Dear Shareholders,
 
 So much has happened in your company in the recent past and a lot more
 is happening about which I would like to write to you.
 
 As you know, before the separation from Siel Limited and the
 substantive exit from CDR, our hands were considerably tied for making
 any new investments. Owing to the great paradigm shift in the sugar
 industry, where many other small and big sugar companies made very
 significant investments to enhance their crush capacities and also
 de-risk the company by adding facilities for producing ethanol and
 co-generation of power, your company also has invested about Rs 650
 crores in this effort, These investments were committed when the
 domestic and international sugar companies, all, made several
 assumptions about the future and these have proven to be wildly over
 optimistic.
 
 While the sugar industry was looking extremely rosy a few months ago,
 it is now looking distinctly difficult for at least the next two years.
 In MSL, with the expanded capacity, and the diversification into
 Co-generation of Power and Ethanol, the impact will be somewhat
 lessened. As you can see, despite the significant change in the
 prospects of the sugar industry, political compulsions have caused an
 unwarranted increase in the sugarcane price.
 
 Owing to this difficult situation the company is once again proposing a
 change in the structure to further de-risk the enterprise. We are
 proposing that MSL merge with Siel Ltd, out of which it jus twas
 de-merged. WHY?
 
 1. To balance the cash flows and debt ratios and thereby offer greater
 security to the lenders/investors.
 
 2. The ownership by MSL of Siel Ltd of about 44% will get extinguished
 thereby increasing the value to shareholders.
 
 3. We believe that the merger will be great for our stakeholders
 overtime.
 
 4. Siel Ltd requires about 40 MW of power and MSL will be producing
 about 47 MW of power each season. There may be synergy in supplying
 power from one unit of a company to the other, even if they are in
 different states.
 
 5. The asset base of both the companies gets greatly enhanced.
 
 6. In the future there may be very interesting synergies between the
 Chlorine, the merged company, will produce in Punjab and the alcohol we
 produce in U.P
 
 The economy in India is truly growing at about 8% per annum and the
 prospects for the coming years look extremely attractive. We are
 presently in the downside of the commodity cycle and, inevitably, that
 cycle will have an upside in due course. We will be extremely well
 poised to take advantage of that eventuality. All aspects of the
 economy are growing and many foreign companies are also investing in
 India. As a result too many companies are chasing too few people in the
 available HR environment, thereby bidding up the cost of HR very
 considerably. To overcome this, we have commenced a system of
 assessment, training and development which is going to be the bedrock
 of our H R activities over the coming years. We fully expect that young
 engineers/commercial graduates etc. will go through our own training
 programme and develop the commercial, business, H R and community
 skills which are so integral to the development of our culture.
 
 Wishing you and your family a very Happy and Prosperous New Year. With
 warm regards,
 
 SIDDHARTH SHRIRAM