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					                                                                                    Draft Prospectus




                         PROALGEN BIOTECH LIMITED
(Originally Incorporated on March 3, 1997 as “ACL Chemicals Limited” and the Certificate for
Commencement of Business was obtained on April 22, 1997 under the Companies Act, 1956. The
name was subsequently changed to “Proalgen Biotech Limited” on July 18, 2002)

              Registered Office: 15, III Avenue, Indira Nagar, Adyar, Chennai-600 020.
                   Phone/fax: 044-2445 4332/2445 4756 E-mail: aclgrp@eth.net

PUBLIC ISSUE OF 77,00,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A PREMIUM
OF RS.10/- PER SHARE AGGREGATING TO RS.1540.00 LAKHS

RISK IN RELATION TO THE FIRST ISSUE
This being the first issue of the company, there has been no formal market for the securities of the
company. The issue price (as determined by the Company in consultation with the Lead Manager)
should not be taken to be indicative of the market price of the equity shares after the shares are listed.
No assurance can be given regarding an active or sustained trading in the shares of the company or
regarding the price at which the equity shares will be traded after listing.

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 on Page No. ___ to___ 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 Securities and Exchange Board of India (SEBI) nor does SEBI
guarantee the accuracy or adequacy of this document.

ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this
Prospectus 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 Prospectus 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 make this document
as a whole or any of such information or the expression of any such opinions or intentions misleading
in any material respect.

The Equity Shares of the Company issued through this Prospectus are proposed to be listed at The
Stock Exchange, Mumbai (“BSE”) (Designated Stock Exchange) and National Stock Exchange of
India Ltd., Mumbai (“NSE”). The Company has received in-principle approval for listing from these
stock exchanges for the listing of the equity shares vide letters dated __________ and __________
respectively.

         LEAD MANAGER TO THE ISSUE                                  REGISTRAR TO THE ISSUE
             ASHIKA CAPITAL LIMITED                           CAMEO CORPORATE SERVICES LIMITED
             (SEBI Regn. No.: INM 000010536)                  (SEBI Regn. No.: INR 000003573)
             D. No: 7-1-613/14A, Suite No: 6,                 Subramaniam Building, No.1,
              nd
             2 Floor, Nestcon Lakshmisri,                     Club House Road, Chennai - 600002.
             Ameerpet, Hyderabad - 500 016.                   Tel: + 91 44-2846 0390 - 5
             Tel: + 91 40-5561 7802/2375 0498                 Fax: + 91 44 2846 0129;
             Fax No: + 91 40-5561 7801                        E-mail: cameo@cameoindia.com
             E-mail: ashika_hyderabad@rediffmail.com          Website: www.cameoindia.com

       ISSUE PROGRAMME
    Issue Opens on: _______________2004               Issue closes on : _______________2004




                                                                                                        1
                                       INDEX

                               TABLE OF CONTENTS

                                     TITLE                                 PAGE NO.
Definitions & Abbreviations                                                   3
Risk envisaged by the Management and Proposals to address the Risk            4
Highlights                                                                    7
PART I
I. General Information                                                        8
II. Capital Structure of the Company                                          15
III. Terms of the Present Issue                                               21
IV. Particulars of the Issue                                                  28
V. Company, Management and Project                                            30
VI. Management Discussion and Analysis of the Financial Condition and
                                                                              45
     results of the Operations as reflected in the Financial Statements.
VII. Financial of Group Companies                                             47
VIII.Basis for Issue Price                                                    49
IX. Outstanding Litigations or Defaults                                       50
X. Risk envisaged by the Management and Proposals to address the Risk         51
PART II
  I.     General Information                                                  55
 II.     Financial Information                                                59
III.     Statutory and Other Information                                      63
IV.      Main Provisions of the Articles of Association                       66
 V.      Material Contracts and Documents for Inspection                      79
PART III
       Declaration                                                            80




                                                                                      2
DEFINITIONS AND ABBREVIATIONS

  Act                    The Companies Act, 1956, as amended from time to time
  Articles               The Articles of Association of Proalgen Biotech Limited
  BSE,     Designated    The Stock Exchange, Mumbai
  Stock Exchange
  Board                  Board of Directors of Proalgen Biotech Limited
  CDSL                   Central Depository Services (India) Ltd.
  Depository             A Depository registered with SEBI under the SEBI (Depositories &
                         Participant) Regulations, 1996, as amended from time to time
  DP                     Depository Participant
  DSIR                   Department of Scientific & Industrial Research, Ministry of Science &
                         Technology
  EPS                    Earnings Per Share
  FEMA                   Foreign Exchange Management Act, 1999, as amended from time to time
                         and the regulations framed thereunder
  FIs                    Financial Institutions
  FIIs                   Foreign Institutional Investors registered with SEBI under the applicable
                         laws in India
  HUF                    Hindu Undivided Family
  Issue                  Public Issue of Equity Shares by Proalgen Biotech Limited
  Issuer/Company         Proalgen Biotech Limited
  IPO                    Initial Public Offering
  IT Act                 The Income Tax Act, 1961, as amended from time to time
  Lead Manager to the    Ashika Capital Limited
  Issue/ACL
  MoA                    Memorandum of Association of Proalgen Biotech Limited
  MTPA                   Metric Tonnes Per Annum
  NAV                    Net Asset Value
  NRIs                   Non Resident Indians as defined under FEMA Regulations, 2000
  NSDL.                  National Securities Depository Ltd
  OCB                    Overseas Body Corporate as defined under FEMA Regulations, 2000
  PAN/GIR                Permanent Account Number/ General Index Register
  PAT                    Profit After Tax
  PCB                    Pollution Control Board, Tamil Nadu
  RBI                    The Reserve Bank of India
  R&D                    Research & Development
  ROC                    Registrar of Companies, Tamil Nadu, Chennai.
  SEBI                   The Securities and Exchange Board of India
  SEBI Act               Securities and Exchange Board of India Act, 1992 as amended from time
                         to time.


CURRENCY OF PRESENTATION
In this Prospectus, all references to “Rs.” are to Indian Rupee. All financial data contained in this
Prospectus has been rounded off to the nearest Lakhs, except stated otherwise. In this Prospectus,
any discrepancy in any table between the total and sums of the amount listed are due to rounding off.




                                                                                                     3
RISK ENVISAGED BY THE MANAGEMENT AND PROPOSALS TO ADDRESS THE RISK
Investors should consider carefully the following risk factors, together with the other information
contained in this Prospectus before they decide to buy the Company’s Equity Shares. If any of the
following risks actually occur, the Company’s business, financial condition and results of operations
could suffer, the trading price of the Company’s Equity Shares could decline and you may lose all or
part of your investment.

INTERNAL TO THE COMPANY
   1. Risk envisaged by Management
      The deployment of funds in the proposed expansion project is entirely at the discretion of the
      Company and is not subject to monitoring by any independent agency.
      Proposals to address the Risk
      M/s. ING Vysya Bank Limited, present Banker to the company, have appraised the expansion
      project, which indicates, interalia, cost of expansion project and means of finance. The
      company has drawn out a business plan for the expansion activities to be pursued in the
      manufacturing of Natural Betacarotene. The company will ensure judicious deployment of the
      collected funds depending upon requirements at predetermined intervals.

    2. Risk envisaged by Management
       The Company is promoted by first generation entrepreneurs and the investors will be
       subjected to all consequential risks associated with such ventures.
       Proposals to address the Risk
       The Promoters have experience of more than 5 years in the Biotechnology Sector. Over the
       years, they have also brought in relevant professionals to address key areas of operations.

    3. Risk envisaged by Management
       The Company is yet to acquire the land for the proposed expansion project in respect of mass
       culture of algae and flocculation.
       Proposals to address the Risk
       The company has already identified 144 acres of Leasehold Land and 10 acres of freehold
       land at Kodur Village, Cheyyur Taluk, Kancheepuram District, Tamil Nadu for the proposed
       expansion project and the agreements in this regard will be executed shortly as per schedule
       of implementation.

    4. Risk envisaged by Management
       The Company is yet to appoint architect and contractors for the proposed site development,
       building and civil works to the tune of Rs. 301 lakhs constituting 19.55% of the expansion
       project cost.
       Proposals to address the Risk
       The company has already identified architect/ contractor for the proposed site development,
       building and civil works and shall enter in to formal arrangements with them after acquisition/
       lease of land for the proposed expansion project.

    5. Risk envisaged by Management
       The company is yet to place firm orders for Plant & Machinery of Rs. 850.00 Lakhs
       constituting 55.19% of the total expansion project cost.
       Proposals to address the Risk
       The company has suppliers/ manufacturers who have successfully supplied plant and
       machinery for its similar existing facility and therefore the company does not foresee any
       problem to procure these equipments at the appropriate point of time, for its proposed
       expansion project.

    6. Risk envisaged by Management
       The Company is yet to apply for No Objection Certificate (NOC) from the Tamil Nadu
       Pollution Control Board [TNPCB] for its proposed expansion project. The expansion project
       involves discharge of biomass–harvested wastewater, which is salty in nature, and is an issue
       relating to pollution of environment.
       Proposals to address the Risk
       Since the proposed expansion project envisages mass culture and flocculation in designated
       salt land area, the company does not foresee any problem in obtaining NOC from TNPCB.

                                                                                                    4
    However, in respect of the processing facility for the proposed expansion to be set up at the
    existing site, the company already has clearance from TNPCB.

7. Risk envisaged by Management
   The company is required to obtain necessary clearances from Panchayat / Town Planning
   Department for the proposed buildings at the existing as well as proposed new site.
   Proposals to address the Risk
   The company does not foresee any problem in obtaining the necessary clearances for the
   same.

8. Risk envisaged by Management
   The company is yet to make arrangements for an additional 756HP electricity load to meet its
   expansion requirements.
   Proposals to address the Risk
   At the existing site, the company already has a Connected Load of 147HP. The management
   is seized of the need for the increased electricity load for the expansion project and shall
   make necessary arrangements for the enhancement within the envisaged period.

9. Risk envisaged by Management
   The expansion project shall be entirely funded from the proposed public issue. Any delay in
   raising funds from the public issue may have an adverse impact on the performance of the
   company.
   Proposals to address the Risk
   The company is presently running its existing operations successfully and with the
   deployment of funds raised through the public issue it shall be able to expand the volume of
   operations. Therefore, any delay in raising funds shall affect the performance to the extent of
   increasing the volumes and accordingly future profitability of the company.

10. Risk envisaged by Management
    The Company has not taken any steps for recruiting the required manpower for the proposed
    expansion project.
    Proposals to address the Risk
    The company has requisite manpower for running its existing operations. However for the
    proposed expansion project the necessary recruitment will be done in due course of time.

11. Risk envisaged by Management
    Any failure of the Company to update and upgrade its technology and products and to keep
    abreast of latest developments, may adversely affect the cost competitiveness and the
    profitability of the Company.
    Proposals to address the Risk
    The company has a qualified and experienced team of research personnel who are abreast
    with latest trends. Further, the inhouse R&D facility of the company is recognised for
    developing and commercializing technology by the Department of Scientific and Industrial
    Research, Government of India, since 1999.

12. Risk envisaged by Management
    The Company has not paid term loan installments and interest thereon to Technology
    Development Board [TDB] and M/s. ING Vysya Bank Limited [ING Vysya] as per the original
    repayment schedule.
    Proposals to address the Risk
    On account of delay in commercialisation of the production, the company approached to TDB
    and ING Vysya for deferment of the repayment of loan installments and interest thereon. TDB
    and ING Vysya have agreed for the deferment of the same on the terms and conditions, the
    details of which are given elsewhere in this Prospectus. The company is however presently
    making timely payment of interest and term loan installments to them as per revised
    repayment schedule.

13. Risk envisaged by Management
    The company is yet to achieve their projected level of production of Natural Betacarotene.
    The past performance has been very low in terms of production/ sales.

                                                                                                5
       Proposals to address the Risk
       The company commenced commercial production of Natural Betacarotene which is the
       presently the main product of the company in July 2003 only and therefore the past
       performance should not be taken as an indicator of future operations. The company is
       presently running its existing operations successfully.

   14. Risk envisaged by Management
       The prices of the major raw materials such as Sodium Chloride and other nutrients are
       susceptible to volatility, which will adversely affect the profitability of the Company.
       Proposals to address the Risk
       The volatility in prices of major raw materials can be negated by entering into contractual
       agreements with the vendors for its supply.

   15. Risk envisaged by Management
       The promoters and other persons have been allotted shares of the company at a price lower
       than the public issue price in preceding one year as detailed in the notes to capital structure.

EXTERNAL TO THE COMPANY
   1. Risk envisaged by Management
      The company operates in a globally competitive business environment. Overseas competition
      may force the Company to reduce prices of its products, which may impact margins and
      market share.
      Proposals to address the Risk
      The management is seized of the threat and would use its experience in effectively meeting
      the risk. Moreover adequate demand in the domestic market and growing opportunities of
      exports are likely to mitigate the risk.

   2. Risk envisaged by Management
      Changes in the regulatory environment relating to manufacturing and marketing of biotech
      products in and outside the country will significantly impact the business of the Company.
      Proposals to address the Risk
      The Company keeps itself abreast of the various developments in the regulatory environment
      and gears itself to comply with the dynamics. Moreover, biotechnology is a thrust area of the
      future and the Company is confident of adapting itself to any such change.

   3. Risk envisaged by Management
      Natural calamities like floods, draughts, earthquakes and other Force Majeure events could
      affect the business.
      Proposals to address the Risk
      The above risk factors are essentially applicable to the entire business sector as a whole and
      not specifically to the company only.

   4. Risk envisaged by Management
      Terrorist attacks and other acts of violence or war involving India and other countries where
      the Company sells its products could affect the Company’s business.
      Proposals to address the Risk
      The consequences of any potential conflicts are unpredictable, and the Company may not be
      able to foresee events that could have a materially adverse effect on its business, financial
      condition or results of operations.

NOTES
1. Net worth of the Company before the issue as on September 30, 2003 (as per the latest audited
   Balance Sheet) is Rs.504.52 Lakhs.
2. Public Issue of 77,00,000 equity Shares of Rs. 10 each at a premium of Rs. 10 per share for cash
   aggregating Rs.1540.00 Lakhs.
                                                                th
3. Book Value of the Equity Shares of the Company as on 30 September 2003 is Rs. 10.07 per
   Equity Share.
4. The investors are advised to refer to the Para on "Basis for Issue Price" before making an
   investment in this issue.


                                                                                                     6
5. Investors may note that in case of over subscription, the allotment shall be on proportionate basis
    and for details; reference may be made to Para "Basis of Allotment" given in the Prospectus.
6. The investors are advised to refer the Para on “Promoters’ Background” and “Past financial
    performance of the Company” before making investment in the proposed issue.
7. There are no relationships with statutory auditors of the company other than auditing and
    certification of financial statements.
8. Investors may note that trading in the shares of the company shall be done only in dematerialised
    form.
9. There is no contingent liability as on 30/09/2003.
10. None of the ventures of the promoter have any business interest in the Company other than M/s.
    Primero Enserve (India) Private Limited, which holds 26.38% shares of the company.
11. Except as stated elsewhere in this Prospectus, no amount or benefit has been paid or given by
    the company or indicated to be paid or given to the Promoters or any other Directors save as
    normal remuneration for services rendered as Directors and other expenses incurred in the
    normal course of the business.
12. Related Party Transactions
    As per the Accounting Standard on “Related Party Disclosure’ issued by the Institute of Chartered
    Accountants of India, the related parties of the Company are as follows:

    List of related party and their relationship:
              Party                                           Relationship
              Primero Enserve (India) Pvt. Limited            Associate Company
              N. S. Balamukundan                              Key Management Personnel
              N. S. Venkatesh                                 Key Management Personnel

    Transaction with the related parties:
                                                                                                   In Rs. lakhs
                        30.9.2003                31.3.2003                31.3.2002                31.3.2001
                                 Key                      Key                      Key                      Key
                 Associate Management     Associate Management     Associate Management     Associate Management
                              personnel                personnel                personnel                personnel
 Remuneration
    to Key
                    -          3.48           -         5.61          -          5.16          -           5.16
 Management
   Personnel
    Equity
  subscription    50.00          -          32.50         -         23.25          -           -             -
  by Primero
   Advances        1.23                     2.49                     2.28                     0.19

HIGHLIGHTS
1. The expansion project has been appraised by ING Vysya Bank Ltd., present bankers to the
   company.
2. The inhouse R&D facility of the company is recognised for developing and commercializing
   technology by the Department of Scientific and Industrial Research, Government of India, since
   1999.
3. The company has an internationally published patent under Patent Cooperation Treaty [PCT] in
   respect of producing Betacarotene and other carotenoids from a novel strain of Dunaliella Salina
   using a novel media.
4. The company is producing Natural Betacarotene, the main product of the company from the micro
   algae, Dunaliella Salina using a novel media in one step process whereby simultaneous growth
   and carotenogenesis is achieved, which is unique and cost efficient as compared to the normal
   two step process.




                                                                                                             7
PART-I

I. GENERAL INFORMATION


                             PROALGEN BIOTECH LIMITED
(Originally Incorporated on March 3, 1997 as “ACL Chemicals Limited” and the certificate for
Commencement of Business was obtained on April 22, 1997 under the Companies Act, 1956. The
name was subsequently changed to “Proalgen Biotech Limited” on July 18, 2002)

Registered Office: 15, III Avenue, Indira Nagar, Adyar, Chennai-600 020.
Phone/fax: 044-2445 4332/2445 4756 E-mail: aclgrp@eth.net

   PUBLIC ISSUE OF 77,00,000 EQUITY SHARES OF RS. 10/- EACH FOR CASH AT A
   PREMIUM OF RS.10/- PER SHARE AGGREGATING TO RS.1540.00 LAKHS.

AUTHORITY FOR THE PRESENT ISSUE
Pursuant to Section 81(1A) of the Companies Act 1956, the present issue has been authorised by a
Special Resolution passed at the Annual General Meeting of the shareholders of the company held on
22.10.2003 and Resolution passed by the Board of Directors of the Company at their Meeting held on
28.11.2003.

GOVERNMENT / STATUTORY APPROVALS
FACTORY LICENCE: LICENCE no. 7670 and Registration no. KM 6798/2002 dated November 29
2002 granted by Deputy Chief Inspector of Factories, IV Division, Chennai, in respect of the existing
unit, which is valid till 31.12.2004.

POWER: Original Agreement with Tamil Nadu Electricity Board (“TNEB”) entered on 22.04.2001.
Thereafter there have been enhancements and the present approval is for the supply of 147 HP of
electricity to the existing unit. The Company will obtain approval for the additional load of 756 HP for
the expansion.

ENVIRONMENT, WATER AND AIR: Tamil Nadu Pollution Control Board vide its Consent Order no.
15623 dated July 31, 2002 granted the Company to operate under the Air (Prevention and Control of
Pollution) Act and vide Consent Order no. 19573 dated July 31, 2002 granted the Company to
operate under the Water (Prevention and Control of Pollution) Act for its existing facility for a capacity
to produce 24.0 MTPA [120 MTPA of 20%] of Natural Betacarotene. The validity date for both the
Consent Orders stand renewed till 31.03.2005 vide Lr. No. DEE/TNPCB/KPM/F.NO.RM-1/2004/dated
20.01.04. The company has identified the Land at Kodur Village, Cheyyur Taluk, Kancheepuram Dist.,
Tamil Nadu for the expansion project and the company will obtain the NOC from PCB in due course.

IMPORTER-EXPORTER CODE: Importer-Exporter Code (IEC) no. 0497014980 issued by Joint
Director General of Foreign Trade, Ministry of Commerce, Chennai, Tamil Nadu.

DRUG LICENCE: The Director of Drugs Control, Tamil Nadu vide its letter no. L. Dis. No.
3910/D1/1/2003 dated 14/5/2003 have informed the Company that Natural Betacarotene cannot be
classified under Drug unless any therapeutic claim is made.

LICENCE TO IMPORT AND STORE PETROLEUM IN INSTALLATION: Chief Controller of
Explosives, Government of India, Ministry of Commerce & Industry, Department of Explosives,
Nagpur vides LICENCE no. P/HQ/TN/15/4375 (P21698) dated 09/10/2003 granted permission for the
import of 15 kilolitres Petroleum Class A in bulk and 15 kilolitres Petroleum Class B in bulk.

FIRE SERVICE LICENCE: LICENCE No. 7324/A/03 dated 10/7/2003 granted by Divisional Officer,
Fire & Rescue Services, Kancheepuram Division, Tamil Nadu for the existing unit, which is valid till
09.07.2004.

BLOCK DEVELOPMENT OFFICE APPROVAL: Block Development Office (BDO),
Thirukazhukundram, Kancheepuram vide letter no. 5168/2001/A3 dated 22.04.2002 has given its
approval to establishment of the manufacturing unit at Naduvakkarai village.

                                                                                                        8
TOWN & COUNTRY PLANNING APPROVAL: The existing unit has the approval from Deputy
Director (Town & Country Planning), Chengalpattu, vide its letter no. 3139/2001 dated 08.11.01. The
company has to obtain necessary clearances for the proposed buildings for the project expansion at
the existing site as well as the proposed site in due course.

It must, however, be distinctly understood that in granting the above consents/ licences/ permissions /
approvals, the Government does not take any responsibility for the financial soundness of the
Company or for the correctness of any of the statements or any commitments made or opinions
expressed in this regard.

PROHIBITION BY SEBI
The Company, its Directors / Promoters and persons in control, any of the Group Companies and
companies with which the Company’s directors are associated as directors have not been prohibited
from accessing/operating in the capital markets or restrained from buying / selling / dealing in
securities under any order or direction passed by SEBI.

ELIGIBILITY FOR THE ISSUE
According to Clause 2.2.1 of the SEBI (Disclosure and Investor Protection) Guidelines, 2000 and
amendments thereof, an unlisted company shall make a public issue of any equity share or any
security convertible into equity shares at a later date subject to the following: -
   i. The company has Net Tangible Assets worth of above Rs 3 Crore in each of the preceding 3
         full years (each of 12 months), of which not more than 50% is held in monetary assets;
   ii. It has a track record of Distributable Profits in terms of Section 205 of the Companies Act,
         1956, for at least three (3) out of immediately preceding five (5) years;
   iii. It has a pre- issue Networth of not less than Rs. 1 Crore in each of the preceding three (3) full
         years (of 12 months each);
   iv. It has not changed its name within the last one year;
   v. The aggregate of the proposed issue and all previous issues made in the same financial year
         in terms of size (i.e. Issue through Prospectus+ firm allotment+ promoter’s contribution
         through the Prospectus) does not exceed five (5) times its pre-issue net worth as per the last
         available audited accounts.

As per Clause 2.2.2A, the Issuer shall not make an allotment pursuant to a public issue or Issue for
sale of equity shares or any security convertible into equity shares unless in addition to satisfying the
conditions mentioned in Clause 2.2.1, the prospective allottees are not less than one thousand (1000)
in number.

The Net Tangible Assets, Distributable Profits in terms of Section 205 of the Companies Act and Pre-
issue Networth of the Company for the last three completed years are as under:
                                                                                 (Rs. in Lakhs)
   For the Financial year ending                March 31, 2001            March 31, 2002   March 31, 2003
   Net Tangible Assets                          336.19                    463.68           762.18
   Monetary Assets                              18.63                     14.37            23.69
   % of Monetary Assets to Net Tangible
                                                5.54                      3.10             3.11
   Assets
   Distributable Profits                        0.83                      1.04             0.62
   Net worth                                    271.92                    324.50           452.05
  Source: Audited Annual Accounts of the Company for the respective Financial Years.

The proposed issue size of Rs. 1540.00 Lakhs plus the shares issued during the same financial year
2003-04 amounting to Rs.133.64 Lakhs would not exceed five times the pre-issue Net Worth as on
  st
31 March 2003 which is Rs.452.05 Lakhs.

Based on the above data, the Company is fulfilling the criteria of eligibility norms for Public Issue by
unlisted company as specified in the Guideline 2.2.1 of SEBI (DIP) Guidelines, 2000 and amendments
thereof. Therefore, the Board of Directors of the Company has resolved to go for the proposed Public
Issue pursuant to the above-mentioned guidelines.




                                                                                                            9
DISCLAIMER CLAUSE
AS REQUIRED, A COPY OF THIS DRAFT PROSPECTUS HAS BEEN SUBMITTED TO
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). IT IS TO BE DISTINCTLY
UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT PROSPECTUS TO SEBI SHOULD NOT
IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR
APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE
FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS
PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE
OR OPINIONS EXPRESSED IN THE DRAFT PROSPECTUS. LEAD MANAGER, M/S. ASHIKA
CAPITAL LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT
PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI
GUIDELINES FOR DISCLOSURES AND INVESTOR PROTECTION FOR THE TIME BEING IN
FORCE. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED
DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE
CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE
FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION
IN THE DRAFT PROSPECTUS, THE LEAD MANAGER IS EXPECTED TO EXERCISE DUE
DILIGENCE TO ENSURE THAT THE ISSUER COMPANY DISCHARGES ITS RESPONSIBILITY
ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER, M/S.
ASHIKA CAPITAL LIMITED HAS FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE
DATED MARCH 1, 2004 IN ACCORDANCE WITH SEBI (MERCHANT BANKERS) REGULATIONS,
1992 WHICH READS AS FOLLOWS:

1.    WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
     LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
     COLLABORATORS ETC. AND OTHER MATERIALS MORE PARTICULARLY REFERRED TO
     IN THE ANNEXURE HERETO IN CONNECTION WITH THE FINALISATION OF THE DRAFT
     PROSPECTUS PERTAINING TO THE SAID ISSUE;

2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY,
   ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT
   VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE,
   PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE
   DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE
   COMPANY,

     WE CONFIRM THAT:
     (a) THE DRAFT PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH THE
         DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
     (b) ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE
         GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY
         OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED
         WITH; AND
     (c) THE DISCLOSURES MADE IN THE DRAFT PROSPECTUS ARE TRUE, FAIR AND
         ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION
         AS TO THE INVESTMENT IN THE PROPOSED ISSUE.
     (d) WE CONFIRM THAT BESIDE OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE
         DRAFT PROSPECTUS ARE REGISTERED WITH SEBI AND TILL DATE SUCH
         REGISTRATION IS VALID.

The filing of the Draft Prospectus does not, however, absolve the Company from any liabilities
under Section 63 or 68 of the Companies Act 1956, or from the requirement of obtaining such
statutory or other clearances as may be required for the purpose of the proposed Issue. SEBI,
further reserves the right to take up, at any point of time, with Lead Manager for any
irregularities or lapses in the Draft Prospectus.




                                                                                           10
GENERAL DISCLAIMER
INVESTORS MAY NOTE THAT PROALGEN BIOTECH LIMITED ACCEPT NO RESPONSIBILITY
FOR STATEMENTS MADE OTHERWISE THAN IN THIS DRAFT PROSPECTUS OR IN THE
ADVERTISEMENT OR ANY OTHER MATERIAL ISSUED BY OR AT THE INSTANCE OF THE
ISSUER COMPANY OR THE LEAD MANAGER AND THAT ANYONE PLACING RELIANCE ON
ANY OTHER SOURCE OF INFORMATION WOULD BE DOING SO AT HIS/HER OWN RISK.

DISCLAIMER IN RESPECT OF JURISDICTION
This Issue is made in India to persons resident in India (including Indian nationals resident in India
who are majors, Hindu undivided families, companies, corporate bodies and societies registered
under the applicable laws in India and authorised to invest in shares, Indian mutual funds registered
with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks
(subject to RBI permission), Trusts (registered under the Societies Registration Act, 1860, or any
other Trust law and who are authorised under their constitution to hold and invest in shares) and to
NRIs and FIIs as defined under the Indian laws. This Prospectus does not, however, constitute an
Issue to sell or an invitation to subscribe to shares issued hereby in any other jurisdiction to any
person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose
possession this prospectus comes is required to inform himself about and to observe any such
restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate
court(s) in Chennai, India only.

No action has been or will be taken to permit a public offering in any jurisdiction where action would
be required for that purpose, except that this Prospectus has been submitted to the SEBI for its
observations and SEBI has given its observations and that the Prospectus has been submitted to
ROC. Accordingly, the Equity Shares, represented thereby may not be issued or sold, directly or
indirectly, and this Prospectus may not be distributed, in any jurisdiction, except in accordance with
the legal requirements applicable in such jurisdiction. Neither the delivery of Prospectus nor any sale
hereunder shall, under any circumstances, create any implication that there has been no change in
the affairs of PROALGEN BIOTECH LIMITED since the date hereof or that the information contained
herein is correct as of any time subsequent to this date.

DISCLAIMER CLAUSE OF THE STOCK EXCHANGE, MUMBAI (BSE)
As required, a copy of this Prospectus has been submitted to the BSE. BSE has given vide its letter
dated ________ granted permission to this Company to use the Exchange’s name in this Prospectus
as one of the Stock Exchanges on which the Company’s securities are proposed to be listed. The
Exchange has scrutinised this Prospectus for its limited internal purpose of deciding on the matter of
granting the aforesaid permission to this Company.

BSE does not in any manner:
a. Warrant, certify or endorse the correctness or completeness of any of the contents of this
   Prospectus; or
b. Warrant that this Company’s securities will be listed or continue to be listed on the Exchange; or
c. Take any responsibility for the financial or other soundness of this Company, its Promoters or its
   management or any scheme or project of this Company and it should not for any reason be
   deemed or construed that this Prospectus has been cleared or approved by the Exchange.

Every person who desires to apply for or otherwise acquire any securities of this Company may do so
pursuant to an independent inquiry, investigation and analysis and shall not have any claim against
the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to
or in connection with such subscription, acquisition whether by reason of anything stated or omitted to
be stated herein or any other reason whatsoever.

