Shirdidrhp

Draft Red Herring Prospectus ________________________________________________________________________________________________________________
(Originally Incorporated as Shirdi International Engineers Private Limited on 15th December 1993. The name of the company was changed to Shirdi Industries Private Limited on 9th May 1997, and a fresh certificate of incorporation was obtained. The Company was converted into a Public Limited Company and the name was changed to Shirdi Industries Limited vide certificate of change of name dated 12th June, 1997) Registered & Corporate Office: A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai 400028 (The Registered Office of the Company was changed from 602, Vandana Apartments, Malvani, Marve Road, Malad (West), Mumbai 400 095 to the present address with effect from June 13, 1997) Tel: 022 24318550, Fax: 022 24372200, Website: www.asisindia.com Contact Person: Mr.K.P.Joshi, Compliance officer, Tel: 022 24364520, E-mail: investors@asisindia.com PUBLIC ISSUE OF 65,00,000 EQUITY SHARES OF RS. 10/- EACH ISSUED FOR CASH AT A PREMIUM OF RS. [] PER EQUITY SHARE (PRICE OF RS. [] PER EQUITY SHARE) AGGREGATING TO RS. [] LAKHS (THE ISSUE) BY SHIRDI INDUSTRIES LIMITED (THE COMPANY OR ISSUER). THE ISSUE WOULD CONSTITUTE 26.06% OF THE FULLY DILUTED POST ISSUE PAID UP SHARE CAPITAL OF THE COMPANY. PRICE BAND: Rs. [] to Rs. [] PER EQUITY SHARE OF FACE VALUE Rs. 10 THE ISSUE PRICE IS [] TIMES OF THE FACE VALUE AT THE LOWER END OF THE PRICE BAND AND [] TIMES OF THE FACE VALUE AT THE HIGHER END OF THE PRICE BAND In case of revision in the Price Band, the Bidding Period/ Issue Period will be extended for three additional days after revision of the Price Band subject to the Bidding Period/ Issue Period not exceeding 10 working days. Any revision in the price band and the revised Bidding Period, if applicable, will be widely disseminated by notification to Bombay Stock Exchange Limited and National Stock Exchange of India Limited, by issuing a press release and also by indicating the change on the websites of the Book Running Lead Managers and at the terminals of the syndicate. The issue is being made through the 100% book building process where upto 50% of the Issue Size shall be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs). 5% of the QIB Portion shall be available for allocation to Mutual Funds only and the remaining QIB Portion shall be available for allocation to the QIB Bidders including Mutual Funds, subject to valid Bids being received at or above the Issue Price. Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the issue shall be available for allocation on a proportionate basis to Retail Individual Bidders subject to valid Bids being received at or above the Issue Price. RISK IN RELATION TO THE FIRST ISSUE TO THE PUBLIC This being the first issue of the Equity Shares of Shirdi industries Limited (the Company), there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares of the Company is Rs. 10/- per share and the Issue Price is [] times of the face value at the lower price band and [] times of the face value at the higher price band. The Issue Price (as has been determined and justified by the Book Running Lead Manager and the Company as stated herein under the paragraph Basis of Issue Price) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and / or sustained trading in the Equity Shares of the Company or regarding the price at which the Equity Shares will be traded after listing GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Issue. For taking an investment decision, investors must rely on their own examination of the Company and the Issue including the risks involved. The Equity Shares offered in the Issue have not been recommended or approved by the Securities and Exchange Board of India (SEBI), nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited to the section titled Risk Factors beginning on page iii of this Draft Red Herring Prospectus ISSUERS ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Red Herring Prospectus contains all information with regard to the Company and the Issue, which is material in the context of the Issue, that the information contained in this Draft Red Herring Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The Equity Shares offered through this Draft Red Herring Prospectus are proposed to be listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE). The in-principle approval of NSE and the BSE for the listing of our Equity Shares have been received pursuant to letters dated [] and [], respectively. BSE shall be the Designated Stock Exchange
SHIRDI INDUSTRIES LIMITED
BOOK RUNNING LEAD MANAGER

Allianz Securities Limited 33, Vaswani Mansion, 6th Floor, Dinshaw Vachha Road, Churchgate, Mumbai 400 020 Phone: 022-22870580 Fax: 022-22870581 Email: shirdi@aslfinancial.com Website: www.aslfinancial.com Contact Person: Ms. Nitasha Rathod BIDS/ISSUE OPENS ON: [] 2006 1
REGISTRARS TO THE ISSUE

INTIME SPECTRUM REGISTRY LIMITED C-13 Pannalal Silk Mills Compound, LBS Marg, Bhandup West, Mumbai 400078 Tel: +91 22 555491-94 Fax: +91 22 555499 E-mail: shirdiipo@intimespectrum.com Website: www.intimespectrum.com Contact person: Mr. Vishwas Attvar BIDS/ISSUE CLOSES ON: [] 2006
ISSUE PROGRAMME
TABLE OF CONTENTS PAGE NO. SECTION I: GENERAL DEFINITIONS, ABBREVIATIONS & TECHNICAL TERMS SECTION II: RISK FACTORS CERTAIN CONVENTIONS; USE OF MARKET DATA FORWARD LOOKING STATEMENTS RISK FACTORS SECTION III: INTRODUCTION SUMMARY SUMMARY OF FINANCIAL/OPERATING DATA THE ISSUE GENERAL INFORMATION CAPITAL STRUCTURE OF THE COMPANY OBJECTS OF THE ISSUE BASIS FOR ISSUE PRICE STATEMENT OF TAX BENEFITS SECTION IV: ABOUT THE COMPANY INDUSTRY OVERVIEW OUR BUSINESS REGULATIONS AND POLICIES OUR HISTORY AND CERTAIN CORPORATE MATTERS OUR MANAGEMENT OUR PROMOTERS PROMOTER GROUP COMPANIES CURRENCY OF PRESENTATION RELATED PARTY TRANSACTIONS DIVIDEND POLICY SECTION V: FINANCIAL INFORMATION OF THE COMPANY FINANCIAL STATEMENTS MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SECTION VI: LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS GOVERNMENT APPROVALS SECTION VII: OTHER REGULATORY AND STATUTORY DISCLOSURES SECTION VIII: ISSUE RELATED INFORMATION TERMS OF THE ISSUE ISSUE STRUCTURE ISSUE PROCEDURE SECTION IX: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY SECTION X: INSPECTION MATERIAL CONTRACTS AND DOCUMENTS FOR b i ii iii 1 2 4 5 10 17 33 35 39 41 45 46 50 60 63 73 74 77 78 91
97 100 103 110 112 114 134 159 160
SECTION XI: DECLARATION
Chapter I - General DEFINITIONS AND ABBREVIATIONS DEFINITIONS Term Shirdi Industries Limited We or us or our and Our Company Description Shirdi Industries Limited, a Public limited company incorporated under the Companies Act, 1956 Unless the context otherwise require, refers to Shirdi Industries Limited
CONVENTIONAL / GENERAL TERMS Terms Articles/Articles of Association Auditors Board of Directors / Board Companies Act Depositories Act Director(s) Equity Shares GIR Number HUF Indian GAAP MOA/Memorandum/ Memorandum of Association NOC Non Residents NRIs/ Non-Resident Indians Overseas Corporate Body / OCB Description Articles of Association of Shirdi Industries Ltd. The Statutory Auditors of the Company, viz, M/s. M.P. Kala and Co. The Board of Directors of Shirdi Industries Limited The Companies Act, 1956, as amended from time to time The Depositories Act, 1996, as amended from time to time Director(s) of Shirdi Industries Limited, unless otherwise specified Equity Shares of the Company of face value of Rs. 10 each unless otherwise specified in the context thereof General Index Registry Number Hindu Undivided Family Generally Accepted Accounting Principles In India Memorandum of Association of Shirdi Industries Limited No Objection Certificate A person resident outside India, as defined under FEMA. A person resident outside India, as defined under FEMA and who is a citizen of India or a Person of Indian Origin under FEMA (Transfer or Offer of Security by a Person Resident Outside India) Regulations, 2000 A company, partnership, society or other corporate body owned directly or indirectly to the extent of at least 60% by NRIs including overseas trusts, in which not less than 60% of beneficial interest is irrevocably held by NRIs directly or indirectly as defined under Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 Any individual, sole proprietorship, unincorporated association, unincorporated organization, body corporate, corporation, company, partnership, limited liability company, joint venture, or trust or any other entity or organization validly constituted and/or incorporated in the jurisdiction in which it exists and operates, as the context requires Mr. Rakesh Agarwal, Mr. Mukesh Bansal, Mr. Sarvesh Agarwal, Mr. Hariram Agarwal, Asis Industries Pvt. Ltd. A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai 400028. South Asian Association for Regional Co-operation The Securities and Exchange Board of India constituted under the SEBI Act, 1992 Securities and Exchange Board of India Act, 1992, as amended from time to time SEBI (Disclosure and Investor Protection) Guidelines, 2000 issued by SEBI on January 27, 2000, as amended, including instructions and clarifications issued by SEBI from time to time Securities and Exchange Board of India (Substantial Acquisition of Shares and
b
Person or Persons
Promoters Registered Office SAARC SEBI SEBI Act SEBI Guidelines SEBI Takeover
Regulations Stock Exchanges U.S. GAAP
Takeover) Regulations, 1997, as amended from time to time NSE and BSE Generally Accepted Accounting Principles in the United States of America
ISSUE RELATED TERMS Terms Allianz Allotment Allottee Applicant Application Form Bankers / Escrow Bankers to the Issue Bid Description Allianz Securities Limited Issue of Equity Shares pursuant to the Issue to the successful Bidders as the context requires The successful bidder to whom the Equity Shares are being / have been issued. Any prospective investor who makes an application for Equity Shares in terms of this Draft Red Herring Prospectus. The Form in terms of which the applicant shall apply for the Equity Shares of the Company [ ]
An indication to make an offer during the Bidding Period by a prospective investor to subscribe to or purchase our Equity Shares at a price within the Price Band, including all revisions and modifications thereto. An indication to make an offer during the Bidding Period by a prospective investor to subscribe to or purchase our Equity Shares at a price within the Price Band, including all revisions and modifications thereto.
Bid Amount Bid Closing Date/ Issue Closing date Bid cum Application Form/ Bid Form Bid Opening Date/ Issue Opening Date Bidder Bidding Period/ Issue Period Book Building Process BRLMs/Book Running Lead Managers CAN/ Confirmation of Allocation Note Cap Price Cut-off Price Depository Act Depository Depository Participant Designated Date Designated Stock Exchange
Draft Red Herring Prospectus/Draft RHP/DRHP
The highest value of the optional Bids indicated in the Bid-cum-Application Form and payable by the Bidder on submission of the Bid in the Issue The date after which the members of the Syndicate will not accept any Bids for the issue, which shall be notified in an English National Newspaper, a Hindi national Newspaper and a Marathi Newspaper, all with wide circulation. The form in terms of which the Bidder shall make an offer to subscribe the equity shares of the Company in terms of this Draft Red Herring Prospectus The date after which the members of the Syndicate will not accept any Bids for the issue, which shall be notified in an English National Newspaper, a Hindi national Newspaper and a Marathi Newspaper, all with wide circulation. Any prospective investor who makes a Bid pursuant to the terms of this Draft Red Herring Prospectus The period between the Bid/Issue Opening Date and the Bid/Issue Closing Date inclusive of both days and during which prospective Bidders may submit their Bids Book Building route as provided under Chapter XI of the SEBI Guidelines, in terms of which the Issue is being made Book Running Lead Managers to the Issue being Allianz Securities Limited Means the note or advice or intimation of allocation of Equity Shares sent to the Bidders who have been allocated Equity Shares in the Book Building Process The higher end of the Price Band, above which Issue Price will not be finalized and above which no Bids will be accepted The Issue Price finalized by the Company in consultation with the BRLMs. A Bid
submitted at Cut-off Price is a valid Bid at all price levels within the Price Band
The Depositories Act, 1996 as amended from time to time A depository registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996 as amended from time to time A depository participant as defined under the Depositories Act The date on which funds are transferred from the Escrow Account to the Public Issue Account after the Prospectus is filed with the RoC, following which the Board of Directors shall allot the Equity Shares to successful Bidders Bombay Stock Exchange Limited This Draft Red Herring Prospectus filed with SEBI, which does not have complete particulars on the price at which the Equity Shares are offered and size of the Issue
Escrow Account Escrow Agreement Escrow Collection Bank(s) First Bidder Floor Price Issue Price Issue Account / Public Issue Account Issue Period Margin Amount Members of the Syndicate Mutual Fund portion Non-Institutional Portion Non-Institutional Bidders Pay-in-Date Pay-in-Period
Account opened with the Escrow Collection Bank(s) and in whose favour the Bidder will issue cheques or drafts in respect of the Bid Amount when submitting a Bid Agreement entered into amongst the Company, Syndicate Members, the Registrar, the Escrow Collection Bank(s) and the BRLMs for collection of the Bid Amounts and for remitting refunds (if any) of the amounts collected to the Bidders The banks which are clearing members and registered with SEBI as Bankers to the Issue at which bank(s) the Escrow Account of the Company will be opened The Bidder whose name appears first in the bid cum application form or revision form The price advertised by the Company prior to the Bid/Issue Opening Date, below which the Issue Price will not be finalized and below which no Bids will be accepted The final price at which the Equity Shares will be allotted in terms of the Red Herring Prospectus, as determined by the Company in consultation with BRLMs on the Pricing Date Account opened with the Bankers to the Issue to receive monies from the Escrow Account for the Issue on the Designated Date The period between the Bid / Issue Opening Date and Bid / Issue Closing Date including both these dates The amount paid by the Bidder at the time of submission of the Bid, being 10% to 100% of the Bid Amount. The BRLMs and the Syndicate Members 5% of QIB portion or 1,62,500 equity shares available to allocation to Mutual Funds only, out of QIB portion. The portion of this Issue being at least 15% of the Issue Size consisting of 9,75,000 Equity Shares of Rs. 10 each aggregating Rs.[] lakhs, available for allocation to Non Institutional Bidders. All Bidders that are not eligible Qualified Institutional Buyers for this Issue, including affiliates of BRLMs and Syndicate Members, or Retail Individual Bidders and who have bid for an amount more than Rs. 100,000. Bid Closing Date or the last date specified in the CAN sent to Bidders, as applicable Means: (i) with respect to Bidders whose Margin Amount is 100% of the Bid Amount, the period commencing on the Bid/ Issue Opening Date and extending until the Bid/Issue Closing Date; and (ii) with respect to QIBs, whose Margin Amount is 10% of the Bid Amount, the period commencing on the Bid/Issue Opening Date and extending until the closure of the Pay-in Date. Being the price band of a minimum price of Rs. [] per Equity Share (Floor Price) and the maximum price of Rs. [] per Equity Share (Cap Price)(both inclusive), and including revision thereof. Means the date on which the Company, in consultation with the BRLMs, finalizes the Issue Price The Prospectus, filed with the RoC containing, inter alia, the Issue Price that is determined at the end of the Book Building Process, the size of the Issue and certain other information Initial public offering of 65,00,000 equity shares of Rs. 10/- each at a price of Rs. [] for cash aggregating to Rs. [] lakhs (hereinafter referred to as the issue). The issue would constitute 26.06% of the fully diluted post issue paid up equity capital of the Company. Account opened with Bankers to the Issue for the purpose of transfer of monies from the Escrow Account on or after the Bid / Issue Opening Date
Public financial institutions as specified in Section 4A of the Companies Act, FIIs, Scheduled Commercial Banks, Mutual Funds registered with SEBI, Venture Capital Funds registered with SEBI, Foreign Venture Capital Investors registered with SEBI, State Industrial Development Corporations, Insurance Companies registered with the Insurance Regulatory and Development Authority, Provident Funds with minimum corpus of Rs. 250 million and Pension Funds with minimum corpus of Rs. 250 million.
Price Band Pricing Date Prospectus Public Issue/ Issue Public Issue Account
Qualified Institutional Buyers or QIBs
QIB Portion
Consists of 32,50,000 Equity Shares of Rs. 10 each aggregating at a price of Rs. [] for cash aggregating Rs. [] lakhs being at least 50% of the Issue, available for allocation to
d
Red Herring Prospectus or RHP
Registrar/Registrar to the Issue RoC / Registrar of Companies Retail Portion Retail Individual Bidders Revision Form Syndicate Agreement Syndicate Members TRS or Transaction Registration Slip Underwriters
Underwriting Agreement
cash aggregating Rs. [] lakhs being at least 50% of the Issue, available for allocation to QIBs. 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only. Means the document issued in accordance with Section 60B of the Companies Act and does not have complete particulars on the price at which the Equity Shares are offered and the size of the Issue. It carries the same obligations as are applicable in case of a Prospectus and will be filed with RoC at least three days before the Bid/ Issue Opening Date. It will become a Prospectus after filing with RoC after the pricing and allotment. Registrar to the Issue being Intime Spectrum Registry Ltd. C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai-400078. Registrar of Companies, Maharashtra Consists of 22,75,000 equity shares of Rs. 10 each aggregating Rs. [] lakhs, being at least 35% of the Issue, available for allocation to Retail Individual Bidder(s). Individual Bidders (including HUFs and NRIs) who have made their bid for Equity Shares for a cumulative amount of not more than Rs. 100,000. The form used by the Bidders to modify the quantity of Equity Shares or the Bid Price in any of the Bid options as per their Bid-cum-Application Form and as modified by their subsequent Revision Form(s), if any. Agreement to be entered into amongst the BRLMs, Syndicate Member(s) and the Company in relation to the collection of Bids in the Issue Intermediaries registered with SEBI and eligible to act as underwriters. Syndicate Members are appointed by the BRLMs and in this case, being Allianz Securities Limited and Almondz Capital Markets Private Limited The slip or document registering the Bids, issued by the Syndicate Members to the Bidder as proof of registration of the Bid on submission of the Bid cum Application Form in terms of this Red Herring Prospectus The BRLMs and the Syndicate Members
The Agreement between the Underwriters and our Company to be entered into on the Pricing Date
GLOSSARY OF TECHNICAL AND INDUSTRY TERMS BPLR CBM CEC CETP CHA CIF C&F Downstream project ECO-MARK FIPB FOB HDF HPL MDF MF IPR PB PF PVC RCC SIDCUL SWBP UF Upstream Project Bank Prime Lending Rate Cubic Metre Central Empowered Committee Combined Effluent Treatment Plant Clearing House Agents Cost, Insurance and Freight Clearing and Forwarding Additional Capacity of pre-laminated board, flooring, door skins, laminates, doors and furniture components which are value added products of upstream project Certification by the Ministry of Environment and Forest Foreign Investment Proportion Board Free On Board High Density Fibre High Press Laminate Medium Density Fibre Melamine Formaldehyde Intellectual Property Rights Particle Board Phenol Formaldehyde Poly Venyl Chloride Reinforcement Cement Concrete State Industrial Development Corporation of Uttaranchal Limited Shanghai Wood Based Panel Machinery Company Limited. Urea Formaldehyde Manufacture of MDF and Particle Board (plain & pre-laminated)
e
ABBREVIATIONS OF GENERAL TERMS Abbreviation AS A/c ATC BSE CDSL EPS EGM FCNR Account FIPB FY Fiscal/Financial Year FEMA FIIs GoI/Government GIR Number HUF IPR I.T. Act MoF MFA MOU MT NAV NPV NRIs NRE Account NRO Account NSDL NSE p.a. P/E Ratio PAN PAT RBI RoC ROE RONW Rs. SIL SCRR SCRA Sec. US USD/ US$/ $ Full Form Accounting Standards as issued by the Institute of Chartered Accountants of India Account Agreement on textiles and clothing Bombay Stock Exchange Limited Central Depository Services (India) Limited Earning Per Share Extraordinary General Meeting Foreign Currency Non Resident Account Foreign Investment Promotion Board Period of twelve months ended March 31 of that particular year, unless otherwise stated Foreign Exchange Management Act, 1999, as amended from time to time, and the regulations framed there under Foreign Institutional Investors (as defined under FEMA (Transfer or Offer of Security by a Person Resident outside India) Regulations, 2000) registered with SEBI under applicable laws in India Government of India General Index Registry Number Hindu Undivided Family Intellectual Property Rights Income-tax Act, 1961, as amended from time to time Ministry of Finance, GoI Multi-Fibre Agreement Memorandum of Understanding Metric Ton Net Asset Value Net Present Value Non Resident Indians Non Resident External Account Non Resident Ordinary Account National Securities Depository Limited National Stock Exchange of India Limited Per annum Price/Earnings Ratio Permanent Account Number Profit After Tax The Reserve Bank of India Registrar of Companies, Maharashtra at Mumbai Return on Equity Return on Net Worth Rupees Shirdi Industries Limited Securities Contracts (Regulation) Rules, 1957, as amended from time to time Securities Contract (Regulation) Act, 1956, as amended from time to time Section United States of America United States Dollar
CERTAIN CONVENTIONS; USE OF MARKET DATA In the Draft Red Herring Prospectus, unless the context otherwise requires, all references to one gender also refers to the other gender. Unless stated otherwise, the financial data in the Draft Red Herring Prospectus is derived from our financial statements prepared and restated in accordance with Indian GAAP, the Companies Act and SEBI Guidelines included elsewhere in the Draft Red Herring Prospectus as of and for the fiscal years 2001,2002,2003,2004,2005 and for the period ended October 31, 2005. We have no subsidiaries. Accordingly, financial information relating to us is presented on a non-consolidated basis. Our fiscal year commences on April 1 and ends on March 31 , and therefore all references to a particular fiscal year are to the 12 months period ended March 31 of that year. In the Draft Red Herring Prospectus, any discrepancies in any table between the total and the sum of the amounts listed are due to rounding-off. There are significant differences between Indian GAAP and U.S. GAAP; accordingly, the degree to which the Indian GAAP financial statements included in the Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level of familiarity with Indian accounting practices. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in the Draft Red Herring Prospectus should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data. All references to India contained in the Draft Red Herring Prospectus are to the Republic of India. For additional definitions, see the section titled Definitions and Abbreviations on page no. b of the Draft Red Herring Prospectus. In the section titled Main Provisions of Articles of Association of the Company beginning on page no. 134 of the Draft Red Herring Prospectus, defined terms have the meaning given to such terms in the Articles of Association of the Company. Market data used throughout the Draft Red Herring Prospectus has been obtained from industry publications and internal Company reports. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes market data used in this Draft Red Herring Prospectus is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by the Company to be reliable, have not been verified by any independent source.
FORWARD LOOKING STATEMENTS; Statements included in this Draft Red Herring Prospectus which contain words or phrases such as will, aim, will likely result, believe, expect, will continue, anticipate, estimate, intend, plan, contemplate, seek to, future, objective, goal, project, should, will pursue and similar expression or variations of such expressions, that are forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward looking statement. Important factors that could cause actual results to differ materially from our expectations include, among others: General economic and business conditions in India and other countries Regulatory changes relating to the plywood industry in India and our ability to respond to them Our ability to successfully implement our strategy, our growth and expansion, technological changes, our exposure to market risks that have an impact on our business activities or investments. The monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in our industry. Changes in the value of the Rupee and other currencies. The occurrence of natural disasters or calamities Change in political condition in India
For further discussion of factors that could cause our actual results to differ, see the section titled Risk Factors beginning on page no. iii of this Draft Red Herring Prospectus. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Neither the Company nor any of their respective affiliates have any obligation to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition. In accordance with SEBI requirements, the Company, and the Book Running Lead Managers will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.
ii
RISK FACTORS An investment in equity involves a higher degree of risk. Investors should carefully consider all the information in this Draft Red Herring Prospectus, including the risks and uncertainties described below, before making an investment in our equity shares. Any of the following risks as well as other risks and uncertainties discussed in this Draft Red Herring Prospectus could have a material adverse effect on our business, financial condition and results of operations and could cause the trading price of our Equity Shares to decline, which could result in the loss of all or part of your investment. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial implication of any of the risks described in this section. INTERNAL TO THE COMPANY 1. We have limited experience in manufacturing activities and handling labor intensive operations. We have limited experience in setting up and operating a manufacturing facility of a size similar to the said proposed manufacturing of MDF & Particle Board. Bulk of our revenues in the past is attributable to nonmanufacturing activities, break-up of which is given in the following table: Sr. No. 1 2 3. Period 7 month ended October, 2005 2004-05 2003-04 Total Revenue (Rs. in lakhs) 2973.72 4036.87 3725.33 Manufacturing Revenue (Rs. in lakhs) 756.25 633.62 83.60 % of revenue from Manufacturing 25.43% 15.70% 2.24%
Our limited experience in setting up and operating a manufacturing facility of size comparable to the proposed expansion / diversification may hinder our ability to operate the proposed plant in a commercially successful manner, in the initial periods. Since we will be required to employ a large work force, our limited experience in handling labor related issues may also be a concern. These factors may adversely affect our results of operations and financials. 2. Our operations create environmental challenges, and changes in the environmental laws and regulations may expose the company to liability and result in increased costs The manufacturing activities of our Company are subject to, among other laws, environmental laws and regulations promulgated by the Ministry of Environment of Government of India, Saw Mill Rules, the State Forest Policy, and State Pollution Control Board. These include laws and regulations about cutting of trees, discharge of effluents, polluted emissions, hazardous substances etc. We expect that environmental laws will continue to become stricter. We plan to use the wood from commercial plantations, which does not affect the environment adversely but instead would be advantageous to the farmer. Some of these laws and regulations may be subject to varying and conflicting interpretations. Many of these laws and regulations provide for substantial fines and potential criminal sanctions for violations and require the installation of costly pollution control equipment or operational changes to limit pollution emissions and/or reduce the likelihood or impact of hazardous substance releases, whether permitted or not. In some cases, compliance with environmental, health and safety laws and regulations might only be achievable by capital expenditures, such as the installation of pollution control equipment. We cannot accurately predict future developments, such as increasingly strict environmental laws or regulations and inspection and enforcement policies resulting in higher compliance costs. Though presently we do not have any pending claim or litigation or liability to any environmental agency, we cannot predict with certainty the extent of its future liabilities and claims against them. 3. The Promoters and the Group Companies are involved in number of legal proceedings, which may have some financial implications on the business of the Company. These legal proceedings are pending at different levels of adjudication before various courts, tribunals, enquiry officers and appellate tribunals, should any new development arise, such as a change in Indian law or rulings against the Promoters and Group Companies by appellate courts or tribunals, it may need to establish reserves in the financial statements, which could increase their expenses and current liabilities
iii
Furthermore, if a claim is determined against the Promoters and Group Companies and it is required to pay all or a portion of the disputed amount, it could have a material adverse affect on the results of operations and cash flows of the Company. For further information regarding litigations, please refer section titled Outstanding Litigations on page no. 97 of this Draft Red Herring Prospectus. 4. 42.57% of the project cost is denominated in foreign currency on account of imported plant & machinery; any change in Foreign Exchange rates may affect the project cost. Although, we have made a provision for contingency in this regard in the project cost, but we are exposed to the risk of forex fluctuation. If rupee depreciates vis--vis the currency of the country from which we are importing our plant & machinery, cost of plant & machinery will go up and in turn will affect our profitability. Our cost for various plant & machinery as estimated in the appraisal report has undergone a change while finalizing the order for those plant & machinery without having any substantial effect on the total cost of project. The cost of project was appraised by Union Bank of India in April, 2005 and revised appraisal was done in November, 2005 due to addition of various value added products by Company. While finalizing various plant & machinery, we placed orders with suppliers different from those considered at the time of appraisal, which resulted into change in cost of certain plant & machinery without affecting the overall cost of project significantly. However, we can not assure you that any further change in the cost of plant & machinery will not significantly affect the overall cost of project. We are relying on machinery supplier for technical support during the commissioning of the plant. We do not have any previous experience in running and operating MDF and particle board business with the proposed technology. We are relying on technical support from the machinery supplier, for the necessary technical support during commissioning of the unit and training of Companys manpower and employed experienced persons. Any inability to provide the desired technical support may affect the business operations adversely. The location of the project is away from sea ports which will result in extra cost for import and export. Our manufacturing facilities are located at Uttranchal, which is far from sea ports. We have to incur substantial cost of transportation, which in turn affects the profitability of our Company. Changing customer preferences in furnishings and interior products and new product introductions have an important bearing on our Companys business. Our success depends on our ability to keep pace with these changes. Promoters of our Company are well versed with new introductions in the market and the customers preferences. We are also having variety of products for meeting the customers requirement. However, if we are unable to keep pace with latest changes in furnishings and interior products, our turnover and in turn profitability adversely affect. We require certain registrations and licenses from government and regulatory authorities and the failure to obtain them in a timely manner or at all may adversely affect the operations of our Company. For our existing operations, following consents / approvals have expired and are pending for approvals: Consent from Maharashtra Pollution Control Board, Navi Mumbai, under Water (Prevention and Control of Pollution) Act 1974 and Air (Prevention and Control of Pollution) Act 1981 which was valid upto November 30, 2005. Licence to run a factory at Plot A-467,MIDC, Mahape, Navi Mumbai which was valid upto December 31, 2005. In respect of proposed manufacturing facilities at Uttaranchal, the company have obtained necessary approvals and consents for undertaking business activities. For more information, see Government Approvals on page no. 100 of this Draft Red Herring Prospectus. We will apply for any further approval / registration / consent which may be required in future to commence the commercial production. If we fail to obtain approval of any of registrations and licenses/consents in a timely manner, or at all, the business of our Company may be adversely affected and its directors and officers may be subjected to civil or criminal proceedings.
5.
6.
7.
8.
9.
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10. We do not have any contracts / agreements for supply of our products. We do not have our own internal sales network, therefore, we plan to distribute our products through dealership network. As a result, we rely to a significant extent on the relationship we have with our dealers, as they play a significant part in enhancing customer awareness of our products and maintaining our brand name. As our authorized dealers have day-to-day contact with customers, we are exposed to the risk of our dealers failing to adhere to the standards set for them in respect of sales and after-sales service, which in turn could affect our customers perception of our brand and products. In addition, we provide our dealers with incentives to sell our products by way of discounts. If our competitors provide better incentives to our dealers, such dealers may be persuaded to promote the products of our competitors instead of our products. 11. Quotations for some indigenous equipment have not been received. The items for which the quotations have not been obtained are readily available with delivery period of 2 week to 8 weeks. The erection, installation of these items does not take much time. These items are required in April / May 2006; hence the Company plans to negotiate for purchase of such items according to the requirement. Any delay in placing the order and consequent delay in delivery of plant and machinery will
adversely affect the implementation schedule of project and may defer the commercial production.
12. Competition with Unorganised Players At present wood based industry has several unorganised players who are importers / traders and local manufacturers, the business volume of our Company may be affected due to their operations. 13. We do not own the existing factory premises as it is taken on leave and license from BAT Enterprise Private Limited which is one of the promoter group companies We have executed a Leave and License Agreement for factory premises, which can easily be renewed from time to time. We now plan to shift the equipments from existing premises to the new site at Uttaranchal, for which the Company has lease agreement for 90 years with SIDCUL. 14. Electricity board has already sanctioned the power but it will be available at the proposed site only in April 2006. The Company has received a sanction of required load from Uttaranchal Power Corporation but the power for commercial production will be made available to the Company in May, 2006. The commencement of production is expected in April/May, 2006. Any delay in getting the sanctioned load at the required time will delay the entire implementation schedule. 15. We have not made arrangement for its working capital requirements. The appraised project cost of Rs.12,740.54 lakhs includes margin money of Rs. 1,612.97 lakhs for the working capital. The Company proposes to approach its current lenders for working capital for its requirement of working capital at the time of commencement of commercial production. Any delay in tieing up the working capital requirement at that point of time may affect our operations. 16. Any delay in the commencement of operations as scheduled as per the proposed expansion plans are subject to the risk of cost and time overruns The Companys plan as referred to in the section titled Objects of the Issue on page 17 of this draft Red Herring Prospectus, contains project costs and implementation schedules, appraised by Union Bank of India. The Companys expansion plans are subject to a number of contingencies, including foreign exchange fluctuations, changes in laws and regulations, government action, delays in obtaining approvals, delays in getting requisite land, inability to obtain machinery and other supplies at quoted or at acceptable terms, accidents, natural calamities, terrorist activity and other factors, many of which may be beyond its control. The Company, therefore, cannot assure that the costs incurred or time taken for implementation of these plans will not vary from our estimated parameters or as appraised by the appraising agency. 17. The Company has not paid any dividend since 1998. The capacity of the Company to pay dividend in the near future cannot be ascertained.
Since the Company is a closely held Company, profits were used to meet its working capital requirements and hence, no dividend has been paid since 1998. 18. The objects clauses of Group Companies viz. Asis Industries Private Limited, Asis Global Limited and Asis Overseas Limited permit them to undertake business similar to the current business of the Company thereby causing a potential conflict of interest situation. All the Group Companies are in operation since the last several years and are not in the business where conflict of interest arises. Promoters maintain a strict discipline in this regard. Further in the area of manufacturing planned by the Company there is no other group Company having similar activity. However, in future potential conflict will arise and affect business operations of our company in case any of our promoter group companies decide to undertake similar activities. 19. The business of Company is dependent on its manufacturing facilities. The loss of or shutdown of operations at any of manufacturing facilities may have a material adverse effect on Companys business, financial condition and results of operations. The principal manufacturing facilities at Uttaranchal are subject to operating risks, such as the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, obsolescence, labour disputes, strikes, lock-outs continued availability of services of our external contractors, earthquakes and other natural disasters, industrial accidents and the need to comply with the directives of relevant government authorities. The occurrence of any of these risks could significantly affect our operating results. 20. Promoters are first generation entrepreneurs and the Company depends on its senior management team and the loss of team members may adversely affect its business. Mr. Rakesh Agarwal, Managing Director is a first generation entrepreneur on whom the Company relies for the management of its day-to-day operations including business strategy and growth plans. The Companys future performance will be affected by the absence of continued services of Mr. Rakesh Agarwal. Further, if one or more members of senior management team of the Company is unable or unwilling to continue in their present positions, those persons could be difficult to replace and business could be adversely affected. 21. The Company may continue to be controlled by its Promoters following this Issue and other shareholders may not be able to affect the outcome of shareholders resolution. After the completion of the Issue, Promoters will collectively hold approximately 65.38% of the outstanding Equity Shares. Consequently, Promoters, may exercise substantial control over the Company and inter alia may have the power to elect and remove a majority of Directors and/or determine the outcome of proposals for corporate action requiring approval of Board of Directors or shareholders, such as lending and investment policies, revenue budgets, capital expenditure, dividend policy and strategic acquisitions/joint ventures. 22. Covenants with lenders may restrict companies operations, its capacity to expand, distribute dividends, etc. Certain covenants in the financing agreements require the Company to obtain approval from the bank/ financial institutions inter alia for effecting any change or alteration in the capital structure, for formulating any scheme of amalgamation or reconstruction, before undertaking new projects or expansion of the existing facilities, making any new investments, issuing new security (debt or equity) including shares being issued in this Issue, making changes to the Companys capital structure, distributing dividends to its shareholders. For details see section titled Capital Structure on page 10 of this Draft Red Herring Prospectus. 23. The Company has following contingent liabilities not provided for in the books of accounts under Indian Accounting Standards, which may adversely affect our financial condition. (Rs. In Lakhs) Particulars 31/10/05 Letter Of Credit 1276.49 In the event such contingent liability materializes it may have an adverse affect on our financial performance.
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24. Sr. No.
The group Companies are making losses as shown in the table below: Name of the Company Profit/(Loss) for the year ended of 31.03.2003 (Audited) Rs. (in Lakhs) (1.11) 0.86 0.62 1.18 0.99 2.82 Profit/(Loss) for the year ended of 31.03.2004 (Audited) Rs. (in Lakhs) (0.46) (0.89) (0.10) (0.07) (0.03) (5.90) Profit/(Loss) for the year ended of 31.03.2005 (Audited) Rs. (in Lakhs) 0.08 0.06 0.18 (0.15) 0.05 (103.52)
1. 2. 3. 4. 5. 6.
Labh Capital Services Pvt. Ltd. Repute Properties Pvt. Ltd. Sajal Finance & Investment Pvt. Ltd. Pratibha Finance & Investment Pvt. Ltd. Manhar Properties Pvt. Ltd. Poona Pearls Biotek Ltd
All the above Companies are not engaged in business and they are mainly non-operating Companies. 25. The promoters had also promoted two partnership firms namely M/s Shirdi International which was dissolved on 12th August, 2004 and M/s A. S. Industrial Services which was dissolved on 6th August, 2004. 26. The suppliers of imported plant & machinery had given a performance guarantee to the Company, which is restricted to a fixed amount. Any loss or damage beyond that amount would have to be borne by the Company and in turn affect the financial position of the Company to that extent. The plant & machinery suppliers viz. Klinkert Ltd. and Shanghai Wood Based Panel Machinery Company had given a performance guarantee to the extent of Rs. 55 lakhs (Euro 1,00,000) and Rs. 95 lakhs (2,08,000$) respectively. Any unexpected loss or damage beyond the said amount, would affect our financial position to that extent. 27. Other Promoter group companies have business interest in the Company. The group companies have number of financial and business transactions with our company. For the details please refer to section titled Related Party Transaction on page no. 74 of this Draft Red Herring Prospectus. 28. There has been some deviations in terms of Shareholders Agreement entered into with Klinkert Ltd. The Shareholders Agreement provides for seven directors and it has been executed between Klinkert Ltd. and Shri Rakesh Kumar Agarwal, Shri Mukesh Bansal and Shri Survesh Agarwal as Promoters and our Company. However, at present, there are eight directors on the board of our Company and Shri Hari Ram Agarwal and Asis Industries Private Limtied are also amongst Promoters. The Company has already taken up the matter with Klinkert for amendment in the aforesaid Shareholders Agreement. In case Klinkert does not give its consent, the possibility of litigation by Klinkert cannot be ruled out. EXTERNAL RISK FACTORS 1. Exchange Rate Fluctuations may have impact on the performance of the Company. The Company is exposed to exchange rate fluctuations. Uncertainties in the global financial market may have an adverse impact on the exchange rate between Rupee vis--vis other currencies. The exchange rate between the Rupee and other currencies is variable and may continue to fluctuate in the future. Such fluctuations can have a serious impact on the cost of the Company. 2. Political situation and changes in the Government of India may affect the performance of the Company. The Government of India has pursued the economic liberalization policies including relaxing restrictions on the private sector over the past several years. The present Government has also announced polices and taken initiatives that support continued economic liberalization. There is no assurance that the liberalization policies of the government will continue in the future. Protests against privatization could slow down the
vii
pace of liberalization and deregulation. A significant change in Indias economic liberalization and deregulation policies could disrupt the business and economic conditions in India. 3. Natural disasters could disrupt our operations and result in loss of revenues and increased costs. The business of the Company is exposed to man-made and natural disasters such as, explosions, earthquakes, storms and floods as well as to terrorist attacks or other enemy actions. The occurrence of a man-made or natural disaster, terrorist attack, enemy action or other accidents could disrupt the operations of the business of the Company and result in loss of revenues and increased costs. 4. The acts of violence and terrorist attacks or war involving India could adversely affect the Companys business. There have been instances of terrorist attacks in many parts of the world and also in India in the recent past. Any recurrence of such events or other acts of violence/war may negatively affect the Indian capital market and may also adversely affect performance of our scrip in the stock exchanges. These acts may also result in a loss of business confidence. Any recurrence of events of terrorist attacks or other acts of violence may adversely impact the desire of corporate executives to travel to India for business purposes and thereby adversely impacting business prospects. These uncertainties make it difficult for us and our customers to accurately plan future business activities. 5. Taxes and other levies imposed by the Government of India or other State Governments, as well as other financial policies and regulations, may have a material adverse effect on our business, financial condition and results of operations. Taxes and other levies imposed by the Central or State Governments in India that affect our industry include customs duties, excise duties, sales tax, income tax and other taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. Currently we benefit from certain tax benefits that results in a decrease in the effective tax rate compared to the tax rates that we estimate would have applied if these incentives had not been available. There can be no assurance that these tax incentives will continue in the future. The non-availability of these tax incentives could adversely affect our financial condition and results of operations. Several State Governments in India have recently introduced a value added tax regime. The same is yet to be introduced in the State of Uttaranchal. The impact of the introduction of the value added tax regime on our business and operations would depend on a range of factors including the rates applicable and the exemptions available to our facilities. Currently, we are unable to ascertain the impact of the value added tax regime on our business and operations. 6. After this Issue, the price of the Equity Shares may be highly volatile or there may be no active market for the Equity Shares which may be due to various reasons including the following: Volatility in the Indian and Global securities market; The results of operations and performance; Perceptions about our future performance or the performance of Indian Furniture Industry. Performance of the Indian Economy.
Notes to Risk Factors: 1. 2. 3. 4. The Net worth of the Company as per the financial statements of the Company before the Issue (as on October 31, 2005) is Rs. 3403.96 Lakhs and the size of the Issue is Rs. [*] Lakhs. The average cost of acquisition of Equity Shares of the Promoters is Rs.10.21 per share approx. The Book value per Equity Share as on October 31, 2005 is Rs.18.86/- per Equity Share of Rs.10/- each. Public Issue of 65,00,000 Equity Shares of face value Rs. 10 each for cash at a Price Band of Rs. [ [ ] per Equity Share aggregating Rs. [ ] Lakhs. ] to Rs.
Other than as disclosed in the Related Party Information on page no. 74 of this Draft Red Herring Prospectus, the Promoters / directors / key management personnel of the Company have no interest other than reimbursement of expenses incurred or normal remuneration or benefits.
viii
5.
No loans and advances have been made to any person(s) / companies in which the Director(s) of the Company are interested except as stated section titled Related Party Transactions appearing on page no. 74 of the Draft Red Herring Prospectus. The Investors are advised to refer to the Paragraph on Basis for Issue Price on page no. 33 of this Draft Red Herring Prospectus before making any investment in this Issue. The Issue is being made through a 100% Book Building Process wherein not more than 50 % of the Net Issue will be allocated on a proportionate basis to Qualified Institutional Buyers (QIBs) out of which 5% shall be allocated proportionately for mutual funds. Further, at least 15% of the Net Issue will be available for allocation on a proportionate basis to Non-Institutional Bidders and at least 35% of the Net Issue will be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid bids being received at or above the Issue Price. The Investors may contact the Book Running Lead Managers to the Issue or the Compliance Officer for any complaint / clarification / information pertaining to the Issue, who will be obliged to attend to the same. No part of the Issue proceeds will be paid as consideration to promoters, directors, key managerial personnel, associate or Group Companies.
6. 7.
8. 9.
