Edelweiss Financial Services Limited

Transcription

1 Placement Document Not for Circulation Serial Number [.] Dated January 29, 2013 PI INDUSTRIES LIMITED (Incorporated as The Mewar Oil and General Mills Limited on December 31, 1946 under the Mewar Companies Act of 1942 and commenced its business vide certificate of commencement of business dated March 3, The name of our Company was changed to Pesticides India Limited pursuant to a fresh certificate of incorporation dated January 1, Subsequently the name of our Company was again changed to PI Industries Limited vide a fresh certificate of incorporation dated October 13, The CIN number of our Company is L24211RJ1946PLC The registered office of our Company is located at Udaisagar Road, Udaipur , Rajasthan (India). The corporate office of our Company is located at 5th Floor, Vipul Square, B Block, Sushant Lok, Phase-1, Gurgaon , Haryana (India) PI Industries Limited ( Company / Issuer ) is issuing upto 1,924,656 equity shares of face value ` 5 each, ( Placement Shares ), at a price of ` per Placement Share, including a premium of ` per Placement Share, aggregating to ` 1, Million, ( Issue ) ISSUE PURSUANT TO CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED THIS ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING UNDERTAKEN PURSUANT TO THE PROVISIONS OF CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED, ( SEBI ICDR REGULATIONS ), AND OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S ( REGULATION S ) UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED ( SECURITIES ACT ). THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR, AND DOES NOT CONSTITUTE AN OFFER OR INVITATION OR SOLICITATION OF AN OFFER TO THE PUBLIC OR TO ANY OTHER PERSON OR CLASS OF INVESTOR WITHIN OR OUTSIDE INDIA OTHER THAN QUALIFIED INSTITUTIONAL BUYERS (AS DEFINED IN SEBI ICDR REGULATIONS). Any invitation, offer and sale of the Placement Shares shall only be made pursuant to the Preliminary Placement Document, this Placement Document, the Application Form and the Confirmation of Allocation Note. See Issue Procedure on page 144 of this Placement Document. The distribution of this Placement Document or the disclosure of its contents without our Company s prior consent to any person, other than Qualified Institutional Buyers, (as defined in the SEBI ICDR Regulations), ( QIBs ), and persons retained by QIBs, to advise them with respect to their purchase of the Placement Shares, is unauthorised and prohibited. Each prospective Investor, by accepting delivery of this Placement Document agrees to observe the foregoing restrictions, and not to make copies of this Placement Document or any other document referred herein. THE PRELIMINARY PLACEMENT DOCUMENT AND THIS PLACEMENT DOCUMENT HAS NOT BEEN REVIEWED BY THE SECURITIES AND EXCHANGE BOARD OF INDIA ( SEBI ), THE RESERVE BANK OF INDIA ( RBI ), BSE LIMITED ( BSE ), THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED ( NSE ), ( COLLECTIVELY REFERRED TO AS STOCK EXCHANGES ), OR ANY OTHER REGULATORY OR LISTING AUTHORITY AND IS INTENDED ONLY FOR USE BY QIBs. THE ISSUE AND THIS PLACEMENT DOCUMENT IS MEANT ONLY FOR QIBs, UNDER CHAPTER VIII OF THE SEBI ICDR REGULATIONS ON A PRIVATE PLACEMENT BASIS AND IS NOT AN OFFER TO THE PUBLIC OR TO ANY OTHER CLASS OF INVESTORS. This Placement Document has not been and will not be registered as a prospectus with the Registrar of Companies ( RoC ) in India, and will not be circulated or distributed to the public in India or any other jurisdiction and will not constitute a public offer in India or any other jurisdiction. The Issue proposed to be made pursuaant to this Placement Document is meant solely for QIBs on private placement basis. Investments in equity and equity-related securities involve a certain degree of risk and prospective investors should not invest any amount in this Issue unless they are prepared to bear the risk of losing all or part of the amount invested by them. Prospective investors are advised to carefully read the chapter titled Risk Factors on page 40 of this Placement Document before deciding to invest in this Issue. Each prospective investor is advised to consult its advisors about the particular consequences of it of an investment in Placement Shares being issued pursuant to this Placement Document. The information on our Company s website or any website directly or indirectly linked to our Company s website does not form part of this Placement Document and prospective investors should not rely on such information contained in, or available through, such websites. Except for the Placement Shares, all of our Company s outstanding paid-up equity shares of face value ` 5 /- each, are listed on the Stock Exchanges. The closing price of Equity Shares on the BSE and on the NSE on the date prior to the date of this Placement Document, i.e. January 28, 2013 was ` and ` per Equity Share, respectively. Our Company has applied for and obtained the in-principle approval of the Stock Exchanges under Clause 24(a) of the Listing Agreement. Applications shall be made for the listing of the Placement Shares offered through this Placement Document on the Stock Exchanges. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Placement Shares to trading on the Stock Exchanges should not be taken as an indication of the merits of our Company or the Placement Shares. YOU MAY NOT BE AND ARE NOT AUTHORISED TO (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI ICDR REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA AND OTHER JURISDICTIONS. A copy of the Preliminary Placement Document has been delivered to the Stock Exchanges. A copy of this Placement Document will be filed with the Stock Exchanges in accordance with SEBI ICDR Regulations. THIS PLACEMENT DOCUMENT HAS BEEN PREPARED BY OUR COMPANY SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE PROPOSED ISSUE OF THE PLACEMENT SHARES DESCRIBED IN THIS PLACEMENT DOCUMENT. The Placement Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S ( Regulation S ) under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Placement Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. For further details, see Selling Restrictions and Transfer Restrictions. This Placement Document is dated January 29, SOLE GLOBAL CO-ORDINATOR AND BOOK RUNNING LEAD MANAGER Edelweiss Financial Services Limited

2 TABLE OF CONTENTS NOTICE TO INVESTORS... 1 REPRESENTATIONS BY INVESTORS... 3 OFFSHORE DERIVATIVE INSTRUMENTS... 8 DISCLAIMER CLAUSE OF THE STOCK EXCHANGES... 9 PRESENTATION OF FINANCIAL AND OTHER INFORMATION...10 INDUSTRY AND MARKET DATA...11 FORWARD-LOOKING STATEMENTS...12 ENFORCEMENT OF CIVIL LIABILITIES...14 EXCHANGE RATE INFORMATION...15 CERTAIN DEFINITIONS AND ABBREVIATIONS...16 SUMMARY OF THE ISSUE...21 SUMMARY OF OUR BUSINESS...24 SELECTED FINANCIAL INFORMATION OF OUR COMPANY...28 RISK FACTORS...40 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES...60 USE OF PROCEEDS...64 CAPITALISATION...65 DIVIDEND POLICY...67 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...68 INDUSTRY OVERVIEW...91 OUR BUSINESS BOARD OF DIRECTORS AND SENIOR MANAGEMENT PRINCIPAL SHAREHOLDERS REGULATIONS AND POLICIES ISSUE PROCEDURE PLAN OF DISTRIBUTION SELLING RESTRICTIONS TRANSFER RESTRICTIONS THE SECURITIES MARKET OF INDIA DESCRIPTION OF THE EQUITY SHARES TAXATION LEGAL PROCEEDINGS RECENT DEVELOPMENTS GENERAL INFORMATION FINANCIAL STATEMENTS DECLARATION...187

3 NOTICE TO INVESTORS Our Company accepts full responsibility for the information contained in this Placement Document and to the best of its knowledge and belief, having made all reasonable enquiries, confirms that this Placement Document contains all information with respect to our Company and its Subsidiaries and the Placement Shares, which is material in the context of this Issue. The statements contained in this Placement Document relating to our Company and its Subsidiaries and the Placement Shares are, in all material respects, true and accurate and not misleading, the opinions and intentions expressed in this Placement Document with regard to our Company and its Subsidiaries and the Placement Shares are honestly held, have been reached after considering all relevant circumstances, are based on information presently available to our Company and are based on reasonable assumptions. There are no other facts in relation to our Company and its Subsidiaries and the Placement Shares, the omission of which would, in the context of the Issue, make any statement in this Placement Document misleading in any material respect. Further, all reasonable enquiries have been made by our Company and its Subsidiaries to ascertain such facts and to verify the accuracy of all such information and statements. The Sole Global Co-ordinator and Book Running Lead Manager has not separately verified all the information contained in this Placement Document (financial, legal or otherwise). Accordingly, neither the Sole Global Co-ordinator and Book Running Lead Manager nor any of its members, employees, counsel, officers, directors, representatives, agents or affiliates makes any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted, by the Sole Global Co-ordinator and Book Running Lead Manager, as to the accuracy or completeness of the information contained in this Placement Document or any other information supplied in connection with the Placement Shares. Each person receiving this Placement Document acknowledges that such person has neither relied on the Sole Global Co-ordinator and Book Running Lead Manager nor on any person affiliated with the Sole Global Co-ordinator and Book Running Lead Manager in connection with its investigation of the accuracy of such information or its investment decision, and each such person must rely on its own examination of our Company and its Subsidiaries and the merits and risks involved in investing in the Placement Shares issued pursuant to the Issue. Any prospective investor should not construe anything in this Placement Document as legal, business, tax, acounting or investment advice. No person is authorised to give any information or to make any representation not contained in this Placement Document and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of our Company or the Sole Global Co-ordinator and Book Running Lead Manager. The delivery of this Placement Document at any time does not imply that the information contained in it is correct as at any time subsequent to its date. The Placement Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S ( Regulation S ) under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Placement Shares are being offered and sold only outside the United States in offshore transactions in reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. For further details, see Selling Restrictions and Transfer Restrictions. The distribution of this Placement Document and the Issue of the Placement Shares in certain jurisdictions may be restricted by law. As such, this Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation. In particular, no action has been taken by our Company and its Subsidiaries and the Sole Global Co-ordinator and Book Running Lead Manager which would permit an Issue of the Placement Shares or distribution of this Placement Document in any jurisdiction, other than India. 1

4 Accordingly, the Placement Shares may not be offered or sold, directly or indirectly, and neither this Placement Document nor any Issue materials in connection with the Placement Shares may be distributed or published in or from any country or jurisdiction except under circumstances that will result in the compliance with any applicable rules and regulations of any such country or jurisdiction. Please refer to the section titled Transfer Restrictions on page 159 of this Placement Document. In making an investment decision, investors must rely on their own examination of our Company and the terms of this Issue, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning this Issue. In addition, neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager are making any representation to any offeree or purchaser of the Placement Shares regarding the legality of an investment in the Placement Shares by such offeree or purchaser under applicable legal, investment or applicable laws or regulations. Each purchaser of the Placement Shares in this Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Chapter VIII of the SEBI ICDR Regulations and is not prohibited by SEBI or any other regulatory authority from buying, selling or dealing in securities. Each purchaser of the Placement Shares in this Issue also acknowledges that it has been afforded an opportunity to request from our Company and review information to our Company and the Equity Shares The information on our Company s website or the website of the Sole Global Co-ordinator and Book Running Lead Manager, does not constitute or form part of this Placement Document. Prospective investors should not rely on the information contained in or available through such websites. This Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such documents. 2

5 REPRESENTATIONS BY INVESTORS All references to you in this section are to the propective investors in the Issue. By subscribing to any Placement Shares under the Issue, you are deemed to have agreed, acknowledged warranted and represented to us and the Sole Global Co-ordinator and Book Running Lead Manager and agreed as follows: you are a QIB as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations ( QIB ), and having valid and existing registrations under the applicable laws and regulations of India and undertake to acquire, hold, manage or dispose of any Placement Shares that are allocated to you for the purposes of your business in accordance with Chapter VIII of the SEBI ICDR Regulations; if you are a QIB not resident in India that you are (i) a foreign institutional investor as defined in the SEBI (Foreign Institutional Investor) Regulations, 1995 and registered with SEBI under applicable laws in India, ("FII"), or (ii) a sub-account which is not a foreign corporate or foreign individual, and have a valid and existing registration with SEBI under applicable law. if you are Allotted Placement Shares pursuant to the Issue, you shall not, for a period of one year from the date of Allotment, sell the Placement Shares so acquired except on the floor of the Stock Exchanges; you are aware that the Placement Shares have not been and will not be registered under the SEBI ICDR Regulations or under any other law in force in India. The Preliminary Placement Document and this Placement Document has not been reviewed, verified or affirmed by the SEBI, RBI or the Stock Exchanges and will not be filed or registered with the Registrar of Companies. The Preliminary Placement Document has been filed with the Stock Exchanges for record purposes only and has been displayed on the websites of our Company and the Stock Exchanges; you are entitled to subscribe for and acquire the Placement Shares under the laws of all relevant jurisdictions and that you have all necessary capacity and have obtained all necessary consents and authorisations, governmental or otherwise and complied with all necessary formalities and applicable laws to enable you to commit to this participation in the Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorities to agree to the terms set out or referred to in this Placement Document) and will honor such obligations; you confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by our Company or its agents, ( Company s Presentations ), with regard to our Company, the Placement Shares or the Issue; or (ii) if you have participated in or attended any Company s Presentations: (a) you understand and acknowledge that the Sole Global Co-ordinator and Book Running Lead Manager may not have knowledge of the statements that our Company or its agents may have made at such Company s Presentations and are therefore unable to determine whether the information provided to you at such Company s Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the Sole Global Coordinator and Book Running Lead Manager have advised you not to rely in any way on any information that was provided to you at such Company s presentations, and (b) confirm that, to the best of your knowledge, you have not been provided any price-sensitive information relating to our Company and the Issue that was not made publicly available; neither we nor the Sole Global Co-ordinator and Book Running Lead Manager nor any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates is making any recommendations to you, advising you regarding the suitability of any transactions it may enter into in connection with the Issue and that participation in the Issue is on the basis that you are not and will not be a client of the Sole Global Co-ordinator and Book 3

6 Running Lead Manager and that the Sole Global Co-ordinator and Book Running Lead Manager have no duties or responsibilities to you for providing the protection afforded to their clients or clients or for providing advice in relation to the Issue and is in no way acting in a fiduciary capacity to you; you are aware that if you are Allotted more than 5% of the Equity Shares in this Issue, our Company is required to disclose your name and the number of Equity Shares Allotted to the Stock Exchanges and the Stock Exchanges will make the same information available on their website and you consent to such disclosure; all statements other than statements of historical fact included in this Placement Document, including, without limitation, those regarding our Company s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our Company s business), are forward-looking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our Company s present and future business strategies and environment in which our Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of Placement Document. Our Company assumes no responsibility to update any of the forwardlooking statements contained in this Placement Document; you have been provided a serially numbered copy of the Preliminary Placement Document and this Placement Document and have read the Preliminary Placement Document and this Placement Document in its entirety, including, in particular, the section titled Risk Factors ; you are aware and understand that the Placement Shares are being offered only to QIBs and are not being offered to the general public and the Allotment of the same shall be on a discretionary basis; you have made, or been deemed to have made, as applicable, the representations set forth under section titled Transfer Restrictions ; you are purchasing the Placement Shares in reliance on Regulation S under the Securities Act; that in making your investment decision, (i) you have relied on your own examination of our Company and the terms of the Issue, including the merits and risks involved, (ii) you have made and will continue to make your own assessment of our Company, the Placement Shares and the terms of the Issue based on such information as is publicly available, (iii) you have consulted your own independent advisors or otherwise have satisfied yourself concerning without limitation, the effects of local laws, (iv) you have relied solely on the information contained in this Placement Document and no other disclosure or representation by our Company or any other party; and (v) you have received all information that you believe is necessary or appropriate in order to make an investment decision in respect of our Company and the Placement Shares; you have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the investment in the Placement Shares and you and any accounts for which you are subscribing the Placement Shares (i) are each able to bear the economic risk of the investment in the Placement Shares; (ii) will not look to our Company and/or the Sole Global Co-ordinator and Book Running Lead Manager for all or part of any such loss or losses that may be suffered; (iii) are able to sustain a complete loss on the investment in the Placement Shares; (iv) have no need for liquidity with respect to the investment in the Placement Shares; and (v) have no reason to anticipate any change in your or their circumstances, financial or 4

7 otherwise, which may cause or require any sale or distribution by you or them of all or any part of the Placement Shares; the Sole Global Co-ordinator and Book Running Lead Manager or our Company have not provided you with any tax advice or otherwise made any representations regarding the tax consequences of the Placement Shares (including but not limited to the Issue and the use of the proceeds from the Placement Shares). You will obtain your own independent tax advice and will not rely on the Sole Global Co-ordinator and Book Running Lead Manager or our Company when evaluating the tax consequences in relation to the Placement Shares (including but not limited to the Issue and the use of the proceeds from the Placement Shares). You waive and agree not to assert any claim against the Sole Global Co-ordinator and Book Running Lead Manager or our Company with respect to the tax aspects of the Placement Shares or the Issue or as a result of any tax audits by tax authorities, wherever situated; that where you are acquiring the Placement Shares for one or more managed accounts, you represent and warrant that you are authorised in writing, by each such managed account to acquire the Placement Shares for each managed account; and to make the acknowledgements and agreements herein for and on behalf of each such account, reading the reference to you to include such accounts; you are not a Promoter and are not a person related to our Promoters, either directly or indirectly and your Application does not directly or indirectly represent our Promoters or Promoter Group of our Company; you have no rights under a shareholders agreement or voting agreement with our Promoters or persons related to our Promoters, no veto rights or right to appoint any nominee director on the Board of Directors of our Company other than the acquired in the capacity of a lender not holding any of our Equity Shares which shall not be deemed to be a person related to our Promoter; you have no right to withdraw your Application after the Issue Closing Date; you are eligible to apply and hold Placement Shares so Allotted and together with any Placement Shares held by you prior to the Issue. You further confirm that your holding upon the Issue of the Placement Shares shall not exceed the level permissible as per any applicable regulation; the application form submitted by you would not eventually result in triggering a requirement to make public announcement to acquire Equity Shares in accordance with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended, ( Takeover Code ); to the best of your knowledge and belief together with other prospective QIBs in the Issue that belong to the same group or are under common control as you, the Allotment to you under the present Issue shall not exceed 50 % of the Issue. For the purposes of this representation: a. the expression belongs to the same group shall derive meaning from the concept of companies under the same group as provided in sub-section (11) of Section 372 of the Companies Act. b. control shall have the same meaning as is assigned to it by clause (c) of Regulation 2 of the Takeover Code. you shall not undertake any trade in the Placement Shares credited to your Depository Participant account until such time that the final listing and trading approval for the Placement Shares is issued by the Stock Exchanges; you are aware that our Company has made applications to the Stock Exchanges for in-principle approval for listing and admission of the Placement Shares to trading on the Stock Exchanges 5

8 market for listed securities; you are aware that applications shall be made to the Stock Exchanges after the Allotment of the Equity Shares in the Issue for approvals for listing and admission of the Equity Shares to trading on the Stock Exchanges market for listed securities and there can be no assurance that such approvals will be obtained on time or at all; you are aware and understand that the Sole Global Co-ordinator and Book Running Lead Manager has entered into a Placement Agreement with our Company whereby the Sole Global Co-ordinator and Book Running Lead Manager has, subject to the satisfaction of certain conditions set out therein, to use its reasonable endeavours to seek to procure subscription for the Placement Shares; that the contents of this Placement Document are exclusively the responsibility of our Company and that neither the Sole Global Co-ordinator and Book Running Lead Manager nor any person acting on its behalf has or shall have any liability for any information, representation or statement contained in this Placement Document or any information previously published by or on behalf of our Company and will not be liable for your decision to participate in the Issue based on any information, representation or statement contained in this Placement Document or otherwise. By accepting a participation in this Issue, you agree to the same and confirm that you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Sole Global Co-ordinator and Book Running Lead Manager or our Company or any other person and neither the Sole Global Co-ordinator and Book Running Lead Manager nor our Company nor any other person will be liable for your decision to participate in the Issue based on any other information, representation, warranty or statement that you may have obtained or received; that the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire the Placement Shares is contained in this Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Placement Shares and that you have neither received nor relied on any other information given or representations, warranties or statements made by the Sole Global Co-ordinator and Book Running Lead Manager or our Company and the Sole Global Co-ordinator and Book Running Lead Manager will not be liable for your decision to accept an invitation to participate in the Issue based on any other information, representation, warranty or statement; you agree to indemnify and hold our Company and the Sole Global Co-ordinator and Book Running Lead Manager harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations and warranties, acknowledgements and undertakings in this section. You agree that the indemnity set forth in this section shall survive the resale of the Placement Shares by or on behalf of the managed accounts; that our Company, the Sole Global Co-ordinator and Book Running Lead Manager and others will rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings which are given to the Sole Global Co-ordinator and Book Running Lead Manager on their own behalf and on behalf of our Company and are irrevocable; that you are eligible to invest in India under applicable law, including the Foreign Exchange Management (Transfer or Issue of Security by Person Resident Outside India) Regulations, 2000, as amended, and any notifications, circulars or clarifications issued thereunder, and have not been prohibited by the SEBI from buying, selling or dealing in securities; that you understand that the Sole Global Co-ordinator and Book Running Lead Manager does not have any obligation to purchase or acquire all or any part of the Placement Shares purchased by you in the Issue or to support any losses directly or indirectly sustained or incurred by you for any 6

9 reason whatsoever in connection with the Issue, including non-performance by us of any of our respective obligations or any breach of any representations or warranties by us, whether to you or otherwise; that you are a reputed investor who is seeking to purchase the Placement Shares for your own investment and not with a view to distribution; In particular, you acknowledge that (i) an investment in the Placement Shares involves a high degree of risk and that the Placement Shares are, therefore, a speculative investment, (ii) you have sufficient knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the merits and risk of the purchase of the Placement Shares, and (iii) you are experienced in investing in private placement transactions of securities of companies in a similar stage of development and in similar jurisdictions and have such knowledge and experience in financial, business and investments matters that you are capable of evaluating the merits and risks of your investment in the Placement Shares; and that all references to you are to the prospective investors in the Placement Shares; and that each of the representations, warranties, acknowledgements and undertakings set out above shall continue to be true and accurate at all times up to and including the Allotment of the Placement Shares. 7

10 OFFSHORE DERIVATIVE INSTRUMENTS Subject to compliance with and to the extent permitted by all applicable Indian laws, rules, regulations, guidelines and approvals and in terms of Regulation 15A(1) of the Securities Exchange Board of India (Foreign Institutional Investors) Regulation, 1995, as amended, foreign institutional investors as defined therein, ( FIIs ), may issue, deal in or hold, off-shore derivative instruments such as participatory notes, equity linked notes or any other similar instruments against Placement Shares allocated in this Issue (all such off-shore derivative instruments referred to herein as P-Notes ), listed or proposed to be listed on any stock exchange in India only in favor of those entities which are regulated by any appropriate relevant foreign regulatory authorities in the countries of their incorporation or establishment subject to compliance of know your client requirements. The FII shall also ensure that no further issue or transfer of any instrument referred to above is made to any person other than a regulated entity. P-Notes have not been and are not being offered or sold pursuant to this Placement Document. This Placement Document does not contain any information concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information regarding any risk factors relating thereto. Neither the Preliminary Placement Document nor this document contains or will contain any information concerning P-Notes or the issuer(s) of any P-Notes, including, without limitation, any information regarding any risk factors relating thereto. Any P-Notes that may be issued are not securities of our Company and do not constitute any obligations of, claim on, or interests in our Company. Our Company has not participated in any offer of any P-Notes, or in the establishment of the terms of any P-Notes, or in the preparation of any disclosure related to any P- Notes. Any P-Notes that may be offered are issued by, and are solely the obligations of, third parties that are unrelated to our Company. Our Company and its affiliates do not make any recommendation as to any investment in P-Notes and do not accept any responsibility whatsoever in connection with any P-Notes. Any P-Notes that may be issued are not securities of the Sole Global Co-ordinator and Book Running Lead Manager and do not constitute any obligations of, or claim on the Sole Global Co-ordinator and Book Running Lead Manager. Prospective investors interested in purchasing any P-Notes have the responsibility to obtain adequate disclosures as to the issuer(s) of such P-Notes and the terms and conditions of any such P-Notes from the issuer(s) of such P-Notes. Neither SEBI nor any other regulatory authority has reviewed or approved any P-Notes or any disclosure related thereto. Prospective investors are urged to consult with their own financial, legal, accounting and tax advisors regarding any contemplated investment in P-Notes, including whether P-Notes are issued in compliance with applicable laws and regulations. 8

11 DISCLAIMER CLAUSE OF THE STOCK EXCHANGES As required, a copy of the Preliminary Placement Document has been submitted to the Stock Exchanges and a copy of this Placement Document will be submitted to the Stock Exchanges. The Stock Exchanges do not in any manner: 1. warrant, certify or endorse the correctness or completeness of any of the contents of the Preliminary Placement Document and this Placement Document; 2. warrant that our Company s Placement Shares will be listed or will continue to be listed on the Stock Exchanges; or 3. take any responsibility for the financial or other soundness of our Company, its Promoters, its management or any scheme or project of our Company; and it should not for any reason be deemed or construed to mean that the Preliminary Placement Document and this Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any Placement Shares may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against any of the Stock Exchanges whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever. 9

12 Certain Conventions PRESENTATION OF FINANCIAL AND OTHER INFORMATION In this Placement Document, unless the context otherwise indicates or implies, references to you, offeree, purchaser, subscriber, recipient, investors and potential investor are to the prospective investors in this Issue, references to our Company, the Company or the Issuer are to PI Industries Limited. Financial and Other Information Our Company and its Subsidiaries prepare their financial statements in accordance with Indian GAAP. Indian GAAP differs in certain respects from accounting principles generally accepted in other countries, including IFRS and U.S. GAAP. We do not provide a reconciliation of our financial statements to IFRS or U.S. GAAP. Accordingly, the degree to which the financial statements prepared in accordance with Indian GAAP included in this Placement Document will provide meaningful information is entirely dependent on the reader s level of familiarity with the respective accounting practices. In this Placement Document, references to USD, $ and U.S. dollars are to the legal currency of the United States and references to, `, Rs., INR and Rupees are to the legal currency of India. All references herein to the U.S. or the United States are to the United States of America and its territories and possessions and all references to India are to the Republic of India and its territories and possessions. Unless otherwise stated, references in this Placement Document to a particular year are to the calendar year ended on December 31, and to a particular Fiscal or Fiscal year are to the fiscal year ended on March 31. Our Company publishes its financial statements in Rupees. Our Company s financial statements included herein have been prepared in accordance with Indian GAAP and the Companies Act. Unless otherwise indicated, all financial data in this Placement Document are derived from our Company s financial statements prepared in accordance with Indian GAAP. Indian GAAP differs in certain significant respects from International Financial Reporting Standards, ( IFRS ), and U.S. GAAP. Our Company does not provide a reconciliation of its financial statements to IFRS or U.S. GAAP financial statements. We urge you to consult your own advisors regarding such differences and their impact on our financial data. Accordingly, the degree to which the Indian GAAP financial statements included in this Placement Document will provide meaningful information is entirely dependent on the reader s level of familiarity with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Placement Document should accordingly be limited. The financial statements of our Company, including the Reformatted Consolidated Financial Statements and the Reformatted Standalone Financial Statements of our Company as at and for the financial years ended March 31, 2010, March 31, 2011 and March 31, 2012, which have been prepared in accordance with Indian GAAP and the Limited Reviewed Standalone Financial Statements as at and for the quarter and the half year period ended, September 30, 2012, which have been prepared in accordance with the requirements of Cluse 41 of the Listing Agreement and reviewed in accordance with Standard on Review Engagement (SRE) 2410, Engagements to Review Financial Statements issued by the Institute of Chartered Accountants of India are included in Financial Statements on page 186 of this Placement Document. Any discrepancies between the amounts listed and total thereof, in the tables included herein, are due to rounding off. 10

