BUY-BACK OF SHARES

DRAFT LETTER OF OFFER

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This Letter of Offer is being sent to you as a shareholder of the Company on the Specified date (i.e.5^th October, 2001). For any clarification / help on the subject, investors are advised to contact the Manager to the offer/or the Compliance Officer of the Company.

Offer to buy back upto 7,26,525 fully paid equity shares of face value Rs. 10/- each representing 25% of the issued, subscribed and paid-up equity share capital of RAAJRATNA METAL INDUSTRIES LIMITED at Rs. 80/- (Rupees Eighty Only) per Equity Share through Tender Offer on proportionate basis in accordance with the Companies Act, 1956 as amended and the Securities & Exchange Board of India (Buy-back of Securities) Regulations, 1998

RAAJRATNA METAL INDUSTRIES LIMITED

Rregistered office: 11, Sona Roopa, Opp. Lal Bunglow,

Navrangpura, Ahmedabad – 380 006

Telephone No.: (079) 7543681 Fax No.: 079-7543085

The Procedure for Acceptance of this Offer is set out on page no. 12 of this Letter of Offer. A Tender / Offer Form is enclosed with this Letter of Offer. The Form with relevant enclosures should be despatched / delivered so as to reach before the close of business hours of the respective Collection Centres on or before November 5, 2001.

MANAGER TO THE OFFER REGISTRAR TO THE OFFER

G S F S Caps GSFS Capital and Securities Limited
84, Eighth Floor, City Centre	The Company has in-house
Near Swastik Char Rasta	Share Department
Off C.G.Road, Navrangpura
Ahmedabad – 380 009.
Phone : (079) 6447181 – 82 – 83
Fax : (079) – 6561563

OFFER OPENS ON 15^th October, 2001 : Monday

OFFER CLOSES ON 5^th November, 2001 : Monday

INDEX

SR No.	CONTENTS	Page No.
I	Disclaimer Clause	3
II	Details of Offer	3
III	Proposed Time Table	4
IV	Specified Date	4
V	Authority for Offer of Buy Back	4
VI	Disclosure of Material Facts	4
VII	Necessity for Buy Back	5
VIII	Process adopted for the Buy Back	6
IX	Maximum Investment under Buy Back	6
X	Means of Finance for the Buy Back of Shares	6
XI	Information about the Company	6
XII	Financial Information	8
XIII	Details of Escrow Account	9
XIV	Listing Details and Stock Market Data	9
XV	Present Capital Structure	10
XVI	Share Holding Pattern	11
XVII	Aggregate Shareholding of the Promoter Group	11
XVIII	Aggregate No. of Shares purchased or sold by Promoter Group	11
XIX	Management Discussion	11
XX	Statutory Approval	11
XXI	Interest of the Promoters / Directors	12
XXII	Notes on Taxation	12
XXIII	Procedure for Acceptance and Settlement	12
XXIV	Compliance Officer and Investor Service Centre	14
XXV	Remedies Available to the Investors	14
XXVI	Declaration of Directors of the Company	14
XXVII	Annexure to the declaration of Board of Directors - Auditor Report	15
XXVIII	Material Documents For Inspection	15
	Tender / Offer Form	17

I. DISCLAIMER CLAUSE:

As required, a copy of this Letter of Offer has been submitted to Securities and Exchange Board of India. It is to be distinctly understood that submission of letter of offer to SEBI should not in any way be deemed or construed that the same has been cleared or approved by SEBI. SEBI dose not take any responsibility either for the correctness of the statements made or opinions expressed in the letter of offer. The Merchant Banker, GSFS Capital and Securities Limited has certified that the disclosures made in the letter of offer are generally adequate and are in conformity with SEBI (Buy Back of Securities) Regulations, 1998. This requirement is to facilitate investors to take an informed decision as to the acceptance of the offer.

It should also be clearly understood that while the Company is primarily responsible for the correctness, adequacy and disclosure of all relevant information in the letter of offer, the Merchant Banker is expected to exercise Due Diligence to ensure that the Company discharges its responsibility adequately in this behalf and towards this purpose, the Merchant Banker GSFS Capital and Securities Limited has furnished to SEBI a Due Diligence Certificate dated 5^th September, 2001 in accordance with SEBI (Buyback of Securities) Regulation 1998 which reads as follows:

We have examined various documents and other materials more particularly referred to in the enclosed draft letter of offer pertaining to the said buy back:

On the basis of such examination and the discussions with the Company, its directors and other officers, other agencies, independent verification of the statements concerning the subjects of the offer, the contents of the documents mentioned in the annexure and other papers furnished by the Company, we confirm that:

· The draft letter of offer forwarded to SEBI is in conformity with the documents, materials and papers relevant to the buyback offer;

· All the legal requirements connected with the said offer as also the guidelines, instructions, issued by the government, SEBI and any other competent authority in this behalf have been duly complied with; and

· The disclosures in the Draft letter of offer are true, fair and adequate to enable the members of the company to make a well informed decision in respect of the captioned buyback offer.