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SECTION III INTRODUCTION Summary You should read the following summary with the risk factors beginning on page iii of this draft Red Herring Prospectus and the more detailed information about us and our financial statements included in this draft Red Herring Prospectus. Overview Our Company was set up with an objective of trading consultancy services & other allied activities. In the initial years, the trading activities relating to licenses, consultancy services contributed to approximately 95% of the income. Subsequently we have diversified into the import/ local trading of products required for interior furnishing such as particle board, MDF board, Plywood and Veneer etc. As a trader and importer our Company initially started import of MDF board from Malaysia and Indonesia. The Company started importing MDF Board in the year 1995. During this time, although the consumption of MDF Board had picked up in overseas market and replaced the use of Plywood and other panel products in furniture industry, however, in India the product was not well known. Being among first few importers of MDF Board in the country, our Company created awareness of the product among the users, which resulted into more acceptability of the product in Indian Market. After having established itself in the area of trading, our Company decided to set up its own manufacturing facilities for the products used in interior furnishing. After having knowledge of market of MDF board in India and name in the industry the company decided to set up a plant at Navi Mumbai, MIDC Mhape in October, 2003 with a small capacity for the manufacturing of Door Skin, Panel Doors & Furniture Components. Our Company is currently engaged in activities related to manufacturing of PVC Designer Door Skins, Door Panels, import and sale of MDF Boards (plain and prelaminated boards), Plywood, Particle Board, Veneer and Steel. In addition, our Company also offers consultancy and solutions on Foreign Trade matters to over 500 companies in India. DISTIBUTION NETWORK As a trader, we believe in better Customer Relationship, Supply Chain Management and Inventory Controls. For better customer services and distribution network the Company established many godowns and branch offices, at Hyderabad and New Delhi. The distributors were provided sufficient details about the quality and use of the product, brochure, catalogues and samples. The Company developed a practice of maintaining transparent inventory wherein the available stock and stock in pipeline, is known to the distribution channel. Our Strategy We plan to provide customised solutions to our customers in our area of activity as under: To provide services to distributors according to their needs which may include trade discount, inventory management, cut to size, tailor made requirement and training. To provide services to end-users by creating awareness and giving customized solutions by providing integrated solutions for interior furnishing. To provide services to manufacturers of furniture by supplying the material according to their needs, effective supply chain management and product meeting quality standards like ISO, ECO and ISI.
Summary of Financial/Operating Data STATEMENTS OF ADJUSTED PROFIT & LOSS ACCOUNT (Rs. In Lacs) 31-Mar-03 31-Mar-02 3,097.81 54.94 1.13 3,153.88 2,949.62 31.91 72.52 24.70 48.88 9.72 3,137.35 16.53 6.75 9.78 0.44 9.34 84.73 84.73 3,523.69 45.37 16.74 3,585.80 3,443.71 22.58 39.43 18.70 37.65 9.48 3,571.55 14.25 5.00 9.25 0.74 8.51 75.39 75.39
INCOME SALES Trading Sales Consultancy Manufacturing Other Income Total EXPENDITURE Purchases Manufacturing Expenses Salary Staff Welfare Administrative Expenses Selling Expenses Interest Depreciation Total Profit before Taxation Provision for Taxation Profit after Tax Deffered Tax (Net) Income Tax Adjustment Profit after Extraordinary Items Surplus brought forward From Last Year Reserve Transferd to B/S
31-Oct-05 2,086.33 83.01 756.25 48.13 2,973.72 2,472.45 27.47 22.01 39.96 52.95 36.02 12.87 2,663.73 309.99 83.00 226.99 226.99 475.05 475.05
31-Mar-05 3,273.88 125.46 633.62 3.91 4,036.87 3,591.92 34.95 34.60 66.22 63.29 31.09 11.42 3,833.49 203.38 70.00 133.38 0.81 2.89 129.68 248.06 248.06
31-Mar-04 3,588.57 51.86 83.60 1.30 3,725.33 3,457.96 20.28 27.92 81.98 37.46 36.01 13.41 3,675.02 50.31 18.20 32.11 (1.54) 33.65 118.38 118.38
31-Mar-01 5,727.37 53.52 8.71 5,789.60 5,642.31 22.68 41.95 37.15 23.58 7.58 5,775.25 14.35 5.82 8.53 8.53 66.88 66.88
Statements Of Assets & Liabilities, as restated (Rs. In Lacs) 31-Mar-03 31-Mar-02 31-Mar-01
31-Oct-05 1) SOURCE OF FUNDS SHARE HOLDER FUNDS a) Share Capital b) Share Application Money Reserve and Surplus LOAN FUNDS a) Secured Loans b) Unsecured Loans Total APPLICATION OF FUNDS FIXED ASSETS Gross Block Original Cost Less:Depreciation Net Block INVESTMENTS NET CURRENT ASSETS Current Assets Loans & Advances Inventories Sundry Debtors Creditors Debit Balance Loans & Advances Deffered Tax Asset (Net) Cash & Bank Balance
31-Mar-05
31-Mar-04
2) 3)
1,804.86 1,598.75 1,364.85 4,768.46
1,630.66 608.06 505.67 2,744.39
1,450.66 118.38 387.66 1,956.70
950.66 84.73 247.57 140.00 1,422.96
950.66 75.39
303.37 381.04 66.88
261.69 313.12 1,287.74 1,064.41
1) 1
2,663.76 76.47 2,587.29 136.28
988.56 63.60 924.96 167.61
819.85 52.18 767.67 212.79
77.30 38.77 38.53 688.27
70.19 29.05 41.14 443.18
103.35 19.82 83.53 187.75
2) 3) a b c d e f
a b
4)
332.91 1,462.32 87.14 0.73 1,232.80 3,115.90 CURRENTLIABILITIES AND PROVISIONS Current Liabilities 963.41 Provisions 112.49 1,075.90 2,040.00 MISCELLANEOUS EXPENDITURE ( To the extent not written off of adjusted ) Preoperative Expenses 4.89 4,768.46
320.06 681.38 456.23 0.73 600.78 2,059.18 294.98 118.23 413.21 1,645.97
223.29 857.92 85.19 1.54 89.96 1,257.90 248.51 39.45 287.96 969.94
296.34 852.37 191.19 150.18 64.28 1,554.36 837.25 24.16 861.41 692.95
44.38 368.34 438.31 35.64 886.67 73.10 14.43 87.53 799.14
65.14 465.72 269.43 98.26 898.55 85.28 20.30 105.58 792.97
5.85 2,744.39
6.30 1,956.70
3.21 1,422.96
4.28 0.16 1,287.74 1,064.41
THE ISSUE Particulars Public Issue of Equity Shares Of which: Qualified Institutional Buyers Portion* No. of Equity Shares 65,00,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. [] Up to 32,50,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. [] (Allocation on a proportionate basis) Not Less than 9,75,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. [] (Allocation on a proportionate basis) Not Less than 22,75,000 Equity Shares of Rs. 10/- each for cash at a premium of Rs. [] (Allocation on a proportionate basis) 1,84,40,580 Equity Shares 2,49,40,580 Equity Shares Please see the section entitled Objects of the Issue on page 17 of this Draft Red Herring Prospectus.
Non Institutional Portion
Retail Portion
Equity Shares outstanding prior to the Issue Equity Shares outstanding after the Issue Objects of the Issue
Under subscription, if any, in any of the categories, would be allowed to be met with spill over from any of the other categories including from over subscription at our sole discretion in consultation with the BRLM. * As per the recent amendments to the SEBI Guidelines, allocation to QIBs is proportionate as per the terms of this Draft Red Herring Prospectus, 5% of the QIB portion shall be available for allocation to mutual funds. Mutual Funds participating in the 5% reservation in the QIB portion will also be eligible for allocation in the remaining QIB portion.
GENERAL INFORMATION SHIRDI INDUSTRIES LIMITED Registered & Corporate Office: A Wing, Mhatre Pen Building,IInd Floor, S. B. Marg,Dadar (W), Mumbai - 400028. Phone No: 022 24318550 Fax No : 022 - 24372200 Our registered office was originally situated at 303,Vandana Apt.Malwani Marve Rd. Malad (W), Mumbai and subsequently it was shifted to A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai 400028. Registration No.-11-144347 Address of the RoC Mumbai: Mumbai-400002. The Registrar of Companies, Maharashtra, 100, Everest, Marine Lines,
The Board of Directors comprise of the following members: The following table sets forth details regarding our Board of Directors-Name, Designation and Tenure 1. Mr. Rakesh Kumar Agarwal Managing Director Tenure : Non - Rotational Mr. Mukesh Hariram Bansal Director Tenure: Rotational Mr. Sarvesh Hariram Agarwal Whole Time Director Tenure: Non - Rotational Mr. Hariram Budhram Agarwal Whole Time Director Tenure: Non-Rotational Mr. Ashok Laddha Independent Non Executive Director Tenure : Rotational Mr. Rajesh Sanghavi Independent Non Executive Director Tenure: Rotational Mr. Jashbir Singh Independent Non Executive Director Tenure: Rotational
2.
3.
4.
5.
6.
7.
8. Mr.Sujay.N.Kantawala Independent Non Executive Director Tenure : Rotational Details of Managing Director For details of Managing Director of our Company, please refer to section titled Our Management on page 50 of this Draft Red Herring Prospectus.
COMPLIANCE OFFICER Mr. Kanta Prasad Joshi Manager (Finance) A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai -400028. Tel: 022 - 24364520 Fax: 022 - 24372200 E-mail: investors@asisindia.com Investors can contact the Compliance Officer in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted shares in the respective beneficiary account, refund orders etc. COMPANY SECRETARY Mr. Ashwin Panditpautra A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai -400028. Tel: 022 - 24332402 Fax: 022 - 24372200 E-mail: investors@asisindia.com BOOK RUNNING LEAD MANAGER Allianz Securities Limited 33, 6th Floor, Vaswani Mansion, Dinsha Vachha Road, Churchgate, Mumbai-400 020 Tel: 022-22870580 Fax: 022-22870581 Website: www.aslfinancial.com Email: shirdi@aslfinancial.com Contact Person: Ms. Nitasha Rathod SYNDICATE MEMBERS Allianz Securities Limited 33, 6th Floor, Vaswani Mansion, Dinsha Vachha Road, Churchgate, Mumbai-400020 Tel: 022-22870580 Fax: 022-22870581 Email: shirdi@aslfinancial.com Contact Person: Nitasha Rathod Almondz Capital Markets Private Limited 33, 6th Floor, Vaswani Mansion, Dinsha Vachha Road, Churchgate, Mumbai-400020 Tel: 022-22870580 Fax: 022-22870581 Email: shirdi@almondz.com Contact Person: Mr. Ashish Tapuriah REGISTRARS TO THE ISSUE Intime Spectrum Registry Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai 400 078 Tel.: (022) - 55555454 Fax: (022) 55555353 Web site: www.intimespectrum.com E-mail: shirdiipo@intimespectrum.com Contact Person : Mr. Vishwas Attvar
LEGAL ADVISER TO THE ISSUE Kanga & Co. Readymoney Mansion, 43, Veer Nariman Road, Mumbai 400 001. Tel. No.: +91 22 5633 2288 or +91 22 5633 9643 to +91 22 5633 9653 Fax No.: +91 22 5633 9656 E-mail: Preeti.Mehta@kangacompany.com Contact Person: Ms. Preeti Mehta BANKERS TO THE COMPANY Union Bank Of India Mumbai Samachar Marg, Fort, Mumbai 400 023 Tel No: 022 226629300 Fax No.: 022 22674135 E-mail: ubimsmcs@bol.net.in UCO BANK UCO Bank Bldg. Dr.D.N.Road Mumbai-400 023 Tel: 022-22870256 Fax: 022-22870003 E-mail: bo.dnroad@ucobank.co.in ESCROW BANKERS TO THE ISSUE [*] AUDITORS TO THE COMPANY M. P. Kala & Co. Chartered Accountants Sharon House, Plot No. 163, Park street, Smt. Janakidevi Public School Road, S.V. P. Nagar, Andheri (W), Mumbai 400 053. Tel:022-26323192 Fax:022-26323140 Email: mpkala_ca@rediffmail.com Credit Rating As the Issue is of Equity Shares, credit rating is not required. Trustees As the Issue is of Equity Shares, the appointment of Trustees is not required. Monitoring Agency We have not appointed any agency for monitoring the implementation and utilization of funds. Appraising Entity The proposed project of the Company has been appraised by Union Bank of India.
Book Building Process Book building refers to the process of collection of Bids, on the basis of the Red Herring Prospectus within the Price Band. The Issue Price is fixed after the Bid Closing Date / Issue Closing Date. The principal parties involved in the Book Building Process are: The Company; Book Running Lead Manager; Syndicate Members who are intermediaries registered with SEBI or registered as brokers with NSE / BSE and eligible to act as Underwriters. Syndicate Members are appointed by the BRLMs; Escrow Collection Bank(s); and Registrar to the Issue. The Issue is being made through the 100% Book Building Process wherein not more than 50% of the Issue shall be allotted to Qualified Institutional Buyers on a proportionate basis out of which 5% shall be available for allocation on a proportionate basis to Mutual Funds only. The remainder shall be available for allotment on a proportionate basis to QIBs and Mutual Funds, subject to valid bids being received from them at or above the Issue Price. Further, not less than 15% of the Issue would be allocated to Non-Institutional Bidders and not less than 35% of the Issue would be allocated to Retail Individual Bidders on a proportionate basis, subject to valid bids being received from them at or above the Issue Price. We will comply with the SEBI Guidelines for this Issue. In this regard, the Company has appointed the BRLM to manage the Issue and to procure subscriptions to the Issue. Pursuant to amendments to the SEBI Guidelines, QIB Bidders are not allowed to withdraw their Bid(s) after the Bid Closing Date / Issue Closing Date and for further details see the section titled Terms of the Issue on page 110 of this Draft Red Herring Prospectus. We will comply with the Guidelines issued by SEBI for this Issue. In this regard, we have appointed Allianz Securities Limited as BRLM to manage the issue and to procure subscriptions to the Issue. The process of Book Building under SEBI Guidelines is relatively new and Investors are advised to make their own judgment about investment through this process prior to making a Bid or Application in the Issue. Illustration of Book Building and Price Discovery Process (Investors should note that this example is solely for illustrative purposes and is not specific to the Issue) Bidders can bid at any price within the price band. For instance, assume a price band of Rs. 20 to Rs. 24 per share, issue size of 3,000 equity shares and receipt of five bids from bidders, details of which are shown in the table below. A graphical representation of the consolidated demand and price would be made available at the bidding centers during the bidding period. The illustrative book as shown below shows the demand for the shares of the company at various prices and is collated from bids from various investors. Bid Quantity 500 1000 1500 2000 2500 Bid Price (Rs.) 24 23 22 21 20 Cumulative Quantity 500 1500 3000 5000 7500 Subscription 16.67% 50.00% 100.00% 166.67% 250.00%
The price discovery is a function of demand at various prices. The highest price at which the issuer is able to issue the desired number of shares is the price at which the book cuts off, i.e., Rs. 22 in the above example. The issuer, in consultation with the book running lead managers, will finalize the issue price at or below such cut off price, i.e., at or below Rs. 22. All bids at or above this issue price and cut-off bids are valid bids and are considered for allocation in the respective categories. Steps to be taken for bidding: Check eligibility for bidding, see the section titled Issue Procedure-Who Can Bid? on page 114 of this Draft Red Herring Prospectus; Ensure that the Bidder has a demat account; and
8
Ensure that the Bid cum Application Form is duly completed as per instructions given in this Draft Red Herring Prospectus and in the Bid cum Application Form. Withdrawal of the Issue Our Company, in consultation with the BRLM, reserves the right not to proceed with the Issue at anytime after the Bid Opening Date/ Issue Opening Date but before Allotment, without assigning any reason thereof. Bid/Issue Programme Bidding Period/Issue Period BID/ISSUE OPEN ON: [] BID/ISSUE CLOSE ON: [] Bids and any revision in Bids shall be accepted only between 10 a.m. and 3 p.m. (India Standard Time) during the Bid/ Issue Period as mentioned above at the bidding centers mentioned on the Bid cum Application Form except that on the Bid Closing Date, the Bids shall be accepted only between 10 a.m. and 1.00 p.m (Indian Standard Time) and updated till such time as permitted by the BSE and NSE on the Bid/ Issue Closing Date. Any revision in the Price Band and the revised Bid/ Issue Period, if applicable, will be duly disseminated by notification to the BSE and NSE by issuing a press release and also by indicating the change on the website of the BRLM and at the terminals of the Members of the Syndicate. The Company reserves the right to revise the Price Band during the Bidding Period in accordance with SEBI Guidelines. The cap on the Price Band should not be more than 20% of the floor of the Price Band. Subject to compliance with the immediately preceding sentence, the floor of the Price Band can move up or down to the extent of 20% of the floor of the Price Band advertised at least one day prior to the Bid Opening Date/Issue Opening Date. Underwriters to the issue After the determination of the Issue Price and allotment of our Equity Shares but prior to filing of the Prospectus with the RoC, our Company will enter into an Underwriting Agreement with the Underwriters for the Equity Shares proposed to be offered through this Issue. It is proposed that pursuant to the terms of the Underwriting Agreement, the BRLMs shall be responsible for bringing in the amount devolved in the event that their respective Syndicate Members do not fulfill their underwriting obligations. The Underwriters have indicated their intention to underwrite the following number of Equity Shares: (This portion has been intentionally left blank and will be filled in before filing of the Prospectus with the RoC) Name and Address of the Underwriters Allianz Securities Limited Almondz Capital Markets Pvt. Ltd. Indicative Number of Equity Shares to be Underwritten [] [] Amount Underwritten(Rs. million) [] []
The above-mentioned amount is indicative underwriting and this would be finalized after pricing and actual allocation. The above Underwriting Agreement is dated []. In the opinion of our Board of Directors (based on a certificate given by the Underwriters), the resources of all the above mentioned Underwriters are sufficient to enable them to discharge their respective underwriting obligations in full. All the above-mentioned Underwriters are registered with SEBI under Section 12(1) of the Securities and Exchange Board of India Act, 1992 or registered as brokers with the Stock Exchange(s). Allocation among Underwriters may not necessarily be in proportion to their underwriting commitments. Notwithstanding the above table, the Underwriters shall be severally responsible for ensuring payment with respect to Equity Shares allocated to investors procured by them. In the event of any default, the respective Underwriter in addition to other obligations to be defined in the Underwriting Agreement will also be required to procure / subscribe to the extent of the defaulted amount.
9
CAPITAL STRUCTURE OF THE COMPANY (Amount Rs. in Lakhs) Aggregate Aggregate Nominal Value value at Issue Price (A) Authorized Share Capital 3,00,00,000 Equity shares of Rs.10/- each (B) Issued, Subscribed and Paid-up Equity Capital 1,84,40,580 Equity shares of Rs.10/- each fully paid up (C) Present Issue in terms of this Draft Red Herring Prospectus 65,00,000 Equity Shares of Rs.10/- each fully paid up shares (D) Paid up capital after the Issue 2,49,40,580 Equity shares of Rs.10/- each fully paid up (E) Share Premium Account Before the Issue After the Issue DETAILS OF INCREASE IN AUTHORIZED CAPITAL Date December 15,1993 February 3,1998 December 5,2001 March 22,2004 August 31,2004 October 31,2005 Authorized Capital (Rs.in Lakhs) 50.00 350.00 1000.00 1500.00 2100.00 3000.00 Face Value (Rs.) 10.00 10.00 10.00 10.00 10.00 10.00 No.of Shares 5,00,000 35,00,000 100,00,000 150,00,000 210,00,000 300,00,000 Particulars Incorporation Increase Increase Increase Increase Increase 3000.00 1844.06 650.00 2494.06 1295.55 [*]
[*] [*]
NOTES FORMING PART OF THE CAPITAL STRUCTURE: 1. Capital Build up: Equity Share Capital History of the Company (Capital Build up): No. Equity Shares of Face Value (Rs.) 20 100 Issue Price Per share (Rs.) 100 Consi derati on Reasons for allotment Cumulative Paid-up Capital Cumulative Share Premium Account (Rs.) 0 0 0 0 0 0 0
Date of allotment/ Fully paid up 15.12.93
Shares allotted to 2000 subscribers 28.03.94 730 100 100 Cash Further allotment 75000 of shares The shares of the Company have been sub divided from Rs. 100 to Rs. 10 at EGM dated 2.12.94 5000000 31.03.96 4,92,500 10 10 Cash Further Allotment of shares 30336500 12.02.98 25,33,650 10 10 Cash Further Allotment of shares 56961500 15.12.01 26,62,500 10 10 Cash Further Allotment of shares 95065800 04.02.02 38,10,430 10 10 Cash Further Allotment of shares 31.03.04 50,00,000 10 10 Cash Further 145065800
10
Cash
28.02.05 16.09.05
18,00,000 17,42,000
10 10
30 53.84
Cash Capital isation of Plant Capital isation of Plant
Allotment shares Further Allotment shares Further Allotment shares Further Allotment shares
of 163065800 of 180485800 of 184405800 of 12,95,54,560 11,23,69,280 3,60,00,000
16.12.05
3,92,000
10
53.84
No shares have been issued for consideration other than cash except for share issued against capitalization of plant as mentioned in the above table. 2. Sr. No Name Shareholding of Promoter Group and Others: Date Of Allotment / Transfer Date When Made Fully paid up 15.12.93 28.03.94 12.02.98 04.02.02 24.10.03 28.03.94 12.02.98 04.02.02 24.10.03 28.03.94 31.03.96 12.02.98 04.02.02 24.10.03 24.10.03 04.02.02 04.02.02 15.12.93 28.03.94 31.03.96 12.02.98 04.02.02 Consid eration (Cash, bonus, kind, etc.) Cash Cash Cash Cash Cash Total Cash Cash Cash Cash Total Cash Cash Cash Cash Cash Cash Total Cash Cash Total Cash Cash Cash Cash Cash Total Cash Cash Cash Total Type of Transaction No. of Shares Lock in Face Value Issue Price % of PreIssue Paid-up Capital 7.19 % of PostIssue Paidup Capit al 5.31
1.
Mr. Rakesh Hariram Agarwal
15.12.93 28.03.94 12.02.98 04.02.02 24.10.03 28.03.94 12.02.98 04.02.02 24.10.03 28.03.94 31.03.96 12.02.98 04.02.02 24.10.03 24.10.03 04.02.02 04.02.02 15.12.93 28.03.94 31.03.96 12.02.98 04.02.02
Subscription Allotment Allotment Allotment Transfer Allotment Allotment Allotment Transfer Allotment Allotment Allotment Allotment Transfer Transfer Allotment Allotment Subscription Allotment Allotment Allotment Allotment
2.
Mr. Mukesh Bansal
3.
Mr. Sarvesh Agarwal
4. 5.
Mr. Hariram Agarwal Mrs. Bansal Anita
100 2,050 13,350 3,29,940 9,80,000 13,25,440 500 2,68,690 12000 10,12,500 12,93,690 700 7,000 4,000 27,570 1,77,284 4,95,216 7,11,770 2,18,700 1,87,500 4,06,200 100 2,050 23,600 12,050 5,21,000 5,58,800 1500 2,68,690 30,060 3,00,250
1 yr. 1 yr. 1 yr. 1 yr. .3 Yrs. 1 yr. 1 yr. 1 yr. 3 Yrs. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 3 Yrs. 1 yr. 3 Yrs. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr.
10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10
10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10
7.02
5.19
3.86
2.85
2.20 3.03
1.63 2.24
6.
Mrs. Rukhmani Agarwal
28.03.94 12.02.98 04.02.02
28.03.94 12.02.98 04.02.02
Allotment Allotment Allotment
1 yr. 1 yr. 1 yr.
10 10 10
10 10 10
1.63
1.20
11
7.
Mrs. Anu Agarwal Mrs. Asha S Agarwal M/s. Sajal Finance & Investment M/s. Rachana Finance & Investments M/s. Dytel Finance & Investments M/s. Asis Overseas. Ltd. M/s. Asis Global Ltd M/s. Asis Industries Pvt. Ltd. M/s. Manhar Properties Pvt. Ltd. Pratibha Finance & Investment Pvt. Ltd. Klinkert Ltd.
28.03.94 12.02.98 04.02.02 04.02.02 31.03.96 12.02.98 04.02.02 12.02.98 12.02.98 04.02.02 04.02.02 04.02.02 31.03.04 31.03.04 28.02.05 12.02.98 12.02.98
28.03.94 12.02.98 04.02.02 04.02.02 31.03.96 12.02.98 04.02.02 12.02.98 12.02.98 04.02.02 04.02.02 04.02.02 31.03.04 31.03.04 28.02.05 12.02.98 12.02.98
8. 9.
Cash Cash Cash Total Cash Cash Cash Cash Total Cash Cash Cash Total Cash Cash Cash Cash Cash Total Cash Cash
Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment Allotment
500 2,68,670 4,65,460 7,34,630 2,58,200 4,61,900 2,43,100 20,000 7,25,000 9,65,000 1,60,000 20,000 1,80,000 9,90,000 7,30,000 26,87,100 23,12,900 13,00,000 63,00,000 49,000 1,85,000
1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 yr. 1 Yrs. 3 year 1 yr. 1 year 1 year
10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10
10 10 10 10 10 10 10 10 10 10 10 10 10 10 30 10 10
3.98
2.95
1.40 3.93
1.04 2.91
10. 11. 12. 13. 14.
5.23 0.98 5.37 3.96 34.16
3.87 0.72 3.97 2.93 25.26
15. 16.
0.27 1.00
0.20 0.74
17.
19.06.05
19.06.05
Capitali sation of plant Capitali sation of plant Cash Cash Total
Allotment
17,42,000
1 year
10
53.84
11.57
8.55
16.12.05 18. Labh Capital Services Pvt. Ltd. Total 3. Sr. No 1 2. 3. 4. 5. 28.02.05 20.01.05
16.12.05 28.02.05 20.01.05
Allotment Allotment Transfer
3,92,000 5,00,000 93,600 5,93,600 184,40,580
1 year 1 year
10 10 30 3.22 2.38
100
65.38
Lock-in Details Name No. of Shares 9,80,000 10,12,500 4,95,216 1,87,500 23,12,900 49,88,116 Face Value 10 10 10 10 10 Issue Price 10 10 10 10 10 % of Post-Issue Paid-up Capital 3.93 4.06 1.99 0.75 9.27 20.00% Lock in Period
Mr. Rakesh Agarwal Mr. Mukesh Bansal Mr. Sarvesh Agarwal Mr. Hariram Agarwal M/s. Asis Industries Pvt. Ltd. TOTAL
3 Yrs. 3 Yrs. 3 Yrs. 3 Yrs. 3 Yrs.
The lock-in-period for the shares would commence from the date of allotment under this issue.
12
Other than the above, the entire pre issue capital of the Company shall be locked in for a period of one year from the date of allotment in this issue. The above Promoters have vide their letter dated January 7, 2006 given their consent for lock in as stated above. The lock in period shall commence from the date of allotment of shares in the Public Issue. Shares issued last have been locked in first. 4. Summary of Lock-in of Promoters/Promoter Group holding and Others: Particulars A. Promoter / Promoter Group Mr. Rakesh Agarwal Mr. Mukesh Bansal Mr. Sarvesh Agarwal Mr. Hariram Agarwal Asis Industries Pvt. Ltd. Mrs. Anita Bansal Mrs. Rukhmani Agarwal Mrs. Anu Agarwal Mrs. Asha S Agarwal Sajal Finance & Investment Rachana Finance & Investments Dytel Finance & Investments Asis Overseas. Ltd. Asis Global Ltd Manhar Properties Pratibha Finance & Investment Pvt. Ltd. Labh Capital Services Pvt. Ltd. B. Others Klinkert Limited Total 5. Shares under Lock-in for 1 year 3 years 3,45,440 2,81,190 2,16,554 2,18,700 39,87,100 5,58,800 3,00,250 7,34,630 2,58,200 7,25,000 9,65,000 1,80,000 9,90,000 7,30,000 49,000 1,85,000 5,93,600 21,34,000 1,34,52,464 9,80,000 10,12,500 4,95,216 1,87,500 23,12,900 Total shares held 13,25,440 12,93,690 7,11,770 4,06,200 63,00,000 5,58,800 3,00,250 7,34,630 2,58,200 7,25,000 9,65,000 1,80,000 9,90,000 7,30,000 49,000 1,85,000 5,93,600 21,34,000 1,84,40,580
49,88,116
Locked-in Equity Shares held by the Promoters can be pledged with banks or financial institutions as collateral security for loans granted by such banks or financial institution. The equity shares to be held by the promoters under lock-in period shall not be sold/ hypothecated/ transferred during the lock-in period. However, in terms of Clause 4.16(b) of the SEBI Guidelines, the Equity Shares may be transferred among the Promoters/ Promoter group or to a new promoter or persons in control of the Company, subject to continuation of lock-in in the hands of the transferees for the remaining period and compliance of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as applicable. The Equity Shares held by the persons other than the Promoters may be transferred to any other person holding shares prior to the issue, subject to the continuation of the lock-in with transferees for the remaining period and compliance with the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, as applicable. The securities which are subject to lock-in shall carry inscription `non-transferable along with duration of specified non-transferable period mentioned in the face of security certificate. No shares forming part of the Promoterscontribution consist of any private placement made by solicitation of subscription from unrelated persons either directly or indirectly. Specific written consent has been obtained from the Promoters in respect of the lock-in on their respective shareholding. There is no buy back or stand by arrangement for purchase of equity shares by the Promoters, Directors, Company or BRLM for the equity shares through this Red Herring Prospectus. There has been no sale or purchase of Equity Shares of the Company by the Promoters and Promoter Group, during the period of six months preceding the date on which the Draft Red Herring Prospectus is filed with SEBI.
6.
7. 8.
13
9.
None of Director holds Equity Shares in the Company as on the date of filing this Draft Red Herring Prospectus with SEBI except the following: Sr. No 1 2 3 4 Name No. of shares % of Issued Capital 7.19% 7.02% 3.86% 2.20%
Mr. Rakesh Hariram Agarwal Mr. Mukesh Bansal Mr. Sarvesh Hariram Agarwal Hariram Agarwal
13,25,440 12,93,690 7,11,770 4,06,200
10. 11. a)
The Promoters Contribution brought by persons defined as promoters under the SEBI Guidelines is not less than the specified minimum lot. Details ten largest Shareholders of the Company As on the date of filing the Draft Red Herring Prospectus with SEBI Name Asis Industries Pvt Ltd Klinkert Limited Rakesh Kumar Agarwal Mukesh Bansal Asis Overseas Limited Rachana Finance & Investmnt Pvt Ltd Anu Agarwal Asis Global Limited Sajal Finance & Investment Pvt Ltd Sarvesh Agarwal No. of shares 63,00,000 21,34,000 13,25,440 12,93,690 9,90,000 9,65,000 7,34,630 7,30,000 7,25,000 7,11,770
Sr. No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
b) Ten days prior to filing Draft Red Herring Prospectus with SEBI Sr. No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Name Asis Industries Pvt Ltd Klinkert Limited, UAE Rakesh Kumar Agarwal Mukesh Bansal Asis Overseas Limited Rachana Finance & Investmnt Pvt Ltd Anu Agarwal Asis Global Limited Sajal Finance & Investment Pvt Ltd Sarvesh Agarwal No. of shares 63,00,000 21,34,000 13,25,440 12,93,690 9,90,000 9,65,000 7,34,630 7,30,000 7,25,000 7,11,770
c) Two years prior to filing the Draft Red Herring Prospectus with SEBI Sr. No 1. 2. 3. 4. 5. Name Rakesh Kumar Agarwal Mukesh Bansal Asis Overseas Limited Rachana Finance & Investmnt Pvt Ltd Anu Agarwal
14
No. of shares 13,25,440 12,93,690 990,000 965,000 734,630
6. 7. 8. 9. 10.
Asis Global Limited Sajal Finance & Investment Pvt Ltd Sarvesh Agarwal Mrs. Anita Bansal Mr. Hariram Agarwal Pre-issue and Post-issue Shareholding pattern
730,000 725,000 7,11,770 558,800 406,200
12.
Particulars
Pre-issue shareholding No. of shares % to the present share capital 30.31% 69.69% 0 100%
Post issue shareholding No. of shares 5,588,980 12,851,600 [*] [*] % to the post share capital [*] [*] [*] 100
Promoters, & Relatives Bodies Corporate Public TOTAL 13. 14. 15. 16. 17. 18.
5,588,980 12,851,600 Nil 18,440,580
The Company has not raised any bridge loans against the proceeds of this Issue. Investors may note that in case of over-subscription, allotment will be on proportionate basis as detailed in para on Basis of Allocation on page no. 130 of this Draft Prospectus. An over-subscription to the extent of 10% of the Net Offer to the Public can be retained for the purpose of rounding off to the nearest multiple, while finalizing the allotment. The Equity Shares offered through this Issue will be fully paid up. An applicant in the Net Offer to the Public category cannot make an application for a number of Equity Shares, which exceeds the Net Offer to the public. On the date of filing the Draft Red Herring Prospectus with SEBI, there are no outstanding financial instruments or any other rights which would entitle the existing Promoters or shareholders or any other person any option to receive equity shares after the Issue. Except shares issued to Klinkert Limited against capitalization of Plant and machinery, we have not issued any shares for consideration other than cash. We have not issued any Equity Shares out of revaluation reserves. There would be no further issue of capital whether by way of issue of bonus shares, preferential allotment, rights issue or in any other manner during the period commencing from submission of this Draft Red Herring Prospectus with SEBI until the Equity Shares offered through this Draft Red Herring Prospectus have been listed. The Company presently does not have any intention or proposal to alter its capital structure for a period of six months from date of opening of the Issue, by way of split/consolidation of the denomination of Equity shares or further issue of Equity shares (including issue of securities convertible into Equity Shares) whether preferential or otherwise. However, during such period or a later date, it may issue Equity Shares pursuant to the plan or issue Equity shares or securities linked to equity shares to finance an acquisition, merger or joint venture or as consideration for such acquisition, merger or joint venture, or for regulatory compliance or such other scheme of arrangement if an opportunity of such nature is determined by its Board of Directors to be in the interest of the Company. At any given point of time there shall be only one denomination for a class of Equity Shares of the Company, unless otherwise permitted by law and the Company shall comply with disclosures and accounting norms as may be specified by SEBI from time to time. The company has 18 shareholders as on the date of filing of this Draft Red Herring Prospectus.
15
19. 20. 21.
22.
23.
24.
25.
Restrictive conditions and negative lien under lenders agreements about capital structure There are restrictive covenants in agreements we have entered into with certain banks for short-term loans and long-term borrowings. These restrictive covenants require us to seek the prior permission of the said banks for various activities, including, amongst others, alteration of our capital structure, raising of fresh capital, undertaking new projects, undertaking any merger/ amalgamation/restructuring, investing by way of share capital in or lend or advance funds to or place deposits with any other concern, secured or unsecured borrowings, undertaking guarantee obligations, declaration of dividend not exceeding 20% of the net profits and change in management. In addition, there are negative lien in the lenders agreement which provide that the Company shall not create, without the prior consent of the bank , charge/s on their all or any assets, other than the charge/s created/ to be created in favour of the consortium banks for the Working Capital facilities enjoyed by the Company. There will not be any investments without the prior consent of the bank in writing viz. investment in shares of quoted Companes, Investments including those of money market, Inter Corporate/Deposits, investment in real estate (excluding companys own building to house its own offices/factories) and loans to the Directors, Promoters, Associates and Subsidiaries. Further, the agreement restricts family members, friends, promoters and directors to withdraw deposits or advances during the currency of the loan, extend finance to associate concerns during the currency of the Bank borrowing.
16
OBJECTS OF THE ISSUE The Company is engaged in various activities ranging from consultancy services, importers of Medium Density Fibre (MDF) Boards. Since October 2003, the Company has started manufacturing of panel doors, door skins and furniture components at Navi Mumbai. Currently the demands for MDF and particle boards are met through imports having high landed cost on account of high cost of logistics and import duty. In India there are limited plants for manufacture of these products against which demand is rising. Further the usage / demand of this product is widening on account of high cost of alternate products (plywood, solid wood & other panels), changing habits of people, environmental problems on account of erosions of the forest resources etc. Further, it is much cheaper and advantageous to go for furniture and furnishings from MDF and particle boards. Therefore, the Company decided to set up manufacture of MDF and Particle Board (PB) plain & pre-laminated both, with a total project cost of Rs. 9001.08 lakhs. In addition, the Company also decided to set up new capacities of pre-laminated board, flooring, door skins, laminates, doors and furniture components at an estimated cost of Rs. 3739.46 lakhs. The total cost of both the projects, as has been appraised by Union Bank of India, has been worked out to Rs. 12740.54 lakhs. The object of the issue is to partly finance the project cost. Products proposed to be manufactured Name of the Item Plain MDF Board Plain Particle Board Pre-laminated MDF Board Pre-laminated particle Board Flooring made of Pre-laminated MDF Board & Particle board HDF Door Skins Decorative Laminates Door Skins Panel Door Furniture Components (Source Appraisal Report) Proposed Manufacturing Capacities 2380665 Sq. mtrs(New) 1444967 Sq. mtrs(New) 2429250 Sq. mtrs(New) 3536633 Sq. mtrs (New) 300000 Sq. Mtr. (New) 396000 Nos. (New) 2700000 Sq. Mtr. (New) 36000 Nos. (Additional) 75000 Nos. (Additional) 75000 Sq. Mtr. (Additional)
Project for manufacture of 48,58,500 sq.mtrs of MDF and 50,52,333 sq.mtrs of Particle Board including 10,70,000 sq. mtrs of pre-laminated MDF and 24,10,000 sq.mtrs of pre-laminated PB is referred as Up-Stream Project. The additional capacity of Pre-Laminated Board, Flooring, Door-skins, laminates, door and furniture components are value added products of Up-stream Project and therefore, referred as Down-Stream Project. The plant will have an installed capacity of 48,58500 sq.mtrs of MDF Board and 50,52,333 sq. mtrs of Partcle Board.Of this, capacity for the prelaminated MDF and PB would be 10,70,000 and 24,10,000 sq.mtrs respectively Project Appraisal Union Bank of India appraised the up-stream project in April, 2005 and sanctioned term loan of Rs. 3390 lakhs as Lead Bank and Rs. 2256 lakhs of term loan was sanctioned by UCO Bank. The Company in the meantime decided to set up down-stream project also, for which Union Bank of India has re-appraised the project in November, 2005. Total Cost of Project Up Stream 627.50 100.00 775.00 5,689.56
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PARTICULARS 1 2 3 4 Land Land Development & Fencing Premises & Building Plant & Machinery -
(Rs. In lakhs) Down Stream 75.00 280.00 1,940.48
Total Cost 627.50 175.00 1,055.00 7,630.04
Erection & Commissioning Computers & Software Office Equipment Motor Vehicle Furniture & Fixtures Pre-operative Expenses Public Issue Expenses Preliminary Expenses Contingency 5% (Item 1 to 9) Working Capital Margin / Gap TOTAL (Source: Appraisal Report) Means of Finance
5 6 7 8 9 10 11 11 12 13
300.00 40.00 20.00 20.00 25.00 385.41 379.85 638.76 9,001.08
100.00 250.00 119.77 974.21 3,739.46
400.00 40.00 20.00 20.00 25.00 385.41 250.00 499.63 1,612.96 12,740.54
The estimated total cost of the project Rs.12,740.54 lakhs will be part financed by debt and equity in the ratio of 51:49 as under:
(Rs. In lakhs) Sr. No . 1. 2. 3. Particulars As per Appraisal of upstream project (April, 2005) 197.88 750.00 Share Capital 354.00 3390.00 2256.00 900.00 30.00 9001.78 Premium 1123.00 Share Capital 754.00 3390.00 2256.00 1150.00 30.00 12741.00 As per Appraisal of upstream and value added project (November, 2005) 487.00 750.00 Premium 3923.00 Revised arrangements (Estimated Company) 487.00 750.00 Share Capital 180.00 213.40 Premium 360.00 935.55 Already received Already received Tied up Tied up Tied up Remarks by Already received Rs. 29.00 lakhs Already received
Internal accruals Sale of Assets Equity Share Capital Share Capital & Premium * Promoters Klinkert Public Issue Term loan from UBI Term loan from UCO Bank Unsecured Loan from Promoters Loan from SIDCUL Cash subsidy TOTAL
a) b) c) 5. 6. 7. 8. 9.
650.00 [*] 3390.00 2256.00 [*] ** 142.00 30.00 12741.00
* There was no categorization of Share Capital between Promoters, Klinkert and Public according to the appraisal of Union Bank of India. ** At the time of appraisal, the Company had planned for increase in paid up capital of Rs. 400 lakhs at a price of Rs. 80/- per share and unsecured loan from promoters to the extent of Rs. 1150 lakhs. The total requirement as per appraisal through increase in capital and Unsecured loan was to the extent of Rs. 5827 lakhs. The
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Company has already received an amount of Rs. 1688.95 lakhs from Promtoers and Klinkert (supplier of plant & machinery). The Company has also tied up for payment of 50% of Land amount (Rs.284.63 Lakhs) payable to SIDCUL with them, wherein the payment has to made in four 6 monthly installments. Since the Compny proposes to commence the production of all the products before November 2006, two installments will remain pending for payment before the commencement. Accordingly, term loan of Rs.142 Lakhs has been shown as tied up with SIDCUL. The company is now required to arrange an amount of Rs. 3996.05 lakhs through Public Issue and unsecured loan. The Company is now planning public issue of 65,00,000 equity shares through bookbuilding in the price band of Rs. [*] to Rs. [*]. In the event of amount raised through IPO being less than Rs. 3996.05 lakhs, the Promoters will arrange the difference through unsecured loan. In case the company realises an amount exceeding Rs. 3996.05 lakhs, the surplus amount will be used for meeting the requirement of unsecured loan and working capital or general corporate purposes. The important terms and conditions of Union Bank of India and UCO Bank are as under: Facility Sanction Amount (Rs. in Lacs) 3390 lacs (Union Bank of India) Security Rate of Interest
Term loan Foreign Currency Term Loan
Term loan / Foreign Currency Term Loan
Primary Pari passu charge on the assets acquired out of term loan. Collateral 1. First charge by way of equitable mortgage of Immovable property such as residential flats, Land & building and office premises of group companies valued for Rs. 1386 lakhs. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 0.78 lacs) 2. Mr. Mukesh Bansal (Rs. 1.93 lacs) 3. Mr. Hariram Agarwal (Rs. 0.65 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd. 2256 lacs Primary Hypothecation of plant, machinery to be (UCO Bank) purchased on pari-passu basis with other members of consortium. Proposed value on completion : Rs. 6095 lakhs) Collateral 1. First charge by way of equitable mortgage of Immovable property such as residential flats, Land & building and office premises of group companies valued for Rs. 1386 lakhs. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 414 lacs) 2. Mr. Mukesh Bansal (Rs. 325 lacs) 3. Mr. Hariram Agarwal (Rs. 81 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd.
Rate of interest As per pricing by International Banking division of the Bankor A floating rate of 1.25% below BPLR i.e. 9.50% if the loan is drawn in rupees.
Floating rate of 1.25% below BPLR or Union Bank of India i.e. effective rate 9.50% for the first 2 years of the loan with interest reset clause from the third year.
The Company hereby confirms that firm arrangements have been made through verifiable means towards 75 % of the stated means of finance, excluding the amount to be raised through proposed Public Issue. Land Both up-stream and down-stream projects will be implemented at the same site for which the Company has identified the site at State Industrial Development Corporation of Uttranchal Ltd. (SIDCUL) Industrial area in Pantnagar, District Udhamsingh Nagar in the State of Uttaranchal. The location is close to North & NorthWest consumption centres of the country. In addition, location is closer to major input materials, which are available in sufficient quantity. The Company will also get benefit of exemption of Excise Duty, Income Tax, Sales Tax & Investment subsidy. The Company has finalised the site at Plot No 1, Sector 9, Industrial Area, II E, Pant Nagar, Distt Udham Singh Nagar, in the State of Uttaranchal. The Company has taken on lease for 90 years nearly 101656 sq. mtr. of land from SIDCUL at a total cost of Rs. 627.50 lakhs.