13 INDUSTRY AND MARKET DATA Information regarding market position, growth rates and other industry data pertaining to businesses of our Company contained in this Placement Document consists of estimates based on data reports compiled by government bodies, professional organizations and data from other external sources and knowledge of the markets in which our Company competes. The statistical information included in this Placement Document relating to the various sectors in which our Company operates has been reproduced from various trade, industry and government publications and websites. This data is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. Neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager have independently verified this data and neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager makes any representation regarding the accuracy and completeness of such data. Similarly, while our Company believes its internal estimates to be reasonable, such estimates have not been verified by any independent sources and neither our Company nor the Sole Global Co-ordinator and Book Running Lead Manager can assure potential investors as to their accuracy. The extent to which the market and industry data used in this Placement Document is meaningful depends on the reader s familiarity with and understanding of the methodologies used in compiling such data. 11

14 FORWARD-LOOKING STATEMENTS Certain statements contained in this Placement Document that are not statements of historical fact constitute forward-looking statements. Investors can generally identify forward-looking statements by terminology such as aim, anticipate, believe, continue, could, estimate, expect, intend, may, objective, plan, potential, project, pursue, shall, should, will, would, or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives, plans or goals are also forward-looking statements. All statements regarding our Company s expected financial condition and results of operations and business plans including potential acquisitions and prospects are forward-looking statements. These forward-looking statements include statements as to our Company s business strategy, liquidity, growth, dividend policy, revenue and profitability, planned projects and other matters discussed in this Placement Document that are not historical facts. All forward-looking statements are subject to risks, uncertainties, assumptions and other factors about our Company that could cause actual results, performance or acheivements to differ materially from those contemplated by the relevant forwardlooking statement. Important factors that could cause actual results, performance or acheivements to differ materially from our Company s expectations include, among others: General, political, economic, social and business conditions in India and other countries; Our Company s ability to successfully implement its strategy, its growth and expansion plans and technological changes; Performance of the Indian debt and equity markets; Occurrence of natural calamities or natural disasters affecting the areas in which our Company has operations; Changes in laws and regulations that apply to companies in India; The current worldwide economic recession; Conditions in the Indian securities market affecting the price or liquidity of Equity Shares; Restrictions on daily movements in the price of the Equity Shares that may affect the price/ability to sell such shares; Taxes payable in India on income arising from capital gains; Transfer restrictions set forth in this Placement Document; Dilution of holdings by additional issuances of equity; Significant change in the Government s economic liberalization and deregulation policies; Terrorist attacks and other acts of violence or war involving India or other countries; Financial difficulty and other problems in certain financial institutions in India; Decline in India s foreign exchange reserves; Downgrading of India s debt rating by an international rating agency; Anti takeover provisions under Indian law; 12

15 Risk of fluctuation in the price of Equity Shares; Changes in the foreign exchange control regulations in India; and Other factors discussed in this Placement Document, including under the section titled Risk Factors. All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant statement. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, those discussed under the sections titled Management s Discussion and Analysis of Financial Condition and Results of Operations, Industry Overview and Our Business on pages 68, 91 and 106 respectively of this Placement Document. The forward-looking statements contained in this Placement Document are based on the beliefs of management, as well as the assumptions made by and information currently available to management. Although our Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure prospective investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. If any of these risks and uncertainties materialise, or if any of our Company s underlying assumptions prove to be incorrect, our Company s actual results of operations or financial condition could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our Company are expressly qualified in their entirety by reference to these cautionary statements. Our Company assumes no obligations to update the forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these forward-looking statements. 13

16 ENFORCEMENT OF CIVIL LIABILITIES Our Company is a public listed company incorporated with limited liability under the laws of India. All of our Company s directors and key managerial personnel named herein are residents of India and all or a substantial portion of assets of our Company or such persons are located in India. As a result, it may be difficult for investors to affect service of process upon our Company or such persons outside India or to enforce judgments obtained against such parties outside India. Recognition and enforcement of foreign judgments is provided for under Section 13 and Section 44A of the Code of Civil Procedure, 1908, as amended ( Civil Code ), on a statutory basis. Section 13 of the Civil Code provides that a foreign judgment shall be conclusive regarding any matter directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent jurisdiction; (ii) where the judgment has not been given on the merits of the case; (iii) where it appears on the face of the proceedings that the judgment is founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural justice; (v) where the judgment has been obtained by fraud; and (vi) where the judgment sustains a claim founded on a breach of any law in force in India. Under the Civil Code, a court in India shall, upon the production of any document purporting to be a certified copy of a foreign judgment, presume that the judgment was pronounced by a court of competent jurisdiction, unless the contrary appears on record. India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. However, Section 44A of the Civil Code provides that where a foreign judgment has been rendered by a superior court within the meaning of that section in any country or territory outside India which the Government has by notification declared to be in a reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been rendered by the relevant court in India. However, Section 44A of the Civil Code is applicable only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalties and does not include arbitration awards. Each of the United Kingdom, Singapore and Hong Kong has been declared by the Government to be a reciprocating territory for the purposes of Section 44A of the Civil Code but the United States has not been so declared. A judgment of a court in a jurisdiction which is not a reciprocating territory may be enforced only by a fresh suit upon the judgment and not by proceedings in execution. The suit must be filed in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent with Indian public policy or would violate or contravene Indian law. Further, any judgment or award in a foreign currency would be converted into Rupees on the date of such judgment or award and not on the date of payment. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered pursuant to the execution of such a judgment. In addition, any judgment in a foreign currency would be converted into Indian Rupees on the date of the judgment and not on the date of payment and any such amount may be subject to income tax in accordance with applicable laws. 14

17 EXCHANGE RATE INFORMATION Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar equivalent of the Rupee price of the Shares on the Stock Exchanges. These fluctuations will also affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares including the Placement Shares. The following table sets forth, for the periods indicated, information with respect to the exchange rate between the Rupee and the U.S. dollar (in Rupees per U.S. dollar) based on the reference rates released by the Reserve Bank of India. In 1994, the Rupee was permitted to float fully for the first time. The exchange rate as at December 31, 2012 was ` = USD 1. (Source: Reserve Bank of India). No representation is made that the Rupee amounts actually represent such amounts in U.S. dollars or could have been or could be converted into U.S. dollars at the rates indicated, any other rates, or at all. Year ended March 31 Period End Average High Low Year Ended March 31: (` per USD 1.00) Quarter ends First Quarter Fiscal 2012 (ended June 30, 2012) Second Quarter Fiscal 2012 (ended September , 2012) Third Quarter Fiscal 2012 (ended December 31, ) Source: Reserve Bank of India ( 15

18 CERTAIN DEFINITIONS AND ABBREVIATIONS Our Company has prepared this Placement Document using certain definitions and abbreviations which you should consider when reading the information contained herein. The following list of certain capitalised terms used in this Placement Document is intended for the convenience of the reader/prospective investor only and is not exhaustive The terms defined in this section shall have the meaning set forth herein, unless specified otherwise in the context thereof, and references to any statue or regulations or policies shall include amendments thereto, from time to time. Company Related Terms Term Description Articles/Articles of Association The Articles of Association of our Company Auditors / Statutory Auditors M/s S S Kothari Mehta & Co., Chartered Accountants, the statutory auditors of our Company Board / Board of Directors The Board of Directors of our Company or committees constituted thereof Corporate Office 5 th Floor, Vipul Square, B Block, Sushant Lok, Phase-1, Gurgaon our Company, the Company PI Industries Limited or the Issuer our or we or us PI Industries Limited and its Subsidiaries, unless the context requires otherwise Equity Shares All equity shares of face value ` 5 /- each of PI Industries Limited ESOP Scheme Our Company s Employee Stock Option Plan named PII ESOP 2010 Scheme PII ESOP Trust PII ESOP Trust, a trust settled by our Company to administer the ESOP Scheme Limited Reviewed Standalone Financial Statements The statement of unaudited standalone financial results of our Company as at and for the quarter and the half-year period ended September 30, 2012 subject to a limited review by our Company s Statutory Auditors, M/s. S.S. Kothari Mehta & Co. in accordance with the requirements of Clause 41 of the Listing Agreement. Memorandum or Memorandum The Memorandum of Association of our Company of Association Placement Shares All equity shares of face value ` 5 each of PI Industries Limited offered and to be placed, issued and allotted pursuant to the Issue Promoter Promoters of our Company as defined in Regulation 2(1)(za) of the SEBI ICDR Regulations namely Parteek Finance and Investement Co. Limited, Madhu Singhal, Mayank Sinhgal and Salil Singhal Promoter Group Promoter Group of our Company as defined in Regulation 2(1)(zb) of the SEBI ICDR Regulations Registered Office The registered office of our Company is at Udaisagar Road, Udaipur , Reformatted Consolidated Financial Statements Rajasthan (India) The statement of reformatted consolidated assets and liabilities of our Company and our Subsidiaries as at March 31, 2010, March 31, 2011 and as at March 31, 2012 and the related statement of reformatted consolidated statement of profit and loss and the consolidated cash flow for the financial years ended March 31, 2010, March 31, 2011 and March 31, 2012 as examined by our Company s Statutory Auditors. Reformatted Standalone Financial Statements The audited consolidated financial statements of our Company as at and for the years ended March 31, 2010, 2011 and 2012 and the books of accounts underlying such financial statements form the basis for such Reformatted Consolidated Financial Statements. The statement of reformatted standalone assets and liabilities of our Company as at March 31, 2010, March 31, 2011 and as at March 31, 2012 and the related statement of reformatted standalone statement of profit and loss and the standalone cash flow for the financial years ended March 31, 2010, March 31, 2011 and March 31, 2012 as examined by our Company s Statutory Auditors. The audited standalone financial statements of our Company as at and for the years 16

19 Subsidiaries Term Description ended March 31, 2010, 2011 and 2012 and the books of accounts underlying such financial statements form the basis for such Reformatted Standalone Financial Statements. The subsidiary companies of PI Industries Limited, namely, PI Life Science Research Limited, PI Japan Company Limited and PILL Finance and Investments Limited. Issue Related Terms Term Description Allocated /Allocation The allocation of Placement Shares following the determination of the Issue Price to Allotees on the basis of Application Forms submitted by them, in consultation with the Sole Global Co-ordinator and Book Running Lead Manager in compliance with Chapter VIII of the SEBI ICDR Regulations Allotment/Allotted The allotment and issue of Placement Shares pursuant to this Issue Allottees QIB s to whom Placement Shares of our Company are Alloted pursuant to the Issue Application(s) An offer by a QIB pursuant to the Application Form for subscription of Placement Shares under this Issue. Application Form(s) The form (including any revisions thereof) pursuant to which a QIB subscribes for the Placement Shares CAN/Confirmation of Note or advice or intimation to not more than 49 QIBs confirming the Allocation of Allocation Note Placement Shares to such QIBs after discovery of the Issue Price and requiring payment for the entire Issue Price for the Equity Shares allocated to such QIB Cut-off Price The Issue Price of the Placement Shares which has been finalised by our Company in consultation with the Sole Global Co-ordinator and Book Running Lead Manager Escrow Agreement Escrow agreement dated January 23, 2013 executed between our Company, Sole Global Co-ordinator and Book Running Lead Manager and Escrow Bank. Escrow Bank Axis Bank Limited Escrow Bank Account A special bank account opened by our Company with the Escrow Bank in terms of the arrangement between our Company, the Sole Global Co-ordinator and Book Running Lead Manager and the Escrow Bank, into which the application monies payable by QIBs in connection with subscription to Placement Shares pursuant to the Issue shall be deposited Floor Price The floor price of ` per Placement Share, which has been calculated in accordance with Regulation 85 of the SEBI ICDR Regulations Investor / Applicant Any QIB who applied for Placement Shares under the Issue Issue The offer, issue and placement of upto 1,924,656 Placement Shares to QIBs, pursuant to Chapter VIII of the SEBI ICDR Regulations aggregating upto ` 1, million Issue Closing Date January 29, 2013 Issue Opening Date January 25, 2013 Issue Period The period beginning on the Issue Opening Date and ending on the Issue Closing Date between which Applications for Placement Shares could have been made by QIBs Issue Price A price of ` per Equity Share, which is equal to the Floor Price Issue Size The issue of upto 1,924,656 Placement Shares aggregating upto ` 1, million Lock-up Letter The lock-up letters dated January 23, 2013 issued by our Promoters, namely, Parteek Finance and Investement Co. Limited, Madhu Singhal, Mayank Sinhgal and Salil Singhal to the Sole Global Co-ordinator and Book Running Lead Manager. Lock-up Period Period commencing on the date of the Lock-up Letter and ending on one hundred and eighty days after the date of Allotment of the Placement Shares. Pay-in Date Last date specified in the CAN sent to QIBs, as applicable Placement Agreement Placement agreement dated January 23, 2013 executed between the Sole Global Coordinator and Book Running Lead Manager and our Company. Placement Document This Placement Document dated January 29, 2013 issued in accordance with the provisions of Regulation 84 in Chapter VIII of the SEBI ICDR Regulations Preliminary Placement The Preliminary Placement Document dated January 25, 2013 issued in accordance Document with Chapter VIII of the SEBI ICDR Regulations QIBs or Qualified Institutional Qualified Institutional Buyer as defined under Regulation 2(1)(zd) of the SEBI 17

20 Term Buyers QIP RBI RoC Sole Global Co-ordinator and Book Running Lead Manager Stock Exchanges Description ICDR Regulations Qualified Institutions Placement under Chapter VIII of the SEBI ICDR Regulations The Reserve Bank of India Registrar of Companies, Jaipur The Sole Global Co-ordinator and Book Running Lead Manager to the Issue, in this case being, Edelweiss Financial Services Limited. National Stock Exchange of India Limited and BSE Limited Conventional and General Terms/ Abbreviations Term/Abbreviation Full Form AGM Annual General Meeting AS Accounting Standards issued by the Institute of Chartered Accountants of India AY Assessment Year BOLT BSE On-line Trading BSE BSE Limited CCI Competition Commission of India CEO Chief Executive Officer CFO Chief Financial Officer CIO Chief Information Officer CAR Capital Adequacy Ratio CDSL Central Depository Services (India) Limited CESTAT Customs, Excise and Service Tax Appellate Tribunal CIN Corporate Identification Number CIT(A) Commisioner of Income Tax (Appeals) Civil Code The Code of Civil Procedure, 1908 Companies Act The Companies Act, 1956, as amended Delisting Regulations Securities Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, as amended from time to time. Depository A depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996 Depositories Act The Depositories Act, 1996 DER Debt Equity Ratio DP/Depository Participant A depository participant as defined under the Depositories Act, 1996 DP ID Depository Participant s Identity DIPP The Indian Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation ECB External Commercial Borrowings EPS Earnings Per Share EGM Extraordinary General Meeting ESIC Employee State Insurance Corporation FDI Foreign Direct Investment FEMA The Foreign Exchange Management Act, 1999 FII Foreign Institutional Investor (as defined under the SEBI (Foreign Institutional Investors) Regulations,1995) registered with SEBI under applicable laws in India Financial Year/Fiscal/FY Period of twelve months ending March 31 of that particular year FIPB Foreign Investment Promotion Board GDP Gross Domestic Product GIR Number General Index Registry Number GoI Government of India IAS Indian Administrative Services ICAI Institute of Chartered Accountants of India IFRS International Financial Reporting Standards India The Republic of India Indian GAAP Generally Accepted Accounting Principles followed in India IT Information Technology ITAT Income Tax Appellate Tribunal 18

21 Term/Abbreviation Full Form IT Act Indian Income Tax Act, 1961 ITES Information Technology Enabled Services Listing Agreement The listing agreement in connection with our Equity Shares as entered into with the Stock Exchanges Mn/Million Million Mutual Fund A mutual fund registered with SEBI under the SEBI (Mutual Funds) Regulations, 1996 NECS National Electronic Clearing Service NSDL National Securities Depositaries Limited NSE National Stock Exchange of India Limited p.a. Per annum P/E Ratio Price/Earnings Ratio PAN Permanent Account Number PAT Profit After Tax PBT Profit Before Tax RBI The Reserve Bank of India Regulation S Regulation S under the Securities Act Rs., `, or Rupees Rupees, being the lawful currency for the time being of India SEBI Act The SEBI Act, 1992, as amended SEBI The Securities and Exchange Board of India SEBI ICDR Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended SEBI VCF Regulations SEBI (Venture Capital Fund) Regulations, 1996 Securities Act The U.S. Securities Act of 1933, as amended SICA Sick Industrial Companies (Special Provisions) Act, 1985, as amended STT Securities Transaction Tax Takeover Code SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011, as amended UIN Unique Identification Number US GAAP Generally Accepted Accounting Principles in the United States of America WTO World Trade Organisation Technical and Industry terms Term/Abbreviation BRIC CAGR CENVAT CSO DRI EBIDTA EMS-ISO ERP EXIM Bank FAO FLO GDP GLP GM seeds IND AS IPM ISO MN/Mn. MSP MT Description Brazil, Russian Federation, India and China Compounded Annual Growth Rate Central Value Added Tax Central Statistical Office Direct Reduced Iron Earning before interest, depreciation, tax and amortisation Environmental Management Systems certification by ISO Enterprise Resource Planning Export and Import Bank of India Food and Agricultural Organisation of the United Nations Fair trade Labelling Organisation Gross Domestic Product Good Laboratory Practices Genetically Modified Seeds Indian Accounting Standards (Ind AS) 101 First-time Adoption of Indian Accounting Standards Integrated Pest Management Indian Standards of Organisation Million Minimum Support Prices Million tonnes 19

22 Term/Abbreviation Description NGCMA National GLP Compliance Monitoring Agency NIMZ National Investment and Manufacturing Zones NREGA National Rural Employment Guarantee Act, 2005 OECD Organisation for Economic Co-operations and Development OEMs Original Equipment Manufacturer OHSAS Occupational Health and Safety Advisory Services PAT Profit after tax R&D Research and Development SEZ Special Economic Zone SME s Small and Medium Enterprises SAP System Application and Products 20

23 SUMMARY OF THE ISSUE The following is a general summary of the terms of the Issue. This summary should be read in conjunction with and is qualified in its entirety by the more detailed information appearing elsewhere in this Placement Document, including under the sections titled Risk Factors, Use of Proceeds, Issue Procedure Plan of Distribution and Description of the Equity Shares. Issuer PI Industries Limited Issue Size Upto 1,924,656 Placement Shares of our Company of par value ` 5 /- each issued at a premium of ` per Placement Share, aggregating upto ` 1, million A minimum of 10% of Issue Size shall be available for allocation/allotment to Mutual Funds only. If no Mutual Fund is aggreable to take up the minimum portion mentioned above, such minimum portion or part thereof may be allotted to other eligible QIBs. Floor Price Issue Price Eligible Investors Equity Shares paid-up and outstanding immediately prior to the Issue Equity Shares paid-up and outstanding immediately after the Issue Listing Lock-up The Floor Price for the Issue on the basis of Regulation 85 of the SEBI ICDR Regulations is ` per Placement Share. ` per Placement Share. QIBs as defined in Regulation 2(1)(zd) of the SEBI ICDR Regulations. See section titled Issue Procedure Qualified Institutional Buyers. 25,167,174 Equity Shares 27,091,830 Equity Shares Our Company has obtained an in-principle approval for the Issue from the Stock Exchanges and will apply and obtain the final listing and trading approval for the Placement Shares. Our Company has agreed with the Sole Global Co-ordinator and Book Running Lead Manager that it shall not, and shall not announce an intention to, without the prior written consent of the Sole Global Coordinator and Book Running Lead Manager, during the period commencing on the date of the Placement Agreement and ending one hundred and eighty days after the date of Allotment of the Placement Shares, (the Lock-up Period ), directly or indirectly: (a) issue, offer, allot, contract to issue or allot, contract to purchase, purchase any option or contract to sell, grant or sell any option, right or warrant to purchase, make any short sale, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, including but not limited to any options or warrants to purchase any Equity Shares, or any securities convertible into or exercisable or exchangeable for, or that represent the right to receive, Equity Shares, (b) enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of the Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares, (c) deposit any Equity Shares, or any securities convertible into or exercisable or exchangeable for the Equity Shares or 21

24 which carry the rights to subscribe for or purchase Equity Shares, in any depository receipt facility or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any depository receipt facility, or, (d) publically announce any intention to enter into any transaction described in (a), (b) or (c) above, whether any such transaction described in (a), (b) or (c) above is to be settled by delivery of the Equity Shares, or other securities, in cash or otherwise. Provided that the foregoing restrictions shall not apply to any issuance, allotment and distribution of securities pursuant to the exercise of any stock options granted to employees of our Company or its Subsidiaries pursuant to the subsisting ESOP Scheme of our Company. Our Promoters have agreed with the Sole Global Co-ordinator and Book Running Lead Manager that during the Lock-up Period, without the prior written consent of the Sole Global Co-ordinator and Book Running Lead Manager they have not and will not announce any intention to enter into any transaction whether any such transaction which is to be settled by delivery of Equity Shares, or such other securities, in cash or otherwise, during the period commencing on the date of the Lock-up Letter and ending 180 (one hundred and eighty) days after the date of Allotment of the Placement Shares, ( Lock-up Period ), directly or indirectly, transfer in any manner, offer, lend, sell, contract to sell, pledge, encumber, sell any option or contract to purchase, purchase any option, grant any option, right or warrant to purchase, make any short sale, lend or otherwise transfer or dispose of, directly or indirectly, any Equity Shares, including but not limited to any options, warrants to purchase any Equity Shares, or any securities convertible into or exercisable or exchangeable for, or that represent the right to receive, Equity Shares or enter into any swap or other agreement that transfers, directly or indirectly, in whole or in part, any of the economic consequences of ownership of the Equity Shares or any securities convertible into or exercisable or exchangeable for Equity Shares or deposit any Equity Shares, or any securities convertible into or exercisable or exchangeable for the Equity Shares or which carry the rights to subscribe for or purchase Equity Shares, in any depository receipt facility or enter into any transaction (including a transaction involving derivatives) having an economic effect similar to that of a sale or deposit of Equity Shares in any depository receipt facility. Transferability Restrictions Use of Proceeds Provided that the foregoing restrictions, shall not apply to any acquisition of Equity Shares by the individual Promoters, namely Mr. Salil Singhal, Mr. Mayank Singhal or Ms. Madhu Singhal pursuant to their exercise of any stock options granted to them under our Company s existing ESOP Scheme, if any, which vest during the Lock up Period or have vested prior to it. The Placement Shares being Allotted pursuant to this Issue shall not be sold for a period of one year from the date of Allotment except on the floor of Stock Exchanges. The Placement Shares are subject to certain transfer restrictions. See Transfer Restrictions. The total proceeds of this Issue will be ` 1, million. After deducting the issue expenses of approximately ` million, the net proceeds of this Issue will be approximately ` 1, million. Our Company has identified several growth oppurtunities in its areas of business and intends to use the net proceeds received from this Issue for augmenting our long term resources for future expansion, to meet 22

25 long term working capital requirmeents, to meet other general corporate business purposes allied to the business from time to time and for any other uses subject to compliance with applicable statutory and/or regulatory requirements. For further details, please refer section titled Use of Proceeds. Risk Factors Closing Ranking Security Codes for the Equity Shares See section titled Risk Factors for factors you should consider before investing in Placement Shares of our Company. The Allotment of the Placement Shares offered pursuant to this Issue is expected to be made on or before Friday, February 1, The Placement Shares being issued shall be subject to the provisions of our Company s Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The shareholders will be entitled to participate in dividends and other corporate benefits, if any, declared by our Company after the Issue Closing Date, in compliance with the Companies Act. Shareholders may attend and vote in shareholders meetings on the basis of one vote for every share held. See section titled Description of the Equity Shares. ISIN : INE603J01022 BSE Code : NSE Code : PIIND 23

26 SUMMARY OF OUR BUSINESS In this section any reference to our Company refers to PI Industries Limited on a standalone basis and references to we, us or our refers to PI Industries Limited and its Subsidiaries on a consolidated basis, as the context may require. Unless stated otherwise, the financial data in this section is as per our Standalone Financial Statements and Consolidated Financial Statements, as set forth Financial Statements on page 186 of this Placement Document. The following disclosures in connection with our overview, strengths and strategies should be read together with the risk factors as detailed in the section titled Risk Factors on page 40 of this Placement Document. OVERVIEW Our Company is a chemicals manufacturing and marketing Company with over fifty years of experience in the agrochemicals sector. We are an integrated entity with a differentiated business model driven by respect for intellectual property across two market segments, i.e. the domestic market and the export market. In the domestic market we focus on manufacturing and/or marketing of agri input products through the following model: In-licensing of newly launched or patented molecules from multinational innovators to register and market agri input products in India; Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents have expired); Selectively partnering with global innovators with presence in India to co-market their early stage lifecycle agri input products using our countrywide marketing set up in India. In the export market we undertake custom synthesis and contract manufacturing of niche fine and specialty chemicals, where we offer global innovators a one-stop shop for process scale up and large scale manufacturing of their newly discovered molecules. Through this differentiated business model, we have been able to demonstrate consistent financial growth. Our Company s net revenue from operations on a consolidated basis has grown at a CAGR of 27.30% from ` 5, million for Fiscal 2010 to ` 8, million in Fiscal Our PAT margins have increased by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal 2012 and our EBITDA margins have increased by 1.12% points from 15.27% for Fiscal 2010 to 16.39% in Fiscal 2012, on a consolidated basis. Our basic EPS on a consolidated basis has grown from ` per share in Fiscal 2010 to ` per share in Fiscal We have developed strong process research and manufacturing capabilities which are backed by manufacturing facilities located at Panoli (Gujarat), Jammu and Jambusar (Gujarat) and a GLP and ISO:17025 accredited laboratory set up in Udaipur. Our Company has a robust marketing and distribution network which is spread across India and well established in rural and agricultural belts. As on date, we have 211 people working in our marketing team spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel which comprises of numerous retail points, over 10,000 distributors and direct dealers across the major agriculture areas in the country, 27 stock points including our own depots and 18 C&F agents who work on hub-and-spoke distribution model to ensure timely delivery. We work closely with farmers and distribution channels to build our brand and create awareness for our products. We accordingly have several successful brands such as NOMINEE GOLD, BIOVITA, FORATOX, CARINA, FOSMITE, ROKET, SOLARO, KITAZIN OSHEEN, etc. 24

