Sujana Metal Products Limited 7 =2! 402209 ras2/0s167 eg Oto : 0) 45627055 Srey 80.2067, OA Stam F Sot oes aos Da Pradesh In ‘naa om Date: 25.09, 2009 To, The Department of Corporate Services - CRD, Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers. Dalal Street, ‘Mumbai - 400 001, Dear Sir ‘Sub: Clarifications on the articles in “Deccan Chronicle” and other regional newspapers regarding SMPL & Sujana Group Ref: Scrip Code: 513414 {In continuation to our letter dated 22nd September 2009 and to the discussions had you, please find attached clarifications on the newspaper articles for your kind information and record. Kindly acknowledge the receipt. ‘Thanking you, Yours faithfully, For Sujana Metal Products Limited Shaik Ibraheem ‘Company SecretarySujana ‘Sujana Group of Companies 1 +91 4035 asatesia7 1, Nagarune rs, Panjaguta Foto 25057748 ydorabed 500082, nde Swrsuana.cie Y.S. Chowdary Chairman, Dear Sir, Sujana Metal Products Limited (SMPL) Clarifications _on_the_articles_in_"Decean Chronicle’ _and_other regional newspapers regarding SMPL & Sujana Group With regard to the article published in ‘Deccan Chronicle’ on August 21, 2009, we confirm, after going through our records for the last S years, that the Group did not undertake any business either with NAFED or with Stemeor UK Ltd as stated in the anicle. The Group may have purchased the materials, imported through NAFED/ Stemeor, by some other party. In such case, the liability for payment VAT, if any, ‘will be on the seller and not on the buyer (the Group). Even in the worst case of & Group company being called upon to pay VAT on the transaction, it would work out to not more than Rs.6 lacs for the alleged transaction of 1000 tons of steel scrap ‘mentioned in the article. We confirm that there is no such demand pending on any of the Group companies. With reference to the article published in ‘Deccan Chronicle’ on Sept.2, 2009, we furnish below the questionnaire received from ‘Deccan Chronicle’ on August 31, 2009 and the replies furnished based on factual information, clarifying the position: Qla2, DC: Sujana Metal Products Limited and Sujana Universal Industries in separate replies to show cause notices issued by Commercial Taxes Department mentioned that purchases and sales are notional and that they were shown for purpose of securing book turnover for maintaining working results and to boost up the tumover of the company. The letters were submitted to the CTD in March 2008. The show cause notice pertained to assessment year 2004-2005. Similarly, in a WP 17663 of 2005, the Sujana Metal Products director Mr-Hanumantha Rao submitted a swom affidavit to the court in which it was clearly said the "transactions were nominal ‘wansactions,” Going by these submissions can it be taken that the turnovers submitted by these two groups to various agencies including the SEBI for the particular year as false and fudged? ‘Our Reply Our submissions before the CTD for the year 2004-05 did not include any admission thatthe transactions were notional and were done for booking turnover. We had only stated that all our suppliers are real and identifiable dealers, With regard to W.P.No. 17663/2005, we would like to clarify that the statement ‘that the transactions were ‘nominal transactions’ in the sworn affidavit was made with a different connotation in order to substantiate our stand with regard to levy of tax on second sales exemption, It does not come under false and fudge since it was only a plea before the Court stating that no sales tax is attracted for such transactions, when purchases us well as sales are covered by the same documentary evidence in terms of the guidelines under APGST Act ee ea‘We may further add that both the companies have manufacturing and trading divisions and turnovers in respect of each are separately disclosed in the audited balance sheets as well as in the budgets submitted to the banks. We would like to submit that all our transactions are made from and to real and identifiable, registered dealers and have been covered by proper documentary evidence, including retums submitted to the department. Q3. There was an advertisement in media stating that the company was ready for a public audit. Why is it that the same company is avoiding submission of records to authorities under law and approaching courts seeking @ relict from 1g the records to these agencies? Our Reply: We would like to state that the company never avoided submission of records to statutory authorities under the law, and all records are submitted substantiating our claims. The company had to approach the Appellate Authorities’ Courts only when there were differences in the interpretations of various rules, as compared to the earlier assessment years. Courts have stayed the matters only after consideration of the cases on their merits. These matters are thus presently sub-judice. In order to make the position clear, under the above facts and circumstances, the companies