MAJOR ASSUMPTIONS :

1. The above financial projection for 2000-01 is based upon the business plan of the Company.
2. Manpower cost has been estimated at 30% of the sales of own software.
3. Depreciation has been calculated in accordance with Schedule XIV to the Companies Act,1956.
4. Cost of sales has been estimated at 59% of sales for the year 2000-01.
5. The public issue expenses are to be amortized over a period of 10 years.
6. Interest on term loan has been provided @ 16.5% p.a.(plus interest tax).
7. Provision for taxation has been made as per the provisions of the Income Tax Act, 1961.

Since this is the first Public Issue of the Company and since the shares are yet to be listed there is no stock market data available for the shares of the Company.

I.   Qualitative Factors

1. Company promoted by technocrats who have rich experience in their chosen field.
2. Dr. A Prabhakar, CMD of the Company has rich experience of 32 years and was Director (R&D) in ITI Ltd .
3. Existing Company with ready software products for banking industry.
4. Well trained professionals to support the operations of the Company.

1. 1996-97         -
2. 1997-98        1.52
3. 1998-99         -

     In view of loss for the year 1998-99 , P/E ratio is not arrived at.

1. 1996-97        (0.23)
2. 1997-98         0.20
3. 1998-99        (0.62)

4.  Net Asset Value (NAV)

1. As at 31.01.2000                 Rs.   5.85
2. After issue                          Rs.   8.73
3. Issue Price                         Rs. 10.00

There is no company under the same management as that of the company as per section 370 (1B) of the Act.

There are no other litigation pending on any matters which are likely to affect the operation and and finances of the Company or any other Firm or Company under the same management or associated with the Company.

There are no criminal prosecution cases pending against the Company or its Directors under the enactments specified in Paragraph 1 of part I of Schedule XIII of the Companies Act, 1956.

There has been no default in meeting the statutory dues, bank or Institutional dues by the Company at present.

The Directors of the Company undertake that in their opinion except for the progress achieved in the implementation of the Project as mentioned elsewhere in the Prospectus, there are no circumstances, since the date of last financial statements disclosed in the Prospectus that would materially and adversely affect or is likely to affect the trading or profitability of the Company or the value of its assets or its liability to pay its liability within the next 12 months.

INTERNAL

1. The promoters of the company are first generation entrepreneurs and the project may suffer from all risks associated .

Management Perception: The Company is in operation for past 5 years and the promoters have gained very good experience in its line of Business and in implementation of the projects and does not foresee any problem in completion of the Proposed Project.

2. The Company has not yet placed orders for the fixed assets , for which Rs. 155 lakhs has been earmarked in the Project.

Management Perception: The market for these equipments is competitive & prone to technological changes and the lead time for their purchase is 2 to 6 weeks only. The Company will place the orders at appropriate time.

3. The company has made a SWOT analysis of its operation vis-a-vis that of the Software Industry in which the company is exposed to certain threats and weaknesses.

Management Perception: The SWOT analysis is general in nature and is applicable to any Software Company. The Promoters have sufficient and necessary experience to effectively overcome the deficiencies referred therein.

4. In the project a sum of Rs.180 Lakhs has been earmarked as working capital requirements. Since no bank borrowings are proposed for working capital, it may be difficult for the company to meet future working capital requirements.

Management Perception: The company is confident of generating adequate revenue from the proposed operations to meet the future working capital requirements.

EXTERNAL

1. The market for Software Products & Services is highly competitive.

Management Perception: The company has inherent strengths with reference to its size, past track record satisfied customer base, marketing reach, constant technology upgradation latest computing and communication infrastructure and professionally qualified, experienced manpower, which will provide the competitive edge.

2. Software industry has a high rate of technological obsolescence.

Management Perception: The company has formed a group of talented software engineers in-house who are continuously busy in research and development of the company's technological capabilities and upgradation of skills.

3. Low availability and high turnover of skilled manpower.

Management Perception: Excellent working conditions with latest computing environment & the benefits to the employees would be maintained at a level to ensure their continuity. Further to continuously upgrade the skills of its employees as per the business requirements, the company has various training programs. The Company has formed ESOP Trust to retain the best available talents by enabling them to contribute and share in the growth of the Company.

4. Any changes in the Government policies on computer hardware/software, levies, Custom regulations etc. may have an adverse impact on the profitability of the company.

Management Perception: The software industry has been identified as a major thrust area for Exports by the Government of India & incentives are being provided to encourage this industry. It is hence very unlikely that Government will do anything, which will be detrimental to this Industry.

5. The company faces competition from existing companies and new entrants entering into the Software Business.

Management Perception: The Company has inherent strengths like well established marketing channels, project management skills and professionally qualified, experienced and trained manpower, which play a major role in countering competition.

Investment 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 offering. For taking an investment decision investors must rely on their own examination of the issuer ("issuer"/ "offeror") and the issue("issue"/ "offer") including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India nor does the Securities and Exchange Board of India guarantee the accuracy or the adequacy of this document. The attention of Investors is drawn to the statement of Risk Factors appearing on Page No. i of the prospectus.

The issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Prospectus contains all information with regard to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Prospectus is true and correct in all material respects 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 document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respects.

INVESTORS MAY NOTE THAT DATANET SYSTEMS LIMITED ACCEPTS NO RESPONSIBILITY FOR STATEMENTS MADE OTHERWISE THAN IN THIS PROSPECTUS OR IN THE ADVERTISEMENTS OR ANY OTHER MATERIAL ISSUED BY OR AT THE INSTANCE OF THE ISSUER COMPANY OR THE LEAD MANAGER AND THAT ANYONE PLACING RELIANCE ON ANY OTHER SOURCE OF INFORMATION WOULD BE DOING SO AT HIS/HER OWN RISK

AUTHORITY FOR THE PRESENT ISSUE

Pursuant to Section 81(1A) of the Companies Act 1956, the present issue of Equity Shares has been authorised vide special Resolution passed at the Extra Ordinary General Meeting held on 18^th February, 2000.

Consents in writing of the Directors, Lead Managers to the Issue, Bankers to the Issue, Legal advisors, Registrars to the Issue, Auditors of the Company, and Bankers to the Company to act in their respective capacities have been obtained and filed with the Registrar of Companies, Karnataka at Bangalore along with a copy of this Prospectus as required under Sanction 60 of the Companies Act, 1956 and none of them has withdrawn the said consent upto the time of delivery of a copy of this prospectus for registration with the said Registrar of Companies.

M/s, Sharp & Tannan, Chartered Accountants, the Auditor of the Company have also given their written consent to the inclusion of "Tax Benefits" as advised by them in the form and context and have also given their written consent to include Auditors Report as advised by them and as appearing elsewhere in the Prospectus and such consent has not been withdrawn upto the time of the filing of a copy of this Prospectus with the Registrar of Companies, Karnataka at Bangalore.

Save as mentioned else where in the prospectus, the company has not obtained any expert opinion.

There is no change in Auditors of the Company since inception.

Disposal of Applications & Application money received

The company reserves full, unqualified and absolute right to accept or reject any application, subject to guidelines of SEBI and Stock Exchanges, in whole or part in either case without assigning any reason thereof. In case, an application is rejected in full, the whole of the application money received will be refunded and Where an application is rejected in part, the excess application money received will be refunded to the applicant. Such refund, if any, will carry interest @ 15% p.a. after 30 days from the date of closure of this issue for the period of delay beyond 30 days. Refund will be made by cheques/payorders/demand drafts (only in case of applications not accompanied by Stock Invest) and will be dispatched to the applicant's address at the applicant's risk. Such cheques or pay orders or demand drafts will be payable at par at all the centres where the application were accepted (subject to the regulations of RBI in the regard). In case of joint applications, refund orders, if any, will be made out in the first applicant's name and all communications will be addressed to the person whose name appears first on the application form.

The application money received will be kept in separate bank accounts and the company will neither have access to nor appropriate such funds unless approval for the basis of allotment of shares has been obtained from the Regional Stock Exchanges\ at Bangalore and listing approval has been received from all the stock exchanges where listing is sought.

The company has undertaken that sufficient funds will be made available to the Registrars to the issue to ensure that allotment letters/certificates/refund orders are dispatched by Registered Post as detailed hereunder.

The company will inform the applicants in respect of the allocations made or applications rejected by dispatch of Acceptance Letters/Share Certificates or Letters of Regret, together with refund cheques or pay orders or Stockinvests, as indicated below, at the applicant's sole risk to the first named/sole applicant within 10 weeks of the closure of the issue. The company, however, as far as possible will allot the shares within 30 days from the closure of the issue and shall pay interest @ 15% p.a. for the delayed period if the allotment is not made and/or the refund orders are not dispatched within 30 days from the closure of the issue.

Refund orders of value over Rs.1500/- will be dispatched by Regd. Post and those upto Rs. 1500/- by certificate of posting. Bank charges, if any, for encashing such cheques or pay orders, will be payable by the applicant. However, such cheques or pay orders will be payable at par at the places where the applications are accepted. In case of joint applications refund orders if any, will be made out in the first applicant's name and all communications will be addressed to the person whose name appears first on the Application Form.

In case of any delay in despatch of refund orders the company would be liable to pay interest at the rate prescribed under section 73(2) and (2A) of the Company's Act 1956.

In case of applicants who subscribe with stock invest the following procedure will be followed :

In case of non allotment, the stock invest will be cancelled and returned directly to the applicant.

In case of allotment/partial allotment, stock invest will be presented to the issuing bank for payment to the extent of the allotted amount.