DISCLAIMER CLAUSE OF NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE)
As required, a copy of this Prospectus has been submitted to the NSE. NSE has given vide its letter
dated ________ granted permission to the Company to use the Exchange’s name in this Prospectus
as one of the Stock Exchanges on which the Company’s securities are proposed to be listed subject
to, the company fulfilling the various criteria for listing including the one related to paid-up Capital (i.e.
the paid-up Capital shall not be less than Rs. 10.00 Crores and market capitalisation shall not be less
than Rs. 25.00 Crores at the time of listing). The Exchange has scrutinised this Prospectus for its
limited internal purpose of deciding on the matter of granting the aforesaid permission to the

                                                                                                           11
Company. It is to be distinctly understood that the aforesaid permission given by NSE should not in
any way be deemed or construed that the Prospectus has been cleared or approved by NSE.

NSE does not in any manner:
   a. Warrant, certify or endorse the correctness or completeness of any of the contents of this
      Prospectus; or
   b. Warrant that the Company’s securities will be listed or continue to be listed on the Exchange;
      or
   c. Take any responsibility for the financial or other soundness of the Company, its promoter, its
      management or any scheme or project of the Company.

Every person who desires to apply for or otherwise acquire any securities of the Company may do so
pursuant to an independent inquiry, investigation and analysis and shall not have any claim against
the NSE whatsoever by reason of any loss which may be suffered by such person consequent to or in
connection with such subscription or acquisition whether by reason of anything stated or omitted to be
stated herein or any other reason whatsoever.

DISCLAIMER CLAUSE OF THE ING VYSYA BANK LIMITED (APPRAISER)
i)   It is to be distinctly understood that ING Vysya Bank Ltd. is not responsible for the Company
     achieving their projected level of production/sales, which have a bearing on the financial viability
     of the Project.
ii) This Appraisal is based upon information that we consider reliable.
iii) Neither ING Vysya Bank nor any person connected accepts any liability arising from the use of
     this report.
iv) Opinions expressed are our current opinion as of the date of the report. Actual results may differ
     materially from those set forth in the projections.
v) This report includes historical and current information that are believed to be reliable although
     their accuracy and completeness cannot be guaranteed.
vi) ING Vysya Bank has relied on the records, project report, documents, cost estimates etc.
     provided by M/s Proalgen Biotech Ltd.

FILING
A copy of the Prospectus along with the documents required to be filed under Section 60 of the
Companies Act have been delivered for registration to the Registrar of Companies, Tamil Nadu,
Chennai. A copy of the Prospectus have also been filed with SEBI at its Southern Regional Office at
D’Monte Building, 3rd floor, 32, D’Monte Colony, TTK Road, Alwarpet, Chennai - 600 018.

LISTING
Initial listing applications have been made by the Company to The Stock Exchange, Mumbai
(Designated Stock Exchange) and National Stock Exchange of India Limited for permission to list the
Equity Shares and for an official quotation of the Equity Shares of the Company.

In case the permission for listing of the Equity Shares is not granted by any of the above mentioned
Stock Exchanges, the company shall forthwith repay, without interest, all monies received from
applicants in pursuance of this Prospectus and if such money is not repaid within eight days from
which the Company is liable to pay it, the Company and every Director of the Company who is an
officer in default shall , on and from expiry of 8 days, be jointly and severally liable to repay that
money with interest as prescribed under section 73 of the Companies Act, 1956.

The company with the assistance of the Lead Manager shall ensure that all steps for the completion
of the necessary formalities for listing and commencement of trading at the Stock Exchange
mentioned above are taken within seven working days of finalisation of the basis of allotment for the
Issue.

UNDERTAKING FROM PROMOTERS AND DIRECTORS
The Issuer Company accepts full responsibility for the accuracy for the information given in the
Prospectus and confirms that to the best of their knowledge and belief, there are no other facts, their
omission of which make any statement in the Prospectus misleading and they further confirm that
they have made all reasonable enquiries to ascertain such facts. The Issuer further declares that the
stock exchanges to which an application for official quotation is proposed to be made do not take any

                                                                                                      12
responsibility for the financial soundness of this offer or for the price at which the equity shares are
offered or for the correctness of the statement made or opinions expressed in this Prospectus. The
Promoters/Directors declare and confirm that no information / material likely to have a bearing on the
decision of investors in respect of the shares offered in terms of this Prospectus has been
suppressed, withheld and / or incorporated in the manner that would amount to misstatement /
misrepresentation, and in the event of its transpiring at any point of time till allotment/refund, as the
case may be, that any information/material has been suppressed/with held and/or amounts to a
misstatement/misrepresentation, the Promoters / Directors undertake to refund the entire application
monies to all the subscribers within 7 days thereafter without prejudice to the provisions of section 63
of the Companies Act.

CORPORATE GOVERNANCE
The SEBI Guidelines in respect of Corporate Governance shall be applicable to the Company
immediately upon listing of its shares on the various Stock Exchanges. However the company has
already set up an audit committee. The company undertakes that it shall take necessary steps to
comply with all the requirements of the Guidelines on the Corporate Governance as would be
applicable to it upon listing of its Shares.

IMPERSONATION
Attention of applicants is specifically drawn to the provisions of sub-section (1) of Section 68A
of the Companies Act, 1956 which is reproduced below:
“Any person who-
a) Makes in a fictitious name an application to a company for acquiring, or subscribing for, any
Equity Shares therein, or
b) Otherwise induces a company to allot, or register any transfer of Equity 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.”

MINIMUM SUBSCRIPTION
If the Company does not receive the minimum subscription of 90% of the issued amount on the date
of closure of the issue or if the subscription level falls below 90% after the closure of the issue on
account of cheques having been returned unpaid or withdrawal of applications, the Company shall
forthwith refund the entire subscription amount received. If there is delay beyond 8 days after the
Company becomes liable to pay the amount, the Company shall pay interest as per Section 73 of the
Companies Act, 1956.

ISSUE OF ALLOTMENT LETTERS/REFUND ORDERS
The Company shall give credit to the Beneficiary Account with DP(s) within two working days of the
finalisation of the Basis of Allotment of Equity Shares. Allotment Letter(s) together with Refund Orders
of value over Rs.1,500/-, if any, to allotees and Letter(s) of Regret together with Refund Orders of
value over Rs.1,500 to non-allotees will be dispatched by registered post or speed post and Refund
Orders for value up to Rs.1,500/- will be dispatched under certificate of posting at the applicant’s sole
risk within 10 weeks from the date of Closure of Subscription list.

The Company undertakes that -
a. Allocation of Equity Shares will be made only in Dematerialised form within 30 days from the
   issue closing date.
b. Dispatch of Refund Orders will be done within 30 days from the issue closing date.
c. The Company shall pay interest @15% per annum (for delay beyond 30 days as mentioned
   above), if the transfer is not made, refund orders are not dispatched and/or demat credit are not
   made to investors within the 30 days time prescribed above.

The Company will provide adequate funds required for dispatch of Refund Order or Allotment Advice
to the Registrar to the Issue. Refunds will be made by Cheques, Pay Orders or Demand Drafts drawn
on a Bank appointed by the Company as Refund Banker(s) and payable at par at places where
applications are received. Bank charges, if any, for encashing such Cheques, Pay Order or Demand
Drafts at other Centers will be payable by the applicants.




                                                                                                      13
The listing and trading of the securities offered through this prospectus shall commence at the
aforesaid stock exchanges where they are proposed to be listed within 7 working days of the
finalisation of the basis of allotment.

ISSUE PROGRAMME
The subscription list will open at the commencement of banking hours and will close at the close of
banking hours on the dates as mentioned below.

    Issue Opens on: _______________2004               Issue closes on : _______________2004

ISSUE MANAGEMENT TEAM
 LEAD MANAGER TO THE ISSUE                           REGISTRAR TO THE ISSUE
 Ashika Capital Limited                              Cameo Corporate Services Limited
 (SEBI Regn. No.: INM 000010536)                     (SEBI Regn. No.: INR 000003573)
                                    nd
 D.No: 7-1-613/14A, Suite No: 6, 2 Floor,            Subramaniam Building, No.1,
 Nestcon Lakshmisri, Ameerpet,                       Club House Road, Chennai – 600002.
 Hyderabad –500 016.                                 Ph: + 91 44-2846 0390-5
 Ph: + 91 40-5561 7802/2375 0498                     Fax: + 91 44 2846 0129;
 Fax: + 91 40-5561 7801                              E-mail: cameo@cameoindia.com
 E-mail: ashika_hyderabad@rediffmail.com             Website: www.cameoindia.com
 AUDITORS                                            BANKERS TO THE COMPANY
 M/s. Gopalaiyer & Subramanian                       ING Vysya Bank Ltd.,
 Chartered Accountants,                              Mount Road Branch,
 23, II Floor, Kripa Sankari Street                  185, Anna Salai,
 West Mambalam, Chennai – 600 033.                   Chennai – 600 006.
 Ph: 044-30901560 / 30901565
 LEGAL ADVISOR TO THE ISSUE                          BANKERS TO THE ISSUE
 K Ramasamy
 Advocate
                         th
 II Floor, Plot No. 4A, 5 Street,
   st
 1 Main Road, Jai Nagar,
 Arumbakkam, Chennai-600 106.
 Ph: 044-23790025
 E Mail- ramasamy_2k@vsnl.net

COMPANY SECRETARY / COMPLIANCE OFFICER
Mrs. Meenakshi Shivkumar Eashwaran, A.C.S.
15, III Avenue, Indira Nagar, Chennai-600 020.
Phone/fax: 044-24454332/24454756
E-mail: aclgrp@eth.net

Investors can contact the Compliance Officer in case of any pre-issue or post-issue related
problems such as non-receipt of letters of allotment, refund orders, etc.

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

CREDIT RATING
This being an issue of Equity Shares, credit rating is not required.

UNDERWRITERS TO THE ISSUE
Underwriting being optional, the Company does not propose to underwrite the issue.




                                                                                                14
II. CAPITAL STRUCTURE OF THE COMPANY

                                                           Nominal Value    Share                 Aggregate
                   Share Capital                              (Rs.)      Premium (Rs.)            Value (Rs.)
 A. Authorised Capital
     1,50,00,000 Equity Shares of Rs.10/- each                15,00,00,000                         15,00,00,000
 B. Issued, Subscribed and Paid up Capital
     57,89,255 Equity Shares of Rs.10/- each                   5,78,92,550          7,27,285        5,86,19,835
 C. Present Issue (Net offer to Public)
      77,00,000 Equity Shares of Rs.10/- each at a             7,70,00,000        7,70,00,000      15,40,00,000
     premium of Rs.10 per share
 D. Paid up Share Capital and Premium after the
     Issue
     1,34,89,255 Equity Shares of Rs.10/- each                13,48,92,550        7,77,27,285      21,26,19,835

NOTES TO CAPITAL STRUCTURE

1. Details of Increase in Authorised Share Capital
         Sl.No     Date          of    AGM/EGM            Particulars of     FACE            Cumulative
                   Meeting                                Increase (Rs.)     VALUE                (Rs.)
         1         Incorporation       Incorporation                         10
                                                               10,00,000                        10,00,000
         2         20/03/1997          EGM                     90,00,000     10
                                                                                          1,00,00,000
         3         29/06/1998          EGM                   2,00,00,000     10            3,00,00,000
         4         24/06/2002          EGM                  2,00,00,000      10           5,00,00,000
         5         22/10/2003          AGM                 10, 00,00,000     10          15, 00,00,000

2. Capital History of the Company
   The break-up of the present Share Capital of the Company is as under:
    Date of   Number of     Fac       Iss   Consi      Total Value    Date on        % to          Remarks
    allotme    Equity        e         ue   derati        (Rs.)        which         Post
       nt      Shares       Val       Pri    on                      fully paid     Issue
                             ue        ce                               –up
                            (Rs       (Rs
                             .)        .)
                                                                                             Further Allotment of
   25/06/97      16,000*    10        10    Cash          1,60,000   25/06/97         0.12
                                                                                             Shares
                                                                                             Further Allotment of
   18/07/97       30,000    10        10    Cash          3,00,000   18/07/97         0.22
                                                                                             Shares
                                                                                             Further Allotment of
   18/08/97       10,000    10        10    Cash          1,00,000   18/08/97         0.07
                                                                                             Shares
                                                                                             Further Allotment of
   11/09/97        5,000    10        10    Cash            50,000   11/09/97         0.04
                                                                                             Shares
   05/11/97       48,800                                  4,88,000   05/11/97                Further Allotment of
                            10        10    Cash                                      0.36
                                                                                             Shares
   18/11/97      5,50,000                                55,00,000   18/11/97                Further Allotment of
                            10        10    Cash                                      4.08
                                                                                             Shares
   05/12/97       31,000                                  3,10,000   05/12/97                Further Allotment of
                            10        10    Cash                                      0.23
                                                                                             Shares
   20/03/98       11,800                                  1,18,000   20/03/98                Further Allotment of
                            10        10    Cash                                      0.09
                                                                                             Shares
   20/07/98      1,05,990   10        10    Cash         10,59,900   20/07/98         0.79   Foreign Citizen
   23/09/98        46,607   10        10    Cash          4,66,070   23/09/98         0.34   NRI
   28/09/98        21,165   10        10    Cash          2,11,650   28/09/98         0.16   NRI
   19/12/98      7,08,495                                70,84,950   19/12/98                NRIs/Promoters
                            10        10    Cash                                      5.25
                                                                                             and Associates
   13/03/00      3,67,000                                36,70,000   13/03/00                Further Allotment of
                            10        10    Cash                                      2.72
                                                                                             Shares
   23/07/00      2,00,000                                20,00,000   23/07/00                Further Allotment of
                            10        10    Cash                                      1.48
                                                                                             Shares
   29/12/00      2,50,000                                25,00,000   29/12/00                Further Allotment of
                            10        10    Cash                                      1.85
                                                                                             Shares


                                                                                                                    15
   15/05/01        3,00,000                         30,00,000     15/05/01           Further Allotment of
                               10   10      Cash                              2.22
                                                                                     Shares
   08/03/02        1,93,900                         19,39,000     08/03/02           Further Allotment of
                               10   10      Cash                              1.44
                                                                                     Shares
   19/09/02      12,80,790                         1,28,07,900    19/09/02    9.49   NRI/OCB/Promoter
                               10   10      Cash
                                                                                     s/friends etc.
   19/09/02         13,170                  Non       1,31,700    19/09/02    0.10   Further Allotment of
                               10   10
                                            Cash                                     Shares
   07/03/03        2,63,170                         26,31,700     07/03/03    1.95   Further Allotment of
                               10   10      Cash
                                                                                     Shares
   07/06/03        5,00,000                         50,00,000     07/06/03    3.71   Further Allotment of
                               10   10      Cash
                                                                                     Shares
   28/11/03        3,05,800                         30,58,000     28/11/03    2.27   Further Allotment of
                               10   10      Cash
                                                                                     Shares
   20/12/03       2,44,000     10   10      Cash     24,40,000    20/12/03    1.81   Further Allotment of
                     6,800     10   16      Cash        68,000    20/12/03    0.05   Shares
   26/12/03       1,33,513     10   10      Cash     13,35,130    26/12/03    0.99   Further Allotment of
                     7,000     10   14      Cash        70,000    26/12/03    0.05   Shares
                    57,000     10   15      Cash      5,70,000    26/12/03    0.43
   27/01/04          2,500     10   10      Cash        25,000    27/01/04    0.02   Further Allotment of
                    28,000     10   15      Cash      2,80,000    27/01/04    0.21   Shares
   26/02/04         15,000     10   10      Cash      1,50,000    26/02/04    0.11   Further Allotment of
                    11,900     10   15      Cash      1,19,000    26/02/04    0.09   Shares
                    24,855     10   17      Cash      2,48,550    26/02/04    0.18
   Total         57,89,255                         5,78,92,550               42.92
* Including 1,000 Equity Shares allotted to the Subscribers to the Memorandum.
Note: RBI permission obtained for the shares allotted to Foreign Citizen, NRIs and OCB wherever
     applicable.

3. Promoters’ Contribution and Lock-in

           Sl.    Date of      Date when Conside   No. of    Face Issue % of Post       Lock in
           No.   Allotment /   made fully ration   Shares    Value Price  Issue         Period*
                  Transfer      paid up                                  Capital
           1     25.06.1997    25.06.1997   Cash   16,000        10    10    0.12       3 Years
           2     18.07.1997    18.07.1997   Cash   30000         10    10    0.22       3 Years
           3     18.08.1997    18.08.1997   Cash   10000         10    10    0.07       1 Year
           4     11.09.1997    11.09.1997   Cash    5000         10    10    0.04       3 Years
           5     05.11.1997    05.11.1997   Cash   48600         10    10    0.36       3 Years
           6     05.11.1997    05.11.1997   Cash    200          10    10    0.00       1 Year
           7     18.11.1997    18.11.1997   Cash   544000        10    10    4.03       3 Years
           8     18.11.1997    18.11.1997   Cash    6000         10    10    0.04       1 Year
           9     05.12.1997    05.12.1997   Cash   31000         10    10    0.23       3 Years
           10    20.03.1998    20.03.1998   Cash   11800         10    10    0.09       3 Years
           11    20.07.1998    20.07.1998   Cash   21198         10    10    0.16       3 Years
           12    20.07.1998    20.07.1998   Cash   84792         10    10    0.63       1 Year
           13    23.09.1998    23.09.1998   Cash   46607         10    10    0.35       1 Year
           14    28.09.1998    28.09.1998   Cash   21165         10    10    0.16       1 Year
           15    19.12.1998    19.12.1998   Cash   547395        10    10    4.06       1 Year
           16    19.12.1998    19.12.1998   Cash   161100        10    10    1.19       3 Years
           17    13.03.2000    13.03.2000   Cash    500          10    10    0.00       1 Year
           18    13.03.2000    13.03.2000   Cash   366,500       10    10    2.72       3 Years
           19    23.07.2000    23.07.2000   Cash   200,000       10    10    1.48       3 Years


                                                                                                            16
           20   29.12.2000   29.12.2000   Cash    250,000     10      10        1.85      3 Years
           21   15.05.2001   15.05.2001   Cash    300,000     10      10        2.22      3 Years
           22   08.03.2002   08.03.2002   Cash    193,900     10      10        1.44      3 Years
           23   19.09.2002   19.09.2002   Cash    518,802     10      10        3.84      3 Years
           24   19.09.2002   19.09.2002   Cash    31988       10      10        0.24       1 Year
           25   19.09.2002   19.09.2002   Non     13170       10      10        0.10       1 Year
                                          Cash
           26   07.03.2003   07.03.2003   Cash    263,170     10      10        1.95       1 year
           27   07.06.2003   07.06.2003   Cash    500000      10      10        3.71       1 Year
           28   28.11.2003   28.11.2003   Cash    305,800     10      10        2.27       1 year
           29   20.12.2003   20.12.2003   Cash    229,000     10      10        1.70       1 year
           30   20.12.2003   20.12.2003   Cash     6,800      10      16        0.05       1 Year
           31   26.12.2003   26.12.2003   Cash    33,513      10      10        0.25       1 Year
           32   26.12.2003   26.12.2003   Cash     7000       10      14        0.05       1 Year
           33   26.12.2003   26.12.2003   Cash    57000       10      15        0.42       1 Year
           34   27.01.2004   27.01.2004   Cash     2500       10      10        0.02       1 Year
           35   27.01.2004   27.01.2004   Cash    28000       10      15        0.21       1 Year
           36   26.02.2004   26.02.2004   Cash    15000       10      10        0.11       1 Year
           37   26.02.2004   26.02.2004   Cash    11900       10      15        0.09       1 Year
                                                  4919400                       36.47


   * The lock-in period shall commence from the date of allotment of shares in the public issue or
   commencement of commercial operations, which ever is later.

4. Promoters’ Contribution and Lock–in respect of promoters whose name figure in the
   prospectus as promoters in the paragraph on “Promoters and their Background”

 Sl.No     Name of the    Date of     Date when Conside-     No. of   Face        Issue     % of      Lock in
            Promoter     Allotment / fully paid up ration   Shares    Value       Price     Post     Period *
                         Transfer*                                    (Rs.)       (Rs.)    issue
                                                                                          Paid up
                                                                                          Capital
  1      N.S.            25.06.1997 25.06.1997     Cash      200           10      10      0.00     3 years
         Balamukundan
                         05.11.1997 05.11.1997     Cash      5,000         10      10      0.04     3 years

                         18.11.1997 18.11.1997     Cash      8,500         10      10      0.06     3 years

                         18.07.2000* 25.06.1997    Cash      300           10      10      0.00     3 years

                         18.07.2000* 18.11.1997    Cash     10,500         10      10      0.08     3 years

                         18.07.2000* 05.11.1997    Cash      5,000         10      10      0.04     3 years

                         13.03.2000 13.03.2000     Cash     366,500        10      10      2.72     3 years

                         23.07.2000 23.07.2000     Cash     200,000        10      10      1.48     3 years

                         29.12.2000 29.12.2000     Cash     250,000        10      10      1.85     3 years

                         14.03.2001* 25.06.1997    Cash      100           10      10      0.00     3 years

                         14.03.2001* 20.03.1998    Cash      1,000         10      10      0.01     3 years

                         15.05.2001 15.05.2001     Cash     107,000        10      10      0.79     3 years


                                                                                                           17
                    08.03.2002 08.03.2002    Cash     10,000     10      10     0.07    3 years

                    19.09.2002 19.09.2002    Cash     47,250     10      10     0.35    3 years

                    07.03.2003 07.03.2003    Cash     13,170     10      10     0.10     1 year

                    03.07.2003* 15.05.2001   Cash     31,000     10      10     0.23    3 years

                    03.07.2003* 05.11.1997   Cash     2,200      10      10     0.02    3 years

                    03.07.2003* 18.11.1997   Cash     3,000      10      10     0.02    3 years

                    03.07.2003* 11.09.2002   Cash     11,200     10      10     0.08    3 years

                    03.07.2003* 19.09.2002   Cash     66,200     10      10     0.49    3 years

                    04.09.2003* 18.11.1997   Cash     2,000      10      10     0.01    3 years

                    28.11.2003 28.11.2003    Cash     22,500     10      10     0.17     1 year

                    20.12.2003 20.12.2003    Cash     33,500     10      10     0.25     1 year

                    26.12.2003 26.12.2003    Cash     25,000     10      10     0.19     1 year

                                                    1,221,120                   9.05

2   N.S.Venkatesh   05.11.1997 05.11.1997    Cash     2,500      10      10     0.02    3 years

                    13.03.2000* 18.11.1997   Cash     1,250      10      10     0.01    3 years

                    02.05.2000* 18.11.1997   Cash     3,000      10      10     0.02    3 years

                    20.06.2000* 18.11.1997   Cash     17,750     10      10     0.13    3 years

                    18.07.2000* 18.11.1997   Cash     3,000      10      10     0.02    3 years

                    29.12.2000* 18.11.1997   Cash     21,500     10      10     0.16    3 years

                    15.05.2001* 18.11.1997   Cash     16,000     10      10     0.12    3 years

                    15.05.2001 15.05.2001    Cash     34,500     10      10     0.26    3 years

                    08.03.2002 08.03.2002    Cash     18,000     10      10     0.13    3 years

                    29.05.2002* 18.11.1997   Cash     12,000     10      10     0.09    3 years

                    19.09.2002 19.09.2002    Cash     21,000     10      10     0.16    3 years

                    03.07.2003* 15.05.2001   Cash     26,000     10      10     0.19    3 years

                    03.07.2003* 08.03.2002   Cash     4,000      10      10     0.03    3 years

                    03.07.2003* 19.19.2002   Cash    138,500     10      10     1.03    3 years

                    28.11.2003 28.11.2003    Cash     35,000     10      10     0.26     1 year

                    20.12.2003 20.12.2003    Cash     10,000     10      10     0.07     1 year

                                                     364,000                    2.70

                        TOTAL                       15,85,120                   11.75

Note: * The lock-in period shall commence from the date of allotment of shares in the public issue
or commencement of commercial operations, which ever is later.




                                                                                                  18
5. Existing Shareholding Pattern of the Promoter Group

                                   Particulars                                   No.    of     % to
                                                                                 Equity        Present
                                                                                 Shares        Equity
       a). Promoter                                                               1585120         27.38
       b).Immediate Relative of promoter (Spouse, parent, child, brother,
                                                                                      462900       8.00
       sister)
       c). Company in which 10% or more of the share capital is held by the
       promoter, his immediate relative, firm or HUF in which the promoter or     1527350        26.38
       his immediate relative is a member
       d) Company in which the Company mentioned in (C) above holds 10%
       or more of the share capital                                                      NIL       NIL
       e) Group of individuals or companies or combinations thereof who holds
       20% or more of the equity capital in that company also holds 20% or
       more of the equity capital of the issuer company
       f) HUF in which aggregate share of the promoter and his immediate                 NIL       NIL
       relatives is equal or more than 10% of the total
       g) All persons whose shareholding is aggregated for the purpose of        1344030*        23.21
       disclosing in the prospectus "Shareholding of the
       Promoter group”
       Total                                                                      4919400        84.97
      Note: * includes 821157 equity shares held by NRIs and Foreign Citizen.

6. The minimum promoters’ contribution has been brought in is not less than the specified minimum lot
   of Rs. 25,000/- per application for each individual and Rs. 1,00,000/- from companies.

7. Pre-Issue and Post-Issue Shareholding Pattern of the Company

                                           Pre Issue Capital                    Post Issue Capital
 Particulars                       No. of Equity      % to Present       No. of Equity      % to Post
                                     Shares           Share Capital        Shares         Share Capital
 Promoter, friends, relatives &     4919400*              84.97           4919400*            36.47
 associates and other group
 companies
 Financial Institutions & Mutual        Nil                 Nil                 Nil                Nil
 Funds
 Nationalised Banks                    Nil                 Nil               Nil                   Nil
 Corporate Bodies                    115000                1.99            115000                 0.85
 NRIs / OCB’s                        754855               13.04            754855                 5.60
 Public                                Nil                 Nil            77,00,000              57.08
 Total                               5789255             100.00           13489255               100.00


8. a. The ten largest shareholders two years prior to the date of filing of this Issue document with ROC
are as follows (i.e. as on ___): TO BE FILLED IN AT THE TIME OF FILING TO ROC
            Sl. No.    Name of the Shareholder      No of Shares          % of Issued Capital
            1.
            2.
            3.
            4.
            5.
            6.
            7.
            8.
            9.
            10.
                       Total




                                                                                                          19
    b. The ten largest shareholders as on 10 days prior to the date of filing of the Issue document with
       ROC are as follows (as on ___): TO BE FILLED IN AT THE TIME OF FILING TO ROC
           Sl. No.   Name of the Shareholder      No of Shares         % of Issued Capital
           1.
           2.
           3.
           4.
           5.
           6.
           7.
           8.
           9.
           10.
                     Total



      c. The ten largest shareholders as on date of filing of the Issue document with ROC are as
         follows (as on ____): TO BE FILLED IN AT THE TIME OF FILING TO ROC
           Sl. No.   Name of the Shareholder      No of Shares         % of Issued Capital
           1.
           2.
           3.
           4.
           5.
           6.
           7.
           8.
           9.
           10.
                     Total

9. The Company has not raised any Bridge Loan against the proceeds of this issue.
10. Neither the Company nor its promoters/Directors/Lead Merchant Banker have entered into any
    buy-back and/or standby arrangements for purchase of Equity Shares issued by the Company
    from any person.
11. The securities offered through this public issue will be made fully paid up or may be forfeited
    within 12 months from the date of allotment.
12. As the process of allotment of rounding off to the nearer multiple of 100 result in the actual
    allotment being higher than the Equity Shares offered, an over-subscription to the extent of 10%
    of the net offer to the public can be retained while finalising the allotment.
13. The Company shall not make any further issue of capital in any manner whether by way of issue
    of bonus shares, preferential allotment, rights issue, pubic issue or otherwise during the period
    commencing from the submission of Prospectus to SEBI till the securities offered through this
    Prospectus have been listed or the application moneys refunded on account of non-listing or
    under-subscription, etc.
14. The company presently does not have any intention or proposal to alter its capital structure for a
    period of six months from the date of opening of the issue, by way of split/consolidation of the
    denomination of Equity Shares or further Issue of Equity Shares (including issue of securities
    convertible into exchangeable, directly or indirectly for Equity Shares) whether preferential or
    otherwise, except that the company may issue options to its employee pursuant to any employee
    stock option plan, or if the company goes for acquisitions and joint ventures they might consider
    raising additional capital to fund such activity or use share as currency for acquisition and/or
    participation in such joint venture.
15. The company has not issued any Equity Shares out of revaluation reserves. However, it has
    issued 13,170 Equity Shares on 19.09.2002 for consideration other than cash.
16. At any given point of time, there shall be only one denomination for the Equity Shares of the
    Company and the Company shall comply with such disclosure and accounting norms specified by
    SEBI from time to time.
                                                                                                    20
17. The Company has 107 members as on the date of filing of the Prospectus with SEBI.
18. The Promoters Group/ Directors have not purchased and/or sold /financed any shares of the
    Company during the past six months.
19. 9,84,000 Equity Shares of the Company held by the promoters are pledged with TDB for the Term
    Loan availed by the company to the tune of Rs. 90 Lakhs and 4,68,920 Equity Shares of the
    Company held by the promoters/ promoter group are pledged with ING Vysya Bank for the Term
    Loan availed by the company to the tune of Rs. 248.44 Lakhs.
20. The shareholders of the Company do not hold any warrants, options and right to convert a
    debenture, loan or other instrument, which would entitle them to acquire further shares of the
    Company.
21. A minimum of 50% of the net offer of securities to the public shall initially be made available for
    allotment to retail individual investors who applies for securities of or for a value of not more than
    Rs.50,000/- (2500 equity shares). The remaining 50% of the offer to the public is reserved for
    individuals applying for more than Rs.50,000/- (2500 equity shares) and corporate
    bodies/institutions etc. Unsubscribed portion in either of these categories shall be added to the
    other category interchangeably.

