A B C D Private Limited

1. Confidential A B C D Private Limited Business Valuation Report August 2007

2. Table of Contents • Terms of reference ……………………………………………………………………………………………..Page. 4 • Background………………………………………………………………………………………………………Page. 6 • Valuation Principles……………………………………………………………………………………………. Page. 7 • CCI Guidelines on Valuation…………………..……………………………………………………………….Page. 8 • Valuation Methods………………………………………………………………………………………………Page. 9 • Basis & Approach………………………………………………………………………………………………..Page.10 • Valuation Methodology…………………………………………………………………………………………..Page.11 • Business Value: • Summary of Valuation…………………………………………………………………………………….Page.12 • Major assumptions in our valuation…………………………………………………………………………….Page .14 • Major assumptions underlying Valuation………………………………………………………………….......Page.20 • Disclaimers………………………………………………………………………………………………………..Page.21

3. Table of Contents…contd • Appendices: • Historical Financials • Balance Sheet……………………………………………………………..Appendix-1 • Profit & Loss Account……………………………………………………..Appendix-2 • Latest Management Accounts • Balance Sheet……………………………………………………………..Appendix-3 • Profit & Loss Account……………………………………………………..Appendix-4 • Net Asset Value Method………………………………………………………...Appendix-5 • Price Earning Capacity Value Method…………………………………………Appendix-6

4. Terms of Reference • XYZ, Chartered Accountants are required to arrive at and report on the ‘Business Value’ of A B C D for the limited purpose of the proposed transfer of share holding of EFGH, Mauritius (holding company of ABCD), to another group company, in its entirety and in the context of the implications of transfer pricing, so as to establish an “arms length price” for the shares sought to be transferred. PREMISE OF VALUATION / VALUATION DATE • The Valuation date is as at August 2007 on the premise of a going concern entity.

5. Background • ABCD Private Limited (ABCD), the wholly owned subsidiary of EFGH, Mauritius is engaged in the manufacture and sale of textiles. • The manufacturing facilities are located at Coimbatore, Trichy and Nagercoil in South Tamilnadu • About 40% of the total turnover represents readymade garments which are completely exported, while the balance 60% relate to cloth manufactured of which 10% are exported. • The major target markets for ABCD are represented by Garment Retailers in the country.

6. Background • The company had its shares listed in the stock exchanges in the country but has since got them de-listed consequent to the exercise of buy back and reduction of share capital. • In view of the proposal to transfer the stake holding in the company to another entity in the Group ABCD is keen to assess the fair value of its shares. • ABCD has therefore engaged XYZ, a international firm of Chartered Accountants to ascertain the Business value of its Indian operations as on date of this report, taking into account the financial position reflected by the audited financial statements of the earlier years and the unaudited management accounts as at 31st March 2007. • ABCD have furnished to XYZ its past financials and the management accounts as at 31st March 2007. • XYZ has accordingly completed its assessment of Business value of the Indian operations of ABCD in August 2007 and hereby submit this valuation report.

7. Background Industry Scenario: • Textile Industry has been experiencing global competition in the domestic market particularly with the advent of Chinese products dumped in to the country. • The end products of ABCD (cloth) which find ready market with the garment retailers in the country has recently been witnessing shrinking off-take as a ripple effect of downslide at the end-users business economies. • The first quarter of the current year has indicated such downslide with slimming bottom-line suggestive of shrinking margins and tardy growth. • With the back op of the emerging business front, the management is none too sanguine about any significant growth in business volumes in the coming years and would not prefer to hazard crystal gazing future trend. • To sum it the coming months would be a period of test of sustenance and consolidation rather one of any perceptible growth.

8. Our Valuation Principles • Our task as a valuer of the business of ABCD is to determine the fair value of its business which incidentally represents a value that would be arrived at as an ‘arms length transaction’. • Our valuation is not adjusted for any ‘special’ purchaser who has particular connections or relationships with the company or business and can obtain benefits such as rationalization, synergy in operations etc. • In view of the fact that the valuation is in respect of a subsidiary of a foreign company, the Guidelines by the erstwhile Controller of Capital Issues has been is given due consideration for application in the methods adopted. • The value so arrived at under NAV is compared with PECV and the “fair value” deduced by adducing suitable weights to each in the context of the background of the company’s present business environment.

9. Valuation Methods ** Not considered for our valuation for reasons stated elsewhere

10. Guidelines of Controller of Capital Issues (CCI) Highlights of CCI’s Guidelines in valuation of Equity Shares of Companies

11. Basis & Approach Our approach and scope of examination for this valuation are as follows : • The valuation covers only the financials of the existing operations of ABCD at its manufacturing divisions in Tamilnadu. • The valuation is done on the principles applicable to a ‘going concern’. • The latest financial statements (unaudited) upto 31st March 2007 provided to us has been considered for purposes of arriving at the fair value under the Net Asset Value and Price Earning Capacity Value approach adopted. • We have not considered the Discounted Cash Flow Method, as in our opinion no reasonably certain estimation can be made as to the company’s future financials as: • The industry is going through an uncertain period • The growth during the explicit period and beyond the terminal year cannot be estimated with reasonable accuracy. • Interviews and correspondence with the Company’s management, a review of published market data and any available public information relevant to the industry in which the Company operates have also been relied upon by us in our valuation process.

12. Valuation Methodology Net Asset Value Based on March 2007 management accounts (unaudited) Profit Earning Capacity Based on past financials and the management accounts for the FY2007

13. Business Value Basis of Ascertainment Subject under valuation Equity Share Value Net Assets Value Method Rs 133 Profit Earning Capacity Method Rs 94 Adduced Weights 60 : 40 WEIGHTED VALUE PER SHARE Rs 117

14. Major Assumptions

15. Historical Balance Sheet Appendix -1 Rs in ‘000s

16. Past Performance Appendix-2 Rs in ’000s

17. Balance Sheet as at 31.3 2007 Appendix-3 Rs in 000’s

18. Rs in 000’s

19. Net Asset Value Working Appendix -5 Rs in ‘000s

20. Price Earning Capacity Value Working Appendix 6 Rs in ooo’s

21. Price Earning Capacity Value (Basic Data) Rs in ‘000s ** Annualised profit

22. Disclaimers • In preparing our report, we relied substantially upon the accuracy and completeness of the information provided to us in the form of past audited financials and the management accounts upto March 2007. We have not performed anything in the nature of an audit. Since our procedures in valuation do not constitute an audit or any other form of attestation, we do not express a formal opinion on the information provided by the management except for making suitable adjustments wherever deemed necessary. • In the course of our analysis of the financials furnished to us by ABCD, we held discussions with the executives of the company so as to confirm our understanding and the impact of our perspectives factored therein. The statements and opinions included in this report are given in good faith and in the belief that such statements and opinions are not false or misleading. • The value arrived at by us is based on our estimation of probable devolvement out of matters which are sub-judice as the claims by the relevant authorities have been contested by the company and final decision is yet to be given. Any deviation in the ultimate fructification of such contingent items would impact our estimated value under this report. • We are not required to give testimony in court, or be in attendance during any hearings or depositions, with reference to the company being valued, unless previous arrangements have been made. • This valuation assumes that the Company will continue to operate as a going concern, and that the character of its present business will remain intact. • Our compensation is not contingent on an action or event resulting from the analyses, opinions, or conclusions in, or the use of this report.