Draft Red herring Prospectus Please read Section 60B of the Companies Act, 1956 Dated [?

] (Will become Prospectus on the date of filing with RoC) (Red Herring Prospectus will be updated upon RoC filing) 100% Book Building Issue

MARS RESTAURANTS LIMITED (Incorporated on April 28, 2000 as Mars Restaurants Private Limited under the Companies Act, 1956. Thereafter, the Company was converted into a public limited company and the necessary certificate of incorporation, consequent upon such conversion, was issued on July 9, 2004) Registered Office: Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Tel.: 91-22-28305599/28251701-03; Fax.: 91-22-28305665 website: www.marsrestaurants.com email: ipo@marsrestaurants.com (The Registered Office of the Company at the time of incorporation was at Mehta Mahal, 10th Floor, 15 Mathew Road, Mumbai 400 004. It was later shifted to 1st Floor, Beach View, 93 Warden Road, Mumbai 400 036 and presently is situated at Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059.) PUBLIC ISSUE OF 55,00,000 EQUITY SHARES OF RS.10 EACH AT A PRICE OF RS.[ ] FOR CASH AGGREGATING RS.[ ] LAKHS (HEREINAFTER REFERRED TO AS THE ISSUE). THE ISSUE WOULD CONSTITUTE 52.42% OF THE FULLY DILUTED POST ISSUE PAID-UP CAPITAL OF THE COMPANY. The Issue is being made through 100% Book Building Process wherein minimum 50% of the Issue shall be allocated to Qualified Institutional Buyers on a discretionary basis, upto 25% would be allocated to Non-Institutional Investors and upto 25% would be allocated to Retail Investors on a proportionate basis, subject to valid bids being received from them at or above the Issue Price. If at least 50% of the Offer cannot be allotted to Qualified Institutional Buyers then the entire application money shall be refunded forthwith. In case of delay, if any, in refund, the Company shall pay interest on the application money at the rate of 15% per annum for the period of delay. Price Band: Rs. _____ to Rs. ____ per Equity Share of Rs. 10 each RISK IN RELATION TO FIRST ISSUE This being the first offer of the Equity Shares of Mars Restaurants Limited (the Company or MRL), there has been no formal market for the Equity Shares of the Company. The face value of the share is Rs.10/- and the issue price is (*) times of the face value. The Issue Price (as determined by the Company in consultation with the Book Running Lead Manager, on the basis of assessment of market demand for the Equity Shares by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity 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 carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this draft Red Herring Prospectus. Specific attention of the investors is invited to the statements in Risk Factors on page no.10] to page no. 13 of the draft Red Herring Prospectus ISSUER S ABSOLUTE RESPONSIBILITY MRL having made all reasonable inquiries, accepts responsibility for, and confirms that this draft Red Herring Prospectus contains all information with regard to MRL and the Issue, which is material in the context of the Issue, that the information contained in this draft Red Herring 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 makes this draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares offered through this draft Red Herring Prospectus and the existing equity shares of the Company are proposed to be listed on The Stock Exchange, Mumbai (Designated Stock Exchange). In-principle approval for listing our Equity Shares will be obtained from the aforesaid stock exchange. BOOK RUNNING LEAD MANAGER Karvy Investor Services Limited Karvy House, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034 SEBI Regn.: INM/000008365 Tel.: +91 40 /2337 4714/2332 0752 Fax.: +91 40 2337 4714 Email.: mbd@karvy.com REGISTRAR TO THE ISSUE Intime Spectrum Registry Ltd. C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup(West) Mumbai 400 078 SEBI Regn. : INR00003761 Tel.: +91 22 2592 3837 Fax.: +91 22 2567 2693 Email.: isrl@intimespectrum.com ISSUE PROGRAMME BID/ISSUE OPENS ON BID/ISSUE CLOSES ON

TABLE OF CONTENTS Page Section I- Risk Factors 1. Definitions and abbreviations. 2. Forward-Looking Statements & Market Data ........................................ 3. Currency of Presentation ........................................ 4. Risk Factors................... Section II Introduction 1. Summary ........................... 2. The Issue ........................ 3. General Information............ 4. Capital Structure .................... 5. Objects of the Issue ............................................ Section III - About Us 1. Industry overview 2. Business ..................... 3. Our History and Corporate Structure 4. Management................................ 5. Our Promoter............................... 6. Related Party Transactions 7. Selected Historical Financial Data . 8. Management's Discussion and Analysis of Financial Condition and Results of Operations Section IV - Legal and Regulatory Information 1. Outstanding Litigations and Material Developments 2. Government Approvals/Licensing Arrangements 3. Other Regulatory disclosures.. Section V - Issue related Information 1. Terms of the Issue........................ 2. Issue Structure................................ 3. Issue Procedure ............................. 4. Basis for Issue Price....................... 5. Tax Benefits.................................... Section VI - Financial Statements 1. Financial Statements Section VII - Other Information 1. Statutory and other Information. 2. Main Provisions of Articles of Association.................................................. 3. Material Contracts and Documents for Inspections............................................ Declaration

DEFINITIONS AND ABBREVIATIONS DEFINITIONS Term MRL or Mars or Our Company or the Company We or us or our Description Mars Restaurants Limited Unless the context otherwise requires, refers to Mars Restaurants Limited.

OFFER RELATED TERMS Allotment Articles/Articles of Association Auditors Banker(s) to the Issue Bid Unless the context otherwise requires, fresh issue & allotment of Equity Shares by the Company to the successful bidders. Articles of Association of Mars Restaurants Limited. The statutory auditors of the Company, Deloitte Haskins & Sells, Chartered Accountants. An offer made during the Bidding Period by a prospective investor to subscribe to Equity Shares of the Company at a price within the Price Band, including all revisions and modifications thereto. The amount equal to highest value of the optional Bids indicated in the Bid cum Application Form and payable by the Bidder on submission of the Bid in the Issue The date after which the members of the Syndicate will not accept any Bids for the Issue, which shall be notified in a widely circulated English national newspaper, a Hindi national newspaper and a Marathi regional newspaper The form in terms of which the Bidder shall make an offer to purchase the Equity Shares of the Company and which will be considered as the application for allotment of the Equity Shares in terms of this draft Red Herring Prospectus The date on which the members of the Syndicate shall start accepting Bids for the Issue, which shall be the date notified in a widely circulated English national newspaper, a Hindi national newspaper and a Marathi regional newspaper. Any prospective investor who makes a Bid pursuant to the terms of this draft Red Herring Prospectus. The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders can submit their Bids. The Board of Directors of Mars Restaurants Limited or a committee thereof. Book building route as provided under Chapter XI of the SEBI Guidelines, in terms of which the Issue is made Book Running Lead Manager to the Issue, in this case being Karvy Investor Services Limited The Stock Exchange, Mumbai The note or advice or intimation of allocation of Equity Shares sent to the Bidders who have been allocated Equity Shares in the Book Building Process The higher end of the Price Band, above which the Issue Price will not be finalised and above which no Bids will be accepted.

Bid Price/ Bid Amount

Bid Closing Date / Issue Closing Date

Bid cum Application Form

Bid Opening Date/ Issue Opening Date

Bidder Bidding Period / Issue Period

Board / Board of Directors Book Building Process BRLM BSE CAN/ Confirmation of Allocation Note Cap Price

Companies Act / the Act Cut-off Depository Depositories Act Depository Participant Designated Date

Director(s) Draft Red Herring Prospectus

EPS Equity Shares Equity Shareholders Escrow Account

Escrow Agreement

Escrow Collection Bank(s) Face Value FII/ Foreign Institutional Investor

Financial Year/Fiscal/FY First Bidder Floor Price Fresh Issue Indian GAAP Issue Issue Size Issuer Issue Price

I.T. Act Margin Amount

The Companies Act, 1956, as amended from time to time. Cut-off refers to any price within the Price Band. A Bid submitted at Cut-off is a valid Bid at all price levels within the Price Band. A depository registered with SEBI under the SEBI (Depositories and Participants) Regulations, 1996, as amended from time to time The Depositories Act, 1996, as amended from time to time. A depository participant as defined under the Depositories Act, 1996. The date on which funds are transferred from the Escrow Account of the Company to the Public Issue Account after the Prospectus is filed with the RoC, following which the Board of Directors shall allot Equity Shares to successful bidders. Director(s) of Mars Restaurants Limited, unless otherwise specified. This draft Red Herring Prospectus issued in accordance with Section 60B of the Companies Act, which does not have complete particulars on the price at which the Equity Shares are offered and size of the Issue. It carries the same obligations as are applicable in case of a Prospectus and will be filed with RoC at least three days before the bid/offer opening date. It will become a Prospectus after filing with RoC after the pricing. Earnings per Share Equity shares of the Company of Rs.10 each unless otherwise specified in the context thereof. Persons holding equity shares of the Company unless otherwise specified in the context thereof. Account opened with an Escrow Collection Bank(s) and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bid. Agreement entered into amongst the Company, the Registrar, the Escrow Collection Bank(s) and the BRLM for collection of the Bid Amounts and refunds (if any) of the amounts collected to the Bidders. The banks at which the Escrow Account of the Company for the Issue will be opened. Value of paid up equity capital per Equity Share. Foreign Institutional Investor (as defined under FEMA (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000) registered with Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995. Twelve (12) calendar months ended on March 31; The Bidder whose name appears first in the Bid cum Application Form or Revision Form. The lower end of the Price Band, below which the Issue Price will not be finalized and below which no Bids, will be accepted. The issue of 55,00,000 new Equity Shares of Rs.10 each at the Issue Price by the Company in terms of this draft Red Herring Prospectus. Generally accepted accounting principles in India. The Fresh Issue 55,00,000 Equity Shares of the Company. Mars Restaurants Limited The final price at which Equity Shares will be issued and allotted in terms of this draft Red Herring Prospectus, as determined by the Company in consultation with the BRLM, on the Pricing Date. The Income-Tax Act, 1961, as amended from time to time. The amount paid by the Bidder at the time of submission of his/her

Memorandum / Memorandum of Association Non-Institutional Bidders Non-Institutional Portion Non Residents/ NRI / NonResident Indian

Bid, being 0% to 100% of the Bid Amount. The Memorandum of Association of Mars Restaurants Limited All Bidders that are not Qualified Institutional Buyers or Retail Individual Bidders. The portion of the Issue being a minimum of 13,75,000 Equity Shares of Rs.10 each available for allocation to Non-Institutional Bidders. Non-Resident is a person resident outside India, as defined under FEMA and who is a citizen of India or a Person of Indian Origin under FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. The last date specified in the CAN sent to Bidders. This term means (i) with respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the Bid Closing Date, and (ii) with respect to Bidders whose Margin Amount is less than 100% of the Bid Amount, the period commencing on the Bid Opening Date and extending until the closure of the Pay-in Date. Being the price band of a minimum price (Floor Price) of Rs.____/and the maximum price (Cap Price) of Rs.___/- and includes revision thereof The date on which the Company in consultation with the BRLM finalises the Issue Price. The Prospectus, filed with the RoC containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of the Issue and certain other information. In accordance with Section 73 of the Companies Act, 1956, an account opened with the Banker(s) to the Issue to receive monies from the Escrow Account for the Issue on the Designated Date. Public Financial Institutions as specified in Section 4A of the Companies Act, Scheduled Commercial Banks, Mutual Funds, Foreign Institutional Investors registered with SEBI, Multilateral And Bilateral Development Financial Institutions, Venture Capital Funds registered with SEBI, Foreign Venture Capital Investors registered with SEBI, State Industrial Development Corporations, Insurance Companies registered with the Insurance Regulatory And Development Authority (IRDA), Provident Funds with a minimum corpus of Rs 25 crores and Pension Funds with a minimum corpus of Rs. 25 crores This Red Herring Prospectus issued in accordance with Section 60B of the Companies Act, 1956, which does not have complete particulars on the price at which the equity shares are offered and size of the issue. It carries the same obligations as are applicable in case of a prospectus and will be filed with the RoC at least three (3) days before the opening of the issue. It will become a Prospectus after filing with the RoC after the pricing and allocation. Off. International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Registrar to the Issue, in this case being Intime Spectrum Registry Limited having its registered office as indicated on the cover page of this draft Red Herring Prospectus. Individual Bidders (including HUFs and NRIs) who have not Bid for an amount in excess of Rs. 50,000 in any of the bidding options in the Issue.

Pay-in Date Pay-in-Period

Price Band

Pricing Date Prospectus

Public Issue Account

Qualified Institutional Buyers or QIBs

Red Herring Prospectus

Registered Office of the Company Registrar /Registrar to the Issue

Retail Individual Bidders

Retail Portion Revision Form

RoC/ROC SCRR SEBI Act SEBI Guidelines

Stock Exchange/BSE/Designated Stock Exchange Syndicate Agreement

The portion of the Issue being a minimum of 13,75,000 Equity Shares of Rs.10 each available for allocation to Retail Individual Bidder(s). The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price in any of their Bid cum Application Forms or any previous Revision Form(s). Registrar of Companies, Maharashtra at Mumbai Securities Contracts (Regulation) Rules, 1957, as amended from time to time. Securities and Exchange Board of India Act 1992, as amended from time to time SEBI (Disclosure and Investor Protection) 2000 issued by SEBI on January 27, 2000, as amended, including instructions and clarifications issued by SEBI from time to time The Stock Exchange, Mumbai The agreement to be entered into among the Company and the members of the Syndicate, in relation to the collection of Bids in this Issue Intermediaries registered with SEBI and eligible to act as underwriters. Syndicate Members are appointed by the BRLM. The Syndicate members collectively The slip or document issued by the Syndicate Members to the Bidder as proof of registration of the Bid The BRLM and Syndicate Members The Agreement among the Syndicate members and the Company to be entered into on or after the Pricing Date ICICI Trusteeship Services Limited, a company incorporated under the Companies Act 1956 and having its Registered Office at ICICI Bank Towers, Bandra Kurla Complex, Bandra (E), Mumbai 400 051 as Trustees for ICICI Equity Fund, a scheme of ICICI Venture Capital Fund, established in the form of a Trust under the provisions of the Indian Trusts Act 1882, acting through its investment manager ICICI Venture Funds Management Company Limited, a company incorporated under the provisions of the Companies Act, 1956 and having its registered office at IV floor, Raheja Plaza, 17, Commissariat Road, Bangalore 560025 (ICICI Venture). Subsequent to the transfer of shares by ICICI Equity Fund to ICICI Emerging Sectors Fund and the Deed of Novation dated December 26, 2002, VC Investor shall mean ICICI Trusteeship Services Limited, as Trustees for ICICI Emerging Sectors Fund, a scheme of ICICI Emerging Sectors Trust, established in the form of a Trust under the provisions of the Indian Trusts Act 1882, acting through its investment manager ICICI Venture. Agreement dated September 29, 2000 entered into between (i) ICICI Trusteeship Services Limited as Trustee of ICICI Equity Fund; (ii) Mr. Sanjay Narang and Ms. Rachna Narang; and (iii) the Company, read with Addendum(s) dated June 12, 2001 and October 20, 2001 and Deed of Novation dated December 26, 2002.

Syndicate Members Syndicate TRS or Transaction Registration Slip Underwriters Underwriting Agreement VC Investor

Investment Agreement

ABBREVIATIONS Abbreviation AS A/c BSE CAGR CDSL COO EGM EBITDA EPS FDI FEMA FIPB GoI HUF IPO JATC NAV NJJBB NRE Account NRO Account NSDL NOC PPB P/E Ratio PAN QIB RBI Rs. RONW SIA SEBI TRS US UK USD or US$ Pounds or Full Form Accounting Standards as issued by the Institute of Chartered Accountants of India Account The Stock Exchange, Mumbai Compounded Annual Growth Rate Central Depository Services (India) Limited. Chief Operating Officer Extraordinary General Meeting Earning Before Interest Tax Depreciation and Amortisation Earnings Per Equity Share Foreign Direct Investment Foreign Exchange Management Act, 1999, as amended from time to time and regulations framed thereunder Foreign Investment Promotion Board Government of India Hindu Undivided Family Initial Public Offering Just Around the Corner Net Asset Value Not Just Jazz by the Bay Non Resident External Account Non Resident Ordinary Account National Securities Depository Limited No Objection Certificate The Pizzeria & Pasta Bar Price/Earnings Ratio Permanent Account Number Qualified Institutional Buyer Reserve Bank of India Indian Rupees Return on Net Worth Secretariat for Industrial Assistance The Securities and Exchange Board of India constituted under the SEBI Act, 1992 Transaction Registration Slip United States United Kingdom United States Dollar U.K. Pounds

In this draft Red Herring Prospectus, the terms "we", "us", or "our", unless the context otherwise implies, refer to Mars Restaurants Limited. Our subsidiary Mars Restaurants (UK)., will be referred to specifically by name wherever the context so requires. FORWARD-LOOKING STATEMENTS AND MARKET DATA We have included statements in this draft Red Herring Prospectus which contain words or phrases such as will, aim, will likely result, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue and similar expressions or variations of such expressions, that are forward looking statements. Actual results may differ materially from those suggested by the forward looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, the monetary and interest policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry. For further discussion of factors that could cause our actual results to differ, see the section entitled Risk Factors beginning on page 10 of this draft Red Herring Prospectus. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither the BRLM, nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company, and the BRLM will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges. Market data used throughout this draft Red Herring Prospectus was obtained from internal company reports, data and industry publications. Industry publications database generally state that the information contained in those publications has been obtained from sources believed to be reliable, but that their accuracy and completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Although, we believe market data used in this draft Red Herring Prospectus is reliable, it has not been independently verified. Similarly, internal Company reports and data, while believed to be reliable, have not been verified by any independent source.

CURRENCY OF PRESENTATION In this draft Red Herring Prospectus, all references to Rupees and Rs. are to the legal currency of India, all references to U.S. Dollars, Dollars, US$ and $ are to the legal currency of the United States and all references to Pounds, and U.K. Pound are to the legal currency of the United Kingdom, In this draft Red Herring Prospectus, Pounds, and U.K. Pound amounts have been translated into Rupees for each period, and presented solely to comply with the requirements of Clause 6.8.4 of the SEBI Guidelines. Investors are cautioned to not rely on such translated amounts. The following table sets forth, for each period indicated, information concerning the number of Rupees for which one could be exchanged at the rate given by the Reserve Bank of India. The Company has translated the statements of income and balance sheet data for each period at the rate on the last business day of such period. The translations should not be considered as a representation that such amounts have been, could have been or could be converted into Rupees at any particular rate, the rate stated below, or at all. Financial year ended March 31, 2002 Inter-Bank Rate () as at Average exchange rate used Closing exchange rate used 2003 2004

67.80 69.37

75.07 74.84

78.02 80.52

RISK FACTORS An investment in equity shares involves a high degree of risk. You should carefully consider all of the information in this draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our Equity Shares. If any of the following risks actually occur, our business, financial condition and results of operations could suffer, the trading price of our equity shares could decline, and you may lose all or part of your investment. Internal Risk Factors 1 The Company is promoted by first generation entrepreneurs and the investments will be subjected to all consequential risk associated with such ventures. The Objects of the Issue for which funds are being raised are the companys own estimates and have not been appraised by any bank/financial institution and no monitoring agency has been appointed to monitor the use of funds. The proposed expansion project is mainly funded by the Public Issue. Any delay in raising the funds from IPO may have an adverse impact on the future performance of the company. The Company is yet to identify the locations for its proposed Restaurants / Food Pavilions for which the present IPO is being made. The Company has entered into agreements in respect of 4 premises from which certain Restaurant business of the Company is conducted. These Agreements are due for expiry in September/November 2005. The non-renewal of the same would have adverse effect on the business of the Company. The details of the agreements are given below. Nature of the Agreements Restaurants Validity of Agreement upto 30.11.2005 Clause

Agreement: Mr. M.L.Narang (Now Mars Enterprises) and MRL

Tides All Stir Fry Three Flights Up

Agreement: MARS Food Services and MRL.

The Pizzeria & Pasta Bar

30.11.2005

Agreement: MARS Food Services and MRL.

Not Just Jazz by the Bay

30.11.2005

Conducting Agreement: MARS Enterprises and MRL

Just Around the Corner

30.09.2005

The agreement can be extended for further 2 years i.e. upto 30.11.2007 provided the VC Investor along with one or more financial institutions have a combined minimum share holding of atleast 26% in the Company. The agreement can be extended for further 2 years i.e. upto 30.09.2007 provided the VC Investor along with one or more financial institutions have a combined minimum share holding of atleast 26% in the Company. The agreement can be extended for further 2 years i.e. upto 30.09.2007 provided the VC Investor along with one or more financial institutions have a combined minimum share holding of atleast 26% in the Company. The agreement can be extended for further 2 years i.e. upto 30.09.2007 provided the VC Investor along with one or more financial institutions have a combined minimum share holding of

10

Conducting Agreement: Mr. Manu Narang, Mars Food Services and MRL

Three Flights Up

30.09.2005

atleast 26% in the Company The agreement can be extended for further 2 years i.e. upto 30.09.2007 provided the VC Investor along with one or more financial institutions have a combined minimum share holding of atleast 26% in the Company

6. Contingent Liabilities: Claims against the company not acknowledged as debts towards: Particulars Electricity Charges Tax matters in dispute under Appeal with C.I.T (Appeals) 7. Risk arising out of Internal Liabilities Risk arising out of outstanding liabilities against us, our promoters and the companies promoted by our promoters. Against the Company Civil Cases Criminal Cases under Section 380, 406, 420 Cases by the Company Civil Cases Criminal Cases Against the promoters Civil Case No. of cases 6 Cases 1 Case Amount involved in Rs. Lakhs Rs.188.30 Amount not ascertainable 2004 Rupees 305,585 9,104,095 2003 Rupees 305,585 Nil

3 Cases 2 Case

Not ascertainable Amount not ascertainable in one case and in one case the liability is Rs.0.24 lakhs. There is a dispute pertaining to the declaration of tenancy and possession of a 600 sq.ft space at Gordon House and stay on the repair and reconstruction which was disallowed by the Court. There is a dispute pertaining to nonpayment of custom duty on A/C units supplied by the complainant. The amount of penalty has not yet been ascertained Mr. Sanjay Narang & Ors. have received a notice for non-payment of computer hardware materials supplied to Mars Enterprises (a Partnership Firm of Mr. Sanjay Narang & Ors.) However the claim is being disputed on the ground that the materials supplied were defective in nature.

1 Case

Criminal Case

1 Case

Legal Notice

1 Case

11

Cases by the Promoters Civil Cases Civil Cases Against the Group Companies Civil Cases Criminal Cases By Group Companies/Firms Civil Cases Civil Cases Criminal Cases Legal Notice 8.

2 Cases 2 Cases 6 Cases 3 Cases 2 Cases 4 Cases 1 Case 3 Cases

Rs.186.63 Amount not ascertainable Amount not ascertainable Amount not ascertainable Rs.92.99 lakhs Amount not ascertainable Rs.0.27 lakhs Amount not ascertainable

Risk in relation to approvals from various authorities The business of the Company requires it to obtain licenses/renewals from various local authorities. Any delay in obtaining the approval/renewal would affect the operation/profitability of the Company.

9.

There is a risk associated with transferring cash from outlets to the bank branches/corporate office and risk associated with employee fidelity, especially since there is a significant amount of cash transactions in business. Risk related to non-registration of our Trade Marks We have been assigned in our favour by other group entities application made to appropriate authority for registration of Trade Marks which are as follows The Pizzeria, Not Just Jazz by the Bay, Just around the Corner, Three Flights Up, Trim with Taste, Dosa Diner, All Stir Fry, Tides, China Joe, Roti, Birdys and Cake Khazana - The Registration is awaited.

10.

11.

Loss making ventures of our promoters Some of the group companies that have incurred losses during the last three years are as set-out in the table below: (Rs. in lakhs) Financial year ended March 31, Sl.N 2002 2003 2004 o. Name of the Company 1 Mars Hotels & Resorts Private Limited (30.63) (33.98) (58.22) 2 Taj Birdys Food Services Private (101.66) (9.83) 189.01 Limited 3 Mars Restaurants (Chennai) Private (0.03) (0.02) (0.06)* Limited 4 Manu Hotels Pvt. Ltd. (52.86) (0.10) (0.05) * The loss pertains for the period ended 30th November 2003 as the company has made an application for striking off its name to RoC. Some of the Companies/Firms promoted by the Company/Promoters that have incurred losses during the last three years are: (Rs. in lakhs) Financial year ended March 31, Sl.No. Name of the Company 2002 2003 2004 1 Gourmet Restaurants Private --(9.02) (26.65) Limited 2 Mars Enterprises (138.88) (19.08) 140.08 3 Mars Food Services 7.20 (0.03) 8.51

12.

12

13.

Two of the partnership firms promoted by the promoters viz; Sunrise Film Company and Mars Leasing are defunct and no activities are being undertaken. The success of the companys business depends on its management team. Loss of any key managerial personnel can adversely affect its business. The Company has not entered into any tie-up for the purpose of arranging working capital for the project enumerated in the objects of the issue. Some products manufactured by the Company i.e. Bakery products are highly perishable with the low shelf life. Any un-sold stock of such products will not have any value. Huge gap between the supply and demand of its products may lead to high loss in value, since some of the products of the company are highly perishable. Low Promoter Holding Subsequent to the proposed IPO, the promoters holding will be reduced to 35.03%. The Companys business is dependant upon its ability to keep pace with customers tastes and preferences. If the company fails to keep pace with such changes, the revenue and performance of the Company may suffer. Mars Hotels and Resorts Private Limited is yet to receive the occupation certificate from the Municipal Corporation of Greater Mumbai for the premises from which the Company is operating its Commissary at present. In an agreement with Mars Hotels & Resorts Pvt. Ltd., the company has to have an occupancy certificate from the local authorities to use the premises. In case of any delay in obtaining the occupancy certificate, the operations of the company may be temporarily affected as they would have to re-locate themselves. The Company has closed 10 of its outlets in Mumbai and Pune operated under the brand name Dosa Diner, Rotis, Just around the Corner, in the recent past, as they were considered un-viable.. The Company in an agreement with Tendulkar family (shareholding agreement)has represented and warranted that so long that the agreement subsists, Mr. Sanjay Narang shall not reduce his shareholdings in Mars to an extent below 51% subject to which Tendulkar family shall have right to terminate the agreement 23. The Company has an accumulated loss of Rs.255.28 lakhs pertaining to the current financial year 2003-04 (unconsolidated & restated). 24. Mars Restaurants (Chennai) Private Limited, a group Company has made an application to Registrar of Companies, Chennai for striking off their name.

14.

15.

16.

17.

18.

19.

20.

21.

22.

External Risk Factors 1 2 3 4 5 Competition from new entrants as well as existing players may affect the profitability of the Company. Any changes in regulatory environment may have an impact on the business of the Company. There is a risk any future fundamentalist government could ban, pubs, games, pool, discotheques, etc. There exists a risk to outlets due to fire, riots, vandalism, etc. There is a risk associated with outbreak of epidemic.

13

Notes: Net Offer to the Public of 55,00,000 Equity Shares of Rs.10/- each at a price of Rs.(*) for cash aggregating Rs. (*) Lakhs. The average cost of acquisition of Equity Shares by the Promoters, is Rs. (*) per Equity Share and the Book Value per Equity Share as of March 31, 2004 is Rs. 37.42/- per share. The Networth of the Company as on March 31, 2004 is Rs 1867.77 lakhs (based on Unconsolidated and Restated financials) Related Party Transactions Information on related party transactions as required by Accounting Standard 18(AS-18) for the years ended March 31, 2004, 2003 and 2002. a) Subsidiary: Category 1 Mars Restaurants (UK) Limited Directors and Key management personnel : Category 2 Mr. Sanjay M Narang - Director Ms. Rachna M Narang - Director Mr. Bala Deshpande (Nominee of the ICICI Venture) - Director Mr. Arvind Ghei (Key management personnel) Chief Financial Officer Companies controlled by Directors / Relatives: Category 3 Gourmet Restaurants Private Limited Mars Food Services Deepak Peter Design Private Limited Mars Enterprises Mars Hotel & Resorts Private Limited Sky Gourmet Catering Private Limited Bullworker Private Limited Taj Birdys Food Services Limited Mars Catering Services Private Limited Mars Corporation Relative of Directors: Category 4 Mr. Ashok M Narang Rs. Lakhs
Particulars Category 1 Subsidiary 2004 Sales Mars Enterprises Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Others Total Sales Service provided Mars Enterprises Sky Gourmet Catering Pvt. Ltd. Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Total Service provided Re-imbursement of Expenses from Mars Enterprises Mars Hotels & Resorts Pvt. Ltd Gourmet Restaurants Pvt. Ltd 2003 2002 Category 2 Directors & Key Management Personnel 2004 2003 2002 Category 3 Companies Controlled by Directors/ Relatives 2004 2003 2002 84.39 44.15 0.20 128.75 53.13 63.81 65.97 20.00 202.91 128.36 19.64 95.35 38.99 0.21 134.56 47.23 41.50 30.97 119.70 95.63 15.13 46.28 53.21 99.49 28.53 28.53 22.53 7.58 -

b)

c)

d)

14

Taj Birdys Food Services Ltd Others Total re-imbursement of expenses from Purchases Mars Enterprises Taj Birdys Food Services Ltd Others Total Purchases Service received Mars Enterprises Mars Food Services Total Services received Re-imbursement of Expenses to Mars Enterprise Sky Gourmet Catering Pvt. Ltd. Mars Corporation Taj Birdys Food Services Ltd Deepak Peters Design Pvt. Ltd Others Total re-imbursement of expenses Advance and Loans given Mars Enterprises Others Total Loans and Advances Advance and Loans repaid Mars Enterprises Others Total Loans and Advances repaid Interest Received - Mars Enterprise Purchase of Fixed Assets Mars Enterprises Taj Birdys Food Services Ltd Total purchase of Fixed Assets Directors Remuneration Remuneration Paid Investment Mars Restaurants(UK) Limited Gourmet Restaurants Pvt. Ltd Total Investment Deposits given - Mars Hotels & Resorts Pvt. Ltd Outstanding as on 31/03/04 Loans and Advances Loans and Advances - Mars Enterprise Deposits - Mars Hotels & Resorts Pvt. Ltd Debtors for goods and services Mars Enterprise Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Mars Hotels & Resorts Pvt. Ltd Others Total Debtors for Goods and Services Creditors for goods and services Mars Food Services Mars Corporation Others Total Creditors for goods and Services Investment

5.84 153.83 60.94 0.16 61.11 24.31 23.10 47.41 5.79 3.95 14.64 2.09 26.47 15.85 15.85

6.65 117.41 26.01 26.01 21.14 28.59 49.72 7.38 6.46 0.21 14.05 100.00 13.72 113.72 200.00 13.72 213.72 4.50 -

21.07 1.72 52.91 45.09 0.05 45.14 15.90 35.39 51.29 7.71 26.06 0.22 33.99 100.00 13.65 113.65 13.65 13.65 172.67 18.92 153.75 172.67 -

3.14

43.34

151.31

0.32

5.00

97.96

15.85 15.85 -

1.69 5.31 192.00 192.00

7.75 6.42

11.90 8.63

124.50 124.50 21.53 61.23 417.24

94.82

96.69

151.31

0.32 100.00 500.00 110.59 51.49 20.00 6.53 188.61 9.39 2.55 478.74 43.51 46.41 417.24 9.63 10.37 7.97 0.13 28.11 3.43 1.68 0.07 5.19

7.36 97.28 16.35 1.64

11.94 192.00 192.00 192.00

17.98

15

Investment - Gourmet Restaurants Pvt. Ltd.

124.50

124.50

Note: Advance and Loan repaid includes advance of Rs.100.00 lakhs given in the Year 2002. Investors are advised to refer to the Para titled Basis of Issue Price on page no. 149 of the Red Herring Prospectus. Investors may note that in case of over-subscription in the Issue, allocation shall be on proportionate basis to Retail Bidders and Non-institutional Bidders. Please refer to paragraph titled Basis of Allotment/Allocation on page no. 206 of this draft Red Herring Prospectus. Investors are free to contact the BRLM for any clarification or information pertaining to the Issue.

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SUMMARY You should read the following summary with the Risk Factors included from page numbers 10 to 13 and the more detailed information about us and our financial statements included in this draft Red Herring Prospectus. Our History Mr. Sanjay Narang and Ms. Rachna Narang, our Promoters incorporated the Company on April 28, 2000. At present the company operates a total of 16 restaurants / outlets. Formation of MRL In early nineties, the Narang family started converting properties of partnership and sole proprietorship controlled by them into restaurants by setting up Talk of the Town. In 1993 Birdys by Taj was conceptualized which was a 50-50 joint venture with the Taj Group. However, the joint venture was called off in mid 2001 and the assets and business were transferred to MRL. As a next step the Pizzeria was set up in 1994. In 1996 Jazz by the Bay - the first Jazz restaurant and Bar in India. In 1997 Three Flights Up, a night club was opened. In 1998 they added Just Around the Corner, an American Diner. In 1999 it set up Trim with Taste. In 2000 Dosa Diner was launched and in 2001 Roti was started. During the year 2000 and 2001 the promoters transferred the trademark / trademark applications made by partnership firm and sole proprietorship concerns to MRL by a deed of assignment pursuant to an Investment Agreement dated September 29, 2000 by ICICI Trusteeship Services Limited (ICICI Equity Fund) which investment was subsequently transferred to ICICI Trusteeship Services Limited (ICICI Emerging Sectors Fund). Companies/Partnership Firms under the MARS Flagship Mars Restaurants Limited Mars Enterprises Mars Hotels & Resorts Private Limited Mars Corporation Mars Food Services Bullworker Private Limited. Mars Catering Services Private Limited Taj Birdys Food Services Private Limited. Mars Leasing Sunrise Films Mars Restaurants (Chennai) Private Limited Mars Restaurants (U.K) Limited Wholly Owned Subsidiary of MRL

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GROUP STRUCTURE

PROMOTERS - Mr. Sanjay Narang - Ms. Rachna Narang GROUP ENTITIES MARS RESTAURANTS LIMITED PROMOTER GROUP COMPANY

SUBSIDIARY

JOINT VENTURE

MARS ENTERPRISES DEEPAK PETER DESIGN PVT.LTD MARS FOOD SERVICES

MARS RESTAURANTS (UK) LTD

GOURMET RESTAURANTS PVT. LTD.

MARS CORPORATION SKY GOURMET CATERING SERVICES PVT.LTD

MARS LEASING MARS HOTELS & RESORTS PVT. LTD

BULLWORKER PVT LTD

MARS CATERING SERVICES PVT LTD

TAJ BIRDYS FOOD SERVICES PVT LTD

MARS RESTAURANTS (CHENNAI) PVT. LTD *

* Mars Restaurants (Chennai) Pvt. Ltd. has applied for striking of its name from the ROC. Mars Restaurants Limited The registered office of the Company is located at Off. International Airport Approach Road, Marol, Andheri (East), Mumbai- 400 059. The Company was incorporated on April 28, 2000 by Mr. Sanjay Narang and Ms. Rachna Narang for the purpose of carrying on restaurant business.

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Business Overview Our Business Our Companys key business is operating and managing restaurants. The segments covered by our Company are family dining, over the counter, casual dining and the night club segment. The various trademarks / brand names under which our Company carries out its business are Dosa Diner, Pizzeria & Pasta Bar, Just Around the Corner, Birdys, All Stir Fry, Tides, Not just Jazz by the Bay, PollyEsthers, Cake Khazana and China Joe. The Company is also engaged in institutional catering. Our Key Strengths The Company has leveraged the past experience of its promoters and is one of the very few companies with a clear focus and a well-defined road map. We have institutionalized the business and have built organization capabilities for operating a portfolio of brands / trademarks across the Mumbai city. Today our Company has a turnover of over Rs. 2464.69 Lakhs (Unconsolidated and restated for the FY 2003-04). With a strong foundation in place our Company has laid out an ambitious growth plan. The competitive strengths supporting the Company in its endeavor are: Experienced Promoters Our promoters have considerable experience in this industry. Mr. Sanjay Narang, one of the promoters has studied Hotel Management from Cornell University, USA the most reputed hotel and restaurant management institute in the world. The other promoter Ms. Rachna Narang, also a Cornell University Graduate in liberal arts, has vast experience in conceptualizing, designing, developing and operating chains of fast food restaurants. Addressing popular formats - our Company has created a variety of time-tested brands catering to varied consumer tastes. Scalability our Company has a scalable model with standardized operation, which helps us to easily duplicate the formats. Standardized food and beverages across outlets via pre-cooked ingredients all are made and supplied from one central place. Economies of scale are achieved with centralized procurement Technology our Company has embraced technology to efficiently manage the operation, with specially developed software for supply chain and reporting systems Project Management Capabilities with an in-house project design and execution team, our Company is capable of building a restaurant right from conceptual stage to implementation. Central Commissary- Central commissary situated at Sahar, Mumbai helps in supply of Standardized and quality food to all our restaurants and also acts as economies of scale Strong Customer focus- consumer satisfaction on food and services are ensured through constant interaction with customers, monitoring the market and tracking product offerings HR Strategy - clearly defined policies on training and performance evaluation ensures that quality personnel and well-motivated staff deliver our promise to our customers.

Business Strategy Our restaurants cater to people of all ages right from children to old people. All the restaurants are theme based. Not Just Jazz by the Bay is totally focused on casual dining and live music. Just Around the Corner is based on the American diner format, while Roti was based on a north Indian Dhabha model. Polly Esthers is a nightclub targeting the young crowd, which enjoys food, beverages and music, and is based on a discotheque. Our Company has an arrangement with Caf Coffee Day for selling our cookies and pastries. The coffee vending machines of Caf Coffee Day can be installed at the restaurants.

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Our Company works on a franchise model. The premises for restaurants/outlets are taken on a revenue sharing basis. Our company is in the process of consolidating all the brands under one roof. At E-Square, Pune all offerings of our Company are available. We have a Joint Venture arrangement with the Tendulkar family and have formed Gourmet Restaurants Private Limited (GRPL). GRPL owns the Tendulkars brand / trademark and restaurant which is managed by us. GRPL is expanding its restaurants business by starting Sachins.

THE ISSUE Equity Shares Offered Fresh issue by the Company. 55,00,000 Equity Shares

Of which Qualified Institutional Buyers Portion 27,50,000 Equity Shares (allocation on discretionary basis) Non-Institutional Portion 13,75,000 Equity Shares (allocation on proportionate basis) Retail Portion (allocation on proportionate basis) 13,75,000 Equity Shares

Under- subscription, if any, in any of the categories would be allowed to be met with spillover from the other categories, at the sole discretion of the Company, and BRLM. However, the unsubscribed portion in the QIB category shall not be available for subscription to other categories. Equity Shares outstanding prior to the Issue* Equity Shares outstanding after the Issues.. Use of proceeds 49,91,580 Equity Shares 104,91,580 Equity Shares We intend to use the net proceeds of the Fresh Issue for expansion of new outlets, to meet issue expenses and for long-term working capital. Please see section entitled Objects of the Issue in this Draft Red Herring Prospectus for additional information.

Corporate Information: Our Company was incorporated on April 28, 2000 as a Mars Restaurants Private Limited company under the Companies Act 1956. Thereafter, the Company was converted into a Public Limited Company and the necessary certificate of incorporation, consequent upon such conversion, was issued on July 9, 2004. and subsequently the name was changed to Mars Restaurants Limited. Our principal and registered office is at Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Our telephone nos. is Tel.: 91-22-28305599/28251701-03; Fax.: 91-22-28305665 website: www.marsrestaurants.com email: ipo@marsrestaurants.com

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GENERAL INFORMATION MARS RESTAURANTS LIMITED (Incorporated on April 28, 2000 as a Mars Restaurants Private Limited under the Companies Act, 1956. Thereafter, the Company was converted into a public limited company and the necessary certificate of incorporation, consequent upon such conversion, was issued on July 9, 2004) Registered Office: Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Tel.: 91-22-28305599/28251701-03; Fax.: 91-22-28305665 website: www.marsrestaurants.com email: ipo@marsrestaurants.com (The Registered Office of the Company at the time of incorporation was at Mehta Mahal, 10th Floor, 15 Mathew Road, Mumbai 400 004. It was later shifted to 1st Floor, Beach View, 93 Warden Road, Mumbai 400 036 and presently is situated at Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059.) Authority for the Issue The Fresh Issue of 55,00,000 Equity Shares has been authorised pursuant to (a) a resolution of the Board of Directors adopted on July 21, 2004.; and through (b) a special resolution adopted pursuant to Section 81(1A) of the Companies Act, at the Annual General Meeting of our shareholders held on July 21, 2004. Prohibition by SEBI The Company, its directors/promoters and persons in control, its subsidiaries, its associates and companies/entities with which the Companys directors are associated as directors/promoters have not been prohibited from accessing the capital markets or restrained from buying/selling/dealing in securities under any order or direction passed by SEBI. Eligibility for the Issue As per Clause 2.2.1 of the SEBI (Disclosure & Investor Protection) Guidelines, 2000, an unlisted company may make an initial public offering (IPO) of equity shares only if it meets all the following conditions: The company has net tangible assets of at least Rs. 3 crores in each of the preceding 3 full years (of 12 months each), of which not more than 50% is held in monetary assets: Provided that if more than 50% of the net tangible assets are held in monetary assets, the company has made firm commitments to deploy such excess monetary assets in its business/project; The company 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; Provided further that extra ordinary items shall not be considered for calculating distributable profits in terms of Section 205 of Companies Act, 1956 The company has a net worth of at least Rs. 1 crore in each of the preceding 3 full years (of 12 months each); In case the company has changed its name within the last one year, atleast 50% of the revenue for the preceding 1 full year is earned by the company from the activity suggested by the new name; and The aggregate of the proposed issue and all previous issues made in the same financial year in terms of size (i.e. offer through offer document + firm allotment + promoters contribution through the offer document), does not exceed five (5) times its pre-issue net-worth as per the audited balance sheet of the last financial year.) Since we do not meet the track record criteria specified above, we are offering Equity Shares through the Book Building route in accordance with clause 2.2.2 and 2.2.2A of the SEBI Guidelines, wherein: The issue is made through the book-building process, with at least 50% of the issue size being allotted to the Qualified Institutional Buyers (QIBs), failing which the full subscription monies shall be refunded. The minimum post-issue face value capital of the company shall be Rs. 10 Crore. The prospective allottees are not less than one thousand (1000) in number.

21

DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING 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 THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE BOOK RUNNING LEAD MANAGER, KARVY INVESTOR SERVICES LIMITED, HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI GUIDELINES FOR DISCLOSURES AND INVESTOR PROTECTION AS FOR THE TIME BEING IN FORCE. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING AN INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE BOOK RUNNING LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE BOOK RUNNING LEAD MANAGER, KARVY INVESTOR SERVICES LIMITED HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED AUGUST 16, 2004 IN ACCORDANCE WITH THE 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 IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE. 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.

2.

WE CONFIRM THAT: A. THE DRAFT RED HERRING 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 RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE. 3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID. 4. WHEN UNDERWRITTEN, WE SHALL SATISFY OURSELVES ABOUT THE NET WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS.

22

ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE TIME OF FILING OF THE DRAFT RED HERRING PROSPECTUS WITH THE ROC IN TERMS OF SECTION 60B OF THE ACT. ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE TIME OF REGISTRATION OF THE PROSPECTUS WITH THE ROC IN TERMS OF SECTION 56, SECTION 60 AND SECTION 60B OF THE COMPANIES ACT. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAVE BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF THE PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN WILL NOT BE DISPOSED /SOLD/TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS. THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 AND SECTION 68 OF THE ACT OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY AND 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 THE BOOK RUNNING LEAD MANAGER, ANY IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS. Caution The Company, its Directors and the BRLM accepts no responsibility for statements made otherwise than in the Draft Red Herring Prospectus or in the advertisements or any other material issued by or at the instance of the Company and anyone placing reliance on any other source of information including the company website www.marsrestaurants.com would be doing so at his or her own risk. The BRLM accepts no responsibility, save to the limited extent as provided in the Memorandum of Understanding and the Underwriting Agreement entered into between the Company and the Underwriters. All information shall be made available by the BRLM and the Company to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road show presentations, in research or sales reports or at bidding centres etc. Disclaimer in Respect of Jurisdiction This Issue is being made in India to persons resident in India (including Indian nationals resident in India who are majors, HUFs, 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, as amended from time to time, or any other Trust law and who are authorised under their constitution to hold and invest in shares) and to NRIs and FIIs. This draft Red Herring Prospectus does not, however, constitute an offer 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 draft Red Herring 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 exclusive jurisdiction of appropriate court(s) in Mumbai 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 draft Red Herring Prospectus has been submitted to the SEBI.

23

Accordingly, the Equity Shares, represented thereby may not be offered or sold, directly or indirectly, and this draft Red Herring Prospectus may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this draft Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the company since the date hereof or that the information contained herein is correct as of any time subsequent to this date. Investors may please note that Central Government/RBI does not take any responsibility for the financial soundness or correctness of statements disclosed in this Red Herring Prospectus. Disclaimer Clause of The Stock Exchange, Mumbai (Designated Stock Exchange) As required a copy of this Draft Red Herring Prospectus has been submitted to BSE. The Stock Exchange, Mumbai (the Exchange) has given vide its letter dated [ ] permission to this Company to use the Exchanges name in this draft Red Herring Prospectus as the stock exchange on which this companys securities are proposed to be listed. The Exchange has scrutinised this offer document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner: i) warrant, certify or endorse the correctness or completeness of any of the contents of this Red Herring Prospectus; or ii) warrant that this Companys securities will be listed or will continue to be listed on the Exchange; or iii) take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company; and it should not for any reason be deemed or construed that this Red Herring Prospectus has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to 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 for any other reason whatsoever. Filing A copy of the Red Herring Prospectus, along with the documents required to be filed under 60B of the Companies Act, has been delivered for registration to the ROC, Maharashtra at Mumbai and a copy of the Prospectus to be filed under Section 60 of the Companies Act would be delivered for registration with ROC, Maharashtra at Mumbai. A copy of the draft Red Herring Prospectus has been filed with the Corporate Finance Department of SEBI at B Wing, First Floor, Mittal Court, Nariman Point, Mumbai 400 021. Listing Application has been made to The Stock Exchange, Mumbai for permission to deal in and for an official quotation of the Equity Shares of the Company. If the permissions to deal in and for an official quotation of the Equity Shares are not granted by The Stock Exchanges, Mumbai, the Company shall forthwith repay, without interest, all moneys received from the applicants in pursuance of this draft red herring prospectus. If such money is not repaid within eight days after the Company becomes liable to repay it i.e. from the date of refusal or within 70 days from the date of Issue Closing Date, whichever is earlier, then the Company and every director of the Company who is an officer in default shall, on and from expiry of eight days, will be jointly and severally liable to repay the money, with interest at the rate of 15% per annum on application money, as prescribed under Section 73 of the Companies Act.

24

The Company shall ensure that all steps for the completion of the necessary formalities for listing and commencement of trading at both the Stock Exchanges mentioned above are taken within seven working days of finalisation and adoption of the basis of allotment for the Issue. Impersonation Attention of the applicants is specifically drawn to the provisions of sub-section (1) of Section 68 A of the Companies Act, which is reproduced below: Any person who: (a) makes in a fictitious name, an application to a company for acquiring or subscribing for, any shares therein, or (b) otherwise induces a company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Fresh Issue amount including devolvement of the members of the Syndicate, if any, within 60 days from the Bid Closing Date, the Company shall forthwith refund the entire subscription amount received. If there is a 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. If there is any delay in refund of the amount collected, the Company and Directors, shall be jointly and severally liable to refund the amount due by way of interest @ 15% per annum for the delayed period beyond 68 days from the date of closing of the issue. If the number of allottees in the proposed issue is less than 1,000, the Company shall forthwith refund the entire subscription amount received. If there is a delay beyond 15 days after the Company becomes liable to pay the amount, the Company shall pay interest at the rate of 15% per annum for the delayed period. Withdrawal of the Issue The Company, in consultation with the BRLM, reserves the right not to proceed with the Issue anytime after the bidding, without assigning any reason thereof. Letters of Allotment or Refund Orders The Company shall dispatch allotment advice and refund orders and give benefit to the Beneficiary Account with Depository Participants and submit the allotment and listing documents to the Stock Exchanges within two working days of finalisation of the basis of allotment of Equity Shares. The Company shall dispatch refund orders, if any, of value up to Rs.1,500, by Under Certificate of Posting, and shall dispatch refund orders above Rs.1,500, if any, by registered post or speed post at the Sole or First Bidder's risk. In accordance with the Companies Act, the requirements of the Stock Exchanges and SEBI Guidelines, the Company further undertakes that: Allotment of Equity Shares shall be made only in dematerialised form within 15 days from the Issue Closing Date; It would despatch refund orders within 15 days from the Issue Closing Date; and It shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if allotment is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15 day time prescribed above. The Company will provide adequate funds required for dispatch of refund orders 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 a refund banker and payable at par at places where bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the bidders.

25

Issue Programme ISSUE/BID OPENS ON ISSUE/BID CLOSES ON

( ), 2004 ( ), 2004

Bids and any revision in bids shall be accepted only between 10 A.M and 3 P.M (Indian Standard Time) during the Bidding Period as mentioned above at the bidding centres mentioned on the Bid cum Application Form except that on the Bid/ Issue Closing Date, the Bids shall be accepted only between 10 am and 1 pm (Indian Standard Time) or uploaded till such time as may be permitted by the BSE on the Bid/ Issue Closing Date. In case of revision in the Price Band (not beyond 20% on both sides), the Issue Period will be extended for three additional days after revision of Price Band subject to a maximum of 13 days. Any revision in the Price Band and the revised Bid/Issue Period, if applicable, will be widely disseminated by Notification to the BSE, by issuing a press release, and also by indicating the change on the website of the BRLM and at the terminals of the Syndicate. Registered Office of the Company Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Tel.: 91-22-28305599/28251701-03; Fax.: 91-22-2830566 email: ipo@marsrestaurants.com website: www.marsrestaurants.com Company Secretary Mr. K.L Sethia Company Secretary Mars Restaurants Limited Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Tel.: 91-22-28305599/28251701-03 Fax.: 91-22-28305665 Email: sethia@marsrestaurants.com Compliance Officer Mr.Kalpesh I Ojha Senior Manager Accounts Mars Restaurants Limited Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Tel.: 91-22-28305599/28251701-03 Fax.: 91-22-28305665 Email: ipo@marsrestaurants.com Investors can contact the Compliance Officer in case of any pre-issue or post-issue related problems such as non-receipt of letters of allocation, credit of allotted shares in the respective beneficiary account or refund orders, etc. Book Running Lead Manager Karvy Investor Services Limited Karvy House, 46 Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034 Tel.: +91 40 23374714/23320752 Fax.: +91 40 23374714 Email.: mbd@karvy.com

26

Syndicate Members

Registrar to the Issue Intime Spectrum Registry Ltd. C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup(west) Mumbai 400 078 Tel.: +91 22 2592 3837 Fax.: +91 22 2567 2693 Email.: isrl@intimespectrum.com Legal Advisors to the Issue Rajani Associates F-4 Panchsheel 53, C Road Churchgate, Mumbai 400 020 Tel No.:91-022-22021010 Fax No.: 91-022-22021011 Auditors Deloitte Haskins & Sells Chartered Accountants 12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate, Worli, Mumbai 400 018. Tel. No. : 022 56679000 Fax No. : 022 - 56679025 Bankers to the Issue and Escrow Collection Bankers

Bankers to the Company Citibank, N.A 293, Dr. D. N. Road Fort, Mumbai 400 001. Tel No.: 91-022- 2269 5757 Fax No.: 91-022-2266 1171 IndusInd Bank Limited Acme Plaza, C.T.S. No. 32, Opp. Sangam Talkies, Andheri-Kurla Road Andheri (E), Mumbai 400 059 Tel No.: 91-022-28237636-40 Fax No.: 91-022-2823 7574 Advisor to the Company Inga Advisors Pvt. Ltd. B-107, Neelam Centre, Hind Cycle Road, Worli Mumbai 400 030 Tel No.:91-022-24982919 / 37 Fax No.: 91-022-24982956

27

Credit Rating As this is an issue of Equity Shares, there is no credit rating required for this issue. Trustees As this is an offer of Equity Shares, the appointment of Trustees is not required. Book Building Process Book building refers to the collection of Bids from investors, which is based on the price band, the Issue Price being fixed after the Bid offer/ Closing Date. The principal parties involved in the Book Building Process are: (1) The Company; (2) Book Running Lead Managers; (3) Syndicate Members who are intermediaries registered with SEBI or registered brokers with the Stock Exchanges and are eligible to act as underwriters. (4) Registrar to the Issue i.e. Intime Spectrum Registry Limited The BRLM to appoint the syndicate members. SEBI, through its guidelines has permitted an issuer proposing to offer securities to the public to have an option to offer 100% of the Issue through the Book Building Process, wherein 50% of the Issue shall be allocated to Qualified Institutional Buyers on a discretionary basis, 25% would be allocated to Non-Institutional Investors and 25% would be allocated to Retail Investors (including HUFs and NRIs) whose maximum Bid amount is not more than Rs. 50,000, subject to valid Bids being received at or above the Issue Price on a proportionate basis. Under subscription, if any, in any of the categories, will be met with spill over from the other categories. However, the unsubscribed portion in the QIB category shall not be available for subscription to other categories. The Company will comply with these guidelines for this Issue. In this regard, the Company has appointed Karvy Investor Services Ltd. as the BRLM to the Issue to procure subscription to the Issue. The process of book building, under SEBI guidelines, is relatively new and the investors are advised to make their own judgment about investment through this process prior to making a Bid in the Issue. Pursuant to recent amendments to SEBI guidelines, QIBs are not allowed to withdraw their Bid after the Bid/Closing Date. Please see the section titled Terms of the Issue on page 128 of this Draft Red Herring Prospectus for more details. Steps to be taken by the Bidders for bidding: 1. Check whether he/ she is eligible for bidding; 2. Bidder necessarily needs to have a demat account; and 3. Ensure that the Bid cum Application Form is duly completed as per instructions given in this draft Red Herring Prospectus and in the Bid cum Application Form. Underwriting Agreement After the determination of the Issue Price and prior to filing of the Prospectus with ROC, the Company will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through the Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLM shall be responsible for bringing in the amount devolved in the event that the Syndicate Members do not fulfill their underwriting obligations. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be filled in before filing of the Prospectus with ROC) Name & Address of the Underwriter Indicated No. of shares to be underwritten Amount Underwritten (Rs. Million)

The above underwriting agreement is dated [ ].

