100% Book Built Issue LUMAX AUTOMOTIVE SYSTEMS LIMITEDLUMAX AUTOMOTIVE SYSTEMS LIMITED (Originally incorporated as Lumax Air Cleaners Private Limited on 31st March 1999 under the Companies

DRAFT RED HERRING PROSPECTUSPlease read Section 60B of the Companies Act, 1956

Dated: 10th] February 2006 (The Draft Red Herring Prospectus will be

updated upon RoC filing)100% Book Built Issue

LUMAX AUTOMOTIVE SYSTEMS LIMITED(Originally incorporated as Lumax Air Cleaners Private Limited on 31st March 1999 under the Companies Act, 1956 with Registration No.55-

99103 with Registrar of Companies, NCT of Delhi and Haryana. The name was changed to Lumax Air Cleaners Limited on 22nd August, 2000and subsequently changed to Lumax Automotive Systems Limited on 10th November, 2003)

Registered and Corporate Office: B- 86, Mayapuri Industrial Area, Phase I, New Delhi- 110 064 Tel: +91- 11- 41031267, 28117937 Fax +91-11- 28116455 e-mail: [email protected] Website: www.lumaxauto.com

Contact Person: Ms. Monika Gupta, Company Secretary & Compliance officer

PUBLIC ISSUE OF 34,00,000 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PRICE OF RS. [•] PER EQUITY SHARE AGGREGATINGRS. [•] (HEREINAFTER REFERRED TO AS “THE ISSUE”) BY LUMAX AUTOMOTIVE SYSTEMS LIMITED (“LUMAX”, “THE COMPANY”OR “THE ISSUER” OR “LASL”). THE ISSUE SHALL CONSTITUTE 31.47% OF THE FULLY DILUTED POST-ISSUE CAPITAL OF OURCOMPANY.THE PRICE BAND WILL BE DECIDED BY THE COMPANY IN CONSULTATION WITH THE BOOK RUNNING LEAD MANAGER AND AN-NOUNCED AND ADVERTISED AT LEAST ONE DAY PRIOR TO THE ISSUE OPENING DATE/BID OPENING DATE.ISSUE PRICE IS [•] TIMES THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [•] TIMES THE FACE VALUE AT THEHIGHER END OF THE PRICE BAND

In case of revision in the Price Band, the Bidding Period/Issue Period will be extended for three additional days after revision of the Price Bandsubject to the Bidding Period/Issue Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding Period/IssuePeriod, if applicable, will be widely disseminated by notification to Bombay Stock Exchange Limited (BSE) and the National Stock Exchange ofIndia Limited (NSE), by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Managers and at theterminals of the Syndicate.

The Issue is being made through the 100% Book Building Process wherein up to 50% of the Issue shall be allocated on a proportionate basis toQualified Institutional Buyers including 5% reserved for mutual funds exclusively. Further, at least 15% of the Issue shall be available for allocationon a proportionate basis to Non-Institutional Bidders and at least 35% of the Issue shall be available for allocation on a proportionate basis toRetail Individual Bidders, subject to valid Bids being received at or above the Issue Price.

RISK IN RELATION TO THE ISSUE

The Issue Price (as determined by the Company in consultation with the BRLM on the basis of assessment of market demand for the EquityShares by way of book-building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed.The market price of the existing Equity Shares of the Company could affect the price discovery through book building and vice versa. Noassurance can be given regarding an active and/or sustained trading in the Equity Shares or regarding the price at which the Equity Shares willbe traded after listing of the Equity Shares allotted pursuant to the Issue.

GENERAL RISKS

Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Issue unless they canafford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in thisIssue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved.The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (“SEBI”), nordoes SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to section titled“Risk Factors” appearing on page [•] of this Draft Red Herring Prospectus.

ISSUER’S ABSOLUTE RESPONSIBILITY

The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains allinformation with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft RedHerring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentionsexpressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a wholeor any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on Bombay Stock Exchange Limited (BSE) andNational Stock Exchange of India Limited (NSE), where the existing Equity Shares of our Company are listed. We have received in-principleapprovals from Bombay Stock Exchange Limited and National Stock Exchange of India Limited for the listing of the Equity Shares to be allottedpursuant to the Issue, pursuant to letters dated [•] 2006 and [•] 2006, respectively. Bombay Stock Exchange Limited is the designated stockexchange.BOOK RUNNING LEAD MANAGER LEAD MANAGER REGISTRAR TO THE ISSUE

MICROSEC CAPITAL LTDSEBI Regn.No INM 000010791Azimganj House, 2nd Floor7, Camac Street, Kolkata 700 017Ph: 91-33-2282 9330Fax: 91-33-2282 9335E-Mail: [email protected]: www.microsec.co.in

CHARTERED CAPITAL AND INVEST-MENT LTD13, Community Centre, East of Kailash,New Delhi- 110 001Phones: 91–11-26218274Fax: 91 11 26219491E-Mail: [email protected]: www.charteredcapital.net

INTIME SPECTRUM REGISTRY LTDC-13, Pannalal Silk Mills CompoundL B S Marg, Bhandup (West)Mumbai 400 078Tel: +91-22-5555 5454Fax: +91-22-5555 5353E-Mail: [email protected]: www.intimespectrum.com

ISSUE PROGRAMME

BID / ISSUE OPENS ON: BID / ISSUE CLOSES ON:

AUTOMOTIVE PARTS

TABLE OF CONTENTS

DEFINITIONS AND ABBREVIATIONS ............................................................................................................... (i)

PRESENTATION OF FINANCIAL AND MARKET DATA .................................................................................. (vi)

FORWARD-LOOKING STATEMENTS ............................................................................................................ (vii)

RISK FACTORS .............................................................................................................................................. (viii)

SUMMARY .......................................................................................................................................................... 1

THE ISSUE ......................................................................................................................................................... 2

SUMMARY FINANCIAL AND OPERATING INFORMATION .............................................................................. 3

GENERAL INFORMATION ................................................................................................................................. 5

CAPITAL STRUCTURE..................................................................................................................................... 10

OBJECTS OF THE ISSUE ................................................................................................................................ 16

TERMS OF THE ISSUE .................................................................................................................................... 24

BASIS FOR ISSUE PRICE ............................................................................................................................... 26

STATEMENT OF TAX BENEFITS ..................................................................................................................... 28

INDUSTRY OVERVIEW .................................................................................................................................... 32

OUR BUSINESS ............................................................................................................................................... 39

REGULATIONS AND POLICIES IN INDIA ........................................................................................................ 54

HISTORY AND CORPORATE MATTERS ......................................................................................................... 55

OUR MANAGEMENT ....................................................................................................................................... 64

OUR PROMOTERS .......................................................................................................................................... 71

DIVIDEND POLICY............................................................................................................................................ 74

FINANCIAL STATEMENTS ............................................................................................................................... 75

FINANCIAL INFORMATION OF GROUP COMPANIES ................................................................................... 99

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS .......................................................................................................................... 103

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS................................................................. 112

GOVERNMENT AND OTHER APPROVALS .................................................................................................. 122

OTHER REGULATORY AND STATUTORY DISCLOSURES .......................................................................... 130

ISSUE INFORMATION .................................................................................................................................... 137

MAIN PROVISIONS OF ARTICLES OF ASSOCIATION ................................................................................ 157

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................................... 171

DECLARATION ............................................................................................................................................... 172

DEFINITIONS AND ABBREVIATIONSGeneral Terms

Term Description“Lumax” or “the Company” or Lumax Automotive Systems Limited, a public limited company incorporated under“our Company” or “ Or Issuer” the Companies Act.or “LASL” or “LAL” or “LUMAX”“we” or “us” or “our” Lumax Automotive Systems Limited

Issue Related Terms

Term DescriptionAllotment Unless the context otherwise requires, the allotment of Equity Shares pursuant

to the Issue.Appointed Date 1st April, 2002 in relation to the demerger of filter (air/oil cleaner) and mirror divisions

of Lumax Industries Limited into Lumax Automotive Systems Limited as per orderof Hon’ble High Court Delhi dated 15th September, 2003.1st April, 2004 in relation to amalgamation of Toshi and MPI with Lumax AutomotiveSystems Limited as per order of Hon’ble High Court Delhi dated 23rd Feb 2005.

Articles/Articles of Association Articles of Association of the Company.Auditors R Jain & Sanjay Associates, Chartered Accountants.Banker(s) to the Issue [•]Bid An indication to make an offer during the Bidding Period by a prospective investor

to subscribe to the Equity Shares at a price within the Price Band, including allrevisions and modifications thereto.

Bid Amount The highest value of the optional Bids indicated in the Bid cum Application Formand payable by the Bidder on submission of the Bid in the Issue.

Bid Closing Date / The date after which the Syndicate will not accept any Bids for the Issue, whichIssue Closing Date shall be notified in an English national newspaper and Hindi national newspaper,

with wide circulation.Bid cum Application Form The form in terms of which the Bidder shall make an offer to subscribe to the

Equity Shares and which will be considered as the application for issue of theEquity Shares pursuant to the terms of this Draft Red Herring Prospectus.

Bidder Any prospective investor who makes a Bid pursuant to the terms of this Draft RedHerring Prospectus and the Bid cum Application Form.

Bidding Period / Issue Period The period between the Bid Opening Date/Issue Opening Date and the Bid ClosingDate/Issue Closing Date inclusive of both days and during which prospectiveBidders can submit their Bids at such times and in such manner as is set forth inthe Draft Red Herring Prospectus.

Bid Opening Date/ The date on which the Syndicate shall start accepting Bids for the Issue, whichIssue Opening Date shall be notified in an English national newspaper and a Hindi national newspaper,

with wide circulation.Board of Directors/Board The board of directors of the Company or a duly constituted committee thereof.Book Building Process Book building route as provided in Chapter XI of the SEBI Guidelines, in terms of

which the Issue is being made.BRLM/Book Running Book Running Lead Manager to the Issue, in this case being Microsec CapitalLead Manager LimitedBSE Bombay Stock Exchange Limited.CAN/ Confirmation of Means the note or advice or intimation of allocation of Equity Shares sent to theAllocation Note Bidders who have been allocated Equity Shares after discovery of the Issue Price

in accordance with the Book Building Process.Cap Price The higher end of the Price Band, above which the Issue Price will not be finalized

and above which no Bids, will be accepted.Companies Act The Companies Act, 1956, as amended from time to time.

(i)

Cut-off Price Any price within the Price Band finalized by us in consultation with the BRLM andthe Lead Manager.A Bid submitted at Cut-off Price is a valid Bid at all price levels within the PriceBand.

Depository A depository registered with SEBI under the SEBI (Depositories and Participant)Regulations, 1996, as amended from time to time.

Depositories Act The Depositories Act, 1996, as amended from time to time.Depository Participant A depository participant as defined under the Depositories Act.Designated Date The date on which the Escrow Collection Banks transfer the funds from the Escrow

Account of the Company to the Issue Account, which in no event shall be earlierthan the date on which the Prospectus is filed with the RoC.

Designated Stock Exchange Bombay Stock Exchange Limited.Director(s) Director(s) of Lumax Automotive Systems Limited, unless otherwise specified.Draft Red Herring Prospectus Means this Draft Red Herring Prospectus issued in accordance with Section 60B

of the Companies Act, submitted to SEBI, which does not have complete particularson the price at which the Equity Shares are issued and size of the Issue. It carriesthe same obligations as are applicable in case of a Prospectus and will be filedwith RoC at least three days before the opening of the Issue. It will become aProspectus after filing with Registrar of Companies after the pricing and allocation.

Equity Shares Equity shares of the Company of face value of Rs. 10 each.Escrow Account Account opened with an Escrow Collection Bank(s) and in whose favour the Bidder

will issue cheques or drafts in respect of the Bid Amount when submitting a Bid.Escrow Agreement Agreement to be entered into among the Company, the Registrar, the Escrow

Collection Bank(s), and the BRLM for collection of the Bid Amounts and for remittingrefunds, if any, of the amounts collected, to the Bidders.

Escrow Collection Bank(s) The banks, which are clearing members and registered with SEBI as Banker tothe Issue at which the Escrow Account will be opened in this case being [•] Bank[•] Bank [•] Bank

FEMA Foreign Exchange Management Act, 1999, as amended from time to time, andthe regulations framed thereunder.

FII Foreign Institutional Investor (as defined under the Securities and Exchange Boardof India (Foreign Institutional Investors) Regulations, 1995), as amended fromtime to time, registered with SEBI under applicable laws in India.

Financial year /fiscal / FY Period of 12 months ended March 31 of that particular year, unless otherwisestated.

First Bidder The Bidder whose name appears first in the Bid cum Application Form or RevisionForm.

Floor Price The lower end of the Price Band, below which the Issue Price will not be finalizedand below which no Bids will be accepted.

I.T. Act The Income Tax Act, 1961, as amended from time to time.Indian GAAP Generally accepted accounting principles in India.Issue Public issue of 34,00,000 Equity Shares, at a price of Rs. [•] each for cash,

aggregating upto Rs. [•] million. For Details refer to page [•] of this Draft RedHerring Prospectus

Issue Price The final price at which Equity Shares will be allotted in terms of this Draft RedHerring Prospectus, as determined by us in consultation with the BRLM, on thePricing Date.

Issue Account Account opened with the Banker(s) to the Issue to receive monies from the EscrowAccount on the Designated Date.

LIL Lumax Industries LimitedLead Manager Lead Manager to the Issue, in this case being Chartered Capital And Investments

Ltd

(ii)

MAPIN Regulations SEBI (Central Database of Market Participants) Regulations, 2003 as amended.Margin Amount The amount paid by the Bidder at the time of submission of his/her Bid, being

10% to 100% of the Bid Amount.Memorandum / The memorandum of association of the Company.Memorandum of AssociationMPI Metal Pressing Industries Private LimitedNSE National Stock Exchange of India Limited.Non-Institutional Bidders All Bidders that are not Qualified Institutional Buyers or Retail Individual Bidders

and who have bid for an amount more than Rs. 100,000.Non-Institutional Portion The portion of the Issue being at least 5,10,000 Equity Shares available for

allocation to Non-Institutional Bidders, subject to valid bids being received at orabove the Issue Price.

Non-Residents Non-Resident is a person resident outside India, as defined under FEMA.NRI / Non-Resident Indian Non-Resident Indian, is a person resident outside India, who is a citizen of India

or a person of Indian origin and shall have the same meaning as described in theForeign Exchange Management (Transfer or Issue of Security by a PersonResident Outside India) Regulations, 2000, as amended from time to time.

OCB/Overseas Corporate Body A company, partnership, society or other corporate body owned directly or indirectlyto the extent of at least 60% by NRIs including overseas trusts, in which not lessthan 60% of beneficial interest is irrevocably held by NRIs directly or indirectly asdefined under Foreign Exchange Management (Transfer or Issue of Security by aPerson Resident Outside India) Regulations, 2000, as amended from time to time.

Pay-in Date Bid Closing Date/Issue Closing Date or the last date specified in the CAN sent tothe Bidders, as applicable.

Pay-in Period (i) With respect to Bidders whose Margin Amount is 100% of the Bid Amount, theperiod commencing on the Bid Opening Date/Issue Opening Date and extendinguntil the Bid Closing Date/Issue Closing Date, and (ii) with respect to Bidderswhose Margin Amount is less than 100% of the Bid Amount, the periodcommencing on the Bid Opening Date/Issue Opening Date and extending untilthe closure of the Pay-in Date, as specified in the CAN.

Price Band The price band with a minimum price (Floor Price) of Rs. [•] and the maximumprice (Cap Price) of Rs. [•], which shall be advertised at least one day prior to theBid Opening Date/Issue Opening Date in an English language newspaper withwide circulation and a Hindi language newspaper with wide circulation.

Pricing Date The date on which the Company in consultation with the BRLM finalises theIssue Price.

Promoters Mr. U. K Jain, Mr. Nitin Jain , Mrs. Kamlesh Jain and Mr. Milan JainProspectus The prospectus, filed with the RoC after pricing containing, inter alia, the Issue

Price that is determined at the end of the Book Building Process, the size of theIssue and certain other information.

Qualified Institutional Public financial institutions as specified in Section 4A of the Companies Act, FIIs,Buyers or QIBs scheduled commercial banks, mutual funds registered with SEBI, multilateral and

bilateral development financial institutions, venture capital funds registered withSEBI, foreign venture capital investors registered with SEBI, state industrialdevelopment corporations, insurance companies registered with the InsuranceRegulatory and Development Authority, provident funds with minimum corpus ofRs. 250 million and pension funds with minimum corpus of Rs. 250 million.

QIB Portion The portion of the Issue being up to 17,00,000 Equity Shares available for allocationto QIBs including 85,000 Equity Shares being 5% being reserved for allotment tomutual funds exclcusively.

Registered Office of the Company B – 86, Mayapuri Industrial Area, Phase – I, New Delhi – 110064Registrar to the Issue Intime Spectrum Registry Limited

(iii)

Retail Individual Bidders Bidders who apply or bid for Equity Shares of or for a value of not more than Rs.100,000.

Retail Portion The portion of the Issue being at least 11,90,000 Equity Shares available forallocation to Retail Individual Bidder(s), subject to valid bids being received at orabove the Issue Price.

Revision Form The form used by the Bidders to modify the quantity of Equity Shares or the BidPrice in any of their Bid cum Application Forms or any previous Revision Form(s).

RHP or Red Herring Prospectus Means the Document issued in accordance with the SEBI Guidelines and whichis not a Prospectus in accordance with Section 60B of the Companies Act, 1956,which does not have complete particulars on the price at which the Equity Sharesare offered and size of the Issue. It carries the same obligations as are applicablein case of a Prospectus and will be filed with ROC atleast three days before theBid/Issue Opening Date. It will become a Prospectus after filing with ROC afterthe pricing.

RoC Registrar of Companies, NCT Of Delhi & Haryana, Paryavaran Bhawan, CGOComplex, Lodhi Road, New Delhi – 110003

SCRR Securities Contracts (Regulation) Rules, 1957, as amended from time to time.SEBI The Securities and Exchange Board of India constituted under the SEBI Act.SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time.SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on

January 27, 2000, as amended from time to time, including instructions andclarifications issued by SEBI from time to time.

Stock Exchanges BSE and NSE.Syndicate or members of theSyndicate The BRLM and the Syndicate Members.Syndicate Agreement The agreement to be entered into among the Company and the members of the

Syndicate, in relation to the collection of Bids in this Issue.Syndicate Members [•] Bank, LimitedTRS or Transaction The slip or document issued by any of the members of the Syndicate to a BidderRegistration Slip as proof of registration of the Bid.Toshi Toshi Auto Industries Pvt LimitedUIN Unique Identification NumberUnderwriters The BRLM and the Syndicate Members.Underwriting Agreement The agreement among the members of the Syndicate and the Company to be

entered into on or after the Pricing Date.

Industry Related Terms

Abbreviations Full FormACMA Automotive Components Manufactures Association of IndiaHTV Heavy Transport VehicleLCV Light Commercial VehicleMUV Multi utility VehicleOE Original EquipmentOEM Original Equipment ManufacturerRVM Rear View MirrorSIAM Society of Indian Automobile ManufacturersSUV Sports Utility Vehicle

(iv)

Abbreviation Full FormAS Accounting Standards as issued by the Institute of Chartered Accountants of IndiaCAGR Compound Annual Growth RateCDSL Central Depository Services (India) LimitedCCE Chief Commissioner of ExciseCESTAT Custom Excise and Service Tax Appellate TribunalCMVR Regulations Central Motor Vehicles RegulationsDelhi High Court High Court of Judicature at DelhiEGM Extraordinary General MeetingEPS Earnings per shareESI Employees State InsuranceFCNR Account Foreign Currency Non-Resident AccountFIPB Foreign Investment Promotion BoardFY Financial year/ Fiscal yearHUF Hindu Undivided FamilyHSIDC Haryana State Industrial Development Corporation Ltd.ICAI Institute of Chartered Accountants of IndiaJIS Japanese International StandardLac(s)/Lakh(s) One Hundred ThousandLC Letters of creditLIBOR London Interbank Offered RateN.A. Not ApplicableNAV Net Asset ValueNRE Account Non-Resident External AccountNRO Account Non-Resident Ordinary AccountNSDL National Securities Depository Limitedp.a. Per annumP/E Ratio Price/Earnings RatioPAN Permanent Account NumberPF Provident FundPLR Prime Lending RateRBI The Reserve Bank of IndiaRoNW Return on Net WorthSAE System of Automotive Engineerssq. mt. Square meterssq. ft. Square feet

(v)

PRESENTATION OF FINANCIAL AND MARKET DATAFinancial DataUnless indicated otherwise, the financial data in this Draft Red Herring Prospectus is derived from our restatedunconsolidated financial statements prepared in accordance with Indian GAAP and included in this Draft Red HerringProspectus. Unless indicated otherwise, the operational data in this Draft Red Herring Prospectus is presented onan unconsolidated basis and refers to the operations of the Company. Our fiscal year commences on April 1 andends on March 31, so all references to a particular fiscal year are to the twelve-month period ended March 31 of thatyear. In this Draft Red Herring Prospectus, any discrepancies in any table between the total and the sums of theamounts listed are due to rounding.

Currency of PresentationAll references to “Rupees” or “Re’ or “Rs.” are to Indian Rupees, the official currency of the Republic of India.

Market DataUnless stated otherwise, industry data used throughout this Draft Red Herring Prospectus has been obtained fromindustry publications. Industry publications generally state that the information contained in those publications hasbeen obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteedand their reliability cannot be assured. Although we believe industry data used in this Draft Red Herring Prospectusis reliable, it has not been verified by any independent sources.

(vi)

FORWARD-LOOKING STATEMENTSWe have included statements in this Draft Red Herring Prospectus which contain words or phrases such as “will”,“aim”, “will likely result”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”,“seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar expressions or variations of suchexpressions, that are “forward-looking statements”.

Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertaintiesassociated with our expectations with respect to, but not limited to, regulatory changes pertaining to the AutomotiveComponents and Auto Ancillary industries in India and our ability to respond to them, our ability to successfullyimplement our strategy, our growth and expansion, our ability to manage operational risks, our inability to procuremachinery or supplies at acceptable rates, technological changes, our exposure to market risks, general economicand political conditions in India and our overseas markets, which have an impact on our business activities orinvestments, the monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates,foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India andglobally, changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry.

For further discussion of factors that could cause our actual results to differ, see “Risk Factors” appearing on page [•]of this Draft Red Herring Prospectus. By their nature, certain market risk disclosures are only estimates and could bematerially different from what actually occurs in the future. As a result, actual future gains or losses could materiallydiffer from those that have been estimated. Neither our Company nor the BRLM and the Lead Manager, Directorsand Officers of the Company the members of the Syndicate, nor any of their respective affiliates have any obligationto update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect theoccurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance withSEBI requirements, our Company and the BRLM and the Lead Manager will ensure that investors in India areinformed of material developments until such time as the grant of trading permission by the Stock Exchanges for theEquity Shares allotted pursuant to the Issue.

(vii)

RISK FACTORS

An investment in equity securities involves a high degree of risk. You should carefully consider all information in thisDraft Red Herring Prospectus, including the risks and uncertainties described below, before making an investmentin our Equity Shares. Any of the following risks as well as the other risks and uncertainties discussed in this Draft RedHerring Prospectus could have a material adverse effect on our business, financial condition and results of operationsand could cause the trading price of our Equity Shares to decline, which could result in the loss of all or part of yourinvestment

Internal RisksWe share the ‘LUMAX’ brand and trademark along with Lumax Industries Limited pursuant to the scheme ofde-merger approved by Hon’ble High Court, DelhiAll our products are marketed under the brand ‘Lumax’. The brand and trademark is registered in the name of LumaxIndustries Ltd. In terms of the orders passed by Hon’ble High Court, Delhi approving the scheme of de-merger(please refer section titled Our History on page no [•] of this Draft Red Herring Prospectus for details) of filter andmirror divisions of Lumax Industries Limited into the Company, the Hon’ble High Court directed to share the ‘Lumax’brand and trade mark mutually by Lumax Industries Limited with our Company and promoters groups for theirrespective business. We are not the registered owner of the brand or the trademark and may have some proceduraldifficulties to protect it against infringement from third parties. Further, the LIL and our Company shall not be entitledto use this brand name at any time in relation to any business, which is in any manner competing with or in any waysimilar to the business that are then being carried on by any of the two companies or said promoter groups. In suchsituation our business relating to such new product which both the companies may intend to take be adverselyaffected.

We drive around 51% of our Sales from our top three customersOur main customers are Maruti Suzuki, Honda Motorcycles and Tata Motors. They accounted for almost 51% of ourtotal sales for the year ended 31st March 2005. We could be adversely affected in case supplies to any of thesecustomers are reduced for any reason. We are expanding our customer base and consequently our dependence onsuch large customers will be minimised.

The total cost of proposed expansion of the project is Rs 2491 Lacs. We are yet to place orders for plant andmachinery and other equipments forming part of expansion scheme.We have already received quotation from the proposed suppliers for all the plants and machineries and otherequipments and procurement of these plants and machineries and equipments will be as per the schedule ofimplementation as stated in this Draft Red Herring Prospectus and orders would be placed accordingly.

The funds requirements and funding plans are as per our own estimates and have not been appraised byany bank/financial institution. The deployment of fund in the expansion plan is entirely at our discretion andthe same will not be monitored by any independent agency.Our Managing Director, Executive Director and key managerial personnel have successfully implemented variousprojects in the past. Most of our plans have been implemented under the direction of our Managing Director. Wehave been continuously upgrading our manufacturing facilities and hence we do not foresee any difficulty in meetingimplementation schedule.

Time and cost OverrunsThere has been cost over run in the construction of building for the proposed expansion of Plastic & Filter Division atManesar, Haryana to the tune of Rs. 53.92 Lac from the projected cost of Rs 333.14 Lac to Rs 387.06 Lac. The costover run was due to increase in cost of building material.Our plan for capacity expansion as referred to in the section titled “Objects of the Issue” on page [•] of this Draft RedHerring Prospectus contains project costs and implementation schedules estimated by us. We intend to apply thenet proceeds of the Issue to increase the production capacity at some of our existing facilities. Our proposed capacityexpansion plans have not been appraised by any financial institution. Our expansion plans are subject to a numberof contingencies, including foreign exchange fluctuations, changes in laws and regulations, governmental action,inability to obtain machinery and other supplies at quoted or at acceptable rates, accidents, natural calamities,terrorist activities and other factors, many of which may be beyond our control.

Although we have a capability to complete the expansion plan within parameters estimated by us, we cannot assurethat the actual costs incurred, the production capacity added or time taken for implementation of these plans will notvary from our estimated parameters.

(viii)

Introduction of alternative technology or consumer habits may reduce demand for our existing productsand may adversely affect our profitability and business prospects.Our products are used by the automobile industry. Our customers may decide to seek alternative technology coupledwith the development of more alternatives, which may adversely affect our business and profitability if we are notable to respond to these changes. Our ability to anticipate changes in technology and to develop and introduce newand enhanced products successfully on a timely basis will be a significant factor in our ability to grow and to remaincompetitive. We cannot assure that we will be able to achieve the technological advances that may be necessary forus to remain competitive or that some of our products will not become obsolete. We are also subject to the risksgenerally associated with new product introductions and applications, including lack of market acceptance anddelays in product development.

Further, any substantial change in the spending habits of end users of automobiles (containing our components),business of our customers will be affected which in turn will affect the demand for our products. Any failure on ourpart to forecast and/or meet the changing demands will have an adverse effect on our business, profitability andgrowth prospects.

We have recently entered into joint venture agreement with a Magna Donnelly Corporation, Michigan, USAto form a company to manufacture mirror/ mirror components. There may be conflict of interest in the futuredue to competitive nature of the business. Further, the joint venture may otherwise not be successful.In, May 2005 we entered into a Joint Venture Agreement with Magna Donnelly Corporation, Michigan, USA to forma company to manufacture mirror/ mirror components with a proposed equity participation of 26% by Magna Donnellyand 74% by Lumax in the equity share capital of Rs. 4.5 crores. Please refer to page [•] of this Draft Red HerringProspectus for more details. The joint venture company will manufacture specialty mirrors and its components notbeing manufactured by our Company at present and as such will not compete directly with us. But we cannot assurethat in future the joint venture company will not manufacture similar products as that of our Company and directlycompete with our Company. There can be no assurance that this joint venture will be successful.

Some properties/agreements not changed in the name of the Company after demerger or mergerThere are some properties/ agreements that were entered by Lumax Industries Limited before the demerger. Theagreements were transferred to the Company as part of the demerger scheme. We are yet to renew / transfer theagreement in the name of our Company. Similarly some properties/ agreements have been transferred from Toshi &MPI to our Company upon amalgamation. We are in the process of getting these properties/ agreements renewed ortransferred in the name of the Company.

An inability to manage our growth could disrupt our business and reduce our profitability.We have experienced high growth in recent times and expect our business to grow significantly in view of our planfor modernization and capacity expansion. We expect this growth to place significant demands on us and require usto continuously evolve and improve our operational, financial and internal controls across the organization. In particular,continued expansion increases the challenges involved in:

(a) maintaining high levels of customer satisfaction;(b) recruiting, training and retaining sufficient skilled management, technical and marketing personnel;(c) adhering to quality and process execution standards that meet customer expectations;(d) preserving a uniform culture, values and work environment in operations within and outside India; and(e) developing and improving our internal administrative infrastructure, particularly our financial, operational,

communications and other internal systems.Any inability to manage our growth may have an adverse effect on our business and financial results.

Covenants with institutional lenders may restrict our operations and expansion ability, which may hurt ourbusiness and results of operations and financial condition.Certain covenants in our financing agreements require us to obtain approval from the financial institutions beforeundertaking new projects or substantial expansion of the existing facilities, making any investments, issuing newsecurities (debt or equity), making changes to our capital structure or our senior management or declaring dividendsin certain circumstances. Pursuant to the terms of working capital facilities extended by Syndicate Bank, the Companycannot make payment of dividend without their consent. Further, in respect of term loan from HSIDC, the Companycannot declare dividend beyond 6%, enter into agreements and arrangements, create any subsidiary, carry outamendment(s) in Memorandum and Articles of Association, transfer or dispose of any undertaking, increaseremuneration to directors or pay commission to directors, Promoters, merger or consolidation, change the registered

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office, issue capital, make investments, transfer or dispose of its undertaking or any of its capital fixed assets exceptin the ordinary course of business, enter into borrowing arrangements with any bank, financial institution, companyor otherwise accept deposits. All such restriction may have adverse impact on working of the Company. Certainlenders are also entitled to appoint additional nominee directors on our Board of Directors. Further as per thecondition laid down by HSIDC vide sanction letter dated 22.07.05 the Company will have to shift its Registered Officefrom Delhi to the State of Haryana. Regarding shifting of the registered office from the state of Delhi to state ofHaryana we have written to HSIDC to drop this clause from sanction letter. Although we have generally not encountereddifficulties in obtaining consent from the financial institutions for desired actions in the past, no assurance can begiven that such consent will be granted in the future.

For further details, please refer to the sections titled “Our Business-Financial Indebtedness” on page [•] of this DraftRed Herring Prospectus.

The nature of our business exposes us to product liability and warranty claims and other legal proceedings.Under our sale agreements, we provide service, structural warranties on our products. We rely on manufacturersand other suppliers for raw materials and/or other components. Because we do not have direct control over thequality of such products manufactured or supplied by such third party suppliers, we are exposed to risks relating tothe quality of our finished products. We do not have any insurance cover for warranty claims or any such liabilities.

Though no major warranty claims have been made against us in past, we cannot assure that such risks, claims andliabilities can be adequately and timely passed on to the concerned supplier. Further, we have no arrangements withthe subcontractors to pass on the risk associated with potential defects in workmanship on to the subcontractorsperforming the work. Our failure to pass on such warranty claims and liabilities may negatively affect our financialcondition, results of operations and cash flows. Further, claims of this nature could also have a negative impact oncustomer confidence in our products and our Company.

Our industry is competitive and increased competitive pressure may adversely affect our results.We face significant competition from other auto components manufacturers many of which supply goods to ourCustomers. A number of our competitors may be able to take advantage of efficiencies created by size, and havebetter financial resources or increased access to capital at lower costs. Our size as compared to some of ourcompetitors may increase our susceptibility to economic down turns and pressures on prices of products beingmanufactured/marketed by us. Our failure to compete successfully in our industry would materially affect our businessprospects.

We have recently experienced rapid growth and may not be able to sustain our growth, which may adverselyaffect our results. We are currently experiencing a period of rapid growth. We may not, however, be able to sustain our growth effectivelyor maintain a similar rate of growth in the future, and the failure to do so may have an adverse effect on our financialcondition and results of operations.

Significant increase in prices or shortage of raw materials could harm our results of operations and financialcondition.Our ability to remain competitive and maintain our market share is dependent upon our ability to source adequatesupply of the raw materials. During periods of shortages in supply of the raw materials, we may not be able to meetdelivery schedules and deliver the products as per the agreed timelines. Agreements in relation to our sales stipulatecertain penalties, which may be levied on us, in the event we fail to deliver and/or perform on time.

We do not have escalation clauses in our agreements and during periods of rising prices of the raw materials, wemay not be able to pass on price increases to our customers, which could harm our operational results and financialcondition.

In addition, our operations and results may, from time to time, be affected by circumstances beyond our control,including work stoppages, labour disputes and shortages of qualified skilled labour, lack of availability of adequateinfrastructure services and increase in transportation cost.

Changes in current customs duty regulations applying to the import of mirror glass and filter paper couldadversely affect our overall performance.The import duties on mirror glass, and filter paper have been reduced in the past. Any increase in import duty infuture will have an adverse impact on our financial condition and results of operations.

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Environmental regulation imposes additional costs and may affect the results of our operations.While we believe that our facilities are in compliance in all material respects with applicable environmental laws andregulations, additional costs and liabilities related to compliance with these laws and regulations are an inherent part ofour business. We, like other automobile component/ancillary manufactures, are subject to various central, state andlocal environmental, health and safety laws and regulations concerning issues such as damage caused by air emissions,wastewater discharges, solid and hazardous waste handling and disposal, and the investigation and remediation ofcontamination. These laws and regulations are increasingly becoming stringent and may in the future create substantialenvironmental compliance or remediation liabilities and costs. These laws can impose liability for non-compliance withhealth and safety regulations or clean up liability on generators of hazardous waste and other substances that aredisposed of either on or off-site, regardless of fault or the legality of the disposal activities. Other laws may require us toinvestigate and remediate contamination at our properties, including contamination that was caused in whole or in partby previous owners of our properties. While we intend to comply with applicable environmental legislation and regulatoryrequirements, it is possible that such compliance may prove restrictive and onerous.

In addition to potential clean up liability, we may become subject to monetary fines and penalties for violation ofapplicable laws, regulations or administrative orders. This may result in the closure or temporary suspension of ouroperations or impose adverse restrictions on our operations. We may also, in the future, become involved inproceedings with various regulatory authorities that may require us to pay fines, comply with more rigorous standardsor other requirements or incur capital and operating expenses for environmental compliance. This could have amaterial adverse effect on our results of operations.

Our business is dependent on our manufacturing facilities. The loss of or shutdown of operations at any ofour manufacturing facilities may have a material adverse effect on our business, financial condition andresults of operations.We currently conduct operations at our manufacturing facilities at Faridabad, Gurgaon, Pune and Aurangabad. Ourfacilities are subject to operational risks, such as the breakdown or failure of equipment, power supply or processes,performance below expected levels of output or efficiency, obsolescence, labour disputes, natural disasters, industrialaccidents and the need to comply with the directives of relevant government authorities. The occurrence of any ofthese risks could significantly affect our operating results. We are required to carry out planned shutdowns of ourplants for maintenance, statutory inspections and testing. We also shut down plants for capacity expansion andequipment upgrades. Although we take precautions to minimize the risk of any significant operational problems atour facilities, our business, financial condition and results of operations may be adversely affected by any disruptionof operations at our facilities, including due to any of the factors mentioned above.

The shortage or non-availability of electricity may adversely affect our manufacturing processes and havean adverse impact on our results of operations and financial condition.Our manufacturing processes require a substantial amount of electricity. In order to have an efficient and reliableelectricity supply and reduce production losses, we use the high voltage state electricity supply as primary sourceand maintain power generators as backup source. However, we have experienced some minor power interruptionsin the past and cannot assure that in the future our results of operations or financial condition will not be adverselyaffected by power interruptions.

We are dependent on third-party transportation providers for the supply of raw materials and delivery ofproducts.We typically use third-party transportation providers for the supply of most of our raw materials and for deliveries ofour products to our customers. Transportation strikes by members of various Indian truckers’ unions have had in thepast, and could in the future, an adverse effect on our receipt of supplies and our ability to deliver our products. Inaddition, transportation costs have been steadily increasing. Continuing increase in transportation costs may havean adverse effect on our business and results of operations.

Our results of operations could be adversely affected by strikes, work stoppages or increased wage demandsby our employees.As of March 31, 2005, we had 658 full-time employees, including 309 at our facilities at Faridabad, 117 in ourfacilities at Gurgaon, 141 at Pune facilities, 67 at Aurangabad facilities and 24 at corporate office in New Delhi. Thenumber of our employees is likely to increase with our proposed expansion plans.

While we consider our current labour relations at all our facilities to be good, there can be no assurance that we willnot experience future disruptions to our operations due to disputes or other problems with our work force, which mayadversely affect our business and results of operations.

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Our success depends in large part upon our senior management, directors and key personnel and ourability to attract and retain them.We are highly dependent on our senior management, our directors and our other key personnel. Our futureperformance will depend upon the continued services of these persons. Competition for senior management in ourindustry is intense, and we may not be able to retain our senior management personnel or attract and retain newsenior management personnel in the future. The loss of any of these directors or key personnel may adversely affectour business and results of operations.

Our insurance coverage may not adequately protect us against certain operational hazards and this mayhave a material adverse effect on our business.Our insurance policies consist of a comprehensive coverage for risks relating to physical loss or damage etc. Inaddition, we have obtained separate insurance coverage for personnel related risks, motor vehicle risks and loss ofmovable assets risks. For details of our insurance policies see the section titled “Our Business – Insurance” on page[•] of this Draft Red Herring Prospectus. While we believe that the insurance coverage we maintain would reasonablybe adequate to cover all normal risks associated with the operation of our business, there can be no assurance thatany claim under the insurance policies maintained by us will be honoured fully, in part or on time. To the extent thatwe suffer loss or damage that is not covered by insurance or exceeds our insurance coverage, or the insurancepolicy covering such risk is not honoured, our results of operations may be adversely affected.

Members of our Promoter group will continue to retain majority control in our Company after the Issue,which will allow them to influence the outcome of matters submitted to shareholders for approval.Upon completion of the Issue, members of our Promoter group will beneficially own approximately 50.36% of ourpost-Issue equity share capital. As a result, the Promoter group will have the ability to exercise significant influenceover all matters requiring shareholders’ approval, including the election of directors and approval of significantcorporate transactions. As a consequence of its post-issue shareholding, the Promoter group will also have theability to influence the outcome of any shareholder action or approval requiring a majority vote, except where theyare required by applicable laws to abstain from voting. Such a concentration of ownership may also have the effectof delaying, preventing or deterring a change in control.

If we are not able to renew or maintain our statutory and regulatory permits and approvals required tooperate our business it may have a material adverse effect on our business.We require certain statutory and regulatory permits and approvals to operate our business. We are yet to receive thefollowing material statutory approvals which have expired and for which renewal applications have been made:

1. For our manufacturing facilities at Aurangabad, Manesar-PD, Gurgaon-PPD, DLF under the Factories Act, 1948,

2. Consents under the Water (Prevention and Control of Pollution) Act, 1974 and the Air (Prevention and Control ofPollution) Act, 1981 for our facilities at Faridabad-PPD, Manesar-PPD, Gurgaon-PPD, DLF.

We are yet to apply for the following regulatory approvals/permission:

1. Fire NOC at our Aurangabad Mirror unit, Pune Filter unit and Pune unit-II

2. Factory licences at our Manesar Filter plant;

3. Polution NOC at Manesar Filter Plant and Pune unit-II.

There are certain licences, which are in the name of LUMAX, Toshi or MPI and have not been transferred to theCompany after scheme of demerger or merger. The application for name change has been made. For details pleaserefer to page [•] and [•] of Draft Red Herring Prospectus.

In the future, we will be required to renew such permits and approvals and obtain new permits and approvals for ourproposed operations. While we believe that we will be able to renew or obtain such permits and approvals at suchtimes as may be required, there can be no assurance that the relevant authorities will issue any of such permits orapprovals in the time-frame anticipated by us or at all. Failure by us to renew, maintain or obtain the required permitsor approvals, including those set forth above, may result in the interruption of our operations or delay or prevent ourexpansion plans and may have a material adverse effect on our business, financial condition and results of operations.For further information, please refer to the section titled “Government and Other Approvals” on page [•] of this DraftRed Herring Prospectus.

We are involved in some legal and regulatory proceedings that, if determined against us, could have anadverse impact on us.The following legal and regulatory proceedings are currently pending :

An appeal has been filed by the Company before the High Court of Punjab and Haryana against an order of theLabour Court. The appeal is against the order of the Labour Court where the Company was ordered to pay a workera claim of approximately of Rs. 2.75 lacs.

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There are four other labour cases which are pending against the Company, out of which two cases are relate toFaridabad units and the other two are related to Pune Unit. Out of these, amount involved in three cases (both thecases of the Faridabad unit and one case of the Pune unit), is Rs. 5.35 lacs and in the other case relating to the Puneunit the amount has not yet been ascertained.

For further details on the above cases, see the section titled “Outstanding Litigation and Material Developments” onpage [•] of this Draft Red Herring Prospectus.

We are involved in a number of cases relating to excise duty, customs duty, sales tax, income tax, servicetax and other statutory dues which if determined against us could have a material adverse impact on us.There is a dispute relating to excise duty pending against our Company. The disputed excise duty in these casesaggregates to approximately Rs. 16.50 Lac.

There is a dispute relating to customs duty pending against our Company. The disputed customs duty in this casesaggregates to approximately Rs. 1.00 Lac

The sales tax assessments have been pending ever since implementation of de-merger scheme. We are not sure ofliability that may arise as and when these sssessments are taken up by respective authorities. Any such demandsmay have a material adverse effect on our business, financial condition and our operations.

There are disputes relating to income tax assessments for the financial years 2002-2003 and 2003-04 pendingagainst our Company. The income tax liability in dispute aggregates to approximately Rs. 1.50 Lac.

There are two disputes relating to service tax pending against us. The claim in one case is approximately Rs. 59Thousand, and the fiancial burden of the other case is yet to be known.

All the above legal proceedings are pending at different levels of adjudication before various courts, tribunals,enquiry officers, and appellate tribunals. If any, all or some of these cases are determined against us, our results ofoperations could be adversely affected. For further details on the above cases, please see the section titled“Outstanding Litigation and Material Developments” appearing on page [•] of this Draft Red Herring Prospectus.

We have contingent liabilities under Indian Accounting Standards, which may adversely affect our financialcondition.As on March 31, 2005 the contingent liabilities appearing in our financial statements were:Bank guarantees, Counter Guarantees and Bonds amounting to Rs. 12.70 Lac given on behalf of our Company; andoutstanding letters of credit amounting to Rs. 18.70 Lac.

We had negative cash flow in the previous financial yearThe filter and mirror division of Lumax Industries Limited were demerged into our Company effective 1st April, 2002.Prior to this demerger, focus area of the Company was lighting division. After demerger, we started consolidatingourselves and in the process Toshi and MPI were amalgamated with the Company. In view of this there was negativecash flow in the first year of operation after demerger. However, the Company is now in profits for past two financialyears. For details please refer to Financial Statements and Management Discussion and Analysis on page no. [•]and [•] respectively.

Some of our group/associate companies have incurred losses in recent fiscal periods.Some of our group/associate companies have incurred losses as per their financial statements for the last threefiscal years ended March 31, 2005.

The details of these losses are set out in the table below: (Figures in Lacs)

Group or Associate Company /Partnership Firm 2003 2004 2005Lucky Pharma Private Limited (3.58) (1.27) (3.20)Lucky Tours & Travels (P) Ltd* (0.83) (11.09) (9.14)Micro Exports (Partnership Firm*) 1.01 0.00 0.00

* Disassociate Company/Firm

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We have in the last 12 months issued Equity Shares at a price which could be lower than the Issue Price.

We have made the following issue of Equity Shares in the last 12 months:

Date of Allotment/ No. of Face Issue Conside- Value Date on RemarksFully paid up Shares Value Price ration (Rs) which fully

(Rs.) (Rs.) paid-up20/04/2005 31,79,990 10/- Nil As per the 3,17,99,900 20/04/2005 Sanctioned by

Scheme of Hon’ble Delhiamalgamation High Court.

One of our associate companies, M/s. Lumax Mirrors Limited has applied to the RoC under section 560 ofthe Companies Act for removal of its name from the register of companies maintained by the RoC.M/s. Lumax Mirrors Limited was incorporated in 1991. The Company has not been carrying on any business sinceincorporation. In view of this, the directors of Lumax Mirrors Ltd. in their board meeting held on 23rd July 2005passed a resolution to make an application to the RoC to strike off of the name of the company from the register ofcompanies. The application has been made on 22nd July 2005. The RoC is yet to pass an order on the saidapplication.

External Risks

Further expansions in the auto component Industry in our segment of operation may result in excesscapacity, which may affect our financial condition.Our current expansion plan contemplates increase in the capacity of our existing mirror division, filter division andthe plastic moulding division.

The high growth rate and prospects for profitability in the mirror and filter business could lead to other companiesincreasing their production capacity in these segments. This could result in excess capacity in the market. Althoughour products have so far been able to compete in terms of quality and price, in domestic markets, no assurance canbe given that we will be able to fully utilise our increased capacity and sell our increased production on competitiveterms / terms acceptable to us or at all.

Changes in economic conditions may adversely affect our sales.We operate in auto component industry which is directly related to automobile industry. Demand for ourproducts is sensitive to changes in automobile industry capacity and output levels, cyclical changes in regional andglobal economic conditions and changes in consumer demand.Due to the above factors, there can be no assurance that sales of our products will continue to improve or bemaintained at current levels. A downturn in any of these market segments can have a significant impact on theselling prices of our products and on our results of operations.

Taxes and other levies imposed by the Government of India or other state governments, as well as otherfinancial policies and regulations, may have a material adverse effect on our business, financial conditionand results of operations.Taxes and other levies imposed by the central or state governments in India that affect our industry include customsduties, excise duties, sales tax, income tax and other taxes, duties or surcharges introduced on a permanent ortemporary basis from time to time.

The central and state tax scheme in India is extensive and subject to change from time to time. Any adversechanges in any of the taxes levied by the central or state governments may adversely affect our competitive positionand profitability. Currently we enjoy certain tax benefits, which result in a decrease in the effective tax rate comparedto the tax rates that we estimate would have been applicable if these incentives had not been available. There canbe no assurance that these tax incentives will continue in the future. The non-availability of these tax incentivescould adversely affect our financial condition and results of operations.

Several state governments in India have recently introduced a value added tax regime. The impact of the introductionof the value added tax regime on our business and operations will depend on a range of factors including the ratesapplicable and the exemptions available to our facilities. Currently, we are unable to ascertain the impact of thevalue added tax regime on our business and operations.

The Government of India has recently introduced a fringe benefit tax payable in connection with certain expendituresincurred by the Company which is likely to increase the tax liability of the Company.

We face foreign exchange risks, which may adversely affect our cash flows and results of operations.We expect to import some of the machineries for our proposed production. As cost of these machines have to bepaid for in foreign currencies, adverse changes in the foreign currency exchange rates will increase our machinery

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costs, affect our cash flow adversely and will also affect our profitability on account of an additional depreciationcharge. We will face foreign exchange risks in the future if we decide to purchase new machinery or equipment fromoutside India.

We are subject to risks arising from interest rate fluctuations, which could adversely affect our business,financial condition and results of operations.Changes in interest rates could significantly affect our financial condition and results of operations. We are exposedto interest rate risk on our working capital loans and on additional debt financing that may be periodically neededfor the capital expenditures associated with our future acquisitions or expansion plans. Upward fluctuations ininterest rates increase the cost of both existing and new debt. The interest rate that we will be able to secure in afuture debt financing will depend on market conditions at that time, and may differ from the rates on our existingdebt. This may adversely impact our results of operations, planned capital expenditures and cash flows. Althoughwe may in the future enter into hedging arrangements against interest rate risks, there can be no assurance thatthese arrangements will successfully protect us from losses due to fluctuations in interest rates.

Any further issuance of Equity Shares by us or sales of our Equity Shares by our significant shareholdersmay adversely affect the trading price of the Equity Shares.Any future issuance of our Equity Shares by us could dilute your shareholding. Any such future issuance of ourEquity Shares or sales of our Equity Shares by any significant shareholder, including our Promoters, may alsoadversely affect the trading price of our Equity Shares, and could impact our ability to raise capital through anoffering of our securities. In addition, any perception by investors that such issuances or sales might occur couldalso affect the trading price of our Equity Shares.

Terrorist attacks or war or other serious conflicts involving India or other countries could adversely affectbusiness sentiment and the financial markets and adversely affect our business.Incidents such as the terrorist attacks of September 11, 2001 in New York and Washington D.C., and other resentincidents such as in Bali, Indonesia, Madrid, Spain, London, New Delhi, India may adversely affect global equitymarkets and economic growth as well as the Indian economy and stock markets. Such acts negatively impactbusiness and economic sentiment, which could adversely affect our business and profitability.India has from time to time experienced, and continues to experience, social and civil unrest, hostilities and armedconflicts, which could also adversely affect the Indian economy, as a whole, and our business, in particular.

Notes:The net worth of our Company as on March 31 2005 was Rs. 1061.30 Lac.Public issue of 34,00,000 Equity Shares of Rs. 10 each at a price of Rs. [•] for cash aggregating upto Rs. [•] Lac.The average cost of acquisition of Equity Shares by our Promoters cannot be determined, as they have acquiredshare as per the orders of High Court Delhi in demerger from Lumax Industries Limited and merger of TOSHIand MPI in the Company.Investors may contact the Lead Manager/BRLM for any complaints, information or clarifications pertaining to theIssue. Investors are advised to see the section titled “Basis for Issue Price” on page [•] of this Draft Red HerringProspectus.The Issue is being made through a 100% Book Building Process wherein up to 50% of the Issue will be allocatedon a proportionate basis to QIBs including 5% for mutual funds exclusively. Further, at least 15% of the Issue will bemade available for allotment on a proportionate basis to Non Institutional Bidders and at least 35% of the Issue willbe available for allotment on a proportionate basis to Retail Individual Bidders, subject to valid Bids being receivedat or above the Issue PriceThe name of our Company was changed from Lumax Air Cleaners Limited to Lumax Automotives SystemsLimited on 10 November 2003 pursuant to demerger of mirror and filter division of Lumax Insustries Limitedinto our Company effective 1st April 2002. To further broad base its production capacities; Toshi & MPI wasmerged with our company with effect from 1st April 2004. Except as disclosed in section titled “Capital Structure– Notes to the Capital Structure” appearing on page [•] of this Draft Red Herring Prospectus, our directors, ourPromoters have not purchased or sold any securities of the Company during a period of six months preceding thedate of the filing of the Draft Red Herring Prospectus.Refer to Annexure III (B) of the section titled “Financial Statements” on page [•] of this Draft Red Herring Prospectus forthe related party transactions, related companies and individuals.Investors should note that in case of oversubscription in the Issue, Allotment will be made on a proportionate basis toRetail Individual Bidders and Non-Institutional Bidders. For details please refer to the section titled “Basis of Allocation”appearing on page [•] of this Draft Red Herring Prospectus. Investors may contact the BRLMs for any clarification orinformation that they may require in connection with this Issue.

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1

SUMMARY

This is only a summary and does not contain all information that you should consider before investing in our EquityShares. You should read the entire Red Herring Prospectus, including the information on “Risk Factors” and ourfinancial statements and related notes appearing elsewhere in this Red Herring Prospectus, before deciding toinvest in our Equity Shares.

Overview of the Auto Component IndustryAuto component industry caters to growing automobile industry by supplying it with vital components as OE fitmentsneeded for manufacture of Automobile. Over past few years the automobile industry has seen robust growth and intandem according to recent reports by ACMA, SIAM. The Indian auto component industry, has witnessed consistentgrowth over the years. If current trends are any indication, the auto-component industry is poised for a period ofsustained high growth fuelled by a robust domestic automotive market and by rapidly expanding global outsourcingbusiness. The year 2004-2005 ended with an overall growth of more than 25% and with an export growth of +30%in the auto-component sector. According to the “Vision 2015” study recently conducted by Mckinsey & Co, the Indianpassenger car market is poised to touch the 2 million mark by 2010 and 3 million by 2015, leading to a domesticmarket of US $ 18-20 billion for auto-components in the next 10 years. The other segments of automobile industryare also witnessing similar trend. Easy availability of raw material, cheap labour and technology upgradation hasresulted in outsourcing of auto components by Global Auto Manufacturers. Automobile and auto component industryseems ready to establish India as the global manufacturing center. The auto component industry production (in US$ Million) has risen from 3278 million in 1996 to 8700 million in 2005 which shows a clear increasing trend over theyears. This, combined with the exports possibility of another US $ 20-25 billion, the auto-component industry has thepotential of achieving a total size of US $ 40-45 billion by 2015. The industry has exported goods worth US $ 330million in year 1997-98 which estimated to go up to US $ 1400 million in the year 2004-2005.

Capacity expansion in industry is at a high and most of the companies are actively engaged in enhancing capacitiesmaking further investments and even expanding their footprints abroad. The investment in auto component industryhas risen from US $ 1813 million to estimated US $ 3750 million in year 2004-05.

Overview of our BusinessThe Company plans to address the growing opportunities in the field of auto component manufacturing with referenceto its main products like rear view mirrors, filters and plastic moulding parts. LUMAX is a well-known brand in India.We are leading manufacturer and supplier of a wide variety of automotive components for various auto applications.Lumax has established itself a reputation and a brand value which is unparalleled till date. During this period markedby major technological innovations & up gradations, Lumax has acquired deep expertise and know-how to manufactureworld-class auto components. Our main products are automotive rear vision systems, filteration systems, blowmoulding & injection moulding parts and sheet metal components. Lumax is the largest tier-I OEM supplier of theseproducts to major automobile manufacturers in India.We have nine state-of-the-art manufacturing plants located all over India for manufacturing of world-class automotiveproducts. With this strong infrastructure and a team of dedicated professionals working with us, we are in a positionto produce both quality as well as quantity of products.We are strongly committed to quality as well as customer satisfaction by providing finest products and services. Thisis well evident with our ISO/TS: 16949, QS: 9000 and ISO: 9000 accreditations for our various manufacturinglocations. In addition to this, many customers have honoured us with appreciation certificates & awards. We haveclearly laid down quality policy and objectives, which are embedded, deeply into our entire workforce and to guidethem towards ensuring customer satisfaction.Our Company’s philosophy is of continuous modernization and up gradation of skills, processes and machineries.With our sizeable production capacity, advantage of low manufacturing cost and in-house tool making capabilities,we are in a position to provide good quality products at very competitive prices.Since the year of its establishment, Lumax has retained its position of a market leader through continual improvement.Lumax’s commitment to customer satisfaction in terms of quality, cost, delivery, service and support is also wellreflected in the voice of its satisfied customers. LUMAX’s product range caters to passenger cars, utility vehicles,light & heavy commercial vehicles, tractors & farm equipments, earth moving equipments and two & three wheelers.Lumax can boast of the widest customer base in India comprising more than 75 locations where we are supplyingour products from our different manufacturing units. This figure in itself explains that we have presence in almostevery type of vehicle running on the Indian roads. Our customers list features some of the most prestigious andprominent names world wide such as: General Motors, Mitsubishi, Maruti-Suzuki, Honda, Hyundai, Tata Motors,Bajaj, M&M, Eicher, Yamaha and many more.

2

THE ISSUE

Equity Shares offered by the Company of which 34,00,000 Equity SharesQualified Institutional Buyers Portion (1) of which Not more than 17,00,000 Equity SharesMutual Funds 85,000 Equity SharesBalance for QIBs 16,15,000 Equity SharesNon-institutional portion 5,10,000 Equity SharesRetail Portion 11,90,000 Equity SharesEquity Shares outstanding prior to the Issue 74,04,106 Equity SharesEquity Shares outstanding post the Issue 108,04,106 Equity SharesObjects of the Issue Please see the section titled “ Objects of the Issue” on page

[•] of this Red Herring Prospectus.

(1) In accordance with the recent amendments to the SEBI Guidelines, allocation to QIBs is proportionate as per theterms of this Red Herring Prospectus. 5% of the QIB Portion shall be available for allocation to mutual funds regis-tered with SEBI. Mutual Funds participating in the 5% share of the QIB Portion will also be eligible for allocation in theremaining QIB Portion.

Note: Under- subscription if any, in any of the categories, would be allowed to be met with the spill over from any ofthe other categories, at the discretion of our Company, in consultation with the BRLM and the Lead Manager.

3

SUMMARY FINANCIAL AND OPERATING INFORMATION

The following summary financial and operating information is derived from our restated financial statements as ofMarch 31, 2001, 2002, 2003, 2004 and 2005 and the six-month period ended September 30, 2005, as describedin the Auditors Report in the section titled “Financial Statements” appearing on page [•] of this Red Herring ProspectusThese financial statements have been prepared in accordance with Indian GAAP, the Companies Act and havebeen restated as required under the SEBI Guidelines.

The summary financial and operating information presented below should be read in conjunction with the financialstatements, the notes thereto included in the sections titled “Financial Statements” and “Management’s Discussionand Analysis of Financial Condition and Results of Operations” appearing on page [•] and [•] , respectively, of thisRed Herring Prospectus.

Summary of Restated Profit and Loss Account

STATEMENT OF PROFITS AND LOSSES ACCOUNT Rs. in Lacs

PARTICULARS 30th Sept., 31st March 31st March 31st March 31st March 31st March2005 2005 2004 2003 2002 2001

INCOMESales (Including Excise)Of Products Manufactured bythe Company 4,996.33 9,524.45 5,008.62 4,427.79 - -Of Products Traded by the Company - - - - - -Increase/ (decrease) in stock 162.54 15.90 64.40 18.89 - -Other Income 3.65 37.79 7.64 3.89 - -TOTAL 5,162.52 9,578.14 5,080.66 4,450.57 - -EXPENDITURE - -Material Consumed 2,544.71 4,762.74 2,583.19 2,261.92 - -Manufacturing & Operating expenses 946.39 1,752.46 1,062.51 978.08 - -Personnel Expenses 246.85 480.84 217.98 272.96 - -Other Operating Expenses 259.55 452.38 311.87 291.10 0.05 0.02Excise Duty (on Sales) 707.08 1,365.19 733.07 606.17 - -Misc & deferred expenditure written off 4.15 7.57 2.69 2.55 - -TOTAL 4,708.73 8,821.18 4,911.31 4,412.78 0.05 0.02Profit before Depreciation,Interest & Tax 453.79 756.96 169.35 37.79 (0.05) (0.02)Depreciation 177.73 332.46 96.81 71.94 - -Profit before Interest & Tax 276.06 424.50 72.54 (34.15) (0.05) (0.02)Interest & Finance charges 117.35 207.66 63.54 77.25 - -Profit/ (Loss) on sales of Fixed Assets (0.15) 1.77 (1.07) (3.94) - -Net Profit before Tax 158.56 218.61 7.93 (115.34) (0.05) (0.02)Income TaxCurrent (As Per MAT) 13.50 23.00 0.97 - - -Fringe Benefit Tax 3.50 - - - - -Deferred Tax Liability/ (Assets) 54.91 (14.15) 7.67 (45.95) - -Net Profit after Tax 86.65 209.76 (0.71) (69.39) (0.05) (0.02)Proposed Dividend & DepreciationWritten backPrior period item (1.58) - - (0.05) - -Net Profit after tax after adjustingprior period item 85.07 209.76 (0.71) (69.44) (0.05) (0.02)

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REPRESENTED BYShare Capital 740.41 740.41 422.41 422.41 0.02 0.02Total Reserves and Surplus 811.96 738.38 212.63 222.88 - -Less: Revaluation Reserve 384.02 385.70 - - - -Less: Profit and Loss A/c (Debit Bal) - - 57.27 66.80 0.07 0.02Net Reserve and Surplus 427.94 352.68 155.36 156.08 (0.07) (0.02)Miscellaneous Expenditure 38.56 31.77 9.29 8.33 0.11 0.11NET WORTH 1,129.79 1,061.32 568.48 570.16 (0.16) (0.11)

SIGNIFICANT ACCOUNTING RATIOS

PARTICULARS 30th Sept. 31st March 31st March 31st March 31st March 31st March2005 2005 2004 2003 2002 2001

EPS (Rs) 1.16 2.83 (0.02) (1.64) (20.00) (8.00)Return of Net Worth 7.53% 19.76 % (0.12%) (12.16%) (31.25%) (18.18%)Net Asset Value Per Share (Rs) 15.26 14.33 13.46 13.49 (64.00) (44.00)

PARTICULARS 30th Sept., 31st March 31st March 31st March 31st March 31st March2005 2005 2004 2003 2002 2001

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GENERAL INFORMATION

Lumax Automotive Systems Limited(Formerly Lumax Air Cleaners Private Limited)

(Incorporated on 31st March 1999 as a private limited company under the Companies Act under the name Lumax AirCleaners Private Limited. Converted into a public company and the name changed to Lumax Air Cleaners Limitedon 22nd August 2000 vide special resolution dated 22nd June, 2000 passed under section 31/21 read with section 44of the Companies Act. Subsequently, the name was changed to Lumax Automotive Systems Limited and a freshCertificate of Incorporation consequent to change of name was received on 10th November, 2003)

Registered Office:B – 86, Mayapuri Industrial Area, Phase-I, New Delhi-110064.Tel.: 91 11 28117937, 28111777, 28115709, 28116990. Fax: 91 11 28116455E-mail: [email protected]: www.lumaxauto.comRegistered with Registrar of Companies, B Block Paryavaran Bhawan, CGO Complex,Lodhi Road, New Delhi –110003Registration No. 55-99103 CIN NO. U72900DL 1999PLC99103

Board of Directors:The Company is currently managed by Board of Directors comprising 6 directors. Mr. U.K. Jain is the Chairman andManaging Director. The day-to-day affairs of the Company are being managed by him along with Mr. Nitin Jain,Executive Director. Our Board of Directors comprises the following:

Name DesignationMr. U.K.Jain Chairman and Managing DirectorMr. Nitin Jain Executive DirectorMrs. Kamlesh Jain Non Executive DirectorMr. Virender Ganda Independent Non Executive DirectorMr. Vinay Panchmiya Independent Non Executive DirectorMr. Jagdeep Kapoor Independent Non Executive Director

For further details of our Chairman and Managing Director and Directors, see “ Our Management” on page [•] of thisDraft Red Herring Prospectus.

COMPANY SECRETARY AND COMPLIANCE OFFICERMs. Monika GuptaCompany SecretaryLumax Automotive Systems LimitedB – 86, Mayapuri Industrial Area,Phase – I, New Delhi – 110064.Tel: 91 11 41031267, 28111777Fax: 91 11 28116455E-mail: [email protected]

Investors can contact the Compliance Officer in case of any pre-offer or post-issue related problems suchas non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary account, refundorders etc.

Book Building Lead ManagerMicrosec Capital LtdSEBI Regn.No INM 000010791Azimganj House, 2nd Floor7, Camac Street,Kolkata 700 017Ph: 91-33-2282 9330Fax: 91-33-2282 9335E-mail: [email protected]: www.microsec.co.inContact Person: Mr. Kamlesh Agarwal

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Lead ManagerChartered Capital And Investment LimitedSEBI Regn.No INM 00000401813, Community Centre,East of Kailash,New Delhi- 110 001Phones: 91–11-26218274,26472557Fax: 91 11 26219491E-Mail: [email protected]: charteredcapital.netContact Person: Mr. Sanjay Jain

Syndicate Members[•]

Legal Advisors To The IssueJ. Sagar Associates84 E, C-6 lane (off Central Avenue)Sainik FarmsNew Delhi-110062Phones: 91–11-29552714-16Fax: 91 11 29552717E-Mail: [email protected] Person : Mr. Lalit Kumar

REGISTRAR TO THE ISSUEIntime Spectrum Registry LtdC-13, Pannalal Silk Mills CompoundL B S Marg, Bhandup (West)Mumbai- 400 078Tel: +91-22-5555 5454Fax: +91-22-5555 5353Website: www.intimespectrum.comE-Mail: [email protected] Person : Mr. Vishwas Attawar

Bankers to the Issue and Escrow Collection Agent[•]

AUDITORSR. Jain & Sanjay AssociatesChartered Accountants1378/21, (1st Floor) Naiwala,Karol Bagh, New Delhi – 110005.Tel: 91 11 25733348, 25749037.Fax: 91 11 25749037

Bankers to the CompanySyndicate Bank7, Sethi Bhawan,East Patel Nagar,New Delhi – 110008.Tel: 91 11 25711266, 25727717Fax: 91 11 25727717

BROKERS TO THE ISSUEAll members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue.

