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Company analysis
y Product line y Image in the market y Technology and experience y Culture y Goals, y Organizational structure

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Products
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38.

Micromax X100 (Black) MRP Rs. 1,028 Micromax X215 (Black) MRP Rs. 2,030 Micromax X117 (Black) MRP Rs. 2,499 Micromax X118 (Black) - MRP Rs. 2,200 Micromax Q1 (Red) MRP Rs. 2,500 Micromax X116 (Black) MRP Rs. 2,100 Micromax X220 (Black) MRP Rs. 2,679 Micromax C2i (Blue) MRP Rs. 2,838 Micromax X235 (Universal Remote) (Black) MRP Rs. 3,945 Micromax X226 (Black) - MRP Rs. 2,265 Micromax X228 (Red) MRP Rs. 3,250 Micromax X2i+ (Black) - MRP Rs. 2,052 Micromax X290 (Black) MRP Rs. 3,299 Micromax Q2 (Black) MRP Rs. 3,474 Micromax G4 Gamolution (Black) MRP Rs. 5,199 Micromax X260 (Black) MRP Rs. 3,636 Micromax Q2+ (Black) MRP Rs. 2,493 Micromax X250 (Red) MRP Rs. 3,530 Micromax X360 (Brown) MRP Rs. 4,283 Micromax Q50 (White) MRP Rs. 5,999 Micromax Q5 (Black) MRP Rs. 5,108 Micromax X600 (Black) - MRP Rs. 4,322 Micromax GC360 (Black) MRP Rs. 4,500 Micromax Pike X510 (Black) MRP Rs. 3,865 Micromax Q7 (Black) MRP Rs. 5,555 Micromax Q7 (Silver) MRP Rs. 5,555 Micromax C350 (Black) MRP Rs. 4,169 Micromax X550 QUBE (Black) MRP Rs. 4,899 Micromax Q6 (Black) - MRP Rs. 5,500 Micromax Q75 (Black) MRP Rs. 5,208 Micromax Q5c (Black) MRP Rs. 4,573 Micromax X505 (White) MRP Rs. 6,250 Micromax Q66 Eclipse (Black) Rs. 6,499 Micromax Q55 Bling-Black (Limited IIFA Edition) (Black) MRP Rs. 5,709 Micromax Andro A60 (Black) MRP Rs. 8,499 Micromax W900 (Black) MRP Rs. 8,149 Micromax MODU T (Black) MRP Rs. 14,999 Micromax X500 (Black) - MRP Rs. 6,213

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Image in the market

Micromax is a challenger brand in the highly competitive mobile handset market. This Indian firm is shaking up the market dominated by MNCs. Micromax was founded in 1991 by Rajesh Agarwal . Micromax in its original avatar was a distributor of computer hardwares. In 1998, three more people Sumit Arora, Rahul Sharma and Vikas Jain joined Micromax as cofounders.The company branched out from a mere distributor to a marketer of telecommunication equipments. It was in 2008 that Micromax ventured into the mobile handset market. The brand wanted to create a base before taking on the large players . Hence as a go-to- market strategy, Micromax concentrated on the rural market first. Micromax launched its first phone in the rural market with a very unique USP- 30 days battery standby time. The brand was launched from a consumer insight that most of the rural households do not get enough electricity to recharge phones on a daily basis . Hence a phone with a 30 day battery standby would be a worthwhile differentiation. The first product was a big success. The success of X1i enthused the company to go aggressively into the market. But tapping the rural market is not an easy task. There is severe logistics pressure in servicing these markets. One of the first things that Micromax did was to establish the distribution network . According to a report in Forbes India ( March 5,2010), Micromax created a distribution network comprising of 34 super distributors, 450 distributors and around 55,000 retailers. The brand could also take advantage of the inroads made by other brands into advantage. Unlike many challenger brands, Micromax was careful in its product strategy. Although all Micromax products were towards the lower end of the pricing spectrum, the brand was focusing on adding more features at a reasonable price . The focus was more on value than price. What I have noticed while going through their product range was that there was some USP in their products which offered more value. I think , that value orientation with a clear differentiation was a significant factor that aided the significant growth of this brand in Indian market. The company in their website claims to have invested heavily in the product development. The brand boast of launching many firsts in the market like the largest Indian domestic mobile handsets company in terms of units shipped during the quarter ended March 31, 2010 and the third largest mobile handset seller in India as at March 31, 2010. We were the fastest growing among India's top five mobile