28

In the opinion of the Board of Directors (based on a certificate given to it by the Underwriters), the resources of all the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. All the above mentioned Underwriters are registered with SEBI under Section 12(1) of the SEBI Act. The above Underwriting Agreement has been accepted by the Board of Directors at their meeting held on [ ] and the Company has issued letters of acceptance to the Underwriters. Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments. Notwithstanding the above tables the BRLM, and the Syndicate Members shall be responsible for ensuring the payment of the amount allocated to investors procured by them. In the event of any default in payment, the respective underwriter, in addition to other obligations defined in the underwriting agreement, will also be required to procure/subscribe to the extent of the defaulted amount. Allocation to QIBs is discretionary as per the terms of the draft Red Herring Prospectus and may not be proportionate in any way and the patterns of allocation to the QIBs could be different for the various Underwriters.

29

CAPITAL STRUCTURE Aggregate Value

Capital Structure

Face Value

Rs. in lakhs A Authorised Capital 1,25,00,000 Equity Shares of Rs. 10 each B Issued, Subscribed and Paid-Up Capital 49,91,580 Equity Shares of Rs. 10 each Present issue to the public in terms of this Red Herring Prospectus Fresh Issue 55,00,000 Equity Shares of Rs.10/- each at a D Net Offer to Indian Public 55,00,000 Equity Shares of Rs.10/- each E Equity Capital after the Issue 104,91,580 Equity Shares of Rs. 10/- each 1049.16 550.00 550.00 [*] 499.16 1250.00

Share Premium Account (c) Before the Issue After the Issue 1623.88 [*]

1.

The authorized share capital of the Company, which at the time of incorporation was Rs. 1 lakh divided into 10,000 Equity Shares of Rs. 10 each has been increased from time to time. For details of increase in our authorized capital, please see our History and Certain Corporate Matters Changes in Memorandum of Association At an extra ordinary general meeting held on July 5, 2004, members of the Company have approved an increase in the authorized share capital through a special resolution resulting in our authorized capital increasing to Rs. 1250.00 lakhs comprising of 1,25,00,000 Equity Shares of Rs. 10/- each.

2.

The addition to the Share Premium Account on account of the Public Issue and the balance in the Share Premium account after the Issue can be determined only after the Issue Price is known after the Book Building Process.

30

Notes to Capital Structure 1. Share Capital History of our Company:

No. of Equity Shares (Face Value Rs.10/- each) 100 Cumulative No. of Shares Issue Price Considera tion % of post issue paid up capital Lock in period # Reasons for allotment

Date of allotment/ Date when made fully paid

05.05.2000

100

10

Cash

Negligible

1 year

Subscription to Memorandum Issued to the partners of Mars Food Services against the debt owed by the Co. to Mars Food Services. ICICI Trusteeship Services Limited, (ICICI Equity Fund) ICICI Trusteeship Services Limited, (ICICI Equity Fund) 2:1 Bonus Issue

05.10.2000

1225000

1225100

10

Cash

11.68

1 year

16.10.2000

216200*

1441300

231.50

Cash

2.06

Nil

21.12.2001

222560*

1663860

673.98

Cash

2.12

Nil

21.07.2004

3327720

4991580

10

Bonus

31.72

2098316 will be subject to lock in for 3 years, 877520 are not subject to lock in being held by ICICI Trusteeshi p Services Limited (ICICI Equity Fund) and the balance (i.e. 3,51,884 equity shares) will be locked in for 1 year

4991580

* These Shares were allotted to ICICI Trusteeship Services Limited (ICICI Equity Fund) Venture Fund pursuant to an Investment Agreement. dated September 29, 2000. Subsequently these shares were transferred to ICICI Trusteeship Services Limited (ICICI Emerging Sectors Fund). # The lock in will start from the date of allotment in the present public issue and the last date of the lock in shall reckoned as 3 years/one year from the date of commencement of commercial production or from the date of allotment in the present public issue, whichever is later.

31

2.

Promoters Holding and Lock-in Name of the Promoter Date of allotment& Date when made fully paid 05.05.2000 05.10.2000# 21.07.2004 Nature of Payment No. of Equity Shares Face Value (Rs) Issue Price (Rs.) Percentage of post issue paid-up capital Lockin Period

Mr. Sanjay Narang

Cash Cash Bonus

50 6,12,500 12,25,100

10 10 10

10 10 10

0.00% 5.84% 11.68%

1 1 *

Ms. Rachna Narang

05.05.2000 05.10.2000# 21.07.2004

Cash Cash Bonus

50 6,12,400 12,24,900

10 10 10

10 10 10

0.00% 5.84% 11.68%

1 1 *

* 10,49,158 Shares each held by Mr. Sanjay Narang and Ms. Rachna Narang are locked in for a period of 3 years and the balance shares will be locked in for a period of one year from the date of allotment in the present issue or from the date of commencement of commercial production, whichever is later. # These shares are held by Mr.Sanjay Narang and Ms. Rachna Narang on behalf of Partners of Mars Food Services. a. The aggregate shareholding of our core promoters is 36,75,000 equity shares of Rs.10/- each which constitutes 35.03% of the post issued capital out of this 20,98,316 equity shares constituting 20% of the post issued share capital held by them would be locked-in for a period of three years from the date of allotment of shares in this Issue or from the date of commencement of commercial production, whichever is later, in accordance with the SEBI Guidelines. The balance 15,76,984 equity shares of Rs.10/- would be locked in for a period of one year from the date of allotment of shares in this Issue, or from the date of commencement of commercial production, whichever is later, in accordance with the SEBI Guidelines. The Promoters may pledge their Equity Shares with banks or financial institutions as additional security for loans whenever availed by them from banks or financial institutions. Shares held by promoter(s) which are locked in as per the relevant provisions, may be transferred to and amongst promoter/promoter group or to a new promoter or persons in control of the company, subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable. Other than the above the entire pre issue share capital shall be locked in for Period of one year from the date of allotment in this Issue or from the date of commencement of commercial production, whichever is later, except the shares held by ICICI Trusteeship Services Ltd. - A/c. ICICI Emerging Sectors Fund. c. Shares held by persons other than the promoters, prior to the Issue and which are locked in for one year from the date of allotment in the Issue or from the date of commencement of commercial production, whichever is later, may be transferred to any other person holding such shares which are locked in, subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as applicable.

b.

32

3.

Save as stated below, our promoters and our directors has not purchased or sold any equity shares during the period of six months preceding the date on which the Red Herring Prospectus is filed with ROC other than the following: Our promoter Ms. Rachna Narang has sold 20 shares each of Face Value Rs.10/- at price of Rs. 10/each for Cash to (a) Mr. Ashok Narang, (b) Mr. Arvind Ghei, (c) Mr. Ramesh Joshee, (d) Mr.Jaswinder Singh, and (e) Mr. Kalpesh Ojha. The transfer date for the above shares was on June 29, 2004. The Company has received a declaration under Section 187-C(1) of the Companies Act, 1956 from Mr.Ashok Narang, Mr. Arvind Ghei, Mr. Ramesh Joshee, Mr. Jaswinder Singh and Mr. Kalpesh Ojha stating that they are holding the shares on behalf of Ms.Rachna Narang.

4.

Shareholding pattern of the Company before and after the issue Category Pre issue No. of % Equity Shares 36,75,300 73.63 13,16,280 26.37 Post issue No. of % Equity Shares 36,75,300 35.03 13,16,280 12.55

Promoters Group - ICICI Trusteeship Services Ltd. A/c. ICICI Emerging Sectors Fund Public

--49,91,580

--100.00

55,00,000 1,04,91,580

52.42 100.00

5.

The list of Top ten shareholders of the Company and the number of equity shares held by them a. Top ten shareholders on the date of filing the draft Red Herring Prospectus with ROC and ten days prior the date of filing the draft Red Herring Prospectus with the ROC S.No. Name of the shareholders No. of Equity Shares 1 Mr. Sanjay Narang 18,37,650 2 Ms. Rachna Narang 18,37,350 3 ICICI Trusteeship Services Ltd. A/c. ICICI Emerging Sectors Fund 13,16,280 4 Mr. Ashok Narang * 60 5 Mr. Arvind Ghei * 60 6 Mr. Ramesh Joshee * 60 7 Mr. Jaswinder Singh * 60 8 Mr. Kalpesh Ojha * 60 * Holding shares on behalf of Ms. Rachana Narang. b. Top ten shareholders two years prior to the date of filing the draft Red Herring Prospectus with ROC S.No. Name of the shareholders No. of Equity Shares 1 Mr. Sanjay Narang 6,12,550 2 Ms. Rachna Narang 6,12,550 3 ICICI Trusteeship Services Ltd. 4,38,760 A/c. ICICI Emerging Sectors Fund 6. As on date, there are no pending warrants, options, right to convert a debenture, loan or other instruments into equity shares of MRL.

33

7.

Neither the Company, its Directors nor BRLM have entered into any buy-back and/or standby arrangements for purchase of Equity Shares of the Company from any person. Our shareholders, vide their resolution passed at the Annual General Meeting of the Company, held on July 21, 2004, have accorded their consent to this issue. Further, as per the requirements of the Investment Agreement, ICICI Emerging Sectors Fund has also accorded its consent at the Board Meeting held on June 29, 2004. For further details, see Our History Agreements with our Shareholders. The Company has not raised any bridge loan against the proceeds of this Issue.

8.

9.

10. An oversubscription to the extent of 10% of the Offer to the public can be retained for the purpose of rounding off to the nearer multiple of () while finalising the allotment. 11. Our shareholder ICICI Trusteeship Services Ltd. (ICICI Emerging Sectors Fund) has certain rights under the Investment Agreement, novated in its favour, which shall stand terminated with the listing of our equity shares on BSE. For further details, see Our History Our agreements with Financial Investors. 12. In this Issue, not less than 50% of the Issue shall be allocated on a discretionary basis to Qualified Institutional Buyers. Further, not less than 25% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 25% of the Issue shall be available for allocation on a proportionate basis to Retail Bidders, subject to valid bids being received at or above the Issue Price. Under-subscription, if any, in any of the categories would be allowed to be met with spill over from any other category, at the sole discretion of the Company, and the BRLM. However, the unsubscribed portion in the QIB category shall not be available for subscription to other categories. 13. A Bidder cannot make a Bid for more than the number of Equity Shares offered through the issue, which is equal to 55,00,000 Equity Shares, subject to the maximum limit of investment prescribed under relevant laws applicable to each category of investor. 14. There would be no further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from submission of the Red Herring Prospectus with SEBI until the Equity Shares offered through this Red Herring Prospectus have been listed. 15. We do not have any intention or proposal to alter our 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. 16. We have not revalued any of our assets since our inception. 17. We have not issued any Equity Shares out of revaluation reserves or for consideration other than cash, in the past. 18. At any given point of time, there shall be only one denomination for the Equity Shares of our Company and the Company shall comply with such disclosure and accounting norms specified by SEBI from time to time. 19. The Company had 8 members as of August 10, 2004.

34

OBJECTS OF THE ISSUE The Main Object of the Issue is listing of the Equity Shares of the Company on the Stock Exchange pursuant to the Investment Agreement dated September 29, 2000 by ICICI Trusteeship Services Limited (ICICI Equity Fund) which investment was subsequently transferred to ICICI Trusteeship Services Limited (ICICI Emerging Sectors Fund).(Refer page no. 67 for the details of the Investment Agreement). The proceeds from the fresh issue of shares will be deployed for meeting our working capital requirements, for setting up of Restaurants and for meeting Issue Expenses. As a result of this Issue, we also expect to provide liquidity to our existing shareholders. The main objects clause and objects incidental or ancillary to the main objects clause of the Memorandum and Articles of Association of the Company enables us to undertake our existing activities and the activities for which the funds are being raised by us, through the present issue. Funds requirement Project cost Setting up cost of Restaurants Working Capital requirement Share issue expenses Total (Rs. Lakhs) Rs 705.00 220.00 75.00 1000.00

Setting up of Restaurants The Company intends to open food courts/restaurants in Mumbai around 5 locations. The Company is in the process of identifying the location/properties. The cost of setting up of new restaurants is as follows: Rs. Lakhs Civil Works and Interior - Building Vehicles Furniture & Fixtures Plant & machinery Kitchen Utensils Crockery, Cutlery & other operating supplies Computers & Others Sub Total Contingencies @ 5% Deposits for Premises Total Say Details of the quotations obtained are as under: Name of the Supplier INTERIOR Nutek Constructions Nutek Constructions Quotation No. Date Particulars Amount 210.77 2.53 67.01 323.89 6.63 17.14 19.61 647.58 32.38 25.00 704.96 705.00

Civil & Plumbing work water proofing, construction

16,064,755.00 5,012,125.00

35

VEHICLES Fort Point Automotive Pvt. Ltd.

17.07.2004

Hero Honda Motor Cycle

252,915.00

FURNITURE & FIXTURE Krishna Interiors KR/1/310/04 Comart Lithographers Ltd. Art N' Glass PLANT & MACHINERY AIRCONDITIONING Classic Comforts Daikin Shriram Airconditioning Pvt. Ltd. ELECTRICAL FITTING Soumya Electricals Urban House Interiors Moonlite Electricals Soumya Electricals 74002 2250/2004

22.07.2004 21.07.2004 20.07.2004

loose furniture, chair, table, counter, sofa Processing charges of prints for framing Framing Charges

6,298,839.00 122,512.00 279,875.00

17 -

19.07.2004 16.07.2004

Kitchen Ventilation System Supply of Air conditioners 2 units

4,308,200.00 3,730,200.00

110 -

19.07.2004 18.07.2004 11.08.2004

Electrical work Supply of Track light system Supply of down lights with tubes. Supply of DG SET 50 KW 6.25 KVA

4,125,125.00 907,990.00 153,262.50 3,250,000.00

FIRE FIGHTING EQUIPMENTS Zenith Fire Services(India) Pvt. Ltd.

304168

23.07.2004

Zenith ABC powder stored pressurized type fire Extinguisher 5 Kg Capacity

40,680.00

KITCHEN EQUIPMENTS Jaybharat Steel Centre R.F. Engineering Co.

18.07.2004 16.07.2004

Supply of Kitchen Equipments Supply of SS racks, sinks, work tables, Trolleys, hoods, refrigerated counter etc.

298,500.00 12,095,115.00

MISC. PLANT & MACHINERY Eureka Forbes Ltd. Pratibha Electronics Pvt. Ltd. Technocrats

Jul-22 62

07.07.2004 20.07.2004 19.07.2004

Supply of Water filter cum Purifier Supply of card reader Supply of aircirculators, hand

32,950.00 105,890.00 292,517.85

36

dryers & insect killers. MUSIC SYSTEMS - MISC. PLANT & MACHINERY Star Professional Audio 20.7.20 Speaker, Amplifier, 04 Deck supply

3,048,415.00

KITCHEN UTENSILS Jaybharat Steel Centre

24.07.2 Kitchen Utensils 004

662,535.00

CROCKERY & CUTLERY Jaybharat Steel Centre Senior (India) Glass Centre

24.07.2 Crockery & Cutlery 004 07.06.2 Crockery & Cutlery 004 13.07.2 Crockery & Cutlery 004

553,875.00 560,310.00 600,270.00

COMPUTERS Wysetek Systems Technologists Fortune Infosystems GRAND TOTAL Working capital

2868A/12/2004

24.06.2 Supply of computers 004 & accessories. 16.07.2 Computer set 004

1,744,500.00 216,750.00 64,758,106.35

We intend to raise funds to meet part of our working capital requirements. Our working capital requirement arises primarily from sundry debtors and inventories to be maintained. Working capital requirements as per audited balance sheet as on 31/03/04 Working Capital Requirements Current Assets Inventories Sundry debtors Other current assets Total Less : Current Liabilities and Provisions Liabilities / Creditors Provisions Total Net Current Assets 2003-04 (Rs. Lakhs) 81.56 264.57 713.54 1059.67 For 2004-05 (Rs. Lakhs) 80.48 162.72 677.88 921.08

486.42 25.50 511.92 547.75

480.77 25.50 506.27 414.81

37

Assumptions: Projected revenue for the financial year 2004-05 are projected @10% from the current financial year ended 2003-2004. We have assumed that new restaurants will not give much revenue contribution to company in the financial year 2004-2005. Sundry debtors are expected at 22 days of sales as against the earlier norm of around 40 days. Other current assets and liabilities are estimates of the anticipated at year end based on the present position. Share Issue Expenses The expenses for this Issue include underwriting and management fees, selling commissions, printing and distribution expenses, legal fees, fees to various advisors, statutory advertisement expenses and listing fees payable to the stock exchange, among others. The total expenses for this Issue are estimated to be approximately (*%) of the total proceeds of this Issue which will be paid by the Company. As on date, we have not deployed any amount towards the proposed Objects of the Issue. Sources of Financing of Balance Fund Requirements We intend to fund our requirements through a combination of internal accruals, proceeds of this Issue and debt. Interim Use of Proceeds Pending any use as described above, we intend to invest the proceeds of this Issue in high quality, interest or dividend bearing short term/long terms liquid instruments including deposits with banks for the necessary duration. These investments would be authorized by our Board or a duly authorized committee thereof. Schedule of Implementation The Schedule of implementation estimated by the Management for the proposed project is as under: Particulars Commencement Completion November 2004 February 2005 Identification of locations June 2005 Interiors & setting up of Plant January 2005 & Machinery and Furniture March 2005 July 2005 Commencement of operations Proposed Deployment of Funds Fund Requirements Capital Expenditure Issue related expenses Working capital Total 2004-2005 348 75 230 653 (Rs. In lakhs) 2005-2006 347 0 347

38

SECTION III ABOUT US INDUSTRY OVERVIEW India, a country with population of over 1 billion, more than 24 languages and 10 different religions, is a nation of multiple cuisines. India is a very diverse country. The diet of North Indian normally consists of wheat-based dishes and red meat, while South Indian diet consists of rice based dishes. Western India cuisines are normally vegetarian while in the East one can see more of seafood diet. Overview of Restaurant Business in India Indian Market size and potential With the increasing population and rising income levels, urban India offers a large and relatively unexploited market for players having a national chain and strong branding. India has 25 cities with over a million population, which are target market for the industry players. The restaurant business is largely in the unorganized sector and vested in partnerships and proprietary entities. Unlike many other industry segments, food caters to a basic human need, which is required to be satisfied of a daily basis, thereby significant insulating it from recessionary trends. Need for a national chain Majority of the industry are small with single outlets. There are 22,000 registered restaurants in India with monthly sales of over $15,000. In additional there are over 1,00,000 roadside eating outlets (dhabas) and 1,700 registered restaurants in India. There are a handful of larger players with regional presence catering to the popular Indian cuisines, but their model lacks scalability and uniform standards. Realizing this opportunity for national foray in volumes and geographical spread, few global companies such as Dominoes, Pizza Hut and McDonalds have tapped this market in the recent past by Indianising their global offerings. However the global players do not cater to traditional Indian cuisine. MRL with its various brands successfully addresses this gap in the market. ( Source : Company ) Growth Drivers Traditionally, the concept of eating out was not very prevalent in India. Earlier, under the joint family system prevalent in India, the family used to eat together and the meal would invariably be freshly cooked, each meal at a time. People were particular as to who cooked the meals and even the ingredient which were used in the food. For a person used to eating vegetarian meals, it was unthinkable to eat in a place, where the kitchen also caters to non-vegetarian food. Eating out as a concept was relatively absent. Even two decades ago, there were either fine dining restaurants or low-end restaurants and wayside stalls offering low quality food. Most of the high-end restaurants were located in metro cities or in five star hotels. In the last decade, restaurant industry in India has gone through a metamorphosis. The various reason for these changes, which has created a large demand for this industry are:1. Urbanisation: With economic growth and industrialization, rural population from across the country are moving to urban areas in search of work. In the last thirty years, urban population has increased by 88%. This also translates to high population density in few areas, giving rise to the need for more eating places.

39

1200

40

Urban Population (in mn)

800 23.3 600 400 200 0 1970-71 1980-81 20

25.7

27.8

30 25 20 15 10 5 0

1990-91

2000-01

Year

(Source: Statistical outline of India, edited, printed and published by Tata Services Limited) 2. Rising Income Level: As seem in the graph, per capital income for 2001-02 has increased by over 200% over the past decade alone. This coupled with a rising trend of dual earning families, depicts there is higher proportion of disposable income and will likely lead to more meals eaten away from home.

20000

Per Capita Income (Rs)

17500 15000 12500 10000 7500 5000 2500 0

199192 199596 199697 199798 199899

14396 11564 10149 6014 12707

15626

16707

17978

199900

200001

200102

Year

Rise in income, gives room for expenses in new segments. Household expenditure on eating-out was negligible five years ago and has grown to 5% in 2003. With industry growth rate and rising demand, this segment portrays enormous growth potential in this sector. (Source: Statistical outline of India, edited, printed and published by Tata Services Limited) 3. Western influence: in early 90s, India liberalized its economy and opened the doors to the world. Foreign companies invested in the country, bring with them their global brands and products to influence the lifestyle of the Indian consumers. This influence was further enhanced with the onset of satellite television in urban areas. The impact is slowly moving towards the rural areas as well. With traditions and cultures fading of, the new generation is accepting a western lifestyle, resulting in more people eating out but with a predominant choice of Indian cuisine.

40

% of total population

1000

35

4.

Traveling: in the last two decade, Indians have been extensively traveling, either for work or pleasure. Over 2.5 mn Indians have traveled abroad in 2002-03. This exposes them to new cultures offering various cuisines, thus becoming another reason for strong western influence into Indian lifestyle and eating habits. Changing dynamics of Indian family: concept of dual working families is catching on in India. With women working, the family dynamics in India are changing. Eating out is preferred and viewed as family entertainment.

5.

Popular Indian tastes cover the following cuisines Gujarati, Maharashtrian, North Indian cuisines, South Indian preparations, Bengali, Moghlai and Rajasthani. Amongst international cuisines, Chinese remains the most popular, which has been completely transformed to suit Indian taste. Other cuisines gaining acceptance are American, Italian, Lebanese, Mexican, Thai and Japanese.

41

Industry Players The restaurant industry in India comprises of the following players.

Highend

MNC & Domestic Chains

Stand Alone Restaurants

Small Udipi Type

Dhabas

Wayside stalls and hawkers

Wayside stall and hawkers serves the low end market. The food prices are cheap and they lack ambience and hygiene. They are found at every nook and corner. Food served varies from Indian Fast food like dosas, wada-pav, bhel, sevpuri, sandwiches, Chinese and many more. Dhabas mainly located on National and State Highways, they serve local cuisine. individuals. Dhabas also lack ambience and hygiene. Operated by

Small Udipi type restaurant - Udipi is a famous place in southern India. People have used this name to market South Indian cuisine. A popular fast food joint in the cities, now Udipi restaurants also serve other fast food cuisines to cater to the wide spectrum of customers. These are small single outlets run by individuals or small proprietary firms. Domestic Chains - Kamats and Nirulas are popular domestic chains serving various Indian and western fast food. Our Company is one of the domestic companies in this sector, which has institutionalized this business and its operations are guided by well researched standards, systems and procedures. MNCs Famous international brands like McDonalds, Pizza Hut and Dominos are very popular in the urban areas. After studying the unique Indian palate, these companies have changed the menu and taste to suit Indian consumer. Stand alone restaurants Majority of the restaurants in India are single outlets run by individuals. These restaurants are present across segments. Few cater to the high-end market while the rest cater to upper middle or middle class segment. High-end restaurants These are special restaurants with formal atmosphere located in five start hotels or present as single outlets run by individuals. They offer fine gourmet Indian or western cuisine.

42

Dining Concepts The individual players cater to various dining concepts which are broadly classified as follows: Formal Dining - This segment consists of specialty restaurants with formal atmosphere. The menu served is exclusive and expensive. The target market served by these restaurants is the top end of the population having high disposable income. Standalone restaurants and restaurants in five star hotels are key players covering this concept. Casual Dining - Restaurants under this concept target the corporate executives, adults and the yuppie population. The key characteristics of this concept is good dcor, casual atmosphere, entertainment and an exclusive menu. This concept is found largely in standalone restaurants and coffee shops in five star hotels. Family Dining - With a change in consumer eating habits, dining out has become a part of family entertainment. There were very few restaurants catering to this market. The main target is the family which in the Indian context covers a wide range of age groups consisting of children and adults. This concept stresses on great ambience, quality food coupled with good service. The menu is economically priced and features special kids menu at selected formats. Over the counter With handful of bakery chains, this format offers bakery and confectionery products and more. It targets wide spectrum of customers, from young executives to a hang-out place for college and school kids. Night Club This concept addresses the need of the young crowd who enjoy dance and music. In the happening nightspots one can spot the citys movers and shakers dressed in the trendiest outfits. From walk-in pubs to those that insist on couples only and an entry or cover charge.

43

BUSINESS Overview Our Companys key business is running and managing restaurants. Our Company was incorporated on April 28, 2000. At present our company operates a total of 16 restaurants/outlets under 11 trademarks/brandnames. The concept of our business is providing value for money. The dining concepts adopted by our Company are: family dining experience, casual dining, over the counter and nightclub experience. Some of the trademarks/brands under which the operations are being carried out by us are Not Just Jazz by the Bay, Just Around the Corner, Pizzeria & Pasta Bar, Birdys, etc. Competitive Strengths Our Company has leveraged its past experience and has shown growth in the sector. Our Company is one of the few companies with a clear focus and a well-defined road map. We have institutionalized the business and have built organization capabilities for operating a portfolio of brands.. The competitive strengths supporting the company in its endeavor are: Experienced Promoters Our promoters have vast experience in this industry. Mr. Sanjay Narang, one of the promoters has done Hotel Management from Cornell University, USA the most reputed Hotel and Restaurant Management Institute in the World. The other promoter Ms. Rachna Narang, also a Cornell University Graduate in liberal arts, has vast experience in conceptualizing, designing, developing and operating various chains of fast food restaurants. Addressing popular formats - our Company has created a variety of time-tested brands catering to varied consumer tastes. Scalability our Company has a scalable model with standardized operation, which helps us to easily duplicate the formats Standardization our Company has standardized various operations there by reducing margin of error. Technology our Company has embraced technology to efficiently manage its operation, with software for supply chain and reporting systems Project Management Capabilities with an in-house project design and execution team, our Company is capable of building restaurants right from conceptual stage to implementation Central Commissary- Central commissary situated at Sahar, Mumbai helps in supplying standardized and quality food to all our restaurants and also acts as economies of scale Strong Customer focus- consumer satisfaction on food and services are ensured through constant interaction with customers, monitoring the market and tracking product offerings HR Strategy- clearly defined policies on training and performance evaluation ensures that quality personnel and well motivated staff deliver our promise to our customers.

Strategy Our Company has touched all segments of the restaurant industry. It has developed a full array of trademarks/brands covering the popular formats in the Indian scenario. These trademarks/brands are offered in the following dining experiences: Experiences Family dining Over the Counter Casual dining Night Club Trade marks / Brands Roti, Dosa Diner, Pizzeria & Pasta Bar, China Joe and Just Around the Corner Birdys and Cake Khazana All Stir Fry, Tides and Not Just Jazz by the Bay Polly Esthers

44

Our restaurants cater to people of all ages right from children to the elderly people. All the restaurants are theme based. Not Just Jazz by the Bay is totally focused on casual dining and live music. Just Around the Corner is based on the American diner format, while Roti was based on North Indian Dhabha model. Polly Esthers is a nightclub targeting the young crowd, which enjoys food and music, the theme here is based on a discotheque. We have an arrangement with Caf Coffee Day wherein our products namely cookies, pastries would be sold at their outlets along with their own products and their Coffee vending machines could be installed at the restaurants/outlets. We also have an arrangement with Gourmet Restaurants Private Limited, a joint venture company with Tendulkars family, to operate and manage Tendulkars restaurant. Presently GRPL owns Tendulkars, restaurant and is in the process of opening a new restaurants styled Sachins. At present our Strategy is to offer the service under the Food Court format, wherein all the themes of restaurant are offered under one roof.

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RESTAURANTS MANAGED BY US NOT JUST JAZZ BY THE BAY Profile, Cuisine Concept & The restaurant previously known as Talk of the Town was one of Mumbais famous restaurants and nightclub of yesteryears. This restaurant was relaunched in Mid 90s and was named Jazz by the Bay and again renamed as Not Just Jazz by the Bay. NJJBBs emphasis is on an exquisite fusion of Continental and Indian cuisine along with a well stocked bar to compliment the menu. The restaurant specialties are seafood, chicken and lamb dishes reflecting the rich cuisine and flavors from different parts of the world. The restaurant offers an a-la-carte menu to cater to various palates and is a place loved by diet conscious crowd. NJJBB has a state of art music and lighting system and a facility for live music. The music itenary is fixed and informed in advance to the customers. One can enjoy this live music by paying an entrance fee. NJJBB occupies an area of about 2240 sq. ft. and is located at Marine Drive, in South Mumbai. At lunch the restaurants lays out its extremely popular salad bar which is enjoyed by corporate executives on weekdays. Weekend dinner is focused primarily towards corporate entertainment and on live nights, music enthusiasts comprise a significant portion of the clientele. Weekend lunch is essentially a family affair but the evenings on Fridays and Saturdays are packed with people in the age group of 18-35 years who enjoy partying and listening to live music. NJJBB is also a favourite place for celebrating various occasions by many families and corporate.

Location Target Clientele

M/s. Mars Food Services is the tenant of the premises Not Just Jazz by the Bay which has a conducting agreement dated September 30, 2000 with the Company for conducting the restaurant business. The salient features of the agreement are as under: S.No. 1 2 Particulars Effective Date Duration Description October 01, 2000 Upto September 30, 2005, which can be extended for a further period of two years i.e., until September 30, 2007 provided the VC Investor along with one or more other Financial Institution have a combined minimum shareholding of atleast 26% in the Company. During such extended period and shall thereafter forthwith expire and terminate on September 30, 2007. All incomes earned and expenditure incurred prior to the effective date shall vest with Mars Food Services and all income and expenditure incurred after the effective date shall be to the account of MRL, except rent, property tax, society outgoings and other taxes and levies pertaining to the said premises shall be borne and paid by Mars Food Services. MRL has to pay 5% of the Net Sales as revenue sharing, which shall be paid on a monthly basis within seven days from the last date of the month. The Company has made a representation to Mars Food Services to reduce the compensation to 2.5%. Mars Food Services shall be responsible to obtain in their own

Income Accrued & Expenses Incurred prior to and after the effective date

Compensation

Licenses and Approvals

46

Termination

name, renew and keep in force all necessary licenses, permits and approvals from any authority or agencies that may be required for conducting the said business. The agreement can be terminated by either party if they fail to perform their respective obligation under this agreement.

THE PIZZERIA & PASTA BAR Profile, Concept & Cuisine The Pizzeria and Pasta Bar is one of the pioneers of fresh baked Pizza in Mumbai. One can experience the time-honoured tradition of Italian dining. It is the one of the few restaurants which serves fresh dough pizzas in Mumbai. All pasta items are prepared in front of the customers eyes with his choice of ingredients. PBB also offers home delivery as well as selling the pizzas through across the counter format. PPB is located on Marine Drive in South Mumbai and is very popular with college students, corporate executives and families. It has an area of about 1835 sq.ft. For weekdays lunch, the PBB caters to a mix of corporate executives, college students and shoppers looking for a quick and tasty meal at an affordable price. Weekdays dinners are entirely a family affair. On weekends, both lunch and dinner customers are family group or late night cinema/theatre goers. The period between lunch and dinner also witnesses a number of middle aged residents from the residential areas in its vicinity.

Location

Target Clientele

M/s. Mars Food Services is the tenant of the premises Pizzeria & the Pasta Bar which has a conducting agreement dated September 30, 2000 with the Company for conducting the restaurant business. The salient features of the agreement are as under: S.No. 1 2 Particulars Effective Date Duration Description October 01, 2000 Upto September 30, 2005, which can be extended for a further period of two years i.e., until September 30, 2007 provided the VC Investor along with one or more other Financial Institution have a combined minimum shareholding of atleast 26% in the Company. During such extended period and shall thereafter forthwith expire and terminate on September 30, 2007. All incomes earned and expenditure incurred prior to the effective date shall vest with Mars Food Services and all income and expenditure incurred after the effective date shall be to the account of MRL, except rent, property tax, society outgoings and other taxes and levies pertaining to the said premises shall be borne and paid by Mars Food Services. MRL has to pay of 5% of the Net Sales as revenue sharing, which shall be paid on a monthly basis within seven days from the last date of the month. The Company has made a representation to Mars Food Services to reduce the compensation to 2.5%. Mars Food Services shall be responsible to obtain in their own name, renew and keep in force all necessary licenses, permits and approvals from any authority or agencies that may be required for conducting the said business.

Income Accrued & Expenses Incurred prior to and after the effective date

Compensation

Licenses and Approvals

47

Termination

The agreement can be terminated by either party if they fail to perform their respective obligation under this agreement.

JUST AROUND THE CORNER The emphasis of JATC is providing family dining experience in a relaxed Profile, Concept & atmosphere. It is a self-service diner catering to a broad clientele. Children Cuisine love to celebrate their birthdays with the Wild and Wacky theme wherein the package includes special kid meals, decorations, birthday cake, children entertainment and return gifts. The diner opens at 8.a.m offering a range of breakfast American, Continental and traditional South Indian. The restaurant has a salad bar and serves soups, sandwiches, burgers, beverages and desserts. Customers can choose from the attractively laid out food counters. All salad items are fixed price and the customer is free to have a one time unlimited serving. JATC also offers a range of specialty submarine sandwiches. The existing outlet is located at Bandra, Mumbais chic uptown suburb. It has an area of 1511 sq. ft. The breakfast crowd on weekdays comprises an equal proportion of college students and young executives. Lunch business is essentially kitty parties of housewives and college students. Between lunch and dinner, shoppers from Linking Road and art/film personalities drop in for a snack. Dinner on weekdays is largely young couples or college and school students from the neighboring areas. The profile of guests on weekends is entirely family based dining from breakfast onwards.

Location

Target Clientele

The premises Just Around the Corner is owned by M/s. Mars Enterprises, which has a conducting agreement dated September 30, 2000 with the Company for conducting the restaurant business. The salient features of the agreement are as under: S.No. 1 2 Particulars Effective Date Duration Description October 01, 2000 Upto September 30, 2005, which can be extended for a further period of two years i.e., until September 30, 2007 provided the VC Investor along with one or more other Financial Institution have a combined minimum shareholding of atleast 26% in the Company. During such extended period and shall thereafter forthwith expire and terminate on September 30, 2007. All incomes earned and expenditure incurred prior to the effective date shall vest with Mars Enterprises and all income and expenditure incurred after the effective date shall be to the account of MRL, except rent, property tax, society outgoings and other taxes and levies pertaining to the said premises shall be borne and paid by Mars Enterprises. MRL has to pay 5% of the Net Sales as revenue sharing, which shall be paid on a monthly basis within seven days from the last date of the month to which such franchise fee / commission persist. Mars Enterprises shall be responsible to obtain in their own name, renew and keep in force all necessary licenses, permits and approvals from any authority or agencies that may be required for conducting the said business. The agreement can be terminated by either party if they fail to perform their respective obligation under this agreement.

Income Accrued & Expenses Incurred prior to and after the effective date

Compensation

Licenses and Approvals

Termination

48

DOSA DINER Profile, Concept & Cuisine The Dosa Diner concept is about providing a comfortable place wherein people can enjoy South Indian food in the company of family and friends. It is the first restaurant in India to transform traditional Udipi, low market restaurant to upmarket family dining restaurant. The extensive menu includes various types of dosas with a choice of filling ranging from prawns, lambs and chicken to mushroom and cottage cheese. The house specialty is the appams served with traditional ishtew. The restaurant also serves a range of ethnic beverages and desserts. Dosa Diner is presently at Bandra measuring approx. 800 sq.ft. with a seating capacity of 45 guests. The weekdays clients are normally college and school students. During the lunch hours one can spot office executives. During the weekends one can see families enjoying the traditional food. It is also a favourite spot for dosa lovers of all ages.

Location

Target Clientele

Outlet Agreement No. Agent/Owner 1 Nehawa Investments & Holdings Pvt. Ltd.

Location Shop No. 1&2, Zainab Villa, 187 Turner Road, Bandra (West), Mumbai 400 050

Revenue Sharing terms Mars to pay franchisee commission 9% of the Monthly Net Sales value upto Rs. 15 lakhs and thereafter 5% on Net Sales exceeding Rs. 15 lakhs in that month or a minimum of Rs. 1.35 lakhs per month 9% of the Monthly Net Sales value upto Rs. 15.56 lakhs and thereafter 5% on Net Sales exceeding Rs. 15.56 lakhs in that month or a minimum of Rs. 1.40 lakhs per month

Tenure April 1, 2003 March 31, 2005

April 1 2005 March 31, 2006

In addition to the above franchisee commission MRL shall pay Rs. 26,000/- per month as co-ordination fee to Nehawa Investments & Holdings Pvt. Ltd. All expenses incurred at the outlet are borne by MRL CHINA JOE Profile, Concept & Cuisine China Joe is a fast food Oriental restaurant where the unique feature is that the guests can create their own dishes on the menu card and can see their favourite dish being prepared. The cuisine offered by China Joe starts from soups, starters through the main course and finally desserts. China Joe is presently at Bandra measuring approx. 1681 sq.ft. with a seating capacity of 70 guests. One normally finds young crowd at China Joe as it is a kind of fast food.

Location

Target Clientele

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Outlet agreement No. Agent/Owner 1 Mrs. Roma Singh

Location Gildhana Bldg., Ground Floor, Plot NO. 78, 29th Road, TPS III, Bandra (West), Mumbai 400 050

Revenue Sharing terms Annual Sale of % of the Restaurant Annual (Rs. Lakhs) Sales 85% 0-150 84% 83% 82% 150-300 300-450 Above 450

Tenure A period of seven years commencing from date of commencement of commercial operations of the restaurant.

BIRDYS Profile, Concept & Cuisine

Birdys is Mumbais popular chain of cake and savory shops. It is targeted at the take-away market as well as positioned as a hang-out for school and college students as it offers a range of snack foods. A percentage of the sales is paid as Commission to the owners of the outlets. All the Birdys outlets are leased out and are not owned by MRL. The bakery items, pastries, cakes, etc are prepared at commissary located at Sahar, Andheri, Mumbai. The finished products are delivered to the respective outlets in specially designed vans. The shop stocks a wide range of sweet and savory patisserie, sandwiches, desserts and an extensive range of premium chocolates. The cakes and deserts include fresh cream pastries, fruit-flavoured cheesecake, gateaux, souffls and mousses. The shops also sells flaky croissants, doughnuts and puffs and cornets filled with Indian and Continental delicacies as well as a selection of fresh baked breads. The outlets of Birdys are strategically spread across Mumbai in places like Andheri (East &West), Bandra, Dadar, Juhu, Mahim, Powai, Prabhadevi, Versova and Vile Parle The striking combination of crimson walls with green wooden paneling and a pinewood ceiling creates a vibrant and warm ambience traditional of a North European patisserie. Since it is based on the over the counter concept there are no seating arrangements as such. Majority of the clients are college students and school students. It is a famous hang out place for working executives too. It is a favourite place for small children who relish the pastries.

Location & Infrastructure

Target Clientele

BRAND (yet to be registered) OWNED BY THE COMPANY BUT MANAGED BY OTHERS ALL STIR FRY Profile, Concept & Cuisine

All Stir Fry is an Oriental street kitchen style restaurant with a noodle bar that allows you to create your own meal and watch it being prepared at the Wok counter. Innovative and interactive dining at its best. The restaurant serves soups, starters, main courses, desserts and beverages with the noodle bar being the USP of the restaurant. The novelty of the restaurant is the 'Be Your Own Chef' menu where you can create your own meal by selecting the catch, choosing the cooking style, the spices and the batter or sauces that go with it. It is located at the Gordon House Hotel at Colaba. It spans across an area of 1420 sq. ft.

Location

50

Target Clientele

During weekends one can spot families enjoying the mouth watering dishes in the peaceful ambience. The noodle bar is the main attraction for youngsters and small children.

TIDES Profile, Concept & Cuisine

Tides is a fine dining restaurant and bar that specializes in local and international seafood delicacies, ideal for a true gourmet. Tides serves a selection of fish, shellfish and crustacea prepared in an array of cuisines ranging from French and Italian to Chinese and Indian complemented by an impressive wine list. At present the restaurant is closed for renovation. Tides is located at the Gordon House Hotel at Colaba. The area occupied by this restaurant is 1055 sq. ft. It is favourite hangout of youngsters/college students. On weekends one can spot family crowd. People of all ages love this dining place because of the food specialties and for its ambience. On weekends one can also see party crowd enjoying at the bar counter and relishing the mouth watering seafood.

Location

Target Clientele

POLLY ESTHERS Profile, Concept & Cuisine

Location Target Clientele

Retro at its best, that's what Polly Esther's, the nightclub is all about! Whether you're out for a night of dancing or just simply hanging out, Polly Esther's is the place to get transported back in time while you groove to the very best in music of days gone by. Reggae, Pop, Rock, Soul, Slow Rock, Motown, Disco, etc. are just some of the genre's of music you can expect at Polly Esther's. A selection of finger licking snacks and exotic classic and house cocktails are served all night long. Situated at the Gordon House Hotel at Colaba occupying an area of 1990 sq. ft. The clientele for weekday evenings typically comes in for a snack and light meal and witness a low spend per person. It is a favourite place for western music lovers. Weekend evenings comprises largely of special occasions especially birthdays celebrated by youngsters in the age group of 18-25 years.

With respect to Polly Esthers trademark no application has been made till date and the management is in the process of making the required application. The Company has entered into an agreement with Mr. M.L. Narang (now Mars Enterprises) on December 15, 2000 for operating the restaurants at Gordon House Hotel, Colaba, Mumbai 400 001, on principal to principal basis and on a revenue sharing basis under the trademark All Stir Fry, Tides and Three Flights Up or any other trademark of MRL whether existing at the time of this agreement or not. MRL shall be entitled to 15% of the Net Revenue of the said restaurants which shall be paid every month within 30 days of the end of the month to which the revenue pertains. The balance revenue belongs to Mars Enterprises. Mars Enterprises to bear all the operating expenses pertaining to carrying out the business of the said restaurants. Mars Enterprises can fix the prices of food and beverages items sold and to decide on the nature of the discounts or promotional schemes that may be given on such items.

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The agreement shall become effective on December 01, 2000 and shall remain valid and in force for a period of 5 years i.e. until November 30, 2005. The agreement can be extended for a further period of two years i.e., until November 30, 2007 provided the VC Investor along with one or more other Financial Institution have a combined minimum shareholding of atleast 26% in the Company. During such extended period and shall thereafter forthwith expire and terminate on November 30, 2007. Mars Enterprises shall not be entitled to terminate this agreement during the duration as provided herein above. MRL may terminate the agreement by giving 180 days notice to Mars Enterprises and without assigning any reasons. On termination MRL will be oblige to remove itself along with all its servants, agents and employees from the said premises forthwith on expiry of the 180 days notice period. Mars Enterprise was a sole proprietorship started by Mr. M.L. Narang. Upon the death of Mr. M.L Narang, the proprietary concern was converted into a partnership firm on 28th April 2001. Mars Enterprises, a Partnership Firm assigned trademarks / trademark applications to Mars Restaurants Pvt. Ltd. through a deed of assignment dated September 1, 2001 for a consideration of Rs. 10,000/-. The trademarks for which the applications were made are Tides and All Stir Fry for which this deed assigns all the rights, title and interest in the said trademarks / trademark applications in favour of MRL. CAKE KHAZANA Profile, Concept & Cuisine The Cake Khazana is another chain of cake and savory shops targeted at low end customers based on a pure franchise basis. It is based on the over-the counter concept. The delicacies offered are cakes, pastries, cornets, puffs, cookies, desserts, sandwiches, etc. All the food items are prepared at our commissary located at Sahar, Andheri, Mumbai and transported in specially designed vans to the respective dealers. The entire operations are handled by the dealership network and the billing is also done by them. The products are supplied by MRL. The franchises are located at Andheri, Dahisar, Dombivili(2), Goregaon and Thane (4 outlets) The target clients are by and large college and school students. It is also a favourite hangout place for young people.

Location Target Clientele

E-SQUARE, Pune Brands / Restaurants

At E-square Mars offers different products of different brands. There are different counters offering brand specific foods. It is a semi self service restaurant. The brands offered here are: The Pizzeria & Pasta Bar, Just Around the Corner, Dosa Diner, Cake Khazana, China Joe and Roti

Profile, Concept & Cuisine

E-square is a Food Court located in a multiplex. The Food Court offers following themes of restaurants south Indian, North Indian, American Diner, Pastries, etc,

Location

Managed by Ganatra Hotels, Pune located at University Road, Shivaji Nagar, Pune.

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Target Clientele

One normally finds young crowd coming to the multiplex,

Mars Enterprise, Partnership firm, has entered into an agreement with Ganatra Hotels Pvt Ltd dated 20/05/2003 to setup and build 40 rooms hotel along with restaurants and other hotel facilities and a food court which is part of Multiplex building namely called as E-Square at Pune. At present, Gantara Hotels has not started hotel at this location but started its food court counter such as Roti, China Joe, Just around the coner, Birdys. The Company has made arrangement with the Mars enterprises for utilizing the above brands/ Trade Marks and sharing revenue for using these brands. Inorbit Mall The Company has received Letter of Intent on 24th November 2003 and 27th November 2003 for setting up of China Joe, Dosa Diner and Rotis food courts in Inorbit Mall. The Company is yet to enter into an agreement with Inorbit Mall in this regard. Arrangement with Caf Coffee Day The Caf Coffee day has entered in the conducting agreement dated May 02, 2000 with the Company. Presently the arrangement is in the following restaurants : Just Around the Corner, Tendulkars, Not Just Jazz by the Bay and Gordon House Hotel.. The salient features of the agreement are as under: S.No. 1 Particulars Duration Description This agreement shall be for a period of 3 years commencing from 1st day of May 2002.unless earlier determined or terminated as hereinafter provided. The parties shall jointly meet to review the terms of this agreement after a period of 3 months from the effective date. This agreement may be renewed, by mutual agreement, for such further periods and on such terms as may be agreed upon. MARS shall pay a conducting Fee of 60% of the total monthly turnover net of all taxes from the Caf Coffee Day business carried on in each MARS restaurant. Mars shall make all billings on its own account. MARS shall conduct and manage the restaurants business and to apply for and obtain, in its own name and on its own account, licenses / permissions, permits, sanctions etc., as required under the prevailing laws, for the said purpose, from the concerned authorities. The agreement can be terminated by either party by giving the 3 months notice of termination ,if they fail to perform their respective obligation under this agreement.

Revenue Sharing.

Licenses and Approvals

Termination

Arrangement with Pepsi Foods Private Limited The Company has entered into an agreement with Pepsi Foods Private Limited on December 1, 2001 wherein PEPSI is desirous of promoting its products in the restaurants and outlets managed by MARS and the parties will jointly promote special promotion campaigns for mutual benefit on mutually agreed terms. The salient features of the agreement are as under:

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S.No. 1

Particulars Products

Description Products means the Pepsi range of soft drinks and includes aerated and non-aerated soft drinks, all kinds of water, fruit based drinks, fruit juices, concentrates, syrups in returnable / non returnable bottles, cans, potato chips & snack foods etc., sold under the Pepsi brands. On execution of the agreement PEPSI agrees to pay MARS, an amount of Rs.1,50,00,000/- (Rupees One Crores Fifty Lakhs Only) as advance discount amount. The advance discount amount has been calculated at advance discounts per case as mentioned in Discount Rates Applicable. The advance discount amount per case as mentioned in Discount Rates Applicable on each purchase during the TERM shall be set off against the advance discount amount of Rs.1,50,00,000 till such time the advance discount amount stands fully extinguished and utilized. It is specifically agreed between the Parties that the Agreement will continue to be in force till such time the advance discount amount is fully extinguished Term means the Period taken by MARS from the date first above mentioned to complete purchases equivalent to 200,000 cases of products such that the advance discount paid by PEPSI is extinguished fully. The Term Products would not include Slice, Mangola, Aquafina, Tropicana & Lays unless otherwise agreed. Rates All products cases purchased in BIBs, bottles, Cans & PET under the trade marks PEPSI, 7 UP, MIRANDA, MIRINDA LEMON, LEHAR EVERVESS, DUKES, DIET Pepsi. Advance Discount = Rs. 75/- per case. One case = 24 bottles / serves of 300 ml.

Advance amount

Discount

Term

Discount Applicable

Discount Commercial terms

and

First Year: BIBs (20 Liter / 12 Liter / 10 Liter / 5 Liter: 20% discount on trade rates applicable. Cups / lids / straws / Co2 cylinders will be paid for at trade rates prevailing (not included in discounts) Bottles (300 ml, 200 ml, 250 ml, 500 ml, 1 Liter etc): 20% discount on trade rates applicable Cans (330 ml etc): 20% discount on trade rates applicable PET (500 ml, 1.5 Liter, 2 Liter etc): 15% discount on trade rates applicable. Second Year: BIBs (20 Liter / 12 Liter / 10 Liter / 5 Liter: 15% discount on trade rates applicable. Cups / lids / straws / Co2 cylinders will be paid for at trade rates prevailing (not included in discounts) Bottles (300 ml, 200 ml, 250 ml, 500 ml, 1 Liter etc): 15% discount on trade rates applicable Cans (330 ml etc): 20% discount on trade rates applicable PET (500 ml, 1.5 Liter, 2 Liter etc): 15% discount on trade rates applicable.

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Premises

Volume Commitment: 200,000 cases of Products purchased (one case = 24 bottles of 300 ml) All existing and future restaurants & hotel brands under the MARS group within India, which currently are: Just Around the Corner, Roti, Not Just Jazz by the Bay, Dosa Diner, Pizzeria & Pasta Bar, Gordon House Hotel, Tides, All Stir Fry, Three Flights Up, Birdys and any other new brands that get introduced in any location in India whether owned / licenses or franchised during the TERM. Selling PEPSI will provide the necessity Post Mix Vending Machine and other chilling equipments required for supplying chilled beverages in the said premises. Any material breach of the terms of the agreement or law applicable to MARS, PEPSI shall be at the liberty to terminate this Agreement by giving three months notice in advance in writing to MARS Any material breach of the terms of the agreement or law applicable to PEPSI, MARS shall be at the liberty to terminate this Agreement by giving three months notice in advance in writing to PEPSI

Installation of Infrastructure

Termination

Compensation Termination

on

In the event of termination of this agreement for any reason whatsoever, then Mars shall: Refund immediately the balance unextinguished / unutilized portion of the advance discount amount of Rs. 1,50,00,000 paid by PEPSI to MARS. The extinguishment / utilization of the advance discount amount will be calculated based on pro rata the balance quantity not procured by MARS from the overall volume commitment of 200,000 PRODUCT cases. The amount so due shall be paid by MARS, failing which MARS will be liable to pay interest @ 24% p.a. from the due date till the date of the payment. MARS shall not be liable to refund the said unextinguished / unutilized balance of the advance discount in the event and only in the event of the agreement being lawfully terminated by MARS due to material breach by PEPSI. Return, within three months of date of notice or date of termination of this Agreement whichever is earlier, to Pepsi all the selling infrastructure installed in the said premises.