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STATEMENT OF INTER-SE ALLOCATION OF RESPONSIBILITIES AMONGST BRLM AND LEAD MANAGERThe responsibilities and co-ordination for various activities in the Issue have been distributed amongst the BRLMand Lead Manager as under:

Particulars Responsibility Coordinator

1

2

3

4

5

6

7

8

Capital structuring with the relative components and formalitiessuch as type of instruments etc.

Due diligence of our Company’s operations/ management/business plans/ legal etc. Drafting and design of the Draft RedHerring Prospectus and of statutory advertisement includingmemorandum containing salient features of the Prospectus. TheBRLM shall ensure compliance with stipulated requirements andcompletion of prescribed formalities with the Stock Exchanges,RoC and SEBI including finalization of Prospectus and RoCfiling of the same.

Drafting and approval of all publicity material other than statutoryadvertisement as mentioned in (2) above including corporateadvertisement, brochure, road show presentations, FAQs,corporate films etc.

Appointment of other intermediaries viz. Registrar, Printers,Advertising Agency and Bankers to the Issue.

Institutional Marketing of the Issue, which will cover, inter alia,Finalize the list and division of investors for one to one meetings;and Finalize road show schedule and investor meetingschedules

Non-Institutional and Retail Marketing of the Issue, which willcover, inter alia, Formulating marketing strategies, preparationof publicity budget; Finalise Media & PR strategy; Finalisecentres for holding conferences for brokers etc.; Finalisecollection centres; and Follow-up on distribution of publicity andissue material including form, prospectus and deciding on thequantum of the Issue material.

Deciding pricing and institutional allocation in consultation withthe Company.

The post bidding activities including management of escrowaccounts, coordinate non-institutional allocation, intimation ofallocation and dispatch of refunds to Bidders etc. The post issueactivities will involve essential follow up steps, which includethe finalisation of listing of instruments and dispatch of certificatesand demat delivery of shares, with the various agenciesconnected with the work such as the Registrar to the Issue andBankers to the Issue and the bank handling refund business.The merchant banker shall be responsible for ensuring that theseagencies fulfill their functions and enable it to discharge thisresponsibility through suitable agreements with the Company.

CCIL/MCL CCIL

CCIL/MCL CCIL

CCIL/MCL CCIL

CCIL/MCL CCIL

CCIL/MCL MCL

CCIL/MCL MCL

CCIL/MCL MCL

CCIL/MCL CCIL

The selection of various agencies like the Registrar to the Issue, Bankers to the Issue, Escrow Collection Bank(s),Syndicate Members, Brokers, Advertising agencies, Public Relations agencies etc. will be finalised by the Companyin consultation with the BRLM & Lead Manager.

TrusteesThis being an issue of Equity Shares, appointment of Trustees is not required.

Credit RatingThis being an issue of Equity Shares, credit rating is not required.

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Monitoring AgencyNo agency has been appointed to monitor the utilization of funds.

Book Building ProcessBook Building refers to the process of collection of bids from investors on the basis of the Red Herring Prospectus,which is based on the price band, with the issue price being finalized after the Bid/ Issue Closing Date. The principalparties involved in the Book Building Process are:The Company; Book Running Lead Manager; Syndicate Members who are intermediaries registered with SEBI orregistered as brokers with BSE/NSE and eligible to act as underwriters. Syndicate Members are appointed by theBRLM; and Registrar to the Issue.SEBI through its guidelines has permitted an issue of securities to the public through 100% Book Building Process,wherein: (i) upto 50% of the Issue shall be allocated on a proportionate basis to QIBs, which includes reservationamounting to 5% for Mutual Fund (ii) at least 15% of the Issue shall be available for allocation on a proportionatebasis to the Non-Institutional Bidders and (iii) at least 35% of the Issue shall be available for allocation on a propor-tionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price.QIBs are not allowed to withdraw their Bid(s) after the Bid Closing Date/Issue Closing Date. For further detailsplease refer to the section titled “Terms of the Issue” appearing on page [•] of this Prospectus.Our Company shall comply with guidelines issued by SEBI for this Issue.

Illustration of Book Building and Price Discovery Process (Investors may note that this illustration is solely forthe purpose of easy understanding and is not specific to the Issue).

Bidders can bid at any price within the price band. For instance, assuming a price band of Rs. 40 to Rs. 48 pershare, issue size of 6,000 equity shares and receipt of nine bids from bidders details of which are shown in the tablebelow. A graphical representation of the consolidated demand and price would be made available at the website ofthe BSE (www.bseindia.com) and NSE (www.nseindia.com). The illustrative book as shown below, shows the de-mand for the shares of the company at various prices and is collated from bids from various investors.

Number of equity for Bid Price (Rs.) Cumulative equity Shares bid Subscription shares bid500 48 500 8.33%700 47 1,200 20.00%1,000 46 2,200 36.67%400 45 2,600 43.33%500 44 3,100 51.67%200 43 3,300 55.00%2,800 42 6,100 101.67%800 41 6,900 115.00%1,200 40 8,100 135.00%

The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issuethe desired quantum of shares is the price at which the book cuts off i.e. Rs. 42 in the above example. The issuer,in consultation with the BRLM will finalise the issue price at or below such cut off price i.e. at or below Rs. 42. Allbids at or above this issue price and cut-off bids are valid bids and are considered for allocation in respectivecategory.

The process of Book Building under the SEBI Guidelines is relatively new and investors are advised tomake their own judgment about investment through this process prior to making a Bid or Application in theIssue.

Steps to be taken for bidding:Check eligibility for bidding (see “Issue Procedure – Who Can Bid” on page [•] of the Red Herring Prospectus);

Ensure that the Bidder has a demat account and demat details are correctly mentioned in Bid cum Application Form;If bid is for Rs. 50,000 or more, ensure that you have mentioned your PAN and attached copy of your PAN to the Bidcum Application Form (see section titled “Issue Procedure”-PAN or GIR Number on Page [•] of this Red HerringProspectus.

Ensure that the Bid cum Application Form is duly completed as per instructions given in the Red Herring Prospectusand in the Bid cum Application Form.

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Withdrawal of the IssueOur Company, in consultation with the BRLM and the Lead Manager, reserves the right not to proceed with theIssue at anytime after the Bid Opening Date/ Issue Opening Date but before Allotment, without assigning anyreason whatsoever.

The Company reserves the right to revise the Price Band during the Bidding Period in accordance with SEBIGuidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject tocompliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extentof 20% of the floor of the Price Band advertised at least one day prior to the Bid Opening Date/Issue Opening Date.

Underwriting AgreementAfter the determination of the Issue Price and allocation of our Equity Shares but prior to filing of the Prospectuswith RoC, our Company will enter into an Underwriting Agreement with the Underwriters for the Equity Sharesproposed to be offered through this Issue. It is proposed that pursuant to the terms of the Underwriting Agreement,the BRLM shall be responsible for bringing in the amount devolved in the event that the Syndicate Members do notfulfill their underwriting obligations. Pursuant to the terms of the Underwriting Agreement, the obligations of theUnderwriters are subject to certain conditions to closing, as specified therein.

The Underwriters have indicated their intention to underwrite the following number of Equity Shares:

Address of the Underwriters Indicative Number Amount Underwritten Nameof Equity Shares and to be Underwritten

(Rs. in million)MICROSEC CAPITAL LTDAzimganj House, 2nd Floor7, Camac Street,Kolkata 700 017 [•] [•]

The above mentioned amount is indicative and this would be finalized after determination of Issue Price and actualallocation of the Equity Shares. The Underwriting Agreement is dated [•].

In the opinion of the Board of Directors (based on a certificate dated [•] given to them by BRLM and the SyndicateMembers), the resources of the Underwriters are sufficient to enable them to discharge their respective underwrit-ing obligations in full. All the above- mentioned Underwriters are registered with SEBI under Section 12(1) of theSEBI Act or registered as brokers with the stock exchanges. The above Underwriting Agreement has been ac-cepted by the Board of Directors and our Company has issued letters of acceptance to the Underwriters.

Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments. Notwith-standing the above table, the Underwriters shall be severally responsible for ensuring payment with respect to theEquity Shares allocated to investors procured by them. In the event of any default, the respective Underwriter, inaddition to other obligations to be defined in the Underwriting Agreement, will also be required to procure / sub-scribe to the extent of the defaulted amount. Allocation to QIBs is proportionate as per the terms of the Red HerringProspectus. For further details about allotment please refer to “Issue Procedure” on page [•] of this Red HerringProspectus.

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CAPITAL STRUCTURE OF THE COMPANY

The share capital of Company as on the date of filing this Red Herring Prospectus with SEBI (before and after theIssue) is set forth below:

(Rs. in Lacs)

Particulars Nominal Value Aggregate ValueA. AUTHORISED CAPITAL

12,000,000 Equity Shares of Rs 10/-each 1,200.00 -B. ISSUED, SUBSCRIBED AND PAID UP

7,404,106 Equity Shares of Rs 10/- each 740.41C. PRESENT ISSUE TO THE PUBLIC IN TERMS OF THIS

RED HERRING PROSPECTUS*3,400,000 Equity Shares of Rs 10/- each 340.00 [•]

D. EQUITY CAPITAL AFTER THE ISSUE10,804,106 Equity Shares of Rs 10/- each 1,080.41 [•]

E. SHARE PREMIUM ACCOUNTBefore the Issue — NilAfter the Issue — [•]

*The Issue in terms of this Red Herring Prospectus has been authorized pursuant to a resolution passed at theAnnual General Meeting of the shareholders of the Company held on August 1, 2005.

NOTES FORMING PART OF THE CAPITAL STRUCTURE:1. Details of the increase in Authorised share capitalThe following is the increase in the share capital of the Company, which has taken place during the tenure of theCompany:

Sl. No. Particulars of Increase Date of the resolutionbeing passed

1 Rs.1,00,000/- divided into 10,000 Equity Shares of Rs.10/- each 31-Mar-992 Rs.6,00,000/- divided into 60,000 Equity Shares of Rs.10/- each 9-Dec-023 Rs.6,00,00,000/- divided into 60,00,000 Equity Shares of Rs.10/- each 14-Oct-034 Rs.8,00,00,000/- divided into 80,00,000 Equity Shares of Rs.10/- each 27-Nov-045 Rs.12,00,00,000/- divided into 1,20,00,000 Equity Shares of Rs.10/- each 1-Aug-05

2. The existing share capital of the Company has been subscribed and allotted as under:

Date of No. of Face Issue Conside- Cumulative Nominal RemarksAllotment/ equity Value Price ration Total Value infully paid up shares (Rs) (Rs) Shares Rs31-Mar-99 210 10 Cash 210 2,100 Subscription at the time of

Incorporation of the Company25-May-00 40 10 10 Cash 250 400 Expansion of Capital10-Dec-02 50,000 10 10 Cash 50,250 500,000 Expansion of Capital19-Nov-03 4,173,866 10 - * As per the 4,224,116 41,738,660 Sanctioned by Hon’ble

scheme of Delhi High Courtarrangement

20-Apr-05 3,179,990 10 - ** As per the 7,404,106 31,799,900 Sanctioned by Hon’blescheme of Delhi High Courtamalgamation

Total 7,404,106 10 - 74,041,060

* Issued on the de-merger of mirror and filter division of Lumax Industries Ltd. into the Company in the ratio of 1:2 (1Equity Share of Rs.10/- of the Company issued for 2 equity shares of Lumax Industries Ltd) as per scheme ofarrangement approved by the Hon’ble High Court of Delhi vide its order dated 15th September 2003.** Issued on the amalgamation of Toshi and MPI with the Company in ratio of 1:1 and 10:1 respectively as per thescheme of amalgamation approved by the Hon’ble High Court of Delhi vide its order dated 23rd February 2005.3. Promoter Contribution and Lock inThe Promoters will not participate in the Issue. Pursuant to the SEBI Guidelines, an aggregate of 20% of the post-Issue equity share capital of the Company shall be locked up by our Promoters for a period of three years from the

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date of Allotment in the Issue. The Equity Shares, which are being locked-in, are not ineligible for computation ofPromoter’s contribution under Clause 4.6 of the SEBI Guidelines.

Promoters’ contribution and lock-in-period in respect of Promoters:

Sl Date of Consideration No. of Face Issue % of Lock Inno. allotment/ Shares Value Price/ post Period

purchase/ Transfer issueTransfer Price capital

U.K.Jain1 25-May-00 Cash 10 10 10 0.00% 3 years

10-Dec-02 Cash 10,000 10 10 0.09% 3 years19-Nov-03 * As per the scheme of arrangement 1,296,284 10 - 12.00% 3 years20-Apr-05 ** As per the scheme of amalgamation 102,800 10 - 0.95% 3 years

Sub-Total 1,409,094 13.04%2 Nitin Jain

16-Jan-03 Cash 100 10 10 0.00% 3 years19-Nov-03 * As per the scheme of arrangement 277,679 10 - 2.57% 3 years20-Apr-05 ** As per the scheme of amalgamation 81,920 10 - 0.76% 3 years

Sub-Total 359,699 3.33%3 Kamlesh Jain

16-Jan-03 Cash 100 10 10 0.00% 3 years19-Nov-03 * As per the scheme of arrangement 262,878 10 - 2.43% 3 years20-Apr-05 ** As per the scheme of amalgamation 3,530 10 - 0.03% 3 years

Sub-Total 266,508 2.47%4 Milan Jain

16-Jan-03 Cash 10 10 10 0.00% 3 years19-Nov-03 * As per the scheme of arrangement 60,230 10 - 0.56% 3 years19-Nov-03 * As per the scheme of arrangement 144,005 10 - 1.33% -20-Apr-05 ** As per the scheme of amalgamation 65,280 10 - 0.60% 3 years

Sub-Total 269,525 2.49%Grand Total 2,304,826

# 21.33%

* Issued on the de-merger of mirror and filter division of Lumax Industries Ltd. into the Company in the ratio of 1:2(1 Equity Share of Rs.10/- of the Company issued for 2 equity shares of Lumax Industries Ltd) as per scheme ofarrangement approved by the Hon’ble High Court of Delhi vide its order dated 15th September 2003.** Issued on the amalgamation of Toshi and MPI with the Company in ratio of 1:1 and 10:1 respectively as per thescheme of amalgamation approved by the Hon’ble High Court of Delhi vide its order dated 23rd February 2005.#Of the 2,304,826 Equity Shares held by the Promoters, 845,000 Equity Shares are already subject to lock-in for aperiod of three years from 24th August 2004 to 23rd August 2007 and 2,50,000 equity shares are subjcetd to lock infrom 9th August 2005 to 14th August 2008 consequrent to Scheme of Arrangement and Scheme of Amalgamationrespectively as per the listing requirement of stock exchanges. As per the requirements of the SEBI Guidelines,these 10,95,000 Equity Shares will continue to be locked-in for a period of three years from the date of Allotmentunder the present Issue.The locked-in Equity Shares held by the Promoters can be pledged only with banks or financial institutions ascollateral security for loans granted by such banks or financial institutions, provided the pledge of shares is one ofthe terms of sanction of loan.Further, under Clause 4.16.1(b) of the SEBI Guidelines, the Equity Shares held by the Promoters may be transferredto and among the Promoter group or to a new promoter or persons in control of our Company subject to continuationof the lock-in in the hands of the transferees for the remaining period and compliance with SEBI Takeover Regula-tions, as applicable.

Under Clause 4.16.1(a) of the SEBI Guidelines, the Equity Shares held by persons other than the Promoters prior tothe Issue may be transferred to any other person holding the Equity Shares which are locked-in as per Clause 4.14of the SEBI Guidelines, subject to continuation of the lock-in in the hands of the transferees for the remaining periodand compliance with SEBI Takeover Regulations, as applicable.

In addition, the Equity Shares subject to lock-in will be transferable subject to compliance with the SEBI Guidelines,as amended from time to time.

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Other RestrictionsOur Company has agreed with the BRLMs that for a period of 180 days commencing from the date of listing of theEquity Shares allotted pursuant to the Issue, our Company shall not, and shall not announce any intention to, withoutthe prior written consent of the BRLMs, directly or indirectly, (1) issue, offer for sale, sell, pledge or otherwise disposeof (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by anyperson at any time in the future of) any equity or equity-linked securities of the Company or (2) enter into any swapor other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks ofownership of such securities, whether any such transaction described in (1) and (2) herein is to be settled by deliveryof any securities of the Company, in cash or otherwise. However, the restriction contained in the preceding sentenceshall not apply to the pledge of securities of the Company for availing of financial facilities from banks/ financialinstitutions as may be permitted by relevant SEBI guidelines.

4. The details of the aggregate shareholding of the Promoter group (Promoter group shares not to be lockedin for a period of 3 years)

Sl Date of Consideration No. of Face Issue % of Lock Inno. allotment/ Shares Value Price/ post Period

purchase/ Transfer issueTransfer Price capital

1 S.C.Jain25-May-00 Cash 10 10 10 0.00%10-Dec-02 Cash 40,000 10 10 0.37%20-Apr-05 ** As per the scheme of amalgamation 2,134,600 10 - 19.75% 5,34,600

EquityShares for

3 yearSub-total 2,174,610

2 Tushina Jain19-Nov-03 * As per the scheme of arrangement 24,427 10 - 0.23%20-Apr-05 ** As per the scheme of amalgamation 23,520 0.22% All Equity

Shares for3 year

Sub-total 47,9473 Anju Jain

20-Apr-05 ** As per the scheme of amalgamation 61,800 10 - 0.56%Sub-total 61,800

4 S.C. Jain & Sons (HUF)20-Apr-05 ** As per the scheme of amalgamation 282,640 10 - 2.62%Sub-total 282,640

5 U.K. Jain & Sons (HUF)20-Apr-05 ** As per the scheme of amalgamation 251,391 10 - 2.33%Sub-total 251,391

6 Deepak Auto Pvt Limited20-Apr-05 ** As per the scheme of amalgamation 315,000 10 - 2.92%Sub-total 315,000

7 Manju Goyal20-Apr-05 ** As per the scheme of amalgamation 2,800 10 - 0.03%Sub-Total 2,800Total 3,136,188 29.03

* Issued on the de-merger of mirror and filter division of Lumax Industries Ltd. into the Company in the ratio of 1:2 (1Equity Share of Rs.10/- of the Company issued for 2 equity shares of Lumax Industries Ltd) as per scheme ofarrangement approved by the Hon’ble High Court of Delhi vide its order dated 15th September 2003.

** Issued on the amalgamation of Toshi and MPI with the Company in ratio of 1:1 and 10:1 respectively as per thescheme of amalgamation approved by the Hon’ble High Court of Delhi vide its order dated 23rd February 2005.

Note:1. 5,34,600 Equity Shares held by Mr. S.C.Jain and 23,520 held by Ms. Tushina Jain are already subject to lock-in

for a period of three years from 9th August 2005 to 14th August 2008 consequrent to Scheme of Amalgamation asper the listing requirement of Stock Exchanges.

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2. The scheme of demerger approved by the Hon’ble High Court of Delhi provided that lighting division (retained byLIL, the demerged entity) and the mirror and filter divisions (transferred to the Company) require managementand strategic focus for future sustainability and profitability. In order to achieve this, it was provided that it wasnecessary and expedient to have separate and distinct management control of LIL and the Company. It wasfurther provided that such controlling interest in LIL and the Company may be obtained through exchange ofshares in these two companies in the manner provided in the scheme. As ordered in the said scheme, theexchange of shares in these two companies has already been done and consequently, LIL and the Companyhave separate and distinct management control. In view of this, LIL, D.K. Jain, M.K. Jain does not constitute a partof the Promoters’ group, Howeever, for information we would like to mention that Mr. M.K. Jain holds 3660 Equityshares of our company .

5. Shareholding Patterna) The Pre-issue and Post-issue shareholding pattern of the Promoters and Promoter group is as under:

Particulars Pre-Issue Post-IssueNo. 0f shares % No. Of %

@ Rs. 10/- each Holding shares @ HoldingRs. 10/- each

A Promoters 2,304,826 31.13% 2,304,826 21.33%B Immediate Relatives of the Promoters 2,287,157 30.89% 2,287,157 21.16%C Companies in which 10% or more of the

Share Capital is held by the Promoters/animmediate relative of the Promoter/a firm orHUF in which the Promoter or any one ormore of his immediate relatives is a member 315,000 4.25% 315,000 2.92%

D Company in which the Company mentionedin C holds 10% or more of the Share Capital - 0.00% - 0.00%

E Any HUF or Firm in which the aggregate shareof the promoter and his immediate relatives isequal or more than 10% of the total 534,031 7.21% 534,031 4.94%Sub-Total 5,441,014 73.49% 5,441,014 50.36%

As on the date of this Draft Red Herring Prospectus, there are no outstanding warrants, options or right to convertdebentures, loans or other financial instruments into our Equity Shares.

b) The pre-Issue and post-Issue shareholding pattern of our Company is as under:

Category Pre-Issue Post-IssueNo. 0f shares % No. Of %

@ Rs. 10/- each Holding shares @ HoldingRs. 10/- each

Promoter 2,304,826 31.13% 2,304,826 21.33%Promoter Group 3,136,188 42.35% 3,136,188 29.03%QIBs 1,910 0.03% - [•]Public 1,857,342 25.09% - [•]Others 103,840 1.40% [•] [•]Total 7,404,106 100.00% 10,804,106 100.00%

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6. Equity Shares held by top 10 shareholders

a. Our top ten shareholders and the Equity shares held by them on the date of filing the Draft Red HerringProspectus with SEBI are as follows:

SL. NO. NAME OF SHAREHOLDER No. of Equity Shares1 S.C. Jain (Sagar Chand Jain) 2,174,6102 U.K. Jain (Umesh Kumar Jain) 1,409,0943 Nitin Jain 359,6994 Deepak Auto (P) Ltd 315,0005 Sagar Chand Jain & Sons (HUF) 282,6406 Milan Jain 269,5257 Kamlesh Jain 266,5088 U.K. Jain (HUF) 251,3919 Quadra Securities & Financial Services 208,30010 Vijay Kumar Agarwal 158,148

b. Our top ten shareholders and Equity Shares held by them ten days prior to the date of filing the Draft RedHerring Prospectus with SEBI are as follows:

Sl. No. Name Of Shareholder No. of Equity Shares1 S.C. Jain (Sagar Chand Jain) 2,174,6102 U.K. Jain (Umesh Kumar Jain) 1,409,0943 Nitin Jain 359,6994 Deepak Auto (P) Ltd 315,0005 Sagar Chand Jain & Sons (HUF) 282,6406 Milan Jain 269,5257 Kamlesh Jain 266,5088 U.K. Jain (HUF) 251,3919 Quadra Securities & Financial Services 208,30010 Vijay Kumar Agarwal 158,148

c. Our top ten shareholders and Equity Shares held by them two years prior to the date of filing the Draft RedHerring Prospectus with SEBI are as follows:

Sl. No. Name Of Shareholder No. Of Shares1 S.C. Jain (Sagar Chand Jain) 40,0102 U.K. Jain (Umesh Kumar Jain) 10,0103 Nitin Jain 1004 Milan Jain 105 Kamlesh Jain 1006 D.K. Jain 107 Lumax Industries Ltd. 10

Note: Two years prior to the Issue the Company had seven shareholders only.

7. Neither the Company, its Promoters, its directors, nor the Lead Manager or BRLM have been entered into anybuy-back and/or standby arrangements for purchase of the Equity Shares from any person.

8. We have not raised any bridge loan against the proceeds of this Issue.

9. The Equity Shares offered through this Issue will be fully paid up.

10. The Company has not issued any shares out of revaluation reserves.

11. A Bidder cannot make a bid for more than the number of Equity Shares offered in this Issue, subject to themaximum limit of investment prescribed under relevant laws applicable to each category of investor.

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12. There would be no further issue of capital in any manner whether by way of issue of bonus shares, preferentialallotment, rights issue, or public issue or otherwise during the period commencing from the submission of DraftRed Herring Prospectus to SEBI on behalf of the Company for this Issue, till the securities offered to in the saiddocument have been listed or the application moneys refunded on account of non-listing or under-subscription,etc.

13. We have not issued any Equity Shares out of revaluation reserves or for consideration other than cash exceptfor the Equity Shares issued pursuant to the scheme of arrangement and the scheme of amalgamation sanc-tioned by the Hon’ble High Court of Delhi where cash was not received by the Company for the Equity Sharesissued.

14. No securities forming part of Promoters’ contribution consists of any private placement made by solicitation ofsubscription from unrelated persons either directly or through any intermediary.

15. At any given point of time, there shall be only one denomination for the Equity Shares of the Company and theCompany shall comply with such disclosure and accounting norms specified by SEBI from time to time.

16. There are no transactions in the securities of the Company during preceding 6 months which were financeddirectly or indirectly by the Promoters, their relations, their group companies or associate or by the above entitiesdirectly or indirectly to other persons.

17. The shareholders of the Company do not hold any warrant, option or convertible loan or any debentures, whichwould entitle them to acquire further Equity Shares of the Company.

18. Written consent for lock-in has been obtained from the persons whose shares form part of Promoters’ contribu-tion and form part of lock in.

19. The Equity Shares to be held by the Promoters, their relatives & associates under the lock-in period shall not besold/ transferred during the lock-in period. However, inter se transfers between the Promoters themselves assuch would be permitted, provided that the requirement of lock-in period guidelines continue to apply, to theextent initially prescribed.

20. An applicant in the net public category cannot make an application for a number of securities, which exceeds thenet offer to the Public.

21. In case of reserved categories, a single applicant in the reserved category cannot make an application for anumber of securities, which exceeds the reservation.

22. In case of over-subscription in all categories, upto 50% of the Issue shall be available for allocation on a propor-tionate basis to QIBs including 5% to mutual funds exclusively, a minimum of 15% of the Issue shall be availablefor allocation on a proportionate basis to Non-Institutional Bidders and a minimum of 35% of the Issue shall beavailable for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being receivedat or above the Issue Price. Under subscription, if any, in any portion would be met with spill over from othercategories at the sole discretion of the Company in consultation with the BRLM and Lead Manager.

23. The Company presently does not have any intention or proposal to alter its capital structure for a period of sixmonths from the date of opening of the Issue, by way of split/consolidation of the Equity Shares or further issueof Equity Shares (including issue of securities convertible into exchangeable, directly or indirectly for EquityShares) whether preferential or otherwise, or if the Company goes in for acquisition and joint ventures theCompany might consider raising additional capital to fund such activity or use shares as currency for acquisitionand/or participation in such joint venture.

24. An over subscription to the extent of 10% of the issue can be retained for the purposes of rounding off to thenearest multiple of minimum allotment lot while finalizing the basis of allotment.

25. The Company has around 18000 shareholders as on 31.12.2005.

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OBJECTS OF THE ISSUE

The net proceeds of the Issue after deducting underwriting and management fees, selling commissions, and allother Issue expenses payable are estimated at approximately Rs. [•] Lac. For details of the Issue expenses, seethe section titled “Other Regulatory and Statutory Disclosures – Expenses of the Issue” on page [•] of this Draft RedHerring Prospectus.

The Company intends to utilize the proceeds of the Issue for up gradation of technology and expansion of productioncapacity at its Manesar, Faridabad, Pune and Aurangabad units.

The main object clause of the Memorandum of Association and the objects incidental and ancillary to the mainobjects enables the Company to undertake its existing activities and activities for which the funds are being raised inthe Issue.

The objects of the Issue are:1. Expansion of existing facilities;2. Investment in joint venture;3. General corporate purposes including working capital;4. To meet expenses of this Issue.

COST OF THE PROJECT AND MEANS OF FINANCEFund requirement as per Company’s own estimates in accordance with the objects of the Issue are as under:-

(Rs. in Lacs)

Sr. No. Particulars Amount1. Expansion of existing facilities 1908.002. Investment in joint venture 333.003. General corporate purposes including working capital 250.00

Total Project Cost 2491.004. Public Issue Expenses [•]

Total [•]

MEANS OF FINANCE(Rs. in Lacs)

Sr. No. Particulars Amount1. Public Issue [•]2. Term loan from HSIDC for Manesar- Plastic and Filter Plant 465.003. Internal accruals [•]

Total [•]

APPRAISALThe expansion project of plastic and filter division at Manesar has been appraised by HSIDC who has sanctioned aterm loan of Rs. 465.00 Lac vide sanctioned letter dated July 22, 2005 out of total project cost of Rs. 775.74 Lac. Theexpansion projects at various other units (except for plastic & filter division at Manesar as referred above) have notbeen appraised by any external agency and as such all funds requirements are based on management estimates.

Notes1. The substantial amount of the funds requirement is proposed to be funded through this Issue. In case of any

shortfall in meeting project cost, the same shall be met through further internal accruals. Excess money, if any,will be utilized for general corporate purposes including but not restricted to repayment of loans.

2. No part of the Issue proceeds will be paid as consideration to Promoters, directors, key managerial personnel,associate or group companies.

3. Pending utilization, the proceeds will be invested in high quality, interest/dividend bearing short term/long terminstruments including deposits with the banks, for the necessary duration. These investments would be authorizedby the Board of Directors or a duly constituted committee thereof.

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COST OF PROJECT

1. EXPANSION OF EXISTING FACILITIESI. Expansion Of Manesar – Plastic & Filter Division (Rs. in Lacs)

Sr. No. Particulars Amount1 Building 333.142 Plant and machinery 299.653 Miscellaneous fixed assets 38.004 Margin money for working capital 48.675 Preoperative expenses 24.696. Contingencies 31.59

Total 775.74

Building:The Company proposes to construct 58095 sq. fts., including basements. The covered area in basement for storageof goods will be 6455 sq. fts. Ground floor of the proposed building will be covering the four production halls. Thetotal proposed covered area at ground floor will be 25820 sq. fts. The first floor in the proposed building will beworking hall for assembly of equipment, storage area and office block. The total covered area at first floor will be25820 sq. fts. Apart from this the Company is also proposing to install a freight elevator of 1000 kgs, internal pavementsof 14529.84 sq. fts., main gate and RCC underground diesel storage tank and rain water harvesting system. Totalexpenditure as estimated by the Company under this head would be Rs. 333.14 Lac

Plant and MachineryThe Company proposes to buy 17 different types of machines like four injection moulding machines, one ultrasonicweilding machine etc for the above project. The total cost of these machines is Rs. 281 Lac. Quotations have beenreceived for most of the machines. Apart from the above a sum of Rs. 6.00 lakh has been proposed to be incurred onelectrical fittings, a sum of Rs. 8.43 Lac on installation and Rs. 4.22 Lac on freight and insurance is also proposed inthe scheme. The total expenditure in this head would be Rs. 299.65 Lac.

Sl.No Particulars Unit Qty. Total SupplierPrice (Inclusive(Fc) of Excise

Duty andSales Tax)

1 Injection moulding machine 16.60 1 20.08 Windsor Machines Limited,Model Polo S 130 1203& 1204, Chiranjiv Tower, 43,

Nehru Place, New Delhi2 Injection moulding machine 24.38 2 58.99 Windsor Machines Limited,

Model Polo S 250 1203& 1204, Chiranjiv Tower, 43,Nehru Place, New Delhi

3 Injection moulding machine 43.00 1 52.02 Windsor Machines Limited,Model Sprint-450 1203& 1204, Chiranjiv Tower, 43,

Nehru Place, New Delhi4 Ultrasonic welding machine 2.95 1 3.57 M/s Access India, 27 C, Street No.1,

Model BW-1528, Govindpuri, Kalkaji,15khz, 2808 New Delhi

5 Converorised oven with 4.43 1 5.36 M/s NSW India Ltd., Plot No.43,loading length of 1000 mm Sector-34, EHTP, Gurgaonand heating zone length of300 mm with overall lengthof 5000 mm

6 Computerized ultrasonic 4.10 5 24.80 M/s Ravira Technologyplastic welding machine Services Pvt. Ltd., 214,for filter assembly P.K.kothari Estate, L.B.S. Road,Model EGA 1522/220v-IPH Bhandup(w), Mumbaiwith horn and fixture, toolboxand manual

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7 Air filter test RIG (AFTR-3) 17.00 1 20.57 Central Manufacturingwith PC based control Technology Institute, Tumkur

Road, Bangalore8 D.G.Set of 500 KVA silent 21.50 1 26.01 M/s Sudhir Genset Ltd.,

type comprising of 18, Phase-11, Sidco Indl.cummines engine Complex, Bari Brahaman,Model Kta 19-g4-e Jammu

9 Liquid chilling plant 4.95 1 5.15 M/s Drycool Systems India(capacity 20 TR) Pvt. Ltd.,C-34, Sector-63, NoidaModel No. Dc-wst-r-20

10 Air compressor of Atlas 3.22 1 3.90 M/s Transcon ServiceCopco Make Model Equipments, 334, Sector-31,Ga 15-7.5 Ap, 94.5 Cfm Gurgaon

11 Mould storage racks 0.50 4 2.08 M/s SGS Fabrication Works,Plot no.1A,IDGAH Colony, Sector-6,Faridabad

12 Pallets for raw material 0.13 12 1.56 M/s SGS Fabrication Works,Plot no.1A,IDGAH Colony, Sector-6,Faridabad

13 MS Trolly for Kspa/Kplf 0.08 300 24.96 M/s SGS Fabrication Works,Models of Plot no.1A,IDGAH Colony, Sector-6,Honda Scooters Faridabad

14 Centrifugal pumps make 0.72 1 0.87 M/s Times Marketing Pvt. Ltd.,L78 B,mather plus pladd of Malviya Nagar, New Delhiend suction back pull out(2900 RPM)

15 EOT crane 7.5 Ton , height 12.84 1 15.53 M/s Light Lift Industries,6 mtrs with span of 10 mtrs., 52/27 A, FaridabadClass 2, Duty Medium

16 Cooling tower frp counter flow, 1.03 1 1.25 M/s Paltech Cooling Towersbottle shape, operating weight and Equipments Ltd.,of 1400 K.G. G-5, First Floor, G BlockModel No. PCFR, 1212/80 Tr Market, Hauj Khas, New Delhi

17 Evaporative cooling plant 11.84 1 14.32 M/s Cool Command(90000 Cfm), having Engineers, 651, Babacapacity of maintaining the Faridpuri, West Patel Nagar,temperature of 32 C+1c New Delhicovered area of 20m*60m*5mwith Kirlosker/ Abb/ Ngef make20hp/1440 Rpm ElectricalMotor, 4 Pole, T.e.f.c. 415 Volt,3 phase A.C. supply.Sub-total 281.00Electrical fittings 6.00Installation charges 8.43Freight and insurance 4.22Sub-total 299.65Total Cost Of PlantAnd Machinery 299.65

Sl.No Particulars Unit Qty. Total SupplierPrice (Inclusive(Fc) of Excise

Duty andSales Tax)

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Miscellaneous Fixed AssetsA total sum of Rs. 38 Lac has been proposed to be incurred under this head, details of which are as under:

(Rs. In Lacs)

Sr. No. Particulars Amount1. Furniture and fixture 4.002. Office equipment 4.003. Fire fighting equipment 4.004. Vehicle for delivery of finishing product 15.005. RO unit 3.006. Transformer 125 KVA 8.00

Total 38.00

Margin Money for Working CapitalMargin money for working capital has been calculated as under: (Rs. In Lacs)

Sl. No. Particulars Norms Amt. in Ist Year 2006-07Total Margin Bank

FundingA) CURRENT ASSETS 1. INVENTORY

a) Raw material 60 days 76.85 19.20 57.65b) WIP 2 days 3.49 0.87 2.62c) Finished goods 3 days 6.29 1.57 4.72

2. Sundry debtors 45 days 125.75 50.30 75.453. Current assets (others) 10.00 2.50 7.50

Total (A) 222.38 74.44 147.94B) CURRENT LIABILITIES1 Sundry creditors 60 days 90.82 22.71 68.112. Current liabilities (others) 12.25 3.06 9.19

Total (B) 103.07 25.77 77.30Net (A - B) 48.67

Preoperative ExpensesA sum of Rs. 24.69 Lac will be incurred under this head, which will include expenditure for processing fee, upfrontfee, power connection charges and interest during construction period.

ContingenciesThe cost estimates are based on quotation for majority of capital equipments and no major charge in cost is expected.Considering these factors the contingency expenses are conservating estimated at around 4% of all main costs.

II. MIRROR DIVISION- SECTOR 6, FARIDABAD(Rs. In Lacs)

Sr. No. Particulars Amount1. Building 100.002 Mirror plant machine 200.003 Moulding machine 123.004 Gen set 40.005. Office equipment 16.00

Total 479.00

BuildingThe Company is planning to construct building on plot no. 78 sector 6, Faridabad for the expansion of mirror plant.The approximate cost of the same would be Rs. 100 Lac. The land is owned by the Company.

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Mirror Plant MachineThe following machines are required for the mirror plant at Faridabad

Particulars Amount (Rs. In Lacs) Quotations receivedVaccum coating furnace 46.91 DKS International Co. Ltd., TaiwanAuto chamfering furnace 23.03 DKS International Co. Ltd., TaiwanCNC second cutting machine 12.17 DKS International Co. Ltd., TaiwanCR. vaccum coater 67.58 DKS International Co. Ltd., TaiwanBaking furnace 50.31 DKS International Co. Ltd., TaiwanTOTAL 200.00

Moulding MachineThe company make use of mirror back housing in the manufacturing of rear view mirrors. Till now the company didnot have any arrangement of moulding machine and had to depend on outside sources for moulding of different typeof mirrors. The following are the machines required by the Company for inhouse manufacturing of mirror backhousing

Particulars Amount (Rs. In Lacs) Quotations receivedSprint 450 T 61.00 Windsor Machines LimitedPOLO S 250 35.00 Windsor Machines LimitedPOLO S 180 T 27.00 Windsor Machines LimitedTotal 123.00

GensetThe Company intends to procure a DG Set of 625 KVA. The approximate cost would be Rs. 40 Lac based onquotation received from Sudhie Gensets Limited.

Office EquipmentsThe expansion in building and machinery would lead to increase requirement of general office equipments. The costof miscellaneous office equipment is estimated at Rs. 16.00 Lac.

III. CENTRALISED TOOL ROOM AND R&D CENTRE (MANESAR)At present we have tool rooms in all our units. These tool rooms are functioning for quite long. Machinery in toolrooms is very old & is of conventional type. Now a days the concept of designing and making a mould has totallychanged. Uptil 3-years back we used to get 2D – drawing & sample only for development of mould. Now we geteither 3D model or CAD-data along with 2D drawing or sample. Sometimes we get only 3D-Model & we have tomake our own data. Further our machines are not suitable for making bigger moulds. For this we have to dependoutside services to be compatible we need to have all sort of modern tool room machinery in addition to CAD-designing software system. With the use of latest technology we can transfer the CAD-data of our distant customersto our systems which will increase our efficiency and effectiveness.

The R&D centre also requiring new facilities for development of new products and enhancement of existing products.The total expenses are estimated as under:

Particulars Amount Qty. Total Quotations received(Rs. In Lacs) Amount

(Rs. In Lacs)CNC milling machine (Type A) 75.32 1 75.32 Supplier – Deckel Maho, Associated

Technocrats Pvt. Ltd., LMWConventional lathe 8.23 1 8.27 Supplier –HMT Ltd., Associated

Technocrats Pvt. LtdConventional milling machine 3.40 2 6.80 Supplier –HMT Ltd, Associated

Technocrats Pvt. Ltd, ArgoEDM 10.25 1 10.25 Supplier – Electronica Machine Tools Ltd.Surface grinder 15.86 1 15.86 Supplier- HMT LtdRadial drill 1.85 1 1.85 Supplier –ICTDie spotting machine 18.00 1 18.00Shaper 1.10 1 1.10 Supplier –ICTDrill machine 0.31 1 0.31 Supplier –ICT

TOTAL 137.76

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IV. NEW MOULD/DIESThe Company wants to develop in house manufacturing of plastic moulds for four wheeler manufacturers. Givenhereunder is the cost breakup for manufacturing moulds for cars of company’s customers. However, the Companyintends to make moulds for other cars, scooter and other vehicles.. The Company also wants to develop filterassemblies. At present the estimated cost of the project would be Rs. 412.50 Lac The breakup is as under:

Cost Estimates for Moulds

Sl. No Description Estimated Cost (Rs. In Lacs) TotalTata Indica Mahindra Tata

Scorpio Indigo1 Mirror housing 34.89 37.49 34.89 107.272 Mirror stay 36.54 48.73 36.54 121.813 Mirror back plate 7.06 7.38 7.06 21.54 Actuator assembly (set of 8 small moulds) 9.60 9.60 9.60 28.85 Mirror cutting & marking fixtures 2.10 2.10 2.10 6.36 Assembly fixtures 6.50 6.50 6.50 19.5

Total project cost (A) 96.69 111.80 96.69 305.18

Tooling Cost Estimate For Filter Assembly

Sl. No Description Estimated Cost (Rs. In Lacs) TotalFOR LCV’s TATA INDICA

1 Filter housing 29.87 29.62 59.492 Filter cover 10.43 28.95 39.383 Sheet metal dies 5.00 2.00 7.004 Assembly fixtures 1.00 0.45 1.45

Total project cost (B) 46.30 61.02 107.32Grand Total (A+B) 412.50

V. TESTING MACHINES FOR PUNE UNITThe Company requires an air filter test rig for its Pune unit. The cost of the machine is Rs. 17 Lac based on thequotations received from Central Manufacturing Technology Institute, Bangalore.

VI. TESTING MACHINES FOR DLF, FARIDABAD UNITThe Company requires two air filter test rigs for its DLF Faridabad unit. The cost of each machine is Rs. 17 Lac. Thetotal cost of Rs. 34 Lac is based on quotations received from Central Manufacturing Technology Institute, Bangalore.

VII. NEW INJECTION AND BLOW MOULDING MACHINE AT AURANGABADThe Company intends to purchase blow moulding machine and injection moulding machine for Aurangabad unit Thecost of blow moulding machine is around Rs.25.00 Lac and injection moulding machine is Rs. 27.00 Lac. The costis based on quotation received from Windsor Machines Limited. The Total cost would be Rs. 52 Lac.

Blow Moulding Machines 20 Litres-Windsor: Digi blowFor quite some time our existing and new customers have been approaching us for their requirement of blowmoulded parts. Since we don’t have any blow moulding arrangement, we were not able to take new business andwith this machine profit of company will improve.

Injection Moulding Machine Polo Smart 180T DGPWe being in the manufacturing of the rear view mirrors have to make use of mirror back housing which is in plasticmoulding. Until now we did’t have any of our own arrangement for moulding machine. We have to depend on outsidesources for moulding of different type of mirrors. We don’t get good quality moulding and it is uneconomical too. Tomeet the increased quality demand of the customers we need to install our own moulding machines. The installationof this machine will improve and will reduce our dependence on outside contractors.

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2. INVESTMENT IN JOINT VENTURE WITH MAGNA DONNELLY CORPORATION, MICHIGAN, U.S.A.The Company has entered into a joint venture agreement with Magna Donnelly Corporation, Michigan, U.S.A, topromote a company in Delhi, India named “LUMAX MAGNA DONNELLY AUTOMOTIVE MIRRORS PRIVATELIMITED” (JV Company) to establish and operate a facility for development (but no design), manufacture, sale anddistribution of automobile mirrors (outside and inside) and such mirror components and systems for the Indianautomotive market. Magna Donnelly will subscribe the shares of JV Company through an affiliate of Magna Donnelly.

The authorised Capital of the Lumax Magna Donnelly Automotive Mirrors Private Limited would be Rs. 50,000,000/- (5,000,000 equity shares of Rs.10/- each). The Subscribed and issued capital of the Company would be Rs.45,000,000/- (4,500,000 equity shares of Rs.10/- each) The shares would be subscribed by LUMAX and MagnaDonnelly in the ratio of 74% and 26% respectively. The Company’s cost of investment would be Rs. 333 Lac.

3. GENERAL CORPORATE PURPOSES INCLUDING WORKING CAPITALThe expenditure on corporate office is estimated to be Rs. 250 Lac and includes cost of land and building appurtenantthereto and cost of furnishing and required infrastructure facilities. Our Company is in the process of identifyingsuitable site / premises for the same. We have identified two sites though we have not finalized any site/ premises forthe said purpose.

EXPENSES OF THE ISSUE

Particulars Amount (Rs. in Lacs)Lead Managers, Underwriters and selling expenses [•]Advertising and Marketing Expenses [•]Printing and Stationery [•]Others (Registrar’s fee, Listing fee, fee to Legal Advisors, Book Building fee) [•]Miscellaneous [•]TOTAL [•]

SCHEDULE OF IMPLEMENTATION

Activity Start Completion CommercialProduction

Construction of building and expansion Building – October 2005 February 2006of plastic and filter division at Manesar Machines- February 2006 April 2006 May 2006Construction of building and expansion Building – December 2005 March 2006of mirror division – Sector 6 Faridabad Machines- March 2006 April 2006 May 2006Setting up of Centralized Tool Roomand R&D centre at Manesar January 2006 March 2006 May 2006Manufacturing of mouldsSetting up of Corporate Office March 2006 April 2006 April 2006Setting up of tool room/testing labat Pune Unit February 2006 March 2006 May 2006Setting up of tool room/testing lab February 2006 March 2006 May 2006at DLF Faridabad UnitInvestment in joint venture company February 2006 April 2006 April 2006Expansion at Aurangabad Unit February 2006 March 2006 May 2006

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The year wise break up of proposed deployment of fund is mentioned hereunder: (Rs. in Lacs)

Deployment of Funds Financial year 2005-2006 Financial year 2006-2007Already Incurred Quarter 3 Quarter 4 Quarter 1 Other TotalBuilding — 393.35 160.00 — 553.35Plant & machinery — 1759.86 — 1769.86Miscellaneous fixed assets — 30.00 — 38.00Margin money for working capital — — — — —Setting up of Corporate office — — 100.00 150 250Issue expenses — 3.72 — — [•]Total — [•]

FUNDS DEPLOYEDAs per the certificate given by Auditors, M/s R Jain & Sanjay Associates, Chartered Accountants, vide their letterdated 15.01.06 the actual expenditure incurred on the Objects of the Issue is Rs. 393.35 Lac. The details are givenbelow

Sr. No. Particulars Amount (Rs. in Lacs)1. Building 387.062. Public Issue expenses 3.723. Pre-Operating expenses 2.57

Total 393.35

Sources of Financing of Funds already Deployed

Sr. No. Particulars Amount (Rs. in Lacs)1. HSIDC loan 178.642. Internal accruals 214.71

Total 393.35

Notes:The quotations for most of the machines have been received but we are yet to place orders for the machines, whichwill be done as per schedule of implementation.

INTERIM USE OF FUNDSPending any use as described above, LUMAX intends to invest the proceeds of this Issue in high quality, interest /dividend bearing short term/long term liquid instruments including deposits with banks for the necessary duration.These investments would be authorized by Board of Directors of the Company or a duly constituted committeethereof.

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TERMS OF THE ISSUE

The Equity Shares being offered are subject to the provisions of the Companies Act, the Memorandum and Articlesof Association, the terms of this Draft Red Herring Prospectus the Bid cum Application Form, the Revision Form, theConfirmation of Allocation Note and other terms and conditions as may be incorporated in the Allotment advices andother documents/ certificates that may be executed in respect of the Issue. The Equity Shares shall also be subjectto laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and tradingof securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, ROC and/ orother authorities, as in force on the date of the Issue and to the extent applicable.

Ranking of Equity SharesThe Equity Shares being offered shall be subject to the provisions of the Memorandum and Articles of Associationand shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividend. Theallottees will be entitled to dividend or any other corporate benefits (including dividend), if any, declared by ourCompany after the date of Allotment.

Mode of Payment of DividendWe shall pay dividend to our shareholders as per the provisions of the Companies Act.

Face Value and Issue PriceThe face value of the Equity Shares is Rs. 10 each and the Issue Price is Rs. [•] each. At any given point of time thereshall be only one denomination for the Equity Shares.

Rights of the Equity ShareholdersSubject to the applicable laws, the equity shareholders of our Company shall have the following rights:• Right to receive dividend, if declared;• Right to attend general meetings and exercise voting powers, unless prohibited by law;• Right to vote on a poll either in person or by proxy;• Right to receive offers for rights shares and be allotted bonus shares, if announced;• Right to receive surplus on liquidation;• Right of free transferability of Equity Shares;• Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and

the terms of the listing agreements with the Stock Exchanges; and• Such other rights as may be available to our shareholders under the Memorandum and Articles of Association.

For a detailed description of the main provisions of the Articles of Association dealing with voting rights, dividend,forfeiture and lien, transfer and transmission and/ or consolidation/ splitting, pledge see the section titled “MainProvisions of Articles of Association of the Company” beginning on page [•] .

Market Lot and Trading LotIn terms of the existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialised form for allinvestors and hence, the tradable lot is one Equity Share. In terms of Section 68B of the Companies Act, the EquityShares shall be allotted only in dematerialised form in multiples of one Equity Share subject to a minimum Allotmentof [•] Equity Shares.

Nomination Facility to the InvestorIn accordance with Section 109A of the Companies Act, the sole or First Bidder, along with other joint Bidder(s), maynominate any one person in whom, in the event of death of sole Bidder or in case of joint Bidders, death of all theBidders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to theEquity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Compa-nies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registeredholder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in theprescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during theminority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of Equity Share(s) by the personnominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. A fresh nomination can bemade only on the prescribed form available on request at the Registered Office of the Company or at the registrarand transfer agent of the Company.

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In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of theprovisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required bythe Board, of Director elect either: (a) to register himself or herself as the holder of the Equity Shares; or (b) to makesuch transfer of the Equity Shares, as the deceased holder could have made.

Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself orherself or to transfer the Equity Shares, and if the notice is not complied with, within a period of 90 days, the Boardmay thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the Equity Shares,until the requirements of the notice have been complied with. Since the Allotment of Equity Shares in the Issue willbe made only in dematerialised mode, there is no need to make a separate nomination with us. Nominations regis-tered with the respective depository participant of the applicant would prevail. If the investors require to change thenomination, they are requested to inform their respective depository participant.

Minimum SubscriptionIf we do not receive the minimum subscription of 90% of the Issue to the extent of the amount including devolvementof the members of the Syndicate, if any, within 60 days from the Bid/ Issue Closing Date, we shall forthwith refund theentire subscription amount received. If there is a delay beyond eight days after we become liable to pay the amount,we shall pay interest as per Section 73 of the Companies Act.

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BASIS FOR ISSUE PRICE

The Price Band for the Issue Price will be decided by us in consultation with the BRLM and advertised at least oneday prior to the Bid Opening Date/Issue Opening Date in The [•] , an English language newspaper with widecirculation, [•] , a Hindi language newspaper with wide circulation. The Issue Price will be determined by the Com-pany in consultation with the BRLM on the basis of assessment of market demand for the offered Equity Shares bythe Book Building Process. The face value of the Equity Shares is Rs. 10 and the Issue Price is [ ] times the facevalue at the lower end of the Price Band and [•] times the face value at the higher end of the Price Band. In themeantime, the investors may be guided by the price of our Equity Shares listed on the BSE and the NSE.

Qualitative FactorsFactors External to us:The demand for auto components in India is expected to grow at an annual average growth rate of 14.3% from2003 to 2008.

(Source: ACMA Industry Statistics).Cost considerations are resulting in a shift of the manufacturing base for auto ancillary components from westerncountries to India and China.

Factors internal to us:Diverse product portfolio: We are into manufacture of three different segments viz. rear view mirrors, oil & airfilters and plastic moulding and parts which offers us advantage over our competitors.

Multi locational manufacturing facilities: We have nine strategically located plants near manufacturing facili-ties of our customers / suppliers, resulting in reduction in supply time and cost saving on account of transport andinventory build-up. Additionally, we believe that our labour and overhead costs are significantly lower than those ofour competitors.

State-of-the-art manufacturing facilities: Most of the production lines installed at our production facilities usestate-of-the-art technology and equipment. Over the years our customer base have grown to include majority ofmanufacturers of 2,3 & 4 wheelers in the country. We have ISO 9002: 2000 for quality Management system and ISO14001:1996 for Environmental Management system certifications and ISO/TS 16949 from Bureau Veritas qualityInternational (BVQI) for our manufacturing facility at Faridabad. With our sizeable production capacity, advantage oflow manufacturing cost and in-house tool making capabilities, we are in a position to provide good quality productsat very competitive prices.

Professional team: Along with strong infrastructure we have a team of dedicated professionals and technicalexperts working with us, we are in a position to produce both quality as well as quantity of products. For more detailsplease refer to the paragraph on ‘Key Managerial Personnel’ on page [•] of this Draft Red Herring Prospectus.

Financial flexibility: We strive to utilize an optimal mix of debt and internal accruals to meet our fund requirements.Our lower leverage, especially as compared to most of our domestic competitors, reduces our cost of debt funds.

We are now a profit making dividend paying Company. Profit after Tax and dividend paid for last 3 years is as under:

Particulars Period Ended 30.09.2005 2004-05 2003-04 2002-03Profit after Tax Rs.86.65 Lac Rs. 209.76 Lac Rs. (0.71) Lac Rs. (69.39) LacDividend - 12% Nil Nil

For more details please refer to our restated accounts in the section titled “Financial Statements” appearing onpage [•] of this Draft Red Herring Prospectus.For detailed discussion on the above factors, see the section titled “Our Business – Our Competitive Strengths” onpage [•] of this Draft Red Herring Prospectus.

QUANTITATIVE FACTORSInformation presented in this section is derived from our restated financial statements prepared in accordance withIndian GAAP appearing on page [•] of this Draft Red Herring Prospectus

1. Earning Per Share (EPS) of face value of Rs.10Particulars EPS ( Rs.) Weighta) 2002-03 (1.64) 1b) 2003-04 (0.01) 2c) 2004-05 2.83 3Weighted Average EPS 1.14

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2. Price/Earning Ratio in relation to Issue Price of Rs [•] /- per share

Particulars PE (No of times)a) Based on 2004-05 EPS of Rs. 2.83 [•]b) Based on weighted average EPS of Rs 2.27 [•]c) Auto Component Industryi) Highest : 51.0ii) Lowest : 8.60iii) Average : 22.60

3. Accounting ratios of some of the companies in the same industry groupThere are no other listed companies manufacturing same products only, in the same industry group. The productrange of other companies varies in comparison to us. In view of the above it is not possible to compare the account-ing ratios of peer group. However we are giving accounting ratios of the auto ancillary group

Particulars EPS (Rs) P/E RONW (%) NAVBanco Products 14.0 11.30 16.20 99.70JMT Auto 5.30 26.80 24.70 50.70Samkrg Pistons 7.40 12.80 24.10 30.30Suprajit Engineering 7.30 22.20 36.80 25.10Clutch Auto 4.30 17.60 31.80 25.80JBM Auto Comp 7.60 14.50 18.50 45.10Talbros Auto Comp 4.30 16.30 31.70 62.60Ucal Fuel Systems 18.0 13.80 18.70 107.40

Source: Capital Market Vol. XX/23, Jan 16-29, 2006

4.Return on Net Worth

Particulars RONW % Weighta) 2001-02 (12.16) 1b) 2002-03 (0.10) 2c) 2004-05 19.52 3Weighted Average 7.70

Minimum return on total net worth needed after the issue to maintain pre-issue EPS of Rs. 2.83 is [•] %

5.Net Asset Value

Particulars NAV (Rs. Per Share)a) As at March 31, 2005 14.51b) As at March 31, 2004 13.46c) After Issue [•]d) Issue Price [•]

6. The face value of the Equity Shares is Rs. 10/- per share and the Issue Price is [•] times (at the lower band ofIssue Price of Rs. [•] per share) and [•] times (at higher band of the Issue Price of Rs. [•] per share) of the facevalue of our Equity Shares.

7. The Lead Manager and the BRLM believe that the Issue Price of Rs. [•] /- per share is justified in view of theabove qualitative and quantitative parameters. The investors may also want to peruse the risk factors and ourfinancials as set out in the Auditors Report on page no. [•] of the Draft Red Herring Prospectus to have a moreinformed view about the investment propositions.

8. The Issue Price of Rs. [•] has been determined by us in consultation with the Lead Manager and the BRLM andon the basis of assessment of market demand for the Equity Shares by way of book building and is justified onthe basis of the above factors.

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STATEMENT OF TAX BENEFITS

The Board of DirectorsLumax Automotive Systems LimitedB – 86, Mayapuri Industrial Area,Phase – I,New Delhi – 110064.

Dear Sirs,We hereby certify that the enclosed annexure states the tax benefits available to Lumax Automotive SystemsLimited (the “Company”) and to the Shareholders of the Company under the provisions of the Income Tax Act, 1961and other direct and indirect tax laws presently in force.

The contents of this annexure are based on information, explanations and representations obtained from the Com-pany and on the basis of our understanding of the business activities and operations of the Company.

A shareholder is advised to consider in his/her/its own case, the tax implications of an investment in the equityshares particularly in view of the fact that certain recently enacted legislation may not have a direct legal precedentor may have a different interpretation on the benefits, which an investor can avail.

For R. Jain & Sanjay AssociatesChartered Accountants, Delhi

Sanjay JainPartnerMembership No. 88027Date : 15 January, 2006Place : New Delhi

STATEMENT OF TAX BENEFITSThe following tax benefits shall be available to the Company and the prospective shareholders under Indian directand indirect tax laws.

A To the Company

A1. Under the Income-tax Act, 1961 (“IT Act”)

1. By virtue of Section 10(34) of the IT Act, income earned by way of dividend income referred to in Section 115Oof the IT Act, from another domestic company is exempt from tax.

2 Under Section 115JAA (1A) credit shall be allowed of any MAT paid under Section 115JB of the Act for any A.Y.commencing on or after April, 2006. Credit eligible for carry forward is the difference between MAT paid and thetax computed as per the normal provisions of the Income-tax Act. Such MAT credit shall be available for set –off upto 5 years succeeding the year in which the MAT credit initially arose.

3 The corporate tax rate shall be 30% and surcharge on tax shall be 10%.

4 Under Section 32 the rates of depreciation on plant and machinery would normally be 15% and those onfurniture and fittings 10% and motor cars 15%. Initial depreciation on plant and machinery would be 20%.

5. In additional to income tax, a fringe benefit tax at the rate of 30% (plus surcharge and education cess) would bepayable in respect of fringe benefits provided/deemed to be provided to the employees.

6. In addition to Income Tax, a fringe benefit tax at the late of 30% (Plus surcharge and education case) would bepayable in respect of Foreign Benefits provided/deemed to be provided to the employee.

A2. Under the Sales Tax Act

1. Deputy Commissioner of Sales Tax (Incentives & Enforcement) Maharashtra State, Mumbai has issued, forAurangabad Unit (Mirror Plant), “Certificate of Entitlement” for availing Sales Tax Incentives under the 1993-package scheme of Incentive of the Government of Maharashtra by way of deferment of sales Tax Liabilityunder Certificate No. 431136-S/R-31B/1051 Dated 6th December 1999. This certificate is issued on the basis ofthe Eligibility certificate No. FINC (I)/ 1993/DEFERAL/EC-4042 Dated 23rd November 1999 issued to theAurangabad Unit by SICOM Limited being the implementing agency in terms of para 3.8(I)(i)© of 1993 PackageScheme of Incentives Outlined in Government of Maharashtra Resolution No. IDL-1093/ (8889)IND 8 Dated 7th

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May 1993 read with Clause VI of Government Resolution No. IDL-1093/ (9378)/ IND 8 DATED 6TH July, 1994.Subject to the provisions of the Bombay Sales Tax Act, 1959/ the Central Sales Tax Act, 1956 and Rules Framedthereunder as also the provisions of the 1993 Scheme/ the Procedure there under and the conditions stipulatedhereunder, LIL, are hereby permitted to defer the sales tax liability as per the returns/ assessment pertaining tothe period from 01.12.1999 to 31.08.2005 covered by the Eligibility Certificate No. FINC (i) 1993/DEFERAL/EC-4042 Dated 23.11.1999 referred to above or for such shorter period as may be reduced by the implementingagency which issued the said Eligibility certificate. The Certificate is valid for the benefit maximum to the extentof Rs. 96,80,125 (Rupees Ninety Six Lac Eighty Thousand One Hundred Twenty Five Only) and for the period01.12.1999 to 31.08.2005.

2. District Industries Centre (DIC) had sanctioned/issued to PPD division of Gurgaon unit the Eligibility CertificateNo. GURGAON/118/95/27607-A dated 11th July, 1997 for exemption from payment of Sales Tax in accordancewith the provisions of rule 28A for the period from 26th August 1997 to 25th August 2004 subject to renewal fromyear to year (Seven years) upto tax amount Rs. 119.64 Lac. LASL.-Gurgaon unit (PPD) had availed defermentof Rs. 119.64 Lac upto March 2002. Repayment of deferred taxhad already been started from July 2002 and thefull amount has to be paid by February 2007.

B. To the Members of the CompanyB1. Under the Income Tax Act, 1961Resident Members1. By virtue of Section 10(34) of the IT Act, income earned by way of dividend income from domestic Company

referred to in Section 115O of the IT Act, are exempt from tax in the hands of the shareholders.

2. In terms of section 10(38) of the Act, any long term capital gains arising to a shareholder from transfer of longterm capital asset being an equity shares in a Company would not be liable to tax in the hands of the share-holder if the following conditions are satisfied:

a The transaction of sale of such equity share is entered into on or after 1st October, 2004

b The transaction is chargeable to such securities transaction tax as explained below.

3. In terms of Securities Transaction Tax as enacted by Chapter VII of the Finance (No.2) Act, 2004, transactionsfor purchase and sale of the securities in the recognized stock exchange by the shareholder, shall be charge-able to securities transaction tax. As per the said provisions, any delivery based purchase and sale of equityshare in a Company through the recognized stock exchange is liable to securities transaction tax at the rate of0.075% of the value payable by both buyer and seller. The non- delivery based sale transactions are liable to tax@ 0.015% of the value payable by the seller.

4. The securities transaction tax will be charged from the assessment year 2006-07as under:-

a delivery based purchase and sale of equity shares will be liable to Securities Transaction tax at the rateof0.10%, and

b non-delivery based sale transactions will be liable to securities transaction tax at the rate of 0.02%.

5. Certain transactions have been specifically excluded from the definition of a speculative transaction by FinanceAct, 2005. Now an eligible transaction (a transaction which, inter-alia, is carried out electronically on a recog-nized stock exchange) in derivatives will not be regarded as a speculative transaction. Consequently gain/ lossthereof will not be regarded as speculation gain/loss.

6. In terms of section 88E of the Act, the securities transaction tax paid by the shareholder in respect of the taxablesecurities transactions entered into in the course of his business would be eligible for rebate from the amount ofincome-tax on the income chargeable under the head “Profit and gains of business or profession” arising fromtaxable securities transactions. As such, no deduction will be allowed in computing the income chargeable to taxas capital gains, such amount paid on account of securities transaction tax.

7. In terms of section 10(23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public FinancialInstitutions or Mutual Funds registered under the Securities and Exchange Board of India or authorized by theReserve Bank of India, subject to the conditions specified therein are eligible for exemption from income tax onall their income, including dividend from their investments in the shares of the Company.

8. Under section 48 of the Act, if the Company’s shares are sold after being held for more than twelve months, thegains (in cases not covered under section 10(38) of the Act), if any, will be treated as long term capital gains andthe gains shall be calculated by deducting from the gross consideration, the indexed cost of acquisition.

