also provided. Our operational facilities are audited to ensure compliance with operational standards and safety systems. In addition, regular reports are provided to senior management on health and safety performances and any health and safety incidents are investigated and corrective actions developed. Both our manufacturing facilities are also accredited with OHSAS 18001 for Occupational health and safety and ISO 14001 for Environment.

Competition We operate in an intensely competitive industry. Certain competitors may be larger than us and may have significantly greater financial resources than us. As a result, to remain competitive in our markets, we continuously strive to reduce our costs of production, transportation and distribution and improve our operating efficiencies. Our industry is to an extent localised, fragmented and unorganised and therefore we compete with other manufactures in both the organised as

100

well as the unorganised sector. Competition is primarily based on availability of product, product range, quality, price, reputation, customer service and customer convenience. There are limited entry barriers in our industry and increase in capacity of our competition is likely to further intensify competition. We face competition from various market players in various segments of tiles. We also compete in our flooring solutions business with many regional and local businesses in the unorganised sector that generally have smaller production capacities and are limited in terms of geographic operations. We believe that our wide portfolio of products provides us with a competitive advantage over other manufacturers. In addition, our long track record, marketing initiatives, use of advanced technology, management of resources, scale of operations and pan-India marketing and distribution network provide us with certain competitive advantages. Research and Development

We have an R&D facility at our Kassar and we continue to make investments in R&D capabilities. As of September 30, 2015, there were 13 employees in our R&D and design and technology facilities. We invest in R&D to improve our products and diversify our product mix. Our R&D team focuses on new products as well as developing energy and resource efficient production methods. Our R&D efforts are focused on the following: (a) improving and developing new production and processing techniques; (b) improving the use and selection of raw materials to lower costs; and (c) developing new products and designs to address changing market demands. As a result of our R&D initiative, we have been able to manufacture our wide range of innovative products including our patented product “V.C.Shield” and our anti-skid floor tiles “Slip Shield” for which we have applied for a patent.

Employees

Our employees contribute significantly to our business operations. We have an employee development and involvement policy which aims at realizing full potential of employees through a shared set of values and culture of trust and empowerment. We believe in involvement of our employees in all improvement activities, providing opportunities to learn and develop skills and emphasise on recruitment, training, retention and skill upgradation of our employees. As of September 30, 2015, we had 1,639 permanent employees across our operations. We also engage contract labour depending on our requirements from time to time, particularly at our manufacturing facilities.

Properties

Our Company’s registered office is located at 82/19, Bhakerwara Road, Mundka New Delhi – 110 041. The premises at which our registered office is located is owned by SR Continental Limited, our wholly owned subsidiary company. Our manufacturing facility at Kassar (Haryana) is located on a freehold land and other manufacturing facility at Kadi (Gujarat) is located on a lease hold land. Our Company also holds a freehold land at Dhanot (Gujarat). In addition to this our Company also holds a freehold commercial space in Ahmedabad and 15 residential flats at Narayan Nagar Cooperative Society at Kadi (Gujarat) and also 3 residential flats at Bahadurgarh, Haryana. In addition, our Company has also taken on lease / rent several offices, showrooms and warehouses at various places in India to facilitate our operations.

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT The general supervision, direction and management of our Company’s operations and business are vested in the Board, which exercises its powers subject to the Memorandum and Articles and the requirements of Indian law. The Articles set out that the number of Directors shall not be less than three (3) and not more than eleven (11). The quorum for meetings of the Board is the higher of one-third of the total number of Directors, subject to a minimum of two (2) Directors. Currently, our Company has ten (10) Directors. The composition of the Board is primarily governed by the provisions of the Companies Act and the Listing Regulations. Of the ten (10) Directors, two (2) are executive Directors, three (3) are non-executive directors and five (5) are independent Directors. The following table sets forth details regarding the Board as at the date of this Preliminary Placement Document:

S.

No.

Name, Designation, Directors

Identification Number, Nationality,

Occupation

Age

(years)

Date of

Appointment /

Date of Last Re-

Appointment*

Address Term

1. Mr. Shreekant Somany Chairman & Managing Director

DIN: 00021423 Nationality: Indian Occupation: Industrialist

67 September 1, 2014 32, Friends Colony (East), New Delhi-110065

3 years

2. Mr. Abhishek Somany Managing Director


43 June 1, 2015 32, Friends Colony (East), New Delhi-110065

3 years

3. Mr. Ratna Kumar Daga Independent Director

DIN: 00227746 Nationality: Indian Occupation: Business

77 September 4, 2014 8, South End Park, Kolkata, 700029, West Bengal

5 years*

4. Mr. Girdhari Lal Sultania Non- Executive & Non-Independent

Director

DIN: 00060931 Nationality: Indian Occupation: Consultant

70 September 4, 2014

Anand Apartments 2 Rowland Road, Kolkata, 700020, West Bengal

Liable to retire by rotation

5. Mr. Salil Singhal Independent Director



Singhal Farm House, Near Airforce Station, Rajokri, New Delhi - 110038

5 years*

6. Mr. Ravinder Nath Independent Director

DIN: 00062186 Nationality: Indian Occupation: Advocate

70 September 4, 2014 Maulseri House, 7, Kapashera Estate, Delhi - 110037

5 years*

7. Dr. Yoginder Kumar Alagh Independent Director

DIN: 00244686 Nationality: Indian Occupation: Economist


45, Surdhara, Near Door Darshan, Thalteg, Ahmedabad - 380054, Gujarat

5 years*

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S.

No.

Name, Designation, Directors

Identification Number, Nationality,

Occupation

Age

(years)

Date of

Appointment /

Date of Last Re-

Appointment*

Address Term

8. Mr. Narayan Anand Non- Executive & Non-Independent

Director



D-03, Palacio, Old No 216, New No 408, TTK Road, Alwarpet, Chennai - 600018, Tamil Nadu


9. Mr. Siddharath Bindra Independent Director



Bindra Farm F - 4, Ansal Villa,, Near CSKM Public School, Satbari, New Delhi - 110030

Up to May 25, 2019

10. Mrs. Anjana Somany Non- Executive & Non-Independent

Director DIN:00133542 Nationality: Indian Occupation: Business


32, Friends Colony (East), New Delhi-110065


*To hold term up to the conclusion of the 51

st AGM to be held in calendar year 2019.

Compensation of Directors

The nomination and remuneration committee determines and recommends to the Board, the compensation of the Directors. The table below sets forth the details of the remuneration (including sitting fees, salaries, commission and perquisites) paid during the current fiscal year and the last three fiscal years, to the Directors on the Board as on the date of this Preliminary Placement Document:

(in Rs.lakhs)

Name Fiscal 2016* Fiscal 2015 Fiscal 2014 Fiscal 2013

Mr. Shreekant Somany 167.66 313.18 256.29 263.12

Mr. Abhishek Somany 167.66 313.18 256.29 276.34

Mr. Ratna Kumar Daga 3.05 6.25 6.40 6.05

Mr. Salil Singhal 2.70 6.15 5.40 5.40

Mr. Girdhari Lal Sultania 3.05 6.00 6.40 6.05

Mr. Ravinder Nath 2.50 5.50 5.45 5.45

Dr. Yoginder Kumar Alagh 2.70 5.80 5.60 5.60

Mr. Narayan Anand** 2.50 5.60 0.58 -

Mr. Siddharath Bindra 3.00 5.10 - -

Mrs. Anjana Somany 2.80 0.11 - -

*For the six-months ended September 30, 2015

**The remuneration is paid to Latinia Limited as Mr. Narayan Anand is a nominee of Latinia Limited

Interests of our Directors All Directors, other than our Chairman & Managing Director and our Managing Director, may be deemed to be interested to the extent of commission, fees, if any, payable to them for attending meetings of the Board or a committee thereof, remuneration and reimbursement of expenses payable to them. Our Chairman & Managing Director and our Managing Director may be deemed to be interested to the extent of remuneration paid to them for services rendered as officers of our Company. All Directors, may also be deemed to be interested to the extent of equity shares and stock options, if any, held by them

103

or their relatives and / or associates or held by any body corporates, firms, trusts, partnerships or entities in which they are interested as a director, member, partner, trustee or officer and / or have beneficial economic interest and to extent of benefits arising out of such shareholding. We have entered into a consultancy services agreement dated October 10, 2014 with Mr. Girdhari Lal Sultania for his professional services in matters relating to income tax law, corporate law, SEBI rules and regulations, listing provisions etc. for an annual fee of Rs.6 lakhs (plus service tax and other out of pocket expenses) for a period of three years starting April 1, 2014 until March 31, 2017. Except as otherwise stated in this Preliminary Placement Document in this regard, we have not entered into any contracts, agreements, arrangements during the preceding two years from the date of this Preliminary Placement Document in which any of the Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements, arrangements which are proposed to be made with them. As on the date of this Preliminary Placement Document, none of the Directors have availed of any loan from our Company, other than Mr. Abhishek Somany who is the son of our Chairman and Managing Director, Mr. Shreekant Somany and Mrs. Anjana Somany who is the wife of our Chairman and Managing Director and mother of our Managing Director, none of the Directors are related to any other Director. Shareholding of the Directors

The table below sets forth the number of Equity Shares held by the Directors, as of September 30, 2015:

Name Number of Equity Shares Percentage of pre-Issue paid up Equity

Share capital

Mr. Shreekant Somany 1,61,385 0.42%

Mr. Abhishek Somany 85,500 0.22%

Mrs. Anjana Somany 94,150 0.24%

Mr. Ratna Kumar Daga 5,000 0.012%

Mr. Girdhari Lal Sultania 1,250 0.003%

Corporate Governance Our Company is in compliance with the requirements of the applicable corporate governance norms, including the Listing Regulations, the Companies Act, the SEBI Regulations, in respect of corporate governance including constitution of the Board and committees thereof. The corporate governance framework is based on an effective independent Board, separation of the supervisory role of the Board from the executive management team and constitution of the committees of the Board, as required under applicable law. Our Company‘s management provides the Board with detailed reports on a periodic basis. Committees Our Company has four committees, which have been constituted and function in accordance with the relevant provisions of the Companies Act and the Listing Regulations, namely: (i) the audit committee; (ii) the nomination and remuneration committee; (iii) the stakeholders’ relationship committee, and (iv) the corporate social responsibility committee. A brief on each committee, its scope and composition is given below: Audit Committee The Board has constituted an audit committee. Pursuant to the last re-constitution of the audit committee on October 16, 2014, the committee comprises of the following members:

S. No. Name of the Director Designation

1. Mr. Ratna Kumar Daga Independent Director (Chairman)


3. Mr. Girdhari Lal Sultania Non- Executive & Non-Independent Director

4. Dr. Yoginder Kumar Alagh Independent Director

The broad terms of reference of the audit committee are in accordance with the requirements of the Listing Regulations,

104

the Companies Act, 2013 and rules prescribed thereunder.

Nomination and Remuneration Committee

The Board has constituted a nomination and remuneration committee. Pursuant to the last re-constitution of the nomination and remuneration committee on October 16, 2014, the committee comprises of the following members:




3. Mr. Siddharath Bindra Independent Director

The broad terms of reference of the nomination and remuneration committee are in accordance with the requirements of the Listing Regulations, the Companies Act, 2013 and rules prescribed thereunder.

Stakeholders’ Relationship Committee

The Board has constituted a stakeholders’ relationship committee. Pursuant to the last re-constitution of the stakeholders’ relationship committee on July 21, 2014, the committee comprises of the following members:




The broad terms of reference of the stakeholders’ relationship committee are in accordance with the requirements of the Listing Regulations, the Companies Act, 2013 and rules prescribed thereunder. As of September 30, 2015, all complaints were solved to the satisfaction of the complainants and there were no pending complaints received from investors.

Corporate Social Responsibility Committee

The Board has constituted a corporate social responsibility committee. Pursuant to the constitution of the corporate social responsibility committee on May 26, 2014, the committee comprises of the following members:


1. Mr. Abhishek Somany Managing Director


3. Mr. Ravinder Nath Independent Director

The corporate social responsibility committee prepared a corporate social responsibility policy indicating the activities to be undertaken by our Company as specified under the Companies Act, 2013 and is responsible for administering and executing the same.

Borrowing Powers of the Board

The Board of Directors are authorized, by way of a special resolution passed by the Shareholders of our Company in the AGM held on August 16, 2010 in accordance with Section 293(1)(d) of the Companies Act, 1956 and all other applicable provisions, if any, of the Companies Act and the Articles, to borrow any sum or sums of monies, from time to time for the purpose of the business of the Company, notwithstanding that the money or monies to be borrowed together with the monies already borrowed by the Company (apart from the temporary loans obtained from the Company’s bankers in the ordinary course of business) may exceed the aggregate of the paid-up share capital of our Company and its free reserves that is to say reserves not set apart for any specific purposes, provided however, the total amount so borrowed shall not exceed at any point in time a sum equivalent to Rs. 500 crores. The Company may revalidate the limits in the next Annual General Meeting of the Company.

105

Key Managerial Personnel

The following are the key managerial personnel of our Company:

i. Mr. Ghanshyam Girdharbhai Trivedi, Chief Executive Officer and Chief Financial Officer;

ii. Mr. Tuljaram Maheshwari, Deputy Chief Executive Officer;

iii. Mr. Sanjay Kalra, President Sales and Marketing;

iv. Mr. Rajeev Kumar Lakhotia, Vice President-Finance; and

v. Mr. Ambrish Julka, DGM(Legal) and Company Secretary.

Interest of Key Managerial Personnel

Except as otherwise stated in this Preliminary Placement Document in this regard and to the extent of the remuneration or benefits to which our Company’s key managerial personnel are entitled as per the terms of their employment, or reimbursement of expenses incurred by them in the ordinary course of business, or to the extent of their shareholding in our Company, our key managerial personnel do not have any other interest in our Company. Shareholding of Key Managerial Personnel

The following table sets forth details regarding the shareholding of the key managerial personnel in our Company as of September 30, 2015:

Name Number of Equity Shares Percentage of pre-Issue paid up Equity

Share capital

Mr. Ghanshyam Girdharbhai Trivedi 2,000 0.005%

Other confirmations

None of the Directors, Promoters or key managerial personnel of our Company has any financial or other material interest in the Issue and there is no effect of such interest in so far as it is different from the interests of other persons.

Management organizational structure

The organizational structure of our Company is as represented in the chart below:

106

PRINCIPAL SHAREHOLDERS AND OTHER INFORMATION

Corporate history relating to incorporation and change of name Our Company was incorporated as a public limited company named ‘Somany Pilkington’s Limited’ on January 20, 1968 under the Companies Act, 1956 vide certificate of incorporation dated January 20, 1968. Subsequently the name of the Company was changed to SPL Limited on October 18, 1995 and from SPL Limited to Somany Ceramics Limited on January 30, 2007. The corporate identification number of the Company is L40200DL1968PLC005169. The registered office of our Company is located at 82/19, Bhakerwara Road, Mundka, New Delhi – 110 041. The Equity Shares are listed on the NSE since November 22, 1995 and on BSE since March 27, 1996. Shareholding Pattern

The shareholding pattern of our Company as on September 30, 2015 is as follows:

No Category of

shareholder

Number of

shareholders

Total number of

shares

Number of

shares held

in de

materialized

form

Total shareholding

as a percentage of

total number of

shares

Shares pledged or otherwise

encumbered

% of

shares

(A+B)

% of

shares

(A+B+C)

Number

of

shares

% No. of shares

(A) Shareholding of Promoter and Promoter Group

(1) Indian

(a) Individuals/ Hindu

Undivided Family 8 31,25,465 31,25,465 8.05 8.05 0 0.00

(b) Central

Government/ State

Government(s)

0 0 0 0.00 0.00 0 0.00

(c) Bodies Corporate 3 1,87,13,895 1,87,13,895 48.18 48.18 0 0.00

(d) Financial

Institutions/ Banks 0 0 0 0.00 0.00 0 0.00

(e) Any Other

(specify) 0 0 0 0.00 0.00 0 0.00

Sub-Total (A)(1) 11 2,18,39,360 2,18,39,360 56.22 56.22 0 0.00

(2) Foreign

(a) Individuals (Non-

Resident

Individuals/

Foreign

Individuals)

0 0 0 0.00 0.00 0 0.00

(b) Bodies Corporate 0 0 0 0.00 0.00 0 0.00

(c) Institutions 0 0 0 0.00 0.00 0 0.00

(d) Qualified Foreign

Investor 0 0 0 0.00 0.00 0 0.00

(e) Any Other

(specify) 0 0 0 0.00 0.00 0 0.00

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

Total Shareholding

of Promoter and

Promoter Group

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

11 2,18,39,360 2,18,39,360 56.22 56.22 0 0.00

(B) Public shareholding

(1) Institutions

(a) Mutual Funds/ UTI 5 14,81,838 14,81,838 3.81 3.81 0 0.00

(b) Financial

Institutions/ Banks 8 14,300 4,270 0.04 0.04 0 0.00

(c) Central

Government/ State 0 0 0 0.00 0.00 0 0.00

107

No Category of

shareholder

Number of

shareholders

Total number of

shares

Number of

shares held

in de

materialized

form

Total shareholding

as a percentage of

total number of

shares

Shares pledged or otherwise

encumbered

% of

shares

(A+B)

% of

shares

(A+B+C)

Number

of

shares

% No. of shares

Government(s)

(d) Venture Capital

Funds 0 0 0 0.00 0.00 0 0.00

(e) Insurance

Companies 0 0 0 0.00 0.00 0 0.00

(f) Foreign

Institutional

Investors

11 19,67,862 19,67,862 5.07 5.07 0 0.00

(g) Foreign Venture

Capital Investors 0 0 0 0.00 0.00 0 0.00

(h) Qualified Foreign

Investor 0 0 0 0.00 0.00 0 0.00

(i) Any Other

(specify) 0 0 0 0.00 0.00 0 0.00

Sub-Total (B)(1) 24 34,64,000 34,53,970 8.92 8.92 0 0.00

(2) Non-institutions

(a) Bodies Corporate 246 11,39,835 11,03,075 2.93 2.93 0 0.00

(b) Individuals

(i) Individual

shareholders

holding nominal

share capital up to

Rs. 1 lakh

5,853 38,63,384 32,02,574 9.95 9.95 0 0.00

(ii) Individual

shareholders

holding nominal

share capital in

excess of Rs. 1 lakh

22 29,17,084 29,17,084 7.51 7.51 0 0.00

(c) Qualified Foreign

Investor 0 0 0 0.00 0.00 0 0.00

(d) Any Other

(specify) 0 0 0 0.00 0.00 0 0.00

Foreign Company 2 55,52,499 55,52,499 14.29 14.29 0 0.00

Clearing Member 35 5,034 5,034 0.01 0.01 0 0.00

Trusts 2 11,300 11,300 0.03 0.03 0 0.00

Non-Resident

Individual 79 52,330 52,330 0.13 0.13 0 0.00

Sub-Total(B)(2)

6,239

1,35,41,466

1,28,43,896

34.86 34.86 0 0.00

Total Public

Shareholding (B)=

(B)(1)+(B)(2)

6,263

1,70,05,466

1,62,97,866

43.78 43.78 0 0.00

TOTAL(A)+(B)

6,274

3,88,44,826

3,81,37,226

100.00 100.00 0 0.00

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

C1 Promoter and

Promoter group 0 0 0

0.00 0 0.00

C2 Public 0 0 0

0.00 0 0.00

Total C=C1+C2 0 0 0

0.00 0 0.00

GRAND TOTAL

(A)+(B)+(C) 6,274 38,844,826 38,137,226 100.00 100.00 0 0.00

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The following table sets our the details of the Equity Shares held by the Promoters and Promoter Group of our Company as on September 30, 2015:

Sr.

No

(I)

Name of the

shareholder

(II)

Details of Shares held Encumbered shares (*) Details of warrants Details of convertible

securities

Total shares

(including

underlying

shares

assuming

full

conversion

of warrants

and

convertible

securities)

as a % of

diluted

share

capital

(XII)

No. of

Shares held

(III)

As

a % of

grand

total

(A) +

(B) +

(C)

(IV)

No.

(V)

As a

percentage

(VI) = (V) /

(III)* 100

As

a % of

grand

total

(A) +

(B) +

(C) of

sub-

clause

(I)(a)

(VII)

Number

of

warrants

held

(VIII)

As a %

total

number

of

warrants

of the

same

class

(IX)

Number of

convertible

securities

held

(X)

As a % total

number of

convertible

securities of

the same

class

(XI)

1 Hiralall Somany

3,13,855 0.81 0 0.00 0.00 0 0.00 0 0.00 0.81

2 Shrivatsa Somany

16,94,675 4.36 0 0.00 0.00 0 0.00 0 0.00 4.36

3 Shreekant Somany

1,15,885 0.30 0 0.00 0.00 0 0.00 0 0.00 0.30

4 Shreekant Somany

45,500 0.12 0 0.00 0.00 0 0.00 0 0.00 0.12

5 Abhishek Somany

85,500 0.22 0 0.00 0.00 0 0.00 0 0.00 0.22

6 Anjana Somany

94,150 0.24 0 0.00 0.00 0 0.00 0 0.00 0.24

7 Minal

Somany 6,25,900 1.61 0 0.00 0.00 0 0.00 0 0.00 1.61

8 Anushree Chopra

1,50,000 0.39 0 0.00 0.00 0 0.00 0 0.00 0.39

9 Bhilwara Holdings

Ltd. 90,09,840 23.19 0 0.00 0.00 0 0.00 0 0.00 23.19

10 Sarvottam

Vanijya Limited

62,12,980 15.99 0 0.00 0.00 0 0.00 0 0.00 15.99

11 Scope

Vinimoy Pvt. Ltd.

34,91,075 8.99 0 0.00 0.00 0 0.00 0 0.00 8.99

Total 2,18,39,360 56.22 0 0.00 0.00 0 0.00 0 0.00 56.22

The following table sets our the details of the shareholding of persons belonging to the category “Public” and holding more than 1% of the total number of Equity Shares as on September 30, 2015:

Sr.

No

Name of the

shareholder

No. of Shares

held

Shares as a

percentage of

total number

of shares {i.e.,

Grand Total

(A)+(B)+(C)

indicated in

Statement at

para (I)(a)

above}

Details of warrants Details of convertible securities Total shares

(including

underlying

shares assuming

full conversion

of warrants and

convertible

securities) as

a % of diluted

share capital

Number

of

warrants

held

As a % total

number of

warrants of

the same class

Number of

convertible

securities held

% w.r.t total

number of

convertible

securities of the

same class

1 Latinia Limited 43,47,826 11.19 0 0.00 0 0.00 11.19

2 Macquarie Bank

Ltd 6,38,526 1.64 0 0.00 0 0.00 1.64

3 Hind Strategic

Investment 12,04,673 3.10 0 0.00 0 0.00 3.10

4 DSP Blackrock Micro Cap Fund

12,79,074 3.29 0 0.00 0 0.00 3.29

5 Kirtivardhan

Finvest Services Ltd

4,33,795 1.12 0 0.00 0 0.00 1.12

6 Ntasian Discovery

Master Fund 10,00,000 2.57 0 0.00 0 0.00 2.57

Total 89,03,894 22.92 0 0.00 0 0.00 22.92

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REGULATIONS AND POLICIES The following description is a summary of the important laws, regulations and policies that are applicable to our

business. The information detailed below has been obtained from the various legislations, including rules and

regulations promulgated by regulatory bodies, and the bye-laws of the respective local authorities that are available in

the public domain. The regulations set out below may not be exhaustive and are merely intended to provide general

information to the investors and are neither designed nor intended to substitute for professional legal advice. The

statements below are based on the current provisions of Indian law and the judicial and administrative interpretations

thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial

decisions.

In addition to the regulations and policies already specified in this Preliminary Placement Document, taxation statutes

such as the IT Act, various labour laws, environmental laws and other miscellaneous laws apply to us as they do to any

other Indian company.

The Legal Metrology Act, 2009 The Legal Metrology Act, 2009 (the “Legal Metrology Act”) has come into effect on April 1, 2011. The Legal Metrology Act replaces the Standard Weights and Measures Act, 1976. The Legal Metrology Act seeks to establish and enforce standards of weights and measures, regulate trade and commerce in weights, measures and other goods which are sold or distributed by weight, measure or number and for matters connected therewith or incidental thereto. The key features of the Legal Metrology Act are (a) appointment of Government approved test centres for verification of weights and measures; (b) allowing the companies to nominate a person who will be held responsible for breach of provisions of the Legal Metrology Act; and (c) simplified definition of packaged commodity and more stringent punishment for violation of provisions. Bureau of Indian Standards Act, 1986 Bureau of Indian Standards Act, 1986 (“Bureau of Indian Standards Act”) provides for the establishment of bureau for the standardisation, marking and quality certification of goods. The Bureau of Indian Standards Act provides for the functions of the bureau which include, among others (a) recognize as an Indian standard, any standard established for any article or process by any other institution in India or elsewhere; (b) specify a standard mark to be called the Bureau of Indian Standards Certification Mark which shall be of such design and contain such particulars as may be prescribed to represent a particular Indian standard; and (c) make such inspection and take such samples of any material or substance as may be necessary to see whether any article or process in relation to which the standard mark has been used conforms to the Indian Standard or whether the standard mark has been improperly used in relation to any article or process with or without a license.The Bureau of Indian Standards Bill, 2015 (the “BIS Bill”) introduced by the Cabinet on July 17, 2015 to replace the Bureau of Indian Standards Act. The BIS Bill proposes to broaden ambit of the Bureau of Indian Standards Act and will make it mandatory for certain notified goods, articles, processes, etc, to carry the standard mark. The BIS Bill also propose to strengthen the penal provisions for more effective compliance and enable compounding of offences for violations

Sale of Goods Act, 1930 The Sale of Goods Act, 1930 (“Sale of Goods Act”) governs the contracts relating to sale of goods. The contracts for sale of goods are subject to the general principles of the law relating to contracts. The Sale of Goods Act is complimentary to the Indian Contract Act, 1872, and the un-repealed provisions of the Indian Contract Act, 1872, save in so far as they are inconsistent with the express provisions of the Sale of Goods Act, continue to apply to contracts for the sale of goods. A contract of sale may be an absolute one or based on certain conditions. The Sale of Goods Act contains provisions in relation to the essential aspects of such contracts, including the transfer of ownership of the goods, delivery of goods, rights and duties of the buyer and seller, remedies for breach of contract and the conditions and warranties implied under a contract for sale of goods.

The Environment (Protection) Act, 1986 The Environment Protection Act, 1986 (“EPA”) encompasses various environment protection laws in India. The EPA grants the Government of India the power to take any measures it deems necessary or expedient for protecting and improving the quality of the environment and preventing and controlling pollution. Penalties for violation of the EPA include imprisonment, payment of a fine, or both. Under the EPA and the Environment (Protection) Rules, 1986, as amended, the Government of India issued a notification (S.O. 1533(E)) dated September 14, 2006 (“EIA Notification”),

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which requires the prior approval of the Ministry of Environment and Forests (“MoEF”) or the State Environment Impact Assessment Authority (“SEIAA”), as the case may be, for the establishment of any new project and for expansion or modernization of existing projects specified in the EIA Notification. Under the EIA Notification, obtaining of prior environment clearance includes four stages: screening, scoping, public consultation and appraisal. An application for environment clearance is made after the prospective project or activity site has been identified, but prior to commencing construction activity or other land preparation. Certain projects which require approval from the SEIAA may not require an EIA report. For projects that require preparation of an EIA report, public consultation involving public hearing and written responses is conducted by the State Pollution Control Board, prior to submission of a final EIA report. The environmental clearance (for commencement of the project) is valid for up to five years for all projects (other than mining projects), which may be further extended by the concerned regulator for up to five years.

The Water (Prevention and Control of Pollution) Act, 1974 The Water (Prevention and Control of Pollution) Act, 1974 (“Water Act”) aims to prevent and control water pollution and to maintain or restore water purity. The Water Act provides for one central pollution control board, as well as various state pollution control boards, to be formed to implement its provisions. Under the Water Act, any person intending to establish any industry, operation or process or any treatment and disposal system likely to discharge sewage or other pollution into a water body, is required to obtain the prior consent of the relevant state pollution control board. Additionally, the Water (Prevention and Control of Pollution) Cess Act, 1977 (“Water Cess Act”) provides for the levy and collection of a cess on water consumed by persons carrying on certain industries and by local authorities, with a view to augment the resources of the Central Board and the State Boards for the prevention and control of water pollution. The cess to be paid is to be calculated on the basis of the amount of water consumed by such industry and the industrial purpose for which the water is consumed, as per the rates specified under the Water Cess Act.

The Air (Prevention and Control of Pollution) Act, 1981 The Air (Prevention and Control of Pollution) Act, 1981 (“Air Act”), aims to prevent, control and abate air pollution, and stipulates that no person shall, without prior consent of the relevant state pollution control board, establish or operate any industrial plant which emits air pollutants in an air pollution control area. The central pollution control board and state pollution control boards constituted under the Water Act perform similar functions under the Air Act as well. Not all provisions of the Air Act apply automatically to all parts of India, and the state pollution control board must notify an area as an “air pollution control area” before the restrictions under the Air Act apply.

Laws relating to employment The Factories Act, 1948 (“Factories Act”) defines a ‘factory’ to cover any premises which employs ten or more workers and in which manufacturing process is carried on with the aid of power and any premises where there are at least twenty workers even though there is or no electrically aided manufacturing process being carried on. Each State Government has rules in respect of the prior submission of plans and their approval for the establishment of factories and registration and licensing of factories. The Factories Act provides that an occupier of a factory i.e. the person who has ultimate control over the affairs of the factory and in the case of a company, any one of the directors, must ensure the health, safety and welfare of all workers. There is a prohibition on employing children below the age of fourteen years in a factory. The occupier and the manager of a factory may be punished with imprisonment for a term up to two years or with a fine up to Rs. 100,000 or with both in case of contravention of any provisions of the Factories Act or rules framed there under and in case of a contravention continuing after conviction, with a fine of up to Rs. 1,000 per day of contravention. In addition to the Factories Act, the employment of workers, depending on the nature of activity, is regulated by a wide variety of generally applicable labour laws. The following in an indicative list of labour laws applicable to the business and operations of Indian companies engaged inter alia in manufacturing activities:

Contract Labour (Regulation and Abolition) Act, 1970;

Employees' Provident Funds and Miscellaneous Provisions Act, 1952;

Employees' State Insurance Act, 1948;

Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979;

Minimum Wages Act, 1948;

Payment of Bonus Act, 1965;

Payment of Gratuity Act, 1972;

Payment of Wages Act, 1936;

Maternity Benefit Act, 1961;

Industrial Disputes Act, 1947 and

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Workmen’s Compensation Act, 1923

Laws relating to intellectual property

The Trade Marks Act, 1999

In India, trademarks enjoy protection under both statutory and common law. Indian trademark law permits the registration of trademarks for goods and services. The Trade Marks Act, 1999 (“Trademark Act”) governs the statutory protection of trademarks and for the prevention of the use of fraudulent marks in India. Certification marks and collective marks can also be registered under the Trademark Act. An application for trademark registration may be made by individual or joint applicants and can be made on the basis of either use or intention to use a trademark in the future. Applications for a trademark registration may be made in one or more international classes. Once granted, trademark registration is valid for ten years unless cancelled. If not renewed after ten years, the mark lapses and the registration has to be restored. The Trademark (Amendment) Act, 2010 has been enacted by the GoI to amend the Trademark Act to enable Indian nationals as well as foreign nationals to secure simultaneous protection of trademark in other countries, and to empower the Registrar of Trademarks to do so. It also seeks to simplify the law relating to transfer of ownership of trademarks by assignment or transmission and to bring the law generally in line with international practice. The Patents Act, 1970

The Patents Act, 1970 (“Patents Act”) governs the patent regime in India. Being a signatory to the Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS”), India is required to recognize product patents as well as process patents. In addition to broad requirement that an invention satisfy the requirements of novelty, utility and non-obviousness in order for it to avail patent protection, the Patents Act further provides that patent protection may not be granted to certain specified types of inventions and materials even if they satisfy the above criteria. The Patents Act also prohibits any person resident in India from applying for patent for an invention outside India without making an application for the invention in India. The term of a patent granted under the Patents Act is for a period of twenty years from the date of filing of the application for the patent.