Sponsorship We sponsor products of various companies through our restaurants/outlets. We leverage the strength of the sponsors product which indirectly boosts our revenue. It also results in joint marketing. The sponsorship is in the form of free supply of products by the sponsors or revenue sharing. Our Company has an arrangement for sponsorship with various companies Pepsi, SAB Miller India Ltd., Fosters India Ltd., Hutchison max Telecom Pvt. Ltd., Seagram Distilleries (P) Ltd.

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Institutional Catering It is a different segment in the Company wherein in the Company supply meals to big Corporates for their staff. The main customer for this segment are Castrol Ltd., , Schlumberger Asia Services Ltd., World Trade Centre (Viswesvaraya Industries Research & Development Ltd.), etc. The meals are supplied from our Commissary. The Birdys products are sold to Otters Club. OTHER TRADEMARKS/BRANDS The main concept of Roti was home food away from home. It was first of its Roti kind, a twenty first century North Indian dhabha with the same mouthwatering cuisine but an ambience to suit your taste. Presently Roti is offered under the Food Court and there are no separate restaurants. The concept here was to offer diet food for health conscious customers. Trim with Taste However as of now we are not offering any restaurants under this trademark. The concept here was Night Club. However as of now we are not offering Three Flights Up Night Club through this trademark. Prior to NJJBB the restaurant was known as Jazz by the Bay. Jazz by the Bay RESTAURANT STRUCTURE Restaurant / Outlets Name

Trademark /Brand Owner MRL MRL MRL MRL MRL MRL MRL MRL

Conductor / Management

No. of restaurants/ outlets 1 1 1 1 1 1 1 1

Premise Owner

Restaurants Not Just Jazz by the Bay The Pizzeria & Pasta Bar Just Around the Corner Dosa Diner China Joe All Stir Fry Tides * Polly Esthers Outlets Birdys Cake Khazana Food Courts Esquare, Pune Restaurant under Management Tendulkars Others Roti under Food Court Trim with Taste no offerings Three Flights Up no offerings Jazz by the Bay,

MRL MRL MRL MRL MRL ME ME ME

MF MF ME

ME ME ME

MRL MRL

MRL Dealer

10 9

MRL

Ganatra

GRPL

MRL

ME

MRL MRL MRL MRL

MRL: Mars Restaurants Ltd. ME: Mars Enterprises, a partnership firm belonging to the promoters MF: Mars Food Services, a partnership firm belonging to the promoters * under renovation

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Trademark background and Status We have applied for trademarks in the following classes in various name. Class Goods / Products 16 Paper, Cardboard and goods made from these materials 29 Meat, Fish, Poultry, Meat extracts, Preserved, dried and cooked fruits and Vegetables, Jellies, Eggs, Milk and other dairy products; Edible oils, Fats; preserved Pickles 30 Coffee, Tea, Cocoa, Sugar, Rice, Tapioca, Sao, Coffee substitutes, Flour and preparations made from Cereals, Bread, Biscuits, Cakes, Pastry and Confectionery; Ices; Honey, Treacle, Yeast, Backing Products, Salt, Mustard, Pepper, Vinegar, Sauces, Spices, Ice. 32 Beer, Ale and Porter, Mineral and Aerated Water and other non alcoholic drinks; syrups and other preparations for making beverages alcoholic 33 Wines, Spirits and Liquors Various stages in the trademark registration process Stage Process 1 Application submission 2 Further paper and documentation submission 3 Clearance for Advertisement in Trademark Journal 4 Advertisement in Trademark Journal 5 Receipt of Registration Certificate 1. Details of Trademarks applied under Mars Enterprises & Mars Food Services and assigned to MRL by way of Deed of Assignment dated September 30, 2000. Trademark Applicant Class applied & Status Not Just Jazz by the Mars Food Services 29 Stage 3 Bay 30 Stage 4 32 Stage 4 33 Stage 3 Jazz by the Bay Mars Catering Services Pvt. 29 Stage 2 Ltd. 30 Stage 2 32 Stage 4 33 Stage 2 Pizzeria & Pasta Bar Mars Food Services 29 Stage 2 30 Stage 2 32 Stage 5 33 Stage 5 Dosa Diner Mars Food Services 29 Stage 2 30 Stage 2 32 Stage 4 33 Stage 4 Trim with Taste Mars Food Services 29 Stage 2 30 Stage 2 32 Stage 2 33 Stage 2 Just Around the Corner Mars Enterprises 29 Stage 4 30 Stage 4 32 Stage 2 33 Stage 2 Three Flights Up Mars Food Services / Mars 16 Stage 5 Enterprises 29 Stage 2 30 Stage 2 32 Stage 5 33 Stage 3

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Mars Food Services a Partnership Firm and Mars Enterprises a proprietor concern assigned trademark applications to Mars Restaurants Pvt. Ltd. through a deed of assignment dated September 30, 2000, for a consideration of Rs. 5,00,000/-. The trademarks for which the applications were made are Not Just Jazz by the Bay, Jazz by the Bay, Pizzeria & Pasta Bar, Dosa Diner, Trim with taste, Just Around the Corner and Three Flights up for which This deed assigns all the rights, title and interest in the said trademark applications in favour of MRL. However no stamp duty has been paid on this Deed of Assignment. As per the New Trademark Act, 2003 the trademark applications are to be recorded with the trademark registry. 2. Details of Trademarks applied under Mars Enterprises and assigned to MRL. by way of Deed of Assignment dated September 7, 2001. Class & Status 29 Stage 2 30 Stage 2 32 Stage 2 33 Stage 2 Tides Mars Enterprises 29 Stage 3 30 Stage 2 32 Stage 2 33 Stage 5 Mars Enterprises a Partnership Firm assigned trademark applications to Mars Restaurants Ltd. through a deed of assignment dated September 7, 2001, for a consideration of Rs. 10,000/-. The trademarks for which the applications were made are All Stir Fry and Tides for which this deed assigns all the rights, title and interest in the said trademarks / trademark applications in favour of MRL. As per the New Trademark Act, 2003 the trademark applications are to be recorded with the trademark registry. 3. Details of Trademarks applied under MRL. Trademark China Joe Applicant MRL Class & Status 16 Stage 3 29 Stage 3 30 Stage 3 32 Stage 3 33 Stage 3 29 Stage 2 30 Stage 2 32 Stage 4 33 Stage 4 16 Stage 1 29 Stage 1 30 Stage 1 32 Stage 1 16 Stage 3 29 Stage 3 30 Stage 1 32 Stage 1 Trademark All Stir Fry Applicant Mars Enterprises

Roti

MRL

Birdys

MRL

Cake Khazana

MRL

4. Details of Trademarks under consideration, pending application. Polly Esther With respect to Polly Esther trademark no application has been made till date and the management is in the process of making the requite application.

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BUSINESS OPERATIONS & PROCEDURES Our concept revolves around standardization, systems and procedures, Branding, deep understanding of customer preferences and maintaining quality. Key aspects of our operations are: Central Commissary Leased Outlets Integrated systems and procedures Central Commissary We have set up a state-of-the-art 2483 Sq. Mts food processing and manufacturing facility at Sahar, Andheri in Mumbai servicing restaurants in Mumbai. Raw materials are processed at this central commissary. Raw Materials, Semi finished and Finished products (Bakery Products) are then transported in refrigerated vans to individual restaurants. The advantages of central commissary are: Standardized food and beverages across outlets via pre-cooked ingredients all are made and supplied from one central place for example food items for Birdys and Cake Khazana Maintaining stringent quality and hygiene parameters with centralized receipt of raw materials and supplies Economies of scale achieved with centralized procurement Efficient utilization of real estate and cost reduction as ratio of kitchen to service space in the restaurant is reduced Utilisation of common resources- stores, dispatch, kitchen and others The Company has entered into an MOU dated December 04, 2000 with Mars Hotels and Resorts Pvt. Ltd. (MHRPL) for the above mentioned premises, the salient features of the MOU and the amendment to the MOU dated June 13, 2001 are as under: MRL requires built-up area of approx. 2483 Sq. Mts. for the purpose of setting up of the commissary to meet the catering requirement of its chain of restaurants & outlets and intending to finance the construction of such commissary. MHRPL has agreed to act as an agent to MRL for the purpose of carrying out the construction of the commissary and agreed to make available an approximate land area of 3283 Sq. Mts. owned by the MHRPL MRL shall reimburse MHRPL the cost of construction and related expenses incurred by MHRPL upon presentation of duly certified bills The cost of construction shall not exceed Rs. 10,000/- per Sq. Mt. MHRPL agrees to complete the construction of the commissary within 36 months from the date of this MOU and MHRPL agrees to pay liquidated damages calculated at the rate of Rs. 1,00,000/for every day of the delay thereafter. Upon completion of the construction of the commissary and after obtaining the occupation certificate from the municipal corporation MHRPL shall transfer the commissary land by way of perpetual lease to MRL on such terms and conditions as may be mutually agreed between the parties but not less than Rs. 20/- per sq. ft. per month. Until such time, MRL shall place with MHRPL a interest free refundable deposit of Rs. 5,00,00,000/- and in consideration of which MHRPL shall permit MRL to continue to occupy and utilize the commissary for carrying out its business. The deposit of Rs. 5,00,00,000/- will be inclusive of all amounts that have already been paid by MRL to MHRPL towards cost of construction. Until MHRPL transfers the said land by way of perpetual lease to MRL no lease rent shall be payable. On obtaining the occupation certificate from the municipal corporation if the parties fails to agree on the terms and conditions within 90 days of obtaining such occupation certificate or if MHRPL fails to execute the lease deed complete with all respect and with all requisite approvals within

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seven years from this date this MOU shall, at the option of MRL, shall be terminated and MHRPL shall repay within 90 days of such termination the deposit of Rs. 5,00,00,000/- together with interest calculated at 15% p.a. of the respective date of payments. Consequent to which MRL shall vacate the land and building. Leased Outlets All the outlets/restaurants of our Company are taken on revenue sharing basis / franchise arrangements. We undertake all the capex with respect to the restaurants. Some of the restaurants are situated at properties/premises of Mars Enterprises and Mars Food Services, our group enterprises. Conducting fees is paid to Mars Enterprises and Mars Food Services. All the operations of the outlets are managed by MRL. Cake Khazana chain of outlets are franchises. Integrated Systems and Procedures The outlets and franchisees are run as per well defined standards, systems and procedures laid down by us. Our company has a systematic, highly process driven, efficient and well-defined operation. The operations are carried out with the highest degree of professionalism in accordance with the specified standards, systems and procedures. The various aspects of the companies operations are: Development of new outlets Operation of existing outlets Supply Chain Management Quality Standards MIS Internal Control & Reporting System Development of new outlets Opening of new outlet is a three-stage process selection of city, location and commencement of new outlet. The selection of cities is done on the basis of certain criteria such as population density, profile of residents and diverse backgrounds, income levels and preference for eating out. Once the city is selected the location is decided. Some of the main parameters considered are; catchment areas in the city and neighborhood suburbs, positioning in residential, university, commercial and resident, high visibility and busy junctions which have ample parking space. Once the location is also decided the other factors include the space requirement, flexibility on approvals and other regulations and infrastructure requirements such as water, electricity etc. After the finalisation of the location and the agreements entered into in house project design and execution team takes over. This team is responsible for the designing the interiors, setting up the kitchen as per specified standards and operationalising the outlet. It is then handed over to the restaurant manager. Simultaneously the corporate office inducts the required staff one month in advance and provides them with necessary training. Once the outlet is ready, the execution team along with the new staff commences the operations. The execution team provides support in the initial days and finally gives complete charge to the restaurant manager. Operation of existing outlets To ensure standardization of food with highest level of service and maintain stringent quality parameters, MRL has laid down an operational manual with the following objectiveso Guest knows what to expect vis--vis brand, identity and standardization o Employees know what is expected from them o Performance standard and performance evaluation process is predefined to avoid disparity o Clear communication of procedures and performance standards down the line ensuring effective implementation. There are two distinct departments in each outlet- the kitchen and service staff. The chefs and kitchen staff report to the corporate executive chef at the commissary while the restaurant manager controls the

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cashier and service staff. Thus there is a clear demarcation of responsibilities and reporting and thereby avoiding even the least chances of malpractices at the outlet. Operational Manual Separate manuals are created for each brand describing the minutest operational details. It lays down simple and intelligent instructions on what an employee is expected to do and how. The manual includes the following: Responsibilities of each staff at the outlet Systems and procedures to be followed by the kitchen staff for recipes, food preparation and kitchen handling Service parameters - look and dcor of the outlet, staff uniforms, etc. Reporting system including formats for monitoring operational and financial performance Cash management procedures Daily stock taking process for both kitchen and service staff Quality standard and quality control mechanisms Performance appraisal Budget preparation

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Collection System

Management

Cash handling is a very crucial component as majority of the transactions are in cash. MRL follows a unique collection handling system: Restaurants: There is a tie-up with its bankers who pick up cash at the end of the day from all the restaurants of MRL Cake Khazana Franchise: Billing is done on a daily basis and a credit period of 5 days is given to the Franchise. In case of Institutional catering billing is done on a monthly basis and a the credit period of 60 days. In case of Birdys outlets the every day collection is sent to company and from there it is collected by the Banker. Credit Card Payments: At the end of the day the balances are confirmed with the banks and on the 2nd day amount is credited to the account.

Food Control

As part of the internal control procedures, the actual material consumed are tallied with menu items sold, spoilage report and normative consumption on a monthly basis. The company gets the feel of the market through its restaurant managers who track the competitors. A competitive analysis is prepared and sent to the head office. The report includes the performance of the competitors, menu, price and discounts or promotions. MRL systematically monitors the sales of each item on the menu. Slow moving items are replaced with customer choice. New items are introduced to replace the old ones. The new items are introduced only after proper checking the taste, format, texture and appearance.

Constant Evaluation Process

Policy for pricing finished products

The menu price of each item at the outlet are set specifically to attract clientele. The philosophy of MRL is providing value for money and to derive profits based on volumes rather than margins. The pricing policy in the food and beverage business is based on the mark-up to cost. The mark-up is the raw material food cost component in any of the items sold. Fast moving items are customarily priced lower than price calculated on the basis of a mark-up/cost policy. In case of liquor, approximately 20% of the items constitute 75% of the total sales and hence popular drinks such as beer, straight drinks and certain cocktails are priced with a lower mark-up keeping in view their high sales volume. Pricing policy is also based on the prices charged for similar items at competing restaurants. Our company carries out a periodic comparison of its prices with restaurants of similar cuisine and standards and ensure that the prices are always lower to provide best available value for money to the customer and thereby ensure his repeated business.

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Supply Chain Management Entire backend system and supply chain is automated. This increases efficiency, reduces time, errors and ensures proper quality check and control. The supply chain also covers standardized vendor selection process. The diagram below lays out the process:

RESTAURANTS/ OUTLETS

DISPATCH

C O M M I S S A R Y

HOT KITCHEN

BAKERY

VEG PREPS

BUTCHERY

STORES

RECEIVING DEPT

Restaurant: Restaurant Manager and Chef indents to commissary based on expected business Dispatch: sends items from hot kitchen, bakery and store. Minimum stock levels triggers production schedule prepared by head chef VENDOR Hot Kitchen: indents daily supplies from butchery and veg. Preps. who intends from stores Stores: on reaching minimum stock levels sends purchase order to vendor

Process Flow

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The entire process flow from the time of receipt of goods at the commissary till the time they are served to the customer at the outlets and methods followed for Quality control and Hygiene at each stage of the process flow are detailed below: Goods received at the Central Commissary after thorough inspection for quality control and disinfection is carried out for all fresh items at this stage. All packaged items entering the commissary are de-containerized before being brought into the premises to avoid any infestation of cockroaches/pests etc within the crates/cartons. Goods are processed, packed and stored as per product specification and requirements at the commissary. Processing is carried out in a temperature controlled environment and al food handlers are taught to thoroughly implement all proper food handling techniques and are subject to bi-annual medical checkups. Processed foods are thereafter hygienically sealed in plastic bags and stored in deep freezer at 20 C Depending on their requirements for the next day, the head chef at each of the outlets places order with the commissary for delivery of the required ingredients. Goods to be dispatched, are placed in hygienic plastic tubs and transferred to the outlets in a specially designed stainless steel walled insulated vans the succeeding day. Final preparation/cooking is done at the outlet after which the meals are served to the guest at their tables. At each kitchen, hygiene practices of disinfection of all table tops and kitchen utensils in a 200 ppm chlorine solution is carried out and all food handlers disinfect their hands prior to and during work.

Vendor Evaluation Process Our Company has a well-defined vendor selection process. Beginning of each year, our purchasing team goes through a vigorous vendor selection process. There are four pre-defined selection criteria on the basis of which vendors are selected. They are quality, reliability, delivery and price. The team prepares an estimate of total purchase quantity of raw materials for the given year. Along with the estimate, the team pre-defines the physical characteristic for each item. Details of estimate quantity and requirements of the products are sent to the vendors for quotation. Once the quotes are received, each vendor is independently evaluated by us. The vendors are selected based on the above mentioned criteria and once evaluated, the team approves the vendors. There is a clear understanding with the vendor that any shortfall arising on account of return goods or delay in the supply is made good by the purchases from the open market. Difference between the contracted price and procurement price from the open market is debited to the suppliers account, thus ensuring time bound delivery and uniform quality of goods. Quality Standards Quality control is distinctively segregated in two divisions commissary operations and at different outlets. Commissary Operations: Microbiologist heads the Quality Control division and carries periodic tests on water and food consumed at the commissary. It is mandatory for everyone to wash his or her hands with a disinfector before entering the floor. Commissary staffs are required to go through regular health check up. Outlets: At the outlets, there are pre-defined quality specifications to be followed by each outlet supervised by the restaurant manager. It ranges from the basic cleaning of doorknobs, tables, windows, kitchen to checking quality of food, etc. To supervise timely execution and check quality, quality control representatives (QCR) do random visits to each outlet, where they have a pre-defined checklist and award points depending on the performance ensuring and entrusting quality parameters right to the bottom

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Guest comments Cards: We have introduced the guest card system in all the restaurants, for checking quality and ensuring continuous customer service, which leads to high conversion rates. All the guest comment cards are numbered, thus keeping track of all the comments. The data collected is put into the system and in-depth analysis is carried out. Most of the customers who addressed a negative remark, is called upon by the restaurant manager and asked for their feedback. This system garners high priority and renders finest quality to all the customers. MIS-Internal Control & Reporting System Our Company has implemented domestic ShawMan software which links all restaurants to central commissary in Mumbai. On a daily basis the Daily Sales Report (DSR) is prepared and submitted to the Head Office. A monthly MIS report is prepared restaurant wise and sent to the Head Office. This contains sales analysis, profitability analysis, cost analysis, etc. QAMAD (Quality Assurance and Management Audit Department) Our Company believes in providing value for money which includes quality through highly involve process including a detail approach to planning and execution, high level service standards careful tracking, and analysis of quality control. We have separate department to check and verify our laid down quality and operational procedures. Internal Audit department We have separate internal audit department which is outsourced to an Chartered Accountant Firm. Our Internal Audit department is conducting periodical audit to check reasonable assurances that the laid down guidelines, polices and procedures of the company have been followed. Utilities Raw Materials There are specific vendors from whom raw materials/ supplies are purchased. There is a clear understanding with the vendor that any shortfall arising on account of return goods or delay in the supply is made good by the purchases from the open market. Difference between the contracted price and procurement price from the open market is debited to the suppliers account, thus ensuring time bound delivery and uniform quality of goods. The supplies are also available in plenty from the market also.

Manpower There are a total of 589 employees in the Company. Of this 462 employees are on the payroll of the company. In addition to this, there are 127 employees on contractual basis. The company hires them from Team Professional Pvt. Ltd.. The securities staff of the Company are hired from Mars Corporation who provide security services. The break-up of total no. of employees on the payroll of the Company are: No. 2 73 8 23 19 8 280

Director Finance/Accounts/Company Secretary F&B Controller HRD/Administration/Operation Purchase/Stores Marketing Production/Services

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Transport/Maintenance Project QMAD EDP Hygiene/Linen Store Manager/Kitchen Keeper Institutional Catering

25 9 2 2 3 21 17 462

Power The Company and commissary receive power supply from BSES. However there are generators for standby supply in case of any power failures. Marketing Strategy With minimum emphasis on marketing, the company has achieved success via their popular formats and has grown through the old and powerful mechanism word of mouth. Our Company has aligned with various companies Pepsi, SAB Miller India Ltd., Fosters India Ltd., Hutchison max Telecom Pvt. Ltd., Seagram Distilleries (P) Ltd. Jointly they have marketed their products and services. We have also launched discount coupon booklet, offering various discounts at all the formats. This concept has been very successful. In order to attract children we had introduced the concept of Martian Meals wherein kids get a variety on the menu and a free gift with every meal. Our company advertises its special offers on meals through the print media. Event based advertising has increased the revenues as well as additions to the clientele. MRL had introduced Mars Value Cards, wherein customers would earn points each time they dine at any outlet and get instant credit on their card. However this has been discontinued due to misuse of the scheme by some of our employees.

Our History Our Company was incorporated on April 28, 2000 by Mr. Sanjay Narang and Ms. Rachna Narang. The Mars Group operates a total of 16 restaurants/outlets under 11 trademarks/ brands. Formation of MARS Group In early nineties, the Narang family converting properties of partnership and sole proprietorship controlled by them into restaurants by setting up Jazz by the Bay - the first Jazz restaurant and Bar in India. As a next step the Pizzeria was set up. In 1993 Birdys by Taj was conceptualized which was a 50-50 joint venture with the Taj Group. However, the joint venture was called off in mid 2001 and the assets and business were transferred to MRL. In 1995 Three Flights Up, a night club was opened. In 1998 they added Just Around the Corner, an American Diner. In 1999 Dosa Diner was launched. During the year 2000 and 2001 the promoters transferred the trademark / trademark applications made by partnership firm and sole proprietorship concerns to MRL by a deed of assignment pursuant to an Investment Agreement dated September 29, 2000 by VC Investor.

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Companies/Partnership Firms under the MARS Flagship Mars Restaurants Limited (MRL) Mars Enterprises Mars Hotels & Resorts Private Limited Mars Corporation Mars Food Services Bullworker Pvt. Ltd. Mars Catering Services Ltd. Taj Birdys Food Services P. Ltd. Mars Leasing Sunrise Films Mars Restaurants Chennai Pvt. Ltd. Mars Restaurants (U.K) Ltd. Wholly Owned Subsidiary of MRL Gourmet Restaurants Pvt. Ltd. Joint Venture between MRL (49%) and Tendulkar family (51%) MARS RESTAURANTS LIMITED (MRL) Our Company is located at Off. International Airport Approach Road, Marol, Andheri (East), Mumbai- 400 059. It was incorporated on April 28, 2000 by Mr. Sanjay Narang and Ms. Rachna Narang for the purpose of carrying out restaurant business. The segments covered by our Company are family dining, over the counter, casual dining and the night club segment. The various trademarks / brand names under which our Company carries out its business are Roti, Dosa Diner, Pizzeria & Pasta Bar, Just Around the Corner, Birdys, All Stir Fry, Tides, Not just Jazz by the Bay, Jazz by the Bay, Polly Esthers, Cake Khazana and China Joe. The Company operates presently in Mumbai and Pune. The Company is also into institutional catering. Also the Company has in-house laundry facilities which are utilized by the Company as well as the group entities. In the year of incorporation ICICI Trusteeship Services Limited (ICICI Equity Fund) (under ICICI Trusteeship Services Ltd. then transferred to ICICI Emerging Sector Fund) invested in our Company. The investment was made in two tranches, The first tranch of Rs. 500 lakhs was bought in September 2000 against which 216200 shares of Rs. 10/- each were issued at a premium of Rs. 221.50 each. The Investment Agreement was entered into between MRL, Mr. Sanjay Narang, Ms. Rachna Narang & ICICI Equity Fund according to which on complying with certain clauses ICICI Equity fund would bring in Rs. 1500 lakhs as the second round of financing. As per the terms ICICI Equity Fund brought in Rs. 1500 lakhs as a second tranch on December 21, 2001 against which 2,65,633 shares of Rs. 10/- each were issued at a premium of Rs. 554.70 each and thereby increasing its stake to 26%. Thereafter ICICI Equity Fund transferred its entire shareholding in the Company to ICICI Emerging Sectors Fund and the Investment Agreement was novated in favour of ICICI Emerging Sectors Fund. The salient features of the agreement are: All the trademarks for the specialty restaurants (which include but are not restricted to Jazz by the Bay, Not Just Jazz by the Bay, Pizzeria, Trim with Taste, Just Around the Corner, Three Flights Up, Dosa Diner) currently held/applied for by the partnership firms- Mars Food Services and Mars Enterprises and are pending registration shall be transferred to the Company. The properties owned by the Narang family or to which they are sufficiently entitled and in which the existing outlets viz. Not Just Jazz by the Bay (Churchgate), Pizzeria (Churchgate), Three Flights Up (Colaba) and Just Around the Corner (Bandra) are housed, shall continue to be offered to the company on a exclusive basis, for a period of at least five years at a conducting/franchisee commission of 5% of net sales. The same terms shall be extended for a further period of at least two years if the VC Investor along with one or more other institutions have a combined holding of more than 26% in the Company at that point of time. The company shall have exclusive rights to managing the business conducted from these properties till the period of this tenure. Further, the

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Narang family shall not sell or lease these properties to any other entity till they are being franchised to the Company. Further, these properties or part thereof shall be made available by the Narang family for offering to a lender as collateral if and when the Company decides to go for any debt financing. The listing shall be either by way of fresh issue of shares or by way of an offer for sale of Ordinary Shares. The Promoters and the Company undertake to obtain Listing of the Companys share within a period of four years from the closing date. In the event of failure by the Company and the Promoters to obtain the Listing of the Companys shares the VC Investors shall have the right to: o Obtain listing of the Companys shares and the Promoters undertake to sell as much of their shareholding as may be required by the VC Investors for listing of the Companys shares in accordance with the listing guidelines prevailing at that time o Sell its shares to a Third Party or its nominee or assignee and the Promoters also undertake to sell their shareholding to the Third Party on the same terms as the VC Investor The Promoters and the Company shall ensure fulfillment of all listing requirements to the satisfaction of the stock exchanges and SEBI, failing which a Material Breach of the Investment Agreement shall be deemed to have occurred. If for any reason the Company fails to have its shares listed on the Stock Exchange, Mumbai or the National Stock Exchange, the company may list the Ordinary shares on any other stock exchange acceptable to VC Investors.

Agreement to Purchase As there is no ready marketability of the Companys shares the Promoters have agreed that the VC Investors shall have the right to sell and terminate the Investment Agreement and put all or part of its shares back to the Promoters and the Promoters have agreed to purchase the VC Investors Shares in the event that o Any material breach of the Investment Agreement is not remedied in 28 days of receipt of formal written notice from the VC Investors o There is no IPO within a period of four years from the Closing Date o If any of the Promoters is found guilty of a criminal offense, of any nature whatsoever by a final and non appealable order. o If any of the Promoters cease to be employees of the Company or cease to be associated with the Company. The Promoters shall be required to purchase the shares as per the Agreement to Purchase a price so as to give a return of 40% per annum from the date of investment by the VC Investors and shall make payment within 30 days following the date upon which notice is served by the VC Investors. In the event that there are any delays in payment, then interest on the outstanding amounts shall be payable at a rate of 22% p.a. If the Promoters fail to fulfill their obligations and are unable to purchase the VC Investors shares within a period of one month of the VC Investors exercising their right under the Agreement to Purchase, the VC Investors shall have the right to call upon the Promoters to sell all or any portion of their shareholding to the third party or parties (or their nominee(s)) at the same price and on the same terms as those applicable to the VC Investor shareholding. Upon being so called upon, the Promoters shall sell their shareholding required to be sold by the VC Investors to such third party/parties/nominee(s) at such price and on such terms as those applicable to the VC Investors shareholding. The Promoters and the Company shall ensure fulfillment of all the requirements for the Agreement to Purchase to the satisfaction of the VC Investors, failing which a Material Breach of the Investment Agreement shall be deemed to have occurred.

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Mars Food Services a Partnership Firm and Mars Enterprises a proprietor concern assigned trademarks / trademark applications to Mars Restaurants Pvt. Ltd. through a deed of assignment dated September 30, 2000, for a consideration of Rs. 5,00,000/-. The trademarks for which the applications were made are Three Flights up, Not Just Jazz by the Bay, Just Jazz by the Bay, Pizzeria & Pasta Bar, Dosa Diner, Trim with taste and Just Around the Corner, for which This deed assigns all the rights, title and interest in the said trademarks / trademark applications in favour of MRL. Initially following trademarks and restaurants Three Flights up, Not Just Jazz by the Bay, Pizzeria & Pasta Bar, Dosa Diner and Trim with taste were held and managed by Mars Food Services, a partnership firm and Mars Enterprises, a sole proprietor concern had the brand Just Around the Corner and also managed the restaurant. Pursuant to the investment by ICICI Equity Fund through the Investment Agreement all the trademark of Mars Food Services and Mars Enterprises were transferred to Mars Restaurants Ltd. through a deed of assignment dated September 30, 2000, for a consideration of Rs. 5,00,000/ all assets and liabilities pertaining to restaurant business of Mars Food Services, were transferred to Mars Restaurants Limited for a total value of Rs.1,30,00,000/-. The consideration for the same was settled by Mars Restaurant Ltd. by way of issue of shares to Mr. Sanjay Narang and Ms. Rachna Narang, Partners of Mars Food Services. Conducting Agreement between Mars Enterprises and Mars Restaurants Ltd. for use of premises of Mars Enterprise by Mars Restaurants Ltd. for conducting the restaurant business of Just Around the Corner. For this purpose Mars Restaurants Ltd. was to pay 5% of the Net Sales to Mars Enterprises Conducting Agreement between Mars Enterprises and Mars Restaurants Ltd. for use of premises of Mars Enterprises by Mars Restaurants Ltd. for conducting the restaurant business of Three Flights Up. For this purpose Mars Restaurants Ltd. was to pay 5% of the Net Sales to Mars Enterprises. (Present status: The Three Flights Up has been closed and in its place Gourmet Restaurants Pvt. has opened Tendulkars Restaurant, which is being managed by Mars Restaurants Ltd.) Conducting Agreement between Mars Food Services and Mars Restaurants Ltd. for use of premises of Mars Food Services by Mars Restaurants Ltd. for conducting the restaurant business of Pizzeria & Pasta Bar. For this purpose Mars Restaurants Ltd. was to pay 5% of the Net Sales to Mars Enterprises Conducting Agreement between Mars Food Services and Mars Restaurants Ltd. for use of premises of Mars Food Services by Mars Restaurants Ltd. for conducting the restaurant business of Not Just Jazz by the Bay. For this purpose Mars Restaurants Ltd. was to pay 5% of the Net Sales to Mars Enterprises Through an agreement with M.L. Narang (now Mars Enterprise) the Company offered M.L. Narang to use trademarks Tides, All Stir Fry and Three Flights Up. For this purpose Mars Enterprises will pay to the Company 15% of the Net Revenue to the Company. Mars Enterprises, a Partnership Firm assigned trademarks / trademark applications to Mars Restaurants Pvt. Ltd. through a deed of assignment dated September 7 ,2001, for a consideration of Rs. 10,000/-. The trademarks for which the applications were made are Tides and All Stir Fry for which This deed assigns all the rights, title and interest in the said trademarks / trademark applications in favour of MRL. On 15th October 2001, MRL took over the assets of Taj Birdys Foods Services Pvt. Ltd. and started its own brand of Birdys shop. In 2002-03 the Company entered into a joint venture agreement with Tendulkar & Family and subscribed to 49% stake in the joint venture company viz. Gourmet Restaurants Pvt. Ltd. Gourmet Restaurants has set up Tendulkars Restaurant & Bar in Colaba which is operated by the Company for which it receives management fees. Sachins, one more restaurant of Gourmet Restaurants is being set up.

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An arrangement with Caf Coffee Day, our products namely cookies, pastries would be sold at their outlets along with their own products and vice versa their coffee vendors could be installed at any of our restaurants/outlets. Our Company has started focusing on Food Courts wherein one can find different brands under the same roof. At present at Our Company is offering different brands at E-square in Pune The brands offered are : The Pizzeria & Pasta Bar, Just Around the Corner, Dosa Diner, Cake Khazana, China Joe and Roti All restaurants and over the counter outlets are operated by MRL on a revenue sharing basis wherein the owners of the premises are given a % of revenue generated by the restaurant or outlet. The operations are entirely handled by MRL and the sales are recorded in the books of MRL. However In case of, Cake Khazana, outlets are operated on a pure franchise basis where the franchisee manages the outlet. MRL sells the products to the franchisee at a discount and the final sale to the customer is by the franchise. In case of, Tides, All Stir Fry and Polly Ester, these restaurants are owned and managed by Mars Enterprises and they share revenue with us for the use of brands. In case of Tendulkars restaurant, our Company manages the restaurant for which we receives management fees LSG Sky Chefs (India) Pvt. Ltd. In October 28, 2002 LSG Sky Chefs (India) Pvt. Ltd. (LSG) was a joint venture between Mars Restaurants Pvt. Ltd. and LSG Asia Gmbh to set up catering units at various metropolitan cities. In this venture MRL had invested 15% of the equity amounting to Rs.1,06,75,000/-. The LSG had set up catering unit at Bangalore to supply meals to Jet Airways. However in 2003-04 MRL had decided to withdraw from this joint venture and accordingly exercised the put option, as per the agreement, and sold the shares back to LSG Asia Gmbh. Subsidiaries of the Company. MRL has one subsidiary company, namely: Mars Restaurants (U.K) Ltd. Mars Restaurants (U.K) Ltd is a 100% subsidiary of Mars Restaurants Ltd. The company was incorporated on 15th October 2001. It was created to capture the growing taste for Indian recipes in the U.K. Moreover the presence of huge Asian population in U.K has also played a vital role in launch of Indian Restaurants in U.K. The company plans to launch its 2 famous brands Dosa Diner and Roti in its initial foray. Financials

U.K.Pounds 31.03.2004 Turnover Other Income Total Expenses PAT -1380 33193 (31885)

U.K.Pounds 31.03.2003 -2394 46578 (44184)

U.K.Pounds 31.03.2002 -599 2493 (1894)

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Equity Capital Reserves Net Asset Value Per share EPS Our Main Object

280000 (77963) 0.72 (0.11)

280000 (46078) 0.84 (0.16)

280000 (1894) 0.99 (0.01)

The Main Object of our Company as stated in the Memorandum of Association is as under: 1. To purchase, conduct, franchise, manage, acquire, construct, erect, equip, promote, finance, or in any other way and in all aspects carry on business of or deal in restaurants, fast food restaurants, cafes, food storage, processing and production facilities, commissaries, hotels, motels, lodging and boarding houses, taverns, bars, bars, discotheques, night clubs, refreshment rooms, flight kitchens, catering services, house keepers, clubs, cinemas, entertainment centers, multiplex theatres, holiday homes, resorts, camps in any part of the world.

The main objects of the Company permits the Company to undertake the present and proposed activities. Changes in the Memorandum Since our incorporation the following changes have been made to the Memorandum of Association Date September 7, 2000 Change Authorised share capital was increased from Rs.100,000 (10,000 shares of Rs.10 each) to Rs.1,50,00,000 (15,00,000 shares of Rs.10 each) Authorised share capital was increased from Rs.1,50,00,000 (15,00,000 shares of Rs.10 each) to Rs. 200,00,000 (20,00,000 shares of Rs. 10 each) Authorised share capital was increased from to Rs. 200,00,000 (20,00,000 shares of Rs. 10 each) to Rs. 12,50,00,000 (125,00,000 shares of Rs. 10 each) Name has been changed from Mars Restaurants Private Limited to Mars Restaurants Limited

August 20, 2001

July 5, 2004

July 5, 2004

DETAILS OF BOARD OF DIRECTORS Name Address Sanjay Narang Georgina C Sherly Rajan Road, Bandra, Mumbai 400 050. Qualification Alumini of Cornell School of Hotel Management, Cornell University, USA Age 41 yrs Experience 18 Date of Appointment 28.04.2000 Other Directorships held Bullworker Pvt. Ltd. Taj Birdys Food Services Pvt. Ltd. Mars Catering Services Pvt. Ltd. Mars Hotels & Resorts Pvt. Ltd Mars Restaurants Services (Chennai) Pvt. Ltd.

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 Rachna Narang Georgina C Sherly Rajan Road, Bandra, Mumbai 400 050. Liberal Arts from Cornell University, USA 39 yrs 16 28.04.2000

Sky Gourmet (India) Pvt. Ltd Manu Hotels (India) Pvt. Ltd Deepak Peters Designs Pvt. Ltd Bullworker Pvt. Ltd. Mars Catering Services Pvt. Ltd. Mars Hotels & Resorts Pvt. Ltd. Taj Birdys Food Services Pvt. Ltd. Caf Network Limited Pantaloon Retails (India) Limited Shopper's Stop Limited Subhiksha Trading Services Limited TV Today Network Limited Crossword Book Stores Limited Indus League Clothing Limited Billjunction Payments Limited Traveljini.com Limited Webquity eMarketing Private Limited Team Four Hospitality Services Pvt. Ltd. Arvind Brands Limited Arvind Fashions Limited Arvind Clothings Limited MITRA Technology Foundation TJ Travel Services Pvt. Ltd. Welspun India Limited

Bala Deshpande (Nominee of ICICI Venture) ICICI Venture Funds Management Co. Ltd. Stanrose House, Ground Floor, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025

Management Graduate from Jamnalal Bajaj Institute of Management Studies

38 years

15

20.08.2001

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Key Managerial Personnel Name Designa Qualification tion Mr. Arvind Ghei CFO B.A (Hons) Econ, MFM

Total Yrs. of Exp 26

Yrs of exp. In the co. 4

Job Profile

Previous Employment Taj Group of Hotels Ambassador Group & Mars Group Plaza Hotels Pvt. Ltd. & Mars Group

Mr. Patrick Rodrigues

VP Finance & Adminis tration

B.Com (F.Y)

25

Mr. K.L Sethia

VP Legal & CS

B.Com. LLB(Pro), C.S

33

In charge of Accounts, Tax, Finance, Secretarial & Legal In charge of Accounts, HRD, Administrati on, EDP, F&B Controls, Operations Standard & QA Sales & Marketing In charge of Secretarial & Legal

Gross Remunerati on Rs. 6,01,722

Rs.4,49,258

Mr.Jaswinder Singh

VPMaterial Manage ment

H.S.C. D.H.M

20

Mr. Ramesh Joshee

VP Business Develop ment & Projects

BE Civil

28

In charge of Purchase, Stores, Material Management ,incharge of Cake Khazana Operation and Laundry In charge of Projects, Engineering transportatio n, Security, Restaurant Operations, , and Birdys Operations

Mars Group, Sanghi Corporate S Ltd. Narang Hotels Pvt. Ltd. Mars Group, Sachdev & Sons Taj Air Caterers Ambassador Sky chef

Rs. 2,42,414

Rs. 5,65,145

Mars Group, Ambassador Group and Taj Group of Hotels

Rs. 5,25,096

Changes in the Key Managerial Personnel in the last three years. Name Designation Joining period Resignation date Anil Pathak COO 06.08.2000 31.03.2002 Justius Phillip VP 02.10.2000 16.05.2003 Operations Aniel Alvarares VP Birdys 28.10.2000 10.12.2003

Reasons Personal reasons Personal reasons Personal reasons

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Details of shares held by Key Managerial Personnel Name Mr. Arvind Ghei * Mr. Ramesh Joshee * Mr. Jaswinder Singh * No. of Shares 60 60 60

* Holding the shares on behalf of Ms.Rachna Narang.

Organization chart

Board of Directors

Chief Financial Officer

VP- Material Management

VP Business Development

VP- Finance & Administration

VPLegal & Company Secretary

Manager F&B Controls HRD & Admn Accounts E.D.P Operations & Standards & Q.A Sales & Marketing

Manager Stores & Purchase Despatch Institutional Catering Cake Khazana Laundry

Manager Projects Transport Engineering Security Restaurant Operations Birdys

Assistants

Assistants

Assistants

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Corporate Governance The Guidelines issued by SEBI in respect of Corporate Governance will be applicable to us immediately upon listing of its Equity Shares on the stock exchanges. We undertake that we will take all necessary steps to comply with all the requirements of the Guidelines on corporate governance, as would be applicable to us on listing of our Equity Shares. We intend to comply with SEBI guidelines in respect to corporate governance, especially with respect to the appointment of independent directors to our board and constituting our board committees: the Shareholding/Investor Grievance Committee; and the Audit Committee; and the Compensation Committee. At present, there are no independent directors on the Board or Audit Committee of the Company. We undertake to adopt the Corporate Governance Code as per clause 49 of the listing agreement of the Stock Exchanges prior to entering into the listing agreement. As a result, at least 50% of our Companys Board of Directors will comprise of independent directors. Promoters & Management Mr. Sanjay Narang Mr. Sanjay Narang, 41 studied Hotel Management at Cornell University, USA, the most reputed hotel and restaurant management institute in the world. He has over 18 years of experience in operating hotel, restaurants and catering units, 8 of which were as Head of Operations of the Narang familys Ambassador Group of Hotels. After reorganization of family business in 1992, Mr. Sanjay Narang embarked on establishing the Mars Group as a leading player in the food service and hospitality industry in India. At this time, he was also appointed as Head of the Flight Catering Division of the Taj Group of Hotels and Advisor to its Chairman and Managing Director. During his association with Taj Group, he designed and set up its new flight catering facilities at Mumbai, New Delhi, Chennai, Bangalore and Goa and was responsible for the operations and revival of the existing units at Mumbai and New Delhi. In 1997, Sanjay completed his assignment with the Taj Group and became of the CEO of the Mars Group. Ms. Rachna Narang Ms. Rachna Narang, 39 years of age, an alumini of Cornell University, USA, was responsible for conceptualizing and developing Croissants etc, chain of bakery and patisserie outlets. She was responsible for the expansion of Birdys which she headed as Executive Director of the Taj Birdys Food Services Ltd., a joint venture with the Taj Group of Hotels. Today she supervises the operations of the Mars Group. She has a total of 16 years of experience in this industry

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Details of Promoters Name Sanjay Narang PAN AABPN1771E Voters ID -Driving License 85/C/5448

Rachna Narang

ACIPN4764C

--

--

Details of Group Companies Mars Hotels & Resorts Private Limited: The Company was incorporated on September 1994, and it owns 35,000 sq.mts of land in north Bombay, close to the international airport, which is being developed in the following manner: a) b) c) d) Corporate Office and centralized production commissary for Mars Restaurants.Ltd. Already developed Airline Catering Unit Already developed (75-100 rooms/suites) along with restaurants and banqueting facilities. The Gordons Country Club developed on 5 acres of landscaped gardens creating a leisure club with the latest facilities on par with the worlds finest international clubs.

Board of Directors 1. Mr. Sanjay Narang 2. Ms. Rachna Narang Shareholding Pattern Sr. No. Name of shareholders 1 Mr. Sanjay Narang 2 Ms. Rachna Narang Total No. of shares held % to total 4474800 83.13% 907800 5382600 16.87% 100%

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Financials 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Revenue Sharing Rent Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 10/- each) Reserves (Excl. revaluation reserve) Net Asset Value Per Share (Rs.) 30.00 4.80 0.32 35.12 93.34 (58.22) 538.26 28.87 7.93 30.00 4.80 11.07 45.87 79.85 (33.98) 538.26 28.87 9.01 5.47 0.39 5.86 36.48 (30.63) 538.26 28.87 9.63 2.80 0.14 2.94 16.40 (13.46) 538.26 28.87 10.18

EPS (Rs) (1.08) (0.63) (0.57) (0.25) The financial summary upto FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Bullworker Pvt.Ltd. Bullworker Pvt.Ltd (Formerly known as Mail Order Sales Private Limited) was incorporated on 27th October 1967, and since then it has been a pioneer in the countrys fitness equipment market for over 30 years and its trade name Bullworker enjoyed considerable brand equity. The Company was a forerunner of the direct marketing business in India and successfully established a distributor-dealer network of over 500 sports and departmental stores spread all over the country. Currently the company is not undertaking any further trading activities. Board of Directors 1. Mr. Sanjay Narang 2. Ms. Rachna Narang 3. Mr. Ashok Narang Shareholding Pattern Sr. No. Name of shareholders 1 Mr. Sanjay Narang ) Ms. Rachna Narang )held Mr. Ashok Narang )jointly 2 Mr. Sanjay Narang 3 Ms. Rachna Narang 4 Mr. Ashok Narang 5 Others Total 26 1 25 15 49,720 0.05% 0.00% 0.05% 0.03% 100% No. of shares held % to total 49,653 99.87%

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Financials 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Revenue Sharing Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 100/- each) Reserves (Excl. revaluation reserve) Net Asset Value Per Share (Rs.) EPS (Rs) 9.54 9.54 5.66 3.88 49.72 513.08 1071.18 7.79 22.64 22.64 5.60 17.05 49.72 513.08 1063.39 34.28 31.70 25.22 56.92 37.11 19.81 49.72 513.08 1029.10 39.85 60.51 7.54 68.05 69.20 (1.15) 49.72 513.08 989.25 (2.32)

The financial summary upto FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Mars Catering Services Pvt.Ltd. Mars Catering Service Pvt. Ltd was promoted by Ms. Rachna Narang, who was responsible for conceptualizing, developing and operating the Birdys cake shop and fast food outlets. Birdys brand gained huge popularity in a very short span. Later the brand was transferred to Taj Birdys Food Services Pvt Ltd when the Mars group entered into joint venture with the Taj group to form Birdys by Taj. Board of Directors Mr. Sanjay Narang Ms. Rachna Narang Shareholding Pattern Sr. No. 1 2 3 Name of shareholders Mr. Sanjay Narang Ms. Rachna Narang Others Total No. of shares held % to total 10050 43.98% 10550 2250 22850 46.17% 9.85% 100%

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Financials. 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Professional Fees Conducting Fees Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 100/- each) Reserves (Excl. revaluation reserve) Net Asset Value Per Share (Rs.) EPS (Rs) 0.85 25.85 8.90 16.94 22.85 6.60 (241.13) 74.14 16.33 1.16 15.17 22.85 6.60 (315.27) 66.38 25.00 16.33 16.33 43.36 59.69 34.29 25.40 22.85 6.60 (381.65) 111.16 25.69 2.20 27.89 32.13 (4.24) 22.85 6.60 (492.82) (18.57)

The financial summary upto FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Taj Birdys Food Services Pvt. Ltd Taj-Birdys Food Services Pvt.Ltd (TBFSL) was incorporated as a joint venture Company promoted by Taj group of Hotels and the Mars Group with each entity holding an equal stake in this Company. Recognizing the growing market for take-home confectionery, TBFSL was started as a chain of cake shops under the brand name Birdys by Taj. TBFSL commenced commercial operations in March 1994 and had around 19 franchised outlets spread across Mumbai. The outlets target both the take away market for families as well as the college going youth who view the shops as the place to be seen. The joint venture however was terminated and since then trading activities has been transferred to Mars Restaurants Ltd with effect from 15th October 2001. The Company is a sick Company within the meaning of Sick Industrial Companies Act, 1985. Directors 1. Mr. Sanjay Narang 2. Ms. Rachna Narang 3. Mr. Arvind Ghei

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Shareholding pattern Sr. No. Name of shareholders 1 Ms. Rachna Narang 2 Mr. Ashok Narang 3 Mr. Sanjay Narang 4 Mars Catering Services Pvt. Ltd. 5 Others Total No. of shares held 87510 10 175010 87500 30 350060 % to total 25.00% 0.00% 49.99% 25.00% 0.01% 100%

Financials 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Sales Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 10/- each) Reserves (Excl. revaluation reserve) Net Asset Value Per Share (Rs.) EPS (Rs) 276.37 276.37 87.36 189.01 35.01 25.98 (18.32) 53.99 1.34 1.34 11.16 (9.83) 35.01 25.98 (72.31) (2.81) 377.64 19.61 397.25 502.50 (101.66) 35.01 25.98 (69.50) (29.04) 936.72 9.37 946.10 897.71 48.39 35.01 25.98 (40.46) 13.82

The financial summary upto FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Mars Restaurants Chennai Pvt. Ltd. (Earlier Landsend Realty Pvt.Ltd) The company was incorporated on 6th February 1997 in the name of Landsend Realty Pvt. Ltd. The company was formed initially to undertake Construction business. However the Company altered its Objects on 7 th February 2000 and entered the Hotel industry business. It changed its name to Mars Restaurants Chennai Pvt. Ltd on 14th July 2000. The company however has found it unviable to run the business and has applied for striking of its name from the ROC. Directors 1. Mr. Sanjay Narang 2. Ms. Rachna Narang 3. Mr. Ramarao Pattabhi

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Shareholding pattern Sr. No. Name of shareholders 1 Mr. Sanjay Narang Ms. Rachna Narang Mr. Ashok Narang (Shares held jointly) 2 Mr. Ashok Narang 3 Others Total Financials

No. of shares held 38290

% to total 95.73%

10 1700 40000

0.03% 4.25% 100%

30.11.2003

31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs

Sales Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 100/- each) Reserves (Excl. revaluation reserve) Net Asset Value Per Share (Rs.)

