PUBLIC ANNOUNCEMENT TO THE SHAREHOLDERS OF

THE GANDHIDHAM SPINNING & MANUFACTURIING CO. LIMITED

Regd. Office: Spinning Mills Building, Adipur (Kutch) 370205

This Public Announcement (“PA”) is being issued by Ashika Capital Limited, Manager to the Offer, on behalf of Mr. Parasmal Munilal Jain, Mrs. Kamladevi Parasmal Jain, Mr. Pradeep Parasmal  Jain, Mr. Sandeep Parasmal Jain, Mr. Sukhraj Amarchand Singhvi, Mr. Babulal Amarchand Singhvi, Mr. Ashokkumar Amarchand Singhvi, Mr. Tribhuvan Amarchand Singhvi, Mr. Rameshkumar Amarchand Singhvi, Mr. Arvind Vithaldas Joshi and M/s. Gautam & Company (hereinafter collectively referred to as “Acquirers”) pursuant to Regulation 10 & 12 and in compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto (hereinafter referred to as “Regulations”).

1.      THE OFFER:

a)      The Open Offer is being made by Mr. Parasmal Munilal Jain, Mrs. Kamladevi Parasmal Jain, Mr. Pradeep Parasmal Jain, Mr. Sandeep Parasmal Jain, all being residents of Plot No. 42, Sector-4, Gandhidham (Kutch), Mr. Sukhraj Amarchand Singhvi, Mr. Babulal Amarchand Singhvi, Mr. Ashokkumar Amarchand Singhvi, Mr. Tribhuvan Amarchand Singhvi, Mr. Rameshkumar Amarchand Singhvi, all being residents of Plot No.99-103, Sector No. 2, Gandhidham (Kutch), Mr. Arvind Vithaldas Joshi resident of Bunglow No. 182, Sector No. 4, Gandhidham (Kutch) and M/s. Gautam & Company, a partnership firm having office at “Maitri Bhavan”, Plot No. 18, Sector-8, Gandhidham-Kutch 370201 to the Equity Shareholders of The Gandhidham Spinning & Manufacturiing Co. Limited (hereinafter referred to as “Target Company” or “GSMC”).

b)      The Acquirers have entered into an Agreement dated 19.11.2003 (“Agreement”) with M/s. Sindhu Resettlement Corporation Limited, having registered office at Adipur (Kutch), Gujarat, (hereinafter referred to as the “SRC Ltd.” or "Seller" or “Promoter”) to acquire 32,86,310 equity shares of GSMC of Rs.10/- each representing 98.07% of the equity share capital of GSMC at a price of Rs.12.9924/- per share (“Negotiated Price”) amounting to Rs.4,26,97,050/- payable in cash (“The Acquisition”). Apart from the above, the Acquirers have also agreed to acquire 200000, 9.5% Redeemable Cumulative preference shares of Rs.10/- each (including arrear dividends) at a price of Rs.50/- per share amounting to Rs.1,00,00,000/- and make necessary financial arrangement from their own sources to enable GSMC to repay the unsecured loan of Rs.88,02,950/- to SRC Ltd. payable as on 31.03.2003. The Agreement has been entered into by the Acquirers in pursuance to the successful bid made by them for purchase of the securities of GSMC from SRC Ltd. in response to the notice published in local as well as the national daily newspapers by SRC Ltd. inviting competitive bids for the sale of the aforesaid shares along with the unsecured loan. In response to the negotiations conducted by SRC Ltd., the highest bid was made by M/s. Gautam & Company, a partnership firm and by virtue of this its partners and associates have entered into this Agreement with SRC Ltd.

c)      The Acquirers are now making this Open Offer (“Offer”) to the shareholders of GSMC (other than the parties to the Agreement) to acquire from them upto 64,690 Equity Shares of Rs.10/- each, representing 1.93% of its equity share capital at a price of Rs.13/- per share (“Offer Price”) payable in cash subject to terms and conditions mentioned hereinafter. As per the Annual Report for the year ended 31^st March, 2003, GSMC has Rs.11,290/- as allotment money-in-arrear.

d)      The shares of GSMC are listed on the Bombay Stock Exchange (“BSE”) only. The equity shares of GSMC are infrequently traded in terms of explanation (i) to Regulation 20(5) of the Regulations and therefore the Offer Price has been determined taking into account the following parameters: -

                           i.      The Negotiated price under the agreement is Rs.12.9924/- per share.