Registrars to the issue have been authorised by the company by Board Resolution passed on to sign on behalf of the company for realising the proceeds of the stock/invest on behalf of successful allottees or to affix non allotment advice on the stock/invest or to cancel the stock/invest of the non - allottees or partially successful allottees with more than one stock/invest. The canceled stock invest will be returned to the applicant by post within 10 weeks of the date of closure of the issue.

The Share Certificates will be delivered by Registered Post within three months from the date of allotment and will be exchanged for allotment letters issued, if any.

In the event of the present issue of Equity shares being over subscribed the basis of allotment will be finalised in consultation with the Stock Exchange, Bangalore within 30 days from the date of closure of subscription list. In case of over subscription of the issue, the basis of allotment of the issue will be finalized by a team consisting of the Company’s representatives, the Registrar to the Issue, the Executive Director of the Regional Stock Exchange and the Lead Merchant Banker.

The allotment shall be subject to marketable lots, on proportionate basis as explained below:

1. Applicants will be categorised according to the number of equity shares applied for.
2. The total number of equity shares to be allotted to each category as a whole shall be arrived at on a proportionate basis i.e. the total number of equity shares applied for in that category (number of applicants in the category x number of shares applied for) multiplied by the inverse of the over-subscription ratio.
3. Number of the equity shares to be allotted to the successful allottees will be arrived at on a proportionate basis, i.e., total number of equity shares applied for by each applicant in that category multiplied by the inverse of the over subscription ratio.
4. In all the applications where the proportionate allotments works out to less than 100 shares per applicant the allotment shall be made as follows:

(i) Each successful applicant shall be allotted a minimum of 100 equity shares and

(ii) The successful applicants out of the total applicants for that category shall be determined by drawl of lots in such a manner that the total number of shares worked out as per (b) above.

5. If the proportionate allotment to an applicant works out to a number more than 100 but is not a multiple of 100 (which is the marketable lot), the number in excess of the multiple of 100 would be rounded off to the higher multiple of 100 if that number is 50 or higher. If that number is lower than 50, it would be rounded off to the lower multiple of 100. All applicants in such categories would be allotted shares arrived at after such rounding off.
6. If the shares allotted on proportionate basis to any category is more than the shares allotted to the applicant in that category, the balance available share as for allotment shall be first adjusted against any other category, where the allocated shares are not sufficient for proportionate allotment to the successful applicants in that category. The balance shares, if any, remaining after such adjustment will be added to the category comprising of applicants applying for minimum number of shares.
7. If the process of rounding off to the nearer multiple of 100 results in the actual allocation being higher than the shares offered, it would be necessary to allow a 10% margin i.e. the final allotment may be higher up to 110% of the size of the issue
8. Investors may note that in the case of over subscription, the allotment will be on proportionate basis as mentioned above, subject to the following conditions.

(i) A minimum of 50% of the net offer of shares to the public shall initially be made available for allotment to individual applicants who have applied for allotment of 1000 or less than 1000 shares.

(ii) The balance 50% of the net offer of shares to the public shall initially be made available for allotment to investors including corporate Bodies/Institutions and individual applicants who have applied for allotment of more than 1000 shares.

(iii) The unsubscribed portion of net offer to any one of the above categories shall/may be made available for allotment to applicants in the other category, if so required.

9. The Company agrees that - there will be at least 5 public shareholders for every Rs. 1 lakh of net capital offer made to the public out of the Public Issue.
10. Explanation: For the purpose of this clause a public shareholder shall mean a person who is neither a promoter nor does he hold more than 1 % equity capital in the Company.

Payment in respect of refund of excess application moneys beyond the stipulated period of 30 days after the date of closure of the Subscription List, interest @ 15% p.a. on the excess application money will be made to the applicant as per the guidelines issued by the Ministry of Finance, Government of India, New Delhi vide Letter no. F/8/6/SE/79 dated 21st July, 1983 addressed to the Stock Exchanges as amended by letter No. F/14/2/SE/85 dated September 27, 1985.

Since this is the first Public Issue of Shares of the Company, there is no past history of Investor Grievances. On completion of this Public Issue, the Company has made arrangements with the Registrars to the issue to handle and redress Investor Grievances promptly for the period of 6 months beginning from the last date of dispatch of letters of allotments/share certificates/refund orders and keep the Company appraised of their redressal to complaints/grievances on weekly basis. On completion of this six months period, the Company will device its own suitable mechanism for prompt redressal of Investor Grievances. The Company has nominated Mrs.Yashoda Srinivas, A.G.M.(Finance), as compliance officer to deal with grievances and the redressal system.

DATANET SYSTEMS LIMITED (Formerly Datanet CorporationLimited)
Registered Office : Unit No. 4/7-8 ( Old no.s 4/53-54 ) , II Floor, Block A,
Morzaria Industrial Estate, No.4, Bannerghatta Road, Bangalore – 560 029
Tel: (080) 5521837, 5521839, 5538011 Fax : (080) 5538010
E-mail : mktg@datanetcorpltd.com Web: www.datanetcorpltd.com

LEAD MANAGERS TO THE ISSUE

1. INDBANK MERCHANT BANKING SERVICES LTD.
   (A Subsidiary of Indian bank)
   Empire Infantry , 29 ,( Old no. 10)
   Infantry Road , bangalore 560 001.
   Phone / Fax : 286 0318 , 286 9083
   E mail : indbbang@vsnl.com

2. BOB CAPITAL MARKETS LIMITED
   (Wholly owned subsidiary of Bank of Baroda)
   3^rd floor, Maneckji Wadia Bldg.,Nanik Motwane Marg,
   Opp. Mumbai University, Fort,
   Mumbai – 400 023
   Phone:91-22-2670205/2670250
   Fax:91-22-2673044

ALPHA SYSTEMS PVT. LTD
30, Ramana Residency, 4^th Cross ,
Sampige Road, Malleswaram,
Bangalore – 560 003
Phone-91-80-3460815(4lines)
Fax:91-80-3460819
E.mail: alfint@vsnl.com

M/s SHARP & TANNAN.
Chartered Accountants,
103, Midford House ,
1, Midford Gardens, Bangalore 560 001.
Phone Nos : 91-80- 5550987, Fax 5550 989
E mail : stca@vsnl.com

Mrs. Yashoda Srinivas,
Assistant General Manager-Finance,
Datanet Corporation Limited
II Floor , Morzaria Industrial Estate,
No. 4 , Bannerghatta Road,
Bangalore 560 029.
Phones : 5538011/5521839,Fax : 5538010
E mail : yashoda@datanetcorpltd.com

Bank of India ,
Cantonment Branch ,
Bangalore .

Indian Bank,
Bangalore

HDFC Bank Ltd.,
Bangalore

All members of the recognised Stock Exchanges in India can act as brokers to the Issue.

To

The Board of Directors
Datanet Systems Ltd.,
Block –A, II Floor
Morzaria Industrial Estate,
4, Bannerghatta Road
Bangalore – 560 029

Dear Sirs,

We have examined the books of account of Datanet Systems Limited (formerly Datanet Corporation Limited) for the four financial years ended 31^st March 1999, being the last date to which the accounts of the Company have been made and audited by us being the Statutory Auditors and adopted by the members, and also accounts for the ten months ended 31^st January 2000 audited by us and approved by the Directors of the Company.

In accordance with the requirements of Clause 24 of Part II of Schedule II of the Companies Act, 1956 we report that the profits, assets & liabilities and dividends of the Company are as set out below and gives a true and fair view of state of affairs of the Company:

1.     Profits & Losses

The company has not declared any dividend since 1996

The company has no borrowings outstanding as at 31^st January, 2000

Note: Other adjustments represents disallowance under Section43B and other provisions of the Income Tax Act, 1961

The accounts have been prepared in accordance with the provisions of the Companies Act, 1956.

Figures for the previous period are re-grouped, wherever necessary.

Fixed assets are capitalised at acquisition cost including directly attributable costs such as freight, insurance and specific installation charges for bringing the assets to its condition for use.

Pre-operative expenses incurred upto the date of commencement of commercial operations are capitalised.

Inventories are valued at lower of cost or replacement value after providing for obsolescence and damages as below:

Raw materials & components : weighted average cost

Finished goods / traded goods : at lower of cost or net realisable value.

Depreciation is provided on Written Down Value (WDV) method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956.

Foreign currency transactions are recorded at the rates prevailing on the date of transaction and adjusted to the rates prevailing on the date of settlement during the accounting period.

Current assets & liabilities remaining unsettled at the close of the accounting period are converted at the contracted rate or year end rate as applicable.

The exchange differences on settlement / conversion are adjusted to :

     i)   Cost of fixed assets, if the foreign currency liability relates to fixed assets.

    ii)   Profit & loss account in other cases.

Contribution to provident fund are accrued each year as per the provisions of the Employees Provident Fund and Miscellaneous Act, 1952. Provision for gratuity and leave encashment are accrued each year as per the terms of the contracts on actual liability basis.

Accounting for contingencies (gain or loss) arising out of contractual obligations are made only on the basis of mutual acceptance.

Events occurring after the date of Balance Sheet are considered upto the date of approval of the accounts by the Board, where material.

Preliminary expenses are amortised equally over a period of ten years from the year of commencement of commercial operation.

Sales & service represents invoice value of goods / services and includes excise duty.

Deferred revenue expenditure incurred on the development of new products are written off over a period of three years from the year of commercial exploitation of the product.

Chartered Accountants
By the hand of

L VAIDYANATHAN
Partner
(Membership No.16368)
Bangalore, 24^th March, 2000

The minimum subscription which, in the opinion of the Board must be raised by the issue of shares in order to provide for the sums required, in terms of the Act, and in terms of this prospectus is Rs315 Lakhs being 100% of the issue amount. The Board will proceed to allot the equity shares on receipt of application money payable on equity shares as mentioned elsewhere in this prospectus. If the company does not receive the minimum subscription amount of 100% of the issued amount on the date of closure of the issue or if the subscription level falls below 100% after the closure of the issue on account of cheques having been returned unpaid or withdrawal of applications, the company shall forthwith refund the entire subscription amount received. If there is 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.