III. TERMS OF THE PRESENT ISSUE

PRINCIPAL TERMS AND CONDITIONS OF THE ISSUE
The equity shares being offered are subject to the provisions of the Companies Act, the Memorandum
and Articles of the Company, the terms of this Prospectus, Application Form, and other terms and
conditions as may be incorporated in the Allotment Letters and other documents/ certificates that may
be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable,
guidelines, notifications and regulations relating to the issue of capital and listing of securities issued
from time to time by SEBI, Government of India, Stock Exchanges, RBI, ROC and/or other authorities,
as in force on the date of the offer and to the extent applicable.

TERMS OF PAYMENT
Applications should be made for minimum of 200 equity shares and in multiples of 100 equity shares
thereafter. The details of amount payable on application and on allotment are as under:
                                     Towards         Towards
                                   Equity Share        Share        Total
                 Particulars
                                      Capital        Premium        (Rs.)
                                       (Rs.)           (Rs.)
              On Application       5.00             5.00           10.00
              On Allotment         5.00             5.00           10.00
              Total                10.00            10.00          20.00
Where an applicant is allotted lesser number of Equity Shares than he / she has applied for, the
excess amount paid on application shall be adjusted towards the amount due on allotment. Further,
unadjusted amount, if any, shall be refunded to the applicant. No interest would be payable on
application money pending allotment up to 30 days from the date of closure of the issue.

ALLOTMENT MONEY
Failure to pay the amount due on allotment on or before the appointed date for payment thereon will
render the allottees liable to pay interest at the rate of 24% per annum or such other lower rate as the
Board of Directors may determine on the amount outstanding from the date so appointed for payment
thereof to the time of actual payment and will also render the Equity Shares including the amount
already paid thereon liable for forfeiture in terms of the Articles of Association of the Company.

INTEREST IN CASE OF DELAY IN DISPATCH OF ALLOTMENT LETTERS/ REFUND ORDERS
The Company agrees that
a) As far as possible allotment of securities offered to the public shall be made within 30 days of the
    closure of public issue.
b) The company further agrees that it shall pay interest @15% per annum if the allotment letters /
    refund orders have not been dispatched to the applicants within 30 days from the date of the
    closure of the issue.


                                                                                                        21
ARRANGEMENT FOR DISPOSAL OF ODD LOTS
Since the Company’s shares will be traded in dematerialised form only and the Market Lot is 1 share,
there is no possibility of odd lots.

RANKING OF EQUITY SHARES
The Equity Shares to be issued shall be subject to the provisions of the Memorandum and Articles of
the Company and shall rank pari passu with the existing Equity Shares of the Company including
rights in respect of dividends.

RIGHTS OF THE EQUITY SHAREHOLDER
Subject to applicable laws, the equity shareholders shall have the following rights:
• Right to receive dividend, if declared;
• Right to attend general meetings and exercise voting powers, unless prohibited by law;
• Right to vote on a poll either in person or by proxy;
• Right to receive offers for right shares and be allotted bonus shares, if announced; right to receive
   surplus on liquidation;
• The right of free transferability; and
• Such other right as may be available to the shareholder of a listed Public Company under the
   Companies Act and Memorandum and Articles of Association of the Company.

MARKETABLE LOT
The Company shall allot Equity Shares in dematerialised form only. The trading in the Equity Shares
of the Company shall only be in dematerialised form for all investors, where the marketable lot is one
(1) Equity Share. Allotment of the Equity Shares will be done in electronic form in lots of one (1)
Equity Share.

PROCEDURE FOR APPLICATION AND MODE OF PAYMENT

AVAILABILITY OF PROSPECTUS AND APPLICATION FORMS
Application forms together with Memorandum containing salient features of the Prospectus may be
obtained from the Registered Office of the Company, Lead Manager, Registrar to the Issue and
Bankers to the Issue named herein or from their branches as stated on the reverse of the application
form. Any individual desiring to have a full copy of the Prospectus may write to the Lead Manager or
to the Registered Office of the Company.

APPLICATION MAY BE MADE BY
  1. Indian Nationals resident of India who are Adult Individuals in single name or joint names (not
     more than three)
  2. Hindu Undivided Family through the Karta of the Hindu Undivided Family
  3. Companies, Bodies Corporate and Societies registered under the applicable laws in India and
     authorised to invest in the Shares
  4. Indian Mutual Funds registered with SEBI
  5. Indian Financial Institutions & Banks
  6. Trusts who are registered under the Societies Regulation Act, 1860 or any other trust law and
     are authorised under its constitution to hold and invest in shares
  7. Commercial Banks and Regional Rural Banks. Co-operative Banks may also apply subject to
     permission from Reserve Bank of India
  8. Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) subject to the
     applicable RBI Guidelines and Approvals, if any.

APPLICATIONS NOT TO BE MADE BY
   1. Minors
   2. Foreign Nationals (except NRIs/FIIs)
   3. Partnership firms or their nominees

A. GENERAL INSTRUCTIONS
1. Applications must be made in the prescribed application form and completed in Full in BLOCK
    LETTERS in English as per the instructions contained herein and in the application form and are
    liable to be rejected if not so made.


                                                                                                    22
   2. The application for equity shares should be for a minimum of 200 equity shares and in
       multiples of 100 shares thereafter. An applicant can make an application only for a maximum
       of equity shares that are offered to the public.
   3. Thumb impressions and signatures other than in English/ Hindi or any other language
       specified in the 8th Schedule to the Constitution of India, must be attested by a Magistrate or
       a Notary Public or a Special Executive Magistrate under his/ her official seal.
   4. Bank Account Details of Applicant: The name of the applicant’s Bank, type of account and
       account number must be filled in the Application Form. This is required for the applicants’ own
       safety and these details will be printed on the refund orders, if any. Applications without these
       details would be treated as incomplete and are liable to be rejected.
   5. Applications under Power of Attorney: In case of applications under Power of Attorney or
       by Companies, Bodies Corporate, Societies registered under the applicable laws, trustees of
       trusts, Provident Funds, Superannuation Funds, Gratuity Funds, a certified copy of the Power
       of Attorney or the relevant authority, as the case may be, must be lodged separately at the
       office of the Registrar to the Issue simultaneously with the submission of the application form,
       indicating the serial number of the application form and the name of the Bank and the branch
       office where the application is submitted.
   6. PAN/ GIR Number: Where an application is for a total value of Rs. 50,000 or more, the
       applicant or in case of application in joint names, each of the applicants should mention his/
       her/ their Permanent Account Number (PAN) allotted under Income Tax Act, 1961 or where
       the same has not been allotted, the GIR Number and the IT Circle/ Ward/ District should be
       mentioned. In case where neither the PAN nor the GIR Number has been allotted, or the
       applicant is not assessed to Income Tax, the appropriate box provided for the purpose in the
       application form must be ticked. Applications without this will be considered incomplete and
       are liable to be rejected.
   7. Joint Applications in the case of individuals: Applications can be in single or joint names
       (not more than three). In the case of joint applications, all payments will be made out in favour
       of the first applicant. All communications will be addressed to the first named applicant whose
       name appears in the Application form at the address mentioned therein.
   8. Applications may be made by Hindu Undivided Family (HUF) through the Karta of the (HUF)
       and will be treated at par with individual applications.
   9. Multiple Applications: An applicant should submit only one application form (and not more
       than one) for the total number of equity shares applied for. Two or more applications in single
       or joint names will be deemed to be multiple applications if the sole and/ or first applicant is
       one and the same. In case of application by Mutual Funds, a separate application can be
       made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such
       applications will not be treated as multiple applications provided that the application made by
       the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to
       the scheme for which the application has been made. Separate applications for electronic and
       physical equity shares by the same applicant shall be considered as multiple applications.
       The Company reserves the right to accept or reject, in its absolute discretion, any or all-
       multiple applications.
   10. Applications by NRIs/FIIs: There is no reservation and separate application form for
       NRIs/FIIs. NRIs/FIIs willing to invest in this issue should follow the relevant RBI Guidelines in
       this regard. Applications by NRIs on non-repatriation basis can be made using the Form
       meant for public out of the funds held in Non Resident (Ordinary) Account (NRO). The
       relevant Bank certificate must accompany such Forms. Such applications will be treated on
       par with the applications made by the Public.
   11. A separate single cheque/Draft must accompany each application form.

   NOTE
   • Applicants are requested to write their names and application serial number on the reverse of
     the instruments by which the payments are being made to avoid misuse of instruments
     submitted along with the applications for equity shares.
   • For further instructions, please read the Application Form carefully.

B. PAYMENT INSTRUCTIONS
    1. Payment may be made by way of Cash or Cheques/ Demand Drafts (money/ postal orders
       will not be accepted) drawn on any Bank, including a Co-operative Bank, which is situated at


                                                                                                     23
         and is a member or sub-member of the Banker’s clearing-house located at the place where
         the application form is submitted, i.e. at designated collection centres.
    2.   Outstation Cheques/ Demand Drafts drawn on Banks not participating in the clearing process
         will not be accepted.
    3.   All Cheques/ Demand Drafts accompanying the Application Form must be made payable to
         the Bankers to the issue and marked "A/c Proalgen Biotech Limited – Public Issue" and
         crossed "A/C payee only". For e.g.” ING Vysya Bank Limited – A/c Proalgen Biotech Limited
         – Public Issue".
    4.   If the amount payable on application is Rs. 20,000 or more, such payment must be effected
         only by way of an account payee Cheque or Bank Draft in terms of section 269SS of the
         Income-Tax Act, 1961. Otherwise the applications may be rejected and application money
         shall be refunded without any interest.
    5.   For Applications made by Stockinvest: The RBI has recently withdrawn the stockinvest
         facilities vide their Circular No. DBOD.NO.FSC.BC.42/24.47.001/2003-04 dated November 5,
         2003

FOR FURTHER INSTRUCTIONS REGARDING APPLICATIONS FOR THE EQUITY SHARES,
INVESTORS ARE REQUESTED TO READ THE APPLICATION FORM CAREFULLY.

SUBMISSION OF COMPLETED APPLICATION FORMS
All applications duly completed and accompanied by Cash/ Cheques/ Demand Drafts shall be
submitted at the branches of the Bankers to the Issue (listed in the Application Form) before the
Closure of the Issue. Applications should NOT be sent to the Office of the Company, the Lead
Manager to the Issue.

Application Forms along with Bank Drafts payable at Chennai can also be sent by registered post with
acknowledgement due to the Registrar to the Issue, M/s. Cameo Corporate Services Limited so that
the same can be received before the closure of the subscription list.

No separate receipts will be issued for the application money. However, the Bankers to the Issue or
their approved collecting branches receiving the duly completed application form will acknowledge
receipt of the application by stamping and returning to the applicant the acknowledgement slip at the
bottom of each application form.

Applications shall be deemed to have been received by the Company only when submitted to the
Bankers to the Issue at their designated branches or on receipt by the Registrar to the Issue as
detailed above and not otherwise.

BASIS OF ALLOTMENT
In the event of over subscription, the allotment will be made on a proportionate basis as given below:

    a. Applicants will be categorised according to the number of shares applied for.
    b. The total number of shares to be allotted to each category as a whole shall be arrived at on a
       proportionate basis i.e. the total number of shares applied for in that category multiplied by
       the inverse of the over subscription ratio (number of applicants in the category x number of
       Shares applied for).
    c. The number of shares to be allocated to the successful allottees will be arrived at on a
       proportionate basis (i.e. total number of shares applied for into the inverse of the over
       subscription ratio).
    d. For applications where the proportionate allotment works out to less than 100 shares, the
       allotment will be made as follows:

            a. Each successful applicant shall be allocated 100 shares; and

            b. The successful applicants out of the total applicants for that category shall be
               determined by the drawal of lots in such a manner that the total number of shares
               allocated in that category is equal to the number of shares worked out as per B
               above.



                                                                                                    24
    e. If the proportionate allotment to an applicant works out to a number that is more than 100 but
       is not a multiple of 100, the number in excess of the multiple of 100 shall be rounded off to the
       higher multiple of 100 if that number is 50 or higher.
    f. If that number is lower than 50, it shall be rounded off to the lower multiple of 100.
    g. All applicants in such categories shall be allocated shares arrived at after such rounding off.
    h. If the shares allocated on a proportionate basis to any category is more than the shares
       allocated to the applicants in that category, the balance available shares for allotment shall be
       first adjusted against any category, where the allocated shares are not sufficient for
       proportionate allotment to the successful applicants in that category. The balance shares, if
       any, remaining after such adjustment will be added to the category comprising of applicants
       applying for the minimum number of shares.
    i. As the process of rounding off to the nearer multiple of 100 may result in the actual allotment
       being higher than the shares offered, the final allotment will be done in consultation with the
       The Stock Exchange, Mumbai (BSE) (Designated Stock Exchange).
    j. Investors may note that in case of over-subscription, the allotment will be on proportionate
       basis as mentioned above, subject to the following conditions:
          i. A minimum of 50% of the net issue to the Indian Public will be made available for
               allotment to individual investors who will apply for Equity Shares of or for a value not
               more than Rs. 50,000/-. This percentage may be increased in consultation with the
               Designated Stock Exchange depending on the extent of response to the issue from
               investors in this category.
          ii. The balance of the Net Issue to the Indian Public shall be made available to investors,
               including Corporate Bodies/ Institutions and Individual applicants who have applied for
               allotment of Equity Shares of or for a value of not more than Rs. 50,000/-.
          iii. The un-subscribed portion of the net Issue to any of the categories specified in (i) or (ii)
               shall be made available for allotment to applicants in the other category, if so required.

Investors may note that in case of over - subscription allotment shall be on proportionate basis and
will be finalised in consultation with the The Stock Exchange, Mumbai (BSE) (Designated Stock
Exchange). The drawl of lots (where the issue is over-subscribed by more than two times) to finalise
the basis of allotment shall be done in the presence of a public representative on the Governing Board
of The Stock Exchange, Mumbai (BSE) (Designated Stock Exchange). The Basis of Allotment shall
be signed as correct by the Executive Director / Managing Director of The Stock Exchange, Mumbai
(BSE) (Designated Stock Exchange) and the public nominee (wherever applicable) in addition to Lead
Merchant Banker and Registrar to the Issue.

DEMATERIALISATION
As per the SEBI Guidelines trading in securities of Companies making a public offer shall be in
dematerialized form only although investors have an option to hold the shares in physical
form or demat form.

The company shall issue the securities only in the dematerialised form as per section 68B of the
Companies Act. Details of depositories account is mandatory and application without depository
account will be treated as incomplete and rejected. Investors will not have the option of getting the
allotment of physical shares. However they may get the shares rematerialized subsequent to
allotment.

1. An applicant who wishes to apply for shares in the electronic form must have at least one
   beneficiary account with any of the Depository Participants (DPs) of NSDL or of CDSL, registered
   with SEBI, prior to making the application.
2. The applicants must necessarily fill in the details (including the Beneficiary Account number and
   Depository Participant’s ID number) in the application form
3. Equity Shares allotted to an applicant in the Electronic mode will be credited directly to the
   respective Beneficiary Account (with the DP).
4. The applicants name in the Depository Instruction Section in the Application Form should be the
   same as appearing in his or its Beneficiary Account. In case of joint applicants, in addition to the
   name, the sequence of the names in the Application Form and the Beneficiary Account should be
   the same.
5. Allotment Advice / Refund Orders will be directly sent to the investors by the Registrar.


                                                                                                        25
6. If incomplete/incorrect investor depository account details are given under the heading request for
   Shares in the Electronic form in the application form, it is liable to be rejected.
7. Responsibility for correctness of applicant’s demographic details given in the Share Application
   form vis-à-vis, those with his/her Depository Participant, would rest with the investor.
8. Shares in electronic form can be traded only on the Stock Exchanges having electronic
   connectivity with the NSDL & CDSL.
9. Trading in the Equity Shares of the Company would be in Dematerialisation Form only for all
   investors.
The company has applied to NSDL & CDSL for allotment of ISIN number and the Tripartite
Agreement with NSDL & CDSL will be entered into before opening of this issue.

ACCEPTANCE OF APPLICATIONS
The Company reserves the right to accept or reject, any application, in whole or in part, without
assigning any reason thereof. If the application is rejected in full, the whole of the application money
received will be refunded by Registered Post to the applicant. If the application is accepted in part, the
excess application money after adjusting for the amount payable on allotment will be refunded to the
applicant. Such refund, if any, will carry interest @ 15% p.a. after 30 days from the closure of the
Issue for the period of delay beyond 30 days.

DESPATCH OF REFUND ORDERS
The company shall ensure dispatch of Refund Orders of value upto Rs. 1500/- under Certificate of
Posting and Refund Orders over Rs.1500/- by Registered Post/ Speed Post only and adequate funds
for the purpose shall be made available to the Registrar to the Issue by the Issuer
company.

SCOPE OF ACTIVITIES OF THE REGISTRAR TO THE ISSUE
The Registrar to the Issue shall also be the Share Transfer Agent and would also be responsible for
all the post issue activities pertaining to this issue.

UNDERTAKINGS BY THE COMPANY
 The company undertakes:
 • That the complaints received in respect of the Issue shall be attended to by the issuer company
   expeditiously and satisfactorily;
 • That the company shall take all steps for completion of the necessary formalities for listing and
   commencement of trading at all stock exchanges where the securities are to be listed within 7
   working days of finalisation of Basis of Allotment;
 • That the funds required for dispatch of refund orders/allotment letters by registered post shall be
   made available to the Registrar to the Issue by the Issuer company;
 • That the Allotment Letters/Refund Orders to the non-resident Indians shall be dispatched within
   specified time;
 • That no further issue of Equity Shares shall be made till the securities Issued through this
   Prospectus are listed or till the application moneys are refunded on account of non-listing, under
   subscription, etc.

UTILISATION OF ISSUE PROCEEDS
The Board of Directors of the Company certifies that:
  • All monies received out of the Fresh Issue shall be transferred to separate Bank account other
    than the Bank account referred to in sub-section (3) of section 73;
  • Details of all monies utilised out of the Fresh issue referred above shall be disclosed under an
    appropriate separate head in the Balance-sheet of the company indicating the purpose for which
    such monies had been utilised;
  • Details of all unutilised monies out of Fresh Issue if any, shall be disclosed under an appropriate
    separate head in the Balance sheet of the company indicating the form in which such unutilised
    monies have been invested;

TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS
M/s Gopalaiyer & Subramanian, Chartered Accountants and the Auditors of the Company have
certified vide their letter dated 28.2.2004 that under the current provisions of the Income Tax Act,
1961 and the existing laws for the time being in force, the following benefits, interalia, will be available
to the Company and its Members:
                                                                                                         26
Income Tax Act, 1961

A. To the Company
    1. Under Section 32 of the Income Tax Act, 1961 the Company is entitled to claim depreciation
        on tangible and intangible assets as explained in the said section.
    2. Subject to compliance of certain conditions laid down in Section 35(2AB) of the Income Tax
        Act, 1961 in respect of any capital expenditure incurred other than the expenditure incurred
        on the acquisition of any land and building, on scientific research related to the business of
        the company to the extent of expenditure incurred.
    3. Subject to Compliance of certain conditions laid down in section 80HHC of the Income Tax
        Act, 1961 the company will be entitled to the benefit of deduction from its total income
        chargeable to income tax, of an amount equal to 30% of profits for Assessment year 2004-05,
        derived from the export of goods out of India, the proceeds where of are realized in
        convertible foreign exchange, to the extent calculated in accordance with the Provisions of
        that Section.
    4. The Company may be liable to pay Income Tax on the Book profits Computed as per Section
        115 JB of the Income Tax Act, 1961.

B. To the Members of the Company
    1. Under Section 112 of the Income Tax Act, 1961 and other relevant provisions of the Act, long
        term capital gains arising on transfer of shares in the company i.e. if shares are held for a
        period exceeding 12 months shall be concessionally taxed at the flat rate of 20% [+ applicable
        surcharge] [after indexation as provided in the second proviso to Section 48] or at 10% [+
        applicable surcharge] [without indexation] at the option of the shareholder.
    2. Under Section 115AD of the Act, income received by Foreign Institutional Investor in respect of
        securities shall be taxed @20%. Income by way of Short term Capital Gains arising from the
        transfer of such securities shall be taxed @30%. Income by way of Long Term Capital Gains
        arising from the transfer of such securities shall be taxed @10%.
    3. Section 10(34) provides that any income by way of dividends referred to in section 115 O i.e.
        dividend declared, distributed or paid by a domestic company, on or after 1.4.2003 is exempt
        in the case of all categories of assesses in relation to assessment year 2004-05 and
        subsequent years.
C. Additional Benefits available to Non-Residents Indians
    Non-resident Indian have an option to be governed by the special provisions of Chapter XIIA of
    the Act according to which:
       a) Under Section 115 G of the Act, it shall not be necessary for the Non-resident Indians to
       furnish their Return of Income, under Section 139(1) of the Income Tax Act if their source of
       income is only investment income or income by way of long term capital gains or both,
       provided income tax deductible at source under the provisions of chapter XVII B has been
       deducted from such income.
       ! The benefit conferred on a Non-resident Indian, assessee will be available even after the
           assessee becomes a resident if declaration in writing is filed along with the return of
           income under Section 139(1) of the IT Act, to the effect that the provisions of Chapter XII A
           shall continue to apply to him in respect of investment income derived from Foreign
           Exchange asset vide Section 115 H of the Act, until the Transfer or conversion (otherwise
           than by transfer) into money of such assets.
       ! Under Section 115 I of the Act a Non-Resident Indian, if he elects by so declaring in the
           return of his income for that assessment year not be governed by the above mentioned
           special provisions of chapter XII-A, then he will be entitled to tax benefits available to
           resident individuals.

D. Benefits available to Foreign Institutional Investors (FIIs)
   i. In terms of section 10(34) of the Income Tax Act, 1961, any income by way of dividends
       referred to in section 115-O (i.e. dividends declared, distributed or paid on or after 1 April
       2003) received on the shares of the company is exempted from the tax.
   ii. The income by way of short term capital gains or long term capital gains (not covered under
       section 10(36) of the Act) realized by FIIs on sale of shares in the company would be taxed at
       the following rates as per section 115AD of the Income Tax Act, 1961.
        - Short term capital gains – 30% (Plus applicable surcharge)

                                                                                                     27
         -Long term capital gains – 10% plus applicable surcharge (without cost indexation and
         protection against foreign exchange fluctuation)
         (Shares held in a company would be considered as a long term capital asset provided they
         are held for a period exceeding 12 months.)
    iii. Under section 54EC of the Income Tax Act, 1961 and subject to the conditions and to the
         extent specified therein, long term capital gain (in cases not covered under section 10(36) of
         the Act arising on the transfer of share of the company will be exempt from capital gain tax if
         the capital gain are invested within a period of 6 month after the date of such transfer for a
         period of last 3 year in specified bonds.
    iv. Under section 54ED of the Income Tax Act, 1961 and subject to the conditions and to the
         extent specified therein, long term capital gains (in cases not covered under section 10(36) of
         the Act) on the transfer of shares of the company, as and when it is listed, will be exempt from
         capital gains tax if the capital gain are invested in shares of an India company forming part of
         a eligible public issue, within a period of 6 months after the date of such transfer and held for
         a period of at least one year. Eligible public issue means issue of equity shares which
         satisfies the following conditions, namely –
         (a) the issue is made by a public company formed and registered in India;
         (b) the shares forming part of the issue are offered for subscription to the public;

E. Benefits available to Venture Capital Companies/Funds
   In terms of section 10(23FB) of the Income Tax Act, 1961 all Venture capital companies/funds
    registered with Securities and Exchange of India, subject to the conditions specified, are eligible
    for exemption from income tax on all their income, including dividend from and income from sale
    of shares of the company.

Wealth Tax Act, 1957
Shares of the Company held by the shareholder will not be treated as an asset within the meaning of
section 2(ea) of Wealth Tax Act, 1957; hence Wealth Tax Act will not be applicable.

Gift Tax Act, 1958
Since the provisions of the Gift Tax Act 1958 do not apply in respect of any gift made on or after
October 1, 1998 any gift of shares in the Company will not attract Gift Tax.

IV. PARTICULARS OF THE ISSUE
OBJECTS OF THE ISSUE
1. To expand the capacity to manufacture Natural Betacarotene from 1.5 MTPA [7.5 MTPA as 20%]
   to 4.0 MTPA [20.0 MTPA as 20%].
2. To meet the expenses of the Issue
3. To list the equity shares of the company on the Stock Exchanges

The main Objects Clause and Objects incidental or ancillary to the main Objects Clause of the
Memorandum of Association of the Company enables the Company to undertake the existing
activities and the activities for which the funds are proposed to be raised through the present issue.
We, further confirm, that the activities of the company carried out until now is in accordance with the
Object of the Memorandum of Association of the Company.




                                                                                                       28
COST OF THE PROJECT AND MEANS OF FINANCE
The expansion Project has been appraised by M/s ING Vysya Bank Ltd., present bankers to the
Company, which indicates, interalia, Cost of Project and Means of Finance. As per their Report dated
21.2.2004, the details are as follows:
                                           Cost of Project
                                                                     Amount
                    Particulars                                      (Rs. in Lakhs)
                    Site & Development                                           140.00
                    Building & Civil Works                                       191.00
                    Plant & Machinery                                            850.00
                    Erection & Commissioning                                      64.00
                    Miscellaneous Fixed Assets                                    48.00
                    Preliminary & Pre-operative Expenses                          20.00
                    Working Capital Requirements                                 103.00
                    Issue Expenses                                                56.00
                    Contingencies                                                 68.00
                    Total                                                    1,540.00
                                             Means of Finance
                    Particulars                                         Amount
                                                                     (Rs. in Lakhs)
                    Equity Share Capital                                        770.00
                    Share Premium                                               770.00
                    Total                                                    1,540.00

DEPLOYMENT OF FUNDS
The Company has incurred certain amount towards the Project Cost as on 28.02.2004, which have
been met out of the temporary borrowings. This expenditure has been certified by M/s Gopalaiyer &
Subramanian, Chartered Accountants, Statutory Auditors of the Company vide their letter dated
February 28, 2004 and the details are as under:
                                                                            Rs. In lakhs
               Sl. No                      Particulars                     Amount
                 1.      Preliminary & Pre-operative Expenses                   5.00
                 2.      Issue Expenses                                         7.59
                         Total                                                 12.59

Year wise break-up of the expenditure proposed to be incurred on the project and as estimated
by the Company is as follows:
                                                           Amount (Rs. in Lakhs)
                            Particulars                    2003-04     2004-05            Total
           Site & Development                               5.00        135.00        140.00
           Building & Civil Works                                       191.00        191.00
           Plant & Machinery                                            850.00        850.00
           Erection & Commissioning                                     64.00             64.00
           Miscellaneous Fixed Assets                                   48.00             48.00
           Preliminary & Pre-operative Expenses             5.00        15.00             20.00
           Working Capital Requirement                                  103.00        103.00
           Issue Expenses                                   10.00       46.00             56.00
           Contingencies                                                68.00             68.00
           Total                                            20.00      1520.00        1540.00

Pending utilization, the proceeds of the issue will be invested in Bank Deposits and/or Gilt Edged
Government Securities, either directly or through Government Security based funds.

                                                                                                  29
APPRAISAL
M/s ING Vysya Bank Ltd. are the present Bankers to the company vide their Report no.
                           st
CNRO/SME/1047 dated 21 February 2004, they have carried out the project appraisal. Funds raised
by the proposed public issue of equity shares by the company is indicated as “Means of Finance” for
carrying out the project.

The weakness and threats given in the Appraisal Report for the proposed project of the Company is
as under:
Weakness
    (a) The product is in the initial entry stage in the domestic market and international markets.

    (b) The company is yet to achieve their projected level of production of Natural Betacarotene.
        Their past performance has been very low in terms of production / sales. Viewed against this
        background, their projections seem to be ambitious. However the company has commenced
        the production only in July 2003.

   (c) The expansion project involves discharge of biomass-harvested wastewater, which is salty in
        nature, and is an issue relating to pollution of environment.
Threats
   (a) Import duties when cut over a five-year period, as proposed by the Indian government, can
        cause a dent in the profitability in respect of the domestic sales.

    (b) International players sets current pricing standard.


V. COMPANY, MANAGEMENT AND PROJECT
BRIEF HISTORY OF THE COMPANY
The Company was originally incorporated on March 3, 1997 as “ACL Chemicals Limited” and the
Certificate for Commencement of Business was obtained on April 22, 1997 under the Companies Act,
1956. The name was subsequently changed to “Proalgen Biotech Limited” on July 18, 2002.

The Company was formed with a focus on products from natural sources. Towards this end, the
company set up an in-house R&D facility in 1997. In the year 1998 the company ventured in to sale of
bio pesticides developed in-house. The company also initiated work on developing a process
technology for Natural Betacarotene and other algal-based products after Dr. N. S. Venkatesh joined
the Company in end 1997. The company completed developing the process technology to
manufacture Natural Betacarotene from marine algae and filed its first patent in Nov 1999. Based on
their application, the Dept. of Scientific and Industrial Research, Ministry of Science & Technology
New Delhi (DSIR) granted its recognition of in-house R & D Unit to the Company which is valid upto
31.3.2006 and renewable thereafter. This enabled the Company to approach Technology
Development Board, New Delhi (TDB) to support in commercialising in-house developed Technology.
After due appraisal, TDB approved a soft Term Loan to commercialise the manufacturing of Natural
Betacarotene. There was however an initial delay of one year, in commercialisation due to a delay in
obtaining statutory clearance from Tamil Nadu Pollution Control Board.

