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DEFINITIONS AND ABBREVIATIONS .............................................................................................. 2PRESENTATION OF FINANCIAL AND MARKET DATA............................................................ .4FORWARD-LOOKING STATEMENTS ............................................................................................ 5RISK FACTORS....................................................................................................................................... 6SUMMARY ............................................................................................................................................. 9ISSUE DETAILS .................................................................................................................................... 15SUMMARY FINANCIAL AND OPERATING INFORMATION ........................................................ 17GENERAL INFORMATION .................................................................................................................. 20CAPITAL STRUCTURE ......................................................................................................................... 25OBJECTS OF THE ISSUE ...................................................................................................................... 27BASIC TERMS OF THE ISSUE ............................................................................................................ .28BASIS FOR ISSUE PRICE ..................................................................................................................... 31STATEMENT OF TAX BENEFITS........................................................................................................ 33INDUSTRY OVERVIEW ...................................................................................................................... 42OUR BUSINESS ...................................................................................................................................... 50OUR HISTORY AND CERTAIN CORPORATE MATTERS................................................................ 76OUR MANAGEMENT ............................................................................................................................ 77OUR PROMOTERS ...................................................................................................................................82FINANCIAL STATEMENTS ....................................................................................................................83LEGAL AND OTHER INFORMATION...91GOVERNMENT APPROVALS.95OTHER REGULATORY AND STATUTORY DISCLOSURES ............................................................97TERMS OF THE ISSUE...........................................................................................................................105ISSUE PROCEDURE ..............................................................................................................................107MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF OUR COMPANY........................ .......118DECLARATION .....................................................................................................................................122

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DEFINITIONS AND ABBREVIATIONS

Term Description

We, us, our, theIssuer, our Company

Unless the context otherwise indicates or implies, SpecialEconomic Zone Limited on a standalone basis.

Term Description

Allotment/Allot Unless the context otherwise requires, the allotment of EquityShares pursuantto the Issue

Allottee A successful Bidder to whom the Equity Shares are AllottedBanker(s) to the Issue HDFC Bank Ltd., ICICI BANK LTD.Basis of Allotment The basis on which Equity Shares will be Allotted to Bidders

under the Issue and which is described in Issue Procedure Basisof Allotment on page 29 of theProspectus

Bid An indication to make an offer during the Bidding Period by aprospective investor to subscribe to the Equity Shares of our Company at a price within the Price Band, including all revisionsand modifications thereto

Bid Amount The highest value of the optional Bids indicated in the Bid cumApplication Form and payable by the Bidder on submission of theBid in the Issue

Bid/Issue Closing Date The date after which the Syndicate will not accept any Bids for theIssue, which shall be notified in an English national newspaper, aHindi national newspaper, each with wide circulation

Bid /Issue Opening Date The date on which the Syndicate shall start accepting Bids for theIssue, which shall be the date notified in an English nationalnewspaper, a Hindi national newspaper and a Gujarati newspaper,each with wide circulation

Bid cum Application Form The form used by a Bidder to make a Bid and which will beconsidered as the application for Allotment for the purposes of theRed Herring Prospectus and the Prospectus

Bidder Any prospective investor who makes a Bid pursuant to the terms of the Red Herring Prospectus and the Bid cum Application Form

Bidding/Issue Period The period between the Bid/Issue Opening Date and the Bid/IssueClosing Date inclusive of both days and during which prospectiveBidders can submit their Bids, including any revisions thereof

Book Building Process/Method

Book building route as provided in Chapter XI of the SEBI DIPGuidelines, in terms of which this Issue is being made

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NEFT National Electronic Fund Transfer

NOC No Objection CertificatePAN Permanent Account Number allotted under the Income Tax Act,

1961PAT Profit After TaxPBT Profit Before TaxPIO Persons of Indian OriginPLR Prime Lending RateRBI The Reserve Bank of IndiaSCRA Securities Contracts (Regulation) Act, 1956, as amended from time

to timeSCRR Securities Contracts (Regulation) Rules, 1957, as amended from

time to timeSEBI The Securities and Exchange Board of India constituted under the

SEBI Act, 1992SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines, 2000 as

amended from time to timeSEBI Takeover Regulations

Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, as amended from timeto time

Sec. SectionSEZ Special Economic ZoneState Government The government of a state of IndiaStock Exchange(s) BSE and/ or NSE as the context may refer toUIN Unique Identification Number US GAAP Generally Accepted Accounting Principles in the United States of

AmericaUSD/ US$ United States Dollars

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FORWARD-LOOKING STATEMENTSAll statements contained in this Prospectus that are not statements of historical fact constituteforward looking statements. Investors can generally identify forward-looking statements byterminology such as aim, anticipate, believe, continue, estimate, expect, intend,may, objective, plan, potential, project, pursue, should, will, would, or other words or phrases of similar import. Similarly, statements that describe our strategies, objectives,

plans or goals are also forward-looking statements. All statements regarding our expectedfinancial condition and results of operations, business, plans and prospects are forward-lookingstatements. These forward-looking statements include statements as to our business strategy, our revenue and profitability and other matters discussed in this Prospectus regarding matters that arenot historical facts. These forward-looking statements and any other projections contained in thisProspectus (whether made by us or any third party) are predictions and involve known andunknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievementsexpressed or implied by such forward-looking statements or other projections. Important factorsthat could cause actual results, performance or achievements to differ materially include, but arenot limited to, those discussed under Risk Factors, Managements Discussion and Analysis of

Financial Condition and Results of Operations, Industry and Our Business. The forward-looking statements contained in this Prospectus are based on the beliefs of management, aswell as the assumptions made by and information currently available to management. Althoughwe believe that the expectations reflected in such forward-looking statements are reasonable atthis time, we cannot assure investors that such expectations will prove to be correct. Given theseuncertainties, investors are cautioned not to place undue reliance on such forward-lookingstatements. If any of these risks and uncertainties materialize, or if any of our underlyingassumptions prove to be incorrect, our actual results of operations or financial condition coulddiffer materially from that described herein as anticipated, believed, estimated or expected. Allsubsequent written and oral forward-looking statements attributable to us are expressly qualifiedin their entirety by reference to these cautionary statements.

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RISK FACTORS

DISCLAIMER : An investment in equity shares involves a high degree of risk. You should carefully consider all the information in this Prospectus, including the risks and uncertaintiesdescribed below, before making an investment in our Equity Shares. The risks and uncertaintiesdescribed in this section are not the only risks that we currently face. Additional risks and

uncertainties not presently known to us or that we currently believe to be immaterial may alsohave an adverse effect on our business, results of operations and financial condition. If any of the following risks, or other risks that are not currently known or are now deemed immaterial,actually occur, our business, results of operations and financial condition could suffer, the priceof our Equity Shares could decline, and you may lose all or part of your investment. I making aninvestment decision, prospective investors must rely on their own examination of the Companyand the terms of the Issue, including the merits and risks involved.

Risk Factors Specific to the Project and Internal to Us :-

1. Our main business is the construction of Highways and Roads and we do not expect toearn higher revenues other than from the Expressway Projects in various states.

2. We sold many developed residential plots as well as Townships to related parties andthere can be no assurance that the value of such sales would have been the same if suchland was sold to third parties.

3. Our business is dependent on our manufacturing facilities. Any loss of or breakdown of operations at any of our manufacturing facilities may have a material adverse effect onour business, financial condition and results of operations.

4. We are largely dependent on our Promoter,, for execution and marketing of our projectsand for financial support. Discontinuance of such arrangements could adversely affectour operations and financial condition.

5. Our success depends in large part upon our senior management and key personnel andour ability to attract and retain them.

6. The shortage or non-availability of electricity may adversely affect our manufacturingprocesses and have an adverse impact on our results of operations and financial conditionbecause our plant is situated in an area where electricity problems occur most frequently.

7. There are legal proceedings currently pending involving our Company, our Promoters,Directors and Group Companies. Any adverse decision may adversely affect our businessand results of operations and/ or render us liable for additional costs/penalties.

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8. A civil suite is pending on our organization.

9. We have not obtained certain approvals for some of our projects and some of our projects are in the preliminary stages of planning and require approvals.

10. We are a newly-formed company with limited history and are subject to all of thebusiness risks and uncertainties associated with any newly operating business.

11. Revenue recognition based on the percentage of completion method of accounting issubject to uncertainties and inaccurate estimates.

12. Our development rights over land may be subject to legal uncertainties and defects.

13. Our results of operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees.

14. Our operations may be adversely affected due to scarcity of raw materials.

15. Our construction work and operations is dependent on the timely supply of construction materials at commercially acceptable prices.