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brands during the twelve month period ended March 31, 2010 compared to the twelve month period ended March 31, 2009 in terms of the number of shipments Quarterly Mobile Handsets Tracker, 1Q 2010, June 2010 release). We sold 7.05 million mobile handsets in Fiscal 2010. Our handset sales have grown by 132.43% from 1.11 million units in the quarter ended June 30, 2009 to 2.58 million units in the quarter ended March 31, 2010. We also sell mobile data cards for computers under our own brand to service providers in India. All of our Promoters have a background in engineering and an average of more than 10 years experience each in the information technology and telecommunications industry. In 2009, TA Associates, a private equity firm based in the United States, through its associate, Wagner, acquired a stake in our Company and currently holds 15.00% of the pre-Issue capital of our Company. Furthermore, Sequoia Capital, Sandstone and Madison, through their affiliates, acquired 5.77% of the current pre-Issue capital of our Company in September 2010. For further details see Capital Structure and History and Certain the earnings before interest, taxation, depreciation and amortization (EBITDA) of ` 3,377.07 million in fiscal 2010 represented growth of 539.37% against ` 528.19 million in fiscal 2009, which in turn represented growth of 164.15% compared to EBITDA of ` 199.96 million in fiscal 2008. In fiscal 2010, we had total income of ` 16,017.58 million, a 358.44% increase compared to total revenues of ` 3,493.95 million in fiscal 2009, which in turn represented a 168.46% increase compared to total revenues of ` 1,301.50 million in fiscal 2008.

Technology and experience

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Micromax G4, Micromax G4 Gaming Phone, Micromax G4 Gamolution, Micromax G4 Motion Sensor Games

Culture
 MicroMax is successful because of our detailed planning, precise execution, and constant, relentless pursuit of quality. Our customers have affirmed that we are successful because of our foundation values.  We believe that consumers in India have unique preferences with respect to mobile handsets such as long battery life, dual GSM capability, lowcost QWERTY phones, universal remote control and gaming phones.

Goals

y Continue to build Micromax as an innovation focused brand.

We seek to seize upon market opportunities by continuing to allocate significant resources to establish Micromax as India's leading and most innovative mobile handset company. Our branding strategy focuses on the innovative functionalities of our products to project Micromax's reputation for innovation. Our marketing plan comprises advertising in print media, electronic advertising, television campaigns, and endorsement by famous Indian personalities who participate in our marketing campaigns, and sponsorship of prominent sporting and film events in India. y to continue to focus on endorsements by leading Indian leading Indian personalities, and sponsoring Bollywood events and sporting events, with a particular focus on cricket. We propose to utilise ` 1,250.00 million from the Net Proceeds of the Issue towards enhancement of the Micromax brand through advertising and marketing in fiscal 2012 and fiscal 2013. For further information, refer to the section

y In addition to our marketing events and endorsements, we plan to continue to familiarise retailers and distributers with our product line and help
them to more effectively sell our products to end customers, including through in-shop marketing activities such as creating branded display counters at retail stores, which

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y we believe improve our brand awareness and profile.

We believe that highlighting our innovative technologies, as well as associating our brand with famous Indians and popular film and sporting events, will help us to establish the 'Micromax' brand in the Indian consumer marketplace as an innovation leader.

y Continue to expand our product portfolio and invest in product development.

Our markets present a diverse consumer base and we intend to develop mobile handsets and mobile data cards that target specific consumer segments. We intend to capitalize on our market leadership position in the middle range of the overall Indian mobile handset market to increase our presence and market share in higher range mobile handsets.

y Expand distribution network and after sales services networks.

We established our mobile handset business by initially targeting rural and semi-urban India, where electricity is often scarce, through our Marathon Battery line of phones that have a 30-day battery life in standby mode.

y Rural markets tend to be under-penetrated in India compared to urban markets

we believe that we can increase our growth by continuing to target such consumers. We initiated distribution into major urban markets subsequently and we believe this market presents significant opportunities for us going forward. We believe our branding efforts will fuel our growth in these markets and in order to cater to the higher anticipated demand for our products, we plan to continue to expand the density as well as the geographic reach of our existing distribution network. Additionally, after-sales services, such as technical support and repair, are essential in order to maintain consumer satisfaction with our products and create positive brand reputation. Accordingly, we plan to continue to grow the number of authorized service providers at all levels and increase the number of field-based technical engineers and service coordinators.Target high growth avenues for the mobile handset business.We intend to target specific market segments where we believe there is potential for growth and where we enjoy competitive advantages. We believe there are numerous attractive growth avenues in the mobile handset markets that we can effectively target:Operator linked businesses. Mobile communication companies often bundle their service plans

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with mobile handsets. We intend to expand and seek new arrangements with operators to bundle our handsets with their services. y International markets. We have recently expanded into Nepal, Sri Lanka, and Bangladesh, and intend to expand into the UAE, Brazil, Nigeria and Ghana. We plan to target countries where we can leverage our track record and experience in India to compete effectively and expand our revenue base. We believe that the demographics of significant consumer segments in Nepal, Sri Lanka, Bangladesh, Brazil, the UAE, Ghana and Nigeria are similar in many ways to consumer segments in India with

y Finally, we also intend to access the value added services market

applications and content as and when we are close to launching our Android devices. Pursue strategic acquisitions and investments in India and abroad.In order to expand, we seek to identify acquisition targets and/or joint venture partners whose resources, capabilities, technologies and strategies are complementary to and are likely to enhance our product offering and business operations. To create better products, we will also pursue strategic alliances and relationships with businesses whose products or services can be incorporated into our handset designs.

y Establish our own manufacturing facility in India.