0.00 0.00 0.00 0.06 (0.06) 0.00 0.00 (11215.00)

0.00 0.00 0.00 0.02 (0.02) 0.00 0.00 (8355.00)

0.00 0.00 0.00 0.03 (0.03) 0.00 0.00 (7595.00)

0.00 0.00 0.00 0.09 (0.09) 0.00 0.00 (5870.00)

EPS (Rs) (2860.00) (760.00) (1725.00) (4740.00) Manu Hotels Pvt Ltd. (Earlier Pachhi Hotels Pvt.Ltd) Manu Hotels Pvt. Ltd ran a 40 room hotel at Igatpuri. However the business go as per expectations and the operations were suspended from 17.05.1996. Central Bank of India has filed a suit for recovery of outstanding amount due from the Company. A court receiver was appointed for the same and since then he has taken formal possession of both movable and immovable assets of the Company. The case has been now transferred to the Debt Recovery tribunal. Directors Mr. Sanjay Narang Mr. Ashok Narang Shareholding Pattern Sr. No. Name of shareholders 1 Ms. Anita Tiwari 2 Mr. Ashok Narang 3 Mr. Ramji Tiwari Total No. of shares held % to total 38290 95.73% 10 1700 40000 0.03% 4.25% 100%

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Financials 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Sales Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 100/- each) Reserves (Excl. revaluation reserve) Net Asset Value Per Share (Rs.) EPS (Rs) 0.00 0.00 0.00 0.05 (0.05) 40.00 10.11 (883.02) (0.14) 0.00 0.00 0.00 0.10 (0.10) 40.00 10.11 (882.89) (0.26) 0.00 0.00 0.00 52.86 (52.86) 40.00 10.11 (882.63) (132.15) 0.00 0.00 0.00 45.61 (45.61) 40.00 10.11 (750.48) (114.03)

COMPANIES PROMOTED BY THE COMPANY Gourmet Restaurants Pvt. Ltd. (GRPL) Gourmet Restaurant Pvt. Ltd. was set up on 27th May 2002 as a result of a joint venture between Tendulkars family (Tendulkars) and Mars Restaurants Limited. Mars Restaurants holds 49% stake in Gourmet Restaurants Pvt. Ltd and the rest is held by the Tendulkar family. The salient features of the shareholders agreement entered into with Tendulkars are as under Tendulkars shall subscribe to the share capital in addition to the shares already held by them to the extent of Rs. 24.50 lakhs at par MRL shall subscribe to the equity capital to the extent of 2,45,000 equity shares each at such time and at such premium as may be fixed by the Company at the time of such allotment. The Share Capital shall be held in proportion of 51:49 by Tendulkars and MRL. Mr. Sanjay Narang, promoter of MRL has to hold 74% shares in the paid up capital of MRL. Further Mr. Sanjay Narang has to warrant that so long this agreement subsist they shall not reduce their shareholding in MRL otherwise than by public offering and that to not below 51% of the total paid up capital of MRL and such that Mr. Sanjay Narang shall always have and retain controlling interest in MRL. In the event of Mr. Sanjay Narang acting contrary to the representation aforesaid Tendulkars shall have a right to terminate this agreement forthwith without giving any notice. The restaurant to be set up by the GRPL shall be in the premises to be made available by MRL on such terms and conditions as may be mutually agreed Mars Restaurants Ltd has been given the turnkey responsibility of management of Tendulkars restaurant for a period of 10 years vide agreement dated July 11, 2002. For the same GRPL pays a management fee of 3% of its gross income to MRL. Apart from the management fee there is a further revenue sharing arrangement between the GRPL, MRL and Mars Enterprises vide revenue sharing agreement dated October 15, 2002. the salient features of the agreement are as under:

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Mars Enterprises provides the premises for the GRPL to develop and operating the restaurant, provided that Mars has at all time a minimum 49% equity stake in the share capital of the Company. The agreement shall be effective on October 15, 2002 and shall remain valid and in force upto September 28, 2007 on which date it shall forthwith terminate. Provided however that Mars Enterprises shall be substituted in place of MRPL on and after the September 28, 2005 upto the aforesaid Expiry date in the event that VC Investor (ICICI Emerging Sector Fund) along with one or more other Financial Institution do not have a combined minimum shareholding of atleast 26% in the Company. To the extent of 0.5 % of the net revenue of the restaurant subject to minimum of Rs.5,25,000/- per month, whichever is higher. This Agreement is valid and in force upto September 27, 2007 and shall forthwith terminate. Directors Mrs. Anjali Tendulkar Mr. Ajit Tendulkar Mr. Sanjay Narang Shareholding Pattern Sr. No. Name of shareholders 1 Mrs. Anjali Tendulkar 2 Mr. Ajit Tendulkar 3 Mars Restaurants Limited Total Financials 31.03.2004 31.03.2003 Rs. Lakhs Sales Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 10/- each) Reserves (Excl. revaluation reserve) Less: P&L Account Less: Miscellaneous Net Asset Value Per Share (Rs.) EPS (Rs) 356.13 0.14 356.27 382.92 (26.65) 50.00 10.00 35.68 1.19 4.86 (5.33) 210.68 0.10 210.77 219.79 (9.02) 50.00 10.00 9.02 1.34 10.20 (1.80) No. of shares held % to total 250000 50.00% 5000 245000 500000 1.00% 49.00% 100%

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The financial summary for the FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. OTHER COMPANIES/FIRMS PROMOTED BY THE PROMOTERS OF THE COMPANY Mars Enterprises: Mars Enterprise was a sole proprietorship started by Mr.M.L. Narang. Upon the death of Mr. M.L Narang, the proprietary concern was converted into a partnership firm on 28th April 2001. Presently the partners are Mr. Sanjay Narang, Ms. Rachna Narang and Mr. Ashok Narang. The profit sharing ratio being 1/3rd each respectively. The firm ran a restaurant under the trademark of Just Around the Corner which was later assigned to Mars Restaurant Ltd by way of deed of assignment. Also it assigned trademark applications of Tides and All Stir Fry. It has two business divisions: Air Catering Unit and Gordon House Hotel. Air Catering Unit It caters to Jet Airways through Sky Gourmet Catering Services Pvt. Ltd, a private Ltd company, wherein the Equity Shares are held by Mr. Sanjay Narang and Mr. Arvind Ghei at 10 % and 90% respectively. The food is supplied to Sky Gourmet by Mars Enterprises, which in turn supplies to Jet Airways. Gordon House Hotel, Colaba (29 rooms hotel) This is first of its kind of boutique property located in the heart of the bustling commercial shopping and tourist district of Mumbai. Its being marketed as a small hotel thats big on style. Apart from the above Hotel the Gordon House has 3 restaurants situated in its property, which are Tides, All Stir Fry and Polly Esthers, These restaurants are being managed by Mars Enterprises. Mars Restaurants pays conducting fees to Mars Enterprises for utilizing the property and inturn gets a share in the revenues of the three restaurants. Conducting fee of 5% of the net sales is received for the property usage of Just Around the Corner from Mars Restaurants Ltd. The firm is receiving conducting fees of 5% of net sales from MRL for usage of its property under the brand of Tendulkars (Earlier Three Flights Up). Brief Financials. 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Sales Other Income Turnover Total Expenses PAT/(Loss) Partners Capital 1935.35 92.37 2027.72 1887.65 140.08 214.02 1590.77 41.09 1631.86 1650.94 (19.08) 102.77 339.79 316.42 656.21 795.09 (138.88) 123.12 107.69 15.95 123.64 147.39 (23.75) 265.90

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The financial summary upto FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Sky Gourmet Catering Services Pvt ltd Sky Gourmet Catering Services Pvt Ltd was incorporated on January 4, 2002. Previously it was known as Gate Gourmet (India) Pvt Ltd., which was then changed on 28/10/2003 to Sky Gourmet Catering Services Pvt. Ltd. The company is in the business of providing catering facilities to airlines. The Company has entered into an agreement with Jet Airways for supplying the catering requirements of the airline. The Company sources its entire catering material from Mars Enterprise. Directors Mr. Sanjay Narang Mr. Arvind Ghei Shareholding Pattern Sr. No. Name of shareholders 1 Mr. Sanjay Narang 2 Mr. Arvind Ghei Total Financials 15 months 31.03.2004 31.03.2003 Rs. Lakhs Sales Other Income Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 10/- each) Reserves (Excl. revaluation reserve) Less: P&L Account Less: Miscellaneous Net Asset Value Per Share (Rs.) EPS (Rs) 0.15 18.53 80.27 0.17 18.34 53.18 1219.65 277.09 1496.74 1488.72 8.03 1.00 4.52 972.28 221.43 1193.71 1187.07 6.65 1.00 6.65 No. of shares held % to total 1100 10.89% 9000 10100 89.11% 100%

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The financial summary upto 15 months period ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. M/s. Sunrise Film Company (Defunct) Sunrise Film Company, a partnership firm was incorporated in 1997. The firm was engaged in the business of producing ad films, hosting commercial shows and other activities in the entertainment industry. It had produced the popular MTV Countdown show. The firm was dissolved on 30th July 2003. M/s. Mars Food Services: Mars Food Services was started for the management of a restaurant/discotheque. The firm owned a discotheque under the brand name of Three Flights Up. Later the brand was transferred to MRL. The firm also owned the following brands under its belt, namely 1. 2. 3. 4. Not just jazz by the way Pizzeria & Pasta bar Dosa Diner Trim with Taste

All the above brands have been transferred to Mars Restaurants Ltd pursuant to a deed of assignment. Mr. Ashok Narang, Mr. Sanjay Narang and Ms. Rachna Narang, the present partners of Mars Food Services hold 1/3rd share each. It also receives 5% of the net sales of the business from Not Just Jazz by the Bay and Pizzeria & Pasta Bar for usage of its properties. Financials 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Sales Franchisee Fees Other Income Turnover Total Expenses PAT Partners Capital 0.00 23.10 2.78 25.88 17.36 8.51 112.84 0.00 28.59 2.72 31.31 31.34 (0.03) 104.57 0.00 35.39 14.17 49.56 42.36 7.20 103.48 653.30 18.85 56.74 728.89 706.18 22.70 89.77

The financial summary upto FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Mars Leasing Mars Leasing, a proprietary firm was started in 1990. The firm owned a fleet of luxury coaches and operated them under the brand name of Country Cruiser. Its major clients for the passenger transportation business were leading international airlines such as British Airways, Singapore Airlines, Cathay Pacific, etc. who used Country Cruiser coaches for crew transportation. The firm also had arrangements with M/s.

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Cox & Kings, one of Indias largest and oldest travel agents, for transportation of tourist to various destinations. There has been no activity after the death of Mr. M L. Narang, the proprietor. M/s. Mars Corporation (Previously Known as United Corporation) : Mars Corporation, a partnership firm was incorporated in 1975. The firm provides security staff and ancillary services to Mars Group Companies . Partners Mr. Sanjay Narang Mr. Ashok Narang Ms. Rachna Narang The partners hold 1/3rd share each. Financials 31.03.2004 31.03.2003 31.03.2002 31.03.2001 Rs. Lakhs Commission Other Income Turnover Total Expenses PAT Partners Capital 4.20 0.00 4.20 2.45 1.75 5.73 4.20 0.01 4.21 2.36 1.85 4.23 4.20 0.02 4.22 3.06 1.16 1.18 4.20 0.39 4.59 4.23 0.36 0.02

The financial summary as certified by the Management. Deepak Peters Design Pvt. Ltd. Deepak Peters Design Pvt Ltd was incorporated under the Companies Act, 1956 on April 1, 2002. he company is providing services and consultations of graphics displays such as signage, Tpackaging, presentation, advertisements, logos etc. The present Directors of the Company and their shareholding is as follows: Board of Directors Mr.Deepak Peters Mr.Sanjay Narang Ms.Sushmita Sen Shareholding Pattern Sr. No. Name of shareholders 1 Deepak Peters 2 Sanjay Narang 3 Sushmita Sen Total No. of shares held % to total 7400 74.00% 1300 1300 10000 13.00% 13.00% 100%

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Financials 31.03.2004 31.03.2003

Rs. Lakhs Graphic Design Fees Turnover Total Expenses PAT/(Loss) Equity Capital (Rs. 10/- each) Less: P&L Account Net Asset Value Per Share (Rs.) EPS (Rs) 18.48 18.48 25.84 (7.36) 1.00 21.92 (209.16) (73.60) 15.49 15.49 30.05 (14.56) 1.00 14.56 (135.57) (145.57)

The financial summary for the FY ended 2003 is audited and for the FY ended 2004 is certified by the Auditor. Related Party transaction Related Party Transactions The Company has entered into the following related party transactions. Such parties and transactions have been identified as per Accounting Standard 18 Related Party Disclosures issued by the Institute of Chartered Accountants of India. a) Subsidiaries: Category 1 Mars Restaurants (UK) Limited Directors and Key Management Personnel : Category 2 Sanjay M Narang Rachna M Narang Bala Deshpande (Nominee of the ICICI Venture) Arvind Ghei (Key Management Personnel) Companies controlled by Directors / Relatives: Category 3 Gourmet Restaurants Private Limited Mars Food Services Deepak Peter Design Private Limited Mars Enterprises Mars Hotel & Resorts Private Limited Sky Gourmet Catering Services Private Limited Bullworker Private Limited Taj Birdys Food Services Limited Mars Hotels & Resorts Private Limited Mars Catering Services Private Limited Mars Corporation Relative of Directors: Category 4 Ashok M Narang

b)

c)

d)

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Related Party Transactions as required by AS 18 for the year ended March 31, 2004, March 31, 2003 and March 31, 2002
Transaction details Category 1 Subsidiaries 2004 Sales Service provided Re-imbursement of Expenses from Purchases Service received Re-imbursement of Expenses to Advance and Loans given Advance and Loans repaid Interest Received Purchase of Fixed Assets Directors Remuneration Remuneration Paid Investment Deposits given Outstanding as on 31/03/04 Loans and Advances Deposits Debtors for goods and services Creditors for goods and services Investment 192.00 192.00 192.00 94.82 96.69 151.31 0.32 500.00 190.06 11.94 124.50 478.74 97.28 17.98 124.50 100.00 417.24 19.44 5.19 192.00 21.53 1.69 5.31 7.75 6.42 153.75 11.90 8.63 124.50 61.23 417.24 3.14 43.34 151.31 0.32 2003 2002 Category 2 Directors & Key Management Personnel 2004 2003 2002 Category 3 Companies Controlled 2004 128.75 202.91 153.83 61.11 47.41 26.47 12.41 15.85 2003 134.56 119.70 117.41 26.01 49.72 14.05 108.79 213.72 4.50 18.92 2002 99.49 28.53 52.91 45.14 51.29 33.99 113.65 0.72

Note : Advance and Loan repaid includes advance of Rs. 10,00,0000 given in the year 2002 Changes in the Auditors

There has been no changes in the Auditors in the last three years. Changes in the Board There has been no changes in the Board of Directors in the last three years.

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Select financial History For the year ended March 31 2004 Income Sales: Food & Beverage Sales Sub-total Other Income Total Income Expenditure Raw material consumed Excise Operating expenses Staff costs Selling and distribution expenses Interest Sub-total Less : Capitalised : Reimbursement Total Expenditure Operating Profit / (Loss) (Loss) on sale of fixed assets on account of closure of outlets Profit from Sale of Investment Deferred and Preliminary expenses written off Loans written off Provision for doubtful loans and advances 878.07 0.12 585.74 408.43 472.53 6.42 2,351.31 0 8.80 2,342.51 122.18 888.01 0.21 670.86 467.55 632.67 10.24 2,669.54 12.43 18.51 2,638.60 (180.83) 843.96 0.40 684.09 543.82 727.87 32.22 2,832.36 67.74 167.69 2,596.93 176.57 318.33 236.56 196.00 199.21 53.50 1,003.60 87.90 7.62 908.08 226.44 2,454.29 2,454.29 10.40 2,464.69 2,433.24 2,433.24 24.53 2,457.77 2,693.75 2,693.75 79.75 2,773.50 1,121.44 1,121.44 13.08 1,134.52 2003 2002 For the period ended March 31, 2001

Particulars

(42.04) 27.51 0 (33.35) (74.51)

(90.77) 2.43 0 0 -

(16.65) 6.78 (3.68) -

(1.41) 0 (2.27) -

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(Loss) / Profit before Depreciation & Tax Depreciation (Loss)/ Profit before Tax Current Tax Prior Year Tax Deferred Tax (Loss)/ Profit after tax

(0.21) (172.54) (172.75) 2.74 1.50 (73.55) (103.44)

(269.17) (195.00) (464.17) 0 (0.14) (171.33) (292.70)

163.02 (143.02) 20.00 1.88 (2.33) 20.45

222.76 (24.06) 198.70 17.01 53.61 128.08

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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND REPORT OF OPERATIONS Management Discussion and Analysis of Financial Condition and Report of Operations You should read the following discussion of our financial condition and results of operations together with our audited financial statements for the period ended March 31, 2004 and each of financial years 2003, 2002 and 2001, including the notes thereto and the reports thereon, which appear elsewhere in this Red Hearing Prospectus. The following discussion is based on our audited financial statements for the period ended March 31, 2004 and each of financial years 2003, 2002 and 2001, which have been prepared in accordance with Indian GAAP, and on information available from other sources. These data have been reclassified in certain respects for purposes of presentation. Our financial year ends on March 31 of each year, so all references to a particular financial year are to the twelve-month period ended March 31 of that year. Overview We are one of Indias fastest growing chain of theme restaurants. Currently, we are present in Mumbai. In the Financial Year 2000-01, we committed to a Business Plan that provided both, product and geographical diversity. Product diversity was sought to be achieved through opening restaurants catering to a wide variety of culinary taste and choices in the casual, over the counter, Night Pubs and dining segments. This was necessary to insulate the Company from unpredictable and sudden shifts in customer preferences for different types of cuisines as witnessed in the Indian restaurant industry in the past. Accordingly, the Company after considerable market and technical research developed the following brands to offer a bouquet of diverse food, ambience and service products and these included: Dosa Diner - Offering traditional South Indian cuisine of dosas, idlis, vadas and appams with nonvegetarian fillings and accompaniments. Roti - Serves traditional North Indian specialties that are available at authentic dhabas (highway cafes) including stuffed parathas in a variety of vegetarian and non-vegetarian fillings and accompaniments. The Pizzeria & Pasta Bar - Serves good old fashioned home-style Italian cuisine specializing in a wide variety of pizzas and pastas. Just Around The Corner - An all American self-service diner offering a wide variety of soups, salads, burgers, sandwiches, desserts and beverages open throughout the day. All Stir Fry / China Joe - These are Oriental street kitchen style restaurants which allow you to create your own meal and specializes in Wok style cooking. Tides - An up market restaurant and bar specializing in local and international seafood delicacies. Not Just Jazz By The Bay - The focus is on live entertainment and the cuisine is an international menu comprising of specialties from different parts of the world. Polly Esthers - Night club where distinctive themes are reflected in the dcor and there is a wide variety of wines, liqueurs and cocktails on offer. In order to establish a presence in both the upper end and lower end of the bakery and confectionery retail business, the Company established Birdys in October, 2001 which then operated a chain of 10 outlets selling a wide range of breads, pastries, cakes, chocolates and savouries to the up market customers. The Company also developed and established a lower end bakery and confectionery chain known as Cake Khazana in June, 2003 which operates on a franchising concept and has 9 outlets.

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The Restaurants / Outlets that were established under these brands were single brand outlets with main street or high street locations. The restaurants were equipped with the most modern equipment and considerable emphasis was placed on hygiene and sanitation. Each brand had a distinctive ambience and the outlets were tastefully decorated to provide a unique and holistic dining experience. The Companys business model however required all production to be done in a centralized kitchen or Commissary in order to take advantage of economies of scale with respect to purchasing and receiving of raw materials, ensure standardized food quality in a hygienic environment and maintaining control over delivery and supplying logistics for both, the raw materials and finished products. Such centralized production units or Commissaries were capital intensive and expensive to set up requiring minimum capacity utilization in order to be viable. Although the Company has set up such a unit in Mumbai, it was unable to do so in Bangalore and Chennai on account of there being insufficient outlets initially to justify a minimum utilization of such a Commissarys production capacity. Over a period of time, the outlets set up in Bangalore and Chennai, not being serviced through a Commissary, were unable to provide the standardized food quality on a consistent basis or benefit from economies of mass food production. The outlets in these cities proved to be unviable and were therefore closed down. The outlets in Mumbai although serviced from a centralized Commissary were located in extremely prominent locations where compensation for premises to the owners of the outlets was high in relation to the sales achieved from these outlets. Since sales at restaurants generally occur during weekends, or on certain weekdays during dinner only, the high rents along with the overhead expenditure of keeping the restaurants in complete operational readiness at all times and on all days during lunch and dinner resulted in outlets becoming unviable as long as quality standards were not to be compromised. We, therefore, revised the strategy and decided to close down stand-alone restaurants which were not generating a surplus at the store level on account of high rents, small area or other factors. The Company decided that it would instead be more viable to locate the restaurant brands it had promoted and established in locations such as shopping malls or multiplexes where footfalls were generated by consumer impulses other than simply eating out. Towards this objective, the Company has been successful in setting up and operating food courts at the E-Square multiplex in Pune and the to be commissioned Inorbit Shopping Mall in Mumbai. The Company also believes that if all its brands could be represented under a single roof with common seating areas then the wide variety of culinary choices and preferences its bouquet of brands offers would attract a sufficient number of guests to make such food pavilions a commercially profitable venture. These food pavilions would be able to cater to groups of diners comprising of individuals with differing food preferences served in a bright and lively ambience with common service and seating facilities for all the brands. It would focus on the unique proposition of being able to partake from a wide variety of established and well known food brands offering a wide range of cuisine to cater to every taste in order to generate the requisite volumes for commercial viability. Factor affecting our business Diminution in Brand life People taste Competition for particular theme Location Government rules and regulation related to timing, liquor Income For the financial years 2004, 2003, 2002 and 2001, our revenue primarily comprises of revenue from sale of food & beverage, liquor, revenues sharing from utilizing our brand, sponsorship income, etc. The other income constitutes interest, dividend and other income from investing activities. The following table sets forth the contribution of the different components of our revenue and of other income towards each of financial years 2004, 2003, 2002 and 2001.

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(Rs. In Lakhs) Financial year ended 2004 Revenue Food and beverages Wines and liquors Other Services Sponsorship Entry Fees Laundry Revenue Sharing Other Facilities Total Revenues Other Income Total Income 2003 2002 2001

1,977.78 173.97

2,029.27 147.41

2,146.63 203.49

849.14 125.50

39.71 50.35 78.23 106.05 28.19 2,454.29 37.91 2,492.20

50.98 41.86 60.90 58.80 44.02 2,433.24 26.96 2,460.19

206.07 68.75 1.12 27.42 40.28 2,693.75 86.54 2,780.29

61.73 44.09 40.99 1,121.44 13.08 1,134.52

Revenue We are presently running 6 restaurants & 10 outlets in Mumbai. We operate through these restaurants & outlets for selling our food, beverages wine & liquors and all transactions are based on the menu card given/kept at restaurants & outlets. Other services We receive other services income mainly associated with our main line of business such as sponsorship, entry fees, revenue sharing etc. we recognize our revenue for the period in which services have been provided and sales occurred. Sponsorship income received from various suppliers who sponsor shows or food & beverage for our customers. Revenue sharing proceeds received from our franchise/third party outlets & restaurants for utilising our brands and fees for managing restaurants. Entry fees are amounts received from our customers for entering in Not Just Jazz by the Bay for live music on specific days / periods. This is recognized on cash basis. Laundry income received from the facilities provided to Group and associates companies for utilizing laundry installed by our Company. Other income primary relates to interest earned on cash deposited in banks and profits from sale of investment. Other income comprises of 1.52%, 1.10%, 3.11% and 1.15% of total income for the financial years 2004, 2003, 2002 & 2001 respectively. In 2002, the company has shown jump in other income from 1.15% to 3.11% for F Y 2001 & 2002 respectively due to income earned from idle funds invested in Mutual Funds.

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Expenditure Employees remuneration and benefits : This includes salary payments, wages, contribution to employee benefits, staff welfare, provident fund and other benefits. Employees remuneration and benefits constitutes 16.3%, 18.7%, 18.8% and 15.9% of the total expenditure for the financial year 2004, 2003, 2002 & 2001 respectively. Material Purchase : This includes purchase of food and beverage items required for production of food and beverage products sold at our outlets/ restaurants. Operating Expenses : our operating expenses primarily include franchisee commission, revenue sharing for outlet/ restaurants premises, power and fuel, band and music expenses etc. Selling and Administrative Expenses : our selling and administrative cost constitute primarily rent, rates, carriage outward, taxes, postage & telegram, traveling & conveyance, legal & professional fees, repairs and maintenance, advertisement and sales promotion expenses. In this head the major component of expense is sales tax which is a state tax on goods sold. We are also incurring substantial traveling, conveyance and telephone expenses which are important for our business. Selling and administrative expenses constitute 24.9%, 28.6%, 20.4% and 16.9 % for the financial year 2004, 2003, 2002 & 2001 respectively. Financial charges : We have taken vehicle loans from banks and the finance cost represent interest on vehicle loan taken.

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Our Critical Accounting Policies Financial statement Financial statements are prepared under the historical cost convention in accordance with applicable Accounting Standards and provision of the Companies Act, 1956. Fixed assets Fixed assets are stated at cost of acquisition/construction. In respect of assets constructed, all related direct/indirect expenses including interest cost/financing charges are apportioned to respective assets. Intangible Assets are recorded at the consideration paid or cost incurred for the acquisition. Borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets is capitalized as part of the cost. All other borrowing costs are charged to revenue. Depreciation Depreciation is provided on a pro-rata basis, from the date the assets have been installed and put to use, on a written down value method at rates and in the manner specified under Schedule XIV to the Companies Act, 1956. Improvements on third party premises included under buildings are amortized over the period of agreements. Trademarks are amortized over three years on a straight line basis. Software is amortized @ 40% on WDV basis. Inventories Inventories are stated at cost or net realizable value, whichever is lower.

Raw materials and packing materials Semi finished goods Stores and Spares Finished goods

At cost net of CENVAT computed on average cost method At cost computed on average cost At cost computed on average cost method. method.

At cost computed on average cost method. Excise duty is considered as cost for finished goods wherever applicable. At average cost or net realizable value whichever is lower.

Trading Goods

Sales Gross sales include amounts recovered towards excise duty and sales tax.

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Retirement benefits The companys contribution to provident fund is charged Profit and Loss Accounts on accrual basis. Liabilities for gratuity and leave encashment are charged to profit and loss account on the basis actuarial valuation. Foreign currency transactions Transactions in foreign currency are recognized at rates on date of transaction. Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using exchange rates prevailing at the date of Balance Sheet and the resulting net exchange difference is recognized in the Profit and Loss Account, except those relating to a acquisition of fixed assets which is adjusted to the cost of such assets. Investments Long term investments are stated at cost. Provision for diminution in value is made if the diminution in value is other than temporary. Current Investments are stated at lower of cost or market value. Income tax Income tax expense comprises current tax and deferred tax charge or credit. Provision for Wealth Tax liability is estimated in accordance with the Wealth Tax Act, 1957 and provided for. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the company. Deferred Taxes Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and writtendown or written-up to reflect the amount that is reasonably/virtually certain to be realized. Miscellaneous expenditure (to the extent not written off or adjusted) Preliminary expenses relating to formation of the company are amortized over a period of ten years. All expenses incurred relating to research for expansion of business are recognized as deferred revenue expenditure and amortized over a period of five years. On adoption of the accounting standard 26 on intangibles, these balances are fully written off. Contingent liabilities These liabilities are appropriately evaluated and disclosed. Dividend Dividend proposed and taxes thereon provided for, is subject to approval of shareholders at the annual general meeting.

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Our Results of Operations The table below sets forth various line items from our restated financial statements for financial year 2004, 2003, 2002 and 2001 as per a percentage of revenue COST TO NET SALES RATIO (Rs. In Lakhs) Financial year ended 2004 Operating Revenues Other Income Total Revenue Material Cost to Total Revenue Material Cost Operating Cost to Total Revenue Operating Cost Employee Remuneration and Benefits to Total Revenue Employee Remuneration and Benefits Selling and Administrative Expenses to Total Revenue Selling and Administrative Expenses Financial Charges to Total Revenue Financial Charges Depreciation to Total Revenue Depreciation Net Profit /(loss) before tax to Total Revenue Net Profit /(loss) before tax Deferred Tax Liability Current Tax Net Profit /(loss) after tax to Total Revenue Net Profit /(loss) after tax 2,454.29 37.91 2,492.20 35.2% 876.41 23.5% 585.62 16.3% 406.34 24.9% 621.42 0.3% 6.42 6.9% 172.54 -7.1% (176.54) (320.63) 4.24 5.6% 139.85 2003 2,433.24 26.96 2,460.19 36.1% 887.95 27.2% 668.25 18.7% 459.93 28.6% 703.95 0.4% 10.24 7.9% 195.00 -18.9% (465.13) (18.91) (0.14) -18.1% (446.08) 2002 2,693.75 86.54 2,780.29 30.3% 843.09 24.3% 675.88 18.8% 521.71 20.4% 567.88 0.2% 5.99 5.1% 143.02 0.8% 22.72 1.88 0.7% 20.84 2001 1,121.44 13.08 1,134.52 27.2% 308.31 20.2% 229.03 15.9% 180.78 16.9% 191.60 0.0% 2.1% 24.06 17.7% 200.75 17.01 16.2% 183.73

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Comparison of financial year 2004 with financial year 2003 Material Cost Material Cost in financial year 2004 decreased by approximately 1 % to Rs. 876.41 lakhs in financial year 2004 from Rs.887.95 lakhs in financial year 2003. Material cost as a percentage of total revenue decreased to 35.2% in financial year 2004 from approximately 36.1% in financial year 2003. Operating Cost Operating cost in financial year 2004 decreased by approximately 12 % to Rs. 585.62 lakhs in financial year 2004 from Rs.668.25 lakhs in financial year 2003. Operating cost as a percentage of total revenue decreased to 23.5% in financial year 2004 from approximately 27.2% in financial year 2003. This is on account of closure of outlets/ restaurants and re-negotiation of revenue sharing fees for premises. Employees Cost Employees cost in financial year 2004 decreased by approximately 11% to Rs 406.34 lakhs in financial year 2004 from Rs.459.93 lakhs in financial year 2003. Employees cost as a percentage of total revenue decreased to 16.3% in financial year 2004 from approximately 18.7% in financial year 2003. This is on account of closure of outlets/ restaurants which has reduced our staff strength. Selling and Administrative Expenses Selling and Administrative Expenses in financial year 2004 decreased by approximately 11% to Rs.621.42 lakhs in financial year 2004 from Rs.703.95 lakhs in financial year 2003. Selling and Administrative Expenses as a percentage of total revenue decreased to 24.9% in financial year 2004 from approximately 28.6% in financial year 2003. This decrease is due to reduction in advertisement & sales promotion expenses and foreign Traveling Expenses. Financial Expenses Financial Expenses in financial year 2004 decreased by approximately 37% to Rs 6.42 lakhs in financial year 2004 from Rs.10.24 lakhs in financial year 2003. Financial Expenses as a percentage of total revenue decreased to 0.3% in financial year 2004 from approximately 0.4% in financial year 2003. Depreciation Depreciation Expenses in financial year 2004 decreased by approximately 12% to Rs.172.54 lakhs in financial year 2004 from Rs.195.00 lakhs in financial year 2003. Depreciation Expenses as a percentage of total revenue decreased to 6.9% in financial year 2004 from approximately 7.9% in financial year 2003. Profit/(Loss) after Tax Profit /(Loss) after tax in financial year 2004 decreased to Rs.139.85 lakhs in financial year 2004 from Rs.(446.08) lakhs in financial year 2003 has arisen due to adjustment of deferred tax assets(net) of Rs 320.63 lakhs. Comparison of financial year 2003 with financial year 2002 Material Cost Material Cost in financial year 2003 increased by approximately 5% to Rs.887.95 lakhs in financial year 2003 from Rs.843.09 lakhs in financial year 2002. Material cost as a percentage of total revenue increased to 36.1% in financial year 2003 from approximately 30.3% in financial year 2002. Operating Cost Operating cost in financial year 2003 decreased by approximately 1% to Rs.668.25 lakhs in financial year 2003 from Rs.675.88lakhs in financial year 2002. Operating cost as a percentage of total revenue increased to 27.2% in financial year 2003 from approximately 24.3% in financial year 2002.

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Employees Cost Employees cost in financial year 2003 decreased by approximately 12% to Rs.459.93 lakhs in financial year 2003 from Rs.521.71 lakhs in financial year 2002. Employees cost as a percentage of total revenue decreased to 18.7% in financial year 2003 from approximately 18.8% in financial year 2002. Selling and Administrative Expenses Selling and Administrative Expenses in financial year 2003 increased by approximately 24% to Rs.703.95 lakhs in financial year 2003 from Rs.567.88 lakhs in financial year 2002. Selling and Administrative Expenses as a percentage of total revenue increased to 28.6% in financial year 2003 from approximately 20.4% in financial year 2002. This is due to excess foreign traveling cost, loss on sale of fixed assets which relates to closure of unprofitable outlets and Advertisement & sales promotion expenses Financial Expenses Financial Expenses in financial year 2003 increased by approximately 71% to Rs.10.24 lakhs in financial year 2003 from Rs.5.99 lakhs in financial year 2002. Financial Expenses as a percentage of total revenue increased to 0.4% in financial year 2003 from approximately 0.2% in financial year 2002. Depreciation Depreciation Expenses in financial year 2003 increased by approximately 36% to Rs.195.00 lakhs in financial year 2003 from Rs.143.02 lakhs in financial year 2002. Depreciation Expenses as a percentage of total revenue increased to 7.9% in financial year 2003 from approximately 5.1% in financial year 2002. The increase in depreciation was primarily due to the additions in fixed assets in financial year 2003 of approximately Rs.37.52 lakhs. Profit/(Loss) After Tax Profit /(Loss) after tax in financial year 2003 decreased to Rs.(446.08) lakhs in financial year 2003 from Rs.20.84 lakhs in financial year 2002. The profitability has been adversely affected due to the shrinkage in the margins due to intense competition witnessed in food service and restaurants business. Comparison of financial year 2002 with financial year 2001 (We had started our operations from 16th October 2000) Material Cost Material Cost in financial year 2002 increased by approximately 174% to Rs.843.09 lakhs in financial year 2002 from Rs.308.31 lakhs in financial year 2001. Material cost as a percentage of total revenue increased to 30.3% in financial year 2002 from approximately 27.2% in financial year 2001. Operating Cost Operating cost in financial year 2002 increased by approximately 195% to Rs.675.88 lakhs in financial year 2002 from Rs.229.03 lakhs in financial year 2001. Operating cost as a percentage of total revenue increased to 24.3% in financial year 2002 from approximately 20.2% in financial year 2001. Employees Cost Employees cost in financial year 2002 decreased by approximately 189% to Rs.521.71 lakhs in financial year 2002 from Rs.180.78 lakhs in financial year 2001. Employees cost as a percentage of total revenue decreased to 18.8% in financial year 2002 from approximately 15.9% in financial year 2001. Selling and Administrative Expenses Selling and Administrative Expenses in financial year 2002 increased by approximately 196% to Rs.567.88 lakhs in financial year 2002 from Rs.191.60 lakhs in financial year 2001. Selling and Administrative Expenses as a percentage of total revenue increased to 20.4% in financial year 2002 from approximately 16.9% in financial year 2001.

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Financial Expenses Financial Expenses in financial year 2002 increased to Rs.5.99 lakhs in financial year 2002 from Rs.Nil in financial year 2001. Financial Expenses as per percentage of total revenue increased to 0.2% in financial year 2002 from Nil in financial year 2001. Depreciation Depreciation Expenses in financial year 2002 increased by approximately 494% to Rs.143.02 lakhs in financial year 2002 from Rs.24.06 lakhs in financial year 2001. Depreciation Expenses as a percentage of total revenue increased to 5.1% in financial year 2002 from approximately 2.1% in financial year 2001. The increase in depreciation was primarily due to the additions in fixed assets in financial year 2002 of approximately Rs.732.13 lakhs. Profit/(Loss) after Tax Profit /(Loss) before tax in financial year 2003 decreased to Rs.20.84 lakhs in financial year 2002 from Rs.183.73 lakhs in financial year 2001. Financial Expenses as per percentage of total revenue decreased to 0.7% in financial year 2002 from approximately 16.2% in financial year 2001. Quarterly Variations in Our Results of Operations After the listing of our Equity Shares, we will be required to report our results of operations on a quarterly basis to the Indian stock exchanges. Our results of operations tend to vary from quarter to quarter based on a number of factors including quantum of competitive restaurants, frequency of occurrence of menu price changes at restaurants that are relevant for our existing and potential guests/customers, macro-economic factors, market conditions and financial regulations, and we expect that they will continue to do so. However, we do not believe that this variation is due to seasonal patterns or that our business is seasonal in nature. Liquidity & Capital Resources Our primarily liquidity needs have been historically to finance our working capital needs and our capital expenditure. To fund there cost we have relied on cash flow from operation and short term and long term borrowings. Cash Flows The table below summarizes our cash flows for the financial years 2001, 2002, 2003 and 2004. (Rs in lakhs) Cash Flow 2004 2003 2002 2001 Net Cash flow from (used in) Operating activities Net Cash Used in investing activities Net Cash flow from (Used in) financing activities Net Increase/(Decrease) in Cash and Cash Equivalents 41.13 0.29 (30.63) 10.79 (50.54) (158.75) (27.15) (236.44) (598.54) (774.75) 1546.90 173.61 314.17 (788.53) 578.06 103.70

Our cash flow from operation have impact primarily by capital expenditure, working capital requirements and cash from operation and repayment of debt. Our net cash flow from operating activities was positive for 2004 of Rs 41.13 Lakhs primarily due to cost control and better consumption ratio. Our cash flow for other years 2003 and 2002 is negative because of closure of restaurants and increase in working capital requirements. Our cash flow from investing activities was negative for all past years because of purchase of fixed assets for opening restaurants at various locations. Our cash flow from financing activities is negative for 2004 and 2003 because of repayment of long term loan.

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Indebtedness As on March 31, 2004, the company has taken term loan for vehicle. The company is negotiating with banker to waive prepayment charges and repay the loan amount. This will effectively reduce the interest cost for the years to come. Historical and planned capital expenditures In financial year 2001, additions to fixed assets, other than capital work in progress, amounted to Rs801.70 Lakhs, which was primarily for purchasing plant and machinery and vehicles. In financial year 2002, additions to fixed assets, other than capital work in progress, amounted to Rs.415.67 Lakhs. In financial year 2003, additions to fixed assets, other than capital work in progress, amounted to Rs.152.50 Lakhs. In financial year 2004, additions to fixed assets, other than capital work in progress, amounted to Rs.149.58 Lakhs. Capital expenditure is mainly incurred on plant & machinery, electrical fittings, equipments, Kitchen equipment, etc., which is primarily relates to opening of new restaurants/outlets. Principal source of liquidity Cash and bank balance and Current Investments amounted to Rs 50.87 Lakhs and Rs.27.58 Lakhs respectively as on 31/03/2004. We believe that our anticipated internal accruals and proceeds of this issue will be sufficient to meet our working capital and capital expenditure. Our anticipated cash flow from operation, however, depends on a number of factors beyond our control, such as prevailing marketing conditions etc. Transaction with related parties We have entered into several transactions for purchase and sale of material, revenue sharing agreement, conducting fees and loans all such transaction are conducted on an arms length basis. For further details see financial statement Related Party Transactions. Loans outstanding to Directors and Key employees As of March 31, 2004, we had no loans outstanding to Directors and Key employees, except loan to Mr. Arvind Ghei Rs.32,250/- and Mr. Ramesh Joshee Rs.32,250/-, Employees of the Company as per details given under Financial Statements Related Party Transactions. All employees including Directors of the Company are entitled to categories of loans in accordance with our policy. Quantitative and Qualitative Disclosures about market risk Our exposure to market risk is a function of our production and selling activities. We are exposed to market risk from changes in both foreign exchange rates and interest rates, though of not a significant nature. Exchange rate risk We have not faced significant exchange rate risk till March, 2004. We import some of our Capital equipment and our employees travel overseas for business purposes, costs of which are denominated in foreign currencies. Our aggregate revenue expenditure in foreign currency was Rs. 17.89 Lakhs, Rs.38.40 Lakhs, Rs. 98.31 Lakhs and Rs. 24.25 Lakhs in financial year 2004,2003,2002 and 2001. Appreciation or depreciation of the Indian rupee relative to the currency of our payables can increase or decrease our payment obligations, though insignificant in nature. Interest rate risk Our interest rate risk results from changes in interest rates, which may affect our financial expenses. We bear interest rate risk with respect to our indebtedness as our secured term loan of Rs. 48.78 Lakhs from ICICI Bank bear rate of interest which are linked to the prime lending rate. Any movement in Banks prime lending rate will affect our interest payment obligations. Effect of Inflation We set the price for our inventory based on various factors, including inflation. Inflation has not had a significant effect on the result of our operations to date. We do not expect that inflation rates in India will have a significant impact on our results of operations for the foreseeable future.

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Significant Accounting and Regulatory Changes Accounting Standard 22 on deferred taxes was adopted with effect from April 1, 2002, resulting in significant increase in amount of income tax provision. Save as stated elsewhere in the Red Herring Prospectus, to our knowledge, no circumstances have arisen since the date of the last financial statement until the date of filing of the Red Herring Prospectus with SEBI, which materially and adversely affect or is likely to affect the trading or profitability of the Company, or value of its assets, or its ability to pay its liability within the next twelve months. Save as stated elsewhere in the Red Herring Prospectus, there is no subsequent development after the date of the Auditors Report, which will have a material impact on reserves, profits, earnings per share and book value of the Company. Section IV - Legal and Regulatory Information Details of Outstanding Litigations and Material Developments Save as stated herein: a. There is no outstanding or pending litigation, suit, criminal or civil prosecution, proceeding initiated for offence (irrespective of whether specified in paragraph (i) of Part 1 of Schedule XIII of the Companies Act) or litigation for tax liabilities against the Company, its Promoters, Directors or Promoter Group Companies. There are no defaults, non payments or overdues of statutory dues, institutional or bank dues or dues towards holders of debentures, bonds and fixed deposits and arrears of preference shares, other than unclaimed liabilities of the Company, its Promoters and Promoter Group Companies. MRL, its Directors, its promoters or companies promoted by its promoters have not been declared as willful defaulter by RBI, have not been debarred from dealing in securities and/or accessing the capital markets by SEBI and no disciplinary action has been taken by SEBI or any stock exchanges. There are no outstanding litigations against the directors of MRL. The names of the small-scale industrial undertakings to whom the company owes any sum which is outstanding for more than 30 days as at the Balance Sheet are:

b.

c.

d. 1.

Name of the Parties i) Amplas Polymers ii) Bhakti Packaging iii) Depti Arts iv) Gas-O-Field v) Kamdar Box Industries vi) Minikem vii Prakash Avikem viii Veena Plastic Industries Material Developments after March 31, 2004 Save as stated elsewhere in the Red Herring Prospectus, including Management Discussion and Analysis of Financial Statements, no material developments have taken place after March 31, 2004, the date of the latest available financial statements that would materially adversely affect the performance or prospects of MRL.

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Details of Outstanding Litigations 1. Against the Company

Civil Cases No. Suit No./ Case No. 1. 2700/ 2001

Dated

Plaintiff/ Applicant

Defendant/ Respondent

July, 2001

Oscar Builders Pvt. Ltd.

Mars Restaurants. Pvt. Ltd.

Name of the Court/ Arbitration Bombay High Court

Amount in Dispute (Rs.) 74.64 Lakhs

Nature of Case

The Company was in negotiation with the Plaintiff for taking their premises on franchisee basis for opening a restaurant. However, the deal did not materialize as the area initially offered was more than the area actually being given to the Company. The Plaintiff has filed the suit for claiming damages at Rs. 20,000 per day and other expenses for the modifications made at the franchisee totaling to Rs.74.64 Lakhs. No interim application has been made by the Plaintiff and the suit is pending in the Court.

104

2.

3113/ 2003

Aug, 2003

BPL Mobile Company

Mars Restaurants. Pvt. Ltd.

Bombay High Court.

12.05 Lakhs

3.

OS. 4735/ 2003

July, 2003

Fresh & Honest cafe

Mars Restaurants. Pvt. Ltd.

Chennai Civil Court

1.39 Lakhs

The Company and the Plaintiff had entered into an agreement whereby the Company subscribed to the mobile services of the Plaintiff and in turn was required to promote the Companys brand. However the parties got into dispute regarding the commitments given under the agreement. The Plaintiff filed this summary suit for recovery of dues for services rendered. The Company disputes the claim as a case of excessive billing and failure to carryout the terms by the Plaintiff as per the Agreement. The suit is pending in the Court. The Plaintiff supplied coffee vending machines to the Company. Dispute has arisen regarding the basis on which the payments

105

4.

245/ 2003

Oct, 2003

Mr. F. K. Irani

Mars Restaurants. Pvt. Ltd.

Arbitratio n

100 Lakhs

are to be made whether on Minimum Guarantee basis or actual coupage basis by the Company to the Plaintiff. The matter is pending before the court. The Company had entered into a revenuesharing agreement with the Claimant on Minimum Guarantee terms. The Claimant has terminated the contract and has claimed the minimum guarantee amount plus damages. The Company has filed a counter claim for Rs.609.75 Lakhs for nondisclosure of material facts regarding the premises and loss of goodwill and costs incurred by it for running the restaurant. The issues in the Arbitration have been framed and the matter is pending before the Honble Arbitrator.

106

5.

R.A.E 112/ 470 of 2000 And RAE/11 3/471 of 2000

Feb, 2003 (The Compan y was made a party to this suit in Feb, 2003

Ms. Dina Randeria

Roma. K. Singh & Others And Mars Restaurants. Pvt. Ltd.

Small Causes Court, Bandra

6.

Compan y Petition No. 630 of 2003 u/s. 433 & 434 of the Compan ies Act, 1956

April, 2003

Mr. Niraj Goel

Mars Restaurants Pvt. Ltd. (wrongly named as Mars Hotels and Restaurants. Pvt. Ltd.)

Bombay High Court

0.22 Lakhs

The Company has been joined as a Defendant to this Suit as the Landlady i.e. Plaintiff has terminated the tenancy of the Tenant viz. Roma Singh i.e. Defendant No.1 who had given the premise for a restaurant to the Company. The Consent Terms have been filed in the Court and accordingly monthly payment is being made to the Landlady/Plain tiff by the Company. Company Petition pending in Court for Admission.

Criminal Cases No. Compla int No./ Case No. 1. CC/ 123 of 2002

Dated

Complainant Accused

Name of the Court

Amount in Dispute (Rs.)

Nature of Case

July, 2003 (Intimat ed to the Compan y)

Mr. Ali Jaffer

Mars Restaurants Pvt. Ltd.

JMFC Court No. 3, Pune

This criminal complaint has been filed against the Company and its Directors for breach of trust and

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cheating by removing movable property from the restaurant which the complainant alleges belong to him as per terms of the revenuesharing agreement. No Summons have been served upon the Company or its Directors. The Court has directed the Police to investigate the matter. Accused u/s 380, 406, 420 read with 34 and 120-B of the IPC 2. By the Company Civil Cases Dated No. Suit No./ Case No. 1. 2250/ 2004 April, 2004

Plaintiff/ Applicant

Defendant/ Respondent

Mars Restaurants Pvt. Ltd.

Mr. Tanveer Khan

Name of the Court/ Arbitrati on Bombay City Civil Court

Amount in Dispute (Rs.) NIL

Nature of Case

The Defendant had signed a franchisee agreement with Taj Birdys Food Services Ltd. and after the takeover of the franchisee by Mars Restaurants Pvt. Ltd. the Defendant terminated the agreement before the

108

2.

309/ 2001

March, 2001

Mars Restaurants Pvt. Ltd.

MSEB (Pune)

Civil Judge, Sr. Division, Pune

The liability of the Company is Rs. 3.00 Lakhs on the basis of period of consumpti on.

expiry of the agreement. The Company filed a suit in the Court for possession and compliance with the terms of the Agreement by way of an application, but the Court rejected the Companys prayer. The Company is likely to withdraw the suit soon. The Company has filed this suit against the Defendant for excess charging of electricity bills and reconnection of electricity at their Pune franchisee. The Defendant had assessed the consumption on the basis of 3 years average load, whereas the franchisee was opened only 6 months preceding the date of the bill. The Company has paid Rs.4 lakhs as an interim payment to get the reconnection. The franchisee has been now

109

3.

1914/ 2003

April, 2003

Mars Restaurants Pvt. Ltd.

Municipal Corporation of Greater Bombay

Bombay City Civil Court

Nil

been closed. The suit is at the stage of evidence and the examinationin-chief of the Plaintiff has been received been taken by the Court. The Defendant issued a stop work notice u/s 354 (A) of the BMC Act for the unauthorized construction at the shop Cake Khazana at Sahar. The Company challenged the above notice in the Court and the Court has passed stay order against any action that may be taken by the BMC under the Notice. The shop is now shut. Nature of Case

Criminal Cases No. Compla Dated int No./ Case No. 1. C.C./ Sept, 339/ 2003 2003

Complainant Accused

Name of the Court

Mars Restaurants Pvt. Ltd.

Mr. Dinesh Chand Tripathi

Metropolit an Magistrate Court, Andheri (FIR filed by the Police in Court)

Amount in Dispute (Rs.) 0.24 Lakhs

The Company has filed a criminal case against the Accused for embezzlement of cash. The police have recovered Rs. 0.23 Lakhs from the Accused till date.

110

2.

FIR No. 332/ 2003

Sept, 2003

Mars Restaurants Pvt. Ltd.

Mr. Wajid A. Shaik Mr. Suraj R. Rajbhar Mr. Zulphikar A. R. Kazi Mr. Ravikiran V. Chinta Mr. Ketan V. Naik

Metropolit an Magistrate Court, Andheri (FIR filed by the Police in Court)

The Company has filed this criminal complaint against these employees for criminal breach of trust and common intention to defraud the Company. The matter is pending in the Court. Under Sections 408 and 34 of the IPC.

3.

Against the Promoters

Civil Cases No. Suit No./ Case No. 1. 1412/ 1999

Dated

Plaintiff/ Applicant

Defendant/ Respondent

Sept, 1999

Mr. P.B. Fernandes

Mr. Sanjay Narang & Ors.

Name of the Court/ Arbitrati on Small Cause Court, Mumbai

Amount in Dispute (Rs.) NIL

Nature of Case

The Plaintiff filed this suit for declaration of tenancy and possession of 600 Sq. Ft at Gordon house against the Landlord/Defe ndant. The matter is pending in the Court.

Criminal Cases No. Compla Dated int No./ Case No 1. CC/198/ Aug, P/99 1999

Complainant

Accused

Name of the Court 40th Metropolit an Magistrate Court, Girgaon

Amount in Dispute (Rs.)

Nature of Case

Konvetka India Pvt. Ltd.

Mr. Sanjay Narang

The Complainant has filed a criminal complaint against Mr. Sanjay Narang

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& Ors. under Section 406, 420, 34, 114 and 120 of the IPC for nonpayment of customs duty on A/C units supplied by the Konvekta Limited (Germany). The matter is pending before the Court. Mr. Sanjay Narang has filed a discharge application in the matter. 4. 1. Legal Notice served upon the Promoters Dec, Microlink Mr. Sanjay 2003 Infotech Narang & Ors.

0.50 Lakhs

Mr. Sanjay Narang & Ors. have received a notice for non-payment of computer hardware materials supplied to Mars Enterprises (a Partnership Firm of Mr. Sanjay Narang & Ors.) However the claim is being disputed on the ground that the materials supplied were defective in nature.

By the Promoters

112

Civil Cases No. Suit No./ Case No. 1. 2763/ 1995

Dated

Plaintiff/ Applicant

Defendant/ Respondent

Aug, 1995

Mr. Sanjay Narang Ms. Rachna Narang

Mr. Vijay Gupta

Name of the Court / Arbitrati on Bombay High Court

Amount in Dispute (Rs.) 8.63 Lakhs

Nature of Case

2.

3436/ 2000

Aug, 2000

Mr. Sanjay Narang Ms. Rachna Narang

Central Cottage Industries Corporation of India

Bombay High Court

178.00 Lakhs

3.

23/ 2001

Jan, 2001

Mr. Sanjay Narang Ms. Rachna Narang

Municipal Corporation of Greater Bombay

Small Causes Court, Bombay

NIL

The Plaintiff has filed this suit against the Defendant for recovery of loan given for the purpose of purchase of flat. The suit is pending before the court and an injunction order has been passed by the Court against the Defendant for sale of flat. The suit is filed for possession of Narang House, 1st Floor part portion (2,500 Sq. Ft.) from Central Cottage Industry which has been declared trespassers by the Trial and Appeal Court. Appeal and Cross Appeal has been filed by Defendant and the Plaintiff respectively in the High Court. Appeals are pending for hearing in the Court. The Plaintiffs have filed a suit against the Defendant for

113

4.

CA No. 17639 of 2001 in CRA No. 161 of 2001

Feb, 2001

Mr. Sanjay Narang & Ors.

Shrimati. Aminabai Rehman

Bombay High Court

NIL

reduction of property tax applicable on Narang House, Colaba property of the Plaintiff. The Plaintiffs have taken possession of the garage at Cyrus House, Bandra from the Defendant who claimed tenancy of the garage. The Apex Court has rejected the Defendant's tenancy claim. On the execution of the Order by the Small Causes Court, the tenants filed an application before the Court alleging irregularity in the execution of the decree, which has been accepted by the Court. The Plaintiffs then filed a Revision Application to quash the above order.

114

5.

Against the Group Companies / Firms

Civil Cases No. Suit No./ Case No. 6361/ 1999

Dated

Plaintiff/ Applicant

Defendant/ Respondent

Name of the Court /Arbitrati on

Amount in Dispute (Rs.)

Nature of Case

1.

Nov, 1999

Anitech Engineering Pvt. Ltd.

Taj Birdys Food Services Pvt.Ltd.

Bombay High Court

35.28 Lakhs + interest

2.

Compan y Petition No. 865 of 2003 filed u/s. 433 & 434 of the Compan

Dec, 2003

Anitech Engineering Pvt. Ltd.

Taj Birdys Food Services Pvt.Ltd.

Bombay High Court

51.04 Lakhs + interest

This suit has been filed by the Plaintiff for recovery of dues for a works contract. The Defendant has filed its Written Statement stating that the work carried out was of sub standard quality and that the Plaintiff charged exorbitantly for the works contract. The Summons for Judgment has been disposed of by the Court and transferred the suit to the list of Commercial Causes. The matter is now pending in the Court. This Petitioner has filed this Petition for non-payment of dues with interest. The Respondent filed a Reply stating that a similar case

115

ies Act, 1956

3.

OA/MA /102/20 01

May, 2003 (Suit filed in the High Court has been transferr ed to the DRT in the above month)

Central Bank of India

Manu Hotels Pvt. Ltd. (Pachhi Hotels Pvt. Ltd.)

Debt Recovery Tribunal-I

79.17 Lakhs

i.e. Summary Suit No. 6361 of 1999 (hereinabove) is pending before the High Court for the same cause of action and that this Petition was not maintainable. The Applicant has filed this Application in the DRT for recovery of debts due to them. The Receiver has already taken possession of the land & building at Igatpuri alongwith furniture & fixtures, which was mortgaged to the Bank for the repayment of the loan. The Respondent has asked the Bank to sell the same for the recovery of its dues. The Respondent is also negotiating with the Applicant Bank for a settlement under the One Time Settlement (OTS) Scheme formulated by the Reserve Bank of India

116

(RBI).

4.

415/ 1979

The Suit was filed in June, 1978 but was number ed in 1979.

Mr. D.B. Khade (Court Receiver)

Bullworker Pvt. Ltd. (previously known as Mail Order Sales Pvt. Ltd.)

Bombay High Court

2.67 Lakhs

5.

103/132 / 2000

Oct, 2000

Mr. R. S. Somani & others

Bullworker Pvt. Ltd.

Small Causes Court, Mumbai

3.54 Lakhs

6.

