LETTER OF OFFER THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 LETTER OF OFFER THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION This Letter of Offer is sent to you as Equity Shareholder(s) of Shriram City Union Finance Limited. If you require any clarifications about the action to be taken, you may consult your stockbroker or investment consultant or Manager to the Offer or Registrars to the Offer. In case, you have sold your Equity Shares in Shriram City Union Finance Limited, please hand over this Letter of Offer, the accompanying Form of Acceptance-cum- Acknowledgement and Transfer Deed to the purchaser of the Equity Shares or the member CASH OFFER BY Shriram Chits & Investments Private Limited ( Acquirer ) (Registered Office: 123, Angappa Naicken Street, Chennai Tel.: (+91 44) ) (Administrative Office: No. 1, Club House Road, Mount Road, Chennai Tel.: (+91 44) / 34 Fax: (+91 44) / 0157) to acquire 54,20,000 fully paid up Equity Shares of Rs. 10/- each representing 20% of the existing outstanding Equity Share Capital, at Rs per fully paid-up Equity Share of Shriram City Union Finance Limited ( Target ) (Registered Office: 123, Angappa Naicken Street, Chennai Tel.: (+91 44) ) (Administrative Office: Mookambika Complex, 3 rd Floor, 4, Lady Desika Road, Mylapore, Chennai Tel.: (+91 44) /3768/1363 Fax: (+91 44) / ) The Offer is being made by Shriram Chits & Investments Private Limited pursuant to Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto. The Offer is subject to the approval of the Reserve Bank of India under the Foreign Exchange Management Act, 2000, if any, for acquiring Equity Shares tendered by non-resident shareholders including NRI(s), OCB(s) and FII(s). The Acquirer will make necessary application to the RBI on behalf of the Non-resident shareholders after the Closure of the Offer. As on the date of this Letter of Offer, there are no other statutory approvals required to implement this Offer. In case of non-receipt of the said approvals within time, Securities and Exchange Board of India (SEBI) has the power to grant extension of time to the Acquirer for payment of consideration to shareholders subject to the Acquirer agreeing to pay interest as directed by SEBI. Shareholders who have accepted the Offer by tendering the requisite documents, in terms of the Public Announcement/ Letter of Offer, can withdraw the same upto three working days (i.e. February 24, 2004) prior to the date of the Closure of the Offer (i.e. February 27, 2004). The Acquirer is permitted to revise the Offer Price of Equity Shares/ No. of Equity Shares upward any time up to seven working days prior to the date of the Closure of the Offer. If there is any upward revision in the Offer Price of Equity Shares/ No. of Equity Shares by the Acquirer till the last date of revision viz. February 16, 2004 or in case of withdrawal of the Offer, the same would be informed by way of a public announcement in the newspapers mentioned in paragraph of this Letter of Offer and the same revised price would be payable by the Acquirer to all shareholders who tendered their Equity Shares at any time during the Offer and which are accepted by the Acquirer under the Offer. If there is a competitive offer/ bid: l The public offers under all the subsisting bids shall close on the same day; l As the Offer Price cannot be revised during seven working days prior to the date of Closure of the Offer/bids, it would therefore, be in the interest of the shareholders to wait till the commencement of that period to know the final Offer Price of each offer/ bid and tender their acceptance accordingly. The Public Announcement and this Letter of Offer (including Form of Acceptance-cum-Acknowledgement and Form of Withdrawal) is available on SEBI s web-site ( or MANAGER TO THE OFFER ENAM FINANCIAL CONSULTANTS PVT. LTD. 801, Dalamal Tower, Nariman Point, Mumbai Tel.: (+91 22) Fax: (+91 22) scuflopenoffer@enam.com Contact Person: Ms. Shilpa Jhaveri REGISTRARS TO THE OFFER MCS LTD. Sri Venkatesh Bhavan, Plot No. 27, Road No. 11, M.I.D.C., Andheri (East), Mumbai Tel.: (+91 22) Fax: (+91 22) mcsmum@vsnl.com Contact Person: Mr. Ashok Gupta OFFER OPENS ON: JANUARY 29, 2004 OFFER CLOSES ON: FEBRUARY 27, 2004 SCHEDULE OF MAJOR ACTIVITIES OF THE OFFER ACTIVITY DAY AND DATE (ORIGINAL) DAY AND DATE (REVISED) Public Announcement Thursday, September 18, 2003 Thursday, September 18, 2003 Specified Date (for the purpose of determining the names of shareholders to whom the Letter of Offer would be sent) Tuesday, September 30, 2003 Tuesday, September 30, 2003 Last date for a Competitive Bid Thursday, October 09, 2003 Thursday, October 09, 2003 Date by which Letter of Offer will be despatched to shareholders Thursday, October 30, 2003 Saturday, January 24, 2004 Date of Opening of the Offer Thursday, November 06, 2003 Thursday, January 29, 2004 Last date for revising the Offer Price / No. of equity Shares Monday, November 24, 2003 Monday, February 16, 2004 Last date of withdrawal of tendered application by the shareholders of SCUFL Tuesday, December 02, 2003 Tuesday, February 24, 2004 Date of Closure of the Offer Friday, December 05, 2003 Friday, February 27, 2004 Date by which acceptance/rejection under the Offer would be intimated and the corresponding payment for the acquired Equity Shares and/or the unaccepted Equity Shares/Share Certificate(s) will be despatched/credited. Friday, January 02, 2004 Thursday, March 25, 2004

2 CONTENTS PAGE NO. Definitions... 1 Disclaimer Clause... 2 Details of the Offer... 2 Information on Shriram Chits & Investments Private Limited, the Acquirer... 4 Delisting/Disinvestment Option... 6 Information on Shriram City Union Finance Limited, the Target... 6 Rationale for the Acquisition and Offer Offer Price and Financial Arrangements Terms and Conditions of the Offer Procedure for Acceptance and Settlement of the Offer Documents for Inspection Declaration by the Acquirer... 23