To date, we have relied on our OEM partners to manufacture our products, however, in the long-term, we intend to acquire or build manufacturing facilities in India to diversify our manufacturing base. We believe we have achieved the economies of scale to benefit from a manufacturing facility in India and also work with our suppliers to provide us with the necessary services in India. We believe that developing manufacturing y we also focus on developing higher value premium products

targeted at urban populations.

We believe that we differentiate ourselves from our competitors through innovation and design, use of advanced technologies and in-depth understanding of rapidly changing consumer preferences in India, which have enabled us to develop several new product categories that address unique customer needs. We believe that our product development capabilities have enabled us to establish ourselves as an innovative Indian mobile handset

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company. authorization, creation or issuance of any new class of shares or other securities of the Company; y capital expenditure in excess ` 150 million; y declare or pay any dividends or declare or make any other distribution by whatever name called, directlyor indirectly, on account of any Share or other securities of the Company; y adopt, amend or modify the business plan; y any change in the Companys capital structure; y acquisition of shares or other instruments whatsoever in, or assets of,another person or entity;

Organizational structure
Shareholders agreement dated September 16, 2010, amongst our Company, Mr. Rajesh Agarwal, Mr. Sumeet Kumar, Mr. Rahul Sharma, Mr. Vikas Jain, Wagner, Sequoia Capital, Sandstone and Madison

OUR MANAGEMENT

Our Articles of Association require us to have not less than three and not more than 12 Directors. We presently have 12 Directors which include our four whole-time Directors, two nominee Directors and six independent Directors. Managing Director:Executive Director:Executive Director:Rajesh Agarwal Rahul Sharma Vikas Jain

Director and Chief Technical Officer:- Sumeet Kumar Nominee Director:Naveen Wadhera

Nominee Director:Independent Director:-

Mohit Bhatnagar Mahendra Swarup, Amit Burman,

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Vijay Kumar Gupt, Ghyanendra Nath Bajpai, R. Balakrishnan, Ashish Bhardwaj

Audit Committee
1. Ghyanendra Nath Bajpai (Chairman) 2. Vijay Kumar Gupta (Member) 3. Sumeet Kumar (Member)

Shareholders ,Investors, Grievance Committee

1. Mahendra Swarup (Chairman) 2. Vikas Jain 3. Rajesh Agarwal

Compensation Committee
1. Amit Burman (Chairman) 2. Mohit Bhatnagar (Member) 3. Mahendra Swarup (Member)

Customers analysis

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1. Market size and growth

Micromax has over the past five years quietly surpassed Korea's LG Electronics to become the third largest player in the world's fastest growing mobile market. And now a dozen-odd copycats suggest that the trouble is just beginning for traditional heavyweights. "They have acquired nearly 12 to 15 percent share in the Indian handset market [in just a few years]," said Shushmul Maheshwari, head of market research firm RNCOS. "The coming five years will definitely prove a big blow to the traditional giants like Nokia, Samsung and LG." With close to 10 percent of India's 100 million-handset market and a target of 20 percent Micromax, for one, is already expanding internationally. our handset sales have grown by 123.48% from 1.15 million units in the quarter ended June 30, 2009 to 2.57 million units in the quarter ended March 31, 2010. We also sell mobile data cards for computers under our own brand to service providers in India.

2.Market segment

Indian Consumer Market and Drivers for Growth

As India's economy has grown, so too has the spending power of its citizens. Real average household disposable income has roughly doubled since 1985 and a new Indian middle class has emerged, according to The 'Bird of Gold': The Rise of India's Consumer Market, a May 2007 report of the McKinsey Global Institute (the"McKinsey Report"). The McKinsey Report posits that if India continues on its current high growth path, the Indian consumer market will undergo a major transformation during the period from 2005 to 2025: y income levels will almost triple, with annual real income growth per household accelerating from 3.6% over the last two decades to 5.3% over the next two; y the shape of India's income pyramid will change dramatically: y over 291 million people will move from poverty to a more sustainable life;

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y India's middle class will swell by over ten times from its 2007 size of 50 million to 583 million people; and y India will climb from its 2007 position as the 12th largest consumer market to become the world's 5th largest consumer market by 2025; y spending patterns will evolve, with basic necessities declining in relative importance, and categories such as communications growing rapidly.