After the necessary clearances, the unit started trial runs and the output from these was provided to
various companies as samples. Based on the feedback from some reputed prospective buyers, the
Company amended the process to suit final product requirements. This also caused some delay in
commercialising the project. In the meantime, the Company approached M/s. ING Vysya Bank Ltd. for
expansion and balancing equipment and were sanctioned a Term Loan of Rs. 350 lakhs.

The company had by this time converted the Indian patent in to one under PCT that has since been
published internationally. The project with a capacity of 1.5 MTPA [7.5 MTPA as 20%] formulation was
completed by March 2003 and the company started its commercial production from July 2003. The
Company is constantly upgrading its process technology to make it eco friendly and cost effective.




                                                                                                  30
MAIN OBJECTS OF THE COMPANY
 1. To manufacture, buy, sell, import and export and generally deal in all kinds of pesticides,
    vermicides, insecticides, fungicides, herbicides, rodenticides, fats, sprays, agro-chemicals,
    hormones, dusts, powders granules, growth regulators for plants, plant nutrients, and other allied
    plant protection chemicals including formulations, technical grade pesticides, chemical,
    intermediates, solvents and emulsifiers.
 2. To undertake research and development work for developing processes for manufacture of
    pesticides, herbicides, chemicals, insecticides, fungicides, neutraceuticals, pharmaceuticals
    products and their derivatives.
 3. To manufacture all kinds of plant protection equipments, machineries, instruments and other
    agricultural equipments, tools appliances and irrigation systems.
 4. To manufacture all kinds of bio-pesticides including neem based pesticide, fertilizers, bio-fertilizers
    and bio-chemicals from plants, earth and other sources and to breed insects parasites and
    earthworms for agricultural and other purposes.
 5. To manufacture acids, alkalies, corrosive and anti-corrosive substances, non-corrosive substances
    and elements and intermediates in mixture or compound forms.
 6. To manufacture buy, sell, import, treat and deal in any kind of raw materials including plastics and
    packaging materials etc.,
 7. To manufacture, buy, sell, deal-in, import and export, Betacarotene, lovastatin, spirulina and other
    allied product
 8. To carry on the business of manufactures, dealers, importers and exporters of all kinds of drugs and
    pharmaceuticals, compounds, formulations, intermediates, derivatives, and health care products.

PRESENT ACTIVITIES
The company has set up its plant to produce 1.50 MTPA [7.50 MTPA as 20%] of Natural
Betacarotene at Naduvakkarai Village, Kancheepuram Dist. in Tamil Nadu. The Commercial
production started in July 2003 and presently it is producing Natural Betacarotene and supplying as
“Natrotene”, Natural Mixed Carotenoids to Pharma companies such as P I Pharmaceuticals Pvt. Ltd.,
Sanat Products Ltd., Carewell Pharma, Albert David Ltd., Paris Dakner Microspherules Pvt. Ltd.,
Windlas Biotech Limited etc. The company produces the final product in two formulations namely as
Oil Form and Powder Form.


PROMOTERS AND THEIR BACKGROUND

                   Mr. N. S. Balamukundan, Managing Director S/o. Shri. N. S. Parthasarathi and
                   aged about 41 years. After graduating in chemistry from University of Madras,
                   Chennai in the year 1984, he qualified as a Chartered Accountant in the year 1989
                   and set up accounting practice. As a practicing Chartered Accountant, his focus
                   was on financial and management consultancy for small/medium businesses. In
                   1994, he joined the Board of Applied Cryogenics Limited, an engineering marketing
                   company pioneering and specialising in a material improvement technology namely
                   cryogenic processing and actively participated in the day to affairs of the company
                   till his resignation in the year 1998. He co-founded Primero Enserve (India) Pvt.
Ltd., in 1997 to carry out engineering marketing and consultancy. Inspired by the enormous potential
for products based on Biotechnology, in the pharmaceuticals and pesticide industry, he founded
Proalgen Biotech Limited [formerly ACL Chemicals Limited] in the year 1997.

The Issuer company confirmed that the Permanent Account Number, Bank Account Number and
Passport Number of Shri. N. S. Balamukundan has been intimated to the BSE and NSE. The details
are as under: -

           Permanent Account Number [PAN]           AAFPB 9161J
           Passport Number                          A5870345
           Voter ID Number                          TN/03/009/035/351749
           Driving LICENCE Number                   R/TN/009/025218/2003
           Bank Account Number                      014010100032069
           UTI Bank, T. Nagar, Chennai.



                                                                                                        31
                     Dr. N. S. Venkatesh, Director – Technical S/o. Shri. N. S. Parthasarathi and
                     aged about 39 years. He graduated in Botany in the year 1987 and obtained
                     Masters Degree in the year 1989 from the University of Madras, Chennai. He
                     has been conferred the Degree of Doctor of Philosophy by the University of
                     Madras, Chennai in the year 1996. He joined Proalgen Biotech Limited in
                     September 1997 as General Manager and elevated to the post of Director,
                     Technical in July 1999.

                     His previous work experience is as follows:
       Biocon India Ltd - Assistant Manager - June 1995 – August 1997
        • Established the upstream (through solid substrate fermentation) and the downstream
            process for Lovastatin and scaled it up to production.
        • Worked on the transformation of Lovastatin to Simvastatin and upstream & downstream
            Cyclosporin A.

       Parry Agro Industries - Research Associate - Oct 1994 - June ' 1995
        • Improved the flavour content of tea. (Patent Pending).

       Research Associate – under Department of Science and Technology July ' 92 - Dec ' 93
        • Mass culture of phototropic bacteria for single cell protein and hydrogen production
           using a halophilic phototropic bacterium Rhodospirillum salinarum.
        • Worked on effluent treatment and mass culture of the blue green algae Spirulina
           fusiformis.

The Issuer company confirmed that the Permanent Account Number, Bank Account Number and
Passport Number of Shri. N. S. Venkatesh has been intimated to BSE and NSE. The details are as
under: -
         Permanent Account Number [PAN]       ABOPV0034C
         Passport Number                      E4559196
         Voter ID Number                      TN/03/009/0351156
         Driving LICENCE Number               10369/NPDL/85
         Bank Account Number                  0171000013496
         – HDFC Bank, Anna Nagar, Chennai

KEY MANAGERIAL PERSONNEL
1. Mr. T. Srinivasan S/o Late Shri. M.R.T. Chari is Corporate Advisor–Marketing. He worked earlier
   as Director – Marketing, Dalmia Industries Limited, New Delhi between 1996-1998, which is
   engaged in the marketing of OTC Health Care Products. He has 3 decades of experience in
   various segments including clinical trials, market research, launching of new molecules etc. He
   also worked as Vice President & member of Advisory Committee of Dolphin Laboratories Limited,
   Kolkata between 1990 and 1996. He started his marketing career with Sarabhai Chemicals
   Limited, Baroda and worked with them between 1965 and 1989. He is a visiting faculty in
   Management Development Institute, Gurgaon/New Delhi.
2. Mr. R. Balaji S/o Shri. D Rajagopal, Asst. General Manager has about 18 years of experience in
   handling projects related to the establishment, production and harvest of blue green algae
   particularly spirulina. He worked with AMM Murugappa Chettiar Research Centre (MCRC) as
   Research Technologists between 1985-1997 and handled projects related to Energy, Electronics,
   Rural Development and Spirulina Algal Technology and also presented papers under various
   topics. He is also a co-author for many publications from MCRC on Spirulina.
3. Mr. P. Sathyamurthy S/o Shri. S. Parthasarathy is a B.Sc.Chemistry graduate with more than 10
   years expertise in solid substrate fermentation and algal culture. His major thrust area is mass
   production of enzymes and its downstream using advanced techniques viz., ultra-filtration using
   hollow fiber technology and he has been involved in the development of the process technology
   for mass culture of Dunaliella Salina since 1997 at Proalgen. He is also trained in ISO 9000
   documentation and has expertise in purification of antibiotics at Biocon.


                                                                                                32
4. Mr. B. Sivakumar S/o Shri. R. Balasubramanian is Manager–Finance & Administration. He has
   more than 6 years experience with Proalgen and managing its finance, accounts and
   administration.
5. Mr. P. Selvakumar S/o Shri. C P Ponnurangam is Manager–Factory. He has more than 9 years
   working experience with 6 years at Proalgen in managing all matters relating to the factory.
6. Dr. C. Meenakshi Sundaram S/o Shri. M. Chelliah is Senior Executive-Technical. He has more
   than two and half years experience with Proalgen and is presently managing the downstream
   process parameters.
Sl.       Name           Age     Qualification      Present     Experience   Joining      Previous
No.                    (years)                    Designation      (Yrs)      Date      Employment
 1. T. Srinivasan         59     B.Sc. (Madras    Corporate     37           March     Director –
                                 University),     Advisor                    2001      Dalmia
                                 PGDM                                                  Industries,
                                 (Ahmedabad                                            Delhi
                                 Productivity
                                 Council)
 2. R. Balaji            40      M. Sc.           Asst.         16           Nov,      Senior
                                 (Annamalai       General                    1997      Scientist -
                                 University)      Manager                              MCRC
 3. P. Sathyamurthy      32      B. Sc.           Asst.         6            Nov,      Jr. Exec.
                                 (University of   Manager-                   1997      Production -
                                 Mysore)          Production                           Biocon Ltd.,
                                                                                       (1993-97)
 4. B. Sivakumar         32      B. Sc (Madurai   Manager-      6            April,    Accounts
                                 Kamaraj          Finance &                  1997      Officer –
                                 University),     Admn.                                Applied
                                 ACA, Grad.                                            Cryogenics
                                 CWA                                                   Ltd.,
 5. P. Selvakumar        42      B. Com           Manager-      6            July,     Nil
                                 (University of   Factory                    1997
                                 Madras)
 6. Dr. C. Meenakshi     31      PhD (Madras      Senior        3            Feb.,     Technologists-
    Sundaram                     University)      Executive-                 2001      MCRC,
                                                  Technical                            Chennai
Notes:
   1. All the above-mentioned personnel are permanent employees of the Company.
   2. There is no understanding with the major shareholders, customers, suppliers or any others
       pursuant to which any of the abovementioned personnel have been recruited.
   3. There is no change in the key managerial personnel in the last one year prior to the date of
       filing the Prospectus except those mentioned above.
   4. The Company will recruit more personnel to meets its expansion project requirements as per
       the Schedule of Implementation.

BOARD OF DIRECTORS
  Sl.
       Name, Designation, Address                        Other Directorship
  No.
  1. Dr. A.S. Aiyar, Chairman                            Health Care Processors Pvt.
      No.II A, Vani Villas Apts, 163, Van7i Villas Road, Ltd. - Director
      Basavangudi, Bangalore –560 004.
  2. N. S. Balamukundan, Managing Director               Primero Enserve (India) Pvt.
      C-2, Kalki Flats, No.21, Bazullah Road,            Ltd. - Director
      T. Nagar, Chennai – 600 017
  3. N. S. Narasimhan, Director,                         Nil
                  nd          th
      “Gayathri” 2 Floor, 15 Road Extn.,
      Santacruz (West), Mumbai – 400 054.
  4. Dr. N. S. Venkatesh, Director -Technical            Nil
                               st
      4/238, Sankarapuram 1 Street,
      Pallavakkam, Chennai – 600 041




                                                                                                      33
DETAILS OF GUARANTEES
The Promoters have extended personal guarantee to M/s. Technology Development Board, New
Delhi and ING Vysya Bank Ltd., Chennai for the Loans extended to the company whose details are
given elsewhere in the Prospectus.

INTEREST OF DIRECTORS AND PROMOTERS
Directors may be deemed to be interested to the extent of the sitting fees and other remuneration for
the services rendered and the reimbursement of expenses, if any, payable to them under the articles.
The Directors may also be deemed to be interested to the extent of –
    A. The shares, if any, held by them or by the relatives or by firms or companies of which any of
        them is a partner and a Director/Member respectively.
    B. The shares, if any, out of the present Issue that may be subscribed for and allotted to them or
        their relatives or any Company in which they are Directors/Members of to firms in which they
        are partners.
    C. The salary incase of Mr. N. S. Balamukundan and Dr. N. S. Venkatesh.

MANAGEMENT
The overall management of the Company is vested with Mr. N. S. Balamukundan and Dr. N. S.
Venkatesh to manage the day-to-day affairs of the Company under the guidance and supervision of
the Board of Directors.

ORGANISATION CHART

                                 BOARD OF DIRECTORS



                                  MANAGING DIRECTOR




       Marketing            Finance, Accounts &                Director -Technical
      Department               Administration




                                                       Research &            Production & Quality
                                                       Development                 Control



DETAILS OF THE PROJECT
1. REGISTERED OFFICE
   The Registered Office of the company is located at 15, III Avenue, Indira Nagar, Adyar, Chennai-
   600 020. The total office area is about 4000 sq. ft and it has been taken on Lease for a period of
   11 months from Mr. S. S. Sudanthiram w.e.f. 01.02.2004 to 31.12.2004 on a monthly rental of Rs.
   25,000/- up to 31.3.2004 and at Rs. 30,000/- thereafter up to 31.12.2004 with a right to the
   company to seek extension of tenancy for a further period of eleven months with an escalation on
   the prevailing rent by 10%. Mr. S. S. Sudanthiram is not related with the Promoters of the
   Company.

2. PLANT/ FACTORY
   The existing Plant/Factory of the Company is located at Nadavukarai Village, Thirukazhukundrum
   Taluk, Kancheepuram Dist., Tamil Nadu on the freehold land of 16.32 acres bought by the
   Company from various people in the year 1997-98 and the total land utilized so far is about 7
   acres. The expansion at the proposed site (at Kodur Village, Cheyyur Taluk, Kancheepuram Dist.,
   Tamil Nadu) will mainly be used for growing ponds and flocculation facility. The flocculated
   biomass will be brought back to the existing site where additional processing capacity will be
   created.

                                                                                                    34
3. BREAK-UP OF LAND/SITE & DEVELOPMENT EXPENSES
   The Company has identified about 154 acres of Salt Land [144 acres - Leasehold and 10 acres -
   Freehold] at Kodur Village, Cheyyur Taluk, Kancheepuram Dist., Tamil Nadu along the western
   side of East Coast Road on the residual banks of Buckingham Canal. The Leasehold Land
   belongs to the Revenue Dept. of the State Govt. and the necessary application for the allotment
   of such Land has been filed to the Special Commissioner & Commissioner of Land
   Administration, Ezhilagam, Chennai and Kancheepuram District Collector. The acquisition/lease
   of Land will be completed as per the Schedule of Implementation and the expenses details are as
   under:
                                                                                     Amount
            Land/Site Cost for Freehold Land                                      (Rs. in Lakhs)
            No of acres                                          10
            Cost per acre including registration fee            3.00
            [Rs. Lakhs]
            Cost of Land [Rs. Lakhs]                                                    30.00
            Sub-Total                                                                   30.00

                                                                                     Amount
            Land/Site Development Expenses                                        (Rs. in Lakhs)
                                                           70 Acres@ 0.75
            Site Development                               Lakhs per Acre               52.50
            Internal Roads                                                              20.00
            Fencing                                                                     35.00
            Gates                                                                       3.00
            Sub - Total                                                              110.50
            Grand Total                                                              140.50
            Rounded off to                                                           140.00

4. BREAK-UP OF BUILDING & CIVIL WORKS EXPENSES
   The Company has obtained quotations from Deepak Builders, Chennai (Civil Engineers &
   Contractors) for their proposed Building & Civil works vide their quotation dated 05.11.2003 and
   the details of the same are as under:
                          Particulars              Type     Total Area      Rate                Cost
                                                              Sq. feet   Rs./Sq. feet    Rs. (Lakhs)
          Process Building                         RCC         5000         1800            90.00
          Material Storage Building               MOCS         1200          600                7 .20
          Utility Building                        MOCS         2000          600            12 .00
          Diesel Generator Room                   MOCS         1000          600                6 .00
          Office & Canteen Area                    RCC         2000          650            13 .00
          Security Rooms                          2 Nos.        950          500                4.75
          Toilets                                 4 Nos.       1900          700            13.30
          Septic Tank Area                        4 Nos.         -            -                 2.70
          Sump – Water storage                    2 Nos.         -            -             14 .00
          Security Quarters                            2       1200          500                6 .00
          Site Storage Building                        1        500          500                2.50
          Site Toilets & Septic Tanks                  2         -            -                 4.00
          Site Building                            RCC         1000          750                7.50
          R&D Building                             RCC         1000          750                7.50
          Total                                                                            190 .45
          Rounded off to                                                                    191.00


                                                                                                        35
5. DETAILS OF PLANT & MACHINERY
   Break-up of Plant & Machinery costing above Rs. 1.00 Lakh each are given hereunder:

     Sl.          Description             Supplier/Manufacturer         No of     Date of Total Cost
     No.                                                                Units    quotation  Rs. in
                                                                                            lakhs
                                                                                22.12.20031
           Water storage Ponds        SRF Ltd. / Deepak Builders
      1                                                                  2        3.12.2003    12.80
                                                                                22.12.20031
      2    Algal Ponds                SRF Ltd. / Deepak Builders         15       3.12.2003   115.20
      3    Paddle Agitators           Techno Consultants, Chennai        15      22.12.2003    35.55
      4    Spray drier                V.R. Associates, Bangalore          1      22.12.2003    19.24
      5    Harvest sheets             SRF Ltd., / Deepak Builders         1      22.12.2003    12.36
      6    Conveyors                  Techno consultants, Chennai         1      22.12.2003     4.24
      7    Extractors                 Techno consultants, Chennai         1      22.12.2003    17.23
      8    Reactor                    V.R.Associates, Bangalore           1      22.12.2003    14.56
      9    Reactors                   V.R.Associates, Bangalore           2      22.12.2003    12.48
      10   BUCHI Rotovap (Imported)   SMP                                 2      22.12.2003    39.49
      11   Micro Filtration           Suraj Enterprises, Chennai          2      22.12.2003     6.18
      12   Sparkler Filter            Techno Consultants, Chennai         1      22.12.2003     1.91
           Cryogenic Filtration       Prime Cryogenics Technology (I)
      13   System                     Pvt Ltd.                           1      15.12.2003     23.87
      14   Solvent storage tank       Pranav Consultants, Chennai        1      22.12.2003      2.89
      15   Solvent storage tanks      Pranav Consultants, Chennai        2      22.12.2003      3.91
      16   Storage tank               Pranav Consultants, Chennai        1      22.12.2003      2.40
                                      Adsensors (India) Pvt Ltd.,
      17   Instrumentation            Chennai                            1      22.12.2003     15.47
      18   Solvent Rectification Unit V.R. Associates, Bangalore         1      22.12.2003      5.20
      19   Formulation vessel         Techno Consultants, Chennai        1      22.12.2003     12.88
      20   Homogeniser                Techno Consultants, Chennai        1      22.12.2003      3.17
      21   Vibro Sieve                Techno Consultants, Chennai        2      22.12.2003      4.33
      22   Sigma Mixer                Techno Consultants, Chennai        2      22.12.2003      5.36
                                      Dharma Scientific Products,
      23   Peristaltic Pump           Chennai                            2      13.11.2003      2.12
                                      Madras Airfilters Pvt Ltd.,
      24   Aseptic Packaging          Chennai                            2      22.12.2003     21.51
      25   Centrifuge                 Techno consultants, Chennai        1      22.12.2003      4.02
      26   Cold Room                  Fast flow systems                  1      22.12.2003     12.48
      27   DM Plant & Sand Filter     Ultra Pure Systems, Chennai        1      12.11.2003      4.01
      28   Cooling Tower              Star Cooling Tower                 1      23.12.2003      1.52
      29   Thermic Fluid Heater       Enmax Engineers, Chennai           2      13.11.2003      9.72
      30   Chimney and accessories KSSR Enterprises, Chennai             2      22.12.2003      5.15
           Algal Transport Truck &
      31   Container                  ACT India / Pranav Consultants     1      10.11.2003      9.49
      32   Air Compressor             Ingersoll Rand                     2      23.12.2003     26.20
      33   Chilling Plant             Maars Refrigeraton, Chennai        1      23.12.2003     23.54
      34   Gensets                    Genlite Engineering                2      27.10.2003     29.44
      35   Genset                     Genlite Engineering                1      27.10.2003      2.81
      36   Piping                     Sri Vari Enterprises, Chennai      1      22.12.2003     46.35
      37   Piping Cladding            KSSR Enterprises, Chennai          1      22.12.2003     15.45
      38   Electrical                 ESSAR Enterprises, Chennai         1      22.12.2003     41.45
      39   HT conversion              ESSAR Enterprises, Chennai         1      22.12.2003     25.25
      40   Valves                     VGS Engineers, Chennai                    22.12.2003      7.17
      41   Tools                      Estimated                          1                      6.06
      42   Spares                     Estimated                          1                      8.08


                                                                                                       36
         Gas chromatograph            Niulab Equipment company Pvt
      43 (Imported)                   Ltd.,                               1      03.11.2003           9.52
      44 HPLC (Imported)              Anatek Services Pvt Ltd., Mumbai    1      22.12.2003          47.78
                                      Niulab Equipment company Pvt
      45   Weighing Balance           Ltd.,                               1      30.10.2003           1.09
                                      Niulab Equipment company Pvt
      46   Karl Fischer (Imported)    Ltd.,                               1      30.10.2003           6.40
      47   BUCHI Rotovap (Imported) SMP                                   1      22.12.2003           4.73
                                      Madras Airfilters Pvt Ltd.,
      48   Laminar Flow Chamber       Chennai                             1      22.12.2003           1.18
                                      Madras Airfilters Pvt Ltd.,
      49   Fume Cupboard              Chennai                             1      22.12.2003           1.13
      50   Orbital Shaker             Scigenics Biotech Pvt Ltd.,         1      24.10.2002           1.46
      51   Glassware                  Estimated                           1                          10.00
           Microscope- Stereo Zoom
      52   (Imported)                 Scientific Systems, Chennai         1      22.12.2003           1.20
      53   Cooling Centrifuge         Scientific Systems, Chennai         1      22.12.2003           1.16
      54   Chemicals, Reagents        Estimated                                                       3.00
      55   Standards                  Estimated                                                       1.00
      56   Culture Collection         ATCC, IMI, SAG etc., Estimated                                  5.00
           Millipore Water Generation
      57   (Imported)                 Millipore, Bangalore                1      23.12.2003           8.27
           Others
      58   (< Rs.1.00 Lakh each)                                       Various      --               74.86
           Total                                                                                 850.31
           Rounded off to                                                                        850.00

Note:
The Orders for the entire Plant & Machineries of Rs. 850 lakhs constituting 55.19% of the total
expansion project shall be placed as per the schedule of implementation mentioned elsewhere in the
prospectus. The expected date of supply shall be six to eight weeks from the date of placement of
order. Out of the Total cost of Rs. 850.00 Lakhs, imported machinery will cost Rs. 117.39 Lakhs.

Plant Capacity
The present capacity of the Plant is 1.5 MTPA [7.5 MTPA as 20%] and the proposed additional
capacity will be 2.5 MTPA [12.5 MTPA as 20%] of Natural Betacarotene based on 300 working days a
year. There are many inter-related factors, which will affect the output of this product as this is
cultured in open ponds. Attainment of plant capacity will mainly depend on favorable weather
conditions.

6. DETAILS OF MISCELLANEOUS FIXED ASSETS
   The break-up of the expenditure as estimated is given below:

                                                                                      Amount
                                   Particulars                                      (Rs. in Lakhs)
        Office Equipments (Computers, Fax, Networking & Interiors)                        18.75
        Furniture & Fixtures                                                                  6.00
        Fire Safety Equipments                                                            10.00
        Light Commercial Vehicle                                           1 No.          12.00
        Two wheelers                                                       3 Nos.             1.50
       Total                                                                              48.25
       The company is yet to identify the supplier for the above mentioned items.

7. BREAK-UP OF PRELIMINARY & PRE-OPERATIVE EXPENSES
   The break-up of the expenditure as estimated is given below:


                                                                                                             37
                                                                   Amount
                   Particulars                                   (Rs. in Lakhs)
                   Registration & Licensing Charges                    15.00
                   Company’s Registration Charges - ROC                  5.00
                   Total                                               20.00

8. WORKING CAPITAL COMPUTATION
   Working capital has been considered based on two month’s stock of raw material, two weeks
   stock of finished goods, one week cost of sale as work in progress and 20 days of creditors.
   Receivable has been considered at 30 days sales. The computation of working capital
   requirement for the financial year 2004-05 is given below:

                                                                        Amount
              Particulars                                             (Rs. in Lakhs)
              Raw Materials – Indigenous – 2 months                           30.00
              Work in Process [1 week]                                          5.00
              Finished Goods [2 weeks]                                        18.00
              Sundry Debtors [30 days]                                        87.00
              Sub - Total                                                    140.00
              Less: Trade Creditors [20 days]                                 10.00
              Total Working Capital Requirements                             130.00
              Less: Existing OCC Limit from ING Vysya bank “*”                27.00
              Working Capital Requirement                                    103.00

   “*” - M/s. ING Vysya Bank Ltd., the present bankers to the company has assessed the working
   capital eligibility for the company at Rs. 27 lakhs as per computation stated below. The company
   will therefore meet the requirement of additional working capital as stated above, out of the
   proposed public issue.

               Sr. No.     Working Capital Assessment       2005    2006      2007
                   1.      Inventory                           54      82        94
                   2.      Receivables                         86     134       153
                   3.      Other Current Assets               489    1059      1740
                   4.      Total Current Assets               629    1275      1988
                   5.      Sundry Creditors for Trade          10      16        18
                   6.      Other Current Liabilities           84      56        86
                           (TL Due within next 12 Months)
                   7.      Total Current Liabilities           94       71        104
                           Other than Bank Borrowings
                   8.      Working Capital Gap (4-7)          536     1204      1884
                   9.      25% of Total Current Assets        157      319       497
                   10.     Actual/ Projected NWC              509     1177      1857
                   11.     MPBF 1 (8-9)                       472      472       472
                   12.     MPBF 2 (8-10)                       27       27        27
                   13.     Working Capital Eligibility         27       27        27
                           (Lower of 11 or 12)


9. BREAK-UP OF ISSUE EXPENSES
   The Issue Expenses have been estimated to Rs. 56.00 Lakhs and it would comprise of Lead
   Manager Fees, Registrar Fees/ Expenses, Brokerage, Printing & Dispatch Expenses, Marketing &
   Advertisement Expenses, Appraisal Fees, Share Valuation Fees, Miscellaneous Expenses etc.



                                                                                                38
10. CONTINGENCIES
    Contingency provision has been made at Rs.68.00 Lakhs which is 6.5% of the Cost of equipment
    and civil works. This provision is considered adequate, as the company has commenced
    commercial production at a lesser capacity.

LOCATION
The expansion project is proposed to be set up at Kodur Village, Cheyyur Taluk, Kancheepuram Dist.,
Tamil Nadu. The proposed site is well connected by the road, the road leading to the project site is 15
KMs from the East Coast Road from Chennai to Pondicherry, and it is at a distance of 25 KMs from
the existing site at Thirukazhukundram, Kancheepuram District, Tamil Nadu..

RAW MATERIAL
The raw material for the project basically is algae, Dunaliella Salina for which the Company has
identified the right strain and the growth of algae in natural process.

However, the growth of the algae and for the algae to produce BetaCarotene, the Process requires
chemicals & minerals like Boric Acid, Calcium Chloride, Magnesium Sulphate, Sodium Chloride and
other chemicals.

The chemicals referred above are available in local markets and the prices assumed by the Company
are at the prevailing market prices. There have not been any wide fluctuations in the market prices of
these chemicals in the last 2 years.

MANUFACTURING PROCESS
The production of Betacarotene starts from a single cell of the marine algae, Dunaliella Salina. Initially
the cells are multiplied in a flask with necessary nutrients and transferred to a tub and then on to a
one Sq. meter pond with due media addition. By this stage, the algae have already entered the
carotenogenesis phase. Further growing from this stage is in the carotenogenesis phase itself. From
this pond, the algae are transferred to varying larger sizes till it reaches the final stage of critical
biomass for harvest. The algae are harvested at the optimal growth state. Thus there is no second
step as in the case of other manufacturing process where the algae is first in the growth phase and
after the growth phase is completed, the carotenogenesis phase is initiated before final harvest.

The harvested algae is flocculated by adding a flocculants and skimmed off the top and taken to an
extraction vessel. The balance water is filtered and returned to the pond. The Natural Betacarotene in
the biomass is extracted using solvents and purified in stages to obtain the final formulation. The
formulation will generally be in vegetable oil or in powder form.

TECHNICAL KNOW-HOW
The promoters already have adequate in-house experience and technical know-how in producing
such a unit smoothly and profitably. The process technology adopted by the facility is proprietary and
patented. The unique nature of the process is two fold. This is the only commercial venture in which
the process starts from fresh water. The water by suitable additions of nutrients is converted to
“artificial sea water”. The algae are then inoculated in to this artificially created process medium. This
is the first innovation. The benefit of this innovation is that the contaminant load is brought down to
almost zero. The second and key innovation is in the process media. The algae are made to produce
Natural Betacarotene and grow at the same time by manipulating the process media. This ensures
the reliability of the system to produce Natural Betacarotene, as any algae that is grown, is
harvestable. In the case of existing concerns that use algae for producing Natural Betacarotene, they
follow a two-step process. The first step is growing the algae to maximum mass and then giving it a
specific constraint to make it produce Natural Betacarotene. In this method not all the biomass can be
converted in to producing Natural Betacarotene. Thus the output per area is much lesser than
compared to our technology as also the reliability factor which mainly depends on how the algae
reacts to the given constraint at any point of time. The benefit due to our process technology is that
the extent of land per output comes down dramatically and so does the project cost and production
cost per metric tonne of output.