The Copyright Act, 1957

The Copyright Act, 1957 (“Copyright Act”) governs copyright protection in India. Under the Copyright Act, copyright may subsist in original literary, dramatic, musical or artistic works, cinematograph films, and sound recordings. While copyright registration is not a prerequisite for acquiring or enforcing a copyright in an otherwise copyrightable work, registration constitutes prima facie evidence of the particulars entered therein and may expedite infringement proceedings and reduce delay caused due to evidentiary considerations. Once registered, copyright protection of a work lasts for a period of sixty years following the demise of the author. Reproduction of a copyrighted work for sale or hire, issuing of copies to the public, performance or exhibition in public, making a translation of the work, making an adaptation of the work and making a cinematograph film of the work without consent of the owner of the copyright are all acts which expressly amount to an infringement of copyright.

Consumer Protection Act, 1986

Consumer Protection Act, 1986 (“COPRA”) came into effect on December 24, 1986. COPRA reinforces the interest and rights of consumers by laying down a mechanism for speedy grievance redressal. Any person to whom goods were delivered/intended to be delivered or services were rendered/ intended to be rendered, or a recognized consumer association, or numerous consumers having the same interest, or the Central/State Government may lodge a complaint before the district forum or any other appropriate forum under COPRA, inter alia, for: a. Defective or spurious goods or services; b. Unfair or restrictive trade practices; c. Manufacture or provision of hazardous goods/services, in contravention of any standards relating to safety; and d. Misleading or false warranties or guarantee or representations by the manufacturer/service provider. In addition to awarding compensations and/or corrective orders, the forums/commissions under COPRA are empowered to impose penalty in terms of imprisonment of not less than a month, but not exceeding three years, or a fine of not less than two thousand rupees, but not more than ten thousand rupees, or both.The Consumer Protection Bill, 2015 (the “COPRA Bill”) was introduced in Lok Sabha on August 10, 2015. The COPRA Bill proposes to widen the ambit and modernise the law on consumer protection due to the changes in the markets. The COPRA Bill provides that if defects in the manufacture, construction, design, testing, etc. of a product results in any personal injury or property damage to a consumer, the manufacturer is liable in a product liability action and may face monetary penalties.

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ISSUE PROCEDURE The following is a summary intended to present a general outline of the procedure relating to the application, payment,

Allocation and Allotment. The procedure followed in the Issue may differ from the one mentioned below, and investors

are presumed to have apprised themselves of the same from our Company or the Book Running Lead Manager. Investors

are advised to inform themselves of any restrictions or limitations that may be applicable to them. See the sections titled“Distribution and Solicitation Restrictions” and “Transfer Restrictions” in this Preliminary Placement Document.

Investors that apply in the Issue will be required to confirm and will be deemed to have represented to the Company, the

Book Running Lead Manager and their respective directors, officers, agents, affiliates and representatives that they are

eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the Equity Shares. The

Company and the Book Running Lead Manager and their respective directors, officers, agents, affiliates and

representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to

acquire the Equity Shares.

Qualified Institutions Placement

The Issue is being made to QIBs in reliance upon Section 42 of the Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations, through the mechanism of a QIP. A company may issue equity shares to QIBs provided that certain conditions are met by the company. Some of these conditions are set out below:

the issuer has completed all allotments with respect to any offer or invitation previously made by it or has withdrawn or abandoned any invitation or offer previously made by it;

the issuer is in compliance with the minimum public shareholding requirements set out in the Securities Contract (Regulation) Rules, 1957;

equity shares of the same class of such issuer, which are proposed to be allotted through the QIP, are listed on a stock exchange in India that has nation-wide trading terminals for a period of at least one year prior to the date of issuance of notice to its shareholders for convening the meeting to pass the below-mentioned special resolution;

the shareholders of the issuer have passed a special resolution approving such QIP. Such special resolution must specify (a) that the allotment of securities is proposed to be made pursuant to the QIP; and (b) the relevant date;

the explanatory statement to the notice to the shareholders for convening the general meeting must disclose the basis or justification for the price (including premium, if any) at which the offer or invitation is being made;

the offer must be made through a private placement offer letter and an application form serially numbered and addressed specifically to the QIB to whom the offer is made and is sent to such QIB within 30 days of recording the names of such QIBs in accordance with Section 42 of the Companies Act, 2013;

the offer must not be to more than 200 persons in a fiscal year. However, an offer to QIBs will not be subject to this limit of 200 persons. Prior to circulating the private placement offer letter, the issuer must prepare and record a list of QIBs to whom the offer will be made. The offer must be made only to such persons whose names are recorded by the issuer prior to the invitation to subscribe;

issuer must offer to each allottee at least such number of the securities in the issue which would aggregate to Rs. 20,000 calculated at the face value of the securities;

the aggregate of the proposed issue and all previous QIPs made by the issuer in the same fiscal year does not exceed five times the net worth (as defined in the SEBI Regulations) of the issuer as per the audited balance sheet of the previous fiscal year; and

the offering of securities by issue of public advertisements or utilization of any media, marketing or distribution channels or agents to inform the public about the issue is prohibited.

At least 10% of the Equity Shares issued to QIBs must be Allotted to Mutual Funds, provided that, if this portion or any part thereof to be Allotted to Mutual Funds remains unsubscribed, it may be Allotted to other QIBs.

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In order to participate in the Issue, prospective purchasers will be deemed to have represented to us and the Book Running Lead Manager that such purchaser is either (i) outside the United States acquiring the Equity Shares in an offshore transaction under Regulation S, or (ii) an institutional investor in the United States that is a “qualified institutional buyer” as defined in Rule 144A. For a description of certain restrictions on transfer of the Equity Shares, see “Distribution and Solicitation Restrictions” and “Transfer Restrictions” in this Preliminary Placement Document. Investors are not allowed to withdraw their Bids after the Bid/Issue Closing Date. Additionally, there is a minimum pricing requirement for pricing equity shares, offered in a QIP under the SEBI Regulations. The Issue Price should not be above the Floor Price. The Floor Price shall not be less than the average of the weekly high and low of the closing prices of the Equity Shares quoted on the stock exchange during the two weeks preceding the Relevant Date. However, a discount of up to 5% of the Floor Price is permitted in accordance with the provisions of the SEBI Regulations. The “relevant date” referred to above, will be the date of the meeting in which the Board or the committee of Directors duly authorized by the Board decides to open the Issue and “stock exchange” means any of the stock exchanges in India on which the Equity Shares of our Company of the same class are listed and on which the highest trading volume in such Equity Shares has been recorded during the two weeks immediately preceding the relevant date. Our Company has applied for and received the in-principle approval of the Stock Exchanges under Regulation 28(1) of the Listing Regulations for the listing of the Equity Shares on the Stock Exchanges. Our Company has also delivered a copy of this Preliminary Placement Document to the Stock Exchanges. Our Company shall make the requisite filings with the RoC and the SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014. The Issue was authorised and approved by the Board on March 24, 2015 and approved by the Shareholders through a special resolution passed by way of a postal ballot pursuant to a postal ballot notice issued on March27, 2015, the results of which were announced on May 2, 2015. The Equity Shares will be Allotted within 12 months from the date of the Shareholders’ resolution approving the QIP and within 60 days from the date of receipt of subscription money from the relevant QIBs. The Equity Shares issued pursuant to the QIP must be issued on the basis of this Preliminary Placement Document and the Placement Document that shall contain all material information including the information specified in Schedule XVIII of the SEBI Regulations and the requirements prescribed under Form PAS-4. The Preliminary Placement Document and the Placement Document are private documents provided to only select investors through serially numbered copies and are required to be placed on the website of the Stock Exchanges and of our Company with a disclaimer to the effect that it is in connection with an issue to QIBs and no offer is being made to the public or to any other category of investors. The minimum number of Allottees for the Issue shall not be less than:

two, where the Issue Size is less than or equal to Rs.2,500 million; and

five, where the Issue Size is greater than Rs.2,500 million.

No single Allottee shall be Allotted more than 50% of the Issue Size. QIBs that belong to the same group or that are under common control shall be deemed to be a single Allottee. See “Issue Procedure - Application Process - Application

Form”. THE EQUITY SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED, LISTED OR OTHERWISE

QUALIFIED IN ANY OTHER JURISDICTION OUTSIDE INDIA AND MAY NOT BE OFFERED OR SOLD,

AND BIDS MAY NOT BE MADE BY PERSONS IN ANY SUCH JURISDICTION, EXCEPT IN COMPLIANCE

WITH THE APPLICABLE LAWS OF SUCH JURISDICTION. Issue Procedure 1. Our Company and the Book Running Lead Manager shall circulate serially numbered copies of this Preliminary

Placement Document and the serially numbered Application Form, either in electronic or physical form to the QIBs and the Application Form will be specifically addressed to such QIBs. In terms of Section 42 (7) of the Companies Act, 2013, our Company shall maintain complete records of the QIBs to whom this Preliminary

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Placement Document, the Placement Document and the serially numbered Application Form have been dispatched. Our Company shall make the requisite filings with the RoC and the SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014.

2. The list of QIBs to whom the Application Form is delivered shall be determined by the Company in consultation

of BRLM.

3. UNLESS A SERIALLY NUMBERED PRELIMINARY PLACEMENT DOCUMENT ALONG WITH

THE SERIALLY NUMBERED APPLICATION FORM IS ADDRESSED TO A PARTICULAR QIB, NO

INVITATION TO SUBSCRIBE SHALL BE DEEMED TO HAVE BEEN MADE TO SUCH QIB. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person and any application that does not comply with this requirement shall be treated as invalid.

4. Bidders shall submit Bids for, and our Company shall issue and Allot to each Allottee at least such number of

Equity Shares which would aggregate to Rs. 20,000 calculated at the face value of the Equity Shares. 5. QIBs may submit an Application Form, during the Bid/Issue Period to the Book Running Lead Manager. 6. QIBs will be required to indicate the following in the Application Form:

name of the QIB to whom Equity Shares are to be Allotted;

number of Equity Shares Bid for;

price at which they are agreeable to subscribe for the Equity Shares, provided that QIBs may also indicate that they are agreeable to submit a Bid at the Cut-Off Price which shall be any price as may be determined by our Company in consultation with the Book Running Lead Manager at or above the Floor Price or the Floor Price net of such discount as approved in accordance with SEBI Regulations.

details of the Depository Participant account to which the Equity Shares should be credited;

if it is within the United States, it is a U.S. QIB who is, or are acquiring the Equity Shares for its own account or for the account of an institutional investor who also meets the requirement of a U.S. QIB, for investment purposes only and not with a view to, or for resale in connection with, the distribution (within the meaning of any United States securities laws) thereof, in whole or in part and are not our affiliate or a person acting on behalf of such an affiliate;

if it is outside the United States, it is purchasing the Equity Shares in an offshore transaction in reliance on Regulation S under the Securities Act, and is not our affiliate or a person acting on behalf of such an affiliate; and

It has read and understood, and by making a Bid for the Equity Shares through the Application Forms and pursuant to the terms of this Preliminary Placement Document, will be deemed to have made the representations, warranties and agreements made under the sections “Notice to Investors”, “Representations by Investors”, “Distribution and Solicitation Restrictions” and “Transfer Restrictions” of this Preliminary Placement Document.

NOTE: Each sub-account of an FII other than a sub-account which is a foreign corporate or a foreign individual will be

considered an individual QIB and separate Application Forms would be required from each such sub-account for

submitting Bids. 7. Once a duly completed Application Form is submitted by a Bidder, such Application Form constitutes an

irrevocable offer and cannot be withdrawn after the Bid/Issue Closing Date. The Bid/Issue Closing Date shall be notified to the Stock Exchanges and the Bidders shall be deemed to have been given notice of such date after receipt of the Application Form.

The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with the SEBI. 8. Upon receipt of the Application Form, after the Bid/Issue Closing Date, our Company shall determine the final

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terms, including the Issue Price in consultation with the Book Running Lead Manager. Upon determination of the final terms of the Equity Shares, the Book Running Lead Manager will send the serially numbered CAN along with the Placement Document to the Bidders who have been Allocated the Equity Shares. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares Allocated to such Bidder. The CAN shall contain details such as the number of Equity Shares Allocated to the Bidder and payment instructions including the details of the amounts payable by the Bidder for Allotment of the Equity Shares in its name and the Pay-In Date as applicable to the respective Bidder. PLEASE NOTE THAT THE ALLOCATION WILL BE AT THE ABSOLUTE DISCRETION OF OUR

COMPANY AFTER CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER. 9. Pursuant to receiving a CAN, each Bidder shall be required to make the payment of the entire application monies

for the Equity Shares indicated in the CAN at the Issue Price, only through electronic transfer to our Company’s designated bank account by the Pay-In Date as specified in the CAN sent to the respective Bidders. No payment

shall be made by Bidders in cash. Please note that any payment of application money for the Equity

Shares shall be made from the bank accounts of the relevant Bidders applying for the Equity Shares. Monies payable on Equity Shares to be held by joint holders shall be paid from the bank account of the person whose name appears first in the Application. Pending Allotment, all monies received for subscription of the Equity Shares shall be kept by our Company in a separate bank account with a scheduled bank and shall be utilized only for the purposes permitted under the Companies Act, 2013, i.e., the Escrow Account. See “Issue Procedure - Bank Account for Payment of Application Money”.

10. Upon receipt of the application monies from the Bidders, our Company shall Allot Equity Shares as per the

details in the CAN sent to the Bidders. 11. The QIB confirms that it is purchasing the Equity Shares in an offshore transaction meeting the requirements of

Rule 903 or 904 of Regulation S and it shall not offer, sell, pledge or otherwise transfer such Equity Shares except in an offshore transaction complying with Regulation S or pursuant to any other available exemption from registration under the Securities Act and in accordance with all applicable securities laws of the states of the United States and any other jurisdiction, including India. It also confirms all other applicable representations and warranties included under"Representations by Investors", "Notice to Investors", "Distribution and Solicitation

Restrictions" and "Transfer Restrictions". 12. After passing the Board resolution for Allotment and prior to crediting the Equity Shares into the beneficiary

accounts maintained with the Depository Participants by the Allottees, our Company shall apply to the Stock Exchanges for listing approvals. Our Company will intimate the Stock Exchanges the details of the Allotment.

13. After receipt of the listing approvals of the Stock Exchanges, our Company shall credit the Equity Shares

Allotted pursuant to the Issue into the Depository Participant accounts of the respective Allottees. 14. Our Company will then apply for the final trading approvals from the Stock Exchanges. 15. The Equity Shares that would have been credited to the beneficiary accounts with the Depository Participants of

the Allottees shall be eligible for trading on the Stock Exchanges only upon the receipt of final listing and trading approvals from the Stock Exchanges.

16. Upon receipt of intimation of final trading and listing approvals from the Stock Exchanges, our Company shall

inform the Allottees of the receipt of such approvals. Our Company and the Book Running Lead Manager shall not be responsible for any delay or non-receipt of the communication of the final trading and listing permissions from the Stock Exchanges or any loss arising from such delay or non- receipt. Final listing and trading approvals granted by the Stock Exchanges are also placed on their respective websites. QIBs are advised to apprise themselves of the status of the receipt of the permissions from the Stock Exchanges or our Company.

Qualified Institutional Buyers Only QIBs as defined in Regulation 2(1)(zd) of the SEBI Regulations and not otherwise excluded pursuant to Regulation 86(1)(b) of the SEBI Regulations are eligible to invest. Currently, under Regulation 2(1)(zd) of the SEBI Regulations, a QIB means:

Eligible FPIs including FIIs and eligible sub-accounts;

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insurance companies registered with the Insurance Regulatory and Development Authority;

insurance funds set up and managed by army, navy or air force of the Government; and

insurance funds set up and managed by the Department of Posts, India.

multilateral and bilateral development financial institutions;

Mutual Funds, VCFs, AIFs and FVCIs;

pension funds with minimum corpus of Rs. 250 million;

provident funds with minimum corpus of Rs. 250 million;

public financial institutions as defined in Section 4A of the Companies Act, 1956 (Section 2(72) of the Companies Act, 2013);

scheduled commercial banks;

state industrial development corporations;

the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government published in the Gazette of India.

Allotments made to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are

applicable to each of them respectively, including in relation to lock-in requirement. FVCIs, VCFs and AIFs

should independently consult their own counsel and advisors as to investment in and related matters concerning

the Issue.

ELIGIBLE NON-RESIDENT QIBS CAN PARTICIPATE IN THE ISSUE UNDER SCHEDULE 1 OF FEMA

REGULATIONS. FIIS, SUB-ACCOUNTS (OTHER THAN A SUB-ACCOUNT WHICH IS A FOREIGN

CORPORATE OR A FOREIGN INDIVIDUAL) AND OTHER ELIGIBLE FPIS ARE PERMITTED TO

PARTICIPATE THROUGH THE PORTFOLIO INVESTMENT SCHEME UNDER THE RESPECTIVE

SCHEDULES OF FEMA REGULATIONS, IN THIS ISSUE. ELIGIBLE FPIS ARE PERMITTED TO

PARTICIPATE IN THE ISSUE SUBJECT TO COMPLIANCE WITH ALL APPLICABLE LAWS AND SUCH

THAT THE SHAREHOLDING OF ELIGIBLE THE FPIS DO NOT EXCEED SPECIFIED LIMITS AS

PRESCRIBED UNDER APPLICABLE LAWS IN THIS REGARD. In terms of the FPI Regulations, the Equity Shares issued to a single Eligible FPI or an investor group (which means the same set of ultimate beneficial owner(s) investing through multiple entities) should not exceed 10% of post-Issue Equity Share capital of our Company. Further, in terms of the FEMA Regulations, the total holding of each FPI shall be below 10% of the total paid-up Equity Share capital of our Company and the total holdings of all Eligible FPIs put together shall not exceed 24% of the paid-up Equity Share capital of our Company. The aggregate limit of 24% may be increased up to the sectoral cap by way of a resolution passed by the Board followed by a special resolution passed by the Shareholders. On March 24, 2015 our Board of Directors passed resolutions for increasing the FII/FPI limit from 24% to 40% and increase in NRI limit to 5% of the paid up equity share capital of our Company. On March 27, 2015 our Company issued notice of postal ballot to the shareholders for considering the proposed increase of the said aggregate limit. The aforementioned increase in aggregate investment limits was approved by our shareholders vide resolution dated May 2, 2015 and was notified by the RBI vide press release dated May 22, 2015. An FII or sub-account (other than a sub-account which is a foreign corporate or foreign individual) who holds a valid certificate of registration from the SEBI shall be deemed to be an FPI until the expiry of the block of three years for which fees has been paid as per the SEBI FII Regulations. An FII or a sub-account (other than a sub-account which is a foreign corporate or a foreign individual) may participate in the Issue, until expiry of its registration as an FII or sub-account or until it obtains a certificate of registration as an FPI, whichever is earlier. If the registration of an FII or sub-account has expired or is about to expire, such FII or sub-account may, subject to payment of conversion fees as applicable under the FPI Regulations, participate in the Issue. An FII or sub-account shall not be eligible to invest as an FII or sub-account after registering as an FPI under the FPI Regulations. In terms of the FEMA Regulations, for calculating the aggregate holding of FPIs in a company, holding of all registered

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FPIs as well as holding of FIIs (being deemed FPIs) shall be included. Under Regulation 86(1)(b) of the SEBI Regulations, no Allotment shall be made, either directly or indirectly, to any QIB being, or any person related to, the Promoters. QIBs which have all or any of the following rights shall be deemed to be persons related to the “promoters” as defined in the SEBI Regulations:

rights under a shareholders’ agreement or voting agreement entered into with the Promoters or persons related to the Promoters;

veto rights; or

a right to appoint any nominee director on the Board. Provided, however, that a QIB which does not hold any shares in our Company and which has acquired the aforesaid rights in the capacity of a lender shall not be deemed to be related to the “promoters”. OUR COMPANY AND THE BOOK RUNNING LEAD MANAGER ARE NOT LIABLE FOR ANY

AMENDMENT OR MODIFICATION OR CHANGE TO APPLICABLE LAWS OR REGULATIONS, WHICH

MAY OCCUR AFTER THE DATE OF THIS PRELIMINARY PLACEMENT DOCUMENT. QIBS ARE

ADVISED TO MAKE THEIR INDEPENDENT INVESTIGATIONS AND SATISFY THEMSELVES THAT

THEY ARE ELIGIBLE TO APPLY. QIBS ARE ADVISED TO ENSURE THAT ANY SINGLE APPLICATION

FROM THEM DOES NOT EXCEED THE INVESTMENT LIMITS OR MAXIMUM NUMBER OF EQUITY

SHARES THAT CAN BE HELD BY THEM UNDER APPLICABLE LAW OR REGULATION OR AS

SPECIFIED IN THIS PRELIMINARY PLACEMENT DOCUMENT. FURTHER, QIBS ARE REQUIRED TO

SATISFY THEMSELVES THAT THEIR BIDS WOULD NOT EVENTUALLY RESULT IN TRIGGERING A

TENDER OFFER UNDER THE TAKEOVER CODE. Note: Affiliates or associates of the Book Running Lead Manager who are QIBs may participate in the Issue in

compliance with applicable laws.

Application Process Bid-Cum Application Form Bidders shall only use the serially numbered Application Forms (which are addressed to them) supplied by our Company and the Book Running Lead Manager in either electronic form or by physical delivery for the purpose of making a Bid (including revision of a Bid) in terms of this Preliminary Placement Document. By making a Bid (including the revision thereof) for Equity Shares through Application Forms and pursuant to the terms of this Preliminary Placement Document, the Bidder will be deemed to have made the following representations and warranties and the representations, warranties and agreements made under “Notice to Investors” “Representation by

Investors”, “Distribution and Solicitation Restrictions” and “Transfer Restrictions”:

The Bidder confirms that it is a QIB in terms of Regulation 2(1)(zd) of the SEBI Regulations and is not excluded under Regulation 86 of the SEBI Regulations, has a valid and existing registration under the applicable laws in India and is eligible to participate in the Issue;

The Bidder confirms that it is not a “promoter” and is not a person related to the “promoters”, either directly or indirectly, and its Application Form does not directly or indirectly represent the “promoters” or “promoter group” or persons related to the “promoters” as defined in the SEBI Regulations;

The Bidder confirms that it has no rights under a shareholders’ agreement or voting agreement with the “promoters” or persons related to the “promoters”, no veto rights or right to appoint any nominee director on the Board other than those acquired in the capacity of a lender which shall not be deemed to be a person related to the “promoters” as defined in the SEBI Regulations;

The Bidder acknowledges that it has no right to withdraw its Bid after the Bid/Issue Closing Date;

The Bidder confirms that if Equity Shares are Allotted, it shall not, for a period of one year from Allotment, sell such Equity Shares otherwise than on the Stock Exchanges;

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The Bidder confirms that it is eligible to Bid and hold Equity Shares so Allotted. The Bidder further confirms that the holding of the Bidder, does not and shall not, exceed the level permissible as per any applicable regulations applicable to the Bidder;

The Bidder confirms that its Bids would not eventually result in triggering a tender offer under the Takeover Code;

The Bidder confirms that together with other Bidders that belongs to the same group or are under same control, the Allotment to the Bidder shall not exceed 50% of the Issue Size. For the purposes of this statement:

a. The expression “belongs to the same group” shall derive meaning from the concept of “companies under the

same group” as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

b. “Control” shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code;

The Bidders shall not undertake any trade in the Equity Shares credited to their beneficiary accounts maintained with the Depository Participants until such time that the final listing and trading approvals for the Equity Shares are issued by the Stock Exchanges.

The QIB confirms that it is purchasing the Equity Shares in an offshore transaction meeting the requirements of Rule 903 or 904 of Regulation S and it shall not offer, sell, pledge or otherwise transfer such Equity Shares except in an offshore transaction complying with Regulation S or pursuant to any other available exemption from registration under the Securities Act and in accordance with all applicable securities laws of the states of the United States and any other jurisdiction, including India. It also confirms all other applicable representations and warranties included under "Representations by Investors""Notice to Investors", "Distribution and Solicitation Restrictions" and "Transfer Restrictions"of this Preliminary Placement Document.

EACH BIDDER MUST PROVIDE ITS DEPOSITORY PARTICIPANT ACCOUNT DETAILS, PAN,

DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER, E-

MAIL ID AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. EACH BIDDER MUST

ENSURE THAT THE NAME GIVEN IN THE APPLICATION FORM IS EXACTLY THE SAME AS THE

NAME IN WHICH THE DEPOSITORY PARTICIPANT ACCOUNT IS HELD. FOR THIS PURPOSE,

ELIGIBLE SUB ACCOUNTS OF AN FII WOULD BE CONSIDERED AS AN INDEPENDENT BIDDER. IF SO REQUIRED BY THE BRLM, THE QIB SUBMITTING A BID, ALONG WITH THE APPLICATION

FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO THE BRLM TO EVIDENCE

THEIR STATUS AS A "QIB" AS DEFINED HEREINABOVE. IF SO REQUIRED BY THE BRLM,

COLLECTION BANK(S) OR ANY STATUTORY OR REGULATORY AUTHORITY IN THIS REGARD,

INCLUDING AFTER ISSUE CLOSURE, THE QIB SUBMITTING A BID AND/OR BEING ALLOTTED

EQUITY SHARES IN THE ISSUE, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO

FULFILL THE KYC NORMS. Demographic details such as address and bank account will be obtained from the Depositories as per the Depository Participant account details given above. The submission of an Application Form by a Bidder shall be deemed a valid, binding and irrevocable offer for the Bidder to pay the entire Issue Price for the Equity Shares (as indicated by the CAN) and becomes a binding contract on the Bidder upon the issuance of the CAN by our Company in favor of the Bidder. Bids by Mutual Funds The bids made by the asset management companies or custodian of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. Each scheme/fund of a mutual fund registered with SEBI, will have to submit separate Application Form. Each mutual fund will have to submit separate Application Forms for each of its participating schemes. Such applications will not be treated as multiple bids provided that the bids clearly indicate the scheme for which the bid has been made. However, for the purpose of calculating the number of allotters/applicants, various schemes of the same mutual fund will be considered as a single allottee/applicant.

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The above information is given for the benefit of the Bidders. The Company and and the BRLM are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of this Preliminary Placement Document. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares Bid for do not exceed the applicable limits under the applicable laws and regulations. Submission of Application Form All Application Forms must be duly completed with information including the number of Equity Shares applied for. All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter shall be submitted to the Book Running Lead Manager as per the details provided in the respective CAN. The Application Form shall be submitted to the Book Running Lead Manager either through electronic form or through physical delivery at the following address:

Name Address Contact person Contact Details

Emkay Global Financial Services Limited

7th Floor, The Ruby, Senapati Bapat Marg,

Dadar - West, Mumbai - 400 028

Rajesh Ranjan Deepak Yadav

Tel: +91 22 66121212 Mobile: +91 93249 22212

Fax: +91 22 66121299 Email: [email protected]

The Book Running Lead Manager shall not be required to provide any written acknowledgement of the same. Permanent Account Number or PAN Each Bidder should mention its PAN allotted under the IT Act in the Application Form. Applications without this information will be considered incomplete and are liable to be rejected. Bidders should not submit the GIR number instead of the PAN as the Application Forms are liable to be rejected on this ground. The copy of the PAN card or PAN allotment letter is required to be submitted with the Bid-Cum Application Form. Pricing and Allocation Build up of the Book The QIBs shall submit their Bids through the Bid-Cum Application Form within the Bid/Issue Period to the Book Running Lead Manager. Such Bids cannot be withdrawn after the Bid/Issue Closing Date. The book shall be maintained by the Book Running Lead Manager. Price Discovery and Allocation Our Company, in consultation with the Book Running Lead Manager, shall determine the Issue Price, which cannot be lower than the Floor Price. However, our Company may offer a discount of not more than 5% on the Floor Price, in accordance with Chapter VIII of the SEBI Regulations. After finalization of the Issue Price, our Company shall update this Preliminary Placement Document with the Issue details and file the same with the Stock Exchanges as the Placement Document.

Method of Allocation Our Company shall determine the Allocation in consultation with the Book Running Lead Manager on a discretionary basis and in compliance with Chapter VIII of the SEBI Regulations. Bids received from the Bidders at or above the Issue Price shall be grouped together to determine the total demand. The Allocation to all such Bidders will be made at the Issue Price. Allocation to Mutual Funds for up to a minimum of 10% of the Issue Size shall be undertaken subject to valid Bids being received at or above the Issue Price. THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD

MANAGER IN RESPECT OF ALLOCATION SHALL BE FINAL AND BINDING ON ALL BIDDERS.