ZG/MA RS/APL /7-1/103

July, 2003

Zigma Enterprises

Mars Food Services

Arbitratio n

92.73 Lakhs

The Plaintiff has filed this suit for recovery of dues from the Defendant for the outstanding dues payable to Mars Communicatio n & Marketing Ltd (in Liquidation). The Defendant is awaiting the Courts order on the same. The Plaintiff has terminated the tenancy of the Defendant and has applied for compensation in the Court. The Defendant has stated in its Reply that the paid up share capital of the company is less than 100 lakhs and so this suit cannot be admitted in the Court. The Claimant has alleged that the Respondent has not paid the bonus for completion of the contract on time and other payments attached thereto. The matter is pending before

117

the Arbitration Tribunal. Criminal Cases No. Complain t No./ Case No. 1. CC/1/S/ 2000

Dated

Complainant Accused

Name of the Court 22nd Metropolit an Magistrate Court, Andheri

Amount in Dispute (Rs.)

Nature Case

of

Feb, 2000

Mr. Mahendra Barde

Mr. Sanjay Narang and C.A. Perriera

2.

CC/ 246/S/ 1995

Oct, 95

Food Inspector

Taj Birdys Food Services Pvt. Ltd.

46th Metropolit an Magistrate Court, Mazagaon

The Complainant has filed a criminal case alleging withholding of materials by the Accused at their site. Mr. Sanjay Narang has filed a discharge application which is pending for hearing in the Court. The Complainant has filed a criminal complaint for contravention of Section 7 (v) read with Rule 16 (1) (a) (ii) of Maharashtra Prevention of Food Adulteration Act, 1954 for not obtaining requisite licence for producing a variety of cake. No charges have been framed yet and the matter is pending in Court.

118

3.

19 and 20/M/ 2004

June, 2004

Registrar of Companies, Mumbai

Bullworker Pvt. Ltd And Mr. Manu Narang, Sanjay Narang and Ms. Rachna Narang

19th Chief Metropolit an Magistrate , Court, Esplanade , Mumbai

Criminal Complaint has been filed against Bullworker Pvt. Ltd., and its Directors for contravention of Section 78 (2)(d) and complaint under section 80(6) for contravention of section 80(1) of Companies Act, 1956.

6. By Group Companies / Firms Civil Cases No. Suit No. /Case No. Dated Plaintiff/ Applicant Defendant/ Respondent Name of the Court/ Arbitrati on Small Causes Court, Mumbai Amount in Dispute (Rs.) 92.01 Lakhs Nature of Case

1.

1020/ 2002 40/2003

May, 2002 Dec, 2002 Dec, 2003

Mars Hotels & Resorts Pvt. Ltd.

Municipal Corporation of Greater Mumbai

2234/ 2003

2.

683/1997

Jan, 1997

Mannu Hotels Pvt. Ltd. (previously known as Pacchi Hotels Pvt. Ltd.)

Mr. N. K. Mehra

Bombay High Court,

0.98 Lakhs

In all these Municipal Appeals the Appellant has appealed for reduction in property tax assessment of land and building at Sahar. The Plaintiff has filed this suit for recovery of loan given to the Defendant, who was an employee, for purchase of a flat. The High Court has passed an order for injunction

119

3.

321/2004

Feb, 2004 April, 2002

Sanjay Narang & Ors.

40/2003

Municipal Corporation of Greater Mumbai

Small Causes Court, Mumbai

108.11 Lakhs

4.

Appeal No. 579/2003

Aug, 2003

Mars Corporation [formerly United Corporation] (Org. Plaintiff and now the Respondent)

Central Cottage Industries Corporation of India (Org. Defendant and now the Appellant)

Appellate Bench Small Causes Court

5.

325/2004

Jan, 2004

Mars Hotels & Resorts Pvt. Ltd.

Municipal Corporation of Greater Mumbai

Bombay City Civil Court

6.

855/2004

Feb, 2004

Mars Hotels & Resorts Pvt. Ltd.

Municipal Corporation of Greater Mumbai

Bombay City Civil Court

against the sale or transfer of his interest in the flat. The Appellant has filed this Appeal for reduction of property tax of Gordon House Hotel. Suit was filed for recovery of possession of 13,750 Sq. Ft. and mesne profit. The Trial Court has decreed for possession in favour of the Plaintiff. The matter is presently pending before the Appeal Court. The Plaintiff has filed this suit against the BMC as the BMC had served a notice u/s 351 of the BMC Act for construction of certain temporary structures at the Sahar Land. The Plaintiff has been granted injunction and the matter is pending in the Court. The Defendant had sent a notice u/s 394 (4) of the BMC Act to the Plaintiff for not

120

obtaining license for Air catering unit. However the Plaintiff claims that they have not been using the premises for commercial purposes. The Plaintiff has been granted an injunction against the Defendant by the Court and the matter is pending in the Court. Criminal Case No. Complain t No./ Case No.

Dated

Complainant Accused

1.

838/M/ 2003

Aug, 2003

Mars Enterprises

Dwren Industries Pvt.Ltd.

Name of the Court/ Arbitrati on 33rd Metropolit an Magistrate Court, Ballard Pier, Mumbai.

Amount in Dispute (Rs.) 0.27 Lakhs

Nature of Case

The Complainant has filed this matter u/s 138 of the Negotiable Instruments Act for the dishonor of cheque by the Defendant. The Defendant has paid Rs.10,000 after filing this Complaint. The matter is pending before the Court.

121

7. Legal Notices served upon the Company No. Suit No. /Case No. Dated Plaintiff/ Applicant/ Claimant Defendant/ Respondent Name of the Court/ Arbitrati on Arbitratio n Amount in Dispute (Rs.) 12.34 Lakhs Nature of Case

1.

April, 2004

Randhawa Consultancy Bureau

Mars Restaurants. Pvt. Ltd.

2.

RAE 1257/20 80/ 2002

Nov, 2002

T.A Seth V/s R.S. Randhawa

Mars Restaurants. Pvt. Ltd.

--Small Causes Court, Bombay

3.

Dec, 2003

Microlink Infotech

Mars Restaurants. Pvt. Ltd. And

--

5.57 Lakhs

The Company has received a notice claiming the damages and amount on the basis of minimum guarantee and for the appointment of an Arbitrator. Appointment of Arbitrator is pending. The Company has been served with a contempt notice for conducting business from the Plaintiff/ Landlords premises in the Suit against the Tenant/Defend ant. The premises is now vacant and the notices have been stayed by Court. The Company is not a party to the Suit. The Company has received notice for nonpayment of computer hardware materials supplied. The Company

122

however disputes the liability on the ground that the materials supplied were of defective nature. Tax Litigation Income Tax and Wealth Tax 8. Mars Restaurants Pvt. Ltd. No. Assessment Authority Year Before which Pending 1. 2001-2002 CIT (A)

Particulars of the Suit/Appeal

The Assessing Officer of the Income Tax Department has disallowed certain amounts claimed in the Return of Income filed by the Company towards contribution to PPF, ESIC Bangalore, ESIC Chennai, Professional Tax, Repairs on third party premises, Costs of crockery/cutlery/linen not allowed as revenue expenditure treated as capital expenditure, amount initially capitalised but later taken as revenue expenditure.

Amount of Claim Involved (Rs.) 91,04,095

Associate Companies 9. Taj Birdy's Food Service Pvt. Ltd. No. Assessment Authority Year Before which Pending

Particulars of the Suit/Appeal

Amount of Claim Involved (Rs.) 8,95,639

1.

1996- 97

CIT (A)

The Assessing Officer has raised demand u/s 143(3). Renovation expenses at the Cuffe Parade and Juhu shops, business promotion expenses and staff entertainment expenses have been disallowed by the Assessing Officer.

10. Mars Catering Services Pvt. Ltd. No. Assessment Authority Year Before which Pending 1. 2001-2002 CIT(A)

Particulars of the Suit/Appeal

The Assessing Officer has raised demand under Section 143(3). Disallowance has been made against 100% depreciation claimed by the Company towards a temporary shed.

Amount of Claim Involved (Rs.) 92,602

123

11. Mars Hotels and Resorts- Wealth Tax No. Assessment Authority Year Before which Pending 1. 1996-1997 CIT(A)

Particulars of the Suit/Appeal

Demand has been raised by the Assessing Officer u/s 143(3). The property at Sahar Land has been valued at Rs 4,54,54,682. Wealth Tax payable has been calculated at Rs 5,36,247

Amount of Claim Involved (Rs.) 4,91,247

12. Mars Food Service No. Assessment Year

Authority Before which Pending CIT(A)

Particulars of the Suit/Appeal

1.

2001-2002

2.

Block Assessment 1 st April, 1990 to 7th November, 2000

CIT(A)

Demand has been raised by the Assessing Officer u/s 143(3). Amounts in the nature of Provident Fund, ESIC, interest claimed and penalty have been disallowed. Demand including a penalty of Rs. 1 Crore has been raised by the Assessing Officer u/s 158BC. Although Rs 1,38,26,650 has been allowed as relief by the CIT (Appeals)

Amount of Claim Involved (Rs.) 8,82,456

1,62,39,305

13. Rachna Narang No. Assessment Year

Authority Before which Pending

Particulars of the Suit/Appeal

Amount of Claim Involved (Rs.) 6,69,485

1.

Block Assessment 1 st April, 1990 to 7th November, 2000

CIT(A)

14. Sanjay Narang No. Assessment Year

Authority Before which Pending CIT(A)

Particulars of the Suit/Appeal

1.

Block Assessment 1 st April, 1990 to 7th November, 2000

Amount of Claim Involved (Rs.) 28,16,442

124

15. Ashok Narang No. Assessment Year

Authority Before which Pending CIT(A)

Particulars of the Suit/Appeal

1.

Block Assessment 1 st April, 1990 to 7th November, 2000

Amount of Claim Involved (Rs.) 1,68,300

Sales Tax 16. Mars Restaurants Pvt. Ltd. No Liabilities Associate Companies 17. Mars Food Services No. Assessment Year

Authority Before which Pending Commissioner of Sales Tax

Particulars of the Suit/Appeal

1.

The total demand raised for various years by the Sales Tax Officer is Rs 31,50,682/-. The Company has already paid Rs. 16,17,199/-. An Appeal to the Commissioner of Sales Tax for the balance amount is pending.

Amount of Claim Involved (Rs.) 15,33,483

18. Taj Birdy's Food Services Pvt. Ltd. No. Assessment Authority Year Before which Pending 1. A.Y. 2000-2001 F.Y. 1999-2000 Commissioner of Sales Tax

Particulars of the Suit/Appeal

The total demand raised is Rs. 80,930/- of which Rs. 10,000/- has been paid. An Appeal to the Commissioner of Sales Tax is pending for the balance amount.

Amount of Claim Involved (Rs.) 70,930

19. Bullworker Pvt. Ltd. No. Assessment Year

Authority Before which Pending Commissioner of Bombay Sales Tax

Particulars of the Suit/Appeal

1.

F.Y. 1999-2000

Amount of Claim Involved (Rs.) 27,295

125

GOVERNMENT APPROVALS / LICENSING ARRANGEMENTS The Company has received all the necessary consents, licenses, permissions and approvals from the Government and various Government agencies/ private certification bodies required for its present business and no further approvals are required for carrying on the present business of the Company. It must, however, be distinctly understood that in granting the above consents/licenses/ permissions/ approvals, the Government/RBI do 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. The Company has received the following approvals that are material to its business: Sl.No 1. 2. 3. 4. 5. Nature of License Eating House Health License Entertainment License Grade License Shops & Establishment License Ticket Selling License Premise License F.L.III (Liquor) Permit Room License Glow Sign Board Performance License Censor Certificate Public Performance License Issuing Authority Ward Officer-Municipal Corporation Medical Officer Municipal Corporation Assistant Commissioner of Police Health Officer- Municipal Corporation Inspector- Shops & Establishment Act Commissioner of Police Commissioner of Police Collector of Excise Health Officer- Municipal Corporation Ward Officer-Municipal Corporation Assistant Commissioner of Police Rangbhoomi Prayog Indian Performing Right Society. (IPRS) Not Just Jazz By the Bay Licence No. 042555 Dated 13/10/97 Licence No.073397 Dated 20/02/92 Licence No. 25/CP, Dated 12/02/81 Licence No. 62246/ MOH, Dated 21/04/04 Registration. No. A-IV 000896 Dated 22/03/01 Licence No. 241 Dated 18/02/98 Licence No. 241 Dated 18/02/98 Licence No.120 Dated 11/12/81 Licence No.062246 Dated Not Applicable Licence No.1/CD Dated 11/03/04 CertificateNo.1106 /03 Dated 31/12/03 Licence No. GL:MUM :01375, Dated 07/06/2004 Just Around the Corner Licence no 042661 Dated 31/07/98 Licence No. 006326 Dated 09/08/99 Not Applicable Licence No. 2515/ MOH Dated 15/03/2004 Registration. No. HWIV/000492 Dated 03/02/01 Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable Not Applicable

6. 7. 8. 9. 10. 11. 12. 13.

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OTHER REGULATORY DISCLOSURES Stock Market Data for our Equity Shares This being our initial public issuing, the Equity Shares of our Company are not listed on any stock exchange. Particulars Regarding Public Issues during the Last Five Years We have not made any public issues during the last five years. Companies Under the Same Management There are no companies under the same management within the meaning of Section 370 (1B) of the Companies Act 1956, other than the subsidiaries and group Companies, details of which are provided in the section Subsidiaries on page 70 of this Draft Red Herring Prospectus and Group / Associate Companies on page 76 of this Draft Red Herring Prospectus. Mechanism for Redressal of Investor Grievances The agreement between the Registrar to the Issue and us will provide for retention of records with the Registrar to the Issue, Intime Spectrum Registry Limited, for a period of at least one year from the last date of dispatch of letters of allotment, demat credit, refund orders to enable the investors to approach the Registrar to the Issue for redressal of their grievances. All grievances relating to this Issue may be addressed to the Registrar to the Issue, giving full details such as name, address of the applicant, number of Equity Shares applied for, amount paid on application, DP id, Client id, and the bank branch or collection centre where the application was submitted. We estimate that the average time required by us or the Registrar to the Issue for the redressal of routine investor grievances shall be seven working days from the date of receipt of the complaint. In case of nonroutine complaints and where external agencies are involved, we or the Registrars will seek to redress these complaints as expeditiously as possible. We have nominated Mr. Kalpesh I Ojha, Senior Manager (Accounts), as the Compliance Officer and he may be contacted in case of any pre-issue or post-issue related problems. He can be contacted at: Off International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059. Tel. No.: 91-2228305599/28251701-03; Fax.: 91-22-28305665 Email: ipo@marsrestaurants.com Details of borrowings in our Company Please refer to page 175 of this Draft Red Herring Prospectus under Additional Financial Information for details of borrowings in our Company as specified under Annexure VI to the report on our financial statements.

127

SECTION V ISSUE RELATED INFORMATION TERMS 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 draft Red Herring Prospectus, Bid-cum-Application Form, the Revision Form, the Confirmation of Allocation Note (CAN) and other terms and conditions as may be incorporated in the Allotment Advice, 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 and trading 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 Issue and to the extent applicable. Authority for the Issue The Fresh Issue of 55,00,000 Equity Shares has been authorised pursuant to a resolution of the Board of Directors adopted on 21.07.2004 and through a special resolution adopted pursuant to Section 81(1A) of the Companies Act, at the extra ordinary general meeting of our shareholders held on 21.07.2004. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of our Memorandum and Articles and shall rank pari passu in all respects with the other existing equity shares of the Company including rights in respect of dividend. The Allottees will be entitled to dividend or any other corporate benefits, if any, declared by the Company after the date of Allotment. Face Value and Issue Price The Equity Shares with a face value of Rs.10 each are being offered in terms of this draft Red Herring prospectus at a total price of Rs. * per share. At any given point of time, there shall be only one denomination for the Equity Shares of the Company, subject to applicable laws. 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 rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation; Right of free transferability; and Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and Memorandum and Articles of Association of the Company. For a detailed description of the main provisions of the Companys Articles of Association relating to voting rights, dividend, forfeiture and lien, transfer and transmission and/or consolidation/splitting, see Main Provisions of Articles of Association of the Company on page 208 in this draft Red Herring Prospectus . Market Lot In terms of Section 68B of the Companies Act, the Equity Shares of the Company shall be allotted only in dematerialised form. In terms of existing SEBI Guidelines, the trading in the Equity Shares of the Company shall only be in dematerialised form for all investors. Since trading of our Equity Shares will be dematerialised mode, the tradable lot is one equity share.

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Jurisdiction The jurisdiction for the purpose of this Issue is with competent courts/authorities in Mumbai, India. Nomination Facility to the Investor In accordance with Section 109A of the Companies Act, the sole or first bidder, along with other joint bidders, may nominate any one person in whom, in the event of the death of sole bidder or in case of joint bidders, death of all the bidders, as the case may be, the Equity Shares transmitted, if any, shall vest. A person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the equity share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any person to become entitled to equity share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of equity share(s) by the person nominating. In accordance with Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either: to register himself or herself as the holder of the equity shares; or to make such transfer of the equity shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the equity shares, and if the notice is not complied with within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the equity shares, until the requirements of the notice have been complied with. Since the allotment of Equity Shares in the Issue will be made only in dematerialized mode, there is no need to make a separate nomination with us. Nominations registered with respective depository participant of the applicant would prevail. If the investors require to change the nomination, they are requested to inform their respective depository participant. Subscription by eligible non-residents/ NRIs/ FIIs As per the policy of the RBI, Overseas Corporate Bodies cannot participate in this Issue. The Company is in the process of making an application to Reserve Bank of India for issue of shares to NRIs/FIIs. Subject to obtaining such approvals, it will not be necessary for the investors to seek separate permission from the FIPB/RBI for this specific purpose. It is to be distinctly understood that there is no reservation for NRIs, FIIs and Foreign Venture Capital Funds registered with SEBI and all NRI, FII and Foreign Venture Capital Funds registered with SEBI applicants will be treated on the same basis with other categories for the purpose of allocation. The allotment of the Equity Shares to Non-Residents shall be subject to the conditions as may be prescribed by the Government of India/RBI while granting such approvals.

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ISSUE STRUCTURE The present Issue of 55,00,000 Equity Shares of Rs.10 each, for cash at a price of Rs. [ ]per Equity Share aggregating Rs. [ ] lakhs. The Issue is being made through a 100% book building process. QIBs Number shares* of equity Up to 27,50,000 Equity Shares or Offer size less allocation to NonInstitutional Bidders and Retail Individual Bidders Higher of 50% or Issue size less allocation to Non-Institutional Bidders and Retail Individual Bidders Discretionary Non-Institutional Bidders Minimum of 13,75,000 Equity Shares or Offer size less allocation to QIBs and Retail Individual Bidders Retail Individual Bidders Minimum of 13,75,000 Equity Shares or Offer Size less allocation to QIBs and NonInstitutional Bidders

Percentage of Issue Size available for allocation

Minimum 25% or Issue size less allocation to QIBs and Retail Individual Bidders Proportionate

Minimum 25% or Issue Size less allocation to QIBs and NonInstitutional Bidders Proportionate

Basis of Allocation if respective category is oversubscribed Minimum Bid

() Maximum Bid

Minimum Bid Amount of Rs.50,001 and in multiples of () Equity Shares Not exceeding the Issue Size subject to applicable limits

Minimum Bid Amount of Rs.50,001 and in multiples of () Equity Shares Not exceeding the Issue Size

() Equity Shares and thereafter in multiples of () Equity Shares Such number of equity shares whereby the Bid amount does not exceed Rs. 50,000 Compulsory in Dematerialised form One Individuals (including NRIs and HUFs) applying for such number of equity shares such that Bid Amount does not exceed Rs.50,000/-.

Mode of Allotment

Compulsory in Dematerialised form One Public financial institutions, as specified in section 4A of the Companies Act, scheduled commercial banks, mutual funds registered with SEBI, FIIs registered with SEBI, venture capital funds registered with SEBI, Foreign Venture Capital Investors registered with SEBI, Multilateral and bilateral development financial institutions, State

Compulsory in Dematerialised form One Resident Indian individuals, HUF (in the name of Karta), companies, corporate bodies, NRIs, scientific institutions, societies and trusts

Trading Lot Who can Apply

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Industrial Development Corporations, insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs. 250 million and pension funds with minimum corpus of Rs. 250 million. Terms of Payment Full Bid Amount on Bidding unless waived by the Syndicate. Full Bid Amount on Bidding unless waived by the Syndicate. Full Bid Amount on Bidding unless waived by the Syndicate.

* Subject to valid bids being received at or above the Issue Price, under-subscription, if any, in any category, would be allowed to be met with spill-over from any other categories at the discretion of the Company in consultation with BRLM. However, the unsubscribed portion in the QIB category shall not be available for subscription to other categories.

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ISSUE PROCEDURE Book Building Procedure The Issue is being made through the 100% Book Building Process wherein 50% of the Issue shall be available for allocation on a discretionary basis to QIBs. Further, not less than 25% shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 25% shall be available for allocation on a proportionate basis to the Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. If at least 50% of the Offer cannot be allotted to Qualified Institutional Buyers then the entire application money shall be refunded forthwith. Bidders are required to submit their Bids through the members of the Syndicate. We, in consultation with the BRLM reserve the right to reject any Bid procured by any or all members of the Syndicate without assigning any reason thereof from QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, the Company would have a right to reject the Bids only on technical grounds. Investors should note that Equity Shares would be allotted to all successful allottees only in the dematerialised form. Bid-cum-Application Form Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall have the option to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as multiple bids. Upon the allocation of Equity Shares, dispatch of CAN, and filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have authorised the Company to make the necessary changes in this Draft Red Herring Prospectus and the Bid-cum-Application Form as would be required for filing the Prospectus with the RoC and as would be required by RoC after such filing, without prior or subsequent notice of such changes to the Bidder. The prescribed colour of the Bid-cum-Application Form for various categories, is as follows: Category Colour of Bid Cum Application Form Indian Public or NRIs applying on a nonWhite repatriation basis Eligible Non residents, NRIs or FIIs applying on a Blue repatriation basis Who can Bid? Indian nationals resident in India who are major, in single or joint names (not more than three); Hindu Undivided Families or HUFs in the individual name of the Karta. The Bidder should specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: Name of Sole or First bidder: ABC Hindu Undivided Family applying through ABC, where ABC is the name of the Karta. Bids by HUFs would be considered at par with those from individuals; Companies, corporate bodies and societies registered under the applicable laws in India and authorised to invest in the Equity Shares; Indian Mutual Funds registered with SEBI; Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI regulations, as applicable); Venture Capital Funds registered with SEBI; Foreign Venture Capital Investors registered with SEBI; State Industrial Development Corporations; Insurance companies registered with the Insurance Regulatory and Development Authority;

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Provident funds with minimum corpus of Rs. 250 million and who are authorised under their constitution to hold and invest in Equity Shares; Pension funds with minimum corpus of Rs. 250 million and who are authorised under their constitution to hold and invest in Equity Shares; Trust/ society registered under the Societies Registration Act, 1860, as amended, or under any other law relating to Trusts/ society and who are authorised under their constitution to hold and invest in Equity Shares; Eligible non-residents including NRIs and FIIs on a repatriation basis or a non- repatriation basis subject to applicable laws; and Scientific and/ or Industrial Research Organisations authorised to invest in Equity Shares.

Note: The members of the Syndicate and any associate of the members of the syndicate (except asset management companies on behalf of mutual funds, Indian financial institutions and public sector banks) cannot participate in that portion of the Issue where allocation is discretionary. Further, the BRLM, and Syndicate Member shall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligation. As per the current regulations, OCBs cannot Bid in this offer. Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under the relevant regulations or statutory guidelines. As per the current regulations, the following restrictions are applicable for investments by mutual funds: No mutual fund scheme shall invest more than 10% of its net asset value in the Equity Shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry specific funds. No mutual fund under its scheme should own more than 10% of any companys paid-up capital carrying voting rights. In accordance with the current regulation, the following restrictions are applicable for investments by FIIs. No single FII can hold more than 10% of the post-Issue paid-up capital of the Company (i.e. 10% of 1,04,91,580 Equity Shares of Rs.10 each). In respect of an FII investing in our Equity shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of the total issued capital in case such sub-account is a foreign corporate or individual. As of now, the aggregate FII holding in the Company cannot exceed 49% of the total issued capital of the Company. In accordance with the current regulations, the following restrictions are applicable for investments by SEBI registered VCFs and FVCIs. The SEBI (Venture Capital) Regulations, 1996 and the SEBI (Foreign Venture Capital Investor) Regulations 2000 prescribe investment restrictions on venture capital funds and foreign venture capital investors registered with SEBI. Accordingly the holding of any VCF or FVCI should not exceed 25% of the companys paid up capital. The aggregate holdings of VCFs and FVCIs could however be restricted by the sector cap. The above information is given for the benefit of the Bidders. Our Company and the BRLM are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of this Draft Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares bid for do not exceed the applicable limits under laws or regulations.

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Maximum and Minimum Bid Size For Retail Individual Bidders The Bid must be for a minimum of () Equity Shares and in multiples of () Equity Shares thereafter, subject to maximum Bid amount of Rs.50,000. In case of revision of Bids, the Retails bidders have to ensure that the Bid amount does not exceed Rs. 50,000. In case the maximum Bid amount is more than Rs.50,000, then the same would be considered for allocation under the Non-Institutional Bidders category. The cut-off option is an option available only to the Retail Individual Bidders indicating their agreement to bid and purchase the equity shares at the final offer price as determined at the end of the Book Building process. For Non-Institutional Bidders and QIBs Bidders The Bid must be for a minimum of such number of Equity shares, so as to ensure that the minimum Bid amount exceeds Rs.50,000. Above this minimum Bid Amount, the Bid should be in multiples of () equity shares. A Bid cannot be submitted for more than the size of the Issue. However, the maximum Bid by a QIB should not exceed the investment limits prescribed for them by the regulatory or statutory authorities governing them. Under SEBI existing guidelines a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date. In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure that the Bid Amount is greater than Rs. 50,000/-. In case the Bid Amount reduces to Rs 50,000/- or less due to a revision in Bids, the same would be considered for allocation under Retail portion. Information for the Bidders i. Our Company will file the Red Herring Prospectus with the RoC at least three days before the Bid/ Issue Opening Date. ii. The members of the Syndicate will circulate copies of the Draft Red Herring Prospectus along with the Bid-cum-Application Form to potential investors. iii. Any investor (who is eligible to invest in our Equity Shares) who would like to obtain the Draft Red Herring Prospectus and/ or the Bid-cum-Application Form can obtain the same from our registered office or from any of the BRLM. iv. The Bids should be submitted on the prescribed Bid-cum-Application Form only. Bid-cumApplication Forms should bear the stamp of the members of the Syndicate. Bid-cum-Application Forms, which do not bear the stamp of the members of the Syndicate, will be rejected. Method & Process of Bidding 1. Our Company and the BRLM shall declare the Bid/Issue Opening Date, Bid/Issue Closing Date and Price Band at the time of filing the Draft Red Herring Prospectus with RoC and also publish the same in three widely circulated newspapers (one each in English, Hindi and Marathi). This advertisement shall contain the salient features of the Draft Red Herring Prospectus as specified under Form 2A of the Companies (Central Government) General Rules & Forms, 1956, the method and process of bidding and the names and addresses of the BRLM, and their bidding centres. The BRLM, and Syndicate Members shall accept Bids from the Bidders during the Issue Period. 2. Investors who are interested in subscribing for our Companys Equity Shares should approach any of the BRLM, or Syndicate Member or their authorised agent(s) to register their Bid. 3. The Bidding Period shall be open for atleast 5 days and not more than 10 days. In case the price band is revised, the revised price band will be published in two widely circulated newspapers (one each in English and Hindi) and the Bidding period will be extended for a further period of three days, subject to the total Bidding period not exceeding 13 days. During the bidding period, The Bidders may approach the Syndicate to submit their Bid. Every Member of the Syndicate shall accept Bids from all clients/investors who place orders through them and shall have the right to vet the bids. 4. Each Bid-cum-Application Form will give the Bidder the choice to bid for up to three optional prices (for details refer to the paragraph entitled Bids at Different Price Levels on page 135 below) and specify the demand (i.e. the number of Equity Shares bid for) in each option. The price and demand options submitted by the Bidder in the Bid-cum-Application Form will be treated as optional demands

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5.

6.

7.

from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid Price, will become automatically invalid. The Bidder cannot bid on another Bid-cum-Application Form after his or her Bids on one Bid-cumApplication Form have been submitted to any member of the Syndicate. Submission of a second Bidcum-Application Form to either the same or to another member of the Syndicate will be treated as multiple bids and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allocation or allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed under the paragraph Build up of the Book and Revision of Bids on page 138 of this Draft Red Herring Prospectus. The BRLM, and Syndicate Members will enter each bid option into the electronic bidding system as a separate Bid and generate a Transaction Registration Slip, (TRS), for each price and demand option and give the same to the Bidder. Bidders should make sure that they ask for a copy of the computerized TRS for every Bid Option from the Syndicate Member. Therefore, a Bidder can receive up to three TRSs for each Bid-cum-Application Form. Along with the Bid-cum-Application Form, all Bidders will make payment in the manner described under the paragraph Terms of Payment and Payment into Escrow Account on page 136 of the Draft Red Herring Prospectus.

Bids at Different Price Levels 1. The Price Band has been fixed at Rs. () to Rs. () per Equity Share of Rs.10 each, Rs. () being the Floor Price and Rs. () being the Cap Price. The Bidders can bid at any price with in the Price Band, in multiples of Re 1. 2. In accordance with SEBI Guidelines, the Company in consultation with the BRLM, can revise the Price Band during the Bidding period, in which case the Issue will be kept open for a period of three days after the revision of the Price Band, subject to the total Bidding Period not exceeding thirteen days. The Price Band can be revised during the Bidding Period in which case the maximum revisions on either side of the Price Band shall not exceed 20% fixed initially and as disclosed in this Draft Red Herring Prospectus. 3. Any revision in the Price Band shall be widely disseminated including by informing the stock exchanges by issuing a public notice in two national languages (One each in English & Hindi) and one regional newspaper (Marathi) also indicating the change on the relevant websites and the terminals of the members of Syndicate. 4. The Company in consultation with the BRLM can finalise the Issue Price within the Price Band in accordance with this clause, without the prior approval of, or intimation, to the Bidders. 5. The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders may bid at Cut off. However, bidding at Cut-off is prohibited for QIB or Non Institutional Bidders and such Bids from QIBs and Non Institutional Bidders shall be rejected. 6. Retail Individual Bidders who bid at the Cut-Off agree that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders bidding at Cut-Off shall deposit the Bid Amount based on the Cap Price in the Escrow Account. In the event the Bid Amount is higher than the subscription amount payable by the Retail Individual Bidders (i.e. the total number of equity shares allocated in the Issue multiplied by the Issue Price), Retail Individual Bidders shall receive the refund of the excess amounts from the Escrow Account. 7. In case of an upward revision in the Price Band announced as above, the Retail Bidders who had bid at Cut-off could either (i) revise their Bid or (ii) make additional payment based on the Cap of the Revised Price Band, with the members of the Syndicate to whom the Original Bid was submitted. In case the total amount (i.e. the original Bid amount plus additional payment) exceeds Rs 50,000, the Bid will be considered for allocation of under the Non-Institutional portion in terms of the Draft Red herring prospectus. If however the Bidder does not either revise the Bid or make additional payment and the offer price is higher than the cap of the Price Band prior to revision, the number of Equity

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8.

9.

Shares bid for shall be adjusted for the purpose of allocation, such that no additional payment would be required from the Bidder. In case of downward revision in the Price Band announced as above, Retail Bidders who have bid at Cut-Off could either revise their Bid or the excess amount at the time of bidding would be refunded from the Escrow Account. In the event of any revision in the Price Band, whether upwards or downwards, the Minimum Application shall remain () Equity Shares irrespective of whether the Bid Amount payable on such Minimum Application is not in the range of Rs.5,000/- to Rs.7,000/-.

Escrow Mechanism Escrow Account of the Company The Company shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft in respect of his or her Bid and/or revision of the bid. Cheques or demand drafts received for the full Bid amount from Bidders in a certain category would be deposited in the Escrow Account for the Issue. The Escrow Collection Banks will act in terms of the Draft Red Herring Prospectus and an Escrow Agreement. The monies in the Escrow Account for the Issue shall be maintained by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer the monies from the Escrow Account to the Public Issue Account with the Bankers to the Issue as per the terms of the Escrow Agreement with the Company. Payments of refunds to the Bidders shall also be made from the Escrow collection Banks are per the terms of the Escrow Agreement and this Draft Red Herring Prospectus. The Bidders should note that the escrow mechanism is not prescribed by SEBI and has been established as an arrangement between the Escrow Collection Bank(s), our Company, the Registrar to the Issue and BRLM, and Syndicate Members to facilitate collections from the Bidders. Terms of Payment and Payment into the Escrow Collection Account Each Bidder shall, with the submission of the Bid-cum-Application Form draw a cheque, or demand draft for the maximum amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (For further details, see Issue Procedure - Payment Instructions on of this Draft Red herring Prospectus) and submit the same to the member of the Syndicate to whom the Bid is being submitted. Bid cumApplication Forms accompanied by cash shall not be accepted. The maximum bid price has to be paid at the time of submission of the Bid-cum-Application Form based on the highest bidding option of the Bidder. The members of the Syndicate shall deposit the cheque, or demand draft with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders until the Designated Date. On the Designated Date, the Escrow Collection Bank(s) shall transfer the funds in respect of those Bidders whose Bids have been accepted from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account with the Banker(s) to the Issue. The balance amount after transfer to the Issue Account shall be held for the benefit of the Bidders who are entitled to refunds on the Designated Date, and no later than 15 days from the Bid / Issue Closing Date, the Escrow Collection Bank(s) shall refund all monies to unsuccessful Bidders and also the excess amount paid on bidding, if any, after adjustment for allocation to the Bidders. Each category of Bidders i.e. QIBs, Non Institutional Bidders and Retail Individual Bidders would be required to pay their applicable Margin Amount at the time of the submission of the Bid-cum-Application Form. The Margin Amount payable by each category of Bidders is mentioned under the heading Issue Structure on page 130 of this Draft Red Herring Prospectus. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Amount, any difference between the amount payable by the Bidder for equity shares allocated at the Issue Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay in-Date, which shall be a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLM. If the payment

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is not made favouring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled. However, if the members of the Syndicate do not waive such payment, the full amount of payment has to be made at the time of submission of the Bid Form. Where the Bidder has been allocated lesser number of Equity Shares than he or she had bid for, the excess amount paid on bidding, if any, after adjustment for allocation, will be refunded to such Bidder within 15 days from the Bid/Issue Closing Date. Electronic Registration of Bids a. The members of the Syndicate will register the Bids using the on-line facilities of NSE. There will be at least one on-line connectivity in each city where a Stock Exchange center is located in India and where the Bids are accepted. b. NSE will offer a screen-based facility for registering Bids for the Issue. This facility will be available on the terminals of the members of the Syndicate and their authorised agents during the Bidding Period. Members of the Syndicate can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently download the off-line data file into the online facilities for book building on an half-hourly basis. On the Bid Closing Date, the members of the Syndicate shall upload the Bids till such time as may be permitted by the Stock Exchanges. c. The aggregate demand and price for bids registered on each of the electronic facilities of NSE will be uploaded on a half hourly basis and consolidated. A graphical representation of consolidated demand and price would be made available at the bidding centers during the bidding period. d. At the time of registering each Bid, the members of the Syndicate shall enter the following details of the investor in the on-line system: Name of the investor ( Investor should ensure that the name given in the Bid cum Application Form is exactly the same as the Name in which the Depository Account is held. In case, the Bid cum Application Form is submitted in joint names, investors should ensure that the Depository Account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form. Investor Category such as Individual, Corporate, NRI, FII, or Mutual Fund etc Numbers of Equity Shares bid for Bid price Bid-cum-Application Form number Whether payment is made upon submission of Bid-cum-Application Form Depository Participant Identification No. and Client Identification No. of the Demat Account of the Bidder e. A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding options. It is the Bidders responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the member of the Syndicate does not guarantee that the Equity Shares shall be allocated either by the members of the Syndicate or the Company. f. Such TRS will be non-negotiable and by itself will not create any obligation of any kind. Consequently, the member of the Syndicate also has the right to accept the Bid or reject it without assigning any reason, in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, Bids would not be rejected except on the technical grounds listed elsewhere in the Draft Red Herring Prospectus. g. It is to be distinctly understood that the permission given by NSE to use its network and software of the Online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by our Company, BRLM, are cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of our Company, our Promoters, our Management or any scheme or project of our Company. h. It is also to be distinctly understood that the approval given by NSE should not in any way be deemed or construed that the Draft Red Herring Prospectus has been cleared or approved by the NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of

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this Draft Red Herring Prospectus; nor does it warrant that the equity shares will be listed or will continue to be listed on the NSE. Build Up of the Book and Revision of Bids a. Bids registered by various Bidders through the members of the Syndicate shall be electronically transmitted to the NSE mainframe on an on-line basis. Data would be uploaded on a regular basis b. The Price Band can be revised during the Bidding Period, in which case the Bidding Period shall be extended further for a period of three days, subject to the total Bidding Period not exceeding thirteen days. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of Price Band can move up or down to the extent of 20% of the floor of the Price Band disclosed in this Draft Red Herring Prospectus. c. Any revision in the Price Band will be widely disseminated by informing the stock exchanges, by issuing a public notice in two national newspapers (one each in English and Hindi, one regional daily Marathi) and also indicating the change on the relevant websites and the terminals of the members of the Syndicate. d. During the Bidding Period, any Bidder who has registered an interest in the Equity Shares at a particular price level is free to revise the Bid within the Price Band using the printed Revision Form that is a part of the Bid cum Application Form. e. Revisions can be made in both the desired number of Equity Shares and the Bid price by using the Revision Form. The Bidder must complete the details of all the options in the Bid cum Application Form or earlier Revision Form and revisions for all the options as per the Bid cum Application Form or earlier Revision Form. For example, if a Bidder has bid for three options in the Bid cum Application Form or the earlier Revision Form and is changing only one of the options in the Revision Form, the Bidder must still complete the details of the other two options, that are not being revised in the Revision Form. Incomplete or inaccurate Revision Forms will not be accepted by the members of the Syndicate. f. The Bidder can make this revision any number of times during the Bidding Period. However, for any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she had placed the original Bid. Bidders are advised to retain copies of the blank Revision Form and the revised Bid must only be made on that Revision Form. g. Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of the Draft Red Herring Prospectus. In case of QIBs, the members of the Syndicate may at their sole discretion waive the payment requirement at the time of one or more revisions by the QIB Bidders. h. When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid. i. In case of discrepancy of data between BSE and the members of the Syndicate, the decision of the BRLM based on the records of BSE shall be final and binding to all concerned. Price Discovery and Allocation a. After the Bid/Issue Closing Date, the BRLM will analyse the demand generated at various price levels and discuss pricing strategy with us. b. The Company, BRLM shall finalise the Issue Price, the number of Equity Shares to be allotted and the allocation to successful QIB Bidders. The allocation will be decided based on the quality of the Bidder determined broadly by the size, price and time of the Bid. c. The allocation for QIBs of 50% of the Issue Size would be discretionary. The allocation to NonInstitutional Bidders and Retail Individual Bidders of not less than 25% and 25% of the Issue Size respectively would be on proportionate basis, in consultation with Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price. However, the unsubscribed portion in the QIB category shall not be available for subscription to other categories.

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e.

f.

g. h. i.

Under-subscription, if any, in any category would be allowed to be met with spill over from any of the other categories at the discretion of the Company, and BRLM. However, the unsubscribed portion in the QIB category shall not be available for subscription to other categories. Allocation to eligible NRIs, FIIs, Foreign Venture Capital Funds Registered with SEBI applying on repatriation basis will be subject to the terms and conditions stipulated by FIPB/ RBI for Issue/ allotment of Equity Shares to them. The BRLM, in consultation with us, shall notify the Syndicate Members of the Issue Price and allocations to their respective Bidders, where the full Bid Amount has not been collected from the Bidders. The Company reserves the right to cancel the Issue any time after the Bid/Issue Opening Date but before allotment. In terms of SEBI Guidelines, QIB Bidders shall not be allowed to withdraw their Bid after the closure of Bidding. The allotment details shall be put on the website of the Registrar to the Issue.

Signing of Underwriting Agreement and RoC Filing a. We, the BRLM, and the Syndicate Member shall enter into an Underwriting Agreement on reaching agreement upon the Issue Price and allocation(s) to the Bidders. b. After the Underwriting Agreement is signed among our Company, on its own behalf, the BRLM, and the other members of the Syndicate, we will file the Red Herring Prospectus with RoC, which then would be termed Prospectus. The Prospectus would have details of the Offer Price, size of the Offer, underwriting arrangements and would be complete in all material respects. Advertisement regarding Issue Price and Prospectus A statutory advertisement will be issued by the Company after the filing of the Prospectus with the RoC. This advertisement in addition to the information that has to be set out in the statutory advertisement shall indicate the Issue Price along with a table showing the number of Equity Shares and the amount payable by an investor. Any material updates between the date of Draft Red Herring Prospectus and the date of Prospectus will be included in such statutory advertisement. Issuance of Confirmation of Allocation Note a. The BRLM, or Registrar to the Issue shall send to the members of the Syndicate a list of their Bidders who have been allocated Equity Shares in the Issue. b. The BRLM, or Syndicate Members would then send the CAN to their Bidders who have been allocated Equity Shares in the Issue. The despatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares allocated to such Bidder. Those Bidders who have not paid into the Escrow Account of the Company at the time of bidding shall pay in full the amount payable into the Escrow Account of the Company by the Pay-in Date specified in the CAN. c. Bidders who have been allocated Equity Shares and who have already paid into the Escrow Account of the Company at the time of bidding shall directly receive the CAN from the Registrar to the Issue subject, however, to realisation of their cheque or demand draft paid into the Escrow Account of the Company. The despatch of a CAN shall be deemed a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares to be allotted to such Bidder. In case, the Company fails to make allotment within 15 days of the Bid/Offer Closing Date, interest would be paid to the investors at the rate of 15% per annum. Designated Date and Allotment of Equity shares a. All allottees will receive credit for the Equity Shares directly in their depository account. Equity Shares will be offered only in the dematerialised form to the allottees. Allottees will have the option to re-materialise the Equity Shares so allotted, if they so desire, as per the provisions of the Companies Act and the Depositories Act. b. Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated to them pursuant to this Issue.

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We would ensure the allotment of Equity Shares within 15 days of Bid / Issue Closing Date. After the funds are transferred from the Escrow Account to the Public issue Account on the Designated Date, we would ensure that credit is given to the allottees depository accounts within two working days from the date of allotment.

GENERAL INSTRUCTIONS Dos: Check if you are eligible to apply; Read all the instructions carefully and complete the Resident Bid-cum-Application Form (white in colour) or Non-Resident Bid-cum-Application Form (blue in colour), as the case may be; Ensure that you bid only in the Price band Ensure that the details about Depository Participant and Beneficiary Account are correct as Equity Shares will be transferred in the dematerialized form only; Ensure that the Bids are submitted at the bidding centres only on forms bearing the stamp of a member of the Syndicate; Ensure that you have been given a TRS for all your Bid options; Submit Revised Bids to the same member of the Syndicate through whom the Original Bid was placed and obtain a revised TRS; and If you are a Non-Institutional or QIB bidder, disclose the amount of foreign shareholding. Donts: Do not Bid for lower than the minimum Bid size; Do not Bid/ revise Bid price to less than the lower end of the price band or higher than the higher end of the price band; Do not Bid on another Bid-cum-Application Form after you have submitted a Bid to the members of the Syndicate; Do not pay the Bid amount in cash or through Stockinvest; Do not send Bid-cum-Application Forms by post; instead submit the same to a member of the Syndicate only; Do not Bid at cut off price (for QIBs and non-institutional bidders); Do not fill up the Bid-cum-Application Form such that the Equity Shares bid for exceeds the Issue size and/ or investment limit or maximum number of Equity Shares that can be held under the applicable laws or regulations or maximum amount permissible under the applicable regulations. Instructions for Completing the Bid-cum-Application Form Bidders can obtain Bid-cum-Application Forms and / or Revision Forms from the BRLM, or Syndicate Members. Bids and Revisions of Bids Bids and revisions of Bids must be: a. Made only in the prescribed Bid-cum-Application Form or Revision Form, as applicable (white colour for Resident Indians, blue colour for Eligible non residents, NRI, FII or Foreign Venture Capital Fund registered with SEBI applying on repatriation basis). b. Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions contained herein, in the Bid-cum-Application Form or in the Revision Form. Incomplete Bid-cumApplication Forms or Revision Forms are liable to be rejected. c. The Bids from the Retail Individual Bidders must be for a minimum of () Equity Shares and in multiples of () thereafter subject to a maximum Bid amount of Rs.50,000. d. For Non-institutional and QIB Bidders, Bids must be for a minimum of such number of shares that the Bid Amount exceeds Rs.50,000 and in multiples of () Equity Shares. All Individual Bidders whose maximum bid amount exceeds Rs.50,000 would be considered under this category. Bids cannot be made for more than the Issue Size. Bidders are advised to ensure that a single Bid from them should

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not exceed the investment limits or maximum number of shares that can be held by them under the applicable laws or regulations. In single name or in joint names (not more than three). Thumb impressions and signatures other than in the languages specified in the Eighth Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.

Bidders Bank Details The name of the sole or first Bidders bank, branch, typ e of account and account numbers must be mandatorily completed in the Bid-cum-Application Form. This is required for the Bidders own safety so that these details can be printed on the refund orders. These bank account details should be the same as those mentioned in the Bidders depository account, as those details will be printed on the refund orders. Bid cum Application Forms without these details are liable to be rejected. It is the Bidders responsibility to ensure that the details of the Bidders depository account are correct.

Bidders Depository Account Details Equity Shares shall be allotted only in dematerialised form. All Bidders should mention their Depository Participants name, Depository Participant Identification number and Beneficiary Account Number in the Bid-cum-Application Form. In case the Bid-cum-Application Form is submitted in joint names, it should be ensured that the Depository Account is also held in the same joint names and in the same sequence in which they appear in the Bid-cum-Application Form. It is the Bidders responsibility to ensure that the details of the Bidders depository account are correct. Bidders should note that on the basis of name of the Bidders, Depository Participants name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Offer will obtain from the Depository demographic details of the Bidders such as address, bank account details for printing on refund orders and occupation (hereinafter referred to as Demographic details). Hence, Bidders should carefully fill in their Depository Account details in the Bid-cum-Application Form. These Demographic Details would be used for all correspondence with the Bidders including mailing of the refund orders/CANs/Allocation Advice and printing of Bank particulars on the refund order and the Demographic Details given by Bidders in the Bid-cum-Application Form would not be used for these purposes by the Registrar. Hence, Bidders are advised to update their Demographic Details as provided to their Depository Participants. By signing the Bid-cum-Application Form, Bidder would have deemed to authorize the depositors to provide, upon request, to the Registrar to the Offer, the required Demographic Details as available on its records. Refund orders/Allocation Advice/CANs would be mailed at the address of the Bidder as per the Demographic Details received from the Depositors. Bidders may note that delivery of refund orders/allocation advice/CANs may get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such an event, the address and other details given by the Bidder in the Bid cum Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participants identity (DP ID) and the beneficiarys identity, then such Bids are liable to be rejected.

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Bids under Power of Attorney In case of Bids made pursuant to a Power of Attorney or by limited companies, corporate bodies, registered societies, a certified copy of the Power of Attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum and Articles of Association and/or Bye Laws must be lodged along with the Bid-cum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof. In case of Bids made pursuant to a Power of Attorney by FIIs, a certified copy of the Power of Attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be lodged along with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof. In case of Bids made by Insurance Companies registered with the Insurance Regulatory and Development Authority, a certified copy of certificate of registration issued by Insurance Regulatory and Development Authority must be lodged along with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof. In case of Bids made by provident funds with minimum corpus of Rs.250 million and pension funds with minimum corpus of Rs.250 million, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be lodged along with the Bid-cum-Application Form. Failing this, our Company reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason thereof. In case of Bids made by mutual fund registered with SEBI, Venture Capital Fund registered with SEBI and Foreign Venture Capital investor registered with SEBI, a certified copy of their SEBI registration certificate must be submitted with the Bid cum Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case without assigning any reason. We, in our absolute discretion, reserve the right to relax the above condition of simultaneous lodging of the Power of Attorney along with the Bid cum Application form, subject to such terms that we may deem fit. Bids by NRIs NRI Bidders to comply with the following: a. Individual NRI Bidders can obtain the Bid cum Application Forms from our Registered Office at Off. International Airport Approach Road, Marol, Andheri(E), Mumbai-400 059, or from members of the Syndicate or the Registrar to the Offer. b. NRI Bidders may please note that only such Bids as are accompanied by payment in free foreign exchange shall be considered for allotment. NRIs who intend to make payment through NonResident Ordinary (NRO) accounts shall use the Bid Cum Application form meant for Resident Indians (white in colour). Bids by Non Residents, NRIs FIIs, Foreign Venture Capital Funds registered with SEBI on a repatriation basis Bids and revision to Bids must be made: a. On the Bid-cum-Application Form or the Revision Form, as applicable, (blue in colour), and completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein. b. In a single name or joint names (not more than three). c. By NRIs Bids for a Bid Amount of up to Rs.50,000 for the Bid to be considered as part of the Retail Bidders for the purposes of allocation and Bids for a Bid Amount of more than Rs. 50,000 would be considered under Non Institutional Bidder Portion for the purposes of allocation. By

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FIIs for a minimum number of such Equity Shares and in Multiple of () Equity Shares for further details see Issue Procedure - Maximum and Minimum Bid Size . The allotment of the Equity Shares to Non Resident Indians, FIIs and Foreign Venture Capital Funds registered with SEBI shall be subject to the conditions as may be prescribed by the Ministry of Communications & Information Technology / FIPB / RBI as applicable for the telecom sector. Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank charges and / or commission. In case of Bidders who remit money payable upon submission of the Bid-cum-Application Form or Revision Form through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into US Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be dispatched by registered post or if the Bidders so desire, will be credited to their NRE accounts, details of which should be furnished in the space provided for this purpose in the Bid-cum-Application Form. We will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency.

Payment Instructions We shall open an Escrow Account(s) with the Escrow Collection Bank(s) for the collection of the Bid Amounts payable upon submission of the Bid-cum-Application Form and for amounts payable pursuant to allocation in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per the following terms: Payment into Escrow Account to the Issue: i. The Bidders for whom the applicable margin is equal to 100% shall, with the submission of the Bid cum Application Form draw a payment instrument for the Bid Amount in favour of the Escrow Account of the Company and submit the same to the members of the Syndicate. ii. In case the above Margin Amount paid by the Bidders during the Bidding Period is less than the Issue Price multiplied by the equity shares allocated to the Bidder, the balance amount shall be paid by the Bidders into the Escrow Account of the Company within the period specified in the CAN which shall be subject to a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLM. iii. The payment instruments for payment into the Escrow Account of the Company should be drawn in favour of: In case of Resident Bidders: Escrow Account Mars Restaurant Public Issue In case of Non Resident Bidders: Escrow Account Mars Restaurant Public Issue -NR iv. In case of Bids by NRIs applying on repatriation basis, the payments must be made through Indian Rupee Drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in Non-Resident External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) Accounts, maintained with banks authorised to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of Non-Resident Ordinary (NRO) Account of NonResident bidder bidding on a repatriation basis. Payment by drafts should be accompanied by Bank Certificate confirming that the draft has been issued by debiting to NRE or FCNR Account. v. In case of Bids by NRIs / FIIs, the payment should be made out of funds held in Special Rupee Account along with documentary evidence in support of the remittance. Payment by drafts should be accompanied by Bank Certificate confirming that the draft has been issued by debiting to Special Rupee Account. vi. Where a Bidder has been allocated a lesser number of Equity Shares than the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Escrow Account of the Company. vii. The monies deposited in the Escrow Account of the Company will be held for the benefit of the Bidders until Designated Date.

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ix.