16. Increasing employee compensation in India may erode some of our competitiveadvantage and may reduce our profit margins.

17. Our projects are subject to construction, financing and operational risks.

18. Global economic, political and social conditions may harm our ability to do business,increase our costs and negatively affect our business.

19. Our projects are subject to physical hazards and similar risks that could expose us tomaterial liabilities, loss in revenues and increased expenses.

20. We may have additional capital or funding requirements for our planned projects or other operational needs, which may have to be met by debt or equity financing. If we areunable to obtain such financing on acceptable terms, our growth plans or one or more of our projects may be adversely affected.

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21. Our proposed integrated townships may not be successfully implemented or marketed.

22. There may be investor grievances against our listed Group companies.

23. We face certain contractual risks associated with agreements that we have entered intowith respect to our projects and this may delay the implementation of our projects.

24. The success of our real estate projects under development and planned to be developed isdependent on, among other things, our ability to anticipate and respond to therequirements of potential customers.

25. Our business is heavily dependent on economic growth in India, particularly in MadhyaPradesh.

26. The real estate development business is very competitive and highly fragmented.

27. National and Local Laws Pertaining to the Environment may adversely affect our projects.

28. The real estate industry has recently undergone a significant downturn which could in thefuture adversely affect our business, liquidity and results of operations.

29. Continued compliance with, and any changes in, safety, health and environmental lawsand regulations may adversely affect the Company's results of operations and financialcondition.

30. Increases in interest rates may materially impact our results of operations.

31. If the rate of Indian price inflation increases, our results of operations and financialcondition may be adversely affected

32. Our business is heavily dependent on the availability of real estate financing andcertain tax benefits in India. Difficult conditions in the global capital markets and theeconomy generally have affected and may continue to materially adversely affect our business and results of operations and may cause us to experience limited availability of funds.

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33. If communal disturbances or riots erupt in India, if regional hostilities increase or if actsof terrorism occur or are threatened, this could adversely affect the financial markets, theIndian economy and our business.

34. The occurrence of natural or man-made disasters could adversely affect our results of

operations and financial condition.

35. Restrictions on foreign direct investment and external commercial borrowings inthe real estate sector may hamper our ability to raise additional capital.

36. Financial instability in Indian financial markets could materially and adversely affect our results of operations and financial condition.

SUMMARY

SUMMARY OF INDUSTRYThe information presented in this section has been obtained from publicly available documentsfrom various sources including industry websites and publications and from Government estimates. Industry websites and publications generally state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believeindustry, market and Government data used in this Prospectus is reliable and that website datais as current as practicable, these have not been independently verified.

Overview of the Indian EconomyUnless otherwise indicated, all financial and statistical data relating to the Indian economy inthe following discussion has been extracted from the RBI Annual Report 2008 and the RBI Macroeconomic and Monetary Developments 2008-09.India, the worlds largest democracy in terms of population (1.2 billion people), had real GDP ona purchasing power parity basis of approximately US$ 3.3 trillion for calendar year 2008. Thismakes it the fifth largest economy by GDP in the world after the European Union, the UnitedStates of America, China and Japan. ( Source: CIA World Factbook) During the last two decades,India has undergone various macroeconomic structural reforms.The following table sets forth the key comparative indicators of the Indian economy as comparedwith the global economy for the 2008 and 2009 (estimated) and 2010 (estimated).

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Infrastructure Development:The fast growth of the Indian economy in recent years has placed increasing stress on physicalinfrastructure such as electricity, railways, roads, ports, airports, irrigation, water supply andsanitation, all of which already suffer from a substantial deficit in terms of capacities andefficiencies in their delivery. While there has been some improvement in infrastructuredevelopment in the transport, communication and energy sectors in recent years, there are stillsignificant gaps that need to be bridged. Building on the general consensus that infrastructureinadequacies would constitute a significant constraint in realizing Indias development potential,an ambitious program of infrastructure investment, involving both the public and private sector,is being implemented for the Eleventh Five Year Plan (2007-08 to 2011-12) which emphasizesbroad-based and inclusive approach to economic growth to improve the quality of life andreducing disparities across regions and communities. Similar policies are being implemented for the Twelfth Five Year Plan (2012-13 to 2017-18). Historically, the Government has played a keyrole in supplying and regulating infrastructure services in India and the private sector did notparticipate in infrastructure development. However, due to the Governments limited ability tomeet the massive infrastructure funding requirements, private sector investment in infrastructurebecame critical. Therefore, the Government actively encouraged private investments ininfrastructure, including through public-private partnerships. According to the World Bank, Indianeeds to invest an additional 3-4% of GDP on infrastructure to sustain its current levels of growth in the medium term and to spread the benefits of growth more widely. (Source: IndiaCountry Overview 2009, World Bank) Despite the critical role of private sector investment ininfrastructure development, there still exists a very wide gap of US$10-15 billion between thecurrent and required levels of private investments in infrastructure. Over the 18-year period from1990 to 2007, total private investments were approximately US$96 billion, or approximatelyUS$5.3 billion per year, of which US$62 billion was invested during the four-year period from2004 through 2007. (Source: Private Participation in Infrastructure Database, World Bank Group)

Road Sector in India:

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As of September 2007, India had the second largest road network in the world, aggregating 3.3million kilometers. Globally, it is second only to the United States, which has the largest roadnetwork, aggregating 6.3 million kilometers, according to the US Department of Transportation.In descending order based on the volume of traffic movement, the road network in India can bedivided into the following categories: Expressways and National highways (NH);

State highways (SH); Major district roads; and Rural and other roads.

MADHYA PRADESH INDUSTRIAL DEVELOPMENT SCENARIO:

Earlier days the investments used to follow trade but in the present global scenario trade isfollowed by pouring investments in opportunity areas. All recent reports from FICCI, WorldBank, Mckinsey & others have confirmed that investments in Infrastructure, Manufacturing,Agriculture & Service sectors fuel growth. These reports also suggest that the G.D.P. growth of India can be enhanced by at least 2-3% points if the procedural bureaucratic delays can beavoided.

Taking cue from these two focal points the new Madhya Pradesh Government has put forwardits vision, & strategies to meet the national objective of attaining 8-10% annual GDP growth on asustained basis. The Madhya Pradesh Government has now come up with Industrial PromotionPolicy, 2004 (being restructured again based on feedbacks from Investors).

It is advantageous to set up units in Madhya Pradesh because the land and knowledge workersare available at a very low cost. It is an industrially peaceful state with fewer law & order problems. As per the CMIE report September 2009, Investment proposals worth about Rs. 3,19,418 crore ($67b approx) are in different stages of consideration in Madhya Pradesh.

Never before has the investment climate been so upbeat.

To a great extent, the Industrial Policy 2004 is responsible for generating an atmosphere of confidence in industry. This is a new Madhya Pradesh, which truly means "Business". Whether in the field of infrastructure or manufacturing or the service sector, fresh investments are pouringinto Madhya Pradesh.

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On it's part, the Madhya Pradesh Government is making every possible endeavor to market theState, invite investments, and offer incentives and conducive environment to facilitate freshinvestments.

INFRASTRUCTURE:

The state has developed an excellent infrastructure. It has 19 Industrial Development centers,129 Industrial Areas, 6 (six) food parks, 8 integrated development centers, one stone park, oneSEZ at Indore, 3 dry parks, one IT park, and one apparel park at Indore.

The Madhya Pradesh State Industrial Development Corporation & Industrial DevelopmentCorporation Indore have taken up an 80 crore project to bring water from Narmada river (fromNemawar which is 128 kms away from Dewas.) to Dewas under BOT scheme.

This project will not only solve the water problems of 460 industries located at Dewas but willfacilitate further industrialisation of Dewas Industrial Belt.

Another project of Industrial hazardous waste disposal is being mooted near Indore to take careof Industrial waste generated at various places in Madhya Pradesh.

2000 Kms of road projects are already being completed under the BOT scheme in which, for thefirst time, private sector participation has ensured that Government spends only 50% of thecapital cost of renovating the roads. Another 1100 Kms. of roads are to be completed under anAsian Development Bank Road Project. Further, another 2000 Kms. of road are planned on aBOT basis. This would take care of almost all major State Highways.