3 Acquirer or SCIL BSE CoSE DP or Depository Participant Escrow Bank FEMA FII(s) Form of Acceptance Form of Withdrawal Guidelines Manager or Manager to the Offer or Enam MSE NRI(s) Non-Resident Shareholders NSDL OCB(s) Offer or Open Offer DEFINITIONS Shriram Chits & Investments Private Limited The Stock Exchange, Mumbai Coimbatore Stock Exchange HDFC Bank Limited HDFC Bank Limited, Kamala Mills Compound, 2 nd Floor, Senapati Bapat Marg, Lower Parel, Mumbai The Foreign Exchange Management Act, 2000 and the subsequent amendments thereto Foreign Institutional Investors registered with SEBI Form of Acceptance-cum-Acknowledgement accompanying this Letter of Offer Form of Withdrawal accompanying this Letter of Offer SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the subsequent amendments thereto Enam Financial Consultants Pvt. Ltd. Madras Stock Exchange Non-Resident Indians Non Resident Indians, Overseas Corporate Bodies and Foreign Institutional Investors holding the Equity Shares of Shriram City Union Finance Limited National Securities Depository Limited Overseas Corporate Bodies Open Offer to acquire 54,20,000 fully paid-up Equity Shares of Rs. 10/- each of Shriram City Union Finance Limited, representing 20% of the outstanding equity share capital of Shriram City Union Finance Limited, at a price of Rs per fully paid-up Equity Share, payable in cash Offer Period From September 18, 2003 to March 25, 2004 Offer Price Rs per fully paid-up Equity Share of Shriram City Union Finance Limited Preferential Issue Allotment of 1,96,00,000 equity shares of Rs. 10/- each at a price of Rs per share by Shriram City Union Finance Limited on a preferential basis to Shriram Chits & Investments Private Limited Public Announcement or PA Public Announcement for the Open Offer issued on behalf of the Acquirer on September 18, 2003 Registrars or Registrars to the Offer MCS Limited RBI The Reserve Bank of India The Regulations SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto SEBI Securities and Exchange Board of India Specified Date September 30, 2003 Target or Target Company or SCUFL Shriram City Union Finance Limited 1

4 1. DISCLAIMER CLAUSE IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF LETTER OF OFFER WITH SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THE LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THE DISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE REGULATIONS. THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF SCUFL TO TAKE AN INFORMED DECISION WITH REGARD TO THE OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR FINANCIAL SOUNDNESS OF THE ACQUIRER OR THE COMPANY WHOSE EQUITY SHARES/CONTROL IS PROPOSED TO BE ACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ACQUIRER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE MANAGER TO THE OFFER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ACQUIRER DULY DISCHARGES ITS RESPONSIBILITIES ADEQUATELY. IN THIS BEHALF AND TOWARDS THIS PURPOSE, ENAM FINANCIAL CONSULTANTS PVT. LTD., HAS SUBMITTED A DUE DILIGENCE CERTIFICATE DATED SEPTEMBER 30, 2003 TO SEBI IN ACCORDANCE WITH THE SEBI (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) REGULATIONS 1997 AND SUBSEQUENT AMENDMENTS THEREOF. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRER FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER. The Acquirer doesn t accept any responsibility for statements made otherwise than in this Letter of Offer or in the advertisement or any material issued by, or at the instance of the Acquirer and the Manager to the Offer and anyone placing reliance on any other source of information would be doing so at his/her/their own risk. 2. DETAILS OF THE OFFER 2.1 Background to the Offer This Offer to the shareholders of SCUFL is made pursuant to regulation 10 of the Regulations consequent to the Preferential Issue of equity shares by SCUFL to SCIL as explained in paragraph and for consolidation of and for substantial acquisition of equity shares without change in control or management The Board of Directors of SCUFL has allotted on preferential basis 1,96,00,000 equity shares of Rs. 10/- each at a price of Rs /- per share to SCIL in accordance with the Guidelines. The Preferential Issue has been duly authorised by a resolution passed by the Board of Directors of SCUFL at its meeting held on July 29, 2003 and by the special resolution passed by the shareholders of SCUFL at the duly constituted Annual General Meeting ( AGM ) held on September 4, Pursuant to the subscription received from SCIL, the Board of Directors of SCUFL allotted 1,96,00,000 equity shares to SCIL on September 12, The said equity shares are subject to lock-in as per the Guidelines. SCUFL has made an application vide their letter dated September 25, 2003 to MSE, CoSE and BSE for listing the above shares Prior to the aforementioned Preferential Issue the Acquirer held 39,432 equity shares or 0.53 % of the fully paid-up equity share capital of the Target Company. Upon the allotment of 1,96,00,000 equity shares, the Acquirer holds 1,96,39,432 equity shares representing 72.47% of the enhanced fully paid-up equity share capital of the Target Company SCIL belongs to the Shriram Companies, Chennai. The total promoter s holding including that of the Acquirer in the Target Company prior to the Preferential Issue was 81,007 equity shares of Rs.10/- each forming 1.08% of the pre Preferential Issue equity share capital of the Target Company. The holding of promoters including that of the Acquirer in the Target Company as a result of the Preferential Issue has increased to 1,96,81,007 equity shares forming 72.62% of the post preferential issued equity share capital of the Target Company. 2