BIDDERS MAY NOTE THAT ALLOCATION IS AT THE SOLE AND ABSOLUTE DISCRETION OF OUR

COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER AND BIDDERS MAY

NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS

AT OR ABOVE THE ISSUE PRICE. NEITHER OUR COMPANY NOR THE BOOK RUNNING LEAD

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MANAGER IS OBLIGED TO ASSIGN ANY REASON FOR ANY NON-ALLOCATION. CAN Based on the Application Forms received, our Company, in consultation with the Book Running Lead Manager, in their sole and absolute discretion, shall decide the Bidders to whom the serially numbered CAN shall be sent, pursuant to which the details of the Equity Shares Allocated to them and the details of the amounts payable for Allotment in their respective names shall be notified to such Bidders. Additionally, a CAN will include details of the Escrow Account into which such payments would need to be made, address where the application money needs to be sent, Pay-In Date as well as the probable Designated Date, being the date of credit of the Equity Shares to the respective Bidder‘s account. The successful Bidders would also be sent a serially numbered Placement Document either in electronic form or by physical delivery along with the serially numbered CAN. The dispatch of the serially numbered Placement Document and the serially numbered CAN to the successful Bidders shall be deemed a valid, binding and irrevocable contract for the successful Bidders to furnish all details that may be required by the Book Running Lead Manager and to pay the entire Issue Price for all the Equity Shares Allocated to such successful Bidders. QIBS ARE ADVISED TO INSTRUCT THEIR DEPOSITORY PARTICIPANT TO ACCEPT THE EQUITY

SHARES THAT MAY BE ALLOTTED TO THEM. Bank Account for Payment of Application Money Our Company has opened the “SCL - QIP Escrow Account” with Axis Bank Limited in terms of the arrangement among our Company, the Book Running Lead Manager and Axis Bank Limited as the Escrow Collection Bank. The successful Bidder will be required to deposit the entire amount payable for the Equity Shares Allocated to it by the Pay-In Date as mentioned in, and in accordance with, the respective CAN.Payments are to be made only through electronic fund transfer. If the payment is not made favoring the “SCL - QIP Escrow Account” within the time stipulated in the CAN, the Application Form and the CAN of the successful Bidder are liable to be cancelled. Our Company undertakes to utilize the amount deposited in “SCL - QIP Escrow Account” only for the purposes of (i) adjustment against Allotment; or (ii) repayment of application money if our Company is not able to Allot. In case of cancellations or default by the Bidders, our Company and the Book Running Lead Manager have the right to reallocate the Equity Shares at the Issue Price among existing or new Bidders at their sole and absolute discretion. Designated Date and Allotment of Equity Shares The Equity Shares will not be Allotted unless the successful Bidders pay the Issue Price to the “SCL - QIP Escrow Account” as stated above. Subject to the satisfaction of the terms and conditions of the Placement Agreement, our Company will ensure that the Allotment of the Equity Shares is completed by the Designated Date provided in the CAN for the Eligible QIBs who have paid the aggregate subscription amounts as stipulated in the CAN The Equity Shares will be issued and Allotment shall be made only in dematerialized form. Allottees will have the option to re-materialize the Equity Shares, if they so desire, as per the provisions of the Companies Act and the Depositories Act.Our Company, at its sole discretion, reserves the right to cancel the Issue at any time up to Allotment without assigning any reason whatsoever. Post receipt of the listing approvals of the Stock Exchange, the Issuer shall credit the Equity Shares into the Depository Participant account of the Eligible QIBs.Following the Allotment and credit of Equity Shares into the QIBs’ Depository Participant accounts, our Company will apply for final trading and listing approvals from the Stock Exchanges. In the case of a QIB who has been Allotted more than five per cent of the Equity Shares in the Issue, our Company shall disclose the QIBs’ name and the number of the Equity Shares Allotted to such QIB to the Stock Exchanges and the Stock Exchanges will make the same available on their website. Our Company shall make the requisite filings with the RoC

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and the SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014. If you are Allotted any Equity Shares, our Company is required to disclose details such as your name, address and the number of Equity Shares Allotted to the RoC and the SEBI.The Escrow Collection Bank shall release the monies lying to the credit of the Escrow Account to our Company after Allotment. In the event that our Company is unable to issue and Allot the Equity Shares or there is a cancellation of the Issue within 60 days from the date of receipt of application money from a Bidder, our Company shall repay the application money within 15 days from expiry of the 60 day period, failing which our Company shall repay that money to such Bidders with interest at the rate of 12% per annum from expiry of the sixtieth day. The application money to be refunded by our Company shall be refunded to the same bank account from which application money was remitted by the Bidders. Other Instructions Right to Reject Applications Our Company, in consultation with the Book Running Lead Manager, may reject Bids, in part or in full, without assigning any reason whatsoever. The decision of our Company and the Book Running Lead Manager in relation to the rejection of Bids shall be final and binding. Equity Shares in Dematerialized form The Allotment shall be only in dematerialized form (i.e., not in physical certificates but be fungible and be represented by the statement issued through the electronic mode).A Bidder pursuant to the Issue must have at least one beneficiary account with a Depository Participant prior to making the Bid. Allotment to a successful Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the successful Bidder. The trading of the Equity Shares to be issued pursuant to the Issue would be in dematerialized form only for all QIBs in the demat segments of the respective Stock Exchanges.Our Company and the Book Running Lead Manager will not be responsible or liable for the delay in the credit of Equity Shares to be issued pursuant to the Issue due to errors in the Application Form or otherwise on part of the QIBs.

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PLACEMENT Placement Agreement

The Book Running Lead Manager has entered into a placement agreement dated December 17, 2015with our Company (the “Placement Agreement”), pursuant to which the Book Running Lead Manager have agreed to manage the Issue and procure subscriptions for the Equity Shares on a reasonable efforts basis, to QIBs, pursuant to Section 42 of Companies Act, 2013, read with Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, and Chapter VIII of the SEBI Regulations.The Placement Agreement contains customary representations, warranties and indemnities from our Company and the Book Running Lead Manager, and it is subject to termination in accordance with the terms contained therein. This Preliminary Placement Document has not been, and will not be, registered as a prospectus with the RoC and, no Equity Shares will be offered in India or overseas to the public or any members of the public or any other class of investors, other than QIBs. Our Company shall make the requisite filings with the RoC and the SEBI within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014. Applications shall be made to list the Equity Shares issued pursuant to the Issue and admit them to trading on the Stock Exchanges. No assurance can be given as to the liquidity or sustainability of the trading market for such Equity Shares, the ability of holders of the Equity Shares to sell their Equity Shares or the price at which holders of the Equity Shares will be able to sell their Equity Shares. The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons who are U.S. QIBs (for the avoidance of doubt, the term U.S. QIBs does not refer to a category of institutional investors defined under applicable Indian regulations and referred to in this Preliminary Placement Document as “QIBs”) and (b) outside the United States in reliance on Regulation S. Prospective purchasers in the United States are hereby notified that we are relying on the exemption under Section 4(a)(2) or another available exemption under the U.S. Securities Act. The Equity Shares are transferable only in accordance with the restrictions described under “Distribution and Solicitation Restrictions” and “Transfer Restrictions” of this Preliminary Placement Document.

Relationship with the Book Running Lead Manager

In connection with the Issue, the Book Running Lead Manager or its affiliates may, for their own accounts, subscribe to the Equity Shares or enter into asset swaps, credit derivatives or other derivative transactions relating to the Equity Shares to be issued pursuant to the Issue at the same time as the offer and sale of the Equity Shares, or in secondary market transactions. As a result of such transactions, the Book Running Lead Manager may hold long or short positions in such Equity Shares. These transactions may comprise a substantial portion of the Issue and no specific disclosure will be made of such positions. Affiliates of the Book Running Lead Manager may purchase the Equity Shares or be Allotted Equity Shares for proprietary purposes and not with a view to distribute or in connection with the issuance of P-Notes. See “Representations by Investors - Offshore Derivative Instruments”.

From time to time, the Book Running Lead Manager, and the affiliates and associates of such entity have engaged in or may in the future engage in transactions with and perform services including but not limited to investment banking, advisory, banking, trading services for our Company, its Subsidiaries, group companies, affiliates and the Shareholders, as well as to their respective associates and affiliates, pursuant to which fees and commissions have been paid or will be paid to the Book Running Lead Manager and its affiliates and associates.

Lock-up

Our Company shall not, without the consent of the Book Running Lead Manager, during the period commencing from the date of the Placement Agreement and ending 180 calendar days after the date of Allotment or failure of the Issue and the termination of the Placement Agreement, whichever is earlier, directly or indirectly: (i) issue, offer, contract to issue, sell any option or contract to purchase, purchase any option or contract to sell or issue, grant any option, right or warrant to purchase, or otherwise transfer or dispose of any Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares; (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Equity Shares or any other securities convertible into or exercisable as or exchangeable for Equity Shares; or (iii) publicly announce any intention to enter into any transaction described in (i) or (ii) above; whether any such transaction described in (i) or (ii) above is to be settled by delivery of

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Equity Shares or such other securities of the Company, Convertible into Equity Shares, in cash or otherwise. The foregoing restriction shall not apply to any issuance, sale, transfer or disposition of Equity Shares, options or stock appreciation rights by the Company (a) pursuant to this Issue and (b) to the extent such issuance, sale, transfer or disposition is required by any statutory or regulatory authorities or under Indian Law. For avoidance of doubt, nothing set forth in this clause shall restrict the ability of the Company to issue non-convertible debentures, commercial papers or any other debt security or instrument

Our Promoters and members of the Promoter Group have agreed that they will not without the prior written consent of the BRLM, during the period commencing on the date of the Placement Agreement and ending 90 days after the date of allotment of the Equity Shares (the “Lock-up Period”), directly or indirectly: (a) sell, lend, pledge, contract to sell, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, or any securities convertible into or exercisable or exchangeable for Equity Shares or publicly announce an intention with respect to any of the foregoing; (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares; (c) deposit any of the Promoter Shares with any depositary in connection with a depositary receipt facility (d) sell, lend, pledge, contract to sell, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares or interest in an entity which holds any Equity Shares or (e) publicly announce any intention to enter into any transaction whether any such transaction described in (a), (b) (c) or (d) above is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise.

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DISTRIBUTION AND SOLICITATION RESTRICTIONS The distribution of this Preliminary Placement Document or any offering material and the offering, sale or delivery of

the Equity Shares in this Issue is restricted by law in certain jurisdictions. Therefore, persons who may come into

possession of this Preliminary Placement Document or any offering material are advised to take legal advice with regard

to any restrictions that may be applicable to them and to observe such restrictions. This Preliminary Placement

Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not

authorized or permitted.

GENERAL

No action has been taken or will be taken by the Company or the Book Running Lead Manager that would permit a public offering of the Equity Shares to occur in any jurisdiction, or the possession, circulation or distribution of this Preliminary Placement Document or any other material relating to the Company or the Equity Shares in any jurisdiction where action for such purpose is required. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and none of this Preliminary Placement Document, any offering materials and any advertisements in connection with the offering of the Equity Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in compliance with any applicable rules and regulations of any such country or jurisdiction. This Issue will be made in compliance with the applicable SEBI Regulations. Each purchaser of the Equity Shares in this Issue will be deemed to have made, as applicable, acknowledgments and agreements as described under the sections “Notice to Investors”, “Representations by Investors” and “Transfer Restrictions” of this Preliminary Placement Document. India

This Preliminary Placement Document may not be distributed directly or indirectly in India or to residents of India and any Equity Shares may not be offered or sold directly or indirectly in India to, or for the account or benefit of, any resident of India except as permitted by applicable Indian laws and regulations, under which an offer is strictly on a private and confidential basis and is limited to QIBs and is not an offer to the public. This Issue is a “private placement” within the meaning of Section 42 of the Companies Act, 2013 since the invitation or offer is to be made only to QIBs. The Preliminary Placement Document is neither a public issue nor a prospectus under the Companies Act, 2013 or an advertisement and should not be circulated to any person other than to whom the offer is made. This Preliminary Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies in India.

Australia

This Preliminary Placement Document is not a disclosure document under Chapter 6D or Part 7.9 of the Corporations Act 2001 of the Commonwealth of Australia (the “Australian Corporations Act”), has not been and will not be lodged with the Australian Securities and Investments Commission (the “ASIC”) as a disclosure document for the purposes of the Australian Corporations Act and does not purport to include the information required of a disclosure document under the Australian Corporations Act. ASIC has not reviewed this Preliminary Placement Document or commented on the merits of investing in the Equity Shares, nor has any other Australian regulator. No offer of the Equity Shares is being made in Australia, and the distribution or receipt of this Preliminary Placement Document in Australia does not constitute an offer of securities capable of acceptance by any person in Australia, except in the limited circumstances described below relying on certain exemptions in the Corporations Act. Accordingly, (i) the offer of the Equity Shares in Australia under this Preliminary Placement Document may only be made to

those select persons who are able to demonstrate that they are “Wholesale Clients” for the purposes of Chapter 7 of the Australian Corporations Act and fall within one or more of the following categories: “Sophisticated Investors” that meet the criteria set out in Section 708(8) of the Australian Corporations Act, “Professional Investors” who meet the criteria set out in Section 708(11) and as defined in Section 9 of the Australian Corporations Act, experienced investors who receive the offer through an Australian financial services licensee where all of the criteria set out in section 708(10) of the Australian Corporations Act have been satisfied or senior managers of the Company (or a related body, including a subsidiary), their spouse, parent, child, brother or sister, or a body corporate controlled by any of those persons, as referred to in section 708(12) of the Australian Corporations Act; and

(ii) this Preliminary Placement Document may only be made available in Australia to those persons who are able to

demonstrate that they are within one of the categories of persons as set forth in clause (i) above.

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The Equity Shares may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the Equity Shares may be issued, and no draft or definitive Preliminary Placement Document, advertisement or other offering material relating to any of the Equity Shares may be distributed in Australia except where disclosure to investors is not required under Chapter 6D or Chapter 7 of the Australian Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. As any offer of the Equity Shares under this Preliminary Placement Document will be made without disclosure in Australia under the Australian Corporations Act, the offer of those Equity Shares for resale in Australia within 12 months may, under sections 707 or 1012C of the Australian Corporations Act, require disclosure to investors under the Australian Corporations Act if none of the exemptions in the Australian Corporations Act apply to that resale. Accordingly, any person who acquires the Equity Shares pursuant to this Preliminary Placement Document should not, within 12 months of acquisition of the Equity Shares, offer, transfer, assign or otherwise alienate those Equity Shares to investors in Australia except in circumstances where disclosure to investors is not required under the Australian Corporations Act or unless a complaint disclosure document is prepared and lodged with the Australian Securities and Investments Commission. Any person who accepts an offer of the Equity Shares under this Preliminary Placement Document must represent that, if they are in Australia, they are such a person as set forth in clause (i) above and acknowledge the restrictions on the on-sale of the Equity Shares set out above. The provisions that define the exempt categories of person as set forth in clause (i) above are complex, and, if you are in any doubt as to whether you fall within one of these categories, you should seek appropriate professional advice regarding those provisions. This Preliminary Placement Document is intended to provide general information only and has been prepared without taking into account any particular person's objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. Investors should review and consider the contents of this Preliminary Placement Document and obtain financial advice specific to their situation before making any decision to make an application for the Equity Shares. Cayman Islands No offer or invitation to purchase Equity Shares may be made to the public in the Cayman Islands.

Dubai International Financial Centre This Preliminary Placement Document relates to an exempt offer (an “Exempt Offer”) in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”). This Preliminary Placement Document is intended for distribution only to persons of a type specified in those rules. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this Preliminary Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it. The Equity Shares to which this Preliminary Placement Document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the Equity Shares offered should conduct their own due diligence on the Equity Shares. If you do not understand the contents of this Preliminary Placement Document, you should consult an authorized financial adviser. For the avoidance of doubt, the Equity Shares are not interests in a “fund” or a “collective investment scheme” within the meaning of either the Collective Investment Law (DIFC Law No. 2 of 2010) or the Collective Investment Rules Module of the Dubai Financial Services Authority Rulebook.

European Economic Area

This Preliminary Placement Document has been prepared on the basis that this Issue will be made pursuant to an exemption under the Prospectus Directive as implemented in member states of the European Economic Area (“EEA”) from the requirement to produce and publish a prospectus which is compliant with the Prospectus Directive, as so implemented, for offers of the Equity Shares. Accordingly, any person making or intending to make any offer within the EEA or any of its member states (each, a “Relevant Member State”) of the Equity Shares which are the subject of the Allotment referred to in this Preliminary Placement Document must only do so in circumstances in which no obligation arises for the Company or the BRLM to produce and publish a prospectus which is compliant with the Preliminary Prospectus Directive, including Article 3 thereof, as so implemented for such offer. For EEA jurisdictions that have not implemented the Prospectus Directive, all offers of the Equity Shares must be in compliance with the laws of such jurisdictions. None of the Company or the Book Running Lead Manager has authorized, nor do they authorize, the making of any offer of the Equity Shares through any financial intermediary, other than offers made by the Book

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Running Lead Manager, which constitute a final Allotment of the Equity Shares. In relation to each Relevant Member State, the Book Running Lead Manager has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”),it has not made and will not make an offer of the Equity Shares which are the subject of the Offer contemplated by this Preliminary Placement Document to the public in that Relevant Member State other than: (i) to any legal entity which is a qualified investor as defined in the Prospectus Directive; (ii) to fewer than 100 natural or legal persons or, if the Relevant Member State has implemented the relevant

provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive subject to obtaining the prior consent of the BRLM nominated by the Company for any such offer; or

(iii) in any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer of the Equity Shares shall result in a requirement for the publication by the Company or the Book Running Lead Manager of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Equity Shares, as such expression may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State. For the purposes of this provision, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State; and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. Each subscriber for, or purchaser of, the Equity Shares in the Offer located within a Relevant Member State will be deemed to have represented, acknowledged and agreed that it is a “qualified investor” within the meaning of Article 2(1)(e) of the Prospectus Directive. The Company, the Book Running Lead Manager and their affiliates and others will rely upon the truth and accuracy of the foregoing representation, acknowledgment and agreement. Hong Kong

No Equity Shares have been offered or sold, and no Equity Shares may be offered or sold, in Hong Kong by means of any document, other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal agent; or to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance; or in other circumstances which do not result in the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. No document, invitation or advertisement relating to the Equity Shares has been issued or may be issued, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted under the securities laws of Hong Kong) other than with respect to the Equity Shares which are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance.

Japan The offering of the Equity Shares has not been and will not be registered under the Financial Instruments and Exchange Law of Japan, as amended (the “Financial Instruments and Exchange Law”). No Equity Shares have been offered or sold, and will not be offered or sold, directly or in directly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for reoffering or re-sale, directly or indirectly in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and otherwise in compliance with the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial ordinances of Japan.

Korea

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The Equity Shares have not been registered under the Korean Securities and Exchange Law, and the Equity Shares acquired in connection with the distribution contemplated hereby may not be offered or sold, directly or indirectly, in Korea or to or for the account of any resident thereof, except as otherwise permitted by applicable Korean laws and regulations, including, without limitation, the Korean Securities and Exchange Law and the Foreign Exchange Transaction Laws.

Kuwait

The Equity Shares have not been authorized or licensed for offering, marketing or sale in the State of Kuwait. The distribution of this Preliminary Placement Document and the offering and sale of the Equity Shares in the State of Kuwait is restricted by law unless a license is obtained from the Kuwaiti Ministry of Commerce and Industry in accordance with Law 31 of 1990.

Malaysia No approval of the Securities Commission of Malaysia has been or will be obtained in connection with the offer and sale of the Equity Shares in Malaysia nor will any prospectus or other offering material or document in connection with the offer and sale of the Equity Shares be registered with the Securities Commission of Malaysia. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, nor may any document or other material in connection therewith be distributed in Malaysia.

Mauritius The Equity Shares may not be offered, distributed or sold, directly or indirectly, in Mauritius or to any resident of Mauritius, except as permitted by applicable Mauritius securities law. No offer or distribution of securities will be made to the public in Mauritius.

New Zealand This Preliminary Placement Document is not a prospectus. It has not been prepared or registered in accordance with the Securities Act 1978 of New Zealand (the “New Zealand Securities Act”). This Preliminary Placement Document is being distributed in New Zealand only to persons whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invest money, within the meaning of section 3(2)(a)(ii) of the New Zealand Securities Act (“Habitual Investors”). By accepting this Preliminary Placement Document, each investor represents and warrants that if they receive this Preliminary Placement Document in New Zealand they are a Habitual Investor and they will not disclose this Preliminary Placement Document to any person who is not also a Habitual Investor.

Oman By receiving this Preliminary Placement Document, the person or entity to whom it has been issued understands, acknowledges and agrees that this Preliminary Placement Document has not been approved by the Capital Market Authority of Oman (the “CMA”:) or any other regulatory body or authority in the Sultanate of Oman (“Oman”), nor has the Book Running Lead Manager or any placement agent acting on its behalf received authorisation, licensing or approval from the CMA or any other regulatory authority in Oman, to market, offer, sell, or distribute interests in the Equity Shares within Oman. No marketing, offering, selling or distribution of any interests in the Equity Shares has been or will be made from within Oman and no subscription for any interests in the Equity Shares may or will be consummated within Oman. Neither the Book Running Lead Manager nor any placement agent acting on its behalf is a company licensed by the CMA to provide investment advisory, brokerage, or portfolio management services in Oman, nor a bank licensed by the Central Bank of Oman to provide investment banking services in Oman. Neither the Book Running Lead Manager nor any placement agent acting on its behalf advise persons or entities resident or based in Oman as to the appropriateness of investing in or purchasing or selling securities or other financial products. Nothing contained in this Preliminary Placement Document is intended to constitute Omani investment, legal, tax, accounting or other professional advice. This Preliminary Placement Document is for your information only, and nothing herein is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice on the basis of your situation.

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People’s Republic of China

This Preliminary Placement Document, may not be circulated or distributed in the People‘s Republic of China and the Equity Shares may not be offered or sold directly or indirectly to any resident of the People‘s Republic of China, or offered or sold to any person for reoffering or resale directly or indirectly to any resident of the People‘s Republic of China except pursuant to applicable laws and regulations of the People‘s Republic of China. The Book Running Lead Manager has represented and agreed that neither it nor any of its affiliates has offered or sold or will offer or sell any of the Equity Shares in the People‘s Republic of China (excluding Hong Kong, Macau and Taiwan) as part of the Issue. We do not represent that this Preliminary Placement Document may be lawfully distributed, or that any Equity Shares may be lawfully offered, in compliance with any applicable registration or other requirements in the People‘s Republic of China, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by us which would permit a public offering of any Equity Shares or distribution of this document in the People‘s Republic of China. Accordingly, the Equity Shares are not being offered or sold within the People‘s Republic of China by means of this Preliminary Placement Document or any other document. Neither this Preliminary Placement Document nor any advertisement or other offering material may be distributed or published in the People‘s Republic of China, except under circumstances that will result in compliance with any applicable laws and regulations.

Qatar

The Equity Shares have not been offered, sold or delivered, and will not be offered, sold or delivered at any time, directly or indirectly, in the state of Qatar in a manner that would constitute a public offering. This Preliminary Placement Document has not been reviewed or registered with Qatari Government Authorities, whether under Law No. 25 (2002) concerning investment funds, Central Bank resolution No. 15 (1997), as amended, or any associated regulations. Therefore, this Preliminary Placement Document is strictly private and confidential, and is being issued to a limited number of sophisticated investors, and may not be reproduced or used for any other purposes, nor provided to any person other than recipient thereof.

Singapore

The Book Running Lead Manager has acknowledged that this Preliminary Placement Document has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the BRLM has represented and agreed that it has not offered or sold any Equity Shares issued pursuant to the Issue or caused such Equity Shares to be made the subject of an invitation for subscription or purchase and will not offer or sell such Equity Shares issued pursuant to the Issue or cause such Equity Shares to be made the subject of an invitation for subscription or purchase, and have not circulated or distributed, nor will they circulate or distribute, this Preliminary Placement Document or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such Equity Shares issued pursuant to the Issue, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. Where the Equity Shares are subscribed or purchased under Section 275 by a relevant person which is:

a corporation (which is not an accredited investor) (as defined in Section 4A of the SFA) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

securities (as defined in Section 239(1) of the SFA) of that corporation to the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within 6 months after that corporation or that trust has acquired the Equity Shares pursuant to an offer made under Section 275 except:

to an institutional investor under Section 274 of the SFA or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

where no consideration is or will be given for the transfer;

where the transfer is by operation of law; or

as specified in Section 276(7) of the SFA.

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This Preliminary Placement Document does not constitute an issue prospectus pursuant to Art. 652a of the Swiss Code of Obligations. The Equity Shares will not be listed on the SWX Swiss Exchange, and therefore, this Preliminary Placement Document does not comply with the disclosure standards of the Listing Rules of the SWX Swiss Exchange. Accordingly, the Equity Shares may not be offered to the public in or from Switzerland, but only to a selected and limited group of investors, which do not subscribe the Shares with a view to distribution to the public. The investors will be individually approached by the BRLM. This Preliminary Placement Document is personal to each offeree and does not constitute an offer to any other person. This Preliminary Placement Document may only be used by those persons to whom it has been handed out in connection with the offer described herein and may neither directly nor indirectly be distributed or made available to other persons without the express consent of our Company. It may not be used in connection with any other offer and shall in particular not be copied and/or distributed to the public in or from Switzerland.

United Arab Emirates

This Preliminary Placement Document is not intended to constitute an offer, sale or delivery of shares or other securities under the laws of the United Arab Emirates (the “UAE”). The Equity Shares have not been and will not be registered under Federal Law No. 4 of 2000 Concerning the Emirates Securities and Commodities Authority and the Emirates Security and Commodity Exchange, or with the UAE Central Bank, the Dubai Financial Market, the Abu Dhabi Securities market or with any other UAE exchange. the Issue, the Equity Shares and interests therein do not constitute a public offer of securities in the UAE in accordance with the Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise. This Preliminary Placement Document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the Equity Shares may not be offered or sold directly or indirectly to the public in the UAE. By receiving this Preliminary Placement Document, the person or entity to whom this Preliminary Placement Document has been issued understands, acknowledges and agrees that the Equity Shares have not been and will not be offered, sold or publicly promoted or advertised in the Dubai International Financial Centre other than in compliance with laws applicable in the Dubai International Financial Centre, governing the issue, offering or sale of securities. The Dubai Financial Services Authority has not approved this Preliminary Placement Document nor taken steps to verify the information set out in it, and has no responsibility for it. United Kingdom The Book Running Lead Manager has represented and agreed that it: i. is a person who is a qualified investor within the meaning of Section 86(7) of the Financial Services and

Markets Act 2000 (the “FSMA”), being an investor whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business;

ii. has not offered or sold and will not offer or sell the Equity Shares other than to persons who are qualified investors within the meaning of Section 86(7) of the FSMA or who it reasonably expects will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Equity Shares would otherwise constitute a contravention of Section 19 of the FSMA by us;

iii. has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Equity Shares in circumstances in which Section 21(1) of the FSMA does not apply to it; and

iv. has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Equity Shares in, from or otherwise involving the United Kingdom.

United States of America The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Equity Shares are being offered and sold (a) in the United States only to persons who are U.S. QIBs and (b) outside the United States in offshore transactions in reliance on Regulation S.

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TRANSFER RESTRICTIONS Allottees are not permitted to sell the Equity Shares for a period of one year from the date of Allotment except through

the Stock Exchanges. In addition to the above, allotments made to QIBs, including FVCIs, VCFs and AIFs in this Issue,

may be subject to lock-in requirements, if any, under the rules and regulations that are applicable to them. Accordingly,

purchasers are advised to consult their own legal counsel prior to making any offer, re-sale, pledge or transfer of the

Equity Shares, except if the resale of the Equity Shares is by way of a regular sale on the Stock Exchanges.Due to the

following restrictions, investors are advised to consult legal counsel prior to purchasing Equity Shares or making any

resale, pledge or transfer of the Equity Shares.

Purchasers are not permitted to sell the Equity Shares Allotted pursuant to the Issue, for a period of one year from the date of Allotment, except on the Stock Exchanges. Allotments made to FVCIs, VCFs and AIFs in the Issue are subject to the rules and regulations that are applicable to them, including in relation to lock-in requirements. Additional transfer restrictions applicable to the Equity Shares are listed below. U.S. TRANSFER RESTRICTIONS

The Equity Shares have not been and will not be registered under the U.S. Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws.

Each purchaser of the Equity Shares in the United States is deemed to have represented, agreed and

acknowledged as follows:

It is a “qualified institutional buyer” (as defined in Rule 144A).

It is aware that the sale of the Equity Shares to it is being made in reliance on an exemption under the U.S. Securities Act.

It is acquiring the Equity Shares for its own account or for the account of one or more eligible U.S. investors (i.e., “qualified institutional buyers”, as defined above), each of which is acquiring beneficial interests in the Equity Shares for its own account.

It understands that the Equity Shares are being offered in a transaction not involving any public offering in the United States within the meaning of the U.S. Securities Act, that the Equity Shares have not been and will not be registered under the U.S. Securities Act and that if in the future it decides to offer, resell, pledge or otherwise transfer any of the Equity Shares, such Equity Shares may be offered, resold, pledged or otherwise transferred in compliance with the U.S. Securities Act and other applicable securities laws only outside the United States in a transaction complying with the provisions of Rule 903 or Rule 904 of Regulation S or in a transaction otherwise exempt from the registration requirements of the U.S. Securities Act.

It will notify any transferee to whom it subsequently offers, sells, pledges or otherwise transfers and the executing broker and any other agent involved in any resale of the Equity Shares of the foregoing restrictions applicable to the Equity Shares and instruct such transferee, broker or agent to abide by such restrictions.

It acknowledges that if at any time its representations cease to be true, it agrees to resell the Equity Shares at the Company’s request.

It is a sophisticated investor and has such knowledge and experience in financial, business and investments as to be capable of evaluating the merits and risks of the investment in the Equity Shares. It is experienced in investing in private placement transactions of securities of companies in similar industries and in similar jurisdictions.

It and any accounts for which it is subscribing to the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to the Company or the Book Running Lead Manager for all or part of any such loss or losses that may be suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares, and (v) have no reason to anticipate any change in its or their circumstances, financial or otherwise, which may cause or require any sale or distribution by it or them of all or any part of the Equity Shares.

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It acknowledges that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. It is seeking to subscribe to the Equity Shares in this Issue for its own investment and not with a view to distribution.

It has been provided access to this Preliminary Placement Document, which it has read in its entirety.

It agrees to indemnify and hold the Company and the Book Running Lead Manager harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of these representations and warranties.

It will not hold any of the Company or the Book Running Lead Manager liable with respect to its investment in the Equity Shares.

It agrees that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares.

Where it is subscribing to the Equity Shares for one or more managed accounts, it represents and warrants that it is authorized in writing, by each such managed account to subscribe to the Equity Shares for each managed account and to make (and it hereby makes) the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “it” to include such accounts.

It acknowledges that the Company and the Book Running Lead Manager and their respective affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations or agreements is no longer accurate, it will promptly notify the Company and the Book Running Lead Manager.

Each other purchaser of the Equity Shares is deemed to have represented, agreed and acknowledged as follows:

It is authorized to consummate the purchase of the Equity Shares in compliance with all applicable laws and regulations.

It acknowledges (or if it is a broker-dealer acting on behalf of a customer, its customer has confirmed to it that such customer acknowledges) that the Equity Shares are being issued in reliance upon Regulation S and such Equity Shares have not been and will not be registered under the U.S. Securities Act.