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Land Development It has been proposed to have RCC/brickwork boundary wall and fencing with steel wires on all 4 sides of the plot. Since the level of the land is down by 3/4 ft., expenses of Rs. 60 lakhs approx have been assumed for land filling also. The development cost of Rs.175 lacs also includes the internal approach roads, boundary, land filling, leveling etc. Building The total constructed area for the factory building, office and administration of staff quarters is estimated at 26375 sq. mtr. The nature of construction for the building blocks is RCC whereas for factory, it will be shed with heights from 6.5 mtr. to 12 mtr. The building will have brick wall upto 3 mtr. height & the remaining structure is pre-engineering comprising of colour coated, galvanised steel sheets for side cladding & roof, with trusses, and structure of high and tensile mild steel. As per estimate received form the Architect, Sijcon Consultants Pvt. Ltd., vide their letter dated November 10, 2005, the cost of land development and building construction is estimated to Rs. 1230.00 Lakhs. Plant & Machinery The total investment on plant and machinery is Rs. 7,630.04 lakhs, details of which are as under: Name of the Item Foreign Exchange Rupee Component Total Component (Rs. in lakhs) (equivalent to Rupees in lakhs) Upstream Downstream Upstream Downstream Upstream Downstream 4282.60 0.00 0.00 4282.60 1141.25 0.00 0.00 1141.25 394.96 200.00 812.00 1406.96 99.23 270.00 430.00 799.23 4677.56 200.00 812.00 5689.56 1240.48 270.00 430.00 1940.48
Imported Equipments Local Equipments Miscellaneous Equipment
The detail of total investment in plant & machinery in different products is as under: Sr.No. 1. 2. 3. 4. 5. 6. 7. 8. Products Particle Board MDF Board Flooring Decorative Laminates Short Cycle Press HDF Door Skin Membrane Press Miscellaneous & Common Equipments TOTAL Rs. in lakhs 2352.27 2149.29 194.35 239.05 485.93 433.40 63.75 1712.00 7630.04
Cost of Imported Plant & Machinery Upstream project The cost of imported plant & machinery as appraised by the banks is estimated as under: Upstream Item MDF Plant Particle Short Cycle Board Plant Press 4200000 150000 75000 300000 25000 10000 Total
FOB($) Dismantling Cost ($) Indian Manpower for Dismantling ($)
3900000 120000 50000
8400000 295000 135000
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Packing ($) Freight ($) C&F Cost (Including Usance 12 months) ($) Insurance @\0.25% of C&F($) CIF Cost ($) Duty ($) Local Transportation ($) Misc. ($) Total ($) Total Equiv. Rs.in Lacs
60000 150000 4280000 10700 4290700 216680 140000 25000 4672380 2149.29
80000 175000 4680000 11700 4691700 236931 160000 25000 5113631 2352.27
5000 10000 350000 875 350875 17719 10000 4000 382594 175.99
145000 335000 9310000 23275 9333275 471330 310000 54000 10168605 4677.56
The Company at the time of appraisal during April, 2005 had planned to purchase MDF plant from Klinkert at an estimated cost of Rs. 2149.29 lakhs. The plant proposed to be acquired was second hand. At the time of finalization, the company decided to purchase the plant from Shanghai Woods Based Panel Company (SWBP) at a total cost of Rs. 1744.56 lakhs due to following reasons: The plant proposed to be acquired from Klinkert requires up-gradation in forming section and press area. The cooling, cutting and sanding area also require upgradation to accommodate the size of the board planned for manufacture in India. The capacity of fibre making machine offered by the supplier is nearly 2 times of the capacity required for the plant. The board size was 6 ft. x 18 ft. against 4 ft. x 8 ft. normally used in India and up gradation in size of line will involve further expenses and reduction in capacity also.
In addition, the company also decided to import Impregnator in the place of acquiring from domestic market for MF Impregnator Paper. The Company is also required to import additional chipping line for particle board plant to avail the benefit of reduced price on less diameter wood which are not suitable for flaker equipment which is being supplied along with main particle board plant. The Company is also upgrading the rotar of flaker through the original manufacturer M/s Homback, Germany at an estimated cost of Rs. 76 lakhs. The estimated cost of the Short Cycle Press has increased from US$ 3,00,000 to Euro 4,50,000. The details of new estimated values of the plant now been imported are as under: (Rs.in Lakhs) Chipping** MDF Short Cycle Impregnator Euro USD Euro Euro 2,00,000 30,80,000* 4,50,000 3,00,000 Contract Value In Foreign Currency 110.00 1390.00 250.00 165.00 Contract Value Dismentalling 5.00 0.00 0.00 0.00 Packing 2.00 0.00 0.00 0.00 Local Trasportation 2.00 0.00 0.00 0.00 Marine Freight 3.00 150.00 0.00 0.00 In land Transportation 2.00 100.00 10.00 5.00 Duty 6.34 69.56 13.00 8.58 Bank Charges, Insurance & Other Misc. 1.00 20.00 5.00 5.00 Misc. 1.50 15.00 5.00 5.00 Net Cost 132.84 1744.56* 283.00 188.58 * The Company has already established the Letter of Credit for import and made advanced payments in accordance with the new contract for USD 20,80,000 and the appraising banks have been informed about the changes. The contract value for MDF board as mentioned above includes a component of technical knowhow and the cost of balancing equipment also for which the contracts with the foreign supplier has yet to be finalized . The value of such equipment and technical know-how is estimated at USD 10,00,000. Name of the Plant
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** For Chipping Line we have still not identified the supplier. However negotiation are going on with the various suppliers and we hope to finanlise the contract in near future The difference between the costs as estimated by the Company and as appraised by Union Bank of India is as under: (Rs.in Lakhs) Name of the Plant Appraised Value New Estimated Value Difference MDF Plant 2149.29 1744.56 (404.73) Short Cycle 175.99 283 107.01 Impregnator 80 188.6 108.6 Additional Chipping Line 0 132.84 132.84 Reconditioning of Rotor 0 76 76 19.72 Total Cost of Imported Plant & Machinery Down-stream project (As per the Appraisal Report) Item FOB(Euro) Dismantling Cost (Euro) Indian Manpower for Dismantling (Euro) Packing (Euro) Freight (Euro) C&F Cost (Euro) Insurance & Bank @\1.50% of C&F (Euro) CIF Cost (Euro) Duty (Euro) 5% Local Transportation (Euro) Misc. (Euro) Total Cost (Euro) Outgo in Foreign Exchange Outgo in Rs. equivalent to Euro Total cost in Rs. lakhs (With exchange rate of Rs. 55) Flooring 300000 5000 5000 5000 10000 325000 4875 329875 16493.75 2000 5000 353369 325000 28369 194.35 Decorative Laminates 400000 0 0 0 5000 405000 6075 411075 20553.75 1000 2000 434629 405000 29629 239.05 Short Cycle HDF Door Skin Press 700000 400000 0 25000 0 25000 0 10000 30000 50000 510000 730000 7650 517650 25882.5 10000 10000 563533 510000 53533 309.94 10950 740950 37047.5 5000 5000 787998 730000 57998 433.40 Membrane Press 100000 0 0 0 5000 105000 1575 106575 5328.75 2000 2000 115904 105000 10904 63.75
Further as per the Order placed with suppliers, there are certain variations in the cost of machines as compared to the appraisal report of Union Bank of India, as per details given below: Name Of Machinery Flooring HDF Door Skin Decorative Laminates Foreign Currency Euro Euro Dollar Price As Per Appraisal 3,00,000 7,00,000 4,00,000 PO/ Contract Value 3,40,000 6,40,000 Difference in Euro 3,50,000* Difference (+) 40,000 (-) 60,000 (-) 20,000 (-) 50,000 $
NET DIFFERENCE (RUPEES IN LAKHS) 34.00 * This does not include the sending and trimming machines which have cost of approx. Rs. 15 lakhs. The Company is yet to place order for the same. Considering the total difference in up-stream and down-stream project, there is negligible variation in cost to the extent of Rs. 0.72 lakhs.
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Imported Plant & Machinery Suppliers The Company is importing plants from following sources for its different products: Item manufacture MDF Board Particle Board of Supplier of Plant Shanghai Wood Based Panel Machinery Co. Ltd. Klinkert Ltd. Condition the Plant New Plant Second Hand of Proforma Invoice (No. & Date) 05SWPM/MDF/116 PI 200512-1.735 FM-BZ Dt. 17-09-2005 and 2005131.735 FM-BZ Dt. 17-092005 200510/15.015 FM-BZ Dt. 22-09-2005. 200510-15.020 FM-BZ Dt. 22-09-2005. 200511-15.014 FM-BZ Dt. 17-09-2005. 200521-17.995 FM-BZ Dt. 09-10-2005 200520-5.58 FM-BZ Dt. 09-10-2005 Email dated January 8, 2006 Value US$2080000 Euro 3380000 equivqlent to USD 42,00,000 Euro 450000 Euro 400000 Euro 300000 Euro 340000 Euro 640000 US$ 3,50,000
Short Cycle Press Short Cycle Press Impregnated Paper Flooring Moulded Panel Decorative Laminates
Klinkert Ltd. Klinkert Ltd. Klinkert Ltd. Klinkert Ltd. Klinkert Ltd. Xinxieli (Suzhou) Enterprise Development Co. Ltd.
Second Hand Second Hand Second Hand Second Hand New Plant New Plant
Klinkert Ltd. is supplier of second hand equipments in this line and they have supplied many such plants in all the parts of world, including India. SWBP is also one of the manufacturers of MDF Plant in China. Cost of Indigenous Equipment and Utility Items The manufacturing of upstream and down stream products requires machinery for making different items and the auxiliary / utility equipments as under: Cost of the Auxillary Equipment Item Resin Making Equipments Cables & Ellectrical Panels Impregnation line HPL Press Furniture components machines Resin Plant Total (Source : Appraisal Report) Cost of Utility, Services & Misc. Equipments (Indigenous) Item A/C Plant (for storage of melamine coated paper) Steam Boiler Storage Tanks for Resin & Chemicals Thermic Fluid Heater
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Cost (Rs. in lakhs) 30.00 90.00 80.00 70.00 150.00 50.00 470.00
Cost (Rs. in lakhs) 10 150 30 40
Water Treatment Plant Cooling Towers Air Compressor Driers Water & Chemical Pumps Cold and hot water tanks, Storage tanks for chemicals Pollution Control Equipments Handling equipments like trolley, fork lift, Tracter etc Pipe Line for steam and water and thermic fluid and air alongwith insulation Electric and switch gear including transformer, DG Set & Sub station Lab Equipments Workshop Equipments Fire Fighting Equipments Overhead Crane Weigh Bridge 30 Tones Capacity A/C Plant (for storage of melamine coated paper) Steam Boiler Storage Tanks for Resin & Chemicals Thermic Fluid Heater Water Treatment Plant Cooling Towers Air Compressor Water & Chemical Pumps Cold and hot water tanks, Storage tanks for chemicals Pollution Control Equipments Pipe Line for steam and water and thermic fluid and air along with insulation Cables & Electrical Panels Total (Source: Appraisal Report)
15 12 10 40 15 15 15 35 200 150 20 10 20 10 15 10 100 30 40 10 10 10 10 15 15 100 90 1252
Out of total requirement of utilities, indigenous & miscellaneous equipments of Rs. 1722 lakhs, the company has placed orders for Rs. 401.31 lakhs and the balance orders are yet to be placed. Erection and commissioning cost The erection and commission cost is estimated at Rs.400 lakhs, which covers the expenses on foundation of machinery and cost of the installation team of the overseas supplier, who will be stationed at plant location for at least 16 weeks or till successful commercial production. It also includes the cost to be paid to local contractors for doing the necessary civil, electrical and mechanical work at site. Pre-operative expenses Pre-operative expenses of Rs.406.85 lakhs are mainly on account of interest during construction, cost on labour, employees, public issue, foreign travel, statutory expenses, etc. The project has gestation period of 16 to 18 months till the date of trial production.
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Interest during construction Since the production is likely to commence from October 2006, the interest has been worked out as per the loan drawal schedule, which is given as a part of the project report. The disbursement for the term loan will commence from October, 2005 however letter of credit for Imported Equipments is already opened in first week of May, 2005. It is also proposed that advance for the equipments shall be paid out of proposed contribution to be brought in by Promoters. The Interest during construction has been estimated at Rs. 231.82 lakhs and same is capitalized on a pro-rata basis to respective assets. Margin for Working Capital Particulars 2005-06 Months 0.25 1.5 1.0 2.0 2005-06 Amount(in lakhs) 9.28 384.59 32.60 881.19 1,307.65 919.69 827.89 512.89 315.00 2006-07 Months 0.25 1.5 1.0 2.0 2006-07 Amount(in lakhs) 222.94 1,600.93 732.60 3,407.16 5,963.63 956.90 4,959.54 *2,002.27 2,957.27
Stock WIP Stock FG Stock RM Debtors Current Assets (A) Current Liabilities (B) Net Current Assets(A)-(B) Less: Margin Bank Finance (Source: Companys Estimate)
* Rs. 2,002.27 lakhs includes margin money for existing working capital requirement for Rs. 389.30 lakhs. Therefore, for the project the required margin money is Rs. 1612.97 lakhs. The company has already submitted the application for the sanction of Working Capital requirement to Union Bank of India and UCO Bank RAW MATERIALS The major raw material for manufacture of MDF and PB is wood waste of different types i.e. Saw dust, cuttings, trimming, used furniture, chips and all under sized trees grown as commercial plantation. The input material can also be used from wood available from small trees, firewood & Tree branches. Wood waste is generated from the production lumber, plywood, rejection, size cut, scrap, trimming, cutting, saw dust and post consumer use where the furniture has served its use and it is destined for disposal. In the manufacturing of MDF & Particle Board, over 95% of the wood available from a tree is utilized as against less than 60% in the case of items made out of timber or plywood. Being the first industry of this nature in the State of Uttaaranchal, no difficulty is envisaged in getting continuous supply of wood waste as a major input. The availability of wood in Uttaranchal has been confirmed by the Department of Forest of State Government based on which the requirement of Company has been recommended for consumption by a Nodal agency appointed by the State Government in compliance of the order of Central Empowered Committee constituted by the Honorable Supreme Court of India in the matter related to Wood based industry. The CEC has also accepted the recommendation of Nodal agency in this regard. For manufacture of other products, the Company requires following raw materials: Name of the Item Pre-laminated boards Flooring made of Pre-laminated MDF Board & Particle board HDF Door Skins Decorative Laminates Door Skins Panel Door Furniture Components Raw Material Plain MDF / Particle Board, Decorative Paper, Melamine Resin, Barrier Paper, Packing Material, Formaldehyde Pre-laminate MDF/Particle Board, Packing Material Plain MDF/Particle Board, Packing Material Craft Paper, Decorative Paper, Phenol, Melamine, Formaldehyde, Packing Material Plywood / MDF / Particle Board, Glue, PVC Foil, Packing Material Flush door, Glue, PVC Foil, HDF Door Skin, Packing Material Laminate, Impregnated Paper, Glue, PVC, Paint, Veneer, Plywood, Particle Board, MDF Board, Packing Material
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All the above raw materials (Paper, Chemicals, Resin, PVC & Wood etc.) are easily available in market. The Company in the up stream project shall manufacture main raw material i.e. MDF Boards, Particle Board & Impregnated Paper, which will be used for making value added products. None of the item required by the Company is proprietary or patented in nature. Infrastructural facilities Power Consumption The total requirement of power at full capacity has been estimated at 9505 KW utilization, details of which are as under: Name of Section MDF Pant Particle Board Plant Short Cycle Press Flooring HDF Door Skin Decorative Laminates Resin Mixing Impregnation PVC Products Utility & Services Miscellaneous Prelaminated Boards Door Skins Panel Door Furniture components Total (Source: Appraisal Report) Connected Load KW 4000 3500 200 100 200 500 100 125 100 130 50 200 100 100 100 9505 Operational Load KW 2800 2200 150 70 150 350 70 90 70 100 40 160 70 70 70 6460
The Company has already applied for sanction of power to Uttaranchal Power Corporation and the sanction letter has been received. However, the power would be available in April 2006. Since the commencement of production is planned in May 2006 it is felt that the power will be timely available. The Company also plans to install DG sets for 1250 KVA for emergency operations, meeting office and general lighting requirements and the process requirements of critical machines. Heat Required (K. Cal.) The estimated requirement of heat for various sections of the plant is as under: Sr. No. 1. Name of section Plain Particle Board Plant MDF Board Plant Short Cycle Press Resin Tank HPL Press Proposal by the Company The Company has already purchased Jet Driers to produce the required heat. Cost of these Jet Driers is included in Particle Board Plant. For press the heat will be by Thermic fluid boiler for which order is placed to Thermex The Company plans to install Steam Boilers for 15 tons / hr. capacity and heat requirement for press will be met through Thermic Fluid Heater. The orders will be placed in Feb 06. The Company will install Thermic Fluid Heater for which orders have been placed to M/s. Thermax The Company plans to install the boiler of required capacity, for which the order has been placed to M/s.Thermex. The same is proposed to be produced through Steam Boiler and thermic fluid heater for which order is placed with Thermex.
2. 3. 4. 5.
The Company is negotiating for most competitive and technically feasible proposal from leading suppliers in India to arrive at optimum Boiler capacities and Thermic Fluid Heater capacity.
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Water The total requirement of water in the operation of the Company is estimated at 125 K.Ltr. per day. However, considering the fact that the Company is setting up a wood based industry, water tank of 700 K.Ltr. capacity has been constructed at the site. The extra capacity of the tank will be utilized for adequate installation of fire retarders. Manpower Total Manpower requirement (Plant) Particular VP Technical Works Manager Manager Supervisor Skilled Labour Un-skilled Clerks Total Total Manpower requirement (Administrative & Marketing) Particular Director GM Marketing GM Finance DGM Marketing DGM Finance DGM Commercial Company Secretary Area Managers Marketing Administrative / Office Staff Grand total No. 4 1 1 1 1 1 1 10 50 55 125 1 1 9 96 346 731 66 1250 No.
We are in the process of recruiting manpower for the project and some persons have been already appointed. We are looking for both skilled and unskilled manpower across various functional areas and ensure their technical / professional competence. We are looking at recruiting personnel from various parts of the country. Our proposed projects being located at Uttaranchal and, which is an established industrial town, we do not foresee any difficulty in the availability of and recruitment of the requisite quality manpower. Effluents: In the manufacturing process of all the products there are no major solid, liquid or gaseous effluents having need to treat them before disposal, except in the manufacturing of decorative laminates where Phenol Formaldehyde effluents are required to be treated. The Company has already obtained NOC from the Department of Pollution of the State Government. According to the condition of the approval, the Company will install effluents treatment equipments before the commencement of the production. The project of the Company is being implemented at industrial area developed by SIDCUL which has provision of Combined Effluent Treatment Plant (CETP). Hence the Company is required to treat the effluents to acceptable level in CETP only.
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Cost of ETP Plant The cost of effluent treatment plant and other equipment is taken at Rs. 15 Lakhs based on the treatment suggested by the environmental expert, which is mainly confined to treatment of discharged effluent. Turnover Capacity for All Products 2006-07 (6months) % Capacity utilisation 40% MDF Board 753084 Particle Board 518580 Prelam MDF Board 214330 Prelam Particle Board 482242 Door Skin 9000 Panel Door 18750 Furniture Components 18750 HDF Skin 99000 Flooring 75000 HP Laminates .6 mm 225000 HP Laminates .8 mm 90000 HP Laminates 1 mm 360000 (Source Appraisal Report) Implementation Schedule Particular CEC Approval Arrangement of Promoters Contribution 75% Loan Syndication Land Acquiring Land Development & fencing Building Plan & misc. approval Start 01/10/2004 01/10/2004 01/04/2005 01/10/2004 01/07/2005 01/07/2005 Completion 30/07/2005 30/06/2005 15/08/2005 30/06/2005 31/10/2005 31/03/2006 Remarks Completed Completed Completed Completed Completed The application has been submitted and the same is pending for approval. For the Upstream project over 80% of work is completed and for Downstream project the orders have been placed. Completed & Shipment Started Part of the orders are placed. Started Yet to start Started Started Name of the products (in sq. mtre / nos.) 2008-09 2007-08 50% 1882710 1296451 535824 1205604 25200 52500 52500 277200 210000 630000 252000 1008000 60% 2259251 1555741 642989 1446725 28800 60000 60000 316800 240000 720000 288000 1152000
Building Construction
01/07/2005
31/03/2006
Orders for the Equipment (Import) Orders for the Equipment (Local) Erection & Commissioning Commencement of production Workers Employment Workers Training (Source Appraisal Report)
01/04/2005 01/08/2005 01/10/2006 01/05/2006 01/01/2005 01/01/2005
31/10/2005 31/03/2006 31/10/2006 30/12/2006 30/11/2006 30/11/2006
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PROPOSED DEPLOYMENT OF FUNDS IN THE PROJECT The quarter -wise breakup of proposed deployment of funds is mentioned below: Particulars For the For the quarter ended quarter March, 2006 ended June, 2006 Nil 75.00 300.00 1,140.78 210.00 20.62 75.79 1,822.19 1000 155.00 Plant & Machinery (includes erectioning &comissioning) Issue Expenses Pre-operative Expenses Contingencies Total 577.09 Nil 75.73 36.60 9.25 1,844.43 882.94 Funds Deployed till date and the Sources of this deployment As per certificate received from Statutory Auditors viz. M.P.Kala & Co., Chartered Accountants, dated January 12, 2006, the total funds deployed is Rs. 3625.95 lakhs. The details are as under: Details of Funds deployed Plant & Machinery Land Building Construction Margin Money for Letter of Credit Pre-operative Expenses (interest, dismantling cost, insurance, traveling, salary, etc.) Preliminary Expenses Others Balance in Bank A/c TOTAL Sources of deployment Promoters Contribution Equity Contribution by Klinkert Sale of Assets Term Loan from Union Bank of India Term Loan from UCO Bank Letter of Credit with usance period for import of equipment against which documents are collected Term Loan from SIDCUL Internal Accruals TOTAL Interim Use of Proceeds Our management, in accordance with the policies established by the Board, will have the flexibility in deploying the proceeds received by us from the Issue. Pending utilization for the purposes described above, we intend to temporarily invest the funds from the Issue, in high quality interest bearing liquid instruments including deposits with banks, for the necessary duration. Such investments would be in accordance with the investment policies approved by our Board of Directors from time to time.
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For the quarter ended Sept ,2006 612.96 75.00
For the quarter ended December 2006, Nil 3,652.16
(Rs. in lakhs) For the Total quarter ended March, 2007 Nil 127.50 446.33 Nil 75.73 28.69 1612.96 802.50 1,055.00 8,135.04 250.00 385.41 499.63
Working Capital Land (land&land development) Building
110.00 Nil 75.73
Nil 75.73 182.61 3,910.50
678.25 12,740.54
Rs. in lakhs 2690.92 636.45 592.75 300.00 290.64 12.00 119.44 150.27 4792.47 540.00 1148.95 750.00 590.00 393.00 1137.52 204.00 29.00 4792.47
Technical Viability of the Imported Second hand Plant The process of manufacture of MDF Board and Particle Board is tested worldwide & none of the material & process technology used in manufacture is proprietary in nature. In India the existing plants have proven technology and conventional method of running. Most of the items related to hydraulic, pneumatic and electrical applications are available indigenously. Technical persons in the field in India have required expertise for running such used plants. Since there are several such plants all over the world the original manufacturers of equipments maintain ready stock of spares. In case of second hand plants being imported by the Company, the equipments are in good condition and the original components have been supplied by leading manufacturers like, Siempelkamp, Dieffenbacher, Staeinemann, Pallmann etc. The main equipments are 5 - 12 years old and there are some items much older also, however they have been re-conditioned and upgraded by the previous owner resulting into residual life of more than 25 years. The supplier has also assured the performance guarantee about the quality of product & capacity of the plant. All the service manuals, operation manuals, electrical & hydraulic manuals are also being supplied to ensure proper maintenance of the plant. Since the technology for manufacture has remained same for last several years, the critical spares & components are also available. Our Company has employed technical team for dismantling, erection, commissioning, running and maintenance of the plants. The team of Company has experience ranging from 5 to 25 years in every section associated with the manufacturing, R&D, engineering and maintenance. This team has already dismantled the equipments and the shipment has been made only after replacement of defective parts. Since the same team members will be responsible for erection and commission also, the process will be simple and smooth. The team members are also entitled for training. Further suppliers shall also assist the team of Company in all such activities. Certification about the residual life for used plant The Company has also reconfirmed through Intertek Group technical evaluation of the plant by obtaining certificate on valuation, residual life, technology & status of technical documents being supplied. Intertek Group is internationally reputed Certification agency since 1885. They have certified the average residual life of 25 years for the plant. Manufacturing Process of MDF & Particle Board Production line for MDF & Particle Board use chips/fibre as raw material, add UF & chemicals as adhesive and to convert into proper density/particle board. The board has even structure, smooth surface. The process has the following 9 sections: Material preparation section Chips/Fibre manufacturing section Resin manufacturing section Glue & paraffin regulating section Spreading and hot pressing section Cooling & trimming section Sanding section Impregnation Section Prelamination section
Material Preparation Section The raw material (Wood waste) is reduced into sized by chipper. Then the chips are conveyed by belt conveyer into a chips silo for temporary storing, thereafter Chips are passed through swinging screen to remove small particles, mud and sand, then transported into pre-heat silo of refiner by a bucket conveyor. Fiber Manufacturing Section Chip in pre-heat silo is pre-heated by saturated steam and then evenly enters the digester via screw feeder to cook and soften the chips, so fibre is easy to be separated. The cooked chip is reduced into fibre by the function
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of heat and mechanical movement. Then the reduced fibre is transported to dryer or cyclone by blow valve via fibre-spray-tube. Glue jetting device is set on the fibre-spray-tube. Paraffin wax adding hole is set on the defibrator housing, it can feedback glue applying volume according to the chip volume in the refiner. Fibre mixed with hot drying medium, is suspended in such a high-pressure and high-speed airflow that water staying in the fibre is evaporated by the drying medium in the dryer. Then through the lower dischargingopening of cyclone, the fibre falls onto the forward-reverse belt conveyer and transported to dried-fibre-silo for temporary storage. Spark detector is set on the drying pipe for fire extinguishing system. Resin Manufacturing Section The required chemicals for making resins are stored in underground tanks. They are mixed in pre-determined ratios in different vessels at specific temperature & pressure to make required quality of binding agents. In manufacturing of panels normally 3 types of resins (UF, PF & MF) are used for different application as below. Type of Resin UF (Urea Formaldehyde) PF (Phenol Formaldehyde) MF (Melamine Formaldehyde) Application For making normal panel of MR grade for interior application, the quantity used is between 80 kgs to 120 kgs (Solid content) per ton of production. For making WBP grade for exterior application the quantity used is between 80kgs to 120 kgs. (Solid content) per ton of production. For impregnation of base paper used in Prelamination of board only is 80 to 90 grams/sq. mtr.
Glue & Paraffin Regulating Section Here the technique is glue applying before drying. Melt paraffin wax and other waterproofing agents are sent to the refiner, mixed evenly with the fibre/chips by grinding and squeezing of grinding plates. Glue jets into the fibre/chips-spray-tube under a certain pressure via pipes. The glue mist adheres to the surface of fibre/chips by the high-speed airflow in the pipe. Spreading and Hot Pressing Section This section including forming, pre-pressing, mat conveying, mat cutting, hot pressing, cooling and trimming. To produce quality board, dried fibre/chips is transported at a certain speed to the upper part of forming machine (the spreader/former), and then spread evenly onto annular screen-belt conveyer by spike-rolls. There is vacuum box under the screen-belt, air is sucked through the screen-belt and fibre/chips is adhered on the screen-belt, thus forming a loose mat. Pressed by the pre-press, the loose mat is reduced into a relatively densed mat, then cut into sized mat by mat-transversal-and-longitudinal saw. Transported by synchronous conveyer, acceleration belt conveyer, and fast-speed belt conveyer, the mat is carried to board loader. The caulless belt-tray of the loader transports the mats into hot press; meanwhile, the pressed rough board is pushed out. When the caulless belt-tray of the loader reaches its terminal point, the pressed rough board enters unloader completely, at the same time, mat reaches its position in hot-press. The mat stays on the press-platen of a hot press, and then it is pressed into a certain thickness by the hot press. Meanwhile, the inner adhesive is hardened, thus a piece of fibreboard (rough board) with certain strength is produced. After pressing, the fibreboard is transported to the next section. Cooling & Trimming Section The board after hot pressing, passed through a cooling machine, inclined roller-conveyer and then enters the transversal-longitudinal saw machine where it is cut into size medium density fibreboard and the same is temporarily stacked. Sanding Section The rough board is transported by forklift truck, and placed on roller stand of hydraulic lift. Pusher pushes board into feed-roller, sanding by wide-belt sander. Hardened surface is removed, and obtain required thickness and roughness. After checking, rating, stacking, packing, finally, the board is sent into warehouse for storage. Impregnation Section In this section on the base paper and balancing paper to be used for pre-lamination of board are impregnated with MF resin. The roll of paper is unwinded & fed into impregnator, where resin of required grams is applied through rollers. Normally the resin pickup is 100% of the weight of paper. The impregnation paper is then dried, cooled & stored in air-conditioned room.
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Prelamination Section In this section the plain board are pre-laminated with impregnated base paper. The plain Board is fed into press & before pressuring the impregnated paper is spread on both the side of board. Inside the hot press the board & paper are pressed under required pressure & temperature. The board is then unloaded from the machine though vacuum hoist system. Flooring For manufacture of Flooring the sheet of Pre-laminated MDF Board of required thickness is cut according to width and length of the flooring. Such cut to size is then feed to a longitudinal grooving machine, which makes the groove on both the side of the panel along the length. One groove is made in male form and another groove is made into female form. This is necessary to fit in together various planks while lying on the floor. The process is repeated for transverse sides also for making the groove. HDF Door Skin HDF Door Skin is produced by utilising MDF boards of a thickness, which is nearly 20% more than the thickness of door skin required as finished product. The process requires a predetermined shape & finish of the mould, which need to be installed on moulding machine. The MDF sheet is feed in to the machine and press under high pressure / temperature. This results into creating of the mould shape and finish and also compression of the sheet. The compression of the sheet converts MDF board into a high-density board. Decorative Laminates Decorative Laminates are paper products, which are made by pressing various sheets of impregnated craft paper & decorative paper on the top. Depending upon the thickness of laminate required the no. of the sheet of the craft paper are pressed over each other. The process of impregnation of decorative paper is similar as explain in impregnation section. However the impregnation of craft paper is done with PF resin in the place of MF resin. For decorative laminates. Furniture, Door Skins & Doors Making Section In this section the process involved is lamination, Vacuum Firming, Moulds making etc. The PVC sheets are laminated on Doors or Plywood in a pre-designed manner. Broad Terms of Agreements with Suppliers of Plant & Machinery Particular/Name of Plant Name of Supplier Date of Agreement Date of Supplimentary Agreement Contract Value Contract Terns Payment Terms Particle Board Klinlert Limited March 8, 2005 September 16,2005 Euro 36,05,000 FOB Against Letter Of Credit with 365 days Usance Period. 40% Amount to be paid by way of Issue of Shares. December 31, 2005 Euro 1,00,000 10 Years To be Provided free of cost. Impregenation Klinlert Limited September 16,2005 Not Applicable Euro 3,00,000 C&F Against Letter Of Credit with 365 days Usance Period. 40% Amount to be paid by way of Issue of Shares. December 31, 2005 Nil 10 Years To be Provided free of cost. Prelamination Klinlert Limited September 16,2005 Not Applicable Euro 4,50,000 C&F Against Letter Of Credit with 365 days Usance Period. 40% Amount to be paid by way of Issue of Shares. December 31, 2005 Nil 10 Years To be Provided free of cost. MDF Board Shanghai Wood Based Panel Machinery Co. Ltd. October 19, 2005 Not Applicable USD 20,80,000 FOB Against Letter Of Credit with 365 days Usance Period
Delivery Period Performance Guarantee Availability of Spares Training
April 30, 2006 USD 2,08,000 10 Years To be Provided free of cost.
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BASIS FOR ISSUE PRICE Qualitative Factors The Company is a profit making Company. The project has been appraised by Union Bank of India, who have also sanctioned term loan for the project. The Company has already got approval from Central Empowered Committee for manufacture of both MDF and Particle Board. Supplier of the plant & machinery viz. Klinkert holds 11.57% of the Pre Issue equity (8.56% of the Post Issue Equity) of the Company which shows confidence of supplier in the project. The proposed factory of the Company is located at Uttaranchal which has a locational advantage like exemption of excise duty for 10 years and income tax for 5 years from the date of commencement of production. Power is cheaper in Uttaranchal where the proposed factory is located and is available at Rs. 2.50 per unit approximately.
Quantitative Factors: 1. Adjusted Earning Per Equity Share EPS (Rs.) 0.10 0.23 0.80 0.49 Weights 1 2 3
Financial year 2002-2003 2003-2004 2004-2005 Weighted Average EPS for 3 Years 2. a. b. (i) (ii) (iii)
Price / Earning Ratio (P/E) in relation to the Issue Price of Rs. [] P/E based on EPS of 2004 2005 [*] P/E based on weighted EPS [*] Industry P/E* Highest 54.47 Lowest 11.23 Average 13.26 (*Source Capital Line Plus Trailing Four Quarters for Wood-Based Decoratives)
3. Return on Networth (RoNW) Financial year RONW (%) Weight s 1 2 3
2002-2003 0.90% 2003-2004 2.15% 2004-2005 5.94% Weighted Average RONW for 3 Years 3.84% 3. 4.
Minimum Return on Increased Net Worth required to maintain Pre-Issue EPS of Rs. [*] is Rs. [*] % Net Asset Value per share (NAV) Adjusted NAV Rs. 18.86 Rs. [*] Rs. [*]
As of October 31, 2005 After the Issue Issue Price
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5.
Comparison with Industry Peers* the NAV (Rs.) 34.60 54.70 48.50 RoNW (%) 15.20 8.00 9.90
Face EPS (Rs.) P/E (times) Value (Rs.) Greenply Industries 10.00 5.00 10.30 Novapan Industries 10.00 4.3 11.90 Century Plyboard 10.00 3.6 19.10 *(Source: Capital Market December 19th 2005 January 1st 2006) 6. 7.
Name of Company
The face value of Equity Shares of Shirdi Industries Limited is Rs. 10 and the Issue Price is Rs. [*] i.e. [*] times of the face value. The final price of Rs. [*] has been determined by the Company in consultation with the Book Running Lead Manager and on the basis of assessment of market demand for the Equity Shares by way of book-building and is justified on the basis of the above factors.
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STATEMENT OF TAX BENEFITS December 17, 2005. M/S. SHIRDI INDUSTRIES LTD. A-Wing, 2nd Floor, Mhatre Pen Bldg., Senapati Bapat Marg, Dadar (W), Mumbai 400 028. Dear Sirs, We hereby report that the enclosed annexure states the possible tax benefits available to Shirdi Industries Limited (the Company) and its shareholders under the current tax laws presently in force in India as also under the Finance (No.2) Bill 2005, as introduced in the Lok Sabha in 2005. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive, the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives the Company faces in the future, the company may or may not choose to fulfill. The benefits discussed below are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences, the changing tax laws and the fact that the company will not distinguish between the shares offered for subscription and the shares offered for sale by the Selling Shareholders, each investors is advised to consult his or their own tax consultant with respect to the specific tax implications arising out of their participation in the issue. We do not express any opinion or provide any assurance as to whether: the Company or its shareholders will continue to obtain these benefits in future; or the conditions prescribed for availing the benefits have been / would be met with.
The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company. For M.P. KALA & CO. Chartered accountants M. P. KALA Proprietor (Membership No. 039840)
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STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS. We have been advised by M.P.Kala & Co. Chartered Accountants in their certificate dated 17th December, 2005 that under the current tax laws, the following tax benefit inter-alia, will be available to us and the members of the Company. A member is advised to consider in his / her / its own case the tax implications or an investment in the Equity shares, particularly in view of the fact that certain recently enacted legislations may not have direct legal precedent or may have a different interpretation on the benefit which an investor can avail. BENEFITS AVAILABLE TO THE COMPANY: 1 UNDER SECTION 80- 1 B (4) OF INCOME TAX ACT, 1961 Where the gross total income of the company includes any profits and gains derived from any business, derived from an Industrial undertaking in an industrially backward State / Union territory specified in the eighth schedule the amount of deduction shall be hundred percent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter another five years thirty percent of the profits and gains derived from such industrial undertaking under section 80-1 B (4) of Income Tax Act, 1961. The total period of deduction should not exceed ten consecutive assessment years subject to fulfillment of the condition that it begins to manufacture or produce articles or things during the period beginning on the 1st day of April 2007 and ending on the 31st day of March 2016. 2 Under Section 115JAA (1A) credit shall be allowed of any MAT paid under Section 115JB of the Act for any A.Y. commencing on or after April 2006. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Income-tax Act. Such MAT credit shall be available for set-off up to 5 years succeeding the year in which the MAT credit initially arose. The corporate tax rate shall be 30% and surcharge on tax shall be 10% Under Section 32 the rates of depreciation on plant and machinery would normally be 15% and those on furniture and fittings 10% and motor cars 15% . Initial depreciation on plant and machinery would be 20%. In addition to income tax, a fringe benefit tax at the rate of 30% (plus surcharge and education cess) would be payable in respect of fringe benefits provided / deemed to be provided to the employees. Capital investment subsidy @ 15% with a maximum of Rs. 30,00,000/- (Rupees Thirty Lacs only) is available to the companies who are setting up the plant at Uttranchal before March 31,2007 at notified areas as per Central Government notifications. Central Transport subsidy extended till 2007 for transportation between the nearest rail head & unit.
3 4
5 6
To The Share Holders of the Company Under Income-tax Act, 1961 (A) Resident Share Holders (1) Under section 10(34) of the Act, dividends (whether interim or final) declared, distributed or paid by the company are exempt in the hands of the individual shareholders.
(2) Computation of Capital Gains Capital assets may be categorized into Short Term Capital Assets and Long Term Capital Assets based on the period of holding All capital assets (except shares held in a company or any other listed securities or units of UTI or specified Mutual Fund units) are considered to be long term
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capital assets if they are held for a period in excess of 36 months. Shares held in a company, any other listed securities, units of UTI and specified Mutual Fund units are considered as long term capital assets is these are held for a period exceeding 12 months. Consequently capital gains arising on sale of shares held in a company or any other listed securities, or units of UTI or specified Mutual Fund units held for more than 12 months are considered as long term capital gains. Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of acquisition / improvement and expenses incurred in connection with the transfer of capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting a substitution of cost of acquisition / improvement with the indexed cost of acquisition / improvement, which adjust the cost of acquisition / improvement by a cost inflation index as prescribed from time to time. (a) Under section 10(38) of the Act, long term capital gains arising on sale of shares where the transaction of sale is entered into on a recognized Stock Exchange in India, or after the date on which Chapter VII of the Finance Act, 2004 comes into force, such Transaction is chargeable to Securities Transaction Tax shall be exempt from tax. Under Section 54EC of the Act and subject to the conditions and to the extent specified therein, long tem capital gains arising on the transfer of shares of the company that are not exempt under Section 10(38) of the Act, shall not be chargeable to tax if the whole or any part of the capital gains is invested in certain notified bonds within a period of six months after the date of such transfer. However, if the said bonds are transferred or converted into money within three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long tem capital gains in the year in which the bonds are transferred or converted into money. Under Section 54ED of the Act and subject to the conditions and to the extent specified therein, long term capital gains arising on the transfer of shares of the company that are not exempted under section 10(38) of the Act, shall not be chargeable to tax if the whole or any part of the capital gains is invested in acquiring equity shares of an Indian Company forming part of an eligible issue of share capital within a period of six months after the date of such transfer. However if the said shares are transferred within a period of one year from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the share are transferred. Eligible issue of share capital has been defined as an issue of equity share which satisfies the following conditions: (i) (ii) (e) The issue is made by a public company formed and registered in India: and The shares forming part of the issue are offered for subscription to the public.
(b) (c)
(d)
Under section 54F of the act, long term capital gains arising to an individual of Hindu Undivided Family (HUF) on transfer of shares of the company, will be exempt from tax subject to other conditions specified therein, if the sale proceeds from such shares are used for the purpose of purchase of residential house property within a period of one year before and two years after the date on which the transfer took place or for construction of residential house property within a period of three years after the date of transfer. Under Section 111A of the Act, short term capital gains arising on sale of shares where the transaction of sale is entered into on a recognized stock exchange in India, on or after the date on which Chapter VII of the Finance Act 2004 comes into force shall be subject to tax at a rate of 10 percent (plus applicable surcharge and education cess).
(f)
(g)
Under Section 112 and other relevant provisions of the Act, long tern capital gains arising on transfer of shares of the company not covered by section 10(38) of the Act, shall be subject to tax at a rate of 20 percent (plus applicable surcharge and education cess) after
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as provided in the second proviso to Section 48 or at 10 percent (plus applicable surcharge and education cess) without indexation, at the option of the shareholder. However, as per the proviso to Section 112(1) of the Act, if the tax on long term capital gains resulting on transfer of listed securities or units, calculated at the rate of 20 percent with indexation benefit exceeds the tax on long term capital gains computed at the rate of 10 percent without indexation benefit, then such gains are chargeable to tax at a concessional rate of 10 percent (plus applicable surcharge and education cess). (B) Mutual Funds Under Section 10 (23D) of the Act, all Mutual Funds set up by Public Sector Banks or Public Financial Institutions or Mutual Funds registered under the Securities and Exchange Board of India or authorized by the Reserve Bank of India, subject to the conditions specified therein are eligible for exemption from income-tax on all their income, including income from investment in the equity shares of a company. (C) Venture Capital Companies / Funds Under section 10 (23FB) of the Act, all venture capital companies / funds registered with Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from incometax on all their income, including income from sale of shares of the company. Benefit to the Shareholders of the Company under The Wealth Tax Act, 1957 Shares of the company held by the shareholders will not treated as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957 and hence Wealth Tax will not be applicable. Benefit to the Shareholders of the Company under The Gift Tax Act, 1958 Gift of shares of the company made on or after October 1, 1998, would not be liable to Gift Tax provided the gift is made to related person. Gift of shares of the company to unrelated persons exceeding Rs. 25,000/- would however be taxed as income in the hands of the recipient as per amendment made by the Finance (No.2) Act, 2005. Notes: All the above benefit are as per the Current Tax Laws as amendment by the Finance (No.2) Act, 2005 and will be available only to the sole / first named holder in case the shares are held by joint holders. Legislation, its judicial interpretation and the policies of the regulatory authorities are subject to change from time to time and these may have a bearing on the advice that we have given. Accordingly, any change or amendment in the law or relevant regulations would necessitate a review of the above. Unless specifically requested, we have no responsibility to carry out any review of our comments for changes in laws or regulations occurring after the date of issue of this note. In view of the individual nature of tax consequences, each investor is advised to consult his / her own tax advisor with respect to specific tax consequences of his / her participation in the scheme. For M.P.KALA & CO. CHARTERED ACCOUNTANTS
M.P. KALA (PROPRIETOR) (Membership No. 39840)
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SECTION IV INDUSTRY OVERVIEW Particle board It is a composite panel product consisting of cellulosic particles of various sizes that are bonded together with a synthetic resin under heat and pressure. Particle board assumes importance in the wood panel products industry from the point of view of conservation of scarce forest resources in a country. Particleboard is widely used in the manufacture of furniture, cabinets, floor underlayment, stair treads, shelving and many other products. Today's particleboard gives industrial users the consistent quality and design flexibility needed for fast, efficient production lines and quality consumer products. Particleboard panels are manufactured in a variety of dimensions and densities, providing the opportunity to design the end product with the specific particleboard needed. Medium Density Fiberboard Fibreboard is a board made from refined or partially refined wood fibres or other vegetable fibres. Bonding agents are incorporated in the manufacture to increase strength, resistance to moisture, fire or decay. The surface of MDF is flat, smooth, uniform, dense and free of knots and grain patterns, all of which make finishing operations easier and more consistent, especially for demanding uses such as direct printing and thin laminates. The homogeneous density profile of MDF allows intricate and precise machining and finishing techniques for superior finished products. Trim waste is significantly reduced when using MDF compared to other subtracts. Stability and strength are important assets of MDF, and it holds precise tolerances in accurately cut parts. Medium Density Fibreboard (MDF) is widely used in the manufacture of furniture, cabinets, door parts, mouldings, millwork and laminate flooring. MDF panels are manufactured in a variety of dimensions and densities, providing the opportunity to design the end product with the specific MDF needed. FURNITURE INDUSTRY Furniture Industry requires solid wood, plywood, particle board or MDF board for different applications. Worldwide MDF board and Particle board has replaced the use of other products as in manufacture of these products over 95% of wood available in the Tree can be utilised in comparison to less than 60% in the case of other products. MDF and Particleboard also have lower prices, better machine-ability and workability. They are not damaged on account of borer of white ants also. Therefore they are preferred for mass production by modular furniture makers. In recent past there is the demand for such products and modular furniture has increased all over the world. INDIAN SCENARIO The industry is at present un-organised and exposed with un-ethical practice due to heavy taxes / duties and guidelines related to operation related to wood based industry. The industry is subject to pressure and self-interest of Architects and Contractors who continue to take advantage of unawareness among consumers. The various items covered in the industry include all type of furniture, flooring, wall & roof paneling, doors & windows etc. which require plain boards, pre-laminated boards, decorative laminates, PVC sheet etc. as input materials. In recent past many companies have started retail outlets for imported modular furniture and the business volume of organised manufacturers has also increased. However, the present manufactures in India have constraints related to inventory and supply chain management. MDF board, Particle Board and items made out of these products are eligible for ECO-MARK certification by the Ministry of Environment and Forest. Since October, 2002, in compliance of the order of Honorable Supreme Court of India many wood based industries have been ordered for closure.