The Real Estate Sector in India :

The real estate sector in India is mainly comprised of the development of residential housing,commercial buildings, hotels, restaurants, cinemas, retail outlets and the purchase and sale of land and development rights. The real estate sector, combined with the construction sector, playsan important role in the overall development of Indias core infrastructure.Historically, the Indian real estate sector has been unorganized and characterized by variousfactors that impeded organized dealing, such as the absence of a centralized title registryproviding title guarantees, a lack of uniformity in local laws and their application, limitedavailability of bank financing, high interest rates and transfer taxes and the lack of transparencyin transaction values. The improved efficiency and transparency in this sector in recent years

attributable to the enactment and implementation of various laws and regulatory reforms havecontributed to the development of more reliable indicators of value. As a result, investments bydomestic and international financial institutions have increased, allowing real estate developersgreater access to capital and financing. Regulatory changes permitting FDI areexpected to further increase investment in this industry. The nature of demand is also changing,with heightened consumer expectations that are influenced by higher (and growing) disposableincomes, increased globalization and the introduction of new real estate products and services.The Government in March 2005 amended existing legislation to allow FDI in the constructionand real estate businesses subject to certain conditions. According to the Department of

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Industrial Policy and Promotion of the Government, FDI inflow into India from April 2000through July 2009 was Rs. 306,750 million in the housing and real estate sector and Rs. 259,580million in the construction sector (which includes roads and highways) as set forth in the following table:

FDI Inflow in Real Estate and Construction (in USD million)

Fiscal

Fiscal

Fiscal

Apr-09 Cumulativeinflow

2007 2008 2009 throughJULY 2009

April 2000through 2009

Housing and real estate 467 2,179 2,801 1,181 6,693Construction including roads& highways)

985 1,743 2,028 603 5,874

Source: Cushman & Wakefield Report: Survival to Revival, Indian Realty Sector on the Path toRecovery, 2009.

The rising investment trends in the real estate sector have been reinforced by the substantialgrowth in the Indian economy, which has stimulated demand for land and developed real estate.Although weakened by the global financial crisis, demand for residential, commercial and retailreal estate has generally been increasing throughout India in recent years, accompanied byincreased demand for hotel accommodation and improved infrastructure. Additionally, certaintax and other benefits applicable to special economic zones are expected to result, over time, inincreased demand in the real estate sector.

The table below sets forth the pan-India cumulative demand projection for the real estate sector across the office, residential, retail and hospitality segments by the year 2013:

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OUR BUSINESS:

We were incorporated as Element Infrastructure Limited on May 26, 2000, and commencedstarted with highways & roadways in October 2000 and we gradually moved to residentialdevelopment in the year 2004 with commercial complex operations beginning in 2007.And recently, we received approval as a developer of SEZ near Airport road and the surroundingareas from the Government of India. On Jan 23, 2010, we received notification from theGovernment of India with respect to land covering near Airport road and the surrounding areasof approximately 180 acres. Notification is granted only once we will seek additionalnotifications in relation to such land, in order to reflect the significance of the SEZ status.

Competitive StrengthsWe believe that our historical success and future prospects are attributable to the followingcompetitive strengths:

SEZ Advantage

As the developer of a SEZ, we are eligible to claim certain tax exemptions, including a 100%income tax exemption of our profits from SEZ related income, which can be taken for 10consecutive years out of a 15-year period commencing from notification of the land by thegovernment pursuant to Section 80-I AB of the Income Tax Act, 1961. Both the developer andoperators of industrial units within the SEZ receive various additional tax incentives, includingexemption from indirect taxes such as customs, excise, and service taxes and from stamp dutyand electricity duty, which we believe makes us more likely to attract additional industries andexternal investment in the Bhopal area over time.

Experienced management team

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We have been able to successfully attract and retain senior executives from top companies aswell as retain key executives. Our management team has an average of over 15 years of experience in the infrastructure industry. Our management team has an established track record,knowledge in the industries we serve and relevant experience in India. Our management hasdemonstrated the ability to manage significant expansion plans and capital expenditures while

maintaining our recent income and profit growth.

Our StrategyWe intend to capitalize on our strategic location to develop into a world class operator in India.In order grow our business volume and to strengthen our market position in India, we have inplace the following strategies:

Develop land as a source of operating income and driver of growthApart from developing basic infrastructure, such as roads, residential complexes. We believe thatthe SEZ status, with its various tax and other incentives, and the surrounding area will help us inattracting industrial units to establish operations in the element infrastructure ltd.. Such growth in

the SEZ would enable us to generate additional income directly from the lease of land andthrough other means also.

Invest in new locations and acquire new customersWe also intend to grow our business by acquiring new customers. We plan to do this bycapitalising on our current capabilities and our reputation in the market. Our relationships withexisting customers have been useful in showing our experience and credibility in the competitivemarket, helping us to attract new customers. Our customers have provided us with references inthe past which have proven to be valuable for acquiring new work. In addition, our capabilitiesand experience enables us to offer expertise to service lines and customers.

Continue to improve our operating efficiency, quality of service and overallcompetitivenessWe will continue to strive to improve the operating efficiency and capacity of our existingfacilities by continuing to invest in advanced handling equipment and improving the efficiencyof our loading, unloading and various other equipment &services. We intend to improve the quality and efficiency of the value-added services while alsoincreasing the services options that we currently provide to customers. We believe our customersvalue our efficiency, high-quality services and responsiveness which help as to move further andgrab various opportunities come our way.

Service DeliveryService delivery is a critical part of our offering. We have a quality and timely -focused servicedelivery approach which is built around the following key elements: efficiency, technology andprocess excellence. In order to achieve and maintain our service delivery goals, we have beencontinuously improving our performance and overall service delivery. We have variousprocesses and methodologies to monitor our performance against such terms and guaranteedlevels of performance in our customer agreements, identify any problems and take necessarycorrective and preventive actions for achieving ongoing adherence to guaranteed service levels.

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ISSUE DETAILS

Equity Shares Offered: 84,00,00,000 Equity Shares of Rs. 10/- each for Fresh Issue by the Company per Equity Share

Of which:

Minimum Allotment to QIBs 8,40,00,000 Equity Shares of Rs. 10/- each for Cash per Equity Share

Reserved for allotment on 8,40,00,000 Equity Shares of Rs. 10/- each for Cash at per competitive basis to Permanent Equity shareEmployees of our Companyincluding Whole-time Directors

Reserved for allotment on 21,00,00,000 Equity Shares of Rs. 10/- each for Cash at acompetitive basis to NIIs Equity share

Net Issue to the Public 46,20,00,000 Equity Shares of Rs. 10/- each for Cash at aPremium of Rs.10/- per

Equity Shares OutstandingPrior to the Issue 84,00,00,000 Equity shares of Rs. 10/- each

Equity Shares Outstandingafter the Issue 12434900000 Equity shares of Rs. 10/- each

OBJECTS OF THE ISSUE:

The Objects of the Issue are to raise capital aggregating Rs. 8400.00 Crores for part financing thefunds requirement aggregating to Rs. 15000.00 Crores for the expansion project of Constructionand development of basic infrastructure and the allied facilities in the proposed SEZ at Airportroad Bhopal The main objects and objects incidental or ancillary to the main objects set out inour Memorandum of Association enable us to undertake our existing activities and the activitiesfor which funds are being raised by us through this Issue. The fund requirements below are basedon our current business plan. In view of the highly competitive and dynamic nature of theindustry in which we operate, we may have to revise our business plan from time to time andconsequently our fund requirement may also change. This may include rescheduling of our capital expenditure programmes and increase or decrease the capital expenditure for a particular purpose vis--vis current plans at the discretion of our management. In case of any variations inthe actual utilisation of funds earmarked for the above activities, increased fund deployment for a

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particular activity will be met from internal accruals of the Company. In case of surplus funds,the same shall be utilised towards General Corporate Purposes.

The details of the proceeds of the Issue are summarised in the table below:

Particulars (in Rs. crores)Gross proceeds of the Issue 9240Issue related expenses 650Net Proceeds of the Issue 8590

Expenses of the IssueThe estimated issue related expenses are as follows:Activity Estimated Expense

(in Rs. crores)Lead management fee, underwriting and selling commission 440

Advertising and marketing expenses 10Printing and stationery 80Others (Monitoring Agent fees, Registrars fee, legal fee, listing fee etc.) 120Total estimated issue expenses 650

Requirement of Funds and Schedule of UtilisationThe break-down of the proposed utilisation of the Net Proceeds excluding general corporatepurpose and the year wisedeployment is as follows:

(in crores)

s.no: Particulars FY2011 FY2012 FY2013 Total

1 Construction and development 2580 4200 1620 8400Of basic infrastructure and theAllied facilities in proposed SEZ

SUMMARY FINANCIAL AND OPERATING INFORMATION

STATEMENT OF ASSETS AND LIABILITIES

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Mar '08 Mar '09 Mar '10

Sources Of Funds

Total Share Capital 363.24 403.49 403.49

Reserves 383.11 2,209.02 2,541.78

Revaluation Reserves 0 0 0

Networth 746.35 2,612.51 2,945.27

Secured Loans 1,281.35 1,884.77 2,284.98

Unsecured Loans 0.9 21.98 28.02Total Debt 1,282.25 1,906.75 2,313.00

Total Liabilities 2,028.60 4,519.26 5,258.27

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STATEMENT OF PROFITS AND LOSSES FOR ELEMENT INFRASTRUCTURELIMITED.