expressed readiness for public audit and the same was reflected in the advertisement.” lt may please be noted that the Deccan Chronicle article twisted the facts by quoting ‘out of context in order to sensationalise the matter. With reference to the recent article in a regional newspaper, we wish to clarify that of the various entities listed therein, only the following are the operating companies of Sujana Group: i, Sujana Universal Industries Limited (SUIL) ji, Sujana Metal Products Limited (SMPL) iii, Sujana Towers Limited (STL) While Sujana Capital Services Ltd and Foster Infin & Trading (P) Ltd are investment companies of the Group, Glade Steel (P) Ltd is a subsidiary of SMPL. AAs you are kindly aware, SUIL and SMPL have been in operation over 21 years and, STL was formed through de-merger of Towers division from SMPL in 2006, SMPL manufactures long steel products like TMT steel bars and a wide range of structural steel. Presently, it has three steel rolling units in Hyderabad, two in Chennai and one in Vizag. Italso has a MS ingot facility at Hyderabad: a ready to use TMT steel plant, by way of forward integration, marketing the value added steel under the brand ‘Smart Stcel’ commenced operations recently near Hyderabad. Presently, SMPL has the widest range of long steel products in the country and has leadership position in the secondary steel sector. SUIL manufactures a wide of domestic appliances under the ‘Appliances Division’ and manufactures ball and taper bearings for OEMs and for replacement market under the ‘LightEngineering Components’ division, It also manufactures castings and other steel products in the castings division; the trading division takes up domestic and International trade. STL manufactures galvanized steel towers for power transmission and telecom sectors and also undertakes tumkey contracts for erecting power transmission lines and telecom towers. The company also has a Cable Division, which manufactures power cables and conductors and Technological Structures Fabrication Division for taking up manufacture of specialized structures in power project erection. SMPL has a large number of customers for their products; the nature of business of these companies is such that some of the large customers (Tier I customers) are dealt with directly by the companies, the requirements of others is met through Tier II customers, numbering over 100, who act as dealers in meeting the demand for the products from smaller customers. The companies listed in the article by a regional newspaper are those of these Tier II category customers. We wish to confirm that Sujana Group has no managerial control or investment interest in these companies and. the relationship is purely business relationship. We may add here that the list of the entities which are controlled by the Group or where the Group or its promoters have investment interest and_all the related transactions are disclosed in the audited balance sheets dated September 30, 2009, It may be seen from the disclosed slatements, that none other than the entities mentioned in the balance sheets is related to the Suiana Group, We wish to confirm further that neither SMPL. nor SUIL or STL have any outstanding ‘or undischarged statutory lability, except the demands which are pending adjudication by various appellate authorities. Particulars of these, which were studied by the Statutory auditors, were also disclosed in the respective balance sheets, With regard to the legal sustainability of the demands of the A.P. commercial taxes dept. on Sales Tax and VAT, which have since been stayed by the AP High Court, we enclose status reports as well as legal opinions obtained in this regard. We wish to highlight that SMPL is managed by a Board consisting of a majority of independent directors of eminence and maintains highest level of corporate governance. The fact that the products of the Group are approved by a large number Of leading customers and have withstood the tests of time, may have rattled the business rivals, who have resorted t0 running motivated campaigns with the support of vested interests in order to malign the Group. SMPL being a listed company, its records are inspected/ audited by the ROC/ Regional office of the Ministry of Corporate Affairs periodically. No major deficiencies were pointed out in the last inspection; minor deficiencies pointed out were corrected during the course of the audit itself: SMPL has been filing regularly, the periodic returns as required for various indirect taxes and these are also audited by the respective dept. periodically. Certificates from independent Company Secretary/ Auditors in respect of the current status with regard to the compliance of company law and statutory liabilities are enclosed. We hope that the above clarifications fully clear any of the doubts created by these misleading articles. We shall be glad to provide any further clarifications in this regard ‘Yours faithfully, Y.S. Chowdary f i :