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With improved life standard and economic activities particularly in service industry, encouragement to housing industry and development of real estate, the demand for the furniture products has surged in recent past. The demand for such products will further increase due to less availability of Plywood in near future on account of closure of several units and in accordance with recent orders of Supreme Court of India. Hence, there is opportunity for many organised players to create a sizeable place in this industry by providing integrated and cost effective solution to the customers in the line with worldwide trend. (Source:Appraisal Report) Recognition as Environment Friendly Product All the products proposed for manufacture by the Company are recognized as ECO friendly products worldwide. Ministry of Environment & Forest Govt. of India has a scheme for certifying such products under ECO Mark. In China, Europe & US, such Eco Friendly products are preferred over consumption and alternate products in the form of purchase preference, price advantage and tax benefit also. Export potential It is reported that nearly 1/3rd of production in the world is imported or exported & rest is consumed in the country for manufacture. India has competitive edge in manufacture of panel products due to cheap labour availability of input material preference treatments for export to SAARC nations Gulf countries & in Africa Region etc. Huge quantity of pre-laminated board is already being exported from the country and such board is made from imported plain board. The competitive edge will increase substantially in case plain boards are available indigenously as cost of logistics in import as a percentage of product value is very high. There is good potential for export of down stream value added products also which use MDF boards & Particle Board as input material.
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OUR BUSINESS Overview We were originally established in 1993 as Shirdi International Engineers Private Limited with the objective of trading in all types of products, consultancy services & other allied activities. We changed our name to Shirdi Industries Pvt. Ltd. on 9th May 1997 and was later converted into a public limited company on 12th June, 1997. In the initial years, more than 95% of turnover of our Company was from the trading activities relating to licenses and consultancy services. The Company then diversified into import/local trading of products required for interior furnishing such as Particle Board (PB), Medium Density Fibre (MDF) Board, Plywood and Veneer. In the year 2003, the Company also started manufacture of doors, door skins & other furnishing products at MIDC, Mhape, Navi Mumbai. The existing business of the Company comprises of trading, manufacturing and consultancy. TRADING As an importer and trader, the Company initially started import of MDF board in 1995. During this time, although the consumption of MDF Board had picked up in overseas market and replaced the use of Plywood and other panel products in furniture industry, however, in India the product was not well known. During last 2 years, we have also started importing HDF Door-Skin and Veneel. The Company is trading through dealer network and branch offices at Hyderabad and Delhi. SERVICES: The advisory services of the Company are offered to leading importers and exporters of the country for ensuring that all the benefits in the form of exemption, refund and deferment of taxes / duties which are legally permissible to their clients are timely availed. This service add value to the business of the customers by reducing the cost and time of transactions and also reduces unforeseen losses on account of procedural lapses, improper presentation and incomplete understanding of the law. Besides providing customized solutions as above, companies also undertake assignment related to documentation, presentation and follow up on Exim matters. MANUFACTURING The Company gained experience in trading of various items required by furniture industry from 1995 to 2002 and decided to set up manufacturing facilities. Initially, the Company made arrangements for manufacturing by appointing Jyoti Panels Private Ltd., as an exclusive job worker for them and later on took over plant and machinery and stock of raw material and finished goods of Jyoti Panels Private Limited. The Company is currently utilizing 100% capacity available with them. Due to the limitation of space and the fact that the premises used by the Company is taken on Leave and License basis, it has been planned that the existing set-up will be now shifted to Uttaranchal and further investment required for expansion will be made at proposed site at Uttaranchal. Location of the Existing Plant The manufacturing plant of the Company is located at Plot No. A 467, MIDC TTC Industrial Area Mahape, Navi Mumbai, Maharashtra. The existing premise where the plant is located is taken on a Leave and Licence basis. The said Licence is valid till 31st August, 2006. The Licence is obtained from BAT Enterprises Private Limited. Registered office & other establishments The registered office of the Company is situated at A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai, -400028. The Company has branch offices at New Delhi & Hyderabad and Godowns at Bhiwandi, New Delhi & Hyderabad. The details of the location of regional offices & godown of the Company is as under: Location of Regional Offices Sr. No. City 1. Delhi Address 3198/1, Sangtarashan Lane,
41
Nature of Possession Leave and License
2.
Hyderabad
Paharganj, New Delhi110055. Shop No.104, Door No.5-5-1044, Raj Towers, Gosha Mahal Road, Hyderabad 500 012. Address Godown No. A-2, A-3 Valgaon, Bhivandi, Dist. Thane. 3198/1, Sangtarashan Lane, Paharganj, New Delhi110055. 131-1-9/C, Seeta Ram Bagh, Hyderabad 500 055
Leave and License
Location of Godowns Sr. No. City 1. Thane 2. 3. Delhi Hyderabad
Nature of Possession Leave and License Leave and License Leave and License
Requirement of Raw Material for Existing Manufacturing Operations Name of the Item Door Skins Panel / Designer / Moulded Door Furniture Components Raw Material Plywood / MDF / Particle Board, Glue, PVC Foil, Packing Material Flush door, Glue, PVC Foil, HDF Door Skin, Packing Material Laminate, Impregnated Paper, Glue, PVC, Paint, Veneer, Plywood, Particle Board, MDF Board, Packing Material
Sources of Raw Material for existing operations The present item of manufacture by the Company requires PVC Sheet, Ply Wood, Flush Doors, Resin, HDF Door Skin and Packing material as raw materials. Plywood and Flush Doors are procured from local markets and other items required by the Company are imported regularly from various suppliers located at China, South East Asia and Europe. The delivery time is nearly one month from the date of establishing L/C. The Company maintains required inventory of all such imported material considering the lead time for procurement. Existing Distribution system for Trading & Manufacture Goods The distribution System and types of users for various customers in different categories are as under: Category of User Actual Users Manufacturers Types of Users Owners of the premises Houses and Corporate offices etc. Manufacturers of furniture components and modular furniture Builders Banks CIDCO HUDA Railways MES Navy Hotels CPWD Hospitals etc. Architects Contractors Carpenters Interior Designers Spread all over the country Spread all over the country Distribution System Stocks are purchased on the recommendation of Professionals on cash / credit. The product needs to meet quality standard specified by the manufacturer & regular supply. The manufacturers want to maintain minimum inventory. The sales are against the credit of 2 to 3 months. Supplies are made against tenders / specific orders. The sales are driven through relation, understanding the product by professional, incentives quality durability & availability. There can be authorised dealers or the sales are made through Area Managers. The customers maintain minimum inventory In this class of distribution the fixed overhead cost is reduced however direct cost of sale is increased in the form of commission payable to commission agent.
Institutional Buyers Professionals Wholesalers / Retailers Distributors / Dealers Commission Agents
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Purchase of Property Except as stated in section titled Objects of the Issue in this Draft Red Herring Prospectus, on page 17 there is no property which the Company has purchased or acquired or propose to purchase or acquire which is to be paid for wholly, or in part, from the net proceeds of the Issue or the purchase or acquisition of which has not been completed on the date of this Draft Red Herring Prospectus, other than property in respect of which: The contracts for the purchase or acquisition were entered into in the ordinary course of the business, and the contracts were not entered into in contemplation of the Issue nor is the Issue contemplated in consequence of the contracts; or the amount of the purchase money is not material; or disclosure has been made in this Draft Red Herring Prospectus.
Except as stated in the section titled Related Party Transactions on page 74 of this Draft Red Herring Prospectus, the Company has not purchased any property in which any Directors, have any direct or indirect interest in any payment made thereof. HUMAN RESOURCES As on 31st October, 2005, we had 55 employees, out of which 25 are in senior executive cadre, 6 are senior executives in technical cadre, 16 are junior executives in technical cadre and 8 are non-technical. INSURANCE The Company has obtained marine policy for import of consignment & stock policy for warehousing of the goods in accordance with their requirements. Sr.No. Insurer and Policy No. Policy Type Description Period Sum Insured (Rs. In lakhs) 20.00 30.00 17,009 1.50 Valid till 07.09.2006 Valid till 26.09.2006 Valid till 19.08.2006 Valid till 09.10.2006 315.00 1,14,553 100.00 8,226 5,000.00 1,160.00 1,17,096 2,27,500 Premium (p.a) Rs.
1. 2.
National Insurance Company Limited 361700/11/05/3100000281 National Insurance Company Limited 551201/11/05/3100000351 Oriental Insurance Company Limited 2006 - 550 Iffco Tokio General Insurance Company 21202203 Iffco Tokio General Insurance Company 21199529 Iffco Tokio General Insurance Company 11082971
Standard Fire and Special Perils Policy Standard Fire and Special Perils Policy Standard Fire and Special Perils Policy Marine Policy Cargo
Stock at Delhi Stock at Hyderabad Building at Hyderabad Stock at Bhiwandi, Navi Mumbai Marine Insurance of Stock Material Plant Transit Insurance Building under Construction
Valid till 22.07.2006 Valid till 16.08.2006
5,510
3.
4.
5. 6.
Marine Transit Open Insurance Policy Standard Fire and Special Perils Policy
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INDEBTEDNESS The Company at present is enjoying following term loan and working capital facilities from the Bank, details of which are as under: Credit Facility Sanction Amount (Rs. in Lacs) 125.00 (Uco Bank) Outstanding as on 31-10-2005 (Rs. In Lacs) Nil Security Fees/Pricing
Cash Credit (Book Debts and Stocks)
Primary Hypothecation charge on the entire current assets of the Company. Collateral 1. First charge by way of equitable mortgage of Immovable property such as flats,Land & building and office premises. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 0.78 lacs) 2. Mr. Mukesh Bansal (Rs. 1.93 lacs) 3. Mr. Hariram Agarwal (Rs. 0.65 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd. Primary Hypothecation charge on the entire current assets of the Company. Collateral 1. First charge by way of equitable mortgage of Immovable property such as flats, Land & building and office premises. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 0.78 lacs) 2. Mr. Mukesh Bansal (Rs. 1.93 lacs) 3. Mr. Hariram Agarwal (Rs. 0.65 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd.
Rate of interest (BPLR +1%) 12% P.A.
Cash Credit (Book Debts & Stocks)
190.00 (Union Bank of India)
116.71
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REGULATIONS AND POLICIES General Vide Press Note No.11 (1997 series) dated the 17th July, 1997, plywood, veneer of all types and other wood based products such as particle board, medium density fibre board/ block board have been delicensed subject to locational conditions and relevant statutes/statutory/policy notifications such as the National Forest Policy and directions and decisions of the Honble Supreme Court. Vide Press Note No. 9 (1998 Series) the Government notified that the entrepreneurs who want to obtain approval from the Government for setting up any wood based project should obtain prior clearance from the Ministry of Environment & Forests before submitting the application to the Administrative Ministry/SIA and enclose a copy of "in principle" approval given by the Ministry of Environment & Forests. The Company has already obtained the approval of the Ministry of Environment & Forests. Accordingly, the manufacturing activities of the Company is an unregulated industry and as such there is no specific legislation governing the same. The manufacturing activities of the Company however are subject to, among other laws, environmental laws and regulations promulgated by the Ministry of Environment and Forest of Government of India, Saw Mill Rules, the State Forest Policy, State Pollution Control Board and Central Empowered Committee. These include laws and regulations about cutting of trees, discharge of effluents, polluted emissions, hazardous substances etc. On wood based industries, the Honourable Supreme Court of India has given specific directives from time to time and the same would be applicable to Company as well. Laws relating to excise, customs, sales-tax, factory and labour related matters etc. are applicable to the Company, as they are applicable to other manufacturing establishments. Order of Honourable Supreme Court applicable to Wood Based Industry The Central Empowered Committee has been constituted by the Hon'ble Supreme Court by its order dated 9.5.2002 in Writ Petitions (Civil) Nos. 202/95 & 171/96. CEC inter alia assesses the sustainable capacity of the forests of the State qua sawmills and timber based industry; the number of sawmills that can safely be sustained in the States and the optimum distance qua the State at which the sawmill is to be located. CEC has granted permission to the Company for the establishment of wood-based industries in the State of Uttranchal. The permission so granted is valid for the production of Particle Board. The operating parts of the order dated 29th October 2002 read as under : No State or Union Territory shall permit any unlicensed saw-mills, veneer, plywood industry to operate and they are directed to close all such unlicensed unit forthwith. No State Government or Union Territory will permit the opening of any saw-mills, veneer or plywood industry without prior permission of the Central Empowered Committee. The Chief Secretary of each State will ensure strict compliance of this direction. There shall also be no relaxation of rules with regard to the grant of license without previous concurrence of or grant of licenses. The company has been granted permission by Central Empowered Committee vide their letter dated 21st June, 2005. Foreign Investment Regulations
Foreign Direct Investment in India is governed by the Foreign Exchange Management Act, 1999 and the regulations made thereunder. The Secretariat for Industrial Assistance, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry on an ongoing basis notifies the Foreign Direct Investment Policy and Procedures, which provides policies with regard to investment in various industries and sectors. Under the current foreign investment policy applicable to the Company foreign equity participation up to 100% is permissible under the automatic route. However, the Company has obtained FIPB approval for issue of shares to Klinkert since the issue is in consideration other than cash i.e. in consideration of the machinery supplied by Klinkert to the Compnay.
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OUR HISTORY AND CERTAIN CORPORATE MATTERS History The Company was incorporated on 15th December.1993 as Shirdi International Engineers Private Limited. The Company changed its name to Shirdi Industries Private Limited on 9th May 1997, and a fresh certificate of incorporation was obtained. The Company was then converted into a Public Limited Company and its name was changed to Shirdi Industries Limited vide a certificate of change of name dated 12th June, 1997. Since 1994, the Company introduced a new concept in the business of trading of transferable export incentives by offering forward sell options to exporters and purchase options to the importers at deferred payment basis. This business model of the Company at one end secured the service charges realizable from the exports against the various services rendered to them as while purchasing the incentives the Company has possibility of deducting or adjusting the service charges in advance in place of realizing the same after rendering the services. Similarly in case of imports options of deferred payment offered by the Company to importers resulted into sharing of business opportunities with the importers, in addition to rendering the services. This approach of the Company also helped to start trading and import activities in Timber and Steel products later. Initially the Company sold the products without any brand, however, after increase in volume of import the Company started selling the product under ASIS Brand. The Company also started importing several other products i.e. Prelaminated Boards, Veneer, Particle Board, PVCa and HDF Door Skins used in furniture industry for offering integrated solution to the customers. The Company gained experience in trading of various items required by furniture industry from 1995 to 2002 and decided to set up manufacturing facilities. Initially, the Company made arrangements for manufacturing by appointing Jyoti Panels Private Ltd., as an exclusive job worker for them. Under this agreement, Jyoti Panels Private Limited manufactured Door-Skin, which is used for esthetic look of the doors in residential and commercial premises. The Company continued this practice from July, 2002 till September, 2003 and from October, 2003, the company took over plant and machinery and stock of raw material and finished goods. The Company also compensated Jyoti Panels Private Limited against the investments made by them in the premises for running the operations. All the plant and machinery available with Jyoti Panels Private Ltd. and other investments made at premises are now used by the Company and the Company has made further investment on plant and machinery for producing Panel Doors and Furniture Components. All these products of the Company enjoy reputation in the market and the present customers include builders in Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu. The Company is utilizing 100% capacity available with them at present. Due to the limitation of space and the fact that the premises used by the Company is taken on Leave and License basis, it has been planned that the existing set-up will be now shifted to Uttaranchal and further investment required for expansion will be made at proposed site at Uttaranchal. Milestones achieved by the Company Milestones Incorporated as Shirdi International Engineers Private Limited on 15th December 1993. The Company introduced a new concept in the business of trading of transferable export incentives by offering forward sell options to exporters and purchase options to the importers at deferred payment basis 1995-96 Commencement of trading of various items required by the furniture industry. 1995-96 The Company was among first few companies in India who had started importing MDF Board in 1995. 1997-98 The Company was converted into a public Company and the name was changed to Shirdi Industries Limited vide a certificate of change of name dated 12th June, 1997. 2003-04 In October 2003, the operations of Jyoti Panels Private Ltd., an exclusive job worker for the Company were taken over by the Company 2003-04 The Company also started manufacture of doors, door skins & other furnishing products at MIDC, Mhape, Navi Mumbai The main objects clause and objects incidental or ancillary to the main objects clause of the Memorandum of Association of the Company enables it to undertake the existing activities and the activities for which the funds are being raised, through the present Issue Year 1993-94 1994-95
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Main Objects of the Company The main objects of the Company as set out in the Memorandum and Articles of association of the Company are as follows: To import, export, own, establish, engineer, design, develop, assemble, dissemble, process, repair, modify, recondition, renovate, buy, sell and lease of mechanical, electronics engineering, optical, machineries, instruments, appliances, equipments, devices and accessories. To carry on the business to design, develop, encourage, promote, maintain, make, undertake contracts, undertake research and development, provide consultancy and solutions for value, lease, license, process, purchase, sell, import, export, supply, manufacture, make, produce, run, transfer, train, teach, trade in, deal in, or act as agents, authorised representatives, advisors, brokers, consultants, distributors, stockists, research groups, or to engage in any way, whether singly or jointly in collaboration, in association, or in tie up with other entities, in all kinds of software developments like software products, software systems, and in 0particular in designing and developing of software for media, entertainment, animation, movies, animation programmes and telecasting, satellite channels, communication, internet, intranet, networking, world wide web, Internet or web parts on-line exchanges for e-commerce, or other kind of nets any signs, locations, web page designing, developing of various types, means and modes of advertising, communication, forms, transmitting data, information technology, publicity, representations, views, ideas, opinions, programs, and software for on line applications, interactive responses and like and to do all such activities also in respect of computers, communication and electronic hardware and software systems, data collection, data entry, data warehousing, data archival, data duplicating, data processing, data transcription, digitization of information available in various forms, processing or these data and selling parts or whole of the processed or raw data facilitating and providing solutions for e-commerce, e-business, e-banking, cyber technologies, running of training schools or other educational institutions, conducting training seminars, providing consultancy services in all the above areas as well as to do all the above activities in any of the areas of computer software, hardware, accessories, peripheral, modems, multiples and other tools systems and like and providing services in the areas of internet, intranet, internet gateways, video conferencing, telephony, communication, computer networking, cyber caf, system integration including repairing, upgrading and maintenance of such systems. To carry on the business of dealer, trader, importer, exporter of all and to deal in textiles items, yarns, fabrics, iron, steels, aluminium items, engineering goods, electronic items, machineries, chemicals, drugs, cosmetics, detergents, rubber, plastic items tyre tubes, computers, software, automobile accessories, agriculture products, grocery provisions, garments, papers, packing, materials, stones and minerals and licensing documents. To carry on the business of manufacturer, dealer, trader, importer, exporter of particle boards, prelaminated particle boards, MDF, pre-laminated MDF, MDF Veneer Plywood, Commercial Plywood, Water Proof Plywood, Shuttering Plywood, Fire Retardant Plywood, Checkered Plywood, Plastic coated Plywood, High Density Plywood, Air Craft Plywood, Flexi Plywood, All types of Block Boards, Decorative Veneers, Decorative Veneer Door Skins, Decorative Laminated Floor Tiles, Timber slicing, Flush Doors, Panel Doors, Mameren Doors, Designer Door Skins, all types of Shutters, Wooden Frames & Carving Frames, Post Forming Laminates, Particle Board, Veneer, All types of Wood Furniture and Furniture Components, Hardwares, Fixtures & Fittings, All types of Adhesives, Synthetic Adhesives, Rubber Adhesives, Leather Products, PVS & Rexin products, Glass Products and to get the same on manufacturing basis, on job work basis, by trading importing and exporting and selling and stocking and in any manner. The Main objects clause of the Memorandum and Association of the Company enables the Company to undertake the activities for which the funds are being raised for the present issue and also the activity, which the Company has been carrying till the date. Changes in the Memorandum of Association Since incorporation of our Company, the following changes have been made in the Memorandum of Association: Amendment Change of Name from Shirdi International Engineers Private Limtied to Shirdi Industries Pvt. Ltd. Change of Name from Shirdi Industries Pvt. Ltd. to Shirdi Industries Ltd.
47
Date of Amendment 09-May-1997 12-June -1997
Alteration of Object Increase in Authorised Capital from 50 Lakhs to 3.50 crore Alteration of Object Increase in Authorised Capital from 3.50 crore to 10 crore Alteration of Object Increase in Authorised Capital from 10 crore to 15 crore Increase in Authorised Capital from 15 crore to 21 crore Increase in Authorised Capital from 21 crore to 30 crore Subsidiaries of the Company The Company does not have any subsidiary. Strategic Partners At present, the Company does not have any strategic partners. Financial Partners At present, the Company does not have any financial partners.
14-July-1997 3-Feburary-1998 14-September-2000 5-December-2001 2-Dececember-2002 22-March-2004 31-August-2004 31-October-2005
Shareholders Agreements The Company, Klinkert and the Promoters have executed a Shareholders Agreement dated 8th March, 2005 for the purpose of regulating their relationship with regard to the Company. Following are the main terms of the Agreement: (i) (ii) (iii) (iv) (v) Klinkert has agreed to subscribe to either by itself or along with its associate Company plus 30 Lakhs shares of the Company at the price of Rs.50 per share (Rs.10/- face value + Rs.40/- premium). Then equity contribution of Klinkert shall come partially/ fully through cash contribution and capitalization of the money payable towards the purchase of equipment by the Company from Klinkert. The Promoters of the Company have liberty to induct fresh shareholders (domestic or foreign) into the Company and such new shareholders would be bound by the terms of this Agreement. The total number of directors on the Board of the Company shall not exceed 7 excluding directors nominated by lenders. The aggregate number of directors shall not exceed 10 directors. Out of the 7, four directors are to be nominated by the shareholders in proportion of their shareholding and three will be independent directors. The Chairman of the Board will be amongst the directors nominated by the Promoters. Till the time Promoters hold not less than /at least 25% of the paid up share capital of the Company the Managing director would be appointed from amongst the directors nominated by the Promoters. In case the shareholding of the Promoters falls below 25% the Managing Director will be appointed from amongst the directors nominated by the largest shareholders. In the event of dead lock of any issue in any meeting of the Board or shareholders meeting, the Chairman shall have a casting vote. The parties have agreed to exercise their voting rights so as to ensure proper implementation of the Agreement. In case of a breach by any of the shareholders, the non-breaching shareholder can give a notice in writing for remedy of such breach failing which the Agreement can be terminated at the option of the non-breaching shareholders. The disputes are subject to arbitration in accordance with the Arbitration and Conciliation Act, 1996 to be held at Mumbai. The Agreement is governed by the laws of India.
(vi)
(vii)
(viii)
Supplemental Shareholders Agreement dated 16th September 2005 between the Company, Klinkert and the Promoters. It is recorded that the total value of the contract for supply by Klinkert to the Company is Euro 7405000 against the various contracts entered into by the Company with Klinkert. (i) The parties have agreed that 40% of the total FOB value of the supply made by Klinkert i.e, Euro 2962000 from the value of Euro 7405000 shall be capitalized towards 2962000 equity shares of the Company at the price of Euro 1 for each share inclusive of premium.
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(ii)
The parties have agreed that such capitalization shall be initially made against handing over possession of the Plant and Machinery in the from of Share Application Money received from Klinkert which will be converted into paid up capital of the Company after completion of dismantling and packing but before shipment. Klinkert does not have an option of refund or calling back the Share Application Money and the Company has undertaken to allot shares to Klinkert in accordance with the Agreement and applicable law.
(iii)
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OUR MANAGEMENT Board of Directors Under our Articles of Association, we cannot have less than three (3) and more than twelve (12) directors. We currently have eight (8) Directors. The following table sets forth current details regarding our Board of Directors: Name, Designation, Fathers Name, Address, Occupation Mr. Rakesh Kumar Agarwal Chairman cum Managing Director S/O Sh. Hariram Agarwal 3rd Floor Plot No.326, Matru Smruti, New Linking Road Khar (W), Mumbai 400 052 Business Mr. Mukesh Hariram Bansal S/O Sh. Hariram Agarwal 4th Floor Plot No.326, Matru Smruti, New Linking Road Khar (W), Mumbai - 400 052 Business Mr. Sarvesh Hariram Agarwal S/O Sh. Hariram Agarwal 2nd Floor Plot No.326, Matru Smruti, New Linking Road Khar (W), Mumbai - 400 052 Business Mr. Hariram Budhram Agarwal S/O Sh. Budh Ram Agarwal 2nd Floor Plot No.326, Matru Smruti, New Linking Road, Khar (W), Mumbai - 400 052 Business Mr. Rajesh Sanghavi S/o Sh. Manhar Lal Sanghvi 89, Sanghvi Sadan,Ranade Road, Shivaji Park, Dadar (W) Mumbai 400 028. Independent Non Executive Director Business Mr. Jasbir Singh S/o Sh. Bhullar Chanchal Singh 703, Vandana Apartments, Janakalyan Nagar, Malvani, Malad (W), Mumbai 400 028 Business Independent Non-Executive Director
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Age 42.
Date of Appointment and Term December, 1993 Was Appointed as Managing Director w.e.f. Apri 1st, 2004 For the period of 5 years
Other Directorships Labh Capital Services Pvt. Ltd. Asis Overseas Ltd. Asis Global Ltd. Repute Properties Pvt. Ltd. Emeca Finance And Investment Pvt. Ltd. Asis Industries Pvt. Ltd. Poona Pearls Biotek Ltd. Swanbay Technologies Pvt. Ltd. Pradeep Metals Ltd. Labh Capital Services Pvt. Ltd. Asis Overseas Ltd. Asis Overseas (C& F) Ltd. Emeca Finance And Investment Pvt. Ltd. Manhar Properties Pvt. Ltd. Swanbay Technologies Pvt. Ltd. Asis Industries Pvt. Ltd Asis Overseas Ltd. Asis Overseas (C& F) Ltd. Asis Global Ltd. Rachana Finance and Investment Pvt. Ltd. Dytel Finance and Investment Pvt. Ltd. Asis Industries Pvt. Ltd. Poona Pearls Biotek Ltd. Dytel Finance and Investment Pvt. Ltd. Sajal Finance and Investment Pvt. Ltd. Pratibha Finance and Investment Pvt. Ltd. Poona Pearls Biotek Ltd. Asis Industries Pvt. Ltd Apple Plaza Pvt. Ltd. Multiplier Real Estate Pvt. Ltd. Ganesh Malls Pvt. Ltd. Amro Real Estate Pvt. Ltd. Amro Metals Pvt. Ltd. 1) Anil Cloth Mills Pvt. Ltd.
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November 16, 1996 Rotational
29
May 30, 2001 Was Appointed as Whole Time Director w.e.f. Apri 1st, 2004 For the period of 5 years
68
November 16, 1996 Was Appointed as Whole Time Director w.e.f. Apri 1st, 2004 For the period of 5 years October 24, 2003
44
52
October 24, 2003
Mr. Ashok Ladha S/o Sh Jamana Lalji Ladha 3/312, Navjivan Lamington Road Mumbai-400008 Chartered Accountant Independent Non-Executive Director Sujay Kantawala S/o Sh. Nitin Kantawal 74, Dariya Mahal 80, Napeansea Road Mumbai 400026 Advocate Independent Non-Executive Director
45
Appointed As Additional Director on December 16, 2005
NIL
38
Appointed Additional on
As Director
NIL
December 16, 2005
Board of Directors Mr. Rakesh Kumar Agarwal The details of Mr. Rakesh Kumar Agarwal are appearing under Our Promoters on page 60. Hariram Agarwal The details of Mr. Rakesh Kumar Agarwal are appearing under Our Promoters on page 60. Mr. Sarvesh Agarwal The details of Mr. Rakesh Kumar Agarwal are appearing under Our Promoters on page 60. Mr. Mukesh Bansal The details of Mr. Rakesh Kumar Agarwal are appearing under Our Promoters on page 60. Mr.Rajesh Sanghavi Mr. Rajesh Sanghavi is a graduate in Commerce. He has experience of over 14 years in the field of Metal industry. He is in the business of Trading, Export and manufacturing of processed metal components. He has been awarded Certificate of Export Excellence by Engineering Export promotion Council, Mumbai for the year 1996-97. Mr.Jashbir Singh Mr.Jashbir Singh is a businessman. He has an experience of over 25 years in the field of trading of Textile goods. Mr.Sujay Kantawala Mr.Sujay Kantawala compeleted his Bachelor of Arts (B.A.) from the University of Mumbai in the year 1988.He passed his LLB in the year 1991. He is a practicing Supreme Court and High Court Lawyer. He specializes in Constitutional & Administrative Law relating to Indirect Taxation Litigation. Mr.Ashok Ladha Mr. Ashok Ladha is a practicing Chartered Accountant. He has been in the Profession for last more than 22 years. After completing his graduation in commerce in the year 1979 he qualified the Chartered Accountancy course in the year 1983 with distinction. He is mainly practicing in the field of direct taxation and corporate consultancy. Borrowing Powers of the Board Vide a resolution passed at the Annual General Meeting of the Company held on 20th July 2005, consent of the members of the Company was accorded to the Board of Directors of the Company pursuant to Section 293(1)(d) of the Companies Act, 1956 for borrowing from time to time any sum or sums of money on such security and on such terms and conditions as the Board may deem fit, notwithstanding that the money to be borrowed together with the money already borrowed by the Company (apart from temporary loans obtained from the Companys Bankers in the ordinary course of business) may exceed in the aggregate, the paid-up capital of the Company
51
and its free reserves, provided however, the total amount so borrowed in excess of the aggregate of the paidup capital of the company and its free reserves shall not at any time exceed Rs. 70,00,00,000 (Rupees Seventy Crore Only). See section titled Main Provisions of the Articles of Association on page no. 134 of the Draft Red Herring Prospectus. Compensation of the Directors 1. Mr. Rakesh Agarwal I. Salary :
Rs. 35,000 per month with an annual increment maximum of 20% on the salary due on 1st April every year. II. 1. Perquisites : Housing :
(a) The expenditure incurred by the Company on hiring furnished accommodation for the Managing Director will be subject to the following ceiling : Sixty per cent of the salary, over and above ten per cent payable by the Managing Director. (b) In case the accommodation is owned by the Company, ten percent of the salary of the Managing Director shall be deducted by the Company. (c) In case no accommodation is provided by the Company, the Managing Director shall be entitled to house rent allowance subject to the ceiling of sixty per cent of the salary of the Managing Director. (d) Expenditure incurred by the Company on gas, electricity, water, furnishings and repairs and other expenses for maintaining in full service the accommodation occupied by the Managing Director restricted to 100% of the Annual salary. For the purpose of calculating the above ceiling the allowances shall be evaluated as per Income tax rules, wherever applicable. In the absence of any such rules, they shall be evaluated at actual cost. 2. Medical Reimbursement :
Expenses incurred for the Managing Director and his family subject to a ceiling of one months salary in a year or three months salary over a period of three years. 3. Leave Travel Allowance :
For the Managing Director and his family, once in a year incurred in accordance with any rules specified by the Company. 4. Club Fees:
Fees of Clubs subject to a maximum of two clubs. This will not include admission and life membership fee. 5. Companys Contribution to Provident Fund, Superannuation Fund or Annuity Fund:
Companys Contribution to Provident Fund, Superannuation Fund or Annuity Fund to the extent these either singly or put together, are not taxable under the Income Tax Act, 1961. 7. Gratuity :
Gratuity payable at a rate not exceeding half a months salary for each completed year of service. 8. Leave Encashment :
52
Encashment of leave at the end of tenure. 9. Car and Telephone :
Provision of car for use on Companys business and telephone at residence will not be considered as perquisites. 2. Hariram Agarwal I. Salary :
(a) The expenditure incurred by the Company on hiring furnished accommodation for the Wholetime Director will be subject to the following ceiling : Sixty per cent of the salary, over and above ten per cent payable by the Wholetime Director. (b) In case the accommodation is owned by the Company, ten percent of the salary of the Wholetime Director shall be deducted by the Company. (c) In case no accommodation is provided by the Company, the Wholetime Director shall be entitled to house rent allowance subject to the ceiling of sixty per cent of the salary of the Wholetime Director. (d) Expenditure incurred by the Company on gas, electricity, water, furnishings and repairs and other expenses for maintaining in full service the accommodation occupied by the Wholetime Director restricted to 100% of the Annual salary. For the purpose of calculating the above ceiling the allowances shall be evaluated as per Income tax rules, wherever applicable. In the absence of any such rules, they shall be evaluated at actual cost. 2. Medical Reimbursement :
Expenses incurred for the Wholetime Director and his family subject to a ceiling of one months salary in a year or three months salary over a period of three years. 3. Leave Travel Allowance :
For the Wholetime Director and his family, once in a year incurred in accordance with any rules specified by the Company. 4. Club Fees :
53
Encashment of leave at the end of tenure. 9. Car and Telephone :
Provision of car for use on Companys business and telephone at residence will not be considered as perquisites. 3. Mr. Sarvesh Agarwal I. Salary :
(a) The expenditure incurred by the Company on hiring furnished accommodation for the Wholetime Director will be subject to the following ceiling : Sixty per cent of the salary, over and above ten per cent payable by the Wholetime Director. (b) In case the accommodation is owned by the Company, ten percent of the salary of the Wholetime Director shall be deducted by the Company. (c) In case no accommodation is provided by the Company, the Wholetime Director shall be entitled to house rent allowance subject to the ceiling of sixty per cent of the salary of the Wholetime Director. (d) Expenditure incurred by the Company on gas, electricity, water, furnishings and repairs and other expenses for maintaining in full service the accommodation occupied by the Wholetime Director restricted to 100% of the Annual salary. For the purpose of calculating the above ceiling the allowances shall be evaluated as per Income tax rules, wherever applicable. In the absence of any such rules, they shall be evaluated at actual cost. 2. Medical Reimbursement :
Expenses incurred for the Wholetime Director and his family subject to a ceiling of one months salary in a year or three months salary over a period of three years. 3. Leave Travel Allowance :
For the Wholetime Director and his family, once in a year incurred in accordance with any rules specified by the Company. 4. Club Fees :
Encashment of leave at the end of tenure.

54
9.
Car and Telephone :
Provision of car for use on Companys business and telephone at residence will not be considered as perquisites. Corporate Governance The provisions of the listing agreement to be entered into with the Stock Exchanges with respect to corporate governance become applicable to us at time of seeking in-principal approval of the Stock Exchanges. The Company has complied with such provisions, including with respect to the appointment of independent Directors to the Board and the constitution of the following committees of the Board: the Audit Committee, the Remuneration Committee and the Investors Grievances Committee. The Company undertakes to take all necessary steps to comply with all the requirements of the guidelines on corporate governance and adopt the Corporate Governance Code as per Clause 49 of the listing agreement to be entered into with the Stock Exchanges, as would be applicable to the Company upon listing its Equity Shares. The Board of Directors of the Company comprises of eight (8) directors, of which three (3) are executive directors, one (1) is Non-Executive Director and four (4) are independent directors. The Company has also constituted the various committees viz. Audit Committee, Share Transfer & Investor Grievance Committee and Remuneration Committee. Further, the Company undertakes to comply with all the other requirements of the SEBI Guidelines on Corporate Governance as may be applicable to the Company upon listing of its equity shares. Committees of the Board Audit Committee The Audit Committee currently comprises of: 1. 2. 3. 4. Mr. Ashok Kumar Ladha Mr.Rajesh Sanghavi Mr.Jasbir Singh Mr. Sujay Kantawala Chairman Member Member Member
Audit committee of the Board has been constituted in compliance with the provisions of Section 292A of the Companies Act, 1956 and Clause 49 of the Listing Agreement relating to the composition and terms of reference of the Audit Committee. Audit Committee is, inter alia, responsible for the financial reporting and ensuring compliance with the Accounting Standard and reviewing the financial policies of the company and to recommend the appointment of statutory auditors and internal auditors and to fix their remuneration. The Committee is responsible for reviewing the reports from internal auditors as well as the group companies. The Committee will review all quarterly reports before submission of the same to the Board. The Company has not made any changes in the Auditors of the Company during the last three years. Share/Debenture Transfer & Investors Grievance Committee The company has constituted an investors relations committee comprising of 4 directors with chairmanship of non executive director for speedy disposal of the share transfer requests received by the company. The committee along with overseeing share transfer work, looks into the complaints received from investors. The Committee will meet at least two times per month to dispose off the pending share transfers and complaints, if any. The constitution of the Committee is as under: 1. 2. 3. 4. Mr. Ashok Kumar Ladha Mr.Rajesh Sanghavi Mr.Jasbir Singh Mr. Sujay Kantawala Chairman Member Member Member
Remuneration Committee The terms of the Remuneration Committee are to decide the remuneration of the managing director and whole time directors of our Company and recommend the same to the board for its implementation. The Committee currently comprises of:
55
1. 2. 3. 4.
Mr. Ashok Kumar Ladha Mr.Rajesh Sanghavi Mr.Jasbir Singh Mr. Sujay Kantawala
Chairman Member Member Member
Shareholding of the Directors in the Company The Articles of Association do not require the directors to hold any qualification shares. The present shareholding of Directors is detailed below: Sr. No 1 2 3 4 Name No. of shares % of Pre Issue Capital 7.19% 7.02% 3.86% 2.20%
Mr. Rakesh Hariram Agarwal Mr. Mukesh Bansal Mr. Sarvesh Hariram Agarwal Mr. Hariram Agarwal
13,25,440 12,93,690 7,11,770 4,06,200
INTEREST OF DIRECTORS / PROMOTERS All the Directors of Shirdi Industries Ltd. may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board or Committee thereof as well as to the extent of other remuneration, reimbursement of expenses payable to them under the Articles of Association. All the Directors may also be deemed to be interested to the extent of equity shares, if any, already held by them and/or their friends and relatives in Shirdi Industries Ltd., or that may be subscribed for and allotted to them, out of the present Issue in terms of the Red Herring Prospectus and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares. The Directors may also be regarded as interested in the shares, if any, held by or that may be subscribed by and allotted to the companies, firms and trust, in which they are interested as Directors, Members, partners and/or trustees. CHANGES IN DIRECTORS DURING THE LAST THREE YEARS Name Mr. Sarvesh Agarwal Mr. Mukti RamAgarwal Mr. Mukti Agarwal Mr. Jasbir Singh Ram 24.10.03 24.10.03 24.10.03 Date of Appointment 30.05.2001 24.10.03 Date of Cessation ---16.12.05 ------10.09.04 -----Reason Appointment Additional Director Appointment Additional Director as as
Resigned as Additional Director Appointment as Additional Director Appointment Additional Director Appointment Additional Director as as
Mr. Rajesh Sanghavi Mr. Anand Kumar Jain Mr. Anand Kumar Jain Mr. Sujay Kantawala Mr. Ashok Ladhha
16.12.05 16.12.05
Resigned as Director Appointment as Additional Director Appointment as Additional Director
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Management Organisation Structure
Key Managerial Personnel Name Mr. B.V. Rao Mr. R. Niambier N. Designation VP Operations General Manager (Commercial ) General Manager (Administrat ion) Regional Manager (North) Regional Manager (South) Works Manager Manager (Finance) Age (In Years) 45 57 Experien ce (in yrs.) 24 30 Date of Joining 20.01.2005 14.06.2005 Qualification Mech. Engineer M.Com Previous Employmen t Ecoboard Industries Ltd. KEC International Ltd. Steelage Industries
Mr. Vianney DGama
49
24
1.1.2004
Diploma in Export Mgmt. From the Indian Institute of Foreign Trade B. B. A., Post Graduate Diploma in Marketing B. Com, M. B. A. Diploma in Mech. Eng. M. Com M. B. A.
Mr. Jain Mr. Jain
Rachit
25
1.04.2004
Lancer India Pvt. Ltd. Trans Valves (India) Pvt. Ltd. Balarshah Plywood Ltd. ASIS Overseas C&F Limited M.J. Pharmaceuti cals Ltd.