It certifies that either (a) it is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares and is located outside the United States (within the meaning of Regulation S) or (b) it is a broker-dealer acting on behalf of its customer and its customer has confirmed to it that (i) such customer is, or at the time the Equity Shares are purchased will be, the beneficial owner of the Equity Shares, and (ii) such customer is not located outside the United States (within the meaning of Regulation S).

It is aware of the restrictions of the offer, sale and resale of the Equity Shares pursuant to Regulation S.

The Equity Shares have not been offered to it by means of any “directed selling efforts” as defined in Regulation S.

It understands that the Equity Shares are being offered in a transaction not involving any public offering in the United States within the meaning of the U.S. Securities Act, that the Equity Shares have not been and will not be registered under the U.S. Securities Act and that if in the future it decides to offer, resell, pledge or otherwise transfer any of the Equity Shares, such Equity Shares may be offered, resold, pledged or otherwise transferred in compliance with the U.S. Securities Act and other applicable securities laws only outside the United States in a transaction complying with the provisions of Rule 903 or Rule 904 of Regulation S or in a transaction otherwise exempt from the registration requirements of the U.S. Securities Act.

It is a sophisticated investor and has such knowledge and experience in financial, business and investments as to be capable of evaluating the merits and risks of the investment in the Equity Shares. It is experienced in investing in private placement transactions of securities of companies in a similar stage of development and in similar jurisdictions. It and any accounts for which it is subscribing to the Equity Shares (i) are each able to bear the economic risk of the investment in the Equity Shares, (ii) will not look to the Company or the Book Running Lead Manager for all or part of any such loss or losses that may be suffered, (iii) are able to sustain a complete loss on the investment in the Equity Shares, (iv) have no need for liquidity with respect to the investment in the Equity Shares,

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and (v) have no reason to anticipate any change in its or their circumstances, financial or otherwise, which may cause or require any sale or distribution by it or them of all or any part of the Equity Shares. It acknowledges that an investment in the Equity Shares involves a high degree of risk and that the Equity Shares are, therefore, a speculative investment. It is seeking to subscribe to the Equity Shares in this Issue for its own investment and not with a view to distribution.

It has been provided access to this Preliminary Placement Document, which it has read in its entirety.

It agrees to indemnify and hold the Company and the Book Running Lead Manager harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of these representations and warranties.

It will not hold any of the Company or the Book Running Lead Manager liable with respect to its investment in the Equity Shares. It agrees that the indemnity set forth in this paragraph shall survive the resale of the Equity Shares.

Where it is subscribing to the Equity Shares for one or more managed accounts, it represents and warrants that it is authorized in writing, by each such managed account to subscribe to the Equity Shares for each managed account and to make (and it hereby makes) the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “it” to include such accounts.

It acknowledges that the Company and the Book Running Lead Manager and their respective affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations or agreements is no longer accurate, it will promptly notify the Company and the Book Running Lead Manager.

Any resale or other transfer or attempted resale or other transfer, made other than in compliance with the above stated restrictions will not be recognized by the Company.

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SECURITIES MARKET OF INDIA The information in this section has been extracted from publicly available documents from various sources, including

officially prepared materials from the SEBI, the Stock Exchanges, and has not been prepared or independently verified

by us, the Book Running Lead Manager, or any of our respective affiliates or advisers.

The Indian Securities Market

India has a long history of organized securities trading. In 1875, the first stock exchange was established in Mumbai. The Stock Exchanges together hold a dominant position among the stock exchanges in terms of the number of listed companies, market capitalization and trading activity. Stock Exchange Regulation

Indian stock exchanges are regulated primarily by the SEBI, as well as by the Central Government acting through the Ministry of Finance, Capital Markets Division, under the Securities Contracts (Regulation) Act, 1956 (the “SCRA”), the Securities Contracts (Regulation) Rules, 1957 (the “SCRR”), the Securities and Exchange Board of India Act, 1992 (the “SEBI Act”), the Depositories Act, the Companies Act, and various other rules and regulations framed thereunder. On June 20, 2012, the SEBI, in exercise of its powers under the SCRA and the SEBI Act, notified the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (the “SCR (SECC) Rules”), which regulate, inter alia, the recognition, ownership and internal governance of stock exchanges and clearing corporations in India together with providing for minimum capitalization requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules along with various rules, byelaws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner in which contracts are entered into and enforced between members. The SEBI Act, under which the SEBI was established by the Central Government, granted powers to the SEBI to promote, develop and regulate the Indian securities markets, including stock exchanges and other financial intermediaries in the capital markets, to protect the interests of investors, to promote and monitor self-regulatory organizations, to prohibit fraudulent and unfair trade practices and insider trading and to regulate substantial acquisitions of shares and takeovers of companies. The SEBI has also issued regulations concerning disclosure requirements by listed and to-be listed companies, rules and regulations concerning investor protection, insider trading, substantial acquisition of shares and takeovers of companies, buyback of securities, delisting of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, Mutual Funds, FIIs, FPIs, credit rating agencies and other capital market participants. Listing The listing of securities on stock exchanges in India is regulated by the applicable Indian laws including the SEBI Regulations, Companies Act, the SCRA, the SCRR, the Listing Regulations the SEBI Act and various guidelines and regulations issued by the SEBI. Under the SCRA and the SCRR, the governing body of each stock exchange is empowered to suspend or withdraw admission to trading of or dealing in a listed security for breach by a listed company of any of the conditions of admission to dealings or for any other reason, subject to such company receiving prior notice of such intent of the stock exchange and upon granting of a hearing in the matter. In the event that a suspension of a company’s securities continues for a period in excess of 90 days, the company may appeal to the Securities Appellate Tribunal against the suspension. The SEBI has the power to vary or veto the decision of the stock exchange in this regard. The SEBI also has the power to amend the byelaws of the stock exchanges.

Disclosures under the Companies Act, 2013 and Listing Regulations Public listed companies are required under the Companies Act, 2013 and the Listing Regulations to prepare, file with the registrar of companies and circulate to their shareholders audited annual accounts which comply with the disclosure requirements and regulations governing their manner of presentation and which include sections relating to corporate governance under the Companies Act, 2013, related party transactions and management’s discussion and analysis as required under Listing Regulations. In addition, a listed company is subject to continuing disclosure requirements pursuant to the terms of the Listing Regulations. Delisting of Securities

The SEBI has, pursuant to a notification dated June 10, 2009, notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, in relation to the voluntary and compulsory delisting of securities from

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the stock exchanges. In addition, certain amendments to the SCRR have also been notified in relation to delisting.

Minimum Level of Public Shareholding Pursuant to an amendment of the SCRR, all listed companies (except public sector undertakings) are required to maintain a minimum public shareholding of 25%. We are in compliance with the minimum public shareholding requirement. Where the public shareholding in a listed company falls below 25% at any time, such company is required to bring the public shareholding to 25% within a maximum period of twelve months from the date of such fall in the manner specified by the SEBI. Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed stock exchanges to apply daily circuit breakers, which do not allow transactions beyond a certain level of price volatility. The index-based market-wide circuit breaker system (equity and equity derivatives) applies at three stages of the index movement, at 10%, 15% and 20%. These circuit breakers, when triggered, bring about a coordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the SENSEX of the BSE or the S&P CNX NIFTY of the NSE, whichever is breached earlier. In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise price bands. However, no price bands are applicable on scrips on which derivative products are available or scrips included in indices.

BSE Established in 1875, the BSE is the oldest stock exchange in India. In 1956, it became the first stock exchange in India to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its present status as one of the premier stock exchanges of India. NSE The NSE was established by financial institutions and banks to serve as a national exchange and to provide nationwide, on-line, satellite-linked, screen-based trading facilities with electronic clearing and settlement for securities including government securities, debentures, public sector bonds and units. It has evolved over the years into its present status as one of the premier stock exchanges of India. The NSE was recognised as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. Internet-Based Securities Trading and Services The SEBI approved internet trading in January 2000. Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution. This permits clients throughout the country to trade using brokers’ internet trading systems. Stock brokers interested in providing this service are required to apply for permission to the relevant stock exchange and to comply with certain minimum conditions stipulated by the SEBI and other applicable laws. NSE became the first exchange to grant approval to its members for providing internet-based trading services. Internet trading is possible on both the ‘equities’ as well as the ‘derivatives’ segments of the NSE.

Trading Hours Trading on both the Stock Exchanges normally occurs Monday through Friday, between 9:15 a.m. and 3:30 p.m Indian Standard Time. The Stock Exchanges are closed on public holidays. Recently, the stock exchanges have been permitted to set their own trading hours (in cash and derivative segments) subject to the condition that (i) the trading hours are between 9 a.m. and 5 p.m.; and (ii) the stock exchange has in place risk management system and infrastructure commensurate to the trading hours.

Trading Procedure

In order to facilitate smooth transactions, the BSE replaced its open outcry system with BSE On-line Trading (BOLT) facility in 1995. This totally automated screen based trading in securities was put into practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in smoothing settlement cycles and improving efficiency in back-office work. NSE also provides on-line trading facilities through a fully automated screen based trading system called ‘National Exchange for Automated Trading’ (“NEAT”), which operates on strict time/price

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priority besides enabling efficient trade. NEAT has provided depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads.

Takeover Code

Disclosure and mandatory open offer obligations for listed Indian companies under Indian law are governed by the Takeover Code which provide specific regulations in relation to substantial acquisition of shares and takeover. Once the equity shares of a company are listed on a stock exchange in India, the provisions of the Takeover Code will apply to acquisitions of the company’s shares/voting rights/control. The Takeover Code prescribes certain thresholds or trigger points in the shareholding a person or entity has in the listed Indian company, which give rise to certain obligations on part of the acquirer. Acquisitions up to a certain threshold prescribed under the Takeover Code mandate specific disclosure requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an open offer of the shares of the target company. The Takeover Code also provides for the possibility of indirect acquisitions, imposing specific obligations on the acquirer in case of such indirect acquisition. Since, our Company is an Indian listed company, the provisions of the Takeover Code apply to our Company. Insider Trading Regulations

The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, (the “Insider Trading

Regulations”) have been notified by SEBI to prohibit and penalize insider trading in India. An “insider” is defined to include any person who has received or has access to unpublished price sensitive information (“UPSI”) or a “Connected Person”. A “Connected Person” includes, inter alia, any person who is or has directly or indirectly, been associated with the company in any capacity whether contractual, fiduciary or employment or has any professional or business relationship with the company whether permanent or temporary, during the six months prior to the concerned act which would allow or reasonably expect to allow access, directly or indirectly, to UPSI. An insider is, inter alia, prohibited from trading in securities of a listed or proposed to be listed company when in possession of UPSI and to provide access to any person including other insiders to the above referred UPSI except where such communication is for legitimate purposes, performance of duties or discharge of legal obligations. UPSI shall include any information, relating to a company or its securities, directly or indirectly, that is not generally available which upon becoming generally available, is likely to materially affect the price of the securities. The Insider Trading Regulations also provide disclosure obligations for shareholders holding more than 5% of equity shares or voting rights, and the changes therein. Initial disclosures are required from promoters, key managerial personnel, directors as well as continual disclosures by every promoter, employee or director in case value of trade exceed monetary threshold of ten lakh rupees over a calendar quarter, within two days of reaching such threshold. The board of directors of all listed companies are required to formulate and publish on the company’s website a code of procedure for fair disclosure of UPSI along with a code of conduct for its employees for compliances with the Insider Trading Regulations. Depositories The Depositories Act provides a legal framework for the establishment of depositories to record ownership details and effect transfers in book-entry form. Further, the SEBI framed regulations in relation to, inter alia, the formation and registration of such Depositories, the registration of Depository Participants as well as the rights and obligations of the Depository Participants, companies and beneficial owners. The depository system has significantly improved the operation of the Indian securities markets. Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and derivative contracts were included within the term ‘securities’, as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange.

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DESCRIPTION OF EQUITY SHARES Set forth below is a brief summary of some of the existing provisions of the Memorandum and Articles, the Companies Act and certain other related legislation relating to the rights attached to the Equity Shares. General

As on the date of this Preliminary Placement Document, our Company’s authorised share capital is Rs.250,000,000 divided into 125,000,000 Equity Shares of Rs. 2 each. As on the date of this Preliminary Placement Document, our Company’s issued subscribed and paid-up capital is Rs. 77,689,652 divided into 38,844,826 Equity Shares of Rs. 2 each. The Equity Shares are listed on the Stock Exchanges.The security identification codes for the Equity Shares are as follows:

ISIN INE355A01028 BSE Code 531548 NSE Symbol SOMANYCERA Articles of Association

Our Company is governed by the Articles.

Dividends The Articles provide that dividend may be paid upon a recommendation of the Board and approval by a majority of the Shareholders, who shall not increase the amount of the dividend recommended by the Board. However, the Board is not under an obligation to recommend a dividend. According to the Articles, the dividend shall be paid in proportion to the amount paid up or credited as paid up on each share where a larger amount is paid up or credited as paid up on some shares than on others, but where capital is paid up in advance of calls carrying interest, such capital whilst carrying interest shall not confer a right to participate in profits or dividend. No dividend shall be payable except in cash out of the profits of our Company of the year or any other undistributed profits and no dividend shall carry any interest against our Company. The Directors may declare interim dividend as justified by the position of our Company. Where any instrument of transfer of shares has been delivered to our Company but the registration to that effect has not been done by our Company, the dividend in relation to such shares shall be transferred to a special account, unless the registered holder of such shares has authorised our Company in writing to pay such dividend to the transferee in such an instrument of transfer. Further, in relation to such shares, our Company shall keep in abeyance any offer of rights shares and any issue of fully paid up bonus shares. Unless otherwise directed, any dividend may be paid by cheque or by warrant sent through post to the registered address of the Shareholder and in the case of joint holders to any one of them first named in the register of Shareholders; and our Company shall not be liable for cheque or warrant or dividend lost in transmission or lost due to forged endorsement or fraudulent recovery.

Increase, Reduction and Alteration of Share Capital

The Articles provide that where it is proposed to increase the subscribed capital of our Company by allotment of further shares which shall be issued upon such terms and conditions with such rights and privileges annexed thereto as the resolution creating the same shall direct and if no direction be given, in the manner provided in Section 62 of the Companies Act, 2013. The Articles provide that our Company may from time to time by a special resolution, reduce its capital and any share premium account or capital redemption reserve account in any manner and with and subject to any consent required by law. Except as so far otherwise provided by the conditions of the issue or by the Articles, any capital raised by the creation of new shares shall be considered as a part of the existing capital. Our Company has the power to modify rights and privileges attached to a class of shares with the consent of the holders of three-fourths of that class in writing or with the sanction of a special resolution passed at a separate meeting of the shareholders of that class. The Articles provide that our Company may from time to time, in a general meeting:

consolidate and divide all or any of its share capital into shares of larger amount; sub-divide its shares or any of them into shares of smaller amount than the amount fixed by the memorandum so,

however, that in the sub-division the proportion between the amount paid and the amount, if any unpaid on each

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reduced share shall be the same as it was in the case of the share from which the reduced share is derived; cancel any shares which, at the date of the passing of the resolution have not been taken up or agreed to be taken up

by any person and diminish the amount of its share capital by the amount of the shares so cancelled. General Meetings of Shareholders

Our Company is required to hold an annual general meeting (“AGM”) every fifteen months in addition to any other general meetings. Not less than 21 days’ notice in writing of a general meeting is to be given, but shorter notice may be given if consent in writing is accorded by all the members entitled to vote and in case of any other meetings, with the consent of members holding not less than 95 per cent of such part of the paid-up share capital of our Company which gives a right to vote at the meeting. No meeting shall be competent to enter upon, discuss or transact any business, which has not been specifically mentioned in the notice, or notices upon which it was convened. Every Shareholder is entitled to attend a meeting and vote either in person or by proxy. All businesses to be transacted at an AGM shall be deemed special except the consideration of accounts, balance sheet and reports of the Board and Auditors, declaration of dividend, appointment of Directors in place of those retiring, the appointment of and fixation of remuneration of the Auditors. In case of an extraordinary general meeting (“EGM”) all business is deemed special. A statement setting out all material facts, including the nature of concern or interest, financial or otherwise in respect of every Director and manager; every other key managerial personnel and relatives of such persons, in respect of special business to be transacted at the meeting, shall be annexed to the notice. The Board may also call an EGM whenever it thinks fit and it shall do so upon a requisition in writing by any Shareholder(s) holding in aggregate not less than one- tenth of the issued and paid-up capital upon which all calls or other sums then due have been paid. Where any resolution requires special notice, notice of the intention to move the resolution should be given to our Company by such number of members not less than one percent of total voting power that has been paid-up and our Company shall immediately on receipt of the notice of intention give its members notice of the resolution in the same manner as it gives notice of the meeting. The quorum requirements for a general meeting are as prescribed under Section 103 of the Companies Act, 2013. If the quorum is not present within half an hour of the time appointed for a meeting, the meeting, if convened upon such requisition as aforesaid, shall be dissolved; but in any other case it shall stand adjourned to the same day in the next week at the same time and place or to such other day and at such other time and place as the Board may determine and if at such adjourned meeting, a quorum is not present at the expiration of half an hour from the time appointed for holding the meeting, the members present shall be a quorum and may transact the business for which the meeting was called. The Articles further provide that no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. The meetings should be convened in the presence of a Chairman. A resolution put to vote shall be decided on a show of hands, unless a poll is ordered to be taken by the Chairman. At every AGM of our Company there shall be laid before the meeting, the Directors’ report and audited statement of accounts, Auditor’s report, proxies and the register of Directors’ and key managerial personnel’s' shareholding and a register of contracts or arrangements in which the Directors and key managerial personnel is interested as required under Section 170 of the Companies Act, 2013. Minutes of the AGM are to be maintained and shall be evidence of the proceedings recorded therein. Voting Rights

Every Shareholder present in person shall have one vote on a show of hands, and on poll, the Shareholder present in person or by proxy shall have voting rights in proportion to his share of the paid-up capital of our Company held by him, subject to any rights or restrictions for the time being attached to any class or classes of shares. The instrument appointing a proxy and the power of attorney (or other authority, if any) under which it is signed is required to be deposited at the registered office at least 48 hours before the time of the meeting. A vote given in accordance with the terms of an instrument appointing a proxy shall be valid notwithstanding the prior death or insanity of the principal or revocation of the proxy, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer of the share shall have been received by our Company at the registered office before the meeting. Further, no Shareholder shall be entitled to exercise any voting right personally or by proxy at any meeting of our Company in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid. No objection to the validity of a vote shall be made except during the meeting or poll and every vote not disallowed shall be deemed valid for all purposes of such meeting or poll. The Chairman of the meeting shall be the judge of the validity of the vote.

Register of Shareholders

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Our Company is required to maintain a register of members wherein the particulars of the Shareholders are entered. For the purpose of determining the Shareholders, the register may be closed for such period not exceeding 45 days in any one year or 30 days at any one time at such times, as the Board may deem expedient. Directors

The Articles provide that the number of Directors shall not be less than three and not be more than eleven. The Directors shall be appointed by our Company in the general meeting subject to the provisions of the Companies Act and the Articles. Two-thirds of the total number of Directors is subject to retirement by rotation. Of such Directors, one-third, or if their number is not three or multiples of three, then the number nearest to one-third, must retire every year. The Directors to retire are those who have been the longest in office. As provided under Section 161 of the Companies Act, 2013, the Director may be appointed by the Board or by the general meeting of the Shareholders. The Directors have the power to appoint any other persons as an additional Director but any Director so appointed shall hold office only up to the date of the next following AGM of our Company but the total number of Directors shall not at any time exceed the maximum strength. The Board shall also have the power to appoint any person to act as an alternate Director for a Director during the latter’s absence for a period of not less than three months from India. The alternate Director shall vacate the office if and when the original Director returns to India and in case the office of the original Director is determined before he returns, the provisions of the Companies Act, 2013, and the Articles for automatic reappointment shall apply to the original Director and not the alternate Director.Our Company must have at least one Director who has stayed in India for at least 182 days in the previous calendar year (i.e. is an Indian resident). Our Company is required to have at least one-half of its Directors as independent Directors. The quorum for meetings of the Board is one-third of the total number of Directors (any fraction contained in that one-third being rounded off as one) or two Directors, whichever is higher. The participation of the Directors by video conferencing or by other visual means will be counted towards quorum. However, where the number of interested Directors is equal to or exceeds two-thirds of total strength, the remaining number of Directors (i.e. Directors who are not interested) present at the meeting, being not less than two shall be the quorum during such time. In case there is no quorum for a Board meeting, the remaining Directors may act only for the purpose of increasing the number of Directors to meet the quorum requirements or to summon a general meeting. Capitalization of profits The Articles provide that any general meeting may resolve that whole or any part of the of our Company’s undivided profit for the time being, (which expression shall include any premiums received on issue of Equity Shares and any profits or other sums which have been set aside as a reserve or reserves or have been carried forward without being dividend) be capitalised and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividend. The capitalization may be done among Shareholders in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised fund be applied on behalf of such Shareholders in paying up in full either at par or at premium, any unissued shares or debentures of our Company which shall be distributed or directed towards payment of the uncalled liability on any issued shares or debentures, and that such distribution or payment shall be accepted by such Shareholders in full satisfaction of their interest. Annual Report and Financial Results

The annual report is required to be laid before the Shareholders at the AGM. This includes financial information such as the audited financial statements as of the date of closing of the financial year, Directors’ report, management’s discussion and analysis and a corporate governance section, and is sent to the Shareholders in advance in compliance with applicable laws. Our Company is required to file the annual report with the RoC within 30 days from the date of the AGM. Our Company must also publish its financial results in at least one English daily newspaper circulating in the whole or substantially the whole of India and also in a newspaper published in the language of the region where the registered office is situated. Our Company is required to file certain information on-line, including the annual report, financial statements and the shareholding pattern statement, in accordance with the requirements of the Listing Regulations. Transfer of Equity Shares

The Equity Shares held through Depositories are transferred in the form of book entries or in electronic form in accordance with the regulations laid down by the SEBI. These regulations provide the regime for the functioning of the

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Depositories and the Depository participants and set out the manner in which the records are to be kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownership of the Equity Shares held through a Depository are exempt from stamp duty. Our Company has entered into an agreement for such depository services with the National Securities Depository Limited and the Central Depository Services India Limited. The SEBI requires that the Equity Shares for trading and settlement purposes be in book-entry form for all investors, except for transactions that are not made on a stock exchange and transactions that are not required to be reported to the Stock Exchange. Acquisition by our Company of its own Equity Shares

A company is empowered to buy-back its own shares or other specified securities out of its free reserves, the securities premium account or the proceeds of any fresh issue of shares or other specified securities (other than the kind of shares or securities proposed to be bought back) subject to certain conditions, including:

the buy-back should be authorised by the articles of association of the company; a special resolution has been passed in a general meeting authorising the buy-back (in the case of listed companies,

by means of a postal ballot) unless the buy-back is for 10% or less than 10% of the total paid-up equity capital and free reserves of the company and such buy-back has been authorized by the board of directors of the company by means of a resolution passed at its meeting;

the proceeds utilised for the buy-back is limited to not more than 25% of the total paid-up capital and free reserves of the company;

the buy-back of equity shares in any financial year is limited to not more than 25% of the total paid-up equity capital of the company in that financial year. No offer of buy-back shall be made within one year from the closure of the previous offer of buy-back;

the secured and unsecured debt owed by the company is not more than twice the paid-up capital and free reserves after such buy-back;

the shares or other specified securities for buy back are fully paid-up; and

the buy-back is in accordance with the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998.

A company buying back its securities is required to extinguish and physically destroy the securities so bought back within seven days of the last date of completion of the buy-back. Further, a company buying back its securities is not permitted to buy back any securities for a period of one year from the date of closure of the preceding offer of buy-back or to issue the same kind of securities for six months subject to certain limited exceptions. Other than as described above, a company is prohibited from acquiring its own shares unless the consequent reduction of capital is effected by an approval of at least 75% of its shareholders, voting on it in accordance with the Companies Act and sanctioned by the High Court in terms of the Companies Act. Subject to certain conditions, a public company is prohibited from giving, whether directly or indirectly and whether by means of loan, guarantee, provision of security or otherwise, any financial assistance for the purpose of or in connection with a purchase or subscription made or to be made by any person for any shares in the company or its holding company. A company is also prohibited from purchasing its own shares or specified securities through any subsidiary company including its own subsidiary companies or through any investment company or group of investment companies. Further, a company is prohibited from purchasing its own shares or specified securities, inter alia, if the company is in default with respect to the repayment of deposit or interest, in the redemption of debentures or preference shares, in payment of dividend to a shareholder, in repayment of any term loan or interest payable thereon to any financial institution or bank. Liquidation Rights

In the event of our Company being wound up, whether voluntarily or otherwise, the liquidators may, with the sanction of a special resolution, divide amongst the contributories in specie, any part of the assets of our Company and may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction shall think fit.

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TAXATION

STATEMENT ON DIRECT TAX BENEFITS

To,

The Board of Directors, Somany Ceramics Limited 82/19, Bhakerwara Road, Mundka,

New Delhi - 110041

Dear Sirs,

Re: Proposed issuance of securities pursuant to Chapter VIII of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, by Somany Ceramics Ltd, (“the

Company”)

Sub: Statement of possible direct tax benefits available to the Company and its potential shareholders i.e. Qualified Institutional Buyers (“QIBs”)

We hereby certify that the enclosed annexure states and accurately summarizes the possible direct tax benefits available to the Company and QIBs under the provisions of the Income-tax Act, 1961, presently in force in India for the Financial Year (“FY”) 2015-16 [i.e. Assessment Year (“AY”) 2016-17]. Several of the said possible direct tax benefits are dependent on the Company and the QIBs fulfilling certain conditions as prescribed under relevant statutory and/or regulatory provisions. Hence, the ability of the Company and QIBs to avail the said direct tax benefit(s) is dependent upon fulfilling such conditions, which the Company may or may not, at its sole discretion, choose to fulfill from time to time.

The benefits discussed in the enclosed statement are not exhaustive and preparation of the contents stated is responsibility of the Company’s management. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and changing direct tax laws, each QIB is advised to consult their own tax consultant with respect to the specific tax implications arising out of their participation in the subject issue.

We do not express any opinion or provide any assurance as to whether:

a) the Company or any QIB will currently or in the future be able to avail of any or all of the said direct tax benefits; or

b) the conditions prescribed for availing the benefits have been / would be met. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company and the provisions of the Income-tax Act, 1961, the Wealth Tax Act, 1957, and the Gift Tax Act, 1958, presently in force in India.

This report is intended solely for your information and for the inclusion in the Preliminary Placement Document in connection with the proposed issuance of securities of the Company to the QIBs and is not to be used, referred to or distributed for any other purpose without our prior written consent.

For Lodha & Co. Chartered Accountants Registration No.: 301051E

Gaurav Lodha Partner

Membership No.: 507462

Date: December 17, 2015

Place: New Delhi

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Annexure

STATEMENT OF DIRECT TAX BENEFITS

The information provided below sets out the possible direct tax benefits available to the Company and the QIBs in a

summary manner only and is not a complete analysis or listing of all potential direct tax consequences of the

purchase, ownership and disposal of Equity Shares, under the direct tax laws presently in force in India. This direct tax

benefit statement is not exhaustive or comprehensive and accordingly is not intended to be a substitute for professional

advice. Investors are advised to consult their own tax consultant with respect to the tax implications of an investment in

the Equity Shares particularly in view of the fact that certain recently enacted legislation may not have a direct legal

precedent or may have a different interpretation on the benefits, which an investor can avail.

YOU SHOULD CONSULT YOUR OWN TAX ADVISORS CONCERNING THE INDIAN TAX

IMPLICATIONS AND CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF EQUITY SHARES

IN YOUR PARTICULAR SITUATION.

Levy of Income Tax

As per the provisions of the Income Tax Act, 1961 (“the Act”) taxation of a person is dependent on its tax residential

status. The Indian tax year i.e. FY runs from April 1 to March 31.

In general, in the case of a person who is "resident'' in India in a tax year, its global income is subject to tax in India. In

the case of a person who is "non-resident'' in India, only the income that is received or deemed to be received or that

accrues or is deemed to accrue or arise to such person in India is subject to tax in India. In the instant case, the equity

shares of the Company would be regarded as capital assets situated in India, the income from such equity shares would

be considered to accrue or arise in India, and would be taxable in the hands of all persons irrespective of residential

status. However, relief may be available under applicable Double Taxation Avoidance Agreement (“DTAA”) to certain

non-residents.

As per the direct taxation laws in force, the direct tax benefits /consequences, as applicable, to the Company and QIBs

investing in the Equity Shares are summarized below:

1. BENEFITS AVAILABLE TO THE COMPANY UNDER THE ACT

1.1. Under Section 10(34) of the Act, income by way of “dividends” received on the shares of any domestic

company is exempt from income tax in the hands of shareholders. However, no deduction is permitted in

respect of expenditure incurred in relation to income which is not chargeable to tax. The expenditure relatable to

“exempt income” need to be determined in accordance with the provisions specified in Section 14A of the Act read

with Rule 8D of the Income Tax Rules, 1962 (“Rules”).

However, the Company will be liable to pay Dividend Distribution Tax (‘‘DDT”) at the rate of 15 per cent

(plus applicable surcharge cess) on the total amount distributed by it as dividends under section 115-O of the Act.

Further, Finance Act 2014 amended this Section wherein DDT shall be levied on grossed up distributable amount

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i.e. the amount distributed and the DDT amount.

In calculating the amount of dividend on which DDT is payable, the same shall be reduced by dividend, if any, received

by the Company during the FY, where:

such dividend is received from subsidiary of the Company (A company shall be a subsidiary of another

company, if such other company, holds more than half in nominal value of the equity share capital of the

company); and

such subsidiary has paid tax under this Section on such dividend;

1.2. Under Section 32(1) of the Act, the Company can claim depreciation allowance at the prescribed rates on its

fixed assets. It is to be noted that in cases where the assets are put to use for less than 180 days in the year in which

they are acquired, the allowance for depreciation will be 50 percent of the prescribed rates of depreciation in the

year of put to use. Subject to fulfillment of conditions prescribed in Section 32(1)(iia) of the Act, the Company will

be entitled to claim additional depreciation of 20 per cent of the actual cost of certain new machinery or plant which

have been acquired and installed after 31st March, 2005. Further, the Company will be entitled to claim additional

depreciation of 35 per cent of the actual cost of such new plant and machinery instead of 20 per cent, if it sets-up an

undertaking or enterprise for manufacture of article or thing in the notified backward area in the State of Andhra

Pradesh, Bihar, Telangana or West Bengal during a period beginning from 1 April 2015 and ending before 1 April

2020. Unabsorbed depreciation, if any, for any assessment year can be carried forward and set off against any source

of income in subsequent assessment years as per Section 32(2) of the Act.