27 Our Company has been conferred with the Power Brand status from amongst 81 successful brands and companies featured in the Indian Power Brands the Global Superpower Edition. We were also awarded a certificate of Excellence in Supplier Sustainability Program 2011 from Bayer Group of Companies in India. Our Company currently has 3 subsidiaries, which includes PI Japan Company Limited (Japan) which carries out business development activities in Japan, PI Life Science Research Limited, which deals in contract research projects, and PILL Finance & Investments Limited, which is engaged in the business of holding investments and providing short term funding. OUR STRENGTHS Our Company has over five decades of experience in the agri-chemicals sector, and has over the years developed in house capabilities and vast experience in process research, plant engineering, process scale ups, large scale chemical manufacturing, product registration and marketing & brand building. We believe following are the key strengths of our Company: Differentiated business model Our Company has, over the years, evolved a differentiated non-conflicting business model driven by respect for intellectual property. On one hand, in our domestic agri input segment, our Company leverages on our pan India marketing and distribution network, brand building capabilities and experienced team to focus on in-licensing and co-marketing arrangements, which allows us to introduce novel products in the Indian market to enhance productivity of Indian farmers and thus enables us to establish long term relations with the farmer community and global innovators. On the other hand in our export segment, we leverage on our chemistry process research and manufacturing capabilities, to focus on performing custom synthesis and contract manufacturing services with respect to patented molecules that are in the early stages of their life cycles, which gives us the opportunity to be the first or second suppliers for such products to the patent holders. We also benefit from increases in volume production on the back of the innovators efforts to enhance sales volumes for the returns on their R&D investments. We derive synergistic benefits from our integrated business model such as (a) common infrastructure for domestic agri inputs and custom synthesis exports and (b) develop knowledge and insight across the entire value chain right from process development, scale up, manufacturing to marketing. Long term relationship and reputation of trust and reliability with global innovators We believe that we enjoy a reputation of trust and reliability with global innovators and we respect their intellectual property and work in close partnership with them. On account of these relationships and reputation we have been able to grow in both the domestic market and the export market and consistently expand our product portfolio. Our strong relationship with global innovators has been demonstrated by our consistent growth in both the Indian and export markets. Wide distribution network and transparent distribution policies and practices Our Company has over the years created a robust marketing and distribution network which is spread throughout India and entrenched in rural and agricultural belts across India. Our wide spread distribution network is further aided by our SAP based ERP system and effective business intelligence tools which enables real-time transactions, efficient delivery mechanism, centralized controls and proactive planning and monitoring. Our Company also practices straight forward and transparent business policies with our customers and distributors thereby creating a healthy business environment for mutual benefits. Clear commercial terms before the sale, no stock return, interest for delayed payments, etc are certain practices which has helped us establish a strong and committed distribution network. Our field staff is regularly trained to ensure that the systems we have created are well sustained. 25

28 Brand building capabilities As part of our marketing approach, we work closely with farmers and distribution channels to create awareness for our products by demonstrating their use through the lifecycle of crops. This approach has helped enhance our reputation and recognition in the domestic markets. Some of our key brands include NOMINEE GOLD, BIOVITA, FORATOX, CARINA, FOSMITE, ROKET, SOLARO, KITAZIN OSHEEN, etc. End-to-end capabilities in custom synthesis Over the years, we have been able to build strong capabilities in process research of diverse chemistries, process engineering and large scale manufacturing. These capabilities have helped us to develop a strong portfolio of products and the ability to offer increasing suite of services which has led to a consistent growth in our business. Entry barriers in our business Our Company has invested significant resources, time and effort in building our reputation, capabilities, relationships and reach which have been critical in evolving our differentiated business model, which thereby serve as significant entry barriers in our business. Experienced management team We are a professionaly managed Company with a Board of Directors consisting of a mix of experienced excutive directors who have been associated with our Company and the industry for a long span of time and highly qualified independent directors from diverse disciplines ranging from the agrochemicals and chemicals industry, accounting, banking and engineering to civil administration. Headed by our Chairman and Managing Director, Mr. Salil Singhal, who has over 45 years of experience in the agro-chemicals sector and has in the past has served as the Chairman of the Crop Care Federation of India for 20 years, our key managerial personnel team comprises of experienced and qualified professionals with diverse skills which include manufacturing, engineering, research, marketing, sourcing, supply chain management, finance and human resources. The experience in diverse disciplines of our management team has helped us to grow and expand our business consistently. OUR STRATEGIES Continue expanding our domestic portfolio of in-licensed products Our Company s focus will continue to be on expanding our domestic portfolio of in-licensed products by leveraging our strong relationships and reputation with global innovators. Our focus will be on new products which provide better efficiencies and cost savings to the farmer. We have developed a robust pipeline of potential products for the future. We are in the process of registering 2 new in-licensing products and have also executed agreements with patent holders in the insecticide / herbicide / fungicide segments to evaluate the potential for such molecules in the Indian market. Adding new product categories to leverage our pan-india marketing network and customer reach We propose to leverage on our pan-india marketing network and deep penetration and reach among the farming community, to expand our categories of agri input products such as hybrid seeds, biocides, nematicides, rodenticides etc. Diversifying our presence across the agricultural value chain by leveraging our strong understanding of the sector We propose to capitalize on our vast experience in the agricultural sector and understanding of needs of farmers by diversifying our presence across the agricultural value chain. As a part of this strategy we intend to seek opportunities to acquire or partner with other corporates to access products, service and technology that have large growth potential in the Indian agricultural market. We believe that pursuing selective acquisitions, partnerships, or alliances would improve our competitiveness, further diversify 26

29 our product offerings and strengthen our market position. Strengthening our relationship with existing clients Leveraging on our process research and manufacturing capabilities, we propose to strengthen our relationships with existing customers by undertaking custom synthesis and contract manufacturing for new molecules across their various product segments. Acquiring new clients For our custom synthesis and contract manufacturing activities, we propose to cater to customers across new industry verticals and in new geographies. We intend to explore acquisition or partnership opportunities to access new customers, which would allow us to improve our competitiveness, strengthen our market position and enhance our business. 27

30 SELECTED FINANCIAL INFORMATION OF OUR COMPANY The summary of selected financial and operating data set forth below are extracted from our Reformatted Standalone Financial Statements and Reformatted Consolidated Financial Statements for Fiscal 2010, Fiscal 2011 and Fiscal 2012 and our Limited Reviewed Standalone Financial Statements for the period ended September 30, 2012 included in Financial Statements on page 186 of this Placement Document. The financial information included in this Placement Document does not reflect our Company s results of operations, financial position and cash flows for the future and its past operating results are no guarantee of its future operating performance. For a summary of our Company s significant accounting policies and the basis of presentation of its financial statements, see the notes to the financial statements under the section titled Financial Statements, of this Placement Document. The selected financial and operational data set forth below should be read in conjunction with Management s Discussion and Analysis of Financial Condition and Results of Operations on page 68 of this Placement Document. SUMMARY OF OUR REFORMATTED STANDALONE BALANCE SHEET AS AT MARCH 31, 2012, MARCH 31, 2011 AND MARCH 31, 2010 As at March 31, 2012 (` In millions) As at March 31, 2011 As at March 31, 2010 I EQUITY & LIABILITIES 1 Shareholders' Funds a Share Capital b Reserves and Surplus 3, , , Total Shareholders' Fund 3, , , Non Current Liabilities a Long-term borrowings 1, b Deferred tax liabilities (Net) c Other long-term liabilities d Long-term provisions Total Non- Current Liabilities 1, , , Current Liabilities a Short-term borrowings 1, , b Trade payables , c Other current liabilities d Short-term provisions Total Current Liabilities 3, , , TOTAL 7, , , II ASSETS 1 Non Current Asset a Fixed asset Tangible asset 2, , , Intangible asset Capital work-in-progress

31 As at March 31, 2012 (` In millions) As at March 31, 2011 As at March 31, 2010 Intangible asset under development Total Fixed Assets 3, , , b Non-current investments c Long term loans & advances d Other assets Total Non-Current Assets 3, , , Current Asset a Inventories 1, , , b Trade receivables 1, , , c Cash and Bank Balances d Short-term loans and advances e Other assets Total Current Assets 3, , , TOTAL 7, , ,

32 SUMMARY OF OUR REFORMATTED STANDALONE PROFIT AND LOSS ACCOUNT FOR FISCAL 2012, FISCAL 2011 AND FISCAL 2010 (` In millions) Fiscal 2012 Fiscal 2011 Fiscal 2010 I. Revenue from Operations Sale of products 9, , , Less: Discount (778.10) (715.52) (527.61) Less: Excise Duty (459.40) (461.92) (247.76) 8, , , Sale of services; Other operating Revenues; II. Other Income III. Total Revenue (I+II) 8, , , IV. V. Expenses: Cost of Materials consumed 4, , , Purchase of Stock in Trade Changes in Inventories of finished goods, work in progress and stock in trade (335.98) (295.08) Employee Benefits expenses Finance Costs Depreciation and amortisation Other Expenses 1, , Total Expenses 7, , , Profit before exceptional and extraordinary items and tax (III-IV) 1, VI. Exceptional Items Profit before extraordinary VII. items and tax 1, VIII. Extraordinary Items - - IX. Profit Before Tax (VII- VIII) 1, Consisting of : - Profit/ (Loss) on Continuing Operations 1, Profit/ (Loss) on Discontinued Operations (0.35) Exceptional Items Profit/ Loss Less: Provision for Current Tax of continuing operations (387.01) (184.18) (116.01) Less: Provision for Current Tax of discontinued operations 0.05 (20.58) (16.35) Less: Provision for Deferred tax (1.39) (52.93) (20.30) Add: Income Tax of earlier years X Profit After Tax 1, Consisting of: 30

33 (` In millions) Fiscal 2012 Fiscal 2011 Fiscal Profit/ (Loss) on Continuing Operations Profit/ (Loss) on Discontinued Operations (0.30) Exceptional Items Profit/ Loss XI Profit/ (loss) for the period 1, XII Earnings per Equity shares. 1) Basic (in `) ) Diluted (in `) Earnings per share ` - Continuing Business 1) Basic (in `) ) Diluted (in `) Earnings per share ` - Discontinued Business 1) Basic (in `) (0.01) ) Diluted (in `) (0.00) Face value per share (in `)

34 SUMMARY OF OUR REFORMATTED STANDALONE CASH FLOW STATEMENT FOR FISCAL 2012, FISCAL 2011 AND FISCAL 2010 (` In millions) PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal 2010 A. Cash Flow from Operating Activities Net Operating Profit before Tax & Extraordinary Items Adjustments for: Net operating profit before tax 1, Depreciation Interest Expenses Provision for Doubtful Debts and Advances Interest Income (41.22) (27.63) (22.42) Dividend Income (0.00) (0.00) (0.00) Employee Stock Option Expense (Profit)/Loss on sale of Fixed Assets (Net) Bad Debts written off Miscellaneous Liability Written - (2.45) back Unrealised Foreign Exchange 6.84 (16.60) (1.39) Loss/(Gain) (Net) Deferred Revenue expenditure 3.70 written off during the year Exceptional Items - Sale of Polymer Business (303.43) Operating Profit before 1, , Working Capital changes (Increase) / Decrease in Short 6.44 (574.78) Term Trade Receivables (292.17) (Increase) / Decrease in Short (100.42) term Loans and advances (120.46) (Increase) / Decrease in Long (2.05) (7.38) (5.33) term Loans and advances (Increase) / Decrease in Other assets (7.32) (1.60) 2.12 (Increase)/Decrease in (377.71) (381.69) Inventories Increase / (Decrease) in Short (84.17) term Trade Payables/ Provisions Increase / (Decrease) in Long term Trade Payables/ Provisions Increase / (Decrease) in Other (66.82) Short term Liabilities Increase / (Decrease) in Other (356.45) (850.31) Long term Liabilities Cash generated from 1, , Operations before tax and exceptional items Net Direct Taxes paid (395.51) (177.64) (114.40) Exceptional Item Net cash from Operating 1, Activities B. Cash flow from Investing Activities 32

35 (` In millions) PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal 2010 Purchase of Fixed Assets (1,171.05) (942.98) (471.89) including Capital work in progress, intangible assets and Capital advances Investment in Shares of Joint - - (1.55) Venture / Subsidiary Companies Sale of Fixed Assets Interest Received Dividend Received Net cash used in investing (1,043.88) (913.20) (449.61) activities Net cash from Operating and (2.42) (727.72) Investing Activities C. Cash flow from Financing Activities Issue of Equity Share capital (Repayment)/Issue of Preference (81.00) (125.00) Share Capital (Repayment/ Redemption) /Issue (294.00) of Debentures Share Premium Account Short Term Borrowings (Net) (434.16) 1, (633.67) Long Term Borrowings (Net of (147.88) (213.26) Repayments) Cash Flow Hedge Reserve (49.26) - - Interest paid (Net) (198.75) (178.00) (183.06) Dividend Distribution (100.13) (14.93) 0.00 Net Cash from Financing (529.99) activities Net Cash from Operating, (0.76) (2.30) Investing & Financing Activities Net increase in Cash & Cash (0.76) (2.30) equivalent Opening balance of Cash & Cash equivalent Closing balance of Cash & Cash equivalent Note: Cash and cash equivalents included in the Cash Flow Statement comprise of the following:- i) Cash Balance on Hand ii) Balance in Current Account Total

36 SUMMARY OF OUR REFORMATTED CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2012, MARCH 31, 2011 AND MARCH 31, 2010 As at March 31, 2012 (` In millions) As at March 31, 2011 As at March 31, 2010 I EQUITY & LIABILITIES 1 Shareholders' Funds a Share Capital b Reserves and Surplus 3, , , Total Shareholders' Fund 3, , , Non Current Liabilities A Long-term borrowings 1, B Deferred tax liabilities (Net) C Other long-term liabilities d Long-term provisions Total Non- Current Liabilities 1, , , Current Liabilities a Short-term borrowings 1, , b Trade payables , c Other current liabilities d Short-term provisions Total Current Liabilities 3, , , TOTAL 8, , , II ASSETS 1 Non Current Asset a Fixed asset Tangible asset 2, , , Intangible asset Capital work-in-progress Intangible asset under development Total Fixed Assets 3, , , b Non-current investments c Long term loans & advances d Other assets Total Non-Current Assets 3, , , Current Asset A Inventories 1, , , B Trade receivables 1, , ,

37 As at March 31, 2012 (` In millions) As at March 31, 2011 As at March 31, 2010 C Cash and Bank Balances d Short-term loans and advances E Other assets Total Current Assets 4, , , TOTAL 8, , ,

38 SUMMARY OF OUR REFORMATTED CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR FISCAL 2012, FISCAL 2011 AND FISCAL 2010 I. Revenue from Operations (` in millions) Fiscal 2012 Fiscal 2011 Fiscal 2010 Sale of products 9, , , Less: Discount (778.10) (715.52) (527.61) Less: Excise Duty (459.40) (461.92) (247.76) 8, , , Sale of services; Other operating Revenues; II. Other Income III. Total Revenue (I+II) 8, , , IV. Expenses: Cost of Materials consumed 4, , , Purchase of Stock in Trade Changes in Inventories of finished goods, work in progress and stock in trade (335.98) (295.08) Employee Benefits expenses Finance Costs Depreciation and amortisation Other Expenses 1, , Total Expenses 7, , , V. Profit before exceptional and extraordinary items and tax (III-IV) 1, VI. Exceptional Items VII. Profit before extraordinary items and tax 1, VIII. Extraordinary Items - - IX. Profit Before Tax (VII- VIII) 1, Consisting of : - Profit/ (Loss) on Continuing Operations 1, Profit/ (Loss) on Discontinued Operations (0.35) Exceptional Items Profit/ Loss Less: Provision for Current Tax of continuing operations (395.50) (187.24) (118.30) 36

39 (` in millions) Fiscal 2012 Fiscal 2011 Fiscal 2010 Less: Provision for Current Tax of discontinued operations 0.05 (20.58) (16.35) Less: Provision for Deferred tax (3.01) (55.80) (20.30) Add: Income Tax of earlier years X Profit After Tax 1, Consisting of: - Profit/ (Loss) on Continuing Operations Profit/ (Loss) on Discontinued Operations (0.30) Exceptional Items Profit/ Loss XI Profit/ (loss) for the period 1, XII Earnings per Equity shares. 1) Basic (in `) ) Diluted (in `) Earnings per share ` - Continuing Business 1) Basic (in `) ) Diluted (in `) Earnings per share ` - Discontinued Business 1) Basic (in `) (0.01) ) Diluted (in `) (0.00) Face value per share (in `)

40 SUMMARY OF OUR REFORMATTED CONSOLIDATED CASH FLOW STATEMENT FOR FISCAL 2012, FISCAL 2011 AND FISCAL 2010 (` in millions) PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal 2010 A. Cash Flow from Operating Activities Net Operating Profit before Tax 1, & Extraordinary Items Adjustments for: Net operating profit before tax Depreciation Interest Expenses Provision for Doubtful Debts and Advances Interest Income (41.35) (27.44) (22.42) Dividend Income (0.05) (0.03) (0.03) Employee Stock Option Expense (Profit)/Loss on sale of Fixed Assets (Net) Miscellaneous Liability Written (2.45) back Bad Debts written off Unrealised Foreign Exchange 6.84 (16.02) (0.10) Loss/(Gain) (Net) Deferred Revenue expenditure 3.70 written off during the year Foreign Currency Translation 0.84 (0.96) (0.23) reserve Exceptional Items - Sale of Polymer Business (320.99) Operating Profit before Working Capital changes 1, , (Increase) / Decrease in Short Term 4.74 (573.40) Trade Receivables (295.55) (Increase) / Decrease in Short term (100.40) (121.77) Loans and advances (Increase) / Decrease in Long term (2.25) (8.86) (3.96) Loans and advances (Increase) / Decrease in Other (7.31) (1.54) 2.02 assets (Increase)/Decrease in Inventories (377.71) (381.69) Increase / (Decrease) in Short term (90.59) Trade Payables/ Provisions Increase / (Decrease) in Long term Trade Payables/ Provisions Increase / (Decrease) in Other Short (69.09) term Liabilities Increase / (Decrease) in Other Long (360.58) (838.95) term Liabilities Cash generated from Operations 1, , before tax and exceptional items Net Direct Taxes paid (399.69) (179.91) (118.70) Exceptional Item Net cash from Operating 1, Activities B. Cash flow from Investing Activities Purchase of Fixed Assets including (1,171.37) Capital work in progress, intangible assets and Capital advances (971.02) (471.88) 38

41 (` in millions) PARTICULARS Fiscal 2012 Fiscal 2011 Fiscal 2010 Investment in Shares (1.56) Sale of Fixed Assets Interest Received Dividend Received Net cash used in investing (1,043.35) (941.40) activities (449.50) Net cash from Operating and Investing Activities (731.03) C. Cash flow from Financing Activities Issue of Equity Share capital (Repayment)/Issue of Preference (81.00) (125.00) Share Capital (Repayment/ Redemption) /Issue of (294.00) Debentures Share Premium Account Short Term Borrowings (Net) (453.66) 1, (634.19) Long Term Borrowings (Net of (147.89) (213.26) Repayments) Cash Flow Hedge Reserve (49.26) - - Interest paid (Net) (196.37) (177.40) (182.49) Dividend Distribution (100.13) (14.93) 0.00 Net Cash from Financing (15.47) (529.94) activities Net Cash from Operating, (7.18) Investing & Financing Activities Net increase in Cash & Cash (7.18) equivalent Opening balance of Cash & Cash equivalent Closing balance of Cash & Cash equivalent Note: Cash and cash equivalents included in the Cash Flow Statement comprise of the following:- i) Cash Balance on Hand ii) Balance in Current Account Total

42 RISK FACTORS Investing in the Placement Shares involves a high degree of risk. Prospective investors should carefully consider the risks and other uncertainties described below, in addition to the other information contained in this Placement Document, before making any investment decision relating to the Placement Shares. The occurrence of any of the following events could have a material adverse effect on our Company s business, results of operations, financial condition and future prospects which may result in loss of all or a part of your investment and/or our Company s ability to pay dividends could be impaired. In particular, any potential investor in or purchaser of the Equity Shares should pay particular attention to the fact that our Company is a company governed by Indian legal and regulatory requirements which may differ from those which prevail in other countries. Unless specified or quantified in the relevant risk factors detailed below, we are not in a position to quantify the financial or other implications of any of the risks described in this section. Additionally, our business operations could also be affected by additional factors that are not presently known to us or that we currently consider as immaterial to our operations. The following factors have been considered for determining their materiality: 1. Some events may not be material individually but may be found material collectively. 2. Some events may have a material impact qualitatively instead of quantitatively. 3. Some events may not be material at present but may have material impacts in the future. In making an investment decision, prospective investors must rely on their own examination of our Company and the terms of the Issue, including the merits and risks involved. Risks relating to our business and operations 1. During the course of business or otherwise, legal proceedings have been initiated against our Company, our directors and our Promoters. Any unfavourable or adverse decision in such pending proceedings may adversely affect our results of operations, financial condition and/or reputation. A summary of pending legal proceedings against our Company, our directors and our Promoters and the amounts involved, where quantifiable, are set forth below: Nature of proceedings/claims Number of proceedings outstanding Amount involved (in ` in millions)* Company Criminal 27 Negligible Tax Civil Labour 8 Negligible Other regulatory proceedings Show Cause Notices under Companies Act 1 -- Directors Criminal Tax Civil Labour Other regulatory proceedings 1 -- Promoters 40

43 Nature of proceedings/claims Number of proceedings outstanding Amount involved (in ` in millions)* Criminal Tax Civil Labour Total amount* * To the extent quantifiable. For further details, please refer to the section titled Legal Proceedings on page 173 of this Placement Document. These legal proceedings are pending at different levels of adjudication before various courts and tribunals. We can give no assurance that these legal proceedings will be decided in favor of our Company, our directors or our Promoters, as the case may be. Further, we may also not be able to quantify all the claims in the aforementioned proceedings. Any unfavourable or adverse decision in such proceedings may adversely affect our results of operations, financial condition and/or reputation. 2. Our Company has sought compounding of certain offences under the Companies Act, which as per law are compoundable. This may have a material adverse effect on our business, financial condition or results of operations. While our Company has filed the aforesaid compounding applications, the Company Law Board and/or the relevant Regional Director may reject to compound each instance of non-compliance. Any subsisting noncompliances by our Company may individually, or in the aggregate, have a material adverse effect on our business, financial condition or results of operations. Our Company had filed the following applications under Section 621A of the Companies Act with the Company Law Board in connection with compounding of certain irregularities/defaults under the Companies Act. Sr No Date Section of the Companies Act for Violation of which the application was made 1. January 1, 2012 Section 125 read with section 127 of the Companies Act 2. April 1, 2011 Section 211(3A), (3B) and (3C) of the Companies Act 3. April 1, 2011 Section 211(3A), (3B) and (3C) of the Companies Act 4. April 1, 2011 Section 217(3) of the Companies Act 5. April 1, 2011 Section 211(3A) of the Companies Act Present status Company had filled Form-61 with Registrar Of Companies Company had filled Form-61 with Registrar of Companies Company had filled Form-61 with Registrar of Companies Company had filled Form-61 with Registrar of Companies Company had filled Form-61 with Registrar of Companies 6. April 1, 2011 Section 211(3A), (3B) Company had filled and (3C) of the Form-61 with Companies Act Registrar of Companies 7. April 1, 2011 Section 211(3A), (3B) Company had filled 41

44 Sr No Date Section of the Companies Act for Violation of which the application was made and (3C) of the Companies Act 8. April 1, 2011 Section 217 (2AA) of the Companies Act 9. April 1, 2011 Section 176 of the Companies Act 10. September 9, 2010 Section 303(1)(a) of the Companies Act Present status Form-61 with Registrar of Companies Company had filled Form-61 with Registrar of Companies Company had filled Form-61 with Registrar of Companies Company had filled Form-61 with Registrar of Companies Our Company has sought to address these non-compliances of the Companies Act by filing the aforesaid compounding applications. However, the Company Law Board and/or the relevant Regional Director may not compound each instance of such non-compliance. Any subsisting non-compliances by our Company may individually, or in the aggregate, be subject to the statutorily prescribed penalty, which could adversely affect on our business, financial condition or results of operations. 3. Our agri input products cater to the agricultural industry, which is seasonal and cyclical in nature and subject to the vagaries of nature to the extent of monsoon and prevailing climatic conditions. Accordingly, if the agricultural sector in India or in any region thereof, and particularly the crops to which our products cater to are adversely affected by unfavourable weather/climatic conditions, poor rainfall, seasonal fluctuations and commodity crop price variations, the demand for our agri input products could be adversely affected. The agri input industry and the agricultural industry (on which our Company s agri input activities are dependent) are subject to climatic conditions, rainfall, seasonal and weather factors, which make the performance of the agricultural sector as a whole or the levels of production of a particular crop relatively unpredictable. The weather can affect the presence of disease and pest infestations in the short term on a regional basis, and accordingly may negatively affect the demand for agri input products and the mix of products used. In addition, sales of agri input products in the domestic retail market are highly seasonal due to the monsoon and the Rabi and Kharif crop seasons in India. Accordingly, if the agricultural sector in India or in any region thereof, and particularly the crops to which our products cater are adversely affected by unfavourable climatic conditions, poor rainfall, seasonal fluctuations, commodity crop price fluctuations and/or any other extraneous events, the demand for our agri input products, and hence the results of our agri input activities and our financial condition could be adversely affected. 4. Any change in Government policies vis-à-vis expenditure, subsidies and incentives etc. in agriculture sector or failure of farmers to realize expected prices could affect crop economics for farmers which in turn could affect their ability to spend on agri input products, thereby affecting our agri input activities. Any changes in government policies relating to the agriculture sector such as reduction of government expenditure in agriculture, withdrawal or changes in incentives and subsidy systems, export restrictions on crops, or adverse changes in commodity prices and/or minimum support prices could have an adverse effect on the ability of farmers to spend on agri input products, which thereby could adversely affect our agri input activities. 42

45 5. Our agri input activities could be adversely affected by introduction of alternative pest management and crop protection measures such as bio technology products, pest resistant seeds or genetically modified crops. Our Company s agri input activities may be adversely affected by increased use of biotechnology products, pest resistant seeds, genetically modified crops and other organic crop protection substitutes for agrochemicals. The adoption of the products derived through biotechnology or alternative pest management and crop protection measures could have a negative impact on traditional agrochemicals. Genetically modified ( GM ) crops are likely to have more resistance to pests and disease than non-gm crops and therefore require significantly less agrochemical usage than non-gm crops. The growth and acceptance of such alternative pest management and crop protection products and measures by consumers may have an adverse effect on sales of our Company s agrochemical products which thereby may affect our financial condition and results of operations. 6. If we are unable to compete successfully with our competitors, our market position and profitability could be adversely impacted. The market for the production and distribution of agrochemicals, industrial and specialty chemicals is competitive in India. The basis of competition includes availability of new products, product range, price and customer service. We compete against our competitors on the basis of quality, technical competence, distribution channels, logistics facilities, prices, business terms and conditions, customer relationships etc. There is no assurance that we will continue to compete successfully in future. Some of our competitors may be able to price their products more attractively or may be able to distribute their products more effectively through establishing better distribution networks, or may have greater access to capital, superior manufacturing techniques, research and development, marketing and other resources. If we are unable to remain sufficiently competitive, or are unable to keep pace with them, our business and operating results will be adversely affected. 7. Our business and profitability will suffer if we fail to anticipate and introduce new products in order to keep pace with rapid changes in customer preferences and the industry on which we focus. The agrochemical business is characterized by constant product innovation due to technological change and evolving industry standards. To compete successfully in the industry, we must be able to identify and respond to changing demands and preferences. Changes in product mix impacts our operating results and our margins. We cannot assure you that our products will always gain buyer acceptance and we will always be able to offer competitive custom synthesis services to meet customer expectations. Failure to identify and respond to changes in consumer preferences could, among other things, limit our ability to differentiate our products, adversely affect consumer acceptance of our products, and lower sales and gross margins. Further, our competitors may offer products/services/terms and conditions which could render our offerings non-competitive or force us to reduce prices, thereby adversely affecting our margins. Any of these factors could have a material adverse effect on our business and results of operations. 8. As a part of our strategy, we propose to launch new products from time to time. The process for registering any new product is expensive and time consuming. If we are unable to successfully launch our proposed products on account of any delay in or refusal of registration or for any other reason we may lose out on the market opportunities and/or may fail to recover the costs incurred towards registration and other pre-launch activities. This could adversely affect our growth, profitability and market position. As a part of our strategy, we propose to launch new products from time to time. With respect to any new proposed agri input product, our Company invests time and money inter alia on the registration procedures and fees, data generation, trials, various brand building and pre-launch marketing activities. The launch of a product depends upon our ability to obtain registration of the product in a timely manner or at all as well as on other factors. The submission of an application for registration to the relevant regulatory authority does not guarantee that 43