Gaurav
28
1.04.2004
Mr. Uppaluri Narayan Sarma Mr. K. P Joshi
36 35
13 12
01.02.2005 1.09.2005
Mr. Ashwin Panditpautra
Company Secretary
49
15
16.11.2005
LLB, ACS
57
Draft Red Herring Prospectus
Brief Profile of the Key Managerial Personnel Mr.B.V.Rao Mr. Rao aged 46 years has experience of more than 22 years in the activities related to manufacturing of particle Board & plywood. Prior to joining the Company, he was employed as Vice President (Operations) with M/s. Bakelite Hylem Ltd. Earlier he served at senior positions with the other companies (Eco-Board, Nova Pan & Kit ply) the companies which are into same line of activities for which SIL is proposing the new setup. Mr. R. N. Nambiar Mr. R. N. Nambiar aged 57 years, is having experience of handling commercial matters, inventory procurement & administration etc. while working as Deputy General Manger in KEC Ltd. & Jyoti Structure Ltd. He was associated with the ASIS group since May, 2005 and as VP Operations of Shirdi Industries Ltd. from 14th June 2005. Mr. Vianney DGama Vianney DGama aged 49 years, holds a B. A. degree and a diploma in Export management from the Indian Institute of Foreign Trade. He has an experience of 24 years as an export-import executive. He was associated with the group since 1996 and as General Manager (Plant and Administration) of Shirdi Industries Ltd. from 1st January 2004. He is in charge of administrative work, implementation of project, procurement and factory management. Mr. Rachit Jain Rachit Jain aged 25 years is the Regional Manager (North) of Shirdi Industries. He has B.B.A. degree in marketing from the Institute of Management Studies, Ghaziabad and a PGDM in marketing and international Business from Amity Business School. Before joining Shirdi Industries he worked for Lancer India Pvt. Ltd. At Shirdi Industries he is responsible for promoting sales in the Northern Region, maintaining inventory and other statutory compliance of Northern Region. Mr. Gaurav Jain Gaurav Jain aged 28 years is the Regional Manager (South) of Shirdi Industries and he has an MBA degree from MIT School of Management. He had worked as GM Marketing at Trans Valves (India) Pvt. Ltd. and Arihant Optics Ltd. prior to joining Shirdi Industries. At Shirdi Industries he is responsible for promoting sales in the Southern Region, maintaining inventory and other statutory compliance of Northern Region. Mr. Uppaluri Narayan Sarma Mr.U.N. Sarma aged 36 years. Mr. Sarma has experience in dismantling, repair, reconditioning, upgrading, commissioning, erection, installation & maintenance of plant. Mr. Kanta Prasad Joshi Kanta Prasad Joshi aged 35 years is currently Manager (Finance) of Shirdi Industries Ltd. He has an experience of 12 years in the accounts & finance field. He was associated with the group since 1998 and as Manager Finance of Shirdi Industries Ltd. from 1st September, 2005. Before joining Shirdi he worked for Sharon Bio-Medicine Ltd. At Shirdi Industries he is responsible for the Finance and Banking activities. Mr. Ashwin Panditpautra Ashwin Panditpautra aged 49 years is the Company Secretary of Shirdi Industries Ltd. He has an experience of 15 years in the legal and secretarial field. He is a fellow member of the Institute of Company Secretaries of India and also holds LLB (Gen.), M.Com, D.F.M. degree. Prior to joining Shirdi Industries he has worked with M.J. Pharmaceuticals Ltd. Bhopal Sugar Ltd & The Cotton Corporation of India Ltd. None of the Key Managerial Personnel are related to each other. All the above-mentioned key managerial personnel are permanent employees of our Company.
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Shareholding of Key Managerial Personnel in the Company The Key Management Personnel do not hold any shares in the Company at present. Bonus and/or profit sharing plan for Key Managerial Personnel. There is no Bonus and / or profit sharing plan for Key Managerial Personnel Changes in the Key Managerial Personnel during the last 12 months for existing Business NAME Mr. Shridhar Burkhe Mr. H. N. Desai Mr. R. N. Nambiar Mr. B.V. Rao Mr. K. P Joshi Mr. Ashwin Panditpautra DESIGNATION Company Secretary General Manager General Manager (Commercial) V. P. (Plant) Manager (Finance) Company Secretary DATE OF CHANGE 01.10.2004 31.12.2004 15.05.2005 01.01.2005 01.09.2005 16.11.2005 REASONS Resigned Resigned Appointed Appointed Appointed Appointed
Employees Stock Option Scheme Till date, the Company has not introduced any Employees Stock Option Scheme/ Employees Stock Purchase Scheme, as required by the guidelines or regulations of SEBI relating to Employee Stock Option Scheme and Employee Stock Purchase Scheme.
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OUR PROMOTERS Mr. Rakesh Kumar Agarwal
Pass Port No.: U289200 Driving Licence No.: MH-02-90 - 2834 Permanent Account No.: ABMPA2307H Mr. Rakesh Kumar Agarwal aged 42 years is the Managing Director of Shirdi Industries Limited. He is an engineer and obtained his B. E. degree in Mechanical Engineering in the year 1984. He served as a Lecturer for 2 years at Regional Engineering College, Kurukshretra, Haryana and then worked as a Class I Central Government Officer in the Central Electricity Authority, Ministry of Power, New Delhi. He later served in Directorate General of Technical Development (DGTD), Ministry of Industry, Govt. of India for 5 years where he gained experience in the field of Export. He resigned from DGTD in November 1992 and promoted the ASIS Group of which Shirdi Industries is a part. Mr. Agarwal is also providing consultancy services to several companies on foreign trade matters. Mr. Mukesh Hariram Bansal
Pass Port No.: 2.1581969 Driving Licence No.: MH-02-95 - 6558 Permanent Account No: AAMPB7108A Mr. Mukesh Bansal aged 44 obtained a university degree and and started his own business independently. Between 1985 - 1993 he gained experience in dealing and liaisoning with various agencies and Departments. In 1993 he joined M/s Narvekar & Co., a Clearing and Forwarding Agency, which was subsequently converted into a Private Limited in the name of Asis Overseas (C&F) Private Limited with Mr Bansal as its Managing Director. He has cleared Rule 9 exams from Customs in 1998 for Custom House Agents Licence Rules & Regulation 1984. His list of clientele comprises of Private and Public Sector Undertakings, Government of India Undertakings, Service Providers, like Hospitality Industry, Infrastructure Industry and status holders like Superstar, Star Trading and Export Houses. Mr. Hariram Agarwal
Voter ID No.: Applied for vide appln. No. 140 1339

60
Pass Port No.: A3574525 Driving Licence No.: N. A. Permanent Account No: ABVPA8375L Mr. Hariram Agarwal aged 67 years is one of the main Promoters of the Company. He is responsible for the administration of the company. He started his career with the State Government of Uttar Pradesh and for 33 years he served in different Departments including Municipal Ward & Irrigation. During his posting in Hill & Tarai areas, he was associated with several irrigation projects. He retired from the service in January 1995. Mr. Sarvesh Agarwal
Voter ID No.: Applied for vide appln. No. 140 1341 Pass Port No.: A5135309 Driving Licence No. MH-02-94 -58755 Permanent Account No: ADXPA6737E Mr. Sarvesh Agarwal is a commerce graduate. He joined the family business of the Group in 1995. He started the timber activities of the group. He is at present responsible for Manufacturing, Import / Local sale of timber products Asis Industries Private Limited Permanent Account No: AACCA9314L (ROC of Maharashtra at Mumbai) Company Registration No. 11-128709 Asis Industries Private Limited was incorporated on 14th September 2000 as Asis Infotech Pvt. Ltd. The name of the company was changed to the present name with effect from November 11th 2003.The Company is involved in the manufacture and export of Software. It promoted www.eximkey.com , a web site on import and export matters. Shareholding Pattern as on December 31st 2005 Name No. of shares of Rs. 10 each Mr. Rakesh Agarwal 2,347,000 Mr. Mukesh Bansal 265,000 Total 2,612,000 Board of Directors as on December 31st 2005 is as under: Mr. Rakesh Agarwal Mr. Mukesh Agarwal Mr. Hariram Agarwal Mr. Sarvesh Agarwal
Financial Performance of ASIS Industries Pvt. Ltd. for the last three years is as under: Financials for the Last Three Years Particulars Sales & Other Income 2002 2003 63.70 2003 2004 596.39 (Rs. In Lakhs) 2004-2005 717.16
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Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs.
38.33 1.00 22.35 22.53 383.30 225.30
570.67 1.00 593.02 589.67 5706.70 5896.70
680.38 251.00 1119.21 1363.93 27.11 54.34
It is hereby confirmed that the permanent account number, bank account number and passport number wherever available of all the above Promoters were submitted to the Stock Exchanges at the time of filing the Draft Red Herring Prospectus with the Stock Exchanges.
62
PROMOTER GROUP COMPANIES 1) Asis Overseas Ltd. Nature of Activities Date of Incorporation Directors Consultancy, Trading of export incentives 31.03.1994 1. Mr. Mukesh Bansal 2. Mrs. Anu Agarwal 3. Mr. Rakesh Agarwal 4. Mrs. Rukhmani Agarwal
The company was incorporated as Private limited company however with effect from October 10th 2002 it was converted to a Public limited Company. Shareholding Pattern as on December 31st 2005 Name Mr. Mukesh Hariram Bansal Mrs. Anu Agarwal Mrs. Rukmani Hariram Agarwal Dytel Finance & Investment Pvt. Ltd. Manhar Properties Pvt. Ltd. Asis Global Ltd. Mr. Rakesh Agarwal Total Financials for the Last Three Years Particulars Sales & Other Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) (In Rs.) Book Value per Share (In Rs.) 2002 2003 847.02 5.30 25.27 21.06 44.59 2.10 17.65 2003 2004 196.68 4.82 25.27 25.88 49.64 1.91 19.65 (Rs. In Lakhs) 2004-2005 296.99 23.81 25.27 49.69 73.75 9.42 29.19 No. of shares of Rs. 10 each 900 900 60,860 120,000 10,100 100 60,100 252,960
Asis Overseas Limited is not a listed at any Stock Exchange neither it has any subsidiary. 2) Asis Overseas (C & F) Pvt. Ltd. Nature of Activities Date of Incorporation Directors Customs Clearing and Warehousing. 21.08.1997 1. Mr. Mukesh Bansal 2. Mr. Sarvesh Agarwal Forwarding and
63
Shareholding Pattern as on Deecmber 31st 2005
Name Mr. Mukesh Hariram Bansal M/s. Shirdi Industries Limited. Mr. Rakesh Hariram Agarwal Mr.Sarvesh Kumar Agarwal Asis Global Limited. M/s. Emeca Finance & Investment Private Limited. Dytel Finance & Investment Private Limited. M/s. Rachana Finance & Investment Private Limited. Sajal Finance & Investment Private Limited. Pratibha Finance & Investment Private Limited. Manhar Properties Private Limited. Repute Properties Private Limited. Total Financials for the Last Three Years Particulars Clearing and forwarding charges & Other Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs. 2002 03 143.69 6.82 100.00 24.98 124.82 0.68 12.48
No. of shares of Rs. 10 each 27,730 483,510 11,880 11,880 275,000 30,000 35,000 32,500 27,500 35,000 15,000 15,000 1,000,000 (Rs. In Lakhs) 2003 04 126.36 4.73 100.00 29.71 129.59 0.47 12.96 2004 05 199.87 (2.15) 100.00 27.56 127.48 Negetaive 12.75
ASIS Overseas (C&F) Private Limited is not listed at any Stock Exchange neither it has any subsidiary. 3) Asis Global Ltd. Nature of Activities Date of Incorporation Directors Trading of export incentives, purchase and sale of Plywood, MDF Board, Veneer, Particle Board, etc. Leasing of commercial premises. 10.07.1995 1. Mr. Rakesh Agarwal 2. Mr. Sarvesh Agarwal 3. Mr. Rachit Jain 4. Mr. Gourav Jain
Initially incorporated as Devika trading Pvt. Ltd. It was converted to Pulic Limited Company on January 2nd 2003. Its name was changed to the current name with effect fromOctober 31st 2003.
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Shareholding Pattern as on December 31st 2005
Name Mrs. Anita Bansal Mr.Hariram Agarwal. Mr. Rakesh Hariram Agarwal .Rachana Finance & Invst. Pvt. Ltd. Labh Capital Services Pvt. Ltd. Asis Overseas Ltd. Emeca Finance & Investment Private Limited Poona Pearls Biotech Ltd. Trans Valve (I) P. Ltd. Mr. A. K. Jain A. K. Jain & Sons (HUF) Ms. Madhu Jain Rishb Fincap Pvt. Ltd. Ms. Urmila Jain Mr. Gaurav Jain Mr. Rachit Jain Gaurav Fincab P. Ltd. Mr. Ravish Chand Jain Total Financials for the Last Three Years Particulars Sales & Other Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs.
No. of shares of Rs. 10 each 9,000 21,000 10,000 250,000 220,000 220,000 50,000 220,000 100,000 200,000 71,500 128,500 90,000 60,000 86,000 44,000 32,000 188,000 2,000,000 (Rs. In Lakhs) 2002 03 1302.55 3.83 100.00 10.77 108.92 0.38 10.89 2003 04 1485.78 6.29 200.00 17.06 215.52 0.31 10.78 2004 05 933.92 9.48 200.00 26.54 225.31 0.47 11.27
ASIS Global Limited is not listed at any Stock Exchange neither it has any subsidiary. 4) Labh Capital Services Pvt. Ltd. Nature of Activities Date of Incorporation Directors Trading & Investments 15.06.1992 1. 2. 3. 4. Mr. Rakesh Agarwal Mr. Mukesh Bansal Mr. Avinash Joshi Mr. Ashok Mahajan
65
Shareholding Pattern as on December 31st 2005
Name Mr. Mukesh Hariram Bansal Mrs. Anu Agarwal Mr. Rakesh Hariram Agarwal Mr. Mukesh Bansal Jt. With Mrs Anu Agarwal Total Financials for the Last Three Years Particulars Sales Profit / (Loss) After Tax (PAT) Equity Capital* Reserves (excl. revaluation reserves) Profit & Loss Account (Dr. bal.) Net Worth Earning / (Loss) per Share (EPS) Rs. Book Value per Share Rs. Note * Face Value Rs 100/- per share 2002 03 0.00 (1.11) 86.90 0.00 (18.17) 68.70 (1.28) 79.06
No. of shares of Rs. 10 each 132,938 72,600 78,887 14,975 299,400 (Rs. In Lakhs) 2003 04 0.00 (0.46) 190.65 0.00 (18.63) 171.46 (0.24) 89.93 2004 05 7.51 0.08 226.90 0.00 (18.54) 207.97 0.03 91.65
Labh Capital Services Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 5) Rachana Finance & Investments Pvt. Ltd. Nature of Activities Date of Incorporation Directors Shareholding Pattern as on December 31st 2005 Name Mr. Sarvesh Agarwal Mrs. Rukhmani Agarwal TOTAL No. of shares of Rs. 10 each 150000 120000 270000 (Rs. In Lakhs) 2002 03 74.58 0.69 1.00 4.44 5.42 6.90 54.22 2003 04 0.58 0.40 1.00 4.84 5.83 4.00 58.26 2004 05 0.53 0.01 10.00 4.85 13.94 0.01 13.94 Trading & Investments 05.06.1995 1. Mr. Sarvesh Agarwal Mrs. Rukhmani Agarwal
Financials for the Last Three Years Particulars Sales Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs.
66
Rachana Finance & Investments Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 6) Repute Properties Pvt. Ltd. Nature of Activities Date of Incorporation Directors Shareholding Pattern as on December 31st 2005 Name RAKESH KUMAR AGARWAL ANU BANSAL TOTAL Financials for the Last Three Years Particulars Sales & Other Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs. 2002 03 74.22 0.86 1.00 15.05 16.02 8.60 160.24 (Rs. In Lakhs) 2003 04 0.65 (0.89) 72.50 14.16 85.42 (0.12) 11.78 2004 05 0.72 0.06 72.50 14.22 85.48 0.008 11.79 No. of shares of Rs. 10 each 350,000 375,000 725,000 Trading & Investments 28.07.1995 1. Mr. Rakesh Agarwal 2.Mrs. Anu Agarwal
Repute Properties Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 7) Dytel Finance and Investment Pvt. Ltd. Nature of Activities Date of Incorporation Directors Trading & Investments 05.06.1995 1. Mr. Hariram Agarwal 2. Mr. Sarvesh Agarwal
Shareholding Pattern a on December 31st 2005 Name Mr. Hariram Agarwal Mr. Sarvesh Agarwal TOTAL No. of shares of Rs. 10 each 100000 150000 250000 (Rs. In Lakhs) 2002 03 71.95 0.87 1.00 4.98 5.96 2003 04 0.73 0.48 1.00 5.47 6.45 2004 05 0.78 0.04 10.00 5.51 14.60
Financials for the Last Three Years Particulars Sales & Other Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth
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Earning per Share (EPS) Rs. Book Value per Share Rs.
8.70 59.61
4.80 64.52
0.40 146.00
Dytel Finance & Investment Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 8) Sajal Finance & Investment Pvt. Ltd. Nature of Activities Date of Incorporation Directors Shareholding Pattern as on December 31st 2005 Name No. of shares of Rs. 10 each Mr. Hariram Agarwal 150000 Mrs. Anu Agarwal 100000 TOTAL 250000 At present the company is not engaged in any business activity. Financials for the Last Three Years Particulars Sales / Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs. 2002 2003 74.48 0.62 1.00 4.22 5.17 6.20 51.74 (Rs. In Lakhs) 2003 2004 0.81 (0.10) 1.00 4.13 5.09 (0.95) 50.90 2004 2005 0.61 0.18 10.00 4.31 13.39 0.18 13.39 Trading & Investments 30.06.1995 1. Mr. Hariram Agarwal 2. Mrs. Anu Agarwal
Sajal Finance & Investment Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 9) Pratibha Finance and Investments Pvt. Ltd. Nature of Activities Date of Incorporation Directors Trading & Investments 23.08.1995 1. Mr. Hariram Agarwal 2. Mrs. Rukhmani Agarwal
Shareholding Pattern as on December 31st 2005 Name Mr. Hariram Agarwal Mrs. Rukhmani Agarwal TOTAL Financials for the Last Three Years Particulars Sales & Other Income Profit After Tax (PAT) 2002 2003 75.47 1.18 No. of shares of Rs. 10 each 4,85,000 4,45,000 9,30,000 (Rs. in Lakhs) 2003 2004 0.0.97 (0.07) 2004 2005 0.71 (0.15)
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Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs.
1.00 4.88 5.38 11.80 53.80
42.00 4.81 45.97 (0.017) 10.95
42.00 4.66 45.52 (0.04) 10.84
Pratibha Finance & Investment Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 10) Emeca Finance and Investment Pvt. Ltd. Nature of Activities Date of Incorporation Directors Trading & Investments 31.07.1995 1. Mr. Mukesh Bansal 2. Mr. Rakesh Agarwal
Shareholding Pattern as on December 31st 2005 Name Mr. Mukesh Bansal Mr. Rakesh Agarwal TOTAL No. of shares of Rs. 10 each 5,000 5,000 10000
Financials for the Last Three Years Particulars Sales / Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs. 2002 03 76.83 0.86 1.00 4.60 5.57 8.6 55.74 2003 04 0.87 0.23 1.00 4.82 5.81 2.3 58.08 2004 05 0.32 0.05 1.00 4.87 5.86 0.5 58.60
Emeca Finance & Investment Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 11) Manhar Properties Pvt. Ltd. Nature of Activities Date of Incorporation Directors Trading & Investments 07.08.1995 1. Mr. Mukesh Bansal 2. Mrs. Anita Bansal
Shareholding Pattern Name Mr. Mukesh Bansal Mrs. Anita Bansal TOTAL Financials for the Last Three Years No. of shares of Rs. 10 each 5,60,000 5,20,000 10,,80,000 (Rs. In Lakhs)
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Particulars Sales & Other Income Profit After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs.
2002 2003 70.28 0.99 1.00 4.40 5.38 9.90 53.78
2003 2004 0.61 (0.03) 74.00 4.37 77.14 (0.004) 10.42
2004 2005 0.72 0.05 74.00 4.42 77.21 0.007 10.43
Manhar Properties Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 12) Poona Pearls Biotek Ltd. Nature of Activities Date of Incorporation Directors Poultry and Leasing 11.03.1996 1. Mr. Rakesh Agarwal 2. Mr. Hariram Agarwal 3. Mr. Sarvesh Agarwal 4. Mr. S. N. Gupta
Initially the company was incorporated as a Private limited Company. However with effect from Auguat 8th 1996 it was converted into a Public Limited Company. Shareholding Pattern No. of shares of Rs. 10 each 1,192,000 413,900 513,500 1,440,500 1,256,600 180,000 180,000 191,500 180,000 180,000 1,005,000 670,000 Total Financials for the Last Three Years Particulars Sales Profit / (Loss) After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth 2002 03 0.00 2.82 366.30 146.81 510.77 7,403,000 (Rs. In Lakhs) 2003 04 0.00 (5.90) 630.30 140.91 768.08 2004 05 93.16 (103.52) 630.30 37.39 665.22
Name Mr. Rakesh Hariram Agarwal Mr. Mukesh Bansal Mrs. Anu Agarwal Shirdi Industries Limited Asis Overseas Private Limited. Pratibha Finance & Investment Private Limited. Manhar Properties Private Limited. Rachana Finance & Investment Private Limited. Emeca Finance & Investment Private Limited. Sajal Finance & Investment Private Limited. Mr. Sarvesh Agarwal Mr. Hari Ram Agarwal
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Earning per Share (EPS) Rs. Book Value per Share Rs.
0.08 13.94
(0.09) 12.19
(1.64) 10.55
Poona Pearls Biotek Limited is not listed at any Stock Exchange neither it has any subsidiary. 13) Swanbay Technologies Pvt. Ltd. Nature of Activities Date of Incorporation Directors Shareholding Pattern Name Mr. Rakesh Agarwal Mr. Mukesh Bansal TOTAL Financials for the Last Three Years Particulars Sales & Other Income Profit / (Loss) After Tax (PAT) Equity Capital Reserves (excl. revaluation reserves) Net Worth Earning per Share (EPS) Rs. Book Value per Share Rs. 2002 03 0.00 (0.04) 1.00 0.37 1.34 (0.39) 13.38 No. of shares of Rs. 10 each 5,000 5,000 10,000 (Rs. In Lakhs) 2003 2004 0.05 0.006 1.00 0.37 1.36 0.06 13.59 2004 05 0.06 0.02 1.00 0.39 1.39 0.20 13.90 Consultancy in engineering matters 17.02.1995 1. Mr. Rakesh Agarwal 2. Mr. Mukesh Bansal
Swanbay Technologies Pvt. Limited is not listed at any Stock Exchange neither it has any subsidiary. 14) A. S. Industrial Services Nature of Activities Proprietor Financials for the Last Three Years 2004-05 NIL Particulars Income Profit / (Loss) Capital No business has been done in the firm during given. 15) Asis Cargo Carriers Nature of Activities Proprietor Consultancy Mukesh Bansal (Rs. In Lakhs) 2002 03 2003 04 38.31 28.76 0.17 1.76 65.23 68.99 the year 2004-05 hence figures for the same has not been
Transportation Sarvesh Agarwal
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Financials for the Last Three Years Particulars Transportation Income Profit / (Loss) Capital 2002 03 3.71 0.89 4.53
(Rs. In Lakhs) 2003 04 2.51 0.27 4.80 2004 05 2.29 0.42 5.18
The promoters had also promoted two partnership firms namely M/s Shirdi International which was dissolved on 12th August, 2004.and M/s A. S. Industrial Services which was dissolved on 6th August, 2004.
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CURRENCY OF PRESENTATION In this Draft Red Herring Prospectus, all references to Rupees and Rs. are to the legal currency of India. In this draft Red Herring Prospectus, throughout all figures have been expressed in millions. The word millions or million means One thousand thousand. Any percentage amounts, as set forth in Risk Factors, Our Business, Managements Discussion and Analysis of Financial Conditions and Results of Operation and elsewhere in this draft Red Herring Prospectus, unless otherwise indicated, have been calculated on the basis of our financial statements prepared in accordance with Indian GAAP.
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RELATED PARTY TRANSACTIONS Related party disclosures as required as per AS-18 on Related Parties Disclosurs issued by the Institute of Chartered Accountants of India, are given below: a) List of Related Parties and relationship Party Rakesh Agarwal Sarvesh Agarwal Anita Bansal Anu Agarwal Asha Sarvesh Agarwal Hariram Agarwal Mukesh Bansal Rukmani Agarwal Shirdi International Asis Global Limited Asis Industries Pvt. Ltd. Asis Overseas (C&F) Pvt Ltd Asis Overseas Limited Dytel Finance & Investments Pvt. Ltd Emeca Finance & Investment Pvt Ltd Labh Capital Services Pvt. Ltd. Manhar Properties Pvt. Ltd. Poona Pearl Biotek Ltd. Pratibha Finance & Investmnt Pvt Ltd Rachana Finance & Investmnt Pvt Ltd Repute Properties Pvt. Ltd. Sajal Finance & Investment Pvt Ltd Swambey Technology Pvt. Ltd. b) Related Party Transactions Name of the Company Investment In Company By Related Parties Asis Global Limited Asis Industries Pvt Ltd Asis Overseas Limited Dytel Finance & Investments Pvt. Ltd Labh Capital Services Pvt. Ltd. Manhar Properties Pratibha Finance & Investmnt Pvt Ltd Rachana Finance & Investmnt Pvt Ltd Sajal Finance & Investment Pvt Ltd Anita Bansal Anu Agarwal Asha Sarvesh Agarwal Hariram Agarwal Mukesh Bansal Rakesh Kumar Agarwal 31/10/05 31/03/05 31/03/04 31/03/03 31/03/02 31/03/01 Relationship Promoter Promoter Wife of Director Wife of Director Wife of Director Promoter Promoter Wife of Director Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company
73.00 630.00 99.00 18.00 59.36 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 129.37 132.54
73.00 630.00 99.00 18.00 59.36 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 129.37 132.54
73.00 500.00 99.00 18.00 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 129.37 132.54
73.00 99.00 18.00 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 28.11 34.54
73.00 99.00 18.00 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 26.92 34.54
16.00 4.90 18.50 96.50 70.50 3.78 26.92 1.55
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Rukmani Agarwal 30.03 Sarvesh Agarwal 71.18 Emeca Finance & Investment Pvt Ltd Investment by company in related parties Asis Overseas (C&F) Pvt Ltd 58.35 Labh Capital Services Ltd 18.92 Poona Pearl Biotek Ltd. 53.48 Asis Overseas Pvt Ltd Asis Global Ltd. Shirdi International Loan And Advances Given: Asis Industries Pvt. Ltd. Dytel Fin. & Inv. Pvt. Ltd. (Deposit) Manhar Properties P. Ltd. Poona Pearls Breeders Pvt.Ltd. Manhar Properties P. Ltd. 10.93 Swambey Technology Pvt. Ltd. 6.57 Repute Properties Pvt Ltd 34.62 Rachana Finance & Injvest.Pvt.Ltd. Sajal Finance & Invest.Pvt.Ltd. Pratibha Finance & Investement Pvt Ltd Asis Overseas Ltd. Emeca Finance & Invest.Pvt.Ltd. 46.37 Asis Global Limited 80.89 Asis Overseas (C&F ) Pvt. Ltd. 370.63 Dytel Fin. & Inv. Pvt. Ltd. 10.85 Labh Capital Service Pvt.Ltd. 18.36 Loan And Advances Accepted: Labh Capital Services Pvt. Ltd. Asis Overseas Pvt. Ltd. 756.54 Asis Infotech Pvt. Ltd. 170.31 Dytel Finance & Invst P Ltd Emeca Finance & Invest.Pvt.Ltd. Labh Capital Service Pvt.Ltd. Poona Pearls Biotech Ltd. 417.85 Pratibha Finance & Investement Pvt Ltd 3.26 Rachana Finance & Injvest.Pvt.Ltd. 36.27 Sajal Finance & Invest.Pvt.Ltd. 40.46 Purchases Asis Overseas Ltd. Asis Global Ltd. Emeca Fin. & Inv. Pvt. Ltd. Poona Pearls Biotech Ltd. 201.78 Pratibha Fin. & Inv. Pvt. Ltd. Rachana Fin. & Inv. Pvt. Ltd. Repute Properties Pvt. Ltd. Dytel Fin. & Inv. Pvt. Ltd. Manhar Properties Pvt. Ltd. -
30.03 71.18 58.35 18.92 53.48 26.89 14.02 108.03 6.47 60.02 50.63 47.34 46.37 103.85 212.27 63.97 38.44 435.35 8.36 8.88 91.60 -
30.03 71.18 0.50 58.35 18.92 53.48 25.00 43.20 45.18 6.47 4.32 16.16 26.02 26.44 41.50 81.14 5.20 4.03 26.05 100.50 60.34 -
30.03 3.93 0.50 68.35 18.92 212.59 19.07 50.00 45.18 11.37 114.89 6.47 258.80 282.09 -
30.03 3.93 0.50 68.35 18.92 212.59 19.07 50.00 45.18 28.13 90.00 15.00 0.30 4.67 456.39 459.52 50.26 456.39 456.39 98.75 72.99
27.02 1.17 0.50 48.35 18.92 53.48 19.07 45.18 17.83 90.00 15.00 4.67 154.47 333.07 506.04 205.08 333.07 288.34 165.99 289.90 204.60 285.53
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Sajal Fin. & Inv. Pvt. Ltd. Asis Overseas (C&F) Pvt. Ltd. Sales Asis Overseas Ltd. Asis Global Ltd. Emeca Fin. & Inv. Pvt. Ltd. Poona Pearls Biotech Ltd. Pratibha Fin. & Inv. Pvt. Ltd. Rachana Fin. & Inv. Pvt. Ltd. Repute Properties Pvt. Ltd. DIRECTORS REMUNERATION R. K. Agarwal Hariram Agarwal Sarvesh Agarwal
27.10 365.75 1.96 1.96 4.20
25.96 331.93 3.36 3.36 7.20
32.19 115.00 51.18 7.20 7.20
1.15 242.26 440.27 7.20 7.20
313.52 -
459.82 1,119.53 640.52 1,076.96 50.00 459.82 1,093.43 148.29 6.74 98.29 75.22 1.50 1.20 1.20 -
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DIVIDEND POLICY The declaration and payment of dividends on our equity shares is recommended by the Board of Directors and approved by the shareholders, at their discretion, and will depend on a number of factors, including but not limited to the profits, capital requirements and overall financial condition. The company has not declared any dividend during the last 5 years.
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FINANCIAL STATEMENTS AUDITORS REPORT The Board of Directors Shirdi Industries Ltd. 2nd Floor, Mhatre Pen Bldg., Dadar (West), Mumbai 400 028. Subject: Your upcoming Initial Public Offer of Equity Shares Dear Sir, As required by part II of Schedule II of the Companies Act, 1956 and Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000 (the Guidelines) issued by the Securities and Exchange Board of India (SEBI) in pursuance of Section 11 of the Securities and Exchange Board of India Act, 1992 and related clarifications and in accordance with the request dated 21/11/2005 received from the Company to carry out the work relating to the Initial Public Issue of Equity Shares of Shirdi Industries Ltd., we have examined the financial information contained in the statements annexed to this report which are proposed to be included in the Prospectus of Shirdi Industries Ltd. (the Company) in connection with the proposed Initial Public issue of shares and report thereon as follows: 1. We have examined the Statement of Adjusted Profits and Losses of the Company for each five financial years ended 31st March 2001, 2002, 2003, 2004, 2005 and for the period ended 31st Oct, 2005 and the Statement of Adjusted Assets and Liabilities as at those dates enclosed as ANNEXURES I and II respectively and confirm that: a. These Statements reflect the profits and losses and the assets and liabilities of the Company for each of the relevant periods as extracted from the Profits and Loss Account and Balance Sheet for the year ended 31st March 2001, 2002, 2003, 2004, 2005 and for the year ended 31st October 2005 audited by us and adopted by the members and adopted by the Board of Directors, after making therein the disclosures and adjustments required to be made in accordance with the provisions of paragraph 6.18.7 of the Guidelines. The Significant Accounting Policies adopted by the Company along with notes forming parts of accounts are enclosed as ANNEXURE III.
b. 2. 3. 4. 5.
We further certify that the company does not have any Subsidiary under the provisions of the Companies Act, 1956. We further certify that all related party transactions are disclosed in this respect of the Company and enclosed as Annexure III. We confirm that the Company has not declared any dividend during the last five years. We have examined the following financial information relating to the Company proposed to be included in the Prospectus as annexed to this report. (i) (ii) (iii) (iv) Statement of cash flow as per annexure IV Summary of Accounting Ratios based on the adjusted profits relating to Earnings Per Share, Net Asset Value and Return on Net worth enclosed as Annexure V. Capitalisation Statement as on 31st October 2005 of the Company enclosed as Annexure VI. Statement of Tax Shelter enclosed as Annexure VII.
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We certify that the information disclosed in Statements mentioned in the above Para No.5 have been correctly computed from the figures stated in the Adjusted Profit and Loss Account and Adjusted Assets and Liabilities referred to in paragraph I above. This report is intended solely for your information for inclusion in the Prospectus in connection with the proposed Initial Public Issue of the Companys shares and is not to be used, referred to or distributed for any other purpose without our prior written consent. Yours faithfully, For M. P. KALA & CO. CHARTERED ACCOUNTANTS M. P. KALA (PROPRIETOR) Place: Mumbai MEMBERSHIP NO.: 39840. Date : December 17, 2005
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ANNEXURE - I : STATEMENT OF ADJUSTED PROFIT & LOSS ACCOUNT INCOME SALES Trading Sales Consultancy Manufacturing Other Income Total EXPENDITURE Purchases Manufacturing Expenses Salary Staff Welfare Administrative Expenses Selling Expenses Interest Depreciation Total Expenditure Profit before Taxation Provision for Taxation Profit after Tax Deffered Tax (Net) Income Tax Adjustment Profit after Extraordinary Items Surplus brouth forward From Last Year Reserve Transferd to B/S (Rs. In Lacs) 31-Oct-05 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01 2,086.33 83.01 756.25 48.13 2,973.72 2,472.45 27.47 22.01 39.96 52.95 36.02 12.87 2,663.73 309.99 83.00 226.99 226.99 475.05 475.05 3,273.88 125.46 633.62 3.91 4,036.87 3,591.92 34.95 34.60 66.22 63.29 31.09 11.42 3,833.49 203.38 70.00 133.38 0.81 2.89 129.68 248.06 248.06 3,588.57 51.86 83.60 1.30 3,725.33 3,457.96 20.28 27.92 81.98 37.46 36.01 13.41 3,675.02 50.31 18.20 32.11 (1.54) 33.65 118.38 118.38 3,097.81 54.94 1.13 3,153.88 2,949.62 31.91 72.52 24.70 48.88 9.72 3,137.35 16.53 6.75 9.78 0.44 9.34 84.73 84.73 3,523.69 45.37 16.74 3,585.80 3,443.71 22.58 39.43 18.70 37.65 9.48 3,571.55 14.25 5.00 9.25 0.74 8.51 75.39 75.39 5,727.37 53.52 8.71 5,789.60 5,642.31 22.68 41.95 37.15 23.58 7.58 5,775.25 14.35 5.82 8.53 8.53 66.88 66.88
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1)
2) 3)
1) 1
2) 3) a b c d e f
a b
4)
ANNEXURE - II : STATEMENT OF ASSETS AND LIABLITIES 31-Oct-05 31-Mar-0531-Mar-04 31-Mar-0331-Mar-02 31-Mar-01 SOURCE OF FUNDS SHARE HOLDER FUNDS a) Share Capital 1,804.86 1,630.66 1,450.66 950.66 950.66 303.37 b) Share Application Money 381.04 Reserve and Surplus 1,598.75 608.06 118.38 84.73 75.39 66.88 LOAN FUNDS a) Secured Loans 1,364.85 505.67 387.66 247.57 261.69 313.12 b) Unsecured Loans 140.00 Total 4,768.46 2,744.39 1,956.70 1,422.96 1,287.74 1,064.41 APPLICATION OF FUNDS FIXED ASSETS Gross Block Original Cost 2,663.76 988.56 819.85 77.30 70.19 103.35 Less:Depreciation 76.47 63.60 52.18 38.77 29.05 19.82 Net Block 2,587.29 924.96 767.67 38.53 41.14 83.53 INVESTMENTS 136.28 167.61 212.79 688.27 443.18 187.75 NET CURRENT ASSETS Current Assets Loans & Advances Inventories 332.91 320.06 223.29 296.34 44.38 65.14 Sundry Debtors 1,462.32 681.38 857.92 852.37 368.34 465.72 Creditors Debit Balance 191.19 Loans & Advances 87.14 456.23 85.19 150.18 438.31 269.43 Deffered Tax Asset (Net) 0.73 0.73 1.54 Cash & Bank Balance 1,232.80 600.78 89.96 64.28 35.64 98.26 3,115.90 2,059.18 1,257.90 1,554.36 886.67 898.55 CURRENTLIABILITIES AND PROVISIONS Current Liabilities 963.41 294.98 248.51 837.25 73.10 85.28 Provisions 112.49 118.23 39.45 24.16 14.43 20.30 1,075.90 413.21 287.96 861.41 87.53 105.58 2,040.00 1,645.97 969.94 692.95 799.14 792.97 MISCELLANEOUS EXPENDITURE ( To the extent not written off of adjusted ) Preoperative Expenses 4.89 5.85 6.30 3.21 4.28 0.16 TOTAL 4,768.46 2,744.39 1,956.70 1,422.96 1,287.74 1,064.41
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ANNEXURE - III SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS 1. SIGNIFICANT ACCOUNTING POLICY :-
a) Accounting Convention:The financial statements are prepared under the historical cost convention method and are in accordance with the requirements of the Companies Act, 1956. b) Revenue Recognition:All expenses and income to be payable or receivable respectively are accounted on accrual basis. c) Fixed assets:Fixed assets are carried at cost, including stamp duty and other incidental expenses incurred for their acquisition, less accumulated depreciation.
d) Depreciation:Depreciation has been provided in accordance with the rates prescribed in Schedule XIV of the Companies Act, 1956 and rules thereon and in accordance with the period they are put to use. e) f) Inventories:Inventories are valued at cost or Market Value whichever is less. Investments:Long-term investments are carried at cost. Provision for diminution is made to recognize a decline, other than temporary, in the value of such investments are carried at lower of cost and fair value. Deferred taxes:Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of Income Tax Act, 1961. Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognized if there is virtual certainty that there will be sufficient future taxable income available to realize such losses. Deffered tax provisions for the period ended as on 31/10/2005 has not been provided and the same will be provided at the end of the year. NOTES TO ACCOUNTS 31/10/05 815.23 NIL NIL 1276.49 NIL 31/03/05 272.52 NIL NIL 29.89 1.73 31/03/04 231.92 NIL NIL 4.69 1.25 31/03/03 230.46 1.84 NIL 67.50 NIL ( Rs. In Lacs ) 31/03/02 31/03/01 182.97 NIL 2.13 NIL NIL NIL NIL NIL NIL NIL
g)
2)
Particulars Value of Imports on CIF basis. Expenditure in foreign currency. Earning in foreign currency. Contingent liabilities not provided On A/c of Letter of credit On A/c BanK Gaurantee
b) The Company has sent letter of confirmation of balance to the Debtors and the same is yet to be received. Necessary adjustments in the accounts arising out of reconciliation will be made after receipt of the confirmation. c) Previous years figures have been re-grouped / rearranged wherever necessary to make them comparable.
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d) Foreign currency transactions are recorded in the books by applying the average rate and any difference on realization due to fluctuation in foreign currency is treated as loss or gain on account of foreign exchange fluctuation and debited / credited to Profit & Loss account as the case may be. e) Segment Reporting : The company revenue has been divided into three segments (1) Trading (2) Manufacturing and (3) Consultancy. In geographical segmentation the revenues are generated only from India. f) Retirement Benefits : i) ii) Liability on account of leave encashment for employees is provided on actual basis. No liability is provided in respect of gratuity and other superannuation benefits for the period ended 31/03/2005 since none of the employees has completed more than 5 years of service as informed by the management.
g) Earning Per Share (EPS) : As per AS-20, the Basis Earning per share is as follows; 31-10-05 226.99 18048580 31-03-05 129.68 1630660 31-03-04 33.65 14506580 31-03-03 9.34 9506580 31-03-02 8.51 9506580 31-03-01 8.53 3033650
Net Profit available to Equity share holders Weighted average no. of equity shares (Nos.) Outstanding, considered for basis EPS (Weightage On the basis of fraction of month i.e., more than 15 Days taken as full month and less than 15 days Ignored) Basic Earnings per share Weighted average no. of equity shares (Nos.) Outstanding, considered for basic EPS (Weightage On the basis of no. of days holding) Basic share Earnings per
1.26 18048580
0.80 16306600
0.23 14506580
0.10 9506580
0.09 9506580
0.28 3033650
1.26
0.80
0.23
0.10
0.09
0.28
g) DEFERRED TAX: Accounting Standard 22-Accounting for Taxes on Income was applicable to theCompany for the first time for the year ended 31st March 2003. Pursuant to the Standard, the Company has recorded net deferred tax Asset of Rs.80, 746/- for the year ended 31st March 2005, which has been charged to the Profit & Loss Account. The significant component and classification of deferred tax asset and liability on account of timing differences are: Period Ended Amount In Rs Lacs 31/10/05 0 31/03/05 1.54 31/03/04 0.81 31/03/03 0 31/03/02 0 31/03/01 0
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h) Related Party Transactions: i. List of Related Parties and relationship Party Rakesh Agarwal Sarvesh Agarwal Anita Bansal Anu Agarwal Asha Sarvesh Agarwal Hariram Agarwal Mukesh Bansal Rukmani Agarwal Shirdi International Asis Global Limited Asis Industries Pvt. Ltd. Asis Overseas (C&F) Pvt Ltd Asis Overseas Limited Dytel Finance & Investments Pvt. Ltd Emeca Finance & Investment Pvt Ltd Labh Capital Services Pvt. Ltd. Manhar Properties Pvt. Ltd. Poona Pearl Biotek Ltd. Pratibha Finance & Investmnt Pvt Ltd Rachana Finance & Investmnt Pvt Ltd Repute Properties Pvt. Ltd. Sajal Finance & Investment Pvt Ltd Swambey Technology Pvt. Ltd. ii) Related Party Transactions. Name Of The Company Investment In Company By Related Parties Asis Global Limited Asis Industries Pvt Ltd Asis Overseas Limited Dytel Finance & Investments Pvt. Ltd Labh Capital Services Pvt. Ltd. Manhar Properties Pratibha Finance & Investmnt Pvt Ltd Rachana Finance & Investmnt Pvt Ltd Sajal Finance & Investment Pvt Ltd Anita Bansal Anu Agarwal Asha Sarvesh Agarwal Hariram Agarwal Mukesh Bansal Rakesh Kumar Agarwal Rukmani Agarwal Sarvesh Agarwal 31/10/05 31/03/05 31/03/04 31/03/03 31/03/02 31/03/01 Relationship Promoter Promoter Wife of Director Wife of Director Wife of Director Promoter Promoter Wife of Director Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company Associate Company
73.00 630.00 99.00 18.00 59.36 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 129.37 132.54 30.03 71.18
73.00 630.00 99.00 18.00 59.36 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 129.37 132.54 30.03 71.18
73.00 500.00 99.00 18.00 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 129.37 132.54 30.03 71.18
73.00 99.00 18.00 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 28.11 34.54 30.03 3.93
73.00 99.00 18.00 4.90 18.50 96.50 72.50 55.88 73.46 25.82 40.62 26.92 34.54 30.03 3.93
16.00 4.90 18.50 96.50 70.50 3.78 26.92 1.55 27.02 1.17
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Emeca Finance & Investment Pvt Ltd Investment by company in related parties Asis Overseas (C&F) Pvt Ltd 58.35 Labh Capital Services Ltd 18.92 Poona Pearl Biotek Ltd. 53.48 Asis Overseas Pvt Ltd Asis Global Ltd. Shirdi International Loan And Advances Given: Asis Industries Pvt. Ltd. Dytel Fin. & Inv. Pvt. Ltd. (Deposit) Manhar Properties P. Ltd. Poona Pearls Breeders Pvt.Ltd. Manhar Properties P. Ltd. 10.93 Swambey Technology Pvt. Ltd. 6.57 Repute Properties Pvt Ltd 34.62 Rachana Finance & Injvest.Pvt.Ltd. Sajal Finance & Invest.Pvt.Ltd. Pratibha Finance & Investement Pvt Ltd Asis Overseas Ltd. Emeca Finance & Invest.Pvt.Ltd. 46.37 Asis Global Limited 80.89 Asis Overseas (C&F ) Pvt. Ltd. 370.63 Dytel Fin. & Inv. Pvt. Ltd. 10.85 Labh Capital Service Pvt.Ltd. 18.36 Loan And Advances Accepted: Labh Capital Services Pvt. Ltd. Asis Overseas Pvt. Ltd. 756.54 Asis Infotech Pvt. Ltd. 170.31 Dytel Finance & Invst P Ltd Emeca Finance & Invest.Pvt.Ltd. Labh Capital Service Pvt.Ltd. Poona Pearls Biotech Ltd. 417.85 Pratibha Finance & Investement Pvt Ltd 3.26 Rachana Finance & Injvest.Pvt.Ltd. 36.27 Sajal Finance & Invest.Pvt.Ltd. 40.46 Purchases Asis Overseas Ltd. Asis Global Ltd. Emeca Fin. & Inv. Pvt. Ltd. Poona Pearls Biotech Ltd. 201.78 Pratibha Fin. & Inv. Pvt. Ltd. Rachana Fin. & Inv. Pvt. Ltd. Repute Properties Pvt. Ltd. Dytel Fin. & Inv. Pvt. Ltd. Manhar Properties Pvt. Ltd. Sajal Fin. & Inv. Pvt. Ltd. Asis Overseas (C&F) Pvt. Ltd. 27.10
58.35 18.92 53.48 26.89 14.02 108.03 6.47 60.02 50.63 47.34 46.37 103.85 212.27 63.97 38.44 435.35 8.36 8.88 91.60 25.96
0.50 58.35 18.92 53.48 25.00 43.20 45.18 6.47 4.32 16.16 26.02 26.44 41.50 81.14 5.20 4.03 26.05 100.50 60.34 32.19
0.50 68.35 18.92 212.59 19.07 50.00 45.18 11.37 114.89 6.47 258.80 282.09 1.15
0.50 68.35 18.92 212.59 19.07 50.00 45.18 28.13 90.00 15.00 0.30 4.67 456.39 459.52 50.26 456.39 456.39 98.75 72.99
0.50 48.35 18.92 53.48 19.07 45.18 17.83 90.00 15.00 4.67 154.47 333.07 506.04 205.08 333.07 288.34 165.99 289.90 204.60 285.53 313.52 -
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Sales Asis Overseas Ltd. Asis Global Ltd. Emeca Fin. & Inv. Pvt. Ltd. Poona Pearls Biotech Ltd. Pratibha Fin. & Inv. Pvt. Ltd. Rachana Fin. & Inv. Pvt. Ltd. Repute Properties Pvt. Ltd. DIRECTORS REMUNERATION R. K. Agarwal Hariram Agarwal Sarvesh Agarwal i) Other Income
365.75 1.96 1.96 4.20
331.93 3.36 3.36 7.20
115.00 51.18 7.20 7.20
242.26 440.27 7.20 7.20
459.82 1,119.53 640.52 1,076.96 50.00 459.82 1,093.43 148.29 6.74 98.29 75.22 1.50 1.20 1.20 -
Particulars Sale Of Property Interest Sale Of Share Commission Insurance Claim Dividend Excise Subsidy Misc. Total j) Debtors Ageing
31/10/05 31/03/05 31/03/04 31/03/03 31/03/02 31/03/01 0.58 2.55 3.68 1.06 1.01 15.80 8.41 45.00 0.25 0.04 0.04 0.12 0.31 0.19 0.15 0.05 0.69 48.13 3.92 1.30 1.13 16.74 8.71
Particulars More Than 6 Months Less Than 6 Months k) Unsecured Loan Particulars Amount l) Secured Loan Sanction Amount (Rs. in Lacs)
31/10/05 31/03/05 31/03/04 31/03/03 31/03/02 31/03/01 95.26 1,367.05 22.52 658.85 234.39 623.54 12.55 839.82 12.55 355.80 6.05 459.66
31/10/05 31/03/05 31/03/04 31/03/03 31/03/02 31/03/01 Nil Nil Nil Nil Nil Nil
Facility
Security
Fees/Pricing
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Term loan
2256 lacs (Uco Bank)
Primary Hypothecation charge on the assets acquired out of term loan. Collateral 1. First charge by way of equitable mortgage of Immovable property such as flats, Land & building and office premises. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 0.78 lacs) 2. Mr. Mukesh Bansal (Rs. 1.93 lacs) 3. Mr. Hariram Agarwal (Rs. 0.65 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd.