5 2.1.5 There has not been any change in the Board of Directors of SCUFL as a consequence of the Preferential Issue. The Acquirer does not propose to change the Board of Directors of SCUFL pursuant to substantial acquisition of equity shares and the Offer As on the date of the Public Announcement, SCIL holds 1,96,39,432 equity shares of SCUFL which have been acquired through open market purchases and Preferential Issue. Out of the above holding, SCIL has acquired 39,432 equity shares of SCUFL, through open market purchases, during the 12 month period prior to the date of the Public Announcement i.e. September 17, The highest price paid by SCIL for these equity shares was Rs on July 02, 2003 and June 30, 2003 and the average price paid for these equity shares for the above period was Rs As on the date of the Public Announcement, the Directors of the Acquirer do not hold any equity shares of SCUFL Neither the Acquirer nor the Directors of the Acquirer have acquired or sold any equity shares of SCUFL from the date of the Public Announcement upto the date of this Letter of Offer Based on the information available from the Acquirer, the Target and SEBI website, the Acquirer and the Target have not been prohibited by SEBI from dealing in securities, in terms of directions issued under Section 11B of SEBI Act or under any of the regulations made under the SEBI Act. 2.2 The Offer The Offer by Acquirer to the shareholders of SCUFL to acquire 54,20,000 fully paid-up Equity Shares of Rs. 10/- each of SCUFL ( Equity Shares ), representing 20% of the outstanding voting equity share capital (post Preferential Issue) of SCUFL, at a price of Rs /- per fully paid-up Equity Share payable in cash is being made in accordance with regulation 10 of the Regulations, consequent to the Preferential Issue of equity shares to SCIL as explained in paragraph above and for consolidation of and for substantial acquisition of equity shares without change in control or management. There are no partly paid-up Equity Shares of SCUFL as at the date of the Public Announcement. This Offer is being made to the equity shareholders of SCUFL other than the Acquirer For the purpose of this Offer, there are no Persons Acting in Concert with the Acquirer The Offer is not subject to any minimum level of acceptance The Public Announcement as per regulation 15(1) of the Regulations, was made in the following newspapers on September 18, 2003: Newspaper Language Editions Financial Express English All editions Janasatta Hindi All editions Makkal Kural Tamil All editions Lokmat Marathi Mumbai edition A copy of this Public Announcement is also available at SEBI s web-site ( and If there is any upward revision in the Offer Price of Equity Shares/ No. of Equity Shares by the Acquirer till the last date of revision viz. February 16, 2004 or in case of withdrawal of the Offer, the same would be informed by way of a public announcement in the newspapers and the same revised price would be payable by the Acquirer to all shareholders who tendered their Equity Shares at any time during the Offer and which are accepted by the Acquirer under the Offer The Equity Shares will be acquired by the Acquirer free from all liens, charges and encumbrances and together with all rights attached thereto, including the right to all dividends, bonus and rights offer declared hereafter. 3

6 3. INFORMATION ON SHRIRAM CHITS & INVESTMENTS PRIVATE LIMITED ( SCIL or the Acquirer ) 3.1 SCIL was incorporated as a private limited company on April 05, 1974 with the name Shriram Chits & Investments Private Limited under the Companies Act, 1956 and received its certificate of incorporation from the Registrar of Companies, Tamilnadu. SCIL became a deemed public limited company on January 01, 1996 under provisions of Section 43A(2) of the Companies Act, Subsequently the word Private was reinstated and SCIL became a private limited company on June 07, 2001 under provisions of Section 43A(2A) of the Companies Act, The registered office of SCIL is at 123, Angappa Naicken Street, Chennai SCIL belongs to the Shriram Companies, Chennai and is promoted by Mr. R. Thyagarajan, Mr. T. Jayaraman and Mr. A.V.S. Raja. SCIL was a leading Chit company and started its operations on April 05, It was started with the main objective to operate the Chit fund business, which encourages the habit of savings. SCIL has a significant network of approximately 400 branches servicing customers and agents in South India. SCIL has since ceased to undertake fresh chit business as the same is now carried on by other companies promoted by SCIL in some states for this purpose. It however continues to service its existing chit portfolios. 3.3 As on date of the Public Announcement, SCIL had 9,50,000 equity shares of face value of Rs. 100/- each fully paid-up aggregating Rs. 950,00,000 which is held by promoters along with their relatives and business associates. Mr. A.V.S. Raja and Mr. R. Thyagarajan hold 1,002 and 2,250 equity shares respectively aggregating 0.11% and 0.24% of SCIL s paid up equity share capital respectively. Mr. G. Mariappan, a partner of S R Real Estate Finance and Mr. H. R. Srinivasan a partner of Shriram Motor Finance hold 30.53% and 68.42% on behalf of beneficial owners being respective firms. Mr. R. Thyagarajan and Mr. A.V.S. Raja are also partners in S R Real Estate Finance and have a 46.25% stake each in this partnership firm. Mr. R. Thyagarajan and Mr. T. Jayaraman are also partners in Shriram Motor Finance and have a 46.25% stake each in this partnership firm. SCIL being a private limited company, the equity shares of SCIL are not listed on any stock exchange in India or abroad. 3.4 As on date of the Public Announcement, the Board of Directors of SCIL was as below: Name of Designation Residential Address Sri R. Chandrasekar 14-B, Warren Road, Mylapore,Chennai Director Sri R. Swaminathan Flat 3 E, Parijath, No. 23 Coats Road, T Nagar Director Chennai Sri G. Muralidhar No.27, 4th Avenue, I Floor, Ashok Nagar Director Chennai (Source: Information provided by SCIL vide letter dated September 17, 2003) 3.5 As on the date of the Public Announcement, none of the Directors of SCIL are on the Board of Directors of SCUFL. 4