46 registration will be granted. Accordingly, if we are unable to obtain the necessary regulatory registration / approvals for our products or successfully launch our product in a timely manner or at all, we may not be able to recover the costs incurred towards registration and pre-launch activities in connection with such product. Further, in such a case we may miss out on the market opportunity with respect to such new products, which could adversely affect our growth, profitability, financial condition and market position. 9. All agro chemical products sold by us are required to be registered under the Insecticides Act 1968, and Rules Further, custom synthesis and contract manufacturing products also are often required to be registered by our customers in the relevant jurisdictions. These registrations are liable to be cancelled or the manufacture/sale/distribution etc. of such products may be restricted. In case any product/s registration is cancelled, or its use etc. restricted, then it could adversely affect our results of operations or growth prospects. The agri input sector and the sectors to which our custom synthesis and contract manufacturing products cater to are usually highly regulated requiring registration of products and strict compliance with various statutory and regulatory requirements and parameters. If the registration of our agri input products and/or the custom synthesis and contract manufacturing products are cancelled on grounds of alleged non compliances with such statutory and/or regulatory requirements, we will not be able to market or manufacture such products, as the case may be, which could adversely affect our results of operations and reputation. Further, we may not be able to recover the expenses incurred for the marketing and/or manufacturing of such products, and in certain cases, the relevant regulatory authority could also impose penalties on us under the relevant statute / regulation. Furthermore, in case of any proceedings initiated or threatened against us challenging the registration of our products, we would have to divert management time and resources in defending such proceedings which could adversely affect our profitability, reputation and growth prospects. 10. Not all our contracts for contract manufacturing are on a long term basis and going forward too that may not be the case. If we are unable to enter into long term contracts for our custom synthesis and contract manufacturing activities, our revenues could be variable in future. Any adverse variations in our revenues as a result could adversely impact our results of operations and growth. Long term agreements for our custom synthesis and contract manufacturing activities give us visibility for long term growth. Not all our contracts for contract manufacturing are on a long term basis and going forward too that may not be the case. If we are unable to enter into long term agreements, our revenue may be subject to variability because of fluctuations in demand for such products and services. Accordingly, if we are unable to enter into long term contracts for this segment of our business our results of operations and growth could be adversely impacted. 11. We currently prefer to enter into exclusive licenses to market in-licensed products developed by global innovators in the Indian markets. If going forward we are unable to continue such activities on an exclusive basis, we may face competition with respect to such products, which may adversely affect our future market position, growth and results of operations. As a part of our in-licensing arrangements with global innovators, we currently prefer to enter into exclusive licenses to market products developed by them in the Indian markets for a stipulated time period, which enables us to introduce new and novel products in the Indian markets, thereby giving us a competitive advantage in our markets. However going forward, if we are unable to obtain such exclusive licenses from global innovators, and/or if similar licenses for the same product are also granted to any of our competitors in India, we may face competition with respect to such products, which may adversely affect our future market position, growth and results of operations. 44

47 12. If any of the global innovators from whom we in-license agri input products establish a presence in the Indian market, we could lose out on the opportunity to market new products of such global innovators exclusively or at all in India, which could adversely affect our results of operations, market position and growth. If global innovators from whom we in-license agri input products, establish a presence in India either through incorporation of a new entity, through acquisition of any agri input entity in India, or otherwise, we could lose out on the opportunity to market new or novel products of such global innovators exclusively or at all. As a result, our results of operations, market position and growth could be adversely affected. 13. As per the current business model, our growth is dependent on our relationship with global innovators in our business. Any adverse changes in such relationships could adversely affect our growth, operations and profitability. In our current business model, in our domestic agro input segment our focus has been on launching new products through in-licensing and co-marketing relationships with global innovators and in our export segment, our focus has been on undertaking custom synthesis and contract manufacturing services with respect to new molecules developed by global innovators. Accordingly, in case of any adverse changes in such relationships, we may not be able to, (i) introduce new and innovative agri input products from time to time through our inlicensing and co-marketing arrangements, (ii) take up custom synthesis and contract manufacturing services with respect to new and innovative molecules developed by global innovators, (iii) procure repeat orders for custom synthesis / contract manufacturing, which in turn would adversely affect our growth, operations and profitability. 14. Our top 5 products contributed to 41.67% of our gross sales (net of discount) from operations Fiscal Any decline in sales or market position of these top 5 products could adversely affect our results of operations and market position. Our top 5 products collectively contributed to 41.67% of our gross sales (net of discount) from operations Fiscal Should there be any decline in sales or market position of the aforesaid products our results of operations and profitability could be adversely affected. 15. Our top 5 customers contributed 40.75% of our gross sales (net of discount) from operations for Fiscal Our failure to continue business activities with any of these customers could adversely affect our results of operations. Our top 5 customers contributed 40.75% of our gross sales (net of discount) from operations for Fiscal Our failure to continue business activities with any of these customers could adversely affect our results of operations. 16. The registration of intellectual property, such as brand names and trademarks, is integral and critical to our growth and profitability. Any failure in the future, to register and protect intellectual property rights, or any infringement thereof could adversely affect our competitive position, our operations, and profitability. Our success is greatly dependent on the branding of our products and our ability to competitively protect intellectual property rights in connection with our brands and products. Such intellectual property rights are a precursor to our sales and marketing efforts. Currently, 21 applications for registration of trade and service marks under different classes are pending before the relevant trademark authorities, out of which the application for registration of one of our trademarks has been disputed. Further, we do not have registered trademarks for certain brands/logos used by us currently. If we are unable to register such trademarks in a timely manner or at all, our goodwill, brand position and/or profitability could be adversely affected due to use of the same brand name by others. Further, there can be no assurance that such brand names and logos will not be infringed. Use of these brand names or logos, in activities similar to those of our Company, by third parties could affect the reputation of our brand which could in turn adversely affect our business, 45

48 financial condition and results of operations. Further, we may need to undertake expensive and time-consuming litigation to protect our intellectual property rights. If for any reason, we are unable to regularly register or adequately manage and protect intellectual property rights, our brand building exercises, business plans, and profitability could be adversely impacted. 17. If we are unable to obtain or to maintain any of the required statutory and regulatory approvals, licenses, permits, certifications and registrations as required for our business activities, our operations and profitability could be adversely affected. We require various approvals, licenses, registrations and permissions for our business activities. Each authority may impose its own requirements or delay or refuse to grant approval. In the future, our Company may be required to renew such permits and approvals or to obtain new permits and approvals There can be no assurance that the relevant authorities will issue any such permits or approvals in the time-frame anticipated by our Company or at all. Failure to renew, maintain or obtain the required permits, approvals and licenses may interrupt our Company s operations and may have a material adverse effect on our Company s results of operations, financial condition and prospects. 18. Any loss resulting from operating risks at our manufacturing, formulation, processing and R&D units, could have an adverse impact on our profitability. Our manufacturing and R&D units are subject to various operating risks, including, inter alia, (i) the breakdown or failure of equipment, (ii) power and water supply disruptions, (iii) performance below expected levels of output or efficiency, (iv) obsolescence, (v) labour disputes, (vi) natural disasters, and, (vii) industrial accidents. Our units use complex equipment and machinery, and the breakdown or failure of equipment or machinery may result in us having to make repairs or procure replacements which may require considerable time and expense. Any of the abovementioned factors could have an adverse impact on our operations/profitability 19. Not all of our raw materials are purchased on long term contracts. Any price volatility in our raw material or our inability to source raw materials in a timely manner or at all could adversely affect our operations and profitability. Not all our raw material are purchased on long term contracts. The prices of these raw materials are subject to fluctuations. We do not have control over the factors affecting prices of raw materials. Any volatility in their prices or availability in a timely manner or at all, could adversely impact our operations and profitability. Further, any failure by our suppliers to (i) deliver the required raw materials in the necessary quantities, (ii) adhere to delivery schedules, or, (iii) provide the raw materials as per the specified quality and technical specifications, would also adversely affect our operations and productivity, and hence our financial performance. 20. Our failure to accurately forecast and manage inventory could result in an unexpected shortfall and / or surplus of products, which could adversely affect our operations and profitability. We monitor our inventory levels based on our own projections of future demand. Because of the time required to produce/market quantities of our products, we may make production/marketing decisions well in advance of sales. If we are unable to appropriately estimate variations in demand for products for any reason, the same could result in surplus of inventory levels or unavailability of products in high demand resulting in below potential sales. Any of the aforesaid circumstances could adversely affect our operations and profitability. 21. Our operations and profitability are dependent upon the availability of timely and cost efficient transportation and other logistic facilities. Their prolonged disruption or unavailability in a timely manner could result in delays or non supply and thereby could adversely affect our operations, profitability, reputation and market position. 46

49 Our operations and profitability could be adversely affected by a number of logistical factors, such as prolonged interruptions in transport schedules, (whether dues to strikes, natural disasters, a change in market conditions, or otherwise), for our products or raw materials. Any logistical or prolonged transportation unavailability or failure that adversely affects the timely delivery of our products to end users or of our raw material could adversely affect our operations, profitability, reputation and market position. 22. We rely on computerized systems to manage our sales, supply chain, production process, logistics, research and development, and, other integral parts of our business operations. Any failure or malfunction in connection with these systems, could adversely affect our business, financial conditions and operations. Our Company s business processes run on a SAP based ERP system and include virtually all areas such as production, sales, human resources, finance and accounts, supply chain, R&D etc. Any failure or malfunction in connection with these computerized systems could result in business interruptions, including disruption in our production, supply chain, distribution and management, etc. This can result in damaged reputation, weakening of our competitive position, operation efficiencies/failures which in turn would have a material adverse effect on our business and financial condition. 23. A pan-india reach and penetration among the farmer community is an important factor for our agri-input sales and also a determinant for global innovators for giving in-licensing products to us. Accordingly, if we are unable to maintain adequate penetration in the domestic market or to competitively expand our distribution network or sales, then our operations and profitability could be adversely impacted. A pan-india reach and penetration among the farmer community is an important factor for our agri-input sales and also a determinant for global innovators for giving in-licensing products to us. For maintaining this pan-india reach, we rely on our distribution network and dealerships to distribute, market and sell our agri input products in India through our marketing team spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel which comprises of numerous retail points, over 10,000 distributors and direct dealers across the major agriculture areas in the country, 27 stock points including our own depots and 18 C&F agents who work on hub-and-spoke distribution model to ensure timely delivery. Hence, our operations are dependent on maintaining good relationships with our distributors and dealers and ensuring that our distributors and dealers are successful. There is no assurance that our current distributors and dealers will continue to do business with us on favorable terms or at all. Accordingly, if we are unable to maintain adequate penetration in the domestic market or to competitively expand our distribution network, our sales, competitiveness, goodwill, operations and profitability could be adversely impacted. 24. Being in the business of chemicals manufacturing, compliance with, and changes in, safety, health and environmental laws, workplace and related laws and regulations applicable in jurisdictions in which we operate, may increase our compliance costs and as such adversely affect our business, prospects, results of operations and financial condition. We are subject to various safety, health and environmental laws, workplace and related laws and regulations. Such statutory / regulatory requirements include: i. obtaining environmental clearance for the manufacture of agrochemicals and specialty chemicals from relevant central and state regulatory environmental authorities; ii. controls on and obtaining permissions / no objections for the disposal/abatement of hazardous materials, noise emissions, air and water discharges; iii. controls on the handling, discharge and disposal of chemicals, toxic and inflammable objects; iv. restrictions on employee exposure to hazardous substances and other aspects of our operations. 47

50 Any damage caused by the discharge of chemicals, hazardous waste and/or other pollutants into the air, soil or water may cause us to be liable to government and regulatory bodies or to third parties. In addition, we may be required to incur costs to remedy the damage caused by such discharges, pay fines or other penalties for non-compliance. Compliance with, and changes in, safety, health and environmental laws and various labour, workplace and related laws and regulations may increase our compliance costs and as such adversely affect our business, prospects, results of operations and financial condition. 25. Many of our raw materials used and stored and/or chemicals produced at our factories are hazardous in nature. In the event of any accidents involving any such hazardous materials and substances, our Company may be held liable for subsequent damages and litigations. Any mishandling / accident / errors while manufacturing and/or storing hazardous material and/or substances at our units may cause personal injury or loss of life and may further lead to severe damage or destruction to property or equipment and environmental damage and may result in the suspension of operations and the imposition of civil and criminal liabilities. Further, we depend on third party transporters capability to transport these hazardous materials/substances. Any mishandling of hazardous substances by these carriers could affect our business adversely and may impose liabilities on our Company. Liabilities incurred as a result of these events have the potential to adversely impact our financial position. 26. Our insurance cover may not adequately protect us against all of the significant risks that our Company faces, or may in the future face, in connection with our business activities. Our financial condition and operations could be adversely affected by any liabilities or risks that arise, which are not completely covered by insurance policies entered into by us Our Company has entered into various insurance policies, in light of our business being exposed to potential liability from its customers or end users for defects in products or services. Product liability claims are a commercial risk for our Company and our Company s business involves the handling, production and transportation of various hazardous or toxic materials. Although, our Company maintains product liability insurance with respect to our major manufactured products, if any product liability claim is not adequately covered by insurance, or at all, our Company s profitability, reputation and marketability of products and services could be adversely affected. Other significant insurance policies entered into by us also provide cover for risks relating to physical loss, theft or damage to our assets, as well as business interruption losses, but there can be no assurance that our insurance policies will at all times cover all the risks associated with our business. There is also the risk of an insurer interpreting our insurance claims in a manner that leads to long and costly litigation and/or denial of our claims. Accordingly, our financial condition and operations could be adversely affected by any liabilities or risks that arise in case of denial or inadequate or delayed compensation under our various insurance policies. 27. The availability of counterfeit agri input products and agri input products passed off by others as our products, could adversely affect our goodwill and results of operations. The spurious pesticides market size in India is estimated to be USD 233 million in 2010 (Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector ). Entities in India could pass off their own spurious/sub-standard products as ours, including counterfeit or pirated products. Certain entities could imitate our brand name, packaging materials or attempt to create look-alike products. The proliferation of unauthorised copies of our products, and the time and attention lost to defending claims and complaints about counterfeit products could have an adverse effect on our goodwill, market share, growth prospects, results of operations and financial condition could be adversely affected. 28. Quality concerns and negative publicity if any, would adversely affect the value of our brand, and our sales 48

51 Our business is dependent on the trust our customers have in the quality of our products. Any negative publicity regarding our Company s, brand, or products, including those arising from any allegations on the quality of our products from our vendors, or any other unforeseen events could adversely affect our reputation our brand value, our operations and our results from operations. 29. Adverse changes in statutory / regulatory requirements (including any fiscal or non fiscal measures), or unfavourable interpretation of statutory/regulatory requirements governing our Company, our products or the industries or geographies to which our products pertain to could adversely affect our business. Our agri input products and the sectors to which our custom synthesis and contract manufacturing products cater to are usually highly regulated requiring various registration requirements and strict compliance with various statutory and regulatory requirements and parameters. Any unfavourable changes in statutory or regulatory requirements in India or globally, including any fiscal or non fiscal measures, could adversely affect our ability to conduct our business in its present form, which thereby could adversely affect our operations and profitability. Further, if the interpretation of the regulators and authorities vary from our interpretation, we could be subject to duties, penalties, restrictions and/or other hardship. 30. As a strategy we plan our capital expenditure in our contract manufacturing segment against contracts that are either signed or being negotiated, and have in recent years invested in capital expenditure for expanding our manufacturing infrastructure in this segment. Our failure to successfully enter into contracts under negotiation or to get adequate compensation upon cancellation could adversely affect our results of operations. The custom synthesis and contract manufacturing activities is a major growth driver for our Company. We have accordingly invested capital expenditure in expanding our manufacturing and process research infrastructure and capabilities to augment growth in such activities. We have recently commissioned a multi product plant in Jambusar to cater to the requirements of this segment. Although, as a strategy we plan our capital expenditure in this segment against contracts that are either signed or being negotiated, we may not be able to recoup or benefit from such capital expenditure in case we are unable to successfully enter into contracts under negotiation. The same would apply if we do not adequate compensation upon any cancellation of orders. Any of the above could adversely affect our results of operations. 31. If we are unable to expand our capacities in a timely manner or at all we may not be able to execute contract manufacturing orders in a timely manner or at all, which could adversely affect our goodwill, growth and results of operations. We typically plan capacity expansion against contracts which have been finalized or are in the process of being negotiated for our contract manufacturing activities. In a situation where all our manufacturing facilities are being utilized to their optimum capacities, and we are unable to undertake capacity expansion in a timely manner or at all, our ability to execute orders will be hampered. This could curtail our growth and adversely affect our turn around time for orders thereby affecting our goodwill and results of operations. 32. We may require capital expenditure in the future in connection with our growth plans which may require additional financing. In the event such financing is not obtained on favourable terms, in a timely manner or at all, our operations and financial condition may be materially and adversely affected. There can be no certainty that our Company can generate revenues that would be sufficient to fund our future expansions. Accordingly, we may need to obtain additional external financing in the future. There can be no assurance that any such additional financing will be available, on terms favourable to us, in a timely manner or at all. Any such additional financing may also be subject to interest rate fluctuations, which could affect our results of operations adversely. Accordingly, our failure to finance our capital expenditure in future on commercially favourable terms, in a timely manner or at all could adversely affect our operations and financial condition. 49

52 33. Our operations require infusion of working capital from time to time. If we are unable to obtain and/or maintain sufficient cash flow, credit facilities and other sources of working capital funding, in a timely manner, or at all, to meet our requirement of working capital or pay our debts, our operations, financial condition and profitability could be adversely affected. Our operations require infusion of working capital from time to time. We need to obtain and/or maintain adequate cash flows and working capital funding facilities, from time to time, in order to, inter-alia, finance the purchase of raw materials, operate, upgrade and maintain our research and manufacturing facilities. If we are unable to obtain and/or maintain sufficient cash flow, credit facilities and other sources of working capital funding, in a timely manner, or at all, to meet our requirement of working capital or pay our debts, our operations, financial condition and profitability could be adversely affected. 34. As of March 31, 2012 we had unsecured loans amounting to ` million on a consolidated basis and repayment of any of these loans may be required on demand. In such event, we may have to raise funds to refinance these obligations. As of March 31, 2012 our Company had unsecured loans amounting to ` million on a consolidated basis and repayment of any of these loans may be required on demand. In such event, we may have to raise funds to refinance these obligations. This requirement to refinance loans on short notice may have a material and adverse effect on our business operations and financial condition. 35. We have availed of borrowing most of which include various conditions and covenants. We may be unable to comply with covenants and conditions or to obtain necessary consents required thereunder in connection with borrowings availed of/to be availed of by our Company. This could lead to termination of our credit facilities, accelerated repayment of all amounts due thereunder, enforcement of any security provided and trigger of cross default provisions. Any of the above actions taken by the relevant lender could adversely impact our credit rating, financial condition and results of operations. Our Company had long term borrowings, on a consolidated basis, of `1, millions as on March 31, 2012 and long term borrowings, on a standalone basis of `1, millions as on September 30, 2012, respectively. Our Company had short term borrowings, on a consolidated basis, of `1, millions as on March 31, 2012 and short term borrowings, on a standalone basis of `1, millions as on September 30, 2012, respectively. Most of our borrowing agreements include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions, which could restrict our ability to conduct our business and operations in the manner we desire. For instance, under some of our financing agreements, we require, consents from the relevant lenders for, among others, the following matters: a. entering into any scheme of merger, amalgamation or reorganization; b. selling or transferring all or a substantial portion of our assets; c. promoters maintaining a particular percentage of the equity share capital of our Company; d. making any change in capital structure or control or constitution of our Company; e. making amendments in our Memorandum and Articles of Association; f. creating any further security interest on the assets upon which the existing lenders have a prior charge; and raising funds by way of any fresh capital issue. Our operations and/or profitability could be adversely impacted if we are unable to obtain, on a timely basis or at all, the relevant approvals or no objection certificates from such lenders for the commencement and completion of any of the said restricted activities by our Company. A failure to observe the covenants under our financing arrangements or to obtain necessary consents required thereunder may lead to the termination of our credit facilities, acceleration of all amounts due under such facilities and the enforcement of any security provided. Any acceleration of amounts due under such facilities may also trigger cross default provisions under our other financing agreements. Any of these circumstances could adversely affect our credit rating, financial condition and results of operations. 50

53 36. Fluctuating foreign exchange rates could adversely impact the financial results of our Company. The business of our Company is dependent on imports and exports entailing large foreign exchange transactions. We also have external commercial borrowings. We are therefore subject currency exchange rate exposures. Foreign exchange fluctuation affects both our revenues and expenditures. To this extent, the revenues and expenditures will be higher or lower depending on the prevalent foreign exchange rates. A weakening of the Rupee against the foreign currencies may have an adverse effect on our cost of borrowing in Rupee terms and on the cost of our imports. An appreciating rupee may adversely affect our export earnings. Our management typically monitors our foreign currency exposure periodically and our Company has adopted a policy of hedging a pre-determined percentage of the difference between our foreign current exposure to exports and imports, by entering into forward contracts. However, there can be no assurance that such hedging measures would at all times be adequate to cover us from any losses arising out of fluctuations in foreign exchange rates. 37. Of the 73 properties used by our Company, we own 1 property while 72 properties including our Corporate Office and manufacturing facilities at Jammu, Panoli and Jambusar are on leasehold/licensed basis. Any termination of the relevant lease or leave and license agreements in connection with such properties or our failure to renew the same could adversely affect our activities. Further, we may not be able to enforce our rights in connection with lease or leave and license agreements which are not registered, which may affect our operations and profitability. Currently, except 1 property at Udaipur which is owned by our Company, none of the other properties used by our Company for the purposes of our business activities, including our Corporate Office at Gurgaon and manufacturing facilities at Jammu, Panoli and Jambusar, are owned by us. Termination of the lease / leave and license agreements in connection with such properties which are not owned by us or failure to renew the lease / licenses which expire in future on favourable conditions, in a timely manner or at all, could require us to vacate such premises at short notice, which could adversely affect our operations, financial condition and profitability. Further, some of the aforementioned leave and license or lease deeds are not registered. Accordingly, we may not be able to enforce our rights in connection with lease or leave and license agreements which are not registered, which may affect our operations and profitability. 38. To enhance our existing business we may seek opportunities to acquire or partner with other corporates, whom we have not identified. If we are unable to acquire or partner with such corporates in a commercially viable manner or at all or to realize expected benefits synergies from such acquisitions or partnerships in a profitable manner our growth prospects, operations and profitability could adversely be affected. To enhance our existing business we may seek opportunities to acquire or partner with other corporates. We cannot assure you that we will be able to successfully acquire and/or partner with such corporates in a commercially viable manner or at all. Further, if we do acquire or partner with such corporates, there can be no assurance that we will be able to realize the expected benefits synergies from such acquisitions or partnerships in a profitable manner. Any of the above factors could adversely affect our growth prospects, operations and profitability. 39. Our success significantly depends on our management and operational teams and other skilled professionals. Our operations and profitability would be adversely affected if we fail to identify, attract, retain, motivate and manage such personnel. We are dependent on the experience and strategic inputs of the senior members of our management and our operational teams, (including our research and development teams). The senior members of our management are responsible, inter alia, for, (i) identifying business risks and mitigating the same, and, (ii) formulating strategic plans for manufacturing, marketing, procurement, research and development. Further, we depend on our operational teams for our day to day core operations, such as sales, manufacturing and R&D. Their experience based strategic inputs are critical to our operations and profitability. Accordingly, 51

54 if we are unable to appropriately identify, attract, retain, motivate and manage such personnel, our operations and profitability could be adversely affected. 40. Our historical financial information may not be indicative of future growth. Historically we have demonstrated growth on account of successful implementation of our strategies. If for some reason our strategies do not result in the same level of success, our results of operations could be adversely affected. Our Company has historically continued to demonstrate growth in revenues year after year. Our Company s net revenue from operations on a consolidated basis has grown at a CAGR of 27.30% from ` 5, million for Fiscal 2010 to ` 8, million in Fiscal 2012, and our PAT margins on a consolidated basis have increased by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal The historical financial information however may not be indicative of our future growth. Our future growth will depend, among other things, upon the continued success of our business model and our ability to successfully implement our strategies which inter-alia include the following: continue expanding our domestic portfolio of in-licensed products; adding new product categories to leverage our pan-india marketing network and customer reach; diversifying our presence across the agricultural value chain by leveraging our strong understanding of the sector; strengthening our relationship with existing clients; acquiring new clients. Our results of future operations may be adversely affected if these strategies do not get succesfully implemented for any reason. 41. The requirement and proposed use of proceeds of the Issue have not been appraised by any bank, financial institution or other independent agency and are based on internal management estimates. Our management will have significant flexibility in applying the proceeds from the Issue, which may affect the results of our operations. The fund requirement and use of the proceeds of the Issue as specified in Use of Proceeds on page 64 of this Placement Document are based on internal management estimates and have not been appraised by any bank, financial institution or other independent agency. The actual operations due to unforeseen circumstances, change in business situation, etc. or otherwise may be different from management estimates and our Company may not be able to deploy funds as planned. Accordingly, our management will have significant flexibility in applying the proceeds received by us from the Issue. This may affect our results of operation. 42. Our contingent liabilities, in our financial statements as on March 31, 2012, aggregated to ` million on a standalone and consolidated basis. If such contingent liabilities materialize, our financial condition could be adversely affected. Our contingent liabilities, in our financial statements as on March 31, 2012, aggregated to ` million on a standalone and consolidated basis, as further detailed below: (` in millions) S.No Particulars As at March 31, Disputed Taxation demands not acknowledged as debts: (i) Sales Tax (ii) Excise Duty 8.50 (iii) Income Tax (iv) Customs Duty Anti Dumping Duty Counter Guarantees to GIDC 3.29 Total