The expenses of the present issue, including brokerage, fees of the Lead Managers, Legal Advisor and Registrar to the issue, stamp duty, printing and stationery, distribution and publication expenses, legal charges, listing fees, charges of Bankers to the issue, Auditors fees, and other miscellaneous expenses are estimated at Rs. 25.00 lakhs which will be met out of the proceeds of this issue.

As per regulation 24A of SEBI (Merchant Bankers) Amendment Regulation 1996 dated 27.06.96, the Company paid a sum of Rs.10,000/- to SEBI vide DD No. 025952 dated 8^th May 2000 drawn on Bank of India , Service Branch, Chennai at the time of filing of draft prospectus.

The fees payable to the Lead Managers to the issue are as set out in their letter of appointment. The lead managers are also to be reimbursed all other out of pocket expenses incurred as agreed in their letters. Copies of the letters of appointment are kept open for inspection at the registered office of the company.

FEES PAYABLE TO THE REGISTRARS TO THE ISSUE.

The fees payable to Registrar to issue is set out in their letter of appointment. Copy is kept open for inspection at the Registered Office of the Company.

No sums have been paid or payable as commission, brokerage or discount for subscribing or agreeing to subscribe or procuring or for agreeing to procure subscriptions for any previous issue of the Company during last five years.

Brokerage will be paid by the company @ 1.5% on the issue price of the equity shares on the basis of allotment made against application bearing the stamp of a member of any recognised Stock Exchange in India. Brokerage at the same rate will also be payable to the Bankers to the Issue in respect of allotment made against applications procured by them provided the relative forms of applications bear their respective stamps in the Brokers column.

In case of tampering or overstamping of broker/agents codes on the application form, the issuer's decision to pay brokerage in this respect will be final and no further correspondence will be entertained in this regard.

Save as otherwise stated elsewhere in the prospectus, the company has not entered into any contract or arrangement and does not presently propose to enter into any contract or arrangement, whereby any option or preferential right of any kind has been or is proposed to be given to any person to subscribe for any equity shares or Shares of the Company.

No capitalisation of reserves or profits has been made by the Company since the date of incorporation.

The share capital of the Company at present consists of ordinary Equity Shares of Rs.10/- each only.

To date there has been no issue of shares, debentures or any other such instruments for consideration other than cash.

The company has issued equity shares of Rs.10/- each for cash at a premium of Rs.5 per share to promoters’ friends and associates during the year 1999-2000. No shares of the company have been issued at a discount.

The company has not made any public issue previously and will be approaching the capital market for the first time.

The Company has not revalued any of its assets since the date of incorporation.

No sums have been paid as commission / brokerage. Commission/brokerage are payable only in respect of the present Issue.

The company has not issued any debentures, debenture-stock, or Redeemable Preference Shares since the date of incorporation.

Save in respect of the property purchased or acquired or to be purchased or acquired as mentioned elsewhere in this prospectus, there is no property which the Company has purchased or acquired or presently proposes to purchase or acquire, which is to be paid for wholly or partly out of the proceeds of the present issue or the purchase or acquisition has not been completed on the date of issue of this prospectus, other than the following:

1. The contract for the purchase or acquisition whereof was entered into in ordinary course of the company's business, the contract not being made in contemplation of this issue nor this issue is consequence of such contract or

2. In respect of which the amount of purchase money is not material except as stated elsewhere in this prospectus, the company has not purchased any property in which any of its promoter or Director had or have any direct or indirect interest or in respect of any payments made thereof.

Save as elsewhere stated in the Prospectus, all the directors are deemed to be interested to the extent of fees, if any, payable to them for attending the meetings of the Board or Committees thereof and reimbursement of travelling and other incidental expenses if any, for such attendance as per the articles.

The promoters and directors are also interested to the extent of the shares, if any, already held by them, in the company or that may be subscribed by and allotted to them out of the present issue. The promoters and the directors are deemed to be interested in the shares that are held or may be allotted to the companies in which they are interested as directors and/or members.

In accordance of provision of section 198, 269 & 309 and in accordance with schedule XIII and in accordance with Articles of Association of the company. Dr. A. Prabhakar was appointed as Chairman and Managing Director of the Company with effect from 1^st April 1995.

Following are the details of monthly remuneration and perquisites payable to the Chairman and Managing Director Consolidated Rs 57,000/-.

The above remuneration payable are in accordance with the schedule XIII of the Companies Act,1956.

3. The Authorised Share Capital of the Company is Rs.15,00,00,000/-(Rupees Fifteen Crores ) divided into 1,50,00,000 (One Crore Fifty Lacs) Equity Shares of Rs.10/- (Rupees Ten) each.
4. Subject to the provisions of these Articles and of the Act, the shares shall be under the control of the Board of Directors, who may allot or otherwise dispose off the same to such persons, on such terms and conditions and at such time as they think fit and with full power to give any person the option to call or be allotted shares of the Company of any class, either at a premium or at par or at a discount and for such time and for such consideration as the Board of Directors think fit (subject to the provisions of Sections 78 and 79 of the Act), provided that option or right to call of shares shall not be given to any person except with the sanction of the Company in General Meeting. The Board shall cause to be made the returns as to allotment provided for in Section 75 of the Act.
5. Any application signed by or on behalf of an applicant for shares in the Company followed by an allotment of any shares therein, shall be an acceptance of shares within the meaning of these Articles; and every person who thus or otherwise accepts any shares and whose name is on the register shall, for the purposes these Articles, be a member.
6. (1)If at any time the share capital is divided into different classes of shares, the rights attached to any class(unless otherwise provided by the terms of issue of the shares of that class) may, subject to the provisions of Sections 106 and 107 of the Act and whether or not the company is being would up be varied with the consent in writing of the holders of three fourths of the issued shares of that class or with a sanction of a resolution passed at a separate meeting of the holders of the shares of that class.

(2) Subject to the provisions of the Section 170 (2) (a) and(b) of Act, to every such separate meeting, the provisions of these regulations relating to meetings shall mutatis mutandis apply, but so that the necessary quorum shall be five persons at least holding or representing by proxy or one-third of the issued shares of the class in question.

7. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not unless otherwise provided by the terms of issue of the shares of that class be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
8. (1)The company may exercise the powers of paying commission’s conferred by Section 76 of the Act, provided that the rate per cent or the amount of the commission paid or agreed to be paid shall be disclosed in the manner required by the Section.

(2) The rate of commission shall not exceed the rate of 5% (five percent )of the price at which the shares in respect whereof the same is paid are issued or an amount equal of 5%(five percent) of such price, as the case may be and in the case of debentures 2½% (two and a half percent)of the price at which the debentures in respect whereof the same is paid are or issued or an amount equal to 2½% (two and a half percent) of such price, as the case may be.

(3) The commission may be satisfied by payment in cash or by allotment of fully or partly paid shares or partly in one way and partly in the other.

(4) The Company may also, on any issue of shares, pay such brokerage a may be lawful.

9. Subject to section 187-C of the Act, no person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent future or partial interest in any share or any interest in any fractional part of a share or any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.
10. (1) Every person whose name is entered as a member in the register of members shall be entitled to receive within three months after allotment (or within such other period as the conditions of issue shall provide) or within one month after the application for the transfer of registration is received by the Company ,

(a) Share/Debenture certificates shall be issued in marketable lots or

(b) One certificate for all his shares without payment, or

(c) Several certificates, each for one or more of his certificates provided that any sub-division, consolidation or splitting of certificates required in marketable lots shall be done by the Company free of any charges.

(2) Every certificate shall be under the seal and shall specify the shares to which it relates and the amount paid up thereon.

(3) In respect of any share or shares held jointly by several persons, the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all such holders.

11. The Company agrees, that it will not charge any fees exceeding those which may be agreed upon with the Stock Exchange

(I) for issue of new certificates in replacement of those that are torn, defaced, lost or destroyed :-

(II) for sub-division and consolidation of shares and debenture certificates and for sub-division of Letter of Allotment and Split, Consolidation Renewal and Pucca Transfer Receipts into denominations other than those fixed for the market units of trading.

12. The Company may issue such fractional certificates as the Board may approve in respect of any of the shares of the Company on such terms as the Board thinks fit as to the period within which the fractional certificates are to be converted into share certificates.
    
13. If any share stands in the names of two or more persons, the person first named in the register of members shall, as regards receipt of dividends, the service of notices and subject to the provisions of these Articles, all or any other matter connected with the Company except the issue of share certificates, voting at meeting and the transfer of the share, be deemed the sole holder thereof.
    

13.B.

1. Every person subscribing to the securities offered by the company shall have the option to receive the security certificates or hold securities with a depository.
2. Where a person opts to hold a security with a Depository, the company shall intimate such depository the details of allotment of the security, and on receipt of such information the Depository shall enter in its record the name of the allottee as the beneficial owner of the security.

13.C

1. All securities held by a Depository shall be dematerialised and shall be in fungible form.
2. Nothing contained in Sections 153, 153A, 153b, 187B, 187C, and 372 of the Act shall apply to a Depository in respect of the securities held by it on behalf of the beneficial owners.
3. In case of transfer or transmission of shares or other marketable securities where the company has not issued any certificates and where such shares or securities are being held in any electronic and fungible form, the provisions of the Depositories Act, 1996, shall apply".