On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account of the Company as per the terms of the Escrow Agreement into the Issue Account with the Bankers to the Issue. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Bank shall also refund all amounts payable to unsuccessful bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders

Payments should be made by cheque or demand draft drawn on any Bank (including a Co-Operative Bank), which is situated at, and is a member of or sub-member of the bankers clearing house located at the centre where the Bid-cum-Application Form is submitted. Outstation cheques/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/Stockinvest/Money Orders/Postal Orders will not be accepted. Payment by Stockinvest In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn with immediate effect. Hence, payment through stockinvest would not be accepted in this Issue. Submission of Bid-cum-Application Form All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by account payee cheques or drafts shall be submitted to the members of the Syndicate at the time of submission of the Bid. Member of the Syndicate may at its sole discretion waive the requirement of payment at the time of submission of the Bid-cum-Application Form and Revision Form. The collection center of the members of the Syndicate will acknowledge the receipt of the Bid-cumApplication Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder. No separate receipts shall be issued for the money payable on the submission of Bid-cumApplication Form or Revision Form. OTHER INSTRUCTIONS Joint Bids in the case of Individuals Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form (First Bidder ). All communications will be addressed to the First Bidder and will be despatched to his or her address. Multiple Bids A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same. In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. We reserve the right to reject, in our absolute discretion, all or any multiple Bids in any or all categories. PAN or GIR Number Where the maximum Bid for Equity Shares by a Bidder is for the total value of Rs.50,000 or more, i.e. the actual numbers of Equity Shares Bid for multiplied by the Bid Amount is Rs. 50,000 or more, the Bidder or, in the case of a Bid in joint names, each of the Bidders should mention his or her Permanent Account Number (PAN) allotted under the I.T. Act or where the same has not been allotted, the General Index Register (GIR) Number and the Income-Tax Circle, Ward or District. In case neither the PAN nor the GIR

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number has been allotted, the Bidders must mention Not allotted in the appropriate place. Bid-cumApplication Forms without this information will be considered incomplete and are liable to be rejected. Our Right to Reject Bids We, the BRLM, and the members of the Syndicate reserve the right to reject any Bid without assigning any reason therefor in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, we, BRLM have a right to reject bids based on technical grounds. Consequent refunds shall be made by cheque or pay order or draft and will be sent to the bidders address at the Bidders risk. Grounds for Technical Rejections Bidders are advised to note that Bids are liable to be rejected on among others on the following technical grounds: 1. Amount paid doesnt tally with the highest number of Equity Shares bid for; 2. Bank account details (for refund) are not given; 3. Age of First Bidder not given; 4. Bid by minor; 5. PAN or GIR Number not given if Bid is for Rs. 50,000 or more; 6. Bids for lower number of Equity Shares than specified for that category of investors; 7. Bids at a price less than lower end of the Price Band; 8. Bids at a price more than the higher end of the Price Band; 9. Bids at cut-off price by Non-Institutional and QIB Bidders; 10. Bids for number of Equity Shares which are not in multiples of (); 11. Category not ticked; 12. Multiple bids; 13. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted; 14. Bids accompanied by Stockinvest 15. Signature of sole and / or joint bidders missing; 16. Bid-cum-Application Form does not have the stamp of the BRLM, or Syndicate Members; 17. Bid-cum-Application Form does not have Bidders depository account details; 18. Bid-cum-Application Forms are not delivered by the Bidders within the time prescribed as per the Bidcum-Application Form, Bid/Issue Opening Date advertisement and this Draft Red Herring Prospectus and as per the instructions in this Draft Red Herring Prospectus and the Bid cum-Application Form; 19. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations. see the details regarding the same page 132 of this Draft Red Herring Prospectus; 20. Bids by OCBs. Equity Shares in Dematerialised Form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a de-materialised form, (i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). In this context, two tripartite agreements have been signed between our Company and the Depositories: a) an agreement dated [ ] with NSDL, the Company and Intime Spectrum Registry Limited b) an agreement dated [ ] with CDSL, the Company and Intime Spectrum Registry Limited Bids from any investor without relevant details of his or her depository account are liable to be rejected. a. A Bidder applying for Equity Shares must have at least one beneficiary account with either of the Depository Participants of either NSDL or CDSL prior to making the Bid. b. The Bidder must necessarily fill in the details (including the Beneficiary Account Number and Depository Participants Identification number) appearing in the Bid-cum-Application Form or Revision Form. c. Equity shares allotted to a successful Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the Bidder.

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e. f. g. h.

i. j.

Names in the Bid-cum-Application Form or Revision Form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the account details in the Depository. Non-transferable allotment advice or refund orders will be directly sent to the Bidder by the Registrar to this Issue. If incomplete or incorrect details are given under the heading Request for Equity Shares in electronic form in the Bid-cum-Application Form or Revision Form, it is liable to be rejected. The Bidder is responsible for the correctness of his or her demographic details given in the Bid-cumApplication Form vis--vis those with his or her Depository Participant. It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. All the Stock Exchanges where our Equity Shares are proposed to be listed have electronic connectivity with CDSL and NSDL. The trading of the Equity Shares of the Company would be in dematerialised form only for all investors. As this Issue comprises of Fresh Issue, investors are advised to instruct their Depository Participants to accept the Equity Shares that may be allocated to them pursuant to this Issue.

Communications All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid-cum-Application Form number, number of Equity Shares applied for, date, bank and branch where the Bid was submitted and cheque, draft number and issuing bank thereof. Despatch of Refund Orders The Company shall ensure despatch of refund orders of value over Rs.1,500 by registered post or speed post only and adequate funds for the purpose shall be made available to the Registrar to the Issue by us. Undertaking by the Company The Company undertakes as follows: that the complaints received in respect of this Issue shall be attended to expeditiously; that all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the stock exchanges where the Equity Shares are proposed to be listed within seven working days of finalisation of the basis of allotment; that the funds required for despatch of refund orders or allotment advice by registered post or speed post shall be made available to the Registrar to the Issue; that the refund orders or allotment advice to the NRIs or FIIs shall be dispatched within specified time; and that no further issue of Equity Shares shall be made till the Equity Shares issued through this Draft Red Herring Prospectus are listed or until the bid monies are refunded on account of non-listing, undersubscription etc. Utilization of Issue proceeds The Board of Directors of the Company Certify that: all monies received out of the Fresh Issue shall be transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Companies Act; details of all monies utilized out of 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 have been utilised; and details of all unutilised monies out of the Fresh Issue, if any shall be disclosed under the appropriate separate head in the balance sheet of the Company indicating the form in which such unutilized monies have been invested.

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Our Company shall not have recourse to the Offer proceeds until approval for trading of Equity Shares from all the stock exchanges where listing is sought is received. Pending utilisation of net proceeds of the Fresh Issue as specified under the section Objects of the Offer the net proceeds will be invested by the Company in high quality interest bearing liquid instruments including but not limited to deposits with banks for the necessary duration. Procedure and Time Schedule for Allotment of Equity Shares We and the members of the Syndicate reserve the right to reject any Bid without assigning any reason thereof in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, we have a right to reject bids based on technical grounds. In case a Bid is rejected in full, the whole of the Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. In case a Bid is rejected in part, the excess Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. Our Company will ensure allotment of the Equity Shares within 15 days from the Bid/Issue Closing Date, and we shall pay interest at the rate of 15% per annum (for any delay beyond the periods as mentioned above), if Equity Shares are not allotted, refund orders, are not dispatched and/ or demat credits are not made to investors within two working days from the date of allotment. Disposal of Applications and Application Money The Issue shall ensure dispatch of allotment advice, transfer advice, or refund orders and give credit to the Beneficiary Account with Depository Participants and submit the documents pertaining to the allotment to the Stock Exchanges within two working days of date of finalisation of basis of allotment of Equity Shares. We shall dispatch refund orders, if any, of value up to Rs. 1,500, Under Certificate of Posting, and shall dispatch refund orders above Rs.1,500, if any, by Registered Post or Speed Post at the sole or First Bidders sole risk. We shall use best efforts to ensure that all steps for completion of the necessary formalities for allotment and trading at all the Stock Exchanges where the Equity Shares are proposed to be listed, are taken within seven working days of finalisation of the basis of allotment. In accordance with the Companies Act, the requirements of the stock exchanges and SEBI Guidelines, we further undertake to: allot Equity Shares only in dematerialised form within 15 days of the Bid/Issue Closing Date; ensure despatch of refund orders within 15 days of the Bid/Issue Closing Date; and pay interest at 15% per annum (for any delay beyond the 15-day time period as mentioned above), if allotment is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15-day time prescribed above. We will provide adequate funds required for dispatch of refund orders 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 us as a refund banker and payable at par at places where Bids are received. Bank charges, if any, for cashing such cheques, pay orders or demand drafts at other centres will be payable by the Bidders. Interest on Refund of excess Bid Amount The Company shall pay interest at the rate of 15% per annum on the excess Bid Amount received if refund orders are not dispatched within 15 days from the Bid/Issue Closing Date as per the Guidelines issued by the Government of India, Ministry of Finance pursuant to their letter No.F/8/S/79 dated July 31, 1983, as amended by their letter No. F/14/SE/85 dated September 27, 1985, addressed to the stock exchanges, and as further modified by SEBIs Clarification XXI dated October 27, 1997, with respect to the SEBI Guidelines. Restrictions On Foreign Ownership Of Indian Securities Foreign investment in shares and convertible debentures of an Indian company is regulated through the Industrial Policy 1991 of the Government of India and by the Reserve Bank of India (RBI) as per the provisions of the Foreign Exchange Management Act, 1999 (FEMA) and rules, regulations and guidelines thereunder. While the Industrial Policy prescribes the limits and the conditions subject to which

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foreign investment can be made in different sectors of the Indian economy, FEMA, along with rules, regulations and guidelines thereunder, regulates the precise manner in which such investment may be made. Under the Industrial Policy, unless specifically restricted, foreign direct investment is freely permitted in all sectors of Indian economy and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. In the event an approval of the Government of India is required, the same may be obtained through the Foreign Investment Promotion Board (FIPB), Ministry of Finance. Currently, in case of a company in Restaurant Management Services (Hotel), such as our company, the Guidelines for foreign ownership (as amended from time to time) state that the foreign direct investment in the company may not exceed 51% of the paid up equity share capital. Investment by Non-Resident Indians and Overseas Corporate Bodies A variety of special facilities for making investments in India in shares of Indian companies are available to individuals of Indian nationality or origin, residing outside India (NRIs). These facilities permit NRIs to make portfolio investments in shares and other securities of Indian companies on a basis not generally available to other foreign investors. Under the portfolio investment scheme, NRIs are permitted to purchase and sell equity shares of the company through a registered broker on the stock exchanges. NRIs collectively should not own more than 10% of the post-offer paid up capital of the company. However, this limit may be increased to 24% if the shares of the company pass a special resolution to that effect. No single NRI may own more than 5% of the post-offer paid up capital of the company. NRI investment in foreign exchange is now fully repatriable whereas investments made in Indian Rupees through rupee accounts remains nonrepatriable. Entities, which are at least 60%, owned by NRIs and categorized as overseas corporate bodies (OCBs) have been recently prohibited from investing under the portfolio investment scheme in India. Investment by Foreign Institutional Investors By way of Circular No 53. dated December 17, 2003, the RBI has permitted FIIs to subscribe to shares of an Indian Company in a public offer without prior RBI approval, so long as the price of equity shares to be issued is not less than the price at which equity shares are issued to residents. Further, RBI has clarified in its Press Release dated February 4, 1998 that Indian Companies that have obtained approval of the FIPB need not obtain RBI approval for issue of equity shares to foreign Investors. Under the portfolio investment scheme, the overall issue of equity shares to FIIs on a repatriation basis should not exceed 24% of paid-up capital of the company. However, the limit of 24% can be raised upto the permitted sectoral cap for that company after approval of the Board of Directors and shareholders of the company. A FII shall not hold more than 10% of the total issued capital of a company in its own name; a corporate/individual sub-account of the FII shall not hold more than 5% of the total issued capital of a company, and a broad based sub-account shall not hold more than 10% of the total issued capital of a company. The above information is given for the benefit of the bidders and neither the Company nor BRLM are liable for any modifications that may happen after the date of this Draft Red Herring Prospectus.

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Basis for Issue Price The offer price has been determined by the Company in consultation with the BRLM, on the basis of an assessment of market demand for the offered equity shares by way of Book Building Process. Qualitative Factors Experienced Promoters Our promoters have experience in this industry. Mr. Sanjay Narang, one of the promoters has studied Hotel Management from Cornell University, USA the most reputed hotel and restaurant management institute in the world. The other promoter Ms. Rachna Narang, also a Cornell University Graduate in liberal arts, has vast experience in conceptualizing, designing, developing and operating various chains of fast food restaurants. Addressing popular formats - our Company has created a variety time-tested brands catering to varied consumer tastes. Scalability our Company has a scalable model with standardized operation, which helps us to easily duplicate the formats. Standardization our Company has standardized various operations there by reducing margin of error. Technology our Company has embraced technology to efficiently manage the operation, with specially developed software for supply chain and reporting systems Project Management Capabilities with an in-house project design and execution team, our Company is capable of building a restaurant right from conceptual stage to implementation. Central Commissary- Central commissary situated at Sahar, Mumbai helps in to supply Standardized and quality food to all our restaurants and also acts as economies of scale Strong Customer focus- consumer satisfaction on food and services are ensured through constant interaction with customers, monitoring the market and tracking product offerings

Quantitative Factors 1 Adjusted Earnings per share Year 2001-2002 2002-2003 2003-2004 Weighted Average EPS 0.42 (5.86) (2.07) (2.92) Weight 1 2 3

2 Price Earning Ratio (P/E) in relation to the offer price of Rs.(*) is ______________ a Based on FE 2004 EPS of Rs.(2.92) (*) b Industry P/E i) Highest ii) Lowest iii) Average Industry Composite Not available as there are no listed companies in this segment. 3 Return on Net Worth (RONW) * Year FY 2002 FY 2003 FY 2004 Weighted Average RONW (%) 0.01 (0.15) (0.06) (0.11) Weight 1 2 3

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4 Minimum Return on Total Net Worth after Offer needed to maintain pre-offer EPS of Rs. () is ()% 5 Net Asset Value (NAV) of _____________________________ As at March 31, 2004: (a) After Offer (b) Offer Price Rs.37.42 () ()

The Offer Price of Rs. () has been determined on the basis of the demand from investors through the Book-Building Process and is justified based on the above accounting ratios. 6 Comparison with other listed companies Not applicable as there are no listed comparable companies in this segment.

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Tax Benefits A shareholder is advised to consider in his / her / its own case the tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislations may not have direct legal precedent or may have a different interpretation on the benefits which an investor can avail. The Board of Directors, Mars Restaurants Limited. We hereby report that the enclosed annexure states the possible tax benefits available to Mars Restaurants Limited (Formerly Mars Restaurants Private Limited) (the Company) and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependant upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill. The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, the changing tax laws and the fact that the Company will not distinguish between the shares offered for subscription and the shares offered for sale by the Selling Shareholders, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether : (i) the Company or its shareholders will continue to obtain these benefits in future; or (ii) the conditions prescribed for availing the benefits have been / would be met with. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. for A.T.Jain & Co. Chartered Accountants Sd/S.T. Jain Partner Membership No. 33809 Place: Mumbai Date: 16th July, 2004

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Annexure: Statement of possible tax benefits available to Mars Restaurant Limited and to its Shareholders As per the existing provisions of the Income Tax Act, 1961 (the Act) and other laws as applicable for the time being in force, the following tax benefits and deductions are and will, inter-alia be available to Mars Restaurant Limited and its shareholders. Benefits available to the Company Under the Income Tax Act, 1961 1 Under Section 10(34) of the Act, dividend (whether interim or final) declared, distributed or paid by any Company on or after April 1, 2003 is completely exempt from tax in the hands of the Company. 2 As per the provisions of Section 112(1)(b) of the Act, long term capital gains would be subject to tax at a rate of 20% (plus applicable surcharge). However, as per the proviso to Section 112(1), if the long term capital gains resulting on transfer of listed securities or units, calculated @ 20% with indexation benefits exceeds the gains computed @ 10% without indexation benefits, then such gains are, at the option of the tax payer, chargeable to tax @ 10% without indexation benefits (plus applicable surcharge). Long term capital gain arising from transfer of an 'eligible equity share' in a Company purchased on or after the 1st day of March, 2003 and before the 1st day of March, 2004 (both days inclusive) and held for a period of 12 months or more is exempt from tax under section 10(36) of the Act. Eligible equity share means: - any equity share in a company being a constituent of BSE-500 Index of the Stock Exchange, Mumbai as on March 1, 2003 and the transactions of purchase and sale of such equity share are entered into on a recognized stock exchange in India: or - any equity share in a company allotted through a public issue on or after March 1, 2003 and listed on a recognized stock exchange in India before March 1, 2004 and the transactions of sale of such equity share is entered into on a recognized stock exchange in India. The Central Board of Direct Taxes (CBDT) has clarified vide Circular No. 7/2003 dated September 5, 2003 that public issue shall include the offer of equity shares in a company to the public through a prospectus, whether by the company or by the existing shareholders of the company. 4 In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the Company would be entitled to exemption from tax on gains arising from transfer of the long term capital asset if such capital gain is invested in any of the long- term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. As per the provisions of Section 54ED of the Act and subject to the conditions specified therein, capital gains arising from transfer of long term assets, being listed securities or units shall not be chargeable to tax to the extent such gains are invested in acquiring equity shares forming part of an 'eligible issue of share capital' in the manner prescribed in the said section. Eligible issue of share capital has been defined as an issue of equity shares which satisfies the following conditions: - the issue is made by a public company formed and registered in India; and - the shares forming part of the issue are offered for subscription to the public.

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Benefits available to Resident Shareholders Under Direct Taxes Under the Income Tax Act, 1961 1 Under Section 10(34) of the Act, dividend (whether interim or final) declared, distributed or paid by the Company on or after April 1, 2003 is completely exempt from tax in the hands of the shareholders of the Company. In accordance with and subject to the conditions and to the extent specified in Section 112(1)(b) of the Act, tax on long term capital gains arising on sale of listed securities or units will be, at the option of the concerned shareholder, 10% of capital gains (computed without indexation benefits) or 20% of capital gains (computed with indexation benefits) as increased by a surcharge at an appropriate rate on the tax so computed in either case. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their eligible equity shares in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. Eligible equity share means: any equity share in a company being a constituent of BSE-500 Index of the Stock Exchange, Mumbai as on March 1, 2003 and the transactions of purchase and sale of such equity share are entered into on a recognized stock exchange in India: or any equity share in a company allotted through a public issue on or after March 1, 2003 and listed on a recognized stock exchange in India before March 1, 2004 and the transactions of sale of such equity share is entered into on a recognized stock exchange in India. The Central Board of Direct Taxes (CBDT) has clarified vide Circular No. 7/2003 dated September 5, 2003 that public issue shall include the offer of equity shares in a company to the public through a prospectus, whether by the company or by the existing shareholders of the company. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the shareholders would be entitled to exemption from tax on gains arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. In accordance with and subject to the conditions and to the extent specified in Section 54ED of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their assets being listed securities or units to the extent such capital gain is invested in acquiring equity shares forming part of an eligible issue of share capital in the manner prescribed in the said section. Eligible issue of share capital has been defined as an issue of equity shares which satisfies the following conditions: a b 6 the issue is made by a public company formed and registered in India; and the shares forming part of the issue are offered for subscription to the public.

In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent specified in Section 54F of the Act, the shareholder would be entitled to exemption from long term capital gains on the sale of shares in the Company upon investment of net consideration in purchase / construction of a residential house. If part of

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net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred. 7 In accordance with the provisions of Section 10(32) of the Act, any income of minor children clubbed with the total income of the parent under Section 64(1A) of the Act will be exempt from tax to the extent of Rs.1,500 per minor child per year.

Benefits available to Non- Resident Indian Shareholders 1 Under Section 10(34) of the Act, dividend (whether interim or final) declared, distributed or paid by the Company on or after April 1, 2003 is completely exempt from tax in the hands of the shareholders of the Company. In accordance with the provisions of Section 10(32) of the Act, any income of minor children clubbed with the total income of the parent under Section 64(1A) of the Act will be exempt from tax to the extent of Rs.1,500 per minor child per year. In the case of a shareholder being a non-resident Indian, and subscribing to the shares in convertible foreign exchange, in accordance with and subject to the conditions and to the extent specified in Section 115D read with Section 115E of the Act, long term capital gains arising on transfer of an Indian company's shares, will be subject to tax at the rate of 10% as increased by a surcharge at an appropriate rate on the tax so computed, without any indexation benefit. In case of a shareholder being a non-resident Indian, and subscribing to the shares in convertible foreign exchange in accordance with and subject to the conditions and to the extent specified in Section 115F of the Act, the non-resident Indian shareholder would be entitled to exemption from long term capital gains on the transfer of shares in the Company upon investment of net consideration in modes as specified in sub-section (1) of Section 115F. In accordance with the provisions of Section 115G of the Act, Non Resident Indians are not obliged to file a return of income under Section 139(1) of the Act, if their only source of income is income from investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Act. In accordance with the provisions of Section 115H of the Act, when a Non Resident Indian becomes assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for that year under Section 139 of the Act to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money. As per the provisions of section 115I of the Act, a Non Resident Indian may elect not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that year under Section 139 of the Act, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Act. In accordance with and subject to the conditions and to the extent specified in Section 112(1)(b) of the Act, tax on long term capital gains arising on sale of listed securities or units will be, at the

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option of the concerned shareholder, 10% of capital gains (computed without indexation benefits) or 20% of capital gains (computed with indexation benefits) as increased by a surcharge at an appropriate rate on the tax so computed in either case. 9 In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their eligible equity shares in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. Eligible equity share means: any equity share in a company being a constituent of BSE-500 Index of the Stock Exchange, Mumbai as on March 1, 2003 and the transactions of purchase and sale of such equity share are entered into on a recognized stock exchange in India: or any equity share in a company allotted through a public issue on or after March 1, 2003 and listed on a recognized stock exchange in India before March 1, 2004 and the transactions of sale of such equity share is entered into on a recognized stock exchange in India. The Central Board of Direct Taxes (CBDT) has clarified vide Circular No. 7/2003 dated September 5, 2003 that public issue shall include the offer of equity shares in a company to the public through a prospectus, whether by the company or by the existing shareholders of the company. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the shareholders would be entitled to exemption from tax on gains arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. In accordance with and subject to the conditions and to the extent specified in Section 54ED of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their assets being listed securities or units to the extent such capital gain is invested in acquiring equity shares forming part of an eligible issue of share capital in the manner prescribed in the said section. Eligible issue of share capital has been defined as an issue of equity shares which satisfies the following conditions: a. b. 12 the issue is made by a public company formed and registered in India; and the shares forming part of the issue are offered for subscription to the public.

10

11

In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent specified in Section 54F of the Act, the shareholder would be entitled to exemption from long term capital gains on the sale of shares in the Company upon investment of net consideration in purchase / construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred.

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Provisions of the Act vis--vis provisions of the tax treaty As per the provisions of Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non Resident. Benefits available to other Non-residents 1 Under Section 10(34) of the Act, dividend (whether interim or final) declared, distributed or paid by the Company on or after April 1, 2003 is completely exempt from tax in the hands of the shareholders of the Company. In accordance with the provisions of Section 10(32) of the Act, any income of minor children clubbed with the total income of the parent under Section 64(1A) of the Act will be exempt from t ax to the extent of Rs.1,500 per minor child per year. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their eligible equity shares in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. Eligible equity share means: any equity share in a company being a constituent of BSE-500 Index of the Stock Exchange, Mumbai as on March 1, 2003 and the transactions of purchase and sale of such equity share are entered into on a recognized stock exchange in India: or any equity share in a company allotted through a public issue on or after March 1, 2003 and listed on a recognized stock exchange in India before March 1, 2004 and the transactions of sale of such equity share is entered into on a recognized stock exchange in India. The Central Board of Direct Taxes (CBDT) has clarified vide Circular No. 7/2003 dated September 5, 2003 that public issue shall include the offer of equity shares in a company to the public through a prospectus, whether by the company or by the existing shareholders of the company. 4 In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the shareholders would be entitled to exemption from tax on gains arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money. In accordance with and subject to the conditions and to the extent specified in Section 54ED of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their assets being listed securities or units to the extent such capital gain is invested in acquiring equity shares forming part of an eligible issue of share capital in the manner prescribed in the said section. Eligible issue of share capital has been defined as an issue of equity shares which satisfies the following conditions: the issue is made by a public company formed and registered in India; and the shares forming part of the issue are offered for subscription to the public.

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In case of a shareholder being an individual or a Hindu Undivided Family, in accordance with and subject to the conditions and to the extent specified in Section 54F of the Act, the shareholder would be entitled to exemption from long term capital gains on the sale of shares in the Company upon investment of net consideration in purchase / construction of a residential house. If part of net consideration is invested within the prescribed period in a residential house, then such gains would not be chargeable to tax on a proportionate basis. Further, if the residential house in which the investment has been made is transferred within a period of three years from the date of its purchase or construction, the amount of capital gains tax exempted earlier would become chargeable to tax as long term capital gains in the year in which such residential house is transferred.

Provisions of the Act vis--vis provisions of the tax treaty As per the provisions of Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non Resident. Benefits available to Foreign Institutional Investors (FII) 1 In case of a shareholder being a Foreign Institutional Investor (FII), in accordance with and subject to the conditions and to the extent specified in Section 115AD of the Act, tax on long term capital gain will be 10% and on short term capital gain will be 30% as increased by a surcharge at an appropriate rate on the tax so computed in either case. It is to be noted that the benefits of indexation and foreign currency fluctuation protection as provided by Section 48 of the Act are not available to a FII. As per the provisions of Section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non Resident. In accordance with and subject to the conditions and to the extent specified in Section 10(36) of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their eligible equity shares in the Company purchased during the period March 1, 2003 to February 29, 2004 (both days inclusive) and held for a period of 12 months or more. Eligible equity share means: a. any equity share in a company being a constituent of BSE-500 Index of the Stock Exchange, Mumbai as on March 1, 2003 and the transactions of purchase and sale of such equity share are entered into on a recognized stock exchange in India: or b. any equity share in a company allotted through a public issue on or after March 1, 2003 and listed on a recognized stock exchange in India before March 1, 2004 and the transactions of sale of such equity share is entered into on a recognized stock exchange in India. The Central Board of Direct Taxes (CBDT) has clarified vide Circular No. 7/2003 dated September 5, 2003 that public issue shall include the offer of equity shares in a company to the public through a prospectus, whether by the company or by the existing shareholders of the company. 4. In accordance with and subject to the conditions and to the extent specified in Section 54EC of the Act, the shareholders would be entitled to exemption from tax on gains arising on transfer of their shares in the Company if such capital gain is invested in any of the long term specified assets in the manner prescribed in the said section. Where the long-term specified asset is transferred or converted into money at any time within a period of three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.

3.

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5.

In accordance with and subject to the conditions and to the extent specified in Section 54ED of the Act, the shareholders would be entitled to exemption from long term capital gain tax on transfer of their assets being listed securities or units to the extent such capital gain is invested in acquiring equity shares forming part of an eligible issue of share capital in the manner prescribed in the said section. Eligible issue of share capital has been defined as an issue of equity shares which satisfies the following conditions: - the issue is made by a public company formed and registered in India; and - the shares forming part of the issue are offered for subscription to the public. Benefits available to Mutual Funds In case of a shareholder being a Mutual fund, as per the provisions of Section 10(23D) of the Act, any income of Mutual funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Funds set up by public sector banks or public financial institutions and Mutual Funds authorised by the Reserve Bank of India would be exempt from Income Tax, subject to the conditions as the Central Government may by notification in the Official Gazette specify in this behalf. Benefits available to Venture Capital Companies / Funds In case of a shareholder being a Venture Capital Company / Fund, as per the provisions of Section 10(23FB) of the Act, any income of Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, would be exempt from Income Tax, subject to the conditions specified. Benefits available under the Wealth Tax Act, 1957 As per the prevailing provisions of the above Act, no Wealth Tax shall be levied on value of shares of the Company. Benefits available under the Gift Tax Act Gift tax is not leviable in respect of any gifts made on or after October 1,1998. Therefore, any gift of shares will not attract gift tax. Note: All the above benefits are as per the current tax laws as amended by the Finance Act, 2003. All the above benefits are as per the current tax law and will be available only to the sole/first named holder in case the shares are held by joint holders. In respect of non-residents, the tax rates and the consequent taxation mentioned above shall be further subject to any benefits available under the double taxation avoidance agreements, if any, between India and the country in which the non-resident has fiscal domicile. In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax advisor with respect to specific tax consequences of his/her participation in the scheme.

158

SECTION VI FINANCIAL INFORMATION To, The Board of Directors Mars Restaurants Limited

Re: Initial public offering of Mars Restaurants Limited Dear Sirs, We have examined the financial information of Mars Restaurants Limited (the company), as attached to this report stamped and initialled by us for identification and as approved by the Board of Directors, which has been prepared in accordance with Part II of Schedule II of the Companies Act, 1956 (the Act) and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000 (the Guidelines) issued by the Securities and Exchange Board of India (SEBI) on January 19, 2000 in pursuance to Section 11 of the Securities and Exchange Board of India Act, 1992 and related clarifications, and in accordance with your instructions dated June 4, 2004 received from the company requesting us to carry out work in connection with the Offer Document to be issued by the company in connection with its Initial Public Offering of Equity Shares (referred to as the Issue). A. Financial Information from audited financial statements We have examined the attached restated balance sheets of the company as at March 31, 2001, March 31, 2002, March 31, 2003 and March 31, 2004 (Annexure I) and the attached restated statements of profit and loss account for the period April 28, 2000 to March 31,2001 (hereinafter referred to as period) and the years ended March 31, 2002, 2003 and 2004 (Annexure II), together referred to as summary statements. These summary statements have been extracted from the audited financial statements for the period ended March 31, 2001 and for the years ended March 31, 2002,2003, 2004. These are adopted by the board of directors/members for the respective period/years. Based on our examination of these summary statements, we confirm that: 1. The summary statements of the company have been restated with retrospective effect to reflect the significant accounting policies of the company (as disclosed in Annexure III) as adopted by the company. The summary of notes to the financial statements of the company, as restated, for the period ended March 31, 2001 and years ended March 31, 2002, 2003 and 2004 (as disclosed in Annexure IV) There are no material adjustments relating to previous period / years which need to be adjusted in summary statement in the period / years to which they relate. There are no qualifications in the auditors report which require adjustment to the summary statements. There are no extra-ordinary items which need to be disclosed separately in the summary statements. Accounting Standard disclosures relating to earnings per share and related party transactions have been provided from the period ended March 31, 2001 and from the years ended March 31, 2002 onwards.

2. 3.

4.

5. 6.

159

B. Other financial information We have examined the following financial information relating to Mars Restaurants Limited, proposed to be included in the Offer Document, as approved by you and annexed to this report: i) Statement of cash flows of the company for the period ended March 31, 2001 and for the years ended March 31, 2002, 2003 and 2004 is enclosed as Annexure VI. ii) Summary of accounting ratios based on the adjusted profits relating to earnings per share, net asset value, capital employed and return on net worth is enclosed as Annexure VII. iii) Capitalisation statement of the company is enclosed as Annexure VIII. iv) Tax shelter statement is enclosed as Annexure IX. v) Details of items of other income is enclosed as Annexure X. vi) Details of dividends paid by the company are enclosed in Annexure XI. In our opinion, the financial information of the company, as attached to this report as mentioned in paragraphs (A) and (B) above, read with respective significant accounting policies after making groupings and adjustments as stated in notes to accounts have been prepared in accordance with Part II of Schedule II of the Act and the Guidelines issued by SEBI. This report is intended solely for use for your information and for inclusion in the Offer Document in connection with the proposed Issue of the company and is not to be used, referred to or distributed for any other purpose without our prior written consent. Yours faithfully, For Deloitte Haskins & Sells Chartered Accountants

R.Raghavan Partner Membership No.: 9483 Place : Mumbai Date : July 21, 2004

160

Assets and Liabilities of Mars Restaurants Limited at the end of each financial year, read with significant accounting policies (Refer Annexure III below)and notes to accounts (Refer Annexure IV below) after making groupings and adjustments (Refer Annexure V below), are set out below :
SUMMARY OF ASSETS AND LIABILITIES, AS RESTATED Particulars A. Fixed assets : Gross block Less: depreciation Add : capital work in progress Total B. Investments C. Deferred tax asset ( net ) D. Current assets, loans and advances: Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Total E. Liabilities and provisions: Loan funds : Secured loan Deferred tax liability (net) Current liabilities and provisions : Liabilities Provisions Total Net Worth (A+B+C+D-E) F. Represented By : 1. Share capital 2. Reserves and surplus - Securities premium account - General reserve - Profit and loss account ( surplus ) Annexure I (Figures in Rs : Lakhs) As at March As at March 31 31, 2004 2003 2002 2001 1,219.76 458.19 17.89 779.46 344.08 193.59 1,207.12 333.45 12.43 886.10 423.25 120.04 1,169.60 163.97 25.64 1,031.27 391.83 437.47 24.00 361.80 775.27 -

81.56 264.58 51.66 0.20 713.34 1,111.34

117.36 159.81 40.87 0.18 853.99 1,172.21

119.55 73.60 277.31 0.49 1,024.54 1,495.49

90.47 55.77 103.70 0.82 130.47 381.23

48.79 -

73.00 -

89.91 51.28

10.82 53.61

486.41 25.50 560.70 1,867.77

531.10 26.29 630.39 1,971.21

484.40 29.09 654.68 2,263.91

333.57 15.08 413.08 743.42

166.39 1,956.66

166.39 1,956.66

166.39 1,956.66 4.59 136.27 2,263.91 2,263.91

144.13 478.88 4.59 115.82 743.42 743.42

2,123.05 G. Profit and Loss Account debit balance Net Worth (F-G) 255.28 1,867.77

2,123.05 151.84 1,971.21

The accompanying significant accounting policies and notes are integral part of this statement.

161

The profits/(losses) of Mars Restaurants Limited for four financial period / year ended March 31, 2004, read with significant accounting policies (Refer Annexure III below) and notes to accounts (Refer Annexure IV below) after making groupings and adjustments and (Refer Annexure V below), are set out below :
SUMMARY OF PROFIT AND LOSS ACCOUNT, AS RESTATED Particulars Income Sales Other income Total Income Expenditure Raw material consumed Excise Operating expenses Staff costs Selling and distribution expenses Interest Sub-total Less : Capitalised : Reimbursement Total Expenditure Operating Profit / (Loss) before non-operating items, depreciation and tax Loss / provision relating to closure of owned / franchisee outlets - fixed assets - loans - advances Gain on sale of investment Deferred and preliminary expenses (Loss) / Profit before depreciation & tax Depreciation (Loss)/ Profit before tax Current tax Prior year tax Deferred tax (Loss)/ Profit after tax For the year ended March 31 2004 2,454.29 10.40 2,464.69 878.07 0.12 585.74 408.43 472.53 6.42 2,351.31 8.80 2,342.51 122.18 2003 2,433.24 24.53 2,457.77 888.01 0.21 670.86 467.55 632.68 10.24 2,669.55 12.43 18.51 2,638.61 (180.84) 2002 2,693.75 79.76 2,773.51 843.96 0.40 684.09 543.82 727.87 32.22 2,832.36 67.74 167.69 2,596.93 176.58 Annexure II (Figures in Rs : Lakhs) For the period ended March 31, 2001 1,121.44 13.08 1,134.52 318.33 236.56 196.00 199.20 53.50 1,003.59 87.90 7.62 908.07 226.45

(42.04) (72.84) (35.03) 27.51 (0.22) (172.54) (172.76) 2.74 1.50 (73.55) (103.45)

(90.77) 2.43 (269.18) (195.00) (464.18) (0.14) (171.33) (292.71)

(16.65) 6.78 (3.67) 163.04 (143.02) 20.02 1.88 (2.33) 20.47

(1.41) (2.27) 222.77 (24.06) 198.71 17.01 53.61 128.09

The accompanying significant accounting policies and notes are integral part of this statement.

162

Annexure III Significant Accounting Policies Financial statement Financial statements are prepared under the historical cost convention in accordance with applicable Accounting Standards and provision of the Companies Act, 1956. Fixed assets Fixed assets are stated at cost of acquisition/construction. In respect of assets constructed, all related direct/indirect expenses including interest cost/financing charges are apportioned to respective assets. Intangible Assets are recorded at the consideration paid or cost incurred for the acquisition. Borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets is capitalized as part of the cost. All other borrowing costs are charged to revenue. Depreciation Depreciation is provided on a prorata basis, from the date the assets have been installed and put to use, on a written down value method at rates and in the manner specified under Schedule XIV to the Companies Act, 1956. Improvements on third party premises included under buildings are amortized over the period of agreements. Trademarks are amortized over three years on a straight line basis. Software is amortized @ 40% on WDV basis. Inventories Inventories are stated at cost or net realizable value, whichever is lower.

Raw materials and packing materials Semi finished goods Stores and Spares Finished goods

At cost net of CENVAT computed on average cost method At cost computed on average cost At cost computed on average cost method. method.

At cost computed on average cost method. Excise duty is considered as cost for finished goods wherever applicable. At average cost or net realizable value whichever is lower.

Trading Goods

Sales Gross sales include amounts recovered towards excise duty and sales tax. Retirement benefits The companys contribution to provident fund is charged Profit and Loss Accounts on accrual basis. Liabilities for gratuity and leave encashment are charged to profit and loss account on the basis actuarial valuation. Foreign currency transactions Transactions in foreign currency are recognized at rates on date of transaction. Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using exchange rates prevailing at the date of Balance Sheet and the resulting net exchange

163

difference is recognized in the Profit and Loss Account, except those relating to a acquisition of fixed assets which is adjusted to the cost of such assets. Investments Long term investments are stated at cost. Provision for diminution in value is made if the diminution in value is other than temporary. Current Investments are stated at lower of cost or market value. Income tax Income tax expense comprises current tax and deferred tax charge or credit. Provision for Wealth Tax liability is estimated in accordance with the Wealth Tax Act, 1957 and provided for. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the company. Deferred Taxes Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and writtendown or written-up to reflect the amount that is reasonably/virtually certain to be realized. Miscellaneous expenditure (to the extent not written off or adjusted) Preliminary or deferred revenue expenditure has been written off in the year in which it incurred. All expenses incurred relating to research for expansion of business are recognized as deferred revenue expenditure and amortized over a period of five years. On adoption of the accounting standard 26 on intangibles, these balances are fully written off. Contingent liabilities These liabilities are appropriately evaluated and disclosed. Dividend Dividend proposed and taxes thereon provided for, is subject to approval of shareholders at the annual general meeting.

164

Annexure IV NOTES (All figures are in lakhs of rupees except for earning per share) The company and its promoters have entered into an Investment Agreement with I.C.I.C.I Equity fund (Venture Capital Fund) by which I.C.I.C.I. Equity fund has agreed to participate in the equity share capital of the company (at an agreed value) by a contribution of Rs.2,000.50 over a period of six months. The agreement stipulates buy-back of the shares held by I.C.I.C.I Equity fund by the promoters in case of noncompliance to specific condition stipulated in the agreement. As of March 31, 2001 I.C.I.C.I Equity fund has contributed Rs.500.50 towards equity shares. During the year 2001-02 I.C.I.C.I Equity fund (Venture Capital Fund) has further participated in the equity share capital of the company by a contribution of Rs.1,500 The agreement stipulates buy-back of the shares held by I..C.I.C.I Equity fund by the promoters in case of noncompliance to specific conditions stipulated in the agreement. As of March 31, 2002 I.C.I.C.I Equity fund has contributed Rs.2,000 towards equity shares. The Board of Directors at their meeting held on June 29, 2004 have resolved to make an Initial Public Offer of equity shares of the company subject to compliances to all regulatory requirements including provisions of the Companies Act 1956. The proceeds from the fresh issue of shares will be deployed for meeting working capital requirements, for setting up of restaurants and share issue expenses. As per investment agreement ICICI Equity fund has the first right to offer its shares to the public at the time of Initial Public Offering. However, ICICI Equity fund has accorded its consent for not exercising this right at the Board Meeting held on June 29, 2004. Notes for the period ended March 31, 2001 Sundry debtors have been hypothecated to the bank for an overdraft facility extended to Mars Food Services (a partnership firm in which two of the director are partners). As of the balance sheet date, Mars Food Services have borrowed Rs.61.91 from the bank, which has been repaid by Mars Food Services as of date and the company has filed necessary papers with the Registrar of companies for satisfaction and release of the charge. Notes for the year ended March 31, 2002 As per the agreement original entered into by the company with Mars Hotels and Resorts Private Limited, the latter was to construct the commissary on behalf of the company and transfer the land on which the said Commissary was to be constructed as a perpetual lease. The company has during the year, based on a mutually amended agreement treated the amounts already paid as an interest free deposit which would permit the company to continue to occupy and utilize the Commissary for carrying on its business.

165

Notes for the year ended March 31, 2003 1. During the year, the company has invested Rs.124.50 for a 49% share in Gourmet Restaurants Private Limited, which operates restaurants under the brand Tendulkars. as per the agreement, the company would be managing the restaurants for a management fee of 3% of net sales. The company had advanced loans aggregating to Rs. 74.66 to K.P Restaurants private Limited, the franchisee for the Chennai outlet of the company. During the year 2001-02 the operations at the outlet were discontinued and the company is to acquire the entire shareholding of K.P. Restaurants Private Limited in full settlement of dues including loan. Pending completion of formalities for the acquisition, no adjustments have been made in this financial statement, which shall be made during 2003-04. Further, the company has advanced Rs.0.69 during 2003-04. In terms of the investment agreement with LSG Asia Gmbh, the company had invested in the equity share capital of LSG Sky Chef ( India) Private limited ( a company promoted by one of the Directors of Mars Restaurants Private Limited). In the current year, the company exercised its put option as per the agreement to disinvest its equity shareholding in the said company, subject to necessary approvals. The shares have been transferred on May 6 th 2003, accordingly all consequent adjustments shall be made in the year 2003-04.

2.

3.

Notes for the year ended March 31, 2004 1. Events after Balance Sheet date a) The Board of Directors at their meeting held on June 29, 2004 have resolved to make an Initial Public Offer of equity shares of the company subject to compliances to all regulatory requirements including provisions of the Companies Act 1956.

b) The name of the company was changed to Mars Restaurants Limited effective July 9, 2004 consequent upon approval by Shareholders for change of name at the extraordinary general meeting held on July 5, 2004. c) The authorized share capital was increased by Rs. 1,050 by creation of 105 equity shares of Rs. 10/- each approved by shareholders at the extraordinary general meeting held on July 5, 2004.

d) At the extraordinary general meeting held on July 5, 2004, the company was authorized to issue bonus shares in the ratio of 2 equity shares of Rs. 10 each for every equity shares of Rs. 10 each by capitalization of share premium account to the extent of Rs. 332.77. The adjustment for the issue shall be effected in the financial year 2004-05. 2. Contingent liabilities not provided for : Claims against the company not acknowledged as debts towards: 2004 Rupees 3.06 91.04 Nil 2003 Rupees 3.06 Nil Nil 2002 Rupees 3.06 Nil Nil 2001 Rupees 3.06 Nil 0.31

Electricity charges Tax matters in dispute under Appeal with C.I.T (Appeals) Security charges 3.

During the year, the company reversed its decision to acquire equity shares in K.P. Restaurants Private Limited and has provided for the loans Rs.39.49 and advances Rs. 35.03 as doubtful.

166

4.

Prior year tax Rs. 1.50 includes : a) Rs. 0.64 being tax paid consequent on search and seizures conducted by the Income tax department under Section 132 of Income Tax Act 1961 and block assessments completed under Section 158 BC of the Income Tax Act 1961.

b) Rs. 0.87 being interest for the assessment year 2001-02 c) 5. Rs. 0.00 (Rupees. Four Hundred Fifteen) being excess provision written back

Current tax Rs. 2.74 includes: a) Wealth tax Rs. 0.08 b) Long term capital gain tax Rs. 2.66 The break up of deferred tax is as under: 2004 Deferred tax assets: Disallowance Business Loss upto AY 2004-05 Unabsorbed depreciation Depreciation Others Preliminary expenses Total Deferred tax liability: Depreciation Preliminary expenses Improvement to third party premises, claimed in Income Tax Expenses capitalized claimed as revenue in Income Tax Others Total Charged for the year Net (Deferred Liability) / Asset 1.97 22.96 10.62 56.73 92.28 2003 (0.42) 87.90 64.79 7.13 35.36 194.76 2002 4.54 3.44 65.33 6.12 79.43 12.77 0.17 36.48 23.72 3.96 77.10 2.33 (51.28) 2001 3.90 22.19

6.

0.93 0.65 27.67 3.31

0.17

0.08 19.46

46.59 31.38 81.28 (53.61) (53.61)

14.98 3.58 18.73 73.55 193.59

1.88 2.01 23.43 171.33 120.04

167

7.

The companys major business is food and catering services and all the other activities of the company revolve around the main business and as such there is no separate reportable segments as per the Accounting Standard, AS 17 on Segment Reporting issued by the Institute of Chartered Accountants of India. SUNDRY DEBTORS: unsecured, considered good 2004 Rupees 2003 Rupees 2.27 157.53 159.81 2002 Rupees 2.88 70.72 73.60 55.77 55.77 2001 Rupees

8.

Debts outstanding for a period exceeding six months (I) Outstanding over Six Months (II) Others 7.93 256.64 264.58 9.

LOANS AND ADVANCES:- unsecured, considered good, unless otherwise stated 2004 Rupees 2003 Rupees 110.47 2002 Rupees 183.75 2001 Rupees 57.81

Loans considered - good - doubtful Advances recoverable in cash or in kind or for value to be received considered good - doubtful Advances to Mars Restaurants (U.K.) Limited, a subsidiary company Deposits Taxation (net) Total Less : Provision for doubtful - loan - advance

32.61 39.49

16.03 35.03 94.82 546.57 23.31 787.86 39.49 35.03 713.34

55.42

181.55

35.00

96.69 567.44 23.97 853.99

151.31 489.31 18.62 1,024.54

35.17 2.49 130.47

853.99

1,024.54

130.47

Net Total 10. Payments made to or provided to whole time directors: 2004 Rupees - Salaries - Perquisites NIL 1.69 1.69

2003 Rupees 5.95 1.80 7.75

2002 Rupees 10.20 1.70 11.90

2001 Rupees 5.10 2.07 7.17

In lieu of the losses the directors have forgone the salaries for year ended March 31, 2004.

168

11. Advances include amounts due from companies under same management or firms in which directors are interested. Name 2004 Rupees 0.12 110.59 20.00 94.82 51.49 0.94 5.46 1.45 2003 Rupees 0.63 43.51 96.69 46.41 3.67 3.06 2002 Rupees 7.97 10.37 151.31 0.01 2001 Rupees 0.37 0.01 16.01 0.69

Mars Hotels & Resorts Pvt Ltd Mars Enterprises Taj Birdys Food Services Ltd. Mars Restaurants (U.K.) Ltd Gourmet Restaurants Pvt. Ltd. Sky Gourmet Catering Pvt. Ltd Deepak Peters Design Pvt. Ltd Bacardi Martini India Ltd. Mars Restaurants (Chennai) Pvt.Ltd. Mars Food Services Mars Catering Services 12. Earnings per share

2004 A i ii iii Weighted average number of equity shares of Rs.10 each Number of shares at the beginning of the year Number of shares at the end of the year Weighted average number of equity shares outstanding during the year Net Profit / (Loss) after tax available for equity share holders Basic and diluted Income / (Loss) per share (in rupees) {B/A(iii)} Note : The company does not have any dilutive potential equity shares. Consequently the basic and diluted loss / earning per share of the company remain the same

2003

2002

2001

49.92 49.92 49.92

49.92 49.92 49.92

14.41 49.92 48.31

NIL 14.41 7.61

(103.45)

(292.71)

20.47

128.09

(2.07)

(5.86)

0.42

16.83

Earning per share (EPS) is calculated after adjusting for 3,327,720 bonus shares issued, vide resolution passed at the extra ordinary general meeting held on July 5, 2004, with retrospective effect as provided in Accounting Standard (AS 20) Earning per share, issued by the Institute of Chartered Accountants of India. 13. Information on related party transactions as required by Accounting Standard 18(AS-18) for the years ended March 31, 2004, 2003 and 2002. a) Subsidiary: Category 1 Mars Restaurants (UK) Limited e) Directors and Key management personnel : Category 2 Mr. Sanjay M Narang - Director Ms. Rachna M Narang - Director Mr. Bala Deshpande (Nominee of the ICICI Venture) - Director Mr. Arvind Ghei (Key management personnel) Chief Financial Officer

169

Companies controlled by Directors / Relatives: Category 3 Gourmet Restaurants Private Limited Mars Food Services Deepak Peter Design Private Limited Mars Enterprises Mars Hotel & Resorts Private Limited Sky Gourmet Catering Private Limited Bullworker Private Limited Taj Birdys Food Services Limited Mars Hotels & Resorts Private Limited Mars Catering Services Private Limited Mars Corporation g) Relative of Directors: Category 4 Mr. Ashok M Narang Particulars Category 1 Category 2 Directors & Key Management Subsidiary Personnel 200 2004 2003 2002 2004 2002 3 Sales Mars Enterprises Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Others Total Sales Service provided Mars Enterprises Sky Gourmet Catering Pvt. Ltd. Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Total Service provided Re-imbursement of Expenses from Mars Enterprises Mars Hotels & Resorts Pvt. Ltd Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Others Total re-imbursement of expenses from Purchases Mars Enterprises

f)

Category 3 Companies Controlled by Directors/ Relatives 2004 2003 2002

84.39 44.15 0.20 128.7 5

95.35 38.99 0.21 134.5 6

46.28 53.21 99.49

53.13 63.81 65.97 20.00 202.9 1

47.23 41.50 30.97 119.7 0

28.53 28.53

128.3 6 19.64 5.84 153.8 3 60.94

95.63 15.13 6.65 117.4 1 26.01

22.53 7.58 21.07 1.72 52.91 -

170

Taj Birdys Food Services Ltd Others Total Purchases Service received Mars Enterprises Mars Food Services Total Services received Re-imbursement of Expenses to Mars Enterprise Sky Gourmet Catering Pvt. Ltd. Mars Corporation Taj Birdys Food Services Ltd Deepak Peters Design Pvt. Ltd Others Total re-imbursement of expenses Advance and Loans given Mars Enterprises Others Total Loans and Advances Advance and Loans repaid Mars Enterprises Others Total Loans and Advances repaid Interest Received - Mars Enterprise Purchase of Fixed Assets Mars Enterprises Taj Birdys Food Services Ltd Total purchase of Fixed Assets Directors Remuneration 1.69 7.75 11.9 0 5.00 97.96 3.14 43.34 151.31 0.32

0.16 61.11

26.01

45.09 0.05 45.14

24.31 23.10 47.41

21.14 28.59 49.72

15.90 35.39 51.29

5.79 3.95 14.64 2.09 26.47

7.38 6.46 0.21 14.05

7.71 26.06 0.22 33.99

15.85 15.85

100.0 0 13.72 113.7 2 200.0 0

100.0 0 13.65 113.6 5

13.65 13.65 172.6 7 18.92 153.7 5 172.6 7 -

15.85 15.85 -

13.72 213.7 2 4.50 -

Remuneration Paid

5.31

6.42

8.63

171

Investment Mars Restaurants(UK) Limited Gourmet Restaurants Pvt. Ltd Total Investment Deposits given - Mars Hotels & Resorts Pvt. Ltd Outstanding as on 31/03/04 Loans and Advances Loans and Advances - Mars Enterprise Deposits - Mars Hotels & Resorts Pvt. Ltd Debtors for goods and services Mars Enterprise Gourmet Restaurants Pvt. Ltd Taj Birdys Food Services Ltd Mars Hotels & Resorts Pvt. Ltd Others Total Debtors for Goods and Services Creditors for goods and services Mars Food Services Mars Corporation Others Total Creditors for goods and Services Investment Investment - Gourmet Restaurants Pvt. Ltd. 192.0 0 192.0 0

192.00 124.5 0 124.5 0 21.53 94.82 96.69 151.31 0.32 100.0 0 417.2 4 61.23 417.2 4

192.00

500.0 0 110.5 9 51.49 20.00

478.7 4

43.51 46.41

9.63

10.37 7.97 7.36 97.28 0.13 28.11

6.53 188.6 1

9.39 2.55

16.35

3.43 1.68

1.64 11.94 192.00 124.5 0 124.5 0 17.98

0.07 5.19

Note : Advance and Loan repaid includes advance of Rs.100.00 given in the Year 2002. 14. Expenditure in foreign currency 2004 Rupees 17.26 0.63 2003 Rupees 37.73 0.67 2002 Rupees 96.51 1.55 0.24 0.02 98.32 2001 Rupees 23.72 0.53

- Foreign travel - Subscription, books and periodicals - Sales promotion - Software expenses Total

17.89

38.40

24.25

172

15.

Joint venture

A.

Disclosure Name of the jointly controlled entity Gourmet Restaurants Private Limited

Percentage of interest 49 %

Country of incorporation India

(B)

Interest in Jointly controlled entity : Financial interest in Gourmet Restaurants Private Limited as below:As at March 31, 2004 98.62 28.19 70.66 174.57 187.63

1. 2. 3. 4. 5. 16.

Fixed Assets Current Assets Loans and Advances Current Liabilities and Provisions Sales and Other Income Expenditure

Tax deducted/ collected at source on: 2004 4.05 0.23 0.27 2003 2.93 2.29 Nil 2002 2.34 0.67 Nil 2001 0.41 2.31 Nil

Sales Interest Purchases 17. Top Ten Sundry Debtors As on 31.03.2004

Name of the Party Mars Enterprises Gourmet Restaurants Pvt Ltd Taj Birdys Food Services Ltd Amalgamated Bean Coffee Trading Vishwesvaraya Ind. Research & Development Deepak Peters Design Pvt. Ltd I.C.I.C.I Bank - Contract Sabmiller India Limited Hindustan Scrap Trader Wonderworld Enterprise

Total outstanding (net) Rs. 110.59 51.49 20.00 14.55 8.06 5.46 5.09 4.76 3.50 3.29

18. Term loan The Company has outstanding vehicle loans aggregate to Rs 4,878,549/- as at March 31, 2004. These loans are secured by hypothecation of vehicles purchased under the loan and in certain cases further secured by personal guarantee of two directods.