Mar '08 Mar '09

Mar '10

IncomeSales Turnover 581.04 818.58 1,137.59Excise Duty 0 0 0Net Sales 581.04 818.58 1,137.59Other Income 6.5 65.2 109.71

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Mar '08 Mar '09 Mar '10Application Of FundsGross Block 2,234.40 3,201.67 3,781.95Less: Accum.Depreciation

250.92 359.84 530.53

Net Block 1,983.48 2,841.83 3,251.42Capital Work in Progress 417.94 405.83 1,232.55Investments 78.99 1,082.66 431.75

Inventories 10.44 18.47 26.49Sundry Debtors 345.64 296.34 211.64Cash and Bank Balance 9.2 81.55 160.35Total Current Assets 365.28 396.36 398.48Loans and Advances 148.3 193.59 210.06Fixed Deposits 47.7 808.01 970.36Total CA, Loans &Advances

561.28 1,397.96 1,578.90

Deffered Credit 0 0 0Current Liabilities 996.17 1,113.94 1,189.47Provisions 22.77 95.09 46.88Total CL & Provisions 1,018.94 1,209.03 1,236.35Net Current Assets -457.66 188.93 342.55Miscellaneous Expenses 5.85 0 0Total Assets 2,028.60 4,519.25 5,258.27


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Stock Adjustments 0 0 0Total Income 587.54 883.78 1,247.30ExpenditureRaw Materials 120.39 97.7 120.41Power & Fuel Cost 36.52 36.23 51.41Employee Cost 18.44 33.66 40.56Other Manufacturing Expenses 35.24 45.08 85.57Selling and Admin Expenses 40.23 47.25 58.88Miscellaneous Expenses 15.47 19.22 16.66Preoperative Exp Capitalized 0 0 0Total Expenses 266.29 279.14 373.49Operating Profit 314.75 539.44 764.1PBDIT 321.25 604.64 873.81Interest 67.92 137.46 200.81PBDT 253.33 467.18 673Depreciation 80.7 100.64 137.24Other Written Off 0.51 0 0Profit Before Tax 172.12 366.54 535.76Extra-ordinary items 2.84 0.27 -20.97PBT (Post Extra-ord Items) 174.96 366.81 514.79Tax -12.46 153.41 53.71PAT 187.44 213.41 461.09

CASH FLOW STATEMENT FOR ELEMENT INFRASTRUCTURE LIMITED.

Net Profit Before Tax 355.16 514.03 760.45

Net Cash From Operating Activities 519.15 695.07 1035.04

Net Cash (used in)/from -1121.95

-1112.4 -1767.76

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Investing Activities

Net Cash (used in)/from Financing Activities 2204.52 -52.34 675.19

Net (decrease)/increase In Cash and Cash Equivalents 1601.73 -469.67 -57.54

Opening Cash & Cash Equivalents 32.67 1634.41 261.24

Closing Cash & Cash Equivalents 1634.4 1164.73 203.7

GENERAL INFORMATION:

Registered Office: MM-28, B- block, 1 st Floor Mansarovar Complex, Bhopal (M.P.)Tel: 0755 - 2499154, 2499155, 2499156 Fax: 0755 - 2499998;

Registrar of Companies , Bhopal having registered office at 3 rd floor A block SanjayComplex Jayendra ganj Gwalior- 4704005 (M.P)

NAME OF THEDIRECTORS

DESIGNATION STATUS

Ms. Varsha Nair Chairman and Executive21


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Managing Directorand Chief ExecutiveOfficer

Mr. Sunil Patidar Joint ManagingDirector

Executive

Mr. DamandeepDhinsa

Whole time director Executive

Mr. Arpit Nagar IndependentDirector

Non-Executive

Ms. Varsha Nathani Executive Director Non-Executive

Brief Profile of our Key Managerial Personnel

Ms. Varsha Nair (chairman and managing director) - aged 42, is engineer and master in businessadministration from London school of business. She has an experience of 18 years in theinfrastructure industry.

Mr. Sunil Partidar (joint managing director) aged 42, is bachelor of commerce and master inbusiness administration from UK. He has an experience of 17 years in various industries.

Mr. Damandeep dinsha (Whole time director) aged 39, is engineering background with theexperience of 15 years in the infrastructure industry.

Mr. Arpit Nagar (independent director) Finance & MIS, aged 36 years, is Master of BusinessAdministration in Finance. He takes care of Finance functions of our Company includingcosting, budgeting, banking, credit control and Management Information System (MIS). He hasalso worked with M/s. G.B Laddha & Co. (Chartered Accountants) at Vapi for 8 years.

Ms. Varsha Nathani (executive director) - aged 35 years, is a Science graduate. She has beenassociated with various social and trade activities including President of Rotary Club of Sachin,Surat. she became director of our Company w.e.f. 05.04.2005. She is also director in two other Companies namely, Sudha Dyeing & Printing Mills Pvt. Ltd and Suprabhat Prints Pvt. Ltd.

COMPANY SECRETARYMr.Rakesh Tiwari,Company Secretary,Elements Infrastucture,F. No. 2 0/9 A, Mansarower complex,Bhopal, Madhya PradeshTel.: 0755-2544271, 6451819E-mail: [email protected]

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LEGAL ADVISOR TO THE ISSUEDave & Girish & Co. ,Advocates,1st Floor, Sethna Building,55, Maharishi Karve Marg, Marine Lines

Mumbai 400 002.Tel: 022 - 22062132, 22062192 Fax: 022 - 22085620Contact Person: Ms. Mona BhideE-mail: [email protected]

BANKERS TO THE COMPANYState Bank of India,Industrial Township Branch,AB road, Indore.Tel.: 0731 2410215 Fax: 0731 - 2431373E-mail: [email protected]

Contact Person: Mr. N.K. MishraBank of BarodaSSI Branch,Zone-2 M.P. nagar Bhopal, M.P.Tel.: 0755 2243447 Fax: 0755 - 2242669Contact Person: Mr. R.P. Nanavaty, Sr. Branch Manager Bank of Baroda,Mangaldas Market Branch,Kitchen Garden Lane, 1st Floor, 375/382,Mumbai 400 002.

Tel: 022 - 22071588 Fax: 022 - 22065403E-mail: [email protected] Person: MR. Vijay C Shah

COMPLIANCE OFFICER Mr. Sanjay Agarwal, Manager Accounts & Banking, has been designated as the ComplianceOfficer for this issue. In case of any pre issue, post issue related problems such as non-receipt of letters of allotments/ share certificates/ demats credits/refund orders etc., the investors are

requested to contact the Compliance Officer at:

Mr. Sanjay Agarwal,Manager Accounts & Banking,Elements Infrastructure,F. No. 2 9/7 B, Mansarower complex,Bhopal, Madhya PradeshTel.: 0260 - 2220176, 2220621, 2221177Fax: 0260 2220177

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BROKERS TO THE ISSUEAll members of the recognized Stock Exchanges would be eligible to act as Brokers to the Issue.AUDITORS TO THE COMPANYH.P. Shah AssociatesChartered Accountants,

11, Rajhans, G.I.D.C, Char Rasta, Vasi 396 191.Tel: 0260 - 2425540 Fax: 0260 - 2425540E-mail: [email protected]

CREDIT RATING :-

This being an Issue of Equity Shares, credit rating is not required.

TRUSTEE

This being an Issue of Equity Shares, appointment of Trustee is not required.

APPRAISAL

The project has been appraised by State Bank of India. The required details of the AppraisingEntity are as under.

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State Bank of India,Central Processing Cell,Mid Corporate Group,Ahmedabad Region

UNDERWRITING:-

The issue has been underwritten to the extent Rs. 3360 crorss by the following underwriters asunder:-

Sr. No. Name and Addressof the Underwriter

Date of Agreement AmountUnderwritten (Rs. Incrores)

1. UTI securities1st Floor, DheerajArma, Anant Kanekar Marg, Station Road,

Bandra (East),Mumbai 400 051.Tel: 022 55515801 /55515806 Fax: 022 55023194Website:www.utisel.comEmail:[email protected]

20-August-2010 3360

Total 3360

In the opinion of the Board of Directors (based on a certificate given by the Underwriters), theresources of all the above Mentioned Underwriters are sufficient to enable them to dischargetheir respective underwriting obligations in full. All the Above-mentioned Underwriters areregistered with SEBI under Section 12(1) of the SEBI Act or registered as brokers with theStock Exchange(s).