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9. Under section 54EC of the Act and subject to the conditions and to the extent specified therein, long term capitalgains (in cases not covered under section 10(38) of the Act) arising on the transfer of shares of the Company willbe exempt from capital gains tax if the capital gain are invested within a period of 6 months after the date of suchtransfer for a period of at least 3 years in bonds issued by:

a National Bank for Agriculture and Rural Development established under section 3 of The National Bank forAgriculture and Rural Development Act, 1981;

b National Highway Authority of India constituted under section 3 of The National Highway Authority of IndiaAct, 1988;

c Rural Electrification Corporation Limited, the company formed and registered under the Companies Act,1956;

d National Housing Bank established under section 3(1) of the National Housing Bank Act, 1987; ande Small Industries Development Bank of India established under section 3(1) of the Small Industries Devel-

opment Bank of India Act, 198910. Under section 54ED of the Act and subject to the conditions and to the extent specified therein, long term capital

gains (in cases not covered under section 10(38) of the Act) on the transfer of shares of the Company, as andwhen it is listed, will be exempt from capital gains tax if the capital gains are invested in shares of an IndianCompany forming part of an eligible public issue, within a period of 6 months after the date of such transfer andheld for a period of at least one year. Eligible public issue means issue of equity shares which satisfies thefollowing conditions, namely –a the issue is made by a public company formed and registered in India;b the shares forming part of the issue are offered for subscription to the public.

11. Under section 54F of the Act, long term capital gains (in cases not covered under section 10(38) of the Act)arising to an individual or Hindu Undivided Family (HUF) on transfer of shares of the Company will be exemptfrom capital gain tax subject to other conditions, if the net consideration from such shares are used for purchaseof residential house property within a period of one year before and two years after the date on which thetransfer took place or for construction of residential house property within a period of three years after the dateof transfer.

12. Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains (i.e. if shares areheld for a period exceeding 12 months) (in cases not covered under section 10(38) of the Act), arising ontransfer of shares in the Company, shall be taxed at a rate of 20% (plus applicable surcharge) after indexation asprovided in the second proviso to section 48. The amount of such tax should however, be limited to 10% (plusapplicable surcharge) without indexation, at the option of the shareholder, if the transfer is made after listing ofshares.

13. Under section 111A of the Act and other relevant provisions of the Act, short-term capital gains (i.e., if shares areheld for a period not exceeding 12 months), arising on transfer of shares in the Company on a recognized stockexchange, shall be taxed at a rate of 10% (plus applicable surcharge).

Non-Resident Indians/Non-Resident Shareholders (Other than FIIs)

Apart from benefits as mentioned in points 1, 2, 3, 4,5,6, 9,10 and 11 of B above

14. Under section 115-I of the Act, the non-resident Indian shareholder has an option to be governed by the provi-sions of Chapter XII-A of the Income Tax Act, 1961 viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows:-

a Under section 115E of the Act, where shares in the Company are acquired or subscribed for in convertibleForeign Exchange by a Non-Resident Indian, capital gains arising to the non-resident on transfer of sharesheld for a period exceeding 12 months on a recognized stock exchange, shall (in cases not covered undersection 10(38) of the Act) be concessionally taxed at the flat rate of 10% (plus applicable surcharge) (withoutindexation benefit but with protection against foreign exchange fluctuation).

b Under provisions of section 115F of the Act, long term capital gains (in cases not covered under section10(38) of the Act) arising to a non-resident Indian from the transfer of shares of the Company subscribed toin convertible Foreign Exchange (in cases not covered under section 115E of the Act) shall be exempt fromIncome tax, if the net consideration is reinvested in specified assets within six months of the date oftransfer. If only part of the net consideration is so reinvested, the exemption shall be proportionately re-duced. The amount so exempted shall be chargeable to tax subsequently, if the specified assets are trans-ferred or converted into money within three years from the date of their acquisition.

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Foreign Institutional Investors (FIIs)Apart from benefits as mentioned in points 1, 2, 3, 4, 9 and 10 of B1 above

15. The income by way of short term capital gain or long term capital gains (not covered under section 10(38) of theAct) realized by FIIs on sale of shares in the Company would be taxed at the following rates as per Section115AD of the Income Tax Act, 1961.

a Short term capital gains – 30% (plus applicable surcharge)

b Long term capital gains – 10% (without cost indexation plus applicable surcharge).

(Shares held in the Company would be considered as a long term capital asset provided they are held fora period exceeding 12 months).

B2. Under the Wealth Tax Act, 195716. Shares held in a Company will not be treated as an asset within the meaning of Section 2 (ea) of Wealth Tax

Act, 1957; hence Wealth Tax Act will not be applicable.

B3. Under the Gift Tax Act, 195817. 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:

1. All the above benefits are as per the current tax law as amended by the Finance (No.2) Act, 2005. The statedbenefits will be available only to the sole/first named holder in case joint holders hold the shares.

2. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subjectto any benefits available under the Double Taxation Avoidance Agreements, if any, between India and thecountry in which the non-resident has fiscal domicile.

3. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisorwith respect to specific tax consequences of his/her participation in the scheme.

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INDUSTRY OVERVIEW

The information presented in this section has been extracted from publicly available documents, which have notbeen prepared or independently verified by the Company, the Lead Manager or any of their respective affiliates oradvisors or the sources referred to herein.

In this Section, we have relied on and referred to information regarding the industry and competitors from marketresearch reports, and other publicly available sources. Although we believe that this information is reliable, wehave not independently verified the accuracy and completeness of the information. We caution you not to placeundue reliance on this data.

India’s reputation has grown drastically as a global manufacturing base in the auto component industry. The domes-tic industry is in the process of aggressive capacity expansion, primarily to cater to the export markets. The improve-ment in trade relations makes it an opportune time for the country to scale up the industry’s fortunes to the next level.However, a key challenge for Indian auto component manufacturers is to diversify their product base and in theprocess comprehensively cover the entire automotive manufacturing process.

‘Auto Evolution 2005’ assessed whether true integration is possible for the fragmented Indian market, or if special-ized manufacturing can be the future of this sector. Some of the panelists opined that India was narrowing down tothe needs of the country rather than becoming system integrated suppliers to the world at large. The panelists alsobelieved that it was possible to achieve global standards by using what is locally available at a smaller - manageablescale and at a good cost.

According to Dr. Albert Hieronimus, “Since the Indian market has narrowed down its focus, it has now reached theworld class level. Indians have the advantage of having a huge pool of talent and producing auto components at alower cost and higher quality, thus achieving global standards.” Dr. V Sumantran however felt that the Indian AutoIndustry compared to its counterparts abroad was still lagging behind in terms of cutting edge, cutting costs, andhence require to take this on as a challenge in order to attain truly global standards.

Indian auto components’ exports are expected to grow at a compound annual growth rate (CAGR) of 21.5 per centto touch $2.57 billion during the period 2003 and 2009 as outsourcing from the country is fast catching up, accordingto a latest study by Frost and Sullivan.

Auto components exports from India will see a structural shift with higher supplies to OEMs and Tier I companies, thestudy says adding exports from joint ventures or subsidiaries of overseas companies are also slated to go up.

“Companies that will benefit from higher exports to OEMs and Tier I manufacturers will necessarily be among theleading participants in the industry as they only have the requisite production capacities and quality levels to cater tothe needs of global OEMs,” the study points out. Total domestic production of automotive components in financialyear (FY) 2003 was approximately 5.40 billion and the industry registered a CAGR of 17 per cent between FY 1998and FY 2003. OEMs and Tier I companies in the global automotive industry are increasingly outsourcing theirrequirements for components as sub-assemblies to developing countries as this assisted them in cost restructuringbesides providing an opportunity to enter these domestic markets.

According to the study, India is clearly emerging as a key sourcing hub and attractive market for auto majors acrossthe world. The Indian subsidiaries of prominent auto manufacturers such as General Motors, Ford, Volvo and Delphihave set up separate business units for purchase of locally made components to meet their global requirements. Infact, many others like Renault, Navistar and Detroit Diesel, despite their lack of presence in India , have also estab-lished their purchase offices in the country.

“Indian auto component manufacturers who can consistently meet quality parameters in terms of packaging, label-ling and logistics are likely to take full advantage of these emerging export opportunities,” said Ganesh Relekar,Industry Manager, Automotive Practice, Frost and Sullivan. According to the study, stringent environmental stan-dards and work legislation as well as the hazardous nature of operations, for instance high ambient temperatures inforging and casting are forcing global auto majors to either shift plants or outsource manufacturing of key compo-nents to developing countries.

“Many US and European vehicle manufacturers prefer to establish their operations in India, attracted mainly by theless stringent environmental standards and flexible labour legislation in terms of working conditions, work hours,shift system, and associated benefits,” says the study. In addition are the design and engineering capabilities avail-able. The US $ 7 billion Indian auto ancillary industry is entering into a high growth phase with global auto playerseyeing the country for its designing, engineering and R&D capabilities in comparison to countries such as Mexico,Brazil & China. The industry is witnessing a paradigm shift from being reliant on the domestic industry for years to

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growth opportunities in global markets. Global OEM majors are likely to increase outsourcing in years to come dueto rising cost pressures. Indian companies including Lumax Auto are likely to benefit from this uptrend in outsourcingdue to global quality and strong designing skills. The domestic auto industry is also expected to sustain its growthmomentum in the coming years benefiting the auto ancillary industry in return.

Auto Components Industry To Emerge As The Export PowerhouseThe auto components industry is poised to emerge as the export powerhouse of India’s burgeoning economy.Future growth rates in terms of exports by auto ancillary companies are expected to match the 30-40 per centachieved by software and pharmaceutical companies, say industry watchers. According to industry estimates, ex-ports by the auto ancillary industry will total roughly $50 billion by 2014-2015. While the booming markets may havepartly contributed to this success story, there is more to it than meets the eye, say analysts. In ever increasingnumbers, global vehicle manufacturers are searching for low-cost manufacturing bases for sourcing equipment andparts for vehicles.

India, along with countries such as Mexico, China, Brazil and Thailand, offers OEMs (original equipment manufac-turers) a great cost-quality proposition, thus making it a preferred destination for outsourcing. Manufacturing costsfor Indian component manufacturers are 20-30 per cent lower than for their American counterparts on an average,despite the fact that Indian productivity is 50-75 per cent below international standards. Yet India is still a minnow inthe global ocean of auto components: it accounted for a mere 0.2 per cent of the global business, with exports of$800 million in 2002-2003. That figure is expected to rise to around $1-1.5 billion by the end of 2003-2004.

According to estimates, exports already account for nearly 10 per cent of the total sales of auto components in India.The global trade in auto components at the beginning of the decade was about $250 billion. So there’s a whole bigmarket waiting to be conquered.

Following is the Auto component industry’s exports from 1997 to 2005:

Source: ACMA Industry statistics & Circular letter no: 2164/2004-05/6.12A from ACMA’s President

AutomobilesThe high growth observed since 2001-02 in automobile production continued in the first three quarters of the currentyear. Annual growth was 16.0 per cent in April-December, 2004; the growth rate in 2003-04 was 15.1 per cent.Consequent to liberalisation, the arrival of new and contemporary models, easy availability of finance at relativelylow rate of interest and price discounts offered by the dealers and manufacturers appear to have stimulated thedemand for vehicles and a strong growth of the industry. The automobile industry grew at a compound annualgrowth rate (CAGR) of 22 per cent between 1992 and 1997. With investment exceeding Rs. 50,000 crore, theturnover of the automobile industry exceeded Rs. 59,518 crore in 2002-03. Including turnover of the auto-compo-nent sector, the automotive industry’s turnover, which was above Rs. 84,000 crore in 2002- 03, is estimated to haveexceeded Rs. 1,00,000 crore in 2003-04.

The progressive liberalisation of the norms for foreign investment and import of technology appear to have benefitedthe automobile sector with production of total vehicles increasing from 4.2 million in 1998- 99 to 7.3 million in 2003-

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04. It is likely that the production of such vehicles will exceed 10 million in the next couple of years. The globalstandards achieved by the industry have manifested in the increasing exports of the sector. After a temporary slumpduring 1998-99 and 1999-00, such exports registered robust growth rates of well over 50 per cent in 2002-03 and2003-04 each to exceed two and- a-half times the export figure for 2001-02. Growth of exports of 32.8 per cent in thefirst three quarters of 2004-05 augurs well for the current year.

Capacity utilisation in industry is at a high and most of the companies are actively engaged in enhancing capacities,making investments and even expanding their footprints within the country as well as abroad.

Following are the details of investments Auto parts companies have done from 1997 to 2005:


All-round GrowthContrary to the misconception that the growth in automobile industry has catered only to the top income-stratum ofsociety by producing mostly passenger cars, the fastest growth in volumes has come from commercial vehicles.Between 1998-99 and 2003-04, output of such vehicles has grown 2.8 times compared to the 2.2 times increase inpassenger cars. Furthermore, two-wheeler output continues to dominate the volume statistics of the sector. In 2003-04, for every passenger car turned out by the sector, there were 7 two-wheelers produced. In the two-wheelersegment, there is a greater preference for motorcycles followed by scooters, with both production and domesticsales of motorcycles increasing at faster rates than for scooters in the current and previous years. However, mopedshave registered low or negative growth. Export growth rates have been high both for motorcycles and scooters.

Sales incentives, introduction of new models as well as variants coupled with easy availability of low cost financewith comfortable repayment options continued to drive demand and sales of automobiles during the first two quar-ters of the current year. The risk of an increase in the interest rates, the impact of delayed monsoons on ruraldemand, and increase in the costs of inputs such as steel are the key concerns for the players in the industry. As theplayers continue to introduce new models and variants, the competition may intensify further. The ability of theplayers to contain costs and focus on exports will be critical for the performance of their respective companies.

The auto component sector has also posted significant growth of 20 per cent in 2003-04, to achieve a sales turnoverof Rs. 30,640 crore (US$ 6.7 billion). Further, there is a potential for higher growth due to outsourcing activities byglobal automobiles giants. Today, this sector has emerged as another sunrise sector.

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Following is the Auto component industry production (in US $ Million) from 1996 to 2005, which shows a clearincreasing trend over the years:


AUTO COMPONENTS SECTORThe past few years have witnessed a continuous influx of global auto majors in India. Many auto majors haveestablished facilities, which have also been aided by the liberal government policy. India crossed million-mark lastfiscal, which has set the domestic auto ancillary industry on a roll. Auto MNC’s are also launching their latest modelsin India. The domestic auto industry has also come up with new and quality models. Consequently, the importancefor precision auto components has been growing.

The increase in demand for auto components in India has also resulted in an increase in revenues and exports.Exports of auto components from India have witnessed a CAGR of over 19% over the last six years. Except forFY02, when the exports were down by 7.5%, the auto ancillary exports have shown steady northward movement. InFY04, the industry achieved a milestone of US$1bn worth of exports.

Geographical breakup of exportsIndia is now amongst one of the most preferred destinations for most of the major global OEM players. Following isan extract of the list of companies already outsourcing from the country.

_ Hyundai – Export base for small cars

_ Ford – exporting CKDs of Ikon to South Africa and other countries

_ Skoda – Hub for exports of cars to neighboring countries

_ General Motors – Global Purchasing Team

_ Volvo – Global buying team

_ Delphi – International purchase office

_ Renault – scouting for truck part suppliers

The India Advantage1. The country provides skilled and cheap labor. For e.g. the wage cost as a percentage of sales in Indian

forging industry is less than 9% and the same for US companies was 38.8%.2. Indian component manufacturing companies have achieved significant level of automation at a lower cost.

Global benchmarks for quality standards are also not too far from being achieved.3. Total Quality Management and Total Productivity Management by the companies also help in lowering the

production cost.4. Investments in the auto component industry in India have witnessed growth over the last seven years;

investments during FY 02-03 were USD 2.6 billion.5. Legal and accounting systems are in place to meet the global standards.

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6. The technology in the industry has improved significantly with quite a few Indian companies entering intotechnological collaborations with global majors.

7. With respect to quality many companies have achieved various certifications.391 companies with ISO 9000 certification222 companies with QS-9000 certification95 companies with TS 1694966 companies with ISO 14001 certification9 companies with ISO 18001 certification5 Deming prize-winning companies1 Japan quality medal winning company

Current Scenario & Future OutlookThe auto component sector is on a growth trajectory as is evident by the fact that auto components has beendesignated as a “Thrust Sector” by the Government of India under the EXIM Policy.

The Department of Commerce is to promote export of auto components through a specific sectoral strategy. Thesize of the global auto component industry is USD 1.2 trillion with most of it located in high cost countries. Globalpurchases of components by international vehicle manufacturers are currently estimated to be USD 45 billion.However, the role of outsourcing is constantly increasing.

Also, the problem of high rejection rates which plagued the domestic auto ancillary industry has been overcomewhich is exhibited in number of overseas deals concluded by the domestic industry amidst stiff competition fromother Asian countries. The Government has extended various fiscal incentives and policy measures, which havehelped the industry.

Critically, outsourcing of automobile components that have relatively high engineering and design content fromsuppliers in low cost countries like India, is gaining momentum fast. It is estimated that in the next 10 years the autocomponents industry will reach USD 33-40 billion.

Going by the current trends in the domestic automotive industry and as stated above, it is expected that the indig-enous demand for auto components will also reach USD 13-15 billion in the next 10 years and about USD 20-25billion would be exported. To meet the combined demand from domestic and international customers the industrywill have to make significant incremental investment Hence, the Indian auto component industry (and by sequel theforging industry) is poised to achieve a position in the top slot in the world and will be in all probability a major driverof growth and employment in the domestic economy. Considering the recovery, particularly in the first half of thefinancial year (which saw substantial growth in the forging industry too) i.e. domestic demand increasing by about15% over the previous year and exports by over 25%, the above estimates look challenging yet achievable.

India has a good opportunity and potentialThe McKinsey’s study has highlighted that India has a good opportunity and potential to develop the auto compo-nent industry from around $ 9 billion today to about $ 40 billion by 2015. The same study projects the export potentialas $ 20 billion by 2015. We are already witnessing acquisitions of companies in Europe and North America by Indianautomotive components manufacturing companies. All these are indicative of the fact that India is fast emerging asa global automotive hub and is engaging much attention for its high competitiveness, cost-effective solutions, goodengineering and design skills etc. This is helping us project ourselves as an ideal outsourcing destination. A stableeconomic environment is enabling the exponential development.

Emergence of Auto Components IndustryThe auto parts industry has emerged as one of the country’s fastest growing manufacturing sectors and a globallycompetitive one. The sector posted a significant growth of 20 per cent in 2003-04 by achieving a sales turnover ofRs. 30,640 crore. The growth has been accelerated due to availability of skilled low cost labour. There is a hugepotential for higher growth due to outsourcing activities by global automobiles giants. Today this sector has emergedas another sunrise sector. India’s automotive component industry manufactures the entire range of parts required bythe domestic automotive industry and provides employment to 2.50 lakh workers. There are reported to be around416 auto components manufacturers in the country. Bharat Forge Ltd, a Pune-based company has emerged as themajor global supplier of automotive engines and suspension components. The company manufactures a wide rangeof forgings and machined components for the diesel engine. Besides, the country has emerged as an outsourcinghub for auto parts for international companies such as Ford, General Motors, Daimler Chrysler, Fiat, Volkswagonand Toyota. These companies have set up permanent offices in India.

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The auto components manufacturers have two kinds of buyers original equipment manufacturers (OEM) and thereplacement market. The replacement market is characterized by the presence of several small scale suppliers whoscore over the organized players in terms of excise duty exemptions and lower overheads. The demand from theOEM market, on the other hand, is dependent on the demand for new vehicles.

Tata Motors have developed cars based on indigenous design and manufacture with 100 per cent of Indian partsand have established themselves as one of the leaders in Indian automobile industry.

In order to meet the international quality requirements, many ancillary units have entered into joint ventures withforeign components majors. In 2002, there were about 225 active collaborations of which 67 were with Japan, 40with the UK, 44 with the Germany and 31 with the USA. India enjoys cost advantage with regard to castings andforgings. The manufacturing costs in India are reported to be 25-30 per cent cheaper when compared with theirwestern counterparts. India’s competitive advantage does not come from costs alone, but from its Full ServiceSupply capability.

To encourage the smooth growth of the industry, the Government of India has allowed automatic approval for foreignequity investment upto 100 of manufacture of auto components.

The Engineering Export Promotion Council under the aegis of Ministry of Commerce & Industry, Government ofIndia over the years has been engaged in promoting exports of engineering goods including auto parts. The Auto-motive Component Manufacturers Association of India (ACMA) has been representing the Indian auto componentindustry. The Association has been engaged in promoting trade, technology up gradation, quality enhancement andcollection and dissemination of information. For getting up-to-date information about the auto component industry,its website: www.acmainfo.com can be accessed. According to ACMA, during 2003-04, auto components exportsfrom India crossed the US$1 billion mark and the Association has predicted that by 2010, the figure will reach a levelof US$5 billion.

RECENT DEVELOMENTSi) Auto Expo

The 9th Auto Expo was organized in New Delhi’s Pragati Maidan. It was organized by ACMA, SIAM & CII from20 January 2006. It provided an excellent opportunity to enhance international business for the auto compo-nent sector.

ii) Auto Compo 2005While India enjoys certain advantages to become a global outsourcing hub for auto components industry, thereare also some hitches that need to be corrected if the full potential is to be realized.

Mr. V.K. Viswanathan stated this recently; Joint Managing Director of MICO while delivering the keynote ad-dress at the “Auto Compo 2005” organized by CII in Coimbatore. The Indian auto industry, he said, is expectedto grow five fold in the next 10 years to reach an annual volume of US$35 billion and the exports might reachUS$8-09 billion. Explaining the reasons for the optimism, he said the cost of auto designing in India is less thanone twelfth of the cost of doing the same in the US. Further, he said that there were some challenges too. Theseinclude poor infrastructure facilities with respect to airports, sea ports, roads and power in which India laggedbehind some of its Asian rivals like China and the labour laws are also restrictive and inflexible and requiredattention.

iii) Setting Up of Cluster for Auto ComponentsThe Government of India have decided to take 19 industrial clusters under the Industrial Infrastructure Upgradation Scheme of the Department of Industry Policy and Promotion, Government of India. This has beendone to enhance the competitiveness of the domestic industry by providing quality infrastructure through public-private partnership.

iv) Setting up of SEZ by Mahindra Group:The Mahindra Group would develop the first corporate special economic zone in the country The SEZ situatedabout an hour drive away from Chennai will cater to three sectors: information technology, apparel and fashionaccessories and auto ancillaries.

v) Sub-Committee to Promote ManufacturingThe National Manufacturing Competitiveness Council (NMCC) has set up a subcommittee to promote manu-facturing of 10 sectors including auto components. The Council is working on a long-term strategy for doublingthe share of manufacturing in GDP from 17% to 37% in the next few years.

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EXPORT PROSPECTSAccording to “Automotive Component Industry: Vision 2015”, a Report prepared by Mckinsey & Co, India-basedautomotive component manufacturing has the potential to grow from US$6.7 billion in 2004 to US$33-40 billion by2015. The potential growth, it says, could create 2.5-3 million additional direct and indirect jobs and provide asignificant employment opportunity for the rural/small town population The Report says that the components indus-try is highly disaggregated with only the top 3-5 per cent having the capacity to compete in the international market.The industry’s strengths, it says, lies in the labour intensive, commodity components such as castings, forgings,tools and dies and such other parts, which are low value, low-margin products. High–technology and high valuecomponents such as engine management and emission control systems are dominated by multinationals. Further,it says that there are only a handful of players, which have the size and scale to compete in the global markets at TierI supplier. The strengths of the domestic industry lie in the Tier II and Tier III products where the competitivenesscomes mainly from lower labour costs. The Report makes many recommendations for the industry. Some of themajor ones are given below:

a) Automotive Component Manufacturers Association of India (ACMA) should initiate a study to identify thespecific components where Indian companies have the competitive advantage. The industry, it says, shouldidentify products and their manufacturers where the strengths are more sustainable and well grounded.

b) Second, ACMA should instil quality consciousness among all its members.

c) The Government should devise policies that support the industry in its efforts to become a global player.

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OUR BUSINESS

OverviewLumax is a well-known brand name in the Indian automotive industry and is recognized as a specialist in producinga wide range of automotive equipment like rear view mirrors, filters (air, oil, fuel) and plastic moulds and sheet metalcomponents. The Company is the OEM supplier to almost all auto majors in the country. The philosophy of theCompany is to produce world-class quality products with optimum utilization of resources, continuous up gradationof technology and total customer satisfaction. Lumax, with its experience in the trade has the capability to deliveroutstanding product quality in order to meet customer satisfaction and international standards at competitive prices.

Specialized staff and a low percentage of error during the production cycle enables us to reach results that aredecidedly superior and assists us in keeping the costs under control. In fact, at Lumax, technology as a resource hasalways had absolute priority since we consider it something that cannot be left aside in the extremely sophisticatedworld of automobiles.

The Company plans to address the growing opportunities in the field of auto components by upgrading itsinfrastructure, design and testing facilities and by adopting the latest manufacturing facilities available worldwide.We continuously interact with our technical collaborators. We also visit various manufacturers of our products worldwideto see their manufacturing practices and we continuously strive to improve our manufacturing facilities accordingly.We also work with our vendors like Honda Motorcycle & Scooter India Private Limited (HMSI), etc. and participate invarious training programmes conducted by them to learn new techniques and implement them in our units.

The Company is undertaking expansion of its existing manufacturing facilities. We plan to upgrade ourfacilities as under:i. Expansion at the Filter & Plastic Divisions at Manesarii. Expansion at the Mirror Division at Sector 6, Faridabadiii. Setting up of tool room and R&D Centre at Manesariv. Manufacture of new mould & diesv. Installation of testing material at Pune and DLF Faridabadvi. Setting up of a corporate office at Delhi andvii. Investment in the joint venture with Magna Donnelly Corporation, Michigan, USA.

LOCATION OF PLANTSWe have nine state of the art manufacturing plants located all over India. A brief description about these plants is asfollows:

Mirror Manufacturing Facilities:We manufacture interior and exterior rear view mirrors. These mirrors are manufactured with the use of CAD/CAMsystems that allow three dimensional design visualization styling to match smooth contours of vehicle bodies andare equipped with actuators for driving comfort. We manufacture mirrors at the following plants:

Plant No. 1 - PLOT NO. 78, SEC-6, FARIDABAD (HARYANA); andPlant No. 2 - C-10, MIDC INDUSTRIAL AREA, WALUJ, AURANGABAD (MAHARASHTRA)

Filter Manufacturing FacilitiesWe manufacture air cleaner assemblies for LCVs , HTVs , all passenger cars, MUVs , SUVs and tractors. We alsomanufacture air cleaner assemblies of dry type, oil wetted foam type and oil bath type for 2 wheelers & 3 wheelers.The filter manufacturing units of Lumax are located in Faridabad, Manesar and Pune at:

Plant No. 3 - PLOT NO. 29 DLF INDUSTRIAL ESTATE, PHASE –II, FARIDABAD (HARYANA)Plant No. 4 - D-2/44, MIDC INDUSTRIAL AREA CHINCHWAD. PUNE (MAHARASHTRA)Plant No. 5 - D-2 BLOCK, PLOT NO. 29/5 MIDC CHINCHWAD, PUNE-19 (MAHARASHTRA)Plant No. 6 - PLOT NO. 46, SECTOR-3, IMT MANESAR, GURGAON (HARYANA)

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Plant For Plastic And Sheet Metal ComponentsWe manufacture plastic moulded components using injection moulding technology and blow moulding technologywith advanced auxiliaries e.g. mould temperature controller and mould cooling using chiller plant. It is to ensuremaximum production of optimum quality products using ideal resources (mainly energy conservation). The plantsfor plastic components are located at:

Plant No. 7 - PLOT NO. 99, UDYOG VIHAR, PHASE-IV GURGAON (HARYANA)

Plant No. 8 - 10, INDRAPRASTHA ESTATE 12/2, SARAI KHAWAJA, MATHURA ROAD, FARIDABAD (HARYANA)

Plant No. 9 - PLOT NO. 46, SECTOR-3, IMT MANESAR, GURGAON (HARYANA)

Details of the Installed Capacity utilization and Expansion Plan: UNITS INSTALLED PRODUCTION CAPACITY

CAPACITY ( IN NOS.) UTILISATION( IN NOS.) (IN %)

A. MIRROR PLANT FARIDABAD 1,600,000 1,394,319 87.14AURANGABAD 2,200,000 1,059,173 48.14

Total 3,800,000 2,453,492B. FILTER PLANT MANESAR 900,000 768,610 85.40

PUNE 600,000 435,172 72.53DLF 200,000 162,364 81.18

Total 1,700,000 1,366,146C. PLASTIC COMPONENTS FARIDABAD 5,500,000 4,817,445 87.59

MANESAR 4,000,000 3,607,049 90.18GURGAON 4,500,000 3,758,432 83.52

Total 14,000,000 12,182,926

Note: The number of pieces varies as per the size of the respective products

Expansion PlanWe have undertaken expansion of our existing manufacturing facilities. After expansion, our capacities & projectedutilization will be as under:

Units Installed Production CapacityCapacity (In Nos.) Utilisation(In Nos ) (In %)

A. Mirror Plant Faridabad 2,850,000 2,400,000 85Aurangabad 3,045,000 2,300,000 75

Total 5,895,000 4,700,000B. Filter Plant Manesar, 1,190,000 1,000,000 85

Pune 600,000 510,000 83DLF 200,000 180,000 90

Total 1,990,000 1,690,000C. Plastic Components Faridabad, 5,500,000 5,000,000 90

Manesar 5,300,000 54,500,000 85Gurgaon 4,500,000 3,500,000 80

Total 15,300,000 13,000,000

Certification, Awards & TechnologyThe Company has ISO/TS169&9:2002; ISO 9001:2000 and QS9000:1998 certifications for its plant locations atFaridabad and Manesar.

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CompetitionThe level of competition among manufacturers is increasing on a day-by-day basis. This is driven by the drive toretain and sustain market share and also by the availability of choice for buyers. For Lumax , our key competitors(product wise) are as follows:

MAIN COMPETITORS FOR REAR VIEW MIRRORS

SL NO NAME OF THE COMPETITOR LOCATION1 Schefenacker Motherson Ltd Delhi2 Tata Ficosa Pune3 Engine Tech systems Pune4 Krishna Toyo Gurgaon5 SLD Delhi6 Fiem Industries Delhi7 Alpha Toyo Faridabad

MAIN COMPETITORS FOR FILTERS

SL NO NAME OF THE COMPETITOR LOCATION1 Fleet guard Jamshedpur2 Purolator Gurgaon3 Kirloskar Mahle Pune4 Ranee Polymer Manesar5 Varroc Pune6 Mag Filter Gurgaon7 Alofic Faridabad8 Enginetech Pune9 Car Line Jamshedpur

MAIN COMPETITORS FOR PLASTIC MOULDING PARTS

SL NO NAME OF THE COMPETITOR LOCATION1 Ranee Polymers Gurgaon2 Motherson Sumi Systems Noida3 Sun Vacuum Gurgaon4 Bright Brothers Faridabad

Raw MaterialsThe basic raw materials are polypropylene, ABS, nylon, filled PP, polyacetal granules for plastic injection moldingproducts and are available in Delhi and nearby areas. As far as filters/air cleaners are concerned, the basic rawmaterial is non woven fabric (filter paper), which the Company is importing from M/s. Toyo Roki Manufacturing Co.Limited, Japan. Alternatively, another grade for non-woven fabric is also available within India and is sourced fromM/s Supreme Non Woven Pvt. Ltd., Daman. The Company has already established requisite network for the purchaseof all these raw materials and does not envisage any problems in respect of raw material procurement.

Infrastructure facilitiesPowerThe Company has regular supply of power from the local electricity boards at its various plant locations and has notfaced any major power cuts. We are also making applications to the various electricity boards for additional powerrequirements in view of proposed expansion plans. As a secondary source of power, we rely on in-house generatorsof various capacities at our various locations, which cater to the power requirements for our plants. The Companyis additionally installing a new generator at its plant at Sector 6, Faridabad in order to take care of additional powerrequirements.

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WaterWater is mainly required for the purpose of cooling with a small part of the total requirement being for drinking,sanitary and other miscellaneous purposes. The requirement of water is met through regular connections from localauthorities at different locations in addition to the bore wells present at the sites at few locations.

AirCompressed air is required in the regular production process as well as for the general cleaning of various items ofequipment. The major utilization of compressed air is at machine centers and presses. For compressed air, we havenecessary provision of air compressors of adequate capacity at plant locations. Other arrangements required for thedistribution of compressed air to various points of operation such as suitable pipelines, valves, pressure regulatingdevices, receivers, etc. are in place for smooth functioning.

ManpowerCurrently (i.e. as on 31st March, 2005) there are 658 people employed with the Company. Apart from this we alsoengage contract labour. We have good relations with our employees. In future we may require additional manpower.There is easy availability of additional technical and non-technical workers around the plant locations of the Companyand we do not foresee any problems in continued and unhindered hiring of manpower resources.

OUR PROPERTIES

Sr. No. Unit Location Leasehold/ Area Remarks1 Registered B- 86 Mayapuri Industrial Area,

Office Phase I, New Delhi- 110 064 Lease hold - - MIRROR PLANTS2 Unit 1 Plot No.78, Sector-6 Freehold 5000 sq. yd. Property stands in

the name of LASLUnit 2 C-10, MIDC Indl. Area Lease hold 4950 sq. mt. Property stands in

Waluj, Aurangabad the name of LASLFILTER PLANTS3 Unit 3 Plot No.29, DLF Indl. Estate Free hold 2588 sq. yd. Property stands in the

Phase-II, Faridabad name of Globe AutoIndustries. Mutation in thename of LASLis in process.

4 Unit 4 Plot No. D-2/44, MIDC Indl. Lease hold 1435 sq. mt. Property stands in theArea Chinchwad, Pune name of LASL

5 Unit 5 D-2 Block, Plot No. 29/5 MIDC Leasehold 800 Sq. mt. Property stands in the Indl. Area, Chinchwad, Pune name of the erstwhile MPI

6 Unit 6 Plot No.-46, Sector 3, IMT Free hold 7875sq. mt. Property stands in theManesar, Gurgaon name of LASL

PLASTIC PARTS PLANTS7 Unit 7 Plot No.99, Udyog Vihar Free hold 1000 sq. mt. Property stands in the

Phase-IV, Gurgaon name of LASL8 Unit 8 10, Indraprastha Estate, Leasehold 1041 sq. mt. Taken on lease from

12/2 Mathura Road each Director Mrs. KamleshFaridabad Jain and Nytex Auto

9 Unit 9 Plot No.-46, Sector 3, IMT Free hold 7875 sq. mt. Property stands in theManesar, Gurgaon name of LASL

OTHER PROPERTIES10 Vacant Land Khasra No.6366/4655/280 and Free hold 425 sq. ft. Property held in name of

for future use 4658/281, Daultabad Road erstwhile ToshiNear Chungi, Gurgaon

11 Vacant Land Plot No. 12, Sector 1 Free hold 450 sq. mt. Property held in name offor future use IMT, Manesar, Gurgaon erstwhile

Toshi12 Shed Block C-2, Flat No. 10. Free hold Property held in name of

IInd Floor, MIDC Chinchwad erstwhile MPIPune

13 Shed A-26, H Block, Pimpri, Pune Leasehold 1079.10 sq. mt. Property held in name ofLASL

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Business StrategyThe Company is striving hard to increase its business presence across its core business area i.e., manufacturing ofworld-class automotive components (rear view mirrors, filters, and plastic parts) through various initiatives andactivities. The growth witnessed by the automotive sector has created significant opportunities for auto componentmanufacturers, which supports expansion and investment. Lumax is determined to take advantage of this scenarioby undertaking many initiatives and activities such as:-

i. New facility creation and up gradation/expansion of existing facilitiesThe demand for our products is increasing on a day-by-day basis due to the increase in vehicle manufacturingin India. In some areas we need to invest in order to cater to the growing demand in this respect. For this, theCompany has planned to go in for investments in plant & machinery, land & building, modernization of existingfacilities, addition of new facilities, etc.

ii. Identification of market opportunities & increasing product portfolioThe Company intends to extend the existing range of its products to include a wider range of automotive parts.For this, we are planning to go in for diversification and horizontal integration of our product line and processes.The Company also intends to go in for manufacturing of technologically advanced products by upgrading itstechnical capabilities.

iii Enhancement of customer base and aggressive marketing to grab and secure more businessLumax intends to continue to grow its business by adding new customers, both domestic as well as international.The Company aims to do this by leveraging its marketing skills and relationships and by further enhancingcustomer satisfaction.

iv. Strengthening sourcing capabilitiesToday the supplier selection forms an integral part of the entire supply chain. Lumax keeps identifying new andmore efficient suppliers in order to reduce costs, increase the speed of delivery, improve quality standards andreduce lead times.

v. Reduction in operational costsThe Company is working aggressively to reduce its operational costs and overheads to increase competitivenessin the tough market conditions. This is being done through cutting expenses, improving efficiency at all level ofoperations and maximizing the utilization of available resources.

vi. Product Technical EnhancementThe demand of technologically advanced rear view mirrors such as electrically operated mirrors, cable operatedmirrors, etc has increased in the premium car segment. The Company has already entered into a joint venturecollaboration with Magna Donnely a global leader in the manufacturing of mirrors in order to cater to the premiumcar segment. For details refer to page no [•] of this Draft Red Herring Prospectus.

Our Competitive StrengthsOur competitive strengths as a participant in the auto component industry include:

1. THE COMPANY IS HAVING ACCREDITATIONS LIKE ISO/TS16949:2002; QS-9000:1998 and ISO9001:2000This reflects our commitment to strong quality systems, compliance with international standards and thecommitment to provide finest products and services to our valued customers.

2. DEDICATED PLANTS FOR MANUFACTURING OF REAR VIEW MIRRORS, FILTERS AND PLASTICMOULDED PARTSWe have nine state-of-the-art plants located all over India for manufacturing of world-class automotive products.The plants are strategically located near manufacturing bases of our major customers to save on transportationcosts and maintain strict delivery schedules for customers. Four plants are dedicated for manufacturing aircleaners and oil/fuel filters, two plants for rear view mirrors and three plants for plastic moulded parts. Our plantsare equipped with imported machinery and the latest equipment. With this strong infrastructure and a team ofdedicated professionals working for us, we are in a position to produce both quality as well as quantity of ourproducts.

3. FULLY EQUIPPED, IN-HOUSE TOOL MANUFACTURING AND TESTING FACILITYWe have dedicated tool-making machinery for manufacturing, maintenance and repair of the most sophisticatedtools and dies at our various plant locations. This is to ensure smooth day-to-day functioning and to support newdevelopments. Our design department works on latest software like IDEAS, Unigraphics, etc. for modeling andmould design.

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We are going to further upgrade these facilities.We have also installed latest testing equipment in our labs for quality assurance right from the raw materialstage to the final product stage. Our products are also homologated from government recognized agencies andare fully compliant to CMVR Regulations. To cater to the export markets, we follow worldwide acceptable standardslike “E” marking, JIS, SAE, etc.

4. WELL-QUALIFIED AND TRAINED STAFFThe Company has well-qualified, trained and comprehensively skilled work force in order to ensure perfectionand impeccability in every work area. We also provide our workforce with a world-class working environmentand take sufficient steps to inculcate a sense of belongingness and participation among our employees. Skilledmanpower coupled with seasoned management at Lumax,makes it a lethal combination for our competitors.

5. CONTINUOUS EFFORTS & PLANS FOR SUPPLIER UPGRADATIONWe fully realize the importance of all participants in a product’s supply chain till it reaches the end user. Therefore,we make our suppliers an integral part of our success effort and we are also in the process of upgrading all oursuppliers to ISO standards in order to make them globally competitive like ourselves.

6. DIVERSIFIED PRODUCT PORTFOLIOWe have manufacturing facilities to manufacture a diversified product range capable of catering to the needsand requirements of almost all segment of the automobile industry viz two wheelers, passenger cars, MUVs,LCVs, HTVs etc. in our areas of operation.

7. SUPPORT OF OUR VALUABLE CUSTOMERSOur large customer base consists of around 75 customer locations in India where we are supplying our products.That figure in itself explains that we have our presence in most types of vehicles running on Indian roads. Thishas been made possible with the unstinting cooperation and faith of our esteemed customers such as TataMotors, Maruti, Hyundai, Honda, GM, Bajaj, Eicher, Ashok Leyland, Kinetic, etc.

8. LUMAX, A BRAND WELL KNOWN IN INDIA & ABROADBeing in the auto components’ business for more than five decades, Lumax has earned for itself a reputationthat is unparalleled till date. We intend to continue in this leadership position by providing our valued patronswith unequalled products and services in the future.

9. TREMENDOUS SCOPE FOR CAPACITY EXPANSIONOur existing facilities have ample scope for capacity expansion in order to cater to the growing needs andrequirements of the automobile sector in India as well as for catering to the overseas markets. We are alsoplanning some new projects for which we seek participation from certain foreign automotive componentmanufacturers.

10. A long and healthy association with financial institutions/banks is also a boon for our expansion activities in theform and manner of timely availability of credit facilities at competitive terms.

OUR PRODUCTSThe product range of the Company caters to passenger cars, utility vehicles, LCVs & HTVs , tractors, earth movingequipment and two & three wheelers. Our product range includes the following:

1. Rear view mirrors2. Automotive filters3. Plastic moulded components

PRODUCTION PROCESSREAR VIEW MIRRORSLumax has two dedicated plants for manufacturing a large variety of rear view mirrors. One of the two plants ,located in northern India, is mainly manufacturing and supplying rear view mirrors for four-wheeler category ofvehicles which include vehicles like passenger cars, MUVs/SUV’s, HCVs, LCVs and tractors. The second mirrorplant located in central India, is mainly manufacturing mirrors for the two & three wheeler segment.

Both mirror plants have all in-house processes right from moulding, mirror forming up to assembly for ensuring thefinest quality control. All our mirrors are homologated as per AIS 001 norms specified by the Central Motor VehiclesRules (CMVR) of India. We have facilities to perform all the mandatory tests for rear view mirrors such as vibrationtests, reflectivity tests, impact tests, bending tests, distortion factor tests, moisture resistance tests, thermal cycletests, etc. Most of our mirrors are ECE approved complying with European Union norms.

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A brief process of manufacturing of rear view mirrors is given below:

Cleaning and strip cuttingIn this process float glass sheets of specific size are first cleaned with septic solution, than the same are cut in stripsof required shape. Cleaning of sheets help us to weed out various defects like scratches, watermarks and othertypes of marks.

MARKINGIt is the process of cutting the glass in required shape with the help of templates, diamond cutting tools, cutting pliersand cutting fixtures and skilled manpower. This is a manual process in which we get the required shape by markingthe desired profile with the help of diamond cutting tools. By giving the path with the help of templates, the desiredshape is achieved by cutting the’ excess glass with the help of cutting pliers.

CONVEXINGIt is the operation of bending of the glass in required shape i.e. radius of curvature. In this process mirror plates areplaced on moulds having specific radius convexed into required shapes. These predetermined shaped plates arepassed through a convexing machine with a temperature range of around 700

o F. The shape is obtained with thehelp of convexed brick of silica on which the required radius is dressed.,The process is controlled by a temperaturecontroller and the speed of the conveyor.

SECOND CUTTING PROCESSIt is the process of getting the required shape of mirror by cutting the convex glass through three axis control CNCmachine.

EDGE GRINDINGIt is the process in which the mirror plates are chamfered or grinded on their edges to remove excess material andsharp edges and to get the required finish and improve the appearance of the mirror plates. The current process ofedge grinding is manual with the help of surface treated emery belts

METALLIZINGThis process is of two types i.e. Chrome and Aluminum. It is the process by which float glass is converted into mirrorby coating pure aluminum/chrome vapors through a process in which the tungsten wire containing aluminum staplesacts as one surface while the glass acts as the other surface. This leads to the travel of aluminum vapour to getattracted to one surface of glass in vacuum with specific voltage and current.

LAB AND TESTING FACILITYThe following tests are carried out on sample basis1 Impact test2 Bending test3 Salt spray test4 Reflectivity test5 Distortion test I6 Vibration test7 Radius of curvature8 Temperature resistance test9 Moisture resistance test

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AUTOMOTIVE FILTERSLumax has been manufacturing filters for the automobile industry since 1983. During this long period, marked bymajor technological innovations in the field of motors, we have acquired deep experience. We are proud to beamongst the few firms that have made a contribution in this field through systems programme, which includesconstant updating of our staff and the use of machinery of the latest generation. Experience, professionalism andresearch are the characteristics that enable us to keep our schemes updated.

FILTER MANUFACTURING PROCESSThe cycle of production of every Lumax product is strictly programmed and controlled at every stage, down to thesmallest detail and through a careful selection of raw materials. The production processes are adjusted wheneverrequired, and the products are tested periodically according to the most severe standards and the specific charac-teristics imposed by the automobile manufacturers. Particular attention is given to the high standards required byquality standard & certification agencies to offer quality products to an increasingly demanding market.

PROCESS FLOW CHART FOR SHEET METAL AIR CLEANER ASSEMBLY’S

*The filters were the manufactured by Lumax Industries Limited. This Plant has been de-merged in our company asper scheme of de-merger. For details plan refer to Page [•] of this Draft Red Herring Prospectus.

Process DescriptionThe raw materials required are steel sheets, filter paper, felt, polyurethane, paint & pre treatment chemicals etc.Steel sheets are procured from reputed sources like SAIL, TISCO, in the required cut sizes. These sheets are thensheared to the required strips and circles to obtain optimum blank sizes so as to minimize the wastage / scrap.First off inspection and inspection at every stage, in addition to patrol inspection ensures that quality is maintainedthrough out each and every process. Inspection is carried out at each stage. These blanks are then fed to the pressshop for further operations like deep draw, punching, flaring, rolling, and reeling operations.Pressed components along with the bought out parts are brazed to the required design requirements, and then sentto the paint shop.Lumax has a special seven-tank process for phosphating and a state of the art paint shop and a powder coat plant.These together ensure the right kind of finish and corrosion resistance to our components.The finished and painted bodies are assembled with the filter element, which is made in-house and then packedproperly before being transported to the customer’s end.In-house facilities include complete testing of air cleaners, oil filters etc. On occasional basis we also get our prod-ucts tested by 3rd party testing facilities for institutions tax supplies, defense, state transport undertakings etc.

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RM – Raw materialPDI – Pre dispatch Inspection

Raw Material Receipt & Inspection:This function is carried out by the Store & Quality Department under predefined procedures covering all the factorsto ensure right Quantity, Quality, Price and time receipts. Strict control on the first step ensures that productionprocess do not suffer at later stage.

Various types of raw materials are used such as LDPE, HDPE, PPCP, PP (Filled), ABS, Nylone, Acrylic, PVC etc.

Plastic Raw Material Pre-HeatingThe plastic material is dehumidified before actual processing to ensure defects free product and least rejectionduring the moulding process. This step ensures the maximum customer delight and optimum cost.

Auto Feeding of Raw Material in Hopper Air drier with LoaderHigh technology equipments are used to ensure high-speed dehumidification and maximum raw material loadingwithout excess manpower. The technology gives us the edge over the competitors.

Moulding ProcessWe manufacture plastic moulded components using injection moulding technology and blow moulding technologywith advanced auxiliaries e.g. mould temperature controller and mould cooling using chiller plant. It is to ensuremaximum production of optimum quality product using ideal resources mainly energy conservation.

Quality InspectionQuality assurance function is given the utmost priority keeping the ultimate customer satisfaction in mind. Our plantat Faridabad is QS-9000: 1998 international quality system certified which ensures that international standards arefollowed at all the stages of mass production.

The quality department is manned by Mechanical Engineers and Industrial Engineers of high caliber having ad-equate experience in the field. Stringent Quality Control measures are monitored on all the products especially onkey parameters of the process and the product.

Customer complaints are handled with utmost care in the fastest manner. Action required is under taken aftercustomer meeting regarding the problem. Temporary and Permanent counter measures are taken in such a way thatproblem does not arise in future. Data is collected regularly at the manufacturing site and also from the customer ondaily basis.

Deflashing & Assembly of PartsMinor nature correction is some times required on few parts. The process called deflashing does this. Subsequentlyrepair or rectification action is taken on the machine or on the mould to ensure flash free product is produced in themass production.

Many components are being supplied as an assembly, which needs a separate, but unique assembly line havingerror detection mechanical & electronics equipments to ensure all assemblies are identical and fully functional.Different stages of product assembly are monitored using work instructions and operation standards with criticalpoints highlighted.

PLASTIC MOULDING (BLOW & INJECTION MOULDING)Three units of the Company at Faridabad, Gurgaon and Manesar are engaged in manufacturing of plastic injectionmoulding and blow moulding parts for all sorts of 2 wheeler and 4 wWheelers. Injection moulding machines rangefrom 80 Ton-850 Ton and blow moulding machines from 2 Ltr.-100 Ltr.

Manufacturing Process Flow Chart of Injection / Blow Moulding

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48

Pre Dispatch InspectionAlthough the manufacturing process and quality assurance is verified and validated from time to time certain rejec-tion take place which is accounted and analyzed on daily basis. Disposal of the rejected products is done regularlyto avoid any chances of mixing the quality test passed products & rejected products.

Pre dispatch inspection is under taken on random sampling basis for various product characteristics that are likely todissatisfy the ultimate customer.

Dispatch to customerDispatch is critical and most important function because the product till this stage has consumed lots of resources.Competetant personnel under take dispatch by using appropriate medium of transportation keeping in mind thecustomer daily requirement. Emphasis is given on the defect free dispatch, good packaging, and timely dispatch andat economical price.

SWOT (STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS) ANALYSIS LUMAX AUTOMOTIVE SYS-TEMS LTD.STRENGTHS1. LUMAX, A BRAND WELL KNOWN IN INDIA & ABROAD

Being into auto components business for more than five decades, Lumax has earned a reputation that is unpar-alleled till date. We intend to continue this leadership by providing our valued patrons with unequalled productsand services in the future.

2. COMPANY HAVING ACCREDITATIONS LIKE ISO/TS:16949, QS:9000, ISO:9000, ISO:9001 & ISO:9002This reflects our strong commitment to quality systems, compliance to international standards and to providefinest products and services to our valued customers.

3. DEDICATED PLANTS FOR MANUFACTURING OF REAR VIEW MIRRORS, FILTERS AND PLASTIC MOUL-DED PARTSWe have nine state-of-the-art plants located all over India for manufacturing of world-class automotive products.Three plants are dedicated for manufacturing of aircleaners and oil/fuel filters, two plants for rear view mirrorsand three plants for plastic moulded parts. Our plants are equipped with imported machinery and latest equip-ments. With this strong infrastructure and a team of dedicated professionals working with us, we are in a positionto produce both quality as well as quantity of products.

4. TREMENDOUS SCOPE FOR CAPACITY EXPANSIONOur existing facilities are having scope for capacity expansion to cater to the growing needs of automobilesector in India as well as for overseas markets. We are also planning some new projects for which we areseeking participation from foreign automotives manufacturers.

5. FULLY EQUIPPED, IN-HOUSE TOOL MANUFACTURING AND TESTING FACILITYWe have dedicated tool making machinery for manufacturing, maintenance and repair of sophisticated toolsand dies at our various plant locations except at Manesar Plant where we are carrying out modernization of toolroom facility. This is to ensure smooth day-to-day functioning and to support new developments. Our designdepartment works on latest softwares like IDEAS, unigraphics, etc. for modeling and mould design.

We have also installed latest testing equipments in our labs for quality assurance right from the raw material tofinal product stage. Our products are also homologated from Government recognized agencies and are fullycompliant to CMVR Regulations. To cater to the exports markets, we follow worldwide acceptable standards like“E” marking, JIS, SAE, etc.

6. WELL-QUALIFIED AND TRAINED STAFFAll our work force is well qualified and trained to ensure perfection and impeccability in every work area. We alsoprovide our workforce with a world-class working environment and take sufficient steps to inculcate a sense ofbelongingness and participation among employees. Skilled manpower and seasoned management of Lumax,makes it really lethal combination for the competitors.

7. CONSTANT EFFORTS TO IMPROVE IN-HOUSE OPERATIONS AND PROCESSESWe work on the concept of continual improvement and on the philosophy that learning is a never-ending pro-cess. Therefore, we try to work in perfect synchronization with our customer’s needs improving our processes asand when required. We also put our earnest efforts to provide quality products to our customers at competitiveprices and ensure availability of right product at right time.

49

8. CONTINUOUS EFFORTS & PLANS FOR SUPPLIER UPGRADATIONWe fully realize the importance of all participants in a product’s supply chain till it reaches the end user. There-fore, we make our suppliers an integral part of our success and we are also on the process of upgrading all oursuppliers to ISO standards to make them globally competitive like ourselves.

9. SUPPORT OF OUR VALUABLE CUSTOMERSOur large customer base consists of around 75 customer locations in India where we are supplying our prod-ucts. That figure in itself explains that we have our presence in almost every vehicle running on Indian roads.This has been made possible with unstinting cooperation and faith of our esteemed customers like Tata Motors,Maruti, Hyundai, Honda, GM, Bajaj, Either, Ashok Leyland, Kinetic, etc.

10. Long and Healthy association with financial institutions/ Banks is also a boon for the expansion activities in formof timely availability of credit facilities at competitive terms.

WEAKNESSES1. Non availability of technologically advanced products & machinery2. Average manpower is quite old, so the desire and zeal to work is missing among employees.3. No global presence at present.4. Vendor base is quite big which can be consolidated and reduced.5. Minimum vertical or horizontal integration of work.6. Outsourcing of work to outside companies, which can be done within group companies.

OPPORTUNITIES1. New entrants, both national & international, are coming to automobile sector in India. These can be potential

customers for Lumax. For old customers also company should try for repeated/renewed business by usingcreativity and providing them new options.

2. Lumax can encash its long and successful relationship with foreign companies in exploring new business, as itwill be a natural choice for these foreign companies.

3. Taking advantage of long acquaintance of Indian market and the available infrastructure the company mustventure in other related areas also like manufacturing of sheet metal components etc., that doesn’t require hugeinvestment or other resources.

4. Lumax, with its brand name and reputation can expand its product portfolio for which market is already there.

THREATS1. The competition in the new era is getting tougher day by day. Now the new age competitor is more technology

driven, has got the creativity and above all is cost effective.2. Multinational player coming to the market are affluent, in term of funds, technology and other resources.3. The Lumax brand and reputation won’t do much good if the quality, cost, delivery and service to the customer is

not up to the mark.4. With increasing competition day-by-day and if the company do not think of innovation and value addition to its

products, it might lose business.

INSURANCEWe maintain property insurance to cover our plant and machinery, stocks, building and offices at various locationagainst fire and allied perils. The manufacturing fiacilities at Sector-6 Faridabad , Aurangabad , filter division Sector3, Manesar, Gurgoan, DLF Industrial Estate Faridabad and Pune are insured with ICICI Lombard General Insur-ance Company Limited. The manufacturing facility at plastic division Sector 3, Manesar, Gurgoan, I.P.Estate,Faridabad and Udyog Vihar are insured with ICICI Lombard General Insurance Company Limited and IFFCO TOKIOGeneral Insurance Co. Ltd.

The various policies that we have taken from above insurance companies are as follows:

1. Fidelity Guarantee Insurance Policy2. Money Insurance Policy3. Standard Fire and Special Perils Policy( Material Damage)4. Burgulary Insurance Policy5. Group Personal Accident Insurance Policy6. Workmen’s Compensation Insurance

50

OUR INDEBTNESS

Set forth below is the brief summary of our aggregate outstanding secured borrowing of approximately Rs. 1,705.31Lac as on 31.01.2006 together with brief discussion of certain significant terms of such financing agreements:

Principal Terms of Sanctioned Loans and Assets Charged as Security

Sr.No.

A

1.

B

1

2

Lender & Type of Facility /Sanction letter no. Loandocuments and date/Terms of repayment

Working capital

Syndicate Bank*Fund based Rs. 1000 Lac*Non fund based Rs. 500Lac*Sanction letter No.19/9006/2005/RA/ dated 05.12.2005

Term Loans

Syndicate Bank*WCTL Rs. 600 Lac*Sanction letter no. SANLTR.3/9006/2005/PNM dated02.03.2005* Charge registered on27.04.2005

HSIDC Ltd.*Term loan – Rs. 330 Lac*Sanction letter dated* Charge registered on02.01.2003

LoanDocumen-tation

* Loandocumentsdated

TOTAL

*Loandocumentsdated30.03.2005


Rate ofinterest

At PLR i.e11% p.a

PLR+1% i.e12% p.a

11 % p.a

Amt. Out-standing as onJanuary 31,2006

6,03,02,529

6,03,02,529

5,46,41,139

90,00,000

R e p a y m e n tSchedule

· Repayable ondemand and areavailable for oneyear.

*Repayable in 20quarterly install-ments of Rs. 30Lac each w.e.ffrom 30.09.2005

*Repayment plan loan is repayable in

22 quarterly in-stallments of Rs.15 Lac each

Details of Security

· Hypothecation of raw mate-rial, WIP, finished goods,stores and book debts of themirror and filter manufactur-ing units of the Company

· And also secured by way offirst charge on immovableproperties (All immovableproperties as per Note – I

· Second charge on the im-movable properties.( All im-movable properties as perNote II )

· Personal guarantees of pro-moter Directors. Viz; Mr. U.K.Jain, Mr. Nitin Jain and Mrs.Kamlesh Jain, of LASL

· Secured by way of firstcharge on immovable prop-erties (All immovable prop-erties as per Note – I

· Second charge on the im-movable properties.( all im-movable properties as perNote II )Personal guarantees of pro-moter Directors. Viz; Mr. U.K.Jain, Mr. Nitin Jain and Mrs.Kamlesh Jain, of LASL

· First charge on the fixed as-sets of the Company i.e landand building situated at plotno. 10, I.P Estate, 12/2,Mathura Road, Faridabad.Plot No. 99, Udyog Vihar,Phase IV, Guraon and PlotNo 46, secotr 3, IMT,Manesar, Gurgaon ( All im-movable properties as perNote II )along with the plantand machinery and othermovable assets installed onthat.

51

Sr.No.

3

4

5

6

7

8

Lender & Type of Facility /Sanction letter no. Loandocuments and date/Terms of repayment

HSIDC Ltd.*Term loan – Rs. 250Lac*Sanction letterNo.HSIDC:APP:2004:3499dated 29.03.04*Charge registered on13.07.2004

HSIDC Ltd.*Term Loan – Rs. 465 Lac*Sanction letterNo.HSIDC:APP:2005:577dated 22.07.05*Charge registered on15.09.2005

MARUTI UDYOG LTD.

CITY CORPORATION MUL

ICICI BANK

GE CAPITAL SERVICESINDIALoan amount Rs.212.69Lac

LoanDocumen-tation



Loanagreementdated21.09.2001

TOTAL

Rate ofinterest

11 % p.a

10.5 % p.a

10.5 % p.a

Between 9%to 10% p.a.(approx.)

Between 9%to 10% p.a.(approx.)

12.5% p.a.

Amt. Out-standing as onJanuary 31,2006

1,67,63,940

1,97,02,000

11,62,152

4,325

57,11,133

31,83,688

11,01,68,377


*Repayment plan loan is repayable in20quarterly install-ments of Rs. 12.50Lac each

*Repayment plan loan is repayable in24 quarterly install-ments of Rs. 19.375Lac each

Loan repayment isadjusted in the in-voice raised to MUL

Loan repayment asper the schedulegiven against theparticular car

Loan repayment asper the schedulegiven against theparticular car

Loan is repayable in20 quarterly install-ments of Rs.10.63Lac each

Details of Security

· First charge on the fixed as-sets of the Company i.e landand building situated at plotno. 10, I.P Estate, 12/2,Mathura Road, Faridabad.Plot No. 99, Udyog Vihar,Phase IV, Guraon and PlotNo 46, Secotr 3, IMT,Manesar, Gurgaon ( All im-movable properties as perNote II )along with the plantand machinery and othermovable assets installed onthat.

· First charge on the fixed as-sets of the Company i.e landand building situated at Plotno. 10, I.P Estate, 12/2,Mathura Road, Faridabad.Plot No. 99, Udyog Vihar,Phase IV, Guraon and PlotNo 46, Sector 3, IMT,Manesar, Gurgaon ( All im-movable properties as perNote II )along with the plantand machinery and othermovable assets installed onthat.

No charges registered againstmould

Hypothetication against the cars(No charges registered)

Hypothetication against the cars(No charges registered)

Hypothetication of 2 Nos. plasticinjection moulds for model A ex-port part no. 73811-79011 and73811-79820

52

NOTE – I(a) All those pieces and parcels of land admeasuring 5000 sq yards bearing Plot No. 78, Sector-6, Faridabad in theState of Haryana and bounded as under:-

On or towards the North by - Plot No.77On or towards the South by - Plot No.79On or towards the East by - Plot No.75On or towards the West by - Road

Together with all buildings and structures thereon and all plant and machinery attached to the earth or permanentlyfastened to anything attached to the earth.

(b) All those pieces and parcels of land admeasuring 2588 sq. yards bearing Plot No. 29, Industrial Estate, No.-II,situated at Village Palla, Tehsil Ballabgarh, Distt. Gurgaon in the State of Haryana and bounded as under:-

On or towards the North by - other’s LandOn or towards the South by - Plot No. 28On or towards the East by - RoadOn or towards the West by - Other’s Land


(c) All those pieces and parcels of land admeasuring 5920 sq. yards bearing C-10, MIDC Industrial Area, Waluj,Aurangabad in the State of Maharashtra and bounded as under:-

On or towards the North by - Plot No.P-3On or towards the South by - MIDC RoadOn or towards the East by - Plot No. C-9On or towards the West by - Plot No.C-11


(d) All those pieces and parcels of land admeasuring 1435 sq. mt. D-2/44 MIDC, Industrial Area, Chinchwad Pune inthe State of Maharashtra and bounded as under:-

On or towards the North by - Plot No.58 &59On or towards the South by - Link Road No.11On or towards the East by - Reserved AreaOn or towards the West by - Plot No.43/2


(e) All those pieces and parcels of land admeasuring 1079.10 sq. mt. bearing A-26, H- Block, MIDC, Industrial Area,Pimpri Pune in the State of Maharashtra and bounded as under:-

On or towards the North by - Plot No.25On or towards the South by - Plot No.27On or towards the East by - Estate RoadOn or towards the West by - Nala


53

NOTE - II

(a) All those pieces and parcels of land admeasuring 1000 sq. mt. bearing Plot No. 99, Udyog Vihar, Phase IV,Gurgaon in the State of Haryana -

Together with all buildings and structures thereon and all plant and machinery attached to the earth or perma-nently fastened to anything attached to the earth.

(b) All those pieces and parcels of land admeasuring 7875 sq. mt. bearing Plot No. 46, Sector 3, IMT, Manesar,Gurgaon in the State of Haryana


There are restrictive covenants under the terms and conditions of this loan agreement executed with the banks.Some of these restrictive covenants require the prior permission of the said banks for the following:

a. Effect any change in the Company’s Memorandum and Articles of Association:

b. Formulate any scheme of amalgamation/reconstruction.

a. Implement any scheme of expansion/ acquire fixed assets.

b. Enter into borrowing arrangements with any bank, financial institution, company or otherwise accept depos-its.

c. To obtain bank’s prior approval before declaring dividends.

d. To make any drastic change in the management set up. Further, the banks have a right to appoint a nomineedirector on the Board of Directors.

e. To enter into any partnership, profit sharing or royalty agreement.

f. To create any subsidiary or permit any company to become its subsidiary.

g. To increase directors remuneration or pay commission to the Promoters, directors, managers or other per-sons for furnishing guarantees.

h. Transfer or dispose of its undertaking or any of its capital fixed assets except in the ordinary course ofbusiness.

i. To change the Registered Office.

54

REGULATIONS AND POLICIES IN INDIA

There is no specific regulation in India governing the manufacturing of automotive parts. The following regulationsand legislations are the significant laws, which broadly govern this industry in India:

Foreign Investment RegulationsThe new industrial policy was formulated in 1991 to implement the Government’s liberalization programme andconsequently, the industrial policy reforms relaxed industrial licensing requirements and restrictions on foreign in-vestment. In subsequent years, the Government has further liberalized the foreign investment regime.

At present, investments in companies manufacturing auto components fall under the RBI automatic approval routefor foreign direct investment/NRI investment upto 100%.

Excise RegulationsThe Central Excise Act, 1944 seeks to impose an excise duty on specified excisable goods, which are produced ormanufactured in India. However, the Government has the power to exempt certain specified goods from exciseduty, by notification. The rate at which the said duty is sought to be imposed is contained in the Central Excise TariffAct. Accordingly, mirrors, filters and plastic components are classified under Chapter 70,48 and 39 of the CentralExcise Tariff Act respectively. At present excise duty is at the rate of 16% of the value of the goods calculated inaccordance with the said Act. An additional 2% education cess is levied and therefore, the aggregate excise duty is16.32% ad valorem.