                                                                                                       39
MAN POWER
Tamil Nadu is a large industrial belt and has lot of biotech oriented institutions that make skilled
workmen available. Unskilled labourers are locally available and will be recruited locally and trained
as per need.
The total requirement of the manpower is given in the below table:

                                                                Number of Heads
         Particulars
                                                     Existing     Additional            Total
         Whole-Time Director                             2           Nil                  2
         Company Secretary                               1           Nil                  1
         Corporate Advisor                               1             1                  2
         Senior Level Personnel                          3             5                  8
         Middle Level Personnel                          4            10                 14
         Lower Level Personnel                           4             6                 10
         Workers                                        15            30                 45
         Total                                          30            52                 82

The company has already engaged the key personnel and does not envisage any difficulty in
recruiting other manpower.

WATER
The plant will have a deep tube-well with Pump for sufficient flow of required water.

EFFLUENT
The Company has consent from the Pollution Control Board to operate for its existing facility for a
capacity to produce 24.0 MTPA [120 MTPA as 20%] of Natural Betacarotene. Appropriate pollution
control equipment shall be installed for the expansion as per the requirements of the Pollution Control
Board. The same has been addressed under Risk Factors.

POWER
The unit has an existing connected load of 147 HP. The Company will obtain approval for the
enhanced load of 756 HP for the expansion. Besides the company has also provided for backup
power through Gensets 2 numbers of 380 KVA and 1 number of 62.5 KVA.

SAFETY MANAGEMENT
The fire protection system are proposed to be provided depending upon the nature/risk of the
installation

SCHEDULE OF IMPLEMENTATION
The project implementation schedule as estimated by the company and as per the Appraisal Report is
as under:
                          Activity                     Commencement           Completion
    i.    Acquisition/ Lease of Land                  Already in progress     March, 2004
    ii. Development of Land                              March, 2004           May, 2004
    iii. Civil Works: Factory Building, Machinery
          Foundation, Auxiliary Building,
                                                          April, 2004         August, 2004
          Administrative Building etc.
    iv. Plant and Machinery
            Placement of order                            April, 2004          June, 2004
            Delivery                                      May, 2004           August, 2004
    v. Arrangement of Power                               April, 2004          July, 2004
                                                      Available – ground
    vi. Arrangement of Water                                                        -
                                                             water
    vii. Erection of Plant & Machinery                    June, 2004        September, 2004
    viii. Commissioning                                  August, 2004       September, 2004
    ix. Procurement of raw materials                      April, 2004          June, 2004
    x. Training of Personnel                             August, 2004       September, 2004
    xi. Trial Runs                                     September, 2004       October, 2004
    xii. Commercial Production                           October, 2004      November, 2004
                                                                                                    40
THE PRODUCTS
Company manufacture only one product, Natural Betacarotene as Natural Mixed Carotenoids which is
a raw material for the dietary supplement, antioxidant, food colouring and feed markets. The company
produces two kinds of formulation as given below:
    • Oil suspension – 10% to 30%.
    • Powder – 1% to 20%.

MARKET CONDITIONS
GLOBAL MARKET
Four large market sectors having considerable potential for growth for Natural Betacarotene are:
   1. Human dietary/pharmaceutical supplements. This is a $A7500 million market and is growing
        at a rate of 7% per year.
   2. Pet food market having a developed world value of $A28, 817 million growing at 2.5% per
        year.
   3. Algal meal/food for crustacean on fish farms.
   4. Medical.

Natural Betacarotene produced from algal sources is considered to have inherent benefits over
synthetic Betacarotene.

HUMAN DIETARY SUPPLEMENTS
This market has a value of about $A7500 million. In all countries it is growing and the annual growth
rate is about 7%. An aging western world population with increased awareness and knowledge has
contributed to the rapid expansion of vitamins, minerals and natural preparations. Some 44% of
women and 32% of men are regular users of dietary supplements. This is predicted to increase to
80%.

The product group neutraceutical represents the largest part of non-prescription medicines in both
Europe and the US. Japan is moderately developed, but the remainder of Asia is underdeveloped and
predicted to grow.

In Europe, Roche has been the leader in promoting the all-in-one supplement containing vitamins,
minerals, trace elements and. This trend is expected to be followed by other major players such as
Seven Seas, Boots and Superdrug. Interestingly, there is little emphasis being placed on natural
ingredients despite consumers increasingly using garlic and fish oils as dietary supplements. The
Roche Betacarotene is synthetic and is all-trans isomer only. This may influence efficacy when
compared to the natural product. This trend is prevalent in Indian market now e.g. A to Z, multivitamin,
minerals by Alkem Labs, Mumbai.

Despite the promotion of the all-in-one type product as "lifestyle supplements" some manufacturers
believe that the most exciting trend is coming from clinical research into single and small groups of
nutrients as both curative and preventive products. It is likely that a diphasic system incorporating
Natural Betacarotene, alphatocopherol, coenxyme Q10 and vitamin C will become as important as the
all-in-one concept. It is widely used in Japan where it is a prescription product and in the US where it
is an over the counter product.

The Table below illustrates the predicted age distribution of the population.

          Estimated Industrial World Age Groups in 2000
          Region            40-50       51-60      61-70       >70
          USA/Canada        46.6        34.5       22.3        26.6
          EU                45.0        39.7       33.2        35.6
          Japan             16.6        19.2       14.8        13.7
          Other             12.5        14.8       11.6        10.7
          Total             20.7        108.2      81.9        86.6

      Source: World Bank World Development Report 1994 (Extracted from the Prospectus of
      AquaCarotene Ltd.)

                                                                                                     41
PET FOOD MARKET
Pets are an increasing part of the human environment. While cats and dogs are the main animals kept
as pets other animals including reptiles, crustaceans, fish are particularly important.

The world market for pet food is estimated at $A28, 800 million and is expected to grow to $A32, 900
million by the year 2000. The forecasts for different regions of the world are shown in the table given
below.

The world pet population is also steadily increasing from a present level of around 500 million to 555
million in 2000 as shown below:

THE FORECAST WORLD PET FOOD MARKET BY REGION AND BY VALUE 95-2000

     $A million,                1995     1996      1997      1998       1999                 2000
     constant 1995 rsp
     Western Europe         10,659.7 10,671.7 10,683.7 10,695.6 10,707.6                  10,719.4
     Eastern Europe            904.0    893.6     883.2     872.8      862.5                 852.1
     North America          10,876.8 10,935.8 10,994.9 11,053.8 11,112.9                  11,171.8
     Africa& Middle East       281.3    268.4     255.6     242.6      229.8                 217.0
     Latin America             587.6    603.4     619.3     635.2      651.0                 666.9
     Australasia &             942.5    997.3   1,052.1   1,106.8    1,161.6               1,216.2
     Pacific Rim
     East & South Asia        2878.8  3,094.6    3310.6   3,526.5    3,742.5               3,958.4
     South East Asia         1,686.8  3,223.7   3,448.6   3,673.6    3,898.6               4,123.6
     World Total            28,817.5 58,540.5    31,248 31,806.9 32,366.5                 32,925.4
Source: Euromonitor (Extracted from the Prospectus of AquaCarotene Ltd.)
Note: Cat and dog food only

As Betacarotene is an important precursor of other carotenoids in birds and crustaceans a specialty
diet for colour development could be developed. There appears to be no product available for this at
present. These could become a high value product sector due to the specialised nature of this market
sub-sector.

FOOD COLOURANTS
Betacarotene is the dominant food colourant in the world market. Estimates place the total market at a
value of $A726 million. Market share consists of Betacarotene (26%) and paprika (24%) of the natural
food products and have a value of $A173 million for Betacarotene and $A307 million for paprika. The
European market for natural and natural identical colourants has a value of $A260 million (1994
values) with Betacarotene occupying 32% market share. In Europe, red and yellow colours are more
popular than other with reds 45%, yellow 10% and brown at 11%. It is a growth market and is
expected to grow at 3.2% to $228 million by 2000. Natural colours, particularly the yellow hues are
predicted to gain in importance. This is in line with a growing consumer preference for natural
ingredients.

The nature identical carotenoids are Betacarotene, beta apo8" carotenal and 70% for canthaxanthin.
This sector has an estimated market value of $91 million.

The major applications of Betacarotene in foods have been in bulk products such as margarine and
cheese. However, in modern times red and yellow coloured foods have gained in importance and
Betacarotene is used in beverages, juice, juice concentrates, baked products and colourants in
dietary supplements.

ALGAL MEAL/FOOD FOR CRUSTACEAN ON FISH FARMS
Shrimp (prawn) production has maintained an annual growth of about 8% since 1988, and now
represents a volume of about 5,50,000 tons/yr. Farm shrimp accounts for about 25-30% of the total
world market. In China and Thailand there is also extensive production of freshwater shrimp. Farm
shrimp production is expected to increase to about 50% of total world production.



                                                                                                     42
A particular high value sector of the market is the production of kuruma shrimp (Penaeus japonicuss)
for the Japanese market. These are sold as live prawns and for the bands (tiger stripes) across the
body segments. The colour of these bands is both genetically and dietary related. The dietary
constituents that influence this colour are carotenoids, which are transformed into a number of
carotenes and xanthophylls such as astaxanthin and canthaxanthin. Betacarotene acts as the base
feed stuff that is metabolised. These live shrimp sell for around $A100/kg and prices can be 20%
lower if the stripes are not correct.

Estimated consumption of carotenoids in prawn food is placed at 200 tonnes with a market value of
$A300 million. Farmed Salmon has, until recently, been a growth industry. In 1979 it represented
about 1% of world trade and by 1990 had grown to 30%.
The food and Agricultural Organisation consider that in about the year 2000 there will be a deficit of
about 40,000 metric tonnes of ocean seafood and this will increase to over 4000,000 tonnes in 2010.
It is expected that this deficit will be provided by farm sources of fish and crustaceans.
The future is positive for the application of Betacarotene, Astaxanthin, Lutein, Zeaxanthin and
Canthaxanthin in fish and shrimp feedstuffs. It is estimated that the uptake of these carotenoids will be
500 tonnes/year increasing at a rate of about 3 % year. In most cases there has only been the use of
synthetic Betacarotene and astaxanthin. It would seem possible to increase the level of differentiation
of the final product (salmon or shrimp) on the basis that they were reared on Natural Betacarotene
and carotenoids of algal origin such as Dunaliella Salina.

WORLD PRODUCTION AND CONSUMPTION OF BETACAROTENE
Since about 1950, Betacarotene has been produced synthetically. Production in 1995 was estimated
at 1,400 tonnes. The synthetic form appears to only occur as the all trans form unlike algal product
that contains both cis and all trans isomers. The production of Betacarotene from natural sources is in
the range of 30/35 tonnes per annum. There are several publications on the extraction of
Betacarotene from vegetable oils including palm oil, Soya oil, peanut oil and from flowers petals of
Tagetes erecta. The latter contains both lutein and Betacarotene and is primarily used in poultry feed
for the colouring of egg yolk.
The international market is estimated in various categories as follows:
     End Use                           Estimated      Value    Equivalent         Estimated         Growth
                                       ($A million)            Quantity (MT)      Rate (%)
     Dietary Supplement                60                      50                 5
     Food Colourant                    115                     80                 3
     Animal Feed                       600                     500                3
     Fish, Crustacean Feed             960                     800                5
     TOTAL                             1735                    1430
    1A$ = Rs. 32/- (Extracted from the Prospectus of AquaCarotene Ltd.)
                                                                                     st
NOTE: The above data on global market are extracted from the Prospectus dated 21 May 1998
of AquaCarotene Limited, Australia, since no other current data are available on this product.

DOMESTIC MARKET
The domestic market is categorised mainly by the use of Betacarotene as Antioxidant as co-
prescribed drug, Provitamin-A in nutritional supplements and Food Colourant in juices, jam,
marmalades and diary products. The Company estimates the domestic market potential in India after
compiling the content of Betacarotene in the given table:
                                                                                (Rs. in Crores)
                                 Total        Adj.       Estimate        Qty   Growth (+/-         Natural
           End Use              Market       Factor        Total        (MT)   over 97-98)          Beta
                                 (Rs.)        50%         Market                                  Carotene
                                                                                                    (MT)
          Antioxidant
        -    2000-01              145          72             217      8.30    (+) 32%‘*’          1.25
        -    2001-02             139‘*’        70             209      8.00    (+) 32%‘*’          1.25
        -    2002-03             149‘*’        75             224      8.60     (+) 5%‘*’          1.34
    Poultry Feed                   30           -             30        0.5      ~ 100%             0.5
    Food Colourant                100           -             100       5.0      ~ 100%             5.0
                        Total                                 358      15.40                       6.84
           Equivalent to Betacarotene 20%                                                          34.20
    ‘*’ Source: ORG – MAT July 2003.


                                                                                                             43
   The total antioxidant and dietary supplement market in India is obtained mainly from the ORG/ IMS
   report. The ORG figures are based on shop audit and hence a correction factor of 50% is added to
   arrive at the estimated market value. Of the total market under this head, the Betacarotene content
   in the products ranges around 15%. Thus about 1.34MT of Natural Betacarotene is consumed
   under this head. The total poultry feed market where Betacarotene is used as an ingredient is of
   the order of Rs. 30 Crores. Betacarotene consumption under this head is about 0.5 MT. A large
   number of companies are venturing in to fruit juices and other foods using natural colouring agents
   mainly for the purpose of value addition. This has led to a tremendous increase in the consumption
   of Betacarotene as a natural colouring agent. The present domestic demand is met out of imports
   mainly from Cognis of Australia.

SUPPLY
GLOBAL OUTLOOK
  The international market for Natural Betacarotene has only three major players namely
        a.     Cognis (Henkel), Australia.
        b.     Nature Beta Technologies, subsidiary of Nikken Sohonsha Corporation, Israel.
        c.     DSM, Germany.
DEMAND- SUPPLY GAP:
                   DEMAND – in MT                  Global      Domestic          Total
                   Dietary Supplement              50          1.50              51.50
                   Food Colourant                  80          5.00              85.00
                   Animal Feed                     500         0.50              500.50
                   Fish, Crustacean Feed           800         -                 800.00
                   TOTAL                           1430        7.00              1437.00

                      SUPPLY – in MT               Natural     Synthetic     Total
                      Cognis, Australia            11.00                     11.00
                      Nature Beta Technology,      2.50                      2.50
                      Israel
                      Aquacarotene, Australia      5.80                      5.80
                      DNP, Netherlands             1.00        600.00        601.00
                      BASF, Germany                            500.00        500.00
                      Proalgen                     4.00                      4.00
                      TOTAL                        24.30       1100.00       1124.30
                                                                  st
                    Source: as per ING Vysya Appraisal Note dated 21 Feb 2004.

PRICING
The market is expanding and conclusive for Natural Betacarotene in the domestic and more so in the
international scenario. At the projected pricing of Rs. 11,500/- per kg. of 20% disbursible, the
Company is very competitive to the present CIF Price of US $240 to 250 of Cognis, Australia.

COMPETITIVE CONDITIONS, MARKETING, ETC.
The company is suitably placed to have an edge over competitor due to the following reasons:
   • Availability of raw material supplies from domestic vendors
   • Stability in price of raw material
   • Assured Product quality
   • Import Substitute

SWOT ANALYSIS
As per the Appraisal Report, the SWOT Analysis is as under:

Strength
• Superior Process Technology in terms of both Project outlay and Revenue expenditure as also
    higher yield efficiency, repeatability and reliability.
• Bio-Pharmaceutical - The product is a biotech product known globally among doctors as safe,
    with very minimal side effects and high bio-availability.
• Generally Recommended As Safe.
• Natural origin and hence in great demand due to antioxidant property.
• Internationally competitive pricing.

                                                                                                   44
•     Many user industries other than pharmaceutical such as food, beverage and dental care products.
•     Growing risk of cancer globally and in India along with growing health awareness.
•     Plant adaptability - Can be used for any algal-based product.

Weakness
• The product is in the initial entry stage in the domestic market and international markets.
• The company is yet to achieve their projected level of production of Natural Betacarotene. Their
   past performance has been very low in terms of Production/Sales. Viewed against this
   background, their projections seem to be ambitious. However the company has commenced the
   production only on July 2003.
• The expansion project involves discharge of biomass-harvested wastewater which is salty in
   nature and is an issue relating to pollution of environment.

Opportunity
• Demand-supply gap.
• Suitable import substitute.
• Potential export markets in Europe, USA and Japan.
• Increased application in food industry, cosmetic industry and nutraceutical industry in addition to
   its extremely popular use in pharmaceutical industry.
• New end use in Energy foods.

Threat
• Import duties when cut over a five-year period, as proposed by the Indian Government, can cause
   a dent in our profitability in respect of domestic sales.
• International player sets current pricing standard.

CAPACITY AND CAPACITY UTILISATION
            Particulars                                      For the year ended
                                                    Actual                            Projections
                                         31.3.01   31.3.02   31.3.03       31.3.04     31.3.05    31.3.06
                                           MT        MT        MT            MT           MT        MT
            Installed Capacity
            Natural Betacarotene            -         -         -           7.50           20.0          20.0
            Capacity Utilised
            Natural Betacarotene            -         -         -           1.31           9.00          14.00

STOCK MARKET DATA
Since this a first Initial Public Offering of the Company, the data relating to the Stock Market are not
given.
I. MANAGEMENT DISCUSSION AND ANALYSIS OF THE FINANCIAL
   CONDITION AND RESULTS OF THE OPERATIONS AS REFLECTED IN THE
   FINANCIAL STATEMENTS.
SUMMARY OF PAST RESULTS FOR THE LAST THREE YEARS
                                                                                    (Rs. in Lakhs)
    Year ended 31st March                                      2001           2002           2003         30.09.2003
    Income
    Sales:
    Of Products Manufactured / Developed by the Company         10.86           1.72              5.00           32.24
    Of Products Traded in by the Company                             Nil             Nil           Nil             Nil
    Total                                                        10.86             1.72           5.00           32.24
    Other income                                                    1.17             Nil           Nil            0.13
    Increase (Decrease) in Inventories                               Nil             Nil           Nil            0.94
    Total Income                                                 11.03             1.72           5.00           33.31
    Expenditure
    Raw Materials consumed                                          7.33        0.36              0.22            7.86

                                                                                                                         45
 Staff Costs                                                  0.27    0.07       2.76        2.82
 Other manufacturing expenses                                 0.44      Nil       Nil         Nil
 Administration Expenses                                      1.49    0.05       0.41        4.14
 Selling and Distribution Expenses                            0.45      Nil       Nil         Nil
 Interest                                                      Nil      Nil       Nil      10.25
 Depreciation                                                 0.21    0.19       0.99        8.02
 Total                                                       10.19    0.67       4.38      33.09
 Net Profit before Tax and Extraordinary items                0.84    1.05       0.62        0.22
 Taxation                                                     0.00    0.00       0.00        0.00
 Net Profit before Extraordinary Items                        0.84    1.05       0.62        0.22
 Extraordinary items (Net of Tax)                             0.00    0.00       0.00        0.00
 Net Profit after Extraordinary items                         0.84    1.05       0.62        0.22

Note:
The Figures given above has been reclassified, rearranged and recasted wherever considered
necessary to reflect the operation of the company on the basis of a uniform practice.

Analysis of Reasons for Changes in Significant Items of Income and Expenditure

Sales
Increase in Sales from Rs. 5.00 lakhs for the year ended 31.3.2003 to Rs. 32.24 lakhs for the half
year ended 30.9.203 is due to increased sale of technical knowhow to the tune of Rs. 23.25 lakhs and
Rs. 8.99 lakhs of Natural Betacarotene sales for which commercial production started only in the
month of July 2003.

Unusual and infrequent events or transactions
There are no unusual or infrequent events or transactions.

Significant economic changes likely to materially affect the income from continuing operations
Any change in Government policy in respect of import duty on Natural Betacarotene will materially
affect the profitability from continuing operations.

Known trends or uncertainties that have had or are expected to have a material adverse impact
on sales, revenue or income from continuing operations
There are no known trends or uncertainties that will adversely impact sales, revenue or income from
continuing operations.

Future Changes in relationship between costs and revenues in case events such as future
increase in labour or material costs or prices that will cause a material change.
The expansion plan of the company is expected to bring about a significant favourable change in the
relationship between costs and revenue, particularly after the first year of its implementation.
Provision has however been made for normal incremental cost of labour and employees based on
experience. The raw materials are commonly used inorganic chemicals and there have been no major
price fluctuations.

Status of any publicly announced new products or new segment.
No publicly announced new products or new segments.

Extent to which the business is seasonal
The production operation of the company is seasonal to the extent that it will be affected on rainy
days.

Any significant dependant on a single or few suppliers or customers
The company is not dependant on any single suppler or few suppliers for the supply of raw materials
sodium chloride and other nutrients. The company supplies its product is broad based that includes a
number of reputed Pharma companies.



                                                                                                    46
Competitive Conditions
The company faces competition from Cognis, Australia, an established player and DSM, Netherlands
who has recently come in to the market with their product. However the company is confident of
withstanding such competition with its expanded operations.

Material Developments Subsequent to Last Balance Sheet
The Directors confirm that there have been no events or circumstances since the date of the last
financial statements, which materially and adversely affect or likely to affect the profitability of the
company or the value of its assets or its ability to pay its liabilities within the next twelve months.

VII.      FINANCIAL OF GROUP COMPANIES
The Company doesn’t have any subsidiaries. However, Mr. N. S. Balamukundan, one of the
promoters of this Company has also promoted Primero Enserve (India) Pvt. Ltd., which was
incorporated on 31.03.1997. This is an unlisted company and primarily engaged in carrying out
engineering marketing and consultancy. Its paid up equity share capital is Rs.1.93 Lakhs and Board of
Directors consists of Shri N. S. Balamukundan, Smt. Latha Balamukundan, Shri Shiva Kumar
Eashwaran and Shri Krishna Kumar. The entire share capital of the company is held by the promoters
and their associates.

The financial performance of Primero Enserve (India) Pvt. Ltd for the last 3 years is as follows:
                                                                        Rs. in Lakhs
   Particulars                                         2000-01          2001-02           2002-03
   Sales & Other Income                                  2.73             5.03             27.40
   Profit After Tax                                      0.08             0.32              1.54
   Equity Capital (Includes    Share   Application
                                                         2.14             2.14              6.79
   Money)
   Reserves                                             0.35              0.68              2.09
   EPS (per share)                                      80.00            320.00             7.98
   Book Value (Rs.)                                     11.64             13.18            13.08


There are no pending litigations, disputes or suits against this Company and there is no default in
meeting any of the Statutory/bank/institutional dues. No proceedings have been initiated for economic
offences against it and it is not a sick Company within the meaning of Sick Industrial Companies
(Special Provisions) Act, 1956.

N. S. Balamukundan has resigned as Director and has also sold his entire shareholding in M/s. Phase
Transformations Private Limited in the year 1999. The promoters during the preceding three years
have disassociated themselves from ACL Bioproducts Limited and Applied Biotechnology Limited to
provide better focus on the activity of Proalgen Biotech Limited. The promoters have resigned from
the directorship of these companies and have also sold their entire shareholding in the company.

SHARE VALUATION
NCR Consultants Limited, Chennai based consultancy company, have done valuations of the equity
share of the Company.

The objective of the exercise:
   1. To understand the baseline value of the shares based on its current operations;
   2. To understand the value of its business based on the value creation of its future operations;
   3. To use an internationally recognized method and derive an share value;
   4. To generate possible scenarios for arriving at the value of the company based on certain
       specific decision criteria.

The framework for this exercise builds up on the three following basic “value considerations”

       1. Past Performance: Proalgen, based on its existing operations in since inception 1996 has
          built up certain value for its shares as a networth of the company;



                                                                                                     47
    2. Future performance: Based on the market demands, its plan of operations, its technical
       competence and huge market potential which the company has acquired through the years of
       its dominance in this field;
    3. Valuation of technology: In order to understand the value of technology brought in by
       Proalgen, a valuation of share made by a similar unit by a company in Australia who are in
       the same business. This is important as the first two models take only the financial aspects.
       This method imputes a financial value for the technology and hence very important.
         {In this model the valuation is based on the valuation done for AquaCarotene Limited,
          Australia. This valuation is taken as base for our valuation as this valuation was based on
          the takeover of a company that produces and markets Natural betaCarotene, which is also
          the profile of Proalgen.

          Excel Consulting group’s valuation (AquaCarotene Prospectus page 23) is based on taking
          into consideration the following
                • The Predicted increase in market value of betaCarotene.
                • An sensitivity analysis done on the company’s financials
                • Taking the value of Denehurst sale in 1995 to Henkel of their interest in Betatene
                    for A$ 62.50 million.}

Financial Modeling for Valuation
The financial modeling for each of the Value Considerations discussed in the framework is given as
below:
              Value Consideration         Financial Model used                Remarks
                                        ‘Likely’ Net Worth (assets
              V1-Past performance                                    Based on balance sheet
                                        based) as on 31.03.2004
                                                                     PV of Cash Flow during
                                          Enterprise Discounted    explicit forecast period + PV
             V2-Future performance
                                             Cash flow Model        of cash flow after explicit
                                                                          forecast period
              V3-Valuation method
                                                                   The basic assumption used
              followed by a quoted
                                       Suggested PER of 7 times     was made on sales values
              company in Australia
                                         on Earnings before tax.        of A$ 1500/kg on a
               who have the same
                                                                   production of 5,800Kg/year.
                     profile.


Valuation Scenarios – Value Per Share
In the present exercise four scenarios have been considered based on the purpose for which
valuation could be done. In each of the scenarios different weightage have been assigned to the value
arrived at based on models V1 to V3 as stated above
                    Share
     Value                      Scenario A       Scenario B        Scenario C        Scenario D
                    Value
  Consideration
                     Rs       Weight    Rs     Weight     Rs     Weight     Rs     Weight     Rs
    V1 - Past        10.19    33.33%    3.40    25%       2.55    10%       1.02     5%        0.51
   V2 - Future      139.81    33.33%   46.60    50%      69.90    45%      62.91    90%      125.84
       V3 -
                   71.68      33.33%   23.89    25%      17.92    45%      32.26    5%         3.58
   Technology
   Weighted Average Value /   Share    73.89             90.37             96.19             129.93

Based on the above consideration, the value per share can be anything between Rs.73.89 and
Rs.129.93. On a conservative basis for any decisions, the Management of Proalgen can consider a
minimum value of Rs.73.89 per share.




                                                                                                     48
    The valuation scenarios given above are based on certain considerations that are shown below:
               Implications of various scenarios
               Scenario       Approach                     Basis                        Implication
                  A       Conservative        Equal weightage for various        For internal decisions
                          internal valuation  value consideration                and to provide a basic
                                                                                 understanding
                   B      Future               Highest weightage (50%)for        When external investors
                          Consideration i.e.   future performance and equal      show interest
                          Earnings Potential   weightage (25%) for the past
                                               performance and technology.
                   C      Looking at a         Here maximum (45%) weightage      If Proalgen wants to enter
                          strategic long       is for future performance and     into strategic alliance
                          term perspective     technology, and past
                                               performance with (10%)
                   D      Focus of future      The future performance is given   For Internal planning and
                          performance          the main focus (90%) others       for inter and intra unit
                                               getting a 5% weightage.           comparisons

    Limitations of the Share Valuation Exercise
    • The exercise is for a limited purpose of ‘Approximating’ an share value of the business;
    • The valuation scenarios have been developed based on NCRCL’s understanding of the needs of
       the Management;
    • Various calculations made in this study is based on the data furnished by the Company and any
       deficiencies in this regard would have influence on the findings;
    • Completeness of information provided cannot be vouched by NCRCL.

VIII.   BASIS FOR ISSUE PRICE
    QUALITATIVE FACTORS
    1. The inhouse R&D facility of the company is recognised for developing and commercializing
       technology by the Department of Scientific and Industrial Research, Government of India, since
       1999.
    2. The company has an internationally published patent under Patent Cooperation Treaty [PCT]
       [Ref:WO 01/34092 A2] in respect of producing Betacarotene and other carotenoids from a novel
       strain of Dunaliella Salina using a novel media.
    3. The company is producing Natural Betacarotene, the main product of the company, using the
       micro algae, Dunaliella Salina using a novel media in one step whereby simultaneous
       carotenogenesis and growth is achieved, as against the normal method of obtaining the active
       ingredient i.e. Natural Betacarotene by a two step process.
    4. It is the first company in India and the fourth company internationally to produce Natural
       Betacarotene which has important anti-oxidant properties. The others are Cognis, Australia,
       Nature Beta Technology, Israel and DSM, Netherlands.
    5. Supply of Natural Betacarotene is limited as compared to the international and domestic demand.
       Domestic demand is presently met mainly through imports from Cognis, Australia.
    6. Promoters are technically qualified and have rich experience in Biotechnology.
    7. The Company is the first in India and second in the world to produce and market Natural
       Betacarotene up to 30% oil formulation and the first in the world to manufacture and market
       powder formulations ranging up to 20%.
    8. The business valuation of AquaCarotene Limited, Australia which has an estimated capacity of
       5.80 MTPA, went for a public issue vide their prospectus dated May 21, 1998, was A$31.5 Million
       [Rs. 110.85 Crores @1A$=Rs.35.19] with a technology valuation of A$18.93 Million [Rs. 66.61
       Crores]. The process technology of Proalgen is a one step technology which is unique and cost
       efficient as against the two step technology of Aquacarotene Limited.
    9. The Company’s equity share has been valued on a conservative basis at Rs. 73.89 per share by
       M/s. NCR Consultants Limited, Chennai, the details of which are mentioned elsewhere in the offer
       document.