7 3.6 The financial highlights of SCIL for the last three years as certified by Mr. K.S. Kalyanasundaram of M/s. Y Prabhu & Co., Chartered Accountants, No. 14, 11 th Cross Street, Indira Nagar, Chennai (Membership no ), Tel.: (+91 44) vide their certificate dated September 17, 2003 are as below: (In Rs. Lacs except ratio and share data) For the year ended March 31, Months Profit and Loss Statement Income from operations Other Income Total Income Total Expenditure (before interest, depreciation & tax) Profit Before Depreciation Interest and Tax Depreciation Interest & Finance Charges Profit Before Tax Provision for Tax Deferred Tax Liability *- Profit After Tax Less: Adjustments relating to earlier years 5.75 Profit after adjustments Balance Sheet Statement Sources of Funds Paid up Equity Share Capital Reserves and Surplus (Excluding Revaluation Reserves) Subtotal Secured Loans Unsecured Loans Deferred Tax Liability Chit Fund Suspense Total Uses of Funds Net Fixed Assets Investments Net Current Assets (353.91) Total Miscellaneous expenditure not written off Debit balance in Profit and Loss account Deferred Tax Asset Total Financial Data Networth (Rs.) Dividend (%) Earning Per Share (Rs.) Return on Networth (%) Book Value Per Share (Rs.) * Deferred Tax Asset adjusted to the extent of Deferred Tax Liability of Rs. 13,95,089/- 5

8 3.7 The provisions of Chapter II of the Regulations are not applicable to SCIL. 4. DELISTING/DISINVESTMENT OPTION 4.1 In terms of regulation 21(3) of the Regulations, if the Offer results in public shareholding being reduced to 10% or less of the voting capital of SCUFL, the Acquirer undertakes to dis-invest through an offer for sale or by a fresh issue of capital to the public which shall open within a period of 6 months from the date of Closure of the Offer, such number of shares so as to satisfy the listing requirements. 5. INFORMATION ON SHRIRAM CITY UNION FINANCE LIMITED ( SCUFL or the Target ) 5.1 SCUFL having its registered office at 123, Angappa Naicken Street, Chennai was incorporated as a private limited company on March 27, 1986 with the name Shriram Hire Purchase Finance Private Limited under the Companies Act, 1956 and received its certificate of incorporation from the Registrar of Companies, Tamil Nadu. The Company became a public limited company on October 29, 1988 and a fresh certificate of incorporation, consequent on a change of name to Shriram City Union Finance Limited was issued on April 10, SCUFL is registered with Reserve Bank of India ( RBI ) under Section 45 IA of the Reserve Bank of India Act, 1934 and received its certificate of registration on September 04, 2000 vide registration number A Further SCUFL certifies that RBI has taken no penal actions against them. 5.2 There have been no restructuring, mergers/ demergers and spin offs during the last three years in SCUFL. 5.3 SCUFL is promoted by Mr. R. Thyagarajan, Mr. T. Jayaraman and Mr. A.V.S. Raja alongwith their relatives. Prior to the initial public offering of SCUFL, Integrated Enterprises (India) Ltd. and Integrated Advisory Services Ltd., companies belonging to the Integrated Group jointly held 58% of the paid up equity capital of SCUFL. As on September 11, 2003 Integrated Holdings Ltd., a Integrated Group company held 28.35% of the paid up equity capital of SCUFL. The Integrated Group has in the past always supported the Promoters of SCUFL namely Mr. R. Thyagarajan, Mr. T. Jayaraman and Mr. A.V.S. Raja. It is with this support that the Promoters of SCUFL manage control of SCUFL. SCUFL is predominantly engaged in hire purchase and lease financing of commercial vehicles. Besides deploying its own funds for financing trucks, it also deploys funds of Banks/Corporates/Institutions under its Portfolio Management Schemes. Recently, SCUFL has also identified major opportunities to grow rapidly in the area of Consumer Durable Financing. 5.4 The Share Capital of SCUFL as on the date of the Public Announcement pursuant to the Preferential Issue comprises of 2,71,00,000 fully paid-up Equity Shares of Rs. 10/- each and 23,28,980 Cumulative Redeemable Preference shares of Rs. 100/- each aggregating Rs. 50,38,98,000. There are no partly paid-up Equity Shares of SCUFL as at the date of the Public Announcement. 5.5 The Equity Share Capital structure of SCUFL as on the date of the Public Announcement was as follows: Issued and paid-up Equity Share No. of Equity Shares % of Equity Shares/ Capital (Face Value - Rs. 10/-)/ Voting Rights Voting Rights Fully paid-up Equity Shares (a) 271,00, % Partly paid-up Equity Shares (b) Total Issued and paid-up Equity Shares (a+b) 271,00, % Total Voting Rights 271,00, % (Source: Information provided by SCUFL vide letter dated September 17, 2003) As on the date of the Public Announcement, there are no outstanding convertible instruments of SCUFL. 6

9 5.6 The Board of Directors of SCUFL as on the date of the Public Announcement was as under: Name / Designation Residential Address Sri A. K. Singh FD - 375, Salt Lake City, Kolkata Managing Director Sri S. M. Bafna C/o Bafna Motors Ltd, Ajinkya Mansion Director Block No.3, First Floor, Pandita Ramabai Road, Mumbai Dr. T. S. Sethurathnam C-139, Sarvodaya Enclave, Nominee Director New Delhi Sri S. Venkatakrishnan 34 Oliver Road, Mylapore Director Chennai Sri E. V. Balasubramanian No.8, 1 st Floor, Dr Vasudevan Nagar extn., South Avenue, Director Tiruvanmiyur, Chennai (Source: Information provided by SCUFL vide letter dated September 17, 2003) 5.7 The financial highlights of SCUFL for the last three years as certified by Mr. Pijush Gupta of M/s. Pijush Gupta & Co., Chartered Accountants, P-199, C.I.T. Road, Scheme IV-M, Kolkata (Membership no ), Tel.: (+91 33) , Fax: (+91 33) , vide their certificate dated September 17, 2003 are as below: (In Rs. Lacs except ratio and share data) For the year ended March 31, Months Profit and Loss Statement Income from operations Other Income Total Income Total Expenditure (Before Depreciation, Interest and Tax) Profit Before Depreciation, Interest and Tax Depreciation Interest, Finance charges & Other charges Profit Before Tax Prior Period adjustment Provision for Tax Provision for Deferred Taxation Profit After Tax Balance Sheet Statement Sources of Funds Paid up Equity Share Capital Paid up Preference Share Capital ** ** Reserves and Surplus (Excluding Revaluation Reserves) # # Subtotal Secured Loans Unsecured Loans Deferred Tax Liability Total