Customs RegulationsAll imports to the country or exports from the country are subject to duties under the Customs Act, 1962 at the ratesspecified under the Customs Tariff Act, 1975. However, the Government has the power to exempt certain specifiedgoods from excise duty, by notification. Mirror and filter paper are classified under Chapter 70 of the Customs TariffAct, 1975 and an import duty of 15% is levied on the value of the goods calculated in accordance with the CustomsTariff Act, 1975. An additional 2% education cess is levied on the customs duty plus additional countervailing duty.

Environmental and other regulationsThe Company has to comply with the provisions of the Environment Protection Act, 1986, Water (Prevention andControl of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981 the Hazardous Waste (Man-agement and Handling) Rules, 1989 and the Hazardous Chemicals Rules, 1989. Companies manufacturing auto-motive parts and packaging materials also frequently obtain approvals under various other legislations.

There are other legislations such as the Factories Act, 1948 and various other industrial and labour legislations,which are also applicable to manufacturing companies such as our Company.

Regulation in Relation to MirrorsCMV RULESWe are manufacturers of rear view mirrors for automotive industry, which comes under safety requirements for thefield of vision. The required standard is prepared by AISC (Automotive Industrial Standard Committee), which isconstituted by Ministry of Surface Transport and approved by CMVR (Technical Standing Committee). Under theprovisions rear view mirrors comes under the standard of AIS 001/2001 and under these regulations certain test arethe test are required to be carried out in respect of rear view mirrors e.g. Dimensional test, Salt spray test, Weatherresistance test, Distortion test, Reflectivity test, Vibration test, Moisture resistance test etc. These test are required tobe approved from certifying agencies like VRDE and ARAI. Our products meet these standards.

55

HISTORY AND CORPORATE MATTERS

The Company was incorporated on 31st March 1999 as Lumax Air Cleaners Private Limited under the CompaniesAct. It was converted into a public company and the name was changed to Lumax Air Cleaners Limited on 22ndAugust, 2000 vide special resolution dated 22nd June, 2000 passed under section 31/21 read with section 44 of theCompanies Act. Subsequently a scheme of arrangement was made for the de-merger of Lumax Industries Limited.In accordance with the terms of the said scheme two divisions of LILviz. mirror division and air/oil-cleaner division ofthe Lumax Industries Limited (Transferor Company) were to be transferred to the Company (referred to as “LAL” inthe scheme of arrangement). The Hon’ble High Court of Delhi vide its order dated 15th September 2003 approvedthe scheme. Further, Toshi and MPI were merged with the Company in terms of the scheme of amalgamationapproved by the order of Hon’ble Delhi High Court dated February 23, 2005.

A. DEMERGERThe synopsis/important terms of the scheme of demerger of LIL into the Company are as follows:

Transfer of assets and liabilities to the Company:The assets and properties along with liabilities and obligations of the mirror division and the air/oil-cleaner divisionwere transferred from LIL to the Company.

Transfer of employees to the Company:All the staff, workmen, officers and other employees in the service of Lumax Industries Limited engaged immediatelybefore the Effective Date of the scheme of arrangement, in or in relation to, the mirror division and the air/oil-cleanerDivision, shall become the staff, workmen, officers and employees of the Company on the basis that:

(a) their services shall have been continuous and shall not have been interrupted by reasons of the transfer by wayof demerger of the mirror division and the air/oil-cleaner Division;

(b) services of such staff, workmen, officers and employees with the Transferor Company up to the Effective Dateshall be taken into account for purposes of all retirement, terminal and other benefits including retrenchmentcompensation, superannuation, gratuity, to which they may be eligible in the Company;

(c) the terms and conditions of service as applicable to such staff, workmen, officers and employees immediatelyafter the Effective Date shall not, in any way be less favourable to them than those applicable to them immediatelybefore the Effective Date.

Further, it was provided in the scheme that The Company shall take necessary steps to establish separate providentfund, gratuity fund and superannuation fund and cause the same to be recognized by the concerned authorities. Assoon as may be after the occurrence of the Effective Date, the respective accumulated balances of such funds forsuch staff, workmen, officers and employees of the mirror division and the air/oil-cleaner special fund created for thebenefit of such staff, workmen, officers and employees of the mirror division and the air/oil-cleaner division of LILshallbe transferred to the respective funds to be established by the Company. It was the aim and intent that, on theoccurrence of the Effective Date, all the rights, powers, duties, and obligation of Lumax Industries Limited in relationto such funds of the staff, workmen, officers and employees of the mirror division and the air/oil-cleaner Division,shall become and be those of the Company.

Issue of shares by the CompanyUpon occurrence of the Effective Date and upon transfer and vesting of the mirror and the air/oil-cleaner division inthe Company, pursuant to the scheme, the Company shall in consideration of such transfer and vesting, issue andallot, without further application to every member of LIL one (1) equity share of Rs.10/- each par value credited asfully paid-up in the Company for every two (2) equity share of Rs.10/- each par value fully paid up and held up suchmember in LIL.

The said issue and allotment of shares in the Company to the shareholders of Lumax Industries Limited shall resultin the issue of 4,173,866 equity shares of Rs. 10/- credited as fully paid up amounting to Rs. 41,738,660/- in valueterms with a corresponding reduction in the share premium account of LIL.

The said equity shares to be issued and allotted by the Company shall rank pari passu in all respects with theexisting equity shares of the Company.

56

Use of TradeMarkUse of “Lumax” trademark and other intellectual property in relation to such name by the Company after the EffectiveDate.

The Promoters (S.C. Jain, D.K. Jain and U.K. Jain) mutually agree, represent warrant and undertake that the “LUMAX”trade marks and the “LUMAX” brand name, which is the property of LIL, upon implementation of the scheme ofarrangement and upon allotment of shares pursuant to the scheme of arrangement, will be shared by LIL with theCompany and promoter groups in a manner that each of them shall be free to use this trade mark and brand namein connection with their respective business, or in respect of any i.e. the existing business or any new business thatthey may commence. However, none of them shall be entitled to use this brand name at any time in relation to anybusiness, which is in any manner competing with or in any way similar to the businesses that are then being carriedon by any of the other two companies or said promoter groups.

Change in nameUpon sanction of the Scheme, the name of the Company shall be changed to “Lumax Automotive Systems Limited”and the Memorandum of Association of the Company shall stand altered and amended by substitution of the followingnew clause 1 in place and stead of the existing clause 1: “The Name of the Company is “Lumax Automotive SystemsLimited.”

Exchange of sharesFor the purpose of providing required management and strategic focus for future sustainability and profitability of thelighting, mirror and air/ oil filter businesses it was necessary and expedient to have separate and distinct managementcontrol of LIL and the Company. Such controlling interest in LIL and the Company may be obtained throughexchange of shares in the respective companies. To provide such focus, Group A was required to divest its controllinginterest in the Company in favour of Group B and Group B was required to divest its shareholding in LIL in favour ofGroup A as set forth hereinafter.

“Group A” meant the members of the Company and/or LIL whose names were set out in Annexure A to the schemeincluding their nominees, assigns, successors, legal heirs, executors and representatives.“Group B” meant the members of the Company and/or LIL whose names are set out in Annexure B to the schemeincluding their nominees assigns, successors, legal heirs and representatives.

Annexure A: Shareholding upon the demerger being complete

Members of Group A Shareholding in LIL Shareholding in the CompanyS.C. Jain GroupMr. Sagar Chand Jain 696,515 348,258Mr. Sagar Chand Jain (Pledged to Syndicate Bank) 25,000 12,500Jainsons Pvt. Ltd 32,270 16,135]Vardhman Agencies P. Ltd 10,270 5,135Toshi Auto Inds. Ltd. 1,000 500Lumax Investment & Finance P. Ltd 3,125 1,562Total 768,180 3,84,090

Members of Group A Shareholding in LIL Shareholding in the CompanyD.K. Jain GroupMr. Dhanesh Kumar Jain 903,800 451,900Mrs Usha Jain 139,505 69,753Mr. Deepak Jain 132,125 66,062Mr. Anmol Jain 51,270 25,635D.K.Jain & Sons (HUF) 115,700 57,850Sheela Finance Pvt Ltd 111.230 55,615Total 1453,630 726,815

57

Mahesh K Jain Group

Mr. Mahesh K. Jain 380,570 190,285Mr. Mahesh K. Jain (Pledged to Syndicate Bank) 50,000 25,000Mrs. Pushpa Jain 32,890 16,445Mr. Rajan Jain 124,420 62,210Kriner Services Pvt Ltd 210,000 105,000Lumax Fiters Pvt Ltd 600 300Rajan Auto Ancillaries Pvt Ltd 600 300Lumax International Pvt Ltd 300 150Total 799,380 399,690

Stanley Group

Stanley Electric Co. Ltd 1,350,000 675,000Thai Stanley Electric Public Co. Ltd 150,000 75,000Total 1,500,000 750,000

Annexure B: Shareholding upon the demerger being complete

Members of Group B Shareholding in LIL Shareholding in the CompanyU. K. Jain GroupMr. Umesh Kumar Jain 211,190 105,595Mrs. Kamlesh Jain 39,000 19,500Mr. U.K. Jain (HUF) 37,295 18,648Ms. Tushina Jain 3,625 1,812Mr. Nitin Jain 41,195 20,598Mr. Milan Jain 30,300 15,150Total 362,605 181,303

Opening Balance Sheet of the Company and LIL as on the Appointed Date as provided in the scheme was as under:

Annexure C : Opening Balance Sheet of the Company and LIL as on the Appointed Date

OPENING BALANCE SHEET OF TRANSFEROR COMPANY (LIL) AND TRANSFEREE CO. (LAL)AFTER CONSIDERING PROPOSED RESTRUCTURING AS ON THE APPOINTED DATE

(Amt. In Rs.)

S.No. PARTICULARS LIL LALTOTAL ASSETS

1 GROSS FIXED ASSETS 1,483,276,592.00 189,162,287.00LESS: ACCUMULATED DEPRECIATION (518,361,250.00) (60,110,441.00)NET FIXED ASSETS INCLUDING REVALUATION RESERVES 964,915,342.00 129,051,846.00LESS: REVALUATION RESERVES (23,091,811.00)NET FIXED ASSETS 964,915,342.00 105,960,035.00

2 CAPITAL WIP 6,226,232.00 815,561.003 INVESTMENTS 44,948,400.004 CURRENT ASSETS

INVENTORY 101,009,919.00 20,427,744.00DEBTORS 335,145,016.00 75,602,463.00CASH & BANK BALANCES 23,987,933.00 5,778,235.00OTHER CURRENT ASSETS 52,000.00LOANS & ADVANCES 37,590,991.00 19,282,604.00TOTAL CURRENT ASSETS 497,733,859.00 121,143,046.00

58

5 MISCELLANEOUS EXPENDITURE 10,146,066.00 902,962.00TOTAL ASSETS (A) 1,523,969,899.00 228,821,604.00TOTAL LIABILITIES

6 CURRENT LIABILITIES & PROVISIONS 242,165,757.00 104,991,937.007 LOAN FUNDS 664,180,241.00 64,053,752.00

TOTAL LIABILITIES (B) 906,345,998.00 169,045,689.00NET WORTH (A-B) 617,623,901.00 59,775,915.00EQUITY & SPECIFIC RESERVES

8 EQUITY 83,477,320.00 42,241,160.009 SHARE PREMIUM 149,635,910.0010 FORFEITURE OF SHARES 65,138.0011 GOVERNMENT SUBSIDY 2,695,000.00 96,000.0012 CAPITAL RESERVE 17,445,430.0013 REVALUATION RESERVE 103,729,415.0014 GENERAL RESERVE 277,995,003.0015 PROFIT & LOSS ACCOUNT 26,115.00 (6,675.00)

TOTAL (EQUITY & SPECIFIC RESERVES) 617,623,901.00 59,775,915.00

Annexure D: Shareholding of Group A and Group B after transfer and exchange of shares as provided in the schemewas as under:

Company Transferee(s) No. of Shares Transferor(s) No. of SharesReceived by transferred bytransferor(s) Transferee(s)

LAL U.K. Jain Group 2,260,595 S.C.Jain Group 384,090Umesh Kumar Jain 1,315,690 Sagar Chand Jain 348,258Kamlesh Jain 243,378 Sagar Chand Jain

(pledged to Syndicate Bank) 12,500Tushina Jain 232,744 Jainsons Pvt. Ltd. 16,135Nitin Jain 22,615 Vardhaman Agencies (P) Ltd 5,135Milan Jain 257,082 Toshi Auto Ind. (P) Ltd 500Tushina Jain 189,086 Lumax Investment & Finance Pvt. Ltd 1,562

D.K. Jain Group 726,815Dhanesh Kumar Jain 451,900Usha Jain 69,753Deepak Jain 66,062Anmol Jain 25,635D.K. Jain & Sons (HUF) 57,850Sheela Finance (P) Ltd 55,615M.K. Jain Group 399,690Mahesh K. Jain 190,285Mahesh K. Jain (Pledged to Syndicate Bank) 25,000Pushpa Jain 16,445Rajan Jain 62,210Kriner Services (P) Ltd 105,000Lumax Filters (P) Ltd 300Rajan Auto Ancillaries (P) Ltd 300Lumax International (P) Ltd 150Stanley Group 750,000Stanley Electric Co. Ltd 675,000Thai Stanley Electric Public Co. Ltd. 75,000

22,60,595 TOTAL 22,60,595

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TransferorCompany S.C. Jain Group 61,548 U.K. Jain Group 362,247

Sagar Chand Jain 55,806Sagar Chand Jain(Pledged toSyndicate Bank) 2,003 Umesh Kumar Jain 210,831Kamlesh Jain 39,000Jainsons Pvt Ltd 2,586 U.K. Jain (HUF) 37,296Vardhman Agencies P Ltd 823 Nitin Jain 3,624Toshi Auto Inds (P) Ltd 80 Milan Jain 41,196Lumax Investment & Finance (P) Ltd 250 30,300D.K. Jain Group 116,468Dhanesh Kumar Jain 72,414Usha Jain 11,178Deepak Jain 10,586Anmol Jain 4,108D.K. Jain & Sons (HUF) 9,270Sheela Finance (P) Ltd 8,912M.K. Jain Group 64,048Mahesh K. Jain 30,492Mahesh K. Jain(Pledged to Syndicate Bank) 4,006Pushpa Jain 2,635Rajan Jain 9,969Kriner Services (P) Ltd 16,826Lumax Filters (P) Ltd 48Rajan Auto Ancillaries (P) Ltd 48Lumax International (P) Ltd 24Stanley Group 120,183Stanley Electric Co. Ltd 108,165Thai Stanley Electric Public Co. Ltd. 12,018TOTAL 3,62,247 3,62,247

Order of the Court:The Hon’ble High Court of Delhi approved the scheme vide its order dated 15th September 2003. In accordancewith the scheme, the Company allotted 41,73,866 Equity Shares to the shareholders of LIL in the rate of 1:2 on 19thNovember 2003. These shares along with the then existing 50,250 Equity Shares were listed with the BSE and NSEon 24th August 2004.

Also, as per the order of the High Court the name of the Company was changed to LASL on 10th November 2003.

B. MERGERIn order to consolidate the automotive capacities within the group and create business with focussed businessobjectives the management of Lumax then proposed to merge the business of Toshi and MPI with Lumax.

Background of ToshiToshi Auto Industries Private Limited (Toshi) is an associate concern of Lumax. It was incorporated in the year1982, as a private limited company under the name of Lumax Plastics Private Limited. In the year 1984, the nameof Toshi was changed to Toshi Auto Industries Private Limited.

During the year 1995, the name of the Company was again changed to Lumax Plastics Private Limited. In the year1997, it became a deemed public company pursuant to sub-section (1A) of section 43-A of the Companies. In theyear 2000, the name was again changed to Toshi Auto Industries Private Limited and in the year 2001 whenpursuant to the amendment in the Companies Act, the concept of the deemed public company was removed

60

consequent to the deletion of section 43-A, itbecame a private limited company.

The main business of Toshi was manufacturing plastic injection moulded components like weather strips, instrumentcluster components, cover steering column holes etc. for four wheelers and fenders, side covers, seat base, setinner box and different components of two wheelers.

Toshi’s registered office was situated at 2nd Floor, Harbans Bhawan-II, Nangal Raya Business Centre, New Delhi.

Background of MPIMetal Pressing Industries Private Limited (MPI) was incorporated in the year 1974, as a private limited companywith the object of establishing its business in the automobile industry. MPI was an associate concern of LUMAX andhad its registered office at 2nd Floor, Harbans Bhawan-II, Nangal Raya Business Centre, New Delhi.

The main business of the Company was to manufacture automobile parts and ancillaries (including motor cars,trucks, buses, tractors, bulldozers, tractor dozers, road rollers, motor cycles, cycle cars, motors, scooters, cycles,bicycles, carriages and other conveyance parts and ancillaries) whether propelled or assisted by means of petrol,motor spirit, steam, gas, diesel oil, electrical, animal or other power.

The essence of merger was to make an arrangement, thereby uniting the units of Toshi and MPI, so that theybecome vested in or under the control of one company i.e Lumax. The scheme of merger as was proposed by thesenior management of Lumax broadly involved the following objectives:· Lumax to become a focused automotive company with manufacture and marketing of automotive products.· Considering the similar nature of business of Toshi and MPI in terms of their commercial strength and site

integration, it would enable Lumax to conduct operations in a most cost effective and efficient manner.· Merger will improve the economies of scale by increasing the volume of production which will lead to a reduction

in cost of production per unit.· Merger will help to expand the volume of production without corresponding increase in fixed cost.· Merger will enable optimal utilization of various infrastructure and manufacturing assets including utilities and

other site facilities, thereby maximizing the wealth of the shareholders.· Merger of these companies will avoid overlapping of functions and facilities. Various functions may be consolidated

and duplicate channels may be eliminated by implementing an integrated planning and control system.· Merger will help in establishing a transnational bridgehead without excessive start up costs to gain access to

foreign market.· Merger will help in eliminating financial constraints; deployment of surplus cash and lowering the cost of financing

and the Company will be able to borrow at a lower rate on interest, which also enhance the debt capacity of theCompany.

Order of the Court:The Hon’ble High Court of Delhi vide its order dated 23rd February 2005 approved the scheme of amalgamation. Thescheme of merger was effective from 1st April 2004. In accordance with terms of the scheme so approved, Lumaxallotted 31,79,990 Equity Shares to the shareholders of Toshi and MPI in the ratio of 1:1 and 10:1 respectively. Theshares so allotted by Lumax to the shareholders of Toshi and MPI were listed with the NSE on 23rd June 2005 andwith BSE on 9th August 2005.

Major events of the Company

Year Events achieved1999 Incorporation of Company2000 Change of status from private limited to public limited2003 Demerger of two business divisions from Lumax Industries Limited to the Company2003 Change of name from Lumax Air Cleaners Limited to Lumax Automotive Systems Limited2004 Listing on BSE and NSE2004 ISO/TS 16949 accreditation to mirror division Faridabad2004 Setting up of Air Cleaner manufacturing unit at Manesar2005 Amalgamation of Toshi and MPI with the Company2005 Listing of additional shares issued pursuant to the scheme of amalgamation on BSE and NSE2005 Joint Venture Agreement with Magna Donnelly

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AWARDS & CERTIFICATIONSLumax is committed to achieve and sustain highest level of customer satisfaction by accomplishing excellenceprocesses and providing ultimate quality products and services constantly which can be seen from the following listof awards/ certifications:

YEAR NAME OF AWARD UNIT AUTHORITY2000 ISO 9002 & QS : 9000 MP-1 Faridabad UL India Pvt. Ltd.2001 Appreciation Certificate For Target Achievement Mp-1 Faridabad Hyundai Motors India Ltd.2002 Qs 9000; 1998 Pp-3 Faridabad TUV2002 Supplier Award For Delivery Pp-1, Manesar Honda Motorcycles &

Scooters India Ltd.2002 100 Ppm Achievement Certificate Mp-1 Faridabad Hyundai Motors India Ltd.2003 ISO 9001:2000 Fp-2, Faridabad Ul India2003 ISO 9001:2000 Fp-1, Pune Rw TUV2004 ISO/Ts : 16949 & ISO 9001:2000 Mp-1 Faridabad Ul India Pvt Ltd2004 QS 9000 : 1998 Pp-1, Manesar Ul India2004 Appreciation Award For System Certification Mp-1 Faridabad Tata Motors Ltd.2005 ISO 9001:2000 Mp-2 Aurangabad Ul India2005 Appreciation Certificate For Target Achievement Mp-1 Faridabad Hyundai Motors India Ltd.

Our main objectsOur main objects as contained in the Memorandum of Association are:

1. To carry on the business as manufacturers, exporters and importers, buyers and sellers, wholesalers and retailers,traders and dealers in Air-cleaners, filters and other purifying apparatus of all types and kinds including Oil BathAir Cleaners, Dry type Air Filters, Oil Filters, Fuel Filters and other purifying apparatus for all types of motor cars,motor buses, motor trucks, tractors, three wheelers, motor cycles, scooters, mopeds, other automotive vehiclesusable on land, sea or air, whether propelled or assisted by means of petrol, diesel, oil, motor spirit gas, steam,electrical or animal power.

2. To carry on the business as manufacturers, exporters and importers, buyers and sellers, wholesalers andretailers, traders and dealers in Mirrors of all types and kinds including Mirror, Assemblies for all types of motorcars, motor buses, motor trucks, tractors, three wheelers, motor cycles, scooters, mopeds, other automotivevehicles usable on land, sea or air, whether propelled or assisted by means of petrol, diesel, oil, motor spirit gas,steam, electrical or animal power.

3. To carry on all or any of the business of manufacturers and producers, importers, and exporters, buyers, sellers,stockists, suppliers and distributors, wholesale and retail dealers, repairers of and workers in motorcars, motorbuses, omnibuses, motor lorries, motor trucks; motor cycles, scooters, jeeps, trolleys, trailors, buses, motorvans, vehicles, velocipedes, and other conveyances of all kinds and descriptions suitable for propulsion of land,sea or the air or in any combination thereof, whether propelled or assisted by means of ‘petrol, diesel oil poweringoil, spirit, gas, vapour, electricity, battery, solar energy, atomic energy, animal, manual labour, or any otherpowers whatsoever and of engines, chassis, bodies, tools and implements, spare parts, agriculture implements,lenses and bulbs and their ancillaries and other uses for, or in connection with the above mentioned things.

4. To carry on the business of mechanical engineers and carriage builders in all their respective branches.

5. To construct garages and stores houses or other buildings for the housing of such vehicles, the storage or fuelor other oils and substances required for the working of such vehicles, the ware housings of the goods carried,and accommodation of the persons intending to be passengers.

6. To carry on the business of importers and dealers in fuel, other oils, petroleum of every kind, business of refinersof such oils and petroleum and the manufacture of lubricating oils and all spare parts and accessories requiredfor the equipment and operation of such vehicles.

62

Sl. No.

1.

2.

Date of Meeting

14th February, 2003

14th October, 2003

Type of Meeting

Extra OrdinaryGeneral Meeting

Extra OrdinaryGeneral Meeting

Change in object

The object clause III(A) of the Memorandum of Association ofthe company be altered by inserting of the under mentionedsub-clause after clause 1 as sub clauses 2

To carry on the business as manufacturers, exporters andimporters, buyers and sellers, wholesalers and retailers, tradersand dealers in mirrors of all types and kinds including mirrorassemblies for all types of motor cars, motor buses, motor trucks,tractors, three wheelers, motor cycles, scooters, mopeds, otherautomotive vehicles usable on land, sea or air, whether propelledor assisted by means of petrol, diesel, oil, motor spirit gas, steam,electrical or animal power

The object clause III(A) of the Memorandum of Association ofthe company be altered by inserting of the undermentionedsub-clauses after clause 2 as sub clauses 3, 4, 5 & 6

3. To carry on all or any of the business of manufacturersand producers, importers, and exporters, buyers,sellers, stockists, suppliers and distributors, wholesaleand retail dealers, repairers of and workers inmotorcars, motor buses, omnibuses, motor lorries,motor trucks, motor cycles, scooters, jeeps, trolleys,trailors, buses, motor vans, vehicles, velocipedes, andother conveyances of all kinds and descriptions suitablefor propulsion of land, sea or the air or in anycombination thereof, whether propelled or assisted bymeans of petrol, diesel oil powering oil, spirit, gas,vapour, electricity, battery, solar energy, atomic energy,animal, manual labour, or any other powers whatsoeverand of engines, chassis, bodies, tools and implements,spare parts, agriculture implements, lenses and bulbsand their ancillaries and other used for, or in connectionwith the above mentioned things.

4. To carry on the business of mechanical engineers andcarriage builders in all their respective branches.

5. To construct garages and stores houses or otherbuildings for the housing of such vehicles, the storageor fuel or other oils and substances required for theworking of such vehicles, the ware housings of thegoods carried, and accommodation of the personsintending to be passengers

6. To carry on the business of importers and dealers infuel, other oils, petroleum of every kind, business ofrefiners of such oils and petroleum and the manufactureof lubricating oils and all spare parts and accessoriesrequired for the equipment and operation of suchvehicles

CHANGES IN MEMORANDUM OF ASSOCIATION

Since the incorporation following changes have been made in object clause of our Memorandum ofAssociation:

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Subsidiary of the CompanyAs on date there is no subsidiary of the Company.

Shareholders AgreementsThere are no shareholders agreements entered into by Company with any of the shareholders.

Other AgreementsJOINT VENTURE AGREEMENTThe Company has entered into a joint venture agreement with Magna Donnelly Corporation, Michigan U.S.A topromote a company named “ LUMAX MAGNA DONNELLY AUTOMOTIVE MIRRORS PRIVATE LIMITED” (JVCompany) to establish and operate a facility for development (but no design), manufacture, sale and distribution ofautomobile mirrors( outside and inside) and such mirror components and systems for the Indian automotive market.Magna Donnelly either itself or through its affiliates will subscribe the shares of JV Company.The authorised Capital of the JV Company is Rs. 50,000,000/- (5,000,000 equity shares of Rs.10/- each). TheSubscribed and issued capital of the Company would be Rs. 45,000,000/- (4,500,000 equity shares of Rs.10/- each)The shares would be subscribed by LUMAX and Magna Donnelly in the ratio of 74% and 26% respectively. Unlessagreed otherwise, the JV Company would pay atleast 20% dividend to its shareholders out of its distrbutable profits,in accordance with the provision of the Companies Act. Magna Donnelly by itself or through an affiliate can acquirethe shares of JV Company under ‘Pressing Circumstances’ as defined in the said agreement.The main focus of the JV Company would be on serving the passenger vehicle market. The objective would be tomaximize the profitability and shareholder value of the JV Company .The aim of the JV Company would be to maintain a positive cash flow. However, the Company and Magna Donnellywould not directly or indirectly compete with the JV Company during the term of agreement.The parties to the above agreement cannot sell shares for the first 36 months (restricted period) after the incorporationof the JV Company. After the restricted period if any party wishes to sell the shares then the first offer would be to theother party. The selling party should give a written notice and the other party should within 14 days notify its intentionto purchase the shares. Once the other party notifies its intention to purchase the shares, the parties shall promptlycomplete the sale and purchase of the shares. The agreement shall terminate in case of sale or transfer of all sharesby one party to the other party.Magna Donnelly shall have the following call options for the term of this agreement:

1. An option to acquire either by itself or through an affiliate, the entire share capital held by Lumax in the JVCompany at any time, under certain specified circumstances;

2. To acquire such number of shares from Lumax so that eventually Magna Donnelly holds 70% of the sharecapital of the JV Company at any time after the expiry of 60 months after the incorporation of the JVCompany.

The board of directors of the JV Company shall consist of 5 directors. Out of which 3 directors shall be nominated byLumax, one of whom shall be the managing director of the JV Company, and 2 directors shall be nominated byMagna Donnelly.In case Magna Donnelly becomes majority shareholder then Magna Donnelly shall have the right to nominatemajority directors.

Strategic PartnersA company by the name LUMAX MAGNA DONNELLY AUTOMOTIVE MIRRORS PRIVATE LIMITED has since beenfound on 11.8.2005. The present authorised capital of the company is Rs. Rs. 5 crore. The directors of the companyare Mr. U.K.Jain, Mr. Nitin Jain, Mr. Frank O’ Brain and Mr. Andrew Koob.

TECHNICAL ASSISTANCE AGREEMENT WITH TOYO ROKI, JAPANWe have a technical collaboration with Toyo Roki Mfg. Co. Ltd., Japan to upgrade technology for producing filters forautomobiles and motorcycles including motor scooters and mopeds. This agreement was entered on 18th of December1996. Toyo Roki is paid a royalty of 3% for air cleaner. Toyo Roki has its registered office at 7800 Nakaze, Hamakita,Shizuoka Prefecture, Japan. This original agreement was entered with the Lumax Industries Ltd. and on de-merger ofmirror & filter division of Lumax Industries Limited to the Company, the same is being looked after by Lumax. With thistechnical collaboration we have been able to produce the high quality of air filters and make our customers moresatisfied.

Financial PartnersThe company has not entered into any such agreement till date. However the Company will subscribe the sharecapital of LUMAX MAGNA DONNELLY AUTOMOTIVE MIRRORS PRIVATE LIMITED upto the extent of 74%.

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OUR MANAGEMENT

NameAgeFather’sname

Mr. U. K. Jain

55

S/o Mr. S CJain

Mrs.Kamlesh Jain

53

w/o Mr. U.K.Jain

Mr. Nitin Jain

29

S/o Mr.U.K.Jain

Mr. VirenderGanda**

53

S/o Late Sh.SomnathGanda

Mr. VinayPanchmiya54S/o Late Sh.Mansukh LalPanchmiya

Mr. JagdeepKapoor

65

S/o Late Sh.Shiv DarshanLal Kapoor

Designationand Status

Chairman andManagingDirector

Promoter

Non ExecutiveDirector

Promoter

ExecutiveDirector

Promoter

IndependentNon ExecutiveDirector

Non Promoter


Non Promoter


Non Promoter

Qualifi-cation

BA

BA

MBA

LLB,FCS &FCWA

B.Sc.

B.Com,LLB &MBA

Address

173A, WesternAvenue, Sainik Farm,New Delhi



C-20, SouthExtension Part-II,New Delhi-110049

Bhai ChandBanglow, RoadNo.2, ContractorsArea, Bistpur,Jamshedpur

S-359, GreaterKailash II, SecondFloor, New Delhi

Occupation

Industrialist

Industrialist

Industrialist

Lawyer

Business

Business

Appointment inthe Companyand date of expi-ration of currentterm of office

15/01/2003 asadditional director

1/11/2003 asManaging Direc-tor for 5 yearswhich will expireson 31/10/2008

31/10/2003 asnon-executive di-rector will retire byrotation

31/10/2003 asadditional director

1/11/2003 as Ex-ecutive directorfor 5 years whichwill expire on 31/10/2008

18/05/2004 as In-dependent direc-tor will retire byrotation



Other Directorships

M/s Lumax MirrorsLtd.*M/s Lucky CapitalPvt. Ltd.M/s Toray AutoIndustries Pvt. Ltd.M/s Lumax MagnaDonnelley AutomotiveMirrors Pvt. Ltd.

M/s Lucky PharmaPvt. Ltd.M/s Lumax MirrorsLtd.*M/s Lucky CapitalPvt. Ltd.

M/s Toray AutoIndustries Pvt. Ltd.M/s Lumax MirrorsLtd.*M/s Lucky PharmaPvt. Ltd.M/s Lumax MagnaDonnelley AutomotiveMirrors Mirrors Pvt.Ltd.

M/s UPTECC o m p u t e rConsultancy Ltd.M/s VishvasSecurities Ltd.M/s. VishvasAssociates Pvt. Ltd.

NIL

NIL

* The application for striking off the name under section 560 of the Companies Act has been filed with ROC.

** Mr. Virender Ganda is an eminent practicing corporate lawyer and on account of his professional expertise, the Company has availed some legalservices from him for which he has been paid a sum of Rs. 3.77 Lac (in two financial years). The said sum paid him before the enforcement of theamended clause 49 of the listing agreement. In the opinion of the Company, the provision of these legal services does not constitute a materialassociation of Mr. Virender Ganda with the Company. However, in order to ensure that he remains an ‘independent director’ on the Board of Directorsin accordance with the revised clause 49 of the listing agreement, the Company may not enagage him for his legal services in the future

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Details of Directors:

Mr. U.K.Jain, aged 55 years is the Chairman and Managing Director of the Company, having more than 30 years ofexperience in the industry line with worldwide experience in auto ancillary industry. He is associated with the Companysince 2003 and has been the driving force behind the Company’s evolution.

Earlier to his appointment as Chairman and Managing Director, he was associated with the Lumax Industries Limitedas Executive Director. With his consummate foresight and vision he has been leading many successful ventures andbusiness enterprises. Presently, he is mainly engaged in long term planning for the growth of the Company, strategicplanning for the execution of objectives and is responsible for the overall management of the Company.

Mr. Nitin Jain, aged 29 years is the Executive Director of the Company. He is the son of Mr. U. K. Jain and has over5 years of experience in the auto ancillary industry. He started his career with the Company and has knowledge ofmarketing and financial functions of the auto ancillary industry. He holds a degree in Masters in Business Administrationfrom Russia .He works with a result oriented approach and oversees the day-to-day routine functions of the business.During his tenure the Company has witnessed a steep rise in its turn over and sales.

Mrs. Kamlesh Jain, aged 53 years is the Non Executive Director of the Company. She is the wife of Mr. U. K. Jain,having 30 years of experience in automobiles and export industry.

Mr. Virendra Ganda, an Independent Director, is a law graduate, Fellow member of the Institute of Cost & WorksAccountants of India and Fellow member & past president of the Institute of Company Secretaries of India (1999).He is a practicing advocate at Delhi High Court and Supreme Court and has over 30 years of experience as anindependent professional and has worked with large industrial houses in the country such as DCM, HERO, EICHER,and THAPARS at senior and general management levels.

His professional assignments have given him international exposure in Denmark, UK, France, Indonesia, Malaysia,Thailand, Singapore and Dubai.

He has been a member of committees appointed by SEBI for Corporate Governance headed by Shri Kumar MangalamBirla and accounting standards by Shri Y.H.Malegam. He has also been a member of advisory board of India’sleading corporate law magazine Corporate Law Advisor

Mr. Jagdeep Kapoor, aged 65 years, an Independent Director, has been heading an agency house for 44 years,handling agriculture, automobile, industrial, earth moving, road building, construction coal handling material handlingequipment manufactured in India and abroad. He is a Bachelor of commerce from St Xavier’s Calcutta University.

Mr. Vinay Panchmiya, an Independent Director, is engaged in the business of trading of furniture & garments andhas an experience of 15 years.

Borrowing Powers of the Board of Directors in our CompanyPursuant to a resolution passed by our shareholders at extra ordinary general meeting held on 31st December, 2001in accordance with provisions of the Companies Act the Board of Directors has been authorised to borrow sums ofmoney for the purpose of the Company upon such terms and conditions and with/without security as the Board ofDirectors may think fit, provided that the money or monies to be borrowed together with the monies already borrowedby the Company (apart from the temporary loans obtained from the Company’s bankers in the ordinary course ofbusiness) shall not exceed, at any time, a sum of Rs. 70 Crores.

Compensation to Managing Directors/ Whole time DirectorsMr. U K Jain was appointed as Chairman and Managing Director of the Company for a term of 5 years with effectfrom 01.11.03, vide Board Resolution dated 31.10.2003 which was approved by the shareholders in the annualgeneral meeting held on 27.11.2004. The details of his remuneration are as follows:

Name Mr. U.K. JainDesignation Chairman and Managing DirectorSalary Rs.4,80,000/- p.a (in the scale of Rs. 40,000 to Rs. 1,00,000 with annual increment as decided

by the Board effective from April every year)

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Perquisites Rs.471330/-Includes:· Housing: The Company to provide free, fully furnished accommodation with the facilities of

telephone, gas, electricity and water etc. The Company also to bear the actual expenses incurredon maintenance, repairs and other facilities as required from time to time. The taxable perquisitevalue on the free furnished accommodation will be taken as per the Income Tax Rules.

· Medical Reimbursement: Expenses incurred by the Managing Director for self and his familysubject to a ceiling of one month’s salary or three months’ salary over a period of three years.

· Leave Travel Concession: For Managing Director and his family once in a year in accordancewith any rules specified by the Company.

· Club Fee: Fees of clubs subject to a maximum of two clubs. This will not include admissionand life membership fee

· Personal Accident Insurance: Premium not to exceed Rs.10,000/- p.a.· Contribution to the provident fund, superannuation fund or annuity fund will not be included in

the computation of the ceiling on perquisites to the extent these either singly or put together arenot taxable under the IT Act.

· Managing Director will be entitled for earned leave/privilege leave on full pay and allowances asper the rules of the Company, but not more than one month’s leave for every 11 months service.Leave accumulated but not availed may be encashed only at the end of tenure.

· Encashment of leave at the end of the tenure will not be included in the computation of ceilingon perquisites

· Provision of car for use on Company’s business and telephone at residence will not be consideredas perquisites. Perquisite value on personal long distance calls on telephone and use of car forprivate purposes shall be treated as per the Income Tax Rules.

Mr. Nitin Jain was appointed the Executive Director of the Company for a term of 5 years with effect from 01.11.03vide resolution of the Board of Directors dated 31.10.2003 which was approved by the shareholders in annualgeneral meeting held on 27.11.2004. The details of his remuneration are as follows:

Name Mr. Nitin JainDesignation Executive DirectorSalary Rs.360000/- p.a. (in the scale of Rs. 30,000 to 60,000 with annual increment as decided by the

Board of Ddirectors effective from April every year)Perquisites Rs.300600/- which includes

· Dearness Allowance Rs.1500/- per month· House Rent Allowance 50% of the Salary· Entertainment Allowance Rs.1000/- per month· Magazine Allowance Rs.500/- per month· Expenses on Gas, Electricity,· Water Charges and Furnishing· Allowances Rs.1000/-· Servant Allowance Rs.750/-· Medical Reimbursement: Expenses incurred for self and the family subject to a ceiling of one

month’s salary in a year or three months salary over a period of three years. The company shallalso pay annual premium on mediclaim, as per the rules of the Company

· Leave Travel Concession: For self and family subject to a ceiling of one month’sClub Fees: Fees of the Clubs subject to a maximum of two clubs. This will not include admission and life

membership fees.Personal Accident Insurance: Annual premium not to exceed Rs.1000/- per annum.Apart from the above, The Director will be entitled to the Company’s contribution to ProvidentFund, Superannuation Fund and other benefits as per the rules of the Company. Gratuity ispayable at the rate not exceeding half a month’s salary for each completed year of service.

67

Use of Company’s Car with Driver and Telephone at the residence. The perquisite value of theseterms will be valued as per the Income Tax Act, if applicable.Leave at the rate allowable as per the rules of the Company and encashment at the end of thetenure.Reimbursement of expenses incurred in connection with the business of the Company includingentertainment expenses.Appointee shall not be entitled to any sitting fee for attending the meeting of Board of Directors orcommittee thereof

CORPORATE GOVERNANCEThe Equity Sshares of the Company were listed on BSE and NSE after the de-merger of two divisions of LumaxIndustries Limited to the Company. The Company is in compliance with the provisions of the listing agreements withthe Stock Exchanges, especially relating to corporate governance, broad basing of management and setting upnecessary committees like the audit committee, the shareholders’ committee and the remuneration committee etc.We are in compliance with the revised clause 49 of the listing agreement.

We have constituted the following committees of our Board of Directors for compliance with corporate governancerequirements:

a Audit Committee; andb Shareholders’ Committee.c Remuneration Committee

AUDIT COMMITTEEThe Audit Committee of Directors comprises three Non- Executive Directors.Composition of the Audit Committee: -

Name of the Directors CategoryMr. Vinay Panchmiya –Chairman IndependentMr. Jagdeep Kapoor IndependentMrs. Kamlesh Jain Non-Executive

Mr. Jagdeep Kapoor is having financial and accounting knowledge.

The company secretary of the Company acts as a Secretary of the said committee.

The committee, in addition to other business, reviews the quarterly/half-yearly/yearly financial results and places areport on the same to the Board of the Directors for its consideration and approval. The scope of activities of theaudit committee is as per provisions of Section 292A of The Companies Act, 1956 and listing agreement.

REMUNERATION COMMITTEEThe terms of reference of the remuneration committee in brief pertain to determine the Company’s policy on andapprove specific remuneration packages for Executive Directors after taking into account financial position of theCompany, interest of the Company and shareholders etc.

Composition of the Remuneration Committee: -

Name of the Directors CategoryMr. Virender Ganda- Chairman IndependentMr. Jagdeep Kapoor IndependentMr. Vinay Panchmiya Independent

None of the Non Executive Directors is drawing any remuneration.

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SHAREHOLDERS’ COMMITTEEThe objective of this committee is to monitor the redressal of shareholders and investors complaints relating totransfer of shares, non-receipt of annual report, issue of duplicate shares certificates, etc.Composition of the shareholders’ committee: -

Members CategoryMr. Virender Ganda- Chairman IndependentMr. U.K. Jain ExecutiveMr. Nitin Jain Executive

Ms. Monika Gupta, Company Secretary is the Compliance Officer of the Company.

Shareholding of directors in the CompanyOur Articles of Association do not require the directors to hold any qualification shares. The following table details theshareholding of our directors:

Sr. No. Name of Director No. of shares held (pre Issue)1. Mr. U.K. Jain 14,09,0942. Mrs. Kamlesh Jain 2,66,5083. Mr. Nitin Jain 3,59,6994. Mr. Virender Ganda Nil5. Mr. Vinay Panchmiya Nil6. Mr. Jagdeep Kapoor Nil

Interest of our DirectorsAll our Directors, including independent directors, may be deemed to be interested to the extent of fees, if any,payable to them for attending meetings of the Board or a committee thereof as well as to the extent of otherremuneration and reimbursement of expenses payable to them under our Articles of Association. The executivedirectors are interested to the extent of remuneration paid to them for services rendered as an officer or employeeof the Company.

All our directors, including independent directors, may also be deemed to be interested to the extent of EquityShares, if any, already held by them or that may be subscribed for and allotted to them, out of the present Issue interms of this Draft Red Herring Prospectus and also to the extent of any dividend payable to them and otherdistributions in respect of the said Equity Shares. Our Directors, including independent directors, may also beregarded as interested in the Equity Shares, if any, held by them or that may be subscribed by and allotted to thecompanies, firms and trust, in which they are interested as directors, members, partners or trustees. For furtherdetails, please see “Our Promoters and Group Companies” on page [•] of this Draft Red Herring Prospectus.No other independent director has any other interest in the Company.

Changes in our Board of Directors during the last three years

Sr. Name Date of Date ofNo. Appointment Ceasing Reason1. Mr. S.C. Jain 15/01/2003 31/10/2003 Resigned from the Directorship on the Board2. Mr. D.K. Jain 15/01/2003 31/10/2003 Resigned from the Directorship on the Board3. Mr. U.K. Jain 15/01/2003 — Appointed as Additional Director

01/11/2003 — Appointed as Managing Director4. Mr. M.K. Jain 31/03/1999 17/01/2003 Resigned from the Directorship on the Board5. Mr. Rajan Jain 31/03/1999 17/01/2003 Resigned from the Directorship on the Board6. Mrs. Pushpa Jain 31/03/1999 17/01/2003 Resigned from the Directorship on the Board7. Mr. Nitin Jain 31/10/2003 Appointed as Director

01/11/2003 — Appointed as Executive Director8. Mrs. Kamlesh Jain 31/10/2003 — Appointed as Director9. Mr. Jagdeep Kapoor 18/05/2004 — Appointed as Independent Director10. Mr. Vinay Panchmiya 18/05/2004 — Appointed as Independent Director11. Mr. Virender Ganda 18/05/2004 — Appointed as Independent Director

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Key Managerial Employees

Mr. V. K. Talwar, Chief Executive Officer, is an engineer by qualification and has over 35 years of experience invarious automobile companies. He did his Diploma in Materials Management from Indian Institute of MaterialsManagement. He has done his Certificate Course in Value Engineering Course from American Society of ValueEngineers and Operations Management Course from Graduate School of Business Administration, Harvard, USA.He was Honorary Secretary of Indian Institute of Material Management, Delhi branch, President of Ghazibad Man-agement Association, Member of CII, UP Committee and Member of Indo German Chamber of Commerce.

Mr. Milan Jain, Vice President (Filter division) is the younger son of Mr. U. K. Jain, associated with the Company forthe past two years. He is looking after the filter-manufacturing units of the Company located inHaryana and Pune.

Mr. A. K. Goel, Vice President (Finance) holds the Masters Degree in Commerce and has an experience of 27 yearsin the automotive mnufacturing, exports, trading and service industry. He is working with various Lumax groupcompanies for the last 23 years and handling matters related to finance, accounts, operations and anufacturing etc.

Ms. Monika Gupta, Company Secretary is a Commerce Graduate from Delhi University and an Associate Memberof the Institute of Company Secretaries of India. She has an expersinece of 4 year in the relevant field. She isassociated with the Company for more than two years. She is heading the secretarial and legal department and isresponsible for the secretarial and legal compliances. She is also the Compliance officer of the Company.

Mr. Vinod Kumar Jain, Vice President (Plastic) joined the Company after the merger of Toshi with the Company. Hewas associated with Toshi for more than two decades. He was holding the position of a director in Toshi. Presently heis looking after the job of tool room working and plastic mouldings.

ORGANISATIONAL STRUCTURE:

PLASTIC DIVISIONHEAD

BOARD OF DIRECTORS

CHAIRMAN & MANAGING DIRECTOR

COMPANY SECRETARYCEOEXECUTIVE DIRECTORV.P. FINANCE

FILTER DIVISIONHEAD

MIRROR DIVISIONHEAD

MARKETINGHEAD

UNIT HEAD FARIDABAD

UNIT HEADGURGAON

UNIT HEADMANESAR

UNIT HEAD FARIDABAD

UNIT HEADPUNE

UNIT HEADMANESAR

UNIT HEADFARIDABAD

UNIT HEADAURANGABAD

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Mr. Sunil Kumar Narang, Senior General Manager (Marketing) is a Commerce Graduate from Delhi University. Hehas an experience of more than 25 years in auto ancillary sector. He was holding the position at senior managementlevel in various companies like ALFA Toyo Ltd., NICCO Auto Ltd., FIEM Industries Ltd, Lumax Industries Limited, etc.

Shareholding of the Key Managerial EmployeesThe following table details the shareholding of our key managerial employees as on date:

Name Number of Equity Shares (Pre-Issue) % of existing CapitalMr. V K Talwar — —Mr. A.K.Goel 670 0.01Mr. Vinod Kumar Jain 1575 0.02Ms. Monika Gupta — —Mr. Sunil Narang 10 —Mr. Milan Jain 269,525 3.64

Bonus or profit sharing plan for our key managerial employeesOur Company has been paying an ex-gratia bonus of 20% of the basic salary to the key managerial employeessubject to maximum limit of Rs. 6,000/-.

Changes in our Key Managerial Employees during the last one-yearThere are no changes in Key Managerial Employees in last one year

Details of remuneration of key managerial employees for fiscal year 2005The details of the remuneration of the key managerial personnel for the fiscal year ending March 31, 2005:

Sl. No Name Remuneration (Amount in Rs. Lacs)1. Mr. V K Talwar 5.502. Mr. A.K.Goel 5.003. Mr. Vinod Kumar Jain 4.504. Ms. Monika Gupta 2.005. Mr. Sunil Narang 3.306. Mr. Milan Jain 1.20

Employees share purchase scheme/employee stock option schemeThe Company does not have any stock option scheme or stock purchase scheme for its employees.

Payment or benefit to officers of the CompanyNo other amount or benefit has been paid or given within the two preceding years or is intended to be paid or givento any of our officers except the normal remuneration for services rendered as sirectors, officers or employees.

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OUR PROMOTERS

Mr. U.K.Jain, aged 55 years is the Chairman and Managing Director of the Company, having more than 30 years ofexperience in the industry line with worldwide experience in auto ancillary industry. He is associated with the Companysince 2003 and has been the driving force behind the Company’s evolution.

Earlier to his appointment as Chairman and Managing Director, he was associated with the Lumax Industries Limitedas Executive Director. With his consummate foresight and vision he has been leading many successful ventures andbusiness enterprises. Presently, he is mainly engaged in long term planning for the growth of the Company, strategicplanning for the execution of objectives and is responsible for the overall management of the Company.

Voter ID number Applied forPAN AAGPJ0092HPassport number Z056364Bank Account number 90062010001019 (Syndicate Bank)

Mr. Nitin Jain, aged 29 years is the Executive Director of the Company. He is the son of Mr. U. K. Jain and has over5 years of experience in the auto ancillary industry. He started his career with the Company and has knowledge ofmarketing and financial functions of the auto ancillary industry. He holds a degree in Masters in Business Administrationfrom Russia. He works with a result oriented approach and oversees the day-to-day routine functions of the business.During his tenure the Company has witnessed a steep rise in its turn over and sales.

Voter Id number Applied forPAN AAGPJ1204MPassport number E3759895Bank Account number 90062010011248 (Syndicate Bank)

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Mrs. Kamlesh Jain, aged 53 years is the Non Executive Director of the Company. She is the wife of Mr. U. K. Jain,having 30 years of experience in automobiles and export industry.

Voter Id number Applied forPAN AAIPJ1283CPassport number A2465609Bank Account number 90062010006799 (Syndicate Bank)

Mr. Milan Jain, Vice President (filter division) is the younger son of Mr. U. K. Jain, associated with the Company forthe past two years. He is looking after the filter-manufacturing units of the Company located in Haryana and Pune.

Voter Id number Applied forPAN ACXPJ7855KPassport number F2798841Bank Account number 9006210017311 (Syndicate Bank)

The Permanent Account No., Bank Account No. and Passport No. of the Promoters will be submitted to BSE/NSE atthe time of filling the Draft Red Herring Prospectus with them.

The following companies/ firms/ ventures are promoted by the Promoters of Company and the Promoters may bedeemed to be interested in these companies:

Sl. No. Name of the concern Type of concern Interested party Nature of transaction1. Lucky Capital (P) Ltd. Company Mr. U.K Jain —

Mrs. Kamlesh Jain2. Lucky Pharma (P) Ltd. Company Mr. U.K. Jain —

Mr. Nitin Jain3. Toray Auto Industries (P) Ltd. Company Mr. U.K Jain Sale and Purchase

Mr. Nitin Jain4. Lumax Magna Donnelly Mr. U.K Jain, —

Automotive Mirrors Private Limited Company Mr. Nitin Jain

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Disassociate ConcernPromoters in the past were interested as shareholders/directors in the following companies

Sl. No. Name of the concern Type of concern Interested party Nature of transaction1. Lucky Tours & Travels (P) Ltd. Company Mr. U.K. Jain Travelling Tickets

Mr. Nitin Jain2. Micro Exports Partnership Mr. U.K. Jain —

Mrs. Kamlesh JainMr. Nitin Jain

3. Lumax Mirrors Ltd. Company Mr. U.K. Jain �Mr. Nitin JainMrs. Kamlesh Jain

Common PursuitsOne of the group companies Lumax Magna Donnelly Automotive Mirrors Private Limited also deals in mirrors.

Interest of the PromotersThe Promoters of the Company have no interest other than reimbursement of expenses incurred or normalremuneration or benefits and their shareholding in the Company, if any. Mrs. Kamlesh Jain has leased a property tothe Company. (i.e. the property situated at 10, Indraprastha Estate, 12/2, Mathura Road, Faridabad admeasuring1041 sq. mt. on the rent of Rs. 30,000/-p.m.)

Related Party TransactionsFor details on related party transactions, please refer to the section titled “Financial Statements” appearing on page[•] of this Draft Red Herring Prospectus.

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DIVIDEND POLICY

The declaration and payment of dividend will be recommended by our Board of Directors and approved by ourshareholders, at their discretion, and will depend on a number of factors, including but not limited to our profits,capital requirements and overall financial condition. The details of dividend paid by our Company during the lastthree year is given as under :

2004-05 2003-04 2002-03 12% Nil Nil

The total amount being paid for dividend for the year 2004-05 was Rs. 88.85 Lac.

Pursuant to the terms of a term loan obtained from Syndicate Bank and HSIDC, we are required to obtain theirconsent for distribution of dividends.

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FINANCIAL STATEMENTS

AUDITORS REPORT

The Board of DirectorsLUMAX AUTOMOTIVE SYSTEMS LTD.B-86, Mayapuri Industrial Area, Phase-I,New Delhi-110064

We have audited the accounts of M/s Lumax Automotive Systems Limited (prior known as Lumax Air Cleaners Pvt.Ltd.) for the financial years ended on 31st March, 2001, 2002, 2003, 2004, 2005 and Half year ended September 302005 for the Financial Year 2005-06 being the last date up to which the accounts of the company have been madeup an audited by us. The accounts of the Pune and Aurangabad units were being audited by the branch auditor M/s D.R. Barve and Co. and their audit reports have been considered by us in preparation of our audit reports. Howeverpursuant to the Scheme of Arrangement for Demerger approved by Hon’ble High Court of Delhi vide order dated 15hSeptember 2003, Balance Sheet and Profit and Loss Account for the financial year 2002-2003 were revised andaudited by M/s K.S. Gupta & Co., Chartered Accountants, the auditor of Demerger company M/s Lumax IndustriesLimited and they have submitted their audit report on 31st October 2003 u/s 44AB of the Income Tax Act. The saidaudited revised financial statements for the financial year 2002-2003 have been considered by us in submitting thisreport.

At the date of signing this report and subject to our audit observations and particularly notes on account on accountsof (i) non provision of earned leave (ii) basis of valuation of stocks (iii) deferred tax liability/assets, we are not awareof any material adjustment, which would affect the result shown by these accounts drawn up in accordance with therequirements of Part II of Schedule II of the Companies Act, 1956.

In accordance with the requirements of Paragraph B(1) of Part II of Schedule II to the Companies Act, 1956 (the Act),and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (SEBIGuidelines) for the purpose of the Offering Memorandum as aforesaid, we report that:

a. The restated profits of the company for the financial years ended March 31 2001, 2002, 2003, 2004, 2005 andHalf Year ended 30th September 2005 for the Financial Year 2005-06 are as set out in Annexure I to this report.These profits have been arrived at after charging all expenses including depreciation and after making suchadjustment and regroupings as in our opinion are appropriate and more fully described in the audit reports,Significant Accounting Policies and Notes on Account appearing in Annexure III and IV respectively to this report.

b. The restated assets and liabilities of the company as at March 31 2001, 2002, 2003, 2004, 2005 and Half Yearended 30th September 2005 for the Financial Year 2005-06, are as set out in Annexure II to this report aftermaking such adjustments and regroupings as in our opinion are appropriate and more fully described in the auditreports, Significant Accounting Policies and Notes on Account appearing in Annexure III and IV respectively tothis report.

c. We have examined the cash flow statement relating to the company after adjustments made and preparedrecasted for the year ended 31st March 2005 and 2004 appearing in Annexure V to this report.

d. The rates of dividends paid by the company in respect of the financial years ended March 31 2001, 2002, 2003,2004, 2005 and Half Year ended 30th September 2005 for the Financial Year 2005-06 are as shown in AnnexureVI to this report.

e. We have examined the following financial information relating to the company and as approved by the Board ofDirectors for the purpose of inclusion in the offer document:

1. Performance Ratios as appearing in Annexure VII to this report.

2. Capitalization Statement as at 30th September 2005 as appearing in Annexure VIII to this report.

3. Statement of tax shelters as appearing in Annexure IX to this report.

4. Details of other income as appearing in Annexure X to this report.

5. Details of Sundry Debtors as appearing in Annexure XI to this report.

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6. Details of loans and advances made to persons or companies in whom/ in which Directors are interestedas appearing in Annexure XII to this report.

7. Details of unsecured loans as appearing in Annexure XIII to this report.

8. Details of secured loans as appearing in Annexure XIV to this report.

9. Details of transaction with related parties as appearing in Annexure XV to this report.

10. Details of aggregate value and market value of quoted investments as appearing in Annexure XVI tothis report.

11. Details of qualifications appearing in the audit report as given in Annexure XVII to this report.

12. Details of changes in Significant Accounting Policies as given in Annexure XVIII to this report.

In our opinion the above financial information of the company read with Significant Accounting Policies and Notes onAccount attached in Annexure III & IV respectively to this report, after making adjustments and regroupings asconsidered appropriate has been prepared in accordance with paragraph B(1) Part II of Schedule II of the Act andthe SEBI Guidelines.

This report in intended solely for your information and for inclusion in the offer document in connection with thespecific Public Offer of equity shares of the company and is not to be used, referred to or distributed for any otherpurpose without our written consent.

For R.Jain & Sanjay AssociatesChartered Accountant, Delhi

Sanjay JainPartnerMembership No.88027

Date: 15 January, 2006Place: New Delhi

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Annexure-ISTATEMENT OF PROFITS AND LOSSES ACCOUNT

Rs. In Lacs

PARTICULARS 30th Sept 31st March 31st March 31st March 31st March 31st March2005 2005 2004 2003 2002 2001

INCOMESales (Including Excise)Of Products Manufacturedby the Company 4,996.33 9,524.45 5,008.62 4,427.79 - -Of Products Traded by the Company - - - - - -Increase/ (decrease) in stock 162.54 15.90 64.40 18.89 - -Other Income 3.65 37.79 7.64 3.89 - -TOTAL 5,162.52 9,578.14 5,080.66 4,450.57 - -EXPENDITURE - -Material Consumed 2,544.71 4,762.74 2,583.19 2,261.92 - -Manufacturing & Operating expenses 946.39 1,752.46 1,062.51 978.08 -Personnel Expenses 246.85 480.84 217.98 272.96 - -Other Operating Expenses 259.55 452.38 311.87 291.10 0.05 0.02Excise Duty (on Sales) 707.08 1,365.19 733.07 606.17 - -Misc & deferred expenditure written off 4.15 7.57 2.69 2.55 - -TOTAL 4,708.73 8,821.18 4,911.31 4,412.78 0.05 0.02Profit before Depreciation,Interest & Tax 453.79 756.96 169.35 37.79 (0.05) (0.02)Depreciation 177.73 332.46 96.81 71.94 - -Profit before Interest & Tax 276.06 424.50 72.54 (34.15) (0.05) (0.02)Interest & Finance charges 117.35 207.66 63.54 77.25 - -Profit/ (Loss) on sales of Fixed Assets (0.15) 1.77 (1.07) (3.94) - -Net Profit before Tax 158.56 218.61 7.93 (115.34) (0.05) (0.02)Income TaxCurrent (As Per MAT) 13.50 23.00 0.97 - - -Fringe Benefit Tax 3.50 - - - - -Deferred Tax Liability/ (Assets) 54.91 (14.15) 7.67 (45.95) - -Net Profit after TaxProposed Dividend & DepreciationWritten back 86.65 209.76 (0.71) (69.39) (0.05) (0.02)Prior period item (1.58) - - (0.05) - -Net Profit after tax after adjustingprior period item 85.07 209.76 (0.71) (69.44) (0.05) (0.02)

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Annexure-IISTATEMENT OF ASSETS AND LIABILITIES

(Rs. In Lacs)

PARTICULARS Sept March March March March March30, 2005 31, 2004 31, 2003 31, 2002 31, 2001 31, 2000

ASSETSGROSS BLOCK 4,901.03 4,703.40 1,223.50 1,120.19 - -Less: Depreciation 1,808.14 1,629.28 166.72 71.94 - -Net Fixed Assets 3,092.89 3,074.12 1,056.78 1,048.25 - -Less: Revaluation Reserve 384.02 385.70 - - - -Net Block after adjustment forRevaluation Reserve 2,708.87 2,688.42 1,056.78 1,048.25 - -Capital Work in Progress 454.53 120.74 6.02 11.47 - -Net Fixed Assets (A) 3,163.40 2,809.16 1,062.80 1,059.72 - -INVESTMENTS (B) 14.62 14.62 - - - -CURRENT ASSTES, LOANS& ADVANCESInventories 875.41 651.71 335.49 223.41 - -Sundry Debtors 1,966.97 1,921.60 881.83 889.05 - -Cash & Bank Balance 52.96 61.76 66.05 97.55 0.02 0.02Loans, Advances & OtherCurrent Assets 390.91 415.61 151.24 79.44 - -TOTAL (C) 3,286.25 3,050.68 1,434.61 1,289.45 0.02 0.02LIABILITIES & PROVISIONSSecured Loans 1,771.08 1,584.16 114.14 137.04 - -Unsecured Loans 330.11 445.47 416.85 413.98 - -Current Liabilities 2,472.15 1,485.45 1,324.12 0.18 0.13Provisions 17.00 124.43 0.95 - - -Deferred Tax Liabilities/ (Assets) 241.84 186.93 (88.46) (96.13) - -TOTAL ( D ) 5,334.48 4,813.14 1,928.93 1,779.01 0.18 0.13NET WORTH E (A+B+C-D) 1,129.79 1,061.32 568.48 570.16 (0.16) (0.11)REPRESENTED BYShare Capital 740.41 740.41 422.41 422.41 0.02 0.02Total Reserves and Surplus 811.96 738.38 212.63 222.88 - -Less : Revaluation Reserve 384.02 385.70 - - - -Less: Profit and Loss A/c (Debit Bal) - - 57.27 66.80 0.07 0.02Net Reserve and Surplus 427.94 352.68 155.36 156.08 (0.07) (0.02)Miscellaneous Expenditure 38.56 31.77 9.29 8.33 0.11 0.11NET WORTH 1,129.79 1,061.32 568.48 570.16 (0.16) (0.11)

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Annexure - IIISignificant Accounting Policies:I. ACCOUNTING POLICIES FOR THE FINANCIAL YEAR 2004-05

i) Method of Depreciation, Depletion & Amortization:a Depreciation of Fixed Tangible Assets has been computed on straight line basis on cost/enhanced cost in

accordance with Schedule-XIV read with Section 205(2)(b) of the Companies Act, 1956 except in cases“where the assets have been identified/retired from active use and where the assets are reduced to theestimated realizable value in the year of its retirement”. However depreciation on plastic bins has beenprovided at 25%, keeping in view, the life of expectancy of the bins. The incremental depreciation onenhanced cost on account of revaluation is adjusted against revaluation reserve.

b Cost of Leasehold Land is not being amortized over the period of lease and shall be amortised on termina-tion/ renewal of lease agreement.

c Intangible Assets-Amortisation of intangible assets is provided on straight-line method to allocate depre-ciable amount of an asset over its usual life.

ii) Conversion of Foreign Currency items:Transactions in foreign currencies are translated at the exchange rate prevailing on the date of the transactionsand in case of purchase of materials and sales of goods, the exchange gains/losses on settlement during theyear, are adjusted to respective accounts. However during the year there is no export sale.In cases where the amount is not received/paid upto the Balance Sheet date, the conversion of foreign cur-rency items have been accounted for at the rates prevailing as at the year end and material variance has beenrecognized in the Profit & Loss Account.

iii) Valuation of Inventories:Raw Materials, Components, Stores and Packing Materials are valued at Cost including taxes. Semi-finishedgoods valued at Estimated Cost including taxes. Finished goods are valued at cost inclusive of excise duty forwhich provision has been made. Custom duty on material lying in bonded warehouse is included in cost whenit is actually paid/incurred at the time of removal from the warehouse. This treatment has no impact on theprofits of the company.

iv) Research & Development:The revenue expenditure on research & development is expensed out under the relevant head of accounts inthe year in which it is incurred. However, expenditure which results in creation of capital tangible assets, istreated in the same way as expenditure on other fixed assets.

v) Valuation of Fixed Assets:The Fixed Assets of the Company are recorded at their Historical Cost of acquisition except otherwise stated(some of the assets are recorded at revalued amounts) including installation & commissioning expenses asreduced by accumulated depreciation to date. Fixed assets identified under asset rationalization programmeare revalued from time to time and the deficit if any on account of the revaluation is recognized in the profit &loss statement of the relevant year.

vi) InvestmentsInvestments are stated at cost. Dividend income is accounted in the year in which it is received.

vii) Treatment of Contingent Liabilities:Liabilities of a contingent nature are accounted for only on actual occurrence/final settlement of the liabilities.

viii) Retirement Benefits to Employees:The company’s contributions to schemes such as Provident Fund & Family Pension Fund are charged to Profit& Loss Account as and when accrued. The company also provides for retirement/post retirement benefits inthe form of Gratuity to all employees under various shemes with the LIC wherein, liability towards the premiumof the policies, based on actuarial valuation is charges to the Profit & Loss Account. However, provision forleave encashment amounting to Rs.64.55 Lac is not made since the liability is of a fluctuating nature from yearto year and is accounted for only at the time of retirement of the employees. (Read along with note No.4 ofNotes on Accounts).

ix) Revenue Recognition:Revenue in respect of insurance/other claims and rate differences etc. is recognized only when it is reasonablycertain that the ultimate collection will be made.