In both rural and urbun areas of india.

3. Benefits that consumer is seeking, tangible and intangible.

y Long life battery mobile phones. We offer marathon battery mobile phones that have a 30-day battery y life in standby mode; y Dual reception mode handsets. We currently offer GC400 and GC275 handset models that are GSMCDMA combination phones and can function using either technology; y Latest technology. y Cheap reats. y No.of verity to chose according to needs. y Dual reception mode handsets. y QWERTY keypad mobile phones. y Utility phonesscreen y Multimedia mobile phones. y Universal remote control mobile y Gaming mobile phone. y Smart phones. y 3G mobile phoneshandsets in India (Source: MTNL); y Gravity phones.

Nation wide after purchase support The business is diversified across products, geographies and distributors.

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4.Decision maker or decision-making unit Directors

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Rajesh Agarwal Rahul Sharma Sumeet Kumar Vikas Jain Ajit Nedungadi Naveen Wadhera Mohit Bhatnagar Amit Burman Vijay Kumar Gupta Ghyanendra Nath Bajpai Mahendra Swarup R. Balakrishnan Ashish Bhardwa

5. Consumer information sources - where does the customer obtain information about the product? Consumer can get information following sources
Website Retail shops Detail Advertisement in newspapers 1. 2. retail shops online shoping web sites

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6.Trends

There are change in treands like y Touch screen y 3Gtechnology y Social networking fecilities y Motion senser Latest technology and trendy mobile sets are made with verity of choises provided to customer by the company.

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Competitors analysis

Some major compititors are 1 LG 2 samsung 3 sony ericsson 4 motorola

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1.

LG

Products
y Optimus 2X y Quantum y Optimus 7 y BL40 y KM900 Arena y KP500 y KU990 Viewty y KG195 y KG271 y KG276 y KE970 Shine y KE770 y KG920 y KE820 y M6100 y KG300 y G800 y P7200 y C3400 y M4410 y B2000 y T5100 y C1100 y G1500 y G1600 y G3100 y G1800 y G5300 y G5400 y G5600

Position of LG in market according to market analysis is lower then micromax Strengths

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LG is a multinational company and a recognized brand around the world. It has successful established not only in developed countries but also in developing countries. LG products are reliable, easy to use, and have simple designs which satisfy customers thats why LG have the advantage of having loyal customers. In LG Corporation the research and development has given greater importance because to satisfy the customers and provide the customers what they want the research and development id required.

Weaknesses
The big weakness of LG is that it has very few competent employeesmostly are not skilled and also there is no training and developmentconcern for employees.

2 Samsung
Products
y Google Nexus S y Galaxy Tab y Wave 533 y Star Duos y Ch@t 322 y Wave 723 y Wave 525 y Focus y Omnia 7 y Galaxy 5 y Galaxy 3 y i8520 Beam y Galaxy S y S8500 Wave y Corby POP y S5230W Star WiFi y C5130 y B5310 CorbyPRO y Corby Plus y Corby Mate y Corby Txt y Guru 2120

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Market share of Samsung is 10.8% which is nearly 2 % more then micromax

Strengths
Samsung is technologically very advanced; it has heavy assets of technology. It is known for its technologically advanced products. Samsung crushed new product concepts in five months. It is strong corporate brand and known for its quality products and advanced technology use. It attracts customers by offering new and innovative design through understanding the customers that which type of designs are suitable to customers and what they want or asked about. It heavily invest in technology, product design and human resource, because for the success of every organization human resource plays a major role, with out human resource no product can be made thats why Samsung gives more important to the human resource. Samsung focuses more towards the innovations and try to keep improving the products to attract more customers and capture moremarket share.

Weaknesses

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Although Samsung focuses innovation but it is not proactive to introducing new products, it waits to attack the competitors. It also lacks in product differentiation. Samsung caters mass market instead of niche market so for this purpose it sets low prices of products and low price products seem as low quality products, so Samsung products perceive as low quality as compared to competitors products. Most of the Samsung products are not user friendly which is a hurdle for Samsung to make it market leader.

3 Sony ericsson
Products
y XPERIA X7 Mini y XPERIA X7 y Yendo y Cedar y XPERIA X8 y Zylo y Spiro y Xperia X10 Mini Pro y Xperia X10 Mini y Vivaz Pro y Aspen y Vivaz y Hazel y Elm y Xperia Pureness y Xperia X10 y Xperia X2

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Sony ericsson mrket share is 8.1 % which is equal to that of micromax.

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Strength
Diversity among products. Sony as a brand name.