10 (In Rs. Lacs except ratio and share data) For the year ended March 31, Months Uses of Funds Net Fixed Assets Investments Net Current Assets Total Misc. expenditure not written off Total Financial Data Networth (Rs.) Dividend (%) Earning Per Share Return on Networth (%) $ Book Value Per Share (Rs.) * Notes : # excludes deferred tax incremental liability to be provided for Rs net of dividend on Preference Shares $ excludes Preference Share Capital and net of dividend on Preference shares * excludes Preference Share Capital ** including application money pending allotment Calculation of Networth: Total Equity Share Capital add Total Reserves and surplus, less Miscellaneous expenditure to the extent not written off Calculation of Earning Per Share: (Profit After Tax less Preference Dividend)/Number of Equity Shares However the Earning per share in Audited Accounts has been calculated as per the Accounting Standard 20 (Earning per Share) issued by Institute of Chartered Accountants of India. As per the Accounting Standard 20 Earnings per share are to be calculated by dividing the net profit or loss for the period attributable to equity shareholders (i.e. Net profit or loss for the period after deducting preference dividends and any attributable tax thereto for the period) by the weighted average number of equity shares outstanding during the period. The same works out to Rs.5.96 for the year March 31, 2001, Rs.8.53 for the year March 31, 2002 and Rs.8.02 for the year March 31, Calculation of Return on Networth: (Net Profit after tax less Preference Dividend)/Networth 8

11 Calculation of Book Value Per Share: Networth/Number of Equity Shares The financial highlights of SCUFL for the quarter ended, June 30, 2003 is as below: (In Rs. Lacs except ratio data) For the quarter ended, June 30, 2003 Months 3 Total Income Profit After Tax Equity Share Capital Preference Share Capital Reserves and Surplus (excluding revaluation reserves and miscellaneous expenditure not written off)# Earning Per Share (Rs.)@ **5.47 Return on Networth (%)$ Book Value Per Share (Rs.)* (Source: June quarter limited review as approved by the Board of Directors of SCUFL by circular resolution on August 29, 2003 and adopted at the meeting of the Board of Directors held on September 04, 2003) Notes: # excludes deferred tax incremental liability to be provided for $ excludes Preference Share Capital and net of dividend on Preference net of dividend on Preference shares * excludes Preference Share Capital ** not annualised 5.8 The Equity Shares of SCUFL are listed on MSE, CoSE and BSE. SCUFL has decided to delist the shares voluntarily from CoSE. This has been duly authorised by a resolution passed by the Board of Directors of SCUFL at its meeting held on July 29, 2003 and by the special resolution passed by the shareholders of SCUFL at the duly constituted Annual General Meeting held on September 4, Subsequently SCUFL has made an application to CoSE to delist its shares. 5.9 SCUFL, vide its letter dated September 17, 2003 has certified that (i) it has not been penalised by any of the stock exchanges, where the shares of the company are listed, on account of default on compliance of listing agreement formalities and (ii) it has complied with the provisions of the Chapter II of the Regulations. However there was a delay of 19 days and 5 days for compliance under regulation 8(3) and 7(3) of the Regulations in 1997 and 1999 respectively. For compliances upto April 2003, as Mr. R. Thyagarajan and Mr. A.V.S. Raja, Promoters of SCUFL were not holding any shares in SCUFL, no disclosure under Chapter II of the Regulations have been made. The Promoters and major shareholders of SCUFL have complied with the provisions of the Chapter II of the Regulations. 9

12 5.10 The Equity Shareholding pattern of SCUFL before the Preferential Issue, the Offer and after the Offer (assuming full acceptance of the Offer) is given in the table below: Shareholder s Shares/Voting Shares/Voting Shares/Voting Shares/Voting Shares/Voting Category Rights held prior Rights acquired Rights held after Rights to be Rights held after to the Preferential through the allotment of acquired in the the Offer (assuming Issue as on Preferential Issue Preferential Issue Offer (assuming full acceptance)# September 11, that triggered the but before the full acceptance) 2003 Regulations Offer# (A) (B) (C)= (A+B) (D) (E)= C+D) No. of % No. of % No. of % No. of % No. of % Shares Shares Shares Shares Shares 1 Promoter group a) Parties to the Agreement b) Promoters other than (a) above@ 41, , , Total (1(a)+(b)) 41, , , a) Acquirer 39, ,96,00, ,96,39, ,20, ,50,59, b) PACs Total (2(a)+(b)) 39, ,96,00, ,96,39, ,20, ,50,59, Parties to the agreement other than (1) (a) & (2) 4 Public (Other than parties to Agreement & Acquirer) a. FI(s)/ SFI(s) $ $ b. MFs 3,89, ,89, $ $ - Franklin India Prima Plus 3,88, ,88, $ $ - Kothari Pioneer Prima Plus $ $ c. Banks 5,24, ,24, $ $ - City Union Bank Ltd. 5,23, ,23, $ $ - Bank of Baroda $ $ d. FII (s) $ $ e. Private Corporate Bodies* *24,33, *24,33, $ $ f. Others 40,72, ,72, $ $ Total (a+b+c+ 74,18, ,18, ,98, d+e+f) Grand Total ((1)+ 75,00, ,96,00, ,71,00, ,20, ,71,00, (2)+(3)+(4) # Based on shareholding as on September 11, 2003 $ Shareholding will depend on the response and acceptance in the Open Promoters have given an undertaking not to participate in the Offer. * Of the above, Integrated Holdings Limited holds 21,26,195 shares on September 11, 2003 representing 28.35% of the Equity share capital. 10