CAPITAL STRUCTURE

Our Equity Share capital before the Issue and after giving effect to the Issue, as at the date of thisProspectus, is set forth below:

in Rs. (except share data)

Aggregate Aggregate Value atIssue Price

Nominal Value

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A. Authorised Share Capital

1000,00,00,000 Equity Shares of Rs. 10 each 1000,00,00,000

B. Issued, Subscribed and Paid-UpEquity Share Capital before the Issue

40,34,90,000 Equity Shares of Rs. 10 each 403,49,00,000

C. Issue pursuant to this Prospectus84,00,00,000 Equity Shares of Rs. 10 each 840,00,00,00

OUT OF WHICH8,40,00,000 Equity Shares of Rs. 10/- to be allottedto QIBs on competitive basis 84,00,00,000

8,40,00,000 Equity Shares of Rs. 10/- are reservedfor allotment to Permanent Employees (includingWhole-timeDirectors) of the Company on a

competitive basis 84,00,00,000

21,00,00,000 Equity Shares of Rs. 10/- each arereserved for allotment on competitive basis to NIIs 210,00,00,000

D. NET ISSUE TO THE PUBLIC IN TERMSOF THIS PROSPECTUS

46,20,00,00 Equity Shares of Rs. 10/- eachEquity Share 462,00,00,000

E. PAID UP CAPITAL AFTER THE PRESENTISSUE124,34,90,00 Equity shares of Rs. 10/- each 1243, 49,00,000

Notes to Capital Structure:

Details of Increase in Authorized Capital:

SNo. Particulars of Increase Nature of Meeting Date of Meeting

1. Rs. 100 crores Since Incorporation

2. From Rs.1000 Lacs to Rs. 10000 Lacs 10.08.08 EGM

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the actual utilisation of funds earmarked for the above activities, increased fund deployment for aparticular activity will be met from internal accruals of the Company. In case of surplus funds,the same shall be utilised towards General Corporate Purposes.

The details of the proceeds of the Issue are summarised in the table below:

Particulars (in Rs. crores)Gross proceeds of the Issue 9240Issue related expenses 650Net Proceeds of the Issue 8590

Expenses of the IssueThe estimated issue related expenses are as follows:Activity Estimated Expense

(in Rs. crores)

Lead management fee, underwriting and selling commission 440Advertising and marketing expenses 10Printing and stationery 80Others (Monitoring Agent fees, Registrars fee, legal fee, listing fee etc.) 120Total estimated issue expenses 650

Requirement of Funds and Schedule of UtilisationThe break-down of the proposed utilisation of the Net Proceeds excluding general corporatepurpose and the year wisedeployment is as follows:

(in crores)s.no: Particulars FY2011 FY2012 FY2013 Tot

1 Construction and development 2580 4200 1620 8400Of basic infrastructure and theAllied facilities in proposed SEZ

Details of Use of Net Proceeds1. Construction and development of basic infrastructure and the allied facilities in the proposed

SEZ at Element. We plan to develop a SEZ at Element Port and surrounding areas. We havereceived a notification dated April 12, 2006 from the Ministry of Commerce and Industry,Government of India approving the establishment of multi product SEZ over 1800 acres, out of which the Government of India vide its notification dated June 23, 2006 has notified 1800 acresof land and on July 3, 2007, we received a subsequent notification with respect to an additional251.4 hectares of land resulting in a total of 180 acre of land as a SEZ. The entire land area isalready in our possession. As part of our strategy for the proposed SEZ at Element, we plan toundertake land development and construct basic infrastructure and other facilities includingroads, drainage and sewerage, water supply, and boundary fencing and gates to attract businesses

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and industries to the SEZ. We have appointed CPG Consultants India Private Limited, a part of CPG Corporation Pte Limited, Singapore as consultants for development planning and urbandesigning. The proposed SEZ has not been appraised by any bank or financial institution and theproject costs are based on the detailed planning prepared by CPG Consultants India PrivateLimited and our internal estimates.

Cost of Project On the basis of our internal estimates, the proposed development of the SEZ is estimated to costas follows:

S.no: Particulars Amount1 Land and site development 2131.562 Civil Works

Roads 2791.68Drainage & Severage 1680.24Water Supply 1355.40

Boudary Fencing and Gates 134.643 Buildings/ Public Amenities 306.48

We plan to finance the entire project from equity contribution arising from the Net Proceeds of this Issue.

Schedule of Implementation.

We plan to concurrently develop the infrastructure services forming part of the proposed SEZ.The lease of land to users of the proposed SEZ would also commence simultaneously. The

development of the SEZ covering 180 acres of land will be completed by fiscal 2013 Theschedule of implementation for the proposed SEZ development and the infrastructure proposedto be provided there under is estimated to be as follows:

Activity Date of CompletionLand and site development March 2011Civil Works

a. Roads 2011b. Drainage and sewerage February 2011

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c. Water supply January 2011d. Boundary fencing and gates June 2011

Buildings / Public amenities March 2013

(a) Land and Site Development We are already in possession of the 180 acre of land that has been notified by the Government of

India as a Special Economic Zone, of which 180 acres is proposed to be developed. Land andSite development will involve excavation, filling and levelling. The filling and levelling wouldbe done from the dredged material. The levelling height would depend upon the land topography.The proposed ground level of the land filled area will be in the range of 7.5 metres to 9.45 metresChart Datum, i.e. height above mean sea level.

(b) Civil Works(i) Roads

We propose to construct bituminous main roads and internal roads in the proposed SEZ. Themain roads are expected to be four lane roads with a provision for expansion and the internal

roads are expected to have two lanes. The main roads shall have 50.0 metres right of way, 22.0metres carriage way and 2.2 metres median. The internal roads shall have an average 29.3 metresright of way and average of 10.0 metres carriage way. The approximate length of the main roadsand internal roads is 65,000 metres and 76,900 metres respectively.

(ii) Drainage and SewerageThe drainage and sewerage system proposed to be developed in the SEZ is expected to beconstructed adjacent to the roads. As part of such development, we propose to constructconstruction storm water drains and sewers. The storm water drains will comprise of plaincement concrete lining or reinforced cement concrete depending upon the gradient. The costexpected to be incurred in relation to the drainage and sewerage systems also includes cost of a

common effluent treatment plant and sewerage treatment plant. The sewerage treatment planthas been designed for 10 million litres per day for a bio oxygen demand load of 146.1kg/day andthe common effluent treatment plant has been designed for 30 million litres per day for achemical oxygen demand load of 840 kg/day.

(iii) Water SupplyThe proposed water supply system as part of the SEZ is also expected to be adjacent to the roadsand will comprise of pipe network in the area and six elevated storage reservoirs (ESR) andclosed water sumps. The expected total length of the pipeline is 126.5 kilometres. The water

consumption demand has been estimated as 17.4 kilolitres per hectares.

(iv) Boundary Fencing and Gates

The boundary fencing and gates comprise of chain link fencing for demarking the SEZ area fromthe rest of the territory to ensure controlled movement of personnel, goods and vehicular traffic.Gates will be provided at entry points. The main gates would be electrically operated while thesecondary gates would be manually operated.

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(c) Buildings / Public Amenities

The buildings proposed to be constructed by us within the proposed SEZ will compriseadministrative buildings and other buildings such as canteen and service offices. The publicamenities block would comprise administrative buildings, traffic control rooms and other buildings ad measuring approximately 32,000 square metres.

BASIS FOR ISSUE PRICEThe Issue Price has been determined by the Company in consultation with the Book Runners onthe basis of the assessment of market demand for the offered Equity Shares by the book buildingprocess. The face value of the Equity Shares of the Company is Rs.10 each. The EPS and NAVpresented in this section are based on the Face Value of Rs. 10 per equity share.