Weakness
Lack in understanding Customer Preferences Less technology advancement Lack of user centered designs. Lack of Brand awareness globally

4 Motorola
Products y Charm y WX161 y WX181 y WX295 y WX280 y WX290 y WX288 y WX395 y WX160 y WX265 y WX390 y WX260 y WX180 y DROID PRO y DEFY y DROID X y DROID 2

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y Quench XT3 y Flipout y Milestone 2 y Kingfisher EX128 y Starling EX115 y Backflip y Milestone y W7 Active Edition y MC55 y ZN300 y A3100 y W233 Renew y VE66 y EM35 y Aura y Q11 y VE538 y RAZR2 V9x y ZN200 y W396 y W231 y EM30 y EM325

Motorola market share s about 5.7 % which is less then micromax

Strengths
1 Big Brand.

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2 One of the best R&D facilities. 3 Solid manufacturing. 4 Variety of products to keep them in the game. 5 Excellent marketing. 6Six Sigma.

Weakness
1Declining monetary resources due to non profitability. 2Products lack the slick and fashionable appeal. 3Too much reliance on their phone Moto Razr. 4Products lack user centered design.

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Climate (or context) analysis

REGULATIONS AND POLICIES IN INDIA

The following description is a summary of the relevant regulations and policies as prescribed by the GoI and other regulatory bodies that are applicable to our business. The information detailed below has been obtained from the various legislations, including rules and regulations promulgated by regulatory bodies, and the bye-laws of the respective local authorities that are available in the public domain. The regulations set out below may not be exhaustive and are merely intended to provide general information to the Bidders and are neither designed nor intended to substitute for professional legal advice.

Importer Exporter Code

Under Section 7 of the Foreign Trade (Development and Regulation) Act, 1992 (the Foreign Trade Act), no person is permitted to make any import or export except under an importer-exporter code (an IEC) number granted by the Director General of Foreign Trade (the DGFT). Section 8(1)(a) of the Foreign Trade Act provides that any contravention of any law relating to central excise, customs, foreign exchange or other economic laws as may be notified by the Central Government is ground for the suspension/cancellation of the IEC number.

New Telecom Policy, 1999

The Department of Telecommunications, Ministry of Communications and Information Technology, GoI, formulated the National Telecom Policy, 1999, for creating an enabling framework for development of the telecom industry. In this regard, the National Telecom Policy, 1999, prescribes that with a view to promote indigenous telecom equipment manufacture for both domestic use and export, the GoI, would provide the necessary support and encouragement to the sector, including suitable incentives to the service providers utilizing such indigenous equipment. In furtherance of the same, the GoI, by way of the CENVAT Credit Rules, 2004, has allowed service providers to take CENVAT credit for utilizing indigenous equipment.

The Indian Telegraph Act, 1885 (Telegraph Act)

The Telegraph Act governs all forms of the usage of telegraph which expression has been defined to mean any appliance, instrument, material or apparatus used or capable of use for transmission or reception of signs,

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signals, writing, images, and sounds or intelligence of any nature, by wire, visual or other electro-magnetic emissions, radio waves or hertzian waves, galvanic, electric or magnetic means. Under Section 7, the Central Government has the power to make rules for conduct of all telegraphs established, maintained or worked by the Government or by persons licensed under the Act including but not limited to governing the conditions and restrictions subject to which any telegraph line, appliance or apparatus for telegraphic communication shall be established, maintained, worked, repaired, transferred, shifted , withdrawn or disconnected. Further, the rules prescribed by the Central Government may prescribe the fines for any breach of such rules, provided that the fines so prescribed shall not ` 250 and in the case of a continuing breach a further fine of ` 50 for every day after the first day during the whole or part of which the breach continues.

The Indian Wireless Telegraphy Act, 1933 (Telegraphy Act)

The Telegraphy Act regulates the possession of wireless telegraphy apparatus in India. Under the Telegraphy Act, wireless telegraphy apparatus has been defined to mean any apparatus, appliance, instrument, used or capable of being used in wireless communication, but does not include any such apparatus, appliance, instrument or material commonly used for other electrical purposes, unless it has been specially designed or adapted for wireless communication or forms part of some apparatus, instrument or material specially so designed or adapted. Under Section 10 of the Act, the Central Government has the power to make rules with respect to the maintenance of records containing details of the acquisition and disposal by sale or otherwise of wireless telegraphy apparatus possessed by dealers and the power to make provisions for penalty of breach of such rules.