55 If such contingent liabilities materialize, our financial condition could be adversely affected. 43. We have experienced negative cash flows in Fiscal 2012, Fiscal 2011 and Fiscal Any significant or sustained negative operating cash flows in the future could adversely affect our financial condition. We have experienced a negative cash flow from investing activities and financing activities on a consolidated basis for Fiscal 2012, Fiscal 2011 and Fiscal 2010 as detailed below: (` in Millions) Sl. No. Particulars 1. Net cash used in investing activities 2. Net cash used in financing activities For the Year ended March 31, 2012 For the Year ended March 31, 2011 For the Year ended March 31, 2010 (1,043.35) (941.40) (449.50) (15.47) (529.94) Any negative cash flows in the future could adversely affect our financial condition. In the event that we are unable to make arrangements to meet our cash requirements, it could have an adverse effect on our business, financial condition and results of operations. 44. Our consolidated financial statements as at and for the Fiscals 2012, 2011 and 2010, have been prepared based on financial statements of one of our Subsidiaries, namely PI Japan Company Limited, which are not audited and prepared based on the certification furnished by the directors of PI Japan Company Limited. Our consolidated financial statements as at and for the Fiscals 2012, 2011 and 2010, have been prepared based on financial statements of one of our Subsidiaries, namely PI Japan Company Limited, which have not been audited for any of the aforementioned periods. The financial statement PI Japan Company Limited reflect (a) total assets of ` 9.62 million, ` 6.75 million, ` 3.96 million, (b) total revenue of ` million, ` million and ` million and (c) net cash flows amounting to ` 2.89 million, ` 2.01 million and ` 0.67 million for the years ended March 31, 2012, March 31, 2011 and March 31, 2010 respectively. These financial statements have been certified by the directors PI Japan Company Limited and consolidation with respect to PI Japan Company Limited is based solely on such certificate. 45. Our Promoters and Directors may from time to time have interests in our Company other than reimbursement of expenses incurred or normal remuneration or benefits. Our Promoters and Directors may from time to time have interests in our Company other than reimbursement of expenses incurred or normal remuneration or benefits. For instance (i) Mr. Raj Kaul, a director on our Board, has entered into an agreement with our Company for providing services in a professional capacity to our Company, and (ii) one of our Promoters Mrs. Madhu Singhal has pursuant to a lease deed dated March 1, 2012 leased a property to our Company for which she is currently entitled to a rent of ` 56,000 per month. Our Promoters and Directors may also from time to time be interested to the extent of any transaction entered into by our Company with any other company or firm in which they are directors or partners. 46. Members of our Promoter Group will continue to retain significant control in our Company after the Issue, which will allow them to influence the outcome of matters submitted to shareholders for approval. Such a concentration of ownership may also have the effect of delaying, preventing or deterring a change in control. Currently, our Promoter Group hold 63.35% of the paid up Equity Share capital of our Company and will continue to hold a substantial percentage of our paid up Equity Share capital post completion of the Issue. As a result, our Promoter will continue to exercise significant control over determining decisions which require simple or special majority voting, and our other shareholders will be unable to affect the outcome of such voting. Our Promoter Group may take or block actions with respect to our business, which may conflict with our interests or the interests of our minority shareholders, such as actions which delay, defer or 53

56 cause a change of our control or a change in our capital structure, merger, consolidation, takeover or other business combination involving us, or which discourage or encourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. We cannot assure you that the members of our Promoter Group will act in our interest while exercising their rights in such entities, which may in turn materially and adversely affect our business and results of operations. We cannot assure you that our Promoter Group will act to resolve any conflicts of interest in our favour. If our Promoter Group sells a substantial number of their Equity Shares in the public market, or if there is a perception that such sale or distribution could occur, the market price of the Equity Shares could be adversely affected. No assurance can be given that such Equity Shares that are held by our Promoter Group will not be sold any time after the Issue, which could cause the price of the Equity Shares to decline. Risks Relating to India 47. An adverse economic, political and/or regulatory environment in India could cause our business to suffer and in turn lead to a loss of revenue. We are incorporated in India, and almost all of our assets and employees are located in India. As a result, we are highly dependent on the prevailing economic, political and regulatory environment in India. Any adverse changes in these socio-economic factors could adversely affect our ability to implement our strategic initiatives, in a timely manner or at all, and our operations and profitability. Our business, and the market price and liquidity of the Equity Shares, are directly affected by the Indian economy, which in turn may be affected, inter alia, by foreign exchange rates and controls, interest rates, changes in government policy, taxation, social and civil unrest, economic/trade policies of equity market perceptions, comments by leaders/economists etc. Political instability and/or unfavorable changes in the policies of the Government in India, could delay the liberalization of the Indian economy, and consequently adversely affect economic conditions in India generally, and our business in particular. Since 1991, successive Indian Governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the private sector. Nevertheless, the role of the Indian central and state governments in the Indian economy as producers, consumers and regulators has remained significant. The continuance or change in the various policies, rules, regulations, taxation etc. can neither be predicted nor taken for granted. The rate of economic liberalization could change, and specific laws, policies taxation affecting our industry, foreign investment and other matters affecting investment in our securities could change as well. Any change in India s economic policies could adversely affect business and economic conditions in India generally, and our business in particular. 48. Instability in financial markets could materially and adversely affect our results of operations and financial condition. The Indian economy and financial markets are significantly influenced by worldwide economic, financial and market conditions. Any financial turmoil, especially in the U.S. or Europe, may have a negative impact on the Indian economy. Although economic conditions differ in each country, investors reaction to any significant developments in one country can have adverse effects on the financial and market conditions in other countries. A loss in investor confidence in the financial systems, particularly in other emerging markets, may cause increased volatility in Indian financial markets. Any prolonged financial crisis may have an adverse impact on the Indian economy and us, thereby resulting in a material and adverse effect on our business, operations, financial condition, profitability and price of our Company s Placement Shares. 49. Investors may be restricted in their ability to exercise preemptive rights under Indian law and thereby may suffer future dilution of your ownership position. Under the Companies Act, a public limited company incorporated in India must offer holders of its equity shares preemptive rights to subscribe and pay for a proportionate number of 54

57 shares to maintain their existing ownership percentages before the issuance of any new equity shares, unless the preemptive rights have been waived by adoption of a special resolution by holders of three-fourths of the equity shares that are present at the relevant meeting. If you are in a jurisdiction that requires registration or qualification of the new securities, you may be unable to exercise your preemptive rights for the Equity Shares unless such registration or qualification is effective with respect to the rights or an exemption from the registration or qualification requirements is available to you. Our Company may elect not to file a registration statement or otherwise qualify the preemptive rights available by Indian law to investors in your jurisdiction. To the extent that an Investor is unable to exercise preemptive rights granted in respect of the Equity Shares, its proportional interests in our Company would be reduced. 50. Rights of shareholders under Indian law may be more limited than statutory/regulatory rights of shareholders in other jurisdictions. The Companies Act and related regulations, our Company's Articles of Association and the Equity Listing Agreements govern the corporate affairs of our Company. Legal principles relating to these matters and the validity of corporate procedures, directors' fiduciary duties and liabilities, and shareholders' rights may differ from those that would apply to a company in another jurisdiction. Shareholders' rights under Indian law may not be as extensive as shareholders' rights under the laws of other countries or jurisdictions. Investors may have more difficulty in asserting their rights as a shareholder of a company incorporated in India than as a shareholder of a corporation in another jurisdiction. 51. Any down-grading of India s debt rating by an international rating agency could have a negative impact on our business and the price of the Equity Shares. Any adverse revisions to India's credit ratings for domestic and international debt by international rating agencies may adversely impact the price of our Equity Shares and also our ability to raise additional debt and/or capital on commercially viable terms, in a timely manner or at all. This could have an adverse effect on our business, our financial condition, and / or the price of the Equity Shares. 52. A decline in India s foreign exchange reserves may affect liquidity and interest rates in the Indian economy, which could adversely impact our financial condition. Flows to foreign exchange reserves can be volatile, and past declines may have affected the valuation of the Rupee. Further declines in foreign exchange reserves, as well as other factors, could adversely affect the valuation of the Rupee and could result in reduced liquidity and higher interest rates that could adversely affect our future financial performance and the market price of the Equity Shares. 53. Companies operating in India are subject to a variety of central and state government taxes and surcharges. Tax and other levies imposed by the central, state and municipal governments in India that affect our tax liability include central and state taxes and other levies, income tax, value added tax, turnover tax, service tax, stamp duty, etc. and other special taxes and surcharges which are introduced on a temporary or permanent basis from time to time. Moreover, the central and state tax scheme in India is extensive and subject to change from time to time. Any such future amendments may affect the overall tax efficiency of companies operating in India and may result in significant additional taxes becoming payable and could adversely affect our business and profitability. 54. Public companies in India, including our Company, may be mandated to prepare financial statements under the IFRS or a variation thereof, namely IND AS. The transition to IND AS is still unclear and may negatively affect the financial results of our Company. Public companies in India, including our Company, may be required to prepare their annual and interim financial statements under IFRS or a variation thereof. Recently, the ICAI has released a near final version of the Indian Accounting Standards (Ind AS) 101 First-time 55

58 Adoption of Indian Accounting Standards ( IND AS ). The Ministry of Corporate Affairs, Government of India, on February 25, 2011 has notified that the IND AS will be implemented in a phased manner and the date of such implementation will be notified at a later date. As on the date of this Placement Document the Ministry of Corporate Affairs, Government of India has not yet notified the date of implementation of the IND AS. There is currently a significant lack of clarity on the adoption of and convergence with IND AS and we currently do not have a set of established practices on which to draw on in forming judgments regarding its implementation and application. We are therefore not able to determine with any degree of certainty the impact that such adoption will have on our financial reporting. Additionally, IND AS has fundamental differences with the IFRS and therefore financial statements prepared under IND AS may differ substantially from financial statements prepared under IFRS. There is no way to predict that our financial condition, results of operations, cash flows or changes in income/expenditure reporting etc. will not appear materially different under IND AS, Indian GAAP or IFRS in comparison to the present reporting. As we adopt IND AS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. There can be no assurance that our adoption of IND AS, if required, will not affect our reported results of operations, financial condition and failure to successfully adopt IND AS in accordance with prescribed statutory and/or regulatory requirements within the timelines as may be prescribed, and this may have an adverse effect on our financial reports/reporting and results of operations. 55. Our business may be adversely affected by recent changes in competition law in India. The Competition Act, 2002, as amended, ( Competition Act ), was enacted for the purpose of preventing practices having an adverse effect on competition in India, and has mandated the Competition Commission of India, ( CCI ), to regulate such practices. Under the Competition Act, any arrangement, understanding or action, whether formal or informal, which causes or is likely to cause an appreciable adverse effect on competition in India is void and may result in substantial penalties. Any agreement among competitors which directly or indirectly determines purchase or sale prices; directly or indirectly results in bid rigging or collusive bidding; limits or controls production, supply, markets, technical development, investment or the provision of services; or shares the market or source of production or provision of services by way of allocation of geographical area or types of goods or services or number of customers in the relevant market or any other similar way, is presumed to have an appreciable adverse effect on competition in the relevant market in India and shall be void. Further, the Competition Act prohibits the abuse of dominant position by any enterprise. If it is proved that the contravention committed by a company took place with the consent or connivance or is attributable to any neglect on the part of, any director, manager, secretary or other officer of such company, that person shall be guilty of the contravention and may be punished. If we or any of our employees is penalized under the Competition Act, our business may be adversely affected. On March 4, 2011, the Government of India notified and brought into force the provisions under the Competition Act in relation to combinations, ( Combination Regulation Provisions ), with effect from June 1, The Combination Regulation Provisions require that acquisition of shares, voting rights, assets or control or mergers or amalgamations, which cross the prescribed asset and turnover based thresholds, shall be mandatorily notified to and pre-approved by the CCI. In addition, on May 11, 2011, the CCI issued the final Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, These regulations, as amended, set out the mechanism for implementation of the Combination Regulation Provisions under the Competition Act. The manner in which the Competition Act and the CCI affect the business environment in India may adversely affect our business operations and consequently, our profitability. 56. Natural disasters could have a negative impact on the Indian economy and cause our business to suffer. India has experienced significant natural disasters such as earthquakes, a tsunami, floods, drought, fires and spread of pandemic diseases such as the H5N1 avian flu and the H1N1 swine flu, in the past few years. The extent and severity of these natural disasters and has an 56

59 impact on the Indian economy and infrastructure. Prolonged spells of abnormal rainfall and other natural calamities could have an adverse impact on the Indian economy in which we operate, which could adversely affect our business and the price of our Equity Shares. Risks Associated with the Placement Shares 57. Your ability to acquire and sell Placement Shares is restricted by the distribution, solicitation and transfer restrictions set forth in this Placement Document. The Placement Shares have not and will not be registered under the U.S. Securities Act, any U.S. state securities laws or the laws of any jurisdiction other than India. Furthermore, the Placement Shares are subject to restrictions on transferability and resale. You are required to inform yourself about and observe these restrictions. See the discussions in this Placement Document under the sections titled Selling Restrictions and Transfer Restrictions beginning on pages 156 and 159, respectively, of this Placement Document. We, our representatives and our agents will not be obligated to recognize any acquisition, transfer or resale of the Placement Shares made other than in compliance with applicable legal restrictions. 58. The ability of persons resident outside India to acquire and sell the Placement Shares may be restricted under Indian law. The acquisition and sale of the Placement Shares by persons resident outside India will be subject to Indian exchange control regulations of the RBI and under the Foreign Exchange Management Act, 1999, as amended ( FEMA ). Such exchange control regulations impose certain restrictions on the acquisition and sale of securities by persons resident outside India. Restrictions on acquisition and/or sale of the Placement Shares under such exchange control regulations in India may restrict your ability to acquire and/or sell the Placement Shares. More specifically, in respect of an FII/ SEBI approved sub-accounts, the total investment of the FII/sub-account of the FII cannot exceed 10% of the total issued capital of our Company. If the sub-account is held by foreign corporates or individuals, the maximum permissible limit is 5% for each such sub-account. The total holding of FIIs or sub accounts of FIIs put together cannot exceed 24% of our Company s paid up equity capital, except if pursuant to the passing of a board resolution followed by a special resolution of the shareholders the 24% limit is increased to the applicable sectoral cap / statutory ceiling, subject to RBI intimation. However, as of the date of this Placement Document, no such resolution has been recommended for adoption to our Board or our shareholders. Accordingly, if any of the aforesaid limits are breached, a QIB which is an FII /SEBI registered sub-account would be restricted from acquiring Placement Shares pursuant to the Issue. Further, under the foreign exchange regulations currently in force in India, transfers of shares between non-residents and residents are freely permitted (subject to certain exceptions) if they comply with the requirements specified by the RBI and other applicable governmental authorities. If the transfer of shares is not in compliance with such requirements or falls under any of the specified exceptions, then prior approval of the RBI and other applicable governmental authorities will be required. In addition, shareholders who seek to convert the Rupee proceeds from a sale of shares in India into foreign currency and repatriate that foreign currency from India will require a no-objection or tax clearance certificate from the income tax authority. We cannot assure you that any of the aforesaid approvals required from the RBI or any other applicable government authority can be obtained on any particular terms or at all. 59. An active market for our Equity Shares may not be sustained, which may cause the price of our Company s Placement Shares to fall. There can be no assurance regarding the continuity of the existing active or liquid market for our Equity Shares, the ability of investors to sell their Placement Shares or the prices at which investors may be able to sell their Placement Shares. In addition, the market for debt and equity securities in markets such as the Indian capital markets has been subject to various factors that have caused volatility in the prices of equity securities. There can be no assurance 57

60 that the market for the Placement Shares offered hereunder will not be subject to similar volatility. Any disruption in these markets may have an adverse effect on the market price of our Company s Placement Shares. 60. Since our Equity Shares are quoted in Indian rupees in India, investors may be subject to potential losses arising out of exchange rate risk on the Indian Rupee and risks associated with the conversion of Indian Rupee proceeds into foreign currency. Investors are subject to currency fluctuation risk and convertibility risk since the Equity Shares are quoted in Indian Rupees on the Stock Exchanges on which they are listed. Dividends on the Equity Shares will also be paid in Indian Rupees. The volatility of the Indian Rupee against the U.S. dollar and other currencies subjects investors who convert funds into Indian Rupees to purchase our Equity Shares, to currency fluctuation risks. 61. Any further issue of Equity Shares and offering of equity-linked instruments by our Company may dilute an investor's shareholding, further, significant sales of Equity Shares by any major shareholder/s may affect the trading price of the Placement Shares. Any future equity offerings by our Company may lead to the dilution of investor shareholding in our Company or affect the market price of the Equity Shares. Additionally, sales of a large number of the Equity Shares by our Company's principal shareholders could adversely affect the market price of the Equity Shares. In addition, any perception by investors that such issuances might occur could also affect the market price of the Equity Shares. There can be no assurance that our Company will not issue further Equity Shares or that the major shareholders will not dispose of, pledge or otherwise encumber their Equity Shares. In addition, any perception by investors that such issuances or sales might occur could also affect the trading price of our Equity Shares. 62. An investor will not be able to sell any of the Placement Shares subscribed in the Issue other than on recognized Stock Exchanges for a period of one year from the date of the allotment of the Placement Shares. Pursuant to Regulation 91 of the SEBI ICDR Regulations, for a period of one year from the date of the allotment of the Placement Shares in the Issue, investors subscribing to Placement Shares in the Issue may only sell their Placement Shares on any of the Stock Exchange(s). These restrictions will impact your ability to sell the Placement Shares through any off-market transfer or under a private arrangement. 63. Holders may be subject to Indian taxes arising out of capital gains on the sale of the Placement Shares. The sale of Placement Shares by any holder may give rise to tax liability in India, as discussed in section titled Taxation on page 167 of this Placement Document. 64. There is no guarantee that the Placement Shares will be listed on any or all of the Stock Exchange(s) in a timely manner or at all, further, any trading closures at the Stock Exchange(s) may adversely affect the trading price of our Equity Shares or a shareholder's ability to sell its Equity Shares. In accordance with Indian law and practice, permission for listing of the Placement Shares will not be granted until after the Placement Shares offered in the Issue have been issued and allotted. Approval will require all other relevant documents authorizing the issuing of Placement Shares to be submitted. There could be a failure or delay in listing the Placement Shares on the Stock Exchanges. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Placement Shares. The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other participants differ, in some cases significantly, from those in Europe and the U.S. The BSE and the NSE have in the past experienced problems, including temporary exchange closures, broker defaults, settlements delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market price and liquidity of the 58

61 securities of Indian companies, including the Placement Shares, in both domestic and international markets. A closure of, or trading stoppage on, either of the Stock Exchanges could adversely affect the trading price of the Equity Shares or a shareholder s ability to sell Equity Shares at a particular point in time. Historical trading prices may not be indicative of the prices at which the Equity Shares will trade in the future. 59

62 MARKET PRICE INFORMATION AND OTHER INFORMATION CONCERNING THE EQUITY SHARES As of December 31, 2012, our Company s share capital comprised of 25,167,174 subscribed and fully paid up Equity Shares. Our Company s Equity Shares have been listed on BSE and NSE w.e.f. January 6, 1993 and June 15, 2011 respectively. The tables below set forth, for the periods indicated the high, low and average market prices and the trading volumes on BSE and NSE for our Company s Equity Shares. For the purpose of this section: Year is a Fiscal year Average price(*) is the average of the daily closing prices of the equity Shares of our company for the year, or the month as the case may be Average price(**) is the total volume for the period divided by total number of equity shares traded in the period or the month as the case may be High price is the maximum of the daily high prices and Low price is the minimum of the daily low prices of the Equity shares of our Company for the year, or the month as the case may be In case of two days with the same high/low/closing price, the date with higher volume has been considered. Pre-Split (Equity shares of face value of ` 10) Fiscal Year The following tables set forth the reported high and low prices of our Equity Shares (of face value of ` 10 each) on the BSE and the NSE and the number of Equity Shares traded on the days such high and low prices were recorded, for the Fiscal years 2010, 2011 and BSE High (`) Date of High Number of Equity Shares traded on date of high Volume on date of high (` In Million) Low (`) Date of Low Number of Equity Shares traded on date of low Volume on date of low (` In Million) Average price for the year (`) * Average price for the year (`) ** March 30, , August 13, July 6, 2010 (Post Bonus) March 28, , July 28, 2011 Fiscal Year NSE # High (`) Date of High , July 28, 2011 Number of Equity Shares traded on date of high 1, May 6, , December 13, , April 1, 2011 Volume on date of high (` In Million) Low (`) Date of Low 40, June 21, 2011 Number of Equity Shares traded on date of low 4, , Volume on date of low (` In Million) Average price for the year (`) * Average price for the year (`) **

63 # Trading of our Equity Shares began on NSE w.e.f June 15, 2011 Post-Split (Equity shares of face value of ` 5) The following tables set forth the reported high and low prices of our Equity Shares (of face value of ` 5 each) on the BSE and the NSE and the number of Equity Shares traded on the days such high and low prices were recorded, for the Fiscal years 2012 and BSE Fiscal Year High (`) Date of High August 26, *** December 20, 2012 Number of Equity Shares traded on date of high Volume on date of high (` In Million) Low (`) Date of Low 12, January 25, , May 15, 2012 Number of Equity Shares traded on date of low Volume on date of low (` In Million) Average price for the year (`) * Average price for the year (`) ** 6, , *** Prices considered till December 31, 2012 NSE # Fiscal Year High (`) Date of High August 26, *** December 20, 2012 Number of Equity Shares traded on date of high Volume on date of high (` In Million) Low (`) Date of Low 19, January 25, , May 15, 2012 # Trading of our Equity Shares began on NSE w.e.f June 15, 2011 *** Prices considered till December 31, 2012 Number of Equity Shares traded on date of low Volume on date of low (` In Million) Average price for the year (`) * Average price for the year (`) ** 10, , Source: market price information is sourced from Source: market price information is sourced from The following tables set forth the reported high and low prices of our Equity Shares on the BSE and the NSE, the number of Equity Shares traded on the days such high and low prices were recorded and the volume of securities traded in each month during the last six months preceding the date of filing of this Placement Document. 61

64 Month, Year BSE High (`) Date of High July July 19, 2012 Number of Equity Shares traded on date of high Volume on date of high (` In Million) Low (`) Date of Low 1, July 16, 2012 Number of Equity Shares traded on date of low Volume on date of low (` In Million) Average price for the month (`)* Average price for the month (`)** August August 31, August 10, , September September 26, , September 12, , October October 3, , October 30, , November November 13, November 7, December December 20, , December 3, Source: market price information is sourced from NSE Month, Year High (`) Date of High July July 19, 2012 Number of Equity Shares traded on date of high Volume on date of high (` In Million) Low (`) Date of Low 9, July 10, 2012 Number of Equity Shares traded on date of low Volume on date of low (` In Million) Average price for the month (`)* Average price for the month (`)** 2, August August 30, , August 6, September September 25, , September 12, , October October 3, , October 30, , November November 13, , November 8, , December December 20, , December 11, , Source: market price information is sourced from 62

65 Details of the number of equity shares and volumes of business transacted during the last six months and the Fiscal years ended 2010, 2011 and 2012 on the Stock Exchanges are given below. Month BSE NSE # Volume (No. of Shares) Turnover (in ` mn) Volume (No. of Shares) Turnover (in ` mn) July , , August , , September , , October ,029, , November , , December , , Fiscal , N.A. N.A. Fiscal , N.A. N.A. Fiscal 2011 (Post Bonus) 654, N.A. N.A. Fiscal ,012, , Fiscal 2012 (Post Split) 1,792, ,201, Fiscal 2013* 1,624, ,887,873 1, Source: # Trading of our Equity Shares began on NSE w.e.f June 15, 2011 * Prices considered till December 31 st, 2012 The following table sets forth the market price of our Equity Shares on the Stock Exchanges on December 7, 2012, the first working day following the day of the Board meeting approving the Issue. Date BSE NSE December 7, 2012 Open High Low Close Numbe r of Equity Shares traded Volume (` In Million ) Open High Low Close Number of Equity Shares traded Volume (` In Million ) , , Source:

66 USE OF PROCEEDS The total proceeds of this Issue is expected to be ` 1, million. The net proceeds of the Issue, after deduction of the Issue management fees (which includes the fees and reimbursements to the Sole Global Co-Ordinator and Book Running Lead Manager to the Issue, the Domestic Legal Advisor to the Issue, the Auditors to the Company), Placement fees (which includes fees in connection with the placement, issue and allotment of equity shares pursuant to the Offering) any other expenses associated with the Issue, are estimated to be approximately ` 1, million, ( Net Proceeds ). Our Company has identified several growth oppurtunities in its areas of business and intends to use the net proceeds received from this Issue for augmenting our long term resources for future expansion, to meet long term working capital requirments, to meet other general corporate business purposes allied to the business from time to time and for any other uses subject to compliance with applicable statutory and/or regulatory requirements. 64

67 CAPITALISATION The following table sets forth our Company s capitalisation as of, March 31, 2012 and/or September 30, 2012, which has been extracted from our Company s Reformatted Consolidated Financial Statements, Reformatted Standalone Financial Statements and Limited Reviewed Standalone Financial Statements which will be adjusted to give effect to the issuance and Allotment of the Placement Shares by us in this Issue. This capitalisation table should be read together with Selected Financial Information of our Company, Risk Factors, Management s Discussion and Analysis of Financial Condition and Results of Operations, and the Financial Statements on pages 28, 40, 68 and 186, respectively of this Placement Document. (a) Capitalisation on a standalone basis: Based on the audited financial statements of the Company for the year ended March 31, 2012, and the limited reviewed Unaudited financial Statements for the period ended September 30, 2012 the statements of capitalization of the Company are as under: Particulars Long Term Borrowings As on March 31, 2012 (Audited) As At September 30, 2012 (unaudited) (` In Millions) As adjusted for the Issue Secured 1, Unsecured Total 1, , , Short Term Borrowings Secured , , Unsecured Current maturity of long term debts Secured Unsecured Total 1, , , Total Indebtedness (A) 2, , , Shareholders Funds Share Capital Reserves and Surplus# 3, , ,806.54* Total Shareholders Funds (B) 3, , , Total Capitalisation (A) + (B) 5, , , *Net of share issue expenses of ` 20 millions as certfied by the management. # Includes as below :- (` In Millions) Particulars As at March 31, 2012 As at September 30, 2012 Capital Reserve Revaluation Reserve Cash Flow Hedge Reserve (49.26)

68 The aforementioned capitalisation statement is based on a certificate dated January 29, 2013 issued by the Statutory Auditors of our Company. Contingent liabilities as per standalone audited financial statements of the Company as at March 31, 2012 amounts to ` million. (b) Capitalisation on a consolidated basis: Based on the Reformatted Consolidated Financial Statements of our Company for the year ended March 31, 2012 the statements of capitalization of our Company are as under: (` In Millions) Particulars As on March 31, 2012 (Audited) As adjusted for the Issue Long Term Borrowings Secured 1, , Unsecured Total 1, , Short Term Borrowings Secured Unsecured Current maturity of long term debts Secured Unsecured Total 1, , Total Indebtedness (A) 2, , Shareholders Funds Share Capital Reserves and Surplus# 3, ,272.85* Total Shareholders Funds (B) 3, , Total Capitalisation (A) + (B) 5, , *Net of share issue expenses of ` 20 millions as certfied by the management. # Includes as below:- (` In Millions) Particulars As at March 31, 2012 Capital Reserve Capital Redemption Reserve 3.50 Revaluation Reserve Cash Flow Hedge Reserve (49.26) The aforementioned capitalisation statement is based on a certificate dated January 29, 2013 issued by the Statutory Auditors of our Company. Contingent liabilities as per the consolidated audited financial statements of the Company as at March 31, 2012 amounts to ` million. 66

69 DIVIDEND POLICY Dividend Policy The declaration and payment of dividend will be recommended by the Board of Directors and approved by the shareholders at their discretion and will depend on our Company s revenues, cash flows, financial condition (including capital position) and other factors. The declaration and payment of equity dividend would be governed by the applicable provisions of the Companies Act and Articles of Association of our Company. The following table details the dividend declared by our Company on the Equity Shares for the Financial Years ended, March 2010, March 2011 and March 2012: Particulars March 31, 2010 March 31, 2011 March 31, 2012 Face Value of Equity Shares (` per share) Rate of Dividend (%) 20% 40% 100% Dividend per Equity Share (`) Dividend declared (`) 14,916,665 50,023, ,241,890 Tax on Dividend (`) 25,35,087 8,308,292 20,315,487 The amounts paid as dividend in the past are not necessarily indicative of the dividend amounts, if any, payable or to be paid in the future. 67