Qualitative FactorsWe believe the following business strengths allow us to compete successfully in the industry:

Proximity to the mid interior of India and major trade routes which provides us with astrategic position to service the significant population of the landlocked north and middle

regions of India which generates significant traffic Land with back-up area and infrastructure which provides us with sufficient resources

for future expansion, and SEZ advantages Access to rail, road and pipeline network that provides us with a competitive advantage

over competing ports in attracting larger volumes of cargo Strategic arrangements and established customer relationships with certain companies Experienced management team that has demonstrated the ability to manage significant

expansion plans and capital expenditures while maintaining our recent income and profitgrowth

Quantitative

Adjusted Earning Per Share (EPS)2010-11 5.5

Price to Earning Ratio (P/E Ratio) in relation to Issue Price of Rs. 20/-Indusrtry PEHighest 45.57Lowest 9.82Average 23.1

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Comparison with Financial Ratios of Peer Group*

Peer Group Company Period Ended Book Value RONW EPS P/EGourav Infra. March 2005 66.0 9.5 5.4 15.8

Maharaj Infra March2005 74.0 8.8 6.3 12.6Modi Infra March 2005 56.5 18.0 9.2 7.2Jindal Infra March 2005 149.9 19.9 27.0 10.1Bantex Infra December 2004 140.5 14.3 8.3 13.0Akrati Infra March 2005 76.2 11.3 8.0 31.2

STATEMENT OF TAX BENEFITS

Elements Special Economic ZoneMM-28,B- block,1st Floor Mansarovar Complex,Bhopal (M.P.)

Dear Sirs,

Statement of Possible Tax Benefits available to the Company and its shareholders

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We report that the enclosed statement states the possible tax benefits available to the Companyand to the shareholders of the Company under the Income Tax Act, 1961 and Wealth Tax Act,1957, presently in force in India. Several of these benefits are dependent on the Company or itsshareholders fulfilling the conditions prescribed under the relevant provisions of the statute.Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent

upon their fulfilling such conditions, which based on business imperatives the Company faces inthe future, the Company may or may not choose to fulfill. The benefits discussed in the enclosedstatement are not exhaustive. This statement is only intended to provide general information tothe investors and is neither designed nor intended to be a substitute for professional tax advice.In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult his or her own tax consultant with respect to the specific tax implicationsarising out of their participation in the issue.

We do not express any opinion or provide any assurance as to whether:(i) the Company or its shareholders will continue to obtain these benefits in the future; or (ii) the conditions prescribed for availing the benefits have been / would be met with.

The contents of the enclosed statement are based on information, explanations andrepresentations obtained from the Company and on the basis of their understanding of thebusiness activities and operations of the Company.

For Aarti Madan & AssociatesChartered AccountantsPer Varsha Nair Partner Membership No: 82028Place: Bhopal

Date: October 10, 2010

STATEMENT OF TAX BENEFITS

The tax benefits listed below are the possible benefits available under the current tax lawsin India. Several of these benefits are dependent on the Company or its Shareholders

fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of theCompany or its Shareholders to derive the tax benefits is dependent upon fulfilling suchconditions, which based on business imperatives it faces in the future, it may not choose tofulfill.

The following tax benefits shall be available to the Company and the prospective shareholdersunder Direct Tax.

1. To the Company - Under the Income-tax Act, 1961 (the Act)

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General Tax Benefits1.1 Under Section 32 of the Act, the Company can claim depreciation allowance at theprescribed rates on tangible assets such as building, plant and machinery, furniture and fixtures,etc. and intangible assets such as patent, trademark, copyright, know-how, licenses, etc. if acquired after March 31, 1998.

1.2 Under Section 35D of the Act, the Company will be entitled to a deduction equal to 1/5th of the expenditure incurred of the nature specified in the said section, including expenditureincurred on present issue, such as under writing commission, brokerage and other charges, asspecified in the provision, by way of amortization over a period of 5 successive years, beginningwith the previous year in which the business commences, subject to the stipulated limits.

1.3 Under Section 35DD of the Act, the company will be entitled to a deduction equal to 1/5th of the expenditure incurred in connection with Amalgamation of an undertaking by way of amortization over a period of 5 successive years, beginning with the previous year in which theamalgamation or demerger takes place. 1.5 The company is entitled to deduction under section80G of the Act in respect of amounts contributed as donations to various charitable institutions

and funds covered under that section, subject to fulfillment of conditions specified therein.

Special Tax Benefits1.1 The company is eligible for deduction under section 80-IA for a period of 10 consecutiveyears in a block of 15 years starting from the commencement of business. The deduction isequivalent to 100 per cent of profits derived from developing, or operating and maintaining or developing, operating and maintaining any infrastructure facility.Infrastructure facility has been defined to include a port, air port, inland waterway or inland port.

1.2 The company has received approval from the Ministry of Commerce for developing of aSpecial Economic Zone

(SEZ) in the state of Madhya Pradesh. By virtue of said approval the company is eligible for deduction equal to 100 per cent of profits derived from the business of developing the SEZ under section 80IAB of the Act for a period of 10 consecutive assessment years out of a block of 15years beginning from the year in which the SEZ is notified by the Central Government.

1.3 The provision of Minimum Alternative Tax specified in section 115JB of the Act shall notapply on or after April 1, 2005 to the profits and gains derived by the company from anybusiness of developing an SEZ.

1.4 The company being an SEZ developer is not liable to pay Dividend Distribution Tax under the provisions of section 115 O of the Act on any amount declared, distributed or paid by way of

dividends (whether interim or otherwise) on or after the 1st day of April, 2005 out of its incomefrom developing an SEZ.

2. To the Members of the Company Under the Income Tax Act2.1 Resident MembersGeneral Tax Benefits

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a) Under Section 10(34) of the Act, income earned by way of dividend from domestic companyreferred to in Section 115-O of the Act is exempt from income-tax in the hands of theshareholders.

b) Under Section 10(38) of the Act, long term capital gain arising to the shareholder fromtransfer of a long term capital asset being an equity share in the company (i.e. capital asset held

for the period of more than twelve months) entered into in a recognized stock exchange in Indiaand being such a transaction, which is chargeable to Securities Transaction Tax, shall be exemptfrom tax. However, as per Finance Act 2006 long term capital gains of a company shall be takeninto account in computing tax payable under section 115JB.

c) In terms of Section 88E of the Act, the Securities Transaction Tax paid by the shareholder inrespect of the taxable securities transactions entered into in the course of the business would beeligible for rebate from the amount of income-tax on the income chargeable under the headProfits and Gains under Business or Profession arising from taxable securities transactions.

d) As per the provisions of Section 10(23D) of the Act, all mutual funds set up by public sector

banks, public financial institutions or mutual funds registered under the Securities and ExchangeBoard of India (SEBI) or authorized by the Reserve Bank of India are eligible for exemptionfrom income-tax, subject to the conditions specified therein, on their entire income includingincome from investment in the shares of the company.

e) Under Section 54EC of the Act, capital gain arising from transfer of long term capital assets[other than those exempt u/s 10(38)] shall be exempt from tax, subject to the conditions and tothe extent specified therein, if the capital gain are invested within a period of six months from thedate of transfer in the bonds redeemable after three years and issued by

(i) National Highways Authority of India (NHAI) constituted under Section 3 of National

Highways Authority of India Act, 1988 and notified by the Central Government in the OfficialGazette for the purpose of this section;

(ii) Rural Electrification Corporation Limited (RECL), a company formed and registered under the Companies Act, 1956 and notified by the Central Government in the Official Gazette for thepurpose of this section; If only part of the capital gain is so reinvested, the exemption shall beproportionately reduced. However, the amount so exempted shall be chargeable to taxsubsequently, if the new bonds are transferred or converted into money within three years fromthe date of their acquisition.

f) Under Section 54F of the Act, where in the case of an individual or HUF capital gain arise

from transfer of long term assets [other than a residential house and those exempt u/s 10(38) of the Act] then such capital gain, subject to the conditions and to the extent specified therein, willbe exempt if the net sales consideration from such transfer is utilized for purchase of residentialhouse property within a period of one year before or two year after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall beproportionately reduced.

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g) Under Section 111A of the Act, capital gains arising from transfer of short term capital assets,being an equity share in a company which is subject to Securities Transaction Tax will be taxableunder the Act at 10% (plus applicable surcharge and educational cess).

h) Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains[not covered under Section 10(38) of the Act] arising on transfer of shares in the Company, if

shares are held for a period exceeding 12 months, shall be taxed at a rate of 20% (plus applicablesurcharge and educational cess on income-tax) after indexation as provided in the second provisoto Section 48 or at 10% (plus applicable surcharge and educational cess on income-tax) (withoutindexation), at the option of the Shareholders.