International Mobile Equipment Identity and Electronic Serial Number

The Groupe Speciale Mobile Association (the GSM Association) is an association which focuses on ensuring mobile services work globally, thereby enhancing their value to individual users and national economies. Membership to this association is voluntary and upon payment of a stipulated amount of fee. Majority of the countries which use GSM technology are a member of this association. In this regard, the GSM Association 91

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issued a non-binding IMEI Allocation and Approval Guidelines dated October 1, 2009, whereby it laid down guidelines for members part of the GSM Association with respect to allocation of a unique international mobile equipment identity (the IMEI) identifying an individual mobile station in a GSM network. The IMEI code consists of a number of fields totaling 15 digits. All digits have the range of zero to nine coded as a binary coded decimal. The GSM Association maintains a unique system known as the IMEI database which is global central database containing basic information on the IMEI ranges of GSM devices that are in use across the GSM networks of the world. This IMEI database is also activated and updated every 15 days in the equipment identity register (EIR) of telecom service providers. Similarly, for mobile phones which implement CDMA technology, the Telecommunications Industry Association manages and co-ordinates manufacturer codes for cellular phones which is the electronic serial number (the ESN). ESN is a 32 bit binary value which is unique to each cellular phone where eight high order bits are used to identify the manufacturer and low order 24 bits are used to identify the unit. In this regard, the Telecommunications Industry Association issued the Electronic Serial Number Manufacturer s Code, Assignment Guidelines and Procedures dated December 2009, laying down guidelines for assignment and allocation of the ESN code. The Department of Telecommunications, Ministry of Communications and Information Technology, GoI, issued a directive (No. 20-40/2006-BSIII(Pt.)/(Vol. I) dated October 6, 2008, in the interest of national security to all access service providers to make provision for an EIR so that all cellular phones without IMEI or ESN or invalid IMEI or ESN are not processed and rejected.

Labour and Environmental Regulations

Depending upon the nature of the activity undertaken by us, applicable environmental and labour laws and regulations include the following: y The Contract Labour (Regulation and Abolition) Act, 1970; y The Employees Provident Funds and Miscellaneous Provisions Act, 1952; y The Employees State Insurance Act, 1948; y The Factories Act, 1948; y The Industrial Disputes Act, 1947; y The Payment of Wages Act, 1936; y The Workmen s Compensation Act, 1923; y The Minimum Wages Act, 1948; y The Payment of Bonus Act, 1965; y The Payment of Gratuity Act, 1972;

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y The Environment (Protection) Act, 1986; y The Environment Impact Assessment Notification S.O. 1533(E), 2006; y The Forest (Conservation) Act, 1980 and The Forest (Conservation) Rules, 2003; y The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008; y The Water (Prevention and Control of Pollution) Act, 1974; y The Water (Prevention and Control of Pollution) Cess Act, 1977; and y The Air (Prevention and Control of Pollution) Act, 1981.

Labour Laws
The Factories Act, 1948, as amended (the Factories Act) The Factories Act defines a factory to be any premise which employs or employed on any day in the previous 12 months, ten or more workers and in which a manufacturing process is being carried on with the aid of power or any premises where there are or were in the previous twelve months, at least 20 workers working even though there is no manufacturing process being carried on with the aid of power. State Governments prescribe rules with respect to the prior submission of plans, their approval for the establishment of factories and the registration and licensing of factories. The Factories Act provides that the occupier of a factory (defined as the person who has ultimate control over the affairs of the factory and in the case of a company, any one of the directors) shall ensure the health, safety and welfare of all workers while they are at work in the factory, especially in respect of safety and proper 92

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maintenance of the factory such that it does not pose health risks, the safe use, handling, storage and transport of factory articles and substances, provision of adequate instruction, training and supervision to ensure workers health and safety, cleanliness and safe working conditions. If there is a contravention of any of the provisions of the Factories Act or the rules framed thereunder, the occupier and manager of the factory may be punished with imprisonment for a term up to two years or with a fine up to ` 100, 000 or with both, and in case of contravention continuing after conviction, with a fine of up to ` 1,000 per day of contravention. In case of a contravention which results in an accident causing death or serious bodily injury, the fine shall not be less than ` 25, 000 in the case of an accident causing death, and ` 5,000 in the case of an accident causing serious bodily injury.

Environmental Laws
Our business is subject to environment laws and regulations. The applicability of these laws and regulations varies from operation to operation and is also dependent on the jurisdiction in which we operate. Compliance with relevant environmental laws is the responsibility of the occupier or operator of the facilities. Our operations require various environmental and other permits covering, among other things, water use and discharges, stream diversions, solid waste disposal and air and other emissions. Major environmental laws applicable to our operations include: The Environment (Protection) Act, 1986 (the EPA) The EPA is an umbrella legislation in respect of the various environmental protection laws in India. The EPA vests the GoI with the power to take any measure it deems necessary or expedient for protecting and improving the quality of the environment and preventing and controlling environmental pollution. This includes rules for inter alia, laying down the quality of environment, standards for emission of discharge of environment pollutants from various sources, inspection of any premises, plant, equipment, machinery, examination of manufacturing processes and materials likely to cause pollution. Penalties for violation of the EPA include fines up to ` 100, 000 or imprisonment of up to five years, or both. There are provisions with respect to certain compliances by persons handling hazardous substances, furnishing of information to the authorities in certain cases, establishment of environment laboratories and appointment of Government analysts.