                         ii.      The Acquirers have not acquired any equity shares of GSMC during the 26 weeks prior to the date of PA including by way of allotment in a public, rights or preferential issue.

                        iii.      Other parameters as on 31.03.2003 such as Book Value, Earning per share and Return on Networth are all negative.

                       iv.      The P/E multiple of the GSMC considering the Offer Price of Rs.13/- per share works out to infinite. The average industry P/E for the sector in which GSMC operates is 3.0 (Source: Capital Market journal Vol. XVIII/18, November 10-23, 2003, sector-Textiles-Jute & Yarn products.)

There has not been any trading in the shares of the Target Company since the last two years.

The Offer Price of Rs.13/- per equity share of GSMC is therefore justified in terms of Regulation 20(11) of the Regulations.

e)      As on the date of this Public Announcement, the Acquirers do not hold any equity shares of GSMC. The Acquirers have not acquired any shares of the Target Company during the twelve months preceding this Public Announcement.

f)       For the purpose of this Offer, there are no persons acting in concert as per the provisions of Regulations 2(1)(e) of the Regulations.

g)      The Offer is not subject to any minimum level of acceptances from shareholders and is not a conditional Offer.

h)      This is not a competitive bid.

i)        The Acquirers have undertaken to comply with the Regulations and complete the Offer formalities irrespective of the compliance or fulfilment or outcome of the Share Purchase Agreement with the Sellers.

2.      INFORMATION ABOUT THE ACQUIRERS:

a)      Mr. Parasmal Munilal Jain, son of Sri Munilal Jain, aged about 50 years is residing at Plot No. 42, Sector-4, Gandhidham (Kutch). He is having more than 20 years of experience in manufacturing and export of garments and madeups. His networth as on 31/03/2002 as certified by Mr. Gajendra Singh Bolia (Membership No.102561), proprietor of Gajendra Bolia & Co., Chartered Accountants, having office at Office No. 5, 1^st Floor, Vicky Chambers, Plot No. 597, Ward 12/C, Near Police Station, Gandhidham (Kutch), Gujarat-370 201 vide certificate dated 05.11.2003 is Rs.304.31 Lacs.

b)      Mrs. Kamladevi Parasmal Jain, wife of Mr. Paraslal Munilal Jain, aged about 48 years is residing at Plot No. 42, Sector-4, Gandhidham (Kutch). She is having more than 15 years of experience in manufacturing and export of garments and madeups. Her networth as on 31/03/2002 as certified by Mr. Gajendra Singh Bolia (Membership No.102561), proprietor of Gajendra Bolia & Co., Chartered Accountants, having office at Office No. 5, 1^st Floor, Vicky Chambers, Plot No. 597, Ward 12/C, Near Police Station, Gandhidham (Kutch), Gujarat-370 201 vide certificate dated 05.11.2003 is Rs.89.38 Lacs.

c)      Mr. Pradeep Parasmal Jain, son of Mr. Paraslal Munilal Jain, aged about 27 years is residing at Plot No. 42, Sector-4, Gandhidham (Kutch). He is having more than 5 years of experience in manufacturing and export of readymade garments, madeups and wollens. His networth as on 31/03/2002 as certified by Mr. Gajendra Singh Bolia (Membership No.102561), proprietor of Gajendra Bolia & Co., Chartered Accountants, having office at Office No. 5, 1^st Floor, Vicky Chambers, Plot No. 597, Ward 12/C, Near Police Station, Gandhidham (Kutch), Gujarat-370 201 vide certificate dated 05.11.2003 is Rs.152.24 Lacs.

d)      Mr. Sandeep Parasmal Jain, son of Mr. Paraslal Munilal Jain, aged about 21 years is residing at Plot No. 42, Sector-4, Gandhidham (Kutch). He is having more than 3 years of experience in manufacturing and export of garments and madeups. His networth as on 31/03/2002 as certified by Mr. Gajendra Singh Bolia (Membership No.102561), proprietor of Gajendra Bolia & Co., Chartered Accountants, having office at Office No. 5, 1^st Floor, Vicky Chambers, Plot No. 597, Ward 12/C, Near Police Station, Gandhidham (Kutch), Gujarat-370 201 vide certificate dated 05.11.2003 is Rs.84.69 Lacs.