13.D

1. Notwithstanding anything to the contrary contained in the Articles or in any other law for the time being in force, a Depository shall be deemed to be registered owner for the purpose of effecting transfer of ownership of security on behalf of a beneficial owner.
2. Save as otherwise provided in clause (1) above, the Depository as a registered owner shall not have any voting rights or any other rights in respect of securities held by it.
3. Every person holding securities of the company and whose name is entered as beneficial owner in the records of the Depository shall be deemed to be the member of the company. The beneficial owner shall be entitled to all the rights and benefits and be subjected to all the liabilities in respect of his securities held by a Depository.
4. Nothing contained in the foregoing Article shall to transfer of security effected by the transferor and the transferee both of whom are entered as Beneficial Owners in the records of Depository".

13.E    Every Depository shall furnish to the company information about the transfer of securities in the name of the beneficial owners at such intervals and in such manner as may be specified by the bye-laws and the company in this behalf.

13.F

1. If a beneficial owner seeks to opt out of a Depository in respect of any security, he shall inform the Depository accordingly.
2. The Depository shall on receipt of such information make appropriate entries in its records and shall inform the company.
3. The company shall, within (30) days of the receipt of intimation from a Depository and a fulfillment of such conditions and on payment of such fees as may be specified by the Regulations, issue the certificate of securities to the beneficial owner or the transferee, as the case may be.

13.G. Notwithstanding anything to the contrary contained in the Articles:

1. Section 83 of the act shall not apply to securities held with a Depository.
2. Nothing contained in section 108 of the act shall apply to a transferor and the transferee both of whom are entered as beneficial owners in the records of a Depository.

13.H

1. The Register and index of beneficial owners maintained by a Depository under section 11 of the Depositories Act shall be deemed to be the Register and index of members for the purposes of the Act and these Articles.
2. Except as ordered by a court of competent jurisdiction or by Law required, the company shall be entitled to treat the person whose name appears on the Register of members as the holder of any share or whose name appears as the beneficial owner of shares in the records of the Depository, as the absolute owner thereof and accordingly shall not be bound to recognise any benami, trust, or equity and equitable contingent or other claim to or interest in such share on the part of any other person, whether or not it shall have express or implied notice thereof ".
3. The company shall keep a Register and index of Members in accordance with all applicable provisions of the Companies Act, 1956 and the Depositories act, 1996 with details of shares held in material and dematerialised forms in any media as may be permitted by Law including in any form of electronic media. The company shall be entitled to keep in any State or Country outside India, a branch Register of members resident in that State or Country".
4. The Company shall keep a Register of Transfers and shall have recorded therein fairly and distinctly particulars of every transfer or transmission of any share held in material form. The transferor shall be deemed to remain the holder of the shares until the name of the transferee is entered on the Register of Members in respect thereof".

14. (1). The Company shall have a first and paramount lien upon every share (not being a fully paid up share), for all money (whether presently payable or not) called or payable at a fixed time in respect of that share and no equitable interest in any share shall be created except upon the footing and condition that this Article will have full effect. And such lien shall extend to all dividends from time to time declared in respect of such shares. Unless otherwise agreed the registration of a transfer of a share shall operate as a waiver of the Company’s lien if any, on such shares. The Board of Directors may at any time declare any shares to be wholly or in part to be exempt from the provisions of this article.

(2) The Company’s lien, if any, on a share shall extend to all dividends payable thereon, subject to section 205A of the Act.

15. The company may sell, in such manner as the Board thinks fit, any share on which the Company has a lien provided that no sale shall be made: -

1. unless a sum in respect of which the lien exists is presently payable : or
2. until the expiration of thirty days after a notice in writing demanding payment of such part of the amount , in respect of which the lien exists as is presently payable , have been given to the registered holder for the time being of the share or the person entitled thereto by reason of his death or insolvency and stating that amount so demanded if not paid within the period specified at the Registered Office of the Company , the said shares shall be sold .

16. (1)To give effect to any such sale, the Board may authorise some person to transfer the shares sold to the purchaser thereof.

(2) The purchaser shall be registered as the shareholder of the shares comprised in any such transfer.

(3) The purchaser shall not be bound to see to the application of the purchaser money, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the sale.

17. (1) The proceeds of the sale shall be received by the Company and applied in payment of the whole or a part of the amount in respect of which the lien exist as is presently payable.

(2) The residue, if any, shall, subject to a like lien for sums not presently payable as existed upon the shares at the date of sale, be paid to the person entitled to the share at the date of the sale.

18. (1)The Board of Directors may, from time to time, make calls upon the members in respect of money unpaid on their shares (whether on account of the nominal value of the shares or by way of premium) and not by the condition of allotment thereof made payable at fixed times.

(2) Each member shall, subject to receiving at least thirty days notice specifying the time or times and place of payment of the call money pay to the Company at the time or times and place so specified, the amount called on his shares.

(3) A call may be revoked or postponed at the discretion of the Board.

19. A call shall be deemed to have been made at the time when the resolution of the Board authorising the call was passed. Call money may be required to be paid by instalments.
    
    
20. The joint holders of share shall be jointly and severally liable to pay all calls in respect thereof
    
    
21. (1) If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest thereon from the day appointed for payment thereof to the time of actual payment at such rate of interest as the Board may determine.

(2) The Board shall be at liberty to waive payment of any such interest wholly or in part.

22. (1) Any sum which by the terms of issue of share become payable on allotment or at any fixed date, whether on account of the nominal value of the share or by way of premium, shall for purposes of these regulations, be deemed to be a call duly made and payable on the date on which by the terms of issue such sum becomes payable.

(2) In case of non-payment of such sum, all the relevant provisions of these regulations as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

23. Subject to the provisions of Section 92 and 292 of the Act, the Board :-

1. may, if it thinks fit, receive from any member willing to advance all or any part of the money uncalled and unpaid upon any shares held by him ; and
2. If it thinks fit, may pay interest upon all or any of the moneys advanced on uncalled and unpaid shares (until the same would but for such advances become presently payable) at such rate not exceeding, unless the Company in general meeting shall otherwise direct , 9% (nine percent) per annum as may be agreed upon between the Board and the members paying the sums or advances, Money so paid in advance shall not confer a right to dividend or to participate in profits or voting Rights.

24. On the trial or hearing of any suit proceedings brought by the Company against any member or his representative to recover any debt or money claimed to be due to the Company in respect of his share , it shall be sufficient to prove that the name of the defendant is or was, when the claim arose, on the Register of members of the Company as a holder or one of the holders of the number of shares in respect of which such claim is made and that the amount claimed is not entered as paid in the books of the Company and it shall not be necessary to prove the appointment of the Directors who resolved to make any call, nor that a quorum of Directors was present at the Board Meeting at which any call was resolved to be made, nor that the meeting at which any call was resolved to be made was duly convened or constituted nor any other matter, but the proof of the matters aforesaid shall be conclusive evidence of the debt.
    
    
25. Neither the receipt by the Company of a portion of any money which shall, from time to time , be due from any member to the Company in respect of his shares, either by way of principal or interest, nor any indulgence granted by the Company in respect of the payment of any such money, shall, preclude the Company from thereafter proceeding to enforce a forfeiture of such shares as hereinafter provided .
    

TRANSFER AND TRANSMISSION OF SHARES

26. The Company shall keep a" Register of Transfers", and therein shall fairly and distinctly enter particulars of every transfer or transmission of any share.
    
    
27. (1) The instrument of transfer of any share in the Company shall be executed by or on behalf of both the transferor and the transferee.

    (2) The transferor shall be deemed to remain a holder of the share until the name of the transferee is entered in the register of members in respect thereof.

28. The instrument of transfer shall be in writing and all the provisions of Section 108 of the Companies Act, 1956 and of any modification thereof for the time being shall be complied with in respect of all transfers of shares and registration thereof.
    
    
29. Unless the Directors decide otherwise, when an instrument of transfer is tendered by the transferee, before registering any such transfer, the Directors shall give notice by letter sent by registered acknowledgment due post to the registered holder that such transfer has been lodged and that unless objection is taken the transfer will be registered. If such registered holder fails to lodge an objection in writing at the office within ten days from the posting of such notice to him, he shall be deemed to have admitted the validity of the said transfer. Where no notice is received by the registered holder , the Directors shall be deemed to have decided not to give notice and in any event the non – receipt by the registered holder of any notice shall not entitle him any to make any claim of any kind against the Company or the Directors in respect of such non-receipt.
    

TRANSFER OF SHARES

30. The Board of Directors may, subject to the right of appeal conferred by Section 111 of the Companies Act, 1956, decline to register :-

(a) the transfer of a share not being a fully paid up share, to a person of whom they do not approve; or

(b) any transfer of the share on which the Company has a lien, provided that the registration of transfer shall not be refused on the ground of transferor being either alone or jointly with any person or persons indebted to the Company on any account except a lien.

(c) Notice of refusal to transfer shares to transferor or transferee shall be sent within 30 days.

31. The Board may also decline to recognise any instrument of transfer unless :-

(a) the instrument of transfer is accompanied by the certificate of the shares to which it relates, and such other evidence as the Board may reasonably require to show the right of the transferor to make the transfer ; and

(b) the instrument is in respect of only one class of shares.

32. All instruments of transfer which shall be registered shall be retained by the Company, but may be destroyed upon the expiration of such period as the Board may from time to time determine. Any instrument of transfer which the Board declines to register shall (except in any case of fraud) be returned to the person depositing the same.
    
    
33. (a)   the registration of to transfers 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 more than forty-five days in the aggregate in any year or for more than thirty days at any one time.

