ABRIDGED LETTER OF OFFER CONTAINING SALIENT FEATURES OF THE LETTER OF OFFER

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1 ABRIDGED LETTER OF OFFER CONTAINING SALIENT FEATURES OF THE LETTER OF OFFER A TATA Enterprise Abridged Letter of Offer Dated May 25, 2011 For Equity Shareholders of the Company Only (Originally incorporated as a public limited company under the Companies Act, 1956 on March 13, 1990 as JBM Tools Limited and subsequently, on August 1, 2003, the name was changed to Automotive Stampings and Assemblies Limited.) Registered Office: G-71/2, MIDC Industrial Area, Bhosari, Pune ; Tel.: Fax: ; cs@autostampings.com; Website: The Registered Office of Our Company was shifted from Chiranjiv Tower, 43, Nehru Place, New Delhi to 703 B-704, 89, Hemkunt Chambers, Nehru Place, New Delhi effective July 1, It was further shifted from 703 B-704, 89, Hemkunt Chambers, Nehru Place, New Delhi to its present location at G-71/2, MIDC Industrial Area, Bhosari, Pune effective June 8, Please refer to page no. 37 of the Abridged Letter of Offer for details of change in registered office of our Company. Contact Person: Mr. Shailendra Dindore, Company Secretary and Compliance Officer ISSUE OF 56,65,856 FULLY PAID-UP EQUITY SHARES OF RS. 10 EACH OF OUR COMPANY FOR CASH AT A PRICE OF RS. 52 (INCLUDING A SHARE PREMIUM OF RS. 42) PER EQUITY SHARE AGGREGATING TO RS MILLION ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF 5 FULLY PAID-UP EQUITY SHARES FOR EVERY 9 FULLY PAID-UP EQUITY SHARES HELD ON THE RECORD DATE, i.e. JUNE 10, THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 PER EQUITY SHARE. THE ISSUE PRICE OF RS. 52 IS 5.2 TIMES THE FACE VALUE OF THE EQUITY SHARES. FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY PROMOTER The Promoter of our Company is Tata AutoComp Systems Limited. GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India ( SEBI ) nor does SEBI guarantee the accuracy or adequacy of this document. Special attention of Investors is invited to the statement of Risk Factors of the Abridged Letter of Offer before making an investment in this Issue. ISSUER S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that the Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in the Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes the Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of our Company are listed on Bombay Stock Exchange Limited ( BSE ) and The National Stock Exchange of India Limited ( NSE ). We have received in-principle approval from BSE and NSE for listing of Equity Shares arising from this Issue vide their letters dated June 1, 2010 and June 2, 2010 respectively. For the purpose of this Issue, the Designated Sock Exchange is Bombay Stock Exchange Limited. LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE PL CAPITAL MARKETS PRIVATE LIMITED 3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai Tel: ; Fax: asal_rights@plindia.com Investors Grievances redressal@plindia.com Contact Person: Mr. Ajesh Dalal /Mr. Ghanshyam Kapadia Website: SEBI Registration No.: INM ISSUE OPENS ON LINK INTIME INDIA PRIVATE LIMITED C-13, Pannalal Silk Mills Compound, LBS Road, Bhandup (West) Mumbai Tel: ; Fax: asal.rights@linkintime.co.in Contact Person: Mr. Nilesh Chalke Website: SEBI Registration No.: INR ISSUE PROGRAMME LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON Monday, June 20, 2011 Wednesday, June 29, 2011 Friday, July 8, 2011

2 GENERAL INSTRUCTIONS Applicants are advised to read the Letter of Offer and the information contained in this Abridged Letter of Offer carefully and satisfy themselves of the disclosures before making an application for subscription. For a copy of the Letter of Offer, the applicant may request the Company and/ or the Registrars to the Issue. Further, investors are advised to retain the copy of this Abridged Letter of Offer for their future reference. OVERSEAS SHAREHOLDERS The distribution of the Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession the Letter of Offer may come are required to inform themselves about and observe such restrictions. The Company is making this Issue of Equity Shares on a rights basis to the Equity Shareholders of the Company and will dispatch the Abridged Letter of Offer and Composite Application Form ( CAF ) to the shareholders who have an Indian address. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Letter of Offer has been filed with SEBI for observations. Accordingly, the Equity Shares may not be offered or sold, directly or indirectly, and the Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of the Letter of Offer and/or Abridiged Letter of Offer and/or CAF will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, the Letter of Offer and/or Abridiged Letter of Offer and/or CAF must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of the Letter of Offer and/or Abridiged Letter of Offer and/or CAF should not, in connection with the issue of the Equity Shares or the Rights Entitlements, distribute or send the Letter of Offer and/or Abridiged Letter of Offer and/or CAF in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If the Letter of Offer and/or Abridiged Letter of Offer and/or CAF are received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Equity Shares or the Rights Entitlements referred to in the Letter of Offer. Neither the delivery of the Letter of Offer and/or Abridiged Letter of Offer and/or CAF nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date. Neither the delivery of the Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date. European Economic Area Restrictions: In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State ), an offer of the Equity Shares to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to the Equity Shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that an offer of Equity Shares to the public in that Relevant Member State at any time may be made: to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than Euro 4,30,00,000 and (3) an annual net turnover of more than Euro 5,00,00,000, as shown in its last annual or consolidated accounts; or in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive. Provided that no such offer of Equity Shares shall result in the requirement for the publication by the Company pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an offer to the public in relation to any Equity Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or subscribe the Equity Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State. This European Economic Area selling restriction is in addition to any other selling restriction set out below. 2

3 United Kingdom Restrictions: This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom, or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order ), or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as relevant persons ). The Equity Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such Equity Shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. NO OFFER IN THE UNITED STATES: The rights and the securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act ), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the United States or U.S. ) or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act ( Regulation S )), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in the Letter of Offer are being offered in India, but not in the United States. The offering to which the Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Equity Shares or rights. Accordingly, the Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time. Neither the Company nor any person acting on behalf of the Company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who the Company or any person acting on behalf of the Company has reason to believe is, either a U.S. person (as defined in Regulation S) or otherwise in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer under the Letter of Offer, and all persons subscribing for the Equity Shares and wishing to hold such Equity Shares in registered form must provide an address for registration of the Equity Shares in India. The Company is making this issue of Equity Shares on a rights basis to Equity Shareholders of the Company and the Letter of Offer and CAF will be dispatched to Equity Shareholders who have an Indian address. Any person who acquires rights and the Equity Shares will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United States when the buy order is made, (ii) it is not a U.S. person (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States, and (iii) is authorized to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations. The Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set out in the CAF to the effect that the subscriber is not a U.S. person (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the Equity Shares in compliance with all applicable laws and regulations; (ii) appears to the Company or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian address is not provided; or (iv) where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and the Company shall not be bound to allot or issue any Equity Shares or Rights Entitlement in respect of any such CAF. SUMMARY OF THE ISSUE Equity Shares proposed to be issued by our Company on rights basis Rights Entitlement for Equity Shares 56,65,856 Equity Shares Record Date Friday, June 10, 2011 Issue Opens on Monday, June 20, 2011 Issue Closes on Friday, July 8, 2011 Issue Price per Equity Share Rs. 52 In the ratio of 5 fully paid-up Equity Shares for every 9 fully paidup Equity Shares held on the Record Date Terms of Payment 100% of the Issue Price i.e. Rs. 52 per Equity Share to be paid on application Equity Shares outstanding prior to the Issue 1,01,98,541 Equity Shares Equity Shares outstanding after the Issue 1,58,64,397 Terms of the Issue For more information, please refer to Issue Related Information beginning on page no. 64 of the Abridged Letter of Offer 3

4 I. GENERAL INFORMATION Dear Equity Shareholder(s), Pursuant to the resolutions passed by the Board of Directors of our Company at its meeting held on October 23, 2009, it has been decided to make the following offer to the Equity Shareholders of the Company, with a right to renounce: ISSUE OF 56,65,856 FULLY PAID-UP EQUITY SHARES OF RS.10 EACH FOR CASH AT A PRICE OF RS. 52 (INCLUDING A SHARE PREMIUM OF RS. 42) PER EQUITY SHARE AGGREGATING TO RS MILLION ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF OUR COMPANY IN THE RATIO OF 5 FULLY PAID-UP EQUITY SHARES FOR EVERY 9 FULLY PAID-UP EQUITY SHARES HELD ON THE RECORD DATE, i.e. JUNE 10, THE FACE VALUE OF THE EQUITY SHARES IS RS. 10 PER EQUITY SHARE. THE ISSUE PRICE OF RS. 52 IS 5.2 TIMES THE FACE VALUE OF THE EQUITY SHARES. Registered Office of Our Company Automotive Stampings and Assemblies Limited G-71/2, MIDC Industrial Area, Bhosari, Pune , Maharashtra, India Tel: ; Fax: cs@autostampings.com; Website: Registration No.: Company Identification No.: L28932PN1990PLC The equity shares of our Company are listed on BSE and NSE. Address of Registrar of Companies Registrar of Companies, Pune PMT Commercial Building, Pune Stock Exchange, 3rd Floor, Deccan Gymkhana, Pune Company Secretary and Compliance Officer Mr. Shailendra Dindore Automotive Stampings and Assemblies Limited G-71/2, MIDC Industrial Area, Bhosari, Pune Tel: ; Fax: cs@autostampings.com Investors may contact the Compliance Officer for any pre-issue / post-issue related matters. Lead Manager to the Issue PL Capital Markets Private Limited 3rd Floor, Sadhana House, 570 P. B Marg, Behind Mahindra Tower, Worli, Mumbai Tel: ; Fax: asal_rights@plindia.com Investors Grievances redressal@plindia.com Contact Person: Mr. Ajesh Dalal /Mr. Ghanshyam Kapadia Website: SEBI Registration No.: INM Legal Advisor to the Issue M/s. ANS Law Associates Advocates & Solicitors 41-A Film Center, 68, Tardeo Road, Mumbai Tel: ; Fax:

5 Contact Person: Mr. Sharad D. Abhyankar Registrar to the Issue Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai Tel: ; Fax: asal.rights@linkintime.co.in Contact Person: Mr. Nilesh Chalke Website: SEBI Registration No.: INR Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer of our Company in case of any pre-issue/post issue related problems such as non-receipt of CAF/Abridged Letter of Offer/Letters of Allotment/ Equity Share certificate(s)/ refund orders etc. Bankers to the Issue HDFC Bank Limited I Think Techno Campus, 3 rd Floor, Next to Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai Tel: ; Fax: Contact Person: Mr. Deepak Rane deepak.rane@hdfcbank.com Website: SEBI Registration No.: INBI Self Certified Syndicate Banks The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI link. Auditors of the Company M/s. Price Waterhouse Chartered Accountants Muttha Towers, 5th Floor, Suite No. 8, Airport Road, Yerwada, Pune Tel: ; Fax: Registration No. of the firm with ICAI: E Contact Person: Mr. Jeetendra Mirchandani, Partner jeetendra.mirchandani@in.pwc.com Membership No.: F Credit Rating: This Issue being an issue of equity shares, credit rating is not required. IPO Grading: This Issue being a rights issue, grading is not mandatory. Debenture Trustee: This Issue being an issue of equity shares, appointment of debenture trustee is not required. Monitoring Agency: In terms of Regulation 16 of the SEBI (ICDR) Regulations, we are not required to appoint a monitoring agency in relation to the Issue. Appraising Entity: Not applicable Book Building Process Details: Not applicable Impersonation: As a matter of abundant caution, attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: 5

6 Any person who (a) makes in a fictitious name an application to a company for acquiring, or subscribing for, any shares therein, or (b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name shall be punishable with imprisonment for a term which may extend to five years. Underwriting Details: The Company has entered into an underwriting agreement dated May 25, 2011 ( Underwriting Agreement ) with PL Capital Markets Private Limited ( Underwriter ) for underwriting the Equity Shares offered through this Issue for a maximum amount up to Rs Million as given in the table below. In terms of the Underwriting Agreement, the Underwriters shall, except to the extent of the subscription by TACO, the Promoter, to its entitlements of Equity Shares in full ( Promoter Subscription ) and any subscription received from the Company s public shareholders other than Promoter Subscription, be responsible for bringing in a shortfall, if any, at a price of Rs. 52 per Equity Share. Name and Address of the Underwriters Number of Equity Shares Underwritten Underwritten Amount (Rs. in Mn.) PL Capital Markets Private Limited 14,16, In the opinion of the Board of Directors, the resources of the Underwriter are sufficient to enable it discharge it s underwriting obligations in full. Minimum Subscription: If the Company does not receive the minimum subscription of ninety percent of the issue including the devolvement upon the Underwriters, if any, the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the Issue. If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), the Issuer will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, RISK FACTORS An investment in equity shares involves a high degree of risk. You should carefully consider all the information in the Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, results of operations and financial condition could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. The financial and other implications of material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are a few risk factors where the impact is not quantifiable and hence the same has not been disclosed in such risk factors. The numbering of risk factors has been done to facilitate ease of reading and reference and signifies the materiality. The Letter of Offer also contains forward looking statements that involve risks and uncertainties. The Company s actual results could differ materially from those anticipated in these forward statements as a result of certain factors, including the considerations described below and elsewhere in the Letter of Offer. Unless otherwise stated in the relevant risk factors set forth below, we are not in a position to specify or quantify the financial or other risks mentioned herein. Internal Risk Factors 1. Our Company is involved in a number of legal proceedings. Our Company is involved in 16 cases of legal proceedings and claims in relation to civil and taxation matters and 157 cases of legal proceedings and claims pertaining to the Labour laws incidental to our business and operations. These proceedings and claims are related to Income Tax (5 cases), Excise (7 cases), Sales Tax (1 case), Service Tax (2 cases), Labour laws (157 cases) and Civil (1 case). These legal proceedings are pending at different levels of adjudication before various appellate authorities, courts and tribunals. Should any new developments arise, such as a change in Indian law or rulings against us by trial or appellate authorities, courts or tribunals, we may need to make provisions in our financial statements, which could increase our expenses and our current liabilities. We can give no assurance that these legal proceedings will be decided in our favour. Any adverse decision may have a significant effect on our business and results of operations. 6