Special Tax BenefitsThere are no special tax benefits available to the resident members.2.2 Non Resident Indians/Members other than Foreign Institutional Investors and ForeignVenture Capital Investors

General Tax Benefits

a) By virtue of Section 10(34) of the Act, income earned by way of dividend income from adomestic company referred to in Section 115-O of the Act, is exempt from tax in the hands of therecipients.

b) Under Section 10(38) of the Act, long term capital gain arising to the shareholder fromtransfer of a long term capital asset being an equity share in the company or unit of an equityoriented mutual fund (i.e. capital asset held for the period of more than twelve months) enteredinto in a recognized stock exchange in India and being such a transaction, which is chargeable toSecurities Transaction Tax, shall be exempt from tax.

c) In terms of Section 88E of the Act, the Securities Transaction Tax paid by the shareholder in

respect of the taxable securities transactions entered into in the course of the business would beeligible for rebate from the amount of income-tax on the income chargeable under the headProfits and Gains under Business or Profession arising from taxable securities transactions.

d) Under the first proviso to section 48 of the Act, in case of a non resident, in computing thecapital gains arising from transfer of shares of the company acquired in convertible foreignexchange (as per exchange control regulations), protection is provided from fluctuations in thevalue of rupee in terms of foreign currency in which the original investment was made. Costindexation benefits will not be available in such a case.

e) Under Section 54EC of the Act, capital gain arising from transfer of long term capital assets

[other than those exempt u/s 10(38) of the Act] shall be exempt from tax, subject to theconditions and to the extent specified therein, if the capital gain are invested within a period of six months from the date of transfer in the bonds issued by

(i) National Highways Authority of India (NHAI) constituted under Section 3 of NationalHighways Authority of India Act, 1988 and notified by the Central Government in the OfficialGazette for the purpose of this section;

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(ii) Rural Electrification Corporation Limited (RECL), a company formed and registered under the Companies Act, 1956 and notified by the Central Government in the Official Gazette for thepurpose of this section; and If only part of the capital gain is so reinvested, the exemption shallbe proportionately reduced. However, the amount so exempted shall be chargeable to taxsubsequently, if the new bonds are transferred or converted into money within three years fromthe date of their acquisition.

f) Under Section 54F of the Act, where in the case of an individual or HUF capital gain arisefrom transfer of long term assets [other than a residential house and those exempt u/s 10(38) of the Act] then such capital gain, subject to the conditions and to the extent specified therein, willbe exempt if the net sales consideration from such transfer is utilized for purchase of residentialhouse property within a period of one year before or two year after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. If only a part of the net consideration is so reinvested, the exemption shall beproportionately reduced.

g) Under Section 111A of the Act, capital gains arising from transfer of short term capital assets,

being an equity share in a company which is subject to Securities Transaction Tax will be taxableunder the Act at 10% (plus applicable surcharge and educational cess).

h) Under Section 112 of the Act and other relevant provisions of the Act, long term capital gains[not covered under Section 10(38) of the Act] arising on transfer of shares in the Company, if shares are held for a period exceeding 12 months, shall be taxed at applicable rates.

i) Taxation of Income from investment and Long Term Capital Gains [other than thoseexempt u/s 10(38)]

(i) A non-resident Indian, i.e. an individual being a citizen of India or person of Indian origin has

an option to be governed by the special provisions contained in Chapter XIIA of the Act, i.e.Special Provisions Relating tocertain incomes of Non-Residents.

(ii) Under Section 115E of the Act, where shares in the company are subscribed for inconvertible Foreign Exchange by a non-resident Indian, capital gains arising to the non residenton transfer of shares held for a period exceeding 12 months shall [in cases not covered under Section 10(38) of the Act] be concessionally taxed at a flat rate of 10% (plus applicablesurcharge and educational cess) without indexation benefit but with protection against foreignexchange fluctuation under the first proviso to Section 48 of the Act.

(iii) Under provisions of section 115F of the Act, long term capital gains [not covered under section 10(38) of the Act] arising to a non-resident Indian from the transfer of shares of thecompany subscribed to in convertible Foreign Exchange shall be exempt from income tax if thenet consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption shall be proportionatelyreduced. The amount so exempted shall be chargeable to tax subsequently, if the specified assetsare transferred or converted within three years from the date of their acquisition.

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(iv) Under provisions of Section 115-G of the Act, it shall not be necessary for a non-residentIndian to furnish his return of income if his only source of income is investment income or longterm capital gains or both arising out of assets acquired, purchased or subscribed in convertibleforeign exchange and tax deductible at source has been deducted there from.

(v) Under Section 115-I of the Act, a non resident Indian may elect not to be governed by the

provisions of Chapter XII-A of the Act for any assessment year by furnishing his return of income under section 139 of the Act declaring therein that the provisions of the Chapter shall notapply to him for that assessment year and if he does so the provisions of this Chapter shall notapply to him. In such a case the tax on investment income and long term capital gains would becomputed as per normal provisions of the Act.

Special Tax Benefits

There are no special tax benefits available to the non resident members.

2.3 Foreign Institutional Investors (FIIs)

General Tax Benefits

a) By virtue of Section 10(34) of the Act, income earned by way of dividend income fromanother domestic company referred to in Section 115-O of the Act, are exempt from tax in thehands of the institutional investor.

b) Under Section 10(38) of the Act, long term capital gain arising to the shareholder fromtransfer of a long term capital asset being an equity share in the company (i.e. capital asset heldfor the period of more than twelve months) entered into in a recognized stock exchange in India

and being such a transaction, which is chargeable to Securities Transaction Tax, shall be exemptfrom tax.

c) In terms of Section 88E of the Act, the Securities Transaction Tax paid by the shareholder inrespect of the taxable securities transactions entered into in the course of the business would beeligible for rebate from the amount of income-tax on the income chargeable under the headProfits and Gains under Business or Profession arising from taxable securities transactions.

d) Under Section 111A of the Act, capital gains arising from transfer of short term capital assets,being an equity share in a company which is subject to Securities Transaction Tax will be taxableunder the Act at the rate of 10% (plus applicable surcharge and educational cess).

e) Under Section 115AD capital gain arising on transfer of long term capital assets, being sharesin a company (other than those mentioned in point b) above), are taxed at the rate of 10% (plusapplicable surcharge and education cess). Such capital gains would be computed without givingeffect to the first and second proviso to Section 48 of the Act. In other words, the benefit of indexation, direct or indirect, as mentioned under the two provisos would not be allowed whilecomputing the capital gains.

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(b) Exemption from any duty of customs, under the Customs Act, 1962 or the Customs Tariff Act, 1975 or any other law for the time being in force, on goods exported from, or servicesprovided, from a Special Economic Zone, to any place outside India;

(c) Exemption from any duty of excise, under the Central Excise Act, 1944 or the Central ExciseTariff Act, 1985 or any other law for the time being in force, on goods brought from Domestic

Tariff Area to a Special Economic Zone, to carry on the authorized operations by the developer;

(d) Drawback or such other benefits as may be admissible from time to time on goods brought or services provided from the Domestic Tariff Area into a Special Economic Zone or servicesprovided in a Special Economic Zone by the service providers located outside India to carry onthe authorized operations by the developer;

(e) Exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable servicesprovided to a developer to carry on the authorized operations in a Special Economic Zone;

(f) Exemption from the securities transaction tax leviable under section 98 of the Finance (No. 2)

Act, 2004 in case the taxable securities transactions are entered into by a non-resident throughthe International Financial Services Centre;

(g) Exemption from the levy of taxes on the sale or purchase of goods other than newspapersunder the Central Sales Tax Act, 1956 if such goods are meant to carry on the authorizedoperations by the developer. 6.2.2 As per Rule 12(8) of SEZ Rules, 2006, as a developer, thecompany is allowed to make DTA clearance without any upper limits subject to permission of Specified Officer.

6.2.3 As per Section 3(13) of SEZ Act, 2005, subject to the provisions of this section and theletter of approval granted to a Developer, the Developer may allocate space or built up area or

provide infrastructure services to the approved units in accordance with the agreement enteredinto by him with the entrepreneurs of such Units, purely on commercial basis on mutually agreedterms and conditions. There are no restrictions as to minimum number of units or minimum landarea requirements for allotment of land to units and the developer has full freedom in allocationof developed land to units.

6.2.4 As per Section 7 of the SEZ Act, 2005, any goods or services exported out of, or importedinto, or procured from the Domestic Tariff Area by, -a Developer; shall, subject to such terms,conditions and limitations, as may be prescribed, be exempt from the payment of taxes, duties or cess under all enactments specified in the First Schedule. The company is exempt for payment of taxes and cess payable under Agricultural Produce Cess Act, Oil Industry (Development) Act,

Tobacco Cess Act, Research and Development (R&D) Cess Act, 1986 etc.

6.2.5 In line with Rule 5(5)(c) of SEZ Rules, 2006 the company is allowed to carry ongeneration, transmission and distribution of power within a Special Economic Zone subject tothe provisions of the Electricity Act, 2003 (No. 36 of 2003); 6.2.6 As per Section 14 (2) of theMadhya Pradesh SEZ Act, 2004, the company is allowed to levy user charges or fees as may beapproved by the Development committee for providing infrastructural facilities, amenities suchas Electricity, Water, Waste Treatment plant, Telecom Connectivity and roads etc. Hence thecompany has full freedom to fix the user charges or other fees.