13 5.11 As on the specified date, as per available information, the total number of equity shareholders in SCUFL, in the public category was 11, RATIONALE FOR THE ACQUISITION AND OFFER 6.1 This Offer to the shareholders of SCUFL is made pursuant to regulation 10 of the Regulations consequent to the Preferential Issue of equity shares to SCIL as explained in paragraph above and for consolidation of and for substantial acquisition of equity shares without change in control or management. 6.2 SCUFL had identified opportunities to grow in the area of consumer durable financing and truck financing. To implement the same SCUFL needed a very significant jump in the Tier I capital from Rs. 7.5 crore to Rs crore. In view of the same and to further augment its working capital requirement SCUFL has made a Preferential Issue. The SCIL network of branches and agents will be utilized by SCUFL to expand its business activities of hire purchase and lease and will also be utilized in consumer durable financing. 6.3 SCIL does not intend to dispose of or otherwise encumber any asset of SCUFL except in the ordinary course of business. SCIL also undertakes not to sell, dispose of or otherwise encumber any substantial asset of SCUFL except with the prior approval of shareholders in the succeeding two years. 7. OFFER PRICE AND FINANCIAL ARRANGEMENTS 7.1 Justification for the Offer Price The Equity Shares of SCUFL are listed on the MSE, the CoSE and BSE The annualized trading turnover of SCUFL s Equity Shares during the preceding six calendar months prior to the month in which the Board Resolution authorizing the Preferential Issue dated July 29, 2003 was passed, i.e. January 1, 2003 to June 30, 2003 in each of the Stock Exchanges is as follows: Stock Total No. of Shares Total No. of Listed Annualized Trading Exchange Ttraded during 6 Shares Turnover (as % of calendar months prior to Total Shares Listed) the month in which the Board Resolution dated July 29, 2003 was passed MSE 96,750 75,00, % CoSE Nil 75,00,000 Nil (Source: Official Quotations from MSE and CoSE) Stock Total No. of Shares Total No. of Listed Annualized Trading Exchange traded for the period Shares Turnover (as % of July 2, 2003 to Total Shares Listed) July 28, 2003 prior to the Board Resolution dated July 29, 2003 was passed BSE* 60,681 75,00, % (Source: Official Quotations from BSE) * The period for the above calculation is July 2, 2003 to July 28, 2003 as SCUFL received listing permission on June 30, 2003 and the equity shares started trading from July 2, The Annualized Trading Turnover is computed on the basis of number of trading days (i.e. 19 days). Based on the above the Annualized Trading Turnover of the Equity Shares on the MSE and CoSE during the preceding six calendar months prior to the month in which the Board Resolution authorizing the Preferential Issue dated July 29, 2003, was passed, is less than 5% of the listed Equity Shares whereas the Annualized 11

14 Trading Turnover of the Equity Shares on the BSE for the period July 2, 2003 to July 28, 2003 (actual number of trading days) prior to the Board Resolution dated July 29, 2003 was passed, is more than 5% of the listed Equity Shares. The Equity Shares of SCUFL are therefore not infrequently traded on BSE and infrequently traded on MSE and CoSE within the meaning of explanation (i) to regulation 20(5) of the Regulations The daily high and low of the price of the Equity Shares of SCUFL, during the 2 weeks period ending July 28, 2003 (being the last trading day before the date of the Board Resolution authorizing the Preferential Issue), as recorded on the BSE are given below: Day. Date Daily Daily Average Daily No. High (Rs.) Low (Rs.) (Rs.) Volume , , , , , , , , ,375 2 Week Average Price of SCUFL The Offer price of Rs /- per fully paid-up Equity Share of SCUFL is justified in terms of regulation 20(4) and 20(5) of the Regulations, as it is the highest of: a. Negotiated Price under the agreement for acquisition of share or voting rights or deciding to acquire shares or voting rights Not applicable b. Highest Price paid by the Acquirer for acquisitions including by way of allotment in a public or rights or preferential issue during the 26 weeks prior to September 17, 2003 (i.e. the date of Public Announcement) c. The highest of the average of the weekly high and low of the closing prices for the equity shares of SCUFL for the 26 week period and the average of the daily high and low prices of the equity shares during the 2 week period prior to July 29, 2003 i.e. the date of the Board Resolution authorizing the Preferential Issue d. Other Parameters based on the audited accounts for year ended March 31, 2003 Pre Preferential Issue Post Preferential Issue Return on Networth (%) Book Value per share (Rs.) Earnings Per Share (Rs.) Price/Earnings Ratio Adjusted Book Value per share (Rs.)