7 A classification of the legal proceedings instituted by and against our Company and the monetary amount involved in these cases is given in the following table: Type of Total number of Remarks and amount involved litigation pending cases Income Tax 5 Rs Mn (Disputed amounts - The liability may be the Tax on the said amount after quantification). Our Company has already provided for/paid the liability on the disputed amount of Rs Mn. Excise Cases 7 Rs Mn (approximately, as in some cases the amount is not quantified) in respect of pending litigations before various adjudication and Appellate Authorities Sales Tax 1 Rs Mn Service Tax 2 Rs Mn along with interest and penalty thereon Labour laws 157 Rs Mn, in respect of cases filed by the Contract Labourers of the Company for reinstatement with back wages. Civil Case 1 Rs Mn. In addition to the aforementioned litigation, we have also received several Show Cause Notices from various regulatory/governmental authorities. For more information regarding litigation and Show Cause Notices, please refer to Legal & Other Information starting from page no. 45 of the Abridged Letter of Offer. 2. Cases filed against our Promoter and Group Companies. Tata AutoComp Systems Limited, our Promoter and some of our Group Companies are involved in 29 and 75 legal proceedings pending at different levels of adjudication before various appellate authorities, courts and tribunals respectively. We can give no assurance that these legal proceedings will be decided in the favour of our Promoter and/or our Group Companies. Cases against our Promoter Type of Total number of Remarks and amount involved litigation pending cases Income Tax 7 Rs Mn (Disputed amount - The liability may be the Tax on the said amount after quantification) Rs Mn (Disputed tax liability) Sales Tax & 6 Rs Mn (Disputed Tax liability). Excise Tax Labour Laws 9 Rs Mn Demand Notices/Others 7 Rs Mn (others not quantifiable) Cases against our Promoter Group Type of Total number of Remarks and amount involved litigation pending cases Direct Taxes 11 Rs Mn (Disputed amount- The liability may be the Tax on the said amount after quantification) Rs Mn (Disputed tax liability) Indirect Taxes Mn along with interest and penalty thereon, if any. Labour laws 14 Rs Mn along with any other amounts that may be imposed by the respective Courts. Civil Cases 6 Rs 7.58 Mn Notices and other demands 22 One case has amount involved of around Rs Mn and others are not quantifiable. For more information regarding litigation, please refer to Legal & Other Information beginning on page no. 45 of the Abridged Letter of Offer. 3. Accumulated losses incurred by Tata AutoComp Systems Limited ( TACO ), our Promoter has resulted in a significant erosion of its net worth and making it a potentially sick industrial company 7

8 in the past. Our company cannot assure you that TACO will be able to restore or maintain its net worth in the future. The Net worth of TACO, our Promoter, had eroded to the extent of 50% of the peak net worth by the end of financial year ended March 31, 2009 thereby making it as a potentially sick company, thereby mandating intimation under Section 23 of the Sick Industrial Companies (Special provisions) Act, 1985 (SICA) to Board for Industrial & Financial Reconstruction (BIFR). TACO has intimated the fact of such erosion to BIFR as required under SICA on November 4, However, no reference has been made by TACO to BIFR to be declared as a sick company. Thus TACO is not a sick company within the meaning of Sick Industrial Companies (Special Provisions) Act, Our company cannot assure you that TACO will be able to restore or maintain its net worth in the future. For further details please refer to the section titled Our Promoter starting at page no. 42 of the Abridged Letter of Offer. 4. We significantly depend on a single customer. We have a long standing relationship with Tata Motors Limited ( TML ). TML accounted for approximately 64.90% and 64.91% of our total net sales for the nine months ended December 31, 2010 and in Fiscal 2010 respectively. Moreover, our new plant at Pantnagar is catering exclusively for TML. We do not have any long term contract with TML and therefore, cannot assure you that we would be able to maintain our sales to TML at the current level, neither can we assure that TML will continue to source its requirement from us. In the event that TML decides to procure its requirements from other suppliers, our revenues and profitability may be adversely affected. 