Rate of interest 6 month LIBOR + 3.5% or 9.5% effective for 2 yrs. If the loan is drawn in rupees. From the third year the interest shall be 1.25% below BPLR. Rate of interest As per pricing by IBD 9.5% effective for 2 yrs. If the loan is drawn in rupees. Rate of interest (BPLR +1%) 12% P.A.
Term loan
3390 lacs Primary Hypothecation charge on the assets acquired out (Union Bank of the Term Loan. of India) Collateral same as above Guarantee same as above 125 (Uco Bank) Primary Hypothecation charge on the entire current assets of the Company. Collateral 1. First charge by way of equitable mortgage of Immovable property such as flats,Land & building and office premises. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 0.78 lacs) 2. Mr. Mukesh Bansal (Rs. 1.93 lacs) 3. Mr. Hariram Agarwal (Rs. 0.65 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd. Primary Hypothecation charge on the entire current assets of the Company. Collateral 1. First charge by way of equitable mortgage of Immovable property such as flats,Land & building and office premises. Guarantee 1. Personal guarantee of Mr. Rakesh Agarwal (Rs. 0.78 lacs) 2. Mr. Mukesh Bansal (Rs. 1.93 lacs) 3. Mr. Hariram Agarwal (Rs. 0.65 lacs) 4. Corporate guarantee of M/s Asis Industries Ltd. & M/s Poona Pearls Biotek Ltd. Primary Same as applicable for the CC limits Collateral same as applicable for the CC limits Guarantee same as applicable for the CC limits Primary Same as applicable for the CC limits Collateral same as applicable for the CC limits Guarantee same as applicable for the CC limits
Cash Credit (Book Debts)
Cash Credit (Book Debts)
190 (Union Bank of India)
Letter of Credit Letter of Credit
240 lacs (Union Bank of India) 160 lacs (Uco Bank)
m) The company has declared no dividend in the last 5 years.
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ANNEXURE - IV CASH FLOW STATEMENT (Rs. In Lacs) 31-Oct-05 31-Mar-05 31-Mar-04 31-Mar-03 31-Mar-02 31-Mar-01 A) CASH FROM OPERATING ACTIVITY Net Profit Before Tax & Extraordinary Item Depreciation Interest & Financing Charges Miscellaneous expenses w/o Interest / Dividend Income Operating Cash Flow Before Working Capital Changes (Increase) / Decrease in Inventory (Increase) / Decrease in Sundry Debtors (Increase) / Decrease in Creditors Debit Balance (Increase) / Decrease in Advances & Deposits 309.99 12.87 36.02 0.96 (48.13) 311.71 (12.85) (780.94) 369.09 203.38 11.42 31.09 0.45 (3.91) 242.43 (96.77) 176.54 (371.04) 125.25 76.41 70.00 6.41 (168.71) 45.18 (123.53) 180.00 360.00 118.01 3.91 (2.89) (31.09) 627.94 510.82 89.96 600.78 50.31 13.41 36.01 (3.09) (1.30) 95.34 73.05 (5.55) 191.19 64.99 (573.45) (154.43) 18.20 (172.63) (742.55) 475.48 (267.07) 500.00 140.09 (140.00) 1.30 (36.01) 465.38 25.68 64.28 89.96 16.53 9.72 48.88 1.07 (1.13) 75.07 (251.96) (484.03) (191.19) 288.13 773.88 209.90 6.75 203.15 (7.11) (245.09) (252.20) (14.12) 140.00 1.13 (0.44) (48.88) 77.69 28.64 35.64 64.28 14.25 9.48 37.65 (4.12) (16.74) 40.52 20.76 97.38 (168.88) (18.05) (28.27) 5.00 (33.27) 32.91 (255.43) (222.52) 266.25 (51.43) 16.74 (0.74) (37.65) 193.17 (62.62) 98.26 35.64 14.35 7.58 23.58 0.03 (8.71) 36.83 59.55 (14.97) (133.81) 6.32 (46.08) 5.82 (51.90) (35.51) (35.51) 78.54 43.94 8.71 (23.58) 107.61 20.20 78.06 98.26
Increase / (Decrease) in Current Liabilities 662.69 Cash Generated from Operation 549.70 Less : Income Tax Paid 83.00 466.70 TOTAL (A) B) CASH FLOW FROM INVESTING ACTIVITIES: Net (Increase) / Decrease in Fixed Assets (1,675.20) (Purchase) / Sales of Investments 31.33 TOTAL (B) (1,643.87) C) CASH FLOW FROM FINANCING ACTIVITIES: Share Capital / Share Application 174.20 Share Premium on Shares issued 763.69 Receipt / (Repayment) of Secured Loan 859.18 Receipt / (Repayment) of Unsecured Loan Interest & Other Income 48.13 Less : Income Tax Adjustment Bank & Other Charges (36.02) TOTAL (C) 1,809.18 D) NET INCREASE IN CASH / CASH 632.01 EQUIVALENT (A+B+C) 600.78 E) OPENING CASH & BANK BALANCE CLOSING CASH & BANK BALANCE 1,232.79 E) (D+E)
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ANNEXURE V
ACCOUNTING RATIOS Period Ended October 31, 2005 1.26 18.86 6.67% 18048580
Key Ratios
March 31, 2005 0.80 13.73 5.94% 16306580
March 31, 2004 0.23 10.82 2.15% 14506580
Year Ended March 31, March 31, March 31, 3003 2002 2001 0.10 10.89 0.90% 9506580 0.09 10.79 0.83% 0.28 24.77 1.14%
a) Earning Per Share (Rs.) b) Net Asset Value Per Share (Rs.) c) Return on Net Worth (%) d) Equity Shares at the end of the year (in Nos.) Formula : Earning Per Share (Rs.)
9506580 3033650
= Net profit after tax, excluding extraordinary/exceptional items, if any Number of equity shares at each year end = Networth Number of equity shares at each year end Net Profit after tax Networth
Net Asset Value Per Share (Rs.)
Return on Net Worth (%)
The key per share ratios computed on the basis of number of Equity Shares post sub-division, had this been in place for the respective years shown above, are given below : Period Ended Year Ended Key Ratios (Post sub-division) October 31, March 31, March 31, March 31, March 31, March 31, 2005 2005 2004 3003 2002 2001 a) Earning per share (Rs.) b) Net Asset value per share (Rs.) c) Equity Shares post subdivision (in Nos.) 1.26 18.86 0.80 13.73 0.23 10.82 0.10 10.89 9506580 9.34 0.09 10.79 0.28 24.77 -
Net Profit After Tax
18048580 16306580 14506580 226.99 129.68 33.65
9506580 3033650 8.51 8.53
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ANNEXURE VI
CAPITALISATION STATEMENT Pre-issue as at As Adjusted for issue 31-Oct-05 Rupees Rupees In lakhs In lakhs
Short Term Debt - Secured Loan - Unsecured Long Term Debt Total Debt Fund Equity Share Capital Reserves and Surplus Total Shareholders Funds Total Debt / Shareholders Funds
1364.85 1364.85 1804.86 1598.75 3403.60 0.40
1364.85 1364.85 [ * ] [ * ] [ * ] [ * ]
B A/B
Notes: 1) The post issue capitalisation cannot be determined till the completion of the book building process. ANNEXURE VII TAX SHELTER STATEMENT Rupees In lakhs PARTICULARS Period Ended 31.03.2005 31/10/2005 309.99 104.34 33.66% 0.30 104.34 104.34 203.38 72.96 35.88% 2.24 2.24 0.80 72.16 72.16 Year Ended 31.03.2003
31.03.2004
31.03.2002
31.03.2001
PROFIT BEFORE TAXES Tax on Net Profits as per applicable Rates : (%) ADJUSTMENTS : Export Profits Diff. Between tax depn. & book depn. Other Adjustments NET ADJUSTMENTS Tax saving thereon Total Taxation (Tax Liability) Taxation on Extraordinary items Tax on profit before extraordinary items
50.31 18.05 35.88% 0.30 0.30 0.11 17.94 17.94
16.53 6.07 36.75% (1.59) (1.59) (0.58) 6.66 6.66
14.25 5.09 35.70% (1.22) (1.22) (0.44) 5.52 5.52
14.35 5.68 39.55% (0.34) (0.34) (0.13) 5.81 5.81
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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The investors should read the following discussion of the financial conditions and results of operations together with the audited financial statements of the Company, each for the three months ending October 31, 2005 and the financial years 2005, 2004, 2003, 2002 and 2001 including the notes thereto and the reports thereon, which appear on the page no. 78 of this Draft Red Herring Prospectus. The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Guidelines and restated, as described in the report of our Statutory Auditor viz. M/s M.P.Kala & Company dated December 17, 2005 in the section titled Financial Information on page no. 78 of this Draft Red Herring Prospectus. The fiscal year of the Company ends on March 31 of each year, so all references to a particular fiscal year are to the twelve month period ended 31st day of that year. OVERVIEW OF THE BUSINESS After incorporation in 1993, we introduced a different concept in the business of trading of transferable export incentives by offering forward sell options to exporters and purchase options to the importers at deferred payment basis. This business model of our Company at one end secured the service charges realizable from the exports against the various services rendered to them as while purchasing the incentives we have the possibility of deducting or adjusting the service charges in advance in place of realizing the same after rendering the services. Similarly in case of imports options of deferred payment offered by us to importers resulted into sharing of business opportunities with the importers, in addition to rendering the services. This approach of our Company also helped us to start trading and import activities in Timber and Steel products later. We gained sufficient experience in trading of various items required by Furniture industry from 1995 to 2002. Since October 2003, we have started manufacturing of panel doors, door skins and furniture components at Navi Mumbai. Initially we sold the products without any brand, but after increase in volume of import we started selling the product under ASIS Brand. We started importing several other products i.e. Prelaminated Boards, Veneer, Particle Board, PVC, HDF Door Skins, etc. used in furniture industry for offering integrated solution to the customers. Currently the demands for MDF and particle boards are met through imports having high landed cost on account of high cost of logistics and import duty. In India there are limited plants for manufacture of these products against which demand is rising. Further the usage / demand of this product is widening on account of high cost of alternate products (plywood, solid wood & other panels), changing habits of people, environmental problems on account of erosions of the forest resources etc. Further, it is much cheaper and advantageous to go for furniture and furnishings from MDF and particle boards. This helped us in setting up of manufacturing facilities. Initially, we made arrangements for manufacturing by appointing Jyoti Panels Private Ltd., as an exclusive job worker for them and later on taken over all the plant and machinery and equipments from them and made further investment on plant and machinery for producing Panel Doors and Furniture Components. We are utilizing 100% capacity available with them at present. We now decided to set up manufacture of MDF and Particle Board (PB) plain & pre-laminated both. In addition, we also decided to set up new capacities of pre-laminated board, flooring, door skins, laminates, doors and furniture components.
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Our Strategy We plan to provide customised solutions to our customers in our area of activity as under: To provide services to distributors according to their needs which may include trade discount, inventory management, cut to size, tailor made requirement and training. To provide services to end-users by creating awareness and giving customized solutions by providing integrated solutions for interior furnishing. To provide services to manufacturers of furniture by supplying the material according to their needs, effective supply chain management and product meeting quality standards like ISO, ECO and ISI.
FACTORS AFFECTING THE FUTURE RESULTS OF OPERATIONS The capacity of the Company to successfully commission the expansion project at the scheduled time; Changes in Government Policies relating to Wood Industry; Companys failure to identify evolving trends in furniture industry and create new designs or changes in consumer preferences; Non- availability of skilled labour force or any dispute between the labour and the management; Fluctuation in Exchange Rates; and Aptitude of the Company to continuously operate optimally. (Rs. In Lakhs) SALES Trading Sales Consultancy Manufacturing Other Income Total EXPENDITURE Purchases Manufacturing Expenses Salary Staff Welfare Administrative Expenses Selling Expenses Interest Depreciation Total Profit before Taxation Provision for Taxation Profit after Tax Deffered Tax (Net) Income Tax Adjustment 31-Mar-05 3,273.88 125.46 633.62 3.91 4,036.87 3,591.92 34.95 34.60 66.22 63.29 31.09 11.42 3,833.49 203.38 70.00 133.38 0.81 (2.89) 31-Mar-04 3,588.57 51.86 83.60 1.30 3,725.33 3,457.96 20.28 27.92 81.98 37.46 36.01 13.41 3,675.02 50.31 18.20 32.11 (1.54) 31-Mar-03 3,097.81 54.94 1.13 3,153.88 2,949.62 31.91 72.52 24.70 48.88 9.72 3,137.35 16.53 6.75 9.78 0.44
ANALYSIS ON RESULTS OF OPERATIONS
92
Profit after Tax
135.46
33.65
9.34
Comparison for the period ended October 31, 2005 to F.Y. 2004-05 For the period ended October 31, 2005, the Company earned total income (including other income) of Rs. 2973.72 lakhs in comparison to Rs. 4036.87 lakhs during F.Y. 2004-05. Expenditure The total expenditure were to the extent of Rs. 2663.73 lakhs for the period ended October 31, 2005 in comparison to Rs. 3833.49 lakhs during F.Y. 2004-05. Profit before Tax Profit before Tax was Rs. 309.99 lakhs for the period ended October 31, 2005 in comparison to Rs. 203.38 lakhs during F.Y. 2004-05. Profit After Tax Profit after tax was Rs. 226.99 lakhs for the period ended October 31, 2005 in comparison to Rs. 129.68 lakhs during F.Y. 2004-05. COMPARISON OF FY ENDED MARCH 31, 2005 WITH FY ENDED MARCH 31, 2004 Sales The total sales increased from Rs.4036.87 lakhs in FY 05 as against Rs.3725.33 lakhs for the FY 04 thus showing an increase of 8.36%. in the FY 05 as compared to FY 04. During the FY 04 trading amounted to Rs. 3588.57 Lakhs, which decreased in the FY 05 to Rs.3273.88 Lakhs. This was mainly due to the fact that although international prices of the material had increased but in local market the corresponding increase were not observed as such there was decreas in the trading volume. Consultancy increased from Rs.51.86 Lakhs in FY 04 to Rs.125.46 Lakhs in FY 05. This was mainly due to addition of more clients and more services to existing clients. Manufacturing sales increased from Rs. 83.60 Lakhs in FY 04 to Rs.633.62 Lakhs in FY 05. The manufacturing had started in October 2003. In the year 04-05 the sales established and acceptability of the product in the market improved, resulting into increased sales. Other Income During the year other income increased from Rs.1.3 Lakhs in FY 04 to Rs.3.91 Lakhs in FY 05. This increase was mainly due to increase in interest income against Fixed Deposit. Expenditure The total expenditure increased from Rs.3675.02 Lakhs in FY 04 to Rs. 3833.49 Lakhs in FY 05 i.e. increase of 4.3% against increase in sales of 8.36%. The manufacturing expenses and salary expenses increased but the company observed reduction in administrative and selling expenses by adequate utilization of resources. Purchases Purchases increased from Rs.3457.96 Lakhs in FY 04 to Rs.3591.92 Lakhs in FY 05 recording an increase of 3.87%. The increase was mainly due to purchase of material for manufacturing activity. Manufacturing expenses
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The manufacturing expense increased from Rs.20.28 Lakhs in FY 2004 to Rs.34.95 Lakhs in FY 2005 recording an increase of 72.34%. This was mainly due to the fact that in 2003-04 the manufacturing operations were only for 6 months as against for full year in 2004-05. Salary & Staff Welfare In the FY 05 salary and staff welfare amounted to Rs.34.60 Lakhs as compared to Rs.27.92 Lakhs in FY 2004. This was mainly due to increase in expenses on staff who were employed for manufacturing operations for 6 months in 2003-04 as against for full year in 2004-05. Administrative Expenses In the FY 2005 the administrative expenses were Rs.66.22 Lakhs as compared to Rs.81.98 Lakhs in FY 2004. The expenses decreased by 19.22% on account of better utilization of resources. Selling Expenses During the year the expenses increased from Rs.37.46 Lakhs in FY 2004 to 63.29 Lakhs in FY 2005 due to increase in sales expenses related to manufactured goods like addition of more godowns, opening of branch offices and other marketing expenses. Interest Charges Interest charges in FY 2004 was Rs. 36.01 Lakhs and it decreased to Rs.31.09 Lakhs in the FY 2005 on account of lower utilization of working capital. Depreciation Depreciation is provided on written down value method. Depriciation in the FY 2004 was Rs.13.41 Lakhs as against Rs.11.42 Lakhs in FY 2005. Profits before tax Profit before tax increased by 304.25% from Rs.50.31 Lakhs in FY 04 to Rs.203.38 Lakhs in FY 05. This was mainly due to increase in consultancy income from Rs.51.88 lakhs to Rs.125.46 lakhs and increase in manufacturing sales from Rs.83.6 lakhs to Rs.633.62 lakhs. Income Tax Provision for Tax is Rs.18.2 Lakhs in FY 04 and Rs.70 Lakhs in FY 05. The tax amount has increased due to increase in taxable income. Profit After Tax Provision for Tax is Rs.32.11 Lakhs in FY 04 and Rs. 133.38 Lakhs in FY 05. The increase in profit was achieved due to increased income from consultancy and manufacturing. COMPARISON OF FY ENDED MARCH 31, 2004 WITH FY ENDED MARCH 31, 2003 Sales The total sales recorded an increase 18.12% in the FY 2004 as compared to FY 2003. The total sales for the FY 2004 were Rs. 3725.33 lakhs as against Rs. 3153.88 lakhs for the FY 2003 on account of increase in trading income. During the FY 2004 trading income amounted to Rs. 3588.57 Lakhs as compared to Rs.3097.81 Lakhs in FY 2003. This increase was due to increase in the prices of the traded goods together with increase in the volume of trading goods. Consultancy Income decreased from Rs.54.94 Lakhs in FY 2003 to Rs.51.86 Lakhs in FY 2004. This was mainly due to the reason that no additional areas of services were added during this period and also the focus of the company was more on the manufacturing operations launched during the FY 2004. Manufacturing sales amounted to Rs. 83.60 Lakhs in FY 2004 as against Nil during the FY 2003 as the manufacturing operations have started from October 2003.
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Other Income During the year other income increased from Rs.1.13 Lakhs in FY 2003 to Rs.1.3 Lakhs in FY 2004. The other income mainly includes interest received on bank Fixed Deposits (margin money against Letter of Credit), which increased marginally because of, increase in Fixed Deposit (margin money). Expenditure The total expenditure increased from Rs.3137.35 Lakhs in FY 2003 to Rs. 3675.02 Lakhs in FY 2004. This was mainly due to starting of the manufacturing operations and a proportionate increase in the expenditure increase in sales turnover of the traded goods. Purchases Purchases increased from Rs. 2949.62 Lakhs in FY 2003 to Rs. 3457.96 Lakhs in FY 2004 recording an increase of 14.70%. The increase in the purchases was due to increase in sale of the traded goods. Manufacturing expenses The manufacturing expenses amounted to Rs.20.28 Lakhs in FY 2004 as against nil for the FY 2003 as the manufacturing operation was started in the month of October 2003. Salary Staff Welfare In the FY 2004 salary staff Welfare amounted to Rs.27.92 Lakhs as compared to Rs.31.91 Lakhs in FY 2003. The decrease was mainly on account of re-organisation of personnel in the group. Administrative Expenses In the FY 2004 the administrative expenses were Rs.81.98 Lakhs as compared to Rs.72.52 Lakhs in FY 2003. The expenses increased by 13.04% on account of start of manufacturing operations. Selling Expenses During the year the expenses increased from Rs.24.7 Lakhs in FY 2003 to Rs. 37.46 Lakhs in FY 2004. This increase was due to increase in volume of sales. Interest Charges Interest charges in FY 2003 were Rs.48.88 Lakhs has decreased to Rs.36.01 Lakhs in the FY 04. This was mainly due to lower utilization of funds from the bank and reduction in interest rates. Depreciation Depreciation is provided on written down value method. Depreciation in the FY 2003 was Rs.9.72 Lakhs as against Rs.13.41 Lakhs in FY 2004. Profits before Tax Profit before Tax increased by 204.35% from Rs.16.53 Lakhs in FY 2003 to Rs.50.31 Lakhs in FY 2004. The increase in profit was mainly due to the commencement of manufacturing and increase of margin in trading. Income Tax Provision for Tax is Rs.18.2 Lakhs in FY 2004 and Rs.6.75 Lakhs in FY 2003. This was mainly due to increase in taxable income. Profit After Tax Profit after Tax is Rs.32.11 Lakhs in FY 2004 and Rs. 9.78 Lakhs in FY 2003. The profits improved due to better sales margin and commencement of manufacturing.
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Other Matters Unusual or infrequent events or transactions To the best of our knowledge, and as disclosed in Management Discussion and Analysis of Financial Condition and Results of Operations, there are no unusual or infrequent events or transactions that has significantly affected the business of the Company. Significant economic changes that materially affected or are likely to affect income from continuing operations There are no significant economic changes that materially affected Companys operations or are likely to affect income from continuing operations. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations. There are no known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations except as described in the section titled Risk Factors on page no. iii and in Management Discussion and Analysis of Financial Condition and Results of Operations in this Draft Red Herring Prospectus, to Companys knowledge. Future changes in relationship between costs and revenues The Company reasonably does not foresee any factor that may have a material adverse impact on the operation and finances of the Company except disclosed in Risk Factors and Management Discussion and Analysis of Financial Condition and Results of Operations in this Draft Red Herring Prospectus. Increases in net sales or revenue and Introduction of new products or services or increased sales prices Increases in revenues are by and large linked to increases in volume of business activity carried out by the Company. Total turnover of each major industry segment in which the Company operated The Company operates in only one Industry Segment i.e. Plywood Industry. Status of any publicly announced New Products or Business Segment The Company has not announced any new products or business segment. Seasonality of Business The business operations of the Company are not seasonal. Dependence on a single or few suppliers or customers We are not dependent on any single or few suppliers or customers. Competitive conditions We will face competition from existing manufacturers in India. However, as previously we were importing these items and reselling them in India, we have already developed a distribution system for the products which we will now manufacture. Significant Developments after October 31, 2005 that may affect the future results of operations No circumstances have arisen since the date of the last financial statement until the date of filing of this Draft Red Herring Prospectus with SEBI, which materially and adversely affect or is likely to affect the operations or profitability of the Company, or value of its assets, or its ability to pay its liability within next twelve months. There is no subsequent development after the date of the Auditors Report, which will have a material impact on the reserves, profits, earnings per share and book value of the Equity Shares of the Company.
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SECTION VI - LEGAL AND OTHER INFORMATION Except as described below, there are no outstanding litigations, suits or criminal or civil prosecutions or tax liabilities against the Company, its directors, Promoters or companies promoted by its promoters that would have a material impact on the business of the Company and there are no defaults, non payment or statutory dues, institutional/bank dues and dues payable to holders of debentures, bonds and fixed deposits and arrears of preference shares that would have a material adverse effect on the business other than unclaimed liabilities by the Company or its directors, its Promoters or companies promoted by its promoters. Further, the directors, promoters or companies promoted by the promoters have not been declared as willful defaulter by Reserve Bank of India, and also have not been debarred from dealing in securities and/or accessing the capital markets by SEBI and no disciplinary action has been taken against them by SEBI or any stock exchanges. OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS Litigation against ASIS Overseas (C&F) Private Limited (ASIS Overseas) (i) The Service Tax Department has passed an Order dated 4th January, 2001 directing ASIS Overseas to pay penalty of Rs.1,81,000/- for late filing of service tax return. ASIS Overseas was directed to predeposit a sum of Rs.1.5 Lakhs within 15 days from the receipt of the said Order. ASIS Overseas had preferred an appeal against the said Order. However, the said appeal was dismissed vide Order dated 26th February, 2002. Asis Overseas has now filed an appeal against the said Order dated 26th February, 2002 in Customs, Excise and Gold (Control) Appellate Tribunal. Vide Order dated 12th January, 2005 the Appellate Tribunal, West Zonal, Bench has set aside the said Order dated 26th February 2002 and remanded back the matter to the Commissioner (Appeals) for fresh adjudication without insisting on further predeposit of the balance amount. Asis Overseas had made pre-deposit of 50% of the penalty amount in pursuance of the Order dated 2nd September, 2005. (ii) The Directorate of Revenue Intelligence Regional Unit Jamnagar, has issued show cause notice dated 4th October, 2004 to Koatex Infrastructure Limited (Koatex), ASIS Overseas and other persons mentioned therein, for misutilisation of imported material against Special Imprest Licence (SIL). It is alleged that ASIS Overseas had acted as Customs House Agents for the consignments of Koatex. It has been alleged that ASIS Overseas was instrumental in permitting and facilitating misuse of SIL by Koatex and that ASIS Overseas did not check the misrepresentation made by Koatex for getting SIL registered and for redemption of Bond/Bank Guarantee. It is also alleged that such acts of ASIS Overseas has led to evasion of customs duty of Rs.21,31,50,898. Vide the said show cause notice, ASIS Overseas has been called upon to show cause to the Commissioner of Customs, Jamnagar, Commissioner of Customs, Mumbai and Commissioner of Customs, ACC Mumbai within 30 days of acceptance of the said notice as to why penalty should not be imposed upon them under Section 112 of the Customs Act, 1962. The hearing on this show cause notice is scheduled on January 27, 2006. Litigation against Mr.R.K.Agarwal (i) Mr.R.K.Agarwal had acted as a consultant to Ravishankar Films Private Limited. On account of misdeclaration as regards the goods to be exported, the said Ravishankar Films Private Limited and Mr.R.K.Agarwal (in his capacity as a consultant) were ordered to pay penalty of Rs.2,00,000/- and Rs.1,00,000/-, respectively. The said Ravishankar Films Private Limited and Mr.R.K.Agarwal have challenged the said Order and an order was passed on 5th February, 1996 by the Custom, Excise and Service Tax Appellate Tribunal, West Zonal Bench Mumbai, directing Mr.R.K.Agarwal to deposit Rs.50,000/- towards the said penalty. Mr.R.K.Agarwal had deposited the said amount and the matter is still pending with the Custom, Excise and Service Tax Appellate Tribunal, West Zonal Bench Mumbai. (ii) It was alleged in a Show Cause Notice dated 30th March, 2002 issued by Directorate of Revenue Intelligence issued to Mr. .R.K.Agarwal that Mr.R.K.Agarwal had arranged for purchase of export
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performance and issue of Chartered Engineers Certificate to Pennar Industries Limited. In an investigation by the Customs Department, for misuse of licence by Pennar Industries Limited, Mr.R.K.Agarwal was held guilty of aiding and abetting offence committed by Pennar Industries Limited and penalty of Rs.3,00,000/- was imposed on him. Mr.R.K.Agarwal has challenged the said Order in Appeal No.534 of 2004 before the Custom, Excise and Service Tax Appellate Tribunal, West Zonal Bench Mumbai. Vide Order dated 28th April, 2005 the Appellate Tribunal West Regional Bench at Mumbai has set aside the Order of the Commissioner and allowed the appeal with consequential reliefs to Mr. R.K.Agarwal. (iii) The Directorate of Revenue Intelligence Regional Unit Jamnagar has issued show cause notice dated 4th October, 2004 to Koatex, Mr. R.K. Agarwal and other persons mentioned therein, for misutilisation of imported material against SIL. It is alleged that ASIS Overseas Limited, wherein Mr. R.K. Agarwal is a director, had acted as advisors to Koatex in the matter related to issuance of Advance Licence. It is alleged that Mr. R.K. Agarwal, being director of Asis Overseas Limited has promoted and prompted the misuse of the licence by way of giving advice to Koatex and others for his financial gain. It is also alleged that Mr. R.K. Agarwal had also taken up matter for redemption of Bond/Bank Guarantee with DGFT on the wrong information prepared by him. It is also alleged that such acts of Mr. R.K. Agrawal has led to evasion of customs duty of Rs.213150898. Vide the said show cause notice, Mr. R.K. Agarwal has been called upon to show cause to the Commissioner of Customs, Jamnagar, Commissioner of Customs, Mumbai and Commissioner of Customs, ACC Mumbai within 30 days of acceptance of the said notice as to why penalty should not be imposed upon them under Section 112 of the Customs Act, 1962. The hearing on this show cause notice is scheduled on January 27, 2006. Litigation against Devika Trading Company Private Limited now Asis Global Limited (AGL) a) AGL, a group Company of the Company had acquired property at K.C.House, 2nd floor, MIDC Central Road, Andheri (East), Mumbai 400 093 from Bagwe Udyog Limited vide a Deed of Assignment dated 17th September, 1999. After the execution of the said Deed, on application of the Bank of Maharashtra, DRT issued an injunction order dated 14th October, 1999 against Bagve Udyog Limited restraining Bagve Udyog Limited from dealing with or disposing of its properties. Bank of Maharashtra challenged the assignment in Suit No.475 of 2002 in High Court, Mumbai. The single Judge Bench of High Court, Mumbai rejected application of Bank of Maharashtra against which, the said Bank has preferred an appeal No.275 of 2002 to larger bench. The Court directed to maintain statusquo and ordered AGL not to alienate, transfer, dispose or part with possession of the property till the matter is finally disposed off. On application made in the Notice of Motion No.454 of 2002 by AGL to the High Court, AGL has been allowed for giving the premises on leave and licence basis. At present, the premises has been given on leave and licence basis and the final hearing of the matter is awaited. b) The Directorate of Revenue Intelligence Regional Unit Jamnagar has issued show cause notice dated 4th October, 2004 to Koatex, ASIS Overseas Limited and other persons mentioned therein, for misutilisation of imported material against SIL. It is alleged that ASIS Overseas Limited had acted as Advisors to Koatex in the matter related to issuance of Advance Licence. It is alleged that ASIS Overseas Limited has promoted and prompted the misuse of the licence by way of giving advice to Koatex and others for his financial gain. It is also alleged that ASIS Overseas Limited had also taken up matter for redemption of Bond/Bank Guarantee with DGFT on the wrong information prepared by them. It is alleged that such acts of ASIS Overseas Limited has led to evasion of customs duty of Rs.213150898. Vide the said show cause notice, ASIS Overseas Limited has been called upon to show cause to the Commissioner of Customs, Jamnagar, Commissioner of Customs, Mumbai and Commissioner of Customs, ACC Mumbai within 30 days of acceptance of the said notice as to why penalty should not be imposed upon them under Section 112 of the Customs Act, 1962. c) The Directorate of Revenue Intelligence Regional Unit Jamnagar has issued show cause notice dated 4th October, 2004 to Koatex, Mr. Mukesh Bansal and other persons mentioned therein, for misutilisation of imported material against SIL. It is alleged that Mr. Mukesh Bansal had represented Koatex as Customs House Agent for the consignments of Koatex. It has been alleged that Mr. Mukesh Bansal did not check the Statement of Imports and Exports and other documents before submitting to the
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Customs Officers for getting Bond/Bank Guarantee redeemed from Customs. It is alleged that such acts of ASIS Overseas Limited has led to evasion of customs duty of Rs.213150898. Vide the said show cause notice, Mr. Mukesh Bansal has been called upon to show cause to the Commissioner of Customs, Jamnagar, Commissioner of Customs, Mumbai and Commissioner of Customs, ACC Mumbai within 30 days of acceptance of the said notice as to why penalty should not be imposed upon them under Section 112 of the Customs Act, 1962.
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GOVERNMENT APPROVALS The Company does not require any letter of intent or industrial license from the GoI for carrying out its current operations or those proposed in this draft Red Herring Prospectus. The Company also does not require any permission or approval from the GoI and various GoI agencies for proceeding with the proposed capital expenditure from the proceeds of the Issue except those mentioned in this draft Red Herring Prospectus. The Company does not require any further approval from any GoI authority or RBI to undertake the proposed activities save and except those consents and approvals, which it may require to take in the normal course of business from time to time. The Company has received all the necessary consents, licenses, permissions and approvals from the GoI and various GoI agencies / private certification bodies required for our present business and no further approvals are required for carrying on the present as well as our proposed business except as mentioned herein. It must, however, be distinctly understood that in granting the above consents/ licenses/ permissions/ approvals, the GoI does not take any responsibility for our financial soundness or for the correctness of any of the statements or any commitments made or opinions expressed. Particular SIA memorandum for manufacture of plain MDF & Particle board. SIA memorandum for manufacture of pre-laminate MDF & Particle board. FIPB approval for capitalization of part value of equipments in the form of equity. Approval of Central Empowered Committee constitutive by Honourable Supreme Court of India in respect of wood based industries. Approval of Forest Dept. of State Govt.Department of Uttaranchal State Government. Environmental clearance by Central Govt.Government for manufacture of PB and MDF board. Dept. of Industrial Development, Govt. of Uttaranchal for manufacture of PB and MDF board. Environment & Pollution Control Board, Govt. of Uttaranchal to set up a Factory License for import under EPCG (Export Promotion Capital Goods) Scheme Consent to operate the factory at TTC Industrial Area, Mahape from Maharashtra Pollution Control Board, Navi Mumbai , under Water (Prevention and Control of Pollution) Act 1974 and Air (Prevention and Control of Pollution) Act 1981 Membership of Plastics Export Promotion Council and the membership fee paid upto March 31, 2004 Sales Tax Registration under Bombay Sales Tax Act, 1959 and Central Sales (Registration and Turnover Rules), 1957 Approval Registration under Central Excise Rules, 2002 Registration under Bombay Shops & Establishments Act., 1948 Licence to run a factory at Plot A-467,MIDC, Mahape, Navi Mumbai. No objection certificate from Uttaranchal State Environmental Protection and Pollution Control Board to set up a factory at Rudrapur Licence No. 3106/SIA/IMO/2005 Dated Dt. 29/06/2005 3111/SIA/IMO/2005 Dated Dt. 30/06/2005 FCII:122(2005/101)2005 Dated Dt. 03/06/2005 2-7/CEC/SC/2005 Dated Dt. 21/06/2005 1534/20-37 Dated Dt. 29/12/2004 J-11013/73/2004-IA-II(I) Dated Dt. 07/12/2004 49/PS/2005 Datedt. 15/02/2005 UPPCB/HO/NOC-392/05/1089 Dt. Dated 06/10/05 0330008925 Dated. 16/06/2005 Valid upto November 30, 2005 Consent No. RONM/NNB/TTC/CC/O/C-94 Dated 15/12/2003 Valid upto 31st March, 2008 PLEPC/S/739/2003-2004 Dated 19/9/2003 400095 S-67 Dated 14/3/96 400095 C-54 Dated 14/3/96 AACFS3288CXM001 Dated 27/10/2003 GN-II/0 11388 Dated 25/2/2004 Valid upto December 31, 2005 52518 6th October, 2005
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NOC from Fire Brigade Office, Rudrapur (Udam Singh Nagar) to set up a factory at Rudrapur Noc from the Collectors office, Udam Singh Nagar for setting up a factory at Rudrapur. Letter from State Industrial Development Corporation of Uttaranchal granting Mega Status to the Company. Membership of Engineering Export Promotion Council Sales Tax Registration under Andhra Pradesh General Sales Tax Act and Delhi Sales Tax Rules. Sales Tax Registration under State of Uttranchal Permanent Account Number TDS Account Number ROC Certificate No. IEC No Employees Provident Fund License from Forest Department of Uttranchal Sanction Letter from Uttranchal Power Corporation
N-2/FS/05 Dated 7/09/05 7th September, 2005 271/SBA/05 Dated 12/09/05 12th September, 2005 Dated 20/07/05 20th July, 2005 RCMC: B: MER: 5323: 99-2000 Dated 1/07/99 ABS/04/01/2498/2002-2004 Dated 10/12/2003 LC/53/210150/1098 R-U-0062009 AACFS3288C MUMS26935G 11-144347 0394002768 Dated 2/5/94 MH/BAN/47419 Dated 19/01/05 72/T.K/2005 dated 05-12-2005 2536 dated 1-09-2005
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MATERIAL DEVELOPMENTS Significant development since the last audited balance sheet as on October 31, 2005 till the date of Draft Red Herring Prospectus No circumstances have arisen since the date of last financial statement until the date of filing of this draft Red Herring Prospectus with SEBI, which materially and adversely affect or is likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months. There is no subsequent development after the date of the Auditors Report, which will have a material impact on the reserves, profits, earnings per share and book value of the Equity Shares of our Company.
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SECTION VII - OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue The Issue of Equity Shares in the Issue by the Company has been authorised by the resolution of the Board of Directors passed at their meeting held on July 23, 2005, subject to the approval of shareholders through a special resolution to be passed pursuant to Section 81(1A) of the Companies Act, 1956. The shareholders approved the issue at the general meeting of the Company held on July 23, 2005. Prohibition by SEBI Neither the Company, nor its Promoters, its directors, any of its Group Companies, and the companies or entities with which directors of the Company are associated, as directors or promoters, have been prohibited from accessing or operating in the capital market or restrained from buying, selling or dealing in securities under any order or directions passed by SEBI. None of the Promoters, their relatives, the Company or the Promoter Group Companies are detained as willful defaulters by RBI/ government authorities and there are no proceedings relating to violations of securities laws pending against them and there are no violations of securities laws committed by them in the past. The Listing of any securities of the Issuer has never been refused at anytime by any of the Stock Exchanges in India. ELIGIBILITY FOR THE ISSUE As per Clause 2.2.1 of SEBI Guidelines, the Company may make an initial public offering of equity shares or any other securities that may be converted into or exchanged with equity shares at a later date, only if it meets all the following conditions: The Company has net tangible assets of atleast Rs. 300 lakhs in each of the 3 preceding full years (of 12 months each) of which not more than 50% is held in monetary assets. The Company has a track record of Distributable Profits as per Section 205 of the Companies Act, 1956, for atleast three out of immediately preceding five years. The Company has a pre-issue Net Worth of atleast Rs. 100 lakhs in each of the preceding 3 full years (of 12 months each). The proposed issue size does not exceed five (5) times the pre-issue net worth of the Company as per the audited accounts for the year ended March 31, 2005.