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x) LeasesIn respect of operating lease, rentals and all other expenses are treated as revenue expenditure with referenceto the term(s) of the lease(s)

xi) Taxation:Tax liability of the company is estimated considering the provisions of the Income Tax Act, 1961. Deferred taxis recognized subject to the consideration of prudence, on timing difference, being the difference betweentaxable income and accounting income that originate in one period and are capable of reversal in one or moresubsequent periods.

Annexure - IVNotes To Account:1. General

The financial statements are drawn up in accordance with historical cost convention and on the going concernconcept, income and expenses are accounted for on accrual basis except where otherwise indicated.

2.(a) As per Scheme of arrangement for demerger between Lumax Industries Ltd. (LIL) and the Company, approvedby the Hon’ble High Court of Delhi vide its order dated 15/09/2003, the units for manufacturing of Filters, AirCleaners and Rear View Mirrors located at Pune, Faridabad, Aurangabad and Dharuhera stand transferredto and vested in the company as a going concern with effect from 01/04/2002. However the filter division atDharuhera unit upto 30/06/2004 was working under the premises of LIL and was jointly controlled and man-aged by the company and LIL and no separate books of account in respect of the manufacturing of filters atDharuhera upto that date were maintained and up to that date in the financial results direct expenses likepurchase of raw materials, interest, rebate & discount and travelling relatable to filter unit at Dharuheraunit have been incorporated on actual basis and the indirect expenses such as wages, salaries, packing andforwarding, sales promotion, etc. have been incorporated on pro rata basis of total turnover of the Dharuheraunit/the turnover of the filter division.

(b) Some assets taken over from LIL under the scheme of arrangement(demerger) are pending for transfer in thename of the company and for which necessary steps are being taken.

3) AmalgamationIn terms of Court order dated 23/02/2005 issued by the Hon’ble High Court of Delhi, the erstwhile companiesnamely M/s Toshi Auto Industries (P) Ltd. & M/s Metal Pressing Industries (P) Ltd. have been amalgamatedwith the company w.e.f. 01/04/04 and accordingly:-i. All the assets and liabilities including reserves of the amalgamating companies as on 01/04/04 have

been taken over at their respective book values as per the scheme of amalgamation.ii. The company has followed the “pooling of interest” method as prescribed under Accounting Standard-14

issued by the Institute of Chartered Accountants of India.iii. Pending allotment, the values of Rs.3,17,99,900/- equivalent to 3179990 equity shares of Rs.10/- each to

be issued to the shareholders of the amalgamating companies, has been shown under the head“share Capital suspense” in Schedule-I. The company has since made the allotment on 20/04/2005.

iv. Loans from Banks, Financial institutions, land, building and vehicles taken over from amalgamating com-panies are pending for transfer in the name of the company for which necessary steps are being taken.The charges registered u/s 125 of the Companies Act, 1956 in respect of assets of the amalgamatingcompanies in ROC office are pending for registration in the name of the company.

v. The amalgamating companies erstwhile M/s Toshi Auto Industries (P) Ltd. and erstwhile M/s Metal Press-ing Industries (P) Ltd. had revalued their fixed assets in order to present a true & fair value of their fixedassets. The said revaluations were made after obtaining certificates from the registered valuers.

vi. Unsecured loans from persons covered u/s 301 of the Act amounting to Rs.32306740/- were transferredto the company by the erstwhile Toshi Auto Industries (P) Ltd. Similarly an advance of Rs.3,03,535/- toMrs. Kamlesh Jain, a director of the company was transferred to the company by erstwhile Metal Press-ing Industries (P) Ltd.

vii. Figures of the current year are not comparable with that of the previous year figures as in the current yearfigures, the working results of the amalgamating companies are incorporated.

4) i) The company has set-up its own gratuity fund which is covered under the group gratuity scheme with LifeInsurance Corporation of India. The gratuity fund in respect of the employees transferred as per the scheme ofthe demerger has been transferred by the gratuity trust of Lumax Industries Limited through life Insurance

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Corporation of India to the company’s Trust. Yearly payment in respect thereof is accounted for on accrualbasis. The amalgamating companies erstwhile M/s Toshi Auto Industries Private Limited and erstwhile M/sMetal Pressing Industries (P) Ltd. have their own gratuity trusts and policies with the Life Insurance Corpora-tion of India. Yearly premiums payable in respect of their employees are also accounted for on accrual basisthrough their respective gratuity trusts. The matter is under negotiation with LIC for merging the policies of theamalgamating companies with the policy of the company.ii) Liability in respect of earned leave due to the employees as on 31/03/2005 as per actuarial valuation

amounts to Rs.77.82 Lac (37.92 Lac) and Rs.64.55 Lac (37.92 Lac) has not been provided in the books ofthe company.

iii) Under the scheme of demerger with Lumax Industries Ltd. sale-tax deferment liability in respect of rearview mirror division was transferred to the company. Similarly under the scheme of amalgamation saletax deferment liability in respect of Gurgaon unit of erstwhile Toshi Auto Industries (P) Ltd. was also trans-ferred to the company. However the approvals and certificates for deferment of sale tax liability from StateAuthorities are awaited. The sale-tax deferred liability amounting to Rs.14685406/- has been included inunsecured loans and the said liability is repayable after expiry of the sanctioned period.

5) i) Other contingent liabilities not provided for :a) Bonds given to Government Agencies & Counter Guarantees given to banks on behalf of the company

Rs.12.40 Lac (Rs.12.40 Lac)b) Letter of credit outstanding Rs.18.73 Lac (Nil).c) Bank guarantees given in favour of Government agencies Rs.0.25 Lac (0.20 Lac)

ii) Outstanding capital commitmentsEstimated amount of contracts remaining to be executed on capital account-Rs.500 Lac (Rs.74.80 Lac)

6) i) Computation of net profit in accordance with section 198 of the Companies Act, 1956.

Particulars 2004-05 2003-04Profit before Tax 28,730,826 1,051,031Add:Director’s Remuneration 1,611,930 710,814Loss on sale of Fixed Assets - 106,960

30,342,756 1,868,805Less:Profit on sale of Fixed Assets 177,042 -Net Profit u/s 198 of The Companies Act, 1956 30,165,714 1,868,80511% Net Profit as computed above 3,318,229 205,569

Managerial Remuneration (Other than Director’s Sitting Fee) :

Particulars 2004-05 (Rs.) 2003-04 (Rs.)Salaries 864,000 366,080Contribution to PF 102,960 39,661Value of Perquisites 644,970 305,073Total 1,611,930 710,814

(Previous year - The company has inadequate profits and the remuneration paid to the directors was minimumremuneration within the limits specified under para 1(A) of Section-II, Part-II of Schedule XIII of the Companies Act,1956.)

Auditors fee and Remuneration

Particulars 2004-05 (Rs.) 2003-04 (Rs.)Audit Fee 191,000 126,600Taxation 40,000 20,000Certification fee, Service tax, Reimbursement of expenses and others 48,330 -Total 279,330 146,600

82

Particulars of Licensed and Installed Capacity :

Class of Goods Manufactured Licensed (*) Installed (*)Capacity (Nos.) Capacity (Nos.)

Oil/Air Filters and Cleaners N.A. 1,700,000 (1,000,000)

Rear View Mirrors N.A. 3,800,000(3,800,000)

Plastic moulded auto components 14,000,000

(*) As certified by the management which has been determined on the basis of past production records and is anestimate which may change on account of changes in product mix. The same has been accepted by the Auditors,being a technical matter, without verification.

ii) Particulars pertaining to finished goods :

Class of Goods Opening Stock Production Turnover Closing Stock Manufactured Qty (Nos) (Rs.) Qty (Nos) Qty (Nos) (Rs.) Qty (Nos) (Rs.)

Oil/Air Filters 8,941 1,037,089 1,366,146 1,364,671 306,038,199 10,416 1,389,103and Cleaners (2,344) (445,254) (848,997) (842,400) (227,788,693) (8,941) (1,037,089)Rear view 29,528 1,206,912 2,453,492 2,468,533 176,926,358 14,487 849,875Mirrors

(20,625) (749,366) (2,893,263) (2,884,360) (149,596,357) (29,528) (1,206,912)Plastic mouldedauto components(see note 3 below) (Nil) (Nil) (Nil) (Nil) (Nil) (Nil) (Nil)Others (See Notes1& 2 below) 54,195 39,096,776 445,409

(177,868) (501,169,667) (54,195)5,913,392 815,926,007 5,452,284

(1,372,488) (427,554,717) (2,298,196)

Notes:1. Comprise of large number of items such as components and parts of Air Cleaners/Filters, thereof such quan-

titative details have not been shown.

2. Total Turnover includes Job Work amounting to Rs.144002/- (10454/-)

Plastic moulded auto components used in house 1243318 are excluded from production figure.

Details of Raw Materials consumed:

Name of Items Unit Qty. Value (Rs.)Steel Sheet M.Tones 1,671 61,868,888

(1,366) (41,162,799)Plastic Powder M.Tones 2,430 154,411,446

(244) (12,664,585)Filter Paper M.Tones/PCs. (116/865662) 46,887,571

(101/642796) (37,358,375)Others 213,106,124

(167,132,913)476,274,029

(258,318,672)

83

Value and percentage of Raw Materials and Stores Consumed :

Particulars Raw Materials Consumable Stores % Value (Rs.) % Value (Rs.)

Indigenous 92 435,973,181 100 9,466,889(88) (227,287,220) (100) (5,497,360)

Imported 8 40,300,848 Nil Nil(12) (31,031,452) (Nil) (Nil)

476,274,029 9,466,889(258,318,672) (5,497,360)

Expenditure/Payments in Foreign Currency:

Particulars 2004-05 (Rs.) 2003-04 (Rs.)Raw Materials (CIF Value) 46,652,012 34,057,198Foreign Travels 448,677 853,228Job Work for moulds 34,775 -Advance for Bike project 122,195 -

47,257,659 34,910,426

12) Earning in Foreign Currency:Advance received for moulds - Rs.1654135/- (Nil)

13) The names of small scale industrial undertakings to whom the company owes sums outstanding for more than30 days are as under :

1. Devishree Immense 2. Elite Rubber Industries3. Krishna Packwell Pvt. Ltd. 4. Karun Enterprises5. Kamal Enterprises 6. Rajan Enterprises7. Super Metal 8. Shiv Industries9. S.J.B. Rubber Udyog 10. New Swan Enterprises11. Paragon Packing 12. M.N. Rama Rao & Co.13. Pradeep Mahindra Rubber Udyog 14. Stariware Plastic Products15. Asiatic Enterprises 16. D.R. Polimers (P) Ltd.17. Gayatri Packers 18. Goodwill Enterprises19. HGI Automotive Pvt. Ltd. 20. Horizon Rubber Products Ltd.21. Jyoti Traders 22. Jay Bee Auto Pvt. Ltd.23. Karun Enterprises 24. Krishna Packwell Pvt. Ltd.25. Kiran Engineering Works 26. Rajan Enterprises27. Super Screw (P) Ltd. 28. Sumit Engineering Works29. Sagar Plastic Industries 30. Singhal Fastners31. Tech-Plast (I) Pvt. Ltd. 32. Verma Die Casting33. Alankar Leather Industries 34. Aiswarya Rubber & Engg Works35. Dayal & Associates Pvt Ltd 36. Mukesh Enterprises37. Devishree Immense 38. Palm Aries39. Rubber Craft Industries 40. Raju Fabricators41. Shri Industries 42. Universal Instrument43. Vidyut Plast 44. Vishwakarma Indus. (Cr)45. Rapid Engg. Co. Pvt.Ltd. 46. Vijay Trading Corporation47. Vishwakarma Enterprises 48. Accurate Polybod Inds.49. Kapila Enterprises 50. Meher Enterprises51. Mileage Filter Pvt. Ltd. 52. Spring Teknics & Engg Co.(P) Ltd.53. Namitha Engineering 54. Securafence Securities (P)

84

55. Securafence Securities Pvt. Ltd. 56. Soni Enterprises57. Techno Venture 58. Chandra Electricals59. Bengal Packers, FBD 60. Dee Kay Plastics, Fbd61. Harvee Packaging Solutions Enterp. 62. Masros Enterprises63. Newsun Plastic Inds. 64. Ravi Sons Industries65. Supreme Vinyl Products 66. Vee Kay Industries67. Akshay Heaters 68. Aman Enterprises69. Aakriti Enterprises 70. Essjay Industries71. Belitte Sping Pvt. Ltd. 72. Dayal and Associates73. Focus Infosoft Pvt Ltd 74. JDS Industrial Corpn.75. Harshad Engg Works 76. Jayshree Enterprises77. Lasariya Plastic Inds. 78. Lumax Auto Pvt. Ltd.79. LAPL Automotive Pvt. Ltd. 80. Monica Enterprises81. ND Industries 82. Neo Plast83. N.K. Poly Pack Inds. 84. Press Crome Works85. Prasad Press Works 86. Sunrise Packaging Inds.87. Modern Tools (P) Ltd. 88. Vinnay Engineering Pvt. Ltd.89. Sar Industries 90. Sarita Plastic Industries91. Shree Vyankatesh Engg. Ind. 92. Shree Shyam Print N Pack93. Sonicoat Industries 94. Shree Enterprises95. Tirupati Press Co. 96. Shree Gobji Packers97. Sheet Shapers 98. Sarvesh Engineering Works99. Sun Polymer 100. Spark Engineering101. Shree Inds. of Chemical 102. Sanjay Techno Plast P Ltd.103. Vishwa Pharma Chem 104. Ajay Indl. Corporation105. Belmont Rubber Industries 106. D.P. Packaging ndustries107. Industrial Product Mfg.Co. 108. Newsun Plastic Industries109. Harvee Packaging Solutions Ent. 110. Neel International111. Precision Tech Enterprises 112. Sharda Proplene Pvt. Ltd.113. Aapar Packaging Pvt. Ltd. 114. Kamla Enterprises115. Masros Engineers 116. Newsun Plastics Inds.117. Prime Polymers 118. R.R. Metal Industries119. Bgyor Trade Link 120. Albis Industries

14) The above information and that given in schedule of current liabilities regarding SSI Undertakings has beendetermined to the extent such parties have been identified on the basis of information available with the com-pany. This has been relied upon by the auditors.

15) In terms of Note 3 to Part II of Schedule VI of The Companies Act, 1956 quantity-wise disclosures have beenmade only/restricted to those items/articles, which individually account for 10% or more of the total raw materialsconsumed/turnover.

16) The business of the company falls within one primary business segment, namely automotive components,therefore, the requirement of disclosure as per AS-17 regarding “Segment Reporting” does not apply. The com-pany is primarily engaged in the business of Auto Components which are governed by the same set of risk &returns and hence there is only one segment. The said treatment is in accordance with the guiding principleenunciated in the Accounting Standard on segment reporting (AS-17)

17) Particulars of Companies/firms disclosed to comply with Para 3(a) of AS-18 on “Related Party Disclosure” inwhich the directors of the company exercise control over the composition of the Board of the directors/governingbody are given here below. However, these do not have a potential conflict with the interest of the Company atlarge nor do they control or exercise significant influence over the interest of Lumax Automotive Systems Lim-ited.

85

i) Names of Related Parties with whom Transactions were carried out during the year :-

Key Management Relatives/Enterprises of Associates/Enterprises controlledPersonnel Relatives of Key Personnel by Key Management PersonnelMr. U.K. Jain Lumax Filters (P) Ltd. Lucky Tour &Travels (P) Ltd.Mrs. Kamlesh Jain Deepak Auto Pvt. Ltd. Toray Auto Industries (P) Ltd.Mr. Nitin Jain Lumax Industries Ltd.

Lumax Finance & Investments (P) Ltd.Lumax Auto Pvt. Ltd.Nytex Auto IndustriesSh. S.C. JainSh. Sagar Chand Jain & sonsMrs. Anju JainJainsons Pvt. Ltd.

ii) Detail of Related Parties Transactions :-(Amount in Rs.)

Sr. Account Head/ Key Relatives/ Associates/ Total TotalNo. Particulars Manage- Enterprises of Enterprises Current Previous

ment Relatives of Key Controlled by Year YearManagement Key Management

Personnel Personnel1 Machine Hire Charges 1,200,000 1,200,000 1,200,0002 Components -Sale 55,838,895 62,166,5893 Components/R.M. -

Purchase 5,973,120 1,999,423 7,972,543 33,384,3114 Packing Material -

Purchase 12,050 12,0505 Service Charges Paid 1,962,953 1,962,953 5,271,7086 Travelling 895,498 895,498 654,9277 Job Work 2,942,091 2,942,091 7,308,7368 Managerial Remuneration 1,611,930 1,611,930 710,8149 Sale of fixed asets 12,667 12,66710 Purchase of fixed assets 1,900,000 1,900,00011 Interest on

unsecured loans 3,059,879 3,059,879 3,963,61412 Rent 240,000 428,000 668,00013 Salaries & allowances 52,698

18) The company has no subsidiary company and therefore, the requirement of presentation of consolidated finan-cial statements as envisaged vide AS-21, of the ICAI for “Consolidated Financial Statement” is not relevant.

19) Impairment of AssetsAs stipulated in AS-28, the company assessed potential generation of economic benefits from its business unitsand is of the view that assets employed in continuing businesses are capable of generating adequate returnsover their useful lives in the usual course of business, there is no indication to the contrary and accordingly themanagement is of the view that no impairment provision is called for in these accounts.

86

20) i) TaxationThe company is liable to pay the income tax for the year, Under the provision of section 115JB of the IncomeTax Act and necessary provision for the same has been made.

Deferred Tax liabilities (Assets)The major components of Deferred Tax Assets and liabilities are given below: (Amount in Rs)Deferred Tax Assets:Expenses deductible on payment basis 1,717,152Carry forward losses 14,367,099Deferred Tax Liabilities:Difference between book and tax depreciation 34,777,709Deferred tax liability as on 31/03/2005 18,693,458Less: Deferred tax liability transferred fromAmalgamating company erstwhile Toshi Auto Inds. (P) Ltd. 20,108,564Deferred Tax assets for the year 1,415,106

Note:In the previous year there were substantial unabsorbed depreciation and b/f losses, deferred assets were

not recognized as a matter of prudence and sound accounting policy.

21) i) Expenditure incurred towards payment to employees under voluntary retirement scheme (VRS) during theyear and in the preceding years was amortized in equal installments over five years.

ii) Expenditure incurred on new project (Bike) shall be capitalised/amortised in the year of the implementationof the project/production.

iii) Preliminary and amalgamation expenses were written off in five years.

22) MiscellaneousSundry creditors, sundry debtors and loans and advances include certain items for which confirmations are yetto be received and include certain long outstanding balances which are considered payable/realizable as thecase may be.

Earning Per Share (EPS):

Particulars As on 30th Sept 2004-05 2003-04Net profit as per Profit & Loss A/c after taxation 8,616,178 26,766,240 953,671Number of Equity Shares of Rs 10/- each at thebeginning of the year 7,404,106 4,224,116 50,250Add: increase in number of equity shares pursuant tothe scheme of amalgamation with effect from 01/04/2004(increase in number of Equity shares pursuant to thescheme of arrangement with Lumax Industries Ltdw.e.f 01/04/2002) - 3,179,990 4,173,866Total No. of Equity Shares 7,404,106 7,404,106 4,224,116Weighted average number of Equity shares of Rs 10/- eachat the end of the year for Calculation of basic and diluted EPS 7,404,106 7,404,106 4,224,116Face value of equity share 10 10 10Basic & Diluted Earnings (in Rupees Per Share) 1.16 3.62 0.23

87

Annexure – VCash Flow Statement: Rs. In Lacs

Particulars 2004-05 2003-04A. Cash Flow From Operating ActivitiesNet Profit before tax & Extraordinary items 218.610 7.930Adjustments for :Depreciation 332.460 96.810Other Income (37.790) (7.640)Interest Expenses 207.660 63.540(Profit)/Loss on sale of fixed assets (1.770) 1.070Miscellaneous expenses written off 7.570 2.690Operating profit before working capital changes 726.740 164.400Adjustments for:Inventories (316.210) (112.090)Trade and Other receivables (1304.140) (64.590)Trade and Other payables 986.700 164.370Cash generated from Operations 93.090 152.100Income/wealth Tax Paid (0.830) (0.020)Interest paid (207.660) (63.550)Cash Flow Before Extraordinary items (115.400) 88.530Extraordinary items (Prior Year Adjustments) 0.00 0.00Net cash generated from Operating Activities(A) (115.400) 88.530B. Cash Flow from Investing ActivitiesCapital Work in Progress (114.720) 5.450Purchase of Fixed assets (net) (503.930) (106.400)Fixed Assets T/F from Amaalgamating companies (1847.450) 0.000Investment in share Y/f from Amalgamating Companies (14.620) 0.000Other Income 37.790 7.640Deferred Revenue expenditure (29.700) (3.650)Preliminary Expenses T/f from Amalgamating Companies (0.350) 0.000Net Cash used in Investing Activities (2472.990) (96.960)C. Cash flow from Financing activities Net Proceeds/Repayments of long term loans 448.760 (23.070)T/f from Amalgamating Companies for allotment of shares 318.000 0.00Capital Revaluation Reserve T/F from Amalgamating Companies 389.050 0.00General Reserve T/f from Amalgamating Companies 177.320 0.00Long term Borrowings T/f from Amalgamating Companies 824.650 0.00Short term Borrowings T/f from amalgamating Companies 36.730Working Capital Loans T/f from amalgamating Companies 188.500Deferred Tax Liability T/f from Amalgamating Companies 201.090Net Cash used in Financing Activities 2584.100 (23.070)D. Net(decrease)/Increase in cash (A+B+C) (4.290) (31.050)Cash and Cash Equivalent as on 01.04.2004 66.050 97.550Cash and Cash equivalent as on 31.03.2005 61.760 66.050

88

Annexure – VIStatement of dividend paid:

Rs. in Lacs

Particulars For the year endedSep-05 Mar-05 Mar-04 Mar-03 Mar-02 Mar-01

On Equity Share CapitalPaid up share capital 740.41 740.41 422.41 422.41 0.02 0.02Face value (Rs.) 10.00 10.00 10.00 10.00 10.00 10.00Rate of Dividend % - 0.12 - - - -Amount of Dividend - 88.84 - - - -Corporate Dividend tax - 12.46 - - - -

Annexure – VIIPerformance Ratios:

Rs. in Lacs


Earnings per share (Rs) 1.16 2.83 (0.02) (1.64) (20.00) (8.00)Return on Net worth (%) 7.53 19.76 (0.12) (12.16) (31.25) 18.18Net asset value/Bookvalue per share 15.26 14.33 13.46 13.49 (64.00) (44.00)

1.Earnings per share (Rs.) = Profit available to equity shareholders/No. of equity shares2.Return on Net worth (%) = Profit after taxation/Net worth * 1003.Net asset value/Book value per share (Rs.) = Net worth /No. of equity shares

Annexure - VIIICapitalization Statement: Rs. in Lacs

Pre Issue As on Post IssueParticulars 30.9.2005 31.03.2005 31.03.2004Total Debt: 2,101.2 2,029.6 531.0 2,029.6Short Term Debt 1,273.3 1,299.7 389.8 1,299.7Long Term Debt 827.9 729.9 320.0 729.9Shareholders Funds:Share Capital 740.4 740.4 422.4 1,040.4Reserves & Surplus 812.0 738.4 212.8 [•]Less: Misc expenditure 38.6 31.8 9.3 50.0Total Shareholders Funds 1,513.8 1,447.0 625.9 [•]Long Term Debt/ Shareholders funds 0.0 0.0 0.0 [•]

89

Annexure – IXStatement of Tax Shelters Rs. in Lacs

Particulars For the year endedMar-05 Mar-04 Mar-03 Mar-02 Mar-01

Profit before current and deferred taxes, as restated (A) 218.61 7.93 (115.34) (0.05) (0.02)Tax rate,%(E) 36.59 35.88 36.75 35.70 39.55Tax impact 79.99 2.85 (42.39) (0.02) (0.01)Adjustments Permanent differencesOther adjustments - -Fines and Penalties 3.02 0.30 0.30charity and Donations 0.30 0.02 0.06 - -Prior period expenses - - 0.05 - -Loss/(profit) on sale of Fixed assets (1.77) 1.06 3.93 - -Dividend Received (5.52) - - - -Total (B) (3.97) 1.38 4.34 - -Temporary differencesDifference between book depreciationand tax depreciation (108.41) (125.68) (208.65) - -Research & Development expenditure - - - - -Brought Forward Losses (78.50) (78.50) - - -Brought Forward Depreciation (572.85) (490.05) (209.46) - -43B adjustments 16.10 30.93 (20.45) - -Differences under Gratuity u/s 40A(7) 9.75 - - - -U/s 40(a) adjustments (0.47) (0.02) (5.81) - -Total (C) (734.38) (663.32) (444.37)Net Adjustments (B+C) (738.35) (661.94) (440.03) - -Tax Shelter 270.16 237.47 161.71 - -

Notes:1.The figures in the above statement for the period ended on March 31, 2005 are provisional and would be finalizedat the year-end.2.The figures of all the other years are as per the Returns of Income filed.3. Lumax Industries Ltd paid Income Tax for the A/y 2003-04.* does not include MAT paid under provision of 115JA/ 115JB of the Income Tax Act, 1961.

Annexure – XDetails of Other income

Rs. In Lacs Particulars For the year ended

Sep-05 Mar-05 Mar-04 Mar-03 Mar-02 Mar-01Income from Interest 0.40 0.63 0.16 0.16 - -Dividend 0.73 5.52 - - - -Miscellaneous Income 2.52 31.64 7.48 3.72 - -Total 3.65 37.79 7.64 3.88 - -

90

Annexure – XISundry Debtors:

Rs. in LacsFor the year ended

Particulars Sep-05 Mar-05 Mar-04 Mar-03 Mar-02 Mar-01Debtors outstanding for a periodexceeding six months 380.45 401.61 72.68 66.25 - -Others 1,586.51 1,519.99 809.15 822.79 - -Total 1,966.96 1,921.60 881.83 889.04 - -

Annexure – XIILoans & Advances:There are no loans to Companies in which Directors are interested.

Annexure – XIIIUnsecured Loans:

Rs. in Lacs


From bodies corporate 10.58 18.13 317.00 317.00 - -Security from Staff & Customers 93.07 90.96 3.05 5.63 - -Fixed Deposits - - - - - -Redeemable Non-Convertible Debenture - - - - - -Others 226.45 336.38 96.80 91.35 - -Total 330.10 445.47 416.85 413.98 - -

Annexure – XIVSecured Loans:

Rs. In Lacs


Term Loan 1,011.55 899.04 114.14 137.04 - -Working Capital Loan 759.53 685.12 - - - -Total 1,771.08 1,584.16 114.14 137.04 - -

91

Sr.No.

A

1.

2.

3.

Lender & Type ofFacility / Sanction letterno. Loan documentsand date/ Terms ofrepayment

Working capital

Syndicate Bank

• Fund based Rs. 1000Lac• Non fund Based Rs.500 Lac• Sanction letter No.19/9006/2005/RA/ dated05.12.2005

Canara Bank

• Fund based Rs.160Lac

• Non fund basedRs.100 Lac

• Sanction letterNo.Cr:Sanction:Renewaldated 03.09.2003

Bank of India

• Fund based Rs.40 Lac• Sanction letterNo.PMP:CBD::SRB:2:97dated 14.07.1997 (thissanction is a old sanctionand for renewal letter isgiven by the Companyand the personalguarantee is given by thenew Directors (copyenclosed) Limits are nonoperative and ODbalance is payable

Rate ofinterest

At PLR i.e11% p.a

12.50% p.a

18.75% p.a

Amt. Out-standing ason Septem-ber 30, 2005(in Rs.)

5,70,02,660

1,83,79,636

5,70,329

7,59,52,625

RepaymentSchedule

Repayable ondemand andare availablefor one year.

Repayable ondemand and areavailable for oneyear.

Limits are nonoperative and ODbalance is beingrepayed ininstalments ofRs. 1.04 lacseach.

Details of Security

• Hypothecation of rawmaterial, WIP, finishedgoods, stores and bookdebts of the mirror andfilter manufacturingunits of the Company

• And also secured byway of first charge onimmovable properties(All immovableproperties as per Note– I

• Personal guarantees ofpromoter Directors. Viz; Mr.U.K. Jain, Mr. Nitin Jain andMrs. Kamlesh Jain, ofLASL

• Hypothecation of Rawmaterial, WIP, finishedgoods, stores and bookdebts of the plasticmoulding units of theCompany

• Second charge on theimmovable properties.( Allimmovable properties asper Note II )

• Personal guarantees ofpromoter Directors. Viz; Mr.U.K. Jain, Mr. Nitin Jain andMrs. Kamlesh Jain, ofLASL

• Hypothication of rawmaterial, WIP, finishedgoods, stores and bookdebts of the sheet metalcomponents unit of theCompany

• Personal guarantee ofpromoter Directorsviz.U.K.Jain and MilanJain, of erstwhile MPI

Principal Terms of Sanctioned Loans and Assets Charged as Security

LoanDocu-menta-tion

Loandocu-mentsdated

Total

92

Sr.No.

B

1

2

3


Term Loans

Syndicate Bank• WCTL Rs. 600 Lac• Sanction letter no.SANL TR.3/9006/2005/PNM dated 02.03.2005• Charge registered on27.04.2005

HSIDC Ltd.• Term Loan – Rs. 330Lac• Sanction letter dated• Charge registered on02.01.2003

HSIDC LTD.• Term Loan – Rs. 100Lac• Sanction letterNo.HSIDC:FIN:2002:1325dated 21.08.02• Charge registered on12.11.02

Rate ofinterest

PLR+1%i.e 12% p.a

11 % p.a

11 % p.a


4,44,99,724

1,20,00,000

8,50,000


Repayable in 20q u a r t e r l yinstallments ofRs. 30 Lac eachw.e.f from30.09.2005

Repayment PlanLoan is repayablein 22 quarterlyinstallments ofRs. 15 Lacs each

Repayment plan loan is repayablein 20 quarterlyinstallments ofRs. 5 Lac each

Details of Security

• Hypothecation of rawmaterial, WIP, finishedgoods, stores and bookdebts of the mirror andfilter manufacturingunits of the Company

• Secured by way of firstcharge on immovableproperties (All immov-able properties as perNote – I

• Personal guarantees ofpromoter Directors. Viz;Mr. U.K. Jain, Mr. NitinJain and Mrs. KamleshJain, of LASL

• First Charge on thefixed assets of theCompany i.e Land andbuilding situated at plotno. 10, I.P estate, 12/2,Mathura Road,Faridabad. Plot No. 99,Udyog Vihar, Phase IV,Guraon and Plot No 46,secotr 3, IMT ,Manesar,Gurgaon (Allimmovable propertiesas per Note II ) alongwith the Plant andMachinery and othermovable assetsinstalled on that.

• First Charge on thefixed assets of theCompany i.e Land andbuilding situated at plotno. 10, I.P estate, 12/2,Mathura Road,Faridabad. Plot No. 99,Udyog Vihar, Phase IV,Guraon and Plot No 46,secotr 3, IMT ,Manesar,Gurgaon (Allimmovable propertiesas per Note II ) alongwith the Plant andMachinery and othermovable assetsinstalled on that.

LoanDocu-menta-tion

Loandocu-mentsdated30.03.2005

\



93

Sr.No.

4

5

6

7

8

9


HSIDC LTD.• Term Loan – Rs.250Lac• Sanction letterNo.HSIDC:APP:2004:3499dated 29.03.04• Charge registered on13.07.2004

HSIDC LTD.• Term Loan – Rs.465Lac• Sanction letterNo.HSIDC:APP:2005:577dated 22.07.05• Charge registered on15.09.2005

MARUTI UDYOG LTD.

CITY CORPORATIONMUL

ICICI BANK

GE CAPITAL SERVICESINDIALoan amount Rs.212.69Lac

TOTAL

Rate ofinterest

11 % p.a

10.5 % p.a

10.5 % p.a

Between9% to 10%p.a.(approx.)

Between9% to 10%p.a.(approx.)

12.5% p.a.


1,88,59,000

1,18,85,000

23,72,835

33,585

64,05,087

42,48,936

10,11,54,167


Repayment plan loan is repayablein 20quarterlyinstallments ofRs. 12.50 Laceach

Repayment PlanLoan is repayablein 24quarterlyinstallments ofRs. 19.375 Lacseach

Loan repaymentis adjusted in theinvoice raised toMUL

Loan repaymentas per theschedule givenagainst theparticular car

Loan repaymentas per theschedule givenagainst theparticular car

Loan is repayablein 20 quarterlyinstallments ofRs.10.63 Laceach

Details of Security

• First Charge on thefixed assets of theCompany i.e Land andbuilding situated at plotno. 10, I.P estate, 12/2,Mathura Road,Faridabad. Plot No. 99,Udyog Vihar, Phase IV,Guraon and Plot No 46,secotr 3, IMT ,Manesar,Gurgaon ( Allimmovable propertiesas per Note II )alongwith the Plant andMachinery and othermovable assetsinstalled on that.

• First Charge on thefixed assets of theCompany i.e Land andbuilding situated at plotno. 10, I.P estate, 12/2,Mathura Road,Faridabad. Plot No. 99,Udyog Vihar, Phase IV,Guraon and Plot No 46,Sector 3, IMT ,Manesar,Gurgaon ( Allimmovable propertiesas per Note II )alongwith the Plant andMachinery and othermovable assetsinstalled on that.

No charges registered againstmould

Hypothetication against thecars (No charges registered)

Hypothetication against thecars (No charges registered)

Hypothetication of 2 Nos.plastic injection moulds formodel A export part no. 73811-79011 and 73811-79820

L o a nD o c u -m e n t a -tion

L o a nd o c u -m e n t sd a t e d16.04.2004

L o a nd o c u -m e n t sd a t e d22.08.2005

L o a na g r e e -m e n td a t e d21.09.2001

94

NOTE – I(a) All those pieces and parcels of land admeasuring 5000 Sq yards bearing Plot No. 78, Sect-6, Faridabad in

the State of Haryana and bounded as under:-

On or towards the North by - Plot No.77On or towards the South by - Plot No.79On or towards the East by - Plot No.75On or towards the West by - Road


(b) All those pieces and parcels of land admeasuring 2588 sq. yards bearing Plot No. 29, Industrial Estate, No.-II, situated at village Palla, Tehsil Ballabgarh, Distt. Gurgaon in the State of Haryana and bounded as under:-

On or towards the North by - others’s LandOn or towards the South by - Plot No. 28On or towards the East by - RoadOn or towards the West by - Other’s Land


(c) All those pieces and parcels of land admeasuring 5920 sq. yards bearing C-10, MIDC Industrial Area, Waluj,Aurangabad in the State of Maharashtra and bounded as under:-

On or towards the North by - Plot No.P-3On or towards the South by - MIDC RoadOn or towards the East by - Plot No. C-9On or towards the West by - Plot No.C-11


(d) All those pieces and parcels of land admeasuring 1435 sq. Mt. D-2/44 MIDC, Industrial Area, ChinchwadPune in the State of Maharashtra and bounded as under:-

On or towards the North by - Plot No.58 &59On or towards the South by - Link Road No.11On or towards the East by - Reserved AreaOn or towards the West by - Plot No.43/2


(e) All those pieces and parcels of land admeasuring 1079.10 sq. mt. bearing A-26, H- Block, MIDC, IndustrialArea, Pimpri Pune in the State of Maharashtra and bounded as under:-

On or towards the North by - Plot No.25On or towards the South by - Plot No.27On or towards the East by - Estate RoadOn or towards the West by - Nala


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NOTE - II(a) All those pieces and parcels of land admeasuring 1000 sq. mt. bearing Plot No. 99, Udyog Vihar, Phase IV,

Gurgaon in the State of Haryana


(b) All those pieces and parcels of land admeasuring 7875 sq. mt. bearing Plot No. 46, Sector 3, IMT, Manesar,Gurgaon in the State of Haryana


Annexure – XVRelated Party Transactions:

I) List of Related Parties

Name of the Related Party RelationshipKey Managerial PersonnelMr. U.K. Jain Chairman & Managing DirectorMrs. Kamlesh Jain DirectorMr. Nitin Jain Executive DirectorSubsidiary CompanyNONECompanies in which Directors aresubstantially interestedLucky Tour & Travels (P) Ltd Mr. U.K. Jain is Director in the CompanyToray Auto Industries (P) Ltd. Mr. U.K. Jain is Director in the CompanyRelative/ Enterprises of Relativesof Key Managerial PersonnelLumax Filters (P) Ltd. Mr. M.K. Jain Mg. Director of this compnay is brother of Mr. U.K. JainDeepak Auto Pvt. Ltd. Mr. S.C. Jain Director of this company is father of Mr. U.K. JainLumax Industries Ltd. Mr. D.K. Jain Director of this company is brother of Mr. U.K. JainJainsons Pvt Ltd. Mr. S.C. Jain Director of this company is father of Mr. U.K. JainLumax Finance & Investments (P) Ltd. Mr. D.K. Jain Director of this company is brother of Mr. U.K. JainLumax Auto Pvt. Ltd, Mr. M.K. Jain Director of this company is brother of Mr. U.K. JainNytex Auto Industries Mr D.K. Jain and Mr. S.C. Jain are the Partner.Dhanesh Auto Electricals Ltd. Mr. D.K. Jain Director of this company is brother of Mr. U.K. JainBharat Enterprises Mrs Usha Jain is Partner she is wife of Mr. D.K.JainLucky Pharma (P) Ltd. Mr U.K. Jain is Director in this companySh. S.C. Jain Mr. S.C. Jain is father of Mr. U.K. JainSh. Sagar Chand Jain & Sons Mr. S.C. Jain is father of Mr. U.K. JainMrs. Anju Jain Mrs Anju Jain is sister of Mr U.K. Jain

96

Rs. In Lacs

For the year endedName of related party Nature of September March March March March March

Transaction 30, 2005 31, 2005 31, 2004 31, 2003* 31, 2002 31, 2001Mr. U.K Jain Managerial Remuneration 2.96 9.51 3.98 6.06 - -Mrs.Kamlesh Jain Salary & Allowance - - 0.53 1.18Mrs.Kamlesh Jain Rent Paid 1.20 2.40 - -

Mr. Nitin Jain Managerial Remuneration 3.24 6.60 3.13 - - -Mr. Nitin Jain Salary & Allowance - - - 1.88Mr Milan Jain Salary & Allowance 0.60 1.13

Lucky Tours & Travels (P) Ltd. Travelling Expenses 8.82 8.95 6.55 -Lucky Tours & Travels (P) Ltd. Purchase of Car - 19.00 - -Toray Auto Industries (P) Ltd Job Work charges 15.73 29.42 28.19

Toray Auto Industries (P) Ltd Sale of Fixed asset - 0.13 - -Toray Auto Industries (P) Ltd Machine Hire charges 6.00 12.00 12.00 -Toray Auto Industries (P) Ltd. Component Purchase 23.22 19.99 5.82 -

Deepak Auto (P) Ltd. Component Purchase 0.89 2.36 0.47 0.46Jain sons (P) Ltd. Int. on loan 0.16 0.69 - -Lumax Filters (P) Ltd. Components Purchase 14.80 43.20 79.66 -

Lumax Filters (P) Ltd. Components Sale - - 0.66 -Lumax Auto (P) Ltd. Component Purchase - 12.55 11.42 -Lumax Auto (P) Ltd R.M. Purchase - - - 10.71

Lumax Industries Ltd. Rent Paid 0.24 0.72 - -Lumax Industries Ltd. Int On working capital - - 39.64 -Lumax Industries Ltd. R.M.- Purchase - - 0.65 -

Lumax Industries Ltd. Pack Mat. Purchase 1.10 0.95 0.62 -Lumax Industries Ltd P. powder Purchase 0.10 0.68 - -Lumax Industries Ltd Component Purchaes - - - 0.46

Lumax Industries Ltd Service Charges 1.50 19.64 52.72 47.16Lumax Industries Ltd. Pack mat. Purchase - 0.12 - -Lumax Industries Ltd Components Sale 355.27 557.89 587.29 463.34

Lumax Industries Ltd Mould Sale - 0.48 - -Lumax Finance & Investments Ltd. Int. on loan 0.57 2.48 - -Dhanesh Auto Electricals Ltd, Components sale - - 0.21 0.14

Nytex Auto Industries Rent Paid 0.78 1.56 - -Bharat Enterprises Plastic Mould Purase - - - 1.93Bharat Enterprises Moulds/ Machinery Purchase - - - 4.70

Sagar Chand Jain & Sons Int. On loan 1.26 5.53 - -Mr. S. C. Jain Rent Paid 1.20 2.00 - -Mr. S.C.Jain Int. on loan 4.97 21.80 - -

Ms Anju Jain Int. on loan - 0.10 - -Mr. Rajan Jain Managerial Remuneration - - - 3.86Metal Pressing Ind (P) Ltd. Job work Charges - - 44.90 59.99

Metal Pressing Ind. (P) Ltd. R.M. Purchase - - - 30.67Metal Pressing Ind (P) Ltd. Component Sale - - 2.99 1.93Metal Pressing Ind (P) Ltd. Comp. Purchase - - 27.98 -

Metal Pressing Ind (P) Ltd. Job work Receipts - - - 0.06Toshi Auto Ind (P) Ltd. Sales P. Powder - 30.51 25.27Toshi Auto Industries (P) Ltd. Component Purchase - - 207.88 131.25

CLOSING BALANCESLucky Tours & Travels (P) Ltd. (0.29) (0.58) (0.239) -Toray Auto Industries (P) Ltd (43.09) (25.13) ( (7.42) 6.25

Deepak Auto (P) Ltd (1.17) (0.60) (0.65) (0.18)Lumax Filter (P) Ltd. (0.35) 7.39 3.44 2.33Lumax Auto (P) Ltd. (6.76) (0.60) (3.39) (1.46)

Lumax Industries Ltd. 146.62 173.83 141.21 (78.40)Jain Sons (P) Ltd (2.30) (3.95) - -

II) Details of Related Parties Transactions

97

Lumax Finance & Investments Ltd (8.27) (14.18) - -Dhanesh Auto Electricals Ltd (0.49) (0.26) - -Bharat Enterprises - - (0.84) (1.39)

Sagar Chand Jain & Sons (18.45) (31.64) - -Mr. S.C. Jain (72.70) (124.64) - -Metal Pressing Ind (P) Ltd - - 0.70 -

Toshi Auto Industries (P) Ltd. - - (76.27) (165.80)

* Information given for the financial Year 2002-03 is based on the information provided by Lumax Industries Ltd.

Annexure – XVIInvestments:Long-term investments

Rs. In Lacs

For the year ended 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01Trade (Quoted) 1.09 - - - -Trade (Unquoted) 13.53 - - - -In subsidiary company (unquoted) NA NA NA NA NATotal 14.62 - - - -Quoted investmentsEquity Shares of Lumax Book Value 0.80 NA NA NA NAIndustries Ltd Market Value 1.37 NA NA NA NAEquity Shares of Reliance Book Value 0.29 NA NA NA NAIndustries Ltd Market Value 1.09 NA NA NA NA

Rs. In Lacs

For the year endedName of related party Nature of September March March March *March March

Transaction 30, 2005 31, 2005 31, 2004 31, 2003 31, 2002 31, 2001

98

Annexure – XVII

There have been qualifications in the Audit report for the preceding five years. The Qualifications are detailed asbelow:

Financial Year 2004-05: (I) a liability as per actuarial valuation on account of earned leaves due to the employeesamounting to Rs. 64.55 Lac has not been provided in the accounting statements, which is contrary to AS-15 (accountingto retirement benefits) and (ii) Stocks are being valued consistently inclusive of taxes in compliance to section 145Aof the Income Tax Act, 1961, which is contrary to AS-2 (Valuation of Inventories- revised) and on account of theabove, the Profit for the year has increase by Rs. 45.43 Lac.

Regarding incorporation of financial results in the audited accounts of the filter division at Dharuhera and non-provision of service charges in respect of common facilities enjoyed by the company with Lumax Industries Ltd, theamount of which is indeterminable.

Financial Year 2003-04: Liability as per actuarial valuation on account of earned leaves due to the employeeamounting to Rs. 37.92 Lac is not provided in the accounting statements.

Annexure - XVIII

Changes in the Significant Accounting Policies

There have been change in accounting polices during the preceding five years which are as follow:

A. Valuation of Inventories:-

Financial Year 2002-03: Raw Materials, Components, Stores and Packing Materials are valued at Cost. Semi-finished goods is valued at estimated cost and Finished Goods are valued at Cost which is determined by reducingGross Margin from Sales Price. Custom duty on material lying in bonded warehouse and excise duty on finishedgoods lying at Factory is included in cost when it is actually paid/incurred at the time of removal from the warehouseor Factory as the case may be. This treatment has no impact on the profits or Net assets of the company.

Financial Year 2003-04 and 2004-05: Raw Materials, Components, Stores and Packing Materials are valued atCost including taxes. Semi-finished goods valued at Estimated Cost including taxes. Finished goods are valued atcost inclusive of excise duty for which provision has been made. Custom duty on material lying in bonded warehouseis included in cost when it is actually paid/incurred at the time of removal from the warehouse. This treatment has noimpact on the profits of the company.

B. Taxation:-

Financial Year 2002-03 and 2003-04: Provision for current tax is made in accordance with the provisions of theIncome Tax Act, 1961. Since there are substantial unabsorbed depreciation and brought forward losses, deferredassets are not recognized as a matter of prudence and sound accounting policy. Such deferred assets are recognizableonly to the extent there is reasonable certainty of realization in future.

Financial Year 2004-05: Tax liability of the company is estimated considering the provisions of the Income Tax Act,1961. Deferred tax is recognized subject to the consideration of prudence, on timing difference, being the differencebetween taxable income and accounting income that originate in one period and are capable of reversal in one ormore subsequent periods.

For R.Jain & Sanjay Associates

Chartered Accountants, Delhi

Sanjay Jain

Partner

Membership No. 88027

Date: 15 January, 2006

Place: New Delhi

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FINANCIAL INFORMATION OF GROUP COMPANIES

The details of companies/partnerships firms/proprietary concerns of the Promoters is as mentioned below:

LUCKY CAPITAL PRIVATE LIMITEDLucky Capital Private Limited was incorporated on 21st July 1994. It is promoted Mr. U K Jain and Mrs. Kamlesh Jain.It is mainly engaged in the business of finance and investment. The present directors of the company are Mr. U.K.Jain and Mrs. Kamlesh Jain.

SHAREHOLDING PATTERN AS ON MARCH 31, 2005

Name No. of shares % HoldingU.K. Jain 25,532 56.06%Kamlesh Jain 20,010 43.94%Total 45,542 100.00%

BRIEF FINANCIALS (Rs. in Lacs)

Particulars 31/03/03 31/03/04 31/03/05Paid up Capital 45.54 45.54 45.54Reserves & Surplus 8.92 10.31 12.32Interest Income 3.50 3.06 3.22PAT 1.65 1.39 2.02EPS (Rs.) 3.61 3.04 4.43Net Asset Value (Rs.) 119.37 122.47 126.97

Notes:1. Face value of each equity share is Rs. 1002. For the calculation of Earnings Per Share and Net Asset Value per Share, number of equity shares outstanding

at the end of the year has been considered. Share application money pending allotment has not been consid-ered.

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for eco-nomic offences against the Company and it is not a sick Company within the meaning of Sick Industrial Companies(Special Provisions) Act, 1985.

LUCKY PHARMA PRIVATE LIMITEDLucky Pharma Private Limited is a private limited company incorporated on 7th July, 1994. The promoters of thecompany are Mr. U K Jain and Mrs. Kamlesh Jain. The board of directors comprises Mr. Nitin Jain and Mrs. KamleshJain. The company is mainly engaged in the business of manufacturing coolants.


Name No. of shares % HoldingU.K. Jain 1,260 26.41%Kamlesh Jain 1,510 31.66%Nitin Jain 250 5.24%S.C. Jain 1,750 36.69%Total 4,770 100.00%

100


Particulars 31/03/03 31/03/04 31/03/05Paid up Capital 4.77 4.77 4.77Reserves & Surplus - - -Interest Income 13.13 13.56 7.47PAT (3.58) (1.27) (3.20)EPS (Rs.) (74.95) (26.62) (67.09)Net Asset Value (Rs.) (10.97) (37.66) (104.44)


at the end of the year has been considered. Share application money pending allotment has not been considered.There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for eco-nomic offences against the Company and it is not a sick Company within the meaning of Sick Industrial Companies(Special Provisions) Act, 1985.

TORAY AUTO INDUSTRIES PRIVATE LIMITED

Toray Auto Industries Private Limited was incorporated on 9th March, 1988. The promoters of the company are Mr.U K Jain and Mrs. Indrani Devi Jain. The board of directors comprises Mr. U K Jain and Mr. Nitin Jain. The companyis mainly engaged in the business of leasing of plant and machinery, metal components and moulding of plasticcomponents.


Name No. of shares % HoldingU.K. Jain 8,294 89.30%M.K. Jain 100 1.07%S.P. Jain 10 0.11%S.C. Jain 884 9.52%Total 9,288 100.00%


Particulars 31/03/03 31/03/04 31/03/05Paid up Capital 9.29 9.29 9.29Reserves & Surplus 17.51 23.80 45.88Interest Income 22.75 41.43 60.62PAT 8.75 6.28 22.08EPS (Rs.) 94.24 67.67 237.72Net Asset Value (Rs.) 288.54 356.21 593.93


at the end of the year has been considered. Share application money pending allotment has not been considered.

There are no defaults in meeting any statutory/bank/institutional dues. No proceedings have been initiated for eco-nomic offences against the Company and it is not a sick Company within the meaning of Sick Industrial Companies(Special Provisions) Act, 1985.

LUMAX MAGNA DONNELLY AUTOMOTIVE MIRRORS PRIVATE LIMITEDOur Company has recently formed a company by the name of LUMAX MAGNA DONNELLY AUTOMOTIVE MIR-RORS PRIVATE LIMITED on 11th August 2005. The company is formed as a result of joint venture of Lumax andMagna Donnelly Corporation, Michigan U.S.A. The details of the joint venture are given under the heading “JointVenture Agreement” on page [•] of the Draft Red Herring Prospectus:

101

The authorised capital of the company is Rs. 5.00 Crores divided into 50,00,000 equity shares of Rs. 10/- each. Themain objects of the company are:

a. To carry on the business as manufacturers, sale and distribution of automotive mirrors (outside and inside)including assemblies, mirror components and systems for the Indian automotive market.

b. To establish and operate a facility for the development (but no design) in respect of the objects referred in clause1 above.

The directors of the company are Mr. U.K.Jain, Mr. Nitin Jain, Mr. Frank O’ Brain and Mr. Andrew Koob.Since the company has been recently incorporated and has not commenced its business operation, therefore, thefinancials are not available.

DISASSOCIATED CONCERNS

LUCKY TOURS AND TRAVELS PRIVATE LIMITEDLucky Tours And Travels Private Limited was incorporated on 9th July, 1993. The promoters of the company are Mr.U K Jain and Mr. Ashish Oberoi. The board of directors comprises Mr. U K Jain, Mrs. Kamlesh Jain, Mrs. Neha Jainand Mr. Nitin Jain. The company is mainly engaged in the business of air ticketing.

SHAREHOLDING AS ON MARCH 31, 2005

Name No. of shares % HoldingU.K. Jain 130,000 52.00%Kamlesh Jain 98,000 39.20%Nitin Jain 5,000 2.00%Lucky Capital Pvt Ltd 17,000 6.80%Total 250,000 100.00%


Particulars 31/03/03 31/03/04 31/03/05Paid up Capital 25.00 25.00 48.00Reserves & Surplus - - -Interest Income 16.04 17.10 6.40PAT (0.83) (11.09) (9.14)EPS (Rs.) (0.33) (4.45) (1.90)Net Asset Value (Rs.) (1.80) (6.23) (0.35)

M/S MICRO EXPORTSM/S Micro Exports is a partnership firm. The partners of the firm are Mr. U K Jain, Mrs. Kamlesh Jain, Mr. Milan Jainand Mr. Nitin Jain. The partnership firm was made with the purpose of carrying on business of trading, import andexport of fabric/yarn, ready made garments, auto parts, consumer goods, industrial goods and other merchandise.

SHAREHOLDING/PROFIT SHARING RATIO

Name % HoldingU.K. Jain 40.00%Kamlesh Jain 10.00%Nitin Jain 25.00%Milan Jain 25.00%Total 100.00%

BRIEF FINANCIALS (Rs. In Lacs)

Particulars 31/03/03 31/03/04 31/03/05Partners’ capital (2.98) (12.38) -Interest income 3.13 - -PBT 1.01 - -PAT 1.01 - -

102

LUMAX MIRRORS LIMITEDLumax Mirrors Limited was incorporated as a private limited company on 31st March, 1999.Later on the companywas converted into a public limited company. The board of directors comprises Mr. U K Jain, Mrs. Kamlesh Jain andMr. Nitin Jain. The company is presently not doing any business. In the meeting of the board of directors held on 23rdJuly, 2005 it was decided to apply for striking off the name of the company under section 560 of the Companies Act.The company has filed the application with RoC on 27th July, 2005 for striking off name of the company.

SHAREHOLDING AS ON MARCH 31, 2005

Name No. of shares % HoldingS.C. Jain 10 4.00%D.K. Jain 10 4.00%M.K. Jain 10 4.00%U.K. Jain 100 40.00%Kamlesh Jain 10 4.00%Nitin Jain 100 40.00%Lumax Industries Ltd 10 4.00%Total 250 100.00%


Particulars 31/03/03 31/03/04 31/03/05Paid up Capital 2500.00 2500.00 2500.00Reserves & Surplus - - -Interest Income - - -PAT (0.03) (0.14) -EPS (Rs.) - - -Net Asset Value (Rs.) (89.69) (93.43) (93.43)

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONSYou should read the following discussion of our financial condition and results of operations together with our auditedrestated financial statements for the fiscal years ended March 31, 2001, 2002, 2003 and 2004, 2005 and periodended 30.9.2005 including the significant accounting policies and notes thereto and reports thereon which appearelsewhere in this Draft Red Herring Prospectus. These financial statements have been prepared in accordance withIndian GAAP, the Companies Act and as required under the SEBI Guidelines.

Unless indicated otherwise, the financial data in this section is derived from our restated unconsolidated financialstatements prepared in accordance with Indian GAAP and included in this Draft Red Herring Prospectus.

Our fiscal year ends on March 31 of each year. All references to a particular fiscal year are therefore to the 12-monthending March 31 of that year. You should also read the section titled “Risk Factors” beginning on page [•] whichdiscusses a numerous of factors and contingencies that could in part our company’s financial condition and respectof operations.

OVERVIEWOur Products under the brand name ‘LUMAX’ are well known in India. We are leading manufacturers andsuppliers of a wide variety of automotive components for various auto applications. Our main Product areautomotive Rear Vision Systems, Filtration Systems, Blow Moulding & Injection Moulding Parts and SheetMetal Components. We make rear view mirrors for all type of vehicles including 2,3 & 4 wheelers and CommercialVehicles. Our Air filters are being used in almost all type of vehicles. Our Oil filters are essentially used in 3 and 4wheelers including Commercial vehicles. We thus have presence in all segments of the industry in relation to ourproducts. We believe that we are the largest tier-I (OEM) supplier of these products to the major AutomobileManufacturers in India.

Lumax’s commitment to customer’s satisfaction in terms of quality, cost, delivery, service and support is well reflectedin repeated orders from customers. List of our major Customers include General Motors, Mitsubishi, Maruti-Suzuki,Honda, Hyundai, Tata Motors, Bajaj, M &M, Eicher, Yamaha etc.

Mirrors, Filters and Plastic Mouldings accounted for 21.68%, 44.51% and 33.81%, respectively, of our net sales forfiscal 2005 and 23.05%, 48.16% and 28.80%, respectively, of our net sales for the six month period ended September30, 2005. These figures reflect our strong presence in all the segments.

We are currently undertaking expansion of production facilities in all the segments we operate. We expect theexpansion plans to be completed by March 2006.

Generally, we secure orders for our products from (1) existing customers, mostly Automobile Manufacturers and (2)new customers through direct marketing and referrals by existing customers. Factors considered by customerswhen deciding to purchase our products include the track record and reputation of suppliers, cost, quality, deliverytime and credit terms offered by the suppliers. Our ability to offer a full range of products enables us to service largeauto manufacturers who prefer to purchase multiple products from a single source.

MATERIAL DEVELOPMENTS SINCE THE LAST AUDITED BALANCE SHEET DATEThe company has entered in Joint Venture agreement with Magna Donnelly Corporation, USA to set up a companywith 74 % equity participation by our Company and 26% by Magna Donnelly to establish and operate a facility fordevelopment, manufacture, sale and distribution of Automobile mirrors and mirror components and systems forIndian Automotive market. Magna Donnelly is world leader in manufacture of Auto Mirrors and Company stand togain considerably from the Joint Venture. The JV Company under the name Lumax Magna Donnelly Automotivemirrors (P) Ltd has been incorporated on 11th August 2005 with initial paid of capital of Rs 1.00 Lac. Our investmentin the new Company will be Rs 3.33 Crores by way of equity participation.

In the opinion of our Board of Directors, other than as disclosed in this Draft Red Herring Prospectus, there have notarisen any circumstances since September 30, 2005 which materially and adversely affect, or are likely to materiallyand adversely affect, our manufacturing or sales or the profitability of our Company, or the value of our assets, or ourability to pay our liabilities within the next 12 months.

FACTORS AFFECTING OUR RESULTS OF OPERATIONSOur financial condition and results of operations are affected by the various factors including the following:

104

General economic and business conditions: The demand for our products is dependent on general economicconditions in India and may affect if there are changes in business conditions in our country.

Demand: The demand for our products is a derived demand, meaning that it is dependent upon the production andsale of other products i.e. Automobiles. We have diversified our customer base and portfolio of products, to reducedependence on any major Customer. We have further sought to expand our customer base. The prospects andearnings growth of the customers we serve, will have an impact on our ability to generate sales.

Competition: Selling prices of our products may be affected if competition intensifies, as a result of increasedcapacity of Competitors or our competitors adopting aggressive pricing strategies in order to gain market share ornew competitors entering the markets we serve.

Our ability to fulfill larger orders will depend upon our ability to complete our expansion plans as scheduled. Webelieve that the scale of our production, and lower per unit operating costs due to economies of scale, give us anedge over our competitors.

Raw Material Prices: Raw materials constitute a major portion of our total expenses. Since most of our raw materialsare petroleum based, their prices are dependent upon, and may fluctuate with, crude oil prices. Fluctuations in crudeoil prices may alter our cost structure and affect profitability. Historically, we have been able to pass on increases inraw material costs to our customers but we cannot assure you that in future also we will be able to do so.

Other Factors: Our results of operations are dependent upon our success in managing our inventories. We have toschedule out production process according to delivery Schedule of customers. Any change in schedule may affectour operation in short run.

RESULTS OF OPERATIONS

SalesThe increasing demand for Automobiles in the domestic market has been a key reason for our increased sales inrecent years. The merger of Toshi with the Company has started paying of dividends in terms of increase in salesand over all market share. We have been able to meet the increasing demand for our products because of Broadbasing of capacities on account of Merger of Toshi with our Company. Net sales increased by 90.84% from fiscal2004 to fiscal 2005.

ExpensesOur expenses consist of the cost of raw material consumed, manufacturing expenses, depreciation, selling anddistribution expenses, interest and financial charges and personnel expenses. The following table shows our variousexpenses for fiscal years 2003 through 2005 and for the six month periods ended September 30, 2005 and showsthose expenses as a percentage of total expenses:

(Rs. in lacs)

As on 30.09.05 FY 2005 FY 2004 FY 2003% of Total Expenses Amount % Amount % Amount % Amount %Raw Material Consumed 254.47 59.22 476.30 59.60 258.30 59.50 226.20 57.20Manufacturing Expenses 94.64 22.03 175.20 21.90 106.30 24.50 97.80 24.70Depreciation 17.77 4.14 33.20 4.20 9.70 2.20 7.20 1.80Selling & Distribution Expenses 12.68 2.95 24.20 3.00 17.70 4.10 15.90 4.00Personnel Expenses 24.69 5.75 48.10 6.00 21.80 5.00 27.30 6.90Interest & Financial Charges 11.73 2.73 20.80 2.60 6.40 1.50 7.70 1.90Other Expenses 13.70 3.19 21.80 2.70 13.70 3.20 13.40 3.40Total 429.68 100.00 799.60 100.00 433.90 100.00 395.50 100.00

105

The following table shows our various expenses for fiscal years 2003 through 2005 and for the six month periodended September 30 2005 and shows those expenses as a percentage of net sales:

(Rs. in Lacs)

As on 30.09.05 FY 2005 FY 2004 FY 2003% of Total Expenses Amount % Amount % Amount % Amount %Raw Material Consumed 254.47 53.33 476.30 58.40 258.30 60.40 226.20 59.20Manufacturing Expenses 94.64 22.06 175.20 21.50 106.30 24.90 97.80 25.60Depreciation 17.77 4.14 33.20 4.10 9.70 2.30 7.20 1.90Selling & Distribution Expenses 12.68 2.96 24.20 3.00 17.70 4.10 15.90 4.20Personnel Expenses 24.69 5.76 48.10 5.90 21.80 5.10 27.30 7.10Interest & Financial Charges 11.73 2.73 20.80 2.50 6.40 1.50 7.70 2.00Other Expenses 13.70 3.19 21.80 2.70 13.70 3.20 13.40 3.50Increase in stock 16.25) (3.79) (1.60) (0.20) (6.40) (1.50) (1.90) (0.50)Other Income (0.37) (0.09) (4.60) (0.60) (0.70) (0.20) 0.00 0.00Total Expenses (Net of stock andOther income) 413.07 96.30 793.40 97.20 426.80 99.80 393.60 103.00Margins 15.86 3.70 22.50 2.80 0.80 0.20 (11.40) (3.00)Net Sales 428.92 100.00 815.90 100.00 427.60 100.00 382.20 100.00

Our margins have increased from 0.2% in fiscal 2004 to approximately 2.8% in fiscal year 2005.

Although increased Interest and financial cost and Depreciation costs put downward pressure on our margins, thecumulative effect of decreases in Raw Material Consumed, manufacturing costs, selling & distribution expenses andother expenses more than offset the effects of the increased interest, Finance and Depreciation costs and resultedin an increase in our profit margins.

Raw Material ConsumedRaw materials as a percentage of total expenses is almost equal in fiscal year 2005 in comparison of fiscal year2004. Our principal raw materials for the production of Air/Oil Filters, Mirrors and Plastic Moulded Components areSteel Sheet, Plastic Powder and Filter Paper. We have a production capacity of 17,00,000 Nos. of Filters, 38,00,000Nos. Mirrors and 1,40,00,000 Nos. of Plastic Moulded parts/components. The steel sheet is mostly purchaseddirectly from the manufacturing companies like TATA, SAIL etc. and prices are always negotiable as the availabilityof suppliers. Plastic powder is purchased from IPCL and rates are revised and published in every fortnight. Filterpaper is mainly imported from Japan and Thailand. Steel Sheet price has been reduced in the recent period due todecrease in excise duty rate on steel and has benefited the company.

Our increased production, resulting from increased capacity and sales, has strengthened our negotiating positionwith our suppliers and has enabled us to get higher quantity discounts and other favorable terms. Wastage inproduction has also decreased due to increased automation.

Manufacturing ExpensesThe manufacturing expenses are direct wages, power and fuel, packaging material consumed and stores and spareparts. Manufacturing expenses form the second largest component of total expenses (21.9% for the year endedMarch 31, 2005). These expense items account for 40.8%, 23.34%, 12.84% and 5.42% of manufacturing expensesin fiscal 2005, respectively. Manufacturing expenses also include water charges, repairs to buildings and machineryand Job work charges. Manufacturing expenses as a percentage of total expenses have declined due to the economiesof scale that we have achieved through increased capacities. This is due to the fact that, once production reaches acertain minimum level, the power and labour requirements necessary to produce additional output do not increaseproportionately with increases in output. Therefore, the cost per unit of output declines as capacity increases. Theuse of wider and faster high capacity production lines has enabled us to decrease the per rupee cost of output. Withfurther increases in our capacities and high capacity utilization, we expect manufacturing expenses as a proportionof total expenses to decrease in the medium term.