5. We are dependent on vendors for supply of raw materials, components and consumables used in the manufacture of our products. We depend on external suppliers for the supply of raw materials, components and other parts for our products. We currently have seventy five major vendors in India. We generally source our basic raw material, steel, from a limited number of vendors on account of various economic and logistical considerations. As a result, we have a high vendor concentration. For the nine months ended December 31, 2010 and in Fiscal 2010, the share of our top five suppliers was as high as about 51.97% and 61.10% respectively, of the total raw materials purchased. If the vendors increase the prices of raw material and other inputs and we are unable to pass on this increase in cost to our customers, our profitability will be impacted. Historically, in the automotive components industry, the ability to pass on such increased input cost to the customers has been limited. Further, in the event such vendors discontinue to supply or fail to adhere to our technical specifications, quality requirements and delivery schedules for any reason whatsoever, we may have temporary stoppages of production till alternate arrangements are made. Such temporary stoppages may affect our business and profitability. There can be no assurance that we will be in a position to develop an alternate supplier in a timely or cost efficient manner. 6. We have had negative cash flows in some of the years. In some of the earlier years, we had a negative cash flow primarily because of our investment activities; in addition to this, in the nine months ended December 31, 2010 too we have negative cash flow primarily because of our investment activities, as shown in the following table (figures are from the Restated Financial Statement) (Rs. in Mn) Particulars Nine months ended December 31, 2010 Fiscal 2010 Fiscal 2009 Fiscal 2008 Fiscal 2007 Fiscal 2006 Net cash from operating activities Net cash from/ (used in) investment activities (158.51) (55.46) (149.59) (541.80) (126.90) (76.22) Net cash from/(used in) financing activities (61.65) (273.97) (28.26) (153.37) (58.45) Net increase/(decrease) in cash (118.71) (95.23)

9 Particulars & cash equivalents Nine months ended December 31, 2010 Fiscal 2010 Fiscal 2009 Fiscal 2008 Fiscal 2007 Fiscal 2006 This trend, if it continues, will require us to raise finance from outside, which we may not be able to raise at an economic rate or at all. In such case, our project may face delays or our interest cost may increase or our cash liquidity position may be adversely affected, which can have a material adverse effect on our business, results of operations and financial condition. 7. Some of our Group Companies have incurred losses during the last three years. Some of our Group Companies has incurred losses during last three years, as set forth in the tables below Name of the Group Company (Rs. in Mn) For the financial year ended March TACO Composites Limited ( TACOCL ) (Formerly known as Automotive Composite Systems (International) Limited or ACSI) (96.11) (209.73) TACO Hendrickson Suspensions Private Limited - (38.14) (11.37) Tata AutoComp GY Batteries Limited (60.17) (366.69) (338.98) TACO Sasken Automotive Electronics Limited (9.29) (80.52) (50.50) Tata Yazaki Autocomp Limited (198.80) (57.61) Tata Ficosa Automotive Systems Limited 5.19 (125.72) (121.15) Tata Nifco Fasteners Limited (0.01) (0.09) (0.05) Tata AutoComp Systems Limited 418 (1,925) 409 TACO Holdings (Mauritius) Limited* (124.92) (1,084.20) 4.48 * The amounts shown for TACO Holdings (Mauritius) Limited have been converted into INR based on the applicable foreign exchange rates as on February 28, 2011 (Conversion rate as on February 28, 2011: 1 Euro = INR). Tata Yazaki Autocomp Limited informed BIFR on November 27, 2009 that it has became a potentially sick industrial company under the provisions of section 23 of SICA. TACO Composites Limited has on October 4, 2008 filed a Reference to the BIFR informing that it has become sick industrial company under SICA. For further details of our Group Companies, please refer to Our Group Companies of the Letter of Offer. 8. Our industry is competitive and increased competitive pressure may adversely affect the results of our operations. The market for automotive component manufacturers is highly competitive, and we expect competition to intensify and increase from a number of sources. We believe that the principal competitive factors in our markets are price, service quality, sales and marketing skills, the ability to manufacture customized products, technological and industry expertise. We face significant competition from several entities located in India and several other countries. We cater to OEM market and replacement markets for the sheet metal component industry. In this industry, several existing players are present and there are no entry barriers. The market is very price sensitive and we face stiff competition from the unorganized sector that is able to compete at lower prices. We may not be able to match the price provided by the unorganized sector which would limit the growth potential. Some of the existing and future competitors may have greater financial, personnel and other resources, longer operating histories, a broader range of product offerings, greater technological expertise, more recognizable brand names and more established relationships in industries that we currently serve or may serve in the future. 9