The following table shows the net tangible assets, monetary assets, distributable profits and net worth for the past five financial years in accordance with Indian GAAP: (Rs. in lakhs) Financial 2000-01 2001-02 2002-03 2003-04 2004-05 Year Net Tangible 751.13 1021.77 1032.18 1561.20 2232.14 Assets Monetary 98.26 35.64 64.28 89.96 600.78 Assets Distributable 8.53 8.51 9.34 33.65 129.68 Profits Net Worth 751.43 1025.76 1035.27 1569.61 2238.89 *Share Capital excludes the Share Application Money pending Allotment
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(1) Net Tangible Assets are defined as the sum of fixed assets (including capital work in progress and excluding revaluation reserves, if any), trade investments, current assets (excluding deferred tax assets) less current liabilities (excluding deferred tax liabilities) and secured as well as unsecured long term liabilities and non-trade investments. (2) Monetary Assets are defined as the sum of cash on hand, Non Trade Investments, Balance with Scheduled Bank in Current accounts and Fixed Deposits and balance with Post Office Savings account. (3) Net Worth includes equity share capital and reserves (net off miscellaneous expenditure not written off) SEBI DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THE DRAFT RED HERRING PROSPECTUS HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF THE DRAFT RED HERRING PROSPECTUS TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT RED HERRING PROSPECTUS. THE LEAD MANAGER, ALLIANZ SECURITIES LIMITED HAS CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (DISCLOSURE AND INVESTOR PROTECTION) GUIDELINES 2000, IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT RED HERRING PROSPECTUS, THE LEAD MANAGERS IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER M/S ALLIANZ SECURITIES LIMITED HAS FURNISHED TO SEBI, A DUE DILIGENCE CERTIFICATE DATED JANUARY 21, 2006 IN ACCORDANCE WITH THE SEBI (MERCHANT BANKERS) REGULATIONS, 1992 WHICH READS AS FOLLOWS: (1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRAFT RED HERRING PROSPECTUS PERTAINING TO THE SAID ISSUE; (2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PROJECTED PROFITABILITY, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS MENTIONED IN THE ANNEXURE AND OTHER PAPERS FURNISHED BY THE COMPANY. (3) WE CONFIRM THAT:
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A. THE DRAFT RED HERRING PROSPECTUS FORWARDED TO SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE; B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE SAID ISSUE, AS ALSO THE GUIDELINES, INSTRUCTIONS, ETC. ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; C. THE DISCLOSURES MADE IN THE DRAFT RED HERRING PROSPECTUS ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE; D. BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT RED HERRING PROSPECTUS ARE REGISTERED WITH SEBI AND THAT TILL DATE SUCH REGISTRATIONS ARE VALID; AND E. WE HAVE SATISFIED OURSELVES ABOUT THE WORTH OF UNDERWRITERS TO FULFILL THEIR UNDERWRITING COMMITMENTS. (4) WE CERTIFY THAT A WRITTEN CONSENT FROM THE SHAREHOLDERS HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS A PART OF PROMOTERS CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED/SOLD/TRANFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING OF THE DRAFT RED HERRING PROSPECTUS WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF THE LOCK-IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS. ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE TIME OF FILING OF THE RED HERRING PROSPECTUS WITH THE ROC IN TERMS OF SECTION 60B OF THE COMPANIES ACT, 1956. ALL LEGAL REQUIREMENTS PERTAINING TO THE ISSUE WILL BE COMPLIED WITH AT THE TIME OF REGISTRATION OF THE RED HERRING PROSPECTUS WITH THE ROC IN TERMS OF SECTIONS 60 AND 60B OF THE COMPANIES ACT. THE FILING OF THE DRAFT RED HERRING PROSPECTUS DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTIONS 63 OR 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI, FURTHER, RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGERS (MERCHANT BANKER), ANY IRREGULARITIES OR LAPSES IN THE DRAFT RED HERRING PROSPECTUS. DISCLAIMER FROM THE ISSUER AND THE BOOK RUNNING LEAD MANAGER The Company, its Directors and the Book Running Lead Manager accepts no responsibility for statements made otherwise than in this Draft Red Herring Prospectus or in the advertisement or any other material issued by or at instance of the Company and that anyone placing reliance on any other source of information, including our website, www.asisindia.com , would be doing so at his or her own risk. CAUTION The Book Running Lead Managers accepts no responsibility, save to the limited extent as provided in the Memorandum of Understanding entered into between the Book Running Lead Managers and the Company dated December 15, 2005.
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All information shall be made available by the Book Running Lead Managers and the Company to the public and investors at large and no selective or additional information would be available for a section of investors in any manner whatsoever including road show presentations, research or sales reports or at collection centres or elsewhere. We shall not be liable to the Bidders for any failure in downloading the bids due to faults in any software/ hardware system or otherwise. DISCLAIMER IN RESPECT OF JURISDICTION This Issue is being made in India to persons resident in India (including Indian nationals resident in India), who are majors, Hindu Undivided Families, Companies, Corporate Bodies and Societies registered under the applicable laws in India and authorized to invest in shares, Indian Mutual Funds registered with SEBI, Indian Financial Institutions, Commercial Banks, Regional Rural Banks, Co-operative Banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, as amended fro time to time, or any other Trust law and who are authorized under their constitution to hold and invest in shares, permitted insurance companies and pension funds and to NRIs on non-repatriable basis and FIIs registered with SEBI. This Draft Red Herring Prospectus does not, however, constitute an Issue to sell or an invitation to subscribe to shares issued hereby in any other jurisdiction to any person to whom it is unlawful to make an issue or invitation in such jurisdiction. Any person into whose possession this Draft Red Herring Prospectus comes into is required to inform himself about and to observe any such restrictions. Any dispute arising out of this Issue will be subject to the jurisdiction of appropriate court(s) in Mumbai only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Red Herring Prospectus has been filed with SEBI for observations and SEBI has given its observations and the final Red Herring Prospectus has been filed with RoC as per the provisions of the Act. Accordingly, the Equity Shares, represented thereby may not be offered or sold, directly or indirectly, and this Red Herring Prospectus may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of this Red Herring Prospectus nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to this date. DISCLAIMER CLAUSE OF BOMBAY STOCK EXCHANGE LIMITED (BSE, the Designated Stock Exchange) [] DISCLAIMER CLAUSE OF THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED (NSE) [] FILING OF PROSPECTUS WITH THE BOARD AND ROC A copy of this Draft Red Herring Prospectus has been filed with SEBI at Corporation Finance Department, Ground Floor, Mittal Court, A Wing, Nariman Point, Mumbai - 400021. A copy of the Red Herring Prospectus, along with the material contracts and documents required to be filed under section 60 of the Companies Act, 1956 having being attached thereto, has been delivered for registration to the Registrar of Companies, Maharashtra, 100,Everest, Marine Lines,Mumbai-400002
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IMPERSONATION As a matter abundant caution, attention of the applicants is specifically drawn to the provisions of subsection (1) of Section 68 A of the Companies Act, 1956 which is reproduced below: Any person who: (a) makes in a fictitious name, an application to a Company for acquiring or subscribing for, any shares therein, or (b) otherwise induces a Company to allot, or register any transfer of shares, therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years. LISTING The initial listing applications have been made to Bombay Stock Exchange Ltd. (BSE) and The National Stock Exchange of India Limited (NSE) for permission to list the Equity Shares and for an official quotation of the Equity Shares of the Company. Bombay Stock Exchange Ltd. will be the Designated Stock Exchange. In case the permission for listing of the Equity Shares and for official quotation of the Equity Shares is not granted by any of the above mentioned Stock Exchanges, the Company will forthwith repay, without interest, all monies received from the applicants in pursuance of this Draft Red Herring Prospectus and if such money is not repaid within eight days after the day from which the Company becomes liable to repay it, then the Company and every director of the Company who is an officer in default shall, on and from the expiry of 8 days, be jointly and severally liable to repay the money with interest prescribed under Section 73 of the Companies Act 1956. The Company with the assistance of the Book Running Lead Manager shall ensure that all steps for the completion of necessary requirements for listing and commencement of trading at the Stock Exchanges mentioned above are taken within seven days of finalisation of the Basis of Allotment for the Issue. CONSENTS Consents in writing of: (a) our Directors, the Company Secretary, Compliance Officer, the Auditors, Bankers to the Company; and (b) Book Running Lead Managers to the Issue and Bankers to the Issue, Registrars to the Issue and Legal advisors to the Issue, to act in their respective capacities, have been obtained and shall be filed along with a copy of the Red Herring Prospectus with the Registrar of Companies, Maharashtra, Mumbai as required under Section 60 of the Companies Act, 1956 and such consents have not been withdrawn up to the time of delivery of a copy of this Red Herring Prospectus, for registration with the Registrar of Companies, Maharashtra, Mumbai. M/s M.P. Kala & Co., Statutory Auditors, have also given their consent to the inclusion of their report as appearing hereinafter in the form and context in which it appears in this Red Herring Prospectus and also tax benefits accruing to the Company and to the members of the Company and such consent and report have not been withdrawn up to the time of delivery of this Red Herring Prospectus for registration with the Registrar of Companies, Maharashtra at Mumbai.. EXPERT OPINION No opinion of any expert has been obtained by the Company, except that of M/s M. P. Kala & Co., Statutory Auditors of the Company and Kanga & Co., Legal Advisors to the Issue.
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PUBLIC ISSUE EXPENSES The expenses for this Issue includes issue management fees, selling commission, distribution expenses, legal fees, fees to advisors, stationery costs, advertising expenses and listing fees payable to the Stock Exchanges, among others. The total expenses for this Issue are estimated at approximately Rs. [] Lakhs, details of which are as under: (Rs. In Lakhs) Activity % OF TOTAL ISSUE SIZE Issue Management [*] Registrars fees [*] Printing & Distribution of Issue Stationery [*] Advertising and Marketing expenses [*] Brokerage and Selling commission [*] Other expenses [*] [*] Total Fees Payable to the BRLM, Underwriting, Brokerage and Selling Commission The total fees payable to the Book Running Lead Manager, and Syndicate Members including brokerage and selling commission for the Issue will be as per the Memorandum of Understanding executed between us and the BRLMs dated December 15, 2005, copy of which is available for inspection at the Registered Office of the Company. Fees Payable to the Registrar The total fees payable to the Registrar to the Issue will be as per the Memorandum of Understanding executed between the Company and the Registrar, copy of which is available for inspection at the Registered Office of the Company. Adequate funds will be provided to the Registrar to the Issue for making refunds to unsuccessful applicants as per the mode disclosed under para Dispatch of Refund Orders appearing on page no. 132. Previous Public and Rights Issues The Company has not made any public or rights issue since its inception. Previous Issues of Shares Otherwise than for Cash Except to Klinkert the Company has not issued shares for consideration other than for Cash. Commission and Brokerage paid on Previous Issues The Company has not made any public or rights Issue since its inception and has not paid any commission or brokerage. Companies under the Same Management There are no companies under the same management within the meaning of Section 370 (1B) of the Companies Act, 1956. PROMISE VIS-A-VIS PERFORMANCE (A) LAST THREE ISSUES MADE BY SHIRDI INDUSTRIES LTD. The Company has not made any issue of equity shares to the public prior to the present Public Issue. LAST ISSUE OF THE LISTED VENTURES OF PROMOTER GROUP There is no Listed venture of the Promoter Group.
(B)
Outstanding Debentures, Bonds, Redeemable Preference Shares or other Instruments
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The Company, since its incorporation has not issued any Redeemable Preference shares and debentures, bonds or other instruments. Stock Market Data for our Equity Shares This being the first Public Issue of the Company, no Stock Market Data is available. Mechanism for Redressal of Investor Grievances The Company has appointed Intime Spectrum Registry Limited as the Registrar to the Issue, to handle the investor grievances in co-ordination with Compliance Officer of the Company. All grievances relating to the present issue may be addressed to the Registrar with a copy to the Compliance Officer, giving full details such as name, address of the applicant, number of Equity Shares applied for, amount paid on application and Bank branch where the application was submitted. The Company will monitor the work of the Registrar to ensure that the grievances are settled expeditiously and satisfactorily. Disposal of Investor Grievances Intime Spectrum Registry Limited, the Registrar to the Issue, will handle investor grievances pertaining to the Issue. A fortnightly status report of the complaints received and redressed by them would be forwarded to the Company. The Company would also be co-ordinating with Registrar to the Issue in attending to the grievances of the Investors. The Company assures that the Board of Directors, in respect of the complaints, if any, to be received, shall adhere to the following schedules: Sr. No. 1. 2. 3. Nature of Complaint Non-receipt of refunds Change of Address notification Any other complaint in relation to Public Issue Time Taken Within 7 days of receipt of complaint, subject to production of satisfactory evidence. Within 7 days of receipt of information Within 7 days of receipt of complaint with all relevant details
The Company has appointed Mr. Kanta Prasad Joshi of the Company, as Compliance Officer who would directly deal with SEBI with respect to implementation /compliance of various laws, regulations and other directives issued by SEBI and matters related to Investor complaints. The Investor may contact the Compliance Officer in case of any pre Issue/post Issue related problems. The Compliance Officer can be contacted at the following address: Shirdi Industries Limited A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai - 400028 Tel : 022 24364520 Fax: 022 24372200 E-mail: investors@asisindia.com Website : www.asisindia.com CHANGES IN AUDITORS There has been no change in the Auditors of the Company during the last three years. Capitalization of Reserves or Profits (during the last five years) The Company has not capitalized its profits or reserves at any time except as stated in the Section titled Financial Information on page no. 78 of this Draft Red Herring Prospectus. Revaluation of Assets (during the last five years) The Company has not revalued its assets during the last five years.
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TERMS OF THE ISSUE The Equity Shares being offered are subject to the provisions of the Companies Act, Companys Memorandum and Articles of Association, the terms of this Draft Red Herring Prospectus, Prospectus, Bid cum Application Form, the Revision Form, the Confirmation of Allocation Note and other terms and conditions as may be incorporated in the allotment advices and other documents/certificates that may be executed in respect of the Issue. The Equity Shares shall also be subject to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, the Government of India, Stock Exchanges, FIPB, RBI, RoC and/or other authorities, as in force on the date of the Issue and to the extent applicable. Ranking of Equity Shares The Equity Shares being offered shall be subject to the provisions of our Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares of the Company including rights in respect of dividend. FACE VALUE AND ISSUE PRICE The Equity Shares with a face value of Rs. 10/- each are being offered at a total price of Rs. [*] per Equity Share. At any given point of time there shall be only one denomination for the Equity Shares. Rights of the Equity Shareholder Subject to applicable laws, the equity shareholders shall have the following rights: Right to receive dividend, if declared; Right to attend general meetings and exercise voting powers, unless prohibited by law; Right to vote on a poll either in person or by proxy; Right to receive offers for rights shares and be allotted bonus shares, if announced; Right to receive surplus on liquidation; Right of free transferability; and Such other rights, as may be available to a shareholder of a listed public company under the Companies Act and our Memorandum and Articles of Association. For a detailed description of the main provisions of our Articles of Association dealing with voting rights, dividend, forfeiture and lien, transfer and transmission and/or consolidation/splitting, refer to the Section on Main Provisions of Articles of Association of the Company on page 134 of this Draft Red Herring Prospectus. MARKET LOT AND TRADING LOT In terms of Section 68B of the Companies Act, the Equity Shares of the Company shall be allotted only in dematerialised form. As per existing SEBI Guidelines, the trading of our Equity Shares shall only be in dematerialised form. Since trading of our Equity Shares is compulsorily in dematerialized mode, the tradable lot is one Equity Share. Allotment through this Issue will be done only in electronic form in multiples of 1 Equity Shares subject to a minimum Allotment of [*] Equity Shares.
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NOMINATION FACILITY TO THE INVESTOR In accordance with Section 109A of the Companies Act, the sole or first Bidder, along with other joint Bidder, may nominate any one Person in whom, in the event of the death of sole Bidder or in case of joint Bidders, death of all the Bidders, as the case may be, the Equity Shares allotted, if any, shall vest. A Person, being a nominee, entitled to the Equity Shares by reason of the death of the original holder(s), shall in accordance with Section 109A of the Companies Act, be entitled to the same advantages to which he or she would be entitled if he or she were the registered holder of the Equity Share(s). Where the nominee is a minor, the holder(s) may make a nomination to appoint, in the prescribed manner, any Person to become entitled to Equity Share(s) in the event of his or her death during the minority. A nomination shall stand rescinded upon a sale/ transfer/ alienation of Equity Share(s) by the Person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. Fresh nomination can be made only on the prescribed form available on request at the registered office of the Company or at the Registrar and Transfer Agents of the Company. In accordance with Section 109B of the Companies Act, any Person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon the production of such evidence as may be required by the Board, elect either: a. to register himself or herself as the holder of the Equity Shares; or b. to make such transfer of the Equity Shares, as the deceased holder could have made. Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself or herself or to transfer the Equity Shares, and if the notice is not complied with, within a period of ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Since the allotment of Equity Shares in the Issue will be made only in dematerialised mode, there is no need to make a separate nomination with us. Nominations registered with the respective depository participant of the applicant would prevail. If an investor needs to change the nomination, they are requested to inform their respective depository participant. MINIMUM SUBSCRIPTION If we do not receive the minimum subscription of 90% of the Issue to the public to the extent of the amount payable on application, including devolvement on Underwriters, if any, within 60 days from the Bid Closing Date, we shall forthwith refund the entire subscription amount received. If there is a delay beyond eight days after we become liable to pay the amount (i.e., 60 days from the Bid Closing Date), we will pay interest prescribed under Section 73 of the Companies Act. JURISDICTION Exclusive jurisdiction for the purpose of this Issue is with competent courts/authorities in Mumbai. WITHDRAWAL OF THE ISSUE The Company, in consultation with the BRLMs, reserves the right not to proceed with the Issue at anytime including after the Bid Closing Date, without assigning any reason thereof.
ISSUE STRUCTURE Public Issue of 65,00,000 Equity Shares of Rs. 10/- each for cash at a price of Rs. [] per Equity Share aggregating to Rs. [] (referred to as the Issue), by Shirdi Industries Limited (the Company or Issuer). The Issue would constitute 26.06% of the fully diluted post Issue paid up Equity Share Capital of the Company. QIBs Number of Equity Shares* Upto 32,50,000 Equity Shares or Net Issue less allocation to Non-Institutional Bidders and Retail Individual Bidders. Upto 50% Net Issue or Net Issue less allocation to NonInstitutional Bidders and Retail Individual Bidders with 5% compulsory to mutual funds. Proportionate Non-Institutional Bidders Minimum of 9,75,000 Equity Shares or Net Issue less allocation to QIB Bidders and Retails Individual Bidders. Minimum of 15% of Net Issue or Net Issue less allocation to QIB Bidders and Retails Individual Bidders Proportionate Retail individual Bidders Minimum of 22,75,000 Equity Shares or Net Issue less allocation to QIB Bidders and NonInstitutional Bidders Minimum of 35% of Net Issue or Net Issue less allocation to QIB Bidders and Non-Institutional Bidders Proportionate
Percentage of Issue Size Available for allocation Basis of Allocation if respective category is oversubscribed Minimum Bid#
Maximum Bid
Mode of Allotment Trading Lot Who can apply***
Such number of Equity Shares that the Bid Amount exceeds Rs. 1, 00,000 and in multiples of [] Equity Shares thereafter. Such number of Equity Shares not exceeding the Net Issue, subject to applicable limits. Compulsorily in dematerialised mode One Public financial institutions, as specified in Section 4A of the Companies Act, scheduled commercial banks, mutual funds, foreign institutional investors registered with SEBI, multilateral and bilateral development financial institutions, venture capital funds registered with SEBI, foreign venture capital investors registered with SEBI and State Industrial Development Corporations, permitted insurance companies registered with the Insurance Regulatory and Development Authority, provident funds with minimum corpus of Rs. 250 million and pension funds
Such number of Equity Shares that the Bid Amount exceeds Rs. 1,00,000 and in multiples of [] Equity Shares thereafter Such number of Equity Shares not exceeding the Net Issue, subject to applicable limits. Compulsorily in dematerialised mode One Resident Indian individuals, HUF (in the name of Karta), companies, corporate bodies, NRIs, scientific institutions, societies and trusts.
[] Equity shares and in multiples of [] Equity Share thereafter
Such number of Equity Shares whereby the Bid amount does not exceeds Rs. 1,00,000 Compulsorily in dematerialised mode One Individuals (including NRIs and HUFs) applying for Equity Shares such that the Bid amount does not exceed Rs. 100,000 in value.
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Terms of Payment
with minimum corpus of Rs. 250 million in accordance with applicable laws. Margin Money applicable to QIBs at the time of submission of Bid cum Application Form to the Syndicate Members. 10% of the bid amount
Margin Amount
Margin Money applicable to Non institutional Bidders at the time of submission of Bid cum Application Form to the Syndicate Members. Full Bid amount on Bidding
Margin Money applicable to Retail Individual Bidders at the time of submission of Bid cum Application Form to the Syndicate Members. Full Bid amount on Bidding
* Subject to valid Bids being received at or above the Issue Price. Under-subscription, if any, in any portion, would be allowed to be met with spillover from any other portions at the Companys discretion, in consultation with the BRLMs. *** In case the Bid cum Application Form is submitted in Joint names, the Investors should ensure that the demat account is also held in the same joint names and are in the same sequence in which they appear in the Bid cum Application Form. # The minimum number of Equity Shares for which Bids can be made by Bidders and the multiples of Equity Shares in which the Bids can be made, shall be advertised at least one day prior to the Bid Opening Date/Issue Opening Date, in [], an English language newspaper, in [], a Hindi language newspaper and in [], a Marathi newspaper, all with wide circulation; and also on the websites of the BRLMs and the Company, as appearing on the cover page.
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ISSUE PROCEDURE Book Building Procedure The Issue is being made through the 100% book building method where in up to 50% of the Net Issue to Public shall be allocated on a proportionate basis to Qualified Institutional Buyers with 5 % of compulsory allocation to mutual funds only and the remainder of the Qualified Institutional Buyers portion shall be available for allocation on a proportionate basis to all Qualified Institutional Buyers, including Mutual Funds, subject to valid Bids being received at or above the Issue price. Further, not less than 15% of the Net Issue to Public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and not less than 35% of the Net Issue to Public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Issue Price. Bidders are required to submit their Bids through the members of the Syndicate. We, in consultation with the BRLMs, reserve the right to reject any Bid procured by any or all members of the Syndicate without assigning any reasons therefore in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, we would have a right to reject the Bids only on technical grounds. We, in consultation with the BRLMs would have proportionately allocate to QIBs based on a number of criteria, which will typically include, but would not be limited to, the following: prior commitment, investor quality, price, earliness of bid, existing and continued shareholding of QIBs during the period prior to the Bid Opening Date and until the date of pricing. Investors should note that Equity Shares would be allotted to all successful Bidders only in dematerialized form. Bidders will not have the option of getting Allotment of the Equity Shares in physical form. The Equity Shares on Allotment shall be traded only in the dematerialized segment of the Stock Exchanges. Bid-cum-Application Form Bidders shall only use the specified Bid-cum-Application Form bearing the stamp of a member of the Syndicate for the purpose of making a Bid in terms of this Draft Red Herring Prospectus. The Bidder shall have the option to make a maximum of three Bids in the Bid-cum-Application Form and such options shall not be considered as multiple Bids. Upon the allotment of Equity Shares, dispatch of the CAN and filing of the Prospectus with the RoC, the Bid-cum-Application Form shall be considered as the Application Form. Upon completing and submitting the Bid-cum-Application Form to a member of the Syndicate, the Bidder is deemed to have authorized us to make the necessary changes in this Draft Red Herring Prospectus and the Bid-cum-Application Form as would be required for filing the Prospectus with the RoC and as would be required by the RoC after such filing, without prior or subsequent notice of such changes to the Bidder. The prescribed colour of the Bid-cum-Application Form for various categories, is as follows: Category Indian Nationals or NRIs applying on a non-repatriation basis NRIs or FIIs or Foreign Venture Capital Funds registered with SEBI, Multilateral and Bilateral Development Financial Institutions applying on a repatriation basis Who Can Bid? Indian nationals resident in India who are majors, in single or joint names (not more than three); HUFs, in the individual name of the Karta. The Bidder should specify that the Bid is being made in the name of the HUF in the Bid cum Application Form as follows: Name of Sole or First Bidder: XYZ Hindu Undivided Family applying through XYZ, where XYZ is the name of the Karta. Bids by HUFs would be considered at par with those from individuals; Companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in Equity shares;
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Colour of Bid-cum-Application Form White Blue
Indian Mutual Funds registered with SEBI; Indian Financial Institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI regulations and SEBI Guidelines and Regulations, as applicable); Venture Capital Funds registered with SEBI; Foreign Venture Capital investors registered with SEBI; State Industrial Development Corporations; Insurance companies registered with the Insurance Regulatory and Development Authority; Provident funds with minimum corpus of Rs. 2500 lakhs and who are authorized under their constitution to invest in Equity Shares; Pension funds with minimum corpus of Rs. 2500 lakhs and who are authorized under their constitution to invest in Equity Shares; Multilateral and bilateral development financial institutions; Trusts/Societies registered under the Societies Registration Act, 1860, as amended, or under any other law relating to Trusts/Societies and who are authorized under their constitution to hold and invest in equity shares; Eligible Non-residents including NRIs and FIIs on a repatriation basis or a non- repatriation basis subject to applicable local laws; and Scientific and/or industrial research organizations authorized under their constitution to invest in equity shares.
Note: The members of the Syndicate and any associate of the members of the Syndicate (except asset management companies on behalf of mutual funds, Indian financial institutions and public sector banks) cannot participate in that portion of the Issue where allocation is discretionary and will not be eligible as a QIB in this Issue. Further, the BRLMs and the Syndicate Members shall not be entitled to subscribe to this Issue in any manner except towards fulfilling their underwriting obligation. Bidders are advised to ensure that any single Bid from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law. Bids by Mutual Funds As per the current regulations, the following restrictions are applicable for investments by mutual funds: No mutual fund scheme shall invest more than 10% of its net asset value in equity shares or equity related instruments of any company provided that the limit of 10% shall not be applicable for investments in index funds or sector or industry specific funds. No mutual fund under all its schemes should own more than 10% of any Companys paid-up share capital carrying voting rights. These limits would have to be adhered to by the mutual funds for investment in the Equity Shares. In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple Bids provided that the Bids clearly indicate the scheme for which the Bid has been made. Bids by Eligible NRIs NRI Bidders to comply with the following: 1. Individual NRI Bidders can obtain the Bid cum Application Forms from our Registered Office, members of the Syndicate or the Registrar to the Issue. 2. NRI Bidders may please note that only such Bids as are accompanied by payment in free foreign exchange shall be considered for allotment. NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the Bid cum Application Form meant for resident Indians (White in color). All instruments accompanying bids shall be payable in Mumbai only. Bids by FIIs As per the current regulations, the following restrictions are applicable for investments by FIIs:
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No single FII can hold more than 10% of our post-issue paid-up capital (i.e., 10% of [*] Equity Shares). In respect of an FII investing in our Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 10% of our total issued capital or 5% of our total issued capital in case such subaccount is a foreign corporate or an individual. Under the current foreign investment policy applicable to us foreign
equity participation up to 100% is permissible under the automatic route.
Bids by non-residents including NRIs, FIIs and Foreign Venture Capital Funds registered with SEBI on a repatriation basis. Bids and Revision to Bids must be made: On the prescribed Bid cum Application Form or Revision Form, as applicable (blue in colour) and completed in full in BLOCK LETTERS in ENGLISH in accordance with the instructions contained therein. In a single name or joint names (not more than three) NRIs for a Bid Amount of up to Rs. 1,00,000 would be considered under the Retail Bidders portion for the purposes of allocation and Bids for a Bid amount of more than Rs. 1,00,000 would be considered under the Non-Institutional Bidders portion for the purposes of allocation; by FIIs for a minimum of such number of Equity Shares and in multiples of [] thereafter that the Bid Amount exceeds Rs. 1,00,000; for further details see Maximum and Minimum Bid Size at page 116 of this Draft Red Herring Prospectus. In the names of individuals, or in the names of FIIs but not in the names of minors, OCBs, firms or partnerships, foreign nationals (excluding NRIs) or their nominees. Refunds, dividends and other distributions, if any, will be payable in Indian Rupees only and net of bank charges and / or commission. In case of Bidders who remit money through Indian Rupee drafts purchased abroad, such payments in Indian Rupees will be converted into U.S. Dollars or any other freely convertible currency as may be permitted by the RBI at the rate of exchange prevailing at the time of remittance and will be despatched by registered post or if the Bidders so desire, will be credited to their NRE accounts, details of which should be furnished in the space provided for this purpose in the Bid-cum-Application Form. The Company will not be responsible for loss, if any, incurred by the Bidder on account of conversion of foreign currency.
As per the current regulations, the following restrictions are applicable for investments by SEBI registered VCFs and FVCIs: The SEBI (Venture Capital) Regulations, 1996, and the SEBI (Foreign Venture Capital Investor) Regulations, 2000, prescribe investment restrictions on venture capital funds and foreign venture capital investors registered with SEBI. Accordingly, the investment by any VCF or FVCI should not exceed the prescribed investment limit as the case may be. It is to be distinctly understood that there is no reservation for Non Residents, NRIs, FIIs and Foreign Venture Capital Funds and all Non Residents, NRI, FII and Foreign Venture Capital Funds applicants will be treated on the same basis with other categories for the purpose of allocation. Maximum and Minimum Bid size For Retail Bidders: The Bid must be for minimum [*] number of Equity Shares and in multiples of [*] Equity Shares thereafter subject to maximum bid amount of Rs. 1,00,000 In case of revision of Bids, the Retail Individual Bidders have to ensure that the Bid Amount does not exceed Rs. 1,00,000. In case the Bid Amount is over Rs. 1,00,000 due to revision or revision of the Price Band or on exercise of Cut-off option, the Bid would be considered for allotment under the Non-Institutional Bidders category. The Cut-off option is an option given only to the Retail Individual Bidders indicating their agreement to bid and purchase at the final Issue Price as determined at the end of the Book Building Process.
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For Others (Non-Institutional Bidders and QIBs) Bidders: The Bid must be for a minimum of such number of Equity Shares in multiples of [*] such that the Bid Amount payable by the Bidder exceeds Rs. 1,00,000 and in multiples of [*] Equity Shares thereafter. A Bid cannot be submitted for more than the net Issue to the public. However, the maximum Bid by a QIB should not exceed the investment limits prescribed for them by applicable laws. Under existing SEBI guidelines, a QIB Bidder cannot withdraw its Bid after the Bid/Issue Closing Date. In case of revision in Bids, the Non-Institutional Bidders who are individuals have to ensure that the Bid Amount is greater than Rs. 1,00,000, for being considered for allocation in the Non Institutional Portion. In case the Bid Amount reduces to Rs. 1,00,000 or less due to a revision in Bids or revision of Price Band, the same would be considered for allocation under the Retail Portion. Non Institutional Bidders and QIBs are not allowed to Bid at Cut-off. Information for the Bidders a) b) The Company will file this Draft Red Herring Prospectus with the RoC at least 3 (three) days before the Bid/Issue Opening Date. The Price Band shall be advertised at least one day prior to the Bid Opening Date/Issue Opening Date. With regard to the Price Band, the Bidders can be guided by the secondary market prices of the Equity Shares. The members of the Syndicate will circulate copies of this Draft Red Herring Prospectus along with the Bid-cum-Application Form to their potential investors. Any investor (who is eligible to invest in the Equity Shares) desirous of obtaining a copy of this Draft Red Herring Prospectus along with the Bid-cum- Application Form can obtain the same from the registered office of the Company or from the BRLMs, or from a member of the Syndicate. The Bids should be compulsorily submitted on the prescribed Bid-cum-Application Form only. Bidcum-Application Forms should bear the stamp of a member of the Syndicate. The Bid-cum-Application Forms, which do not bear the stamp of a member of the Syndicate, will be rejected.
c) d)
e)
METHOD AND PROCESS OF BIDDING 1. We, with the BRLMs shall declare the Bid/Issue Opening Date and Bid/Issue Closing Date in the Red Herring Prospectus filed with RoC and publish the same and the Price Band in two national newspapers (one each in English and Hindi) and a regional newspaper (Marathi) and on websites of BRLMs and Company as appearing on the cover page. This advertisement, subject to the provisions of Section 66 of the Companies Act and shall be in the format prescribed in Schedule XX-A of SEBI DIP Guidelines, as amended vide SEBI Circular no. SEBI / CFD / DIL / DIP / 14 / 2005 / 25 / 1 dated January 25, 2005. The members of the Syndicate shall accept Bids from the Bidders during the Issue Period. Investors who are interested in subscribing for our Equity Shares should approach any of the members of the Syndicate or their authorized agent(s) to register their Bid. The Bidding Period shall be a minimum of 3 working (three) days and not exceed 7 working days. In case the Price Band is revised, the revised Price Band and the Bidding Period will be informed to the Stock Exchanges and published in two national newspapers (one each in English and Hindi) and one regional newspaper (Marathi) and on websites of BRLMs and Company, as appearing on the cover page and the Bidding Period may be extended, if required, by an additional 3 (three) days, subject to the total Bidding Period not exceeding ten working days. During the Bidding Period, the Bidders may approach the Syndicate to submit their Bid. Every member of the Syndicate shall accept Bids from all clients/investors who place orders through them and shall have the right to vet the Bids.
2. 3.
4.
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5.
Each Bid cum Application Form will give the Bidder the choice to bid for up to three optional prices (for details refer to the paragraph entitled Bids at Different Price Levels on page 118 of this Draft Red Herring Prospectus) within the Price Band and specify the demand (i.e., the number of Equity Shares bid for) in each option. The price and demand options submitted by the Bidder in the Bid cum Application Form will be treated as optional demands from the Bidder and will not be cumulated. After determination of the Issue Price, the maximum number of Equity Shares bid for by a Bidder at or above the Issue Price will be considered for allocation and the rest of the Bid(s), irrespective of the Bid price, will become automatically invalid. The Bidder cannot bid on another Bid cum Application Form after Bids on one Bid cum Application Form have been submitted to any member of the Syndicate. Submission of a second Bid cum Application Form to either the same or to another member of the Syndicate will be treated as multiple bidding and is liable to be rejected either before entering the Bid into the electronic bidding system, or at any point of time prior to the allotment of Equity Shares in this Issue. However, the Bidder can revise the Bid through the Revision Form, the procedure for which is detailed in the paragraph Build up of the Book and Revision of Bids on page 121 of this Draft Red Herring Prospectus. The members of the Syndicate will enter each option into the electronic bidding system as a separate Bid and generate a Transaction Registration Slip, (TRS), for each price and demand option and give the same to the Bidder. Therefore, a Bidder can receive up to three TRSs for each Bid cum application Form. Along with the Bid cum Application Form, all Bidders will make payment in the manner described under the paragraph Terms of Payment and Payment into the Escrow Account on page 119 of the Draft Red Herring Prospectus.
6.
7.
8.
Bids at Different Price Levels 1. The Price Band shall be advertised at least one day prior to the Bid Opening Date/ Issue Opening Date in [], an English language newspaper with wide circulation, [], a Hindi language newspaper with wide circulation and [] a Marathi newspaper with wide circulation and also on the websites of the BRLMs and the Company, as appearing on the cover page. The Bidders can bid at any price within the Price Band, in multiples of []. We, in consultation with the BRLMs, can revise the Price Band during the Bidding Period, in which case the Bidding Period shall be extended further for a period of three additional days, subject to the total Bidding Period not exceeding ten working days. The cap on the Price Band should not be more than 20% of the Floor of the Price-band. Subject to compliance with the immediately preceding sentence, the floor of Price Band can move up or down to the extent of 20% of the Floor Price disclosed in this Red Herring Prospectus. Any revision in the Price Band and the revised Bidding Period/Issue Period, if applicable, will be widely disseminated by informing the stock exchanges, by issuing a public notice in two national newspapers (one each in English and Hindi), and one regional newspaper (Marathi) and also indicating the change on the relevant websites of the BRLMs, Company and the terminals of the members of the Syndicate. We, in consultation with the BRLMs, can finalise the Offer Price within the Price Band without the prior approval of, or intimation to, the Bidders. The Bidder can bid at any price within the Price Band. The Bidder has to bid for the desired number of Equity Shares at a specific price. Retail Individual Bidders applying for a maximum Bid in any of the bidding options not exceeding Rs. 1,00,000 may bid at Cut-off. However, bidding at Cut-off is prohibited for QIB or Non Institutional Bidders and such Bids from QIBs and Non Institutional Bidders shall be rejected. Retail Individual Bidders who bid at the Cut-off agree that they shall purchase the Equity Shares at any price within the Price Band. Retail Individual Bidders bidding at Cut-off shall deposit the Bid Amount based on the Cap Price in the Escrow Account. In the event the Bid Amount is higher than the subscription amount payable by the Retail Individual Bidders (i.e. the total number of Equity Shares allocated in the
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2.
3.
4. 5.
6.
Issue multiplied by the Issue Price), Retail Individual Bidders, who bid at Cut off Price, shall receive the refund of the excess amounts from the Escrow Account. 7. In case of an upward revision in the Price Band announced as above, Retail Individual Bidders, who had bid at Cut-off could either (i) revise their Bid or (ii) make additional payment based on the cap of the revised Price Band (such that the total amount i.e. original Bid Amount plus additional payment does not exceed Rs. 1,00,000 of the bidder wants to continue to bid at Cut-off Price), with the member of the Syndicate to whom the original Bid was submitted. In case the total amount (i.e. original Bid Amount plus additional payment) exceeds Rs.1, 00,000, the Bid will be considered for allocation under the Non-Institutional category in terms of this Draft Red Herring Prospectus. If, however, the Bidder does not either revise the Bid or make additional payment and the Issue Price is higher than the cap of the Price Band prior to revision, the number of Equity Shares bid for shall be adjusted downward for the purpose of allocation, such that no additional payment would be required from the Bidder and the Bidders shall be deemed to have approved such revised Bid at Cut-off Price. In case of a downward revision in the Price Band, announced as above, Retail Individual Bidders who have bid at Cut-off could either revise their Bid or the excess amount paid at the time of bidding would be refunded form the Escrow Account. In the event of any revision in the Price Band, whether upwards or downwards, the Minimum Application Size shall remain [] Equity Shares irrespective of whether the Bid Amount payable on such Minimum Application is not in the range of Rs. 5,000 to Rs.7, 000.
8.
9.
Application in the Issue Equity Shares being issued through this Draft Red Herring Prospectus can be applied for in the dematerialized form only. Escrow Mechanism 1. The Company and members of the Syndicate shall open Escrow Accounts with one or more Escrow Collection Banks in whose favour the Bidders shall make out the cheque or demand draft in respect of his or her Bid and/or revision of the bid. Cheques or demand drafts received for the full Bid amount from Bidders in a certain category would be deposited in the Escrow Account for the Issue. The Escrow Collection Banks will act in terms of the Draft Red Herring Prospectus and an Escrow Agreement. The monies in the Escrow Account of the Company shall be maintained by the Escrow Collection Bank(s) for and on behalf of the Bidders. The Escrow Collection Bank(s) shall not exercise any lien whatsoever over the monies deposited therein and shall hold the monies therein in trust for the Bidders. On the Designated Date, the Escrow Collection Banks shall transfer the monies from the Escrow Account to the Public Issue Account with the Bankers to the Issue as per the terms of the Escrow Agreement with the Company. Payment of refund to the Bidders shall also be made from the Escrow Agreement and this Draft Red Herring Prospectus. The Bidders may note that the Escrow Mechanism is not prescribed by SEBI and the same has been established as an arrangement between the Company, the Syndicate, Escrow Collection Bank(s) and the Registrars to the Issue to facilitate collections from the Bidders.
2.
Terms of Payment and Payment into the Escrow Collection Account Each Bidder shall pay the applicable margin amount, with the submission of the Bid-cum-Application Form draw a cheque, demand draft for the maximum amount of his/ her Bid in favour of the Escrow Account of the Escrow Collection Bank(s) (for details refer to the paragraph Payment Instructions on page 126 of this Draft Red Herring Prospectus) and submit the same to the member of the Syndicate to whom the Bid is being submitted. Bid-cum-Application Forms accompanied by cash shall not be accepted. The maximum bid price has to be paid at the time of submission of the Bid-cum-Application Form based on the highest bidding option of the Bidder. The members of the Syndicate shall deposit the cheque or demand draft with the Escrow Collection Bank(s), which will hold the monies for the benefit of the Bidders till such time as the Designated Date. On the
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Designated Date, the Escrow Collection Bank(s) shall transfer the funds whose bids have been accepted from the Escrow Account, as per the terms of the Escrow Agreement, into the Public Issue Account with the Banker(s) to the Issue. The balance amount after transfer to the Public Issue Account, lying credited with Escrow Collection Banks shall be held for the benefit of the Bidders who are entitled to refunds. On the Designated Date, and no later than 15 days from the Bid / Issue Closing Date, the Escrow Collection Bank(s) shall refund all amount payable to unsuccessful Bidders and also the excess amount paid on bidding, if any, after adjustment for allocation to the Bidders. Each category of Bidders (i.e. QIBs, Non Institutional Bidders, Retail Individual Bidders would be required to pay their applicable Margin Amount at the time of the submission of the Bid-cum-Application Form. The Margin Money payable by each category of Bidders is mentioned under the heading Issue Structure on page 112 this Draft Red Herring Prospectus. Where the Margin Amount applicable to the Bidder is less than 100% of the Bid Amount, any difference between the amount payable by the Bidder for Equity Shares allocated at the Issue Price and the Margin Amount paid at the time of Bidding, shall be payable by the Bidder no later than the Pay-in-Date. QIB bidders will be required to deposit a margin of 10% at the time of submitting their bids. After the Issue Closing Date / Bid Closing Date, the level of subscription in all categories shall be determined. Based on the level of subscription, additional margin money, if any, shall be called from QIBs. If the payment is not made favoring the Escrow Account within the time stipulated above, the Bid of the Bidder is liable to be cancelled. However, if the members of the Syndicate do not waive such payment, the full amount of payment has to be made at the time of submission of the Bid Form. Where the Bidder has been allocated lesser number of Equity Shares than he or she had applied for, the excess amount paid on bidding, if any, after adjustment for allocation, will be refunded to such Bidder within 15 days from the Bid Closing Date/Issue Closing Date, failing which the Company shall pay interest @15% per annum for any delay beyond the periods mentioned above. Electronic Registration of Bids (a) The members of the Syndicate will register the Bids using the on-line facilities of NSE and BSE. There will be at least one NSE/BSE on-line connectivity to each city where a Stock Exchange is located in India and the Bids are accepted. NSE and BSE will offer a screen-based facility for registering Bids for the Issue. This facility will be available on the terminals of the members of the Syndicate and their authorized agents during the Bidding Period. Members of the Syndicate can also set up facilities for off-line electronic registration of Bids subject to the condition that they will subsequently download the off-line data file into the online facilities for book building on an half hourly basis. On the Bid Closing Date, the Syndicate Member shall upload the Bids till such time as may be permitted by the Stock Exchanges. The aggregate demand and price for bids registered on the electronic facilities of NSE and BSE will be downloaded on an half hourly basis, consolidated and displayed on-line at all bidding centers. A graphical representation of consolidated demand and price would be made available at the bidding centers during the bidding period. At the time of registering each Bid, the members of the Syndicate shall enter the following details of the investor in the on-line system: Name of the investor. Investor Category Individual, Corporate, NRI, FII, or Mutual Fund, etc. Numbers of Equity Shares bid for. Bid price. Bid-cum-Application Form number. Whether payment is made upon submission of Bid-cum-Application Form. Depository Participant Identification No. and Client Identification No. of the Demat Account of the Bidder.