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The Environment Impact Assessment Notification S.O. 1533(E), 2006 (the EIA Notification) The EIA Notification issued under the EPA and the Environment (Protection) Rules, 1986, as amended, provides that the prior approval of the MoEF, GoI, or State Environment Impact Assessment Authority, as the case may be, is required for the establishment of any new project and for the expansion or modernisation of existing projects specified in the EIA Notification. The EIA Notification states that obtaining of prior environmental clearance includes a maximum of four stages, i.e., screening, scoping, public consultation and appraisal. An application for environmental clearance is made after the identification of prospective site(s) for the project and/or activities to which the application relates but before commencing any construction activity, or preparation of land, at the site by the applicant. Certain projects which require approval from the State Environment Impact Assessment Authority may not require an Environment Impact Assessment Report. For projects that require preparation of an Environment Impact Assessment Report public consultation involving both public hearing and written response is conducted by the State Pollution Control Board. The appropriate authority makes an appraisal of the project only after a Final EIA Report is submitted addressing the questions raised in the public consultation process. The prior environmental clearance granted for a project or activity is valid for a period of ten years in the case of river valley projects, project life as estimated by Expert Appraisal Committee or State Level Expert Appraisal Committee subject to a maximum of 30 years for mining projects and five years in the case of all other projects and activities. This period of validity may be extended by the regulatory authority concerned by a maximum period of five years. 93

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The Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008 (the Hazardous Wastes Rules) The Hazardous Wastes Rules aim to regulate the proper collection, reception, treatment, storage and disposal of hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous waste to dispose such waste without adverse effect on the environment, including through the proper collection, treatment, storage and disposal of such waste. Every occupier and operator of a facility generating hazardous waste must obtain an approval from the Pollution Control Board. The occupier, the transporter and the operator are liable for damages caused to the environment resulting from the improper handling and disposal of hazardous waste. The operator and the occupier of a facility are liable for any fine that may be levied by the respective State Pollution Control Boards. Penalty for the contravention of the provisions of the Hazardous Waste Rules includes imprisonment up to five years and imposition of fines as may be specified in the EPA or both. The Water (Prevention and Control of Pollution) Act, 1974 (the Water Act) The Water Act aims to prevent and control water pollution as well as restore water quality by establishing and empowering the Central Pollution Control Board and the State Pollution Control Boards. Under the Water Act, any person establishing any industry, operation or process, any treatment or disposal system, use of any new or altered outlet for the discharge of sewage or new discharge of sewage, must obtain the consent of the relevant State Pollution Control Board, which is empowered to establish standards and conditions that are required to be complied with. In certain cases the State Pollution Control Board may cause the local Magistrates to restrain the activities of such person who is likely to cause pollution. Penalty for the contravention of the provisions of the Water Act include imposition of fines or imprisonment or both. The Central Pollution Control Board has powers, inter alia, to specify and modify standards for streams and wells, while the State Pollution Control Boards have powers, inter alia, to inspect any sewage or trade effluents, and to review plans, specifications or other data relating to plants set up for treatment of water, to evolve efficient methods of disposal of sewage and trade effluents on land, to advise the State Government with respect to the suitability of any premises or location for carrying on any industry likely to pollute a stream or a well, to specify standards for treatment of sewage and trade effluents, to specify effluent standards to be complied with by persons while causing discharge of sewage, to obtain information from any industry and to take emergency measures in case of pollution of any stream or well.

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A central water laboratory and a state water laboratory have been established under the Water Act. The Water (Prevention and Control of Pollution) Cess Act, 1977 (the Water Cess Act) The Water Cess Act provides for levy and collection of a cess on water consumed by industries with a view to augment the resources of the Central and State Pollution Control Boards constituted under the Water Act. Under this statute, every person carrying on any industry is required to pay a cess calculated on the basis of the amount of water consumed for any of the purposes specified under the Water Cess Act at such rate not exceeding the rate specified under the Water Cess Act. A rebate of up to 25% on the cess payable is available to those persons who install any plant for the treatment of sewage or trade effluent, provided that they consume water within the quantity prescribed for that category of industries and also comply with the provision relating to restrictions on new outlets and discharges under the Water Act or any standards laid down under the EPA. For the purpose of recording the water consumption, every industry is required to affix meters as prescribed. Penalties for non-compliance with the obligation to furnish a return and evasion of cess include imprisonment of any person for a period up to six months or a fine of ` 1,000 or both and penalty for non payment of cess within a specified time includes an amount not exceeding the amount of cess which is in arrears. The Air (Prevention and Control of Pollution) Act, 1981 (the Air Act) Pursuant to the provisions of the Air Act, any person, establishing or operating any industrial plant within an air pollution control area, must obtain the consent of the relevant State Pollution Control Board prior to establishing or operating such industrial plant. The State Pollution Control Board is required to grant consent within a period of four months of receipt of an application, but may impose conditions relating to pollution control equipment to be installed at the facilities. No person operating any industrial plant in any air pollution control area is permitted to discharge the emission of any air pollutant in excess of the standards laid down by the State Pollution Control Board. The penalties for the failure to comply with the provisions of the Air Act include 94 imprisonment of up to six years and the payment of a fine as may be deemed appropriate. If an area is declared by the State Government to be an