10 In addition, some of our competitors may enter into strategic or commercial relationships among themselves or with larger, more established companies in order to increase their ability to address client needs, or enter into similar arrangements with potential clients. Increased competition, our inability to compete successfully against competitors, pricing pressures, loss of market share could have a material adverse effect on our business, results of operations, financial condition and cash flows. 9. Our future growth will be contingent upon our ability to finance our working capital requirements. Our business is working capital intensive. Historically, we met our working capital requirement through bank borrowings since in some of the yesteryears, our operational cash flow was not sufficient enough to run our operations. Since we propose to expand the capacity of our existing plant at Pantnagar, our working capital requirement is expected to increase on commencement of operation of the additional capacity. Further, if our average credit period gets reduced and/or our collection period increases for any reason whatsoever, our working capital requirement will increase for the given scale of operations. We cannot assure you that we will be able to raise funds from external sources at a competitive rate or at all to finance the increased working capital requirement which in turn may adversely affect our future growth. 10. The objects of the Issue for which funds are being raised have not been appraised by any bank or financial institution. The deployment of funds in the project is entirely at our discretion, based on the parameters as mentioned in the Objects of the Issue. The fund requirement and deployment, as mentioned in the Objects of the Issue beginning on page no. 26 of the Abridged Letter of Offer, is based on the estimates of our project department and has not been appraised by any bank or financial institution. The fund requirement as detailed below is based on our current business plan. We cannot assure that the current business plan will be implemented in its entirety. In view of the highly competitive and dynamic nature of the industry in which we operate, we may have to revise our business plan from time to time and consequently our fund requirement. The deployment of the funds towards the Objects of the Issue is entirely at the discretion of our Board of Directors and is not subject to monitoring by an external independent agency. Further, we cannot assure that the actual costs or schedule of implementation of the proposed expansion of the manufacturing facility at our Pantnagar Plant will not vary from the estimated costs or schedule of implementation, and such variance may be on account of one or more factors, some of which may be beyond our control. 11. There were shortfalls in our performance, when compared to the promises made in our last rights issue. We made a rights issue in the year 1996 and had made certain projections in that issue. We could not achieve those projections. For further details, please refer to Promise vs. Performance on page no. 60 of the Abridged Letter of Offer. 12. We do not have long term contracts with most of our customers. We do not have long term contracts with most of our customers. Typically, we sell our products on the basis of purchase orders. In the absence of any long term contract, we cannot assure you that our present customers will continue to procure their requirement from us. In case they decide not to procure from us, we may not be able to find new customers at a comparable profit margin, or at all. As a result, our business, results of operations and financial condition could suffer. 13. We are subject to risks associated with product warranty, which could adversely affect our business, results of operations and financial condition. Defects, if any, in some of our products could require us to undertake service actions. These actions could require us to expend considerable resources in correcting these problems and could adversely affect demand for our products. Our Company may also suffer claims for penalties under the conditions of certain contracts. Further, if a vendor fails to meet quality standards, it could expose us to warranty claims. In defending these claims, we could incur substantial costs and receive adverse publicity. As a result, our business, results of operations and financial condition could suffer. 10

11 14. Our Company uses the phrase A Tata Enterprise by virtue of a Tata Brand Equity and Business Promotion Agreement with Tata Sons Limited which requires it to meet certain conditions on a continuous basis. Our Company has executed a Tata Brand Equity and Business Promotion Agreement dated May 24, 2006 with Tata Sons Limited, pursuant to which we are permitted to use the by-line A Tata Enterprise on the terms and conditions stated therein including compliance with the Tata Group s code of conduct. Our Company cannot provide any assurance that Tata Sons Limited will continue with the Tata Brand Equity and Business Promotion Agreement which may adversely affect our Company s business. Our Company has made the payment of Rs 3.29 Mn, Rs. NIL and Rs Mn in the Financial Year 2008, 2009 and 2010 respectively to Tata Sons Limited as per the terms & conditions of the said agreement. For details of the key terms and conditions of the said agreement, please refer to section titled History and Corporate Structure on page no. 37 of the Abridged Letter of Offer. 15. If we are unable to implement or manage our growth strategies in a timely manner, our business and results of operations could be adversely affected. We have adopted certain growth strategies and capacity expansion of our existing plants. All these projects involve risks and accordingly, there can be no assurance that we will be able to complete our plans on schedule within budget or at all. If due to changes in market conditions, our operations cannot generate sufficient funds or for any other reason we decide to delay, modify or forego some aspects of our growth strategies, our future results of operations may be adversely affected. 