The filing of letter of offer does not, however, absolve the company form any liabilities under Section 77A, Section 77AA and 77B of the Companies (Amendment) Ordinance, 1998 or from the requirement of obtaining such statutory or other clearances as may be required for the purpose of the proposed issue. SEBI, further reserves the right to take up, at any point of time, with the Merchant Banker any irregularities or lapses in letter of offer.

II. DETAILS OF THE OFFER:

1. At present Total Number of Shares of Raajratna Metal Industries Limited is 29,06,100 Equity Shares of Rs. 10/- each consisting of 79.72 % of the equity being held by promoters, relatives, friends and associates and balance 20.28 % by the public.

2. The Company proposes to buy-back up to 7,26,525 fully paid up equity shares of face value of Rs. 10/- each, through “Tender Offer” from shareholders of the Company at a price of Rs. 80/- per equity share representing 25% of the paid up equity capital of the Company.

3. The total number of shares i.e., 7,26,525 fully paid up equity shares offered by the Company to the shareholders is representing 25 % of the paid up equity capital of the Company which is 9.92% of paid up capital and free reserves of the Company as on 31.03.2001.

The Company will restrict the buy back of Equity shares to a maximum number of 7,26,525 equity shares on proportionate basis i.e., in case the number of shares offered by the shareholders is more than the total number of shares to be bought back by the Company, the acceptances per share holder shall be equal to the acceptances tendered by the shareholder divided by the total acceptances received and multiplied by the total number of shares to be bought back. The acceptances will be restricted to the whole number so as to avoid the fraction of shares.

III. PROPOSED TIME TABLE FROM OPENING OF THE OFFER TILL THE EXTINGUISHMENT OF THE CERTIFICATES.

Sr.No	Activity	Date
1	Date of Board Meeting for considering the proposal of Buy Back	30.06.2001
2	Date of Annual General Meeting for approval of the proposal of the Buy Back of shares.	31.08.2001
3	Date of opening of Escrow Account	01.09.2001
4	Date of Depositing the amount in Escrow Account	06.11.2001
5	Date of Public Announcement	03.09.2001
6	Date of Opening of Offer	15.10.2001
7	Closure of the Offer	05.11.2001
8	Date of Payment to Shareholders	23.11.2001
9	Date of Extinguishment of Certificate	24.11.2001

IV. Specified Date: 5^th October, 2001.

V. AUTHORITY FOR THE OFFER OF BUY-BACK:

The present buy-back of Equity Shares of the Company has been authorized by the Shareholders through Special Resolution under section 77 (A) (2) of the Companies Act, 1956 (hereinafter referred to as the ‘Act’) passed at the Annual General Meeting of the Company held on 31^st August, 2001 copies of which have been filed with Registrar of Companies-Gujarat, Stock Exchanges at Mumbai & at Ahmedabad and Securities Exchange Board of India.

VI. DISCLOSURE OF MATERIAL FACT:

Explanatory Statement pursuant to provisions of Section 173(2) of the Companies Act, 1956.

Item No. 5

1. The paid up share capital of the Company is Rs. 2,90,61,000/- consisting of 29,06,100 equity shares of Rs. 10/- each fully paid up, out of which 20.28% is held by public. The equity shares of the Company are listed on the Ahmedabad and Mumbai Stock Exchanges. The shares of the Company are not frequently traded. As an investors service and with a view to provide an exit route to the shareholders, it is felt advisable to buy back the shares from the public.

2. The Board of Directors, in its meeting held on 30.06.2001 approved the buy back of fully paid up equity shares not exceeding 7,26,525 equity shares through tender offer at price not exceeding Rs. 80/- per share out of the free reserves and / or share premium account. The amount to be invested for buy back shall not exceed Rs. 581.22 lacs.

3. The last trading of the equity shares of the Company at Mumbai stock exchange was @ Rs. 51/- per share in September, 2000. It is therefore decided to give fair opportunity to the Shareholders of the Company and to buy back the fully paid up equity shares @ Rs. 80/- per share.

4. The proposed buy back of equity shares is expected to be completed within 12 months from the date of passing this resolution.

5. The aggregate shareholding of the promoters and directors is 23,16,800 equity shares. They have neither purchased nor sold any shares during the preceding six months.

6. The buy back of shares shall be as under:

i. Not exceeding 5,89,300 Equity shares (20.28% of paid up capital) from the public.

ii. Not exceeding 1,37,225 Equity Shares (4.72% of paid up capital) from the promoters and Directors.

These shares have been acquired by them on various dates prior to Company becoming a listed Company at Rs. 10/- per share.

If SEBI, Stock Exchange or any other competent authority stipulates that the public holding after completion of the buy back should not be less than the minimum required as per the Securities Contract (Regulation) Act or Securities Contract (Regulation) Rules or listing agreement or the provisions of any other Act or Regulations, the Company shall buy back the entire 20.28% of the public holding.

7. It is confirmed that there are no defaults subsisting in repayment of term loans to any financial institutions or banks. The Company has neither issued debentures / preference shares nor accepted any deposits.

8.