Packaging material costs are a part of our manufacturing expenses. We have introduced some innovations inpacking design, which led to savings in packaging cost.

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DepreciationOur depreciation expense when expressed as a percentage of expenses for fiscal 2004 and Fiscal 2005 was 2.2%and 4.2%, respectively. Increase in depreciation is because of fixed assets transferred from Toshi due to merger.Our recent and continuing capital expenditure on new production facilities and improvement of current facilities willresult in a significant increase in depreciation expense in absolute terms. For details of our expansion plans, refer to“Our Business” on page [•] of this Draft Red Herring Prospectus.

Selling and Distribution ExpensesSelling and distribution expenses consist largely of transportation costs, Sales promotion expenses and commissionspaid to our sales agents and representatives.

Transportation costs, sales promotion expenses and commissions accounted for 78.10%, 4.13 and 7.85%,respectively, of selling and distribution expenses in fiscal 2005 and Selling and distribution expenses account for 3%of total net sales and have decreased significantly in comparison with the fiscal 2004 due to effective cost managementand economies of scale.

Personnel ExpensesPersonnel expenses consist of salaries and allowances, Managerial Remunerations, staff welfare and contributionto employee benefit schemes. Salaries and allowances accounted for 53.22%, of personnel expenses in fiscal 2005Personnel expenses have increased from 5.0% to 6.0% as percentage of total expense from fiscal 2004 to fiscal2005

Interest and Finance ChargesInterest and finance charges represent expenses incurred in respect of our short-term and long-term bank loans,customer deposits and other charges incurred by us in respect of letters of credit and other financing arrangementsand facilities. The average cost of debt has increased from 1.9% per annum in fiscal 2003 to 2.6% per annum infiscal 2005. The increase in interest and finance charges is mainly due to various loans facilities available in thefiscal 2005 and the loans transferred from Toshi due to merger.

TaxationProvision for income tax accounted for 0.28% of net sales, in fiscal 2005 and is based upon the estimated taxcomputation for fiscal 2005 and any excess or shortfall will be accounted on completion of assessment.

We availed of benefits of carry forward losses in fiscal 2003 and fiscal 2004 and have paid Minimum Alternate Tax(“MAT”) under Indian taxation laws. MAT involves the payment of tax on a company’s book profits in the event thatthe tax payable in accordance with the tax laws is less than a certain limit. A depreciation tax shield would beavailable in the future due to our incurrence of capital expenditures.

InflationWe do not consider the impact of inflation on our financial performance over the periods under review to be significant.

AdjustmentsThe financial information for fiscal 2003, 2004 and 2005 and for the period ended 30th June 2005 has been restatedin compliance with SEBI guidelines. In accordance with Indian GAAP, the effects of restatement are shown as acumulative effect on our adjusted profit after tax rather than as restatements of individual line items in our statementof profit and loss. Adjustment as per SEBI guidelines have been made in relation to tax in the years to which itpertains, the effect of which is not material.

REVIEW OF RESULTS OF OPERATIONSFiscal Year 2005 Compared with Fiscal year 2004Net salesOur net sales increased from Rs. 427.60 million for the fiscal year 2004 by approximately Rs. 388.3 million, or90.84%, to Rs. 815.9 million for the fiscal year 2005. The increase was primarily due to merger of Toshi. Theproduction capacity and facilities and sales have increased drastically due to this merger.

Other incomeOther income increased from Rs. 0.7 million for the fiscal year 2004 by approximately Rs. 3.9 million, to Rs. 4.6million for the fiscal year 2005.

Raw material consumedOur raw material consumed increased from Rs. 258.3 million for the fiscal year 2004 by approximately Rs. 218

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million, or 84.39%, to Rs. 476.3 million for the fiscal year 2005. The increase was primarily due to merger of Toshi. Asa percentage of net sales, our raw materials costs decreased from 60.4% for the fiscal year 2004 to 58.4% for thefiscal year 2005.

Manufacturing expensesOur manufacturing expenses increased from Rs. 106.3 million for the fiscal year 2004 by approximately Rs. 68.9million, or 64.82%, to Rs. 175.2 million for the fiscal year 2005. The increase was primarily due to merger of Toshi.

Selling and distribution expensesOur selling and distribution expenses increased from Rs. 17.7 millions for the fiscal year 2004 by approximately Rs.6.5 million, or 36.72%, to Rs. 24.2 million for the fiscal year 2005. The increase was primarily due to merger of Toshi.

Personnel expensesPersonnel expenses increased from Rs. 21.8 million for the fiscal year 2004 by approximately Rs. 26.3 million, or120.64%, to Rs. 48.1 million for the fiscal year 2005. The increase was primarily due to merger of Toshi.

Other operating expensesOur other operating expenses increased from Rs. 13.7 million for the fiscal year 2004 by approximately Rs. 8.1million, or 59.12%, to Rs. 21.8 million for the fiscal year 2005. The increase was primarily due to merger of Toshi.

Interest and finance chargesOur interest & finance charge increased from Rs. 6.4 millions for the fiscal year 2004 by approximately Rs. 14.4million, or 225%, to Rs. 20.8 million for the fiscal year 2005. The increase was primarily due to merger of Toshi andsome new loans taken in the fiscal year 2005.

DepreciationOur depreciation expense increased from Rs. 9.7 million for the fiscal year 2004 by approximately Rs. 23.5 million,or 242.27%, to Rs. 33.2 million for the fiscal year 2005. The increase was primarily due to merger of Toshi andincrease in fixed assets on installation of new capacities as mentioned above.

Net profit before taxesOur net profit before taxes increased from Rs. 0.80 million for the fiscal year 2004 by approximately Rs. 21.7 million,or 2712.5%, to Rs. 22.8 million for the fiscal year 2005. The increase was primarily due to merger of Toshi and otherfactors discussed above.

TaxesOur taxes increased from Rs. 0.1 million for the fiscal year 2004 by approximately Rs. 2.2 million, or 2200%, to Rs.2.3 million for the fiscal year 2005. The increase was primarily due to merger of Toshi.

Net profitOur net profit increased from Rs. (0.1) million for the fiscal year 2004 by approximately Rs. 209.86 million, or %, toRs. 20.9 million for the fiscal year 2005. The increase was primarily due to merger of Toshi.

Fiscal 2004 as Compared to Fiscal 2003Net salesOur net sales increased from Rs. 393.6 million for fiscal 2003 by Rs. 33.2 million, to Rs. 426.8 million for fiscal 2004,which is a rise of 8.43%.

Other incomeOther incomes are negligible therefore not considered for comparison.

Raw material consumedThe raw material consumed increased from Rs. 226.2 million for fiscal 2003 by Rs. 32.1 million, to Rs. 258.3 millionfor fiscal 2004, which is a rise of 14.19%. The increase was primarily due to increased production and sales ofmirrors and filters. Other factors include increases in raw material prices. As a percentage of net sales, our rawmaterials costs remained relatively constant, increasing from 59.2% for fiscal 2003 to 60.4% for fiscal 2004.

Manufacturing expensesOur manufacturing expenses increased from Rs. 97.8 million for fiscal 2003 by Rs. 8.5 million, to Rs. 106.3 millionfor fiscal 2004, which is a rise of 8.69%. The increase was primarily due to an increase in power and fuel cost andpacking cost due to increased production. As a percentage of net sales, our Manufacturing costs remained relativelyconstant, decreasing from 25.6% for fiscal 2003 to 24.9% for fiscal 2004.

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Selling and distribution expensesOur selling and distribution expenses increased from Rs. 15.9 million for fiscal 2003 by Rs. 1.8 million, to Rs. 17.7million for fiscal 2004, which is a rise of 11.32%. The increase was primarily due to increased production and sales.

Personnel expensesOur personnel expenses decreased from Rs. 27.3 million for fiscal 2003 by Rs. 5.5 million, to Rs. 21.8 million forfiscal 2004, which is a decrease of 20.14%. The decrease was primarily due to a VRS offered in the year 2003 and2004.

Other operating expensesOur other operating expenses increased from Rs. 13.4 million for fiscal 2003 by Rs. 0.3 million, or 2.34% to Rs. 13.7million for fiscal 2004. The increase is not significant.

Interest and finance chargesOur interest and finance charges decreased from Rs. 7.7 million for fiscal 2003 by approximately Rs. 1.3 million, or16.88%, to Rs. 6.4 million for fiscal 2004.

DepreciationOur depreciation expense increased from Rs. 7.2 million for fiscal 2003 by approximately Rs. 2.5 million, or 34.72%to Rs. 9.7 million for fiscal 2004.

Net profit before taxesAll the above factors culminated in an increase in net profit before taxes from Rs. (11.4) million for fiscal 2003 byapproximately Rs.12.2 million, to Rs. 0.8 million for fiscal 2004.

TaxesThere was no tax liability on our company for the fiscal year 2003 since the tax was paid by the demerged company( Lumax Industries Ltd).

Net profitConsequently, our net Profit increased from Rs. (6.9) million for fiscal 2003 by approximately Rs. 6.8 million, or %,to Rs. (0.1) million for fiscal 2004.

REVIEW OF FINANCIAL POSITIONFixed AssetsFixed assets are comprised mainly of land and buildings, plant and machinery, furniture and fixtures, office equipment,computers, vehicles and capital work in progress (in respect of various moulds and dies are under process). Wehave invested significant amounts over the past three years to increase our production capacity for Filter plant . Wehave purchased production lines offering the latest technology comprising Indian and imported machineries.

Fixed assets increased by Rs. 174.6 million, or 164.32%, from Rs. 106.3 million as of March 31, 2004 to Rs. 280.9million as of March 31, 2005. This was due to net additions to fixed assets of Rs. 348 million and increased capitalin progress of Rs. 11.5 million. The net additions to fixed assets in this period largely relate to the fixed assetstransferred from Toshi due to merger and filter unit established in Manesar. Fixed assets increased by Rs. 0.3million, or 2.91%, from Rs. 105.9 million as at March 31, 2003 to Rs. 106.3 million as at March 31, 2004. During thisperiod, there were net additions of fixed assets of Rs. 10.3 million, consisting of purchased plant and equipmentand other fixed assets and an increase in the depreciation charge of Rs. 9.5 million.

InvestmentsWe do not have any major investments in the shares. The Investments of Rs. 1.5 million comprises mainly 27,459shares of Deepak Auto (P) Ltd. at book cost of Rs. 1.4 million, which has been, basically, Investments of erstwhilecompany Toshi Auto Industries (P) Ltd.

Current AssetsCurrent assets consist of inventories, trade and other debtors, cash and bank balances, loans and advances andother receivables. Current assets have generally increased in line with the growth of our business activities. Currentassets increased by Rs. 161.6 million, or 112.61%, from Rs. 143.5 million as at Fiscal 2004 to Rs. 305.1 million asat fiscal 2005, due to increases in inventories (Rs. 31.4 million), debtors (Rs. 104 million), loans and advances (Rs.26.5 million), and decrease in cash and bank balances (Rs. 0.4 million) Inventories made up 21.36% of total currentassets as at fiscal 2004. Inventories comprise mainly steel sheet, plastic powder, filter paper in the form of Rawmaterial and Filter, mirrors and plastic moulded auto component in the safe of finished and semi finished goods.The overall increase in the inventory from Rs 33.5 millions in the fiscal 2004 increased by Rs. 31.7 millions, to Rs.

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65.2 million in the fiscal 2005. The main reason of increase in inventory is because of merger of Toshi. Inventoriesturnover period remains almost constant at 29 days in the fiscal year 2005 and fiscal year 2004 ever after merger ofToshi. Debtors accounted for 62.99% of total current assets as at fiscal year 2005. Debtors increased from Rs. 88.2million as at fiscal yar 2004 to Rs. 192.2 million as at fiscal year 2005, mainly due to merger of Toshi and increase insales. Debtors turnover increased from 75 days to 86 days.

Cash and bank balances accounted for only 2.02% of total current assets as at fiscal year 2005. There is marginaldecrease of Rs. 0.4 millions in the fiscal year 2005. Loans and advances accounted for 13.62% of total currentassets as at fiscal year 2005. Loans and advances increased from Rs. 15.1 million as at fiscal year 2004 to Rs. 41.6million as at fiscal year 2005, mainly due to merger of Toshi. Current assets increased by Rs. 14.6 million, or 11.33%,from Rs. 128.9 million as at March 31, 2003 to Rs. 143.34 million as at March 31, 2004 mainly due to increase ininventories of Rs. 11.2 million, and loans and advances of Rs. 7.2 million. Inventories made up 23.38% of totalcurrent assets as at March 31, 2004. The increase in inventories from Rs. 22.3 million as at March 31, 2003 to Rs.33.5 million as at March 31, 2004 was attributable to the increase in production in sales and production. Our inventoriesturnover period increased from 21 days to 29 days. Debtors accounted for 61.47% of total current assets as atMarch 31, 2004. Debtors decreased slightly in comparison of fiscal year. Debtors turnover decreased from 85 daysto 75 days. Cash and bank balances accounted for 4.6% of total current assets as at March 31, 2004. Cash andbank balances decreased from Rs. 9.8 million as at March 31, 2003 to Rs. 66.05 million as at March 31, 2004. Loansand advances accounted for 10.54% of total current assets as at March 31, 2004. Loans and advances increasedfrom Rs. 7.9 million as at March 31, 2003 to Rs. 15.1 million as at March 31, 2004. due to an increase in advancesto suppliers and other prepayments associated with increased sales.

Current Liabilities and ProvisionsCurrent liabilities comprise accounts payable, other payables, deposits received and accrued liabilities, tax payableand dividend payable. Current liabilities have generally increased in line with the growth in our business activities.

Current liabilities and provisions increased by % from Rs. 148.6 million as at fiscal year 2004 to Rs. 259.7 million asat fiscal year 2005 mainly due to merger of Toshi and provision of dividend and tax on dividend of Rs. 10.1million.

Current liabilities and provisions increased by Rs. 16.2 million, or 12.24%, from Rs. 132.4 million as at March 31,2003 to Rs. 1,48.6 million as at March 31, 2004 due to increase in accounts payable of Rs. 16 million.

Non-Current LiabilitiesNon-current liabilities consist of long-term secured loans, long-term unsecured loans and deferred tax liabilities.Non-current Liabilities has increased in fiscal year 2005 mainly due to merger of Toshi.

Non-current liabilities increased by Rs. 177.4 million, or 400.88%, from Rs. 44.3 million as at fiscal year 2004 to Rs.221.7 million as at fiscal year, 2005 mainly due to attributable to increases in long-term secured loans of Rs. 147million from Rs. 11.4 million as at fiscal year 2004 to Rs. 158.4 million as at fiscal year 2005 and increases indeferred tax liabilities of Rs. 27.5 million from Rs. (8.8) million as at fiscal year 2004 to Rs. 18.7 million as at fiscalyear 2005.

Non-current liabilities decreased by Rs. 1.2 million, or 2.72%, from Rs. 45.5 million as at March 31, 2003 to Rs. 44.3million as at March 31, 2004 due principally to decreases in long-term secured loans of Rs. 2.3 million

Net WorthNet worth increased by Rs. 49.3 million, or 86.69%, from Rs. 56.8 million as at fiscal year 2004 to Rs. 106.1 millionas at fiscal year 2005.

Net worth decreased by Rs. 0.2 million, or 0.3%, from Rs. 57 million as at March 31, 2003 to Rs. 56.8 million as atMarch 31, 2004 due to a marginal loss during this period.

Review of Results of Operations Period ended on September 30th 2005 (6 months) with Fiscal year 2005Net Sales:Our sales were Rs 428.92 Million for the period ended September 20th 2005 (6 month) as against Rs. 815.90 Millionperiod ended 31st March 2005.

Other Income:Other income decreased from 4.60 million for the fiscal year 2005 to Rs. 0.09 million for the period ended onSeptember 30th 2005 (6 months)

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Cost of Material :As a percentage of Net sales our Raw Material cost increased to 59.33% for the period ended on September 30th2005 (6 months) as against 58.40% for the fiscal year 2005.Manufacturing Expenses:As a percentage of Net Sales our Manufacturing cost increased to 22.06% for the period ended on September 30th2005 (6 months) as against 21.50% for the fiscal year 2005.Selling Expenses:As a percentage of Net Sales our Selling Expenses reduced to 2.96% for the period ended on September 30th 2005(6 months) against 3% for the fiscal year 2005.Administrative & Other Expenses:As a percentage of Net Sales our Administrative Expenses increased to 3.19% for the period ended on September30th 2005 (6 months) as against 2.70% for the fiscal year 2005.Interest & Finance Charges:As a percentage of Net Sales our Interest & Finance Exp. Increased to 2.73% for the period ended on September30th 2005 ( 6 months) as against 2.50% for the Fiscal year 2005.Depreciation:As a percentage of Net Sales our depreciation increased to 4.14% for the period ended September 30th 2005 (6months) as against 4.10% for the fiscal year 2005.Net Profit before Tax:As a percentage of Net Sales our Net Profit before tax increased to 3.70% for the period ended on September30th2005 (6 months) as against 2.68% for the fiscal year 2005.

Taxes:As percentage of Net Sales our Tax increased to 1.68% for the period ended on September 30th 2005 (6 months) asagainst 0.14% for the fiscal year 2005. The increase was due to introduction of Fringe Benefit Tax in the FinancialYear 2005-06 and increase in Income Tax Deferred liability.

Net profit After Tax:As a percentage of Net Sales our Net Profit after Tax decreased to 2.02% for the period ended September 30th 2005(6 months) as against 2.46% for the fiscal year 2005.

Review of Financial Position:Fixed Assets:Fixed Assets are comprised mainly of Land & Building, Plant & Machinery, Furniture, Office Equipments, Computers,Vehicles & Capital Work in Progress. Gross Fixed Assets increased by Rs. 19.76 Million or 4.20% from Rs. 470.34Millions as on March 31st 2005 to 490.10 Millions as at September 30th 2005. During this period there was netdecrease of fixed assets of Rs. 17.89 millions.

Investments:We do not have any major investments in the shares. The investments of Rs. 1.46 millions comprises mainly27459 Equity Shares of M/s Deepak Auto Industries (P) Ltd at cost of Rs. 49.27 per share.

Current Assets:Current Assets consist of Inventories, Debtors, Cash and Bank Balances and Loan & Advances. Current Assetshave generally increased in line with the growth of our business activities. Current Assets increased by Rs. 23.56Millions or 7.72% from Rs. 305.02 millions as fiscal year 2005 to 328.58 millions as at September 30th 2005 ( 6months), Due to increase in inventories (Rs 22.37 Millions), Debtors (Rs. 4.54 Millions) and Decrease in Cash andBank Balances (Rs. 0.88 Millions) and Loans and Advances (Rs. 2.47 millions). Debtors made up 58.73% andInventories made up 28.03% of total current assets as at September 30th 2005. Inventories consists mainly SteelSheet, Float glass paper, Plastic Powder and Filter paper. The overall increase in the inventory from Rs. 65.17millions in the fiscal year 2005 increased by22.37 millions to Rs. 87.54 millions on September 30th 2005. InventoryTurnover period is 29 days and 37 days respectively in fiscal year 2005 and on September 30th 2005 (6 months).

Debtors accounted for 58.73% of total current assets as at September 30th 2005 (6 months)Debtors increased from Rs. 162.16 millions as at fiscal year 2005 to Rs. 196.70 millions as at September 30th 2005(6 months). Debtor’s turnover period is 86 days and 84 days respectively in the fiscal year 2005 and on September30th 2005 (6 months). Cash and Bank Balances accounted for1.58% of total current assets as at September 30th2005 (6 months) There is decrease of Rs.0.88 millions on September 30th 2005, Loans and advances accounted for11.66% of total current assets as at September 30th 2005. Loan and advances decreased from Rs.41.51 Millions as

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at fiscal year 2005 to Rs. 39.04 millions on September 30th 2005.

Current Liabilities and Provisions:Current liabilities comprises sundry creditors against goods, expenses payable, gratuity payable and tax provisions.Current liabilities and provisions have increased as compared with the fiscal year 2005. Current liabilities and provisionsincreases by 15.20% from Rs. 259.66 millions as at fiscal year 2005 to Rs. 299.15 millions on September 30th 2005.

Non-Current Liabilities:Non-Current liabilities consist of Long Term secured Loans; Long term unsecured loans and deferred tax liabilities.Non-current liabilities have increased on September 30th 2005. (6 months).Non Current liabilities increased by Rs. 12.64 millions or 5.70% from Rs. 221.66 millions as at fiscal year 2005 to Rs.234.30 millions on September 30th 2005 mainly due to attribute to increase in secured loans of Rs. 18.69 millionsfrom Rs. 158.42 millions in fiscal year 2005 to Rs. 177.11 millions as at September 30th 2005, decrease in unsecuredloans of Rs. 11.54 millions from 44.55 millions in fiscal year 2005 to Rs. 33.01 millions on September 30th 2005 andincrease in deferred tax liabilities of Rs. 5.49 millions from Rs. 18.69 millions in fiscal year 2005 to Rs. 24.18 millionson September 30th 2005.

Net Worth:Net worth increased by Rs. 6.85 million or 6.45% from Rs. 106.13 millions in fiscal year 2005 to Rs. 12.98 millions onSeptember 30th 2005.

Information required as per clause 6.10.5.5(a) of the SEBI Guidelines:

a. Unusual or infrequent events or transactions:There have been no unusual or infrequent transactions that have taken place.

b. Significant Economic changes that materially affected or are likely to affect income from continuingoperations:Volatility in foreign exchange rates may have an inflationary effect on cost of imports. However, considering thelow amount of imports, the effect of foreign exchange rate variations on our business is limited. Except theabove, there are no significant economics changes that materially affect or likely to affect income from continuingoperations.

c. Known trends or uncertaintiesApart from the risks as disclosed in this Draft Red Herring Prospectus, there are no other known trends oruncertainties that have had or are expected to have a material adverse impact on sales, revenue or income formcontinuing operations.

d. Future relationship between costs and revenueThe expansion of the current operations would enable the Company to procure raw materials on more competitiveterms from suppliers. This would in turn result in over all reduction in cost and help the Company to achieveeconomies of scale.

e. Reason for increase in sales/revenueThe increase in sales is mainly due to increased volume.

f. Total turnover of the IndustryPlease refer to the Para on “Industry Data” referred on page [·] of this Draft Red Herring Prospectus.

g. New products introduced in the year 2005We have not introduced any new products except for an enhanced range of rear view mirrors.

h. Seasonality of businessNone of the Company’s products sold are seasonal in nature.

i. Over dependence on Single supplier/CustomerThe Company sources its raw materials from a number of suppliers and is not under threat from excessivedependence on any single supplier. Also, the Company is not excessively dependent on a single customer for itssales although top three customers constitute around 49% of our Sales.

j. Competitive conditionsThe Company has been strengthening its position in the product lines in which it is operating. The Company alsohas been expanding its markets and customer base in the local and wish to explore international market. Allthese things have been helping the Company to stand against the competition.

Total Expected liability in litigations Liability except Pune (labour) 3016533/-. The liability in Service Tax againstLumax Industries Limited is not ascertainable.

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OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS

Except as described below, there are no outstanding litigation, suits or criminal or civil prosecutions, proceedings ortax liabilities against our Company, our Directors that would have a material adverse effect on our business andthere are no defaults, non-payment or overdue of statutory dues, institutional/ bank dues and dues payable toholders of any debentures, bonds and fixed deposits that would have a material adverse effect on our businessother than unclaimed liabilities against our Company or Directors. Please note that in relation to the outstandinglitigation described below, the details of the next date of hearing have been provided only in such proceedingswhere such dates have been fixed

LITIGATION AGAINST OUR COMPANYPending Litigations against Company

Sr. No.

1

2

Case No.

Show Cause Notice.No. ST/FBD/FAR/III/2005/60/05/1156 dated13/05/05

Show Cause NoticeNo. 44/ST/2004 issuedvide C.No.D-III/ST/R-1/LAR/Lumax/1/2004/12239 and 12240dated 20/10/2004

Party

Assistant Commis-sioner of ServiceTax

Asst. Commis-sioner Service Tax

Forum

Office of Asst.Commissioner,Service Tax Di-v i s i o n - I I I ,Udyog ViharGurgaon

Description

Brief Case History:The Assistant Commis-sioner (Audit ) to CentralExcise Commissioner Delhi-IV Faridabad vide LetterC.No. V/CE/GR VIII/II/EA/2000/2005/2219 Dated 7th

April 2005 had raised auditobjections that as per theBalance Sheet for the year2001-02 the company hadincurred expenses on tech-nical know how amountingto Rs. 6,39,900/-, leviable to Service Tax as ‘Consulting Engineers’ @5% i.e. Rs. 31,995.Demand Raised:Rs. 31,995 along with inter-est to be deposited immedi-atelyPresent Status:Case dismissed Rs.55463/- deposited with the depart-ment on 7/12/2005 as fulland final settlement.

Brief Case History:During the Course of scru-tiny of records of M/s LumaxIndustries Ltd. ( LIL, the of-ficers of Comptroller & Au-ditor General, Chandigarh,observed that the servicesprovided by the foreign col-laborators are covered un-der the category of “Consult-ing Engineering” Servicebutno Service Tax has beenpaid on the value of servicesso provided.Demand Raised throughShow Cause NoticeAn amount of Rs. 34,51,809as service Tax U/S 73 of theAct.

Rs. 31995/- plus Rs.28795/-

Impact of fianancialburden on LASL yet tobe known. The case isbeing contested by LILand the foreigncollaborators

113

Sr. No.

3.

Case No.

Show Cause Notice no.F.No.S/3-15/04 ACCVC dated 12th January,2005 u/s 124 of the Cus-toms Act, 1962

Party

Deputy Commis-sioner Customs

Forum

Deputy Com-missioner Cus-toms Group VC, Mumbai

Description

1) Interest underSection 75 of theFinance Act, 1994

2) Penalty in terms ofSection 75A, 76and 78 of the Fi-nance Act. 1994

Reply to the Notice:All Foreign Collaboratorsjointly submitted the follow-ing reply: :That foreign collaboratorsare not subject to Indianjurisdicaion as serviceswere rendered out of India,, no service is described, noreason is specified, incor-rect computation of the Taxliability and the notice isTime Barred etc.

Present Status:Case is still in the progress.

Brief Case History:The consignment of importof One motor cycles (fromM/s Chongqing Lifan Indus-try (Group) Imp. & Exp. Co.Ltd. China) has been de-tained by Custom AuthorityMumbai on the grounds thatsuch import violates theconditions Note 2 (ii) (c) & 2(ii) (d ) of licensing notes tochapter 87Appearing in theITC (HS) classification ofExport and import.Show cause was issuedfor:-1) confiscation of goods

value at Rs 33,654 CIFunder sectionIII (d) ofCustom Act.

2) penal action under sec-tion 112(a) of CustomAct

Reply to the Notice:-

In reply to the Show CauseNotice (SCN)We submittedthat we have signed theMemorandum of Under-standing with the SupplierM/s Chongqing Lifan Indus-try (Group) for the manufac-ture of Motor Cycles in In-dia. For doing so, M/s Lifanis required to prepare two

Amount of Claim

Duty Rs.11,442Penalty Rs.22,884D e m u r r a g eRs.1,00,000

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4

5

Ref No. R/ 77/ 03

Reference (I.D.A.)No.646 of 2004

Mr.Triloki Nath.

Mr. Sahdev TChavan

Presiding Of-ficer, LabourCourt –2 SCFNo. 3,4,& 5,Sector-9 Mar-ket, Faridabad

Hon. PresidingOfficer HonLabour CourtPune, At Pune

models of qualified motorcycle samples which meetour ARAI’s regulations andpollution norms. The mo-tor cycle Model LF 125/19was sent by M/s Lifan withbonafide intention for suchassessment purpose.as far as the condition NoII (c) (1) of Note in the ITC(HS) classification of Exportand import items is con-cern, The Rule containingthe condition is for the lo-cal manufacturers intend-ing to produce a motorcycle or motor vehicle of anew model who are re-quired to submit a proto-type of the model to bemanufactured by them totesting authorities for grant-ing a certificate. We cansubmit the model beforethe said testing agenciesonly after clearance fromCustoms.Present Status:Surrendered the Bikes on23/05/2005.

Brief Case History: Irrespective of the severalletters sent by the Com-pany to Mr. Triloki Nath hekept himself absent fromthe duty After complyingwith the procedure of disci-plinary action his serviceswere terminated. Companyreceived a Notice fromLabour DepartmentHaryana appointing Presid-ing Office, Labour Court-2Faridabad to adjudicate thecase.Present Status:Presently case is pendingin Labour Court Faridabad.Next date of hearing is 21st

feb.2006 for Managementreply.

Brief Case History:Mr. Sahdev T Chavan wasterminated (after a properenquiry) for carrying outfraudulent act. He filed pe-tition in Labour Court Pune.He prayed for re-instate-ment of service and that hisservice be treated as con-

Rs.1,60,000

Rs.2,75,000

Sr. No. Case No. Party Forum Description Amount of Claim

115

6

7

Show cause cum de-mand notice No. v (84)T5-79/ Adj./04 dated on10th June 2004.

Regular AssessmentNotice for the year2000-01 & 01-02

Joint Commis-sioner Central Ex-cise Pune-IMaharashtra

Sales Tax AuthorityHaryana [LocalArea DevelopmentTax(LADT)]

Central ExciseP u n e - ICommissioneratePune

tinuous payment of fullwages and incidental ben-efits from the date of termi-nation.Present Status:Date of hearing has beenfixed as 13.02.2006.

Brief Case History:As per show cause cumDemand Notice of the JointCommissioner Central Ex-cise PuneCommissionerate Pune-1,the Company is required toremove the goods to itsother units at 115% of thecost of production as pre-scribed in the Rule 8& 9 ofthe Central Excise Valua-tion (determination of Priceof Excisable GoodsRules2000) The Goods ofRs. 30,68,481/- had beenundervalued leading toshort levy of duty ofRs.4,90,957/-.Demand made in the No-tice:1) The Central Excise

duty amounting to Rs.4,90,957 , being theduty on different valueof Rs. 30,68,481

2) Interest as applicableunder the provisions ofSection 11AB of theSaid Act.

3) Penalty to be imposedupon under Rule 25 ofthe Central ExciseRules 2002.The Show Cause no-tice was

Present Status: Cost Cer-tificate to This effect is yetto be produced before theDepartment.

Brief Case History :As per the notice companyhas not appended the listof goods received andbrought outside the state ofHaryana along with the re-turn as required Rule 9 (i)(g) of the Haryana LocalArea Development Taxrules. So the Authoritieshave to resorted to the Bestjudgement assessment forthe valuation

Duty Rs.4,90,957interest Rs.1,76,744Penalty Rs.9,81,914Total Rs.16,49,615

Rs.1,10,000


116

8 Ref. No. 101 of 2001 Mr. Mahesh Nagar Presiding Of-ficer, LabourC o u r t - 1 ,Faridabad

Further LADT @ 4% is alsopayable on any purchasemade out of Haryana. Aswe had purchase buildingmaterial in 2000-01 ofRs.27.39 Lac but LADT due@ 4 % (Rs.1.10 Lac) wasnot deposited.Present Status :The data as required by theExise and Taxation Officerhas already been submittedto the department and theyhave not yet fixed the nexthearing date.

Brief Case History:Mr. Mahesh Nagar wasemployed as AssistantQuality Control Superinten-dent. He along with onetemporary workman Mr.Ravi Kumar had physicallyassaulted another tempo-rary workman Mr. Sri Kanton 22.12.1999. Thereafterhe did not report for duty norsent any leave applicationfor the period of his ab-sence. However, on30.12.1999 he visited fac-tory at about 3.10 p.m. andhad extended threats toShri Gokulesh Kumar, Pro-duction Supervisior Somanagement sent thecharge sheet dated31.12.1999 to the con-cerned workman by speedpost which was duly re-ceived by him. Subse-quently his services wasterminated after conductinginternal enquiry.Subsequently he raised ademand notice dated03.01.2000 before the Con-ciliation officer allegingwrongful termination of hisservices. The Managementreceived the demand noticethrough conciliation officeron 10.01.2000. Manage-ment has submitted its rep-resentation.

Present Status:Next date of hearing is fixedfor 7th March 2006(Case stands in the nameof Erstwhile Toshi )

Rs.1,00,000


117

9 No. D/INS-1/ WDO/DIV/11-6531/42 Dt. 29.08.03

From the Office Di-visional Office(North) Employee’sState InsuranceC o r p o r a t i o nRajendra Place,New Delhi-8

Brief Case History:ESI Department sent a let-ter on 29.08.2003 to erst-while company Toshi forthe reason that:Information has been laidbefore the RD/ JRD/ DRD/ASST. REGIONAL DIREC-TOR of ESI Corporationand on considerationwhereof he has reason tobelieve that company haveso far not paid the contri-butions as per provisions ofLaw and have also not sub-mitted return of contribu-tions for the period fromApril 98 to March 99. Andwhereas it is proposed todetermine and recover theamount of Adhoc contribu-tions of Rs 1,04,065 for theperiod April 98 to March 99( Calculated as 6.50% ofWages of Rs. 16,01,000)payable in respect of theemployees of the Factoryunder section 45-A of theAct.Representations madeBy Company:Company made its repre-sentation and submitted therequired documents..In furtherance of variousrepresentation and the lastone representation madeby company on 21st May 05it is submitted that theNangloi unit has neve r ei-ther shifted or worked aDaultabad, Gurgaon nor itsconstruction was in anywayuseful for manufacturingprocess of Nangloi unit.Therefore, the contributionon bills of Rs. 16,03,843 ofM/s Exclusive is not claim-able under ESI Act More-over company have neverworked at Daultabad evenfor one day. the Manage-ment was forced to closethe Nangloi Unit in year2000 due to leck of busi-ness.Demand Made:For Rs 1,04,065/-Present Status:-Company has alreadymade its representations

Rs.1,04,065


118

and waiting for the next or-der of the department.

Brief Case History:M/s Maruti Udyog Ltd.(MUL) failed to fulfil the ob-ligation as required underEPCG Scheme and on6.9.2000 the re-assessmentof Bill of Entry was got doneby the Customs and as aresult MUL paid the differ-ential Customs duty, and in-terest of Rs. 43,92,661 andCounter Vailing Duty (CVD)Rs. 17,44,473. MUL raisedthe supplementary invoicesof Rs. 17,44,473 on Erst-while company Toshi AutoIndustries (P) Ltd. (Toshi).Toshi availed CENVATcredit of the same amount.Toshi were liable to assessthe appropriate duty liabilitywhich they did not andtherefor undervalued thegoods manufactured andcleared. A show Cause no-tice No. V(Prev.)/GGN-II/20/2002 Dt. 7.4.03 was issuedto the erstwhile company M/s Toshi Auto Industries (P)Ltd. on the matter of Cen-tral Excise duty of Rs.7,02,826 to pay, interest dueto pay and penalty of Rs7,02,826 to impose underRule 25 of Central ExciseRules 2002. Toshi paid theCentral Excise duty of Rs.7,02,826 and interest duethrough Personal LedgerAccount(PLA). Companyopted to appeal to Commis-sioner (Appeal) against theimposition of Penalty of Rs.7,02,826 and deposited asum of Rs. 1,75,707 as 25%of the penalty imposed.Commissioner (A) set asidethe penalty. CCE preferredto appeal to Central excise,service tax Appellate Tribu-nal (CESTA T) against theorder of Commissioner (A).Finally as per the CESTATorder dated 10.1.05 the or-der of Commissioner (A) ismodified and penalty of Rs.70,000 imposed on thecompany.

CESTAT, NewDelhi

CCE, DelhiE/ A No.4547/04-NB(C)10


119

11

Present Status:The company had alreadydeposited Rs. 1,75,707therefor Rs. 1,05,707 is re-fundable to the company.The refund is yet to berecieved

Brief Case History:Mr. Narpat Singh was re-cruited by the Company forUnskilled work and he waslegally discharged by theCompany on the bases ofthe certificate from the govt.authority stating that the hewas unfit for the work (dueto his continued ill health).The above decision of theCompany was challengedby the worker in the labourcourt.Present Status:Date of hearing has beenfixed as 08.03.06.

Hon. PresidingOfficer HonLabour CourtPune, At Pune

Mr. Narpat SinghReference (ULP)No.112/2003

BY COMPANY

Sr.No.

1.

Case No.

Appeal No.354/ 04-05.Yr. 02-03

Party

D e p u t yCommissioner ofIncome Tax, Centralcircle-3, New Delhi

Forum

Commissionerof IncomeTax(Appeals) –II Room NO.418, MayurBhavan NewDelhi

Description

Brief case History: DeputyCommissioner of Income Tax (DCIT)Central Circle-3, New Delhi passed theAssessment Order for the A/Y 2002-03 that following should be added backto the Profit and Loss Account-Provision for Revaluation Reserve ofRs.76, 640,-Excess Provision of Electricity ofRs.95, 943, andProvision of Earned Leave of Rs.11,51,734.for the purpose of computation ofIncome U/s 115-JB.

Demand Raised:Rs.1,42,737 deposited on 16.03.2005.But no provision has been made in theBalance Sheet of the year ending 31st

March 2005.

Ground of Appeal: Company hasfiled an appeal to Income Tax(Appeals)- II [CIT(A)] U/s 246Aagainst the order of DCIT on theground that provision of earned leaveof Rs. 11,51,734 should have beenallowed by the assessing officer asascertained liability for calculating thebook profits u/s 115JB of the Act. TheOther two issues of the order have notbeen appealed.

Amount ofClaim (Rs.)

Rs.1,42,737


120

Sr.No.

2

3

Case No.

Assessment OrderPassed for A/Y 2003-04by Deputy Commis-sioner Income Tax, Cen-tral circle-3

C.W.P.NO. 1279 of2000

Party

D e p u t yCommissioner ofIncome Tax, Centralcircle-3, New Delhi

Mr. Budh Ram

Forum

Commissionerof IncomeTax(Appeals) –II Room NO.418, MayurBhavan NewDelhi

High Court ofPunjab &Haryana atChandigarh

Description

Present Status:Case decided in favour of theCompany and refund of Rs.124137/-(app.) is yet to be received

Brief case History: DeputyCommissioner of Income Tax (DCIT)Central Circle-3, New Delhi passedthe Assessment Order for the A/Y2003-04 with the addition of earnedleave of Rs. 63,491 in computation ofIncome U/s 115-JB. Order has beenreleased on 18.07.2005.

Demand Raised:Total demand was made of Rs.5, 000.

Ground of Appeal: Company haspreferred an appeal to Income Tax(Appeals)-II [CIT(A)] U/s 246A against the orderof DCIT on the ground that the earnedleave liability is an ascertained liabilityand no addition should have beenmade on account of the above whilecomputing book profits u/s 115JB.Present Status:No demand or refund is due.( Case stands in the name of erstwhilecompany Toshi )

Brief case History: Mr.Budh Ramwas the Security Guard Provided bySecurity Contractor M/s KanoonSecurity Services. The Companyterminated the contract with M/sKanoon Securities Services but MrBudh Ram continued to work with thecompany as casual worker. He wasasked to discontinue beforecompletion of six months services ascausal worker. He opted to go toLabour Court with the plea that hisservices should be continued, as heis a permanent worker. Labour courtawarded him Re-instatement of dutywith 10% back wages. Managementappealed in Hon’ble High CourtChandigarh Challenging the LabourCourt Order. Appeal has beenadmitted on 2.5.2000.Present Status:Date of hearing has yet to be fixed bythe Hon’ble High Court.(Case stands in the name of LIL,demerged company)


Rs.5,000

Rs.2,75,000/-

121

Sr.No.

4

Description

Brief Case History:DeputyCommissioner of Income Tax (DCIT)Circle 4(1) New Delhi Passed theAssessment Order for the A/Y 2003-04 It has been stated in the order thatthe assessee has been derivingbenefit of enduring nature on thelicenced products and therefore, 25%of the net royalty payment i.e. Rs.1,65,661/- (25% of Rs 5,82,646/-) istreated as expenditure of capitalnature and added to the income forthe year under consideration. Apartform this a sales Tax penlty and otherpenalty of Rs. 6,500/- has beendisallowed. Therefor totaldisallowance of Rs. 1,72,161 has beenadded in the computation.Demand Raised: No Demand for Taxhas been raised but the Business losshas been reduced by Rs 1,72,161/-Ground of Appeal: Company hasfiled an appeal on 28.11.2005 toIncome Tax )Appeals-VII {CIT(A)} U/S 246A Against the order of DCIT onthe ground that DCIT has summarilyand arbitrarily rejected the explanationfiled by the company. Secondly DCITgas wrongly calculated the 25%disallowance of net royalty paymentsamounting to Rs 5,82,646/- works outto Rs. 1,45,661/- and not Rs 1,65,661.Directions may please be given toDCIT to allow depreciation at 25%being admissible rate of depreciationof technical know how.Present Status: Hearing date yet tobe fixed(Case stands in the name of LASL)


Case No.

LASLAssessment OrderPassed for A/y 2003-04by Deputy Commis-sioner Income Tax,circle-4(1)

Party

D e p u t yCommissioner ofIncome Tax, circle-4(1), New Delhi

Forum

Commissionerof IncomeTax(Appeals) –VII, New Delhi

LITIGATION AGAINST OUR DIRECTORSOur directors have no outstanding litigation towards tax liabilities, criminal/civil prosecution for any offences(irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XIII of the Companies Act),disputes, defaults, non payment of statutory dues, proceedings initiated for economic offences, in their individualcapacity or in connection with our Company and other companies with which the Directors are associated.

Material Developments after March 31, 2005Except as stated in the sections titled “Recent Developments”, “Management’s Discussion and Analysis of FinancialStatements and Results of Operations-Material Developments since the Last Audited Balance Sheet Date” and“Financial Statements” on page [•] s [•] and [•], respectively, of this Draft Red Herring Prospectus, no materialdevelopments have taken place after March 31, 2005, the date of the latest balance sheet, that would materiallyadversely affect the performance or prospects of our Company and its subsidiaries taken as a whole

122

GOVERNMENT AND OTHER APPROVALS

We are holding the following government and other approvals pertaining to our business:

In view of the approvals listed below, we can undertake and this Issue and our current business activities and nofurther major approvals from any governmental or regulatory authority or any other entity are required to undertakethe Issue or continue our business activities. Unless otherwise stated, these approvals are all valid as of the date ofthis Draft Red Herring Prospectus.

A. HEAD OFFICE

1. PAN AAACL6930D2. Import Export Code No* 0503061981 Dated. 19.12.20033. Registration Number of Company 55-99103 CIN NO. U72900 DL1999PLC991034. PF No. : DL/28391 dated 01.11.035. ESI No. : Applied for

* The following units which were transferred to the Company pursuant to the scheme of amalgamation are yet tobe added:1. Lumax Automotive Systems Ltd- Plastic Part Division (Faridabad)2. Lumax Automotive Systems Ltd- Plastic Part Division (IMT Manesar)3. Lumax Automotive Systems Ltd- Plastic Part Division (Gurgaon)4. Lumax Automotive Systems Ltd- Pune Unit-II

B. LASL- AURANGABAD (MIRROR)

S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT MST431136-S-462 Sales Tax Office 28.11.03 Until TIN no. yet to be

CST431136-C-382 Aurangabad cancelled allotted by theSales TaxDepartment

2. Excise AAACL6930DXM001 Asst. Commissioner 02.12.03 UntilExcise, Aurangabad cancelled

3. Service Tax 64/ST/Business Superintendent 11.02.05 UntilAuxiliary & (Service Tax), CancelledGTAS/2005 Customs &

Central Excise,Aurangabad

4. Factory Licence Licence No 42786 Joint Director, 02.04.04 31.12.04 Application forIndustrial Renewal submittedSafety & Health on 28.10.04Aurangabad

5. Pollution Consent Regional office 14.02.05 31.10.06Certificate No. WP/UG/ABD/E-25 Maharashtra Board

OF 98/CC/19/423/2005 Pollution Control6. Maharashtra State No PT/R/3/1/918/334 Profession Tax 16.05.96 Until

Tax on Professional, Officer-2 cancelledTraders, Callings Aurangabadand EmploymentAct, 1975

7. TDS NSKL00596B Income Tax Officer 19.12.03 UntilAurangabad cancelled

8. PF MH/20276-A Assistant Provident 3.07.96 Until Registration in theFund Commissioner, cancelled name of LILAuragabad

9. ESI 25-1452-44 Sub Regional Office, 01.10.04 UntilEmployees State cancelledInsurance Corporation,Nagpur

123

C. LASL- PUNE UNIT-I (FILTER)

S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT MST411019/S/2036 Sales Tax office, 15.12.03 Until TIN no. yet to be

CST411019/C/1725 Pune Maharashtra cancelled allotted by Department2. Excise AAACL6930DXM002 Asst. Commissioner 03.12.03 Until

Pune cancelled3. Service Tax STC/BAS-76150/PL-04 Superintendent 28.02.05 Until

STC/GTA-406/PL-04 Central Excise Pune cancelled4. Factory Licence 81266 The Inspector of 01.10.05 31.12.06

Factories Pune73807 The Inspector of 01.10.05 31.12.06

Factories Pune5. Pollution Certificate Consent No. BO/ Maharashtra Pollution 26.06.03 31.12.07

Pune/128/R/CC/414 Control Board MumbaiConsent No. SRPC/ Sub- Regional Office 08.10.03 31.08.06C-C/UB/Pune/456 MPC Board Pune

6. Municipal Licence No.03753 Asst. Commissioner 30.06.04 31.03.06Pimpri Chinch wadMahanagar Palika

A/3/935/04 Asst. Commissioner 30.09.04 31.03.06Pimpri Chinch wadMahanagar Palika

7. Maharashtra State PT/R/21217/10583 Professional Tax 06.01.04 UntilTax on Professionals, Officer No.4 Pune CancelledTraders, Callings andEmployment Act, 1975

8. TDS PNEL03787A Income Tax Office 19.07.04 Untilcancelled

9. PF MH/PUN/120284 Sub regional office, 26.12.03 UntilPune cancelled

10. ESI 33-12393-67 Sub regional office, 26.12.03 UntilPune cancelled

NOTE:

1. Sales Tax No.MST411019/S/2036 and CST411019/C/1725 is same for Pune Unit-I and Pune Unit-II.2. TDS No. PNEL03787A is for Pune Unit-I and Unit-II3. Service Tax No. STC/BAS-76150/PL-04 and STC/GTA-406/PL-04 is for Pune Unit-I and Unit-II4. Maharashtra State Tax on Professionas, Traders, Callings and Employment Act, 1975 No. PT/R/21217/10583is for Pune Unit-I and Unit-II

124

D. LASL- Faridabad (MIRROR)S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT 06591216738 Excise and Taxation 13.01.05 Until

Officer Faridabad Cancelled2. Excise AAACL6930DXM003 Deputy Commissioner 18.12.03 Until

Central Excise CancelledDivision-IV FBD

3. Service Tax ST/FBD/GTA/313/05 Sales Tax 08.02.03 UntilCommission-6 CancelledDelhi-IV

4. Factory Licence FBD/L-165/3630 (4969) Commissioner & 08.05.05 31.12.05 Renewal applicationChief Inspector of submitted on 24.11.05Factories Haryana

5. Pollution Certificate HSPCB/C-1/2004/33 Haryana Pollution 30.11.05 31.03.06Board

6. Fire NOC Application of FireNOC submitted on18.01.05

7. Municipal Licence Joint Commissioner 22.11.05 31.03.06Municipal CorporationBallabgarh

8. TDS RTKL00713G Income Tax Office 17.07.04 Untilcancelled

9. PF HR/5068 Regional Provident 03.02.04 UntilFund Commissioner, cancelledHaryana

10. ESI 13/16296/78 Regional Provident 05.04.05 UntilFund Commissioner, cancelledHaryana

NOTE:5. VAT No. 06591216738 is same for Filter Division DLF Faridabad, Filter Division Manesar, Mirror Division Sect-6 Faridabad

and Plastic Parts Division Faridabad.6. TDS NO. RTKL00713G is for Filter Division DLF Faridabad, Mirror Division Sect-6 Faridabad and Plastic Parts Division

Faridabad

E. LASL- MANESAR (FILTER)S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT 06591216738 Excise and Taxation 13.01.05 Until

Officer Faridabad Cancelled2. Excise AAACL6930DXM004 Asst. Commissioner 16.06.04 Until

Central Excise CancelledGurgaon Haryana

3. Service Tax D-III/ST/R/I/SEA/ Sales Tax 07.03.05 Until872005 Commission-6 cancelled

Delhi-IV4. TDS RTKL00886E Income Tax Office 01.09.04 Until

cancelled5. PF HR/GGN/26467 Sub regional Provident 17.09.04 Until

Fund Commissioner, cancelledGurgoan

6. ESI 13/37560/67 Regional Office, 24.03.05 UntilEmployees State cancelledInsurance Corporation,Faridabad


and Plastic Parts Division Faridabad.2. TDS NO. RTKL00886E is for Filter Division Manesar, Plastic Parts Division Manesar and Faridabad, Plastic Parts Division

Gurgaon.

125

F. LASL- Faridabad (PLASTIC DIVISION)S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue

1. Sales Tax/ VAT 06591216738 Excise and Taxation UntilOfficer Faridabad 13.01.05 Cancelled

2. Excise AAACL6930DXM005 Asst. Commissioner 04.05.05 UntilCentral Excise CancelledDivision-I FBD

3. Service Tax ST/FBD/GTA/977/2005 Superintendent 24.05.05 UntilService Tax Division-6 CancelledDelhi-IV Faridabad

4. Factory Licence FBT/T-199/6854 (5154) Commissioner & 01.07.05 31.12.05 Application for renewalChief Inspector of submitted on 22.11.05Factories Haryana

5. Pollution Certificate HSPCB/C-1/2004/7 Haryana Pollution 13.2.04 31.3.05 Renewal applicationBoard submitted on 06.1.05


7. Municipal Licence 52(44) Joint Commissioner 08.12.05 31.03.06Municipal CorporationFaridabad


9. PF HR/5565 Regional Provident 03.05.05 UntilFund Commissioner, cancelledFaridabad

10. ESI 13/162426/100 Regional Office, 03.05.05 UntilEmployees State cancelledInsuranceCorporation,


and Plastic Parts Division Faridabad.2. TDS NO. RTKL00713G is for Filter Division DLF Faridabad, Mirror Division Sect-6 Faridabad and Plastic Parts Division

Faridabad

126

G. LASL- MANESAR (PLASTIC DIVISION)S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT 06321922416 Until RC yet to be received

Cancelled from Department2. Excise AAACL6930DXM006 Asst. Commissioner 06.05.05 Until


3. Service Tax D-III/ST/R/II/GTO/113/05 Superintendent 07.02.05 Until(Range-II) Service CancelledTax Division,Gurgaon

4. Factory Licence GGN/T-114/4400 Addl Chief Inspector 17.09.04 31.12.04 Renewal of Factoryof Factories Haryana Licence submitted on

26.11.04 for the year2005 and on 26.11.05for 2006

5. Pollution Certificate HSPCB/Cons/2004/39 Haryana Pollution 09.02.04 31.03.05 Renewal of ConsentControl Board submitted on 01.01.05

6. Fire NOC FS/05/1217 Fires Station officer 16.06.05 10.03.06 Renewal of Fire NOCGurgaon submitted on 1.4.05

and name changeapplied on 26.4.05

7. TDS RTKL00886E Income Tax Office Untilcancelled

8. PF HR/GGN/25617 Regional Provident 24.03.05 Until No. was allotted to Toshi,Fund Commissioner, cancelled Application for nameGurgoan change applied for

9. ESI 13/37562/66 Regional Office, 05.02.03 Until No. was allottedEmployees State cancelled to Toshi,Insurance Corporation, ApplicationFaridabad for name change

applied for

NOTE:1. TDS NO. RTKL00886E is for Filter Division Manesar, Plastic Parts Division Manesar anddabad, Plastic Parts Division Gurgaon.

127

H. LASL- GURGAON (PLASTIC DIVISION)

S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT 06231818530 Until RC yet to be received

Cancelled from Department2. Excise AAACL6930DXM007 Asst.Commissioner 06.05.05 Until


3. Service Tax D-III/ST/R/II/GTO/104/05 Suprintendent 31.01.05 Until (Range-II) Service CancelledTax Division, Gurgaon

4. Factory License GGN/T-80/820/6043 Addl Chief Inspector 05.07.05 31.12.05 Renewal of Factoryof Factories Haryana licence submitted on

22.11.05 .5. Pollution Certificate HSPCB/Cons/2004/73 Haryana Pollution 11.02.04 31.3.05 Renewal of Consent

Control Board submitted6. Fire NOC FS2004/568 Fires Station officer 14.06.04 12.06.05 Renewal application

Gurgaon and name change tobe applied.

7. TDS RTKL00886E Income Tax Office Untilcancelled

8. PF EB III/ HR/FD/8184 Regional Provident 18.09.95 Until No. was allotted toFund Commissioner, cancelled Toshi, Application forGurgoan name change applied

for9. ESI 13/23673/66 Regional Office, 31.03.95 Until No. was allotted to

Employees State cancelled Toshi, Application forInsurance Corporation, name change appliedFaridabad for

NOTE:1. TDS NO. RTKL00886E is for Filter Division Manesar, Plastic Parts Division Manesar and Faridabad, Plastic Parts Division

Gurgaon.’

128

I. LASL- PUNE (MPI UNIT)

S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT MST411019/S/2036 Sales Tax office, 15.12.03 Until TIN no. yet to be

CST411019/C/1725 Pune Maharashtra cancelled allotted by Department2. Excise AAACL6930DXM008 Asst. Commissioner 18.05.05 Until

Pune cancelled3. Service Tax STC/BAS-76150/PL-04 Superintendent Central 28.02.05 Until

STC/GTA-406/PL-04 Excise Pune cancelled4. Factory Licence Licence No.073931 The Inspector of 31.10.05 31.12.06

Factories Pune5. Pollution Certificate SRO/PC/E/250/95/ 08.02.05 31.12.06

CC44/2845/056. Municipal Licence A/3/90/95 Municipal Corporation, 07.04.05 31.03.06

Pune7. Maharashtra State PT/R/21217/10583 Professional Tax 06.01.04 Until

Tax on Professionals, Officer No.4 Pune CancelledTraders, Callingsand EmploymentAct, 1975

8. TDS PNEL03787A Income Tax Office 19.7.04 Untilcancelled

9. PF MH/PUN/120284 1981 Untilcancelled

10. ESI 33-12393-67 1981 Untilcancelled

NOTE:1. Sales Tax No.MST411019/S/2036 and CST411019/C/1725 is same for Pune Unit-I and Pune Unit-II.2. TDS No. PNEL03787A is for Pune Unit-I and Unit-II3. Service Tax No. STC/BAS-76150/PL-04 and STC/GTA-406/PL-04 is for Pune Unit-I and Unit-II4. Maharashtra State Tax on Professionas, Traders, Callings and Employment Act, 1975 No. PT/R/21217/10583 is for Pune

Unit-I and Unit-II

129

J. LASL- DLF (FILTER)

S. Particulars Registration No. Issuing Authority Date of Validity RemarksNo. issue1. Sales Tax/ VAT 06591216738 Excise and Taxation 13.01.05 Until

Officer Faridabad Cancelled2. Excise AAACL6930DXM009 Deputy Commissioner 05.07.05 Until

Central Excise CancelledDivision-IV FBD

3. Service Tax ST/FBD/GTA & Sales Tax 15.02.05 UntilBAS/371/05 Commission-6 Cancelled

Delhi-IV4. Factory Licence FBD/L-46/3993 (4530) Commissioner & 31.12.04 Renewal application

Chief Inspector of submitted on 22.11.04Factories Haryana

5. Pollution Certificate HSPCB/C-1/2004/302 Haryana Pollution 04.10.04 31.3.05 Renewal applicationBoard submitted on 25.1.05


7. Municipal Licence Joint Commissioner 31.03.05 Application for renewalMunicipal Corporation of Licence submittedFaridabad on 13.06.05


9. PF EB-III/Con./Genl/ Regional Provident 14.3.92 Until No. was allotted to LILHR/2990/10533 Fund Commissioner, cancelled Application for name

Haryana change applied for10. ESI 13/15549/65SF Sub Regional Office, 1983 Until No. was allotted to LIL

Employees State cancelled Application for nameInsurance Corporation, change applied forFaridabad

NOTE:

1. VAT No. 06591216738 is same for Filter Division DLF Faridabad, Filter Division Manesar, Mirror Division Sect-6 Faridabadand Plastic Parts Division Faridabad

2. TDS NO. RTKL00713G is for Filter Division DLF Faridabad, Mirror Division Sect-6 Faridabad and Plastic Parts DivisionFaridab

130

OTHER REGULATORY AND STATUTORY DISCLOSURES

Authority for the IssueThe Board of Directors has, pursuant to resolution passed at its meeting held on June 28, 2005 authorised theIssue subject to the approval by the shareholders of the Company under section 81(1A) of The Companies Act.

The shareholders of the Company have authorised the Issue by a special resolution in accordance with section81(1A) of the Companies Act, passed at the annual general meeting of the Company held on August 1, 2005.

We have also obtained all necessary contractual consents required for the Issue. For further information, pleasesee the section titled “Government and Other Approvals” on page [•] of this Draft Red Herring Prospectus.

Prohibition by SEBIThe Company, its directors, Promoters, our affiliates and companies in which our directors are associated with asdirectors, have not been prohibited from accessing or operating in capital markets under any order or directionpassed by SEBI.

None of the Promoters, their relatives, the Company or the Promoter group companies are detained as wilful defaultersby RBI/ government authorities and there are no proceedings relating to violations of securities laws pending againstthem and there are no violations of securities laws committed by them in the past.

Eligibility for the IssueSince Lumax is a listed company, it is eligible to make the Issue of Equity Shares as per clause 2.3.1 of the SEBIGuidelines, as the aggregate of the proposed Issue and all the previous issues made in the same financial year interms of size (i.e., offer through offer document +firm allotment + promoters contribution through the offer document),issue size does not exceed 5 times the pre issue net worth as per the audited balance sheet of the last financial year.The detailed working of the same is hereunder:

Rs. in Lacs

a) Proposed Issue size [•]b) All previous issues made in the same financial year in terms of size (i.e. offer through

offer document+ firm allotment+ Promoters contribution through the offer document) 317.99c) Aggregate of a. & b. [•]d) Pre Issue net worth as per audited balance sheet of the last financial year i.e. March 31, 2005 1061.32e) 5 times of (d). [•]

Further there in no change in the name of the Company within the last 1-year

DISCLAIMER CLAUSEAS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. ITIS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS TOSEBI SHOULD NOT, IN ANY WAY, BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED ORAPPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIALSOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE ORFOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT REDHERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGER, MICROSEC CAPITAL, LEAD MANAGERCHARTERED CAPITAL AND INVESTMENTS LTD HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THEDRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI(DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES, 2000 AS FOR THE TIME BEING IN FORCE. THISREQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING ANINVESTMENT IN THE PROPOSED ISSUE.

IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY RESPONSIBLEFOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFTRED HERRINGPROSPECTUS, THE BOOK RUNNING LEAD MANAGER AND THE LEAD MANAGER AREEXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITSRESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNINGLEAD MANAGER, MICROSEC CAPITAL LIMITED AND THE LEAD MANAGER CHARTERED CAPITAL ANDINVESTMENTS LTD HAVE FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED 10TH FEBRUARY,2006 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS ASFOLLOWS:

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“(I) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKECOMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHERMATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUSPERTAINING TO THE SAID ISSUE.

(II) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORSAND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTSCONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THECONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BYTHE COMPANY, WE CONFIRM THAT:

THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH THEDOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE

A. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE AS ALSO THE GUIDELINES,INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENTAUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND

B. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR ANDADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO THEINVESTMENT IN THE PROPOSED ISSUE.

C. BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRINGPROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS AREVALID.

D. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED FOR INCLUSIONOF THEIR SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN ANDTHE SECURITIES PROPOSED TO FORM PART OF THE PROMOTERS’ CONTRIBUTION SUBJECT TOLOCK-IN, WILL NOT BE DISPOSED/SOLD/ TRANSFERRED BY THE PROMOTERS DURING THEPERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITHSEBI TILL THE DATE OF COMMENCEMENT OF LOCK IN PERIOD AS STATED IN THE DRAFT REDHERRING PROSPECTUS.

E. WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE WORTH OF THEUNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.

F. ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE TIMEOF FILING OF THE DRAFT RED HERRING PROSPECTUS WITH THE ROC IN TERMS OF SECTION60B OF THE COMPANIES ACT, 1956. ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILLBE COMPLIED WITH AT THE TIME OF REGISTRATION OF THE PROSPECTUS WITH THE ROC INTERMS OF SECTION 56, SECTION 60 AND SECTION 60B OF THE COMPANIES ACT.”

THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANYFROM ANY LIABILITIES UNDER SECTION 63 AND SECTION 68 OF THE COMPANIES ACT OR FROM THEREQUIREMENT OF OBTAINING SUCH STATUTORY AND OTHER CLEARANCES AS MAY BE REQUIRED FORTHE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP AT ANYPOINT OF TIME, WITH THE BOOK RUNNING LEAD MANAGER AND THE LEAD MANAGER; ANYIRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS.

Disclaimer from our Company and the BRLM and the Lead ManagerOur Company, our Directors, and the BRLM and the Lead Manager accept no responsibility for statements madeotherwise than in this Draft Red Herring Prospectus or in the advertisements or any other material issued by or atinstance of the above mentioned entities and anyone placing reliance on any other source of information, includingour website, www.lumaxauto.com would be doing so at his or her own risk.

The BRLM and the Lead Manager accept no responsibility, save to the limited extent as provided in the Memorandumof Understanding entered into among the BRLM and the Lead Manager and us and the Underwriting Agreementto be entered into among the Underwriters and us.

All information shall be made available by us and BRLM and the Lead Manager to the public and investors at largeand no selective or additional information would be available for a section of the investors in any manner whatsoeverincluding at road show presentations, in research or sales reports or at bidding centres etc.

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Disclaimer in Respect of JurisdictionThis Issue is being made in India to persons resident in India (including Indian nationals resident in India who aremajors, HUFs, companies, corporate bodies and societies registered under the applicable laws in India and authorisedto invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regionalrural banks, co-operative banks (subject to RBI permission), or trusts under the applicable trust law and who areauthorised under their constitution to hold and invest in shares, permitted insurance companies and pension fundsand to permitted Non-Residents including NRIs, FIIs and eligible foreign investors. This Draft Red Herring Prospectusdoes not, however, constitute an invitation to subscribe to Equity Shares offered hereby in any other jurisdiction toany person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possessionthis Draft Red Herring Prospectus comes is required to inform himself or herself about and to observe, any suchrestrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in NewDelhi only.

No action has been or will be taken to permit a public offering in any jurisdiction where action would be required forthat purpose, except that this Draft Red Herring Prospectus has been filed with SEBI for observations. Accordingly,the Equity Shares, represented thereby may not be offered or sold, directly or indirectly, and this Draft Red HerringProspectus may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicablein such jurisdiction. Neither the delivery of this Draft Red Herring Prospectus nor any sale hereunder shall, underany circumstances, create any implication that there has been no change in our affairs from the date hereof or thatthe information contained herein is correct as of any time subsequent to this date.

Disclaimer clause of the BSEAs required, a copy of this Draft Red Herring Prospectus has been submitted to the BSE. BSE has given by its letterdated [•] , permission to the Company to use BSE’s name in this Red Herring Prospectus as one of the stockexchanges on which this Company’s further securities are proposed to be listed. BSE has scrutinized this Draft RedHerring Prospectus for its limited internal purpose of deciding on the matter of granting the aforesaid permission tous. BSE does not in any manner:

i) warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Red HerringProspectus; or

ii) warrant that this Company’s securities will be listed or will continue to be listed on BSE; oriii) take any responsibility for the financial or other soundness of this Company, its promoters, its management

or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that this Draft Red Herring Prospectus has beencleared or approved by BSE. Every person who desires to apply for or otherwise acquires any securities of thisCompany may do so pursuant to independent inquiry, investigation and analysis and shall not have any claimagainst BSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connectionwith such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for anyother reason whatsoever.

Disclaimer clause of the NSEAs required, a copy of this Draft Red Herring Prospectus has been submitted to NSE. NSE has given by its [•],permission to us to use NSE’s name in this Draft Red Herring Prospectus as one of the stock exchanges on whichour further securities are proposed to be listed. The NSE has scrutinised this Draft Red Herring Prospectus for itslimited internal purpose of deciding on the matter of granting the aforesaid permission to us. It is to be distinctlyunderstood that the aforesaid permission given by NSE should not in any way be deemed or construed to meanthat this Draft Red Herring Prospectus has been cleared or approved by NSE; nor does it in any manner warrant,certify or endorse the correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nordoes it warrant that our securities will be listed or will continue to be listed on the NSE; nor does it take anyresponsibility for the financial or other soundness of this Company, its promoters, its management or any scheme orproject of this Company.