16. Our inability to attract, recruit and retain skilled personnel could adversely affect our business and results of operations. Our ability to meet future business challenges depends on our ability to attract, recruit and retain talented and skilled personnel. We are highly dependent on our senior management, our Directors and other key personnel, including skilled project management personnel. A significant number of our employees are skilled engineers and we face strong competition to recruit and retain skilled and professionally qualified staff. Due to the limited pool of available skilled personnel, competition for senior management and skilled engineers in our industry is intense. We may experience difficulties in attracting, recruiting and retaining an appropriate number of managers and engineers for our business needs. We may also need to increase our pay structures to attract and retain such personnel. Our future performance will depend upon the continued services of these persons. The loss of any of the members of our senior management, our Directors or other key managerial personnel or an inability to manage the attrition levels in different employee categories may materially and adversely impact our business and results of operations. 17. The attrition rate in our Company is high The attrition rate in our Company has historically been high. The attrition rate in our Company was 23.12%, 20.45% and 29.11% in the Financial Year 2010, 2009 and 2008 respectively. We cannot assure you that we will be able to bring down the attrition rate. In case we cannot bring down the attrition rate, we will be required to allocate greater resources for training of new personnel which could have an adverse impact on our financial condition. 18. Work stoppages and other labour related problems could adversely affect our business. The operations of our Company are labour intensive. Wage costs in India have historically been significantly lower than wage costs in western countries, which has been one of our competitive advantages. However, by and large, wages in India are increasing at a faster rate than in the developed countries, which may reduce our competitive advantage in relation to pricing. We may need to increase the levels of employee compensation more rapidly than in the past to attract necessary talent. If we are unable to negotiate with the workmen or the contractors, it could result in work stoppages or increased operating costs as a result of higher than anticipated wages or benefits. Further, we have labour unions at our manufacturing units at Bhosari and Chakan. If there is any dispute between the unions and the management, it might affect the operations and profitability. The manufacturing of sheet metal auto components, involve hazards that could result in fires, explosions, spills, and other unexpected or dangerous conditions or accidents. Manufacturing facilities are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output, efficiency, obsolescence, labour disputes, strikes, lock-outs, non-availability of services of our external contractors etc. In the event that we are forced to shut down any of our manufacturing facilities for a significant period of time, it would have a material adverse effect on our earnings, our other results of operations 11

12 and our financial condition as a whole. Occurrence of accidents at any of our manufacturing facilities may expose our Company to pay compensation and penalty to our workmen and third parties for any losses or damage to human life/health or the environment 19. We have certain contingent liabilities. As per our audited Balance Sheet as on December 31, 2010, contingent liabilities are as follows - (Rs. in Mn) Particulars Amount Bills discounted not matured Claims against the Company not acknowledged as Debts 2.26 In the event the above contingent liabilities materialize, it may have an adverse effect on our financial performance. 20. Our insurance coverage may not adequately protect us against certain operating hazards and this may have a material adverse effect on our business. Our assets are insured against hazards such as fire, burglary and business interruption. The assets covered include all parts of buildings, all plant and machinery, utilities, office equipments, stocks, finished & semifinished goods and stores & spares. While we believe that the insurance coverage which we maintain is reasonably adequate to cover all normal risks associated with the operation of our business, there can be no assurance that any claim under the insurance policies maintained by us will be honoured on time fully or in part or at all. To the extent that we may suffer loss or damage that is not covered by insurance or exceeds our insurance coverage, our results of operations and cash flow may be adversely affected. 21. We may not be able to keep pace with technological changes and develop new products and as a result, our competitive position may suffer. The markets in which our businesses operate can experience significant changes due to the introduction of innovative technologies. To remain competitive and to meet our customers needs in these businesses, we must continuously design new products and invest in and develop new technologies or manufacturing processes. Our sales and profits would suffer if we invest in technologies or manufacturing processes that do not function as expected, or if our products become obsolete. 22. Our product offering is limited Our product offering is limited. We produce only sheet metal stampings, welded assemblies and modules for the automotive industry. This segment is highly fragmented and competitive and therefore, offers low profit margin. Further, on account of this limited product portfolio, our ability to exploit various market opportunities, to absorb any shock on account of technological change and/or increase in raw material price is limited. 