1.3. As per section 32AC of the Act, the Company can claim a deduction of fifteen per cent of the actual cost of new

assets acquired and installed during any previous year provided that the amount of actual cost of such new assets

acquired and installed during the previous year exceeds rupees twenty-five crore.

1.4. As per section 32AD of the Act, can claim a deduction of fifteen per cent of the actual cost of new assets acquired

and installed during any previous year, if the Company sets-up an undertaking or enterprise for manufacture of an

article or a thing in the notified backward area in the State of Andhra Pradesh, Bihar, Telangana or West Bengal

during a period beginning from 1 April 2015 and ending before 1 April 2020.

1.5. Under Section 72(1) of the Act, where for any FY, the net result of the computation under the head “Profits and

Gains of Business or Profession” is a loss to the Company (not being a loss sustained in a speculation business),

then to the extent to which such loss cannot be set off against income from any other head of income for the same

year, it shall be eligible to be carried forward and available for set off only against income from business under

head “Profits and Gains of Business or Profession” for subsequent years. As per Section 72(3) of the Act, the loss

so carried forward can be set off subject to a limit of 8 FYs immediately succeeding the FY for which the loss was

first computed.

1.6. Under Section 10(35) of the Act, any income received in respect of the units of a Mutual Fund specified in

Section 10(23D) of the Act; or units from the Administrator of the specified undertaking; or units from the

specified company, as defined in Explanation to Section 10(35) of the Act, is exempt from tax. However, as per

the proviso, the above provisions are not applicable to any income arising from transfer of units of the

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Administrator of the specified undertaking or of the specified company or of a mutual fund.

1.7. Under Section 10(38) of the Act, long term capital gains2 arising to a shareholder on transfer of shares in the

company or units of an equity oriented fund are exempt from tax, where the sale transaction has been entered into

on a recognized stock exchange of India and Securities Transaction Tax (“STT”) has been paid on the same.

1.8. 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 wholly and exclusively in connection with the transfer of a

capital asset from the sale consideration to arrive at the amount of capital gains. However, second proviso to

Section 48 of the Act permits substitution of cost of acquisition / improvement with the indexed cost of acquisition

/ improvement, in case of long term capital assets thereby adjusting the cost of acquisition / improvement by a cost

inflation index, as prescribed yearly.

1.9. Under section 112 of the Act, long term capital gains, [other than those exempt under section 10(38) of the Act]

arising on transfer of long term capital asset would be subject to tax at a rate of 20 per cent (plus applicable

surcharge and education cess) after indexation. In case of listed securities (other than units) and zero coupon

bonds, tax on long term capital gains is restricted to 10 per cent of capital gains without the benefit of Indexation.

1.10. In accordance with and subject to the conditions, including the limit of investment of Rs 50 lacs, and to the extent

specified in Section 54EC of the Act, capital gains arising on transfer of long-term capital assets of the Company

shall be exempt from capital gains tax if the gains are invested within six months from the date of transfer in the

purchase of long-term specified assets.

1.11. Under section 111A of the Act, short term capital gains arising on transfer of equity share or units of equity

oriented mutual funds as specified in section 10(23D) of the Act or units of a business trust in the Company would

be taxable at 15 per cent (plus applicable surcharge and education cess) where such transaction of sale is entered

on a recognized stock exchange in India and STT has been paid on the same. Short term capital gains arising from

transfer of shares in the Company, other than those covered by section 111A of the Act, would be subject to tax

under the normal provisions of the Act.

1.12. As per Section 74 of the Act, short-term capital loss suffered by the Company during the financial year will be

allowed to be set-off against short-term as well as long-term capital gains of the same year. Balance loss, if any,

which cannot be set-off will be allowed to be carried forward for eight years for claiming set-off against

subsequent years’ short-term as well as long-term capital gains. Long-term capital loss suffered during the year

will be allowed to be set-off against long-term capital gains only. Balance loss, if any, which cannot be set-off will

be allowed to be carried forward for eight years for claiming set-off against subsequent years long-term capital

2 Assets may be categorized into short-term capital assets and long-term capital assets, based on the period of holding Capital asset.

Securities (other than units) listed on recognized stock exchanges in India or units of the Unit Trust of India or a unit of equity

oriented mutual fund or zero coupon bonds will be considered as long-term capital assets if they are held for a period exceeding

12 months. In respect of any other capital assets (including unlisted securities and units of debt oriented mutual fund), the

holding period should exceed 36 months to be considered as long-term capital assets.

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gains.

2. Benefits available to QIB shareholders of the Company

Shareholders being Foreign Institutional Investors (‘FIIs’)

2.1. As per Section 10(34) of the Act, any income by way of dividend received from domestic companies referred to

in Section 115-O of the Act (i.e. dividends declared, distributed or paid on or after 1st April, 2003 by domestic

companies) will be exempt from tax in the hands of shareholders.

2.2. As per Section 2(14) of the Act, capital asset includes any securities held by a FII which it has invested in such

securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992.

Hence, income earned by FII from transfer of such securities is taxable under the head “Income from Capital

Gains” only.

2.3. Income arising on transfer of the shares of the company will be exempt under Section 10(38) of the Act if the

said shares are long-term capital assets and securities transaction tax has been charged on the said transaction.

2.4. Under Section 115AD(1)(b)(iii) of the Act, income by way of long-term capital gains arising from the transfer of

shares held in the company not covered under point 2.3 above will be chargeable to tax at the rate of 10% (plus

applicable surcharge and education cess).

2.5. Under Section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising on transfer of the

shares of the company will be chargeable to tax at the rate of 15% (plus applicable surcharge and education cess)

as per the provisions of Section 111A of the Act if securities transaction tax has been charged on the said

transaction.

2.6. Under Section 115AD(1)(b)(ii) of the Act, income by way of short-term capital gains arising from the transfer of

shares held in the company not covered under point 2.5 above will be chargeable to tax at the rate of 30% (plus

applicable surcharge and education cess).

2.7. The benefit of indexation and foreign currency fluctuation protection as provided by Section 48 of the Income-

tax Act is not applicable to FIIs while computing capital gains. Further, if gross total income of FII’s includes

any short-term capital gains referred to above, deduction under chapter VI-A of the Income-tax Act shall be

allowed from the gross total income as reduced by such short-term capital gains.

2.8. Under the provisions of Section 90(2) of the Act, a FII will be governed by the provisions of the Agreement for

Avoidance of Double Taxation (‘DTAA’) between India and the country of residence of the FII if the said

provisions are more beneficial than the provisions under the Act.

2.9. Where the business income of shareholder includes profits and gains arising from transactions on which

securities transaction tax has been charged, such securities transaction tax shall be a deductible expense from

business income as per the provisions of Section 36(1)(xv) of the Act.

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Shareholders being Mutual Funds

2.10. Under Section 10(23D) of the Act, any income earned by a Mutual Fund registered under the Securities and

Exchange Board of India Act, 1992, or a Mutual Fund set up by a public sector bank or a public financial

institution, or a Mutual Fund authorized by the Reserve Bank of India would be exempt from income-tax, subject

to such conditions as the Central Government may by notification in the Official Gazette specify in this behalf.

Shareholders being Provident Funds

2.11. Under Section 10(25) of the Act any income received by the trustees on behalf of a recognized provident fund or

on behalf of an approved superannuation fund or on behalf of an approved gratuity fund will be exempt from

income tax. Further, the interest earned on securities by provident fund to which the Provident Funds Act, 1925

applies, and any capital gains of the fund arising from the sale, exchange or transfer of securities will also be

exempt from tax.

QIB resident shareholders other than those discussed above


in Section 115-O of the Act will be exempt from tax in the hands of shareholders.

2.13. Income arising on transfer of the shares of the Company will be exempt under Section 10(38) of the Act if the

said shares are long-term capital assets and securities transaction tax has been charged on the said transaction.

2.14. The long-term capital gains accruing to the shareholders of the company from the transfer of the shares of the

Company otherwise than as mentioned in point 2.13 above shall be chargeable to tax at the rate of 20% (plus

applicable surcharge and education cess) of the capital gains computed after indexing the cost of acquisition or at

the rate of 10% (plus applicable surcharge and education cess) of the capital gains computed before indexing the

cost of acquisition, whichever is lower.

2.15. Short-term capital gains arising on transfer of the shares of the company will be chargeable to tax at the rate of

15% (plus applicable surcharge and education cess) as per the provisions of Section 111A of the Act if securities

transaction tax has been charged on the said transaction.

2.16. Short-term capital gains arising from the transfer of shares held in the company not covered under point 2.15

above will be chargeable to tax at the rate of 30% (plus applicable surcharge and education cess).

2.17. In accordance with, and subject to the conditions, including the limit of investment of Rs. 50 lacs, and to the

extent specified in Section 54EC of the Act, long-term capital gains arising on transfer of the shares of the

company not covered under point (2.13) above will be exempt from capital gains tax if the gains are invested

within six months from the date of transfer in the purchase of long-term specified assets.

2.18. Where the business income of shareholder includes profits and gains from transactions on which securities

transaction tax has been charged, such securities transaction tax shall be a deductible expense from business

income as per the provisions of Section 36(1)(xv) of the Act.

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QIB resident shareholders who are Insurance Companies.


in Section 115-O of the Act will be exempt from tax in the hands of shareholders.

2.20. As per provisions of Section 44 of the Act, notwithstanding anything to the contrary contained in the provisions

of the Act, while computing total income of Insurance Company, Capital Gains arising shall be computed in

accordance with the rules contained in the First Schedule of the Act.

3. Benefits available under the Wealth tax Act, 1957

In terms of Section 3 of the Wealth-tax Act, 1957, wealth-tax Act has been abolished w.e.f. 1 April 2015, according the

company would not be liable to wealth tax for FY 2015-16 and onwards.

4. Benefits available under the Gift tax Act, 1958

Gift made after 1st October, 1998 is not liable for any gift tax, and hence, gift of shares of the company would not be

liable for any gift tax.

Notes:

a. The above Statement of Direct Tax Benefits sets out the provisions of law in a summary manner only and is not a

complete analysis or listing of all potential direct tax consequences of the purchase, ownership and disposal of

equity shares;

b. The above Statement of Direct Tax Benefits sets out the possible direct tax benefits available to the Company and

QIBs under the direct tax laws (i.e. Act as amended by the, Finance Act 2015) presently in force in India. Several of

these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the

relevant tax laws;

c. This statement is only intended to provide general information to the investors and is neither designed nor intended

to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, the changing

tax laws, each investor is advised to consult his or her/ its own tax consultant with respect to the specific tax

implications arising out of their participation in the issue;

d. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to

any benefits available under the DTAA, if any, between India and the country in which the non- resident has fiscal

domicile; and

e. The stated benefits will be available only to the sole/first named holder in case the shares are held by joint

shareholders.

For Lodha & Co.

Chartered Accountants

Registration No.: 301051E

Gaurav Lodha

Partner



Place: New Delhi

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CERTAIN U.S. TAX CONSIDERATIONS

The following is a general description of certain material United States federal income tax consequences to U.S.

Holders under present law of an investment in the Equity Shares. This summary applies only to investors that hold the

Equity Shares as capital assets (generally, property held for investment). This discussion is based on the tax laws of

the United States as in effect on the date of this Preliminary Placement Document; U.S. Treasury regulations in effect

or, in some cases, proposed, as of the date of this Preliminary Placement Document; judicial and administrative

interpretations thereof available on or before such date; and the Convention Between the Government of the United

States of America and the Government of the Republic of India for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with Respect to Taxes on Income (the “US India Treaty”). All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences

described below. The following discussion does not address alternative minimum tax considerations or state, local, non-United States or other tax laws, or the tax consequences to any particular investor or to persons in special tax situations such as:

banks;

certain financial institutions;

insurance companies;

dealers in stocks, securities, currencies or notional principal contracts;

U.S. expatriates and former long-term residents of the United States;

regulated investment companies and real estate investment trusts;

tax-exempt entities;

U.S. Holders that have a functional currency other than the U.S. dollar;

persons holding an Equity Share as part of a straddle, hedging, conversion or integrated transaction;

persons that actually or constructively own 10% or more of the Company’s voting stock; persons who acquired Equity Shares pursuant to the exercise of any employee share option or otherwise as

consideration;

persons holding Equity Shares who are not U.S. Holders (defined below); or

persons holding Equity Shares through partnerships or other pass-through entities. For purposes of this summary, a “U.S. Holder” is a beneficial owner of Equity Shares that is for United States federal income tax purposes,

an individual who is a citizen or resident of the United States;

a corporation organized under the laws of the United States, any state thereof or the District of Columbia;

an estate whose income is subject to United States federal income taxation regardless of its source; or

a trust that (1) is subject to the primary supervision of a court within the United States and the control of one or more U.S. persons for all substantial decisions of the trust, or (2) has a valid election in effect under the applicable U.S. Treasury regulations to be treated as a U.S. person.

If you are a partner in a partnership, or other entity taxable as a partnership for United States federal income tax purposes, that holds Equity Shares, your tax treatment generally will depend on your status and the activities of the partnership. Prospective purchasers of Equity Shares that are partnerships should consult their tax advisors. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE

APPLICATION OF THE UNITED STATES FEDERAL TAX RULES TO THEIR PARTICULAR

CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL, FOREIGN AND OTHER TAX

CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF EQUITY

SHARES.

Taxation of Distributions on the Equity Shares

Subject to the PFIC rules discussed below, the gross amount of distributions to you with respect to the Equity Shares generally will be included in your gross income in the year received as foreign source ordinary dividend income, but only to the extent that the distribution is paid out of the Company’s current or accumulated earnings and profits (as determined under United States federal income tax principles). To the extent that the amount of the distribution exceeds the Company’s current and accumulated earnings and profits, it will be treated first as a tax-free return of your tax basis in

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your Equity Shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. However, the Company does not intend to calculate its earnings and profits under United States federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will generally be treated as a dividend. The dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations. Subject to applicable limitations, with respect to non-corporate U.S. Holders (including individual U.S. Holders), dividends may constitute “qualified dividend income” that is taxed at the lower applicable capital gains rate provided that (1) the Company is not a PFIC (as discussed below) for either the taxable year in which the dividend is paid or the preceding taxable year, (2) such dividend is paid on Equity Shares that have been held by you for at least 61 days during the 121-day period beginning 60 days before the ex-dividend date, and (3) the Company is eligible for the benefits of the US India Treaty. The Company does not believe it was a PFIC for the taxable year ending March 31, 2014 and does not expect to be a PFIC for the current year or any future years. Non-corporate U.S. Holders are strongly urged to consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to the Equity Shares. The amount of any distribution paid by the Company in a currency other than U.S. dollars (a “foreign currency”) will be equal to the U.S. dollar value of such foreign currency on the date such distribution is received by the U.S. Holder, regardless of whether the payment is in fact converted into U.S. dollars at that time. If the foreign currency so received is converted into U.S. dollars on the date of receipt, a U.S. Holder generally will not recognize foreign currency gain or loss on such conversion. If the foreign currency so received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Gain or loss, if any, realized on the subsequent sale or other disposition of such foreign currency will generally be U.S. source ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. For foreign tax credit purposes, dividends distributed with respect to Equity Shares will generally constitute “passive category income”. A U.S. Holder will not be able to claim a U.S. foreign tax credit for Indian taxes for which the Company is liable and must pay with respect to distributions on Equity Shares. The rules relating to the determination of the U.S. foreign tax credit are complex and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available in their particular circumstances. Taxation of a Disposition of Equity Shares

Subject to the PFIC rules discussed below, you generally will recognize capital gain or loss on any sale or other taxable disposition of an Equity Share equal to the difference between the U.S. dollar value of the amount realized for the Equity Share and your tax basis (in U.S. dollars) in the Equity Share. If you are a non-corporate U.S. Holder (including an individual U.S. Holder) who has held the Equity Share for more than one year, capital gain on a disposition of the Equity Share generally will be eligible for reduced federal income tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize generally will be treated as U.S. source income or loss for foreign tax credit limitation purposes. Because gains on a disposition of an Equity Share generally will be treated as U.S. source, the use of foreign tax credits relating to any Indian income tax imposed upon gains in respect of Equity Shares may be limited. U.S. Holders should consult their tax advisors regarding the application of Indian taxes to a disposition of an Equity Share and their ability to credit an Indian tax against their United States federal income tax liability. A U.S. Holder that receives foreign currency from the sale or disposition of Equity Shares generally will realize an amount equal to the U.S. dollar value of such foreign currency on the date of sale or disposition or, if such U.S. Holder is a cash basis or electing accrual basis taxpayer and the Equity Shares are treated as being traded on an “established securities market” for this purpose, the settlement date. If the Equity Shares are so treated and the foreign currency received is converted into U.S. dollars on the settlement date, a cash basis or electing accrual basis U.S. Holder will not recognize foreign currency gain or loss on the conversion. If the foreign currency received is not converted into U.S. dollars on the settlement date, the U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the settlement date. Gain or loss, if any, realized on the subsequent conversion or other disposition of such foreign currency will generally be U.S. source ordinary income or loss. Medicare Tax Certain U.S. Holders who are individuals, estates, or trusts are required to pay a 3.8% Medicare surtax on all or part of that holder’s “net investment income”, which includes, among other items, dividends on, and capital gains from the sale

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or other taxable disposition of, the Equity Shares, subject to certain limitations and exceptions. Prospective investors should consult their own tax advisors regarding the effect, if any, of this surtax on their ownership and disposition of the equity shares. Information with Respect to Foreign Financial Assets Individuals (and, under proposed Treasury Regulations, certain entities) who are U.S. Holders that own “specified foreign financial assets”, including stock of a non-U.S. corporation not held through a financial institution, with an aggregate value in excess of certain dollar thresholds may be required to file an information report with respect to such assets on IRS Form 8938 with their United States federal income tax returns. Penalties apply for failure to properly complete and file IRS Form 8938. U.S. Holders are encouraged to consult their tax advisors regarding the application of this reporting requirement to their ownership of our Equity Shares. Passive Foreign Investment Company In general, a non-U.S. corporation is considered to be a passive foreign investment company, or a PFIC, for any taxable year if either:

at least 75% of its gross income is passive income, or

at least 50% of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income.

Passive income for these purposes generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. The Company will be treated as owning its proportionate share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or indirectly, 25% or more (by value) of the stock. Although not free from doubt, the Company does not believe it was a PFIC for its taxable year ending March 31, 2014, and does not expect to be a PFIC for the current year or any future years. However, the determination of whether the Company is a PFIC is a factual determination made annually after the end of each taxable year, and there can be no assurance that the Company will not be considered a PFIC in the current taxable year or any future taxable year because, among other reasons, (i) the composition of the Company’s income and assets will vary over time, (ii) there can be no assurance that the proposed treasury regulations will be finalized in their current form, and (iii) the manner of the application of the proposed treasury regulations and other relevant rules is uncertain in several respects. Furthermore, the Company’s PFIC status may depend on the market price of its Equity Shares, which may fluctuate considerably. PROSPECTIVE PURCHASERS ARE URGED TO CONSULT YOUR TAX ADVISORS REGARDING THE

COMPANY’S POSSIBLE STATUS AS A PFIC. If the Company is a PFIC for any taxable year during which you hold Equity Shares, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of the Equity Shares, unless you make a “mark-to-market” election as discussed below. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the Equity Shares will be treated as an excess distribution. Under these special tax rules:

the excess distribution or gain will be allocated ratably over your holding period for the Equity Shares,

the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which the Company became a PFIC, will be treated as ordinary income, and

the amount allocated to each other year will be subject to the highest tax rate in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.

The tax liability for amounts allocated to years prior to the year of disposition or “excess distribution” cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Equity Shares cannot be treated as capital, even if you hold the Equity Shares as capital assets. If the Company is a PFIC for any year during which you hold Equity Shares, the Company generally will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold Equity Shares, regardless of whether the Company continues to meet the income or asset test described above.

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In addition, if the Company is treated as a PFIC, to the extent any of its direct or indirect subsidiaries are also PFICs, you may be deemed to own shares in such subsidiaries and you may be subject to the adverse PFIC tax consequences with respect to the shares of such subsidiaries that you would be deemed to own.

Qualified electing fund election

To mitigate the application of the PFIC rules discussed above, a U.S. Holder may make an election to treat the Company as a qualified electing fund (“QEF”) for U.S. federal income tax purposes. To make a QEF election, the Company must provide U.S. Holders with information compiled according to U.S. federal income tax principles. The Company does not currently intend to prepare or provide the information that would enable you to make a QEF election.

Mark-to-market election

A U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election with respect to such stock to elect out of the tax treatment discussed above, although it is possible the mark-to-market election may not apply or be available with respect to the shares in the Company’s subsidiaries to the extent they are PFICs that you may be deemed to own if the Company is treated as a PFIC, as discussed above. If you make a valid mark-to-market election for the Equity Shares, you will include in income each year an amount equal to the excess, if any, of the fair market value of the Equity Shares as of the close of your taxable year over your adjusted basis in such Equity Shares. You are allowed a deduction for the excess, if any, of the adjusted basis of the Equity Shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the Equity Shares included in your income for prior taxable years. Amounts included in your income under a mark-to-market election, as well as gain on the actual sale or other disposition of the Equity Shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to market loss on the Equity Shares, as well as to any loss realized on the actual sale or disposition of the Equity Shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such Equity Shares. Your basis in the Equity Shares will be adjusted to reflect any such income or loss amounts. If you make such an election, the tax rules that apply to distributions by corporations that are not PFICs generally would apply to distributions by the Company, except that the lower applicable capital gains rate with respect to qualified dividend income (discussed above) would not apply. The mark-to-market election is available only for “marketable stock”, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange or other market, as defined in the applicable U.S. Treasury regulations. Under applicable U.S. Treasury regulations, a “qualified exchange” includes a foreign exchange that is regulated by a governmental authority in the jurisdiction in which the exchange is located and in respect of which certain other requirements are met. U.S. Holders of Equity Shares should consult their own tax advisors as to whether the Equity Shares would qualify for the mark-to-market election.

PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX ADVISOR REGARDING THE

APPLICATION OF THE PFIC RULES TO THEIR INVESTMENT IN EQUITY SHARES, AND THE

AVAILABILITY AND ADVISABILITY OF ANY ELECTIONS.

Information Reporting and Backup Withholding Dividend payments with respect to Equity Shares and proceeds from the sale, exchange or redemption of Equity Shares may be subject to information reporting to the Internal Revenue Service and possible U.S. backup withholding under certain circumstances. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status generally must provide such certification on Internal Revenue Service Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules. Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your United States federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the Internal Revenue Service and furnishing any required information. U.S. Holders that hold Equity Shares in any year in which the Company is a PFIC, may be required to file Internal Revenue Service Form 8621 with respect to their ownership of the Equity Shares. In addition, U.S. Holders may be required to file additional information with respect to their ownership of Equity Shares.

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INDEPENDENT AUDITORS Our Company’s statutory auditors Lodha & Co., Chartered Accountants, who have audited the standalone and consolidated financial statements of our Company for the fiscal years 2015, 2014 and 2013, are independent auditors with respect to our Company in accordance with the guidelines issued by the ICAI. Lodha & Co. have also examined the Reformatted Consolidated Financial Statements included in this Preliminary Placement Document and their examination report on the Reformatted Consolidated Financial Statements is also included herein. Lodha & Co have also performed a limited review of our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015, and their limited review report in relation to such Unaudited Standalone Interim Financial Information has been included in this Preliminary Placement Document.

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LEGAL PROCEEDINGS Our Company and our Subsidiaries are, from time to time, involved in various legal proceedings in the ordinary course

of business, which involve matters pertaining to, amongst others, tax, regulatory and other disputes. As on date of this

Preliminary Placement Document, except as disclosed hereunder, our Company and our Subsidiaries are not involved in

any material governmental, legal or arbitration proceedings or litigation and our Company and our Subsidiaries are not

aware of any pending or threatened material governmental, legal or arbitration proceedings or litigation relating to

them which may have a material effect on our financial condition, the results of operations or cash flows.

Proceedings involving our Company 1. Our Company filed a special civil application (SCA 11946 of 2012) (“SCA”) before the High Court of Gujarat in

connection with debit note dated May 22, 2012 for an amount of Rs. 8.28 crores raised by the Gas Authority of India Limited (“GAIL”) towards difference in pricing on additional supply of natural gas resultant upon pricing the natural gas on market price basis as opposed to on an average price basis. Our Company prayed for, inter alia, quashing of the aforementioned demand note and quashing Circular dated February 9, 2010 issued by the Union of India directing GAIL to recover market rates for gas supplied for the period July 1, 2005 to March 31, 2010. The High Court of Gujarat rejected the SCA vide its order dated September 26, 2012. Our Company filed a Letter Patent Appeal (LPA 1260 of 2012) before the High Court of Gujarat pursuant to which the SCA was admitted subject to furnishing of a bank guarantee equivalent to the amount of the demand note. Our Company filed a Civil Application (11732 of 2012) against the order dated October 8, 2012; pursuant to the same, the High Court of Gujarat passed an order dated October 12, 2012 directing our Company to furnish a bank guarantee for an amount payable upto the period of three years from the date of demand. Accordingly, our Company furnished a bank guarantee for an amount upto Rs. 1.18 crores. Aggrieved by the aforementioned order, GAIL filed a special leave petition before the Supreme Court of India which was dismissed on the ground to find alternative remedy is available before High Court. Further, GAIL filed a transfer petition before the Supreme Court of India (Transfer Petition (Civil) Nos. 108-128) pursuant to which the Supreme Court of India passed an order dated August 4, 2014 to transfer the matter from the High Court of Gujarat to the Supreme Court of India. The matter is currently pending hearing and final disposal.

2. Our Company has filed a civil suit (CS No. 361 of 2000) before the High Court of Calcutta against Kirloskar Oil Engines Limited (“KOEL”) and Solar Turbine International (“Solar”) in connection with setting up of a gas turbine based co-generating system with as agent alleging that the system supplied by Solar through its agent KOEL was defective and incapable of performance as per the agreed standards. Our Company has prayed for a decree for Rs. 43.30 crores as damages suffered by our Company due to failure to supply the gas turbine system within the agreed and reasonable period. The matter is pending hearing and final disposal.

3. Our Company has filed a civil appeal (No. 8246 of 2003) before the Supreme Court of India against an order of

the High Court of Punjab and Haryana (“HCPH”) dated January 23, 2002 in the matter of the civil writ petition (No. 11237 of 2001) before the said HCPH in relation to the imposition of local area development tax (“LADT”) by the Government of Haryana (the “Order”). Subsequently, the Supreme Court vide its order dated May 10, 2006, allowed the appeal and ordered that the recovery of any further liability of tax under the LADT and the operation of the impugned Order be stayed. The matter is pending hearing and final disposal.

Proceedings involving our Directors

Proceedings involving Mr. Salil Singhal

1. The State of Uttar Pradesh through the Insecticides Inspector, Krishi Rakcha Kendra, Aligarh has filed a

complaint (Case No. 645 of 1990) before the ACJM, Hathras against our Director, Mr. Salil Singhal in his capacity as the managing director of Pesticides India Limited pursuant to Section 29 and 33 of the Insecticides Act, 1968 in connection with, inter alia, alleged misbranding of various products. Aggrieved by the aforementioned complaint, Mr. Salil Singhal along with Pesticides India Limited has filed a criminal miscellaneous application (12057 of 1992) before the High Court of Allahabad under Section 482 of the Code of Criminal Procedure, 1973 praying for, inter alia, quash of the aforementioned proceedings.

2. The State of Karnataka and others have filed a complaint (Criminal Case No.719 of 2002) before the Judicial Magistrate (First Class), Mallawalli District, Karnataka against our Director, Mr. Salil Singhal in his capacity as the managing director of Pesticides India Limited pursuant to Section 29(1) of the Insecticides Act, 1968 in connection with, inter alia, alleged misbranding of various products. Aggrieved by the aforementioned complaint,

153

Mr. Salil Singhal has filed a criminal miscellaneous petition (CRLP 2578 of 2014) before the High Court of Karnataka under Section 482 of the Code of Criminal Procedure, 1973 praying for, inter alia, quash of the aforementioned proceedings.

3. The State of Rajasthan through the Insecticides Inspector, Chittorgarh, has filed a complaint (Case No. 627 of

1992) before the ACJM, Chittorgarh, against our Director, Mr. Salil Singhal in his capacity as the managing director of Pesticides India Limited and others pursuant to Section 29 of the Insecticides Act, 1968 in connection with, inter alia, alleged misbranding of various products. Aggrieved by the aforementioned complaint, Mr. Salil Singhal along with Pesticides India Limited and other has filed a criminal miscellaneous petition (324 of 1996) before the High Court of Rajasthan at Jodhpur under Section 482 of the Code of Criminal Procedure, 1973 praying for, inter alia, quash of the aforementioned proceedings.

Material frauds

There are no material frauds committed against our Company during the last three years.

Defaults in respect of dues payable

Our Company has no outstanding defaults in relation to statutory dues payable, dues payable to holders of any debentures (including interest thereon) or dues in respect of deposits (including interest thereon) or any defaults in repayment of loans from any bank or financial institution (including interest thereon).

Litigation or legal action against the Promoters taken by any Ministry, Department of Government or any

statutory authority

There are no litigation or legal action pending or taken by any ministry or department of the Government or statutory authority against any of the Promoters during the last three years immediately preceding the year of the circulation of this Preliminary Placement Document and any direction issued by such ministry or department of the Government or statutory authority upon conclusion of such litigation or legal action.

Reservations or qualifications or adverse remarks of the Auditors

The audit reports of the last five financial years immediately preceding the year of circulation of the Preliminary

Placement Document do not contain any reservations, qualifications or adverse remarks.

Inquiries, inspections or investigations initiated or conducted under the Companies Act

There have been no inquiries, inspections or investigations initiated or conducted under the Companies Act, 2013 or any

previous company law in the last three years immediately preceding the year of circulation of this Preliminary Placement

Document in the case of the Company and all of its subsidiaries. Also, there were no prosecutions filed (whether pending

or not) fines imposed, compounding of offences in the last three years immediately preceding the year of this Preliminary

Placement Document.

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GENERAL INFORMATION 1. Our Company was incorporated as a public limited company named ‘Somany Pilkington’s Limited’ on January 20,

1968 under the Companies Act, 1956 vide certificate of incorporation dated January 20, 1968. Subsequently the name of the Company was changed to SPL Limited on October 18, 1995 and from SPL Limited to Somany Ceramics Limited on January 30, 2007. The corporate identification number of the Company is L40200DL1968PLC005169. The registered office of our Company is located at 82/19, Bhakerwara Road, Mundka, New Delhi – 110 041.