Every person who desires to apply for or otherwise acquires any of our securities may do so pursuant to independentinquiry, investigation and analysis and shall not have any claim against NSE whatsoever by reason of any losswhich may be suffered by such Person consequent to or in connection with such subscription/acquisition whetherby reason of anything stated or omitted to be stated herein or any other reason whatsoever.

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FilingA copy of this Draft Red Herring Prospectus has been filed with SEBI at Corporation Finance Department, GroundFloor, Mittal Court, “A” Wing, Nariman Point, Mumbai 400 021.

A copy of the Draft Red Herring Prospectus, along with the documents required to be filed under Section 60B of theCompanies Act, will be delivered for registration to the RoC and a copy of the Prospectus required to be filed underSection 60 of the Companies Act will be delivered for registration with RoC situated at B Block Paryavaran Bhawan,CGO Complex, Lodhi Road, New Delhi -110003

ListingOur existing Equity Shares are listed on the BSE and the NSE. Applications have been made to the BSE and theNSE for permission for listing of our Equity Shares being offered through this Draft Red Herring Prospectus.

If the permission to deal in and for an official quotation of the Equity Shares are not granted by any of the StockExchanges, our Company shall forthwith repay, without interest, all moneys received from the applicants in pursuanceof this Draft Red Herring Prospectus. If such money is not repaid within eight days after our Company becomesliable to repay it (i.e. from the date of refusal or within 15 days from the date of Bid Closing Date/Issue Closing Date,whichever is earlier), then our Company shall, on and from expiry of 8 days, be liable to repay the money, withinterest at the rate of 15% per annum on application money, as prescribed under Section 73 of the Companies Act.

Our Company shall ensure that all steps for the completion of the necessary formalities for listing and commencementof trading at both the Stock Exchanges mentioned above are taken within seven working days of finalisation of thebasis of allotment for the Issue.

ConsentsConsents in writing of: (a) our Directors, the Company Secretary and Compliance Officer, the Auditors, the LegalAdvisors, the Bankers to the Issue; and (b) the Book Running Lead Managers, the Syndicate Members, the EscrowCollection Bankers and the Registrar to the Issue to act in their respective capacities, have been obtained and filedalong with a copy of the Red Herring Prospectus with the RoC as required under Sections 60 and 60B of theCompanies Act and such consents have not been withdrawn up to the time of delivery of this Draft Red HerringProspectus for registration with the RoC.

R. K Jain & Sanjay Associates, Chartered Accountants, our Auditors have given their written consent to the inclusionof their report in the form and context in which it appears in this Draft Red Herring Prospectus and such consent andreport has not been withdrawn up to the time of delivery of this Draft Red Herring Prospectus for registration withthe RoC.

Expert OpinionExcept as stated in the sections titled “Objects of the Issue”, “Statement of Tax Benefits” and “Financial Statements”appearing on pages [•] , [•] and [•] respectively, of the Draft Red Herring Prospectus, we have not obtained anyexpert opinions.

Expenses of the IssueThe expenses of this Issue include, among others, underwriting and management fees, selling commission, printingand distribution expenses, legal fees, statutory advertisement expenses and listing fees. The estimated expensesof the Issue are as follows:

Particulars Amount (Rs. In Lacs) % of Total IssueLead managers, underwriters and selling expenses [•] [•]Advertising and Marketing Expenses [•] [•]Printing and Stationery [•] [•]Others (Registrar’s fee, Listing fee, fee to Legal Advisors,Book Building fee) [•] [•]Miscellaneous [•] [•]TOTAL [•] [•]

Fees Payable to the Book Running Lead Managers and Syndicate MembersThe total fees payable to the Book Running Lead Managers and Syndicate Members (including underwritingcommission and selling commission) will be as stated in the Engagement Letter with the BRLM and the LeadManager, a copy of which is available for inspection at the corporate office of our Company and reimbursement oftheir out of pocket expenses.

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Fees Payable to the Registrar to the IssueThe fees payable to the Registrar to the Issue for processing of application, data entry, printing of CAN/refund order,preparation of refund data on magnetic tape, printing of bulk mailing register will be as per the Memorandum ofUnderstanding signed with our Company, a copy of which is available for inspection at the corporate office of ourCompany.

The Registrar to the Issue will be reimbursed for all out-of-pocket expenses including cost of stationery, postage,stamp duty and communication expenses. Adequate funds will be provided to the Registrar to the Issue to enablethem to send refund orders or allotment advice by registered post/speed post/under certificate of posting.

Particulars regarding Public or Rights Issues during the Last Five YearsWe have not made any public or rights issues during the last five years.

Issues otherwise than for CashWe have not issued any Equity Shares for consideration otherwise than for cash, except as below:

At the time of de-merger of part business of Lumax Industries Ltd. into Lumax Automotive Systems Ltd. in ratio of 1equity share of Rs.10/- of Lumax Automotive Systems Ltd issued for 2 equity shares of Lumax Industries Ltd asapproved Delhi High Court vide order dated 15th September 2003 effective from 1st April 2002.

At the time of Amalgamation of Toshi Auto Industries Pvt. Ltd. and Metal Pressing Industries Pvt. Ltd. into LumaxAutomotive Systems Ltd. in ratio of 1:1 and 10:1 respectively as approved by Delhi High Court vide its order dated23rd February 2005. The amalgamation was effective from 1st April 2004.

For details of demerger and merger by us, see section titled “History and Corporate matters” on page [•] of this DraftRed Herring Prospectus.

Commission and Brokerage paid on Previous Issues of our Equity Shares

No sums have been paid since the date of incorporation of the Company till the date of issue of this Draft RedHerring Prospectus as commission, brokerage or discount for subscribing are agreeing to subscribe or procuring oragreeging to procure any subscription for any shares in the company including the promoters, their associates,relatives and friends.

Companies under the Same ManagementWe do not have any other company under the same management within the meaning of erstwhile Section 370 (1B)of the Companies Act.

Promise vs. Performance – Last Three IssuesThe shares of the company were listed after demerger from LIL. The Company has not made any promises as such.

Promise vs. Performance – Last Issue of Group/Associate CompaniesThere are no listed ventures in the group companies.

Outstanding Debentures or BondsOur Company does not have any outstanding debentures or bonds.

Outstanding Preference SharesOur Company does not have any preference shares

Stock Market Data of our Equity SharesThe following table sets forth, for the periods indicated, the high and low and average of daily closing prices of ourEquity Shares on the BSE and NSE, unless otherwise mentioned

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BSE DATA

Year High Date of Volume on Low Date of Volume on Average priceending (Rs.) High date of (Rs.) Low date of for the yr.31-Mar high (no. low (no. (Rs.)

of shares) of shares)2005 73.20 Dec. 30, 2004 90389 21.20 Aug. 24, 2004 40747 41.44

Month High Date of Volume on Low Date of Volume on Volume per Average priceending (Rs.) High date of (Rs.) Low date of month (No. for the month

high (no. low (no. of shares) (Rs.)of shares) of shares)

Jan-06 87.00 Jan. 25, 2006 1941 75.25 Jan. 10, 2006 1360 50962 81.39Dec-06 83.00 Dec. 30, 2005 1919 70.00 Dec. 7, 2005 1293 46570 77.40Nov-05 90.50 Nov. 10, 2005 102662 55.00 Nov. 2, 2005 320 264253 84.32Oct-05 73.00 Oct. 10, 2005 1246 51.40 Oct. 28, 2005 1118 25406 63.34Sep-05 85.95 Sept. 1, 2005 4733 62.75 Sept. 23, 2005 1867 49624 77.16Aug-05 94.80 Aug. 4, 2005 2389 72.65 Aug. 24, 2005 1951 114067 84.70

NSE DATA

Year High Date of Volume on Low Date of Volume on Average priceending (Rs.) High date of (Rs.) Low date of for the yr.31-Mar high (no. low (no. (Rs.)

of shares) of shares)2005 68.50 Dec. 31, 2004 93468 16.05 August 24, 2004 80667 38.37

Month High Date of Volume on Low Date of Volume on Volume per Average priceending (Rs.) High date of (Rs.) Low date of month (No. for the month

high (no. low (no. of shares) (Rs.)of shares) of shares)

Jan-06 85.50 Jan. 24, 2006 20036 77.00 Jan. 18, 2006 1060 165,139 80.7Dec-06 83.45 Dec. 29, 2005 21341 70.05 Dec. 8, 2005 9074 216,845 76.89Nov-05 90.95 Nov. 10, 2005 255947 53.00 Nov. 2, 2005 420 683,142 78.16Oct-05 81.90 Oct. 11, 2005 2577 48.70 Oct. 28, 2005 2580 56,536 62.43Sep-05 90.00 Sept. 1, 2005 6514 63.15 Sept. 23, 2005 4219 96,303 76.64Aug-05 96.00 Aug. 4, 2005 5985 72.35 Aug.b 24, 2005 2757 193,151 83.77

Other DisclosuresThe closing market price of our Equity Shares on June 29, 2005 the day after the day our Board approved the Issue,at BSE was Rs. 74.95 per Equity Share.

Our Equity Shares are actively traded on the BSE and the NSE.

Except as disclosed on page [•] of this Draft Red Herring Prospectus, our Promoter group, or the directors of ourPromoter companies or our Directors have not purchased or sold any securities of the Company during a period ofsix months preceding the date on which this Draft Red Herring Prospectus is filed with SEBI.

Mechanism for Redressal of Investor Grievances by our CompanyThe Memorandum of Understanding between the Registrar to the Issue and us, will provide for retention of recordswith the Registrar to the Issue for a period of at least one year from the last date of dispatch of letters of allotment,demat credit, refund orders to enable the investors to approach the Registrar to the Issue for redressal of theirgrievances.

All grievances relating to the Issue may be addressed to the Registrar to the Issue, giving full details such as name,address of the applicant, application number, number of shares applied for, amount paid on application, DepositoryParticipant, and the bank branch or collection center where the application was submitted.

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Disposal of Investor Grievances by our CompanyNo investor grievance is pending for over one month.

We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investorgrievances shall be seven days from the date of receipt of the complaint. In case of non-routine complaints andcomplaints where external agencies are involved, we will seek to redress these complaints as expeditiously aspossible.

We have appointed Ms. Monika Gupta, Company Secretary as the Compliance Officer and she may be contactedin case of any pre- Issue or post-Issue-related problems at the following address:]

Lumax Automotive Systems LimitedB – 86, Mayapuri Industrial Area,Phase – I, New Delhi – 110064.Tel: 91 11 41031267, 28111777Fax: 91 11 28116455E.Mail: [email protected]

Mechanism for Redressal of Investor Grievances by Companies under the Same ManagementWe do not have any other company under the same management within the meaning of erstwhile Section 370 (1B)of the Companies Act.

Changes in AuditorsThere has been no change of the auditors in the last three years

Capitalisation of Reserves or ProfitsWe have not capitalised our reserves or profits at any time during last five years,

Revaluation of AssetsWe have not revalued our assets in the past five years.

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ISSUE INFORMATION

TERMS OF THE ISSUEThe present issue of 34,00,000 Equity Shares at a price of [•] for cash aggregating upto Rs [•] is being madethrough a book building process.

Number of EquityShares available forallocation

Percentage of OfferSize available for al-location

Basis of Allocation ifrespective categoryis oversubscribed

Minimum Bid

Maximum Bid

Allotment Mode

Trading Lot

Who can Apply

Terms of Payment

Margin Money

QIBs

Upto 17, 00,000 equity Shares orIssue less allocation to NonInstitutional Bidders and RetailIndividual Bidders

Upto 50% or Issue Size, 5% thereofto be specifically available forMutual Funds.

Proportionate

Such number of Equity Shares thatthe Bid Amount exceeds Rs.100,000

Such number of Equity Shares notexceeding the Issue, subject toapplicable limits.

Compulsory in dematerialisedmode

One Equity Share

Public financial institutions, and asdefined in section 4A of theCompanies Act, scheduledcommercial banks, mutual funds,foreign institutional investorsregistered with SEBI, multilateraland bi-lateral developmentinstitutions, venture capital fundsregistered with SEBI, foreignventure capital investors registeredwith SEBI, State IndustrialDevelopment Corporations,Insurance Companies registeredwith Insurance Regulatory andDevelopment Authority, ProvidentFunds with minimum corpus of Rs.250 million and Pension Funds withminimum corpus of Rs. 250 million

Margin Amount applicable to QIBBidders at the time of submissionof Bid cum Application Form to themembers of the Syndicate.

10% of the Bid Amount on bidding

Non-Institutional Bidders

At least 5,10,000Equity Shares or issue lesallocation to QIB Bidders and RetailIndividual Bidders.

Minimum 15% of Issue or Issue lessallocation to QIB Bidders and RetailIndividual Bidders.

Proportionate

Such number of Equity Shares thatthe Bid Amount exceeds Rs.100,000

Such number of Equity Shares notexceeding the Issue, subject toapplicable limits.


One Equity Share

Resident Indian individuals, HUF (inthe name of Karta), corporatebodies, NRIs, societies and trusts

Margin Amount applicable to Non-Institutional Bidders at the time ofsubmission of Bid cum ApplicationForm to the members of theSyndicate.

Full Bid Amount on Bidding

Retail Individual Bidders

At least 11,90,000Equity Shares or Issue lessallocation to QIB Bidders andNon-Institutional Bidders.

Minimum 35% of Issue orIssue less allocation to QIBBidders and Non InstitutionalBidders

Proportionate

[·] Equity Shares

Such number of EquityShares whereby the BidAmount does not exceed Rs.100,000


One Equity Share

Individuals including NRIs andHUFs (in the name of Karta)applying for such number ofEquity Shares such that theBid exceed Rs. 50,000

Margin Amount applicable toRetail Bidders at the time ofsubmission of Bid cumApplication Form to themembers of the Syndicate.

Full Bid amount on Bidding

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The Equity Shares being offered are subject to the provisions of the Companies Act, our Memorandum and Articlesof Association, the terms of this Draft Red Herring ProspectusBid cum Application Form, the Revision Form, theConfirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices andother documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subjectto laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and tradingof securities issued from time to time by SEBI, the Government of India, the Stock Exchanges, the RBI, RoC and/orother authorities, as in force on the date of the Issue and to the extent applicable.

Ranking of Equity SharesThe Equity Shares being offered shall be subject to the provisions of our Memorandum and Articles of Associationand shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividend. Theallottees will be entitled to dividend or any other corporate benefits (including dividend), if any, declared by ourCompany after the date of allotment.

Mode of payment of dividendWe shall pay dividend to our shareholders as per the provisions of the Companies Act. We pay dividend throughissue of dividend warrants.

Face value and Issue PriceThe Equity Shares with a face value of Rs. 10 each are being offered in terms of this Draft Red Herring Prospectusat a total price of Rs. [?] per Equity Share. At any given point of time there shall be only one denomination for theEquity Shares.

Rights of the Equity ShareholderSubject to applicable laws, the equity shareholders shall have the following rights:

· Right to receive dividend, if declared;· Right to attend general meetings and exercise voting powers, unless prohibited by law; Right to vote on a poll

either in person or by proxy;· Right to receive offers for rights shares and be allotted bonus shares, if announced;· Right to receive surplus on liquidation;· Right of free transferability; and· Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and

our Memorandum and Articles of Association.

For a detailed description of the main provisions of our Articles of Association dealing with voting rights, dividend,forfeiture and lien, transfer and transmission and/or consolidation/splitting, see the section titled “Main Provisions ofArticles of Association of the Company” appearing on page [•] of this Draft Red Herring Prospectus.

Market Lot and Trading LotIn terms of existing SEBI Guidelines, the trading in the Equity Shares shall only be in dematerialised form for allinvestors. Since trading of our Equity Shares is in dematerialised mode, the tradable lot is one Equity Share. In termsof Section 68B of the Companies Act, the Equity Shares shall be allotted only in dematerialised form. Allotmentthrough this Issue will be done only in electronic form in multiples of 1 Equity Share subject to a minimum allotmentof [• ] Equity Shares.

Nomination Facility to the InvestorIn accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidder(s), maynominate any one person in whom, in the event of death of sole Bidder or in case of joint Bidders, death of all theBidders, as the case may be, the Equity Shares allotted, if any, shall vest. A person, being a nominee, entitled to theEquity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Compa-nies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registeredholder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in theprescribed manner, any person to become entitled to Equity Share(s) in the event of his or her death during theminority. A nomination shall stand rescinded upon a sale/transfer/alienation of Equity Share(s) by the person nomi-nating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be madeonly on the prescribed form available on request at the registered office of our Company or at the registrar andtransfer agent of our Company.

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In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of theprovisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required byour Board, elect either:

a. to register himself or herself as the holder of the Equity Shares; or

b. to make such transfer of the Equity Shares, as the deceased holder could have made.

Further, our Board may at any time give notice requiring any nominee to choose either to be registered himself orherself or to transfer the Equity Shares, and if the notice is not complied with, within a period of 90 days, our Boardmay thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the Equity Shares,until the requirements of the notice have been complied with.

Notwithstanding anything stated above, since the allotment of Equity Shares in the Issue will be made only indematerialised mode, there is no need to make a separate nomination with us. Nominations registered with therespective Depository Participant of the applicant would prevail. If the investors require changing the nomination,they are requested to inform their respective Depository Participant.

Minimum SubscriptionIf we do not receive the minimum subscription of 90% of the Issue to the extent of the amount payable on applica-tion, including devolvement of Underwriters, within 60 days from the Bid Closing Date/Issue Closing Date, we shallforthwith refund the entire subscription amount received. If there is a delay beyond eight days after we become liableto pay the amount (i.e. 60 days from the Bid Closing Date/Issue Closing Date), we shall pay interest prescribedunder Section 73 of the Companies Act.

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ISSUE PROCEDURE

Book Building ProcedureThe Issue is being made through the 100% Book Building Process wherein up to 50% of the Issue shall be availablefor allocation on a proportionate basis to QIBs. Further, not less than 35% shall be available for allocation on aproportionate basis to the Retail Individual Bidders and not less than 15% shall be available for allocation on aproportionate basis to Non-Institutional Bidders, subject to valid Bids being received at or above the Issue Price.

Bidders are required to submit their Bids through the Syndicate. Our Company, in consultation with the BRLM andthe Lead Manager, reserves the right to reject any Bid procured from QIBs, by any or all members of the Syndicate,without assigning any reason therefor. In case of Non- Institutional Bidders and Retail Individual Bidders, the Companywould have a right to reject the Bids only on technical grounds. Investors should note that the Equity Shares wouldbe allotted to all successful Bidders only in the dematerialised form. Bidders will not have the option of gettingAllotment in physical form. The Equity Shares on allotment shall be traded only in the dematerialised segment of theStock Exchanges.

Bid cum Application FormBidders shall only use the specified Bid cum Application Form bearing the stamp of a member of the Syndicate forthe purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall have the option to makea maximum of three Bids in the Bid cum Application Form and such options shall not be considered as multiple Bids.Upon the allocation of Equity Shares, dispatch of the CAN, and filing of the Prospectus with the RoC, the Bid cumApplication Form shall be considered as the Application Form. Upon completing and submitting the Bid cum ApplicationForm to a member of the Syndicate, the Bidder is deemed to have authorised the Company to make the necessarychanges in this Draft Red Herring Prospectus and the Bid cum Application Form as would be required for filing theProspectus with the RoC and as would be required by RoC after such filing, without prior or subsequent notice ofsuch changes to the Bidder.

The prescribed colour of the Bid cum Application Form for various categories, is as follows:

Category Colour of Bid cum Application FormIndian public, NRIs applying on a non-repatriation basis WhiteNon-Residents, NRIs or FIIs applying on a repatriation basis BlueQIBs Pink

Who can Bid1. Indian nationals resident in India who are majors, or in the names of their minor children as natural/legal

guardians, in single or joint names (not more than three);2. Hindu undivided families or HUFs in the individual name of the Karta. The Bidder should specify that the Bid is

being made in the name of the HUF in the Bid cum Application Form as follows: “Name of Sole or First Bidder:XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta”. Bids by HUFswould be considered at par with those from individuals;

3. Insurance companies registered with the Insurance Regulatory and Development Authority, India;4. As permitted by the applicable laws, provident funds with minimum corpus of Rs. 250 million and who are

authorised under their constitution to invest in equity shares;5. Pension funds with a minimum corpus of Rs. 250 million and who are authorised under their constitution to

invest in equity shares;6. Companies, corporate bodies and societies registered under the applicable laws in India and authorised to

invest in equity shares;7. Indian mutual funds registered with SEBI;8. Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to the RBI

regulations and the SEBI guidelines and regulations, as applicable);9. Multilateral and bilateral development financial institutions;10. State Industrial Development Corporations;11. Trusts/societies registered under the Societies Registration Act, 1860, as amended, or under any other law

relating to trusts/societies and who are authorised under their constitution to hold and invest in equity shares;12. Eligible Non-Residents including NRIs and FIIs on a repatriation basis or a non-repatriation basis subject to

applicable laws; and13. Scientific and/or industrial research organizations authorised to invest in equity shares.14. Any other OIB’S permitted to invest.

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15. Venture capital funds registered with SEBI.As per existing regulations, OCBs cannot bid in the offer.

Note: The BRLM and the Lead Manager, Syndicate Members and any associate of the BRLM and the LeadManager and Syndicate Members (except asset management companies on behalf of mutual funds, Indian financialinstitutions and public sector banks) cannot participate in that portion of the Issue where allocation is discretionary,unless specifically permitted by SEBI. However, pursuant to recent amendments to SEBI Guidelines, there is nolonger (any) discretionary portion in the Issue. Further, the BRLM and the Lead Manager and Syndicate Membersshall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligation.

Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximumnumber of Equity Shares that can be held by them under applicable law.

Maximum and Minimum Bid Size(a) For Retail Individual Bidders: The Bid must be for a minimum of [•] Equity Shares and in multiples of [•] Equity

Shares thereafter and it must be ensured that the Bid Amount payable by the Bidder does not exceed Rs.100,000. In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does notexceed Rs. 100,000. In case the Bid Amount is over Rs. 100,000 due to revision of the Bid or revision of thePrice Band or on exercise of option to bid at Cut-off Price, the Bid would be considered for allocation under theNon Institutional Portion. The option to bid at Cut-off Price is an option given only to the Retail IndividualBidders indicating their agreement to Bid and purchase at the final Issue Price as determined at the end of theBook Building Process.

(b) For Other Bidders (i.e. Non-Institutional Bidders and QIB Bidders): The Bid must be for a minimum of suchnumber of Equity Shares such that the Bid Amount exceeds Rs. 100,000 and in multiples of [ •] Equity Shares.A Bid cannot be submitted for more than the Issue size. However, the maximum Bid by a QIB investor shouldnot exceed the investment limits prescribed for them by applicable laws. Under existing SEBI Guidelines, a QIBBidder cannot withdraw its Bid after the Bid Closing Date/Issue Closing Date and is now required to pay a 10%margin amount (upon submission of the Bid-cum-Application Form). Bidders are advised to ensure that anysingle bids from them does not exceed the investment limits or maximum number of equity shares that can beheld by them under the applicable law or regulations or as specified in the Draft Red Herring Prospectus. In caseof revision in Bids, the Non Institutional Bidders, who are individuals, have to ensure that the Bid Amount isgreater than Rs. 100,000 for being considered for allocation in the Non Institutional Portion. In case the BidAmount reduces to Rs. 100,000 or less due to a revision in Bids or revision of the Price Band, Bids by NonInstitutional Bidders who are eligible for allocation in the Retail Portion would be considered for allocation underthe Retail Portion. Non Institutional Bidders and QIB Bidders are not entitled to the option of bidding at Cut-offPrice.

Information for the Bidders:a) Our Company has filed the Red Herring Prospectus with the RoC at least three days before the Bid Opening

Date/Issue Opening Date.b) The members of the Syndicate will circulate copies of the Red Herring Prospectus along with the Bid cum

Application Form to potential investors.c) Any investor (who is eligible to invest in our Equity Shares) who would like to obtain the Red Herring Prospectus

and/or the Bid cum Application Form can obtain the same from our registered office or from any of the membersof the Syndicate.

d) The Bids should be submitted on the prescribed Bid cum Application Form only. Bid cum Application Formsshould bear the stamp of a member of the Syndicate. Bid cum Application Forms, which do not bear the stampof a member of the Syndicate will be rejected.

· Eligible investors who are interested in subscribing for the equity shares should approach any of the BRLMs orSyndicate Members or their authorised agents to register their Bids.

Method and Process of Biddinga) Our Company and the BRLM and the Lead Manager shall declare the Bid Opening Date/Issue Opening Date

and the Bid Closing Date/Issue Closing Date at the time of filing the Draft Red Herring Prospectus with RoC andalso publish the same in two widely circulated newspapers (one each in English and Hindi) and a regionalnewspaper. This advertisement shall contain the salient features of the Draft Red Herring Prospectus as specifiedunder Form 2A of the Companies Act and shall contain the minimum disclosures as specified under ScheduleXX-A of the SEBI Guidelines. The Syndicate Members shall accept Bids from the Bidders during the Issue

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Period in accordance with the terms of the Syndicate Agreement.b) Investors who are interested in subscribing to our Equity Shares should approach any of the members of the

Syndicate or their authorised agent(s) to register their Bid. Every members of the Syndicate shall accept bidsfrom investors who place orders through them and shall have the right to vet the bids.

c) The Bidding Period shall be a minimum of three working days and shall not exceed seven working days. In casethe Price Band is revised, the revised Price Band and Bidding Period will be published in two national newspapers(one each in English and Hindi) and the Bidding Period may be extended, if required, by an additional threedays, subject to the total Bidding Period not exceeding 10 working days.

d) Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional prices (for detailssee section titled “Issue Procedure - Bids at Different Price Levels” on page [•] ) of this Draft Red HerringProspectus within the Price Band and specify the demand (i.e. the number of Equity Shares bid for) in eachoption. The price and demand options submitted by the Bidder in the Bid cum Application Form will be treatedas optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, themaximum number of Equity Shares Bid for by a Bidder at or above the Issue Price will be considered forallocation and the rest of the Bid(s), irrespective of the Bid Price, will become automatically invalid.

e) The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum Application Form havebeen submitted to any member of the Syndicate. Submission of a second Bid cum Application Form to either thesame or to another member of the Syndicate will be treated as multiple Bids and is liable to be rejected eitherbefore entering the Bid into the electronic bidding system, or at any point of time prior to the allocation orallotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, theprocedure for which is detailed under the paragraph “Issue Procedure - Build up of the Book and Revision ofBids” on page [•] of this Draft Red Herring Prospectus.

f) The Syndicate Members will enter each Bid option into the electronic bidding system as a separate Bid andgenerate a Transaction Registration Slip (“TRS”), for each price and demand option and give the same to theBidder. Therefore, a Bidder can receive up to three TRSs for each Bid cum Application Form.

g) During the Bidding Period, Bidders may approach the members of the Syndicate to submit their Bid. Everymember of the Syndicate shall accept Bids from all clients/investors who place orders through them and shallhave the right to vet the Bids.

h) Along with the Bid cum Application Form, all Bidders will make payment in the manner described under theparagraph titled “Issue Procedure - Terms of Payment and Payment into the Escrow Account” on page [•] of thisDraft Red Herring Prospectus.

Bids at Different Price Levelsa) The Price Band will be advertised at least one day prior to the Bid Opening Date/Issue Opening Date in [•], an

English language newspaper with wide circulation, [•] a Hindi language newspaper with wide circulation [•] .The Bidders can bid at any price within the Price Band, in multiples of Re. 1.

b) In accordance with the SEBI Guidelines, our Company reserves the right to revise the Price Band during theBidding Period. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subjectto compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to theextent of 20% of the floor of the Price Band advertised at least one day prior to the Bid Opening Date/IssueOpening Date in [•] an English language newspaper with wide circulation, [•] , a Hindi language newspaper withwide circulation [•] .

c) In case of revision in the Price Band, the Issue Period will be extended for three additional days after revision ofPrice Band subject to a maximum of 10 working days. Any revision in the Price Band and the revised BiddingPeriod/Issue Period, if applicable, will be widely disseminated by notification to the BSE and the NSE, by issuinga public notice in two national newspapers (one each in English and Hindi) and a regional newspaper, and alsoby indicating the change on the websites of the BRLM and the Lead Manager and at the terminals of themembers of the Syndicate.

d) We, in consultation with the BRLM and the Lead Manager, can finalise the Issue Price within the Price Band inaccordance with this clause, without the prior approval of, or intimation to, the Bidders.

e) The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired number of EquityShares at a specific price. Retail Individual Bidders may bid at Cut-off Price. However, bidding at Cut-off Price isprohibited for QIB or Non Institutional Bidders and such Bids from QIBs and Non Institutional Bidders shall berejected.

f) Retail Individual Bidders who bid at Cut-off Price agree that they shall purchase the Equity Shares at any pricewithin the Price Band. Retail Individual Bidders bidding at Cut-Off Price shall deposit the Bid Amount based onthe Cap Price in the Escrow Account. In the event the Bid Amount is higher than the subscription amount

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payable by the Retail Individual Bidders, who Bid at Cut-off Price (i.e. the total number of Equity Shares allocatedin the Issue multiplied by the Issue Price), the Retail Individual Bidders, who Bid at Cut-off Price, shall receivethe refund of the excess amounts from the Escrow Account.

g) In case of an upward revision in the Price Band announced as above, Retail Individual Bidders, who had bid atCut-off Price could either (i) revise their Bid or (ii) make additional payment based on the cap of the revised PriceBand (such that the total amount i.e. original Bid Amount plus additional payment does not exceed Rs. 100,000if the Bidder wants to continue to bid at Cut-off Price), with the Syndicate Member to whom the original Bid wassubmitted. In case the total amount (i.e. original Bid Amount plus additional payment) exceeds Rs. 100,000, theBid will be considered for allocation under the Non-Institutional Portion in terms of this Draft Red HerringProspectus. If, however, the Bidder does not either revise the Bid or make additional payment and the IssuePrice is higher than the cap of the Price Band prior to revision, the number of Equity Shares bid for shall beadjusted downwards for the purpose of allotment, such that no additional payment would be required from theBidder and the Bidder is deemed to have approved such revised Bid at Cut-off Price.

h) In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders, who have bidat Cut-off Price could either revise their Bid or the excess amount paid at the time of bidding would be refundedfrom the Escrow Account.

i) In the event of any revision in the Price Band, whether upwards or downwards, the minimum application sizeshall remain [•] Equity Shares irrespective of whether the Bid Amount payable on such minimum application isnot in the range of Rs.5,000 to Rs. 7,000.

Application in the IssueEquity Shares being issued through this Draft Red Herring Prospectus can be applied for in the dematerialized formonly.

Bids by Mutual FundsMultiple BidsIn case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered withSEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bidsprovided that the Bids clearly indicate the scheme for which the Bid has been made.

As per the current regulations, the following restrictions are applicable for investments by mutual funds:

No mutual fund scheme shall invest more than 10% of its net asset value in equity shares or equity related instrumentsof any company provided that the limit of 10% shall not be applicable for investments in index funds or sector orindustry specific funds. No mutual fund under all its schemes should own more than 10% of any company’s paid-upcapital carrying voting rights.

The above information is given for the benefit of the Bidders. Our Company and the BRLM and the Lead Managerare not liable for any amendments or modification or changes in applicable laws or regulations, which may happenafter the date of this Red Herring Prospectus. Bidders are advised to make their independent investigations andensure that the number of Equity Shares bid for do not exceed the applicable limits under laws or regulations.

Bids by NRIsNRI Bidders to comply with the following:

1) Individual NRI Bidders can obtain the Bid cum Application Forms from our Registered Office, our corporateoffice, members of the Syndicate or the Registrar to the Issue.

2) NRI Bidders may please note that only such Bids as are accompanied by payment in free foreign exchangeshall be considered for allotment. NRIs who intend to make payment through Non-Resident Ordinary (NRO)accounts shall use the Bid cum Application Form meant for resident Indians (White in color).

Escrow MechanismWe shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall makeout the cheque or demand draft in respect of his or her Bid and/or revision of the Bid. Cheques or demand draftsreceived for the full Bid Amount from Bidders in a certain category would be deposited in the Escrow Account. TheEscrow Collection Banks will act in terms of this Draft Red Herring Prospectus and the Escrow Agreement. Themonies in the Escrow Account shall be maintained by the Escrow Collection Bank(s) for and on behalf of theBidders. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited thereinand shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banksshall transfer the monies from the Escrow Account to the Issue Account as per the terms of the Escrow Agreement.

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Payments of refund to the Bidders shall also be made from the Escrow Account as per the terms of the EscrowAgreement and this Draft Red Herring Prospectus.

The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as anarrangement between us, the Syndicate, the Escrow Collection Bank(s) and the Registrar to the Issue to facilitatecollections from the Bidders.

Terms of Payment and Payment into the Escrow AccountsEach Bidder, who is required to pay Margin Amount greater than 10% shall, with the submission of the Bid cumApplication Form draw a cheque or demand draft for the maximum amount of his/ her Bid in favour of the EscrowAccount of the Escrow Collection Bank(s) (for details refer to the paragraph titled “Issue Procedure - PaymentInstructions” on page [•] of this Draft Red Herring Prospectus) and submit the same to the member of the Syndicateto whom the Bid is being submitted. Bid cum Application Forms accompanied by cash shall not be accepted. Themaximum Bid price has to be paid at the time of submission of the Bid cum Application Form based on the highestbidding option of the Bidder.

The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), whichwill hold the monies for the benefit of the Bidders till the Designated Date. On the Designated Date, the EscrowCollection Bank(s) shall transfer the funds equivalent to the size of the Issue from the Escrow Account, as per theterms of the Escrow Agreement, into the Issue Account of the Company with the Banker(s) to the Issue. Thebalance amount after transfer to the Issue Account shall be held for the benefit of the Bidders who are entitled torefunds on the Designated Date, and no later than 15 days from the Bid Closing Date/Issue Closing Date, theEscrow Collection Bank(s) shall refund all monies to unsuccessful Bidders and also the excess amount paid onbidding, if any, after adjustment for allotment to the Bidders.

Each category of Bidders i.e. QIB Bidders, Non Institutional Bidders and Retail Individual Bidders would be requiredto pay their applicable Margin Amount at the time of the submission of the Bid cum Application Form. The MarginAmount payable by each category of Bidders is mentioned in the section titled “Issue Structure” on page [•] of thisDraft Red Herring Prospectus. Where the Margin Amount applicable to the Bidder is less than 100% of the BidAmount, any difference between the amount payable by the Bidder for Equity Shares allocated at the Issue Priceand the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date,which shall be a minimum period of two days from the date of communication of the allocation list to the membersof the Syndicate by the BRLM and the Lead Manager. If the payment is not made favouring the Escrow Accountwithin the time stipulated above, the Bid of the Bidder is liable to be cancelled. However, if the members of theSyndicate do not waive such payment, the full amount of payment has to be made at the time of submission of theBid cum Application Form.

Where the Bidder has been allocated lesser number of Equity Shares than he or she or it had bid for, the excessamount paid on bidding, if any, after adjustment for allotment, will be refunded to such Bidder within 15 days fromthe Bid Closing Date/Issue Closing Date, failing which we shall pay interest at 15% per annum for any delaybeyond the periods as mentioned above.

Electronic Registration of Bidsa) The Syndicate Members will register the Bids using the on-line facilities of the BSE and the NSE. There will be

at least one on-line connectivity in each city, where a stock exchange is located in India and where Bids arebeing accepted.

b) The BSE and the NSE will offer a screen-based facility for registering Bids for the Issue. This facility will beavailable on the terminals of the Syndicate Members and their authorised agents during the Bidding Period.The Syndicate Members can also set up facilities for off-line electronic registration of Bids subject to the conditionthat they will subsequently download the off-line data file into the on-line facilities for book building on a regularbasis. On the Bid Closing Date/Issue Closing Date, the Syndicate Members shall upload the Bids till such timeas may be permitted by the Stock Exchanges.

c) The aggregate demand and price for Bids registered on the electronic facilities of the BSE and the NSE will bedownloaded on a regular basis, consolidated and displayed on-line at all bidding centers. A graphicalrepresentation of consolidated demand and price would be made available at the bidding centers during thebidding period.

d) At the time of registering each Bid, the members of the Syndicate shall enter the following details of the investorin the on-line system:

· Name of the investor

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· Investor category – individual, corporate, eligible NRI, FII, or mutual fund etc.· Numbers of Equity Shares bid for Bid price· Bid cum Application Form number· Whether payment is made upon submission of Bid cum Application Form· Depository participant identification no. and client identification no. of the beneficiary account of the Bidder/of

the demat account of the Biddere) A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding options.

It is the Bidder’s responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bidby the member of the Syndicate does not guarantee that the Equity Shares shall be allocated either by themembers of the Syndicate or our Company.

f) Such TRS will be non-negotiable and by itself will not create any obligation of any kind.g) Consequently, the member of the Syndicate also has the right to review the bid, accept the Bid or reject it without

assigning any reason therefor, in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders,Bids would not be rejected except on the technical grounds listed elsewhere in this Draft Red Herring Prospectus.

h) It is to be distinctly understood that the permission given by the BSE and the NSE to use their network andsoftware of the Online IPO system should not in any way be deemed or construed to mean that the compliancewith various statutory and other requirements by our Company or the BRLM and the Lead Manager are clearedor approved by the BSE and the NSE; nor does it in any manner warrant, certify or endorse the correctness orcompleteness of compliance with the statutory and other requirements nor does it take any responsibility for thefinancial or other soundness of our Company, our Promoters, our management or any scheme or project of ourCompany.

i) It is also to be distinctly understood that the approval given by the BSE and the NSE should not in any way bedeemed or construed that this Draft Red Herring Prospectus has been cleared or approved by the BSE and theNSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of thecontents of this Draft Red Herring Prospectus; nor does it warrant that our Equity Shares will be listed or willcontinue to be listed on the BSE and the NSE.

Build Up of the Book and Revision of Bidsa) Bids registered by various Bidders through the Syndicate Members shall be electronically transmitted to the

BSE or the NSE mainframe on a regular basis.b) The book gets built up at various price levels. This information will be available with the BRLM and the Lead

Manager on a regular basis.c) During the Bidding Period/Issue Period, any Bidder who has registered his or her interest in the Equity Shares at

a particular price level is free to revise his or her Bid within the Price Band using the printed Revision Form whichis a part of the Bid cum Application Form.

d) Revisions can be made in both the desired number of Equity Shares and the Bid price by using the RevisionForm. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details ofall the options in his or her Bid cum Application Form or earlier Revision Form. For example, if a Bidder has Bidfor three options in the Bid cum Application Form and he is changing only one of the options in the RevisionForm, he must still fill the details of the other two options that are not being changed in the Revision Form.Incomplete or inaccurate Revision Forms will not be accepted by the members of the Syndicate.

e) The Bidder can make this revision any number of times during the Bidding Period. However, for any revision(s)in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he orshe had placed the original Bid. Bidders are advised to retain copies of the blank Revision Form and the revisedBid must be made only in such Revision Form or copies thereof.

f) Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incrementalamount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resultingfrom downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with theterms of this Draft Red Herring Prospectus. In case of QIBs, the members of the Syndicate may at their solediscretion waive the payment requirement at the time of one or more revisions by the QIB Bidders.

g) When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from themembers of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, whichwill act as proof of his or her having revised the previous Bid.

h) In case of discrepancy of data between the BSE or the NSE and the members of the Syndicate, the decision ofthe BRLM, based on the physical records of Bid cum Application Forms, shall be final and binding on allconcerned.

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Price Discovery and Allocationa) After the Bid Closing Date/Issue Closing Date, the BRLM and the Lead Manager will analyse the demand

generated at various price levels and discuss pricing strategy with us.b) Our Company in consultation with the BRLM and the Lead Manager, shall finalise the “Issue Price”, the number

of Equity Shares to be allotted in each category and the allocation to successful QIB Bidders. The allocation willbe decided based, inter alia, on the quality of the Bidder, size, price and time of the Bid.

c) The allocation for QIBs for up to 50% of the Issue would be on a proportionate basis (with a minimum 5%allocation of the QIB Portion reserved for Mutual Funds, and such other Mutual Funds can participate in theremaining [•]% allocation for QIBS). The allocation to Non-Institutional Bidders and Retail Individual Bidders ofnot less than 15% and 35% of the Issue, respectively, would be on proportionate basis, in the manner specifiedin the SEBI Guidelines and this Draft Red Herring Prospectus, in consultation with Designated Stock Exchange,subject to valid Bids being received at or above the Issue Price.

d) Under subscription, if any, in any category would be allowed to be met with spill over from any of the othercategories at the discretion of our Company in consultation with the BRLM and the Lead Manager.

e) The BRLM and the Lead Manager, in consultation with us, shall notify the members of the Syndicate of the IssuePrice and allocations to their respective Bidders, where the full Bid Amount has not been collected from theBidders.

f) Allocation to eligible Non-Residents/FIIs applying on repatriation basis will be subject to the applicable law.g) We reserve the right to cancel the Issue any time after the Bid Opening Date/Issue Opening Date but before the

Allotment without assigning any reasons whatsoever.h) In terms of the SEBI Guidelines, QIBs shall not be allowed to withdraw their Bid after the Bid Closing Date/Issue

Closing Date.

Signing of Underwriting Agreement and RoC Filinga) We, the BRLM and THE Lead Manager And the Syndicate Members shall enter into an Underwriting Agreement

on finalisation of the Issue Price and allocation(s) to the Bidders.b) After signing the Underwriting Agreement, we would update and file the updated Draft Red Herring Prospectus

with the RoC, which then would be termed ‘Prospectus’. The Prospectus would have details of the Issue Priceand Issue size and would be complete in all material respects.

Advertisement regarding Issue Price and ProspectusA statutory advertisement will be issued by our Company after the filing of the Prospectus with the RoC. Thisadvertisement, in addition to the information that has to be set out in the statutory advertisement, shall indicate theIssue Price. Any material updates between the date of Draft Red Herring Prospectus and the date of Prospectuswill be included in such statutory advertisement.

Issuance of CANa) The BRLM or the Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who

have been allocated Equity Shares in the Issue.b) The BRLM or the members of the Syndicate would then send the CAN to their Bidders who have been allocated

Equity Shares in the Issue. The dispatch of a CAN shall be deemed a valid, binding and irrevocable contract forthe Bidder to pay the entire Issue Price for all the Equity Shares allocated to such Bidder. Those Bidders whohave not paid into the Escrow Account at the time of bidding shall pay in full the amount payable into the EscrowAccount by the Pay-in Date specified in the CAN.

c) Bidders who have been allocated Equity Shares and who have already paid into the Escrow Account at the timeof bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realisation of theircheque or demand draft paid into the Escrow Account. The dispatch of a CAN shall be deemed as a valid,binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares to beallotted to such Bidder.

Designated Date and Allotment of Equity Sharesa) Our Company will ensure that the Allotment of Equity Shares is done within 15 days of the Bid Closing Date/

Issue Closing Date. After the funds are transferred from the Escrow Account to the Issue Account on the DesignatedDate, our Company would ensure the credit to the successful Bidders’ depository accounts of the allotted EquityShares to the allottees within two working days of the date of Allotment.

b) As per the SEBI Guidelines, Equity Shares will be issued and allotted only in the dematerialised form to theallottees. Allottees will have the option to re-materialise the Equity Shares so allotted, if they so desire, as per theprovisions of the Companies Act and the Depositories Act.

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Investors are advised to instruct their Depository Participant to accept the Equity Shares that may beallocated to them pursuant to this Issue.

GENERAL INSTRUCTIONSDo’s:a) Check if you are eligible to apply having regard to applicable laws, rules, regulations, guidelines and approvals

and the terms of Red Herring Prospectus;b) Read all the instructions carefully and complete the Bid cum Application Form (white or blue in colour) as the

case may be;c) Ensure that the details about your Depository Participant and beneficiary account are correct as Equity Shares

will be allotted in the dematerialized form only;d) Ensure that the Bids are submitted at the bidding centers only on forms bearing the stamp of a member of the

Syndicate;e) Ensure that you have been given a TRS for all your Bid options;f) Submit Revised Bids to the same member of the Syndicate through whom the original Bid was placed and

obtain a revised TRS; andg) Where Bid(s) is/are for Rs. 50,000 or more, you or in the case of a Bid in joint names, each of the Bidders, should

mention your/ his/her Permanent Account Number (PAN) allotted under the IT Act. The copy of the PAN card orPAN allotment letter should be submitted with the application form.

h) If you have mentioned “Applied For” or “Not Applicable”, in the Bid cum Application Form in the section dealingwith PAN number, ensure that you submit Form 60 or 61, as the case may be, together with permissible documentsas address proof .

i) Ensure that the name(s) given in the Bid cum Application Form is exactly the same as the name(s) in which thebeneficiary account is held with the Depository Participant. In case the Bid cum Application Form is submittedin joint names, ensure that the beneficiary account is also held in same joint names and such names are in thesame sequence in which they appear in the Bid cum Application Form.

Don’ts:a) Do not Bid for lower than the minimum Bid size;b) Do not Bid/revise Bid price to less than the lower end of the Price Band or higher than the higher end of the Price

Band;c) Do not Bid on another Bid cum Application Form after you have submitted a Bid to the members of the Syndicate;d) Do not pay the Bid amount in cash;e) Do not send Bid cum Application Forms by post; instead submit the same to a member of the Syndicate only;f) Do not Bid at Cut-off Price (for QIB Bidders and Non-Institutional Bidders);g) Do not fill up the Bid cum Application Form such that the Equity Shares bid for exceeds the Issue size and/or

investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulationsor maximum amount permissible under the applicable regulations;

h) Do not submit Bid accompanied with Stockinvestsi) Do not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground.

INSTRUCTIONS FOR COMPLETING THE BID CUM APPLICATION FORMBidders can obtain Bid cum Application Forms and/or Revision Forms from the members of the Syndicate.

Bids and Revisions of BidsBids and revisions of Bids must be:a) Made only in the prescribed Bid cum Application Form or Revision Form, as applicable (White or Blue colour).b) Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions contained herein, in

the Bid cum Application Form or in the Revision Form. Incomplete Bid cum Application Forms or Revision Formsare liable to be rejected.

c) The Bids from the Retail Individual Bidders must be for a minimum of [•] Equity Shares and in multiples of [•]Equity Shares thereafter subject to a maximum Bid Amount of Rs. 100,000.

d) For Non-Institutional Bidders and QIB Bidders, Bids must be for a minimum of such number of Equity Sharessuch that the Bid Amount exceeds Rs. 100,000 and in multiples of [•] Equity Shares. Bids cannot be made formore than the Issue size. Bidders are advised to ensure that a single Bid from them should not exceed theinvestment limits or maximum number of shares that can be held by them under the applicable laws or regulations.

e) In single name or in joint names (not more than three, and in the same order as their Depository Participantdetails).

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f) Thumb impressions and signatures other than in the languages specified in the Eighth Schedule in the Constitutionof India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

Bidder’s Bank DetailsBidders should note that on the basis of name of the Bidders, Depository Participant’s name and identificationnumber and the beneficiary account number provided by them in the Bid cum Application Form, the Registrar to theIssue will obtain from the Depository the details of the Bidder’s bank account. These bank account details wouldbe printed on the refund order, if any, to be sent to Bidders. Hence, Bidders are advised to immediatelyupdate their bank account details as appearing on the records of the Depository Participant. Please notethat failure to do so could result in delays in credit of refunds to Bidders at the Bidders sole risk and neither theBRLM nor the Company shall have any responsibility and undertake any liability for the same.

Bidder’s Depository Account DetailsIT IS MANDATORY FOR ALL THE BIDDERS TO GET THE EQUITY SHARES IN DEMATERIALISED FORM. ALLBIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANTIDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID CUM APPLICATION FORM.INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLYTHE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID CUMAPPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORYACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEYAPPEAR IN THE BID CUM APPLICATION FORM.

Bidders should note that on the basis of name of the Bidders, Depository Participant’s name and identificationnumber and beneficiary account number provided by them in the Bid cum Application Form, the Registrar tothe Issue will obtain from the Depository demographic details of the Bidders such as address, bank accountdetails for printing on refund orders and occupation (“Demographic Details”). Hence, Bidders should carefullyfill in their Depository Account details in the Bid cum Application Form.

These Demographic Details would be used for all correspondence with the Bidders including mailing of the refundorders/CANs/allocation advices and printing of bank particulars on the refund orders.

Hence, Bidders are advised to update their Demographic Details as provided to their Depository Participants andensure that they are true and correct.

By signing the Bid cum Application Form, the Bidder would deemed to have authorised the Depositories to provide,upon request, to the Registrar to the Issue, the required Demographic Details as available on its records.

Refund orders/allocation advices/CANs would be mailed at the address of the Bidder as per the DemographicDetails received from the Depositories. Bidders may note that delivery of refund orders/allocation advice/CANs mayget delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In suchan event, the address and other details given by the Bidder in the Bid cum Application Form would be used only toensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk and neither theBank nor the BRLM shall be liable to compensate the Bidder for any losses caused to the Bidder due to any suchdelay or liable to pay any interest for such delay.

In case no corresponding record is available with the Depositories that matches three parameters, namely, names ofthe Bidders (including the order of names of joint holders), the Depository Participant’s identity (DP ID) and thebeneficiary account number, then such Bids are liable to be rejected.

Bids under Power of AttorneyIn case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered societies,a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with acertified copy of the memorandum and articles of association and/or bye laws must be lodged along with the Bid cumApplication Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in eithercase, without assigning any reason therefor.

In case of the Bids made pursuant to a power of attorney by FIIs, a certified copy of the power of attorney or therelevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificatemust be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to accept orreject any Bid in whole or in part, in either case, without assigning any reason therefor.

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In case of the Bids made by insurance companies registered with the Insurance Regulatory and DevelopmentAuthority, a certified copy of certificate of registration issued by Insurance Regulatory and Development Authoritymust be lodged along with the Bid cum Application Form. Failing this, our Company reserves the right to accept orreject any Bid in whole or in part, in either case, without assigning any reason therefor.

In case of the Bids made by provident funds, subject to applicable law, with minimum corpus of Rs. 250 million andpension funds with minimum corpus of Rs. 250 million, a certified copy of certificate from a chartered accountantcertifying the corpus of the provident fund/pension fund must be lodged along with the Bid cum Application Form.Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, withoutassigning any reason therefor.

We, in our absolute discretion, reserve the right to relax the above condition of simultaneous lodging of the power ofattorney along with the Bid cum Application Form, subject to such terms and conditions that we/the BRLM maydeem fit.

We, in our absolute discretion, reserve the right to permit the holder of the power of attorney to request the Registrarthat for the purpose of printing particulars on the refund order and mailing of the refund order/CANs/allocationadvice, the Demographic Details given on the Bid cum Application Form should be used (and not those obtainedfrom the Depository of the Bidder). In such cases, the Registrar shall use Demographic Details as given in the Bidcum Application Form instead of those obtained from the depositories.

Bids by Non-Residents, NRIs and FIIs on a repatriation basisBids and revision to the Bids must be made:

1. On the Bid cum Application Form or the Revision Form, as applicable (blue in color), and completed in fullin BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein.

2. In a single name or joint names (not more than three).3. NRIs for a Bid Amount of up to Rs. 100,000 would be considered under the Retail Portion for the purposes

of allocation and Bids for a Bid Amount of more than Rs. 100,000 would be considered under Non-InstitutionalPortion for the purposes of allocation; by other eligible Non-Resident Bidders for a minimum of suchnumber of Equity Shares and in multiples of [? ] thereafter that the Bid Amount exceeds Rs. 100,000. Forfurther details see “Issue Procedure - Maximum and Minimum Bid Size” on page [•] of this Draft RedHerring Prospectus.

4. In the names of individuals, or in the names of FIIs but not in the names of minors, OCBs, firms orpartnerships, foreign nationals (excluding NRIs) or their nominees.

Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank chargesand/or commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, suchpayments in Indian Rupees will be converted into U.S. Dollars or any other freely convertible currency as may bepermitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registeredpost or if the Bidders so desire, will be credited to their Non-Resident External (NRE) accounts, details of whichshould be furnished in the space provided for this purpose in the Bid cum Application Form. We will not be responsiblefor loss, if any, incurred by the Bidder on account of conversion of foreign currency.

It is to be distinctly understood that there is no reservation for Non-Residents, NRIs and FIIs and all Non-Residents,NRI and FII applicants will be treated on the same basis with other categories for the purpose of allocation. As perthe existing policy of the Government of India, OCBs cannot participate in this Issue.

PAYMENT INSTRUCTIONSWe shall open Escrow Accounts with the Escrow Collection Bank(s) for the collection of the Bid Amounts payableupon submission of the Bid cum Application Form and for amounts payable pursuant to allocation in the Issue.

Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per thefollowing terms:

Payment into Escrow Accounti.) The Bidders for whom the applicable margin is equal to 100% shall, with the submission of the Bid cum

Application Form draw a payment instrument for the Bid Amount in favour of the Escrow Account and submitthe same to the members of the Syndicate.

ii.) In case the above Margin Amount paid by the Bidders during the Bidding Period is less than the Issue Pricemultiplied by the Equity Shares allocated to the Bidder, the balance amount shall be paid by the Bidders into

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the Escrow Account within the period specified in the CAN which shall be subject to a minimum period of twodays from the date of communication of the allocation list to the members of the Syndicate by the BRLM.

iii.) The payment instruments for payment into the Escrow Account should be drawn in favour of:a) In case of Resident Bidders: “Escrow Account – LUMAX Public Issue”b) In case of Non-Resident Bidders: “Escrow Account – LUMAX Public Issue - NR”c) In case of QIB Bidders: “Escrow Account – LUMAX Public Issue - QIB”

In case of Bids by NRIs applying on repatriation basis, the payments must be made through IndianRupee drafts purchased abroad or cheques or bank drafts, for the amount payable on applicationremitted through normal banking channels or out of funds held in NRE accounts or Foreign CurrencyNon-Resident (FCNR) accounts, maintained with banks authorised to deal in foreign exchange in India,along with documentary evidence in support of the remittance. Payment will not be accepted out ofNon-Resident Ordinary (NRO) Account of Non-Resident Bidder bidding on a repatriation basis. Paymentby drafts should be accompanied by bank certificate confirming that the draft has been issued bydebiting to NRE or FCNR account.

In case of the payment of the Bid Amount has been waived by a member of the Syndicate during theBidding/offer period, on receipt of the CAN, an amount equal to the offer price multiplied by the equityshares allocated for the bidders shall be paid by the bidders into the escrow account within the periodspecified in the CAN which shall be a minimum period of two days from the date of communications ofthe allocation list to the members of the Syndicate by the BRLMs.

In case of Bids by FIIs, the payment should be made out of funds held in Special Rupee Account alongwith documentary evidence in support of the remittance. Payment by drafts should be accompanied bybank certificate confirming that the draft has been issued by debiting to a Special Rupee Account.

iv.) Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the excessamount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Sharesallocated, will be refunded to the Bidder from the Escrow Account.

v.) The monies deposited in the Escrow Account will be held for the benefit of the Bidders till the DesignatedDate.

vi.) On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account asper the terms of the Escrow Agreement into the Issue Account.

vii.) No later than 15 days from the Bid Closing Date/Issue Closing Date, the Escrow Collection Banks shall refundall amounts payable to unsuccessful Bidders and the excess amount paid on Bidding, if any, after adjustingfor allocation to the Bidders.

Payment should be made by cheque or demand draft drawn on any bank (including a co-operative bank) which issituated at and is a member of, or sub-member of the bankers clearing house, located at the centre where the Bidcum Application Form is submitted. Outstation cheques/bank drafts on banks not participating in the clearing processwill not be accepted and applications accompanied by such cheques/bank drafts are liable to be rejected. Cash/money orders/postal orders will not be accepted.

Payment by StockinvestsIn terms of the Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5,2003, the option to use the stockinvests instrument in lieu of cheques or bank drafts for payment of Bid money hasbeen withdrawn.

SUBMISSION OF BID CUM APPLICATION FORMAll Bids cum Application Forms or Revision Forms duly completed and accompanied by account payee cheques ordrafts shall be submitted to the members of the Syndicate at the time of submission of the Bid. Member of theSyndicate may at its sole discretion waive the requirement of payment at the time of submission of the Bid cumApplication Form and Revision Form. In case of QIB bidders subject to the payment of a minimum of 10% marginamount.

Separate receipts shall not be issued for the money payable on the submission of Bid cum Application Form orRevision Form. However, the collection center of the members of the Syndicate will acknowledge the receipt of theBid cum Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip.This acknowledgement slip will serve as the duplicate of the Bid cum Application Form for the records of the Bidder.

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OTHER INSTRUCTIONSJoint Bids in case of IndividualsBids may be made in single or joint names (not more than three). In case of joint Bids, all payments will be made outin favour of the Bidder whose name appears first in the Bid cum Application Form or Revision Form (“First Bidder”).All communication will be addressed to the first Bidder and will be dispatched to his or her address.

Multiple BidsA Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two ormore Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same.

In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered withSEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bidsprovided that the Bids clearly indicate the scheme for which the Bid has been made.

We reserve the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories.]

‘PAN’ or ‘GIR’ NumberWhere Bid(s) is/are for Rs. 50,000 or more, the Bidder or in the case of a Bid in joint names, each of the Bidders,should mention his/ her Permanent Account Number (PAN) allotted under the IT Act. The copy of the PAN card orPAN allotment letter is required to be submitted with the application form. Applications without this information anddocuments will be considered incomplete and are liable to be rejected. It is to be specifically noted that Biddersshould not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case thesole/first Bidder and joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention “NotApplicable” and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yetbeen allotted each of the Bidder(s) should mention “Applied for” in the Bid cum Application Form. Further, where theBidder(s) has mentioned “Applied for” or “Not Applicable”, the sole/first Bidder and each of the joint Bidder(s), as thecase may be, would be required to submit Form 60 (form of declaration to be filed by a person who does not have apermanent account number and who enters into any transaction specified in Rule 114B), or, Form 61 (form ofdeclaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeableto income-tax in respect of transactions specified in Rule 114B), as may be applicable, duly filled along with a copyof any one of the following documents in support of the address: (a) Ration card (b) Passport (c) Driving licence (d)Identity card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f)Any document or communication issued by any authority of the Central Government, State Government or localbodies showing residential address (g) Any other documentary evidence in support of address given in the declaration.It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004 bythe Central Board of Direct Taxes, Department of Revenue, Ministry of Finance. All Bidders are requested to furnish,where applicable, the revised Form 60 or Form 61 as the case may be.

Unique Identification Number (“UIN”)SEBI had vide a circular dated July 1, 2005 has suspended fresh registration for obtaining “UIN” and requirement toobtain /quote UIN under the SEBI (Central Database of Market Participants) Regulations, 2003 (MAPIN Regulations)with effect from July 1, 2005. Prior to this the provisions were as under.

Under the SEBI (Central Database of Market Participants) Regulations, 2003, as amended from time to time (“MAPINRegulations”), and SEBI notifications dated November 25, 2003, July 30, 2004 and August 17, 2004, and pressrelease dated December 31, 2004, no specified investor being a body corporate shall subscribe to securities whichare proposed to be listed on any recognized stock exchange unless such specified investor and its promoters anddirectors have been allotted unique identification numbers or UINs, except (i) those promoters or directors who arepersons resident outside India (such promoters or directors are required to obtain their UINs by December 31, 2005)and (ii) where such specified investor being a body corporate has applied for allotment of a UIN before December31, 2004 and has not yet been allotted the UIN until disposal of its application, or where it has filed an appeal, untildisposal of the appeal, as the case may be.

The SEBI press release dated December 31, 2004 further clarified that wherever the President of India/ CentralGovernment/ State Government is a promoter, it is exempted from the requirement of obtaining a UIN under regulation6(2) of the MAPIN Regulations. Previously SEBI required that all resident investors not being bodies corporate whoenter into any securities market transaction (including any transaction in units of mutual funds or collective investmentschemes) of the value of Rs. 100,000 or more would be required to obtain a UIN by March 31, 2005. Subsequently,

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by a press release dated February 24, 2005, SEBI has announced that the date for obtaining the UIN has beenextended from March 31, 2005 to December 31, 2005 for such specified investors.

In terms of the above, it shall be compulsory for an investor being a body corporate making an application in thisIssue to provide its UIN. In cases where a body corporate has made an application for such a number beforeDecember 31, 2004 but the number has not been allotted, or where an appeal has been filed but not disposed off,the investor shall provide such information in the Bid cum Application Form. A Bid cum Application Form from aspecified investor being a body corporate that does not provide a UIN or UIN application status (in cases where anapplication for a UIN has been made before December 31, 2004, is liable to be rejected.

Right to Reject BidsWe and the BRLM reserve the right to reject any Bid without assigning any reason therefor in case of QIBs. In caseof Non-Institutional Bidders and Retail Individual Bidders, we have a right to reject Bids based on technical grounds.Consequent refunds shall be made by cheque or pay order or draft and will be sent to the Bidder’s address at theBidder’s risk.

GROUNDS FOR TECHNICAL REJECTIONSBidders are advised to note that Bids are liable to be rejected on, inter alia, the following technical grounds:1. Amount paid does not tally with the amount payable for the highest value of Equity Shares bid for;2. Age of first Bidder not given;3. In case of partnership firms, Equity Shares may be registered in the names of the individual partners and no

firm as such, shall be entitled to apply;4. NRIs, except eligible NRIs and Non-Residents;5. Bids by persons not competent to contract under the Indian Contract Act, 1872, including minors, insane

persons;6. PAN not stated if Bid is for Rs. 50,000 or more and GIR number given instead of PAN;7. Bids for lower number of Equity Shares than specified for that category of investors;8. Bids at a price less than lower end of the Price Band;9. Bids at a price more than the higher end of the Price Band;10. Bids at Cut-off Price by Non-Institutional Bidders and QIB Bidders;11. Bids for number of Equity Shares, which are not in multiples of [ ];12. Category not ticked;13. Multiple Bids as defined in this Draft Red Herring Prospectus;14. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are

not submitted;15. Bids accompanied by stockinvest/money order/postal order/cash;16. Signature of sole and/or joint Bidders missing;17. Bid cum Application Form does not have the stamp of the BRLM or the Syndicate Members;18. Bid cum Application Form does not have the Bidder’s depository account details;19. Bid cum Application Form is not delivered by the Bidder within the time prescribed as per the Bid cum Application

Form, Bid Opening Date/Issue Opening Date advertisement and this Draft Red Herring Prospectus and as perthe instructions in this Draft Red Herring Prospectus and the Bid cum Application Form;

20. In case no corresponding record is available with the Depositories that matches three parameters namely,names of the Bidders (including the order of names of joint holders), the depositary participant’s identity (DPID) and the beneficiary account number;

21. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations. See thedetails regarding the same in “Issue Procedure – Bids at Different Price Levels” at page [•] of this Draft RedHerring Prospectus;

22. Bids by OCBs;23. Bids by U.S. persons other than “qualified institutional buyers” as defined in Rule 144A of the Securities Act;

EQUITY SHARES IN DEMATERIALISED FORM WITH NSDL OR CDSLAs per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only ina de-materialised form, (i.e. not in the form of physical certificates but be fungible and be represented by thestatement issued through the electronic mode). In this context, two agreements have been signed among ourCompany, the respective Depositories and the Registrar to the Issue:

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a) an agreement dated 22.06.2005 between NSDL, us and Registrar to the Issue;b) an agreement dated 05.07.2004 between CDSL, us and Registrar to the Issue. All Bidders can seek Allotment

only in dematerialised mode. Bids from any Bidder without relevant details of his or her depository accountare liable to be rejected.

c) A Bidder applying for Equity Shares must have at least one beneficiary account with the Depository Participantsof either NSDL or CDSL prior to making the Bid.

d) The Bidder must necessarily fill in the details (including the beneficiary account number and DepositoryParticipant’s identification number) appearing in the Bid cum Application Form or Revision Form.

e) Equity Shares allotted to a successful Bidder will be credited in electronic form directly to the beneficiaryaccount (with the Depository Participant) of the Bidder

f) Names in the Bid cum Application Form or Revision Form should be identical to those appearing in the accountdetails with the Depository. In case of joint holders, the names should necessarily be in the same sequence asthey appear in the account details with the Depository.

g) If incomplete or incorrect details are given under the heading ‘Bidders Depository Account Details’ in the Bidcum Application Form or Revision Form, it is liable to be rejected.

h) The Bidder is responsible for the correctness of his or her demographic details given in the Bid cum ApplicationForm vis-à-vis those with his or her Depository Participant.

i) It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges havingelectronic connectivity with NSDL and CDSL. All the Stock Exchanges where our Equity Shares are proposedto be listed have electronic connectivity with CDSL and NSDL.

j) The trading of the Equity Shares would be in dematerialised form only for all investors in the demat segmentof the respective Stock Exchanges.