2. There shall be no charge for :

3. registration of shares or debentures ;
4. Sub-division and/or consolidation of shares and debenture certificates and sub-division of Letter of Allotment and split consolidation, renewal and pucca transfer receipts into denominations corresponding to the market unit of trading;
5. sub-division of renouncible Letter of Right;
6. issue of new certificates in replacement of those which are decrepit or worn out or where the cages on the reverse for recording transfer have been fully utilised;
7. registration of any Powers of Attorney, Letter of Administration and similar other documents.

Notwithstanding anything contrary contained in these articles , Canbank Venture Capital Fund Ltd., acting in its capacity as trustee of Canbank Venture Capital Fund , hereinafter referred to as CVCFL , shall, at its absolute discretion and without any restriction as to its price , transfer any shares registered in its name to any person not necessarily being member of the Company as CVCFL may decide. No notice for sale or transfer of such shares will be required to be given to the Board of Directors or any member and the Board of Directors will have no right to refuse such transfer.

34. (1) On the death of a member, the survivor or survivors where the member was a joint holder and his legal representative where he was a sole holder shall be the only person recognised by the Company as having any title to his interest in the shares.

(2) Nothing in clause (1) shall release the estate of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons.

35. (1) Any person becoming entitled to a share in consequence of the death or insolvency of a member may, upon such evidence being produced as may from time to time properly be required by the Board and subject as hereinafter provided elect, either –

(a) To be registered himself as holder of the share; or
(b) To make such transfer of the shares as the deceased or insolvent member could have made.

(2) The Board shall, in either case, have the same right to decline or suspend registration as it would have had, if the deceased or insolvent member had himself transferred the share before his death or insolvency.

36. (1)If the person so becoming entitled, shall elect to be registered as holder of the share himself, he shall deliver or send to the Company a notice in writing signed by him stating that he so elects.

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

(3) All the limitations, restrictions and provisions of these regulations relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the death or insolvency of the member had not occurred and the notice of transfer were a transfer signed by that member.

37. On the transfer of the share being registered in his name a person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he was the registered holder of the share and that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company ;

Provided that the Board may, at any time, give notice requiring any such person to elect either to be registered himself or to transfer the share and if the notice is not complied with within 90 (ninety) days, the Board may thereafter withhold payment of all dividends, bonus or other moneys payable in respect of the share, until the requirements of the notice have been complied with.

38. Where the Company has knowledge through any of its principal officers within the meaning of Section 2 of the Estate Duty Act, 1953 of the death of any member or of debenture holder in the Company, it shall furnish to the Controller within the meaning of such section, the prescribed particulars in accordance with that Act and the rules made thereunder and it shall not be lawful for the Company to register the transfer of any shares or debentures standing in the name of the deceased, unless the transferor has acquired such shares for valuable consideration or a certificate from the Controller is produced before the Company to the effect that the Estate Duty in respect of such shares or debentures has been paid or will be paid or that none is due, as the case may be.
    
    
39. The Company shall incur liability whatever in consequence of its registering or giving effect, to any transfer of share made or purporting to be made by any apparent legal owner thereof (as shown or appearing in the register of members) to the prejudice of persons having or claiming any equitable right, title or interest to or in the said shares, notwithstanding that the Company may have had notice of such equitable right, title or interest or notice prohibiting registration of such transfer and may have entered such notice or referred thereto, in any book of the Company, and the Company shall not be bound or required to regard or attend or give effect to any notice which may be given to it of any equitable right, title or interest or be under any liability for refusing or neglecting so to do, though it may have been entered or referred to in some book of the Company but the Company though not bound so to do, shall be at liberty to regard and attend to any such notice and give effect thereto if the Board shall so think fit.
    

39 (A) No fee shall be charged for shares/debentures or for effecting transmission or for registering any letters of probate, letters of administration and similar other documents.

FORFEITURE OF SHARES

40. If a member fails to pay any call or instalment of a call, on the day appointed for payment thereof, the Board may, at any time thereafter during such time as any part of the call or instalment remains unpaid, serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment.
    
    
41. The notice aforesaid shall :-
    

(a) name a further day (not earlier than the expiry of 30(thirty) days from the date of service of notice) on or before which the payment required by the notice is to be made; and

(b) state that, in the event of non-payment on or before the day so named, the shares in respect of which the call was made, will be liable to be forfeited.

42. If the requirements of any such notice as aforesaid are non 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 been made, be forfeited by a resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the date of forfeiture, which shall be the date on which the resolution of the Board is passed forfeiting the shares.
    
    
43. (1) A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Board thinks fit.

(2) At any time before a sale or disposal, as aforesaid, the Board may annul the forfeiture on such terms as it thinks fit.

44. (1) A person whose shares have been forfeited shall cease to be a member In respect of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to pay to the Company all moneys which, at date of forfeiture, were presently payable by him to the Company in respect of the shares together with interest thereon from the time of forfeiture until payment at the rate of 9%(nine percent ) per annum.

(2) The liability of such person shall cease if and when the Company shall have received payments in full of all such money in respect of the shares.

45. (1) A duly verified declaration in writing that the declarant is a director or the secretary 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 stated therein stated as against all persons claiming to be entitled to the share.

    (2) The Company may receive the consideration, if any, given for the share on any sale or disposal thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of.

(3) To transferee shall thereupon be registered as the holder of the share.

(4) The transferee shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.

46. The provisions of these regulations as to forfeiture shall apply, in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the nominal value of the share or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
    
    
47. The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands against the Company in respect of the share, and all other rights incidental thereto except only such of those rights as by these Articles are expressly saved.
    
    
48. Upon any sale, after forfeiture or for enforcing a lien in purported exercise of powers herein before given, the Board may appoint some person to execute an instrument of transfer of the shares sold and cause the purchaser’s name to be entered in the Register in respect of the shares sold and the purchaser shall not be bound to see to the regularity of the proceedings or to the application of the purchase money and after his name has been entered in the Register in respect of such shares, the validity, of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.
    
    
49. Upon any sale, re-allotment or other disposal under the provisions of these Articles relating to lien or to forfeiture, the certificate or certificates originally issued in respect of the relative shares shall (unless the same shall on demand by the Company have been previously surrendered to it by the defaulting member) stand cancelled and become null and void and of no effect. When any shares, under the powers in that behalf herein contained are sold by the Board and the certificate in respect thereof has not been delivered up to the Company by the former holder of such shares, the Board may issue a new certificate for such shares distinguishing it in such manner as it may think fit, from the certificate not so delivered.
    
    
50. The directors may, subject to the provisions of the Act, accept from any member on such terms and conditions as shall be agreed, a surrender of his shares or stock or any part thereof.

CONVERSION OF SHARES INTO STOCK

51. The Company may, by an ordinary resolution :-

1. convert any paid-up shares into stock ; and
2. reconvert any stock into paid up shares of any denomination authorised by these regulations.

52. The holders of stock may transfer the same or any part thereof in the same manner as, and subject to the same regulations under which, the shares from which the stock arose might before the conversion have been transferred or as near thereto as circumstances admit :

Provided the Board may, from time to time ,fix the minimum amount of Stock transferable, so, however, that such minimum shall not exceed the nominal amount of the shares from which the stock arose.

53. The holders of stock shall, according to the amount of stock held by them, have the same rights, privileges and advantages as regard dividends voting and meeting of the Company, and other matters, as if they held the shares from which the stock arose; but no such privilege or advantage (except participation in the dividends and profits of the Company and in the assets on winding up) shall be conferred by an amount of stock which would not, if existing in shares, have conferred that privilege or advantage.
    
    
54. Such of the regulations of the Company (other than those relating to share warrants), as are applicable to paid-up shares shall apply to stock and the words "share" and "shareholders" in those regulations shall include "stock" and "stockholders" respectively.

SHARE WARRANTS

ALTERATION OF CAPITAL

59. The Company may, from time to time by ordinary resolution increase its share capital by such sum, to be divided into shares of such amount, as the resolution shall specify.

60. The Company may, by ordinary resolution in general meeting :-

(a) consolidate and divide all or any of its capital into shares of larger amounts than its existing shares :

(b) sub- divide its shares or any of them, into shares of smaller amounts than is fixed by the Memorandum of Association, so however, than in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived ;

(c) cancel any share which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.

61. The Company may, from time to time, by special resolution and on compliance with the provisions of Section 100 to 105 of the Act, reduce its share capital and any capital reserve fund or share premium account.

62. The Company shall have power to establish Branch Offices, subject to the provisions of Section 8 of the Act or any statutory modifications thereof.

63. The Company shall have power to pay interest out of its capital on so much of shares which were issued for the purpose of raising money to defray the expenses of the construction of any work or building or the provisions of any plant for the Company in accordance with the provisions of Section 208 of the Act.

64. The Company, if authorised by a special resolution passed at a General Meeting may amalgamate or cause itself to be amalgamated with any other person, or body corporate, subject however, to the provisions of Section 391 to 394 of the Act.

GENERAL MEETINGS

65. All General Meetings other than the Annual General Meetings of the Company shall be called Extraordinary General Meetings.

66. (1) The Board may, whenever it thinks fit call an Extraordinary General Meeting.

(2) If at any time there are not within India Directors capable of acting who are sufficient in number to form a quorum any Director or any two members of the Company may call an extraordinary general meeting in the same manners, as nearly as possible, to that in which such a meeting may be called by the Board.

CONDUCT OF GENERAL MEETINGS

67. No general meeting, annual or extraordinary, shall be competent to enter upon, discuss or transact any business, which has not been stated in the notice by which it was convened or called.

68. (1) No business shall be transacted at any general meeting, unless a quorum of members is present at the time when the meeting proceeds to business.