                                                                                                              49
QUANTITATIVE FACTORS

1.Adjusted Earnings Per Share (EPS)
          Year      EPS (Rs.)
  A      2000-01      0.035
  B      2001-02      0.036
  C      2002-03      0.014
    Average EPS      0.0283

2. Price Earnings Ratio (P/E Ratio) in relation to the Issue price of Rs. 20/- per share
Based on Avg. EPS                    707

Industry P/E
Highest                              38.2
Lowest                               5.3
Composite Average                    27.9

[Source: Capital Market (VOL.XVIII/22 Dated Jan 5-18, 2004) Category: “Pharmaceuticals – Indian
Bulk Drugs and Formulation”]

3. RETURN ON NET-WORTH
         Year    RONW (%)
  A     2000-01    0.31
  B     2001-02    0.32
  C     2002-03    0.14
Avg RONW (%)       0.26

4. Minimum Return on Total Networth after Issue needed to maintain Average EPS of Rs.0.028
is 0.177%.

4. Net Asset Value (NAV) Per Share

                          As per Books of
      Particulars
                             Accounts
As on 31.3.2003              Rs. 10.07
Post Issue                   Rs. 15.79
Issue Price                  Rs. 20.00

Notes:
Considering the facts as stated above and the future prospects of the company, in our opinion, the
issue price of Rs. 20.00 per share appears to be reasonable and justified.

IX. OUTSTANDING LITIGATIONS OR DEFAULTS
    1. There are no pending litigations in which the promoters of the Company are involved.
    2. There are no overdue, defaults to the Financial Institutions/Banks, Re-schedulement of Loans
       to Banks / FI’s by the Company except those mentioned elsewhere in this Draft Prospectus.
       There are no pending offences of non-payment of statutory dues and dues towards
       instrument holders like debenture holders, fixed deposit holders and arrears of cumulative
       preference shares by the promoters of the Company and by the Companies/firms promoted
       by the promoters.
    3. There are no cases of litigations pending against the Company or against any other company
       whose outcome could have a materially adverse effect on the position of the Company.
    4. There are no pending litigation’s against the Promoters / Directors in their personal capacities
       and also involving violation of statutory regulations or criminal offences.

                                                                                                    50
    5. There are no pending proceedings initiated for economic offences against the Directors,
       Promoters, Companies and Firms promoted by the promoters.
    6. There are no outstanding litigation’s, disputes pertaining to the matters likely to affect the
       operations and Financials of the Company including disputed tax liability, prosecution under
       any enactment in respect of Schedule XIII of the Companies Act, 1956.
    7. There are no litigations outstanding against the Promoters/Directors in their personal
       capacity. The Company, its promoters and other Companies with which promoters are
       associated have neither been suspended by SEBI nor any disciplinary action has been taken
       by SEBI. There are no prosecution launched by Income Tax Authorities and no liability
       compounded by the Promoters/Company/Companies/Ventures with which the Promoters are
       associated is subsisting.
    8. There are no cases of pending litigation/defaults in respect of the firms/Companies with which
       the Promoters are associated in the past but are no longer associated.

THE FOLLOWING ARE THE DETAILS OF PROMOTERS / DIRECTORS WHO WERE
SIGNATORIES TO MEMORANDUM OF ASSOCIATION OF OTHER COMPANIES
           Name of Director                       Name of the Company

           N. S. Balamukundan                     1.ACL Bioproducts Limited
                                                  2.Applied Biotechnology Limited
                                                  3.Phase Transformations Pvt. Ltd.
                                                  4.Primero Enserve (I) Pvt. Ltd.

           Dr. A. S. Aiyar                        1. Health Care Processors Pvt. Ltd.

           Dr. N. S. Venkatesh                    1.ACL Bioproducts Limited
                                                  2.Applied Biotechnology Limited



RISK ENVISAGED BY THE MANAGEMENT AND PROPOSALS TO ADDRESS THE RISK
Investors should consider carefully the following risk factors, together with the other information
contained in this Issue for Sale Document, before they decide to buy the Company’s Equity Shares. If
any of the following risks actually occur, the Company’s business, financial condition and results of
operations could suffer, the trading price of the Company’s Equity Shares could decline and you may
lose all or part of your investment.

INTERNAL TO THE COMPANY
1. Risk envisaged by Management
   The deployment of funds in the proposed expansion project is entirely at the discretion of the
   Company and is not subject to monitoring by any independent agency.
   Proposals to address the Risk
   M/s. ING Vysya Bank Limited, present Banker to the company, have appraised the expansion
   project, which indicates, interalia, cost of expansion project and means of finance. The company
   has drawn out a business plan for the expansion activities to be pursued in the manufacturing of
   Natural Betacarotene. The company will ensure judicious deployment of the collected funds
   depending upon requirements at predetermined intervals.

2. Risk envisaged by Management
   The Company is promoted by first generation entrepreneurs and the investors will be subjected to
   all consequential risks associated with such ventures.
   Proposals to address the Risk
   The Promoters have experience of more than 5 years in the Biotechnology Sector. Over the
   years, they have also brought in relevant professionals to address key areas of operations.

3. Risk envisaged by Management
   The Company is yet to acquire the land for the proposed expansion project in respect of mass
   culture of algae and flocculation.
   Proposals to address the Risk


                                                                                                  51
    The company has already identified 144 acres of Leasehold Land and 10 acres of freehold land at
    Kodur Village, Cheyyur Taluk, Kancheepuram District, Tamil Nadu for the proposed expansion
    project and the agreements in this regard will be executed shortly as per schedule of
    implementation.

4. Risk envisaged by Management
   The Company is yet to appoint architect and contractors for the proposed site development,
   building and civil works to the tune of Rs. 301 lakhs constituting 19.55% of the expansion project
   cost.
   Proposals to address the Risk
   The company has already identified architect/ contractor for the proposed site development,
   building and civil works and shall enter in to formal arrangements with them after acquisition/
   lease of land for the proposed expansion project.

5. Risk envisaged by Management
   The company is yet to place firm orders for Plant & Machinery of Rs. 850.00 Lakhs constituting
   55.19% of the total expansion project cost.
   Proposals to address the Risk
   The company has suppliers/ manufacturers who have successfully supplied plant and machinery
   for its similar existing facility and therefore the company does not foresee any problem to procure
   these equipments at the appropriate point of time, for its proposed expansion project.

6. Risk envisaged by Management
   The Company is yet to apply for No Objection Certificate (NOC) from the Tamil Nadu Pollution
   Control Board [TNPCB] for its proposed expansion project. The expansion project involves
   discharge of biomass–harvested wastewater, which is salty in nature, and is an issue relating to
   pollution of environment.
   Proposals to address the Risk
   Since the proposed expansion project envisages mass culture and flocculation in designated salt
   land area, the company does not foresee any problem in obtaining NOC from TNPCB. However,
   in respect of the processing facility for the proposed expansion to be set up at the existing site,
   the company already has clearance from TNPCB.

7. Risk envisaged by Management
   The company is required to obtain necessary clearances from Panchayat / Town Planning
   Department for the proposed buildings at the existing as well as proposed new site.
   Proposals to address the Risk
   The company does not foresee any problem in obtaining the necessary clearances for the same.

8. Risk envisaged by Management
   The company is yet to make arrangements for an additional 756HP electricity load to meet its
   expansion requirements.
   Proposals to address the Risk
   At the existing site, the company already has a Connected Load of 147HP. The management is
   seized of the need for the increased electricity load for the expansion project and shall make
   necessary arrangements for the enhancement within the envisaged period.

9. Risk envisaged by Management
   The expansion project shall be entirely funded from the proposed public issue. Any delay in
   raising funds from the public issue may have an adverse impact on the performance of the
   company.
   Proposals to address the Risk
   The company is presently running its existing operations successfully and with the deployment of
   funds raised through the public issue it shall be able to expand the volume of operations.
   Therefore, any delay in raising funds shall affect the performance to the extent of increasing the
   volumes and accordingly future profitability of the company.

10. Risk envisaged by Management
    The Company has not taken any steps for recruiting the required manpower for the proposed
    expansion project.

                                                                                                   52
    Proposals to address the Risk
    The company has requisite manpower for running its existing operations. However for the
    proposed expansion project the necessary recruitment will be done in due course of time.

11. Risk envisaged by Management
    Any failure of the Company to update and upgrade its technology and products and to keep
    abreast of latest developments, may adversely affect the cost competitiveness and the profitability
    of the Company.
    Proposals to address the Risk
    The company has a qualified and experienced team of research personnel who are abreast with
    latest trends. Further, the inhouse R&D facility of the company is recognised for developing and
    commercializing technology by the Department of Scientific and Industrial Research, Government
    of India, since 1999.

12. Risk envisaged by Management
    The Company has not paid term loan installments and interest thereon to Technology
    Development Board [TDB] and M/s. ING Vysya Bank Limited [ING Vysya] as per the original
    repayment schedule.
    Proposals to address the Risk
    On account of delay in commercialisation of the production, the company approached to TDB and
    ING Vysya for deferment of the repayment of loan installments and interest thereon. TDB and
    ING Vysya have agreed for the deferment of the same on the terms and conditions, the details of
    which are given elsewhere in this Prospectus. The company is however presently making timely
    payment of interest and term loan installments to them as per revised repayment schedule.

13. Risk envisaged by Management
    The company is yet to achieve their projected level of production of Natural Betacarotene. The
    past performance has been very low in terms of production/ sales.
    Proposals to address the Risk
    The company commenced commercial production of Natural Betacarotene which is the presently
    the main product of the company in July 2003 only and therefore the past performance should not
    be taken as an indicator of future operations. The company is presently running its existing
    operations successfully.

14. Risk envisaged by Management
    The prices of the major raw materials such as Sodium Chloride and other nutrients are
    susceptible to volatility, which will adversely affect the profitability of the Company.
    Proposals to address the Risk
    The volatility in prices of major raw materials can be negated by entering into contractual
    agreements with the vendors for its supply.

15. Risk envisaged by Management
    The promoters and other persons have been allotted shares of the company at a price lower than
    the public issue price in preceding one year as detailed in the notes to capital structure.

EXTERNAL TO THE COMPANY
   1. Risk envisaged by Management
      The company operates in a globally competitive business environment. Overseas competition
      may force the Company to reduce prices of its products, which may impact margins and
      market share.
      Proposals to address the Risk
      The management is seized of the threat and would use its experience in effectively meeting
      the risk. Moreover adequate demand in the domestic market and growing opportunities of
      exports are likely to mitigate the risk.

    2. Risk envisaged by Management
       Changes in the regulatory environment relating to manufacturing and marketing of biotech
       products in and outside the country will significantly impact the business of the Company.
       Proposals to address the Risk


                                                                                                    53
    The Company keeps itself abreast of the various developments in the regulatory environment
    and gears itself to comply with the dynamics. Moreover, biotechnology is a thrust area of the
    future and the Company is confident of adapting itself to any such change.

3. Risk envisaged by Management
   Natural calamities like floods, draughts, earthquakes and other Force Majeure events could
   affect the business.
   Proposals to address the Risk
   The above risk factors are essentially applicable to the entire business sector as a whole and
   not specifically to the company only.

4. Risk envisaged by Management
   Terrorist attacks and other acts of violence or war involving India and other countries where
   the Company sells its products could affect the Company’s business.
   Proposals to address the Risk
   The consequences of any potential conflicts are unpredictable, and the Company may not be
   able to foresee events that could have a materially adverse effect on its business, financial
   condition or results of operations.




                                                                                              54
PART II

I.        GENERAL INFORMATION
CONSENTS
Consent in writing of the Directors, Lead Manager, Auditor, Registrar to the Issue, Bankers to the
Company, Company Secretary and Compliance Officer, and the Legal Advisor to act in their
respective capacities have been obtained and filed along with a copy of the Prospectus with ROC as
required under Section 60 of the Companies Act 1956 and none of them have withdrawn their
consent upto the time of delivery of a copy of this Prospectus for registration.

M/s Gopalaiyer & Subramanian, Chartered Accountants, the Statutory Auditors of Proalgen Biotech
Limited have also given their written consent to their report being included in the form and content in
which it appears in this Prospectus and also of the Tax benefits accruing to the Company and its
members and same consent has not been withdrawn upto the time of the delivery of this Prospectus
for registration to the Registrar of Companies, Tamil Nadu at Chennai.

EXPERT OPINION
No opinion of any expert has been obtained by the Company, except Auditor’s Certificate regarding
the Tax Benefits available to the Company and Members of the Company as stated elsewhere in this
Prospectus.

AUTHORITY FOR THE PRESENT ISSUE
Pursuant to Section 81(1A) of the Companies Act 1956, the present issue has been authorised by a
Special Resolution passed at the Annual General Meeting of the shareholders of the company held on
22.10.2003 and Resolution passed by the Board of Directors of the Company at their Meeting held on
28.11.2003.

CHANGE IN THE BOARD OF DIRECTORS DURING THE LAST THREE YEARS
The details of the changes are as under:
                   Name                  Date of Appointment  Date of Resignation
     Mr. N. S. Balamukundan               Since Incorporation          --
     Dr. A. S. Aiyar                          05/12/1997               --
     Mr. N. S. Narasimhan                     01/04/1998               --
     Dr. N. S. Venkatesh                      10/07/1999               --
     Mr. S. Lakshmi Narasimhan                16/11/1998          27/07/2001
     Mr. Vir A Nanda                          10/07/1999          27/07/2001
     Mr. Mohan Rao Devu                       15/03/2000          20/12/2000
     Mr. B. Sivakumar                         15/06/2003          16/10/2003

CHANGE IN THE AUDITORS DURING THE LAST THREE YEARS
Gopalaiyer & Subramanian, Chartered Accountants having their office at 23, II Floor, Kripa Sankari
Street, West Mambalam, Chennai -33 are the Statutory Auditors of the Company. There has been no
change in the Auditors of the company since the last three years i.e. from the Financial Year 1999-00
to 2002-03. The Statutory Auditors of the company for the year 1999-2000, M/s. Ganesh & Venkat
was restructured as Gopalaiyer & Subramanian.

DISPOSAL OF APPLICATIONS AND APPLICATION MONEY
No receipt will be issued for application money. However, the Bankers to the issue receiving the
applications will acknowledge the receipt of the application by stamping and returning the detachable
acknowledgement slip appended to each application form.

The sum received in respect of the issue will be kept in separate bank account and the Company will
not appropriate the funds unless approval is obtained for allotment and listing from the designated
stock exchange and listing permission from the other stock exchange where the shares are proposed
to be listed.

The Board reserves the right to accept or reject any application in whole or part and in either case
without assigning any reason thereof.


                                                                                                    55
BASIS OF ALLOTMENT
In the event of over subscription, the allotment will be made on a proportionate basis as given below:

    a. Applicants will be categorised according to the number of shares applied for.
    b. The total number of shares to be allotted to each category as a whole shall be arrived at on a
       proportionate basis i.e. the total number of shares applied for in that category multiplied by
       the inverse of the over subscription ratio (number of applicants in the category x number of
       Shares applied for).
    c. The number of shares to be allocated to the successful allottees will be arrived at on a
       proportionate basis (i.e. total number of shares applied for into the inverse of the over
       subscription ratio).
    d. For applications where the proportionate allotment works out to less than 100 shares, the
       allotment will be made as follows:
       • Each successful applicant shall be allocated 100 shares; and

        •   The successful applicants out of the total applicants for that category shall be determined
            by the drawal of lots in such a manner that the total number of shares allocated in that
            category is equal to the number of shares worked out as per B above.

    e. If the proportionate allotment to an applicant works out to a number that is more than 100 but
       is not a multiple of 100, the number in excess of the multiple of 100 shall be rounded off to the
       higher multiple of 100 if that number is 50 or higher.
    f. If that number is lower than 50, it shall be rounded off to the lower multiple of 100.
    g. All applicants in such categories shall be allocated shares arrived at after such rounding off.
    h. If the shares allocated on a proportionate basis to any category is more than the shares
       allocated to the applicants in that category, the balance available shares for allotment shall be
       first adjusted against any category, where the allocated shares are not sufficient for
       proportionate allotment to the successful applicants in that category. The balance shares, if
       any, remaining after such adjustment will be added to the category comprising of applicants
       applying for the minimum number of shares.
    i. As the process of rounding off to the nearer multiple of 100 may result in the actual allotment
       being higher than the shares offered, the final allotment will be done in consultation with the
       The Stock Exchange, Mumbai (BSE)(Designated Stock Exchange).
    j. Investors may note that in case of over-subscription, the allotment will be on proportionate
       basis as mentioned above, subject to the following conditions:
       • A minimum of 50% of the net issue to the Indian Public will be made available for
            allotment to individual investors who will apply for Equity Shares of or for a value not more
            than Rs. 50,000/-. This percentage may be increased in consultation with the Designated
            Stock Exchange depending on the extent of response to the issue from investors in this
            category.
       • The balance of the Net Issue to the Indian Public shall be made available to investors,
            including Corporate Bodies/ Institutions and Individual applicants who have applied for
            allotment of Equity Shares of or for a value of not more than Rs. 50,000/-.
       • The un-subscribed portion of the net Issue to any of the categories specified in (i) or (ii)
            shall be made available for allotment to applicants in the other category, if so required.

Investors may note that in case of over - subscription allotment shall be on proportionate basis and
will be finalised in consultation with the The Stock Exchange, Mumbai (BSE) (Designated Stock
Exchange). The drawl of lots (where the issue is over-subscribed by more than two times) to finalise
the basis of allotment shall be done in the presence of a public representative on the Governing Board
of The Stock Exchange, Mumbai (BSE) (Designated Stock Exchange). The Basis of Allotment shall
be signed as correct by the Executive Director / Managing Director of The Stock Exchange, Mumbai
(BSE) (Designated Stock Exchange) and the public nominee (wherever applicable) in addition to Lead
Merchant Banker and Registrar to the Issue.

ISSUE OF ALLOTMENT LETTERS/REFUND ORDERS
The Company shall give credit to the Beneficiary Account with DP(s) within two working days of the
finalisation of the Basis of Allotment of Equity Shares. Allotment Letter(s) together with Refund Orders
of value over Rs.1,500/-, if any, to allotees and Letter(s) of Regret together with Refund Orders of
value over Rs.1,500 to non-allotees will be dispatched by registered post or speed post and Refund

                                                                                                      56
Orders for value up to Rs.1,500/- will be dispatched under certificate of posting at the applicant’s sole
risk within 10 weeks from the date of Closure of Subscription list.

The Company undertakes that -
• Allocation and transfer of Equity Shares will be made only in Dematerialised form within 30 days
   from the issue closing date.
• Dispatch of Refund Orders will be done within 30 days from the issue closing date.
• The Company shall pay interest @15% per annum (for delay beyond 30 days as mentioned
   above), if the transfer is not made, refund orders are not dispatched and/or demat credit are not
   made to investors within the 30 days time prescribed above.

The Company will provide adequate funds required for dispatch of Refund Order or Allotment Advice
to the Registrar to the Issue. Refunds will be made by Cheques, Pay Orders or Demand Drafts drawn
on a Bank appointed by the Company as Refund Banker(s) and payable at par at places where
applications are received. Bank charges, if any, for encashing such Cheques, Pay Order or Demand
Drafts at other Centers will be payable by the applicants.

The listing and trading of the securities offered through this prospectus shall commence at the
aforesaid stock exchanges where they are proposed to be listed within 7 working days of the
finalisation of the basis of allotment.

INTEREST ON EXCESS APPLICATION MONEY
Payment of interest at the rate of 15% per annum on the excess application money will be made to
the applicants for the delayed period, if any, beyond 30 days from the date of closure of the
subscription list, in terms of the provisions of the Companies Act, 1956 and the guidelines issued by
the Ministry of Finance vide Letter No.F/8/6/SE/79 dated 21.7.83 and as amended by Letter
No.F/14/2/SE/85 dated 27.9.1985 addressed to Stock Exchanges and as further modified by SEBI's
circular dated May 15, 1996.

APPLICATION OF SECTION 269SS OF THE INCOME TAX ACT, 1961.
In respect of the provisions of Section 269SS of the Income Tax Act, 1961, the subscription against
the equity shares should be effected only by an account payee cheque or an account payee
Draft/stock invest, if the amount payable is Rs.20, 000/- or more. In case the payment is made in
contravention of this provision, the application money will be refunded and no interest will be paid.

INVESTORS GRIEVANCES REDRESSAL MECHANISM
The Registrar to the Issue will handle investors’ grievances pertaining to this issue. A fortnightly status
report of the complaints received and redressed by them would be forwarded to the Company. The
Company would also be coordinating with the Registrar to the Issue in attending to the grievances of
the investors.

The Company assures that the following schedules shall be adhered to by the Board of Directors in
respect of the complaints, if any, to be received.

   Sl. No    Nature of the Complaint                     Time Taken

   1         Non-receipt of the refund warrants or       Within 7 days of receipt of complaint, subject to
             share certificates                          production of satisfactory evidence.

   2.        Change of Address notification              Within 7 days of receipt of information

   3.        Any other complaint in relation to Public   Within 7 days of receipt of complaint with all
             Issue                                       relevant details.


The Company has appointed Mrs. Meenakshi Shivkumar Eashwaran, as Compliance Officer who
would directly deal with SEBI office with respect to implementation of various laws, rules, regulations
and other directives issued by SEBI and matters related to investor complaints. Investors can contact
the Compliance Officer in case of any pre-Issue or post-Issue related problems such as non-receipt of
letters of allotment, share certificates, refund orders, etc.


                                                                                                             57
The Compliance officer will be available at the following address:

COMPANY SECRETARY / COMPLIANCE OFFICER
Mrs. Meenakshi Shivkumar Eashwaran, A.C.S.
15, III Avenue, Indira Nagar, Chennai-600 020.
Phone/fax: 044-24454332/24454756
E-mail: aclgrap@eth.net

COMPANY INFORMATION AND ISSUE MANAGEMENT TEAM

Regd Office:
Proalgen Biotech Limited
15, III Avenue, Indira Nagar, Chennai-600 020.
Phone/fax: 044-24454332/24454756
E-mail: aclgrap@eth.net

ISSUE MANAGEMENT TEAM
 LEAD MANAGER TO THE ISSUE                          REGISTRAR TO THE ISSUE
 Ashika Capital Limited                             Cameo Corporate Services Limited
 (SEBI Regn. No.: INM 000010536)                    (SEBI Regn. No.: INR 000003573)
                                    nd
 D.No: 7-1-613/14A, Suite No: 6, 2 Floor,           Subramaniam Building, No.1,
 Nestcon Lakshmisri, Ameerpet,                      Club House Road, Chennai – 600002.
 Hyderabad –500 016.                                Ph: + 91 44-2846 0390-5
 Ph: + 91 40-5561 7802/2375 0498                    Fax: + 91 44 2846 0129;
 Fax: + 91 40-5561 7801                             E-mail: cameo@cameoindia.com
 E-mail: ashika_hyderabad@rediffmail.com            Website: www.cameoindia.com
 AUDITORS                                           BANKERS TO THE COMPANY
 M/s. Gopalaiyer & Subramanian                      ING Vysya Bank Ltd.,
 Chartered Accountants,                             Mount Road Branch,
 23, II Floor, Kripa Sankari Street                 Chennai – 600 002.
 West Mambalam, Chennai – 600 033.
 Ph: 044-30901560 / 30901565
 LEGAL ADVISOR TO THE ISSUE                         BANKERS TO THE ISSUE
 K Ramasamy
 Advocate
                         th
 II Floor, Plot No. 4A, 5 Street,
   st
 1 Main Road, Jai Nagar,
 Arumbakkam, Chennai-600 106
 Ph: 044-23790025
 E Mail- ramasamy_2k@vsnl.net




                                                                                         58
II.           FINANCIAL INFORMATION
                                               AUDITORS’ REPORT
The Board of Directors,
Proalgen Biotech Limited
15, III Avenue, Indira Nagar
Chennai – 600 020

Dear Sir,
We have examined the Balance Sheet of the Company as at 31.03.1999, 31.03.2000, 31.03.2001,
31.03.2002, 31.03.2003 and the Profit & Loss Account of the five years ended on those dates and
audited by us for presentation to the members of the Company and period ended 30.09.2003 and in
accordance with the requirements of Part II of Schedule II to the Companies Act, 1956,and the SEBI
(Disclosures and Investor Protections) Guidelines 2000,in Connection with the proposed issue of
77,00,000 equity shares of Rs 10/-each at a premium of Rs 10/-per share aggregating to Rs. 1540
Lakhs.
Annexure I
 STATEMENT OF PROFITS and LOSSES:
The profits of the company for the year ended 31.03.2000, 31.03.2001, 31.03.2000, 31.03.2003 and
period ended 30.09.2003 are given below after making such adjustments and are in our opinion
appropriate and subject to the notes.
Statement of Income and Expenditure
                                                                                        (Rs. in Lakhs)
                     st
      Year ended 31 March                              1999     2000     2001    2002       2003     30.09.2003
      Income
      Sales:
      Of Products Manufactured / Developed by the
      Company                                           19.76     8.85   10.86    1.72       5.00         32.24
      Of Products Traded in by the Company                Nil      Nil     Nil     Nil         Nil           Nil
      Total                                             19.76     8.85   10.86    1.72       5.00         32.24
      Other income                                       0.91      Nil    0.17     Nil         Nil         0.13
      Increase (Decrease) in Inventories                  Nil      Nil     Nil     Nil         Nil         0.94
      Total Income                                      20.67     8.85   11.03    1.72       5.00         33.31


      Expenditure
      Raw Materials consumed                            10.27     2.00    7.33    0.36       0.22          7.86
      Staff Costs                                        0.78     0.44    0.27    0.07       2.76          2.82
      Other manufacturing expenses                       1.15     0.86    0.44     Nil         Nil           Nil
      Administration Expenses                            5.52     4.33    1.49    0.05       0.41          4.14
      Selling and Distribution Expenses                  1.90     0.66    0.45     Nil         Nil           Nil
      Interest                                            Nil      Nil     Nil     Nil         Nil        10.25
      Depreciation                                       0.39     0.21    0.21    0.19       0.99          8.02
      Total                                             20.01     8.50   10.19    0.67       4.38         33.09
      Net Profit before Tax and Extraordinary items      0.66     0.35    0.84    1.05       0.62          0.22
      Taxation                                            Nil      Nil     Nil     Nil         Nil           Nil
      Net Profit before Extraordinary Items              0.66     0.35    0.84    1.05       0.62          0.22
      Extraordinary items (Net of Tax)                    Nil      Nil     Nil     Nil         Nil           Nil
      Net Profit after Extraordinary items               0.66     0.35    0.84    1.05       0.62          0.22

Note: The figures given above has been reclassified, rearranged and recasted wherever considered
necessary to reflect the operations of the company on the basis of an uniform practice.


                                                                                                           59
Details of Other Income
                  st
    Year ended 31 March                                 1999          2000             2001        2002            2003       30.09.2003
    Interest                                            0.91           -                -             -             -            0.13
    Scrap Sales                                          -             -               0.17           -             -             -
    Total Other Income                                       0.91          Nil          0.17              Nil           Nil            0.13
    Note: The other income has arisen out of normal business activity and is of non recurring nature.
Annexure II
STATEMENT OF ASSETS AND LIABILITIES:
The Assets and liabilities of the company for the year ended 31.03.2000, 31.03.2001, 31.03.2002,
31.03.2003 and period ended 30.09.2003 are set out below after making such adjustments as are in
our opinion appropriate and subject to the notes.
                                                                                  (Rs. in Lakhs)
  As on 31st March                             1999      2000           2001                2002            2003         30.09.2003
  Particulars
  A. Fixed Assets:
  Gross Block                                   43.39     69.20        137.48               217.24         689.85             754.39
  Less Depreciation                              0.39         2.21          4.10               5.83               Nil           8.02
  Net Block                                     43.00        66.99     133.38               211.41         689.85             746.37
  Less: Revaluation Reserve                       Nil           Nil              Nil            Nil               Nil            Nil
  Net Block after adjustment for Revaluation
  Reserve                                       43.00        66.99     133.38               211.41         689.85             746.37
  Add: Pre-operative Expenses Pending
  Allocation                                   111.03    141.53        184.18               236.25              33.05            Nil
  Intangible Assets                               Nil           Nil              Nil            Nil               Nil          36.09
                                               154.03    208.52        317.56               447.66         722.90             782.46
  B. Current Assets, Loans and
  Advances:
  Inventories                                    3.57         4.32               Nil           1.65             15.59          14.54
  Sundry Debtors                                12.46        16.51          2.00               2.00              5.95          33.51
  Cash and Bank Balances                         7.17         1.04          1.62               5.35              0.20           0.04
  Loans and Advances                            19.19         4.13         31.82             39.68              55.53          68.04
  Other Current Assets                            Nil         1.17          1.74               2.28              3.03           3.01
                                                42.39        27.17         37.18             50.96              80.30         119.14
  C. Liabilities and Provisions:
  Secured Loans                                  0.58         4.71         64.27            139.18         310.13             338.94
  Unsecured Loans                               15.24        22.31               Nil            Nil               Nil            Nil
  Current Liabilities and Provisions             9.01        12.72         18.55             34.94              41.02          58.14
                                                24.83        39.74         82.82            174.12         351.15             397.08
  D. Networth                                  171.59    195.95        271.92               324.50         452.05             504.52


  E. Represented by
  1. Share Capital (including share
  application money)                           171.18    195.19        270.33               321.87         448.79             501.04
  2. Reserves                                    0.65         1.00          1.83               2.87              3.50           3.72
  Less: Revaluation Reserve                       Nil           Nil              Nil            Nil               Nil            Nil
  Reserves (Net of Revaluation Reserves)
  Less: Miscellaneous Expenditure - to the
  extent not Written-Off                         0.24         0.24          0.24               0.24              0.24           0.24
  Networth                                     171.59    195.95        271.92               324.50         452.05             504.52
Note:1.The company has allotted 8,36,368 equity shares of Rs. 10/- each since 30.9.2003.
     2.The figures given above has been reclassified, rearranged and recasted wherever considered
       necessary to reflect the operations of the company on the basis of an uniform practice.