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Adjusted Profit and Loss Account Annexure V (Figures in Rs : Lakhs) For the For the year ended March 31 period ended March 31, 2004 2003 2002 2001 139.85 (446.08) 20.84 183.73

Particulars Net (Loss)/Profit after tax as per audited statement of accounts Adjustment : Preliminary expenses / Deferred revenue Deferred tax (Loss) / Profit as per Profit and Loss Account

(3.78) 247.08 (103.45)

(0.95) (152.42) (292.71)

2.70 (2.33) 20.47

2.03 53.61 128.09

174

RESTATED CASH FLOW STATEMENT Particulars A. Cash flow from operating activities: Net (loss)/profit before tax and extraordinary items Adjustments for: Depreciation Preliminary & Deferred revenue expenses written off Financial Charges Interest Expense Dividend Received Interest Income (Profit)/Loss on Investments sold (Profit)/Loss on Fixed Assets sold Loans Written off Base Stock Written off Provision for doubtful loans & advances Operating profit before working capital changes Adjustments for changes in working capital : Sundry debtors Other receivables Loans and Advances Inventories Trade and other payables Cash (used in) / generated from operations Deferred revenue expenditure Taxes paid Net cash from operating activities B. Cash flow from Investing activities: Investments in Subsidiaries / Joint ventures Purchase of fixed assets Proceeds from sale of fixed assets Purchase of investments Proceed from sales of investments Interest received (Revenue) Dividend received Net cash (used in) / generated from investing activities C. Cash flow from financing activities: Proceeds from issue of shares Preliminary expenses incurred

2004 (172.76) 172.54

2003 (464.18) 195.00 10.24 (0.01) (10.85) (2.43) 90.78

Annexure VI (Figures in Rs : Lakhs) 2002 2001 20.02 143.02 3.67 26.24 5.99 (23.44) (2.52) (6.78) 16.65 198.71 24.06 2.27 53.35 0.16

6.42

(1.53) (27.51) 42.04 33.34 38.48 74.52 165.54

(12.21) 1.41 267.75

(181.45)

182.85

(104.77) (0.03) 32.12 (2.69) (45.47) 44.70

(86.20) 0.31 175.90 2.20 43.91 (45.33)

(17.83) 0.33 (877.94) (29.09) 164.84 (576.84) (3.68) (18.01) (598.53)

(55.77) (0.82) (127.98) (90.47) 340.97 333.68

(3.57) 41.13

(5.22) (50.55)

(19.50) 314.18

(149.58) 41.65 (27.58) 134.27 1.53 0.29

(152.50) 11.89 (124.50) 95.50 10.86 0.01 (158.74)

(192.00) (415.67) (199.82) 6.78 2.52 23.44 (774.75)

(801.70) 0.96 12.21 (788.53)

1,500.03

623.01 (2.27)

175

Proceeds from long term borrowings Repayments from long term borrowings Financial charges Interest paid Net cash (used in) / generated from financing activities Net (Decrease)/Increase in cash and cash equivalents during the year Opening Balances of Cash and Cash Equivalents Closing Balances of Cash and Cash Equivalents

(24.21)

(16.91)

79.09 (26.24)

10.82 (53.35) (0.16) 578.05

(6.42) (30.63)

(10.24) (27.15)

(5.99) 1,546.89

10.79 40.87 51.66

(236.44) 277.31 40.87

173.61 103.70 277.31

103.70 103.70

176

STATEMENT OF ACCOUNTING RATIOS 2004 (2.07) (0.06) 37.42 (0.05) 2003 (5.86) (0.15) 39.49 (0.14) 2002 0.42 0.01 46.87 0.01

Annexure VII 2001 16.83 0.17 97.68 0.17

Particulars Earnings per share (Rs) Return on Net worth (%) Net Asset Value per share (Rs) Return on Capital Employed (%)

Definition of Accounting Ratios

Earning per Share =

Profit after Tax No. of Equity Shares

Net Asset Value =

Fixed Assets + Investments + Deferred Tax Asset/(Liability)+Working Capital-Secured loans No. of Equity Shares

Return on Net Worth =

Profit after Tax Equity + Reserves & Surplus-Profit &Loss Account debit balance

Return on Capital Employed =

Profit after Tax Equity + Reserves & Surplus-Profit &Loss Account debit balance+ Secured loans

Note :

1. Ratios have been computed on the basis of the adjusted (Losses)/ Profits for the respective years/period 2. Earning Per Share, Return on New Worth and Return on Capital Employed for the period ended March 31, 2001 therefore not comparable with other years 3. Earning Per Share (EPS) and Net Asset Value is calculated after adjusting for 3327720 bonus shares issued, vide resolution passed at the extra ordinary general meeting held on July 5, 2004, with retrospective effect.

177

Capitalisation Statement Annexure - VIII (Figures in Rs : Lakhs) Pre- Issue as 31st March 2004 48.79 48.79

Description Debt Long term debt Total debts Shareholder's funds Equity capital Reserves & surplus Profit and Loss account debit balance Total Equity Shareholder's Funds

166.39 1,956.66 (255.28) 1,867.76

Debt - Equity Ratio 0.03:1 The post-Issue capitalisation cannot be determined till the completion of the book building process.

178

TAX SHELTER STATEMENT

Annexure IX (Figures in Rs: Lakhs) 2004 (172.76) 2003 (464.18) (464.18) 36.75% 2002 20.02 20.02 35.70% 7.15 2001 198.71 198.71 39.55% 78.59

(Loss)/Profit as per books of account Tax rate Tax on actual profits Adjustments 1.Permanent differences: Dividend(exempt u/s 10) Donation Profit on sale of investments

'A'

(172.76) 36.75%

'B'

0.13 (27.51)

(0.01) 0.30 (2.42)

(23.44) 0.69 (6.78)

0.07

2.Temporary differences: Difference between book depreciation and tax depreciation Provision for expenses disallowed u/s 43 B (net of claimed in income tax) Provision for doubtful loans and advances Crockery cutlery and linen written off (net of claimed in income tax) loss on sale of assets(net) Improvements to third party premises Expenses capitalised claimed as revenue Preliminary/Deferred revenue expenditure written off(net of claimed in income tax) Net adjustments Tax savings thereon Business (loss)/ profit as per Income Tax 'A' Less 'B' Short term capital gains Income from other sources Taxable income 'C'+'D'+'E' Minimum Alternate Tax (MAT) liability TOTAL BROUGHT FORWARD LOSS Business loss for the year Unabsorbed depreciation for the year TOTAL CARRIED FORWARD LOSS AS PER RETURN OF INCOME 'C'=

29.01

19.41

(34.74)

(9.28)

(4.41) 74.52 38.49 42.04 (39.45) (1.49) (0.45)

(6.02) (8.40) 96.22 (52.95) (5.11) (0.45)

(0.20) (3.60) 16.65 (99.27) (64.54) (0.45)

12.11

1.41 (130.49) (136.50) 1.80

110.88 -

40.58 -

(215.68) (77.00)

(260.87) (103.18)

(61.88) 'D' 'E' 1.58 -

(423.60) 2.42 0.01

(195.66) 6.78 -

(62.16) -

(60.30) (672.21) (60.30) (732.51)

(421.17) (251.05) (245.57) (175.60) (672.21)

(188.88) (62.16) (11.12) (177.76) (251.05)

(62.16) 17.01 (28.82) (33.34) (62.16)

179

Details of Other Income

Particulars Non - Recurring Interest - Bank Interest - Others Interest - Income tax refund Dividend - Mutual funds Profit on sale of investments (net) Provision for expenses written back Miscellaneous income Total

Annexure X (Figures in Rs : Lakhs) For the period For the year ended March 31 ended March 31, 2004 2003 2002 2001 0.91 0.30 0.32 27.51 6.25 2.61 37.91 6.22 4.64 0.01 2.43 3.06 10.61 26.96 0.65 1.87 23.44 6.78 7.25 46.54 86.54 11.10 1.12 0.86 13.08

STATEMENT OF DIVIDEND PAID We further report that the dividends declared by Mars Restaurants Limited in respect of four financial period / years are as follows. Annexure XI (Figures in Rs : Lakhs) Tax on Dividend dividend %

Financial Year / period ending on March 31, 2004 March 31, 2003 March 31, 2002 March 31, 2001

Dividend paid

6.96

0.71

10%

180

MARS RESTAURANTS (UK) LTD SUMMARY OF ASSETS AND LIABILITIES AS RESTATED Description 2004 Sources of Funds Shareholders Funds Equity Capital Reserves & Surplus Total Exchange fluctuation on translation Total Funds Employed Application of Funds Current Assets, Loans & Advances Sundry Debtors Cash & Bank Balances Total Less Current Liabilities & Provisions Current Liabilities Total Net Current Assets Profit & Loss Debit balance TOTAL (Figures in Rs. Lakhs) As at 31st March 2003 2002

192.00 192.00 28.30 220.31

192.00 192.00 10.64 202.64

192.00 192.00 0.39 192.39

167.13 167.13 95.96 95.96 71.17 149.14 220.31

0.75 175.20 175.95 97.57 97.57 78.38 124.26 202.64

24.28 169.05 193.33 80.56 80.56 112.77 79.63 192.39

181

MARS RESTAURANTS (UK) LTD SUMMARY OF PROFIT AND LOSS ACCOUNTS, AS RESTATED Description 2004 Income Other Income Total Expenditure Operating Expenses Selling and Distribution Expenses Total Loss from operation Preliminary expenses written off Net Loss Balance brought forward - Deficit Transfer From General Reserve Deferred Tax initial adoption Balance being surplus available for appropriation Appropriation: General reserve Proposed dividend Tax on dividend 1.02 1.02 (Figures in Rs.Lakhs) As at 31st March 2003 2002 1.80 1.80 0.41 0.41

25.90 25.90 (24.88) (24.88) (124.26)

0.09 34.88 34.97 (33.17) 11.47 (44.64) (79.63)

1.69 1.69 (1.28) 78.34 (79.63)

(124.26)

(79.63)

Balance being (deficit)carried to Balance Sheet 1. CURRENCY CONVERSION (149.14)

(124.26)

(79.63)

The companys financial statements are prepared in Indian rupees, the reporting currency. These financial statements have been prepared by translating revenue and expenditure at an average rate for the year and current assets, current liabilities and fixed assets at the year-end rate, the difference arising on translation is shown as foreign exchange fluctuation. Exchange rates used: Average exchange rate used Closing exchange rate used 2004 78.02 80.52 2003 75.07 74.84 2002 67.80 69.37

182

To The Board of Directors Mars Restaurants Limited

Re: Initial public offering of Mars Restaurants Limited Dear Sirs, 1. We have audited the attached summary restated consolidated Balance Sheet (Annexure I) of Mars Restaurants Limited (the company), its subsidiary and jointly controlled entity, as at March 31, 2002, 2003 and 2004, and the summary restated consolidated Profit and Loss Account for each of these years ended on those dates (Annexure II), annexed thereto, significant accounting policies (Annexure III) and notes to accounts for each of these years ended on those dates (Annexure IV) annexed thereto, which we have signed under reference to this report. These consolidated financial statements are the responsibility of the companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all material respects, in accordance with an identified financial reporting framework and are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 3. We did not audit the financial statements of the subsidiary for the years ended March 31, 2002, 2003 and 2004. These financial statements have been audited by another firm of Chartered Accountants and have been accepted by us in so far as it relates to the amounts included in these consolidated financial statements. We also did not audit the financial statements of the joint venture for the years ended March 31, 2003 and 2004. These financial statements have been audited (for the year ended March 31, 2003) and certified (for the year ended March 31, 2004) by another firm of Chartered Accountants and have been accepted by us in so far as it relates to the amounts included in these consolidated financial statements. We have performed certain tests to review the restated consolidated accounts drawn from the above financial statements and underlying accounts for the year ended March 31, 2002, 2003 and 2004. Nothing has come to our attention that causes us to believe that the adjustments relating to consolidation have not been carried out in terms of the requirements of the applicable accounting standards. 4. We report that the summary restated consolidated financial statements have been prepared by the company in accordance with the requirements of Accounting Standard-21 (AS-21) Consolidated Financial Statements and Accounting Standard-27 (AS-27) Financial Reporting of Interests in Joint Ventures issued by the Institute of Chartered Accountants of India, on the basis of the separate audited financial statements of the company and its subsidiary and audited/certified financial statements of the jointly controlled entity, included in the summary restated consolidated financial statements. On the basis of the information and explanations given to us and on consideration of the separate audit reports/certificate on individual audited financial statements of the company, its subsidiary and jointly controlled entity, in our opinion, read with para 3 above, the summary restated consolidated financial

5.

183

statements give a true and fair view in conformity with the accounting principles generally accepted in India: 1) in the case of the summary restated consolidated Balance Sheet, of the consolidated state of affairs of Mars Restaurants Limited, its subsidiary and jointly controlled entity as at year ended March 31, 2002, March 31, 2003 and March 31, 2004; and 2) in case of the summary restated consolidated Profit and Loss Account, of the consolidated results of operations of Mars Restaurants Limited, its subsidiary and joint controlled entity for the years ended on that date. 6. This report is solely for your information and for inclusion in the offer document being issued by the company in connection with the Initial Public Offering by the company of certain Equity Shares and is not to be used, referred to or distributed for any other purpose without our prior written consent.

Yours faithfully, For DELOITTE HASKINS & SELLS Chartered Accountants

R Raghavan Partner Membership No.9483 Place : Mumbai Date : July 21, 2004

184

Assets and Liabilities of Mars Restaurants Limited, its subsidiary and jointly controlled entity at the end of each financial year, read with significant accounting policies (Refer Annexure III below), and notes to accounts (refer Annexure IV below) after making groupings and adjustments (refer annexure V below) , are set below:
SUMMARY OF CONSOLIDATED ASSETS AND LIABILITIES, AS RESTATED Annexure I (Figures in Rs : Lakh) Particulars As at 31st March 2004 2003 2002 A. Fixed assets : Gross block 1,396.77 1,382.88 1,169.60 Less depreciation 501.30 349.08 163.97 Less revaluation reserve Add : capital work in progress 23.42 12.43 25.64 Total 918.88 1,046.23 1,031.26 B.Investment C. Deferred tax asset ( net ) D. Current assets, loans and advances: Inventories Sundry debtors Cash and bank balances Other current assets Loans and advances Total E. Liabilities and provisions: Loan funds : Secured loans Unsecured loans Deferred tax liability (net) Current liabilities and provisions : Liabilities Provisions Total E.Net Worth (A+B+C+D-E) F.Represented by : 1. Share capital 2. Reserves and surplus - Securities premium account - General reserve - Foreign exchange fluctuation reserve - Profit and loss account ( surplus ) 27.58 200.21 106.75 121.91 199.83 -

101.70 214.14 223.59 0.20 620.71 1,160.34

134.47 116.93 224.35 0.17 758.26 1,234.18

119.56 97.88 446.37 0.49 944.38 1,608.67

49.50 -

74.15 1.47 -

89.91 51.28

505.53 26.70 581.72 1,725.28

557.13 27.06 659.81 1,849.27

484.81 29.09 655.09 2,184.66

166.39 1,956.66 28.30

166.39 1,956.66 10.64

166.39 1,956.66 4.59 0.39 56.63 2,184.66 2,184.66

2,151.35 2,133.68 426.07 284.42 G.Profit and Loss Account debit balance Net Worth (F-G) 1,725.28 1,849.27 The accompanying significant accounting policies and notes are integral part of this statement

185

The profits/(losses) of Mars Restaurants Limited, its subsidiary and jointly controlled entity for three financial year read with significant accounting policies (Refer Annexure III below)and notes to accounts (refer Annexure I V below) after making groupings and adjustments (refer Annexure V below), are as set out below:
SUMMARY OF CONSOLIDATED RESTATED PROFIT AND LOSS ACCOUNT, AS RESTATED Annexure II (Figures in Rs.Lakhs) Particulars As at March 31 2004 2003 2002 Income Sales 2,577.87 2,499.15 2,693.75 Other income 11.49 26.38 80.16 Total 2,589.35 2,525.52 2,773.91 Expenditure Raw material consumed Excise Operating expenses Staff costs Selling and distribution expenses Interest Total Less : Capitalised : Reimbursement Total Expenditure Operating Profit / (Loss) before non-operating item, depreciation and tax Loss / provision relating to closure of owned / franchisee outlets - fixed assets - loans - advances Gain on sale of investment Deferred and preliminary expenses (Loss) / Profit before depreciation & income tax Depreciation (Loss)/ Profit before tax Taxation Prior year tax - write back Deferred tax (Loss)/ Profit after tax

917.80 0.12 615.48 441.24 510.29 6.52 2,491.45 8.80 2,482.65 106.71

909.35 0.21 685.32 484.60 674.51 10.30 2,764.28 12.43 18.51 2,733.34 (207.81)

843.96 0.40 684.09 543.82 729.56 32.22 2,834.05 67.74 167.69 2,598.62 175.30

(42.04) (72.84) (35.03) 27.51 (15.69) 200.02 (215.71) 2.74 1.50 (78.30) (141.65)

(90.77) 2.43 (12.20) (308.35) 210.63 (518.98) (0.14) (173.19) (345.65)

(16.65) 6.78 (82.02) 83.41 143.02 (59.62) 1.88 (2.33) (59.17)

The accompanying significant accounting policies and notes are integral part of this statement

186

Annexure III I. Significant Accounting Policies Financial statement Financial statements are prepared under the historical cost convention in accordance with applicable Accounting Standards and provision of the Companies Act, 1956. Fixed assets Fixed assets are stated at cost of acquisition/construction. In respect of assets constructed, all related direct/indirect expenses including interest cost/financing charges are apportioned to respective assets. Intangible Assets are recorded at the consideration paid or cost incurred for the acquisition. Borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets is capitalized as part of the cost. All other borrowing costs are charged to revenue. Depreciation Depreciation is provided on a prorata basis, from the date the assets have been installed and put to use, on a written down value method at rates and in the manner specified under Schedule XIV to the Companies Act, 1956. Improvements on third party premises included under buildings are amortized over the period of agreements. Trademarks are amortized over three years on a straight line basis. Software is amortized @ 40% on WDV basis. Inventories Inventories are stated at cost or net realizable value, whichever is lower.

Raw materials and packing materials Semi finished goods Stores and Spares Finished goods

At cost net of CENVAT computed on average cost method At cost computed on average cost At cost computed on average cost method. method.

At cost computed on average cost method. Excise duty is considered as cost for finished goods wherever applicable. At average cost or net realizable value whichever is lower.

Trading Goods

Sales Gross sales include amounts recovered towards excise duty and sales tax. Retirement benefits The companys contribution to provident fund is charged Profit and Loss Accounts on accrual basis. Liabilities for gratuity and leave encashment are charged to profit and loss account on the basis actuarial valuation. Foreign currency transactions Transactions in foreign currency are recognized at rates on date of transaction. Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using exchange rates prevailing at the date of Balance Sheet and the resulting net exchange difference is

187

recognized in the Profit and Loss Account, except those relating to a acquisition of fixed assets which is adjusted to the cost of such assets. Investments Long term investments are stated at cost. Provision for diminution in value is made if the diminution in value is other than temporary. Current Investments are stated at lower of cost or market value. Income tax Income tax expense comprises current tax and deferred tax charge or credit. Provision for Wealth Tax liability is estimated in accordance with the Wealth Tax Act, 1957 and provided for. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the company. Deferred Taxes Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and writtendown or written-up to reflect the amount that is reasonably/virtually certain to be realized. Miscellaneous expenditure (to the extent of not written off or adjusted) Preliminary or deferred revenue expenditure has been written off in the year in which it incurred. All expenses incurred relating to research for expansion of business are recognized as deferred revenue expenditure and amortized over a period of five years. On adoption of the accounting standard 26 on intangibles, these balances are fully written off. Contingent liabilities These liabilities are appropriately evaluated and disclosed. Dividend Dividend proposed and taxes thereon provided for, is subject to approval of shareholders at the annual general meeting. Annexure IV I. NOTES 1. Principles of Consolidation: The consolidated financial statements relate to Mars Restaurants Limited (the parent company) and its wholly owned subsidiary company and jointly controlled entity. The consolidated financial statements have been prepared on the following basis: 1. The financial statements of the parent company and its subsidiary have been combined on line-byline basis by adding together the book values of like items of assets, liabilities, income and expenses as per respective financial statements duly certified by auditors of the respective companies. Inter-company balances and inter-company transactions and unrealized profits, if any, arising out of inter-company transactions have been eliminated. The financial statements of the parent company and its interest in the jointly controlled entity have been combined using the proportionate consolidation method on a line by line basis by adding together the

2.

188

book values of like items of assets, liabilities, income and expenses after eliminating inter-company balances, inter-group transactions and unrealized profits, as per Accounting Standard 27 Financial Reporting of Interests in Joint Ventures. The financial year of the company and the jointly controlled entity is April March. The un-audited financial statements of the jointly controlled entity for the year April March 2004 have been considered for the consolidated financial statements. 3. The subsidiary company considered in the consolidated financial statements is: Country of incorporation Name of the subsidiary % of voting power held on 31st March, 2004 Mars Restaurants (UK) 100% United Kingdom Ltd. IV. The Jointly Controlled Entity considered in the consolidated financial statements is: Country of incorporation Name of the jointly % of voting power controlled entity held on 31st March, 2004 Gourmet Restaurants 49 % India Private limited The following entities/companies have not been consolidated as the company does not directly control the same: i. Mars Enterprises (Partnership Firm) ii. Mars Corporation (Partnership Firm) iii. Mars Food Service (Partnership Firm) iv. Mars Hotels & Resort Pvt Ltd v. Mars Catering Service Pvt Ltd vi. Bullworker Pvt Ltd vii. Sky Gourmet Catering Pvt Ltd

V.

VI.

Revenue items are consolidated at the average rate prevailing during the year. All current assets and liabilities are converted at the rate prevailing at the end of the year. Exchange gains/(losses) arising on conversion are recognized under the Foreign Currency Translation Reserve (arising on consolidation).

2. NOTES TO ACCOUNTS (All figures are in lakhs of rupees except for earning per share) The company and its promoters have entered into an Investment Agreement with I.C.I.C.I Equity fund (Venture Capital Fund) by which I.C.I.C.I. Equity fund has agreed to participate in the equity share capital of the company (at an agreed value) by a contribution of Rs.2000.50 over a period of six months. The agreement stipulates buy-back of the shares held by I.C.I.C.I Equity fund by the promoters in case of noncompliance to specific condition stipulated in the agreement. As of March 31, 2001 I.C.I.C.I Equity fund has contributed Rs.500.50 towards equity shares. During the year I.C.I.C.I Equity fund (Venture Capital Fund) has further participated in the equity shaper capital of the company by a contribution of Rs.1,500. The agreement stipulates buy-back of the shares held by I..C.I.C.I Equity fund by the promoters in case of noncompliance to specific conditions stipulated in the agreement. As of March 31, 2002 I.C.I.C.I Equity fund has contributed Rs.2000 towards equity shares. The Board of Directors at their meeting held on June 29, 2004 have resolved to make an Initial Public Offer of equity shares of the company subject to compliances to all regulatory requirements including provisions of the

189

Companies Act 1956. The proceeds from the fresh issue of shares will be deployed for meeting working capital requirements, for setting up of restaurants and share issue expenses. As per investment agreement ICICI Equity fund has the first right to offer its shares to the public at the time of Initial Public Offering. However, ICICI Equity fund has accorded its consent for not exercising this right at the Board Meeting held on June 29, 2004. Notes for the period ended March 31, 2001 Sundry debtors have been hypothecated to the bank for an overdraft facility extended to Mars Food Services (a partnership firm in which two of the director are partners). As of the balance sheet date, Mars Food Services have borrowed Rs.61.91 from the bank, which has been repaid by Mars Food Services as of date and the company has filed necessary papers with the Registrar of companies for satisfaction and release of the charge. Notes for the year ended March 31, 2002 As per the agreement original entered into by the company with Mars Hotels and Resorts Private Limited, the latter was to construct the commissary on behalf of the company and transfer the land on which the said commissary was to be constructed as a perpetual lease. The company has during the year, based on a mutually amended agreement treated the amounts already paid as an interest free deposit which would permit the company to continue to occupy and utilize the commissary for carrying on its business. Notes for the year ended March 31, 2003 1. During the year, the company has invested Rs.124.50 for a 49% share in Gourmet Restaurants Private Limited, which operates restaurants under the brand Tendulkars. as per the agreement, the company would be managing the restaurants for a management fee of 3% of net sales. The company had advanced loans aggregating to Rs. 74.66 to K.P Restaurants Private Limited, the franchisee for the Chennai outlet of the company. During the year 2001-02 the operations at the outlet were discontinued and the company is to acquire the entire shareholding of K.P. Restaurants Private Limited in full settlement of dues including loan. Pending completion of formalities for the acquisition, no adjustments have been made in this financial statement, which shall be made during 2003-04. Further, the company has advanced Rs.0.69 during 2003-04. In terms of the investment agreement with LSG Asia Gmbh, the company had invested in the equity share capital of LSG Sky Chef ( India) Private limited (a company promoted by one of the Directors of Mars Restaurants Private Limited). In the current year, the company exercised its put option as per the agreement to disinvest its equity shareholding in the said company, subject to necessary approvals. The shares have been transferred on May 6 th 2003, accordingly all consequent adjustments shall be made in the year 2003-04.

2.

3.

Notes for the year ended March 31, 2004 1. Events after Balance Sheet date: a) The Board of Directors at their meeting held on June 29, 2004 have resolved to make an Initial Public Offer of equity shares of the company subject to compliances to all regulatory requirements including provisions of the Companies Act 1956.

b) The name of the company was changed to Mars Restaurants Limited effective July 9, 2004 consequent upon approval by Shareholders for change of name at the extraordinary general meeting held on July 5, 2004.

190

c)

The authorized share capital was increased by Rs. 1,005 by creation of 100.50 equity shares of Rs. 10/- each approved by shareholders at the extraordinary general meeting held on July 5, 2004.

d) At the extraordinary general meeting held on July 5, 2004, the company was authorized to issue bonus shares in the ratio of 2 equity shares of Rs. 10 each for every equity shares of Rs. 10 each by capitalization of share premium account to the extent of Rs. 332.77 The adjustment for the issue shall be effected in the financial year 2004-05. Contingent liabilities not provided for : Claims against the company not acknowledged as debts towards: 2004 Electricity charges Tax matters in dispute under Appeal with C.I.T (Appeals) Guarantees given by Mars Restaurants (UK) Limited in respect of facilities given to Mars Restaurants Private Limited 2. 3.06 91.04 NIL 2003 3.06 Nil USD 3.65 2002 3.06 Nil NIL

During the year, the company reversed its decision to acquire equity shares in K.P. Restaurants Private Limited and has provided for the loans Rs.39.49 and advances Rs.35.03 as doubtful.. Prior year tax Rs. 1.50 includes: a. Rs. 0.63 being tax paid consequent on search and seizures conducted by the Income tax department under Section 132 of Income Tax Act 1961 and block assessments completed under Section 158 BC of the Income Tax Act 1961. Rs. 0.87 being interest for the assessment year 2001-02 as per Income Tax Act 1961. Rs. 0.00 (Rupees Four Hundred Fifteen) being excess provision written back as per Wealth Tax Act.

3.

b. c. 4.

Current tax Rs. 2.74 includes: a) Wealth tax Rs. 0.08 b) Long term capital gain tax Rs. 2.66 The break up of deferred tax is as under: 2004 2003 2002

5.

Deferred tax assets: Disallowance u/s. 43B Business loss upto AY 2004-05 Unabsorbed depreciation Depreciation Others Preliminary expenses Total Deferred tax liability: Depreciation Preliminary expenses

2.40 24.35 13.60 56.73

0.12 88.27 68.94 7.13 35.36 0.13 199.95 0.28 -

4.54 3.44 65.33 6.12

97.08 0.22

79.43 12.77 0.17

191

Improvement to third party premises, claimed in income tax Expenses capitalized claimed as revenue in Income Tax Others Total Charged for the year Net (Deferred Liability) / Asset 6.

19.46 14.98 3.58 18.78 78.30 200.21 5.01 2.01 26.76 173.19 121.91

36.48 23.72 3.96 77.10 2.33 (51.28)

The companys major business is food and catering services and all the other activities of the company revolve around the main business and as such there is no separate reportable segments as per the Accounting Standard, AS 17 on Segment Reporting issued by the Institute of Chartered Accountants of India.

7.

Earnings per share 2004 2003 2002

A i ii iii

Weighted average number of equity shares of Rs.10 each Number of shares at the beginning of the year Number of shares at the end of the year Weighted average number of equity shares outstanding during the year Net Profit / (Loss after tax available for equity share holders

49.92 49.92 49.92

49.92 49.92 49.92

14.41 49.92 48.31

(141.65)

(345.65)

(59.17)

Basic and diluted Earnings / (Loss) per share (in rupees) {B/A(iii)} (2.84) (6.92) (1.22) Note : The company does not have any dilutive potential equity shares. Consequently the basic and diluted loss / earning per share of the company remain the same Earning per share (EPS) is calculated after adjusting for 3,327,720 bonus shares issued, vide resolution passed at the extra ordinary general meeting held on July 5, 2004, with retrospective effect as provided in Accounting Standard (AS 20) Earning per share, issued by the Institute of Chartered Accountants of India. 8. Information on related party transactions as required by Accounting Standard -18 (AS 18) the years ended March 31, 2004, 2003 and 2002. Directors and Key management personnel : Category 1 Mr. Sanjay M Narang - Director Ms. Rachna M Narang - Director Mr. Bala Deshpande (Nominee of the ICICI Venture) - Director Mr. Arvind Ghei (Key management personnel) Chief Financial Officer

a)

192

b)

Companies controlled by Directors / Relatives: Category 2 Mars Food Services Deepak Peter Design Private Limited Mars Enterprises Mars Hotel & Resorts Private Limited Sky Gourmet Catering Private Limited Bullworker Private Limited Taj Birdys Food Services Limited Mars Hotels & Resorts Private Limited Mars Catering Services Private Limited Mars Corporation Relative of Directors: Category 3 Mr. Ashok M Narang Category 1 Directors & Key Management Personnel 2004 2003 2002 Category 2 Companies Controlled by Directors / Relatives 2004 84.39 0.20 84.59 53.13 63.81 20.00 136.94 128.36 5.84 134.19 60.94 60.94 24.31 23.10 47.41 5.79 3.95 14.64 0.23 24.62 2003 95.35 0.21 95.57 47.23 41.50 88.73 95.63 6.65 102.28 26.01 26.01 21.14 28.59 49.72 7.38 6.46 0.13 13.98 2002 46.28 53.21 99.49 28.53 28.53 22.53 7.58 21.07 1.72 52.91 45.09 0.05 45.14 15.90 35.39 51.29 7.71 26.06 0.22 33.99

c)

Particulars

Sales Mars Enterprises Taj Birdys Food Services Ltd Others Total Sales Service provided Mars Enterprises Sky Gourmet Catering Pvt. Ltd. Taj Birdys Food Services Ltd Others Total Service provided Re-imbursement of Expenses from Mars Enterprises Mars Hotels & Resorts Pvt. Ltd Taj Birdys Food Services Ltd Others Total re-imbursement of expenses from Purchases Mars Enterprises Taj Birdys Food Services Ltd Others Total Purchases Service received Mars Enterprises Mars Food Services Total Services received Re-imbursement of Expenses to Mars Enterprises Sky Gourmet Catering Pvt. Ltd. Mars Corporation Taj Birdys Food Services Ltd Deepak Peters Design Pvt. Ltd Others Total re-imbursement of expenses

193

Advance and Loans given Mars Enterprises Others Total Loans and Advances Advance and Loans repaid Mars Enterprises Others Total Loans and Advances repaid Interest Received - Mars Enterprise Purchase of Fixed Assets Mars Enterprises Taj Birdys Food Services Ltd Total purchase of Fixed Assets Directors Remuneration Remuneration Paid Deposits given - Mars Hotels & Resorts Pvt. Ltd Outstanding as on 31/03/04 Loans and Advances Loans and Advances - Mars Enterprise Deposits - Mars Hotels & Resorts Pvt. Ltd Debtors for goods and services Mars Enterprises Taj Birdys Food Services Ltd Mars Hotels & Resorts Pvt. Ltd Others Total Debtors for Goods and Services Creditors for goods and services Mars Food Services Mars Corporation Others Total Creditors for goods and Services

0.32 1.69 5.31 0.32 -

7.75 6.42 -

11.90 8.63 -

9.01 9.01 9.01 9.01 21.53 500.00 110.59 20.00 6.53 137.12 9.39 2.55 11.94

100.00 10.73 110.73 200.00 10.73 210.73 4.50 61.23 478.74 43.51 7.36 50.87 16.35 1.64 17.98

100.00 13.65 113.65 13.65 13.65 18.92 153.75 172.67 417.24 100.00 417.24 9.63 10.37 7.97 0.13 28.11 3.43 1.68 0.07 5.19

Note: Advance and Loan repaid includes advance of Rs.100 given in the Year 2002. 10. Tax deducted/ collected at source on: 2004 Sales Interest Purchases 4.05 0.23 0.27 2003 2.93 2.29 Nil 2002 2.34 0.67 Nil

Adjusted Profit and Loss Account Particulars Net (Loss)/Profit as per statement of accounts after tax

Annexure V (Figures in Rs : Lakh) For the year ended March 31 2004 2003 2002

11.41

(487.15)

19.56

194

Adjustment : Preliminary expenses / deferred revenue Deferred tax (94.26) 247.32 11.16 (152.66) 81.06 (2.33)

(Loss) / Profit as per profit and loss account (141.65)

(345.65)

(59.17)

195

ANNEXURE III CONSOLIDATED RESTATED FINANCIAL STATEMENTS OF THE COMPANY AND ITS SUBSIDIARY FOR THE FINANCIAL YEAR 2003-04: I. Principles of Consolidation : The Consolidated Financial Statements relate to Mars Restaurants Private Limited. (the Company) and its wholly owned subsidiary company Mars Restaurants (UK) Limited. The Consolidated Financial Statements have been prepared on the following basis: The financial statements of the Company and its subsidiary Company have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealized profits of losses as per Accounting Standard 21 Consolidated Financial Statements issued by The Institute of Chartered Accountants of India. Revenue items are consolidated at the average rate prevailing during the year. All current assets and liabilities are converted at the rate prevailing at the end of the year. Exchange gains/(losses) arising on conversion are recognized under the Foreign Currency Translation Reserve (arising on consolidation). There is only one subsidiary company included in the consolidation and the companys holding therein is 100%. The Associates of the Company and Ownership interest are as follows: Name of the Company % share held 49% Original cost of Investment 12,450,000 Carrying amount of investment on 31st March, 2003 69,07,935 Carrying amount of investment on 31st March, 2004 5,601,870

Gourmet Restaurants Pvt. Ltd II. Significant Accounting Policies Financial statements

Financial statements are prepared under the historical cost convention in accordance with applicable Accounting Standards and provision of the Companies Act, 1956. Fixed Assets Fixed assets are stated at cost of acquisition/construction. In respect of assets constructed, all related direct/indirect expenses including interest cost/financing charges are apportioned to respective assets. Intangible Assets are recorded at the consideration paid or cost incurred for the acquisition. Borrowing costs Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue. Depreciation Depreciation is provided on a pro-rata basis, from the date the assets have been installed and put to use, on a written down value method at rates and in the manner specified under Schedule XIV to the Companies Act, 1956. Improvements on third party premises included under buildings are amortized over the period of agreements. Trademarks are amortized over three years on a straight line basis. Software is amortized @ 40% on WDV basis.

196

Inventories Inventories are stated at cost or net realizable value, whichever is lower.

Raw materials and packing materials Raw materials and packing materials Semi finished goods Stores and Spares Finished goods

At cost net of CENVAT computed on average cost method At cost net of CENVAT computed on average cost method At cost computed on average cost At cost computed on average cost method. method.

At cost computed on average cost method. Excise duty is considered as cost for finished goods wherever applicable. At average cost or net realizable value whichever is lower.

Trading Goods

Sales Gross sales include amounts recovered towards Excise Duty and Sales Tax. Retirement Benefits The Companys contribution to provident fund is charged Profit and Loss Accounts on accrual basis. Liabilities for gratuity and leave encashment are charged to profit and loss account on the basis actuarial valuation. Foreign currency transactions Transactions in foreign currency are recognized at rates on date of transaction. Monetary items (other than those related to acquisition of fixed assets) denominated in a foreign currency are restated using exchange rates prevailing at the date of Balance Sheet and the resulting net exchange difference is recognized in the Profit and Loss Account. Investments Long Term Investments are stated at cost. Provision for diminution in value is made if the diminution in value is other than temporary. Current Investments are stated at lower of cost or market value. Income tax Income tax expense comprises current tax and deferred tax charge or credit. Provision for Wealth Tax liability is estimated in accordance with the Wealth Tax Act, 1957 and provided for. Current tax The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the company. Deferred Taxes Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantially enacted by the balance sheet date. Deferred tax assets are recognized only if there is a virtual certainty of realization of such assets. Deferred tax assets are reviewed

197

as at each balance sheet date and writtendown or written-up to reflect the amount that is reasonably/virtually certain to be realized. Preliminary expenses and Deferred revenue expenditure Preliminary expenses relating to formation of the company are amortized over a period of ten years. All expenses incurred relating to research for expansion of business are recognized as deferred revenue expenditure and amortized over a period of five years. On adoption of the accounting standard 26 on intangibles, these balances are fully written off. Contingent liabilities These liabilities are appropriately evaluated and disclosed. Dividend Dividend proposed and taxes thereon provided for, is subject to approval of shareholders at the annual general meeting.

198

III. NOTES ( All figures are in lakhs of rupees except for earning per share) The Company and its promoters have entered into an Investment Agreement with ICICI Trusteeship Services Limited (ICICI Equity fund by which Fund has agreed to participate in the equity share capital of the company (at an agreed value) by a contribution of Rs.2000.50 over a period of six months. The agreement stipulates buy-back of the shares held by I.C.I.C.I Equity fund by the promoters in case of noncompliance to specific condition stipulated in the agreement. As of March 31, 2001 ICICI Equity Fund has contributed Rs.500.50 towards equity shares. During the year I.C.I.C.I Equity fund Fund (Venture Capital Fund) has further participated in the equity shaper capital of the Company by a contribution of Rs.1,500. The Investment Agreement stipulates buy-back of the shares held by ICICI Equity Fund by the Promoters in case of noncompliance to specific conditions stipulated in the Investment Agreement. The agreement stipulates buy-back of the shares held by I..C.I.C.I Equity fund by the promoters in case of noncompliance to specific conditions stipulated in the agreement . As of March 31, 2002 I.C.I.C.IICICI Equity fund Fund has contributed Rs.2000 towards equity shares. Pursuant to a transfer of these shares to ICICI Trusteeship Services Limited (ICICI Emerging Sectors Fund), the Investment Agreement was novated in favour of ICICI Trusteeship Services Limited (ICICI Emerging Sectors Fund).

The agreement stipulates buy-back of the shares held by I..C.I.C.I Equity fund by the promoters in case of noncompliance to specific conditions stipulated in the agreement. As of March 31, 2002 I.C.I.C.I Equity fund has contributed Rs.2000 towards equity shares. Notes for the period ended March 31, 2001 Sundry debtors have been hypothecated to the bank for an overdraft facility extended to Mars Food Services (a partnership firm in which two of the director are partners). As of the balance sheet date, Mars Food Services have borrowed Rs.61.91 from the bank, which has been repaid by Mars Food Services as of date and the company has filed necessary papers with the Registrar of companies for satisfaction and release of the charge. Notes for the period ended March 31, 2002 As per the agreement original entered into by the Company with Mars Hotels and Resorts Private Limited, the latter was to construct the commissary on behalf of the Company and transfer the land on which the said Commissary was to be constructed as a perpetual lease. The Company has during the year, based on a mutually amended agreement treated the amounts already paid as an interest free deposit which would permit the Company to continue to occupy and utilize the Commissary for carrying on its business. Notes for the period ended March 31, 2003 1. During the year, the Company has invested Rs.124.50 for a 49% share in Gourmet Restaurants Private Limited, which operates restaurants under the brand Tendulkars. as per the agreement, the company would be managing the restaurants for a management fee of 3% of net sales. 4. The company had advanced loans aggregating to Rs. 74.66 to K.P Restaurants private Limited, the franchisee for the Chennai outlet of the company. During the year 2001-02 the operations at the outlet were discontinued and the company acquired the entire shareholding of K.P. Restaurants Private Limited in full settlement of dues including loan. Pending completion of formalities for the acquisition, no adjustments have been made in this financial statement, which shall be made during 2003-04. Further, the company has advanced Rs.0.69 during 2003-04.

199

5.

In terms of the investment agreement with LSG Asia Gmbh, the company had invested in the equity share capital of LSG Sky Chef ( India) Private limited ( a company promoted by one of the Directors of Mars Restaurants Private Limited). In the current year, the company exercised its put option as per the agreement to disinvest its equity shareholding in the said company, subject to necessary approvals. The shares have been transferred on May 6th 2003, accordingly all consequent adjustments shall be made in the year 200304.

Notes for the period ended March 31, 2004 7. Events after Balance Sheet date: a) The Board of Directors at their meeting held on June 29, 2004 have resolved to make an Initial Public Offer of equity shares of the Company subject to compliances to all regulatory requirements including provisions of the Companies Act 1956.

b) The name of the Company was changed to Mars Restaurants Limited effective July 9, 2004 consequent upon approval by Shareholders for change of name at the extraordinary general meeting held on July 5, 2004. c) The authorized share capital was increased by Rs. 1,005 by creation of 100.50 equity shares of Rs. 10/- each approved by shareholders at the extraordinary general meeting held on July 5, 2004.

d) At the extraordinary general meeting held on July 5, 2004, the company was authorized to issue bonus shares in the ratio of 2 equity shares of Rs. 10 each for every equity shares of Rs. 10 each by capitalization of share premium account to the extent of Rs. 332.77 The adjustment for the issue shall be effected in the financial year 2004-05. 8. Contingent liabilities not provided for : Claims against the company not acknowledged as debts towards: 2004 Electricity Charges Tax matters in dispute under Appeal with C.I.T (Appeals) Guarantees given by Mars Restaurants (UK) Limited in respect of facilities given to Mars Restaurants Private Limited 9. 3.06 91.04 NIL 2003 3.06 Nil USD 3.65 2002 3.06 Nil NIL

During the year, the company reversed its decision to acquire equity shares in K.P. Restaurants Private Limited and has provided for the loans Rs.39.49 and advances Rs.35.03 as doubtful..

10. Prior year tax Rs. 1.50 includes: a) Rs. 0.63 being tax paid consequent on search and seizures conducted by the Income tax department under Section 132 of Income Tax Act 1961 and block assessments completed under Section 158 BC of the Income Tax Act 1961. b) Rs. 0.87 being interest for the assessment year 2001-02 as per Income Tax Act 1961. c) Rs. 0.00 (Rupees Four Hundred Fifteen) being excess provision written back as per Wealth Tax Act. 11. Current tax Rs. 2.74 includes: a) Wealth tax Rs. 0.08 b) Long term capital gain tax Rs. 2.66

200

12. The Break up of Deferred tax assets and liabilities are as under: Nature of Timing difference As at 31.3.2004 As at 31.3.2003

Deferred Tax Assets: Disallowance u/s. 43B Business Loss upto AY 2004-05 Unabsorbed Depreciation Depreciation Others Total Deferred Tax Liability: Depreciation Preliminary Expenses Deferred Revenue Expenditure Improvement to third party premises, claimed in Income Tax Expenses capitalized claimed as revenue in Income Tax Total

2.85 104.51 164.15 10.62 96.71 378.84 8.95 0.17 0.00 117.51 56.98 183.27

4.47

39.98 44.45 8.95 0.25 0.81 102.53 56.98 169.51

Net (Deferred Liability) / Asset 195.57 (125.06) * (Rupees Three Hundred Forty Eight) 13. The companys major business is food and catering services and all the other activities of the company revolve around the main business and as such there is no separate reportable segments as per the Accounting Standard, AS 17 on Segment Reporting issued by the Institute of Chartered Accountants of India. 8. Earnings per share 2004 A I Ii Iii Weighted average number of equity shares of Rs.10 each Number of shares at the beginning of the year Number of shares at the end of the year Weighted average number of equity shares outstanding during the year Net Profit / (Loss after tax available for equity share holders (in Rs.) Basic and diluted Income / (Loss) per share (in rupees) {B/A(iii)} Note : The Company does not have any dilutive potential equity shares. Consequently the basic and diluted loss / earning per share of the Company remain the same 2003 2002

16.64 16.64 16.64

16.64 16.64 16.64

14.41 16.64 15.03

139.85

(446.08)

20.83

08.41

(26.81)

1.39

201

9. a)

Information on Related Party Transactions as required by AS 18 for the year ended March 31, 2004. Directors and Key Management Personnel : Category 1 Sanjay M Narang Rachna M Narang Bala Deshpande (Nominee of the ICICI Venture) Arvind Ghei (Key Management Personnel) Companies controlled by Directors / Relatives: Category 2 Gourmet Restaurants Private Limited Mars Food Services Deepak Peter Design Private Limited Mars Enterprises Mars Hotel & Resorts Private Limited Sky Gourmet Catering Services Private Limited Bullworker Private Limited Taj Birdys Food Services Limited Mars Hotels & Resorts Private Limited Mars Catering Services Private Limited Mars Corporation d) Relative of Directors: Category 3 Ashok M Narang

b)

Related Party Transactions as required by AS 18 for the year ended March 31, 2004. Particulars Category 1 Category 2 Directors & Key Management Companies Controlled Personnel by Directors/ relatives Sales 128.75 Service provided 202.91 Re-imbursement of Expenses from 153.83 Purchases 61.11 Service received 47.41 Re-imbursement of Expenses to 26.47 Advance and Loans given 0.32 15.85 Advance and Loans repaid 15.85 Directors Remuneration 1.69 Remuneration Paid 5.31 Deposits given 21.53 Outstanding as on 31/03/04 Advance 0.32 Deposits 500.00 Debtors for goods and services 190.06 Creditors for goods and services 11.94 Investment 124.50 Note: Advance and Loan repaid includes advance of Rs.100 given in the Year 2002.

202

10. The Company has adopted accounting standard 26 Intangible Assets during the year. Accordingly, balances in Preliminary expenditure and Deferred revenue expenditure aggregated to Rs.91.40 and Rs.2.21 respectively has been charged to Profit and Loss Account consequent to the adoption of the standard, the loss before tax for the year has increased by Rs.92.64 11. Tax deducted/ collected at source on: 2004 Sales Interest Purchases 12. 4.05 0.23 0.27 2003 2.93 2.29 Nil 2002 2.34 0.67

Previous years figures have been regrouped and rearranged wherever necessary.

203

SECTION VII OTHER INFORMATION STATUTORY AND OTHER INFORMATION Consents Consents in writing of: (a) the Directors, the Company Secretary and Compliance officer, the Auditors, Legal Advisors to the Issue, Bankers to the Company and Bankers to the Issue; and (b) Book Running Lead Manager to the Issue, Escrow Collection Banker and Registrars to the Issue, to act in their respective capacities, have been obtained and filed along with a copy of the Prospectus with the Registrar of Companies, Maharashtra, at Mumbai as required under Section 60 and Section 60 B of the Companies Act and such consents have not been withdrawn up to the time of delivery of the offer document for registration. Further, as per the requirements of the Investment Agreement dated September 29, 2000, ICICI Emerging Sectors Fund has also accorded its consent at the Board Meeting held on June 29, 2004. For further details, see Our History Agreements with our Shareholders. Deloitte, Haskins and Sells, Chartered Accountants and our statutory auditors have given their written consent to the inclusion of their report in the form and context in which it appears in the Draft Red Herring Prospectus and such consent and report has not been withdrawn up to the time of delivery of the Draft Red Herring Prospectus for registration with the Registrar of Companies, Maharashtra at Mumbai. A T Jain & Co.,, Chartered Accountants, have given their consent to the tax benefits accruing to us and our members in the form and context in which it appears in the Draft Red Herring Prospectus and has not withdrawn the same up to the time of delivery of the Draft Red Herring Prospectus for registration with the Registrar of Companies, Maharashtra at Mumbai. Minimum Subscription If the Company does not receive the minimum subscription of 90% of the Fresh Issue amount including devolvement of the members of the Syndicate, if any, within 60 days from the Bid Closing Date, the Company shall forthwith refund the entire subscription amount received. If there is a 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. If the number of allottees in the proposed issue is less than 1,000, the Company shall forthwith refund the entire subscription amount received. If there is a delay beyond 15 days after the Company becomes liable to pay the amount, the Company shall pay interest at the rate of 15% per annum for the delayed period. Expert Opinion Save as stated elsewhere in the Draft Red Herring Prospectus, we have not obtained any expert opinions. Changes in Directors and Auditors during the last three financial years and reasons thereof There were no changes in Directors during the last three years,. There has been no change in the Auditors during last three years. Procedure and Time Schedule for Allotment and Issue of Share Certificates We reserve at our sole, absolute and uncontrolled discretion and without assigning any reason thereof, the right to accept or reject any Bid in whole or in part. In case a Bid is rejected in full, the whole of the Bid Amount will be refunded to the Bidder within 15 days of the Bid Closing Date. In case a Bid is rejected in part, the excess Bid Amount will be refunded to the Bidder within 15 days of the Bid Closing Date. We will allot the Equity Shares within 15 days from the Bid Closing Date, and shall pay interest at the rate of 15% per annum (for any delay beyond the periods as mentioned above), if allotment is not made within 15 days of Bid Closing Date, or if refund orders are not dispatched and/ or demat credits are not made to investors within two working days from the date of allotment.

204

Utilisation of Issue Proceeds Pending the utilisation of net proceeds of the Issue as specified under the section Objects of Issue, the net proceeds will be invested in high quality, interest bearing liquid instruments including deposits with banks for the necessary duration Disposal of Applications and Applications Money We shall dispatch allotment advice, refund orders and give benefit to the Beneficiary Account with Depository Participants and submit the allotment and listing documents to the Stock Exchanges within two working days of finalisation of the basis of allotment. We shall dispatch refund orders, if any, of value upto Rs.1,500, by Under certificate of posting, and shall dispatch refund orders above Rs.1,500, if any, by Registered Post or Speed Post at the sole or first bidder's sole risk. The BRLM shall ensure that all steps for completion of the necessary formalities for listing and commencement of trading at all the Stock Exchanges where the Equity Shares are proposed to be listed, are taken within seven working days of finalisation of the basis of allotment. In accordance with the Companies Act, the Stock Exchange requirements and SEBI Guidelines, we further undertake that: allotment of Equity Shares shall be made only in dematerialised form within 15 days from the Bid Closing Date; despatch of refund orders shall be made within 15 days from the Bid Closing Date; and Interest in Case of Delay in Despatch of allotment letters refund orders -interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), shall be paid if allotment is not made, refund orders are not dispatched and/or demat credits are not made to investors within the 15 days time prescribed above. We will provide adequate funds required for dispatch of refund orders 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 us as a refund banker and payable at par at places where bids are received. Bank charges, if any, for encashing such cheques, pay orders or demand drafts at other centres will be payable by the bidders. No receipt will be issued for the Bid Amount received by us. However, the Bankers to the Issue and Syndicate Members receiving the Bid Forms will acknowledge receipt by stamping and returning the acknowledgement slip at the bottom of each form. Interest on refund of excess bid amount We shall pay interest at the rate of 15% per annum on the excess bid amount received by us if refund orders are not dispatched within 15 days from the Bid Closing Date as per the Guidelines issued by the Government of India, Ministry of Finance pursuant to their letter no. F-8/6/SE/79 dated July 21, 1983, as amended by their letter no. F/14/SE/85 dated September 27, 1985, addressed to the Stock Exchanges, and as further modified by SEBI's Clarification XXI dated October 27, 1997, with respect to the SEBI Guidelines. Basis of Allotment or Allocation (A) For Retail Individual Bidders Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allocation to all the successful Retail Individual Bidders will be made at the Issue Price. The Issue size less allocation to Non-Institutional Bidders and QIBs shall be available for allocation to Retail Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price. If the aggregate demand in this category is less than or equal to 25% of the Issue at or above the Issue Price, full allocation shall be made to the Retail Bidders to the extent of their demand. If the aggregate demand in this category is greater than 25% of the Issue at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of (*) Equity Shares. For the method of proportionate basis of allotment, refer below.