e)      Mr. Sukhraj Amarchand Singhvi, son of Sri Amarchand Kundalmal Singhvi, aged about 54 years, is residing at Plot No.100, Sector No. 2, Gandhidham-Kutch. He is having more than 25 years of experience in various sectors of port related activities such as Shipping, Clearing, Forwarding, Stevedoring, Transportation, Finance, Warehousing, Salt Production etc. His networth as on 31/03/2002 as certified by Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 vide certificate dated 05.11.2003 is Rs.687.07 Lacs.

f)       Mr. Babulal Amarchand Singhvi, son of Sri Amarchand Kundalmal Singhvi, aged about 51 years is residing at Plot No.99, Sector No. 2, Gandhidham-Kutch. He is having more than 20 years of experience in production, trading and export of Salt, Wheat, Rice, Sugar, Soya and allied agri-products. His networth as on 31/03/2002 as certified by Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 vide certificate dated 05.11.2003 is Rs.736.35 Lacs.

g)      Mr. Ashokkumar Amarchand Singhvi, son of Sri Amarchand Kundalmal Singhvi, aged about 43 years is residing at Plot No.103, Sector No. 2, Gandhidham-Kutch. He is having more than 10 years of experience in Production and export of salt and all agri-products. His networth as on 31/03/2002 as certified by Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 vide certificate dated 05.11.2003 is Rs.789.41 Lacs.

h)      Mr. Tribhuvan Amarchand Singhvi, son of Sri Amarchand Kundalmal Singhvi, aged about 38 years is residing at Plot No.101, Sector No. 2, Gandhidham-Kutch. He is having more than 15 years of experience in Accounts, Finance, Legal and Taxation matters. His networth as on 31/03/2002 as certified by Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 vide certificate dated 05.11.2003 is Rs.193.24 Lacs.

i)        Mr. Rameshkumar Amarchand Singhvi, son of Sri Amarchand Kundalmal Singhvi, aged about 41 years is residing at Plot No.102, Sector No. 2, Gandhidham-Kutch. He is having more than 15 years of experience in Transportation, Stevedoring and Marine related activities. His networth as on 31/03/2002 as certified by Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 vide certificate dated 05.11.2003 is Rs.780.58 Lacs.

j)        Mr. Arvind Vithaldas Joshi, son of Sri Vithaldas Gaurishankar Joshi, aged about 58 years is residing at Bunglow No.182, Sector No. 4, Gandhidham-Kutch. He is having more than 25 years of experience in Shipping, Clearing, Forwarding, Stevedoring, Transportation, Finance, Warehousing, Salt Production etc. His networth as on 31/03/2002 as certified by Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 vide certificate dated 05.11.2003 is Rs 2385.12 Lacs.

k)      M/s. Gautam & Company is a partnership firm having office at “Maitri Bhavan”, Plot No. 18, Sector-08, Gandhidham-Kutch 370 201. Mr. Parasmal Munilal Jain and Mr. Sukhraj Amarchand. Singhvi are the partners of the firm. The firm has been formed with the sole objective of acquiring equity shares of GSMC and repayment of unsecured loan to SRC Ltd. Its networth as on 13/11/2003 as certified by Mr. Gajendra Singh Bolia (Membership No.102561), proprietor of Gajendra Bolia & Co., Chartered Accountants, having office at Office No. 5, 1^st Floor, Vicky Chambers, Plot No. 597, Ward 12/C, Near Police Station, Gandhidham (Kutch), Gujarat-370 201 vide certificate dated 13.11.2003 is Rs.8.14 Lacs.

3.      INFORMATION ABOUT THE TARGET COMPANY:

a)      GSMC having its registered office at Spinning Mills Building, Adipur (Kutch)-370205 was incorporated under the Companies Act, 1956, on December 21, 1962.

b)      As on the date of this Public Announcement, the paid-up share capital of GSMC is Rs. 3,54,98,710/- comprising of 33,51,000 Equity Shares of Rs.10/- each and 200000, 9.5% Redeemable Cumulative Preference Shares of Rs.10/- each. The Company has allotment money-in-arrear of Rs.11,290/- as on date. Out of the present equity share capital, 30,00,000 equity shares of Rs.10/- each at par were allotted to SRC Ltd. on 17/11/2003 pursuant to the A.I.F.R. order dated 17/09/2000 by way of conversion of loan of Rs.3 crores into fully paid up equity shares.

c)      GSMC is presently not carrying on any business activity.

d)      The Equity Shares of GSMC are listed at the Bombay Stock Exchange only.

e)      As per the audited Accounts for the year ended 31.03.2003, the total income and net loss of GSMC was Rs.10 lacs and Rs.0.13 lacs respectively. The Networth, Book Value per share, Earning per share and Return on Networth for the year ended 31/03/2003 are all negative. 

f)       As per the available information, GSMC has complied with the provisions of Chapter II of the Regulations by participating in the SEBI Regularization Scheme, 2002.

