10 September 2007
CRISIL IPO grade 1/5 assigned to the IPO of
Varun Industries Limited

Proposed public issue of 9,000,000 equity shares at a price of Rs 60 per share aggregating Rs 540 million

CRISIL has assigned a CRISIL IPO Grade "1/5" (pronounced "one on five") to the proposed initial public offer (IPO) of Varun Industries Limited (VIL). This grade indicates that fundamentals of the issue are poor relative to other listed equity securities in India.

In CRISIL's opinion, the grading is constrained by VIL's lack of cogent business and operating strategy in its current business, as well as significant uncertainties associated with the consummation of its plans in new business areas, in most of which it does not have any prior experience and expertise. The grading also reflects the inadequate information available with management on key aspects of business operations. The grading has taken into consideration VIL's status as India's largest exporter of stainless steel utensils, where it aggregates products from many small manufacturers spread across the country to supply to overseas customers.

About the company
VIL, promoted by Kiran Mehta, Kailash Agarwal and Virendra Mehta, received its certificate of incorporation on April 21, 2005. VIL, earlier known as Varun Continental Limited, was incorporated on March 8, 1996 and exported stainless steel houseware and kitchenware, and gems and jewellery. Varun Continental Limited, in turn, took over Varun Exports, the proprietorship concern of Kiran Mehta, on April 10, 1996, which had been in the business of exporting stainless steel utensils.

Currently, the company exports stainless steel houseware and kitchenware, gems and jewellery, and other general merchandise. VIL has set up an in-house manufacturing and warehousing facility at Vasai (E), District Thane. The company has also set up a stainless steel re-rolling mill at Jodhpur.

For the year ended March 2007, VIL recorded a net profit of Rs 196 million, on an operating income of Rs 7,585 million, as compared with a net profit of Rs 144 million on an operating income of Rs 6,076 million for the year ended March 2006.

About CRISIL IPO Grading
CRISIL IPO (Initial Public Offering) Grading is an opinion on the fundamentals of the graded issue that reflects CRISIL's independence and expertise. This opinion is expressed as a relative assessment in relation to other listed equity securities in India. The assessment is based on a grading exercise carried out by industry specialists from CRISIL Research. A CRISIL IPO Grade 5/5 indicates strong fundamentals and a CRISIL IPO Grade 1/5 indicates poor fundamentals. CRISIL IPO Grading reflects its assessment of the graded company's equity fundamentals as distinct from an assessment of debt fundamentals. A CRISIL IPO Grade should not be construed to mean a comment on the price of the graded security nor is it a recommendation to invest or not to invest in the graded security.

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Ajay Dwivedi
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Sudhir Nair
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Phone: +91-22-6691 3526
Email : snair@crisil.com
Client Servicing
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A CRISIL IPO Grading is a one-time assessment and reflects CRISIL's current opinion on the fundamentals of the graded equity issue in relation to other listed equity securities in India. A CRISIL IPO Grading is neither an audit of the issuer by CRISIL nor is it a credit rating. Every CRISIL IPO Grading is based on the information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the grading is based. A CRISIL IPO Grading is not a recommendation to buy / sell or hold the graded instrument; it does not comment on the issue price, future market price or suitability for a particular investor.

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September 10, 2007