15 1. Calculation of Adjusted Book Value per share Pre Preferential Issue Post Preferential Issue Share Holders Funds Equity Share Capital Reserves and Surplus Less: Unprovided Liabilities Incremental Deferred Tax Liability Contingent Liability on Account of Income Tax Miscellaneous Expenses Net Worth Number of Shares Book Value per share Value Per Share Parameters Value per share Weights Weighted Value (a) (b) per share (a) x (b) Market Based Value per share Earning Based Value per share (PECV) Net Asset Value per share (NAV) Total Value per share on a weighted basis (73.64/5) The Company is operating in Industry segment Finance & Investment with an industry PE of 7.00 (Source: Capital Market Volume XVIII/13 dated 14/09/03). The Industry PE is not strictly comparable as the Industry segment covered by the Capital Market consists of companies, which have varied and different businesses compared to SCUFL and also vary widely in terms of financial parameters with SCUFL. Mr. Nandu Redij of M/s. N.P. Redij & Co., Chartered Accountants, Mumbai (Membership No ) have vide their report dated January 13, 2004 stated that based on the decision of Hon ble Supreme Court of India in the case of Hindustan Lever Employees Union Vs Hindustan Lever Limited, 1995, (83 Com case 30) and precedences where weighted average has been used the Value Per Share on a weighted basis as per table above 2 would be Rs per share, considering the pre preferential Net Asset Value of SCUFL of Rs per share, the post preferential Earning Based Value per share (PECV) of Rs and Average Market Price of Rs per share for the 2 weeks prior to August 05, 2003 (i.e. 30 days prior to September 4, 2003 the date of AGM approving the Preferential Issue). Accordingly the valuation based on the above parameters works out to be Rs /- per equity share. Hence the Offer Price of Rs /- per share offered by SCIL to the shareholders of SCUFL under the proposed Offer is justified. The Acquirer presently holds 1,96,39,432 equity shares of the Target, which have been acquired through open market purchases and Preferential Issue. Out of the above holding, the Acquirer has acquired 39,432 equity shares of the Target, through open market purchases, during the 12 month period prior to the date of the Public Announcement i.e. September 17, The highest price paid by SCIL for these equity shares was Rs on July 02, 2003 and June 30, 2003 and the average price paid for these equity shares for the above period was Rs The Directors of the Acquirer have not acquired any Equity Shares of SCUFL including by public or rights or preferential issue in the last 26 weeks prior to the date of Public Announcement. 13

16 7.1.5 In view of the above and in the opinion of the Manager to the Offer, the Offer Price of Rs /- per fully paidup Equity Share of SCUFL is justified in terms of regulation 20(11) of the Regulation The Offer Price shall not be less than the highest price paid by the Acquirer for any acquisition of Equity Shares of SCUFL from the date of the Public Announcement upto 7 working days (i.e. upto February 16, 2004) prior to the date of Closure of the Offer (i.e. February 27, 2004). 7.2 Financial Arrangement for the Offer The maximum purchase consideration payable by the Acquirer in the case of full acceptance of the Offer (i.e. 54,20,000 fully paid-up Equity Shares of Rs. 10/- each at the rate of Rs per Equity Share) would be Rs. 8,31,97, The Acquirer has adequate and firm financial resources to meet the financial requirement and fulfill the obligations under the Offer. The Offer is being funded through internal accruals and borrowings The Acquirer has made a cash deposit of Rs. 8,31,970 (being 1% of the purchase consideration payable under this Offer) in the Escrow Account with HDFC Bank Limited, Maneckji Wadia Bldg., Ground Floor, Nanik Motwani Marg, Fort, Mumbai The Manager to the Offer has been empowered to operate the Escrow Account City Union Bank Limited having its Registered Office at 149, TSR Big Street, Kumbakonam has through its branch office at No. 67, Mandaveli Street, Mandaveli, Chennai issued a bank guarantee dated September 15, 2003 for Rs. 8,31,97,000 (being 100% of the purchase consideration payable under this Offer) in favour of Enam, the Manager to the Offer, on behalf of the Acquirer, to be enforced in the event of the Acquirer failing to meet their obligations under this Offer and the Regulations. This bank guarantee was valid upto February 03, City Union Bank Limited has extended this bank guarantee upto April 30, 2004 vide extension of Bank Guarantee dated January 19, Mr. Y. Prabhu of M/s. Y Prabhu & Co., Chartered Accountants, 45, Poes Road, Chennai (Membership no ), Tel.: (+91 44) have certified vide their letter dated January 20, 2004, that on the basis of necessary information and explanation given by the Acquirer and on verification of assets, liabilities, requirement of funds and the Bank Guarantee dated September 15, 2003 and extension of Bank Guarantee dated January 19, 2004 issued to Enam by City Union Bank Limited, the Acquirer has adequate resources to meet the financial requirements of the Open Offer The Manager to the Offer has been authorised to utilise the value of the Escrow arrangement in terms of regulation 28 of the Regulations The Manager to the Offer on the basis of the above confirms that it has satisfied itself that the Acquirer has the ability to implement the Offer in accordance with the Regulations as firm arrangements for funds and money for payment through verifiable means are in place to fulfil the Offer obligations. 8. TERMS AND CONDITIONS 8.1 The Acquirer had made a Public Announcement on September 18, 2003 for the Offer. This Offer is being made to all the equity shareholders of SCUFL other than the Acquirer, whose names appear on the Register of Members of SCUFL or on the beneficial record of the respective depositories, at the close of business on September 30, 2003 (the Specified Date ) and to also those persons except the Acquirer who own the equity shares at any time prior to the Closure of the Offer, but are not registered shareholders. The Letter of Offer together with Form of Acceptance cum Acknowledgement ( Form of Acceptance ), Form of Withdrawal (to be used only if shareholders wish to withdraw the equity shares tendered in the Offer) and transfer deed (for shareholders holding equity shares in the physical form) is being mailed to those shareholders whose names appear on the Register of Members of SCUFL and to the beneficial owners of Equity Shares of SCUFL whose names appear on the beneficial record of the respective depositories, at the close of business on September 30, 2003 (the Specified Date ). Owners of Equity Shares at any time prior to the Closure of the Offer but not registered as shareholder(s) are also eligible to participate in the Offer. No Letter of Offer will be mailed to the Acquirer. 14