4.      REASONS FOR THE OFFER AND FUTURE PLANS ABOUT TARGET COMPANY:

a)      This Offer has been made pursuant to Regulation 10 and 12 and other provisions of Chapter III and in compliance with the Regulations.

b)      As the promoters of GSMC are not in a position to turnaround the Company, they have decided to sell their controlling interest to the Acquirers who emerged as successful bidder for acquiring the stake of the Promoter. The Acquirers intend to take control over GSMC through acquisition of these shares and have plans to revive the business operations of the Company. They have also plans to develop and construct commercial buildings and residential colonies on the vacant landed properties of GSMC.

c)      The Acquirers do not have plans to dispose off or otherwise encumber any assets of GSMC in the next two years except in the ordinary course of business and except to the extent required for the purpose of restructuring and/or rationalization of assets, investments, liabilities or otherwise of GSMC.

d)      The Acquirers shall not sell, dispose of or otherwise encumber any substantial assets of GSMC except with the prior approval of the shareholders.

5.      STATUTORY APPROVALS/ OTHER APPROVALS REQUIRED FOR THE OFFER:

As on the date of this Public Announcement no approvals, statutory or otherwise, are required under the Companies Act, 1956, Monopolies and Restrictive Trade Practices Act, 1999, the Foreign Exchange Management Act, 1999 and/or any other applicable laws and from any bank and/or financial institutions for the said acquisition.

6.      DELISTING OPTION TO THE ACQUIRERS IN TERMS OF REGULATION 21(3):

Assuming full acceptance of the Offer, the post offer equity share capital with the public in the Target Company would be nil. The Acquirers however undertake to buy out the outstanding shares remaining with the shareholders, if any, after this Offer in accordance with the SEBI (Delisting of Securities) Guidelines, 2003.

7.      FINANCIAL ARRANGEMENTS:

a)      The Acquirers have adequate financial resources and have made firm financial arrangement for the implementation of the Offer in full out of their own sources / networth and no borrowings from any bank and/or financial institutions or foreign sources is envisaged. Mr. M. B. Sorathia (Membership No.36992), proprietor of M. B. Sorathia & Co., Chartered Accountants, having office at 21, Ajanta Commercial Centre, Near Hotel President, Gandhidham (Kutch) 370 201 has certified vide its letter dated 05.11.2003 that sufficient resources are available with the Acquirers for fulfilling the obligations under this “Offer” in full.

b)      The total fund requirement for the Offer is Rs.8,40,970/-. In accordance with Regulation 28 of the Regulations, the Acquirers have opened an Escrow account in Tamilnad Mercantile Bank Limited, 58D, N. S. Road, Kolkata-700 001 in the form of a fixed deposit of Rs.2,15,000/- being more than 25% of the total consideration payable to shareholders under the Offer.

c)      The Manager to the Offer, Ashika Capital Limited has been duly authorised by the Acquirers to operate & realize the value of Escrow Account in terms of the Regulations.

d)      The Manager to the Offer confirms that the firm arrangement for the funds and money for payment through verifiable means are in place to fulfill the Offer obligations.

8.      OTHER TERMS OF THE OFFER:

a)      The Letter of Offer (“LO”) together with the Form of Acceptance cum Acknowledgement will be mailed to all those shareholders of GSMC (other than parties to the agreement) whose name appear on the Register of Members of GSMC at the close of business hours on 25.11.2003 (the “Specified Date”).

b)      Persons who are shareholders of GSMC but are not registered or who have sent their shares for transfer or shareholders who have not received the Letter of Offer and who wish to accept the Offer should send their application in writing on plain paper with the following information:

Name & address of the first holder, Name(s) & address(s) of joint holders(s) if any, Regd. Folio No., Share Certificate No., Distinctive Nos., No of Shares offered. The said application should be sent to the Registrar to the Offer.  Alternatively, shareholders who have not received the Letter of Offer & Form of Acceptance may obtain a copy of the same (on providing suitable documentary evidence like folio number, share certificate number, distinctive numbers etc.) from Registrar to the Offer.