(2) Save as otherwise provided in Section 174 of the Act, a minimum of five members present in person shall be the quorum. A body corporate, being a member, shall be deemed to be personally present if it is represented in accordance with Section 187 of the Act.

CONDUCT OF MEETINGS

69. The Chairman, if any, of the Board shall preside as Chairman at every general meeting of the Company.

70. If there is no such Chairman or if he is not present within fifteen minutes of the time appointed for holding the meeting or is unwilling to act as Chairman of the meeting, the Directors present shall elect one of their members to be the Chairman of the meeting.
    
    

71. If at any meeting no Director is willing to act as Chairman or if no Director is present within 15 (fifteen) minutes of the time appointed for holding the meeting, the members present shall choose one of their members to be the Chairman of the meeting.

72. No business shall be discussed at any general meeting except the election of a Chairman, whilst the chair is vacant.

73. (1) The Chairman may with the consent of any meeting at which a quorum is present and shall, if so directed by the meeting, adjourn the meeting, from time to time and place to place.

(2) No business shall be transacted at any adjourned meeting, other than the business left unfinished at the meeting from which the adjournment took place.

(3) When a meeting is adjourned for thirty days or more, fresh notice of the adjourned meeting shall be given as in the case of an original meeting.

(4) Save as aforesaid, it shall not be necessary to give any notice of any adjournment or of the business to be transacted at an adjourned meeting.

74. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes places or at which the poll is demanded , shall be entitled to a second or casting vote.
    
    
75. Any business other than that upon which a poll has been demanded, may be proceeded with, pending the taking of the poll.

BOARD OF DIRECTORS

84. The number of Directors of the Company shall not be less than three and not more than twelve.
    
    
85. The following shall be the first directors of the Company.
    

    1. Dr.Anantharamaiah Prabhakar
    2. Hari Mohan Sharma
    3. Chhotalal Govindji Morzaria.

1. 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 in accordance with the provisions of Section 255 of the Act or if their number is not three or a multiple of three, then the number nearest to one third shall retire from office in accordance with the provisions of Section 256 of the Act.
   
   
2. (1) Subject to the provisions of the Companies Act, 1956 and Rules made thereunder, each Director including a Managing Director shall be paid sitting fees for each meeting of the Board or a committee thereof, attended by him a sum not exceeding Rs. 1000/-(Rupees One Thousand).

(2) Subject to the provisions of Sections 309, 310 and 314 of the Act, the Directors shall be paid such further remuneration, whether in the form of monthly payment or by a percentage of profit or otherwise, as the Company in General meeting may, from time to time, determine and such further remuneration shall be divided among the Directors in such proportion and in such manner as the Board may, from time to time, determine and in default of such determination, shall be divided among the Directors equally or if so determined paid on a monthly basis.
(3) The remuneration of the Directors shall, in so far as it consists of a monthly payment, be deemed to accrue from day to day.
(4) Subject to the provisions of Sections 198,309, 310 and 314 of the Act, if any Director be called upon to perform any extra services or make special exertions or efforts (which expression shall include work done by a Director as a member of any committee formed by the Directors) the Board may pay such Director special remuneration for such extra services or special exertions or efforts either by way of fixed sum or by percentage of profit or otherwise and may allow such Director at the cost and expense of the Company such facilities or amenities ( such as rent free house, free medical aid and free conveyance) as the Board may determine from time to time.
(5) In addition to the remuneration payable to them in pursuance of the Act, the Directors may be paid in accordance with Company’s rules to be made by the Board all travelling, hotels and other expenses properly incurred by them:-
(a) In attending and returning from meetings or adjourned meeting of the Board of Directors of any committee thereof; or
(b) in connection with the business of the Company.

3. The Directors shall not be required to hold any qualification shares in the company.
   
   
4. The Board of Directors shall have power to appoint additional Directors in accordance with the provisions of Section 260 of the Act.
   
   
5. If it is provided by any trust deed securing or otherwise in connection with any issue of debentures of the Company that any person or persons shall have power to nominate a Director of the Company then in the case of any and every such issue of debentures, the persons having such power may exercise such power, from time to time and appoint a Director accordingly. Any Director so appointed is herein referred to as a Debenture Director. A Debenture Director may be removed from office at any time by the person or persons in whom for the time being is vested the power under which he was appointed and another Director may be appointed in his place. A Debenture Director shall not be liable to retire by rotation, but he shall be counted in determining the number of retiring Directors.
   
   
6. In the course of its business and for its benefit the Company shall, subject to the provisions of the Act, be entitled to agree with any person, firm, corporation, government, financing institution or other authority that he or it shall have the right to appoint his or its nominee on the Board of Directors of the Company upon such terms and conditions as the Directors may deem fit. Such nominees and their successors in office appointed under this Articles shall be called Special Directors. Special Directors shall be entitled to hold office until requested to retire by the government, authority, person, firm, institution or corporation who may have appointed them and will not be bound to retire by rotation. As and whenever a Special Director vacates office whether upon request as aforesaid or by death, resignation or otherwise the government, authority, person, firm, institution or corporation who appointed such Special Director may if the agreement so provide, appoint another Director in his place. But he shall be counted in determining the number of retiring Directors.

91. a) Not withstanding anything to the contrary contained in these Articles, so long as any monies remain owing by the company to All India Financial Institutions like Industrial Development Bank of India(IDBI), Industrial Financial Corporation of India Ltd.(IFCI), The Industrial Credit and Investment Corporation of India Ltd.(ICICI), etc., or to Insurance Companies like Life Insurance Corporation of India(LIC), General Insurance Corporation of India(GIC), New India Assurance Co. Ltd.(NIA) etc., or to Unit Trust of India(UTI) or to State Financial Corporation or any Financial Institution owned or controlled by the Central Government or a State Government or the Reserve Bank of India or by two or more of them or by Central Government or State Government by themselves or to any Venture Capital Fund or Venture Capital Companies like Canbank Venture Capital Fund(CVCF) represented by Canbank Venture Capital Fund Ltd.(CVCFL) as its Trustee, each of the above hereinafter referred to as the "the CORPORATION ", which expression shall unless repugnant to the context or meaning thereof , be deemed to include its successors and assigns, out of any loans/debenture assistance granted by them to the company and/or so long as the CORPORATION holds or continues to hold debenture/shares in the company as a result of underwriting or by direct subscription or by private placement and/or so long as any liability of the company arising out of any guarantee furnished by the CORPORATION on behalf of the company remains outstanding, the CORPORATION shall have a right to appoint from time to time any person or persons as Director/Observer or Directors/Observers, wholetime or non wholetime (which Director(s) or Observer(s) is/are hereinafter referred to as Nominee Director(s)) on the Board of the company and to remove from such office any person or persons so appointed and to appoint any person or persons in his or their place/s.

b) The Board of Directors of the Company shall have no power to remove from office the Nominee Director/s. At the option of the CORPORATION, such Nominee Director/s shall not be required to hold any share qualification in the Company. Also at the option of the CORPORATION such Nominee Director/s shall not be liable to retirement by rotation , nor shall he/they be treated as "Officer(s)-in-default" as defined in the Companies Act, 1956.

c). The Nominee Director/s so appointed shall hold the said office only so long as any moneys remain owing by the company to the CORPORATION or so long as the CORPORATION holds or continues to hold debentures/shares in the company as a result of underwriting or by direct subscription or private placement or the liability of the company arising out of the guarantee is outstanding and the nominee directors so appointed in exercise of the said power shall ipso facto vacate such office immediately on the monies owing by the company to the CORPORATION are paid off or on the CORPORATION ceasing to hold debentures/shares in the Company or on the satisfaction of the liability of the Company arising out of the guarantee furnished by the CORPORATION.

d)  The Nominee Director/s appointed under this Article shall be entitled to receive all notices of , and attend all general Meetings, Board Meetings and the Meetings of the Committees of which the Nominee Director/s is/are member/s as also the minutes of such meetings. The CORPORATION shall also be entitled to receive all such notices and minutes.

e)  The Company shall pay to the Nominee Director/s sitting fees and expenses to which the other Director of the Company are entitled, but if any other fees, commission, monies or remuneration in any form is payable to the Directors of the Company, then fees, commission, monies and remuneration in relation to such nominee Director/s shall accrue to the CORPORATION and the same shall accordingly be paid by the company directly to the CORPORATION. Any expenses that may be incurred by the CORPORATION or such nominee Director/s in connection with their appointment of Directorship shall also be paid or reimbursed by the Company to the CORPORATION or as the case may be, to such nominee Director/s.

Provided that if any such nominee Director/s is an officer of the CORPORATION, the sitting fees, in relation to such Nominee Director/s shall also accrue to the CORPORATION and the same shall accordingly be paid by the company directly to the CORPORATION.

Provided also that in the event of the Nominee Director/s being appointed as whole time Director/s, such Nominee Director/s shall exercise such power and duties as may be approved by the CORPORATION and have such right as are usually exercised or available to a whole time Director in the management of the affairs of the Company. Such whole time Director/s shall be entitled to receive such remuneration, fees, commission and monies as may be approved by the CORPORATION.

f)   Board, if so desired by the CORPORATION.

g)  Without prejudice to Section 313 of the Companies Act, 1956, at any time, the Nominee Director/s is/are not able to attend the meeting of the Board of Directors or any of its committees of which he is member, the CORPORATION may depute an observer to attend the meeting. The expense incurred by the CORPORATION in this connection shall be borne by the Company.

7. Subject to the provisions of Section 313 of the Act, the Board of Directors shall have power to appoint an alternate Director to act for a Director during his absence for a period of not less than three months from the State in which meetings of the Board are ordinarily held.
   