                                                                                                                                       60
ANNEXURE III

Accounting policies and notes on accounts forming part of Balance sheet as at 30th September 2003
and Profit and Loss account for the half year ended on that date.
A.      ACCOUNTING POLICIES:
1. Significant Accounting Policies:
(i) Basis of Accounting:
The accounts have been made up as per the accrual basis
(ii) Fixes assets and Depreciation:
Assets whose existences are likely to result in a benefit of enduring nature are capitalized and shown
as fixed assets. Fixed assets are stated at historical cost. Cost includes installation charges, freight
and incidental cost. With regard to assets acquired under hire purchase, the cost of the asset is
capitalized while the annual charge is charged to revenue. Depreciation is provided at the rates
prescribed under schedule xiv of the companies act, 1956 on straight-line method.
The company has commenced production in July 2003 and all fixed assets acquired for the project
upto 30/06/03 has been capitalized. The company has capitalized the preoperative expenses upto
30/6/03 by allocating them to fixed assets in proportion to the cost of each fixed assets. In the earlier
years the unallocated pre-operative expenses were shown as Pre-operative expenses pending
allocation in the Statement of Assets.
(iii) Inventories:
Stock of raw materials is valued at cost, computed on weighted average basis. The realizable WIP
and finished goods obtained in the process are valued at cost.
(iv) Research and Development Expenses:
This expenditure relates to development of Natural Betacarotene. As the company has been
successful in implementing the project and they are going to derive enduring benefit out of this, the
company is showing this expenditure as Intangible Assets as per AS 26 as on 30/9/03 in the Balance
Sheet. This will be written off by the company over 8 years.
(v) Previous year figures have been regrouped to confirm to the classification adopted for the current
year.
NOTES ON ACCOUNTS
Related Party Transactions
As per the Accounting Standard on “Related Party Disclosure’ issued by the Institute of Chartered
Accountants of India, the related parties of the Company are as follows:
List of related party and their relationship:
   Party                                           Relationship
   Primero Enserve (I) Pvt. Limited                Associate Company
   N. S. Balamukundan                              Key Management Personnel
   N. S. Venkatesh                                 Key Management Personnel




                                                                                                      61
Transaction with the related parties:
                                                                                                   In Rs. lakhs
                              30.9.2003          31.3.2003          31.3.2002                     31.3.2001
                                     Key                 Key                Key
                                                                                                        Key
                                    Manage             Manag              Manage
                         Assoc                Associ            Associ                   Associ      Manageme
                                     ment               ement              ment
                          iate                 ate               ate                      ate            nt
                                   personne            person            personne
                                                                                                     personnel
                                       l                 nel                 l
         Remuneration
            to Key
                           -        3.48        -       5.61      -         5.16              -          5.16
         Management
           Personnel
            Equity
          subscription   50.00        -       32.50      -      23.25           -             -           -
          by Primero
           Advances      1.23                  2.49              2.28                     0.19



                                                                                    For Gopalaiyer & Subramanian
                                                                                          Chartered Accountants,

                                                                                                      V. S. Ganesan
Dated: 28/2/2004                                                                                           Partner
Place: Chennai                                                                                        M. No. 24641


Accounting Ratios:

            Year Ended 31st March                                 2000-01           2001-02       2002-03
            Earning per share                                           0.035          0.036           0.014
            Net Asset Value (Rs. per share)                             10.06          10.08           10.07
            Return on Net Worth (RONW) (%)                               0.31           0.32            0.14
            Return on Capital Employed (ROCE) (%)                        0.25           0.22            0.08

ANNEXURE IV
Capitalisation Statement:
                                                                                        (Rs. in Lakhs)
                                                            Pre-Issue                  As adjusted for the
                                                        (as on 26.02.2004)                    issue
      Debts
      Short term Debts                                                   15.67                                 15.67
      Long Term Debts                                                   323.77                                323.77
      Total Debts                                                       339.44                                339.44
      Share holders Funds
      Share Capital                                                     578.93                            1348.93
      Reserves & Surplus                                                 10.99                             780.99
      Total Shareholders Funds                                          589.92                            2129.92
      Long-term Debt to Equity Ratio                                      0.55                               0.15


ANNEXURE V

TAX SHELTER STATEMENT:
As the company is engaged in the business of Biotechnology, any expenditure on Scientific research
not being in the nature of land or building is eligible for a deduction of a sum equal to one and one half
times of the expenditure so incurred subject to the approval as laid down under Sec 35(2AB).

The company is eligible for 30 % on export profits under sec. 80 HHC for the assessment year 2004-
05.


                                                                                                                       62
PRINCIPLE TERMS OF LOANS AND ASSETS CHARGED AS SECURITY
The details of the total secured loan of the company as at 30.9.2003 are as follows:
               Particulars                   Amount                  Nature of Security
                                             Rs. lacs
   Technology Development                      90.00     Secured by Paripassu first charge on
   Board, New Delhi                         @ 5.00%      entire fixed assets including patent rights
                                           interest per  of the company (present & future) along
                                              annum      with ING Vysya Bank Ltd.

                                                          Deed of Hypothecation of fixed assets,
                                                          present and future.

                                                          Mortgage by Deposit of Title Deed to the
                                                          tune of 16.34 acres of land of the
                                                          company at Naduvakkarai village,
                                                          Kancheepuram District, Tamil Nadu.
                                                          Personal Guarantee of the Promoters.

                                                          Pledge of Promoter Shares to the tune of
                                                          face value of Rs. 98.40 lakhs.
       ING Vysya Bank Ltd.,                 244.95        Secured by Paripassu first charge on
                                          @15.50%         entire fixed assets including patent rights
                                         interest per     of the company (present & future) along
                                            annum         with Technology
                                                          Development Board.

                                                          Personal Guarantee of Promoters.

                                                          Pledge of Promoter Group shares to the
                                                          tune of face value of Rs.46.89 lakhs.
       OCC limits – ING Vysya Bank           12.39        First charge on Current assets of the
       Ltd.,                              @15.50%         company
                                         Interest per
                                            annum
       NBFC Vehicle loan – Citi Bank         3.99         Secured by hypothecation of the vehicles
       N.A                                                purchased.


III.      STATUTORY AND OTHER INFORMATION
MINIMUM SUBSCRIPTION
The minimum subscription to be raised by this issue is 69,30,000 Equity Shares aggregating to Rs.
Rs. 1386.00 Lakhs being 90% of 77,00,000 Equity Shares aggregating to Rs. 1540.00 Lakhs Issued
through this Prospectus.

If the Company does not receive the minimum subscription of 90% of the net Issue to the Public on
the date of closure of the issue or the subscription level falls below 90% after the closure of the issue
on account of cheques having been returned unpaid or withdrawal of applications, the Company shall
forthwith refund the entire subscription amount received. For delay beyond 8 days, after the company
becomes liable to pay the amount, the company shall pay interest as per Section 73 of the
Companies Act 1956.

RIGHTS OF THE EQUITY SHAREHOLDERS
The Equity Shares now being issued are subject to the terms of this Prospectus, the Application
Form, Memorandum and Articles of Association of the Company, the Guidelines issued by the
Government of India and Securities and Exchange Board of India from time to time and the
Companies Act, 1956. These new equity shares shall rank pari-passu with the existing issued equity
shares of the Company in all respects, including the rights of dividend. Shareholders are entitled to
receive dividend as and when declared, Bonus and Rights shares as and when made. Further the


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rights of the above and other holders of the instruments are subject to the provisions of Section 206A
of the Companies Act, 1956 and other laws applicable from time to time.

EXPENSES OF THE ISSUE
The expenses of the Issue payable by Proalgen Biotech Limited inclusive of brokerage, fees payable
to the Lead Manager to the Issue, Registrar to the Issue, Legal Advisors & Tax Consultants, stamp
duty, printing, publication, advertising and distribution expenses, bank charges, listing fees and other
miscellaneous expenses will not exceed Rs.56.00 Lakhs, and will be met out of the proceeds of the
present issue.

FEES PAYABLE TO THE LEAD MANAGER
The total fees payable to the Lead Manager to the Issue will be as per the Memorandum of
Understanding signed with the Lead Manager viz. Ashika Capital Limited, copies of which are
available for inspection at the Registered Office of the Company.

FEES PAYABLE TO THE REGISTRAR TO THE ISSUE
The fees payable to the Registrar to the Issue as set out in their Issue letter, copies of, which are kept
open for inspection at the Registered Office of the Company. The Registrar will be reimbursed for all
relevant out-of-pocket expenses including such as cost of stationery, postage, stamp duty,
communication expenses. Adequate funds will be provided to the Registrar to the Issue to enable
them to send refund orders or allotment advice by registered post.

BROKERAGE
Brokerage will be paid @0.5% on the nominal value of the equity shares on the basis of allotments
made against applications bearing the stamp of a member of any recognised stock exchange in India
in the brokers column. Brokerage at the same rate will also be payable to the bankers to the issue in
respect of allotment made against applications bearing their respective stamps in the brokers column.
In case of tampering or over stamping of broker/agents codes on the application form, the Issuer’s
decision to pay brokerage in this respect will be final and no further correspondence will be
entertained in this matter.

PREVIOUS ISSUE OF CAPITAL DURING LAST FIVE YEARS
The Company has not made any public issue of equity / debentures whatsoever prior to this issue.
The details of issue of capital have been outlined in the paragraph on the build up of the share capital
under the capital structure.

ISSUE OF SHARES OTHERWISE THAN FOR CASH
No shares or debentures have been issued as fully or partly paid otherwise than for cash except those
mentioned else where in this Prospectus.

PREFERENCE SHARES AND DEBENTURES
The Company has not issued any preference shares or debentures since its incorporation.

ISSUE AT A PREMIUM OR DISCOUNT
No shares of the Company have been issued at either a premium or at a discount since its
incorporation except those mentioned else where and to be issued at premium through this
Prospectus.

OPTION TO SUBSCRIBE
Except as otherwise stated in this Prospectus, the Company has not entered into nor does it at
present propose to enter into any contract or arrangement whereby any option or preferential right of
any kind has been or is proposed to be given to any person to subscribe to any shares or debentures
of the Company.

The investor shall have option either to receive the security certificates or to hold the securities in
dematerialised form with a depository.

PURCHASE OF PROPERTY
Save in respect of the property purchased or acquired or proposed to be purchased or acquired under
the contract referred to herein below under the heading Material Contracts and Documents for

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Inspection, there is no property which the Company has purchased or acquired or proposes to
purchase or acquire which is to be paid, wholly or partly out of the proceeds of the present issue or
the purchase of acquisition of which has not been completed on the date of issue of this Prospectus
other than the following:
    b) The contract for the purchase or acquisition whereof was entered into in the ordinary course
        of the company’s business, the contract not being made in contemplation of the issue in
        consequence of the contract.
    c) b) In respect of which the amount is not material. Except as stated in this Prospectus the
        Company has not purchased any property in which any of its promoters or directors has or
        have any direct or indirect interest or in respect of any payment thereof.

REVALUATION OF ASSETS
There has been no revaluation of the assets since incorporation of the Company.

INTEREST OF DIRECTORS AND PROMOTERS
Except as otherwise stated elsewhere in this Prospectus, all the Directors may be deemed to be
interested to the extent of remuneration and fees payable to them for attending the meeting of the
Board or Committee thereof and reimbursement of traveling and other incidental expenses, if any, for
such attendance’s as per the Articles. All the Directors/ Promoters of the Company shall be deemed
to be interested to the extent of shares held by them and/or their friends and relatives and which may
be allotted to them out of the present issue, and are deemed to be interested to the extent of
remuneration and perquisites being drawn by them from the Company. The Whole-time Director is
interested to the extent of remuneration paid to him for services rendered to the Company. Further,
the Managing Director is interested to the extent of equity shares that may be subscribed and allotted/
transferred to him out of the present Issue in terms of the PROSPECTUS and also to the extent of
any dividend payable to him and other distributions in respect of the said Equity Shares. The Directors
may also be regarded as interested in the shares, if any, held by or that may be subscribed by and
allotted/ transferred to the companies, firms and trust, in which they are interested as Directors,
Members, partners and/or trustees. All Directors may be deemed to be interested in the contracts,
agreements/arrangements entered into or to be entered into by/ with any company in which they hold
Directorships or any partnership firm in which they are partners as declared in their respective
declarations. Except as stated otherwise in this Prospectus, the Company has not entered into any
contract, agreements or arrangement during the preceding two years from the date of the Prospectus
in which the directors are interested directly or indirectly and Proalgen Biotech Limited no payments
have been made to them in respect of these contracts, agreements or arrangements which are
proposed to be made to them.

APPOINTMENT OF WHOLE-TIME DIRECTOR
1. Mr. N. S. Balamukundan was appointed as Managing Director for a period of 5 years with effect
   from 01.01.2003 in the meeting of Board of Directors held on 20.01.2003 and the same was
   confirmed by the Members of the company at the Extra Ordinary General Meeting held on
   26.03.2003.

The remuneration payable to the above Director is as under.

    a) Salary: Rs. 40,000/- per month, with such annual increment as may be decided by the Board.
    b) Commission on the net profit of the company, provided however the aggregate remuneration
       including salaries perquisites and allowances shall not exceed the overall remuneration
       payable under Schedule XIII read with Section 309 of Companies Act, 1956 and as amended
       from time to time.
    c) Perquisites:
       i) Housing: He shall be entitled to house rent allowance not exceeding 60 % of his salary.
       ii) Medical expenses: Reimbursement of medical expenses including hospitalization and
            surgical charges incurred for Mr. Balamukundan and his family subject to a maximum of
            one month salary.
       iii) Leave travel concession: Leave travel concession for Mr. N. S. Balamukundan and his
            family once in a year subject to a maximum of one month salary
       iv) Club fees: Reimbursement of membership fee upto 2 clubs, including admission and life
            membership fee.
       v) Personal accident Insurance: Premium payable shall not exceed Rs.4000 p. a.

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        vi) Contribution to Provident fund, Superannuation fund or Annuity fund to the extent these
              singly are put together are not taxable under the Income tax act 1961
        vii) Gratuity: Gratuity payable at the rate not exceeding half month’s salary for each
              completed year of service.
        viii) Telephone: He is entitled for a telephone at residence. However, personal long distance
              calls shall be logged in and paid over to the company.

Overall Remuneration:
The aggregate of salary and perquisites in any financial year shall not exceed the limits prescribed
from time to time under Section 198, 309 and other applicable provisions of the Companies Act, 1956
read with Schedule XIII to the said Act, as may for the time being be in force.

Minimum Remuneration:
In case of loss or inadequacy of profits in any financial year during the currency of tenure of his
service the payment of salary and perquisites and other allowances shall be governed by the limits
prescribed under Section II of part II of Schedule XIII of the Companies Act, 1956.

2. Mr. N. S. Venkatesh was appointed as Director -Technical for a period of 5 years with effect from
   01.11.2003 in the meeting of Board of Directors held on 25.09.2003 and the same was approved
   by the Members at the Annual General Meeting held on 22.10.2003.

The remuneration payable to the above Director is as under.

    a) Salary: Rs. 30,000/-per month.
    b) Commission: 0.25% of the Net profit earned by the Company.
    c) Perquisites:
       • Housing: He shall be entitled to house rent allowance not exceeding 60 % of his salary
       • Medical Expenses: Reimbursement of medical expenses including hospitalization and
           surgical charges incurred for Dr. N. S. Venkatesh and his family subject to a maximum of
           one-month salary.
       • Leave Travel Concession: leave travel concession for Dr. N. S. Venkatesh and his family
           once in a year subject to a maximum of one-month salary.
       • Personal Accident Insurance: Premium payable shall not exceed Rs.4000/- p.a.
       • Contribution to provident fund, superannuation fund or annuity fund to the extent these
           singly are put together are not taxable under the Income Tax Act, 1961
       • Gratuity: Gratuity payable at the rate not exceeding half month’s salary for each
           completed year of service.
       • Telephone: Entitled to a telephone at residence. However, personal long distance calls
           shall be logged in and paid over to the company.

Overall Remuneration:
The aggregate of salary and perquisites in any financial year shall not exceed the limits prescribed
from time to time under section 198, 309 and other applicable provisions of the Companies Act, 1956
read with Schedule XIII to the said Act, as may for the time being in force.

Minimum Remuneration:
In case of loss or inadequacy of profit in any financial year, during the currency of tenure of his
service, the payment of salary and perquisites and other allowances shall be governed by the limits
prescribed under section II of part II of Schedule III of the Companies Act, 1956.

IV. THE MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY

SHARE CAPITAL
 4.a) The Authorised Share Capital of the Company is Rs.15, 00,00,000 (Rupees Fifteen Crores only)
     divided into 1,50,00,000 (One Crore Fifty Lakhs) equity shares of Rs.10/- (Rupees Ten only) each.

LIEN
 23. The company shall have a first and paramount lien upon all the shares/debentures (other than
     fully paid-up shares/debentures) registered in the name of each member (whether solely or
     jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently
                                                                                                   66
      payable or not) called or payable at a fixed time in respect of such shares/debentures and no
      equitable interest in any share shall be created except upon the footing and condition that this
      Article will have full effect. And such lien shall extend to all dividends and bonuses from time to
      time declared in respect of such shares/debentures. Unless otherwise agreed the registration of
      a transfer of shares/debentures shall operate as a waiver of the Company’s lien if any, on such
      shares/debentures. The Directors may at any time declare any shares/debentures wholly or in
      part to be exempt from the provisions of this clause.

 24. For the purpose of enforcing such lien the Board of Directors may sell the shares subject thereto in
     such manner as it thinks fit but no sale shall be made until the expiration of 14 days after a notice in
     writing stating and demanding payment of such amount in respect of which the lien exist has been
     given to the registered holder of the shares for the time being or to the person entitled to the shares
     by reason of the death or insolvency of the registered holder.

CALLS ON SHARES
27. a) Subject to the provisions of section 91 of the act, the shareholders, at a properly convened
    general meeting of the company may from time to time make such calls as they may think fit upon
    the members in respect of all moneys unpaid on the shares held by them respectively, and not by the
    conditions of allotment there of made payable at fixed times, and the members shall pay the amount
    of every call so made on him to the persons and at the time and place so appointed.

    (b) The option or right to calls on shares shall not be given to any person expect with the sanction of
    the company in a General Meeting. The Company in a duly convened General Meeting, from time to
    time, may delegate the option or right to calls on shares to the Board of Directors.

28. A call shall be deemed to have been made at the time when the resolution of the Directors
    authorising such call was passed. The Board of Directors making a call may by resolution determine
    that the call shall be deemed to be made on a date subsequent to the date of the resolution; and in
    the absence of such a provision a call shall be deemed to have been made on the said date as that
    of the resolution of the Board of Directors making such calls.

29. Not less than thirty days notice of any calls shall be given specifying the time and place of payment
    provided that before the time for payment of such call the Directors may, by notice in writing to the
    members, extend the time for payment thereof.

30. If by the terms of issue of any share or otherwise, any amounts is made payable at any first time or
    by installments at fixed times, whether on account of the shares or by way of premium every such
    amount or installment shall be payable as if, it were a call duly made by the Directors, of which due
    notice had been given and all the provisions herein contained in respect of call shall relate and apply
    to such amount or installment accordingly.

31. If the sum payable in respect of any call or installment be not paid on or before the day appointed for
    payment thereof, the holder for the time being of the share in respect of which the call shall have
    been made or the installment shall be due shall pay interest for the same at the rate of 24 percent per
    annum from the day appointed for the payment thereof to the time of the actual payment. The Board
    of Directors shall also be at liberty to charge a lower rate or waive the payment of interest wholly or in
    part.

32. The provisions of these Articles as to payment of interest shall apply in the case of non-payment of
    any sum which by the terms of issue of a share becomes payable at a fixed time whether on account
    of the amount of the share or by way of premium, as if the same had become payable by virtue of a
    call duly made and notified.

33. The Board of Directors may, if they think fit, receive from any member willing to advance all or any
    part of the moneys uncalled and unpaid upon any shares held by him and upon all or any part of the
    moneys so advanced may (until the same would, but for such advance become presently payable)
    pay interest at such rate as the Board of Directors may decide but shall not in respect of such
    advances confer a right to the dividend or participate in profits.



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34. Neither a judgement nor a decree in favour of the Company for calls or other moneys due in respect
    of any share, nor any part payment or satisfaction thereunder, not the receipt by the Company of a
    portion, of any money which shall from time be due from any member in respect of any share either
    by way of principal or interest, nor any indulgence granted by the Company in respect of the payment
    of any such moneys shall preclude the Company from thereafter proceeding to enforce a forfeiture of
    such shares as hereinafter provided.

FORFEITURE OF SHARES
35. a) If a member fails to pay any calls or installment of a call on the day appointed for the payment
    thereof, the Board of Directors may at any time thereafter, during such time as any part of such call
    or installment remains unpaid, serve a notice on him requiring payment of so much of the call or
    installment as is unpaid, together with any interest, which may have accrued. The Board may
    accept in the name and for the benefit of the Company, and upon such terms and conditions as
    may be agreed upon, the surrender of any share liable to forfeiture and so far as the law permits of
    any other shares.

      b) On the trial or hearing of any action or suit brought by the Company against any share holder or
      his representative to recover any debt or money claimed to be due to the Company in respect of
      his share, it shall be sufficient to prove that the name of the defendant is or was, when the claim
      arose, on the Register of Share holders of the Company as a holder, or one of the holders of the
      number of shares in respect to which such claim is made, and that the amount claimed is not
      entered as paid in the books of the Company and it shall not be necessary to prove the
      appointments of the Directors who made any call nor that a quorum of Directors was present at the
      Board at which any call was made nor that the meeting at which the call was made duly convened
      or constituted not any other matter whatsoever; but the proof of the matters aforesaid shall be
      conclusive evidence of the debt.

36.   The Notice shall name a further day (not earlier than the expiration of fourteen days from the date
      of service of the notice), on or before which the payment required by the notice is to be made, and
      it shall state that in the event of non-payment on or before the day appointed, the shares in respect
      of which the call was made will be liable to be forfeited.

37.a) If the requirements of any such notice as aforementioned are not complied with, any share in
      respect of which the notice has been given may at any time thereafter, and before the payment
      required by the notice has been made, be forfeited by a resolution of the board to the effect. Such
      forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid
      before the forfeiture.

  b) When any share shall have been so forfeited, notice of the resolution shall be given to the member
     in whose name it stood immediately prior to the forfeiture and an entry of the forfeiture shall not be
     in any manner invalidated by any omission or neglect to give such notice or to make such entry as
     aforesaid.

38. A forfeited or surrendered share may be sold, or otherwise disposed of on such terms and in such
    manner as the Board may think fit, and at any time before such a sale or disposal the forfeiture may
    be concealed on such terms as the Board may think fit.

39. A person whose shares have been forfeited shall cease to be a member in respect of the forfeited
    shares but shall, notwithstanding such forfeiture, remain liable to pay and shall forthwith pay to the
    company all monies payable by him on the date of forfeiture to the Company in respect of the shares,
    whether such claim be barred by limitation on the date of the forfeiture or not, but his liability shall
    cease if and when the Company received payment in full of all such moneys due in respect of the
    shares.

40. The forfeiture of a share shall involve the extinction of all interest in and also of all claims and
    demands against the Company in respect of the shares, and all other rights, incidental to the
    share, except only such of these rights as by these articles are expressly saved.

41. A duly verified declaration in writing that the declarant is a Director of the Company and that the
    share in the Company has been duly forfeited on a date stated in the declaration, shall be

                                                                                                           68
    conclusive evidence of the facts, therein stated as against all persons claiming to be entitled to
    the share, and that declaration and the receipt by the company for the consideration, if any given
    for the share and the person to whom the share is sold or disposed of shall be registered as the
    holder of the share and shall not be bound to see to the application of the purchase money (if
    any) nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in
    reference to the forfeiture, sale or disposal of this share.

42. The provisions of these regulations as to forfeiture shall apply in the case of non-payment of any
    sum which, by terms of issue of a share, becomes payable at a fixed time, whether on account of
    the amount of the share or by way of premium or otherwise, as if the same had been payable by
    virtue of a call duly made and notified.

43. Upon any sale after forfeiture, or for enforcing a lien in purported exercise of the powers herein
    before given, the Directors may cause the purchaser's name to be entered in the Register in
    respect of the shares sold and may issue fresh certificate in the name of such purchaser. The
    purchaser shall not be bound to see to the regularity of the proceedings nor to the application of
    the purchase money, and after his name has been entered in the Register in respect of such
    shares, the validity of the sale shall not be impeached by any person and the remedy of any
    person aggrieved by the sale shall be in damages only and against the Company exclusively.

TRANSFER AND TRANSMISSION OF SHARES
44. a. The instruments of Transfer of any shares in the Company shall be executed both by the
    transferor and the transferee and the transferor shall be deemed to remain holder of the shares
    until the name of the transferee is entered in the Register of members in respect thereof.

    b. The Board shall not register any transfer of shares unless a proper instrument of transfer, duly
    stamped and executed by the transferor and the transferee, has been delivered to the company
    along with the certificate and such evidence as the company may require to prove the title of the
    transferor or his right to transfer the shares.

    Provided that where it is proved to the satisfaction of the Board that an instrument of transfer duly
    stamped and executed by the transferor and the transferee has been lost the company may, on
    an application in writing made by the transferee, and bearing the stamp required for an instrument
    of transfer, register the transfer on such terms as to indemnity as the Board may think fit.

    c. An application for the registration of the transfer of any share or shares may be made either
    by the transferor or the transferee, provided that where such application is made by the transferor
    no registration shall, in the case of partly paid shares, to be effected unless the company gives
    notice of the application to the transferee. The Company shall, unless objection is made by the
    transferee within two weeks from the date of receipts of the notice, enter in the Register the name
    of the transferee in the same manner and subject to the same conditions as if the application for
    registration was made by the transferee.

    d. For the purpose of sub-clause (c), notice to the transferee shall be deemed to have been duly
    given if the notice is dispatched by prepaid registered post to the transferee of the address given
    in the instrument of transfer, and it shall be deemed to have been delivered at which it would have
    been delivered in the ordinary course of post.

    e. Nothing in sub-clause (d) shall prejudice any power of the Board to register as a shareholder
    any person to whom the right to any share has been transmitted by operation of the law.

    f. Nothing in this Article shall prejudice the power of the Board to refuse to register as a
    shareholder any person to whom the right to any share has been transmitted by operation of the
    law.

    g. No fee shall be charged for transfer of shares, or for effecting for transmission, or for
    registering a letter or probate, letters of administration and similar other document.

45. The instrument shall be in writing in form 7B or such other form as may be prescribed by the
    central government from time to time in this behalf and all the provisions of section 108 of the

                                                                                                          69
    companies act, 1956 and of any statutory modification thereof for the time being shall be duly
    complied with in respect of all transfers of shares and the registration thereof.

45A. Nothing contained in Section 108 of the Act or these Articles shall apply to transfer of securities
     effected by a transferor and transferee both of whom are entered as beneficial owners in the
     records of a depository and the provisions of Article 44 to Article 53 shall be subject to the
     provisions of the Depositories Act, 1996."

45B. The Company shall keep a book to be called Register of a Transfers and therein shall be
     entered the particulars of every transfer or transmission of any shares held in dematerialized
     form.

46. a. The Board may, subject to the right of appeal conferred by Section 111, decline to register
       i. The transfer of a share, not being fully paid shares, to a person of whom they do not
           approve or
       ii. Any transfer or transmission of shares on which the Company has a lien.

        Provided that registration of a transfer shall not be refused on the ground of the transferor
        being, either alone or jointly with any other person or persons, indebted to the company on
        any account whatsoever except a lien on the shares.

    b. If the Board refuses to register any transfer or transmission of right, they shall, within one
    month from the date on which the instrument of transfer or the intimation of such transmission
    was delivered to the company, send notice of the refusal to the transferee and the transferor or to
    the person giving intimation of such transmission as the case may be, giving reasons for such
    refusal.

    c. In case of such refusal by the Board, the decision of the Board shall be subject to the right of
    appeal conferred by Section 111 sub-clause (3).

    The Company shall effect transfer, transmission, sub-division or consolidation of shares within
    one month from the date of lodgement of the required documents.

47. a. The Board, at their discretion, may decline to recognise or accept an instrument of transfer of
      shares unless the instrument of transfer is in respect of one class of shares.

   b. No fee shall be charged by the Company for registration of transfers or for effecting
     transmission of shares on the death of any member.

48. a. In the event of death of any one or more or several joint holder, the survivor or survivors alone
      shall be entitled to be recognised as having title to the shares.

    b. In the event of death of any sole holder or of the death of the last surviving holder, the
    executors or administrators of such holder or other person legally entitled to the shares, shall be
    entitled to be recognised by the company as having any title to the shares of the deceased.