70 MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our Reformatted Standalone Financial Statements and Reformatted Consolidated Financial Statements, including the notes thereto, and other financial data on page 186 of this Placement Document. You should also read the sections titled Risk Factors and Forward-Looking Statements on pages 40 and 12, respectively, of this Placement Document, which discuss a number of factors or contingencies that could affect our financial condition and results of operations. In this section any reference to our Company refers to PI Industries Limited on a standalone basis and our Group, we, us or our refers to PI Industries Limited and/or its Subsidiaries, on a consolidated basis, as the context may require. Unless stated otherwise, the financial data in this section is as per our Reformatted Standalone Financial Statements and Reformatted Consolidated Financial Statements, as set forth in Financial Statements on page 186 of this Placement Document. The following discussion and analysis of our financial condition and results of operation is based on our Reformatted Consolidated Financials as of and for the years ended March 31, and 2010 and Limited Reviewed Standalone Financial Statements for the quarter and the six months period ended September 30, 2012 and Our fiscal year ends on March 31 of every year. Unless otherwise stated, fiscal year or fiscal refers to the twelve month period ending March 31 of that year. OVERVIEW Our Company is a chemicals manufacturing and marketing Company with over fifty years of experience in the agrochemicals sector. We are an integrated entity with a differentiated business model driven by respect for intellectual property across two market segments, i.e. the domestic market and the export market. In the domestic market we focus on manufacturing and/or marketing of agri input products through the following model: In-licensing of newly launched or patented molecules from multinational innovators to register and market agri input products in India on an exclusive basis; Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents have expired); Selectively partnering with global innovators with presence in India to co-market their early stage lifecycle agri input products using our countrywide marketing set up in India. In the export market we undertake custom synthesis and contract manufacturing of niche fine and specialty chemicals, where we offer global innovators a one-stop shop for process scale up and large scale manufacturing of their newly discovered molecules. Through this differentiated business model, we have been able to demonstrate consistent financial growth. Our Company s net revenue from operations on a consolidated basis has grown at a CAGR of 27.30% from ` 5, million for Fiscal 2010 to ` 8, million in Fiscal Our PAT margins have increased by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal 2012 and our EBITDA margins have increased by 1.12% points from 15.27% for Fiscal 2010 to 16.39% in Fiscal 2012, on a consolidated basis. Our basic EPS on a consolidated basis has grown from ` per share in Fiscal 2010 to ` per share in Fiscal

71 We have developed strong process research and manufacturing capabilities which are backed by manufacturing facilities located at Panoli (Gujarat), Jammu and Jambusar (Gujarat) and a GLP and ISO:17025 accredited laboratory set up in Udaipur. Our Company has a robust marketing and distribution network which is spread across India and well established in rural and agricultural belts. As on date, we have 211 people working in our marketing team spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel which comprises of numerous retail points, over 10,000 distributors and direct dealers across the major agriculture areas in the country, 27 stock points including our own depots and 18 C&F agents who work on hub-andspoke distribution model to ensure timely delivery. We work closely with farmers and distribution channels to build our brand and create awareness for our products. We accordingly have several successful brands such as NOMINEE GOLD, BIOVITA, FORATOX, CARINA, FOSMITE, ROKET, SOLARO, KITAZIN OSHEEN, etc. Our Company has been conferred with the Power Brand status from amongst 81 successful brands and companies featured in the Indian Power Brands the Global Superpower Edition. We were also awarded a certificate of Excellence in Supplier Sustainability Program 2011 from Bayer Group of Companies in India. Our Company currently has 3 subsidiaries, which includes PI Japan Company Limited (Japan) which carries out business development activities in Japan, PI Life Science Research Limited, which deals in contract research projects, and PILL Finance & Investments Limited, which is engaged in the business of holding investments and providing short term funding. SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS Our financial condition and results of operations are affected by a number of factors. Some of the factors affecting our results of operations include: Factors affecting the agricultural industry and particularly the crops to which our products cater The agri input industry and the agricultural industry (on which our Company s agri input activities are dependent) are subject to climatic conditions, rainfall, seasonal and weather factors, which make the performance of the agricultural sector as a whole or the levels of production of a particular crop relatively unpredictable. The weather can affect the presence of disease and pest infestations in the short term on a regional basis, and accordingly affect the demand for agri input products and the mix of products used. In addition, sales of agri input products in the domestic retail market are highly seasonal due to the monsoon and the Rabi and Kharif crop seasons in India. Accordingly, the effect of climatic conditions, rainfall, seasonal fluctuations, commodity crop price fluctuations and/or any of the abovementioned events on the agricultural sector in India or in any region thereof, and particularly the crops to which our products cater drive the demand for our agri input products, and hence the results of our agri input activities and our financial condition depend on such factors. Further, changes in government policies relating to the agriculture sector such as government expenditure in agriculture, changes in incentives and subsidy systems, export policy for crops, commodity pricing, ability of farmers to realize minimum support prices could also have an effect on the ability of farmers to spend on agri input products, which thereby could affect our agri input activities. Ability to register and successfully launch products As a part of our strategy we propose to launch new products from time to time. With respect to any new proposed agri input product, our Company invests time and money inter alia on the registration procedures and fees, trials, various brand building and pre-launch marketing activities. The launch of a product depends upon our ability to obtain registration of the product in a timely manner or at all as well as on other factors. Accordingly, our profitability, financial condition and market position is dependent on our ability 69

72 to obtain the necessary regulatory registration / approvals for our products in a timely manner and to successfully launch and market our products. Competition The agri input sector in India is highly competitive. Our ability to grow and our results of operations and profitability depends upon our ability to manage competition efficiently. The introduction of competing or improved products through R&D efforts or otherwise which are more effective and/or more cost effective than our existing agri input products may result in our existing products being rendered obsolete which may result in us losing our market share and/or witness a decline in sales. Use of substitutes for agrochemicals Our Company s agri input activities may be adversely affected by increased use of biotechnology products, hybrid seeds, genetically modified crops and other organic crop protection substitutes for agrochemicals. The adoption of the products derived through biotechnology or alternative pest management and crop protection measures could have a negative impact on traditional agrochemicals. Genetically modified ( GM ) crops are likely to have more resistance to pests and disease than non-gm crops and therefore require significantly less agrochemical usage than non-gm crops. The growth and acceptance of such alternative pest management and crop protection products and measures by consumers may have an adverse effect on sales of our Company s agrochemical products which thereby may affect our financial condition and results of operations. Relationships with global innovators Our growth in both the domestic and export segments depends upon our ability to maintain and strengthen our existing relationships with global innovators or to establish relationships with new global innovators. These relationships give us the opportunity introduce new agri input products from time to time through our in-licensing arrangements, perform custom synthesis and contract manufacturing services with respect to new molecules developed by global innovators, and procure repeat orders for custom synthesis / contract manufacturing, which impact our long term growth, operations and profitability. Global innovators establishing a presence in India Our results of operations could be affected if global innovators from whom we in-license agri input products, establish a presence in India either through incorporation of a new entity, through acquisition of any agri input entity in India, or otherwise, as we could lose out on the opportunity to market new or novel products of such global innovators exclusively or at all. Ability to manage raw material costs and other operational costs The prices for our key raw materials are subject to fluctuations. We do not and will not have control over the factors affecting prices of raw materials and volatility thereof. Any volatility in the cost and timely availability of raw materials or our ability to enter into contracts to source raw materials in a timely manner or at all impact our operations and profitability. Further, the ability of our suppliers to (i) deliver the required raw materials in the necessary quantities, (ii) adhere to delivery schedules, or, (iii) provide the raw materials as per the specified quality standards and technical specifications, also affect our operations and productivity. Fluctuating foreign exchange rates We are subject currency exchange rate exposures on account of our export operations, imports and foreign currency external commercial borrowings. Foreign exchange fluctuation affects both our revenues and expenditures. To this extent, the revenues and expenditures will be higher or lower depending on the prevalent foreign exchange rates. A weakening of the Rupee against the foreign currencies may have an adverse effect on our cost of borrowing in Rupee terms and on the cost of our imports. An appreciating 70

73 rupee may adversely affect our export earnings. Our management typically monitors our foreign currency exposure periodically and our Company has adopted a policy of hedging a pre-determined percentage of the difference between our foreign current exposure to exports and imports, by entering into forward contracts. However, there can be no assurance that such hedging measures would at all times be adequate to cover us from any losses arising out of fluctuations in foreign exchange rates. OUR CRITICAL ACCOUNTING POLICIES FOR FISCAL 2012 Our audited financial statements are prepared and presented in accordance with Indian GAAP. The most significant accounting conventions and principles used by us and our critical accounting policies followed by us in preparing our financial statements are set out below. For details, see Significant Accounting Policies in the section titled Financial Statements on page 186 of this Placement Document. BASIS OF PREPARATION The financial statements have been prepared to comply in all material respects with the Notified Accounting Standards pursuant to the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956.The financial statements have been prepared under the historical cost convention, as a going concern, on an accrual basis except in case of assets for which provision for impairment is made and revaluation is carried out. The accounting policies have been consistently applied by our Company. Changes in Accounting Policy During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, has become applicable to our Company, for preparation and presentation of its financial statements. The adoption of Revised Schedule VI does not impact the recognition and measurement principles followed for preparation of the financial statements. However, it had significant impact on presentation and disclosures made in the financial statements. All Assets and Liabilities have been classified as current or non-current as per our Company s normal operating cycle and other criteria set out in the Schedule VI to the Companies Act, Based on the nature of services provided and time between the rendering of services and their realization in cash and cash equivalents, our Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities. Our Company has adopted Accounting Standard 30 (AS 30) Financial Instruments: Recognition and Measurement. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on aid foreign currency instruments are transferred to Cash Flow Hedge Reserve directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction. USE OF ESTIMATES The presentation of financial statements requires estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Differences between the actual results and estimates are recognised in the period in which the results are known/ materialised. REVENUE RECOGNITION Revenue is recognized to the extent it is probable that the economic benefits will flow to our Company and the revenue can be reliably measured. 71

74 Sale of Goods: Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and is stated net of trade discount, returns and Sales Tax / VAT but includes Excise Duty. Revenue from services: Revenue is recognised as the service is performed by the completed service method and no significant uncertainty exists regarding the amount of consideration that will be derived from rendering the services. Interest: Revenue is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. Lease rent Income: Lease income is recognised on straight line basis over the lease term. Dividends: Revenue is recognized when the shareholder s right to receive payment is established by the Balance Sheet date. Export Benefits / Incentives: Export entitlement under Duty Entitlement Pass Book ( DEPB ) Scheme are recognised in the Profit & Loss Account when the right to receive credit as per terms of the scheme is established in respect of export made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds. EXPENDITURE Rebate, claims & settlement on goods sold are accounted for as and when these are ascertained with reasonable accuracy. FIXED ASSETS AND DEPRECIATION a) Fixed Assets are stated at cost or as revalued, less accumulated depreciation and impairment losses, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, if material, are also included in cost to the extent they relate to the period till such assets are ready to be put to use. Expenditure during construction / erection period is included under capital work-inprogress and is allocated to the respective fixed assets on completion of construction / erection. b) Depreciation on Building, Plant & Machinery and R&D Equipments of Pesticides Division at Udaipur (in respect of fixed assets commissioned on or after July 1, 1988), Pesticides Division at Panoli & Jammu and Polymer Division Panoli is provided on Straight Line method and depreciation on all other fixed assets is provided on Written Down Value method at the rates specified in Schedule XIV to the Companies Act, c) Leasehold land and Cost of improvement on leasehold building is being amortised over the lease period. d) Revaluation of Fixed assets: Depreciation on the increased amount of assets due to revaluation is computed on the basis of the residual life of the assets as estimated by the valuers on straight-line method. e) Leasehold Improvements are amortised over its useful life of 15 years on Declining Balance method. - Equipments over yen are depreciated on Declining Balance method over its useful life of 3 years. - Equipments ( yen) are depreciated on straight line basis over its useful life of 3 years. 72

75 INTANGIBLE ASSETS Intangible Assets are stated at cost of acquisition less accumulated amortisation as below Software:- Software is stated at cost of acquisition and includes all attributable expenditure on making the assets ready for their intended use. Product Development costs:- Product Development costs considered to have finite useful lives, are capitalised and recognized as intangible assets are stated at cost less any impairment losses. Amortisation:- Amortisation of intangible asset is provided on the basis of estimated useful life of the assets as below: Software: Amortised on straight line basis over a period of 6 years. Product Development: Amortised on straight line basis over a period of 5 years. IMPAIRMENT OF ASSETS An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the profit & loss account in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life. INVENTORIES a) Inventories of Finished Goods, Work in progress, Raw materials, Packing materials and Stores & Spares are stated at lower of cost and net realisable value. By-products are valued at estimated realisable value. b) Cost of Raw Materials, Packing Materials, Stores and Spares, Trading and other products are determined on weighted average basis and are net of Cenvat credit. c) Cost of Work in progress and Finished Goods is determined considering direct material cost and appropriate portion of manufacturing overheads based on normal operating capacity. Cost of finished goods include excise duty. d) Obsolete, slow moving and defective inventories are identified at the time of physical verification of inventories and where necessary, the same are written off or provision is made for such inventories. EMPLOYEE BENEFITS a) Defined Contribution Plan: Employees benefits in the form of our Company s contribution to Provident Fund, Pension scheme, Superannuation Fund and Employees State Insurance is a defined contribution scheme and contributions are charged to the Profit &Loss Account of the year when the contribution to the respective fund is due. b) Defined Benefit Plan: Retirement benefits in the form of gratuity and leave encashment are considered as defined benefit obligations and are provided for on the basis of an actuarial valuation as at the date of the Balance Sheet using the projected unit credit method. c) Actuarial gains/losses, if any, are immediately recognised in the Profit & Loss Account. 73

76 d) Short Term Employee benefits: Short term benefits are charged off at the undiscounted amount in the year in which the related service is rendered. DEFERRED REVENUE EXPENDITURE Expenditure incurred towards the Voluntary Retirement Scheme of our Company is treated as Deferred Revenue Expenditure and charged to the Profit & Loss Account over a period of five years. FOREIGN CURRENCY TRANSACTIONS a) Initial Recognition: Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. b) Conversion: Foreign currency monetary items are reported using the closing rate. c) Exchange Difference: Any gain or loss on account of exchange difference arising either on the settlement or on reinstatement of foreign currency monetary items is recognised in the Profit & Loss account, except exchange difference arising on long term foreign currency monetary items relating to acquisition of depreciable fixed assets, which is adjusted to the carrying amount of such assets. An asset shall be designated as a long term foreign currency monetary item, if the asset or liability is expressed in foreign currency and has a term of 12 months or more at the date of origination of the asset or liability. d) Translation of non integral foreign operations: In translating the financial statements of a nonintegral foreign operation for incorporation in financial statements, the assets and liabilities, both monetary and non monetary of the non-integral foreign operation are translated at the closing rate; income and expenses items of the non-integral foreign operations are translated at the average rate prevailing during the year; and all resulting exchange differences are accumulated in the foreign currency translation reserve until the disposal of net investment. RESEARCH AND DEVELOPMENT Capital Expenditure incurred for Research and Development is capitalised when commissioned and included in the gross block of fixed assets. Revenue expenditure on research and development is charged to the Profit & Loss account in the period in which it is incurred. Expenditure incurred on projects to develop new products is capitalized and deferred only when our Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale. Product development expenditure which do not meet these criteria are expensed when incurred. PRIOR PERIOD ADJUSTMENTS Earlier year items, adjustment/claims, arisen / settled / noted during the year, if material in nature, are debited / credited to prior period Expenses/Income or respective heads of account, if not material in nature. INVESTMENTS Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value. Long -term investments are stated at cost. Provision for diminution in the value of investments is made, if it is other than temporary. BORROWING COST Borrowing costs that are attributable to the acquisition or construction of a qualifying asset are capitalised 74

77 as part of the cost of such asset. A qualifying asset is one that necessarily takes a substantial period of time to get ready for intended use. All other borrowing costs are recognised as an expense in the period in which they are incurred. TAXATION a) Provision for Current Tax is made after considering benefits, exemptions and deductions available under the Income Tax Act, b) Deferred tax is recognised subject to consideration of prudence, on timing differences, representing the difference between the taxable income/(loss) and accounting income/(loss) that originated in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. LEASES Operating Lease: Lease rentals in respect of assets taken on operating leases are charged to the profit and loss account with reference to lease terms and other consideration. PROVISIONS, CONTINGENT LIABILITIES & CONTINGENT ASSETS Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in notes. Contingent assets are neither recognised nor disclosed in the financial statements. SEGMENT REPORTING The accounting policies adopted by our Company for segment reporting are in line with the accounting standard on Segmental Reporting. Primary Segment: Business Segment: Our Company s operating business is organized and managed separately according to the nature of products, with each segment representing a strategic business unit that offers different products. The identified segments are Chemicals and Others. Secondary Segment: Geographical Segment: The analysis of geographical segment is based on the geographical location of the customers. The geographical segments considered for disclosure are as follows: (a) Sales within India (b) Sales outside India Segment Expenses, Segment Assets and Segment Liabilities have been allocated to segments on the basis of their relationship the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to our Company as a whole and are not allocable to segments on reasonable basis, have been included under Unallocated Revenue/Expenses/Assets/Liabilities. CASH FLOW STATEMENTS Cash-flow statements are prepared in accordance with Indirect Method as explained in the Accounting Standard on Cash Flow Statements (AS-3) notified under the Companies (Accounting Standards) Rules, 75

78 2006. The cash flows from regular revenue generating, financing and investing activity of our Company are segregated. EARNING PER SHARE Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earning per Share, the net profit or loss for the period attributable to Equity Shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential Equity Shares. DERIVATIVE INSTRUMENTS Our Company has adopted Accounting Standard 30 (AS 30) Financial Instruments: Recognition and Measurement. Based on the Recognition and Measurement principles set out in AS 30, changes in the fair values of derivative financial instruments, the net foreign exchange exposure over a period of one year against the committed order in hand hedged through forward contracts, are designated as effective cash flow hedges and marked to market loss/gain arising on said foreign currency instruments are transferred to Cash Flow Hedge Reserve directly in the Balance Sheet under Reserves & Surplus and later the same is reclassified into Profit & Loss account upon the occurrence of the hedging transaction. Changes in the fair value of ineffective hedges taken are recognized directly to Profit & Loss account. EMPLOYEE STOCK OPTION BASED COMPENSATION Accounting value of stock options is determined on the basis of intrinsic value representing the excess of the market price on the date of grant over the exercise price of the options granted under the Employees Stock Option Scheme of our Company, and is being amortised as Deferred employee compensation on a straight-line basis over the vesting period in accordance with the SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,1999 and Guidance Note No.18 Share Based Payments issued by the ICAI. PRINCIPLES OF CONSOLIDATION (i) The consolidated financial statements relate to PI Industries Ltd. and its wholly owned subsidiary companies. The consolidated financial statements have been prepared on the following basis: The financial statements of our Company and its subsidiary companies have been combined on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses. The consolidated financial statements have been prepared using uniform accounting policies for the transactions and other events in similar circumstances and are prepared to the extent possible in the same manner as our Company s separate financial statements. (ii) The subsidiary companies considered in the consolidated financial statements are: Name of the company Country of Incorporation % voting power held as at March 31, 2012 PILL Finance & Investment Limited India

79 Name of the company Country of Incorporation % voting power held as at March 31, 2012 PI Life Science Research Limited India 100 PI Japan Company Limited Japan 100 DESCRIPTION OF PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE Total Revenue Our total revenue consists of revenue from operations and other income. Revenue from operations Our revenue from operations comprises (i) sale of products (finished goods and traded goods) net of discount and excise duties (ii) sale of services (including job work and research and development activities) and (iii) other operating revenues (including scrap sales, export incentives etc.). Other Income Other income primarily includes (i) dividend income from long term investments and (ii) income from short term investments which includes interest income, gain on sale of fixed assets, foreign exchange gain and other non operating income. Expenditure Our expenditure comprises of (i) cost of materials consumed, (ii) purchase of stock in trade, (iii) changes in inventories of finished goods, work-in-progress and stock in trade, (iv) employee benefits expenses, (v) finance costs, (vi) depreciation and amortization and (vii) other expenses. Description of expenditures items Cost of materials consumed Our cost of materials consumed comprises of cost of raw materials and packing material consumed such as basic chemicals, active ingredients, solvent, packaging material, catalyst and emulsifiers. Purchase of stock in trade Our expenses on purchase of stock in trade comprises of costs incurred towards purchase of primarily finished goods for trading purposes. Changes in inventories of finished goods, work-in-progress and stock in trade Our expenses due to changes in inventories comprises of inventories for finished goods, traded goods and work-in-progress. Our traded goods comprise of mainly agro chemicals and others, our work in progress comprise of agro chemicals, specialty chemicals, plant nutrient and polymers and our finished goods comprise of agro chemicals, specialty chemicals, plant nutrients, polymers and others. Employee benefits expense Our employee benefits expenses comprise of (i) salaries, wages and bonus, (ii) contribution to provident fund and other funds, (iii) gratuity and leave encashment expenses, (iv) employee welfare expenses and (v) expense on employee stock option scheme. 77

80 Finance Costs Our finance costs comprises of (i) interest expenses on fixed loans, working capital and others, (ii) other borrowing costs and (iii) exchange difference. Depreciation and amortization expense Depreciation comprises of (i) depreciation on tangible assets and (ii) depreciation on intangible assets, net of recoupment from revaluation reserves. Other Expenses Our other expenses comprises of power, fuel & water, stores & spares consumed, repairs & maintenance to building, plant & machinery & others, environmental & pollution control expenses, laboratory & testing charges, freight & cartage, advertisement & sale promotion, traveling & conveyance, foreign exchange difference, rent, rates, taxes, & fees, insurance, donation, loss on sale of fixed assets (net), auditors remuneration, communication expenses, bad debts written off (net), provisions for bad and doubtful debt & advances, director sitting fees, legal & professional expenses, commission on sale, bank charges, prior period expenses and miscellaneous expenses. The following table sets out the principal components of our profit and loss line items and as a percentage of our total income, for the year ended March , 2011 and Results of Operations for Fiscal 2012, 2011 and 2010 Particulars I Revenue from operations Sale of products (net of Discount and excise duty) Sale of services ` in million For the year ended March 31, (on a consolidated basis) As a% of Total Income ` in million As a% of Total Income ` in million As a% of Total Income 8, , , Other operating revenue II Other income III Total Revenue((I+II ) 8, , , IV Expenses Cost of Materials 4, , , consumed Purchase of Stock in Trade Changes in inventories of (335.98) (3.80) (295.08) (4.04) finished good, work in progress and stock in trade Employee Benefit Expenses Finance Costs

81 Particulars For the year ended March 31, (on a consolidated basis) ` in million As a% of Total Income ` in million As a% of Total Income ` in million As a% of Total Income Depreciation and amortization Other Expenses 1, , Total Expenses 7, , , V Profit before 1, exceptional and extraordinary items and tax (III-IV VI Exceptional Items VII Profit before 1, extraordinary items and tax VIII Extraordinary Items IX Profit Before Tax 1, (Vii-VIII) X Profit After Tax 1, XI Profit/Loss for the Period 1, Results for Fiscal 2012 compared to Fiscal 2011 Revenue Our total revenue increased by 21.05% from ` 7, million in Fiscal 2011 to ` 8, million in Fiscal 2012 primarily due to a significant increase in our revenue from operations. Revenue from operations Our net revenue from operations increased by 22.10% from ` 7, million in Fiscal 2011 to ` 8, million in Fiscal This was primarily on account of growth in sales of our existing products and introduction of new products during Fiscal 2012 in both our domestic and exports business segments. The volume of chemicals sold including traded products increased by 8.50% from 46,575 tonnes in Fiscal 2011 to 50,534 tonnes in Fiscal Further, we improved our product mix during Fiscal 2012 towards high value products and accordingly the aggregate value of chemicals sold including traded products increased by 32.57% from `7, million in Fiscal 2011 to `9, million in Fiscal The aggregate value of finished goods sold increased by 19.42% from `7, million in Fiscal 2011 to `9, million in Fiscal 2012, which included an increase of 63.63% in sales of specialty chemicals, a 17.76% increase in sales of agro chemicals, a marginal increase of 1.69% increase in sale of plant nutrients. In Fiscal 2012 there was an increase in our sales from trading activities as well and the sales of our traded goods increased by 27.50% from ` million in Fiscal 2011 to ` million in Fiscal 2012 primarily on account of a 90.08% increase in sale of agro-chemicals as a part of our trading activities. 79

82 Our segment revenues from activities within India increased by 3.65% from `5, million in Fiscal 2011 to ` million in Fiscal Our segment revenues for activities outside India increased substantially by 53.85% from `2, million in Fiscal 2011 to `3, million in Fiscal Other income Our other income reduced by 51.16% from ` million in Fiscal 2011 to ` million in Fiscal 2012 largely due to the exchange gains of ` million in Fiscal 2011 which was Nil in Fiscal Expenditure Our total expenditure increased by 20.94% from ` 6, million in Fiscal 2011 to ` 7, million in Fiscal 2012 primarily due to the following reasons: 1. Our cost of material consumed increased by 16.65% from ` 4, million in Fiscal 2011 to `4, million in Fiscal 2012, which was primarily due to an increase in the production and sales our products, our purchase of stock in trade increased by 19.47% from ` million in Fiscal 2011 to ` million in Fiscal 2012 due to a marginal increase in our trading activities. However, cost of total material consumed (including traded goods and inventories of finished goods, work in progress and stock in trade) as a percentage of our total revenues reduced from 57.57% in Fiscal 2011 to 55.68% in Fiscal Our employee benefit expenses increased by 20.44% from ` million in Fiscal 2011 ` million in Fiscal 2012 primarily on account of increase in salaries and wages paid to employees of our Company. However employee benefit expenses as a percentage of our total revenues reduced from 8.17% in Fiscal 2011 to 8.13% in Fiscal Our finance costs increased by 7.16% from ` million in Fiscal 2011 to ` million in Fiscal 2012 primarily due to an increase in working capital borrowings which lead to a marginal increase in interest expenses on working capital loans from ` million in Fiscal 2011 to ` million in Fiscal Other expenses increased by 37.66% from ` 1, million for Fiscal 2011 to ` 1, million for Fiscal This is primarily on account of an increase in `94.86 million increase in costs incurred for power, fuel and water, `33.38 million increase in expenses towards stores and spares consumed, `96.05 million increase in environmental and pollution control expenses and ` million increase in advertisement and sales promotion. 5. Our depreciation and amortization costs increased by 10.20% from ` million in Fiscal 2011 to ` million in Fiscal 2012, primarily on account of capitalisation of capital work in progress and other expenses. Exceptional Items Exceptional items include income from sale of polymer business of ` million for Fiscal This is on account of our Company receiving a total purchase consideration of ` million from sale of the same, on a slump sale basis to M/s Rhodia Polymers Limited. The said transaction was concluded on April 11, Profit for the Year Our Profit Before Tax increased by 56.91% from ` million in Fiscal 2011 to `1, million in Fiscal 2012 on account of the abovementioned and our net profit (after tax) increased by 59.12% from ` million in Fiscal 2011 to `1, million in Fiscal