· Non-transferable Allotments advise or refundorders will be directly sent to the Bidder by the Registrar to theoffer.

COMMUNICATIONSAll future communication in connection with Bids made in this Issue should be addressed to the Registrar to theIssue quoting the full name of the sole or First Bidder, Bid cum Application Form number, details of DepositoryParticipant, number of Equity Shares applied for, date of Bid cum Application Form, name and address of themember of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof.

PRE-ISSUE AND POST-ISSUE RELATED PROBLEMSWe have appointed Ms. Monika Gupta, Company Secretary, as the Compliance Officer and she may be contactedin case of any pre- Issue or post-Issue-related problems at the following address:

Lumax Automotive Systems LimitedB – 86, Mayapuri Industrial Area,Phase – I, New Delhi – 110064.Tel: 91 11 28111777, 41031267Fax: 91 11 28116455e-mail: [email protected]

DISPOSAL OF APPLICATIONS AND APPLICATION MONEYSWe shall ensure dispatch of Allotment advice, refund orders and give benefit to the beneficiary account with DepositoryParticipants and submit the documents pertaining to the allotment to the Stock Exchanges within 2 (two) workingdays of date of finalisation of allotment of Equity Shares. We shall dispatch refund orders, if any, of value up to Rs.1,500, “Under Certificate of Posting”, and shall dispatch refund orders above Rs. 1,500, if any, by registered post orspeed post at the sole or First Bidder’s sole risk.

We shall use best efforts to ensure that all steps for completion of the necessary formalities for listing andcommencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed, are takenwithin 7 (seven) working days of finalisation of the basis of allotment.

In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI Guidelines wefurther undertake that: allotment of Equity Shares shall be made only in dematerialised form within 15 (fifteen) daysof the Bid Closing Date/Issue Closing Date; dispatch of refund orders within 15 (fifteen) days of the Bid Closing Date/Issue Closing Date would be ensured; and we shall pay interest at 15% (fifteen) per annum (for any delay beyond

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the 15 (fifteen)-day time period as mentioned above), if Allotment is not made and refund orders are not dispatchedand/or demat credits are not made to investors within the 15 (fifteen)- day time prescribed above as per the guidelinesissued by the Government of India, Ministry of Finance pursuant to their letter No. F/8/S/79 dated July 31, 1983, asamended by their letter No. F/14/SE/85 dated September 27, 1985, addressed to the stock exchanges, and asfurther modified by SEBI’s Clarification XXI dated October 27, 1997, with respect to the SEBI Guidelines.

Refunds will be made by cheques, pay orders or demand drafts drawn on the Escrow Collection Banks and payableat par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demanddrafts at other centers will be payable by the Bidders.

The Company shall not have rrecourse to the Issue proceeds until the approvals for trading of the Equity Shares hasbeen received from the Stock Exchanges.

IMPERSONATIONAttention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of theCompanies Act, which is reproduced below:

“Any person who:

a) makes in a fictitious name, an application to a company for acquiring or subscribing for, anyshares therein, or

b) otherwise induces a company to allot, or register any transfer of shares therein to him, or anyother person in a fictitious name, shall be punishable with imprisonment for a term which mayextend to five years.” Basis of Allocation

A. For Retail Individual BiddersBids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determinethe total demand under this category. The Allotment to all successful Retail Individual Bidders will be made at theIssue Price.

The Issue size less allocation to Non-Institutional Bidders and QIB Bidders shall be available for allocation toRetail Individual Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

If the aggregate demand in this category is less than or equal to 11,90,000 Equity Shares at or above the IssuePrice, full allotment shall be made to the Retail Individual Bidders to the extent of their demand.

If the aggregate demand in this category is greater than 11,90,000 Equity Shares at or above the Issue Price, theallocation shall be made on a proportionate basis up to a minimum of [•] Equity Shares and in multiples of [•]Equity Shares thereafter. For the method of proportionate basis of allocation, refer below.

B. For Non-Institutional BiddersBids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determinethe total demand under this category. The Allotment to all successful Non-Institutional Bidders will be made atthe Issue Price.

The Issue size less allocation to QIB Bidders and Retail Individual Bidders shall be available for allocation toNon-Institutional Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

If the aggregate demand in this category is less than or equal to 5,10,000 Equity Shares at or above the IssuePrice, full allotment shall be made to Non-Institutional Bidders to the extent of their demand.

In case the aggregate demand in this category is greater than 5,10,000 Equity Shares at or above the IssuePrice, allocation shall be made on a proportionate basis up to a minimum of [•] Equity Shares and in multiples of[•] Equity Shares thereafter. For the method of proportionate basis of allocation refer below.

C. For QIBsBids received from the QIB Bidders at or above the Issue Price shall be grouped together to determine the totaldemand under this category. The Allotment to all the QIB Bidders will be made at the Issue Price.

The Issue size less allocation to Non-Institutional Portion and Retail Portion shall be available for allocation toQIB Bidders who have bid in the Issue at a price that is equal to or greater than the Issue Price.

The allocation would be decided by us in consultation with the BRLM and would be at our sole discretion, basedon various factors, such as quality of the Bidder, size, price and date of the Bid.

Except for any shares allocated to QIB Bidders due to under subscription in the Retail Portion and/or NonInstitutional Portion, the aggregate allocation to QIB Bidders shall not be more than 17,00,000 Equity Shares.

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Method of Proportionate basis of allocation in the Retail and Non Institutional categoriesBidders will be categorized according to the number of Equity Shares applied for by them.a) The total number of Equity Shares to be allotted to each category as a whole shall be arrived at on a

proportionate basis, which is the total number of Equity Shares applied for in that category (number of Biddersin the category multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio.

b) Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a proportionate basis,which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse ofthe over-subscription ratio.

In all Bids where the proportionate allotment is less than [? ] Equity Shares per Bidder, the allotment shall be madeas follows: Each successful Bidder shall be allotted a minimum of [? ] Equity Shares; and

The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner suchthat the total number of Equity Shares allotted in that category is equal to the number of Equity Shares calculated inaccordance with (b) above; and Each successful Bidder shall be allotted a minimum of [] Equity Shares.

If the proportionate allotment to a Bidder is a number that is more than [? ] but is not a multiple of one (which is themarket lot), the decimal would be rounded off to the higher whole number if that decimal is 0.5 or higher. If thatnumber is lower than 0.5, it would be rounded off to the lower whole number. All Bidders in such categories would beallotted Equity Shares arrived at after such rounding off.

If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares allotted tothe Bidders in that category, the remaining Equity Shares available for allotment shall be first adjusted against anyother category, where the allotted Equity Shares are not sufficient for proportionate allotment to the successfulBidders in that category. The balance Equity Shares, if any, remaining after such adjustment will be added to thecategory comprising Bidders applying for minimum number of Equity Shares.

Letters of Allotment or Refund OrdersWe shall give credit to the beneficiary account with Depository Participants within two working days from the date ofthe finalisation of basis of allocation. We shall ensure dispatch of refund orders, if any, of value up to Rs. 1,500 by“Under Certificate of Posting”, and shall dispatch refund orders above Rs. 1,500, if any, by registered post or speedpost at the sole or First Bidder’s sole risk within 15 days of the Bid Closing Date/Issue Closing Date.

In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI Guidelines, weundertake that:

· Allotment shall be made only in dematerialized form within 15 days from the Bid /Issue Closing Date;· Dispatch of refund orders/ instructions to the clearing system for electronic credit of refunds shall be done within

15 days from the Bid /Issue Closing Date; and· We shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if

Allotment is not made, refund orders are not dispatched, instructions to the clearing system for electronic creditof refunds and/or demat credits are not made to investors within the 15 day time prescribed above.

Mode of Making RefundsIn case of applicants residing in 15 centres where clearing houses are managed by the Reserve Bank of India,refunds would be credited to the bank accounts of the applicants through electronic transfer of funds by using ECS(Electronic Clearing Service). The 15 centres are Ahmedabad, Bangalore, Bhubneshwar, Kolkata, Chandigarh,Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvanthapuram. In caseof other applicants, the Company shall ensure despatch of refund orders of value over Rs. 1,500 by registered postor speed post only and refund orders of value upto Rs. 1,500 by under Certificate of Posting and adequate funds forthe purpose shall be made available to the Registrar to the Issue by the Company.

Undertaking by our CompanyWe undertake as follows:

1. that the complaints received in respect of this Issue shall be attended to by us expeditiously and satisfactorily;2. that all steps will be taken for the completion of the necessary formalities for listing and commencement of

trading at all the Stock Exchanges where the Equity Shares are proposed to be listed within seven workingdays of finalisation of the basis of Allotment; that the funds required for dispatch of refund orders or Allotmentadvice by registered post or speed post shall be made available to the Registrar to the Issue by us;

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3. that the refund orders or Allotment advice to the NRIs or FIIs shall be dispatched within specified time; and4. that no further issue of Equity Shares shall be made till the Equity Shares offered through this Red Herring

Prospectus are listed or until the Bid monies are refunded on account of non-listing, under-subscription etc.

Utilisation of Issue proceedsOur Board of Directors certify that:

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

2. details of all monies utilised out of Issue referred above shall be disclosed under an appropriate head in ourbalance sheet indicating the purpose for which such monies have been utilised;

3. details of all unutilised monies out of the Issue, if any shall be disclosed under the appropriate head in ourbalance sheet indicating the form in which such unutilised monies have been invested;

4. We shall not have recourse to the Issue proceeds until the approval for trading of the Equity Shares from all theStock Exchanges where listing is sought has been received.

RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIESForeign investment in Indian securities is regulated through the Industrial Policy, 1991 of the Government of Indiaand FEMA. While the Industrial Policy, 1991 prescribes the limits and the conditions subject to which foreign investmentcan be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investmentmay be made. Under the Industrial Policy, unless specifically restricted, foreign investment is freely permitted in allsectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required tofollow certain prescribed procedures for making such investment. As per current foreign investment policies, foreigndirect investment in companies in auto ancillary sectoris permitted up to 100% under the automatic route.

Subscription by NRIs/FIIsIt is to be distinctly understood that there is no reservation for Non-Residents, NRIs and FIIs and all Non-Residents,NRI and FIIs applicants will be treated on the same basis as other categories for the purpose of allocation.

As per the RBI regulations, OCBs cannot participate in this Issue.

.Investors that Bid in the Issue will be required to confirm and will be deemed to have represented to the Companyand its directors, officers, agents, affiliates and representatives, as applicable, that they are eligible under all applicablelaws, rules, regulations, guidelines and approvals to acquire Equity Shares of the Company and will not offer, sell,pledge or transfer the Equity Shares of the Company to any person who is not eligible under applicable laws, rules,regulations, guidelines and approvals to acquire Equity Shares of the Company. The Company, and its directors,officers, agents, affiliates and representatives, as applicable, accept no responsibility or liability for advising anyinvestor on whether such investor is eligible to acquire Equity Shares of the Company.

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MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY

CAPITAL AND INCREASE AND REDUCTION OF CAPITAL4. The Company in General Meeting may, from time to time, increase the capital by the creation of new shares,

such increase to be of such aggregate amount and to be divided into shares of such respective amounts asthe resolution shall prescribe. Subject to the provisions of the Act, any shares of the original or increasedcapital shall be issued upon such terms and conditions and with such rights and privileges annexed thereto,as the General Meeting resolving upon the creation thereof, shall direct, and if no direction be given as theDirectors shall determine and in particular, such shares may be issued with a preferential or qualified right todividends, and in the distribution of assets of the Company, and with a right of voting at general meetings ofthe Company in conformity with Section 87 and 88 of the Act. Whenever the capital of the Company hasbeen increased under the provisions of the Article, the Directors shall comply with the provisions of Section97 of the Act.

6. Subject to the provision of Section 80 of the Act, the Company shall have the power to issue PreferenceShares which are or at the option of the Company are liable to be redeemed and the resolution authorizingsuch Company are liable to be redeemed and the resolution authorizing such issue shall prescribe themanner, terms and conditions of redemption.

8. The Company may (subject to the provisions of Section 78, 80, 100 to 105 inclusive of the Act) from time totime by Special Resolution, reduce its capital and any Capital Redemption Reserve Account or Share PremiumAccount in any manner for the time being authorized by law, and in particular, capital may be paid off on thefooting that it may be called upon again or otherwise. This Articles is not to derogate from any power theCompany would have if it were omited.

9. Subject to the Provisions of Section 94 of the Act the Company in general meeting may, from time to time,sub-divide or consolidate its shares, or any of them and the resolution whereby any share is sub-dividedmay determine that, as between the holder of the shares resulting from such sub-division one or more suchshares shall have some preference or special advantage as regards dividend, capital or otherwise over oras compared with the others or other subject as aforesaid the Company in general meeting may also cancelshares which have not been taken or agreed to be taken by any person and diminish the amount of its sharecapital by the amount of the shares so cancelled.

10. Whenever the capital, by reason the issue of Preference Share or otherwise, is divided into different classesof shares, all or any of the rights and privileges attached to each class may, subject to the provisions ofSection 106 and 107 of the Act, be modified, commuted, affected or abrogated or dealt with by agreementbetween the Company and any person purporting to contract on behalf of that class, provided such agreementis ratified in writing by holders of at least three-fourths in nominal value of the issued shares of the class oris confirmed by a special resolution passed at a separate general meeting of the holders of shares of thatclass.

SHARES AND CERTIFICATES14. Subject to the provisions of Section 81 of the Act and these Articles, the shares in the capital of the Company

for the time being shall be under the control of the directors who may issue, or allot or otherwise dispose ofthe same or any of them to such persons, in such proportion and on such terms and conditions and either ata premium or at part or (subject to the compliance with the provision of Section 79 of the Act) at a discountand at such time as they may from time to time think fit and with the sanction of the Company in the GeneralMeeting to give to any person or persons the option or right to call for any shares either at par or premiumduring such time and for such consideration as the Directors think fit, and may issue ad allot shares in thecapital of the company on payment in full or part of any property sold and transferred or for any servicesrenderedto the Company in the conduct of its business and any shares which may so be allotted may beissued as fully paid up shares and if so issued, shall be deemed to be fully paid shares. Provided that optionor right to call of shares shall not be given to any person or persons without the sanction of the Company inthe General Meeting.

18. Every member, or his heirs, executors or administrators, shall pay to Company the portion of the Capitalrepresented by his share or shares which may, for the time being remain unpaid thereof in such amounts, atsuch time or times, and in such manner as the Board shall, from time to time in accordance with the Company’sregulations, require or fix for the payment thereof.

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19. (a) Every member or allottee of shares shall be entitled without payment, to receive one certificate specifyingthe name of the person in whose favour it is issued, the shares to which it relates and the amount paid-upthereon. Such certificate shall be issued only in pursuance of a resolution passed by the Board and onsurrender to the Company of its letter of allotment or its fractional coupons of requisite value, save in casesof issues against letters of acceptance or of renunciation or in cases of issue of bonus shares. Every suchcertificate shall be issue under the seal of the Company, which shall be affixed in the presence of twoDirectors or persons acting on behalf of the Directors under a duly registered power of attorney and theSecretary or some other person appointed by the Board for the purpose and two Director or their attorneysand the Secretary or other person shall sign the share certificate, provided that if the composition of theBoard permits it, at least one of the aforesaid two Directors shall be a person other than Managing or awhole time Director. Particulars of every share certificate issued shall be entered in the Register of Membersagainst the name of the person to whom it has been issued, indicating the date of issue.

(b) Any two or more joint allottees of a share shall, for the purpose of this Article, be treated as a single member,and the certificate of any share, which may be the subject of joint ownership, may be delivered to anyone ofsuch joint owners on behalf of all of them. For any further certificate the Board shall be entitled, but shall notbe bound, to prescribe a charge not exceeding Rupee One. The Company shall comply with the provisionsof Section 113 of the Act.

(c ) A Director may sign a share certificate by affixing his signature thereon by means of any machine, equipmentor other mechanical means, such as engraving in metal or lithography, but not by means of a rubber stamp,provided that the Director shall be responsible for the safe custody of such machine, equipment or othermaterial used for the purpose.

20.(a) No certificate of any share or shares shall be issued either in exchange for those which are sub-divided orconsolidated or in replacement of those which are defaced, torn or old, decrepit, worn out, or where thecages on the reverse for recording transfers have been duly utilized, unless the certificate in lieu of which itis issued is surrendered to the Company.

(b) When a new share certificate has been issued in pursuance of clause (a) of this Article it shall state on theface of it and against such counterfoil to the effect that it is “issued in lieu of share certificateNo…………………… sub-divided/ replaced/ on consolidation of share”.

(c ) If any certificate lost or destroyed then upon proof thereof to the satisfaction of the Company and on executionof such indemnity as the Company deem adequate, being given, a new Certificate in lieu thereof shall begiven to the party entitled to such lost or destroyed certificate. Every certificate under the Article shall beissued without payment of fees if the Directors so decide, or on payment of such fees (no exceeding Rs.2/- for each certificate) as the Directors shall prescribe. Provided that no fee shall be charged for issue of newcertificates in replacement of those which are old, defaced or worn out or where there is no further space onthe back thereof for endorsement of transfer.

(d) When a new share certificate has been issued in pursuance of clause ( c ) of this Article, it shall state onthe face of it or counterfoil to the effect that it is ‘duplicate issued in lie of share certificate No…………….’The word ‘Duplicate’ shall be stamped or punched in bold letters across the face of the share certificate.

(e) Where a new share certificate has been issued in pursuance of clause (a) or clause (c) of this Article,particulars of every such share certificate shall be entered in Register of Renewed and Duplicate Certificatesindicating against the names of the persons to whom the certificate is issued, the number and date of issueof the share certificate in lieu of which the new certificate is issued, and the necessary changes indicated inthe Register of Members by suitable cross reference in the ‘Remarks’ column.

(f) All blank forms to be issued for issue of share certificates shall be printed and printing shall be done only onthe authority of a resolution of the Board. The blank forms shall be consecutively machine numbered andthe forms and the blocks, engraving facsimiles and hues relating to the printing of such forms shall be keptin the custody of the Secretary or such other person as the Board may appoint for the purpose; and theSecretary or the other person aforesaid shall be responsible for rendering an account of these forms to theBoard.

(g) The Managing Director of the Company for the time being or, if the Company has no Managing Director,every Director of the Company shall be responsible for the maintenance, preservation and self custody of allbooks and documents relating to the issue of share certificates except the blank forms of share certificatesreferred to in sub Article (f)

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(h) All books referred to in sub-Article (g) shall be preserved in good order permanently.

(i) Provided that notwithstanding what is stated above the Director shall comply with such Rules or Regulationsor requirements of any Stock Exchange or the rules made under the Act or the rules made under Securitiescontracts (Regulation) Act, 1956 or any other act, or rules applicable in this behalf.

(j) The provisions of this Articles shall mutatis mutandis apply to debentures of the Company.

21. If any share stands in the names of two or more persons, the person first named in the Register shall asregards receipt of dividends, bonus or service or notices and all or any other matter connected with thecompany, except voting at meetings, and the transfer of the shares, be deemed the sole holder thereof butthe joint-holders of a share shall be severally as well as jointly liable for the payment of all installments andcalls due in respect of such share and for all incidents thereof according to the company’s regulations.

UNDERWRITING AND BROKERAGE24. Subject to the provision of Section 76 of the Act, the Company may at any time pay a commission to any

person in consideration of his subscribing or agreeing to subscribe (whether absolutely or conditionally) forany shares or debentures in the Company, or procuring, or agreeing to procure, subscriptions (whetherabsolute or conditional) for any shares or debentures in the Company, but so that the commission shall notexceed in the case of shares five percent of the price at which the shares are issued and in the case ofdebentures two and a half per cent of the price at which the debentures are issued. Such commission maybe satisfied by payments of cash or by allotment of fully or partly paid share or the other.

LIEN38. The company shall have a first and paramount lien upon all the shares/ debentures (other than fully paid up

shares/debentures) registered in the name of each member (whether solely or jointly with others) and uponthe proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixedtime in respect of such shares / debentures and no equitable interest in any share shall be created exceptupon the footing and condition that this Article will have full effect. And such lien extend to all dividends andbonuses from time to time declared in respect of such shares/debentures. Unless otherwise agreed theregistration of a transfer of shares/debentures shall operate as a waiver of the Company’s lien if any, onsuch shares/debentures. The Directors may at any time declare any shares/debentures wholly or in part tobe exempt from the provisions of this clause.

39. For the purpose of enforcing such lien the Board may sell the shares subject thereto in such manner as theyshall think fit, and for that purpose may cause to be issued a duplicate certificate in respect of such sharesany may authorize one of their members to execute a transfer thereof on behalf of and in the name of suchmember. No sale shall be made until such period as aforesaid shall have arrived, and until notice in writingof the intention to sell shall have been served on such member or his representatives and default shall havebeen made by him or them in payment, fulfillment or discharge of such debts, liabilities or engagements forfourteen days after such notice.

40. The net proceeds of any such sale shall be received by the Company and applied in or towards payment ofsuch part of the amount in respect of which the lien exists as is presently payable and the residue, if any,shall (subject to a like lien for sums not presently payable as existed upon the shares before the sale) bepaid to the persons entitled to the shares at the date of the sale.

40A. Notwithstanding anything contained in these Articles, the Board of Directors may, when and if thought fit,buy back such of the Company’s own shares or other securities as it may think proper subject to such limits,upon such terms & conditions and subject to such approvals as may be provided by law.

FORFEITURE OF SHARES41. If any member fails to pay any call or installment of a call on or before the day appointed for the payment of

the same or any such extension thereof as aforesaid, the Board may at any time thereafter, during such timeas the call or installment remains unpaid, give notice to him requiring him to pay the same together with anyinterest that may have accrued, and all expenses that may have been incurred by the Company by reasonof such non-payment.

43. If the requirements of any such notice as aforesaid shall not be complied with, every or any share in respectof which such notice has been given, may at any time there after before payment of calls or installments,interest and expenses due in respect thereof, be forfeited by a resolution of the Board to that effect. Such

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forfeiture shall include all dividends declared or any other moneys payable in respect of the forfeited shareand not actually paid before the forfeiture.

44. When any share shall have been so forfeited notice of the forfeiture shall be given to the member in whosename is stood immediately prior to the forfeiture and an entry of the forfeiture with the date thereof, shallforthwith be made in the Register of Members, but no forfeiture shall be in any manner invalidated by anyomission or neglect to give such notice or to make any such entry as aforesaid.

45. Any share so forfeited shall be deemed to be the property of the Company and may be sold, re-allotted, orotherwise disposed of, either to the original holder thereof or to any other person, upon such terms and insuch manner as the Board shall think fit.

46. Any member whose shares have been forfeited shall notwithstanding the forfeiture, be liable to pay andshall forthwith pay to the Company, on demand all calls, installments, interest and expenses owing upon orin respect of such shares at the time of the forfeiture, together with interest thereon from the time of forfeiture,until a payment, at such rate not exceeding 18 percent per annum as the Board may determine and theBoard may enforce the payment thereof, if it think fit.

47. The forfeiture of a share shall involve extinction at the time of the forfeiture, of all interest in all claims anddemand against the Company, in respect of the share and all other rights incidental to the share, except onlysuch of those rights as by these Articles are expressly save.

48. A declaration in writing that the declarant is a Director or Secretary of the Company and that a share in theCompany has been duly forfeited in accordance with these Articles on a date stated in the declaration, shallbe conclusive evidence of the facts therein stated as against all persons claimed to be entitled to the shares.

TRANSFER AND TRANSMISSION OF SHARES53. The instrument of transfer shall be in writing and all provisions of Section 108 of the Companies Act, 1956

and statutory modification thereof for the time being shall be duly complied with in respect of all transfer ofshares and registration thereof.

54. The instrument of Transfer duly stamped and executed by the Transferor and the Transferee shall be deliveredto the Company in accordance with the provisions of the Act. the instrument of Transfer shall be accompaniedby such evidence as the Board may require to prove the title of Transferor and his right to transfer the sharesand every registered instrument of Transfer shall remain in the custody of the Company until destroyed byorder of the Board. The transferor shall be deemed to be the holder of such shares until the name of theTransferee shall have been entered in the Register of Members in respect thereof. Before the registration ofa transfer the certificate of the shares must be delivered to the Company.

55. The Board shall have power on giving not less than seven days previous notice by advertisement in somenewspaper circulating in the district in which the office of the Company is situated to close the Transfer Books,the Register of Member or Register of Debenture-holders at such time or times and for such period or periods,not exceeding thirty days at a time and not exceeding in the aggregate forty-five days in each year.

56. Subject to the provisions of Section 111 of the Act and Section 22A of the Securities Contracts (Regulation)Act, 1956, the directors may, at their own absolute and uncontrolled discretion and by giving reasons,decline to register or acknowledge any transfer of shares whether fully paid or not and the right revusal, shallnot be affected by the circumstances that the proposed transferee is already a member of the Company butin such cases, the Directors shall within one month from the date on which the instrument of transfer waslodged with the Company, send to the transferee and transferor notice of the refusal to register suchtransfer provided that registration of transfer shall not be refused on the ground of the transferor being eitheralone or jointly with any other person or persons indebted to the company on any account whatsoeverexcept when the company has a lien on the shares. Transfer of shares/debentures in whatever lot shall notbe refused.

58. In the case of the death of any one or more of the persons named in the Register of Members as the joint-holders of any share, the survivor or survivors shall be the only persons recognized by the Company ashaving any title to or interest in such share, but nothing herein contained shall be taken to release the estateof a deceased join-holder from any liability on shares held by him jointly with any other person.

59. The executors or administrators or holders of a Succession Certificate or the legal representatives of adeceased member (not being one or two or more joint holders) shall be the only persons recognized by theCompany as having any title to the shares registered in the name of such member, and the company shall

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not be bound to recognize such executors or administrators or holders if a Succession Certificate, as thecase may be, from a duly constituted Court in the Union of India; provided that in any case where the Boardin its absolute discretion thinks fit, the Board may dispense with production of Probate or Letters ofAdministration or Succession certificate, as the case may be, from a duly constituted Court in the Union ofIndia; provided that in any case where the Board in its absolute discretion thinks fit, the Board may dispensewith production of Probate or Letters of Administration or Succession Certificate, upon such terms as toindemnity or otherwise as the Board in its absolute discretion may think necessary and under Article 65register the name of any person who claims to be absolutely entitled to the share standing in the name of adeceased member, as a member.

63. No fee shall be charged for registration of transfer, transmission, Probate, Succession Certificate and Lettersof administration, Certification of Death or Marriage, Power of Attorney or similar other document.

64. The Company shall incur no liability or responsibility or responsibility whatsoever in consequence of its orgiving effect to any transfer of share made or purporting to be made by any apparent legal owner thereof (asshown or appearing in the Register of Members) to the prejudice of person having or claiming any equitableright, title or interest to or in the said shares, notwithstanding that the Company may have had notice of suchequitable right, title or interest or notice prohibiting registration of such transfer, and may have such notice,or referred thereto, in any book of the Company, and the Company shall not be bound or required to regardor attend or give effect to any notice which may be given to it of any equitable right, title or interest or beunder any liability whatsoever for refusing or neglecting so to do, though it may have been entered orreferred to in some book of the Company, but the Company shall nevertheless be at liberty to record andattend to any such notice and give effect thereto if the Board shall so thinks fit.

DEMATERIALISATION OF SECURITIES64A.(1) For the purpose of this Articles:

‘Beneficial Owner’ means a person or persons whose name is recorded in the Register maintained by aDepository under the Depository Act, 1996.

‘SEBI means the Securities & Exchange Board of India.

‘Depository’ means a Company formed and registered under the Act and which has been granted a certificateof registration by SEBI under the Securities & Exchange Board of India Act, 1992.

‘Security’ means such security as may specified by SEBI from time to time.

(2) Notwithstanding anything contained in these Articles, the company shall be entitled to dematerialise itssecurities and to offer securities in dematerialised form pursuant to the provisions of the Depositories Act,1996.

(3) Notwithstanding anything contained in these Articles, every issue of securities by the company shall be inthe dematerialised form and the company shall intimate the details of allotment to the depository immediatelyon allotment of such securities.

Investors in a new issue and the beneficial owners shall have the option to dematerialise the sharessubsequent to the allotment or dematerialisation, as the case may be, in which event the company shallissue to the investor/ beneficiary the required certificates of securities subject to the provisions of applicablelaws, rules regulation or guidelines.

(4) All securities held in the depository mode with a depository shall be dematerialised and be in fungible form.To such securities held by a depository on behalf of a beneficial owner nothing contained in section 153,153A, 153B, 187B, 187C and 372 of the Act shall apply.

(5) (a) Notwithstanding anything to the contrary contained in the Act or these Articles, a depository shall be deemedto be the registered owners for the purpose of effecting transfer of ownership of security on behalf of thebeneficial owner.

(b) Save as otherwise provided in (a) above, the depository as the registered owner of the securities shall nothave other membership rights in respect of the security held by it.

(c) Every person holding securities of the company and whose name is entered as the beneficial owner in theregister maintained by a depository shall be deemed to be a member.

(6) Notwithstanding anything contained in the Act, or these Articles to the company where securities are held indepository mode, the records of the beneficial ownership may be served by such depository on the company

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by means of electronic mode or by delivery of floppies or disks.

(7) Nothing contained in section 108 of the Act or the Articles shall apply to transfer of securities effected by atransferor and transferee both of whom are entered as beneficial owner in the records of depository.

(8) Nothing contained in the Act or these articles regarding the necessary of having distinctive number forsecurities issued by the company shall apply to securities held with a depository.

(9) The register and index of beneficial owners maintain by a depository under the Depositories Act, 1996, shallbe deemed to be the register and index of members and security holder for the purpose of these Articles.

BORROWING POWERS66. Subject to the provision of Section 292 and 293 of the Act the Board may from time to time at its discretion

by a resolution passed at a meeting of the Board, accept deposits from members either in advance of callsor otherwise and generally raise or borrow or secure the payment of any sum or sums of moneys for thepurpose of the Company provided however, where the moneys, to be borrowed together with the moneysalready borrowed (apart from temporary loans obtained from the Company’s bankers in the ordinary courseof business) exceed the aggregate of the paid up capital of the company and its free reserves (not beingreserves set apart for any specific purpose) the Board shall not borrow such moneys without the consent ofthe company in General Meeting.

67. Subject to the provisions of Article 71 hereof, the payment or re-payment of moneys borrowed as aforesaidmay be secured in such manner and upon such terms and conditions in all respect as the Special Resolutionshall prescribe including by the issue of debentures or debenture-stock of the Company, charged upon all orany part of the property of the Company (both present and future) including its uncalled capital for the timebeing; and debentures, debenture-stock and other securities may be made assignable free from any equitiesbetween the Company and the person to whom the same may be issued.

SHARE WARRANTS71. The Company may issue share warrants subject to, and in accordance with the provision of Section 114 and

115; and accordingly the Board may in its discretion, with respect to any share, which is fully paid uponapplication in writing signed by the persons registered as holder of the share, and authenticated by suchevidence (if any) as the Board may, from time to time, require as to the identity of the person signing theapplication, and on receiving the certificate (if any) of the share, and the amount of the stamp duty on thewarrant and such fee as the Board may from time to time require, issue a share warrant.

72. (1) The bearer of a share warrant may at any time deposit the warrant at the office of the Company, andso long as the warrant remains so deposited, the depositor shall have the same right of signing arequisition of calling a meeting of the Company, and of attending and voting and exercising theother privileges of a member at any meeting held after the expiry of two clear days from the time ofdeposit, as if his name were inserted in the Register of Members as the holder of the share includedin the deposited warrant.

(2) Not more than one person shall be recognized as depositor of the share warrant.

(3) The company shall, on two days written notice, return the deposited share warrant to the depositor.

CONVERSION OF SHARES INTO STOCK AND RECONVERSION75. The company in general meeting may convert any paid-up share into stock, and when any shares shall

have been converted into stock, the several holders of such stock may thenceforth transfer their respectiveinterest therein, or any part of such interest, in the same manner and subject the same regulations as, andsubject to which shares from which the stock arose might have been transferred, if no such conversion hadtaken place, or as near thereto as circumstances will admit. The company may at any time reconvert anystock into paid-up shares of any denomination.

76. The holders of stock shall, accordingly to the amount of stock held by them, have same rights, privileges asregards dividends, voting at meetings of the Company, and other matters, as if they held the shares fromwhich the stock arose; but no such privilege or advantage / except participation in the dividends and profitsof the Company, and in the assets on winding up) shall be conferred by an amount of stock which would not,if existing in shares, have conferred that privilege or advantage.

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MEETING OF MEMBERS77. The Company shall in each year hold a General Meeting as its Annual General Meeting in addition to any

other meeting in that year. All General Meetings other than Annual General Meeting shall be calledExtraordinary General Meetings. The first Annual General Meeting shall be held within six months after theexpiry of each financial year, provided that not more than fifteen months shall elapse between the date ofone Annual General Meeting and that of the next. Nothing contained in the foregoing provisions shall betaken as affecting the right conferred upon the Registrar under the provisions of Section 166(1) of the Act toextend the time within which any Annual General Meeting may be held. Every Annual General Meeting shallbe called for a time during business hours, on a day that is not a public holiday, and shall be held at the officeof the Company or at some other place within the city in which the office of the Company is situate as theboard may determine and the Notice calling the Meeting shall specify it as the Annual General Meeting. TheCompany may in anyone Annual General Meeting fix the time for its subsequent Annual General Meetings.Every member of the Company shall be entitled to attend either in person or by proxy and the Auditor of theCompany shall have the right to attend and to be heard at any General Meeting which he attends on anypart of the business which concern him as Auditor. At every Annual General Meeting of the Company, thereshall be laid on the table the Directors’ Report and Audited Statement of Account, Auditors’ Report (if notalready incorporated in the audited Statements of Account), the proxy Register with proxies and the Registerof Directors shareholdings which later Register shall remain open and accessible during the continuance ofthe meeting. The Board shall cause to be prepared the Annual List of Members, Summary of the ShareCapital, Balance Sheet and Profit and Loss Account and forward the same to the Registrar in accordancewith Sections 159, 161 and 220 of the Act.

78. The Board may, whenever it thinks fit, call an Extraordinary General Meeting and it shall do so upon arequisition in writing by any member or members holding in the aggregate not less than one-tenth of such ofthe paid-up capital as at that date carries the right of voting in regard to the matter in respect of which therequisition has been made.

84. No General Meeting, Annual or Extraordinary, shall be competent to enter upon, discuss or transact anybusiness which has not been mentioned in the notice or notices upon which it was convened

91. At any General meeting, a resolution put to vote of the meeting shall be decided on a show of hands, unlessa poll is (before or on declaration of the result of the show of hands) demanded by any member or memberspresent in person or by proxy and holding shares in the Company which confer a power to vote on theresolution not being less than one-tenth of the total voting power in respect of the resolution or on which anaggregate sum of not less than fifty thousand rupees has been paid-up and unless a poll is demanded, adeclaration by the Chairman that a resolution has on a show of hands been carried or carried unanimously,or by a particular majority or lost and an entry to that effect in the Minute Book of the Company shall beconclusive evidence of the fact without proof of .the number or proportion of the votes recorded in favour ofor against that resolution.

92. In the case of an equality of votes, the Chairman shall both on show of hands and at a poll (if any) have acasting vote in addition to the vote or votes to which he may be entitled as member.

93. If a poll is demanded as aforesaid, the same shall be taken at such time (not later than forty-eight hoursfrom the time when the demand was made) and place in the city or town in which the Office of the Companyis for the time being situate and either by open voting or by ballot, as the Chairman shall direct, and eitherat once or after an interval or adjournment, or otherwise, and the result of the poll shall be deemed to be theresolution of the meeting at which poll was demanded. The demand for a poll may be withdrawn at any timeby the person or persons who made the demand.

96. The demand for a poll except on the question of the election of the Chairman and of an adjournment shallnot prevent the continuance of ~ meeting for the transaction of any business other than the question onwhich the poll has been demanded.

97. No member shall be entitled to vote either personally or by proxy at any General Meeting or Meeting of aclass of shareholders either upon a show of hands or upon a poll in respect of any shares registered in hisname on which any calls or other sums presently payable by him have not been paid or in regard to whichthe Company has, and has exercised any right of lien.

98. Subject to the provisions of these Articles and without prejudice to any special privileges or restrictions as tovoting for the time being attached to any class of shares for the time being forming part of the capital of theCompany, every member, not disqualified by the last preceding Articles shall be entitled to be present, and

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to speak and vote at such meeting, and on a show of hands every member present in person shall have onevote and upon a poll the voting right of every member present in person or by proxy shall be in proportion tohis share of the paid-up equity share capital of the Company. Provided, however, if any preferenceshareholder be present at any meeting of the Company save as provided in clause (b) of sub-section (2) ofSection 87, of the Act, he shall have a right to vote only on resolutions placed before the meeting whichdirectly affect the rights attached to his preference shares.

102. Subject to the provisions of these Articles votes may be given either personally or by proxy. A body corporatebeing a member may vote either by a representative duly authorised in accordance with Section 187 of theAct” and such representative shall be entitled to exercise the same rights and powers (including the right tovote by proxy) on behalf of the body corporate which he represents as that body could exercise if it were anindividual member.

104. Every proxy (whether a member or not) shall be appointed in writing under the hand of the appointer or hisattorney, or if such appointer is corporation under the common seal of such corporation, or be signed by anofficer or any attorney duly authorised by it and any committee or guardian may appoint such proxy. Theproxy so appointed shall not have any right to speak at the meetings.

106. A member present by proxy shall be entitled to vote only on a poll.

108. Every instrument of proxy shall as nearly as circumstances will admit, be in any of the forms set out inSchedule IX of the Act.

The Company will send proxy forms to shareholders and debenture holders in all cases where proposalsother than that of a purely routine nature are to the considered, such proxy form being so worded that ashareholder or debenture holder may vote either for or against each resolution.

DIRECTORS113(a) Until otherwise determined by a General Meeting of the Company and subject to the provisions of Section

252 of the Act, the number of Directors (excluding Debenture and Alternate Directors) shall not be less thanthree nor more than twelve.

(b) On the date of adoption of these articles the following persons shall be the Directors of the Company :1. Sh. Mahesh Kumar Jain2. Sh. Rajan Jain3. Mrs. Pushpa Jain

117. Subject to the provisions of Section 260, 261 and 264 of the Act, the Board shall have power at any time andfrom time to time to appoint any other qualified person to be an additional Director, but so that the totalnumber of Directors shall not at any time exceed the maximum fixed under Article 113. Any such additionalDirector shall hold office only up to the date of the next Annual General Meeting.

118. Subject to the provisions of Section 261, 264 and 284 (6) of the Act, the Board shall have power at any timeand from time to time to appoint any other qualified person to be Director to fill a casual vacancy. Any personso appointed shall hold office only up to the date up to which the Director in whose place he is appointedwould have held office if it had not been vacated by him.

119. A Director of the Company shall not be bound to hold any qualification share.

120 (1). Subject to the provisions of the Act, a Managing Director(s) and/or Wholetime Director(s) of the Company,may be paid remuneration either by way of a monthly payment, fee for each meeting or participation inprofits or by any or all these modes and/or any other mode not expressly prohibited by the Act.

(2). Subject to the provisions of the Act a Director, who is neither in the whole time’ employment nor a ManagingDirector may be paid remuneration either;

i) by way of monthly, quarterly or annual payment in accordance with the provisions of Section 198, 309,310 & 314.

(ii) by way of commission if the Company by a special resolution authorised such payment.

(3). The fee payable to a Director (including a Managing or Whole-time Director. if any) for attending a meetingof the Board or Committee thereof shall be a sum as the board may from time to time determine.

124. (1) A Director or his relative, firm in which such Director or relative is a partner, or any other partner in such firmor a private Company of which the Director is member or director may enter into any contract with the

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Company for the sale,pur~hase or supply of any goods, materials, or services or for underwriting thesubscription of any share in or debentures of the Company, provided that the sanction of the Board isobtained before or within three months of the date on which the contract is entered into in accordance withSection 297 of the Act.

(2) No sanction shall however, be necessary for:

(a) Any purchase of goods and material from the Company, or the sale of goods and material to theCompany, by any such Director, relative, firm, partner or private company as aforesaid for cash atprevailing market prices;

(b) Any contracts between the Company on one side and any such Director, relative, firm, partner orPrivate company on the other for sale, purchase or supply of any goods, materials and services in.which either the Company or the Director, relative, firm., partner or private company, as the casemay be, regularly trade or does business, where the value of the goods and materials or the cost ofsuch services does not exceed Rs.5,000/- in the aggregate in any year comprised in the period ofthe contract or contracts.

Provided that in circumstance of urgent necessity, a Director, relative, firm, partner or privateCompany as aforesaid may without obtaining the consent of the board enter into any such contractwith the Company for the sale, purchase or supply of any goods, materials or services even if thevalue of such goods or the cost of such services exceeds Rs.5,000/- in the aggregate in any yearcomprised in the period of the contract if the consent of the board shall be obtained to such contractor contracts at a meeting within three months of the date on which contract was entered into.

125. A Director of the Company who is in any way, whether directly or indirectly concerned or interested in acontract or arrangement or proposed contract or arrangement entered into or to be entered into by or onbehalf of the Company, shall disclose the nature of his concern or interest at a meeting of the Board in themanner provided Section 299 (2) of the Act; provided that it shall not be necessary for a Director to disclosehis concern or interest in any contract or arrangement entered into or to be entered into with any othercompany where any of the Directors of the Company or two or more of them together holds not more thantwo per cent of the paid-up share capital in any such Company.

130. At every Annual General Meeting of the Company, one third of such of the Directors for time being as areliable to retire by rotation or if their number is not three or a multiple of three, the number nearest to one thirdshall retire from office. The debenture Director, if any, shall not be subject to retirement under this clause andshall not be taken into account in determining the rotation of retirement of the number of Directors retire.

132. A retiring Director shall be eligible for re-election.

MANAGING DIRECTOR, MANAGING DIRECTORS OR WHOLE TIME DIRECTOR OR WHOLE. TIME DIRECTORS139. Subject to the provisions of Sections 197A, 198,267,266,269,309,310, 311, 316 and 317 and other applicable

provisions of the Act and of these Articles. the Directors may from time to time appoint one or more of theirbody to be a Managing Director or Managing Directors whole time Director or whole time Directors of theCompany for such term not exceeding five years at a time and subject to such contract as they may think fit.

141. The remuneration of the Managing Director or Managing Directors or Wholetime Director or WholetimeDirectors (Subject to Section 300 and other applicable provisions of the Act and of these Articles of and ofany contract between him and the Company) shall be in accordance with the terms of his contract with thecompany.

PROCEEDING OF THE BOARD OF DIRECTORS143. The Directors may meet together as a Board for the dispatch of business from time to time and shall so meet

at least once in every three months and at least four such meeting shall be held in every year. The Directorsmay adjourn and otherwise regulate their meetings as they think fit.

150. A meeting of the Board for the time being at which a quorum is present shall be competent to exercise all orany of the authorities, powers and discretions which by or under the Act or the Articles of the Company arefor the time being vested in or exercisable by the Board generally.

151. Subject to the restriction contained in Section 292 of the Act the Board may delegate any of their power toCommittees of the Board consisting of such Member or Members of its body, as it thinks fit, and it may fromtime to time revoke and discharge any such Committee of the Board either wholly or in part and either as to

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person or purposes, but every Committee of the Board so formed shall, in the exercise of the powers sodelegated, conform to any regulations that may from time to time be imposed on it by the Board. All actsdone by any such Committee of the board in conformity with such relations and fulfillment of the purposes oftheir appointment, but not otherwise, shall have the like force and effect as if done by the Board

153. No resolution shall be deemed to have been duly passed by the Board or by a Committee thereof bycirculation, unless the resolution has been circulated in draft, together with the necessary papers, if any, toall the directors, or to all the Members of the Committee (not being less in number that the quorum fixed fora meeting of the Board or Committee, as the case may be), and to all other Directors or Members of theCommittee, and has been approved by such of the directors or Members of the Committee or by a majorityof them as are entitled to vote in the resolution.

156. The Board may exercise all such powers of the company and do all such acts and things as are not, by theAct, or any other Act or by the Memorandum or by the Articles of the company required to be exercised bythe Company in General Meeting, subject nevertheless to these Articles, to the provisions of the Act, or anyother Act and to such regulations being not inconsistent with the aforesaid regulations or provisions as maybe prescribed by the company in General Meeting but no regulation made by the Company in GeneralMeeting shall invalidate any prior act of the Board which would have been valid if that regulation had notbeen made: Provided that the Board shall not, except with the consent ‘of the Company in General Meeting.

(a) Sell, lease or otherwise dispose of the whole, or substantially the whole, of the undertaking of theCompany or where the Company owns more than one undertaking, of the whole, or substantially thewhole, of any such undertaking

(b) Remit, or give time for the repayment of, any debt due by a Director;

(c ) Invest otherwise than in trust securities the amount of compensation received by the Company in respectof the compulsory acquisition of any such undertakings as is referred to in clause (a), or of any premisesor properties used for any such undertaking and without which it cannot be carried on or can be carriedon only with difficulty or only after a considerable time;

(d) Borrow moneys where the moneys to be borrowed together with the moneys already borrowed by theCompany (apart from temporary loans obtained from the Company’s bankers in the ordinary course ofbusiness), will exceed the aggregate of the paid-up capital of the Company and its free reserves that isto say, reserves not set apart for any specific purpose;

Provided further that the powers specified in Section 292 of the Act shall subject to these Articles beexercised only at meetings of the Board unless the same be delegated to the extent therein stated; or

(e) Contribute to charitable and other funds not directly relating to the business of the Company or thewelfare of its employees, any amounts the aggregate of which will, in any financial year; exceed twentyfive thousand rupees or five per cent of its average net profits as determined in accordance with theprovisions of Sections 349 and 350 of the Act during the financial years immediately preceding, whicheveris greater.

157. Without prejudice to the general powers conferred by the preceding Article and so as not in any way to limitor restrict those powers, and without prejudice to the other power conferred by these Articles but subject tothe restrictions contained in the last preceding Article, it is hereby declared that the Directors shall havefollowing powers, that is to say, power

1) To pay the costs, charges and expenses preliminary and incidental to the promotion, formation,establishment and registration of the Company.

2) To pay and charge to the capital account of the company and commission or interest lawfully payablethere out under the provisions of Section 76 and 208 of the Act.

3) Subject to Section 292, 297 and 360 of the Act to purchase or otherwise acquire for the Company anyproperty, right or privileges which the Company is authorised to acquire, at or for such price orconsideration and generally on such terms and conditions as they may think fit, and in any such purchaseor other acquisition to accept such title as the Directors may believe or may be advised to be reasonablysatisfactory.

4) At their discretion and subject to the provisions of the Act to pay for any property, rights or privilegesacquired by or services rendered to the Company, either wholly or partially, in cash or in shares, bonds,debentures, mortgages, or other securities of the company, and any such shares may be issued either

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as fully paid up or with such amount credited as paid up thereon as may be agreed upon; and any suchbonds, debentures, mortgages or other securities may be either specifically charged upon all or anypart of the property of the company and its uncalled capital or not so charged.

5) To secure the fulfillment of any contracts or engagement entered into by the Company by mortgage orcharge of Company and its uncalled capital for the time being or in such manner as they may think fit.

6) To accept from any member, as far as may be permissible by law, a surrender of his shares or any partthereof, on such terms and conditions as shall be agreed.

7) To appoint any person to accept and hold in trust for the Company any property belonging to theCompany, in which it is interested, or for any other purposes; and to execute and do all such deeds andthings as may be required in relation to any trust, and provide for remuneration of such trustee ortrustees.

8) To institute, conduct, defend, compound or abandon any legal proceeding by or against the Companyor its officers, or otherwise concerning the affairs of the company, and also to compound and allow thetime for payment or satisfaction of any debts, due and of any claim or demands by or against thecompany and to refer any differences to arbitration, and observe and perform any awards made thereon.

9) To act on behalf of the Company in all matters relating to bankrupts and insolvents.

10) To make and give receipts, releases, and other discharges or moneys payable to the Company and forthe claims and demands of the Company.

11) Subject to the provisions of Sections 292, 295, 369, 370 and 372 of the Act to invest and deal with anymoneys of the Company not immediately required for the purpose thereof upon such security (notbeing shares of this Company), or without security and in such manner as they may think fit, and fromtime to time to vary or realise such investments., save as provided in Section 49 of the Act, all investmentsshall be made and held in the company’s own name.

12) To execute in the name and on behalf of the Company in favour of any Director or other person whomay incur or be about to incur any personal liability whether as principal or surety, for the benefit of theCompany, such mortgages of the Company’s property (present and future) as they think fit, and anysuch mortgage may contain a power of sale. and such .other powers, provisions, covenants andagreements as shall be agreed upon.

13) To determine from time to time who shall be entitled to sign, on the company’s behalf, bills, notes,receipts, acceptances, endorsements, cheques, dividend warrants, releases, contracts and documentsand to give, the necessary authority for such purposes.

14) To distribute by way of bonus amongst the staff of the Company a share or shares in the. profits of theCompany, and to give to any officer or other person employed by the company, a commission on theprofits of any particular business or transaction; and charge such bonus or commission as part of theworking expenses of the Company.

15) To provide for the welfare of Directors or Ex-Directors or employees and Ex- employees of the Companyand their wives, widows and families or the dependents on connections of such persons, by building orcontributing to the building of the houses, dwelling or chawls, or by grants of money pension, gratuities,allowances, bonus or other payments, or by creating, and from time to time subscribing or contributingto provident and other associations, institutions, funds or trusts and by providing or subscribing orcontributing towards places of instruction and recreation, hospitals and dispensaries, medical and otherattendance and other assistance as the Board shall think fit; and to subscribe or contribute or otherwiseto assist or to guarantee to charitable, benevolent, religious, scientific, national or other institutions orobjects which shall have any moral or other claim to support or aid by the Company, either by reason oflocality of operation, or of public and general utility or otherwise.

16) Before recommending any, dividend, to set aside out of the profits of the Company such sums as theymay think proper for depreciation or to Depreciation Fund, or to an Insurance Fund, or as a ReserveFund or Sinking Fund or any special Fund to meet contingencies or to repay debentures or debenture-stocks. or for special dividends or for repairing, improving, extending and maintaining any of the propertyof the Company and for such other purposes including the purposes referred to in the preceding clause,as the Board may in their absolute discretion, think conducive to the interest of the Company, andsubject to Section 292 of the Act, to invest the several sums so set aside or so much thereof as requiredto be invested, upon such investments (other than .shares of the Company) as they may think fit, and

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from time to time to deal with or vary such investments and dispose of and apply and expend all or anypart thereof for the benefit of the Company, in such manner and for such purposes as the Board in theirabsolute , think conducive to the interest of the Company, notwithstanding that the matters to which theBoard apply or upon which they expend the same, or any part thereof, may be matters to or upon whichthe capital moneys of the Company might rightly be applied or expended; and to divide the ReserveFund into such special funds as the Board may think fit, with full power to transfer the whole or anyportion of a Reserve Fund or division of a Reserve Fund to another Reserve Fund or division of aReserve Fund and with power to employ the assets constituting all or any of the above funds includingthe Depreciation Fund in the business of the Company or in the purchase or repayment of Debentures,debenture stock and without being bound to keep the same separate from the other assets and withoutbeing bound to pay interest on the same with power however to the Board at their discretion to pay orallow to the credit of such funds interest at such rate as the Board may think proper, not exceedingnine percent per annum.

17) To appoint, and at their discretion remove or suspend such general managers, secretaries, assistants,supervisors, clerks, agents, and servants for permanent, temporary or special services as they mayfrom time to time think fit and to determine their powers and duties and fix their salaries or emoluments,remuneration and to require security as they may think fit. And also from time to time provide for themanagement and transaction of the affairs of the Company in any specified locality in India or elsewherein such manner as they think fit; and the provisions contained in the four next following general powersconferred by this sub-clause.

18) To comply with the requirements of any local law which in their opinion shall in the interests of theCompany be necessary or expedient to comply, with.

19) From time to time and at any time to establish any Local Board for managing any of the affairs of theCompany in any specified locality in India or elsewhere and to appoint any persons to be members ofsuch Local Boards, and to fix their remuneration.

20) Subject to Section 292 of the Act, from time to time, and at any time to delegate to any person soappointed any of the powers, authorities and discretions for the time being vested in the Board, otherthan their power to make calls or to make loans or borrow moneys, and to authorize the Members forthe time being of any such Local Board, or any of them to fill up any vacancies, and any such appointmentor delegation may be made on such terms and subject to such conditions as the Board may think fit,and the Board may at any time remove any person so appointed and may annul or vary any suchdelegation.

21) At any time and from time to time by Power of Attorney under the Seal of the Company, to appoint anyperson or persons to be the Attorney or Attorneys of the Company for such purposes and with suchpowers, authorities and discretions (not exceeding those vested in or exercisable by the Board underthese presents and excluding the power to make calls and excluding also except in their limits authorisedby the Board the power to make loans and borrow moneys) and for such Period and subject to suchconditions as the Board may from time to time think fit; and any such appointment may (if the Boardthinks fit) be made in favour of the members of any Local Board, established as aforesaid or in favourof any company, or the shareholders, directors, nominees, or managers of any company or firm orotherwise in favour of any fluctuating body of persons whether nominated directly or indirectly by theBoard and any such Power of Attorney may contain such powers for the protection or convenience ofpersons dealing with Attorneys as the Board may think fit, and may contain powers enabling any suchdelegates or attorneys as aforesaid to sub-delegate all or any of the powers, authorities and discretionsfor the time being vested in them.

22) Subject to Section 294 and 297 of the Act, for or in relation to any of the matters aforesaid or otherwisefor the purposes of the Company to enter into all such negotiations and contracts, and rescind and varyall such contracts, and execute and do all such acts, deeds and things in the name and on behalf of theCompany as they may consider expedient.

23) From time to time to make, vary and repeal by laws for the regulation of the business of the Company,its officers and servants.

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DIVIDENDS162. The profit of the Company, subject to any special rights relating thereto created or authorised to be created

by these Articles and subject to the members in proportion to the amount of capital paid-up or credited aspaid-up on the shares held by them respectively.

163. The Company in General Meeting may declare dividends to be paid to members according to their respectiverights, but no dividend shall exceed the amount recommended by the Board, but the Company in GeneralMeeting may declare a smaller dividend.

164. No dividend shall be declared or paid otherwise than out of profits of the financial year arrived at afterproviding for depreciation in accordance with the provisions of Section 205 of the Act or out of the profits ofthe Company for previous financial year or years arrived at after providing for depreciation in accordancewith these provisions and remaining undistributed or ,out of both; Provided that:

(a) If the Company has not provided for depreciation for any previous financial year or years it shallbefore declaring or paying a dividend for any financial year, provide for such depreciation out ofprofits of the financial year or out of the profits of any other previous financial year or years.

(b) If the Company has incurred any loss in any previous financial year or years the amount of the lossor an amount which is equal to the amount provided for depreciation for that year or those yearswhichever is less, shall be set off against the profits of the Company for the year for which thedividend is proposed to be declared or paid of against the profit of the Company for any previousfinancial year or years arrived at in both cases after providing for depreciation in accordance withthe provisions of sub-section(2) of Section 205 of the Act or against both.

165. The Board may, from time to time, pay to the Members, such interim dividend as in their judgment theposition of the Company Justifies.

167. All dividends shall be apportioned and paid proportionately to the amounts paid or credited as paid ordividend as paid on the shares during any portion or portions of the period in respect of which the dividendis paid; but if any share is issued on terms providing that it shall rank for dividend as from a particular date,such share shall rank for dividend accordingly.

172. Unless otherwise directed any dividend may be paid by cheque or warrant or by a pay slip or receipt havingthe force of a cheque or warrant or bank order sent through the post to registered address of the member orperson entitled or in case of joint-holders to that one of them first named in the Register in respect of thejoint-holdings. Every such cheque or warrant or bank order shall be made payable to the order of the personto whom it is sent. The Company shall not be liable for non-receipt, lost in transmission, or for ‘any dividendlost to the member or person entitled thereto by the forged endorsement of any cheque or warrant or theforged signature of any payslip or the fraudulent recovery of the dividend by any other means.

174(a) The Company in General Meeting may resolve that any moneys, investments or other assets forming partof the undivided profits of the Company standing to the credit of the Reserve Fund, or any Capital RedemptionReserve Account, or in the hands of Company and available dividend (or representing premium received onthe issue of shares and standing to the credit of the Share Premium Account) be capitalised and distributedamongst such of the shareholders as would be entitled to receive the same proportions on the footing thatthey become entitled thereto as capital and that all or any part of such capitalised be applied on behalf ofsuch shareholders in paying up in full either at par or at such premium as the resolution may provide, anyunissued shares or debentures or debenture-stock of the Company which shall be distributed accordinglyor in or towards payment of the uncalled liability on any issued shares of debentures or debenture-stock andthat such distribution or payment shall be accepted by such shareholders in full satisfaction of their interestin the said capitalised sum. Provided that a Share Premium Account and a Capital Redemption ReserveAccount may, for the purposes of the Article, only be applied in the paying of any unissued shares, to beissued to members of the Company as fully paid bonus shares.

(b) General Meeting may resolve that any surplus moneys, arising from the realization of any capitalassets of the company or any investments representing the same or any other undistributed profitsof the Company not subject to charge for Income Tax be distributed among the members on thefooting that they receive the same as capital.

(c) For the purpose of giving effect to any resolution under the preceding paragraphs of this Article theBoard may settle any difficulty which may arise in regard to the distribution as it thinks expedient andin particular may issue fractional certificates, and may fix the value for distribution of any specific

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assets, and may determine that such cash payments shall be made to and members upon thefooting of the value so fixed or that fraction of less value than Rs.10/- may be disregarded in order toadjust the rights of all parties, and may vest any such cash or specific assets in trustees upon suchtrusts for the person entitled to the dividend or capitalised fund as may seem expedient to the Board.Where requisite, a proper contract shall be delivered to the Registrar for registration in accordancewith Section 75 of the Companies Act, 1956, and the Board may appoint any person to sign suchcontract on behalf of the persons entitled to the dividend or capitalised fund, and such appointmentshall be effective.

175. Where the Company has declared a dividend but which has not been paid or the dividend warrant in respectthereof has not been posted within the time stipulated by Companies Act from the date of declaration to anyshareholder entitled to the payment of the dividend, the Company shall within 7 days from the date of expiryof the said period of the time stipulated by Companies Act, open a special account in that behalf in anyscheduled bank called Unpaid Dividend of (India) Ltd.” and transfer to the said account, the total amount ofdividend which remains unpaid or in relation to which no dividend warrant has been posted.

Any money transferred to the unpaid dividend account of the Company which remains unpaid or unclaimedfor such period as may be specified under the Companies Act, 1956 from time to time from the date of suchtransfer, shall be transferred by the company to such Fund/Account as the Central Government may specify.A claim to any money so transferred to the said Fund/Account may be preferred to the Central Governmentby the shareholders to whom the money is due.

No unclaimed or unpaid dividend shall be forfeited by the Board.

WINDING UP190. The liquidator on any winding-up (Whether voluntary, under supervision or compulsory) may, with the sanction

of a Special Resolution, but subject to the rights attached to any preference share capital, divide among thecontributories in specie any of the assets of the Company and may with the like sanction, vest any part of theassets of the Company in Trustees upon such trusts for the benefit of the contributories as the liquidator withthe like sanction shall think fit.

171

MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

The following contracts (not being contracts entered into in the ordinary course of business carried on by theCompany or entered into more than two years before the date of this Draft Red Herring Prospectus), which are ormay be deemed material have been entered or to be entered into by the Company. These contracts, copies ofwhich have been attached to the copy of this Draft Red Herring Prospectus, delivered to the Registrar of Companies,NCT of Delhi and Haryana for registration and also the documents for inspection referred to hereunder, may beinspected at the registered office of the Company situated at B- 86, Mayapuri Industrial Area, Phase I, New Delhi-110 064 from 10.00 am to 4.00 pm on working days from the date of this Draft Red Herring Prospectus until the BidClosing Date/Issue Closing Date.

Material Contracts1. Engagement Letter dated December 15, 2005 for appointment of Chartered Capital and Investments Limited

and Microsec Capital Limited as Lead Manager & Book Running Lead Manager respectively.2. Memorandum of Understanding dated 19th January, 2006 amongs the Company, the BRLM and the Lead

Manager.3. Memorandum of Understanding dated 19th January, 2006 executed by the Company with the Registrar to the

Issue.4. Escrow Agreement dated [•] among the Company, the BRLM, Escrow Collection Banks and the Registrar to the

Issue.5. Syndicate Agreement dated [•] among the Company, the BRLM and Syndicate Members.6. Underwriting Agreement dated [•] among the Company, the BRLM and Syndicate Members.

Material Documents1. The Company’s Memorandum and Articles of Association, as amended from time to time.2. The Company’s certification of incorporation, amended for change of name, effective November 10, 2003.3. Shareholders’ resolutions dated August 1, 2005 in relation to this Issue and other related matters.4. Resolutions of the Board dated June 28, 2005 authorizing the Issue.5. Resolutions of the general body for appointment and remuneration of our whole-time Directors dated November

27, 20046. Report of the Auditors, R Jain & Sanjay Associates, Chartered Accountants, prepared as per Indian GAAP and

mentioned in this Draft Red Herring Prospectus.7. Copies of annual reports of the Company for the past five financial years ended March 31, 2005 and for the half

year ended September 30, 2005.8. Consents of the Auditors, being R Jain & Sanjay Associates, Chartered Accountants, for inclusion of their report

on accounts in the form and context in which they appear in this Draft Red Herring Prospectus.9. General powers of attorney executed by the director(s) in favour of person(s) for signing and making necessary

changes to this Draft Red Herring Prospectus and other related documents.10. Consents of Bankers to the Company, the BRLM and the Lead Manager, Syndicate Members, Registrar to the

Issue, Escrow Collection Bank(s), Banker to the Issue, Legal Counsel to the Company, the Directors, CompanySecretary and Compliance Officer, as referred to, in their respective capacities.

11. Listing approvals dated August 20, 2004 by BSE and the NSE for listing w.e.f. August 24, 2004.12. Agreement between NSDL, the Company and the Registrar to the Issue dated June 22, 2004.13. Agreement between CDSL, the Company and the Registrar to the Issue dated July 5, 2004.14. Due diligence certificate dated 10th February, 2006 to SEBI from Chartered Capital and Investments Limited

and Microsec Capital Limited. .15. SEBI observation letter [·] dated [·].16. Joint Venture Agreement between the Company and Magna Donnelly Corporation, Michigan, USA.17. Technical Know How Agreement between Lumax Industries Limited and TOYO Roki, Japan18. Scheme of demerger and copy of the Hon’ble High Court of Delhi’s order dated Septemebr 15, 2003.19. Scheme of Merger of Toshi and MPI with the Company copy of the Hon’ble High Court of Delhi’s order dated

February 23, 2005Any of the contracts or documents mentioned in this Draft Red Herring Prospectus may be amended or modified atany time if so required in the interest of the Company or if required by the other parties, without reference to theshareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

172

DECLARATION

All the relevant provisions of the Companies Act and the guidelines issued by the Government of India or theguidelines issued by the SEBI, established under Section 3 of the SEBI Act, as the case may be, have beencomplied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of theCompanies Act, the SEBI Act, 1or rules made there under or guidelines issued, as the case may be. We furthercertify that all statements in this Draft Red Herring Prospectus are true and correct.

SIGNED BY ALL DIRECTORS

Mr. U K Jain

Mr. Nitin Jain

Mrs. Kamlesh Jain

Mr. Virender Ganda

Mr. Vinay Panchmiya*

Mr. Jagdeep Kapoor

*THROUGH DULY CONSTITUTED ATTORNEY MR. U K JAIN

_______________________Mr. U.K. JainManaging Director

_______________________Mr. A.K. GoelVice President (Finance)

_______________________Ms. Monika GuptaCompany Secretary

Date: 10th February, 2006

Place: New Delhi