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air pollution control area, then, no industrial plant may be operated in that area without the prior consent of the State Pollution Control Board. Under the Air Act, the Central Pollution Control Board has powers, inter alia, to specify standards for quality of air, while the State Pollution Control Boards have powers, inter alia, to inspect any control equipment, industrial plant or manufacturing process, to advise the State Government with respect to the suitability of any premises or location for carrying on any industry and to obtain information from any industry.

Other Legislations:
Intellectual Property Laws Trademarks A trademark is used in relation to goods so as to indicate a connection in the course of trade between the goods and some person having the right as proprietor or user to use the mark. A mark may consist of a word or invented word, signature, device, letter, numeral, brand, heading, label, name written in a particular style and so forth. The Trademarks Act, 1999 (the Trademarks Act) governs the registration, acquisition, transfer and infringement of trademarks and remedies available to a registered proprietor or user of a trademark. The registration of a trademark is valid for a period of 10 years but can be renewed in accordance with the specified procedure. Currently, a person desirous of obtaining registration of his trademark in other countries has to make separate applications in different languages and disburse different fees in the respective countries. However, the Madrid Protocol, administered by the International Bureau of the World Intellectual Property Organization (WIPO), of which India is a member country, aims to facilitate global registration of trademarks by enabling nationals of member countries to secure protection of trademarks by filing a single application with one fee and in one language in their country of origin. This in turn is transmitted to the other designated countries through the International Bureau of the WIPO. The Trademarks (Amendment) Bill 2009 was recently tabled before the Lok Sabha, to amend the Trademarks Act to enable Indian nationals as well as foreign nationals to secure simultaneous protection of trademarks in other countries, and to empower the Registrar of Trademarks accordingly, as well as to simplify the law relating to transfer of ownership of trademarks by assignment or transmission and to bring the law generally in line with international practice. Copyrights A copyright is an exclusive right to do or authorization to do certain acts in relation to literary, dramatic, musical and artistic works, cinematographic films and sound recordings. The Copyright Act, 1957 (the Copyright Act) provides for registration of copyrights, transfer of ownership and licensing of copyrights, and infringement of copyrights and remedies available in that respect. Depending upon the subject, copyright is granted for a

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certain period of time, usually for a period of 60 years, subsequent to which the work falls in the public domain and any act of reproduction of the work by any person other than the author would not amount to infringement. Software, both in source and object code, constitutes a literary work under Indian law and is afforded copyright protection. Following the issuance of the International Copyright Order, 1999, subject to certain conditions and exceptions, the provisions of the Copyright Act apply to nationals of all member states of the World Trade Organization, the Berne Convention and the Universal Copyright Convention. While intellectual property registration is not a prerequisite for acquiring or enforcing such rights, registration creates a presumption favouring the ownership of the right by the registered owner. Registration may expedite infringement proceedings and reduce delay caused due to evidentiary considerations. The registration of certain types of intellectual property is prohibited, including where the property sought to be registered is not distinctive. The remedies available in the event of infringement under the Copyright Act and the Trademarks Act include civil proceedings for damages, account of profits, injunction and the delivery of the infringing materials to the owner of the right, as well as criminal remedies including imprisonment of the accused and the imposition of fines and seizure of infringing materials. Miscellaneous The Shops and Establishments Act Under the provisions of local shops and establishments legislations applicable in the states in which establishments are set up, establishments are required to be registered. Such legislations regulate the working and employment conditions of the workers employed in shops and establishments including commercial establishments and provide for fixation of working hours, rest intervals, overtime, holidays, leave, termination 95 Consumer Protection Act, 1986 The Consumer Protection Act, 1986 (COPRA) aims at providing better protection to the interests of consumers and for that purpose makes provisions for the establishment of authorities for the settlement of consumer disputes. The COPRA provides a mechanism for the consumer to file a complaint against a trader or service provider in cases of unfair trade practices, restrictive trade practices, defects in goods, deficiency in services, price charged being unlawful and goods being hazardous to life and safety when used. The COPRA provides for a three tier consumer grievance redressal mechanism at the national, state and district levels. Non compliance of the orders of these authorities attracts criminal penalties.

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