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6.2.7 In line with Section 50(a) of SEZ Act, 2005 and as per Section 21(1) of the MadhyaPradesh SEZ Act, 2004, the company is entitled to exemption from stamp duty and registrationfees payable on transfer of land, exemption from levy of stamp duty and registration fees on loanagreements, credit deeds and mortgages executed by the company, exemption from sales tax,

purchase tax, motor spirit, luxury tax, entertainment tax and other taxes and cess payable on salesand transactions within the entire SEZ. In line with Section 50(a) of SEZ Act, 2005 and as per Section 21(2) and 21(3) of the Madhya Pradesh SEZ Act, 2004, inputs (goods and services)purchased by the company from Domestic Tariff Area will be exempt from sales tax andother taxes under the State law.6.2.8 As per Rule 27(4) of the SEZ Rules, 2006 Company may also source capital goods,

without payment of duty, taxes or cess from a domestic or foreign leasing company, under avalid lease agreement and in such cases Developer shall jointly file documents for import or domestic procurement, as the case may be.

Notes

a) All the above benefits are as per the current tax law and will be available only to the sole/ firstnamed holder in case th shares are held by joint holders.b) In respect of non-residents, taxability of capital gains mentioned above shall be further subjectto any benefits available under the Double Taxation Avoidance Agreement, if any between Indiaand the country in which the non-resident has fiscal domicile.c) In view of the individual nature of tax consequence, each investor is advised to consult his/ her own tax adviser with respect to specific tax consequences of his/ her participation in the scheme.

INDUSTRY OVERVIEW:

The information presented in this section has been obtained from publicly available documentsfrom various sources including industry websites and publications and from Government estimates. Industry websites and publications generally state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although we believeindustry, market and Government data used in this Prospectus is reliable and that website datais as current as practicable, these have not been independently verified.

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Unless otherwise indicated, all financial and statistical data relating to the Indian economy inthe following discussion has been extracted from the RBI Annual Report 2008 and the RBI Macroeconomic and Monetary Developments 2008-09.

India, the worlds largest democracy in terms of population (1.2 billion people), had real GDP ona purchasing power parity basis of approximately US$ 3.3 trillion for calendar year 2008. This

makes it the fifth largest economy by GDP in the world after the European Union, the UnitedStates of America, China and Japan. ( Source: CIA World Factbook) During the last two decades,India has undergone various macroeconomic structural reforms.In recent years, India has experienced rapid economic growth, with GDP increasing at anaverage rate of 8.5% per year from Fiscal year 2004 through Fiscal year 2009, according to theEconomic Survey of India 2009 ( Source: Ministry of Finance, Government of India) . Aninstrumental driver of the economic growth has been attributed to the increase of foreign directinvestment (FDI). The Government of India, or the Government, has taken a number of steps toencourage and facilitate FDI. FDI is now permitted in almost every sector of the economy,including manufacturing, services and infrastructure. For many subsectors, 100% FDI ispermitted through the automatic route, which dispensed with the requirement of prior Foreign

Investment Promotion Board approval. FDI inflows into India have accelerated since Fiscal year 2007 due to regulatory reforms in respect of the real estate sector, better infrastructure and amore vibrant financial sector. To illustrate, from April 2000 through July 2009, FDI inflows inthe housing and real estate sector of India amounted to Rs. 306,750 million. According to theDepartment of Industrial Policy & Promotion Fact Sheet on Foreign Direct Investment fromAugust 1991 to July 2009, FDI inflows into India were US$ 9.0 billion, US$ 22.8 billion, US$34.4 billion and US$ 35.2 billion in Fiscal years 2006, 2007, 2008 and 2009, respectively, andIndia registered a net capital inflow of US$ 12.5 billion, US$ 7.0 billion, US$ 27.3 billion inFiscal years 2006, 2007 and 2008, respectively, and a net capital outflow of US$ 13.9 billion inFiscal year 2009.

Global Financial SituationEconomic activity in both high-income and developing countries fell abruptly in 2008 and in thefirst quarter of 2009. The outbreak of the financial crisis provoked a broad liquidation of investments, substantial loss in wealth worldwide, a tightening of lending conditions, and awidespread increase in economic uncertainty. There was also extreme volatility in stock prices,exchange rates and inflation levels. Indias ability to recover from the global slowdown (and itsown domestic liquidity crunch) has been driven by the countrys large domestic savings(including corporate retained earnings) and private consumption. Further, the Governmentsfiscal polices and the monetary policies of the Reserve Bank of India (RBI) have also played animportant role in the revival of economic growth. In particular, the Government as part of itsfiscal stimulus package took the following initiatives to promote consumption in the economy:

Increased Government expenditure especially on infrastructure Reduced taxes across the board to spur consumption

o Across-the-board cut of 4% in the ad valorem central value-added taxo Reduction in service tax from 12% to 10%o Reduction in excise duty by 2%

Further, the RBI has been following a loose monetary policy which has kept the interest rates at alow level. This has revived consumer demand especially in interest rate sensitive sectors like

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automobiles (both passenger and commercial vehicles) and real estate. Investment in India has,in fact, remained relatively stable despite the global slowdown and has been growing at a ratehigher than that of GDP. The ratio of fixed investment to GDP increased to 32.2% of GDP inFiscal year 2009 from 31.6% in Fiscal year 2008, according to the Economic Survey of India2009 (Ministry of Finance, Government of India). As a result, Indias fiscal deficit increasedfrom 2.7% of GDP in Fiscal year 2008 to 6.2% of GDP in Fiscal year 2009, according to the

Economic Survey of India 2009 (Ministry of Finance, Government of India).

RBI maintains that Indias structural growth opportunities continue to remain strong, given thehigh domestic savings rate, sound financial system, and macroeconomic policy environment.Thus, although urban consumption has slowed as a result of a recent decline in the labor marketand job losses, low export dependence, large rural consumption and employment have all helpedIndia to sustain consumption. Finally, fiscal policy, primarily in the form of reduced interestrates and Government intervention, has helped to maintain private demand, liquidity and short-term rates, thereby reducing the risk of loan losses. Domestic deceleration in demand andpersistent uncertainty in the global conditions, however, operate as the major impediment to aquicker economic recovery. It is believed that strengthening consumer and investor confidence in

India will be necessary in order to sustain growth over the long term. ( Source: Macroeconomicand Monetary Developments: First Quarter Review 2009-10)

The following table sets forth the key comparative indicators of the Indian economy as comparedwith the global economy for the 2008 and 2009 (estimated) and 2010 (estimated).

Infrastructure Development The fast growth of the Indian economy in recent years has placed increasing stress on physical

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infrastructure such as electricity, railways, roads, ports, airports, irrigation, water supply andsanitation, all of which already suffer from a substantial deficit in terms of capacities andefficiencies in their delivery. While there has been some improvement in infrastructuredevelopment in the transport, communication and energy sectors in recent years, there are stillsignificant gaps that need to be bridged. Building on the general consensus that infrastructureinadequacies would constitute a significant constraint in realizing Indias development potential,

an ambitious program of infrastructure investment, involving both the public and private sector,is being implemented for the Eleventh Five Year Plan (2007-08 to 2011-12) which emphasizesbroad-based and inclusive approach to economic growth to improve the quality of life andreducing disparities across regions and communities. Similar policies are being implemented for the Twelfth Five Year Plan (2012-13 to 2017-18). Infrastructure spending targets for theEleventh Five Year Plan were revised from 4.6% to 7.5% of GDP representing an increase of over 140% compared to the Tenth Five Year Plan. The program strengthens and consolidatesrecent infrastructure related initiatives, such as the Bharat Nirman for building ruralinfrastructure, as well as sectoral initiatives, such as the National Highways DevelopmentProgramme (NHDP), the Airport Financing Plan, and the National Maritime DevelopmentProgramme and the Jawaharlal Nehru National Urban Renewal Mission. In order to meet the

intended level of planned infrastructure spending, the Government is encouraging private sector participation through public private partnerships, or PPP projects. Furthermore, states includingMadhya Pradesh, Uttar Pradesh, Bihar, Tamil Nadu, Delhi and the NCR region have proactivelyimplemented measures to foster infrastructure investment.

The following table sets forth a comparison between the Tenth and Eleventh Five Year Plans of planned expenditures for infrastructure initiatives:

The following table sets forth the figures for private participation and other participation for theEleventh

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As of September 2007, India had the second largest road network in the world, aggregating 3.3million kilometres. Globally, it is second only to the United States, which has the largest

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