23. Our business is dependent on our manufacturing facility and the loss of or shutdown of the facility could adversely affect our business. A significant portion of our business is dependent on smooth production of sheet metal automotive components at our various plants; and therefore, are subject to various operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, labour disputes, natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. Any significant operational problem, loss or shutdown of the manufacturing facility for an extended period of time could adversely affect our business, result of operation and financial condition. 24. As a manufacturing business, our success depends on the continuous supply and transportation of our products from our manufacturing units to our customers, which are subject to various uncertainties and risks. We depend on trucking to deliver our products from our manufacturing facilities to our OEM customers. We rely on third parties to provide such services. Disruptions of transportation services because of weather related problems, strikes, inadequacies in the road infrastructure or other events could impair our procurement of raw 12

13 material and our ability to supply our products to our customers. Any such disruption could materially and adversely affect our business, financial condition and results of operations. In addition transportation costs may increase in particular due to rising oil and gas prices. Any material increase in transportation costs may adversely impact our margins as we may not be able to increase our prices to fully recover these cost increase. 25. Majority of our existing manufacturing facilities are concentrated in Western India. Any disruption affecting our manufacturing facilities could have a material adverse effect on our business, financial condition and results of operations. Two of our manufacturing facilities are in Maharashtra, one is in Uttarakhand and one is in Gujarat. As a result, any localized social unrest, localized political turmoil, natural disaster or breakdown of services and utilities in Western India, especially in Maharashtra, could have material adverse effect on the business, financial position and results of operations of our Company. Further, continuous addition of industries in Maharashtra, Uttarakhand and Gujarat without commensurate growth of its infrastructural facilities may put pressure on the existing infrastructure therein, which may affect our business. In addition, the spiraling cost of living in Maharashtra, Uttarakhand and Gujarat may push our manpower costs in the upward direction, which may reduce our margin and cost competitiveness. 26. We enter into Related Party Transactions. During the course of our business, we have entered into and will continue to enter into related party transactions. We have entered into related party transactions amounting to Rs Mn for the 9 months period ended on December 31, 2010 and Rs Mn, Rs Mn, Rs Mn, Rs Mn and Rs Mn in the Financial Year 2010, 2009, 2008, 2007 and 2006 respectively. For more information please refer to Related Party Transactions of the Letter of Offer. 27. Your holdings may be diluted by additional issuances of Equity Shares. Further, any sales by our Promoter may adversely affect the market price of our Equity Shares. Any future issuance of our Equity Shares may dilute the holdings of existing investors in our Equity Shares. Additionally, sales of a large number of Equity Shares by our Promoter could adversely affect the market price of our Equity Shares. The perception that any such primary or secondary sale may occur also could adversely affect the market price of our Equity Shares. 28. We are bound by certain restrictive covenants provided in the agreements entered into with banks for availing term loans and working capital facilities As of the date of the Letter of Offer, we have a significant amount of indebtedness. We have entered into agreements with certain banks for short term loans and long term borrowings. As per the signed loan agreements with them, there are certain standard restrictions imposed on us as under, where prior permission of the lenders is required for a) effecting any change in our capital structure b) formulating any scheme of amalgamation or reconstruction c) undertaking any new project/schemes d) implementing any schemes of expansion or acquire fixed assets e) investing by way of share capital in or lend or advance funds to or place deposits with any other concern f) entering into borrowing arrangement either secured or unsecured with any other bank, financial institution, company or otherwise save and except the working capital facilities granted/to be granted by other consortium-member banks, under consortium arrangement with the bank and the term loans proposed to be obtained from financial institutions/banks for the completion of the replacement-cummodernization programme g) undertaking guarantee obligations on behalf of our Company h) declaring dividends for any year except out of profits relating to that year after making all due and necessary provisions and provided further that no default had occurred in any repayment obligations i) creating any charge, lien or encumbrance over its undertaking or any part thereof in favour of any financial institution, bank, company, firm or persons j) selling, assigning, mortgaging or otherwise disposing off any of the fixed assets charged to the bank k) entering into any contractual obligation of a long term nature Further, the unsecured loans taken by the Company can be recalled by the lenders at any time. The aforesaid requirements may restrict our ability to take swift business decisions as required by a dynamic business 13