2. Our Company’s authorized share capital is Rs. 250,000,000 divided into 125,000,000 Equity Shares of Rs. 2 each.

Our Company’s issued, subscribed and paid-up capital is Rs. 77,689,652 divided into 38,844,826 Equity Shares of Rs. 2 each.

3. The Issue was authorised and approved by the Board of Directors on March 24, 2015 and approved by the

Shareholders of our Company through a special resolution passed by way of a postal ballot pursuant to a postal ballot notice issued on March 27, 2015, the results of which were announced on May 2, 2015, for an issue size of up to Rs. 150 crores.

4. For the main objects of our Company, please refer to the Memorandum of Association of our Company.

5. Our Company has applied for in-principle approvals to list the Equity Shares on the Stock Exchanges and have obtained in-principle approvals in terms of Regulation 28(1) of the Listing Regulations on [●], for the listing of the Equity Shares on the Stock Exchanges.

6. Copies of the Memorandum and Articles will be available for inspection during usual business hours on any

weekday between 10:00 a.m. to 5:00 p.m. (except Saturdays and public holidays), at the Registered Office. 7. Except as disclosed in this Preliminary Placement Document, there are no significant changes in the financial or

trading position of our Company since March 31, 2015, the date of the last audited financial statements, prepared in accordance with Indian GAAP, the Companies Act and the guidelines issued by the RBI, as applicable, included herein.

8. Except as disclosed in this Preliminary Placement Document, there are no material litigation or arbitration

proceedings against or affecting our Company or our Company’s assets or revenues, nor is our Company aware of any pending or threatened litigation or arbitration proceedings, which are or might be material in the context of the Issue.

9. Except as disclosed in this Preliminary Placement Document, our Company has obtained necessary consents,

approvals and authorizations required in connection with the Issue. 10. Our Company’s statutory auditors Lodha & Co., Chartered Accountants, who have audited the standalone and

consolidated financial statements of our Company for the fiscal years 2015, 2014 and 2013, are independent auditors with respect to our Company in accordance with the guidelines issued by the ICAI. Lodha & Co. have also examined the Reformatted Consolidated Financial Statements included in this Preliminary Placement Document and their examination report on the Reformatted Consolidated Financial Statements is also included herein. Lodha & Co have also performed a limited review of our Unaudited Standalone Interim Financial Information as of and for the quarter and six months ended September 30, 2015, and their limited review report in relation to such Unaudited Standalone Interim Financial Information has been included in this Preliminary Placement Document.

11. Our Company confirms that it is in compliance with the minimum public shareholding requirements as specified

under the SCRR and required under the terms of the Listing Regulations. 12. The Floor Price for the Issue is Rs. 357.24 per Equity Share on December 17, 2015 as the Relevant Date. The Floor

Price has been calculated as per Regulation 85 of the SEBI Regulations.

13. Our Company may offer a discount of not more than 5% on the Floor Price in terms of Regulation 85 of the SEBI Regulations.

155

FINANCIAL STATEMENTS

Particulars Page

Number

Examination Report on the Reformatted Consolidated Financial Statements as at and for the financial years ended March 31, 2013; March 31, 2014 and March 31, 2015

F1 - F3

Reformatted Consolidated Financial Statements as at and for the financial years ended March 31, 2013; March 31, 2014 and March 31, 2015

F4 - F27

Limited Review Report on the Unaudited Standalone Interim Financial Information as at and for the quarter and six months ended September 30, 2015

F28

Unaudited Standalone Interim Financial Information as at and for the quarter and six months ended September 30, 2015

F29 - F30

Report of the Independent Auditor on Reformatted Consolidated Financial Statements

To,

The Board of Directors

Somany Ceramics Limited

82/19 Bhakerwara Road

New Delhi 110041

1. The accompanying Summary Reformatted Consolidated Balance Sheet of SOMANY CERAMICS

LIMITED (the “Parent Company” or the “Issuer”) and its subsidiaries, associates and joint venture

(hereinafter collectively referred to as the “Group”) as at 31st March 2015, 31

st March 2014 and 31

st

March 2013, related Summary Reformatted Consolidated Statement of Profit and Loss and Summary

Reformatted Consolidated Statement of Cash Flows for the years ended 31st March 2015, 31

st March

2014 and 31st March 2013 and the related Statement of Notes to Reformatted Consolidated Financial

Statements of the Group and Annexures (collectively, the “Reformatted Consolidated Financial

Statements”), have been derived by the management of the Parent Company from the Audited

Consolidated Financial Statements for the years ended 31st March 2015, 31


st

March 2013 (the “Audited Consolidated Financial Statements”) respectively. The Audited

Consolidated Financial Statements for respective years were adopted by the Board of Directors on 18th

May 2015, 26th

May 2014 and , 21st May 2013 respectively.

2. (a) Our report on the Audited Consolidated Financial Statements for the year ended 31st March 2015

state that we did not audit the financial statements of the subsidiaries namely, S. R. Continental Ltd and

Amora Tiles Private Ltd, whose financial statements reflect total assets of Rs. 4,939.32 lacs as at 31st

March, 2015, total revenues of Rs. 8521.56 lacs and net cash outflows of Rs. 72.96 lacs for the year

ended on that date, as considered in the consolidated financial statements. The consolidated financial

statements also include the Group’s share of net profit of Rs. 132.93 lacs for the year ended 31st

March, 2015, as considered in the consolidated financial statements, in respect of associates, namely,

Commander Vitrified Pvt. Ltd., Vintage Tiles Pvt. Ltd., Vicon Ceramic Private Ltd., Acer Granito Pvt.

Ltd., Somany Sanitary Ware Pvt. Ltd. and Somany Fine Vitrified Pvt. Ltd whose financial statements

have not been audited by us. These financial statements have been audited by other auditors, whose

reports have been furnished to us by the Management and our opinion on the consolidated financial

statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries

and associate, and our report in terms of sub-sections (3) and (11) of Section 143 of the Companies

Act, 2013, in so far as it relates to the aforesaid subsidiaries and associate, is based solely on the report

of the other auditors.

(b)Our report on the Audited Consolidated Financial Statements for the year ended 31st March 2014

state that we did not audit the financial statements of associates namely Vicon Ceramics Pvt. Ltd.,

Vintage Tiles Pvt. Ltd., Commander Vitrified Pvt. Ltd. & Acer Granito Pvt. Ltd. whose financial

statements reflect total assets of Rs. 20,261.20 lacs as at 31st March 2014 and total revenues of Rs.

22,996.37 lacs and net cash flows amounting to Rs 380.93 lacs for the year then ended. These financial

statements have been audited by other auditors, whose report have been furnished to us, and our

opinion, insofar as it relates to the amounts included in respect of these Associates, are based solely on

the report of the other auditors.

(c) Our report on the Audited Consolidated Financial Statements for the year ended 31st March 2013

state that we have relied on the unaudited financial statements of associates namely Commander

Vitrified Pvt. Ltd. and Vintage Tiles Pvt. Ltd. whose financial statements reflect total assets of Rs

6232.25 lacs and Rs 5077.32 lacs respectively as at 31st March 2013 and total revenues of Rs 5258.95

lacs and Rs 5931.67 lacs respectively for the year then ended. These respective financial statements

have been certified by the Management and furnished to us (read with Point No.14-Annexure-5), and in

our opinion, insofar as it relates to the amounts included in respect of the associates, are based solely

on the these certified financial statements.

F-1

(d)Our report on the Audited Consolidated Financial Statements for the years ended 31st March 2014

and 31st March 2013 state that we have relied on the unaudited financial statements of a joint venture

wherein the company’s share of losses aggregate to Rs 86.52 Lacs and Rs 87.36 Lacs for years ended

31st March 2014 and 31

st March 2013 respectively. These financial statements have been certified by

Management and furnished to us (read with Point No.13-Annexure-5), and in our opinion, insofar as it

relates to the amounts included in respect of a Joint Venture, are based solely on the these certified

financial statements.

(e) Our report on the Audited Consolidated Financial Statements for the year ended 31st March 2014

state that we did not audit the financial statements of subsidiaries namely SR Continental Limited and

Amora Tiles Pvt. Ltd. whose financial statements reflect total assets of Rs. 1,221.09 lacs and total

revenues of Rs. 761.70 lacs and net cash flows amounting to Rs. 106.54 lacs for the year then ended.

These financial statements have been audited by other auditors, whose report have been furnished to us,

and our opinion, insofar as it relates to the amounts included in respect of the subsidiary, is based

solely on the report of the other auditor.

(f) Our report on the Audited Consolidated Financial statements for the year ended 31st March 2013

state that we did not audit the financial statements of a subsidiary namely SR Continental Limited

whose financial statements reflect total assets of Rs. 483.37 lacs as at 31st March 2013, total revenues

of Rs. 616.79 lacs and net cash flows amounting to Rs. 30.46 lacs for the year ended on 31st March

2013. These financial statements have been audited by other auditors, whose report have been

furnished to us, and our opinion, insofar as it relates to the amounts included in respect of the

subsidiary, is based solely on the report of the other auditor.

3. Our audit opinion on the Audited Consolidated Financial Statements for the year ended 31st March

2014 and 31st March 2013 vide our report dated 26

th May 2014 and 21

st May 2013 respectively

contains an emphasis of matter paragraph and other matters referred in Para 2(c) & (d) above .

4. The figures included in the Reformatted Consolidated Financial Statements do not reflect the effects of

the events that occurred subsequent to the date of our audit reports on the Audited Consolidated

Financial Statements for the financial years referred to above.

5. The Reformatted Consolidated Financial Statements have been prepared by the management of the

Parent Company for the purposes of inclusion in the Preliminary Placement Document and the

Placement Document (together with any supplements or amendments thereto, the “Placement

Documents"), prepared by the Issuer in connection with the proposed qualified institutions placement

of equity shares of Rs. 2/- each (the "proposed QIP") (i) in the United States only to persons who are

qualified institutional buyers (as defined in Rule 144A under the U.S. Securities Act of 1933) pursuant

to Section 4(a)(2) or any other available exemption from registration under the U.S. Securities Act of

1933, and (b) outside the United States in offshore transactions in reliance on Regulation S under the

U.S. Securities Act of 1933 (“Regulation S”) and the applicable laws of the jurisdictions where those

offers and sales occur (the "Issue"). The Issue will involve the preparation by the issuer, and for which

the Issuer will be solely responsible, of the Placement documents for filing with the Securities

Exchange Board of India ("SEBI"), National Stock Exchange of India Limited and the BSE Limited in

accordance with the Securities Exchange Board of India (Issue of Capital and Disclosure requirements)

Regulations, 2009, as amended.

Management's Responsibility for the Reformatted Consolidated Financial Statements

6. The management of the Parent Company is responsible for the preparation of the Reformatted

Consolidated Financial Statements from the Audited Consolidated Financial Statements for the

respective periods referred above on the basis described in Note 1 of Annexure 4 to the Reformatted

Consolidated Financial Statements.

Auditors' Responsibility

7. Our responsibility is to express an opinion on these Reformatted Consolidated Financial Statements

based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810,

"Engagements to Report on Summary Financial Statements" issued by the Institute of Chartered

Accountants of India.

F-2

Opinion

8. In our opinion, and to best of our information and according to the explanation given to us the

Reformatted Consolidated Financial Statements, which have been derived from the Audited

Consolidated Financial Statements of the Group for the years ended 31st March 2015, 31

st March 2014

and 31st March 2013 are a fair summary of those Audited Consolidated Financial Statements on the

basis described in Note 1 of Annexure 4 to the Reformatted Consolidated Financial Statements.

9. This report is intended solely for your information and for inclusion in the placement documents

prepared in connection with the Issue and is not to be used, referred to or distributed for any other

purpose, without our prior written consent.

F-3

For Lodha& Co


Firm Registration No.: 301051E

Gaurav Lodha

Partner


Date: December 17, 2015 Place: New Delhi

Rupees in lacs

Particulars Annexure 2015 2014 2013

EQUITY AND LIABILITIES

Shareholders' funds

Share Capital 6 776.90 776.90 689.94

Reserves & Surplus 7 25,023.73 21,569.46 14,614.85

25,800.63 22,346.36 15,304.79

Minority Interest 531.06 444.46 -

Non- current Liabilities

Long term Borrowings 8 7,677.95 7,079.48 6,157.84

Deffered Tax Liabilities (Net) 2,874.27 2,837.97 2,619.09

Other Long-term Liabilities 9 1,918.80 1,784.33 1,421.11

Long-term Provisions 10 333.78 305.51 249.27

12,804.80 12,007.29 10,447.31

Current Liabilities

Short-term Borrowings 11 8,485.95 7,644.83 8,015.86

Trade Payables 20,787.34 17,826.64 16,123.73

Other Current Liabilities 12 8,971.52 6,966.57 6,348.70

Short-term Provisions 13 9,173.69 7,471.67 5,869.67

47,418.50 39,909.71 36,357.96

Total 86,554.99 74,707.82 62,110.06

ASSETS

Non-current Assets

Fixed Assets

Tangible Assets 14 26,209.08 23,884.52 19,905.40

Intangible Assets 15 169.24 170.09 80.80

Capital work-in-Progress 81.43 292.78 937.97

Non-current Investments 16 1,980.43 1,765.39 867.05

Long-term Loans and Advances 17 1,825.39 1,589.17 414.59

Other non-current assets 18 250.93 - -

TOTAL 30,516.50 27,701.95 22,205.81

Current Assets

Current Investment 19 2,681.01 3,710.00 -

Inventories 20 13,644.66 9,061.70 12,049.81

Trade Receivables 21 25,909.89 21,492.67 17,474.99

Cash and Bank Balances 22 1,537.26 3,456.24 2,580.15

Short-Term Loans and Advances 23 12,006.90 9,079.54 7,717.71

Other Current Assets 24 258.77 205.72 81.59

56,038.49 47,005.87 39,904.25

Total 86,554.99 74,707.82 62,110.06

0.00 0.01

The above statement should be read with the Statement of Notes to Reformatted Consolidated Financial Statements of the Group in Annexure

This is the Summary Reformatted Consolidated Balance Sheet, referred to in our report of even date

As per our report of even date FOR AND ON BEHALF OF COMPANY ADMINISTRATIVE COMMITTEE

For LODHA & CO.


(ICAI FRN. NO.: 301051E)

SHREEKANT SOMANY

(CHAIRMAN & MANAGING DIRECTOR)

GAURAV LODHA

Partner

M.NO.507462

ANNEXURE 1-SUMMARY REFORMATTED CONSOLIDATED BALANCE SHEET

As At 31 March

F-4

Place: New Delhi

Date : December 17, 2015

Rupees in lacs

Particulars Annexure 2015 2014 2013

Revenue from Operations 25 154,312.48 126,476.35 105,536.59

Other Income 26 766.32 308.24 258.76

Total Revenue 155,078.80 126,784.59 105,795.35

Expenses:

Cost of Materials Consumed 27 20,346.08 17,159.62 16,463.60

Purchases of Stock-in-Trade 77,425.25 58,132.17 47,237.94

Change in Inventories of Finished Goods ,

Work-in-progress and Stock-in-Trade 28 (3,918.27) 2,666.85 (1,602.92)

Employee Benefit Expense 29 10,135.31 8,319.60 7,457.31

Finance Costs 30 2,053.90 1,852.20 1,997.49

Depreciation and Amortization Expense 14 & 15 2,659.11 2,242.54 2,050.46

Other Expenses 31 39,567.38 32,059.72 27,409.28

Total Expenses 148,268.76 122,432.70 101,013.16

Profit Before Exceptional and Extraordinary Items and Tax 6,810.04 4,351.89 4,782.19

Exceptional items (Net) - - -

Profit before tax 6,810.04 4,351.89 4,782.19

Extraordinary Items - - -

Profit before tax 6,810.04 4,351.89 4,782.19

Tax Expense:

(1) Current tax 2,089.62 1,479.60 1,439.50

(2) Deferred tax charges/credit 115.64 218.88 81.38

(3) Income Tax for Earlier Years 12.35 1.29 3.64

Profit After Tax 4,592.43 2,652.12 3,257.67

Share in Profit of Associate 132.92 169.76 (57.01)

Profit after tax (including associate) 4,725.35 2,821.88 3,200.66

Minority Interest 86.60 (65.14) -

Profit after tax and minority Interest 4,638.75 2,887.02 3,200.66

Earnings per Equity Share (Rs.)

Basic 11.94 8.25 9.28

Diluted 11.94 8.25 9.28

(Refer Note No 7 of annexure 5)

The above statement should be read with the Statement of Notes to Reformatted Consolidated Financial Statements of the Group in Annexure

This is the Summary Reformatted Consolidated Balance Sheet, referred to in our report of even date

As per our report of even date

For LODHA & CO. FOR AND ON BEHALF OF COMPANY ADMINISTRATIVE COMMITTEE


(ICAI FRN. NO.: 301051E)

SHREEKANT SOMANY

(CHAIRMAN & MANAGING DIRECTOR)

GAURAV LODHA

Partner

M.NO.507462

ANNEXURE 2-SUMMARY REFORMATTED CONSOLIDATED STATEMENT OF PROFIT AND LOSS


F-5

Place: New Delhi


Particulars

2015 2014 2013

A. CASH FLOW FROM OPERATING ACTIVITIES

NET PROFIT / ( LOSS ) BEFORE TAX & EXCEPTIONAL ITEMS 6,810.04 4,351.89 4782.19

I. ADJUSTMENT FOR

Depreciation & Amortisation Expense 2,659.11 2,242.54 2050.46

Interest and Finance Charges 2,053.90 1,852.20 1997.49

Interest Income (464.91) (215.01) (156.71)

Dividend Income (Rs.125/-) (0.00) (0.07) (4.80)

Unrealized Foreign Exchange Loss (Net) 3.56 11.94 (18.93)

Profit on Sale of Investment (Net) (186.90) (41.07) (2.75)

Diminution in the value of Investment writen back (net) (2.95) 0.79 -

Provision for Doubtful Debts (written Off) (net) 5.50 26.16 (0.43)

Bad Debts 28.21 0.63 0.43

Liabilities no longer required written back (net) - (9.70) (94.53)

Sundry Balances written off / (back) (net) 87.91 (15.22) 9.46

(Profit)/ Loss on sale / Discard of Fixed Assets/ Assets written off (net) 125.43 185.04 50.50

OPERATING PROFIT BEFORE WORKING CAPITAL CHANGES 11,118.90 8,390.12 8,612.38

II. ADJUSTED FOR :

Trade & Other Receivable (6,574.30) (5,089.68) (3,490.74)

Inventories (4,582.97) 2,988.11 (1,993.24)

Trade & Other Payable 4,673.84 2,436.60 5494.80

Cash Generated from Operation 4,635.47 8,725.15 8,623.20

Income Taxes Refund /(paid) (2,127.88) (1,340.53) (1,551.88)

NET CASH FLOW FROM OPERATING ACTIVITIES (A) 2,507.59 7,384.62 7,071.32

B. CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (5,177.95) (5,992.64) (3,812.49)

Sale of Fixed Assets 99.59 98.31 42.41

Purchase of Short Term Investment (22,301.72) (5,075.80) -

Purchase of Long Term Investment (271.51) (817.76) (328.10)

Sale of Short Term Investment 23,514.08 1,349.32 -

Sale of Long Term Investment 103.43 100.82 3.11

Share Application Advance (162.40) (137.60) -


TDS on Interest (27.35) (22.06) (12.83)

Dividend Received (Rs. 125/-) 0.00 0.07 4.80

NET CASH OUTFLOW IN INVESTING ACTIVITIES (B) (3,788.82) (10,387.93) (3,959.67)

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Long Term Borrowings 4,164.25 3,285.75 1827.69

Repayment of Long Term Borrowings (2,913.88) (2,309.42) (1,936.73)

Proceeds from issue of Share Capital - 596.56 0

Security Premium (Net of Share Issue Expenses) - 4,767.10 0

Short Term Loans Borrowings (net) 834.63 (138.64) (305.70)

Interest Paid (2,046.01) (1,841.68) (2,021.98)

Dividend Paid (including corporate dividend tax) (676.74) (480.27) (317.74)

NET CASH INFLOW FROM FINANCING ACTIVITIES (C) (637.75) 3,879.40 (2,754.46)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (A+B+C) (1,918.98) 876.09 357.19

CASH AND CASH EQUIVALENTS

Opening



3,456.24 2,580.15 2,222.96

Closing



1,537.26 3,456.24 2,580.15

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (1,918.98) 876.09 357.19

Notes :

a) Cash & Cash Equivalents represents cash and bank balances.(Annexure 22 )

This is the Summary Reformatted Consolidated Statement of Cash Flows, referred to in our report of even date

For LODHA & CO.


(ICAI FRN No. 301051E) FOR AND ON BEHALF OF COMPANY ADMINISTRATIVE COMMITTEE

GAURAV LODHA SHREEKANT SOMANY

Partner (CHAIRMAN & MANAGING DIRECTOR)

M.NO. 507462

b)The above statement should be read with the Statement of Notes to Reformatted Consolidated Financial Statements of the Group in Annexure


ANNEXURE 3 SUMMARY REFORMATTED CONSOLIDATED STATEMENT OF CASH FLOW

F-6

Place : New Delhi


ANNEXURE 4 SUMMARY REFORMATTED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The "Summary Reformatted Consolidated Balance Sheet" of the Group as at 31 March 2015, 31 March

2014 and 31 March 2013, the "Summary Reformatted Consolidated Statement of Profit and Loss" and the

"Summary Reformatted Consolidated Statement of Cash Flows" for the years ended 31 March 2015, 31

March 2014 and 31 March 2013 (collectively referred to as "Reformatted Consolidated Financial

Statements") have been prepared specifically for the purpose of inclusion in the preliminary placement

document to be filed by the Company with the Securities and Exchange Board of India ("SEBI") in

connection with the proposed Qualified Institutional Placement (hereinafter referred to as "QIP"). The reformatted consolidated financial statements of the company have been extracted from the audited

consolidated financial statements of the Company as at and for the years ended 31 March 2015, 31 March

2014 and 31 March 2013 which are available with the management of the Company.

The figures for the year‟s ended March 31, 2014 and 2013 included in the Reformatted Consolidated

Financial Statements have been reclassified to correspond with the classification criteria followed for the

year ended 31 March 2015.

2. SIGNIFICANT ACCOUNTING POLICIES

2.1 PRINCIPLES OF CONSOLIDATION

i) The reformatted consolidated financial statements of the parent company and its subsidiary companies have

been combined on a line by line basis by adding together the book values of like items of assets, liabilities,

income and expenses after fully eliminating intra group balances and intra group transactions resulting in

unrealized profits or losses, if any, as per Accounting Standard-21, “Consolidated Financial Statements”, as

prescribed under Section 133 of the Companies Act, 2013 („Act‟) read with Rule 7 of the Companies

(Accounts) Rule, 2014. Interest in assets, liabilities, income and expenses of the Joint Venture Company

have been consolidated using proportionate consolidation method. Intra Group balances, transactions and

unrealized profits/losses have been eliminated to the extent of parent company‟s proportionate shares as per

Accounting Standard-27, Financial Reporting of Interests in Joint Ventures, prescribed under Section 133 of

the Companies Act, 2013 („Act‟) read with Rules 7 of the Companies (Accounts) Rules, 2014. Investments

in associates & share in profits/losses in associate after eliminating intra group transactions resulting in

unrealized profits or losses if any, as per Accounting Standard-23, Accounting for Investment in Associates

in Consolidated Financial Statement prescribed under Section 133 of the Companies Act, 2013 („Act‟) read

with Rules 7 of the Companies (Accounts) Rules, 2014.

ii) The reformatted consolidated financial statements include the accounts of Somany Ceramics Limited (Parent

Company), its subsidiaries, Joint Venture and associates as detailed below:


Incorporati

on

% of Shareholding & Voting Power

2014-15 2013-14 2012-13

SR Continental Ltd. Subsidiary India 100.00% 100.00% 100.00%

Somany Global Ltd. Subsidiary India 100.00% 100.00% 100.00%

Amora Tiles Pvt. Ltd. Subsidiary India 51.00% 51.00% -

Somany Keraben Pvt. Ltd. Joint Venture India 50.00% 50.00% 50.00%

Somany Sanitary Ware Pvt. Ltd.

(Formerly Sonec Sanitary Ware

Pvt. Ltd.)


Somany Fine Vitrified Pvt. Ltd.

(Formerly Fine Vitrified Pvt.

Ltd.)


Vintage Tiles Pvt. Ltd. Associate India 26.00% 26.00% 26.00%

Commander Vitrified Pvt. Ltd. Associate India 26.00% 26.00% 26.00%

Vicon Ceramic Pvt. Ltd. Associate India 26.00% 26.00% -

Acer Granito Pvt. Ltd. Associate India 26.00% 26.00% -

iii) All intra group balances and intra group transactions resulting into material unrealized profits/ losses are

eliminated in full on consolidation.

F-7

iv) The accounting policy of the parent company, its subsidiaries and associates are largely similar except in

case of associates where depreciation on all assets have been provided on straight line method.

2.2 ACCOUNTING CONCEPTS The financial statements have been prepared under the historical cost convention on accrual basis in

compliance with applicable accounting standards as prescribed under Section 133 of the Companies Act,

2013 („Act‟) read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the

Act. The Company follows the mercantile system of accounting and recognizes income and expenditure on

accrual basis except where otherwise stated.

2.3 REVENUE RECOGNITION

Revenue is recognised when significant risks and reward of ownership have been passed to buyer and there

is no uncertainty exists to its realization or collection.

2.4 FIXED ASSETS

i) Fixed assets are shown at cost of acquisition and/or construction less accumulated depreciation and

impairment losses.

ii) Intangible assets are stated at cost less amortisation.

iii) Pre-operative expenditure during the construction/erection period is included under capital work-in-progress

and is allocated to the respective fixed assets on completion of construction/erection.

2.5 DEPRECIATION, AMORTISATION AND IMPAIRMENT LOSS

i) Fixed assets are depreciated using written down value method except fixed assets of the floor tile unit

(including MTP & GVT plant) and addition made after 1st April, 1995 to plant and machinery of wall tile

units, where depreciation is provided on a straight line method, considering the estimated useful lives as

specified in Schedule II of the Companies Act, 2013 except in case of vehicles, press punches / die boxes

and hand pallet truck where useful lives are taken as 5, 8 and 3 years respectively. Continuous process plants

as defined in Schedule II have been considered on technical evaluation. Impaired assets are amortised over

the estimated balance useful life.

ii) In case of indication of impairment of the carrying amount of the Company‟s assets, an asset recoverable

amount is estimated. Impairment loss is recognised whenever the carrying amount of an asset exceeds its

recoverable amount. Reversal of impairment loss recognised in prior periods is recorded when there is an

indication that the impairment losses recognised for the assets no longer exist or have decreased. Post

impairment, depreciation is provided on the revised carrying value of the asset over its remaining useful life.

iii) Leasehold land is amortised over the period of lease.

iv) Intangible assets are being recognised if the future economic benefits attributable to the assets are expected

to flow to the Company and cost of the assets can be measured reliably. The same are being amortised over

the expected duration of benefits.

Intangible assets being computer software is amortised over a period of five years.

2.6 TRANSACTION OF FOREIGN CURRENCY ITEMS

Transactions denominated in foreign currencies are recorded at exchange rate prevailing at the time of

transactions. Monetary items denominated in foreign currencies at the year-end translated at exchange rates

prevailing on the balance sheet date. Premium in respect of forward contract is accounted over the period of

the contract. Exchange differences arising on settlement/translation of monetary items including forward

contracts are dealt in the statement of Profit and Loss except foreign exchange loss/gain arising after 1st

April, 2012 on long-term foreign currency monetary items used for depreciable assets, which are capitalised.

2.7 INVESTMENTS

Long-term investments are stated at cost less provision for diminution in the value other than temporary.

Current investments are stated at cost or market value whichever is lower.

2.8 INVENTORIES

Inventories are valued at lower of cost and net realisable value except waste/scrap which is valued at net

realisable value. Cost of raw materials and stores and spare parts is computed on weighted average basis.

Cost of finished goods and stock in process is determined by taking material, labour and related overheads.

Cost of finished goods includes excise duty.

2.9 RESEARCH & DEVELOPMENT EXPENSES

Revenue expenditure on research and development is charged to Statement of Profit & Loss and

F-8

Capital expenditure is added to fixed assets.

2.10 INTEREST ON BORROWINGS

Interest on borrowings is charged to the Statement of Profit & Loss for the year in which it is incurred

except interest on borrowings for qualifying fixed assets which is capitalised till the date of commercial use

of the asset.

2.11 EMPLOYEE BENEFITS:

i) Defined Contribution Plan:

Employee benefits in the form of Provident Fund (with Government Authorities) and Employees‟ pension

Scheme are defined as contribution plan and charged as expenses during the period in which the employees

perform the services.

ii) Defined Benefit Plan:

Retirement benefits in the form of gratuity, long-term compensated leaves; other long-term employee benefit

and provident fund (multi-employer plan) are considered as defined benefit obligations and are provided for

on the basis of an actuarial valuation, using the projected unit credit method, according to the date of the

Balance Sheet. Actuarial gain/losses, if any, are immediately recognised in the Statement of Profit & Loss.

iii) Short-term employee benefit:

Short-term benefits are charged off at the undiscounted amount in the year in which the related services

rendered.

2.12 GOVERNMENT GRANTS

Grants from government relating to fixed assets are shown as a deduction from the gross value of fixed

assets and those of the nature of project capital subsidy are credited to capital reserve. Other government

grants including incentive, duty drawback among others are credited to Statement of Profit & Loss or

deducted from the related expenses.

2.13 LEASES

Operating lease payments are recognized as expenditure in the Statement of Profit and Loss on straight line

basis, over the lease period.

2.14 SHARE ISSUE EXPENSES

Share issue expenses are written off against the Security Premium Account.

2.15 PROVISION FOR CURRENT AND DEFERRED TAX

Provision for current tax liability of the Company is estimated considering the provisions of the Income Tax

Act, 1961.

Deferred tax is recognised subject to the consideration of timing differences being the difference between

taxable income and accounting income that originate in one period and are capable of reversal in one or

more subsequent periods.

2.16 USE OF ACCOUNTING ESTIMATES

The preparation of financial statements is in conformity with generally accepted accounting principles

requires the management to make estimates and assumptions in certain circumstances, affecting amounts

reported in these financial statements and related notes. Actual results could differ from these estimates.

2.17 CONTINGENT LIABILITY, CONTINGENT ASSETS AND PROVISION

Contingent liabilities if material, are disclosed by way of notes, contingent assets are not recognised or

disclosed in the financial statement, a provision is recognised when the Company has a present obligation as

a result of past event and it is probable that an outflow of resources will be required to settle obligation(s), in

respect to which an estimate can be made for the amount of obligation.

F-9

ANNEXURE 5 STATEMENT OF NOTES TO REFORMATTED CONSOLIDATED STATEMENT OF THE

GROUP.