   
8. A Director may be or become a director of any company promoted by the company or in which it may be interested as a vendor, shareholder or otherwise and no such Director shall be accountable for any benefits received as director or shareholder of such company. Such Director before receiving or enjoying such benefits in cases in which the provisions of Section 314 of the Act are attracted will ensure that the same have been complied with.
   
   
9. Every nomination, appointment or removal of Special Director shall be in writing and accordance with the rules and regulations of the government, corporation or any other institution. A Special Director shall be entitled to the same rights and privileges and be subject to same obligations as any other Director of the Company.
   
   
10. The office of a Director shall become vacant :-
    
1.   on the happening of any of the events provided for in Section 283 of the Act;
2.   on contravention of the provisions of Section 314 of the Act, or any statutory modifications thereof;
3.   if a person is a Director of more than twenty Companies at a time;
4.   in the case of alternate Director on return of the original Director to the State in terms of Section 313 of the Act ; or
5.   on resignation of his office by notice in writing and is accepted by the Board.

11. Every Director present at any meeting of the Board or a committee thereof shall sign his name in a book to be kept for that purpose, to show his attendance there at.

POWERS OF BOARD OF DIRECTORS

12. The Board of Directors may pay all expenses incurred in the formation, promotion and registration of the Company.
    
    
13. The Company may exercise the powers conferred by Section 50 of the Act, with regard to having an official seal for use abroad and such powers shall be vested in the Board.
    
    
14. The Company may exercise the powers conferred on it by Section 157 and 158 of the Act with regard to the keeping of a foreign register ; and the Board may (subject the provisions of those Sections) make and vary such regulations as it may think fit with respect to the keeping of any such register.
    
    
15. The Directors may enter into contracts or arrangements on behalf of the Company subject to the necessary disclosures required by the Act being made wherever any Director is in any way, whether directly or indirectly concerned or interested in the contract or arrangement.

BORROWING POWER

16. Subject to the provisions of sections 58A, 292 and 293 of the Act, and Regulations made thereunder and directions issued by the R.B.I. the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property (both present and future) and uncalled capital, or any part thereof and to issue debentures, debenture-stock and other securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.
    
    
17. The payment or repayment of moneys borrowed as aforesaid may be secured in such manner and upon such terms and conditions in all respects as the Board may think fit and in particular by a resolution passed at a meeting of the Board (and not by circulation) by the issue of debenture or debenture stock of the Company, charged upon all or any of the property of the Company (both present and future) including its uncalled capital for the time being.
    
    
18. Any debentures, debenture-stock or other securities may be issued at a discount , premium or otherwise, may be made assignable free from any equities between the Company and person to whom the same may be issued and may be issued on the condition that they shall be convertible into shares of any authorised denomination, and with privileges and conditions as to redemption, surrender, drawings, allotment of shares, attending (but not voting) at general meetings , appointment of Directors and otherwise, provided that debentures with the right to allotment of or conversion into shares shall not be issued except with the sanction of Company in General meeting.
    
19. All cheques, promissory notes, drafts, hundies , bills of exchange and other negotiable instruments and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed or otherwise executed, as the case may be, by such person and in such manner as the Board may, from time to time, by resolution determine.

PROCEEDINGS OF THE BOARD

20. Subject to Section 287 of the Act, the quorum for a 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 ; provided that where at any time the number of interested Directors exceeds or is equal to two thirds of the total strengths, the number of the remaining Directors, that is to say, the number of Directors, who are not interested, present at the meeting, being not less than two, shall be the quorum during such time.
    
    
21. If a meeting of the Board could not be held for want of quorum, whatever number of Directors, not being less than two, shall be present at the adjourned meeting, notice whereof shall be given to all the Directors, shall form a quorum.
    
    
22. (1) Save as otherwise expressly provided in the Act, questions arising at any meeting of the Board shall be decided by a majority of vote.

(2) In case of an equality of votes, the Chairman of the meeting shall have a second or casting vote.

23. The continuing Directors may act notwithstanding any vacancy in the Board, but if and so long as their number is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing Directors or Director may act for the purpose of increasing the number of Directors to that fixed for the quorum or for summoning a General Meeting of the Company, but for no other purpose.
    
    
24. (1) Save as provided in Article 93, the Board may elect one of its members as Chairman of its meetings and determine the period for which he is to hold office as such.

(2) If no such Chairman is elected or if at any meeting the Chairman is not present within fifteen minutes after the time appointed for holding the meeting, the Directors present may choose one of their members to be Chairman of the meeting.

25. Subject to the restrictions contained in Section 292 and 293 of the Act, the Board may delegate any of its powers to committees of the Board consisting of such member or members of its body as it thinks fit and it may, from time to time, revoke such delegation and discharge any such committee of the Board either wholly or In part, and either as to person or purposes, but every committee of the Board so formed shall in the exercise of the powers so delegated conform to any regulations that may from time to time be imposed on it by the Board. All acts done by any such Committee of the Board in conformity with such regulations and in fulfilment of the the purposes of their appointment but not otherwise, shall have the like force and effect as if done by the Board.
    
    
26. The meetings and proceedings of any such committee of the Board, consisting of two or more members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Directors so for as the same are applicable thereto and are not superseded by any regulations made by the Directors under the last preceedings Article.
    
    
27. (1) A committee may elect a chairman of its meetings.

(2) If no such chairman is elected or if at any meeting the chairman is not present within five minutes of the time appointed for holding the meeting, the members present may choose one of their members to be chairman of the meeting.

28. (1) committee may meet and adjourn as it thinks proper.

(2) Questions arising at any meeting of a committee shall be determined by a majority of votes of the members present and in case of an equality of votes, the Chairman shall have a second or casting vote.

29. All acts done by any meeting of the Board or by a committee thereof or by any person acting as a Director shall, notwithstanding that it shall afterwards be discovered that there was some defect in the appointment or continuance in office of any such Director or persons acting as aforesaid : or that they or any of them were disqualified or had vacated office or were not entitled to act as such, or that the appointment of any of them had been terminated by virtue of any provisions contained in the Act or in these Articles, be as valid as if every such person had been duly appointed, had duly continued in office, was qualified, had continued to be a Director, his appointment had not been terminated and he had been entitled to be a Director provided that nothing in this Article shall be deemed to give validity to any act done by a Director after his appointment has been shown to the Company to be invalid or to have terminated.
    
    
30. Subject to Section 289 of the Act and except a resolution which the Act requires specifically to be passed in any board meeting, a resolution in writing, signed by the majority members of the Board or of a committee thereof, for the time being entitled to receive notice of a 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.

MANAGING DIRECTOR(S) AND WHOLE TIME DIRECTOR(S)

31. Subject to provisions of Sections 197A, 269,198, and 309 of the Act, the Board of Directors may , from time to time, appoint one or more of their body to the office of Managing Director/s or whole time Director/s for a period not exceeding 5 (five) years at a time and on such terms and conditions as the Board may think fit and subject to the terms of any agreement entered into with him, may revoke such appointment, and in making such appointments the Board shall ensure compliance with the requirements of the Companies Act, 1956 and shall seek and obtain such approvals as are prescribed by the Act, provided that a Director so appointed, shall not be whilst holding such office, be subject to retirement by rotation but his appointment shall be automatically determined if he ceases to be a Director. However, he shall be counted in determining the number of retiring Directors.
    
    
32. The Board may entrust and confer upon Managing Director/s or Whole time Director/s any of the powers of management which would not otherwise be exercisable by him upon such terms and conditions and with such restrictions as the Board, may think fit, subject always to the superintendence, control and direction of the Board and the Board may, from time to time, revoke, withdraw, alter or vary all or any such powers.

SECRETARY

33. (1) Subject to section 383A of the Act, a Secretary of the Company may be appointed by the Board on such terms, at such remuneration and upon such conditions as it may think fit, and any Secretary so appointed may be removed by the Board.

(2) A Director may be appointed as a Secretary.

34. Any provision in the Act or these regulations requiring or authorising a thing to be done by or to a Director and the Secretary shall not be satisfied by its being done by or to the same person acting both as Director and as, or in place of the Secretary.

THE SEAL

120.       (1) The Board shall provide a common seal for the purposes of the Company and shall have power, from time to time, to vary or cancel the same and substitute a new seal in lieu thereof. The Board shall provide for the safe custody of the seal for the time being.

(2) Subject to any statutory requirements as to Share Certificates or otherwise, the seal of the Company shall not be affixed to any Instrument except by authority a resolution of the Board or of a Committee of the Board authorised by it in that behalf and except in the presence of atleast one Director and of the Secretary or of two Directors who shall sign every instrument to which the seal of the Company is so affixed in their presence. This is, however, subject to Rule 6 of the Companies (Issue of Share Certificates) Rules, 1960.

(3) The Board shall also be at liberty to have an official seal in accordance with Section 50 of the Act, for use in any territory, district or place outside India. The Company shall, however, comply with Rule 6 of the Companies (issue of Share Certificates) Rules, 1960.

DIVIDENDS AND RESERVES

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

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

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

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

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

(2) No amount paid or credited as paid on a share in advance of calls shall be treated for the purposes of this regulation as having been paid on the share.

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

126. (A). No Unclaimed dividend shall be forfeited by the Board and the Company shall comply with all the provisions of Section 205A of the Act., in respect of all unclaimed or unpaid dividends.

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

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

129. No dividend shall bear interest against the Company, irrespective of the reason for which it has remained unpaid.

ACCOUNTS

130. (1) The Board shall cause proper books of accounts to be maintained under section 209 of the Act.

(2) The Board shall, from time to time, determine whether and to what extent and at what times and places and under what conditions or regulations, the accounts and books of the Company or any or them, shall be open to the inspection of members not being Directors.