205

(B) For Non-Institutional Bidders Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this category. The allocation to all successful Non-Institutional Bidders will be made at the Issue Price. The Issue size less allocation to Retail Bidders and QIBs shall be available for allocation to Non-institutional Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price. If the aggregate demand in this category is less than or equal to 25% of the Issue at or above the Issue Price, full allocation shall be made to Non-Institutional Bidders to the extent of their demand. In case the aggregate demand in this category is greater than 25% of the Issue at or above the Issue Price, allocation shall be made on a proportionate basis up to a minimum of (*) Equity Shares. For the method of proportionate basis of allotment refer below. (C) For QIB Bidders Bids received from QIBs at or above the Issue Price shall be grouped together to determine the total demand under this category. The allocation to all successful QIBs will be made at the Issue Price. 50% of the Issue size shall be available for allocation to QIBs who have bid in the Issue at a price, which is equal to or greater than the Issue Price. The allocation would be broadly decided based on the quality of the Bidder determined by the size, price and date of the Bid. The Company, in consultation with the BRLMs, would have the discretion for any allocation. Undersubscription, if any, in the Non-institutional and Retail individual bidder categories would be allowed to be met with the spill over from any of the other categories, at the Companys sole discretion and in consultation with the BRLMs. Method of Proportionate Basis of Allocation In the event the Issue is over-subscribed, the basis of allotment to Retail Individual Bidders and Non-Institutional Bidders shall be finalised by us in consultation with the BRLMs and the Stock Exchange, Mumbai (Designated Stock Exchange). The Executive Director of the Stock Exchange, Mumbai along with the BRLMs and the Registrar to the Issue shall be responsible for ensuring that the basis of allotment is finalised in a fair and proper manner. The allotment to Bidders shall be as per the basis of allocation as set out in this Draft Red Herring Prospectus under Offer Structure. (a) Bidders will be categorised according to the number of Equity Shares applied for. (b) The total number of Equity Shares to be allocated to each category as a whole shall be arrived at on a proportionate basis which is the total number of Equity Shares applied for in that category (number of bidders in the category multiplied by the number of shares applied for) multiplied by the inverse of the over-subscription ratio. (c) Number of Equity Shares to be allocated to the successful Bidders will be arrived at on a proportionate basis which is total number of Equity Shares applied for by each Bidder in that category multiplied by the inverse of the over-subscription ratio in that category subject to minimum allotment of (*) Equity Shares. The Allotment Lot shall be the same as the Minimum Application lot irrespective of any revisions to the Price Band. (d) In case the proportionate allotment to any Bidders is in fractions, then the same would be rounded off to nearest integer. (e) In all Bids where the proportionate allocation is less than (*) Equity Shares per Bidder, the allocation shall be made as follows: Each successful Bidder shall be allocated a minimum of (*) Equity Shares; and The successful Bidders out of the total Bidders for a category shall be determined by draw of lots in a manner such that the total number of Equity Shares allocated in that category is equal to the number of Equity Shares calculated in accordance with (b) above (f) If the Equity Shares allocated on a proportionate basis to any category are more than the Equity Shares allocated to the Bidders in that category, the remaining Equity Shares available for allocation shall be first adjusted against any other category, where the allocated shares are not sufficient for proportionate allocation to the successful bidders in that category. The balance Equity Shares, if any, remaining after such adjustment will be added to the category comprising Bidders applying for minimum number of Equity Shares.

206

Expenses of the Offer The expenses of the Issue payable by us inclusive of brokerage, fees payable to the BRLM, Syndicate Members, other advisors to the Issue, fees of Legal Advisors, stamp duty, printing, publication, advertising and distribution expenses, bank charges, fees payable to the Registrars to the Issue, listing fees and other miscellaneous expenses is estimated to be approximately [*]% of the Issue size, and will be met out of the proceeds of the Issue. Fees Payable to the Book Running Lead Manager The total fees payable to the Book Running Lead Managers will be as per the Memorandum of Understanding signed with the Company, 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 will be as per will be as per the Memorandum of Understanding signed with the Company, copy of which is available 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 allocation advice by registered post/ Speed Post. Refund Orders up to Rs.1,500 would be send under certificate of posting. Underwriting Commission, Brokerage and Selling Commission The Underwriting Commission and selling commission for the Offer is set out in the Syndicate Agreement among the Company, the BLRM and Syndicate Members. The underwriting commission shall be paid as set out in the Syndicate Agreement based on the Offer Price and underwritten in the manner mentioned elsewhere in the Draft Red Herring Prospectus. For further details see General Information. Previous Rights and Public Issues We have not made any previous rights or public issue. Commission and Brokerage on Previous Issues Except as stated elsewhere in the Draft Red Herring Prospectus, no sum has been paid or is payable as commission or brokerage for subscribing to or procuring or agreeing to procure subscription for any of our Equity Shares since its inception

Outstanding Debentures or Bond Issues or Preference Shares As on date the Company has no outstanding Debentures or Bond Issues or preference shares Capitalisation of Reserves or Profits We have not capitalised our reserves or profits at any time since its inception except as stated in the Section entitled Capital Structure of this Draft Red Herring Prospectus. Issues otherwise than for Cash We have not issued any Equity Shares for a consideration otherwise than for cash. Application in Issue Equity shares being issued through this Draft Red Herring prospectus can be applied for in the Dematerialized form only. Option to Subscribe We have not given any options for any of our Equity Shares in the Issue.

207

Purchase of Property Except as stated in Objects of the Issue in this Draft Red Herring Prospectus and save in respect of the property purchased or acquired or to be purchased or acquired in connection with the business or activities contemplated by the Objects of the Issue, there is no property which we have purchased or acquired or propose to purchase or acquire which is to be paid for wholly or partly out of the net proceeds of the present Issue or the purchase or acquisition of which has not been completed on the date of this Draft Red Herring Prospectus, other than property in respect of which: the contracts for the purchase or acquisition were entered into in the ordinary course of the business, and the contracts were not entered into in contemplation of the Issue nor is the Issue contemplated in consequence of the contracts; or the amount of the purchase money is not material or disclosure has been made earlier in this Draft Red Herring Prospectus Except as elsewhere stated in this Draft Red Herring Prospectus, we have not purchased any property in which any of its promoters and/or Directors, have any direct or indirect interest in any payment made thereof. Revaluation of Assets We have not revalued any of our assets since our inception. Classes of Shares Our authorised capital is Rs.1250 lakhs divided into 125 lakhs Equity Shares of Rs.10 each. Payment or Benefit to Promoters or Officers of the Company Except as stated otherwise in this Draft Red Herring Prospectus, no amount or benefit has been paid or given within the two preceding years or is intended to be paid or given to any of our promoters or officers except the normal remuneration for services rendered as directors, officers or employees. Interest of the Promoters and Directors All the Directors of the Company are deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee thereof as well as to the extent of other remuneration, reimbursement of expenses payable to them under the Articles of Association. All the Directors may also be deemed to be interested to the extent of the Equity Shares, if any, already held by them or their relatives in the Company and also to the extent of any dividend payable to them and any other distributions in respect of the said Equity Shares. Except as stated otherwise in the Draft Red Herring Prospectus, the Company has not entered into any contracts, agreements or arrangements during the preceding two years from the date of the Draft Red Herring Prospectus, in which the Directors are interested directly or indirectly and no payments have been made to them in respect of these contracts, agreements or arrangements or are proposed to be made to them. Payment or benefit to Promoters or Officers of the Company Except as stated elsewhere in this Draft Red Herring Prospectus no amount or benefit has been paid or given within the two preceding years or is intended to be paid or given to the promoter or any officer of the Company except the normal remuneration for services rendered as Officers or Employees. MAIN PROVISIONS OF ARTICLES OF ASSOCIATION SHARE CAPITAL 4. The authorized Share Capital of the Company is Rs.12,50,00,000/- (Rupees Twelve Crore fifty lakhs only) divided into 1,25,00,000 Equity Shares of Rs.10/- each with power of the Company to increase, reduce, consolidate or subdivide such capital (original, increased or reduced) with the rights, privileges and conditions attached thereto as are prescribed by the Articles of Association of the Company and subject to the provisions of the Companies Act, 1956. 5. The Board may at any time increase the subscribed capital of the Company by issue of new shares from the unissued part of the authorized share capital of the Company as Equity Shares or as Redeemable Preference Shares and from time to time convert any Redeemable Preference Shares or Equity Shares (not being shares already subscribed and allotted) into shares of any other class.

208

6.

The Board may at their discretion, when issuing any portion of the Share Capital of the Company as preference shares, determine the preferential rights, provided, that an option or right to make call on shares shall not be given to any person except with the sanction of the Company in General Meeting, as to dividend, repayment of capital or otherwise and issue the said shares on such terms of capital as they may deem fit but subject to the provisions of the Act. Subject to the provisions of the Act and these presents, the shares shall be under the control of the Board of Directors who may allot or otherwise dispose off the same to such persons as they think desirable for being admitted as a share holder. The Company may at any time pay commission to any person for subscribing or agreeing to subscribe (whether absolutely or conditionally) for any shares, debentures or debenture stock of the Company, or procuring or agreeing to procure subscription (whether absolute or conditional) for shares, debentures or debenture stock of the Company but if the commission in respect of shares be paid, the provisions of Sections 76 and 79 of the Act and other statutory requirements shall be observed and complied with and the amount or rate of commission shall not exceed 5 per cent of the issue price of shares and 2 % of the issue price of debentures or debenture stocks in each case subscribed or to be subscribed.

7.

8.

ALTERATION OF CAPITAL 9. The Company may from time to time, by an ordinary resolution increase the capital by the creation of new shares as Equity shares or as Redeemable Preference shares of such amount as may be deemed expedient, subject to the provisions of Section 94 of the Act. The new shares shall be issued subject to the provisions of Section 86 and 87 of the Act and the Company shall not issue any shares (other than preference shares). 10. Except so far as otherwise provided by the conditions of issue or by means any presents, any capital raised by the creation of new shares shall be considered part of the original capital and shall be subject to the provisions herein contained as to payment of calls and installments transfer and transmission, forfeiture, lien or otherwise. The Company may (subject to the provisions of Section 100 to 104 of the Act) from time to time by special resolution cancel shares which at the date of resolution on that behalf, have not been taken or agreed to be taken by any person or reduce its capital by paying off capital not canceling capital which has been lost or is unrepresented by tangible assets as may deem expedient and capital may be paid off upon the footing that it may be called up again or otherwise.

11.

NON-VOTING SHARES 12. If the Act permits, then subject to the provisions of the Act and all other applicable provisions of law, the Company may issue shares, either equity or any other kind with non-voting rights and the resolutions authorizing such issue shall prescribe the terms and conditions of the issue. FORFEITURE OF SHARES 27. If any member fails to pay any calls or installment of a call on or before the day appointed for the payment of the same or any such extension thereof as aforesaid, the board may at any time thereafter, during such time as the call or installment remains unpaid give notice to him requiring him to pay the same together with any interest that may have accrued and all expenses. 28. 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 shall state that in the event of non payment on or before the day named the shares in respect which the call was made will be liable to be forfeited. 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 before the payment required by the notice has

29.

209

been made be forfeited by a resolution of the board of directors to that effect such forfeited shall include all dividend declared in respect of the forfeited shares and not actually paid before the forfeiture. 30. A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the board of directors may think fit, and at any time before a sale or disposition, the forfeiture may be cancelled on such terms as the board of director may think fit. A person whose shares have been forfeited shall cease to be a member in respect of the forfeited shares but shall notwithstanding remain liable to pay and shall forthwith pay the company all monies which at the date of forfeiture were presently payable by him to the company in respect of the shares but his nominal shall cease if any when the company receive payment receive payment in full of the nominal amount of shares whether legal proceeding for the recovery of the same had been barred by limitation or not. A duly verified declaration in writing that the declarant is a director of the company and that a share in the company has been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and that declaration and receipt of the company for the consideration if any given for the shares on the sales or disposition thereof shall constitute a good title to the share and the person to whom the share is sold or disposed of shall be registered as the purchase money if any nor shall his title to the share be effected by way of irregularity or invalidity in the proceedings in references to the forfeiture sale or disposal of the share. The provisions of these regulation as to forfeiture shall apply in the case of non payment of any sum which by the terms of issue of a share become 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 has been payable by virtue of a call duly made and notified.

31.

32.

33.

SHARES AND SHAREHOLDERS 34. The joint holders of a share or shares shall be severally as well as jointly liable for payment of all installments, calls, interest, expenses and other sums due in respect of such share or shares. 35. Save as otherwise provided by these Articles, the Company shall be entitled to treat the registered holder of any shares as the absolute owner thereof and accordingly the Company shall not except as ordered by a Court of competent jurisdiction or by the relevant Statute, be bound by or recognize any equitable, contingent, future or partial interest, lien, pledge or charge in any share or (except only as by these presents otherwise provided for) any other right in respect of any share except an absolute right to the entirety thereof in the registered holder. The Board may issue and allot shares in the capital of the Company or part payment for any property, goods, machinery, appliances, trademarks, merchandise marks, patents, patent right, licenses, privileges, processes and secrets or stock-in-trade purchased or services rendered or to be rendered to the Company in or about the formation or promotion of the Company or the acquisition and/or conduct of its business and any shares which may be so allotted shall be deemed to be fully paid up shares and if so allotted, shall be deemed to be fully paid up shares.

36.

INTEREST OUT OF CAPITAL 37. where shares in the Company are issued for the purpose of raising money to defray the expenses of the construction of any project, or the provisions of any plant ,machinery or equipment, which cannot be made profitable for a long period, the Company may pay interest on so much of that share capital as is for the time being paid up, for the period and at the rate and subject to the conditions and restrictions provided by Section 208 of the Act, and may charge the same to capital as part of the cost of construction of the projector the provision of plant, machinery or equipment.

210

LIEN ON SHARES 38. The Company shall have first and paramount lien upon all shares (other than fully paid up shares) registered in the name of every member (whether solely or jointly with others) and upon the proceeds of sales thereof for all moneys (whether presently payable or not) called or payable at fixed time in respect of such shares and not equitable interest in any share shall be credited except upon the footing and condition that this Article will have full, and such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares. Unless otherwise agreed, the registration of a transfer of shares shall operate as waiver of the Companys lien, if any, on such shares. The Directors may at any time declare any shares wholly or in part to be exempt from the provisions of this clause. SHARE CERTIFICATE 39. Every person whose name is entered as a member in the Register of Members of the Company shall, without payment of any fee, be entitled to a Certificate under the common seal of the Company signed by two Directors including the Managing Director if any, and another person authorized by the Board specifying the shares held by him and the amount paid up thereon. Provided that in respect of shares held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate for shares to the first named of the several joint holders, shall be sufficient delivery to all. SURRENDER OF SHARES 40. The Board may accept surrender of shares (a) by way of compromise of any question as the holder being a member of the Company and (b) in lieu of forfeiture of shares by the Company. DEMATERIALISATION OF SECURITIES 41. Notwithstanding anything contained in these Articles, the Company shall be entitled to dematerialize its securities and to offer security in a dematerialized form pursuant to the Depositories Act, 1996 and in that event every person subscribing to such securities shall have the option to receive security certificates or to hold the securities with a depository. Such a person who is the beneficial owner of the securities can at any time opt out of a depository, if permitted by law. 42. Nothing contained in the Act or these Articles, regarding the necessity of having distinctive numbers for securities issued by the Company shall apply to securities held with a depository. All securities held by a depository shall be dematerialized and be in electronic/ fungible form. Nothing contained in Sections 153, 153A, 153B, 187B, 187C and 372A of the Act shall apply to a depository in respect of the securities held by it on behalf of the beneficial owners. Notwithstanding anything to the contrary contained in the Act, or these Articles, a depository shall be deemed to be the registered owner solely for the purposes of effecting transfer of ownership of security held by on behalf of the beneficial owner. Save as otherwise provided in the Article above, the depository, deemed as the registered owner of the securities shall not have any voting rights or any other rights in respect of the securities held by it. Every person holding securities of the Company and whose name is entered as a beneficial owner in the records of the depository shall be deemed to be a member of the Company. The beneficial owner of securities shall be entitled to all rights and benefits and be subjected to all the liabilities in respect of his securities, which are held by a depository.

43.

44.

45.

46.

NOMINATION FACILITY 53. Subject to the provisions of the Act and these Articles (including any statutory modification or reenactment thereof, for the time being force), the Company shall provide for the facility of nomination to its share/debenture/deposit holders. 54. The investors availing of the nomination facility, shall have the option of nominating persons who would be entitled to receive share(s)/debenture(s)/deposit(s) outstanding in their names in case of their death.

211

TRANSFER OF SHARES 55. Subject to the restrictions of these Articles, shares shall be transferable, but every transfer must be in the form prescribed under Section 108 of the Act and the provisions as to transfer and instruments of transfer contained in Section 108 of the Act, so far as it is applicable to a public company, shall apply. 56. Nothing contained in the foregoing Article shall apply to transfer of security effected by the transferor and the transferee both of whom are entered as Beneficial Owners in the records of Depository. In the case of transfer of shares or other marketable securities where the Company has not issued any certificates and where such shares or securities are being held in an electronic and fungible form, the provisions of the Depositories Act, 1996 shall apply. No member shall be entitled to transfer his shares in the Company, except with the previous sanction of the Board of Directors. The Board may refuse to register the transfer of shares to a person whom the Board does not approve or may decline the registration of transfer of shares on which the Company has a lien. Any person becoming entitled to the shares in consequences of death or insolvency of any member, upon producing such evidence as the Board thinks sufficient to prove the title to the estate of deceased member, with the consent of Board of Directors, be registered as a member in respect of such shares. No share shall in any circumstances be transferred to any insolvent or person of unsound mind. Till such time the shares of the Company are listed on a stock exchange the Promoters shall not sell or otherwise dispose of all or part of their present and future shares in the Company, or any interest therein, without the prior approval of the VC Investors and the Company shall not recognize or register any transfer of shares in the Company's capital made or to be made by the Promoters and such of their friends or associates as may be specified by the VC Investors. However, with the consent of the VC Investors, if the Promoters negotiate or receive an offer for purchase from or are required to offer shares for sale to a third party, the VC Investors shall, at their discretion, have the right to sell all or part of their shares along with the Promoters to such third party at the same price and terms applicable to the Promoters and the third party shall have an obligation to purchase the VC Investors shares at the same price and terms applicable to the Promoters shares. The company shall keep a book to be called the Register of Members and therein shall be entered the particulars of every transfer or transmission of any share and all other particulars of shares required by the Act to be entered in such Register. Subject to the provisions of section 154 of the act the registration of transfer may be suspended at such times and for such periods as the board may from time to time determine, provided that such registration shall not be suspended for than thirty days at any one time or more than forty five days in the aggregate in any year. The Board, without assigning any reason for such refusal may, subject to right of appeal conferred by Section 111, decline to register: (a) (b) the transfer of a share not being a fully paid share, to a person of whom it does not approve, or any transfer of shares on which the Company has a lien:

57.

58.

59.

60.

61. 62.

63.

64.

64A.

Provided that registration of transfer shall not be refused on the ground of 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. If the Directors decline to register any transfer, they shall give notice of such refusal to the transferee and the transferor as required by Section 111 of the Act.

212

TRANSMISSION OF SHARES 65. On the death of a member, the survivor or survivors where the member is a joint holder and his legal representative where he was sole holder shall be the only person whom the Company may recognize as having any title to or interest in the shares. 66 The executors or administrators of a deceased member (not being one of two or more joint holders) shall be the only persons recognized by the Company as having any title to the shares registered in the name of such member and the Company shall not be bound to recognize executors or administrators unless such executors or administrators, shall have first obtained probate or letters of administration, as the case may be from a duly constituted court in the Union of India, provided that in any case where the Board of Directors in its absolute discretion think fit, the Board of Directors may dispense with production of probate or letter of administration and register the name of any person who claim to be absolutely entitled to the shares standing in the name of a deceased member, as a member.

EMPLOYEES STOCK OPTION PLAN 67. Subject to the provisions of the Act, the Company shall have the power to create an Employees Stock Option Plan, so as to issue its own shares or shares even in some other Company, to its own employees including executive and non-executive Directors but excluding promoter Directors. SWEAT EQUITY 68. Subject to the provisions of the Act (including any statutory modification or re-enactment thereof, for the time being in force), shares of the Company may be issued at a discount or for consideration other than cash to Directors or employees who provide know-how to the Company or create an intellectual property right or other value addition. GENERAL MEETINGS 69. In addition to any other meetings, Annual General Meeting of the Company shall be held within such intervals as are specified in Section 166(1) of the Act and, subject to the provision of Section 166(2) of the Act, at such time and place as may be determined by the Board. Each such general meeting shall be called Annual General Meeting and shall be specified as such in the notice convening the meeting. Any other meeting of the Company shall be an Extraordinary General Meeting. 70. Extraordinary General Meetings may be held either at the registered office of the Company or subject to the provisions of the Act, at such convenient place, as the Board of Directors may deem fit. The Board may whenever it thinks fit and shall on the requisition of the members in accordance with Section 169 of the Act proceed to call an Extraordinary General Meeting. The requisitionists may, in default of the Board convening the same, convene the Extraordinary General Meeting as provided by Section 169 of the Act, provided that unless the Board has refused in writing to permit requisitionists to hold the said meeting at the Registered Office, it shall be held at the Registered Office. The Company shall comply with the provisions of Section 188 of the Act as to giving notice of resolutions proposed by the Members and circulation statements on the requisition of members. Sections 171 to 186 of the Act with such adaptations and modifications, if any, as may be prescribed, shall apply with respect to meetings of any class of members or debenture holders of the Company in like manner as they apply with respect to general meetings of the Company. A General meeting of the Company may be called by giving not less than 21 days clear notice in writing. A general meeting of the Company may be called after giving shorter notice than that specified in the foregoing Article, if consent is accorded thereto: (i) in the case of an annual general meeting, by all the members entitled to vote thereat; and

71.

72.

73.

74. 75.

213

(ii)

in the case of any other meeting, by Members of the Company holding not less than 95 (Ninety Five) percent of such part of the paid-up capital of the Company as gives a right to vote at the meeting;

Provided that where any Members of the Company are entitled to vote only on some resolution(s) to be moved at a meeting and not on the others, those members shall be taken into account for the purposes of this clause in respect of the former resolution(s) and not in respect of the latter. 76. Accidental omission to give notice of any meeting to or non-receipt of any such notice by any of the Members shall not invalidate the proceedings of or any resolutions passed at such meeting. All business shall be deemed special that is transacted at an Extraordinary General Meeting and also that is transacted at an Annual General Meeting with the exception of (i) the consideration of accounts, balance sheet and reports of the Directors and Auditors (ii)declaration of a dividend, and (iii) the appointment of Directors in the place of those retiring(iv) and the appointment and fixing of the remuneration of Auditors. Any Annual General Meeting, may transact any item of business, Ordinary and Special and, any Extraordinary General Meeting shall be entitled to transact any business which may be Special or pass any resolution which can be properly transacted or moved at an Extra Ordinary General Meeting. Where any items of business to be transacted at the Meeting is 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 and the Managing Director and 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.

77.

78.

79.

PROCEEDING AT GENERAL MEETINGS 80. Five members personally present shall be a quorum for General Meeting and no business shall be transacted at any General Meeting unless the requisite quorum is present at the time when the meeting proceeds to business. 81. If within half an hour from the time appointed for the meeting, a quorum is not present, the meeting if called upon the requisition of Members, shall be dissolved, in any other case, shall stand adjourned to the same day in the next week at the same time and place or to such other day and such other time and place as the Board may determine and if at the adjourned meeting also a quorum is not present, within half an hour from the time appointed for the meeting, the Members present shall be a quorum. The Chairman, if any, of the Board of Directors, shall preside as Chairman at every General Meeting of the Company. If there is no such Chairman or if at any meeting he is not present within half an hour after the time appointed for holding the meeting or is unwilling to act as Chairman, the Managing Director, if any, or a Director of the Board shall preside and failing him, the Members present shall choose another Director as Chairman and if no Directors be present or if all the Directors decline to take the chair, then the Members present shall choose one of their members to be Chairman of the meeting. At any General Meeting, a resolution put to vote in the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded, in accordance with the provisions of Section 179 of the Act. Unless a poll is so demanded, a declaration by the Chairman that a resolution has on a show of hands been carried unanimously or by a particular majority and an entry to that effect in the books of proceedings of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of or against that resolution.

82.

83.

84.

214

85.

In the case of an equality of votes, the Chairman shall, both on a show of hands and on a poll, have a second or casting vote in addition to the vote or votes to which he may be entitled as a Member. If poll is demanded in accordance with the provisions of Section 179 of the Act, it shall be taken in such manner as the Chairman directs and in accordance with the provisions of Section 183 and 185 of the Act and the result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was taken. The Chairman shall appoint two scrutinizers in the manner required under Section 184 of the Act. A poll demanded on the election of Chairman or on a question of adjournment , shall be taken forth with. A poll demanded on any other question shall be taken at such time, not being later than forty-eight hours from the time when demand was made or as the Chairman may direct.

86.

87.

VOTES OF MEMBERS 88. Every Member of the Company holding equity shares shall have a right to vote in respect of such shares on every resolution placed before the Company. On a show of hands, every such Member present in person shall have one vote. On a poll, his voting right in respect of such shares shall be in proportion to his share of the paid up equity capital of the Company. 89. A demand for a poll does not prevent the continuance of the meeting or the transaction of any business other than that on which a poll has been demanded. The demand for a poll may be withdrawn at any time by the person or persons who made the demand. In the case of joint holders, the votes of the first-named of such joint holders who tender votes whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders. A member of unsound mind, or in respect of whom an order has been made by any Court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee or other legal guardian, and any such committee or legal guardian may, on a poll, vote by proxy. On a poll, votes may be given either personally or by proxy. Where a Company or body corporate (herein after called Member Company) is a Member of the Company, a person, duly appointed by resolution of the Member Companys Board of Directors in accordance with the provisions of Section 187 of the Act to represent such Member Company at a meeting of the Company or at any meeting of Class of Members of the Company, shall not by reason of such appointment, be deemed to be a proxy, and the lodging with the Company at the Office or production at the meeting of a copy of such resolution duly signed by a Director of such Member-Company and certified by him as being a true copy of the resolution shall on production at the meeting, be accepted by the Company as sufficient evidence of the validity of his appointment; such a person shall be entitled to exercise the same rights and powers, including the right to vote by proxy on behalf of the Member Company could exercise if it were an individual Member. A vote given in accordance with the terms of an instrument of proxy, shall be valid notwithstanding the previous death of the appointer, or revocation of the proxy, transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, revocation or transfer shall have been received at the Registered Office of the Company before the commencement of the meeting or adjourned meeting at which the proxy is used. No objection shall be made as to the validity of any vote, except at the meeting or the adjourned meeting or poll of which such vote shall be tendered and every vote, whether given personally or by proxy and not disallowed at such meeting or poll, shall be deemed valid for all purpose of such meeting or poll whatsoever.

90.

91.

92. 93.

94.

95.

215

96.

The Chairman of the meeting shall be the judge, to decide at the time of taking poll of the validity of every vote tendered at such meeting and the Chairman present at the taking of the poll shall be the sole judge of the validity of every vote tendered at such poll. Every instrument appointing a proxy shall be retained by the Company and shall be in either of the forms specified in Schedule IX of the Act, or a form as near thereto as circumstances will admit.

97.

POSTAL BALLOT 98. The Company may decide to pass any resolution by resorting to postal ballot instead of transacting the business in general meeting of the Company, provided an enabling provision is present in the Act or its Rules (including any statutory modification or re-enactment thereof). 99. The Company shall send a notice to all the Members, along with a draft resolution explaining the reasons therefore, and requesting them to send their assent or dissent in writing on a postal ballot within a period of thirty days from the date of posting of the letter. The notice shall be sent by registered post acknowledgement due, or by any other method as may be prescribed by the Central Government in this behalf, and shall enclosed with the notice, a postage pre-paid envelope for facilitating the communication to the Company of the asset or dissent of the Member to the resolution within the said period. A resolution assented to by a majority of the Members by means of postal ballot shall be deemed to have been duly passed at a general meeting convened in that behalf.

100.

101.

MINORITY PROTECTIONS 102. CONSENT OF THE VC INVESTOR: The Company shall not act upon any resolution of its Board or its Shareholders in relation to or affecting any of the following matters unless at least one VC Director nominated by the VC Investors consents or votes in favour of such a resolution: 1.1 1.2 1.3 1.4 1.5 1.6 any changes to the New Memorandum and Articles; any change in the corporate name or registered address; the issue of any Ordinary Shares or any equity financial instrument; any alteration to the rights of any class of shares; any increase, reduction or variation in share capital; the disposal, transfer, merger or acquisition of any part of the business into either a separate company, a subsidiary or to any other person; any amalgamation/merger or any of its subsidiaries with any other entity and the spinning off of any division; the sale, transfer, lease, license in respect of property or assets owned or leased or taking or omitting to take any action which could prejudice the continuation of any lease or license to which it is entitled except in the usual course of business; the acquisition of any other business, diversification or expansion either directly or indirectly through any other firm or company whether carried on individually or through partnership or otherwise; any capital expenditure in a single transaction exceeding a sum of Rs. 15 million and any capital expenditure greater than Rs. 25 million planned in any one quarter;

1.7

1.8

1.9

1.10

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1.11

any borrowing exceeding a sum of Rs. 10 million, excluding borrowings on account of working capital requirement; any guarantee or comfort letter issued and provided for the Promoters own account or any guarantee or comfort letter issued and provided in favour of any other person other than in the usual course of business; any mortgages or other charges over the property of the company other than in the usual course of business; investment, financially or otherwise, in any other business, partnership, company or any other entity whether incorporated or otherwise; any sale or disposal of any Intellectual Property; increase in remuneration of any Director or Chief Executive Officer or any scheme of profit sharing for the benefit of any employee other than any scheme already operative at the time of VC Investor's investment in the Company; any appointment or changes to the terms of employment of the Chief Executive Officer; any loans to Directors and Chief Executive Officer; the commencement or discontinuance of any litigation or arbitration which is material in the context of the company's business; appointment of new Directors other than the nominees of the Promoters and the VC Investors; any material change in the nature and extent of the companys business; ceasing or proposing to cease to carry on the business of the company or taking any steps to wind up the company; appointment of any sole selling agent; any liquidation or dissolution of the company; any transaction outside the Group but to an entity in which the Promoters have an interest above the value of Rs. 10 million or group of such transactions above the value of Rs. 30 million in any six (6) months period; declaration of bonus shares; any declaration of dividends; creation of any reserve or/and distribution of any amount standing to the credit of any reserve; the buy-back of shares by the company. any change of statutory auditor or change in company's accounting reference date; any changes in the company's financial year or any material changes in its accounting policies; or

1.12

1.13

1.14

1.15 1.16

1.17 1.18 1.19

1.20 1.21 1.22

1.23 1.24 1.25

1.26 1.27 1.28 1.29 1.30 1.31

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the entering into material contracts not in the ordinary course of business and/or of significant size or duration in relation to the normal business of the company. any resolution which requires three fourth majority of shareholders under applicable laws.

1.33 103.

LISTING

The Listing shall be either by way of fresh issue of shares or by way of an offer for sale of Ordinary Shares within a period of four years from the Closing Date. In the event the Company or the Promoters fail to obtain the Listing of the Company's shares as stated herein , the VC Investors shall have the right to: a) Obtain Listing of the Company's shares and the Promoters undertake to sell as much of their shareholding as may be required by the VC Investors for listing of the Company's shares in accordance with the listing guidelines prevailing at that time; Sell its shares to a Third Party or its nominee or assignee and the Promoters also undertake to sell their shareholding to the Third Party on the same terms as the VC Investors; Notwithstanding anything to the contrary, the VC Investors may exercise their rights under this Article without any claims by the Company, shareholders or the Promoters.

b) c)

104.AGREEMENT TO PURCHASE 1. THE VC INVESTOR RIGHTS: As there is no ready marketability of the Companys shares, the Promoters have agreed that the VC Investors shall have the right to sell and terminate this Agreement and put all or part of its shares back to the Promoters, and the Promoters have agreed to purchase the VC Investors Shares (hereinafter referred to as the Agreement to Purchase), in the event that: 1.1 any Material Breach of this Agreement is not remedied within 28 days of receipt of formal written notice from the VC Investors. there is no IPO within a period of four years from the Closing Date if any of the Promoters is found guilty of a criminal offense, of any nature whatsoever by a final and non appealable order. if any of the Promoters cease to be employees of the Company or cease to be associated with the Company.

1.2 1.3

1.4

JOINT AND SEVERAL LIABILITY: The Promoters agree that they shall be jointly and severally liable under the Agreement to Purchase. TIME AND PRICE: The Promoters shall be required to purchase the shares as per the Agreement to Purchase at a price so as to give a return of 40% per annum from the date of investment by the VC Investors and shall make payment within 30 days following the date upon which notice is served by the VC Investors. In the event that there are any delays in payment, then interest on the outstanding amounts shall be payable at a rate of 22% p.a. 4 FAILURE: If the Promoters fail to fulfill their obligations and are unable to purchase the VC Investors shares within a period of one month of the VC Investors exercising their right under the Agreement to Purchase, the VC Investors shall have the right to call upon the Promoters to sell all or any portion of their shareholding to the third party or parties (or their nominee(s)) at the same price and on the same terms as those applicable to the VC Investors shareholding. Upon being so called upon, the Promoters shall sell their shareholding required to be sold by the VC Investors to such third party/parties/nominee(s) at such price and on such terms as those applicable to the VC Investors shareholding.

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BOARD OF DIRECTORS 105. Unless otherwise determined by the Company in General Meeting, the number of directors shall not be less than three or more than twelve. a) b) Any person, whether a member of the Company or not may be appointed, as Director. No qualification by way of holding of shares in the capital of the Company shall be required for appointment as Director.

106.

Subject to the provisions of section 260 of the Act, the Board shall have power, at any time and from time to time, to appoint any person as a Director, as an addition to the Board, but the total number of Directors shall not at any time exceed the maximum number fixed by these Articles. Any Director so appointed shall hold Office only until the next Annual General Meeting of the Company, but shall be eligible for reelection at such meeting. The Board of Directors of the Company may appoint an Alternate Director to act for a Director (hereinafter in this Article call ``the Original Director``) during his absence for a period of not less than three months from the State where meetings of the Board are ordinarily held The Alternate Director appointed under this Article shall not hold office as such for a period longer than that permissible to the Original Director in whose place he has been appointed and shall vacate office if and when the Original Director returns to the State in which meeting of the Board are ordinarily held. If the term of office of the Original Director is determined before he returns to the State aforesaid, any provision for the automatic reappointment of the retiring Director in default of another appointment, shall apply to the original and not to the alternate director. If any Director, being willing shall be called upon to perform extra services or to take any special extensions for any of the official purposes of the Company and in that even the Company may, subject to the provisions of the Act, remunerate such Director either by a fixed sum or by a percentage of profits or otherwise, as may be determined by the Directors but not exceeding that permitted under Section 309 of the Act and such remuneration may be either in addition to or in substitution for his share in the remuneration above provided. A retiring director shall be eligible for re-election. If at any annual general meeting at which an election of directors ought to take place, the office of any retiring director is not filled , and the meeting has not expressly resolved to fill up the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place or if the day is a public holiday, at the same time and place and if at the adjourned meeting also the office of the retiring Director is not filled he/she shall, if willing, be deemed to have been re-appointed, unless the resolution for such reappointment has been put to vote and lost either at the adjourned meeting or at the previous meeting. The Chairman, may, with consent of any meeting of which quorum is present, and shall if so directed by the meeting adjourn the meeting from time to time and place to place. No business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting for which adjournment took place. When a meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at any adjourned meeting. All the Directors of the company (except the directors nominated by the VC Investor) shall be liable to retire by rotation. At every Annual General Meeting of the company one third of such of the Directors for the time being as are liable to retire by rotation or, if their number is not three or a multiple of three, then the number of nearest to one third shall retire from office. The Directors to retire by rotation shall be those who have been longest in office since their last appointment but as between persons who become Directors on the same day those who are to retire shall in default of any agreement among themselves be determined by lot.

107.

108.

109.

110.

111. 112.

113.

114.

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PROCEEDINGS OF BOARD 119 The Board of Directors may meet together for the dispatch of business, adjourn and otherwise regulate the meeting and proceedings as they think fit. 120 A meeting of the Board of Directors shall be held at least once in every three calendar months as required by Section 285 or any statutory modification thereof. The quorum for meeting of the Board of Directors shall be one-third of its total strength (any fraction contained in that one-third being rounded off as one) or Two Directors, whichever is higher. All acts done at any meeting of the Board or a Committee thereof or by any person acting as a Director shall notwithstanding that it may be afterwards discovered that there was some defect in the appointment of any one or more of such Directors or of any person acting as aforesaid or that they or any of them were disqualified be as valid as if every such Director or such person has been duly appointed and was qualified to be a Director. Save or otherwise expressly provided in the Act, a resolution in writing signed by all the members of the Board or a Committee thereof for the time being entitled to receive notice of meeting of the Board or Committee shall be as valid and effectual as if it had been passed at a meeting of the Board or Committee, duly convened and held. The management and control of the business of the Company shall be vested in the Directors who may exercise all such power and do all such acts and things as may be exercised or done by the Company in General Meeting, but subject nevertheless to the provisions of the Act and to any regulations from time to time made by the Company in General Meeting, provided that no regulations so made shall invalidate any prior act of the Directors which would have been valid if such regulations had not been made. The Board may, subject to the provisions of the Act, delegate any of its powers to a committee consisting of such member or members of its body as it thinks fit and / or to the Managing Director or Manager. Any Committee also formed or the Managing Director or Manager shall in the exercise of the powers so delegated conform to any regulations that may from time to time impose upon it by the Board.

121

122

123

124

125

POWERS OF DIRECTORS 126 In addition to the general powers conferred on the Board by Section 291 of the Act, the Board shall have the following specific powers. a) b) To appoint necessary employees for the conduct of the business of the Company. To open bank accounts in the name of the Company in such banks as they may decide and to authorize the Managing Director or any Director or employee to operate such accounts whether solely or jointly. To institute, defend, compound or compromise any suit by or against the Company and authorize one or more of the Directors or employees of the Company to represent the Company in all such suits and to sign and present pleadings etc. To authorize the Managing Director or any other Director or employee whether solely or jointly to execute on behalf of the Company all documents that are to be executed in the name of the Company.

c)

d)

RETIREMENT OF DIRECTORS 127 Any casual vacancy occurring in the office of the Director may be filled by the Board. However, the Director so appointed shall retire at the conclusion of the General Meeting held next, after his appointment. 128 Subject to the Provisions of Section 284 of the Act, the Company in General Meeting may, by special resolution remove a Director before the expiry of his period of office. The office of a director shall become vacant as per the provision of section 283 of the Act.

129

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130

Subject to the provision of sections 297 299 to 301 of the Act, a Director shall no be disqualified from contracting with the company either as vendor, purchase or otherwise for goods, material or service or for underwriting the subscription or any shares in or debentures of the company nor shall any such contract or arrangement entered into by or on behalf of the company with a relative of such director or a firm in which such partner in such firm in which such director or relative is a partner or which any other partner in such firm or with a company of which such director is a member or director be void nor shall any director so contracting or being such member so interested be liable to account to the company for any profit by such contact or arrangement by reasons of such Director holding that office or of the fiduciary relation thereby established.

MANAGING DIRECTOR/WHOLE TIME DIRECTOR 131 The Directors may from time to time appoint one among them to be the Managing Director or whole time director of the Company on such terms and conditions as the Board may think fit subject to the provisions in the Act. 132 Subject to the provisions in the Act, the Board may appoint and fix the terms and conditions of appointment of all managerial personnel including Whole time Directors and functional Directors of the Company. The Managing Director shall have by virtue of his office, all powers of superintendence and management of the affairs and business of the Company and to represent the Company in all legal and other proceedings and the power to enter into all negotiations and issue, accept, endorse negotiable instruments and to do all acts, matter, deeds and other things or/and on behalf of the Company as may usually be necessary or desirable in the management of the business or affairs of the Company and in carrying out its objects and also power to appoint staff and fix their remuneration, subject to guidelines laid down by the Board from time to time. The Managing Director shall, subject to the provisions of any contract between him and the Company, be subject to the same provisions as to resignations and removal as the other Directors of the Company and he shall ipso facto and immediately cease to be a Managing Director, if he or they ease to hold the office of Director for any case. Subject to the provisions of the Act, the Board may fix the remuneration of all the managerial personnel and employees. Subject to the provisions of the Act and to provisions of any resolution of the Company in General Meeting or of any resolution of the board and to the terms of any contract with him, the Managing Director shall have whole or substantially the whole of the management of the affairs of the Company. Subject to the provisions of the Act, a Director, who is neither in the whole time employment nor a Managing Director, may be paid remuneration either; by way of monthly, quarterly or annual payment or by way of commission, if the Company by a special resolution authorizes such payment. The maximum remuneration of a Director by way of sitting fee shall be such sum as may be prescribed by the Act or Central Government from time to time for each meeting of the Board of Directors/ Committee attended by him. The Company may allow and pay to a Director who for the time being is residing out of the place at which any meeting of the Directors may be held and who may come to that place for the purpose of attending that meeting, such sum as the Board may consider fair compensation for his expenses in connection with his attending the meeting, in addition to his remuneration as above specified. If any Director be called upon to perform extra services or special exertion or efforts (which expression shall include work done by a Director as a Member of any Committee formed by the Directors), the Board may arrange with such Director, for such special remuneration for such extra services, special exertions or way of efforts, whether by a fixed sum or otherwise as- may be determined by the board and such remuneration may be either in addition to or in substitution for his remuneration above provided.

133

134

135 136

137 i) ii) 138

139

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BORROWING POWERS 140 The Board may subject to the provisions of the Act, borrow moneys from banks, financial institutions, autonomous Corporations, firms or other Companies on the security of the assets of the Company or otherwise and also issue debentures, accept deposits of money from the Members or non-members on such terms and conditions as the Board may deem fit. DIVIDENDS AND RESERVES 143 The Company in General Meeting may declare dividends but no dividend shall exceed the amount recommended by the Board. 144 The Company may create and maintain general or other reserves to which shall be credited such amounts out of the profits of the Company as the Board may think proper. The Board may from time to time pay to the members such interim dividend as appear to them to be justified be the profits of the Company. (1) a. The company in general meeting may upon the recommendation of the Board, resolve: to capitalize whole or any part of the amount for the time being standing to the credit of any of the companys reserve accounts, or to the credit of the profit and loss account or otherwise available for distribution; and that such sum be accordingly set free for distribution in the manner specified in clause (2) amongst the members who would have been entitled thereof if distributed by way of dividend and to the same proportions. The sum aforesaid shall not be paid in cash, but shall be applied subject to the provisions contained in clause (3) either in or towards : Paying up any amount for the time being in any shares held by such members respectively Paying up in full, un-issued shares of the company to be allotted and distributed credited as fully paid up to be and amongst such members in the proportion aforesaid or Party in the way specified in sub clause (1) and partly in that specified in sub clause (2) A share premium account and a capital redemption reserve fund may for the purpose of this Article only be applied in the paying up of un-issued shares to be issued, to members of the company as full paid bonus shares. The Board shall give effect tot resolution passed by the company in pursuance of this Article. Whenever such a resolution as aforesaid shall have been passed the board shall: Make all appropriations and application of the undivided profit resolved to be capitalized thereby and all allotment and issues of fully paid shares if any and Generally do all acts and things required to give effect hereto. The board shall have full power To make such provision by the issue of fractional certificate or by payment in cash or otherwise as it thinks fit, the case of shares becoming distributable in fractions and also. To authorized any person to enter on behalf of all the members entitled thereto into an agreement with the company providing for the allotment to them respectively credited as fully paid up of any further shares or debentures to which they may be entitled upon such capitalization of (as the case may require) for the payment by the company on their behalf by the application thereto of their respective proportions of profits resolved to be capitalized of the amount or any part of the amount remaining unpaid on their existing shares. Any agreement made under such authority shall be effective and binding on all such members.

145

146

b.

(2) c. d. e. (3)

(4) 147 (1) a. b. (2)

(3)

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INDEMNITY AND RESPONSIBILITY 155. Without prejudice to the generality of the foregoing, it is hereby expressly declared that any filing fee payable on any document required to be filed with the Registrar of Companies in respect of any act done by any Director or other officer, by reason of his holding the said office, shall be paid and borne by the Company. 156. Every Director, Managing Director, Agent, Auditor, Secretary or other officers of the Company shall be entitled to be indemnified out of the assets of the Company against all losses and liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto including any liability incurred by him in defending any proceedings whether civil or criminal, in which judgement is given in his favour or in which he is acquitted or in connection with any application under Section 633 of the Act in which relief is granted to him by the Court, and no Director or other officer shall be liable for any loss, damage or misfortune which may be incurred by the Company in the execution of the duties of his office or in relation thereto.

SECRECY CLAUSE 157. Every Director, Managing, Technical, Whole time or Executive, Manager, Secretary, Auditor, Trustee, Member of a Committee, Officer, Employees agent or other person exposed in the business of the Company shall if so required by the Board before entering upon his duties, or at any time during his term of office, sign a declaration, pledging himself to strict secrecy respecting all transactions of the Company, all technical information possessed by the Company and the state of accounts and in matters relating thereto, and shall by such declaration pledge himself not to reveal any of the matter which come to his knowledge in the discharge of his 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 in so far as may be necessary in order to comply with any of the provisions contained in these Articles. 158. No member shall be entitled to inspect the Companys books without the permission of the Board or to require discovery of or any information respecting any detail of the Companys trading or any matter which may be in the nature of trade secret, mystery of trade or secret process which may relate to the conduct of the business of the Company and which, in the interest of the members of the Company to communicate to the public.

WINDING UP 159 If the Company shall be wound up the liquidator may with the sanction of a special resolution of the Company and any other sanction required by the Act, divide amongst the members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of the kind or not) and may for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the members or different classes of members. The liquidators may with the like sanction vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, shall be compelled to accept on shares or other securities whereon there is any liability. GENERAL POWER 160 Wherever in the Act, it has been provided that the Company shall have any right, privilege or authority or that the Company could carry out any transaction only if the Company is so authorized by its articles, then and in that case, these regulations here by authorize and empower the Company to have such rights, privilege or authority and to carry such transactions as have been permitted by the Act, without there being any specific regulation in that behalf herein provided. MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTIONS The following Contracts (not being contracts entered into in the ordinary course of business carried on by our Company) which are or may be deemed material have been entered or to be entered into by our Company. These Contracts, copies of which have been attached to the copy of this Draft Red Herring Prospectus, delivered to the Registrar of Companies, Maharashtra at Mumbai for registration and also the documents for inspection referred to

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hereunder, may be inspected at the registered office of our Company situated at Off. International Airport Approach Road, Marol, Andheri (E), Mumbai 400 059 from 10.00 a.m. to 4.00 p.m. from the date of this Draft Red Herring Prospectus until the Bid/ Issue Closing Date. Material Contracts 1. Memorandum of Understanding between MRL and Karvy Investor Services Limited dated July 27, 2004. 2. Letter dated July 6, 2004 from MRL appointing Karvy Investor Services Limited and their acceptance thereto. 3. Letter from MRL dated August 13, 2004 appointing Intime Spectrum Registry Limited as Registrar to the Issue. 4. Memorandum of Understanding between MRL and Intime Spectrum Registry Limited dated August 13, 2004. 5. Quotations obtained for plant and machinery. Material Documents 1. The Memorandum and Articles of Association of the Company. 2. Certificate of Incorporation of the Company dated April 28, 2000 3. Fresh Certificate of Incorporation of the Company dated July 9, 2004 4. Special resolution adopted by shareholders of the company pursuant to Section 81(1A) of the Companies Act, at the general meeting held on July 21, 2004, approving this Issue. 5. The report of the statutory auditors, Deloitte, Haskins and Sells dated July 21, 2004 prepared as per Indian GAAP for (i) unconsolidated financial statements and (ii) consolidated financial statements and mentioned in the Draft Red Herring Prospectus and their consent for inclusion of their report on accounts in the form and context in which they appear in the Draft Red Herring Prospectus. (iii) Copies of balance sheet and profit and loss account of Mars Restaurants Limited and Mars Restaurants (U.K.) referred to in the report. 6. A copy of the tax benefit report dated July 16, 2004, from A T Jain & Co., Chartered Accountants. 7. Certificate from Rajani & Associate, Legal Advisor to the Issue dated August 13, 2004. 8. Consents letter of i. Directors (a) Mr. Sanjay Narang, (b) Ms. Rachna Narang and (c) Mrs. Bala Deshpande ii. Auditors - Deloitte Haskins & Sells iii. Legal Advisor to the Issue Rajani Associates iv. Advisors to the Company Inga Advisors Pvt. Ltd. v. Book Running Lead Manager Karvy Investor Services Limited vi. Registrar to the Issue Intime Spectrum Registry Limited vii. Bankers to the Company (a) IndusInd Bank and (b) Cititbank viii. Tax Expert./Consultant to the Company A.T. Jain & Co. ix. Compliance Officer Mr. Kalpesh Ojha x. Company Secretary Mr. K.L. Sethia xi. Syndicate Member xii. Banker to the Issue xiii. Escrow Collection Banker 9. General Power of Attorney dated August 13, 2004 executed by Directors of the Company in favour of person(s) for signing and making necessary changes to the red herring prospectus. 10. Government Approvals. 11. Due Diligence Certificate dated August 16, 2004 to SEBI from Karvy Investor Services Limited. 12. SEBI observation Letters No. _____ dated ______ and in-seriatim reply dated ______. 13. In-principle listing approval dated _________ from BSE. 14. Initial listing application dated __________ for listing the equity shares at The Stock Exchange, Mumbai. 15. Tripartite Agreement between the Company, NSDL and Intime Spectrum Registry Limited dated ____________, 2004. 16. Tripartite Agreement between the Company, CDSL and Intime Spectrum Registry Limited dated ________________. 17. Copies of the following agreements: i. The Investment Agreement dated September 29, 2000, Addendum(s) dated June 12, 2001 and October 20, 2001 and Deed of Novation dated December 26, 2002. ii. Deed of Assignment between Mars Food Services & Mars Restaurants Private Limited for Not Just Jazz by the Bay, The Pizzeria, Trim with Taste and Dosa Diner and Mars Enterprises & Mars

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iii. iv. v. vi. vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi.

Restaurants Private Limited for Just Around the Corner and Three Flights Up dated September 30, 2000 Deed of Assignment between Mars Enterprises and Mars Restaurants Pvt. Ltd. for All Stir Fry & Tides dated September 7, 2001 Conducting Agreement between Mars Food Services and Mars Restaurants Pvt. Ltd. for Not Just Jazz by the Bay dated September 30, 2000. Conducting Agreement between Mars Food Services and Mars Restaurants Pvt. Ltd. for Pizzeria and Pasta Bar dated September 30, 2000. Conducting Agreement between Mars Enterprises and Mars Restaurants Pvt. Ltd. for Just Around the Corner dated September 30, 2000. Conducting Agreement between Mr. Manu Narang, Mars Food Services and Mars Restaurants Pvt. Ltd. for Three Flights Up dated September 30, 2000. Conducting Agreement between Mars Restaurants Pvt. Ltd. and Amalgamated Bean Coffee Trading Co. Ltd. dated May 2, 2002. Agreement between Mr. M. L. Narang and Mars Restaurants Private Ltd. dated December 15, 2000. Memorandum of Understanding between Mars Hotels and Resorts Private Limited and Mars Restaurants Pvt. Ltd. dated December 4, 2000 and June 13, 2001. Shareholders Agreement between Anjali Sachin Tendulkar, Ajit Ramesh Tendulkar and Mars Restaurants Pvt. Ltd. dated July 11, 2002. Management Agreement between Gourmet Restaurants Pvt Ltd. and Mars Restaurants Pvt. Ltd. dated July 11, 2002. Revenue Sharing Agreement between Gourmet Restaurants Pvt. Ltd. and Mars Restaurants Private Ltd. dated October 15, 2002. Revenue Sharing Agreement between Nehawa Investments and Holdings Private Limited and Mars Restaurants Pvt. Ltd. for Dosa Diner dated March 19, 2001. Franchise Agreement between Mrs. Roma Singh and Mars Restaurants Pvt. Ltd. for China Joe dated May 6, 2002. Copy of the agreement entered into with Pepsi Foods Private Limited dated December 1, 2001.

Any of the contracts or documents mentioned in this Red Herring Prospectus may be amended or modified at any time if so required in the interest of the Company or if required by the other parties, without reference to the shareholders subject to compliance of the provisions contained in the Companies Act and other relevant statutes.

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DECLARATION All the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of India 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 Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, 1956, the Securities and Exchange Board of India Act, 1992 or rules made there-under or guidelines issued, as the case may be. We further certify that all the statements in this Draft Red Herring Prospectus are true and fair. SIGNED BY THE DIRECTORS OF THE COMPANY Mr. Sanjay Narang, Managing Director Ms. Rachna Narang, Director Ms. Bala Deshpande, Director And Mr. Arvind Ghei Chief Financial Officer Date : August 18, 2004 Place: Mumbai

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