1. Contingent liabilities and commitments (to the extent not provided for)

(As certified by the Management of the Holding Company – Somany Ceramics Limited)

(Rs. in Lacs)

S.

No.

Particulars 31.03.2015 31.03.2014 31.03.2013

A) (i) Estimated amount of contracts remaining to be executed

on capital account and not provided for [net of

advances]

131.07 712.31 652.97


(As certified by the Management)

a) Claims and other demands against the Company not

acknowledged as debts.

288.76 204.01 127.00

b) Sales tax and purchase tax demands, among others

against which the Company has preferred appeals.

226.29 247.09 254.97

c)

Excise and custom duty (excluding interest and penalty)

and service tax demands and show-cause notices issued

against which the Company/Department has preferred

appeals/filed replies.

426.59 353.39 353.39

d) Disputed income tax and wealth tax demand (excluding

penalty if any)

93.69 196.51 230.20

e) Against the imposition of Local Area Development Tax

(LADT) levied by Haryana Government ,the Hon‟ble

Supreme Court of India vide its order dated 10th

May,

2006 has accepted the Company‟s application for stay.

Further, Hon‟ble Supreme Court vide their order dated

30th October, 2009 stated the assessees to file the LADT

returns; however, no recovery of tax will be made till

further order. In the meantime, the Haryana Government

has repealed the LADT Act and introduced another Act

by the name of „Entry Tax‟ on the same line, which was

also been held ultra vires by the Hon‟ble Punjab and

Haryana High court. Pending the final Order of the

Hon‟ble Supreme Court on the above matter And there

is no Act either LADT / Entry Tax prevalent in Haryana,

no provision for the same is considered necessary by the

Company for the period from 1st April, 2006.

676.07 603.30 517.82

f) Demand notice from ESIC 15.41 - -

(iii) Bond executed in favour of sales tax/custom authorities. 12.50 25.00 25.00

(iv)

Custom duty, which may arise if obligation for exports

is not fulfilled against import for capital goods under

EPCG.

-

-

3,662.65

B)

Outstanding Corporate Guarantee to banks in respect of

various fund/non fund based facilities extended to other

body corporates.

944.00 1,230.00 1230.00

C) Bank Guarantee outstanding 317.05 289.23 -

2. During the financial year 2012-13, a demand of Rs. 925.65 lacs (including interest of Rs. 97.41 lacs) for

difference between market rate (Non-APM) and contracted price (APM) of gas for the period from 1st July,

2005 to 31st March, 2010 has been raised by GAIL (India) Limited (GAIL). After considering further debit

notes on account of interest / bank charges for the past periods, the total demand increased to Rs. 1,218.56 lacs

(including interest of Rs. 390.32 lacs) as on 31st March 2015. The Company along with others filed a Special

Civil Application (SCA) which was admitted by the Hon‟ble Gujarat High Court on submission of bank

guarantee of Rs. 118 lacs. On 4th

August, 2014, Hon‟ble Supreme Court of India passed an order to transfer the

case to this Court on the basis of transfer petition filed by the GAIL. Pending decision / further direction, no

provision in this regard is considered necessary by the Company.

F-10

3. In terms of Long Term Gas supply Agreements (GSAs) with GAIL (India) Limited and Indian Oil

Corporation Limited (jointly referred to as ‘Sellers’) which are valid till period ending April 2028 and

December 2016 respectively, there are underdrawn quantities of Re-Liquified Natural Gas (RLNG) equivalent

to Rs 6090.94 Lacs for the calendar year 2014. Against this the company has received demand notices from

Sellers aggregating to Rs. 2415.45 lacs only representing an aggregate under drawn quantity of 242490

MMBTU. If these demands are paid, the same will be treated as advance in accounts as the company will be

eligible to take under drawn quantities of RLNG including that for calendar year 2014 in subsequent contract

years subject to Sellers‟ operational flexibility and price adjustments. The Company has also represented to

Sellers for reducing the said amounts demanded which is pending resolution.

Further in view of proposed increase in production capacity by 4 million square meters per annum at Kassar

unit and also generally a decreasing trend in prices of the said RLNG in recent months, Management is

confident about utilization of under drawn RLNG as above in subsequent contract years. Accordingly pending

resolution and in view of proposed use of RLNG in future as stated above, no effect of the same has been

given in these accounts.

4. Other long-term liabilities include encashment of bank guarantee in earlier years amounting to Rs. 202.50 lacs

and above amount is included in balance at year end 31st March 2015,31


st March 2013,

provided by the supplier of machinery. The supplier of machinery has challenged the encashment of bank

guarantee and the case is pending before Hon‟ble High Court of Delhi and Kolkata. Pending final decision, no

adjustment has been carried out in accounts and above amount is shown under long term liabilities.

5. (a) During the Financial Year 2013-14, the Company raised Rs. 49,99,99,990/- by allotting 43,47,826 equity

shares of Rs. 2/- each @ Rs. 115/- per share (including premium @ Rs.113/- per share) on preferential basis to

Latinia Limited, Mauritius. The funds so raised (net of issue expenses of Rs. 145.94 lacs) have been utilized

for the purposes for which the same were raised except for Rs. 2,350 lacs which have been temporarily parked

in bonds / debt scheme of mutual funds as on 31 March 2015.

(b) Share issue expenses amounting Rs.145.94 lacs in the financial year 2013-14 ,on issue of above shares

have been charged to Security Premium Account and to that extent profit is stated higher.

6. Related Party Transactions (As certified by the Management)

A. Related parties with whom transactions have taken place and description of relationship:

1. Key Management Personnel

Mr. Shreekant Somany,Chairman & Managing Director.

Mr. Abhishek Somany, Joint Managing Director.(Son of Chairman & Managing Director)

Mr. G.G. Trivedi, CEO*

Mr. Ambrish Julka, DGM (Legal) &Company Secretary*

Mr. Devendrabhai L. Sherashiya

Mr. Naresh P. Amrutiya

2. Relatives of Key ManagementPersonnel

Mrs. Anjana Somany, Additional Director (w.e.f. 24th

March, 2015) (Wife of Chairman & Managing

Director)

Mrs. Minal Somany(Wife of Joint Managing Director)

Mrs. Kala Trivedi (Wife of CEO)*

Mr. MansukhbhaiSavjibhaiSherasiya

Mr. LaljiBhaiSavijibhaiSherasiya

Mr. JivrajbhaiSavjibhaiSherasiya

Mr. Prabhubhai R. Amrutiya

Ms. Sangitaben N. Amrutiya

Mr. Hiteshbhai P. Amrutiya

Ms. Varshaben D Sherasiya

LaljiBhaiSavijibhaiSherasiya (HUF)

MansukhbhaiSavjibhaiSherasiya (HUF)

3. Associate Company

Vintage Tiles Private Limited


Vicon Ceramic Private Limited (w.e.f. 25th

November ,2013)

Acer Granito Private Limited (w.e.f. 8th

March,2014)

Somany Sanitary Ware Private Limited (w.e.f. 27th

November, 2014) (Formerly Sonec Sanitary Ware Pvt

Ltd)

F-11

Somany Fine Vitrified Private Limited (w.e.f. 20th

January, 2015) (Formerly Fine Vitrified Pvt Ltd)

4. Enterprise over which Key Management Personnel and their relatives exercise significant influence

and with whom transactions have taken place during the year*:

Vidres India Ceramics Private Limited

Yogi Cerachem Private Limited

Ishiv India Solutions Private Limited

5. Other related parties with which Company has transactions*:

Biba Apparels Private Limited – Private company in which director is a director

Wolkem India Limited – Public company in which director is a director and holds more than 2% shares

alongwith relatives

G.L. Sultania& Co. – Firm in which director is proprietor

* Related w.e.f. 1st April, 2014 pursuant to the Companies Act, 2013

B. The following material transactions were carried out with related parties in the ordinary course of

business and on arm’s length basis:

(Rs. in Lacs)

31.03.2015 31.03.2014 31.03.2013

Mr. Shreekant Somany

Remuneration paid 220.94 158.27 136.92

Commission 92.24 98.02 126.20

Mr. Abhishek Somany


Commission 146.90 117.11 143.27

Rent paid 8.00 7.57 7.16

Outstanding payable at the year end 0.61 0.59 0.55

Mrs. Minal Somany


Rent paid 25.16 16.59 8.05

Outstanding payable at the year end 1.93 1.89 0.63

Mr. G.G. Trivedi

Remuneration paid 113.00 - -

Mrs. Kala Trivedi

Rent paid 2.74 - -

Mr. Ambrish Julka


G.L. Sultania& Co.

Consultancy fee paid 6.00 - -

Vintage Tiles Private Limited

Purchase of goods 10,133.79 9,841.61 6911.63

Technical services provided 93.60 35.10 -

Sale of goods - - 5.46


Deposit given - 200.00 26.00

Inter Corporate Deposit given 300.00 - -

Outstanding at the year-end:

Advance given against supply - - 36.92

Trade Payable 364.79 164.03 -

Deposits 226.00 226.00 26.00

F-12

Interest Receivable 16.74 21.71 -

Inter Corporate Deposit 300.00 - -


Investment made - - 325.00

Purchase of goods 18,930.64 10,240.99 6039.76

Sale of goods 16.60 14.38 3.63



Deposit given 300.00 - 170.00

Deposit received back 9.45 - -

Loan taken - 202.74 -

Loan repaid - 202.74 -

Interest paid - 1.35 -


Trade Payable 738.81 355.59 540.69

Trade Receivable 20.15 2.08 1.09

Deposits 460.55 170.00 170.00


Vicon Ceramic Private Limited

Investment made - 188.50 -

Purchase of goods 4,751.19 7.93 -

Interest Received 34.74 3.85 -

Deposit given 100.00 226.50 -



Deposits 326.50 226.50 -


Acer Granito Private Limited

Investment made - 511.00 -

Purchase of goods 9,400.89 540.91 -


Interest Received 59.79 4.34 -

Deposit given - 300.00 -

Inter Corporate Deposit given 550.00 - -

Inter Corporate Deposit received back 550.00 - -



Deposits 300.00 300.00 -


Somany Sanitary Ware Private Limited

Investment made 38.51 - -

Share Application Money 100.00 - -

Purchase of goods 810.19 - -

Outstanding at the year-end: -

Advance against supply 24.84 - -

Somany Fine Vitrified Private Limited

Investment made 200.00 - -

Share Application Money 200.00 - -

Ishiv India Solutions Pvt. Ltd.

F-13


Services received 31.21 - -


Trade Payable 8.55 - -

Wolkem India Limited


Biba Apparels Private Limited

Sale of goods 24.62 - -


Advance received against supply 0.70 - -

Yogi Cerachem Private Limited




Vidres India Ceramics Private Limited

Purchase of goods 1,671.20 - -



Laljibhai Savjibhai Sherasiya (HUF)

Loan taken - 9.80 -

Interest paid 1.18 - -


Unsecured Loan 9.80 9.80 -

Laljibhai Savjibhai Sherasiya

Loan taken - 4.00 -




Mansukhbhai Savjibhai Sherasiya

Loan taken - 3.00 -




Mansukhbhai Savjibhai Sherasiya (HUF)

Loan taken - 2.55 -




Jivrajbhai Savjibhai Sherasiya

Loan taken - 19.55 -




Naresh P Amrutiya


Devendrakumar L. Sherasiya


Loan taken - 0.50 -


F-14



Prabhubhai R. Amrutiya

Loan taken - 3.00 -




Sangitaben N. Amrutiya


Loan taken 6.50 14.65 -




Hiteshbhai P. Amrutiya


Loan taken - 7.50 -




Varshaben D Sherashia


7. Earnings Per Share The numerators and denominators used to calculate basic and diluted earnings per share:

31.03.2015 31.03.2014 31.03.2013

Profit /(Loss) attributable to the equity shareholders

(Rs. in Lacs)(A) 4638.75 2,887.02

3,200.66

Weighted average number of equity shares

outstanding during the year (B) 38,844,826 34,997,298

344,97,000

Nominal value of equity shares (Rs.) 2 2 2

Basic earnings per share (Rs.) (A/B) 11.94 8.25 9.28

Diluted earnings per share (Rs.) (A/B) 11.94 8.25 9.28

8. Balances of certain trade receivables, advances, trade payables and other liabilities are in the process

ofconfirmation and/or reconciliation.

9. The business activity of the Company falls within a single business segment viz. „Ceramic Tiles and allied

products‟ and mainly sale of the product is within the country. Hence, the disclosure requirement of

Accounting Standard 17 of „Segment Reporting‟ is not considered applicable.

10. (a)Foreign exchange derivatives and exposures outstanding at the year-end:

Name

Amount

(In

Foreign

Currency)

31.03.2015

Amount

(In Lacs

equivalent)

31.03.2015

Amount

(In

Foreign

Currency)

31.03.2014

Amount (In

Lacs

equivalent)

31.03.2014

Amount

(In

Foreign

Currency)

31.03.2013

Amount

(In Lacs

equivalent)

31.03.2013

Derivatives

Forward contract - - - - EURO

492,555 345.48

Forward contract - - USD

400,000 240.44

USD

105,679 57.66

F-15

Open Exposures

Receivables USD

668,132 416.05

USD

528,947 314.56

USD

316,798 171.32

Receivables - - GBP

11,724 11.58 - -

Payables USD

3,376,793 2,122.99

USD

199,665 120.02

USD

285,932 156.01

Payables EURO

1,156,682 789.32

EURO

2,391,988 1987.74

EURO

2,286,262 1603.59

(b) The Company uses derivative instruments for hedging and/or reducing finance cost.

11. The net worth of Somany Keraben Private Limited (JV Company-negative net worth) has been considerably

eroded on account of losses.

12. In respect of the joint venture company (Somany Keraben Pvt. Ltd.), the auditors have qualified in their

audit report for the year ended March, 2015,March 2014 and March 2013 regarding the accounts being

prepared as going concern assumption even after negative net worth of the company.

13. Subsequent to the approval of financial statement for the year i.e.2013-14 and 2012-13, Audited financial

statements of JVC (Somany Keraben Pvt. Ltd.) for 2013-14 and 2012-13 were made. Accordingly the effect

of audited financial statements of the previous year of JVC for 2013-14 and 2012-13 has been given in the

2014-15 and 2013-14 respectively for the purposes of consolidation

14. While applying equity method, the company has considered cost of acquisition of shares in Associate &

adjusted it by the profits/loss earned for the year 2011-12 on proportionate basis. Subsequent to the approval

of financial statement of 2011-12, Audited financial statements of an Associates namely Vintage Tiles Pvt.

Ltd. were made. Accordingly the effect of audited financial statements of the 2011-12 has been given in the

financial statement of 2012-13 for the purposes of consolidation.

15. In respect of the associates company namely, Vicon Ceramic Pvt. Ltd. and Somany Sanitary Ware Pvt. Ltd,

the auditors have drawn attention in their audit report for the year ended 31st March, 2015 regarding

accumulated losses and cash loss in the previous year (2013-14) and no such other indications were found by

the auditor, which affect the going concern principle of the company.

16. The company has not provided diminution in the value of certain unquoted long term strategic investments,

since in the opining of Board, such diminution in their value is temporary in nature, considering the inherent

value, nature of investments, the investees‟ assets and expected future cash flow from such investment.

17. In respect of the Holding Company, a sum of Rs. 96.84 lacs have been provided towards Corporate Social

Responsibility (CSR) in the year 2014-15 and same included under Other Expenses. Out of which Rs. 9.74

lacs was spent and the balance amount of Rs. 87.10 lacs would be utilized for CSR activities in subsequent

year.

18. During the year 2014-15, the Holding Company has computed depreciation based on useful life of the fixed

assets as specified under schedule II of the Companies Act, 2013. The carrying value of the fixed assets

which have completed their useful lives as on 1st April, 2014 has been charged against the balance in

General Reserve of amounting to Rs. 154.08 lacs (net of deferred tax Rs. 79.34 lacs). Had there not been any

change in the useful life of the fixed assets, the depreciation would have been higher by Rs. 216.47 lacs for

the year ended 31st March, 2015 and to the extent profit would have been lower.

19. Accounting policies and Notes on Accounts (including disclosure requirements of Accounting Standard 15 –

Employment Benefits and Accounting Standard 22 – Accounting for taxes on income) of the financial

statement of the parent company and subsidiary company are set out in their respective financial statement.

20. (A)

(i) In the year 2012-13, in terms of the shareholders agreement, the company has acquired 32.50 lacs numbers

of fully paid up equity shares of Rs. 10 each at the rate of Rs. 10 per share for aggregating to Rs. 325 lacs

which represents 26% equity stake in M/s Commander Vitrified Pvt.Ltd. (CVPL).

(ii) In the year 2013-14, in terms of the shareholders agreement, the company has acquired 18.85 lacs numbers

of fully paid up equity shares of Rs. 10 each at the rate of Rs. 10 per share for aggregating to Rs. 188.50 lacs

which represents 26% equity stake in M/s Vicon Ceramic Pvt. Ltd. (VCPL).

F-16

(iii) In the year 2013-14, in terms of the shareholders agreement, the company has acquired 14.60 lacs numbers

of fully paid up equity shares of Rs. 10 each at the rate of Rs. 35 per share (including premium of Rs. 25 per

share) for aggregating to Rs. 511.00 lacs, which represents 26% equity stake in M/s Acer Granito Pvt. Ltd.

(AGPL).

(iv) In the year 2013-14,in terms of the shareholders agreement, the company has acquired 53.04 lacs numbers of

fully paid up equity shares of Rs. 10 each at the rate of Rs. 10 per share for aggregating to Rs. 530.40 Lacs,

which represents 51% equity stake in M/s Amora Tiles Pvt. Ltd. (ATPL), thereby making the ATPL a

subsidiary company of Somany Ceramics Ltd.

(v) Details of Investment made during the year2014-15 in terms of the Shareholders Agreement:

(Rs. in Lacs)

Name Investment

Amount

No. of shares

allotted

Date of

Allotment

% of total

share capital

Somany Sanitary Ware Pvt. Ltd.

(Formerly Sonec Sanitary Ware Pvt.

Ltd.)

38.51 3,85,103 27/11/2014 44.61%

Somany Fine Vitrified Pvt. Ltd.

(Formerly Fine Vitrified Pvt. Ltd.)

200.00 20,00,000 20/01/2015 26.67%

(vi) The Company intends to further increase its shareholding in the above stated two companies to 51% of total

issued and subscribed capital in aforesaid companies; accordingly the company has further paid following

sums:

Somany Sanitary Ware Pvt. Ltd.* Rs. 100.00 lacs

Somany Fine Vitrified Pvt. Ltd.* Rs. 200.00 lacs

* stated amount paid has been shown as „Advance against Share Application Money‟ under Long Term

Loans and Advances as on 31 March 2015.

By the above said shareholders agreements and supply agreements, the company has right to buy and sell the

entire production of tiles / sanitaryware of companies stated in/under its own brand.

(B) During the year 2013-14 the company has acquired 30662 numbers of fully paid up equity shares of Rs. 10

each of M/s Sonec Sanitary Ware Pvt. Ltd. (SSWL) for Rs. 18.40 lacs. Further the company have also paid

Rs. 137.60 lacs for acquisition of 2,29,338 numbers fully paid up equity shares of Rs.10 each and stated

amount paid is shown as advance against Share Application Money under long term loans and advances as

on 31 March 2014.

21. Additional Information to the Consolidated Financial Statements:

Name of the entity

Net Assets, i.e., total assets

minus total liabilities Share in profit or loss

As % of

consolidated

net assets

Amount

(Rs. in lacs)

As % of

consolidated

profit or loss

Amount

(Rs. in lacs)

Parent:

Somany Ceramics Limited 98.45% 25400.40 95.68% 4438.25

Subsidiaries (Indian):

SR Continental Limited 0.99% 254.47 -0.88% -40.90

Somany Global Limited 0.27% 68.39 0.40% 18.51

Amora Tiles Pvt. Ltd. 4.20% 1083.80 3.81% 176.75

Minority Interests in all subsidiaries -2.06% -531.06 -1.87% -86.60

Associates (Indian):

Vintage Tiles Pvt. Ltd. 0.27% 68.46 0.87% 40.21

Commander Vitrified Pvt. Ltd. 0.65% 167.16 2.11% 97.83

Acer Granito Pvt. Ltd. 0.15% 39.22 0.47% 21.83

Vicon Ceramic Pvt. Ltd. -0.07% -17.01 -0.33% -15.11

Somany Sanitary Ware Pvt. Ltd. -0.18% -47.60 -0.26% -11.84

Joint Venture (Indian):

Somany Keraben Pvt. Ltd. -0.04% -9.40 0.00% -0.18

Total Eliminations -2.62% -676.20 0.00% 0.00

Total 100.00% 25800.63 100.00% 4638.75

F-17

22. The Company has entered into long term supply agreements (LTA or Agreements) with Vintage Tiles Pvt.

Ltd., Commander Vitrified Pvt. Ltd., Amora Tiles Pvt. Ltd., Acer Granito Pvt. Ltd., Vicon Ceramic Pvt.

Ltd., Somany Sanitary Ware Pvt. Ltd. and Somany Fine Vitrified Pvt. Ltd. by the said agreements the

Company has right to buy and sell the entire production of tiles / sanitaryware of companies stated in/under

its Own Brand.

As liability will accrue / arise as and when purchase will be made under LTA. Hence under the agreements

there is no material foreseeable losses as on date in the opinion of the management.

23. The previous year‟s (FY 2013-14 and 2012-13) figures have been regrouped, rearranged wherever consider

necessary.

As per our report of even date

For LODHA & CO.

FOR AND ON BEHALF OF COMPANY ADMINISTRATIVE COMMITTEE


(ICAI FRN No 301051E)

GAURAV LODHA

SHREEKANT SOMANY

Partner

M.NO.507462

(Chairman &Managing Director)

F-18

Place: New Delhi


Rupees in lacs

Number Amount Number Amount Number Amount

Share Capital

Authorised

Equity Shares of Rs. 2 /-each 125,000,000 2,500.00 125,000,000 2,500.00 125,000,000 2,500.00

Issued, Subscribed and Paid up

Equity Shares of Rs 2/- each fully paid up 38,844,826 776.90 38,844,826 776.90 34,497,000 689.94

776.90 776.90 689.94

Notes :

(a) (i) Reconciliation of Equity Share Capital (In numbers)

38,844,826 34,497,000 34,497,000

Add : Shares issued during the year (Refer Note no 5 of annexure 5) - 4,347,826 -

Less : Shares bought back during the year - - -

Shares outstanding at the end of the year 38,844,826 38,844,826 34,497,000

During the year 2013- 2014 company has issued 4347826 equity shares @Rs.115/-each (including Premium Rs.113/-)

(b) (i) Equity Shares:

(c) List of shareholders holding more than 5% of the Equity Share Capital of the Company (In numbers)

i) Bhilwara Holding Limited 9,009,840 9,009,840 9,009,840

ii) Sarvottam Vanijay Limited 6,212,980 6,212,980 6,212,980

iii) Scope Vinimoy Private Limited 3,491,075 3,491,075 3,491,075

iv)Latinia Limited 4,347,826 4,347,826 -

23,061,721 23,061,721 18,713,895

(d) Details of Allotment/Buy Back of Shares during the period of 5 years 2013-14 2012-13 2011-12 2010-11 2009-10

immediately preceding the reporting date NIL NIL NIL NIL NIL

Rupees in lacs

2015 2014 2013

Reserves and Surplus

Capital Reserve

Balance at the Beginning of the Year 45.00 45.00 45.00

Addition/Transfer During the Year - - -

Closing Balance 45.00 45.00 45.00

Capital Redemption Reserve

Balance at the Beginning of the Year 0.03 0.03 0.03

Addition/Transfer During the Year - - -

Closing Balance 0.03 0.03 0.03

Security Premium Reserve

Balance at the beginning of the year 4,767.10 - -

Premium on allotment of equity shares - 4,913.04 -

Less:-Share Issue Expenses (Refer note no 5 of annexure 5) - 145.94 -

Closing balance 4,767.10 4,767.10 -

General Reserve

Balance at the Beginning of the Year 4,278.87 3,978.87 3,658.87

Addition During the Year 440.00 300.00 320.00

Less:-Depreciation* 156.96 - -

Closing Balance 4,561.91 4,278.87 3,978.87

Surplus in Statement of Profit & Loss Account

Balance at the Beginning of the Year 12,478.46 10,573.14 8,194.60

Less:-Goodwill-adjustment (92.46) - -

Net Profit for the Current Year 4,638.75 2,887.02 3,200.66

Amount Available for Appropriation 17,024.75 13,460.16 11,395.26

Less:- Appropriation:

Transfer to General reserve: 440.00 300.00 320.00

Proposed Dividend 776.90 582.67 413.96

Corporate Dividend Tax 158.16 99.03 70.35

Closing Balance 15,649.69 12,478.46 10,590.95

Total of Reserves & Surplus 25,023.73 21,569.46 14,614.85

In the event of winding up, the equity shareholders will be entitled to receive the remaining balance of assets if any,

in proportionate to their individual shareholding in the paid up equity capital of the the company.

ANNEXURE 7- REFORMATTED CONSOLIDATED STATEMENT OF RESERVES AND SURPLUS

As at 31 March

*During the year 2014-15 in view of adoption of Schedule II of the Companies Act,2013 depreciation on assets whose life expired prior to 1st April,2014 (net of deferred tax of Rs.79.34 Lacs )

per share.Each shareholders have the right in profit / surplus in proporation to amount paid up with respect to share holder.

ANNEXURE 6 - REFORMATTED CONSOLIDATED STATEMENT OF SHARE CAPITAL

As at 31 March

2015 2014 2013

Shares outstanding at the beginning of the year

The Company has only one class of Equity Shares having face value of Rs. 2/- each and each shareholder is entitled to one vote

F-19

Rupees in lacs

2015 2014 2013

Long-term borrowings

Secured

Term loans

- From Banks 7,993.46 6,736.09 5,493.44

- From others 675.00 975.00 1,275.00

Car Loans

- From Banks 533.94 390.95 231.61

- From others 77.40 80.12 128.68

Deferred Payment Liabilities 1,130.14 1,013.86 1,095.76

Unsecured

- From others 228.85 228.85 -

10,638.79 9,424.87 8,224.49

Less: Current Maturities of Long Term Borrowings

Term Loan

- From Banks 2,357.33 1,880.00 1,629.08

- From others 300.00 300.00 300.00

Car Loans

From Banks 169.74 127.04 80.16

From others 42.17 38.35 47.02

Deferred Payment Liabilities 91.60 - 10.39

2,960.84 2,345.39 2,066.65

7,677.95 7,079.48 6,157.84

Note:-Long term Borrowing as at 31 March 2015 comprises of

6. Rupee Loan of Rs. 1,550.00 Lacs (Previous Year Rs. Nil) from a Bank and Buyers’ credit of Rs. 732.81 Lacs (Previous year Rs. Nil) {Equivalent to Euro 11.66 lacs (Previous Year Euro Nil)} is secured by

first pari passu charges by way of hypothecation of all movable fixed assets of the company both present and future, excluding those exclusively charged to other Banks. The aforesaid loan is repayable in 16

quarterly installments starting from November, 2015.

7. Rupee Loan of Rs.1,495.74 (Previous Year Nil) of a subsidiary company from a Bank is secured by equitable mortgage of factory Building, and hypothecation of all movable assets,both present and future.The

afroresaid loan is repayable in 66 monthly installment starting from April 2015.

8. Car loan from Banks and others are secured (charge created/to be created) by hypothecation of cars purchased there under are repayable in monthly installment over the period of loan.

9. Unsecured Loan from others in a susbidiary company.

5. Rupee Loan of Rs. 1,764.14 Lacs (Previous Year Rs.1,938.91 Lacs) from a Bank and Buyers’ credit of Rs. 397.33 Lacs (Previous year Rs 1,013.86 lacs ) {Equivalent to Euro 5.82 lacs (Previous Year Euro

12.20 lacs)} is secured by first pari passu charges by way of hypothecation of Plant & Machinery and other movable fixed assets of the company situated at Kassar and Kadi excluding those exclusively charged to

other Banks and second pari passu on current assets of the company both present and future. The aforesaid loan is repayable in 12 quarterly installments starting from June, 2015.

ANNEXURE 8- REFORMATTED CONSOLIDATED STATEMENT OF LONG TERM BORROWINGS

As at 31 March

1. Rupee loan of Rs. 883.58 Lacs (Previous year Rs. 1,773.75 Lacs) from a Bank is secured by first pari passu charge by way of hypothecation of machinery, equipment and other fixed assets purchased / to be

purchased out of the said loan. The aforesaid loan is repayable in 4 quarterly installments from June, 2015

2. Rupee loan of Rs. 2,000.00 Lacs (Previous Year Rs. 1,142.00) from a Bank is secured by first pari passu charge by way of hypothecation of all movable fixed assets of the Company, excluding assets

exclusively charged to other Banks and second pari- passu charge on all the current assets of the company both present and future. The aforesaid loan is repayable in 20 equal quarterly installments starting from

June 2015

3. Rupee loan of Rs. 300.00 Lacs (Previous year Rs. 600.00 Lacs) from a Bank is secured by first pari passu charge by way of hypothecation of all movable assets and mortgage of all immovable properties of the

Company, both present and future, excluding assets exclusively charged to other Banks. The aforesaid loan is repayable in 4 equal quarterly installments from June, 2015.

4. Rupee loan of Rs. 675.00 Lacs (Previous Year Rs.975.00Lacs) from others is secured by first pari passu charge on all fixed assets of the company both present and future except specifically charged and

Government Land at Kassar / Kadi. The aforesaid loan is repayable in 9 equal quarterly installments from June, 2015.

