PRESS RELEASE

Jessop: Rights issue planned for the Phoenix to soar higher

Kolkata, 22 September 2005: After turning Jessop & Co around, the Ruia Group is taking the much-needed initiative to turn it into a vibrant growth engine by infusing fresh capital. A proposal to issue shares amounting Rs 50 crore to the existing shareholders of the company has been approved at the Board meeting of Jessop & Co on Wednesday, 21 September 2005.

Jessop, under the management control of the Ruia Group since 29 August 2003, made a Net Profit Rs 4.82 crore for FY 2004-05 and the first quarter of the current fiscal too witnessed an impressive growth in business. The company moving in black after a lapse of more than 15 years, however is still burdened with accumulated losses of Rs 118 crore. A financial restructuring of the company became imperative for approaching banks and financial institutions for an unhindered growth process with adequate working capital and improved liquidity.

The exercise started with the reduction of Jessop’s paid-up capital. With the consent of the Board for Industrial and Financial Reconstruction (BIFR), the face value of the shares of the company has already been lowered from Rs 10 to Re 1, reducing the paid-up capital of the company from Rs 95 crore to Rs 9.5 crore. This has effectively set-off Rs 85.5 crore from the accumulated losses of the company. With contribution of Rs 50 crore in the form of 50 crore rights shares of Re1 each, the paid-up capital of the company will rise to Rs 59.5 crore and the networth of the company will turn positive. This will also be in compliance with BIFR’s order of infusing fresh capital in the company to ensure its vitality.

Commenting on the development and referring to the Phoenix, Jessop’s symbol for over two centuries, Mr P K Ruia, Chairman, Jessop & Co Ltd, observed: “Turning around Jessop was my first target and the next is take-off. I have every reason to believe that henceforth the phoenix will soar higher and higher.” He added: “At the time of take-over I had promised that I’d make Jessop’s networth positive by 2006. Today I am happy indeed that I have lived up to my words.”

For any clarification, please call: Mr Dhrubajyoti Nandi, GM: Corp Comm, 98310 56023