83 Results for Fiscal 2011 compared to Fiscal 2010 Revenue Our total revenue increased by 33.09% from ` 5, million in Fiscal 2010 to ` 7, million in Fiscal 2011 primarily due to a significant increase in our revenue from operations. Revenue from operations Our revenue from operations increased by 32.73% from ` 5, million in Fiscal 2010 to ` 7, million in Fiscal This was primarily on account of growth in sales of our existing products and introduction of new products during Fiscal 2011 in both our domestic and exports business segments. The volume of chemicals sold including traded products increased by 9.82% from 42,409 tonnes in Fiscal 2010 to 46,575 tonnes in Fiscal Further, we improved our product mix during Fiscal 2011 towards high value products and accordingly the aggregate value of chemicals sold including traded products increased by 32.88% from `5, million in Fiscal 2010 to `7, million in Fiscal The aggregate value of finished goods sold increased by 33.89% from `5, million in Fiscal 2010 to `7, million in Fiscal 2011, which included an increase of 20.97% in sales of specialty chemicals, an increase of 44.31% in sales of agro chemicals, a marginal increase of 13.84% increase in sales of plant nutrients and an increase of 36.96% in sales of polymers. In Fiscal 2011 there was an increase in our sales from trading activities as well and the sales of our traded goods sold increased by 63.86% from ` million in Fiscal 2010 to ` million in Fiscal 2011 primarily on account of a 17.75% increase in sale of agro-chemicals and an increase of % in sales of other goods traded as a part of our trading activities. Our segment revenues from activities within India increased by 40.90% from `4, million in Fiscal 2010 to `5, million in Fiscal Our segment revenues for activities outside India increased by 24.24% from `2, million in Fiscal 2010 to `2, million in Fiscal Other income Our other income increased by 63.02% from `64.07 million in Fiscal 2010 to ` million in Fiscal 2011 largely due to increase in the exchange gains from ` million in Fiscal 2010 to `72.94 million in Fiscal Expenditure Our total expenditure increased by 29.98% from ` 4, million in Fiscal 2010 to ` 6, million in Fiscal 2011 primarily due to the following reasons: 1. Our cost of material consumed increased by 37.99% from ` 3, million in Fiscal 2010 to `4, million in Fiscal 2011, which was primarily due to an increase in the production and sales our products, our purchase of stock in trade increased by % from ` million in Fiscal 2010 to ` million in Fiscal 2011 due to an increase in our trading activities. However, cost of total material consumed (including traded goods and inventories of finished goods, work in progress and stock in trade) as a percentage of our total revenues reduced marginally from 58.00% in Fiscal 2010 to 57.57% in Fiscal Our employee benefit expenses increased by 27.04% from ` million in Fiscal 2010 ` million in Fiscal 2011 primarily on account of increase in salaries and wages paid to employees of our Company. However employee benefit expenses as a percentage of our total revenues reduced from 8.56% in Fiscal 2010 to 8.17% in Fiscal Our finance costs increased very marginally by 0.41% from ` million in Fiscal 2010 to 81

84 ` million in Fiscal 2011 primarily due to an increase in working capital borrowings which lead to a marginal increase in interest expenses on working capital loans from ` million in Fiscal 2010 to ` million in Fiscal 2011 and on account of other interest expenses of `5.66 million in Fiscal 2011 which was Nil in Fiscal Our interest expenses on fixed loans however, reduced from ` million in Fiscal 2010 to `68.13 million in Fiscal Other expenses increased by 31.57% from ` million for Fiscal 2010 to ` 1, million for Fiscal This is primarily on account of an increase in `58.85 million increase in costs incurred for power, fuel and water, ` million increase in environmental and pollution control expenses and ` million increase in advertisement and sales promotion. 5. Our depreciation and amortization costs increased by 19.05% from ` million in Fiscal 2010 to ` million in Fiscal 2011, primarily on account of capitalisation of capital work in progress and other expenses. Profit for the Year Our Profit Before Tax increased by 59.80% from ` million in Fiscal 2010 to ` million in Fiscal 2011 on account of the abovementioned and our net profit (after tax) increased by 55.37% from ` million in Fiscal 2010 to ` million in Fiscal RESULTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 2012 ON A STANDALONE BASIS: (` in million) S. No. Particulars Quarter Ended Half Year Ended 1 Income From Operations (a) (b) Septembe r 30, 2012 Un- Audited June 30, 2012 Un- Audited Septembe r 30, 2011 Un- Audited Septembe r 30, 2012 Un- Audited Septembe r 30, 2011 Un- Audited Halfyearly Growth Net Sales/ Income from operations 2, , , , , (Net of Discount & Excise Duty) Other Operating income Total income from Operations (net) 2, , , , , Expenses (a) Cost of Material Consumed 1, , , , , (b) Purchases of stock - in- trade (26.63) (c) Changes in inventories of finished goods, work in progress and stock in trade (133.34) (224.18) (118.80) (553.24) (78.53) (d) Employee Benefit

85 S. No. Particulars Quarter Ended Half Year Ended Septembe r 30, 2012 June 30, 2012 Septembe r 30, 2011 Septembe r 30, 2012 Septembe r 30, 2011 Un- Un- Un- Un- Un- Audited Audited Audited Audited Audited expenses Halfyearly Growth (e) (f) Depreciation and amortisation expenses Other Expenses Total Expenses , , , , , Profit/ (Loss) from operations before other income, finance costs, exchange difference and exceptional items (1-2) Other Income (a) 6 (b) 5 Profit/ (Loss) from ordinary activities before finance costs, exchange difference and exceptional items (3+4) Finance Costs Exchange Fluctuation (Gain)/ Loss (21.33) (2.73) (1,803.41) 7 Profit/ (Loss) from ordinary activities after finance costs, but before exceptional items (5-6) Exceptional items - - (0.00) (100.00) 83

86 S. No. Particulars Quarter Ended Half Year Ended Septembe r 30, 2012 Un- Audited June 30, 2012 Un- Audited Septembe r 30, 2011 Un- Audited Septembe r 30, 2012 Un- Audited Septembe r 30, 2011 Un- Audited Halfyearly Growth 9 Profit/ (loss) from ordinary activities before tax (7+8) (23.07) 10 Tax expense (12.99) 11 Net Profit / (Loss) from ordinary activities after tax (9-10) (26.78) 12 Extraordinary items (Net of tax expense Net Profit/ (Loss) for the period (11+12) after taxes (26.78) Standalone Results for the Half Year Ended September 30, 2012 compared to the Half Year Ended September 30, 2011 Revenue Our total revenue increased by 19.02% from ` 4, million for the half year ended September 30, 2011 to ` 5, million for the half year ended September 30, 2012 primarily due to a significant increase in our revenue from operations. Our revenue from operations increased by 19.02% from ` 4, million for the half year ended September 30, 2011 to ` 5, million for the half year ended September 30, This was primarily on account of growth in sales of our existing products and introduction of new products during the half year ended September 30, 2012 in both our domestic and exports business segments. Our other income increased marginally by 14.48% from ` 5.62 million for the half year ended September 30, 2011 to ` 6.43 million for the half year ended September 30, Expenditure Our total expenditure increased by % from ` 3, million for the half year ended September 30, 2011 to ` 4, million for the half year ended September 30, 2012 primarily due to an increase by 6.49% in cost of material consumed (on account of an increase in the production and sales our products), an increase of 17.83% in our employee benefit expenses (on account of increase in salaries and wages paid to employees) of our Company, an increase in other expenses by 9.75% and an increase in depreciation and amortization by 18.18%. Exceptional Items Income from sale of polymer business of ` million is shown an exceptional item for the half year 84

87 ended September 30, This is on account of our Company receiving a total purchase consideration of ` million from sale of its polymer division as a going concern on a slump sale basis to M/s Rhodia Polymers Limited. The said transaction was concluded on April 11, Profit for the Half-year Our Profit Before Tax reduced by 23.07% from ` million for the half year ended September 30, 2011 to ` million for the half year ended September 30, 2012 primarily on account of the exceptional item of income from sale of polymer business of ` million being netted of from the profit before tax and accordingly our net profit (after tax) reduced by 26.78% from ` million for the half year ended September 30, 2011 to ` million for the half year ended September 30, FINANCIAL CONDITION AS AT MARCH 31, 2012, 2011 and 2010 Liabilities: The following table sets forth the principal components of our total liabilities for the Fiscal years 2012, 2011 and 2010 on a consolidated basis: Particulars As at March 31, 2012 Non Current Liabilities As at March 31, 2011 As at March 31, 2010 Long-term borrowings 1, Deferred tax liabilities (Net) Other long-term liabilities Long-term provisions Total Non- Current Liabilities 1, , , Current Liabilities Short-term borrowings 1, , Trade payables , Other current liabilities Short-term provisions Total Current Liabilities 3, , Total 4, , Our total liabilities increased by 5.74% from ` 4, million as at March 31, 2011 to ` 4, million as at March 31, 2012 primarily on account of a substantial increase in long term borrowings in March 31, 2012 as compared to March 31, 2011, as further detailed below. Our total liabilities increased by 33.89% from ` 3,362.93million as at March 31, 2010 to ` 4, million as at March 31, 2011 primarily on account of an increase in short term borrowings, as further detailed below. Non-current liabilities Our total non-current liabilities increased by 60.47% from ` 1, million in March 31, 2011 to ` 1, million in March 31, 2012 primarily on account of a substantial increase in long term borrowings by % which was primarily the result of a substantial increase by % in term loans 85

88 from banks and financial institutions from ` millions as at March 31, 2011 to `1, million as at March 31, 2012 and an increase of % in unsecured deposits from `22.04 million as at March 31, 2011 to `51.77 million as at March 31, Our total non-current liabilities reduced by 5.70% from ` 1, million as at March 31, 2010 to ` 1, million in March 31, 2011 primarily on account of a reduction in long term borrowings by 18.12%, which was primarily the result of a reduction by 27.64% in term loans from banks and financial institutions from ` million as at March 31, 2010 to ` million as at March 31, 2011 and a reduction by 51.68% in deposits from `45.61 million as at March 31, 2010 to `22.04 million as at March 31, Current liabilities Our total current liabilities reduced by 10.37% from ` 3, million in March 31, 2011 to `3, million in March 31, 2012 on account of a reduction in short term borrowings by 28.51%, which was primarily the result of a reduction by 36.72% in secured working capital loans from banks from `1, million as at March 31, 2011 to ` million as at March 31, 2012 and a reduction by 8.13% in unsecured packing credit from foreign currency loans from ` million as at March 31, 2011 to ` million as at March 31, Our total current liabilities increased substantially by 52.77% from ` 2, million in March 31, 2010 to `3, million in March 31, 2011 primarily on account of a substantial increase in short term borrowings by %, which was primarily the result of a substantial increase of % in secured working capital loans from banks from ` million as at March 31, 2010 to `1, million as at March 31, 2011 and a substantial increase of % in unsecured packing credit from foreign currency loans from ` million as at March 31, 2010 to ` million as at March 31, Consolidated Shareholders Fund Shareholders funds comprises share capital and reserves and surplus. The following table sets out the shareholders funds as at March 31, 2012, 2011 and 2010: (` in million) Particulars As at March 31, 2012 As at March 31, 2011 As at March 31, 2010 Share Capital Reserves and Surplus 3, , , Total Shareholders Funds 3, , , Our Total Shareholders Funds increased by 52.27% from `2, million as at March 31, 2011 to ` 3, million as at March 31, 2012 primarily on account of the following: (a) (b) (c) 810,000 compulsorily convertible preference shares held by Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited were converted into 311,658 equity shares at a premium of ` per equity share. 2,664,053 optionally convertible debentures held by Standard Chartered Investments and Loans (India) Limited were converted into 1,025,030 equity shares at a premium of ` per equity share and the remaining 275,947 optionally convertible debentures were redeemed. As a consequence of the above the total paid-up Equity Share capital increased from ` million as at March 31, 2011 to ` million as at March 31, Increase in reserves and surplus by 60.93% primarily as a result of an increase in securities premium account (on account of premium on issue of Equity Shares on conversion of compulsorily convertible preference shares and optionally convertible debentures in Fiscal 2012 as detailed above) by % from `84.00 million as at March 31, 2011 to ` million as at March 31, 2012, an increase in general reserve by 21.76% from ` million as at March 31, to ` million as at March 31, 2012 and an increase in surplus in profit and loss account of 58.09% from `1, million as at March 31, 2011 to `2, million as at March 31,

89 Our Total Shareholders Funds increased by 38.26% from ` 1, million as at March 31, 2010 to ` 2, million as at March 31, 2011 primarily on account of the following: (a) (b) 1,250,000 compulsorily convertible preference shares held by Standard Chartered Private Equity (Mauritius) Limited and Standard Chartered Private Equity (Mauritius) II Limited were converted into 370,826 equity shares at a premium of ` per equity share. In Fiscal 2011 our Company issued 3,729,164 equity shares of face value of `10 each by capitalizing the share premium account. As a consequence of the above, the total paid-up Equity Share capital increased from `70.87 million as at March 31, 2010 to ` million as at March 31, (c) Increase in reserves and surplus by 53.23% primarily as a result of an increase in securities premium account (on account of the fresh allotment of equity shares at a premium in Fiscal 2011 as detailed above) from Nil as at March 31, 2010 to `84.00 million as at March 31, 2011, an increase in general reserve by 16.11% from ` million as at March 31, 2010 to ` million as at March 31, 2011 and an increase of 63.61% in surplus in profit and loss account from ` million as at March 31, 2010 to `1, million as at March 31, Consolidated Assets Particulars As at March 31, 2012 Non Current Asset Fixed asset As at March 31, 2011 ` in Millions As at March 31, 2010 Tangible asset 2, , , Intangible asset Capital work-in-progress Intangible asset under development Total Fixed Assets 3, , , Non-current investments Long term loans & advances Other assets Total Non-Current Assets 3, , , Current Asset Inventories 1, , , Trade receivables 1, , , Cash and Bank Balances

90 Particulars As at March 31, 2012 As at March 31, 2011 As at March 31, 2010 Short-term loans and advances Other assets Total Current Assets 4, , , Total 8, , , Our total assets increased by 20.72% from ` 6, million as at March 31, 2011 to ` 8, million as at March 31, This increase was primarily due to an increase in total current assets from ` 3, million as at March 31, 2011 to ` 4, million as of March 31, 2012 and an increase in non current assets from `3, million as at March 31, 2011 to ` 3, million as at March 31, The increase in our current assets was primarily due to an increase in inventories by 26.79% from ` 1, million as at March 31, 2011 to ` 1, million as at March 31, 2012, an increase in cash and bank balances by 34.37% from `70.04 million as at March 31, 2011 to ` million as at March 31, 2012 and an increase in short term loans and advances by 25.31% from ` million as at March 31, 2011 to ` million as at March 31, The increase in non-current assets was primarily on account of an increase in tangible assets, intangible assets and capital work in progress on account of our expansion activities at our Panoli plant and setting up of a new plant in Jambusar during Fiscal Our total assets increased by 35.27% from ` 4, million as at March 31, 2010 to ` 6, million as at March 31, This increase was primarily due to an increase in total current assets from ` 2, million as at March 31, 2010 to ` 3, million as of March 31, 2011 and an increase in non current assets from ` 2, million as of March 31, 2010 to ` 3, million as of March 31, The increase in our current assets was primarily due to an increase in inventories by 37.13% from ` 1, million as at March 31, 2010 to `1, million as at March 31, 2011, an increase in trade receivables by 48.01% from ` 1, million as at March 31, 2010 to `1, million as at March 31, 2011, an increase in cash and bank balances by 72.71% from `40.55 million as at March 31, 2010 to ` million as at March 31, 2011 and an decrease in short term loans and advances by 17.64% from ` million as at March 31, 2010 to ` million as at March 31, The increase in non-current assets was primarily on account of an increase in tangible assets and capital work in progress on account of our expansion activities at our Panoli plant during Fiscal Consolidated Cash Flows Particulars For Fiscal 2012 For Fiscal 2011 (` in million) For Fiscal 2010 Net cash from Operating Activities 1, Net cash from Operating and Investing Activities (731.03) Net Cash from Operating, Investing & Financing Activities (7.18) Net increase in Cash & Cash equivalent (7.18) Opening balance of Cash & Cash equivalent Closing balance of Cash & Cash equivalent

91 Net cash from operating activities Net cash from operating activities in Fiscal 2012 was ` 1, million and our operating cash flow before working capital changes for that period was ` 1, million. The difference was mainly attributable to a ` million increase in loans and advances, ` million increase in inventories, ` million increase in trade payables and other liabilities and direct taxes paid amounting to ` million. Net cash from operating activities in Fiscal 2011 was ` million and our operating cash flow before working capital changes for that period was ` 1, million. The difference was mainly attributable to a ` million increase in trade receivables, ` million decrease in loans and advances, ` million increase in inventories, ` million increase in trade payables and other liabilities and direct taxes paid amounting to ` million. Net cash from operating activities in Fiscal 2010 was ` million and our operating cash flow before working capital changes for that period was ` million. The difference was mainly attributable to a ` million increase in trade receivables, ` million increase in trade payables and other liabilities and direct taxes paid amounting to ` million. Net cash Flow from investing activities In Fiscal 2012, our net cash outflow from investing activities after extraordinary items was ` 1, million. This mainly reflected the payments of ` 1, million towards purchase of fixed assets which primarily consists of plant & machinery and leasehold land purchased for new plant during the year and amount of ` million received primarily on account of sale of our polymer business under slump sale. Interest received by us on account of overdue debts, Fixed Deposit etc. amounting to ` million. In Fiscal 2011, our net cash outflow from investing activities was ` million. This mainly reflected the payments of ` million for purchase of fixed assets consisting of plant & machinery and building. Interest received by us on account of overdue debts, Fixed Deposit etc. amounting to ` million. In Fiscal 2010, our net cash outflow from investing activities was ` million. This mainly reflected the payments of ` million towards purchase of fixed assets which primarily consists of plant & machinery and Building. Interest received by us on account of overdue debts, Fixed Deposit etc. amounting to ` million. Net cash from/used in financing activities In Fiscal 2012, our net cash outflow from financing activities was ` million. This mainly reflected ` million paid as interest, ` million as dividend payment, ` million as net borrowings and repayment against debentures not converted to equity amounting to ` million. In Fiscal 2011, our net cash inflow from financing activities was ` million. This mainly reflected ` million paid as interest, proceeds from borrowings net of repayment amounting to ` million. In Fiscal 2010, our net cash outflow from financing activities was ` million. This mainly reflected ` million paid as interest and repayment of loans net of borrowings amounting to ` million and ` 500 million received on issue of CCPS and OCDs. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements, derivative instruments or other relationships with unconsolidated entities that were established for the purpose of facilitating off-balance sheet arrangements. 89

92 Transactions with Related Parties We have engaged in the past, and may engage in the future, in transactions with related parties, including with our affiliates and certain key management members on an arm s length basis. For a description of our related party transactions, see Reformatted Consolidated Financials on page 186 of this Placement Document. Quantitative and Qualitative Disclosure about Market Risk Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk and commodity risk. We are exposed to interest rate risk, foreign exchange risk, inflation risk and credit risk in the normal course of our business. For further details please see sections titled Risk Factors and Our Business on page 40 and 106, respectively of this Placement Document. Effect of New Accounting Pronouncements There are no recent accounting pronouncements that were not yet effective as at March 31, 2012 that will result in a change in our Company s significant accounting policies. Public companies in India, including our Company, may be required to prepare their annual and interim financial statements under IFRS or a variation thereof. Recently, the ICAI has released a near final version of the Indian Accounting Standards (Ind AS) 101 First-time Adoption of Indian Accounting Standards ( IND AS ). The Ministry of Corporate Affairs, Government of India, on February 25, 2011 has notified that the IND AS will be implemented in a phased manner and the date of such implementation will be notified at a later date. As on the date of this Placement Document the Ministry of Corporate Affairs, Government of India has not yet notified the date of implementation of the IND AS. There is currently a significant lack of clarity on the adoption of and convergence with IND AS and we currently do not have a set of established practices on which to draw on in forming judgments regarding its implementation and application, we have not determined with any degree of certainty the impact that such adoption will have on our financial reporting. Additionally, IND AS has fundamental differences with the IFRS and therefore financial statements prepared under IND AS may differ substantially from financial statements prepared under IFRS. There can be no assurance that our financial condition, results of operations, cash flows or changes in shareholders equity will not appear materially different under IND AS, Indian GAAP or IFRS. As we adopt IND AS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. There can be no assurance that our adoption of IND AS, if required, will not affect our reported results of operations, financial condition. 90

93 INDUSTRY OVERVIEW The information in this section is derived from various government publications and other industry sources. Neither we, nor any other person connected with the issue has verified this information. Industry sources and publications generally state that the information contained therein has been obtained from sources generally believed to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured and accordingly, investment decisions should not be based on such information. OVERVEIW OF THE GLOBAL AGRICULTURE AND FOOD INDUSTRY The current world food and agricultural situation is characterized by continued high and volatile international food prices and the persistence of hunger and malnutrition in many parts of the world. This is generating growing concerns about the long-term sustainability of agricultural and food systems. These problems lie at the heart of recent discussions by the G20 Ministers of agriculture and the United Nations conference on Sustainable development (Rio+20 Summit), both held in June 2012, which emphasized the need for sustainable growth in agricultural productivity to help eradicate hunger and ensure more efficient use of natural resources. Source: FAO, State of Food and Agriculture Investing in Agriculture for a Better Future Global agricultural production growth declined somewhat from the 1960s through the 1980s before resuming higher rates of growth in recent years. Total production growth for crops largely mirrors that for all agriculture, whereas total production growth for livestock has not increased in the most recent period, perhaps because prices for livestock products have not risen as much as for crops. In per capita terms, growth in agricultural production declined very slightly in the latter decades of the last century before accelerating significantly since The decline and subsequent recovery of per capita production was more pronounced for crops than for all agriculture. Source: FAO, State of Food and Agriculture Investing in Agriculture for a Better Future Region-wise Production The production responses by the different regions over the last decade have been very diverse. In Latin America, agricultural production increased by more than 50 percent from 2000 to 2012, with Brazil expanding production by more than 70 percent. Sub-Saharan Africa saw agricultural production growth of more than 40 percent. Eastern Europe and Central Asia expanded production by almost 40 percent, and the region is emerging as a key global supplier. In North America and Western Europe, on the other hand, 91

94 agricultural output has increased only by about 20 percent and 6 percent, respectively, since Indeed, the OECD countries as a group increased output by only 14 percent over the period, while the BRIC countries (Brazil, Russian Federation, India and China) increased it by 39 percent, the least-developed countries by 54 percent and the remaining developing countries by 45 percent. Source: FAO, State of Food and Agriculture Investing in Agriculture for a Better Future Food consumption Despite higher prices, rapid income growth has supported robust increases in per capita food consumption in most emerging and developing countries. Eastern Europe and Central Asia experienced the strongest growth in per capita food consumption since 2000 at 24 percent, followed by Asia at almost 20 percent. In sub-saharan Africa, per capita consumption grew quickly from 2000 to 2005, but higher prices in the latter part of the decade appear to have limited further growth, and per capita consumption in the region was only 11 percent higher in 2012 than in Not surprisingly, per capita consumption of food has been stagnant in Western Europe and declining in North America, given the already high consumption levels. Source: FAO, State of Food and Agriculture Investing in Agriculture for a Better Future OVERVEIW OF THE AGRICULTURE INDUSTRY IN INDIA Agriculture is the principal source of livelihood for more than 58% of the population of this country. Agriculture provides the bulk of wage goods required by non-agriculture sectors and most of the raw materials for the industries sector. The combined efforts of Central Government, State Governments and the farming community have succeeded in achieving record production of million tonnes of foodgrains during This record production has been achieved through effective transfer of latest crop production technologies to farmers under various crop development schemes being implemented by the Department of Agriculture & Cooperation backed by remunerative prices for various crops through enhanced minimum support prices. Source: Annual Report , Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation. 92

95 Agriculture GDP The Agriculture and Allied Sector is estimated to contribute approximately 13.9% of India s GDP (at constant prices) during as per advance estimate released by CSO on Gross Domestic Product (GDP) of Agriculture and Allied Sectors and its share in the total GDP of the country during the last 4 years, including Fiscal 2012, at prices, is as follows: Particulars GDP of Agriculture and 6,550,800 6,556,890 6,625,090 7,091,030 7,271,610 Allied Sectors (` in millions) Percentage of Total GDP Source: Annual Report , Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation; Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India There has been a continuous decline in the share of Agriculture and Allied Sectors in the GDP from 16.8 percent in to 13.9 percent in at prices. Falling share of Agriculture and Allied Sectors in GDP is an expected outcome in a fast growing and structurally changing economy. Source: Annual Report , Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation Overall Growth of the Agricultural Sector in India The growth performance of the agriculture sector has been fluctuating. It witnessed a growth rate of 4.8 per cent between However, the agrarian situation saw a downturn towards the beginning of and , when the agricultural growth rate came down to 2.5 percent and 2.4 percent respectively. This crippling growth rate of 2.4 percent in agriculture as against a robust annual average overall growth rate of 7.6 per cent for the economy during the tenth plan period was clearly a cause for concern. The trend rate of growth during the period to is 2.8 percent while the average annual rate of growth in agriculture & allied sectors-gdp during the same period is 3.2 percent. Source: State of Indian Agriculture Agriculture Production As per second advance estimates of kharif production for released by the Ministry of Agriculture on February 3, 2012, production of food grains and cotton are estimated at all time record levels of million tonnes and million bales (of 170 kg each) respectively. Production of pulses and oilseeds is estimated at million tonnes and million tonnes respectively. Compared to , food grains output is estimated to go up by 2.30 per cent, oilseeds decline by 6.00 per cent, sugarcane output is estimated to go up by 1.60 per cent, and cotton by 3.30 per cent. The higher production estimates compared to last year are primarily due to significant improvement in productivity of major foodgrain crops resulting from favourable weather conditions and various initiatives taken by Ministry of Agriculture. Source: Annual Report , Government of India, Ministry of Agriculture, Department of Agriculture and Cooperation 93

96 Pulses Cereals Wheat Rice Foodgrains Fruits Vegetables Milk Growing Demand for Food The demand for food and processed commodities is increasing due to growing population and rising per capita income. There are projections that demand for foodgrains would increase from 192 million tonnes in 2000 to 345 million tonnes in Hence in the next 20 years, production of foodgrains needs to be increased at the rate of 5.5 million tonnes annually. Source: Indian Council of Agricultural Research Vision 2030 In Million Tonnes Source: Indian Council of Agricultural Research Vision 2030 OVERVIEW OF THE GLOBAL CHEMICAL INDUSTRY Global chemical industry market size was estimated at $3.6 trillion in 2011 and is expected to grow at 4-5% per annum over the next decade to reach ~$5.8 trillion by Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector The Asian region has emerged as the largest contributor to the global chemical industry, accounting for nearly half the global sales ( 1,147 billion) followed by Europe ( 578 billion). Individually, China was the largest market for chemicals with sales aggregating to 575 billion, followed by USA ( 395 billion), Japan ( 153 billion), Germany ( 142 billion) and France ( 76 billion). India, with sales of 56 billion was ranked the eighth largest market in Source: EXIM Bank Research Brief - Indian Chemical Industry: Exploring Global Demand, June