    Provided that on production of such evidence as to title and on such indemnity, or other terms as
    the Board may deem sufficient, any person may be recognised as having title to the shares as
    heir, or legal representative of the deceased shareholder.

    Provided further that if the deceased shareholder was a member of Hindu joint family, the Board
    on being satisfied to that effect and on being satisfied that the shares standing in his name in fact
    belonged to the joint family, may reconsidered the survivors or the Karta thereof as having title to
    the shares registered in the name of such member.

    Provided further that in any case it shall be lawful for the Board, in their absolute discretion, to
    dispense with the production of probate or letters of administration or other legal representation
    upon such evidence and such terms as to indemnity or otherwise as to the Board may deem just.



                                                                                                      70
49. i.       Any person becoming entitled to a share in consequence of the death or insolvency of a
             member may, upon such evidence being produced as may from time to time be required by
             the Board and subject as herein after provided, elect either:
             a.      To be registered himself as a holder of the share; or
             b.      To make such transfer of the share as the deceased or insolvent member could have
                     made
         ii. The Board shall, in either case, have the same right to decline or suspend registration as it
             would have had if the deceased or insolvent member had transferred the share before his
             death or insolvency.

50.          i. If the person so becoming entitled shall elect to be registered as holder of the shares
           himself, he shall deliver or send to the company a notice in writing signed by him stating that
           he so elects.

           ii. If the person aforesaid shall elect to transfer the share, he shall testify his election by
           executing a transfer of the share.

           iii. All the limitation, restrictions and provisions of these regulations relating to the right to
           transfer and the registration of transfer of shares shall be applicable to any such notice or
           transfer as aforesaid as if the death or insolvency of the member had not occurred and the
           notice or transfer had been signed by that member.

51.        No transfer shall be made to an infant or a person of unsound mind or an insolvent.

52.        Every endorsement upon the certificate of any share in favour of any transferee shall be
           signed by a person for the time being duly authorised by the Board in that behalf. In case any
           transferee of a share shall apply for a new certificate in lieu of the old or existing certificate, he
           shall be entitle to receive a new certificate for every such certificate of shares to which the
           said transfer relates and upon his delivery for cancellation of every old, or existing certificate
           which is to be replaced by a new one.

           Provided that the additional sum of Rupee one shall not be charged for issue of new
           certificate in replacement of those which are decrepit or worn out or whereon the cages on
           the reverse for recording transfers have been fully utilised.

53.        The instrument of transfer shall, after registration, remain in the custody of the Company. The
           Board may cause to be destroyed all transfer deeds lying with the company for a period of ten
           years or more.


ALTERATION OF CAPITAL
56. i. The Company may from time to time, in accordance with the provision of the Act, after the
       conditions of its Memorandum of Association as follows;
          a. Increase its share capital by such amount, as it thinks expedient, by issuing new
               shares;
          b. Consolidate and divide all or any of its share capital into shares of larger amount
                         than its existing shares;
          c. Convert all or any of its fully paid-up shares into stock, and reconvert that stock into
               fully paid up shares of any denomination;
          d. Sub-divide its shares, or any of them, into shares of smaller amount than is fixed by
               the Memorandum, so however, that in sub-division the proportion between the
               amount paid and the amount if any, unpaid on each reduced share shall be the same
               as it was in the case if the shares from which the reduced shares is derived.
          e. Cancel shares which, at the date of the passing of the resolution in that behalf have
               not been taken or agreed to be taken by any person and diminish the amount of the
               share capital by the amount of the shares so cancelled.

         ii. The resolution whereby any share is sub-divided may determine, subject to the provisions of
         the Act, that as between the holders of the shares resulting from such sub-division one or more


                                                                                                             71
      such shares shall have some preference or special advantages as regards dividend, capital or
      otherwise over or as compared with the others.

      iii. The Company may, by Special resolution, reduce in any manner and with and subject to any
      incident authorised and consent required by law:
             a) its share capital
             b) any capital redemption reserve account; or
             c) any share premium account

MODIFICATION OF RIGHTS
The rights and privileges attached to each class of shares may be modified, commuted affected or
abrogated in the manner provided in Section 107 of the Act.

GENERAL MEETINGS
61.  a. The Company shall, within a period of not less than one month nor more than six months
     from the date at which the company is entitled to commence business, hold a General
     Meeting of the members of the Company which shall be called the Statutory Meeting.

       b. The Board of Directors shall, not less than 21 days before the date on which meeting is
          held, forward a report called the Statutory Report to every member of the Company
          provided that if the Statutory Report is forwarded later than is required above, it shall,
          notwithstanding the fact, be deemed to have been forwarded if it is so agreed to by all the
          members entitled to attend and vote at the meeting.

       c.   The Board of Directors shall comply with the provisions of Section 165 of the Act in
            connection therewith.

62.     The Company shall in each year hold, in addition to the other meetings, a General Meeting,
which shall be styled as its Annual General meeting, at intervals and in accordance with the
provisions of Section 166 of the Act.

63.   i. Extra-ordinary General Meetings may be held either at the Registered Office of the Company
      or at such convenient place as the Board or the Chairman (subject to any direction of the
      Board) may deem fit.

      ii. The Chairman or Vice-Chairman may, whether he thinks fit and shall if so directed by the
      Board, convene an Extra-ordinary general meeting at such time and place as may be
      determined

64.         a. The Board shall, on the requisition of such number of members of the Company as is
            specified below, proceed duly to call an Extra-ordinary General Meeting of the Company
            and comply with the provisions of the Act, in regard to meetings on requisition.

       b. The requisition shall set out matters for the consideration of which the meeting is to be
          called, shall be signed by the requistionists, and shall be deposited at the Registered
          Office of the Company or sent to the Company by Registered Post addressed to the
          Company at its Registered Office.

       c.   The requisition may consist of several documents in like forms each signed by one or
            more requisitionist.

       d. The number of members entitled to requisition a meeting in regard to any matter shall be
          such number of them as holders on the date of the deposit of the requisition of not less
          than 1/10th of such of the paid up capital of the company as at the date carried the right
          of voting in regard to the matter set out in the requisition.

       e. If the Board does not, within 21 days from the date of deposit of the requisition with
          regard to any matters, proceed duly to call a meeting for the consideration of these
          matters on a date not later than 45 days from the date of deposit of the requisition, the
          meeting may be called by the requisitionist themselves or such of the requisitionist, as

                                                                                                   72
            represent either majority in value of the paid-up capital of the Company is referred to in
            sub-clause (d) above, whichever is less.

65. A General Meeting of the Company may be called by giving not less than 21 days notice in
    writing, provided that a General Meeting may be called after giving shorter notice if consent
    thereto is accorded in the case of the Annual General Meeting by all the members entitled to vote
    thereat; and in the case of any other meetings of the company, by members holding not less than
    95% of the part of the paid up share capital which gives the right to vote on the matters to be
    considered at the meeting.

    Provided that where any member of the Company is entitled to vote only on some resolution or
    resolutions to be moved at a meeting and not on others, those members shall be taken into
    account for purpose of this clause in respect of the former resolution or resolutions, and not in
    respect of the latter.

66. The accidental omission to give notice of any meeting to or the non-receipt of any such notice by
    any of the members shall not invalidate the proceedings or any resolution passed at such
    meeting.

67. All business shall be deemed special that is transacted at an Extra-ordinary Genera Meeting and
    also that is transacted at an Annual General Meeting with the exception of declaration of a
    dividend, the consideration of the accounts, Balance Sheets and the reports of the Directors and
    Auditors, the election of the Directors in the place of those retiring and the appointment of and the
    fixing of the remuneration of Auditors. Where any items of business to be transacted at the
    meeting are deemed to be special as aforesaid, there shall be annexed to the notice of the
    meeting a statement setting out all material facts concerning each such item of business,
    including in particular the nature of the concern or interest, if any therein, of every Director, if any
    item of business consists of the according of approval to any document by the meeting, the time
    and place where the document can be inspected shall be specified in the statement aforesaid.

    Provided that where any item of Special Business as aforesaid to be transacted at a meeting of
    the Company relates to or affects any other Company, the extent of share holding interest in that
    other company of Special business and statements to be annexed every director of the company
    shall also be set out in the statement if the extent of such shareholding interest is not less than
    20% of the paid up share capital of the Company.


MANAGING AND WHOLE TIME DIRECTORS
92   a) The board may from time to time with such sanction in general meetings of the Company
     and of the Central Government if necessary as may be required by law, appoint one or more
     of their body to the office of the Managing Director or Whole time Director.

        b)The Directors may from time to time resolve that there shall be either one or more
          wholetime Directors/s.

        c) In the event of any vacancy arising in the office of Managing Director or wholetime Director,
           or if the Directors resolve to increase the number of Managing Director/Wholetime
           Directors, the vacancy shall be filled by the Board of Directors and the persons so
           appointed shall hold the office for such period as the Board of Directors may fix.

BORROWING
130. 1) The Board may from time to time raise any money or moneys or sums of money for the
     purpose of the Company; provided that the moneys to be borrowed together with the moneys
     already borrowed by the Company (apart from temporary loans obtained from the company's
     bankers in the ordinary course of business) shall not without the sanction of the company at a
     general meeting exceed the aggregate of the paid up capital of the company and its free
     reserves not set apart for any specific purpose and in particular but subject to the provisions of
     Section 292 of the Act, the Board may from time to time at their discretion raise or borrow or
     secure the payment of any sum or such sums of money for the purpose of the company, by
     the issue of debentures to members, perpetual or otherwise including debentures convertible

                                                                                                         73
     in shares of this or any other company or perpetual annuities and in security of any such
     money so borrowed, raised or received, mortgage, pledge or charge the whole or any part of
     the property, assets or revenue of the company present or future, including its uncalled capital
     by special assignment or otherwise or transfer a convey the same absolutely or in trust, and
     give the lenders powers of sale and other powers as may be expedient and purchase, redeem
     or pay-off any securities.

    Provided that every resolution passed by the company in general meeting in relation to the
    exercise of the power to borrow as stated above shall specify the total amount upto which
    moneys may be borrowed by the Board of Directors.

    Provided further that subject to the provisions of Section 292, the Board may make a resolution
    to delegate the power to borrow money otherwise than on debentures to a committee of
    Directors or the Managing Director subject to limits specified in the said resolution of the total
    amount which may be so borrowed.

    2) Subject to the provisions of the above clause, the Board may from time to time at their
    discretion, raise or borrow or secure the repayment of any sum or sums of money for the
    purpose of the company at such times and in such manner and upon such terms and conditions
    in all respects as they think fit, and in particular, by promissory notes or by opening current
    accounts or by receiving deposits and advances with or without security or by the issue of
    bonds, perpetual or redeemable debentures or debenture stock of the company charged upon
    all or any part of the property of the company (both present and future) including its uncalled
    capital for the time being or by mortgaging or charging or pledging any land, building, bond or
    other property and securities of the company, or by such other means as they may seem
    expedient.

     3) Debenture/ Debenture Stock, Loan/ Loan Stock, bonds or other securities conferring the
     right to allotment or conversion into shares or the potion or right to call for allotment of shares
     shall not be issued except with the sanction of the company in General Meeting.

131. Such debentures, debenture stock, bonds or other securities may be made assignable free
     from any equities between the company and the person to whom the same may be issued.

132. a) Any debentures, debenture-stock or other securities may be issued at a discount, premium
     or otherwise and may be issued on condition that they shall be convertible into shares of any
     denomination and with any privileges and conditions as to redemption, surrender, drawing,
     allotment of shares, attending (but not voting) at the General Meeting, appointment of
     Directors and otherwise Debentures with the right to conversion into or allotment of shares
     shall be issued only with the consent of the company in the General Meeting by a Special
     Resolution.

  b) Any trust deed for the securing of any debentures or debenture stock and or any mortgage
     deed and or other bond for securing payment of monies borrowed by or due by the company
     and or any contract or any agreement made by the company with any person, firm, body
     corporate, Government or authority who may render or agree to render any financial
     assistance to the company be way of loans advanced or by guaranteeing of any loan
     borrowed or other obligations of the company or by subscription to the share capital of the
     company or provide assistance in any other manner, may provide for the appointment from
     time to time by any such Mortgagee, lender, Trustee of or Holders of debentures of
     Contracting Party as aforesaid of one or more person to be a Director or Directors of the
     Company. Such Trust Deed, Mortgage Deed, Bond or Contract may provide that the persons
     appointing the Director as aforesaid may place any other person in his place and provide for
     filling up of any casual vacancy created by such person vacating office as such Director. Such
     power shall determine and terminate on the discharge or repayment of the respective
     mortgage, loan or debt or debentures or on the termination of such contract and any person
     so appointed as Director under mortgage or bond, debenture trust deed or under such
     contract shall cease to hold office as such Director on the discharge of the same. Such
     appointment and provision in such document as aforesaid shall be valid and effective as if
     contained in these presents.

                                                                                                     74
   c) The Director or Directors so appointed by or under a mortgage deed or other bond or contract
      as aforesaid shall be called a Mortgagee Director/s and the Director/s if appointed as
      aforesaid under the provisions of a debenture trust deed, shall be called Debenture Director.
      The words Mortgagee Director or Debenture Director shall not be required to hold any
      qualification shares and shall not be liable to retire by rotation or to be removed from office by
      the company. Such mortgage deed or bond or trust deed or contract may contain such
      auxiliary provisions as may be arranged between the company and mortgagee, lender, the
      trustee or contracting party as the case may be and all such provisions shall have effect
      notwithstanding any of the other provisions herein contained but subject to the provisions of
      the Act.

   d) The Directors appointed, as Mortgagee Director or Debenture Director under the Article shall
      be deemed to be Ex-office Directors.

   e) The total number of Ex-office Directors, if any, so appointed under this Article together with
      the other Ex- office Director, if any, appointed under any other provisions of these presents
      shall not at any time exceed one third of the whole number of Directors for the time being.

133.    Any uncalled capital of the company may be included in or charged by any mortgage or other
        security.

134.    Where any uncalled capital of the company is charged, all person taking any subsequent
        charge thereon shall take the same subject to such prior charge, and shall not be entitled, by
        notice to the shareholders or otherwise to obtain priority over such prior charge.

135.    If the Directors or any of them or any other person, shall become personally liable for the
        payment of any such amount primarily due from the company, the Board may execute or
        cause to be executed any mortgage, charge or security, over or affecting the whole or any part
        of the assets of the company by way of indemnity to secure the Directors or other persons so
        becoming liable as aforesaid from any loss in respect of such liability.

136.    1) Subject to the provision of the Act, the Board shall exercise the following Borrowing powers
        on behalf of the Company and the said power shall be exercised only by resolution passed at
        the meetings of the Board.
        a.     The power to make calls on shareholders in respect of money unpaid on their shares.
        b.     Power to issue debentures.
        c.     Power to borrow moneys otherwise than on debentures.
        d.     The Power to invest the funds of the Company; and
        e.     The Power to make loans.

       2) The Board may, by a meeting, delegate to any committee of the Board or to the Managing
       Director the powers specified under item c, d and e to sub clause (1) above.

       3) Every resolution delegating the power set out in sub clause a, d and e in clause (1) shall
          specify limits upto, which the powers can be exercised.

137.    The Directors shall cause a proper register to be kept in accordance with the provisions of the
        Companies Act, 1956 for all mortgages and charges specifically affecting the property of the
        company and shall duly comply with the requirements of the said act in regard to the
        registration of mortgages and charges therein specified, and otherwise shall also duly comply
        with the requirements of the said Act as to keeping a copy of every instrument creating any
        mortgage or charge at the office of the company.

138.    Every Register of holders of debentures of the company may be closed for any period not
        exceeding on the whole 45 days in any year and not exceeding 30 days at any one time.
        Subject as aforesaid, every such register shall be open to the inspection of registered holder of
        any such debentures and of any members; but the company may, in general meeting, impose
        any reasonable restrictions so that at least two hours in every day, when such register is open,
        are appointed for inspection.

                                                                                                      75
139.   The Debenture Certificates shall be issued in marketable lots and where the debenture
       certificates are issued for either more or less than marketable lots, sub division or
       consolidation into marketable lots shall be done free of charge.

140.   No fee shall be charged for transfer of debentures or for effecting transmission or for
       registering any letters of probate, letters of administration and similar other documents.

141.   The company shall comply with the provisions of the Companies Act, 1956, as to allowing
       inspection of copies of any register of holder of debentures or any trust deed for securing any
       issue of debentures.

142.   The company shall comply with the provisions of the Companies Act, 1956, as to supplying
       copies of any register of holder of debentures or any trust deed for securing any issue of
       debentures.

143.   The trustee/s of holders of debentures shall have the same right to receive and inspect the
       Balance Sheet of the Company and the reports of the Auditors and other reports as are
       possessed by the members of the Company.

COMMON SEAL
150. The Board shall provide a Common Seal of the Company and shall have power from time to
     time to destroy the same and substitute a new seal in lieu thereof. The Common Seal shall be
     kept at the registered office of the Company and committed to the custody of the Directors.

151.   The Seal shall not be affixed to any instrument except by authority of a resolution of the Board
       or Committee of the Board authorised by it in that behalf and except in the presence of a
       Director or the Managing Director or such other person as the Board may appoint for the
       purpose who shall sign every instrument of which the seal of the Company is so affixed in his
       presence.


DIVIDENDS AND RESERVES
152.  The profits of the Company, subject to any special rights relating thereto, created or
      authorised to be created by these presents and subject to the provisions of these presents as
      to the Reserve Fund, shall be dividable among the equity shareholders.

153.   The Company in General Meeting may declare dividends but no dividend shall exceed the
       amount recommended by the Board.

154.   The declaration of the Directors as to the amount of the net profits of the Company shall be
       conclusive.

155.   The Board may from time to time pay to the members such interim dividends as appear to it
       to be justified by the profits of the Company.

156.   No dividend shall be payable except out of the profits of the year or any other undistributed
       profits except as provided by Section 205 of the Act.

157.   1. The Board may, before recommending any dividends, set aside out of the profits of the
       Company such sums as it thinks proper as a reserve or reserves which shall, at the discretion
       of the Board, be applicable for any purpose to which the profits of the Company may be
       properly applied including provision for meeting contingencies, or for equalising dividends,
       and pending such application, may, at the discretion either be employed in the business of the
       Company or be invested in such investments (other than shares of the Company) as the
       Board may, from time to time think fit.

       2. The Board may also carry forward any profits, which it may think prudent not to divide
       without setting them aside as Reserve.


                                                                                                    76
158.   1. Subject to the rights of persons if any entitled to shares with special rights as to dividends,
       all dividends shall be declared and paid according to the amounts paid or credited as paid, on
       the shares in respect whereof the dividend is paid.

       2. No amount paid, or credited as paid on a share in advance of calls shall be treated, for the
       purposes of these regulations, as paid on the share.

       3. All dividends shall be apportioned and paid proportionately to the amounts paid or credited
       as paid on the shares during any portion or portions of the period in respect of which the
       dividend is paid; but if any share is issued on terms providing that it shall rank for dividends as
       from a particular date, such share shall rank for dividend accordingly.

159.   The Board may deduct from any dividend payable to any member all sums of money, if any,
       presently payable by him to the Company on account of calls in relation to the shares of the
       Company or otherwise.

160.   Any General Meeting declaring a dividend or bonus may make a call on the members of such
       amount as the meeting fixes, but so that the call on each shall exceed the dividend payable to
       him, and so that the call be made payable at the same time as the dividend, and the dividend
       may, if so arranged between the company and themselves, be set off against the call.

161.   1. Any dividend, interest or other moneys payable in cash in respect of shares maybe paid by
       cheque or warrant sent through post directed to the registered address of the holder; or in the
       case of joint holder to the registered address of that one of the joint holders who is first named
       in the register of members, or to such person and to such address of the holder as the joint
       holders may in writing direct.

       2. Every such cheque shall be made payable to the order of the person to whom it is sent.

       3. Every dividend or warrant or cheque shall be posted within 30 days from the date of
       declaration of the dividends.

162.   The directors may retain the dividends payable upon the share in respect of which any person
       under the transmission clause is entitled to become a member in respect thereof, or shall duly
       transfer the same.

163.   Any one of two or more joint holders of a share may give effectual receipt for any dividends,
       bonuses or other moneys payable in respect of such share.

164.   Notice of any dividend that may have been declared shall be given to the person entitled to
       share therein in the manner mentioned in the Act.

165.   No dividend shall bear interest against the Company.

166.   Where the company has declared a dividend but which has not been paid or the dividend
       warrant in respect thereof has not been posted within 30 days from the date of declaration to
       any shareholder entitled to the payment of the dividend, the company shall within 7 days from
       the date of expiry of the said period of 30 days, open a special account in that behalf in any
       scheduled bank and transfer to the said account, the total amount of dividend which remains
       unpaid or in relation to which no dividend warrant has been posted.

       The company shall transfer any money transferred to the unpaid dividend account of the
       company, which remains unpaid or unclaimed for a period of seven years from the date of
       such transfer, to the Investor Protection Fund. No unclaimed or unpaid dividend shall be
       forfeited by the Board and the company shall comply with section 205(A) of the Companies
       Act, 1956 in respect of such dividends.

167.   Any transfer of shares shall not pass the right to any dividend declared thereon before the
       registration of the transfer, when an instrument of transfer of shares has been delivered to the

                                                                                                       77
        Company for registration, and the transfer of such shares has not been given effect to by the
        Company, the Company shall comply with the provisions of Section 206 A of the Act in
        respect of such dividend/right shares/bonus shares.

WINDING UP
 196. Subject to the provisions of the Act as to preferential payments, the assets of the Company
      shall, on its winding up, be applied in satisfaction of its liabilities pari passu, and subject to
      such application, shall, unless the Articles otherwise provide, be distributed among the
      members according to their rights and interests in the Company.

  197. If the Company shall be wound up whether voluntarily or otherwise the liquidators may, with
       the sanction of a special resolution, divide among the contributories in specie or kind, any part
       of the assets of the company and may with the like sanction vest any part of the assets of the
       Company in trustees upon such trusts for the benefit of the contributories or any of them, as
       the liquidators with the like sanction shall think fit. In case any shares to be divided as
       aforesaid involve a liability to calls or otherwise any person entitled under such division to any
       of the said shares may within 10 days after the passing of the Special Resolution by notice in
       writing, direct the liquidators to sell his proportion and pay him the net proceeds and the
       liquidators shall, if practicable, act accordingly.

INDEMNITY AND RESPONSIBILITY
  198.a) Subject to the provisions of Section 201 of the Act every Director, Manager, Secretary and
         other officer or employee of the Company shall be indemnified by the Company against and
         it shall be the duty of the Directors out of the funds of the Company to pay all costs, losses
         and expenses (including traveling expenses) which any such Directors, officer or employee
         may incur or become liable to by reason of any contract entered into or act or deed done by
         him or in any other way in the discharge of his duties, as such Director, officer or employee.

      b) Subject as aforesaid every Director, Manager, Secretary, or other Officer or employee of the
        Company shall be indemnified against any liability incurred by them or him in defending any
        proceedings whether civil or criminal in which judgement is given in their or his favour or in
        which he is acquitted or discharged or in connection with any application under Section 633 of
        the Act in which relief is given to him by the court, and without prejudice to the generality, of
        the foregoing, it is hereby expressly declared that the company shall pay and bear all fees
        and other expenses incurred or incurable by or in respect of any Director for filing any return,
        paper or document with the Register of Companies or complying with any of the provisions of
        the Act in respect of or by reason of his office as a Director or other office of the Company.

  199. Subject to the provisions of Section 201 of the Act, no Director or other officer of the company
       shall be liable for the acts, receipts, neglects or defaults of any other Director or officer; or for
       joining in any receipt or other act for conformity for any loss or expense happening to the
       Company through insufficiency or deficiency of title to any property acquired by order of the
       Directors for or on behalf of the Company, or for the insufficiency of deficiency of any security
       in or upon which any of the moneys of the company shall be invested, or for any loss or
       damages arising from the bankruptcy insolvency or tortious act of any person, company or
       corporation with whom any moneys, securities or effects shall be entrusted; or deposited or
       for any loss occasioned by any error of judgement or oversight on his part or for any loss or
       damage or misfortune whatever which shall happen in the execution of the duties of his office
       or in relation thereto unless the same happens through his own act or default.

SECRECY CLAUSE
 200.a) No member shall be entitled to visit or inspect the Company's works without the permission
        of the Directors or Managing Director or to require discovery of or any information respecting
        any detail of the Company's trading or any matter which is or may be in the nature of a trade
        secret, mystery of trade or secret process or which may relate to the conduct of the business
        of the Company and which in the opinion of the Directors it will be inexpedient in the interests
        of the Company to communicate to the public.

         b. Every Director, Managing Director, Whole time Director of the Board and Manager,
         Secretary, Auditor, Trustee, Members of a Committee, Officers, Servant, Agent, Accountant

                                                                                                         78
        or other person employed in the business of the Company, shall if so required by the
        Directors before entering upon his duties, or at any time during his term of office sign a
        declaration pledging himself to observe strict secrecy respecting all transactions of the
        Company and the state of accounts and in matters relating thereto, and shall by such
        declaration pledge himself not to deal any of the matters, which may come to his knowledge
        in the discharge of duties except when required so to do by the Board or by any General
        Meeting or by a Court of Law or by the persons to whom such matters relate and except so
        far as may be necessary in order to comply with any of the provisions contained in these
        Articles.

V. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS
The following contract and agreement referred to in Para “A” below (not being contracts entered into
in the ordinary course of business carried on or intended to be carried on by the Company or
contracts entered into more than two years before the date of this Prospectus) which are / or may be
deemed to be material have been entered into by or on behalf of the Company. Copies of these
contracts together with copies of documents referred to in Para “B” below all of which have been
attached to the copy of this Prospectus and which have been delivered to the Registrar of Companies,
Tamil Nadu at Chennai for registration and may be inspected at the Registered Office of the Company
between 11.00 a.m. and 1.00 p.m. on any working day from the date of this Prospectus until the date
of closing of subscription list.

A) Material Contracts
                                th
    1. Copy of MOU Dated 27 February 2004 between Ashika Capital Limited, Lead Manager to
       the Issue and the Company.
    2. Copy of MOU Dated 19th December 2003 between Cameo Corporate Services Limited,
       Registrars to the Issue and the Company.
    3. Copy of Tripartite Agreement Dated ________ between Central Depository Services Ltd.
       (CDSL), Cameo Corporate Services Limited and the Company.
    4. Copy of Tripartite Agreement Dated _________ between National Securities Depository Ltd.
       (NSDL), Cameo Corporate Services Limited and the Company.

B) Documents for Inspection
1. Copy of Memorandum and Articles of Association of the Company.
2. Copy of Certificate of Incorporation, Commencement of Business and Change of name from ACL
    Chemicals Limited to Proalgen Biotech Limited.
3. Copies of consent letters from Lead Manager to the Issue, Registrar to the Issue, Bankers to the
    Issue, Bankers to the Company, Directors, Auditor, Legal Advisor, Compliance Officer &
    Company Secretary as referred to in this Prospectus to act in their respective capacities.
4. Copy of the Resolutions passed under Sections 81(1A) dated 22.10.2003 and 28.11.2003.
5. Copy of the Auditors Certificate dated 28th February 2004 advising the Company about the Tax
    Benefits available to the Company and its Members.
6. Copy of Certificate dated 28.02.2004 issued by M/s., Chartered Accountants & Statutory Auditors
    of the Company in terms of Part II Schedule II of the Companies Act 1956 including Capitalization
    Statement, Taxation Statement and Accounting Ratios.
7. Copies of the Annual Reports of the Company for the financial year 1998-1999, 1999-2000, 2000-
    2001, 2001-2002, 2002-2003 and period ended 30.09.2003.
8. Copy of the Members Resolutions for appointment of Managing Director and Director-Technical.
9. Copy of the in-principle approval received from the BSE and NSE Dated ________ and
    ___________ respectively.
                                        th
10. Copy of Lease Agreement Dated 24 January 2004 for the Registered Office of the Company.
11. Copy of Annual Report and Memorandum & Articles of Association of Primero Enserve (India)
    Pvt. Ltd. (Group Company)
12. Copies of the Patent Certification.
13. Copy of SEBI observation Letter Dated _______________ 2004 issued in respect of this
    Prospectus.
14. Copies of various undertakings.
                                                                                            st
15. Project Appraisal Report of ING Vysya Ltd. vide no. CNRO/SME/1047 dated dated 21 February
    2004.
16. Share Valuation Report of NCR Consultants Limited dated 23rd February, 2004.

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PART - III

DECLARATION
All the relevant provisions of the Companies Act, 1956 and the guidelines issued by the Government
or the guidelines issued by the Securities and Exchange Board of India established under section 3 of
the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with
and no statement made in this Prospectus is contrary to the provisions of the Companies Act, 1956 or
the Securities and Exchange Board of India Act, 1992 or rules made there under or guidelines issued,
as the case may be.

We, the directors of Proalgen Biotech Limited, hereby declare and confirm that no information /
material likely to have a bearing on the decision of the investors in respect of the equity shares issued
in terms of the Prospectus has been suppressed / withheld and / or incorporated in the manner that
would amount to misstatement / misrepresentation. The Company accepts no responsibility for
statements made otherwise than in the Prospectus or in the advertisements or any other material
issued by or at the instance of the Company and that anyone placing reliance on any other source of
information would be doing so at his/her own risk.

SIGNED BY THE DIRECTORS
Mr. N. S. Balamukundan

Dr. A. S. Aiyar

Dr. N.S. Venkatesh

Mr. N. S. Narasimhan

PLACE: CHENNAI
DATE: March 1, 2004




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posted:9/4/2012
language:English
pages:80