F-20

Rupees in lacs

2015 2014 2013

Other Long term Liabilities

Trade Deposit 1,323.61 1,127.10 1,008.68

Security Deposit (Refer Note no 4 of Annexure 5 ) 623.00 685.04 411.22

Others - - 1.21

1,946.61 1,812.14 1,421.11

Less:-Current Maturities 27.81 27.81 -

1,918.80 1,784.33 1,421.11

Rupees in lacs

2015 2014 2013

Employee Benefit 333.78 305.51 249.27

333.78 305.51 249.27

Rupees in lacs

2015 2014 2013

Secured Loans:

Working Capital Facilities from Banks

Working Capital Demand Loans - 800.00 2,060.00

Cash Credit 6,893.98 5,816.31 5,260.40

Buyer's Import Credit 1,591.97 968.52 695.46

Unsecured Loans:

From Body Corporate (Repaybale on demand) - 60.00 -

8,485.95 7,644.83 8,015.86

Note:-Short term Borrowing as at 31 March 2015 comprises of

1) Cash Credit of Rs.6,358.05 lacs and Buyer's Import Credit of Rs.1,591.97 are secured as under:-

2) Cash Credit of Rs.488.36 Lacs with respect to a subsidiary company is secured as under:-

3) Cash Credit of Rs.47.57 Lacs with respect to another subsidiary company is secured as under:-

Rupees in lacs

2015 2014 2013

Current Maturities of Long Term Borrowings 2,960.84 2,345.39 2,066.65

Interest Accrued But not Due on Borrowings 15.93 10.73 4.47

Interest Accrued and Due on Borrowings 41.92 39.23 30.58

Current Maturities of Other Long Term Liabilities 27.81 27.81 -

Statutory Dues 1,383.14 1,137.57 1,191.43

Capital Creditors 186.47 183.24 200.84

Security Deposit 63.09 96.73 126.19

Advance from Customers 1,000.08 619.84 679.32

Unclaimed Dividends# 18.71 13.75 9.70

Other Liability 3,273.53 2,492.28 2,039.52

8,971.52 6,966.57 6,348.70

# Investor Education & Protection Fund shall be credited when due.

Rupees in lacs

2015 2014 2013

Proposed Dividend 776.90 582.67 413.96

Corporate Dividend Tax 158.16 99.03 70.35

Income Tax 8,111.02 6,594.39 5,139.45

Fringe Benefit Tax - 153.50 153.50

Employees Benefits 127.61 42.08 92.41

9,173.69 7,471.67 5,869.67

Hypothecation of stock,receivables and all other present,future and current assets of the company and further secured by colletaral security of all plant and machinaries and fixed assets of

the company (present and future) and personal gurantee of individuals.

Hypothecation of stocks of raw materials ,stock in trade, finished goods and consumble stores and document of title of goods and first charge on block assets of the company

ANNEXURE 12- REFORMATTED CONSOLIDATED STATEMENT OF OTHER CURRENT LIABILITIES

As at 31 March

ANNEXURE 13 - REFORMATTED CONSOLIDATED STATEMENT OF SHORT TERM PROVISIONS

As at 31 March

ii. Second and subservient charge by way of Equitable Mortgage on all other assets, both present and future, of the company, both movable and immovable & ranking pari-passu, excluding

assets exclusively charged. Charge over land exchanged of about 3 acers at Kassar is to be created

ANNEXURE 9 - REFORMATTED CONSOLIDATED STATEMENT OF OTHER LONG TERM LIABILITIES

As at 31 March

ANNEXURE 10- REFORMATTED CONSOLIDATED STATEMENT OF LONG TERM PROVISIONS

As at 31 March

ANNEXURE 11- REFORMATTED CONSOLIDATED STATEMENT OF SHORT TERM BORROWINGS

As at 31 March

i. First charge by way of hypothecation of stocks of raw materials, finished goods and stock in process, stores & spares and book debts and ranking pari-passu and

F-21

ANNEXURE 14 -REFORMATTED CONSOLIDATED STATEMENT OF TANGIBLE ASSETS

Rupees in lacs

Particulars

Freehold

Land

Leasehold

Land Buildings

Plant and

Equipment

Furniture

and Fixtures

#

Office

Equipments # Vehicles Total

Gross Block

Balance as at 1st April 2012 335.64 116.09 5,213.67 30,168.96 1,192.28 428.84 892.04 38,347.52

Additions 63.62 - 217.92 2,296.83 125.98 92.74 194.81 2,991.90

Deletions/adjustment - - 23.47 824.73 26.80 19.93 73.13 968.06

Balance at at 31st March 2013 399.26 116.09 5,408.12 31,641.06 1,291.46 501.65 1,013.72 40,371.36

Balance as at 1st April 2013 399.26 116.09 5,408.12 31,641.06 1,291.46 501.65 1,013.72 40,371.36

Additions 400.65 - 925.96 4,575.02 149.06 53.91 351.58 6,456.18

Deletions/adjustment - - 46.27 1,859.84 106.65 34.70 153.09 2,200.55

Balance as at 31st March 2014 799.91 116.09 6,287.81 34,356.24 1,333.87 520.86 1,212.21 44,626.99

Balance as at 1st April 2014 799.91 116.09 6,287.81 34,356.24 1,333.87 520.86 1,212.21 44,626.99

Additions - - 523.15 3,870.24 263.88 178.15 551.22 5,386.64

Deletions/adjustment - - - 684.35 46.09 7.94 205.99 944.37

Balance as at 31st March 2015 799.91 116.09 6,810.96 37,542.13 1,551.66 691.07 1,557.44 49,069.26

Accumulated Depreciation

Balance as at 1st April 2012 - 9.64 2,050.02 16,101.66 593.13 211.86 345.80 19,312.11

Additions - 1.31 185.41 1,483.32 134.24 52.54 172.19 2,029.01

Deletions/adjustment - - 20.90 773.70 21.93 17.12 41.51 875.16

Balance as at 31st March 2013 - 10.95 2,214.53 16,811.28 705.44 247.28 476.48 20,465.96

Balance as at 1st April 2013 - 10.95 2,214.53 16,811.28 705.44 247.28 476.48 20,465.96

Additions - 1.31 216.98 1,607.54 140.87 53.70 173.32 2,193.72

Deletions/adjustment - - 46.27 1,630.91 102.54 31.92 105.57 1,917.21


Additions - 3.53 661.93 1,355.78 217.20 144.79 453.83 2,837.06

Deletions/adjustment - - - 511.67 41.53 7.13 159.02 719.35


Net Block

Balance as at 31st March 2015 799.91 100.30 3,763.79 19,910.11 632.22 284.35 718.40 26,209.08



# Regrouped during the Financial year 2014-15

1.Addition in free hold land Rs.183.13 lacs and Rs.63.62 paid on exchange of partial land underan agreement in the year ended March 2014 and March 2013

respectively.

2.Plant and equipment includes machinery Gross Rs.62.29 lacs lying with third parties and the amount is same at the year ended 31 March 2015,31 March 2014

and 31 March 2013 and confirmation of the same is pending (Refer note 4 of Annexure 5)

3.Furniture & Fixtures includes certain expenditure on lease hold premises Gross Rs. 397.23 lacs, Rs.359.01 lacs and Rs.324.93 lacs at the year ened 31 March

2015, 31 March 2014 and 31 March 2013 and WDV of the same is Rs.195.57 lacs, 183.78 lacs and Rs.192.77 lacs respectively at the year ended 31 March

2015,31 March 2014 and 31 March 2013.

4.Addition to Plant & equipments includes foreign exchange loss amounting to Rs.192.97 lacs decapitalised ,Rs.239.91 Lacs and Rs.89.84 lacs capitalised for

the year ended March 2015, March 2014 and March 2013 respectively.

F-22

ANNEXURE 15 - REFORMATTED CONSOLIDATED STATEMENT OF INTANGIBLE ASSETS

Rupees in lacs

Particulars

Computer

Software Total

Gross Block

Balance as at 1st April 2012 142.24 142.24

Additions 26.87 26.87

Deletions/adjustment - -

Balance as at 31st March 2013 169.11 169.11


Additions 138.11 138.11







Accumulated Depreciation












Net Block




F-23

Rupees in lacs

2015 2014 2013

Long term Investments (At cost)

Investment in Shares

Equity 39.34 57.76 39.56

Investment in Subsdiary Companies - - -

Investment in Joint Venture - - -

Investment in Associates* 1,908.09 1,607.77 759.59

Mutual Fund 33.00 99.86 67.90

1,980.43 1,765.39 867.05

*Share of profit has been recongnised in carrying amount and goodwill adjustment

Rupees in lacs

2015 2014 2013

( Unsecured, Considered Good Unless Stated Otherwise )

Deposits

-With Government Authorities 95.67 124.28 89.62

-With Related Parties 1,013.05 922.50 -

-With Others 368.99 280.39 214.70

Prepaid Expenses 0.39 4.92 4.71

Capital Advance 20.28 108.32 82.39

Inter Corporate Deposit with others - - 7.50

Others 27.01 11.16 15.67

Advance against Share Application Money (Refer note no 20(A)(vi) of annexure 5 ) 300.00 137.60 -

1,825.39 1,589.17 414.59

Rupees in lacs

2015 2014 2013

Bank Deposit (Pledge with Government Department) 71.01 - -

Fixed Deposits held as Margin Money with Banks/ Financial institutions 179.92 - -

250.93 - -

Rupees in lacs

2015 2014 2013

Investment in Bonds 1,904.01 2,660.00

Investment in Mutual Fund 777.00 1,050.00

2,681.01 3,710.00 -

Rupees in lacs

2015 2014 2013

(Valued at lower of cost and net realisable Value )

(As taken , valued and certified by the management)

Raw Materials & Packing Material 1,270.69 1,303.94 1,159.03

Work -in-Process 367.86 318.23 359.82

Finished Goods 5,842.50 3,360.70 4,731.43

Stock in Trade 4,706.96 2,498.73 4,116.27

Stores and Spares 1,456.65 1,580.10 1,683.26

13,644.66 9,061.70 12,049.81

ANNEXURE 19 - REFORMATTED CONSOLIDATED STATEMENT OF CURRENT INVESTMENTS

As at 31 March

ANNEXURE 20 - REFORMATTED CONSOLIDATED STATEMENT OF INVENTORIES

As at 31 March

(including goods in transit Rs.3.61 lacs,Rs.2.17 lacs and Rs.29.08 lacs as on March

2015,March 2014 and March 2013 respectively)

(including goods in transit Rs.553.79 lacs,Rs.10.76 lacs and Rs.204.42 lacs as on

March 2015,March 2014 and March 2013 respectively)

(including goods in transit Nil,Nil and Rs. 10.56 lacs as on March 2015,March

2014 and March 2013 respectively)

As at 31 March

ANNEXURE 16 - REFORMATTED CONSOLIDATED STATEMENT OF NON-CURRENT INVESTMENTS

As at 31 March

ANNEXURE 17 - REFORMATTED CONSOLIDATED STATEMENT OF LONG TERM LOANS AND ADVANCES

As at 31 March

ANNEXURE 18 - REFORMATTED CONSOLIDATED STATEMENT OF OTHER NON CURRENT ASSETS

F-24

Rupees in lacs

2015 2014 2013


Exceeding Six month from Due Date

i) Good 952.59 695.50 588.11

II) Doubtful 161.59 165.71 140.01

1,114.18 861.21 728.12

Less: Provision for Doubtful Debt 161.59 165.71 140.01

952.59 695.50 588.11

Others 24,957.30 20,797.17 16,886.88

25,909.89 21,492.67 17,474.99

Rupees in lacs

2015 2014 2013

Cash & Cash Equivalents (As certified by the management)

Cash in Hand 23.29 35.21 10.46

Draft / Cheque in Hand - 0.19 3.25

Balance with Banks :

Current Accounts 1,131.25 1,668.01 1,736.73

Bank Deposit with maturity of 3 months or less 36.96 1,166.09 -

Earmarked balance with banks

Bank Deposit 148.90 133.49 138.67

Less:- Shown Under "Other Non-Current Assets" (More than 12 months) (71.01) 77.89 - 133.49 - 138.67

Unclaimed Dividend Accounts 18.71 13.75 9.70

Other Bank Balance

Fixed Deposits held as Margin Money with Banks/ Financial institutions 429.08 439.50 681.34

Less:- Shown Under "Other Non-Current Assets" (More than 12 months) (179.92) 249.16 - 439.50 - 681.34

1,537.26 3,456.24 2,580.15

Rupees in lacs

2015 2014 2013


Inter Corporate Deposit:-

-To Related Parties 300.00 - -

-To Others 100.00 7.50 18.00

Advance Income Tax / Tax deducted at source 8,217.88 6,801.49 5,465.24

Balance with Government Authorities 1,588.66 1,217.32 1,328.43

Deposits

-With Related Parties 300.00 - -

-With Others 60.35 22.83 41.41

Prepaid Expenses 127.27 145.78 166.66

Other Advances 1,312.74 884.62 697.97

12,006.90 9,079.54 7,717.71

Rupees in lacs

2015 2014 2013

Accrued Interest 176.76 146.86 16.43

Export Incentive Receivable 82.01 49.94 52.80

Derivative Financial Assets - 8.92 12.36

258.77 205.72 81.59

As at 31 March

ANNEXURE 24 - REFORMATTED CONSOLIDATED STATEMENT OF OTHER CURRENT ASSETS

As at 31 March

ANNEXURE 23 - REFORMATTED CONSOLIDATED STATEMENT OF SHORT TERM LOANS AND ADVANCES

ANNEXURE 21 - REFORMATTED CONSOLIDATED STATEMENT OF TRADE RECEIVABLES

As at 31 March

ANNEXURE 22 - REFORMATTED CONSOLIDATED STATEMENT OF CASH AND BANK BALANCES

As at 31 March

F-25

Rupees in lacs

2015 2014 2013

Sales of manufactured goods (tiles) 62,617.65 64,377.45 56,879.15

Sales of Colours/Refractory 122.50 102.46 107.79

Sale of Traded Goods 97,793.84 68,552.20 54,515.01

Sales of Body Clay 801.23 62.77 -

Other Operating Revenue

Scrap Sales 227.20 235.96 218.92

Liabilities No Longer Required Written Back ( Net) - 9.70 6.23

Sundry Balance Written Back (Net)* - 15.22 1.54

Provision for Doubtful Debt Written back 0.82 1.79 0.43

Income from Service 308.21 92.37 -

Gain on Foreign Exchange Fluctuation (Net) 129.78 - -

Insurance Claim Recd 130.63 60.85 89.72

162,131.86 133,510.77 111,818.79

Less: Excise Duty 7,819.38 7,034.42 6,282.20

154,312.48 126,476.35 105,536.59

*Net of Sundry Balance Written Off Nil ,Rs.5.87 Lacs and Rs.11.00 lacs for the year 2015,2014 and 2013 respectively)

Rupees in lacs

2015 2014 2013


Dividend on long term Investments (Rs.125/-) 0.00 0.07 4.80

Rent and Lease Rent Received 5.70 1.22 0.64

Profit on Sale of Fixed assets 40.01 33.26 8.36

Profit on Sale of Short Term Investment 183.36 8.34 -

Profit on Sale of Long Term Investment 3.54 32.73 2.75

Diminution in value of investment written back 2.95 - -

Miscellaneous Receipts 65.85 17.61 85.50

766.32 308.24 258.76

Rupees in lacs

2015 2014 2013

Raw Material Consumed 16,887.41 14,100.68 13,608.18

Packing Material Consumed 3,458.67 3,058.94 2,855.42

20,346.08 17,159.62 16,463.60

Rupees in lacs

2015 2014 2013

Closing Stock*

Finished Goods 5,842.50 3,360.70 4,731.43

Stock-in-Trade 4,153.17 2,487.97 3,911.85

Total Finished Goods 9,995.67 5,848.67 8,643.28

Work-in-Process 367.86 318.23 359.82

10,363.53 6,166.90 9,003.10

Less:Opening Stock*

Finished Goods 3,360.70 4,731.43 3,461.06

Stock-in-Trade 2,487.97 3,911.85 3,560.29

Total Finished Goods 5,848.67 8,643.28 7,021.35

Work-in-Process 318.23 359.82 302.22

6,166.90 9,003.10 7,323.57

(Increase)/Decrease in Stock (4,196.63) 2,836.20 (1,679.53)

Add / (Less): (Increase) Decrease in Excise duty on Stock (278.36) 169.35 (76.61)

(3,918.27) 2,666.85 (1,602.92)

*Excluding Goods in Transit

Rupees in lacs

2015 2014 2013

Salary, Wages, Bonus etc. 9,040.61 7,547.07 6,754.37

Contribution to Provident Fund and Other Funds 609.42 404.11 423.45

Workmen & Staff Welfare 485.28 368.42 279.49

10,135.31 8,319.60 7,457.31


ANNEXURE 29 - REFORMATTED CONSOLIDATED STATEMENT OF EMPLOYEES BENEFIT EXPENSE

ANNEXURE 25 - REFORMATTED CONSOLIDATED STATEMENT OF REVENUE FROM OPERATIONS


ANNEXURE 26 - REFORMATTED CONSOLIDATED STATEMENT OF OTHER INCOME


ANNEXURE 27 - REFORMATTED CONSOLIDATED STATEMENT OF COST OF MATERIAL CONSUMED


ANNEXURE 28 - REFORMATTED CONSOLIDATED STATEMENT OF FINISHED GOODS,WORK-IN-PROCESS AND TRADED GOODS


F-26

Rupees in lacs

2015 2014 2013

Interest 1,929.92 1,751.49 1,866.80

Other Borrowing Cost 123.98 100.71 104.59

Applicable Net Loss on Foreign Currency Transactions/ Translation - - 26.10

2,053.90 1,852.20 1,997.49

Rupees in lacs

2015 2014 2013

Stores and Spare Parts Consumed 2,808.25 2,309.03 2,388.76

Power & Fuel 20,335.36 16,679.40 13,105.67

Repairs and Maintainance:

Buildings 153.99 110.64 172.82

Plant & Machinery 251.62 187.45 155.52

Others 131.43 111.21 105.64

Rent 582.39 493.46 513.37

Rates & Taxes 371.63 178.99 130.12

Insurance 264.79 248.36 203.58

Travelling & Conveyance Expenses 1,234.97 1,117.22 869.86

Exchange Rate Difference (Net) - 194.45 27.78

Directors' Fees 6.45 5.65 5.00

Non Executive directors' Commission 36.51 30.58 30.00

Selling & Distribution Expenses 3,148.68 2,508.89 2,803.33

Discount 1,816.50 1,367.26 1,099.98

Freight Outward and Handling Charges 3,326.46 2,848.27 2,802.07

Advertisement & Sales Promotion Expenses 2,891.46 1,961.01 1,519.23

Commission to Agents 337.95 305.74 198.06

CSR Expenses 96.84 0.26 -

Provision for Doubtful Debts 6.32 27.95 -

Bad Debts 28.21 0.63 0.43

Provision for Diminution in Value of Long Term Investment - 0.79 -

Prior Period Adjustment(Net) 9.26 1.06 0.40

Sundry Balances Written Off* 87.91 - -

Legal & Professional Expenses 357.98 227.79 292.20

Loss on sale of Fixed Assets 63.45 52.22 22.82

Fixed Assets Discard /Written Off 101.99 166.08 36.04

Other Expenses 1,116.98 925.33 926.60

39,567.38 32,059.72 27,409.28

*Net of Sundry Balance/Liabilities no Longer Required Written Back Rs.90.89 Lacs, Nil and Nil for the years 2015,2014 and 2013 respectively)

ANNEXURE 30 - REFORMATTED CONSOLIDATED STATEMENT OF FINANCE COST


ANNEXURE 31 - REFORMATTED CONSOLIDATED STATEMENT OF OTHER EXPENSES


F-27

To,

The Board of Directors,

Somany Ceramics Limited,

New Delhi.

Subject: Limited Review Report: Quarter Ended 30th

September 2015

1. We have reviewed the accompanying statement of unaudited financial results of Somany Ceramics

Limited (the Company) for the quarter/ six months ended 30th September 2015 (“the Statement”)

being submitted by the Company pursuant to the requirements of Clause 41 of the Listing

Agreement with the Stock Exchanges except for the disclosures in Part II – Select Information

referred to in para 4 below. We have also reviewed statement of Asset and Liabilities of the

Company as on that date. This statement of quarterly financial results has been prepared from

interim financial statements which are the responsibility of the Company’s Management and has

been approved by the Board of Directors. Our responsibility is to issue a report on these financial

statements based on our review.

2. We conducted our review in accordance with Standard on Review Engagement (SRE) 2410, Review

of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the

Institute of Chartered Accountants of India. This standard requires that we plan and perform the

review to obtain moderate assurance as to whether the financial statements are free of material

misstatement. A review is limited primarily to inquiries of company personnel and analytical

procedures applied to financial data and thus provide less assurance than an audit. We have not

performed an audit and accordingly, we do not express an audit opinion.

3. Based on our review conducted as above, nothing has come to our attention that causes us to believe

that the accompanying Statement of unaudited financial results prepared in accordance with the

Accounting Standards specified under the Companies Act, 2013 (which are deemed to be applicable

as per Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rule,

2014) and other recognized accounting practices and policies, has not disclosed the information

required to be disclosed in terms of Clause 41 of the Listing Agreement with the stock exchange,

including the manner in which it is to be disclosed, or that it contains any material misstatement.

4. Further, we also report that we have traced the number of shares as well as percentage of

shareholding in respect of the aggregate amount of public shareholding and the number of shares as

well as the percentage of share pledged/encumbered and non-encumbered in respect of the aggregate

amount of promoters and promoter group shareholding in terms of Clause 35 of Listing Agreement

with the Stock Exchange and the particulars relating to investor

complaints disclosed in Part II – Select Information for the Quarter/Half Year ended 30/09/2015 of

the statement, from the details as certified by the Management.

For LODHA & CO.


F.R. No – 301051E

( N.K. LODHA )

Partner

Membership No.85155

Place: New Delhi

Dated: 26.10.2015

F-28

Part-1 (Rs.in Lacs)

Particulars Year ended

30.09.2015 30.06.2015 30.09.2014 30.09.2015 30.09.2014 31.03.2015

Audited

1. Income from operations

( a) Gross Sales 41,948 40,800 38,896 82,748 73,458 159,830

( b) Net Sales /Income from operations (Net of excise duty) 40,333 39,146 37,223 79,479 70,239 153,132

( c) Other Operating Income 230 209 310 439 474 973

Total income from operations (net) 40,563 39,355 37,533 79,918 70,713 154,105

2. Expenses

(a) Consumption of Raw Materials and Packing Material 3,700 4,129 4,287 7,829 8,492 16,997

(b) Purchases of stock- in -Trade 22,749 21,990 20,932 44,739 38,136 85,040

(c) Changes in inventories of finished goods,work-in progress

and stock-in trade 36 (1,105) (1,524) (1,069) (2,747) (3,508)

(d) Employees Cost 2,693 2,609 2,522 5,302 4,802 9,536

(e) Depreciation 481 483 552 964 1,065 2,227

(f) Stores and Spare Parts 622 638 635 1,260 1,284 2,483

(g) Power & Fuel 3,944 4,608 4,319 8,552 8,722 17,763

(h) Other Expenses 4,027 4,086 3,946 8,113 7,644 16,169

Total expenses (a to h) 38,252 37,438 35,669 75,690 67,398 146,707

3. Profit from operation before other income,

finance cost and exceptional Items (1-2) 2,311 1,917 1,864 4,228 3,315 7,398

4. Other Income 168 128 143 296 284 783 5. Profit from ordinary activities before

finance costs and exceptional items(3+4) 2,479 2,045 2,007 4,524 3,599 8,181

6. Finance Cost 451 437 372 888 743 1,630 7. Profit from ordinary activities after

finance costs but before exceptional items (5-6) 2,028 1,608 1,635 3,636 2,856 6,551

8. Exceptional item (Refer Note No.3 below) 383 - - 383 - -

9. Profit from ordinary activities before tax (7-8) 1,645 1,608 1,635 3,253 2,856 6,551

10. Tax expenses (including deferred tax) 580 559 585 1,139 999 2,113

11. Net Profit from ordinary activities after Tax (9-10) 1,065 1,049 1,050 2,114 1,857 4,438

12. Extraordinary items (net of tax expenses) - - - - - -

13. Net Profit for the period (11-12) 1,065 1,049 1,050 2,114 1,857 4,438

14. Paid up Equity Share Capital 777 777 777 777 777 777

(Face Value of Rs. 2/- each)

15. Reserves excluding Revaluation Reserves - - - - - 24,623

16. Earning per share (EPS)-in Rs.

Basic & Diluted EPS before / after Extraordinary items for

the period, for the year to date and for the previous year

-Cash 4.09 3.84 4.03 7.93 7.15 17.34

-After tax 2.74 2.70 2.70 5.44 4.78 11.43

(not annualised)

Part-II 30.09.2015 30.06.2015 30.09.2014 30.09.2015 30.09.2014 31.03.2015

A. PARTICULAR OF SHARE HOLDING

(i) Public Shareholding

-Number of Shares 17,005,466 17,005,466 17,005,466 17,005,466 17,005,466 17,005,466

-Percentage of Shareholding 43.78 43.78 43.78 43.78 43.78 43.78

(ii) Promoters and promoter group shareholding

a) Pledged /Encumbered

Number of shares Nil Nil Nil Nil Nil Nil

Percentage of shares (as a % of the total shareholding - - - - - -

of promoter and promoters group)

Percentage of shares (as a % of the total share capital - - - - - -

of the Company)

b) Non-encumbered

Number of shares 21,839,360 21,839,360 21,839,360 21,839,360 21,839,360 21,839,360

Percentage of shares (as a % of the total shareholding

of promoter and promoters group) 100% 100% 100% 100% 100% 100%

Percentage of shares (as a % of the total share capital

of the Company) 56.22 56.22 56.22 56.22 56.22 56.22

Particulars

B. INVESTOR COMPLAINTS

Pending at the beginning of the quarter

Received during the quarter

Disposal of during the quarter

Remaning unresolved at the end of the quarter

Unaudited Unaudited


(Regd. Office : 82/19, Bhakerwara Road, Mundka, New Delhi - 110 041)

STATEMENT OF STANDALONE UNAUDITED RESULTS FOR THE QUARTER AND SIX MONTHS ENDED 30.09.2015

Quarter ended Six months ended

3 month ended

30.09.2015

0

4

4

0

F-29

Standalone Statement of Assets and Liabilities

(Rs.in Lacs)

Six months Year ended

ended

30.09.2015 31.03.2015

Unaudited Audited

A. EQUITY AND LIABILITIES

1. Shareholders' funds

(a) Share Capital 777 777

(b) Reserves and surplus 26,738 24,623

Sub -total - Shareholders' fund 27,515 25,400

2. Non-current liabilities

(a) Long-term borrowings 5,818 6,133

(b) Deferred tax liabilities (net) 2,743 2,742

(c) Other long-term liabilities 2,029 1,913

(d) Long-term provisions 384 331

Sub -total - Non- Current liabilities 10,974 11,119

3. Current liabilities

(a) Short-term borrowings 9,321 7,950

(b) Trade payables 15,662 20,306

(c) Other current liabilities 9,178 8,676

(d) Short-term provision 9,338 9,098

Sub -total - Current liabilities 43,499 46,030

TOTAL -EQUITY AND LIABILITES 81,988 82,549

B. ASSETS

1. Non-current assets

(a) Fixed assets 23,516 23,671

(b) Non-current investments 3,460 2,406

(c) Long-term loans and advances 2,586 2,102

(d) Other non-current asstes 317 251

Sub -total - Non - current asstes 29,879 28,430

2. Current assets

(a) Current Investment 2,018 2,666

(b) Inventories 13,551 12,726

(c) Trade receivables 23,021 25,347

(d) Cash and Bank Balance 857 1,458

(e) Short - term loans and advances 12,502 11,664

(f) Other current assets 160 258

Sub -total - Current assets 52,109 54,119

TOTAL -ASSETS 81,988 82,549

Notes:

For SOMANY CERAMICS LIMITED

Dated : 26th October, 2015

Place : New Delhi SHREEKANT SOMANY

CHAIRMAN & MANAGING DIRECTOR

DIN 00021423

3. Exceptional item pertains to payment of Rs. 383 lacs to GAIL India Limited towards one time settlement of 'Pay For If Not Taken Obligation' for calendar year

2014.

4. Post-acquisition upto 51% equity shares , M/S Somany Sanitaryware Pvt. Ltd. has become a subsidiary company during the current quarter.

5. Somany Fine Vitrified Pvt. Ltd. , a subsidiary company, commenced production in October,2015 to produce 4.3 MSM per annum of polished vitrified tiles.

6. Figures of the previous period(s) have been regrouped / rearranged wherever necessary to conform to the current period's classification.

7. The above result were reviewed by the Audit Committee and approved by the Board of Directors in their meeting held on 26th October, 2015 and also the

Statutory Auditors have carried limited review of the same.

Particulars

1. The business activity of the Company falls within a single primary business segment viz ‘Ceramic Tiles and allied products’ and hence there is no other

reportable segment .

2. Out of Rs. 5000 lacs raised through private placement of equity shares in February, 2014, the Company has so far utilized Rs.3400 lacs for the purposes the fund

were so raised. The balance Rs. 1600 lacs remain temporarily invested in the bonds/ debt schemes of mutual funds.

F-30

156

DECLARATION Our Company certifies that all relevant provisions of Chapter VIII read with Schedule XVIII of the SEBI Regulations have been complied with and no statement made in this Preliminary Placement Document is contrary to the provisions of the same. Our Company further certifies that all the statements in this Preliminary Placement Document are true and correct. Signed by:

___________________________

G. G. TRIVEDI

CEO & CFO

___________________________

ABHISHEK SOMANY

MANAGING DIRECTOR

Date : December 17, 2015 Place : New Delhi

157

DECLARATION

We, the Directors of our Company certify that: (i) our Company has complied with the provisions of the Companies Act, 2013 and the rules made thereunder;

(ii) the compliance with the Companies Act, 2013 and the rules does not imply that payment of dividend or interest

or repayment of debentures, if applicable, is guaranteed by the Central Government; and

(iii) the monies received under the offer shall be used only for the purposes and objects indicated in this Preliminary Placement Document.

Signed by:

__________________________

ABHISHEK SOMANY

MANAGING DIRECTOR

I am authorized by the Administrative Committee, a committee of the Board of Directors of our Company, vide resolution dated December 17, 2015 to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum and the Articles. It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form.

Signed by:

__________________________

ABHISHEK SOMANY

MANAGING DIRECTOR

Date : December 17, 2015 Place : New Delhi

158


Registered Office: 82/19, Bhakerwara Road, Mundka, New Delhi – 110 041 Corporate Office: F-36, Sector 6, Noida, Uttar Pradesh - 201301

Website: www.somanyceramics.com; CIN:L40200DL1968PLC005169 Compliance Officer: Mr. Ambrish Julka

Address: 82/19, Bhakerwara Road, Mundka, New Delhi – 110 041

Telephone: + 91 011 28341085; Fax: + 91 011 28341085

Email: [email protected]

BOOK RUNNING LEAD MANAGER

EMKAY GLOBAL FINANCIAL SERVICES LIMITED

7th Floor, The Ruby, Senapati Bapat Marg,

Dadar - West, Mumbai - 400 028

LEGAL ADVISOR TO THE ISSUE

J. SAGAR ASSOCIATES

Vakils House, 18 Sprott Road, Ballard Estate, Mumbai - 400 001,

Maharashtra, India

INTERNATIONAL LEGAL ADVISOR TO THE BOOK RUNNING LEAD MANAGER

Squire Patton Boggs Singapore LLP

10 Collyer Quay #03-01/02 Ocean Financial Center

Singapore 049315

AUDITORS TO OUR COMPANY

LODHA & CO., CHARTERED ACCOUNTANTS 12, Bhagat Singh Marg,

New Delhi 110001