97 International trade in chemical products has witnessed a continuous rise with global exports of chemicals recording an average annual increase of 6.2% during to amount to US$ 545 billion in 2010 as compared to US$ 451 billion in USA was the largest exporter of chemicals with exports aggregating US$ 63.9 billion, followed by China (US$ 49.3 billion), Germany (US$ 48.2 billion), Belgium (US$ 36.6 billion) and Japan (US$ 31.9 billion). However, in terms of dynamism in exports, it was led by the emerging markets of Asia-Pacific, Middle East and Africa. While the average annual increase in exports from Asia-Pacific region was 11.9% during the period, it was as high as 21.9% each in the case of Middle East and Africa. Consequently, the shares of these regions in world exports of chemicals registered a consistent increase. Source: EXIM Bank Research Brief - Indian Chemical Industry: Exploring Global Demand, June 2012 OVERVIEW OF THE INDIAN CHEMICALS INDUSTRY India accounted for only 3.3 % of the total chemical market with a market size of ~$ 0.1 trillion in Indian chemical industry is also a much diversified industry with more than 70,000 commercial products. It accounted for ~13% of the gross value added by the industry segment. It accounted for ~13% of the total India's export. Indian chemical sector is very crucial for the economic development of country. For the purposes of such industry classification, the chemical industry is assumed to include chemical sector, petro chemical sector, fertilizers and pharmaceuticals. Indian chemical industry is a much diversified industry with more than 70,000 commercial products. It accounted for ~13% of the gross value added by the industry segment. Indian chemical sector is very crucial for the economic development of country. With significant capacity additions coming into place, the focus has also been towards investments in R&D. India's competence in this knowledge intensive industry is increasing however still the tapped potential is very limited. India has a very strong outlook for the key end user industries (e.g. Packaging is expected to grow at ~17% p.a. over the next five years, electronic is expected to grow at ~15% p.a. over the next five years, construction and automotive both sectors are expected to grow at ~14% p.a. over the next five years). Hence, going ahead the demand of chemical products is expected to surge strongly at % p.a. over the next five years. To meet this increasing demand either the local production will have to ramp up or the imports will have to go up. The anticipation is that R&D investment for companies in India is expected to grow to 5-6% of their turnover making them more competitive. India is observing increasing tie ups of industry and academia which will facilitate the technology access further. The diversification within the chemical industry is huge and covers more than thousands of commercial products. The current low per capita consumption (~7 kgs for polymers in India as compared to world average of 25 kgs) suggests that the demand potential is also yet to be realized. Hence, going ahead the demand of chemical products is expected to surge strongly at % p.a. over the next five years. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector India is today seen as a growth market for many western companies. Domestic companies have built significant assets and have the opportunity to leverage them and will need to strengthen them further to withstand global competition. It could be worthwhile to explore partnerships, in select areas, for mutual beneficial development. OVERVIEW OF THE GLOBAL AGRO CHEMICALS INDUSTRY Global agrochemical industry has grown strongly at ~7.9% p.a. since Fiscal 2008 to reach ~USD 57 Bn in Fiscal Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 95

98 Geographical Distribution: Europe has the largest share in the agrochemical market followed by Asia, Latin America & North America. There has been an increased usage of products in Europe due to high commodity prices & to boost yield and quality. Asia is catching up in global scenario with its share of the market having increased from 23% in 2008 to 25% now. Increased demand for palm oil is boosting the usage of herbicides in Japan, Malaysia & Indonesia and strong rice prices are increasing the agrochemical consumption in India. In Latin America, increased production of soybean and sugarcane for animal feed and bio fuel is the driving the growth of agrochemical consumption. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector INDIAN AGRO CHEMICALS INDUSTRY Overview and Outlook India is the fourth largest producer of crop protection chemicals globally, after United States, Japan & China. The crop protection industry is a significant industry for the Indian economy. The crop protection chemicals accounts for ~2% of the total chemicals market. For Fiscal 2011, Indian crop market is estimated at ~USD 2 Bn and has been growing in double digits in the recent years. Greater export opportunities and introduction of newer molecules have led to high growth rates. Currently, the exports of crop protection chemicals are estimated at ~USD1.8 Bn. In India a high spent on food and being the largest employer status 96

99 makes agriculture a significant part of economy. Agriculture even though accounts for only ~17% of GDP it employs 55-60% of the workforce. However Indian agriculture is faced with challenges like limited farmland availability and low crop yields. India's crop yields in major crops like rice, lentils, corn and soyabean is more than 50% below China's. One of the major reasons for this has been the low average crop protection consumption in India. India's agrochemicals consumption is one of the lowest in the world with per hectare consumption of just0.58 Kg compared to US (4.5 Kg/ha) and Japan (11 Kg/ha). Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Crop wise usage of Agrochemicals In India, paddy accounts for the maximum share of pesticide consumption, around 28%, followed by cotton (20%). Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Rice/Paddy (28%) Cotton (20%) Pulses and Oilseeds (13%) Wheat (9%) Vegetables (9%) Fruits (7%) Chillies (4%) Others (10%) Source: Ministry of Agriculture, Government of India; Directorate of Economics and Statistics 97

100 Industry Structure In India, there are about 125 technical grade manufacturers (10 multinationals), 800 formulators, over 145,000 distributors. 60 technical grade pesticides are being manufactured indigenously. Technical grade manufacturers sell high purity chemicals in bulk (generally in drums of Kg) to formulators. Formulators, in turn, prepare formulations by adding inert carriers, solvents, surface active agents, deodorants etc. These formulations are packed for retail sale and bought by the farmers. The Indian agrochemicals market is characterized by low capacity utilization. The total installed capacity in Fiscal 2011 was 146,000 tons and total production was 87,000 tons leading to a low capacity utilization of ~60%. The industry suffers from high inventory (owing to seasonal & irregular demand on account of monsoons) and long credit periods to farmers, thus making operations 'working capital' intensive. India due to its inherent strength of low-cost manufacturing and qualified low-cost manpower is a net exporter of pesticides to countries such as USA and some European & African countries. Exports formed ~47% of total industry turnover in Fiscal Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Key Segments Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Insecticides: Insecticides are used to ward off or kill insects. Insecticides form the largest segment of the domestic crop protection chemicals market accounting for 55% of the total market. It is mostly dependent on rice and cotton crops. Fungicides: Fungicides, used to control disease attacks on crops, account for 20% of the total crop protection market and are used for fruits and vegetables and rice. The growing horticulture market in India owing to the government support has given a boost to fungicide usage. The market share of fungicides has increased from 16% in 2005 to 20% in Herbicides: Herbicides are the largest growing segment and currently account for 20% of the total crop protection chemicals market. Sales are seasonal, owing to the fact that weeds flourish in damp, warm weather and die in cold spells. Rice and wheat crops consume the major share of herbicides. Their main competition is cheap labor employed to manually pull out weeds, however, increasing cost of farm labour is expected to drive sales of herbicides going forward. 98

101 Bio-pesticides: Bio-pesticides are pesticides derived from natural substances like animals, plants, bacteria and certain minerals. Bio-pesticides include all biological materials organisms, which can be used to control pests. Currently a small segment, biopesticides market is expected to grow in the future owing to government support and increasing awareness about use of non-toxic, environment friendly pesticides. Others: Plant growth regulators, Nematocides, rodenticides, fumigants etc. Rodenticides and plant growth regulators are the stars of this segment. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Key Trends Market Trends Focus on developing environmentally safe pesticides by both the industry and the Government. The Department of Chemicals has initiated a nationwide programme for "Development and production of neem products as Environment Friendly Pesticides" with financial assistance from United Nations Development Programme. Focus by larger companies on brand building by conducting awareness camps for farmers and providing complete solutions. Increase in strategic alliances among large players for greater market reach and acquisitions of smaller companies globally to diversify product portfolio. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 99

102 Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Technology Trends Increased R&D expected for development of new molecules and low dosage, high potency molecules. Focus on R&D in bio-pesticides segment with increasing preference for environmentally safe products in the market. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Growth Drivers Even though the Indian agricultural sector is highly dependent on monsoons, the market for agrochemicals is expected to grow at a high growth rate of ~11% p.a. to reach ~ USD 6.4Bn by Fiscal Key market drivers include: 1. Growth in demand for food grains: With increasing GDP, the Indian middle-class could grow from 31 million households in 2008 to 148 million households by 2030, with quadrupled consumption. (Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector ). Furthermore, India s total population is expected to increase to 1,523 million, (Source: United Nations Population Division) while India's urban population is expected to increase by 275 million people by This will result in consumptionled double-digit growth in key end markets over the next decade and an increased need for better products and services. Increasing population and high emphasis on achieving food grain selfsufficiency as highlighted in the Fiscal 2010 budget, is expected to drive growth. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 100

103 Rising Population Levels in India (Crores) Source: United Nations (Population Division) 2. Limited farmland availability and stagnant production: India has ~190 Mn hectares of gross cultivated area and the scope for bringing new areas under cultivation is severely limited. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Further, the production of foodgrains in India has increased only marginally between to from million tonnes in to million tonnes in Source: Directorate of Economics and Statistics, Department of Agriculture and Cooperation. The stagnant food production has led to a gap in yield of food grains in India as compared to the average yield levels globally. Yield for select major crops (Tons/ Hectare) World India Yield Gap Rice Wheat Corn

104 Yield for select major crops (Tons/ Hectare) World India Yield Gap Sugarcane Soybean Rapeseed Source: Tata Strategic Management Group India Chem Growth of horticulture & floriculture: Buoyed by 50% growth experienced by Indian floriculture industry in last 3 years, Government of India has launched a national horticulture mission to double production by Growing horticulture and floriculture industries will result in increasing demand for agrochemicals, especially fungicides. Also the farmers are now shifting their focus to value added crops like fruits and vegetables from just basic crops. The more assured returns from these and their relatively shorter harvesting duration makes them more profitable. With the increased ease of usage of agrochemicals in fruits and vegetables the demand for agrochemicals will rise. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 4. Shortage of labor: With increasing urbanization and NREGA the labor available for farming has become costlier. This will push the farmers to adopt more usage of agrochemicals and reduce dependence on manual labour. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector The above factors demonstrate that there is a necessity to improve yield per hectare for food grains, which can be achieved through increased usage of agrochemicals. 102

105 Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 5. Increasing awareness and Affordability: As per Government of India estimates, total value of crops lost due to non-use of pesticides is around USD 17 Bn every year. Companies are increasingly training farmers regarding the right use of agrochemicals in terms of quantity to be used, the right application methodology and appropriate chemicals to be used for identified pest problems. With increasing awareness, the use of agrochemicals is expected to increase. Also the minimum support prices (MSP) is much better now and likely to increase further. This will ensure enough financial incentive to increase productivity and increase profits. More and more focus is now towards value added crop/ short duration crops. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Minimum Support Prices have shown a continuous upward trend in the past decade (in `) Government has actively increased MSPs so as to support the farmers 3,000 Paddy of Grade 'A' Wheat Arhar or Tur 2,300 2,000 1, ,200 1,390 1,400 1,410 1,360 1,320 1, , , ,080 1,100 1,030 1,030 1, FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 Source: Government of India Pertinently, the increase in MSPs will improve the ability of the farmers to afford agrochemicals. Moreover, government initiatives to support farmers in recent years have also led to increased affordability. There has been increase in the flow of institutional credit in recent years, from ` 1,253,090 millions in to ` 3,845,140 million in

106 India s agricultural subsidy has also increased from `561 billion in to ` 1,229 billion in Key Challenges 1. High R&D costs: R&D to develop a new agrochemical molecule takes an average of 9 years and ~ USD 180 Mn Indian companies typically have not focused on developing newer molecules and will face challenges in building these capabilities, while continuing to remain cost competitive. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 2. Threat from Genetically Modified (GM) seeds: Genetically modified seeds possess self-immunity towards natural adversaries which have the potential to negatively impact the business of agrochemicals. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 3. Need for efficient distribution systems: Since, the number of end users is large and widespread, effective distribution via retailers is essential to ensure product availability. Lately, companies have been directly dealing with retailers by cutting the distributor from the value chain thereby reducing distribution costs, educating retailers on product usage and offering competitive prices to farmers. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 104

107 4. Support for Integrated Pest Management (IPM) & rising demand for organic farming: Promotion of IPM, zero budget farming and usage of bio-pesticides by Indian Government and NGOs is gaining momentum. With increasing demand for organic food, farmers in certain states like Karnataka have reduced chemical usage and have adopted organic farming. Agrochemical companies will have to tackle the rising environmental awareness and address concerns on negative impact of pesticide usage. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 5. Counterfeit Products: The spurious pesticides market size in India is estimated to be USD 233 Mn in This negatively impacts the revenues of the organized sector. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 6. Regulatory Hindrances: The functioning of regulators is a concern for the industry and their investments. Most of the players believe that the current approval process is slow, especially for newer molecules. The government announced (in recent financial budget) that it plans to provide 150% depreciation for farm extension will be allowed, however no progress is observed for the same. The industry needs good plans and their expedited implementation to grow strongly. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector Key Opportunities 1. Scope for increase in usage: With ~35-40% of the total farmland under crop protection, there is a significant unserved market to tap into. By educating farmers and conducting special training programmes regarding the need to use agrochemicals, Indian companies can hope to increase pesticide consumption. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 2. Huge export potential: The excess production capacity is a perfect opportunity to increase exports by utilizing India s low cost producer status. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 3. Development of newer molecules: There is an increasing focus of end consumers on environment friendly pesticides and the need for further yield enhancement. This translates into development of newer molecules whose volume of consumption may be limited but higher value is likely to increase the market size. Source: Tata Strategic Management Group India Chem "Emerging India: Sustainable Growth of the Chemical Sector 105

108 OUR BUSINESS In this section any reference to our Company refers to PI Industries Limited on a standalone basis and references to we, us or our refers to PI Industries Limited and its Subsidiaries on a consolidated basis, as the context may require. Unless stated otherwise, the financial data in this section is as per our Standalone Financial Statements and Consolidated Financial Statements, as set forth Financial Statements on page 186 of this Placement Document. The following disclosures in connection with our overview, strengths and strategies should be read together with the risk factors as detailed in the section titled Risk Factors on page 40 of this Placement Document. OVERVIEW Our Company is a chemicals manufacturing and marketing Company with over fifty years of experience in the agrochemicals sector. We are an integrated entity with a differentiated business model driven by respect for intellectual property across two market segments, i.e. the domestic market and the export market. In the domestic market we focus on manufacturing and/or marketing of agri input products through the following model: In-licensing of newly launched or patented molecules from multinational innovators to register and market agri input products in India; Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents have expired); Selectively partnering with global innovators with presence in India to co-market their early stage lifecycle agri input products using our countrywide marketing set up in India. In the export market we undertake custom synthesis and contract manufacturing of niche fine and specialty chemicals, where we offer global innovators a one-stop shop for process scale up and large scale manufacturing of their newly discovered molecules. Through this differentiated business model, we have been able to demonstrate consistent financial growth. Our Company s net revenue from operations on a consolidated basis has grown at a CAGR of 27.30% from ` 5, million for Fiscal 2010 to ` 8, million in Fiscal Our PAT margins have increased by 1.27% points from 7.76% for Fiscal 2010 to 9.03% in Fiscal 2012 and our EBITDA margins have increased by 1.12% points from 15.27% for Fiscal 2010 to 16.39% in Fiscal 2012, on a consolidated basis. Our basic EPS on a consolidated basis has grown from ` per share in Fiscal 2010 to ` per share in Fiscal We have developed strong process research and manufacturing capabilities which are backed by manufacturing facilities located at Panoli (Gujarat), Jammu and Jambusar (Gujarat) and a GLP and ISO:17025 accredited laboratory set up in Udaipur. Our Company has a robust marketing and distribution network which is spread across India and well established in rural and agricultural belts. As on date, we have 211 people working in our marketing team spread across the country. Our marketing team is partnered by a 2-3 tier distribution channel which comprises of numerous retail points, over 10,000 distributors and direct dealers across the major agriculture areas in the country, 27 stock points including our own depots and 18 C&F agents who work on hub-andspoke distribution model to ensure timely delivery. We work closely with farmers and distribution channels to build our brand and create awareness for our products. We accordingly have several successful brands such as NOMINEE GOLD, BIOVITA, FORATOX, CARINA, FOSMITE, ROKET, SOLARO, KITAZIN OSHEEN, etc. 106

109 Our Company has been conferred with the Power Brand status from amongst 81 successful brands and companies featured in the Indian Power Brands the Global Superpower Edition. We were also awarded a certificate of Excellence in Supplier Sustainability Program 2011 from Bayer Group of Companies in India. Our Company currently has 3 subsidiaries, which includes PI Japan Company Limited (Japan) which carries out business development activities in Japan, PI Life Science Research Limited, which deals in contract research projects, and PILL Finance & Investments Limited, which is engaged in the business of holding investments and providing short term funding. OUR STRENGTHS Our Company has over five decades of experience in the agri-chemicals sector, and has over the years developed in house capabilities and vast experience in process research, plant engineering, process scale ups, large scale chemical manufacturing, product registration and marketing & brand building. We believe following are the key strengths of our Company: Differentiated business model Our Company has, over the years, evolved a differentiated non-conflicting business model driven by respect for intellectual property. On one hand, in our domestic agri input segment, our Company leverages on our pan India marketing and distribution network, brand building capabilities and experienced team to focus on in-licensing and co-marketing arrangements, which allows us to introduce novel products in the Indian market to enhance productivity of Indian farmers and thus enables us to establish long term relations with the farmer community and global innovators. On the other hand in our export segment, we leverage on our chemistry process research and manufacturing capabilities, to focus on performing custom synthesis and contract manufacturing services with respect to patented molecules that are in the early stages of their life cycles, which gives us the opportunity to be the first or second suppliers for such products to the patent holders. We also benefit from increases in volume production on the back of the innovators efforts to enhance sales volumes for the returns on their R&D investments. We derive synergistic benefits from our integrated business model such as (a) common infrastructure for domestic agri inputs and custom synthesis exports and (b) develop knowledge and insight across the entire value chain right from process development, scale up, manufacturing to marketing. Long term relationship and reputation of trust and reliability with global innovators We believe that we enjoy a reputation of trust and reliability with global innovators and we respect their intellectual property and work in close partnership with them. On account of these relationships and reputation we have been able to grow in both the domestic market and the export market and consistently expand our product portfolio. Our strong relationship with global innovators has been demonstrated by our consistent growth in both the Indian and export markets. Wide distribution network and transparent distribution policies and practices Our Company has over the years created a robust marketing and distribution network which is spread throughout India and entrenched in rural and agricultural belts across India. Our wide spread distribution network is further aided by our SAP based ERP system and effective business intelligence tools which enables real-time transactions, efficient delivery mechanism, centralized controls and proactive planning and monitoring. Our Company also practices straight forward and transparent business policies with our customers and distributors thereby creating a healthy business environment for mutual benefits. Clear commercial terms before the sale, no stock return, interest for delayed payments, etc are certain practices which has helped us establish a strong and committed distribution network. Our field staff is regularly trained to ensure that the systems we have created are well sustained. 107

110 Brand building capabilities As part of our marketing approach, we work closely with farmers and distribution channels to create awareness for our products by demonstrating their use through the lifecycle of crops. This approach has helped enhance our reputation and recognition in the domestic markets. Some of our key brands include NOMINEE GOLD, BIOVITA, FORATOX, CARINA, FOSMITE, ROKET, SOLARO, KITAZIN OSHEEN, etc. End-to-end capabilities in custom synthesis Over the years, we have been able to build strong capabilities in process research of diverse chemistries, process engineering and large scale manufacturing. These capabilities have helped us to develop a strong portfolio of products and the ability to offer increasing suite of services which has led to a consistent growth in our business. Entry barriers in our business Our Company has invested significant resources, time and effort in building our reputation, capabilities, relationships and reach which have been critical in evolving our differentiated business model, which thereby serve as significant entry barriers in our business. Experienced management team We are a professionaly managed Company with a Board of Directors consisting of a mix of experienced excutive directors who have been associated with our Company and the industry for a long span of time and highly qualified independent directors from diverse disciplines ranging from the agrochemicals and chemicals industry, accounting, banking and engineering to civil administration. Headed by our Chairman and Managing Director, Mr. Salil Singhal, who has over 45 years of experience in the agro-chemicals sector and has in the past has served as the Chairman of the Crop Care Federation of India for 20 years, our key managerial personnel team comprises of experienced and qualified professionals with diverse skills which include manufacturing, engineering, research, marketing, sourcing, supply chain management, finance and human resources. The experience in diverse disciplines of our management team has helped us to grow and expand our business consistently. OUR STRATEGIES Continue expanding our domestic portfolio of in-licensed products Our Company s focus will continue to be on expanding our domestic portfolio of in-licensed products by leveraging our strong relationships and reputation with global innovators. Our focus will be on new products which provide better efficiencies and cost savings to the farmer. We have developed a robust pipeline of potential products for the future. We are in the process of registering 2 new in-licensing products and have also executed agreements with patent holders in the insecticide / herbicide / fungicide segments to evaluate the potential for such molecules in the Indian market. Adding new product categories to leverage our pan-india marketing network and customer reach We propose to leverage on our pan-india marketing network and deep penetration and reach among the farming community, to expand our categories of agri input products such as hybrid seeds, biocides, nematicides, rodenticides etc. Diversifying our presence across the agricultural value chain by leveraging our strong understanding of the sector We propose to capitalize on our vast experience in the agricultural sector and understanding of needs of farmers by diversifying our presence across the agricultural value chain. As a part of this strategy we intend 108

111 to seek opportunities to acquire or partner with other corporates to access products, service and technology that have large growth potential in the Indian agricultural market. We believe that pursuing selective acquisitions, partnerships, or alliances would improve our competitiveness, further diversify our product offerings and strengthen our market position. Strengthening our relationship with existing clients Leveraging on our process research and manufacturing capabilities, we propose to strengthen our relationships with existing customers by undertaking custom synthesis and contract manufacturing for new molecules across their various product segments. Acquiring new clients For our custom synthesis and contract manufacturing activities, we propose to cater to customers across new industry verticals and in new geographies. We intend to explore acquisition or partnership opportunities to access new customers, which would allow us to improve our competitiveness, strengthen our market position and enhance our business. OUR BUSINESS ACTIVITIES We are an integrated entity with a non-conflicting approach driven by respect for intellectual property across two market segments, wherein we share synergies arising from our expertise, infrastructure, relationships and goodwill developed over the years. A summary of the market segments is as follows: Domestic market - agri input In the domestic market our Company has over the years developed brand recognition and a pan-india distribution network for our products in India. Agri input products offered by us include agro chemicals, specialty fertilizers and plant nutrients. Our Company has exclusive marketing rights from global innovators for distribution of newly commercialized molecules in India. Our domestic business comprises of three kinds of activities, namely In-licensing of newly launched or patented molecules from multinational innovators to register and market agri input products in India; Manufacturing and marketing of branded generic agri input products (i.e. molecules whose patents have expired); Selectively partnering with multi national companies present in India to co-market their early stage lifecycle agri input products using our countrywide marketing set up in India. In-licensing of agri input products from multi national innovators In recent years, our Company has adopted a differentiated business model of in-licensing agri input products from multi-national Companies, who are generally not present in India, for marketing and distribution of their products in India. We enter into exclusive arrangements with these companies to carryout product evaluation/trials, data generation, registration, introduction and market development for the same in India. Current Product Portfolio Our current array of in-licensed products includes the following: Name of the Product Chemical Name Category Biovita Granules Seaweed (Ascophyllum nodusum) Specialty Plant Nutrient Biovita Liquid Seaweed (Ascophyllum nodusum) Specialty Plant Nutrient 109

112 Name of the Product Chemical Name Category Kitazin Iprobenfos 48% EC Fungicide Nominee Gold Bispyribac Sodium 10% SC Herbicide Osheen Dinotefuran 20 % SG Insecticide Pipeline We are in the process of registering 2 new in-licensing products. Further, our Company has executed various agreements with patent holders in the insecticide / herbicide / fungicide segments to evaluate the potential for such molecules in the Indian market. Manufacture and distribution of branded generic agri input products Manufacturing, formulating, marketing and distributing branded generic agri input products under our own brand has been our traditional business activity. Current Product Portfolio Name of the Product Chemical Name Category Roket Profenofos 40% + Cypermethrin Insecticide 4% Simbaa Propargite 57% EC Insecticide Carina Profenofos 50% EC Insecticide Colfos Ethion 40% + Cypermethrin 5% Insecticide EC Foratox 10 G Phorate 10% G Insecticide Fosmite Ethion 50% EC Insecticide Logik Tricyclozole 75% WP Fungicide Maxima Thiamethoxam 25 WG Insecticide Solaro Atrazine 50% WP Herbicide Colt Cypermethrin 25% EC Insecticide Inro Imazethapyr 10 SL Herbicide Jumbo Imidacloprid 17.8% SL Insecticide Oval Acephate 75 SP Insecticide PI Bupro Buprofezin 25% SC Insecticide PI Glypho Glyphosate 41% SL Herbicide Snailkil Metaldehyde 2.5% DP Insecticide Co-marketing arrangements for agri input products Our Company selectively partners with global innovators who have presence in India for co-marketing their new or early-stage lifecycle products using our countrywide marketing set up in India, under our own brand. Current Product Portfolio Name of the Product Chemical Name Category Voltage Spiromecifen 22.9 SC Insecticide Fluton Flubendiamide 20% WG Insecticide Clutch Pyraclostrobin 5%+Metiram 55% Fungicide WG Lepido Chlorfenapyr 10% SC Insecticide Lurit Dimethomorph 50% WP Fungicide 110

113 Export market - Custom synthesis and contract manufacturing We have been in this segment since the mid 1990s and provide custom synthesis and contract manufacturing services to global innovators in relation to niche fine and specialty chemicals. This segment, backed with in-house process research, process engineering and large scale manufacturing capabilities, offers global innovators a one-stop shop for process scale up and large scale manufacturing of their newly discovered molecules. We have over the years built long standing relationships with the leading multinationals for custom synthesis and contract manufacturing of their newly launched and to be launched products in the global markets. In this segment we focus on molecules which: are patented; are in the early stages of their life cycles; of high/medium value and low volume; involve complex chemistries; we believe would lead to high growth rates on successful commercialization across geographies. We believe that our focus on early stage participation enables us to capitalize on the growth phase of these products and also gives us the opportunity to be the first or second suppliers for such molecules under global patents. We believe that our custom synthesis and contract manufacturing activities have been a successful growth driver for us, with good visibility of business in the coming few years. While the agro-chemical sector had been the major focus for us in this business, our Company also undertakes custom synthesis of pharmaceutical intermediates and other fine chemicals. Service Offerings In this segment we offer the following end-to-end services: Contract Research Process Development Analytical Method Development Synthesis of purity and impurities of molecules for analytical reference standards 5 batch analysis under GLP conditions Scale up studies Process detailed engineering Commercial scale production 111

114 End-to-end process flow chart for custom synthesis and contract manufacturing Infrastructure We have an integrated infrastructure for this business segment and are equipped to undertake end-to-end activities from process evaluation, bench scale trials, kilo lab, and pilot plant to commercial production. Reaction capabilities Our Company seeks to continuously add to its reaction capabilities in order to meet customer requirements. Some of the reaction capabilities possessed by our Company are as follows: Reaction Pyrazoles Suzuki Coupling Reactions Chiral Chemistry Acylation Reduction Darzen's Reaction Diazotisation Halogenation Nitration Olefin Formation Type (Example) N-Methyl substituted using Mono methyl hydrazine Substituted Biphenyls Chiral transformations Friedel-Craft, Houben-Hoesch, Vilsmeier-Haak Fries rearrangement Beechamp reduction, Hydrogenation, Clemmensen and Hydride Glycidic ester Anilines Photochlorination,Bromination, Chlorination Aromatic Compounds Wittig 112