c)      All owners of shares, registered or unregistered, are eligible to participate in the Offer. The Offer is made to all the remaining shareholders except the Acquirers and the Sellers. Unregistered shareholders / owners of shares who have sent shares for transfer should send to the Registrar to the Offer the following documents as applicable to them along with the acceptance cum acknowledgement: (a) Original share certificate(s), (b) Original broker contract note, (c) Valid share transfer form(s) as received from the market. No indemnity is required from unregistered shareholders.

d)      Shareholders who wish to accept the Offer and tender their Equity Shares, will be required to send their  (i) duly signed Form of Acceptance, (ii) original share certificate(s), (iii) duly signed and executed transfer deed(s) and other documents to the Registrar to the Offer, in accordance with the instructions specified in the Letter of Offer and on the Form of Acceptance.

e)      The payment for the acquisition of the shares will be made by the Acquirers in cash through a crossed Demand Draft/Pay Order, to the equity shareholders of GSMC whose equity share certificates and other documents are found in order and accepted, within 30 days from the date of closure of the Offer.

f)       The Registrar to the Offer will hold in trust the share certificates, Form of Acceptance cum Acknowledgement, if any, and the transfer form(s) on behalf of the shareholders of GSMC who have accepted the Offer, till the cheques / drafts for the consideration and / or the unaccepted shares / share certificates are despatched / returned.

g)      In terms of Regulation 22(5A), shareholders shall have the option to withdraw acceptance tendered upto three working days prior to the date of closure of the Offer by submitting the documents as specified below, so as to reach the Registrar to the Offer. The withdrawal can be exercised by submitting Form of Withdrawal enclosed with Letter of Offer. In case of non-receipt of form of withdrawal, the withdrawal can be exercised by making plain paper application alongwith the details viz. Name, Address, Distinctive nos., Folio no., No. of equity shares tendered.

h)      None of the shares of GSMC are in demat mode as the Company has not till date established connectivity with both National Securities Depository Limited and Central Depository Services (India) Ltd. The marketable lot of shares of GSMC is fifty.

i)        The Acquirers undertake to pay interest pursuant to Regulation 22(12) to the shareholders for the delay, if any, in payment of consideration.

j)        A schedule of some of the major activities in respect of the Offer is given below:

9. GENERAL:

a)      Shareholders who have accepted the Offer by tendering the requisite documents, in terms of the Public Announcement / Letter of Offer, can withdraw the same upto 05.02.2004 i.e. three working days prior to the date of Closure of the Offer.

b)      If there is any upward revision in the Offer Price upto seven working days prior to the closure of the Offer i.e. 30.01.2004 or withdrawal of the Offer, the same would be informed by way of PA in the same newspapers where this PA appears and the revised Price would be payable to all the shareholders who have tendered their shares any time during the Offer.

c)      The Acquirers, the Sellers and the Target Company have not been prohibited by SEBI from dealing in securities, in terms of the direction issued u/s 11B of the SEBI Act or under any other regulations made under the SEBI Act.

d)      If there is a competitive bid:

¨       The Open Offers under all the subsisting bids shall close on the same day.

¨       As the Offer price can not be revised during 7 working days prior to the closing date of the Offers / bids, it would therefore be in the interest of shareholders to wait till the commencement of that period to know the final Offer price of each bid and tender their acceptance accordingly.

e)      There is no non-compete agreement.

f)       Pursuant to Regulation 13 of the Regulations, the Acquirers have appointed Ashika Capital Limited, Kolkata, as the Manager to the Offer.

g)      Niche Technologies Pvt. Ltd. of 71, B. R. B.B. Road, D-511, Bagree Market, Kolkata – 700 001, Tel: (033) 2235-7271, Fax: (033) 2215-6823, E-mail:

nichetech@vsnl.net

h)      The Acquirers, jointly and severally accept full responsibility for the information contained in this Public Announcement and also for their obligations as laid down in the Regulations.

i)        This PA will be available on SEBI's website at www.sebi.gov.in. Eligible persons to the Offer may also download a copy of the LO along with Form of Acceptance and Form of Withdrawal which will also be available on the SEBI's website from the Offer opening date i.e. 12.01.2004 and apply in the same.

j)        For further details, please refer to the LO & Acceptance Form.

Issued by Manager to the Offer on behalf of the Acquirers:

Place: Kolkata

Date: 25.11.2003