(3) Subject to provisions of Section 209A of the Act, no member (not being a Director) shall have any right of inspection to any account or book or document of the Company, except as conferred by law or authorised by the Board or by the Company in General Meeting.

BALACE SHEET AND PROFIT AND LOSS ACCOUNT

131. Balance sheet and Profit and Loss Account of the Company will be audited once in year by a qualified auditor for Correctness as per provisions of the Act.

AUDIT

132. (1) The first auditor of the Company shall be appointed by the Board of Directors within one month after its incorporation who shall hold office till the conclusion of the First Annual General Meeting.

(2) The Board of Directors may fill up any Casual Vacancy in the office of the Auditors.

(3) The remuneration of the auditors shall be fixed by the Company in the annual general meeting except that remuneration of the first or any auditors appointed by the directors may be fixed by the directors.

CAPITALISATION OF PROFITS

133.     (1) The Company in General Meeting may, upon the recommendation of the Board resolve :-

1. that it is desirable to capitalise any part of the amount for the time being standing to the credit of any of the Company’s reserve accounts or to the credit of the Profit and Loss Account , or otherwise available for distribution ; and
2. that such sum be accordingly set free for distribution in the manner specified in clause(2) among the members who would have been entitled thereto, if distributed by way of dividend and in the same proportions.

2. 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 :-

1. Paying up any amounts for the time being unpaid on any shares held by such members respectively ;
2. Paying up in full, unissued shares of the Company to be allotted and distributed, credited as fully paid up, to and amongst such members in the proportions aforesaid : or
3. Partly in the way specified in sub-clause (I) and partly in that is specified in sub-clause (ii).

1. Any share premium account and any capital redemption reserve fund may, for the purpose of this regulation, only be applied in the paying up of unissued share to be issued to members of the Company as fully paid bonus shares.
   
   
2. The Board shall give effect to the resolution passed by the Company in pursuance of this regulation.
   
   

134.     (1)  Whenver such a resolution as aforesaid shall have been passed, the Board shall:-

(a)   make all appropriations and applications of the undivided profits resolved to be capitalised thereby and allotment and issue of fully paid shares, if any ; and

(b)  do all acts and things required to give effect thereto.

    (2)  The Board shall have full power :-

(a) To make such provision, by the issue of fractional certificates or by payment in cash or otherwise as it thinks fit in the case of shares becoming distributable in fractions : and also.

(b) To authorise any person to enter, on behalf of all the members entitled thereto, into an agreement with the Company providing for the allotment to him respectively, credited as fully paid up, of any further shares to which that may be entitled upon such capitalisation or (as the case may require) for the payment by the company on their behalf, by the application thereto of their respective proportions of the profit resolved to be capitalised, of the amounts or any part of the amounts remaining unpaid on their existing shares.

   (3)   Any agreement made under such authority shall be effective and binding on all such members.

SECRECY

135. Subject to the provisions of law of land on the Act, no member or other person (not being a Director) shall be entitled to visit or inspect the Company’s works without the permission of the Board of Directors or the Managing Director to require discovery of any information respecting any details of the Company’s business, trading or customers of any matter which is or may be in the nature of a trade secret, mystery of trade or secret process or any other matter which may relate to the conduct of the business of the Company or which in the opinion of the Director, it will be inexpedient in the interest of the Company to disclose.

WINDING UP

136. (1) 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 property of the same kind or not.

(2) For the purpose aforesaid, the liquidator may set such values 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.

(3) The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction, shall think fit but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.

137. Subject to the provisions of Section 201 of the Act, every Director, auditor, secretary and other officer or servant of the Company (all of whom are hereinafter referred to as officer or servant) shall be indemnified by the Company and it shall be the duty of the Directors out of the funds of the Company to pay, all bonafide costs, losses and expenses which any such officer or servant may incur or become liable to by reason of any contract entered into or act or thing done or omitted by him as such officer or servant or in any way in the discharge of his duties ; and in particular and so as not to limit the generality of the foregoing provisions, against any liability incurred by such officer or servant in defending any bonafide proceedings whether civil or criminal in which a judgement is given in his favour or in which he is acquitted or discharged or in connection with any application under Section 633 of the Act in which relief is granted to him by the Court. The amount for which such indemnity is provided shall immediately attach as charge on the property of the Company.

The following contracts and agreements referred to in Para A below, not being entered into the ordinary course of business carried on or intended to be carried on by the company or contracts entered into more than two years before the date of this prospectus which are or may be deemed to be material have been entered into by or on behalf of the company. Copies of these contracts together with copies of the documents referred in Para B below have been attached with the prospectus and delivered to the Registrar of Companies, for registration and may be inspected at the Registered office of the Company between 10.00 am and 1.00 p.m. on any working day until the closing date of the subscription list.

MATERIAL CONTRACTS

1. Letter dated 17.04.2000 from Indbank Merchant Banking Services Limited, Bangalore, offering their services as Lead Managers to the issue and the Company's acceptance thereof dated 17.04.2000
2. Letter dated 27.04.2000 from BOB Capital Markets Limited, Mumbai, offering their services as Lead Managers to the issue and the Company's acceptance thereof dated 27.04.2000
3. Copy of MOU dated 25.04.2000 entered between the Lead Manager – Indbank Merchant Banking Services Ltd. and the Company.
4. Copy of MOU dated 2^nd May 2000 entered between the Lead Manager – BOB Capital Markets Ltd. and the Company.
5. Copy of the inter-se allocation of duties dated 28.04.2000 entered between the lead managers.
6. Letter dated 21.03.2000 from the Registrar offering their services and Company's acceptance thereof.
7. Agreement dated 29.03.2000 entered between the Registrar to the Issue – Alpha Systems Pvt.Ltd and the Company and copy of their Registration Certificate.
8. Copy of the renewal of Lease Agreement dated 11^th January,2000 between the Owners and the Company for the office's premises occupied by the Company presently as Registered Office in Bangalore
9. Sale agreement dated 24.12.1999 with Harita Infoserve Ltd. for disposal of Wireless Division.

DOCUMENTS FOR INSPECTION

1. Memorandum and Articles of Association of the Company.
   
2. Certificate of Incorporation of Datanet Systems Limited vide No . 55-65925 of 94-95 Dated 01/03/1995 , fresh certificate consequent to the change of Registered office no. 25617 dated 18/08/1999
   
3. Copy of fresh certificate of incorporation consequent to change in name vide certificate no. nil dated 03/03/2000.
   
4. Copy of Auditors Report dated 24.03.2000 furnishing the consolidated financial reports for the last five years.
   
5. Certificate from the Auditors of the Company on the tax Benefit available to

a. The Company
b. The Members of the Company
c. The NRIs

6. Copies of resolutions passed by the Company in the Extra Ordinary General Meeting held on 18^th February,2000, for

7. Copies of the Resolution passed at the Board Meeting dated 29.02.2000 regarding :

a.  Authorised to the Registrars to endorse/cancel and realise the stock invests on behalf of the Company.
b.  Agreeing to provide sufficient funds to the Registrars to the issue to ensure dispatch of Refund orders and share certificates by Registered post.

8. Undertaking by the Company dated 29.02.2000 to

9. Declarations dated 29.02.2000 by the Company regarding no disputes/prosecutions/non violations of provisions of the Companies Act and regarding issuers absolute responsibility.
10. Declaration by Promoters in Form 24AA regarding the interests of the promoters/directors and that there is no prosecutions/litigations outstanding against them in their personal capacities in the company and in the group company.
11. Copies of the Bio-data of the Directors.
12. Copy of the Term Loan sanction letter No CTM :KKM : M:94 dated 08/05/2000 from Bank of India
13. Copy of Project appraisal report by Bank of India with covering letter No CTM : KKM : 1363 dated 25/02/2000.
14. Letter from the Company /Board regarding the availability of sufficient power /electricity load to the Company.
15. Certified list of 10 Largest Shareholders of the Company as on date, 10 days prior and 2 years prior to date of filing of Prospectus with ROC.
16. Certified list of confirmed employees of the Company.
17. List of Key Personnel of the company with details of the Resignations/Changes.
18. Certified list of changes in Directors.
19. Copy of Power of Attorney executed by the Directors in favour of Mr.A. Prabhakar to present and make correction in the prospectus.
20. Letter of Consents from the Directors, Auditors, Lead Managers, Registrar to Issue, Bankers to the Issue, Bankers to the Company, Legal Advisors, Compliance Officer to act in their respective capacities.
21. Consents from the Clients whose name has been disclosed in the prospectus.
22. Certificate for Y2K compilance.
23. Copies of Annual reports for the last 4 accounting years.
24. Upto date list of Shareholders of the company
25. The copies of the quotations for purchase of equipment and miscellaneous fixed assets on the basis of which the value of plant and machinery have been made.
26. Copies of all the government approvals mentioned in part I.
27. Copy of SEBI observation letter __________ dt. _________.
28. Copy of Reply furnished by Indbank merchant banking services Ltd .to SEBI.

The Board declares that all the relevant provisions of the Companies Act, 1956 and guidelines issued by the Government have been complied with and no statement made in this prospectus is contrary to the provisions of the Companies Act, 1956 and rules thereunder.

Dr. A. Prabhakar
Mr. Hari Mohan Sharma*
Mr. H. K. Nanjunda Swamy*
Mr. Tushar Anil Dave*
Mr. Sudhir Prakash*
Mr. H.V. Gowthamma*
Mr. B.R. Ganesh*
Mr. Tej Sharma*
Mr. C. S. Shetty*

Place : Bangalore
Dated:
*Signed by the constituted Power of Attorney Dr. A. Prabhakar