17 8.2 The Offer will open on January 29, 2004 and close on February 27, The acceptance of the Offer is entirely at the discretion of the equity shareholders of SCUFL. Each shareholder of SCUFL to whom this Offer is being made, is free to offer his shareholding in SCUFL, in whole or in part while accepting the Offer. 8.4 The acceptance of the Offer must be unconditional and should be on the enclosed Form of Acceptance and sent alongwith the other documents as mentioned under paragraph 9.2 and 9.3 below, duly filled in and signed by the applicant shareholder(s). 8.5 Shareholders who have accepted the Offer by tendering the requisite documents, in terms of the Public Announcement/ Letter of Offer, can withdraw the same up to three working days prior to the date of Closure of the Offer. 8.6 The instructions, authorisations and provisions contained in the Form of Acceptance and the Form of Withdrawal constitute an integral part of the terms of this Offer. 8.7 Accidental omission to dispatch this Letter of Offer or any further communication, to any person to whom this Offer is made or the non-receipt of this Letter of Offer by any such person shall not invalidate the Offer in any way. 8.8 Equity Shares tendered under this Offer should be free from any charge, lien or encumbrance of any kind whatsoever. 8.9 Incase the Acquirer decides to revise the Offer Price of Shares/ No. of equity shares upwards, such upward revision will be made in accordance with regulation 26 of the Regulations, not later than February 16, 2004, which is 7 (Seven) working days prior to the date of Closure of the Offer. If the Offer Price is revised upward, such revised price will be payable to all shareholders who have accepted the Offer and submitted their Equity Shares at any time during the period between the date of Opening of the Offer and the date of Closure of the Offer to the extent that their Shares have been verified and accepted by the Acquirer. The same would be informed by way of public announcement in the same newspapers where the original Public Announcement appeared If there is a competitive offer/ bid: l l The public offers under all the subsisting bids shall close on the same day; As the Offer Price cannot be revised during 7 working days prior to the date of Closure of the Offer/bid, it would therefore, be in the interest of the shareholders to wait till the commencement of that period to know the final Offer Price of each offer/ bid and tender their acceptance accordingly The Acquirer will not be responsible in any manner for any loss of Equity Share Certificate(s) and other documents during transit. The Equity Shareholders of SCUFL are therefore advised to adequately safeguard their interest in this regard Statutory Approvals: The Offer is subject to receipt of the permission from RBI under FEMA to acquire Equity Shares tendered by NRI(s), OCB(s) and FII(s) registered with SEBI (jointly referred to as Non-resident Shareholders ) in this Offer. The Acquirer will make the necessary application to RBI on behalf of Non-resident shareholders after the Closure of the Offer As of the date of this Letter of Offer, to the best of knowledge of the Acquirer there are no other statutory approvals required to implement the Offer other than those indicated in this Letter of Offer. The Offer is not subject to the approvals from Financial Institutions/Banks who have provided loans or financial assistance, as applicable. If any other statutory approvals become applicable prior to the completion of the Offer, the Offer would be subject to such statutory approvals. The Acquirer will not proceed with the Offer in the event that such statutory approvals are not obtained In case of delay in receipt of any statutory approvals SEBI may, if satisfied that non-receipt of requisite statutory approvals was not due to any willful default or neglect of the Acquirer or failure of the Acquirer to diligently pursue the applications for such approvals, grant extension of time for the purpose, subject to the Acquirer agreeing to pay interest to the shareholders for delay beyond 30 days, as may be specified by SEBI from time to time, in accordance 15

18 with regulation 22(12) of the Regulations. Where the Acquirer fails to obtain the requisite statutory approvals in time on account of willful default or neglect or inaction or non-action on his part, the amount lying in the escrow account shall be liable to be forfeited and dealt in the manner provided in regulation 28(12)(e) of the Regulations, apart from the Acquirer being liable for penalty as provided in the Regulations In case, RBI s approval for acquisition of Equity Shares from non-resident shareholders is unduly delayed, the Acquirer reserve the right to proceed with the payment to the resident shareholders whose Equity Shares have been accepted by the Acquirer in terms of this Offer, pending payment to the Non-resident shareholders subject to total consideration payable to the non-resident shareholders being deposited in the escrow/ special account with a lien marked in favour of the Manager to the Offer Pursuant to regulation 13 of the Regulations the Acquirer has appointed Enam Financial Consultants Pvt. Ltd., Mumbai as Manager to the Offer and MCS Limited as Registrars to the Offer. 9. PROCEDURE FOR ACCEPTANCE AND SETTLEMENT 9.1 Shareholders of SCUFL, other than the Acquirer who wish to avail this Offer should forward the under mentioned documents, by hand delivery on days and during the business hours mentioned below, at any of the collection centres listed below, or by registered post to the Registrars to the Offer, MCS Ltd., (Unit: SCUFL Open Offer) at their office at MCS Ltd., Sri Venkatesh Bhavan, Plot No. 27, Road No. 11, M.I.D.C., Andheri (East), Mumbai Tel.: (+91 22) Fax: (+91 22) mcsmum@vsnl.com; Contact Person: Ashok Gupta, so as to reach the Registrars on or before February 27, (i.e. the date of Closure of the Offer). Name & Address of the Contact Person Mode of Telephone No. Fax No. Collection Centre Delivery MCS Limited Mr. Mahendra Singh Hand Delivery , Shatdal Complex, 1st Floor, Opp. Bata Showroom, Ashram Road, Ahmedabad MCS Limited Mr. Kamlesh Jain Hand Delivery C/o Meenakshi Investments, 703, B Wing, 7th Floor, Mittal Tower, M G Road Bangalore MCS Limited Mr. N Swaminathan Hand Delivery New No.118 Old No.59, 1st Floor, Moore Street George Town, Chennai MCS Limited Mr. Hiren Desai Hand Delivery C/o NIDHI [Financial Consultants], New No.15, Old No. 9, East Periaswamy Road, R.S. Puram, Coimbatore MCS Limited Mr. V B S Prasad Hand Delivery C/o Mr. V B S Prasad, , Sheela Nilayam, Street No.9, Ashok Nagar, Hyderabad