(b)
(c)
(d) -
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(e)
A system generated TRS will be given to the Bidder as a proof of the registration of each of the bidding options. It is the Bidders responsibility to obtain the TRS from the members of the Syndicate. The registration of the Bid by the members of the Syndicate does not guarantee that the Equity Shares shall be allocated either by the members of the Syndicate or the Company. Such TRS will be non-negotiable and by itself will not create any obligation of any kind. The BRLM/ member of the Syndicate also has the right to accept the Bid or reject it without assigning any reason, in case of QIBs. In case of Non-Institutional Bidders and Retail Individual Bidders, Bids would not be rejected except on the technical grounds listed on page 128 in this Draft Red Herring Prospectus. It is to be distinctly understood that the permission given by NSE and BSE to use their network and software of the online IPO system should not in any way be deemed or construed to mean that the compliance with various statutory and other requirements by the Company or BRLMs are cleared or approved by NSE and BSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the compliance with the statutory and other requirements nor does it take any responsibility for the financial or other soundness of the Company, its Promoters, its management or any scheme or project of the Company. It is also to be distinctly understood that the approval given by BSE and/or NSE should not in any way be deemed or construed that this Draft Red Herring Prospectus has been cleared or approved by BSE and NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Red Herring Prospectus; nor does it warrant that the Equity Shares will be listed or will continue to be listed on the BSE and NSE.
(f) (g)
(h)
(i)
Build Up of the Book and Revision of Bids (a) (b) (c) Bids registered by various Bidders through the members of the Syndicate shall be electronically transmitted to the NSE or BSE mainframe on a regular basis. The book gets build up at various price levels. This information will be available with the BRLMs on a regular basis. During the Bidding Period, any Bidder who has registered his or her interest in the Equity Shares at a particular price level is free to revise his or her Bid within the price band using the printed Revision Form, which is a part of the Bid-cum-Application Form. Revisions can be made in both the desired numbers of Equity Shares and the bid price by using the Revision Form. Apart from mentioning the revised options in the revision form, the Bidder must also mention the details of all the options in his or her Bid-cum-Application Form or earlier Revision Form. For example, if a Bidder has bid for three options in the Bid-cum-Application Form and he is changing only one of the options in the Revision Form, he must still fill the details of the other two options that are not being changed, in the Revision Form unchanged. Incomplete or inaccurate Revision Forms will not be accepted by the members of the Syndicate. Any revision of the Bid shall be accompanied by payment in the form of cheque or demand draft for the incremental amount, if any, to be paid on account of the upward revision of the Bid. The excess amount, if any, resulting from downward revision of the Bid would be returned to the Bidder at the time of refund in accordance with the terms of the Draft Red Herring Prospectus. In case of QIBs, the members of the Syndicate may at their sole discretion waive the payment requirement at the time of one or more revisions by the QIB Bidders. The Bidder can make this revision any number of times during the Bidding Period. However, for any revision(s) in the Bid, the Bidders will have to use the services of the same member of the Syndicate through whom he or she has placed the original Bid. Bidders are advised to retain copies of the blank Revision Forms and the revised Bid must be made only in such Revision Form or copies thereof.
(d)
(e)
(f)
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(g)
When a Bidder revises his or her Bid, he or she shall surrender the earlier TRS and get a revised TRS from the members of the Syndicate. It is the responsibility of the Bidder to request for and obtain the revised TRS, which will act as proof of his or her having revised the previous Bid. In case of discrepancy of data between BSE or NSE and members of the Syndicate, the decision of the BRLMs based on the physical records of BSE or NSE shall be final and binding to all concerned.
(h)
Price Discovery and Allocation (a) (b) After the Bid/Issue Closing Date, the BRLMs shall analyze the demand generated at various price levels and discuss pricing strategy with the Company. The Company, in consultation with the BRLMs shall finalise the Issue Price, the number of Equity Shares to be allotted and the allocation to successful QIB Bidders. The allocation will be decided based on the quality of the Bidder and the size, price and time of the Bid. The allocation for QIBs would be upto 50% of the Issue Size would be discretionary. The allocation to Non-Institutional Bidders and Retail Individual Bidders of not less than 15% and not less than 35% of the Issue Size, respectively, would be on proportionate basis in consultation with the Designated Stock Exchange, subject to valid Bids being received at or above the Issue Price. Undersubscription, if any, in any category would be allowed to be met with spill over from any of the other categories at the discretion of the Company, in consultation with the BRLMs. Allocation to NRIs, FIIs, foreign venture capital funds registered with SEBI applying on repatriation basis will be subject to applicable laws. The BRLMs, in consultation with the Company shall notify the Syndicate Members of the Issue Price and allocations to their respective Bidders, where the full Bid Amount has not been collected from the Bidders. The Company reserves the right to cancel the Issue any time after the Bid/Issue Opening Date without assigning reasons whatsoever. Our Company in consultation with the BRLM, reserves the right to reject any bid procured from QIB bidders, by any or all members of the Syndicate. Rejection of bids made by QIBs, if any, will be made at the time of submission of bids provided that the reasons for rejecting the same shall be provided to such Bidder in writing. In terms of SEBI DIP guidelines, QIB bidders shall not be allowed to withdraw their bid after the bid / issue closing date.
(c)
(d) (e) (f)
(g) (h)
Signing of Underwriting Agreement and ROC Filing (a) (b) The Company, the BRLMs, and the Syndicate Members shall enter into an Underwriting Agreement on finalisation of the Issue Price and allocation(s) to the Bidders. After signing the Underwriting Agreement, the company will update and file the updated Red Herring Prospectus with RoC, which then would be termed Prospectus. The Prospectus would have details of the Issue Price, Issue Size, underwriting arrangements and would be complete in all material respects.
Advertisement regarding Issue Price and Prospectus A statutory advertisement will be issued by the Company after the filing of the Prospectus with the RoC. This advertisement in addition to the information that has to be set out in the statutory advertisement shall indicate the Issue Price along with a table showing the number of Equity Shares to be issued. Any material updates between the date of the Draft Red Herring Prospectus and the date of the Prospectus will be included in such statutory advertisement. Issuance of Confirmation of Allocation Note
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a)
The BRLM or Registrars to the Issue shall send to the Syndicate Members, a list of their Bidders who have been allocated Equity Shares in the Issue.
b) The Members of the Syndicate would then send the CAN to their Bidders who have been allocated Equity Shares in the Issue. The despatch of a CAN shall be deemed to be a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for all the Equity Shares allocated to such Bidder. Those Bidders who have not paid the full Bid Amount into the Escrow Account on or prior to the time of bidding shall pay in full amount into the Escrow Account on or prior to the Pay-in Date specified in the CAN. c) Bidders who have been allocated Equity Shares and who have already paid the full Bid Amount into the Escrow Account at the time of bidding shall directly receive the CAN from the Registrars to the Issue subject, however, to realization of their cheque or demand draft paid into the Escrow Account. The despatch of a CAN shall be deemed to be a valid, binding and irrevocable contract for the Bidder to pay the entire Issue Price for allotment to such Bidder.
Designated Date and Allotment of Equity Shares Successful Bidders will receive credit for the Equity Shares directly in their depository account. Equity shares will be allotted only in the dematerialized form to the allottees. Successful Bidders will have the option to rematerialize the Equity Shares so allotted, if they so desire, as per the provisions of the Companies Act and the Depositories Act. Investors are advised to instruct their Depository Participant to accept the Equity Shares that may be allocated to them pursuant to this Issue. The Company will ensure the allotment of Equity Shares within 15 days of the Bid/ Issue Closing Date. After the funds are transferred from the Escrow Account to the Public Issue Account on the Designated Date, the Company would ensure that credit is given to the successful Bidders depository accounts within two working days from the date of allotment. General Instructions Dos: a) b) c) d) e) f) g) Check if you are eligible to apply; Read all the instructions carefully and complete the resident Bid-cum-Application Form (white in colour) or Non-Resident Bid-cum-Application Form (blue in colour) Enter that the details about Depository Participant and Beneficiary Account are correct, as Allotment of Equity Shares will be in the dematerialised form only; Ensure that the Bids are submitted at the Bidding Centres only on forms bearing stamp of the Syndicate Member; Ensure that you have been given a TRS for all your Bid options; Submit Revised Bids to the same Syndicate Member through whom the original Bid was placed and obtain a revised TRS; Ensure that you mention your Permanent Account Number (PAN) allotted under the I.T. Act where the maximum Bid for Equity Shares by a Bidder is for a total value of Rs. 50,000 or more and attach a copy of the PAN Card and also submit a photocopy of the PAN card(s) or a communication from the Income Tax authority indicating allotment of PAN along with the application for the purpose of verification of the number, with the Bid cum Application Form. In case you do not have a PAN, ensure that you provide a declaration in Form 60 prescribed under the I.T. Act along with the application; and
Don'ts: a. b. c. d. Do not Bid if you are prohibited from doing so under the law of your local jurisdiction; Do not Bid for lower than minimum Bid size; Do not Bid or revise the Bid to less than the lower end of the Price Band or higher than the higher end of the Price Band; Do not Bid on another Bid cum Application Form after you have submitted a Bid to the members of the Syndicate;
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e. f. g. h. i.
Do not pay Bid amount in cash; Do not Bid at cut off price (for QIB Bidders, Non-Institutional Bidders for whom the Bid Amount exceeds Rs. 100,000); Do not fill up the Bid cum Application Form for an amount that exceeds the investment limit or maximum number of Equity Shares that can be held by a Bidder under the applicable laws / regulations. Do not send Bid cum Application Form by post; instead submit the same to a member of the Syndicate only. Do not submit bid accompanying with Stock Invest.
Bids and Revisions of Bids Bids and revisions of Bids must be: (a) Made only in the prescribed Bid-cum-Application Form or Revision Form, as applicable (white colour for Resident Indians, blue colour for NRI or FII or foreign venture capital fund registered with SEBI applying on repatriation basis. Completed in full, in BLOCK LETTERS in ENGLISH and in accordance with the instructions contained herein, in the Bid-cum-Application Form or in the Revision Form. Incomplete Bid-cumApplication Forms or Revision Forms are liable to be rejected. The Bids from the Retail Individual Bidders must be for a minimum of [] Equity Shares and in multiples of [] thereafter subject to a maximum of Rs. 1,00,000. For non institutional and QIB Bidders, Bids must be for a minimum of such number of Equity Shares that the Bid amount exceeds Rs. 1,00,000 and in multiples of [] Equity Shares thereafter. Bids cannot be made for more than the size of the Issue. Bidders are advised to ensure that a single bid from them should not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable laws or regulations. In single name or in joint names (not more than three, and in the same order as their Depository Participant details). Thumb impressions and signatures other than in the languages specified in the Eighth Schedule in the Constitution of India must be attested by a Magistrate or a Notary Public or a Special Executive Magistrate under official seal.
(b)
(c) (d)
(e) (f)
BIDDER'S BANK DETAILS Bidders should note that on the basis of name of the Bidders, Depository Participants name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Bid cum Application Form, the Registrar to the Issue will obtain from the Depository the Bidders bank account details. These bank account details would be printed on the refund order, if any, to be sent to Bidders. Hence, Bidders are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to Bidders at the Bidders sole risk and neither the BRLMs nor the Bank shall have any responsibility and undertake any liability for the same. Bidders Depository Account Details IT IS MANDATORY FOR ALL THE BIDDERS TO GET THEIR EQUITY SHARES IN THE DEMATERIALISED FORM. ALL BIDDERS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT'S NAME, DEPOSITORY PARTICIPANT'S IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE BID-CUM-APPLICATION FORM. INVESTORS MUST ENSURE THAT THE NAME GIVEN IN THE BID CUM APPLICATION FORM IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE BID-CUM-APPLICATION FORM IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED
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THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE BID CUM APPLICATION FORM. These Demographic Details would be used for all correspondence with the Bidders including mailing of the refund orders/ CANs/Allocation Advice and printing of Bank particulars on the refund order and the Demographic Details given by Bidders in the Bid-cum-Application Form would not be used for these purposes by the Registrar. Hence, Bidders are advised to update their Demographic Details as provided to their Depository Participants and ensure that they are true and correct. By signing the Bid-cum-Application Form, Bidder would have deemed to authorised the depositories to provide, upon request, to the Registrar to the Issue, the required Demographic details as available on its records. Refund Orders/ Allocation Advice/ CANs would be mailed at the address of the Bidder as per the Demographic Details received from the Depositories. Bidders may note that delivery of refund orders/ allocation advice/ CANs may get delayed if the same once sent to the address obtained from the depositories are returned undelivered. In such an event, the address and other details given by the Bidders in the Bid cum Application Form would be used only to ensure dispatch of refund orders. Please note that any such delay shall be at the Bidders sole risk and neither we nor the BRLMs shall be liable to compensate the Bidder for any losses caused to the Bidder due to any such delay or liable to pay any interest for such delay. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the Depository Participants identity (DP ID) and the beneficiarys identity, then such Bids are liable to be rejected. Investors should note that the refund cheques will be overprinted with details of bank account as per the details received from the depository. Bids under Power of Attorney In case of Bids made pursuant to a power of attorney or by limited companies, corporate bodies, registered Societies, a certified copy of the Power of Attorney or the relevant resolution or authority, as the case may be, along with a certified copy of the Memorandum & Article of Association and/or Bye Laws must be lodged along with the Bid cum Application Form. Failing this, the Issuer reserves the right to accept or reject any Bid in whole or in part, in either case, without assigning any reason therefor. In case of Bids made pursuant to a Power of Attorney by FIIs, a certified copy of the power of attorney or the relevant resolution or authority, as the case may be, along with a certified copy of their SEBI registration certificate must be submitted with the Bid-cum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case without assigning any reason therefor. In case of Bids made by insurance companies registered with Insurance Regulatory and Development Authority, a certified copy of the certificate of registration issued by Insurance Regulatory and Development Authority must be submitted with the Bid-cum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case without assigning any reason therefor. In case of Bids made by provident fund with the minimum corpus of Rs. 250 million and pension fund with the minimum corpus of Rs. 250 million, a certified copy of certificate from a chartered accountant certifying the corpus of the provident fund/ pension fund must be lodged with the Bid-cum-Application Form. Failing this, the Company reserves the right to accept or reject any Bid in whole or in part, in either case without assigning any reason therefor. The Company, in its absolute discretion, reserves the right to relax the above condition of simultaneous lodging of the power of attorney along with the Bid-cum-Application Form, subject to such terms and conditions as the Company/BRLM may deem fit.
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BIDS BY NRIS NRI Bidders will have to comply with the following: 1. 2. Individual NRI Bidders can obtain the Bid-cum-Application Forms from the Companys registered office or from members of the Syndicate or the Registrars to the Issue. NRI Bidders may please note that only such Bids as are accompanied by payment in free foreign exchange shall be considered for allotment. NRIs who intend to make payment through Non-Resident Ordinary (NRO) accounts shall use the Bid cum Application form meant for Resident Indians (blue in colour).
Payment Instructions The Company shall open an Escrow Account of the Company with the Escrow Collection Banks for the collection of the Bid Amounts payable upon submission of the Bid cum Application Form. The BRLM and Syndicate Member(s) shall also open Escrow Accounts of the Syndicate with one or more of the Escrow Collection Banks for the collection of the margin amounts payable upon submission of the Bid-cum-Application Form and for amounts payable pursuant to allocation in the Issue. Each Bidder shall draw a cheque or demand draft for the amount payable on the Bid and/or on allocation as per the following terms: Payment into Escrow Account to the Issue 1. The Bidders for whom the applicable Margin Amount is equal to 100% shall, with the submission of the Bid cum Application Form, draw a payment instrument for the Bid Amount in favour of the Escrow Account of the Company and submit the same to the member of the Syndicate. In case the above Margin Amount paid by the Bidders during the Bidding Period is less than the Issue Price multiplied by the Equity Shares allocated to the Bidder, the balance amount shall be paid by the Bidders into the Escrow Account of the Company within the period specified in the CAN which shall be subject to a minimum period of two days from the date of communication of the allocation list to the members of the Syndicate by the BRLMs. The payment instruments for payment into the Escrow Account of the Company should be drawn in favour of: (a) (b) In case of resident Bidders: Escrow Account Shirdi Public Issue In case of Non Resident Bidders: Escrow Account Shirdi Public Issue - NR
2.
3.
- In case of Bids by NRIs applying on repatriation basis, the payments must be made through Indian Rupee drafts purchased abroad or cheques or bank drafts, for the amount payable on application remitted through normal banking channels or out of funds held in Non-Resident External (NRE) Accounts or Foreign Currency Non-Resident (FCNR) accounts, maintained with banks authorised to deal in foreign exchange in India, along with documentary evidence in support of the remittance. Payment will not be accepted out of a Non-Resident Ordinary (NRO) Account of a Non-Resident bidder bidding on a repatriation basis. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting an NRE or FCNR Account. - In case of Bids by FIIs, the payment should be made out of funds held in a Special Rupee Account along with documentary evidence in support of the remittance. Payment by drafts should be accompanied by a bank certificate confirming that the draft has been issued by debiting the Special Rupee Account. 4. Where a Bidder has been allocated a lesser number of Equity Shares than what the Bidder has Bid for, the excess amount, if any, paid on bidding, after adjustment towards the balance amount payable on the Equity Shares allocated, will be refunded to the Bidder from the Escrow Account of the Company.
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5. 6.
The monies deposited in the Escrow Account of the Company will be held for the benefit of the Bidders till the Designated Date. On the Designated Date, the Escrow Collection Banks shall transfer the funds from the Escrow Account of the Company as per the terms of the Escrow Agreement into the Public Issue Account with the Bankers to the Issue. On the Designated Date and no later than 15 days from the Bid/Issue Closing Date, the Escrow Collection Bank shall also refund all amounts payable to unsuccessful Bidders and also the excess amount paid on Bidding, if any, after adjusting for allocation to the Bidders. Payments should be made by cheque, or demand drafts drawn on any Bank (including a Co-operative Bank), which is situated at, and is a member of or sub-member of the bankers clearing house located at the center where the Bid cum Application Form is submitted. Outstation cheque/bank drafts drawn on banks not participating in the clearing process will not be accepted and applications accompanied by such cheques or bank drafts are liable to be rejected. Cash/ Stockinvest/ Money Orders/ Postal Orders will not be accepted.
7.
8.
Payment by Stockinvest In terms of Reserve Bank of India Circular No. DBOD No. FSC BC 42/24.47.00/2003-2004 dated November 5, 2003, the option to use the stockinvest instrument in lieu of cheques or bank drafts for payment of Bid money has been withdrawn. Submission of Bid-cum-Application Form All Bid-cum-Application Forms or Revision Forms duly completed and accompanied by Account Payee cheques or drafts shall be submitted to the Members of the Syndicate at the time of submitting the Bid-cumApplication Form. The Members of the Syndicate may at their discretion waive the requirement of payment at the time of submission of the Bid cum Application Form and Revision Form. No separate receipts shall be issued for the money payable on submission of Bid-cum-Application Form or Revision Form. However, the collection centre of the Members of the Syndicate will acknowledge the receipt of the Bid cum Application Forms or Revision Forms by stamping and returning to the Bidder the acknowledgement slip. This acknowledgement slip will serve as the duplicate of the Bid-cum-Application Form for the records of the Bidder. OTHER INSTRUCTIONS Joint Bids in the case of Individuals Bids may be made in single or joint names (not more than three). In the case of joint Bids, all payments will be made out in favour of the Bidder whose name appears first in the Bid-cum-Application Form or Revision Form (First Bidder). All communications will be addressed to the First Bidder and will be dispatched to his or her address. Multiple Bids A Bidder should submit only one Bid (and not more than one) for the total number of Equity Shares required. Two or more Bids will be deemed to be multiple Bids if the sole or First Bidder is one and the same. In case of a mutual fund, a separate Bid can be made in respect of each scheme of the mutual fund registered with SEBI and such Bids in respect of more than one scheme of the mutual fund will not be treated as multiple bids provided that the Bids clearly indicate the scheme concerned for which the Bid has been made. The Company reserves the right to reject, in their absolute discretion, all or any multiple Bids in any or all categories. Permanent Account Number (PAN)
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Where Bid(s) is/are for Rs. 50,000 or more, the Bidder or in the case of an Bid in joint names, each of the Bidders, should mention his/her Permanent Account Number (PAN) allotted under the I.T. Act. The copy of the PAN card or PAN allotment letter is required to be submitted with the Bid-cum-Application Form. Applications without this information and documents will be considered incomplete and are liable to be rejected. It is to be specifically noted that Bidders should not submit the GIR number instead of the PAN as the Bid is liable to be rejected on this ground. In case the Sole/First Bidder and Joint Bidder(s) is/are not required to obtain PAN, each of the Bidder(s) shall mention Not Applicable and in the event that the sole Bidder and/or the joint Bidder(s) have applied for PAN which has not yet been allotted each of the Bidder(s) should mention Applied for in the Bid each of the Joint Bidder(s), as the case may be, would be required to submit Form 60 (Form of declaration to be filed by a person who does not have a permanent account number and who enters into any transaction specified in rule 114B), or, Form 61 (form of declaration to be filed by a person who has agricultural income and is not in receipt of any other income chargeable to income tax in respect of transactions specified in rule 114B), as may be applicable, duly filled along with a copy of any one of the following documents in support of the address: (a) Ration Card (b) Passport (c) Driving License (d) Identity Card issued by any institution (e) Copy of the electricity bill or telephone bill showing residential address (f) Any document or communication issued by any authority of the Central Government, State Government or local bodies showing residential address (g) Any other documentary evidence in support of address given in the declaration. It may be noted that Form 60 and Form 61 have been amended vide a notification issued on December 1, 2004 by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes. All Bidders are requested to furnish, where applicable, the revised Form 60 or 61, as the case may be. Our Right to Reject Bids In case of QIBs the Company and the BRLMs reserve the right to reject any Bid at the time of submission of Bid provided that the reasons for rejection are provided to such Bidder in writing. In case of Non-Institutional Bidders and Retail Individual Bidders, the Company would have a right to reject bids based on technical grounds. Consequent refunds shall be made by cheque or pay order or draft and will be sent to the bidders address at the Bidders risk. Grounds for Technical Rejections Bidders are advised to note that Bids are liable to be rejected on technical grounds, including the following: 1. Amount paid doesnt tally with the amount payable for the highest value of Equity Shares bid for; 2. In case of Partnership firms, the shares may be registered in the name of individual partners and no firm as such shall be entitled to apply. 3. Age of First Bidder not given; 4. Bids by Persons not competent to contract under the Indian Contract Act, 1872, including minors, insane Persons; 5. PAN photocopy/ PAN Communication/ Form 60 or Form 61 declaration along with documentary evidence in support of address given in the declaration, not given if Bid is for Rs. 50,000 or more; 6. Bids for lower number of Equity Shares than specified for that category of investors; 7. Bids at a price less than the lower end of the Price Band; 8. Bids at a price more than the higher end of the Price Band; 9. Bids at cut-off price by Non-Institutional and QIB Bidders; 10. Bids for number of Equity Shares, which are not in multiples of []; 11. Category not ticked; 12. Multiple bids as defined in this Draft Herring Prospectus; 13. In case of Bid under power of attorney or by limited companies, corporate, trust etc., relevant documents are not submitted; 14. Bids accompanied by Stock invest/money order/ postal order/ cash; 15. Bids not duly signed by the sole/joint Bidders; 16. Bid-cum-Application Form does not have the stamp of the Syndicate Member; 17. Bid-cum-Application Form does not have Bidders depository account details; 18. Bid-cum-Application Forms are not submitted by the Bidders within the time prescribed as per the Bidcum-Application Form, Bid/Issue Opening Date advertisement and this Draft Red Herring Prospectus and as per the instructions in this Draft Red Herring Prospectus and the Bid-cum-Application Form; or
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19. Bids for amounts greater than the maximum permissible amounts prescribed by the regulations see the details regarding the same at [] of this Draft Red Herring Prospectus. 20. In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Bidders (including the order of names of joint holders), the depository participants identity (DP ID) and the beneficiarys identity; 21. Bids by OCBs; 22. Bids by US persons other than Qualified Institutional Buyers as defined in Rule 144A of the Securities Act. 23. Bids by NRIs not disclosing their residential status. Equity Shares in Dematerialised Form with NSDL or CDSL As per the provisions of Section 68B of the Companies Act, the Equity Shares in this Issue shall be allotted only in a de-materialised form, (i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode). In this context, two tripartite agreements have been signed among the Company, the Depositories and the Registrar, 1. An Agreement dated [] among NSDL, the Company and []. 2. An Agreement dated [] among CDSL, the Company and [] Bids from any Bidder without the following details of his or her depository account are liable to be rejected: 1. A Bidder applying for Equity Shares must have at least one beneficiary account with either of the Depository Participants of NSDL or CDSL prior to making the Bid.
2. The Bidder must necessarily fill in the details (including the beneficiary account number and Depository Participants Identification number) appearing in the Bid cum Application Form or Revision Form.
3. 4. Equity Shares allotted to a Bidder will be credited in electronic form directly to the beneficiary account (with the Depository Participant) of the Bidder. Names in the Bid-cum-Application Form or Revision Form should be identical to those appearing in the account details in the Depository. In case of joint holders, the names should necessarily be in the same sequence as they appear in the depository account of the Bidder(s). If incomplete or incorrect details are given under the heading Bidders Depository Account Details in the Bid-cum-Application Form or Revision Form, it is liable to be rejected. The Bidder is responsible for the correctness of his or her demographic details given in the Bid-cumApplication Form vis--vis those with his or her Depository Participant. It may be noted that Equity Shares in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL or CDSL. All the stock exchanges where Equity Shares are proposed to be listed are connected to NSDL and CDSL. The trading of Equity Shares of the Company would only be in dematerialized form for all investors in the demat segment of the respective Stock exchanges.
5. 6. 7.
8.
COMMUNICATIONS All future communications in connection with Bids made in this Issue should be addressed to the Registrar to the Issue quoting the full name of the sole or First Bidder, Bid cum Application Form number, details of Depository Participant, number of Equity Shares applied for, date of Bid form, name and address of the member of the Syndicate where the Bid was submitted and cheque or draft number and issuing bank thereof.
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PRE-ISSUE AND POST ISSUE RELATED PROBLEMS We have appointed Mr. K.P. Joshi, as the Compliance Officer and he may be contacted in case of any pre-Issue or post-Issue-related problems. He can be contacted at the following address: Mr. K.P. Joshi COMPLIANCE OFFICER Shirdi Industries Limited A Wing, Mhatre Pen Building, IInd Floor, S. B. Marg, Dadar (W), Mumbai - 400028 Tel: 022 24364520, Fax: 022 24372200 Website: www.asisindia.com E-mail: investors@asisindia.com Procedure and Time Schedule for Transfer of Equity Shares The Company reserves, at its absolute and uncontrolled discretion and without assigning any reason thereof, the right to accept or reject any Bid in whole or in part. In the case of Retail and Non-Institutional Bidders, the rejection of any Bid is only on grounds of technical non-compliance with the specified procedure. In case a Bid is rejected in full, the whole of the Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date as disclosed under para Dispatch of Refund Orders appearing on page no. 132. In case a Bid is rejected in part, the excess Bid Amount will be refunded to the Bidder within 15 days of the Bid/Issue Closing Date. The Company will ensure the allotment of the Equity Shares within 15 days from the Bid/Issue Closing Date. The Company shall pay interest at the rate of 15% per annum (for any delay beyond the periods as mentioned above), if allotment is not made, refunds are not electronically transferred or refund orders are not despatched and/ or dematerialized credits are not made to investors within two working days from the date of allotment. Basis of Allocation 1. For Retail Individual Bidders Bids received from the Retail Individual Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all the successful Retail individual Bidders will be made at the Issue Price. The Net Issue size less allocation to Non-Institutional Bidders and QIBs shall be available for allocation to Retail Individual Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price. If the aggregate demand in this category is less than or equal to [] Equity Shares at or above the Issue Price, full allocation shall be made to the Retail Individual Bidders to the extent of their demand. If the aggregate demand in this category is greater than [] Equity Shares at or above the Issue Price, the allocation shall be made on a proportionate basis up to a minimum of [] Equity Shares or in multiples of [] Equity Share. For the method of proportionate basis of allocation, refer below.
2. For Non Institutional Bidders Bids received from Non-Institutional Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all successful Non-Institutional Bidders will be made at the Issue Price. The Issue size less allocation to QIBs and Retail Portion shall be available for allocation to NonInstitutional Bidders who have bid in the Issue at a price, which is equal to or greater than the Issue Price. If the aggregate demand in this category is less than or equal to [] Equity Shares at or above the Issue Price, full allocation shall be made to Non-Institutional Bidders to the extent of their demand.
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In case the aggregate demand in this category is greater than [] Equity Shares at or above the Issue Price; allocation shall be made on a proportionate basis up to a minimum of [] Equity Shares or in multiples of one Equity Share. For the method of proportionate basis of allotment refer below.
3. For QIB Bidders Bids received from the QIB Bidders at or above the Issue Price shall be grouped together to determine the total demand under this portion. The allocation to all the QIBs will be made at the issue price. The Issue size less allocation to Non-Institutional portion and Retail Portion shall be available for allocation to QIB Bidders with compulsory 5 % allocation to mutual funds who have bid in the Issue at a price, which is equal to or greater than the Issue Price. The allotment shall be undertaken in the following manner a) In the first instance, allocation to mutual funds for upto 5% of the QIB portion shall be determined as followsi) In the event that bids from mutual funds exceeds 5% of the QIB portion, allocation to mutual funds shall be done on a proportionate basis upto 5% of the QIB portion. ii) In the event that the aggregate demand from mutual funds is less than 5% of QIB portion, then all mutual funds shall get full allotment to the extent of valid bids received above the issue price. iii) Equity Shares remaining unsubscribed, if any, not allocated to mutual funds shall be available to all QIB Bidders as set out in as (b) below; b) In the second instance, allocation to all QIBs shall be determined as follows i) The number of Equity Shares available for this category shall be the QIB portion, allocation to mutual funds as calculated in (a) above. ii) The subscription level for this category shall be determined based on the overall subscription in the QIB portion less allocation only to mutual funds as calculated in (a) above. iii) Based on the above, the level of subscription shall be determined and proportionate allocation to all QIBs including mutual funds in this category shall be made. The aggregate allocation to QIB Bidders shall not be more than [] Equity Shares.
Undersubscription, if any, in any category would be allowed to be met with spillover from any other category at the sole discretion of our company and the BRLM. Method of Proportionate Basis of Allocation In the event of the issue being over-subscribed, we shall finalise the basis of allotment to Retail Individual Bidders and Non-Institutional Bidders in consultation with the Designated Stock Exchange. The Executive Director or Managing Director (or any other senior official nominated by them) of the Designated Stock Exchange along with the BRLM and the Registrars to the issue shall be responsible for ensuring that the basis of allotment is finalized in a fair and proper manner. Bidders will be categorized according to the number of Equity Shares applied for by them. (a) The total number of Equity Shares to be allotted to each portion as a whole shall be arrived at on a proportionate basis, being the total number of Equity Shares applied for in that portion (number of Bidders in the portion multiplied by the number of Equity Shares applied for) multiplied by the inverse of the over-subscription ratio. Number of Equity Shares to be allotted to the successful Bidders will be arrived at on a proportionate basis, being the total number of Equity Shares applied for by each Bidder in that portion multiplied by the inverse of the over-subscription ratio. If the proportionate allotment to a Bidder is a number that is more than [] but is not a multiple of one (which is the market lot), the decimal would be rounded off to the higher whole number if that decimal
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(b)
(c)
is 0.5 or higher. If that number is lower than 0.5, it would be rounded off to the lower whole number. Allotment to all Bidders in such categories would be arrived at after such rounding off. (d) In all Bids where the proportionate allotment is less than [] Equity Shares per Bidder, the allotment shall be made as follows: Each successful Bidder shall be Allotted a minimum of [] Equity Shares; The successful Bidders out of the total Bidders for a portion shall be determined by draw of lots in a manner such that the total number of Equity Shares Allotted in that portion is equal to the number of Equity Shares calculated in accordance with (b) above; and Each successful Bidder shall be allotted a minimum of [] Equity Shares. If the Equity Shares allocated on a proportionate basis to any portion are more than the Equity Shares allotted to the Bidders in that portion, the remaining Equity Shares available for allotment shall be first adjusted against any other portion, where the Equity Shares are not sufficient for proportionate allotment to the successful Bidders in that portion. The balance Equity Shares, if any, remaining after such adjustment will be added to the portion comprising Bidders applying for minimum number of Equity Shares.
(e)
Letters of Allotment or Refund Orders In accordance with the Companies Act, the requirements of the Stock Exchanges and the SEBI guidelines, we undertake that: Allotment shall be made only in dematerialized form within 15 days from the Bid/Issue Closing Date; Despatch of refund orders or refund instructions to the clearing system shall be done within 15 days from the Bid/Issue Closing Date; and We shall pay interest at 15% per annum (for any delay beyond the 15 day time period as mentioned above), if allotment letters / refund orders have not been dispatched to the applicants or if, in a case where the refund or portion thereof is made in electronic manner, the refund instructions have not been given to the clearing system in the disclosed manner appearing under para Dispatch of Refund Orders on page no. 132 within 15 days from the date of Bid / Issue Closing Date.
The company will provide adequate funds for making refunds to unsuccessful applicants as per the mode disclosed under Dispatch of Refund Order appearing on page no. 132 to the Registrars to the Issue. DISPATCH OF REFUND ORDERS The company shall ensure dispatch of refund orders by following mode: a) In case of applicants residing at Ahmedabad, Bangalore, Bhubneshwar, Kolkatta, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna and Thiruvanthapuram refunds shall be credited through electronic transfe of funds by using ECS (Electronic Clearing Service), Direct Credit, RTGS (Real Time Gross Settlement) or NEFT (National Electronic Funds Transfer); In case of applicants residing at places other than those specified in (a) above and where the value of refund order is Rs. 1500/- or more, refund orders will be dispatched to the applicants by registered post; In case of applicants residing at places other than those specified in (a) above and where the value of refund order is less than Rs. 1500/-, refund orders will be dispatched under certificate of posting.
b) c)
UNDERTAKING BY OUR COMPANY We undertake as follows: (a) (b) that the complaints received in respect of this Issue shall be attended to by us expeditiously and satisfactorily; that all steps will be taken for the completion of the necessary formalities for listing and commencement of trading at all the stock exchanges where the Equity Shares are proposed to be listed within seven working days of finalisation of the basis of allotment;
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(c) (d) (e) (f)
that the funds required for despatch of refunds to unsuccessful applicants as per the mode disclosed shall be made available to the Registrar to the Issue by us; that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant within 15 days of closure of issue, giving details of the bank where refunds shall be credited alongwith the amount and expected date of electronic credit of refund; that the refund orders or allotment advice to the Eligible NRIs or FIIs shall be dispatched within specified time; and that no further issue of Equity Shares shall be made until the Equity Shares Offered through this Draft Red Herring Prospectus are listed or until the Bid Moneys are refunded on account of non-listing, undersubscription etc.
UTILISATION OF ISSUE PROCEEDS Our Board of Directors certify that: (a) All monies received out of the Issue shall be credited / transferred to a separate bank account other than the bank account referred to in sub-section (3) of Section 73 of the Companies Act; (b) Details of all monies utilised out of the Issue referred above will be disclosed under an appropriate separate head in our balance sheet indicating the purpose for which such monies have been utilised; (c) Details of all unutilised monies out of the Fresh Issue, if any, will be disclosed under the appropriate separate head in our balance sheet indicating the form in which such unutilised monies have been invested. We shall not have recourse to the Issue proceeds until the approval for trading of the Equity Shares from all the Stock Exchanges where listing is sought has been received Restrictions on Foreign Ownership of Indian Securities Foreign investment in Indian securities is regulated through the Industrial Policy, 1991 of the GoI and FEMA. While the Industrial Policy prescribes the limits and the conditions subject to which foreign investment can be made in different sectors of the Indian economy, FEMA regulates the precise manner in which such investment may be made. Under the Industrial Policy of the Government of India, unless specifically restricted, foreign investment is freely permitted in all sectors of Indian economy up to any extent and without any prior approvals, but the foreign investor is required to follow certain prescribed procedures for making such investment. As per current foreign investment policies applicable to our business, foreign investment is allowed up to 100% under the automatic route. Subscription by Non-Residents The Equity Shares have not been and will not be registered under the Securities Act or any state securities laws in the United States and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or the requirements of the Investment Company Act. Accordingly, the Equity Shares are only being offered and sold (i) in the United States to entities that are both qualified institutional buyers, as defined in Rule 144A of the Securities Act and qualified purchasers as defined under the Investment Company Act and (ii) outside the United States to certain persons in offshore transactions in compliance with Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers and sales occur. As per the current regulations, OCBs cannot participate in this Issue. The above information is given for the benefit of the Bidders. We, the BRLM are not liable for any amendments or modification or changes in applicable laws or regulations, which may happen after the date of this Red Herring Prospectus. Bidders are advised to make their independent investigations and ensure that the number of Equity Shares bid for do not exceed the applicable limits under laws or regulations.
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SECTION IX: MAIN PROVISIONS OF ARTICLES OF ASSOCIATION OF THE COMPANY

SHARE Article 5 The Authorised Share Capital of the Company is Rs.30,00,00,000/- (Rupees Thirty Crores only) divided into 3,00,00,000 (Three Crores) equity shares of Rs. 10/- (Rupees Ten only) each Article 6 Subject to the provisions of these Articles shares shall be under the control of the Board who may allot or, otherwise dispose of the same to such persons on such terms and conditions, and at such times, as the Board think fit. Provided that where at any time subsequent to the first allotment of shares, It is proposed to increase the subscribed capital of the Company by the issue of new shares, then, subject to any directions to the contrary which may be given by the Company in general meeting, the Board shall issue such shares in the manner set out in Section 81 (1) of the Act. Option or right to call of shares shall not be given to any person or persons except with the sanction of the Company In General Meeting. Article 7 As regard all allotments made from time to time the Company shall duly comply with Section 75 of the Act. Article 8 If the Company shall offer any of its shares to the public for subscription: (a) No allotment thereof shall be made, unless the amount stated in the Red Herring Prospectus as the minimum subscription has been subscribed, and the sum payable on application thereof has been paid to and received by the Company; but this provision shall no longer apply after the first allotment of shares offered to the public for subscription. (b) The Company shall comply with the provisions of sub-section (4) of Section 669 of the Act. And if the Company shall propose to commence business on the footing of a statement in lieu of Red Herring Prospectus, the Board shall not make any allotment of shares payable in cash unless seven at least of the shares proposed to be issued shall have been subscribed for on a cash footing by seven members and the Section 70 of the Act shall have been complied with. Article 9 The Company may exercise the powers of paying commissions conferred by Section 76 of the Act, provided that the rate per cent or the amount of the commission paid or agreed to be paid shall be disclosed in the manner required by the said section and the commission shall not exceed 5 per cent of the price at which any shares, in respect whereof the same is paid, are issued or 2.5 per cent of the price at which any debentures are issued (as the case may be). Such commission may be satisfied by the payment of cash by the payment of cash or the allotment of fully or partly paid shares or partly in one way and partly in the other. The Company may also on any issue of shares or debentures pay such brokerage as may be lawful. Article 10 Subject to the provisions of these Articles, the Company shall have power to issue preference Shares carrying a right to redemption out of profits which would otherwise be available for dividend or out of the proceeds dividend or out of the proceeds of a fresh issue of shares-made for the purpose of such redemption or liable to be redeemed at the option of the Company and the Board may, subject to the provisions of Section 80 of the Act, exercise, such power in such manner as may be provided in these Articles. Article 11 With the previous authority of the Company in general meeting and the sanction of the Court and upon otherwise complying with Section 79 of the Act the Board may issue at-a discount shares of a class already issued. Article 12
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If, by the conditions of allotment of any shares, the whole or part of the amount or issue price thereof shall be payable by instalments, every such instalment shall be the member registered in respect of the share or by his executor or administrator. Article 13 Member who are registered jointly in respect of a share shall be severally as well as jointly liable for the payment of all instalments and calls due in respect of such share. Article 14 Save as herein otherwise provided, the Company shall be entitled to treat the member registered in respect of any share as the absolute owner thereof and accordingly shall not, except as ordered by a Court if competent jurisdiction or as by statute required, be bound to recognise any equitable or other claim to or interest in such share on the part of any other person. Article 15 Shares may be registered in the name of any person, Company or other body corporate. Not more than four persons shall be registered jointly as members in respect of any share. Article 16 (1)Where at any time after the expiry of two years from the formation of the Company or at any time after the expiry of one year from the allotment of shares in the Company made for the first time after its formation, whichever is earlier, it is proposed to increase share capital then: (a) Such further shares shall be offered to the persons who at the date of the offer, are holders of the equity shares of the Company, in proportion, as near as circumstances admit, to the capital paid up on those shares at that date. (b) Such offer shall be made by a notice specifying the number of shares offered and limiting a time not being less than thirty days from the date of the offer within which the offer, if not accepted, will be deemed to have been declined. (c) The offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him in favour of any other person and the notice referred to in sub-clause (b) hereof shall contain a statement of this right. PROVIDED THAT the Directors may decline, without assigning any reason to allot any shares to any person in whose favour any member may renounce the shares offered to him. (d) After expiry of the time specified in the aforesaid notice or on receipt of earlier intimation from the person to whom such notice is given that he declines to accept the shares offered, the Board of Directors may dispose them off in such manner and to such person(s) as they may, in their sole discretion, think fit. (2)Notwithstanding anything contained in sub-clause (1) hereof, the further shares aforesaid may be offered to any persons (whether or not those persons include the persons referred to in clause (a) of sub-clause (1) hereof) in any manner whatsoever. (a) if a special resolution to that effect is passed by the Company in General Meeting, or (b) where no such special resolution is passed, if the votes cast (whether on a show of hands or on a poll as the case may be) in favour of the proposal contained in the resolution moved in that general meeting (including the casting vote, if any, of the Chairman) by the members who, being entitled to do so, vote in person, or where proxies are allowed, by proxy, exceed the votes, if any, cast against the proposal by members, so entitled and voting and the Central Government is satisfied, on an application made by the Board of Directors in this behalf that the proposal is most beneficial to the Company. Nothing in sub-clause (c) of (1) hereof shall be deemed: (a) To extend the time within which the offer should be accepted; or (b) To authorise any person to exercise the right of renunciation for a second time on the ground that the person in whose favour the renunciation was first made has declined to take the shares comprised in the renunciation. (4) Nothing in this Article shall apply to the increase of the subscribed capital of the Company caused by the exercise of an option attached to the debentures issued or loans raised by the Company :
(3)
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(i) To convert such debentures or loans into shares in the Company; or (ii) To subscribe for shares in the Company (whether such option is conferred in these Articles or otherwise). PROVIDED THAT the terms of issue of such debentures or the terms of such loans include a term providing for such option and such term : (a) Either has been approved by the Central Government before the issue of the debentures or the raising of the loans or is in conformity with the Rules, if any, made by that Government in this behalf; and (b) In the case of debentures or loans other than debentures issued to or loans obtained from Government or any institution specified by the Central Government in this behalf, has also been approved by a special resolution passed by the Company in General Meeting before the issue of the debentures or raising of the loans. Article 17 Subject to the provisions of the Act and these Articles, the shares in the capital of the Company for the time being shall be under the control of the Directors who may issue, allot or otherwise dispose of the same or any of them to such persons, in such proportion and on such terms and conditions and either at a premium or at par or (subject to the compliance with the provision of Section 79 of the Act) at a discount and at such time as they may from time to time think fit and with the sanction of the Company in the General Meeting to give to any person or persons the option or right to call for any shares either at par or premium during such time and for such consideration as the Directors think fit, and may issue and allot shares in the capital of the Company on payment in full or part of any property sold and transferred or for any services rendered to the Company in the conduct of its business and any shares which may so be allotted may be issued as fully paid shares and if so issued, shall be deemed to be fully paid shares. Provided that option or right to call of shares shall not be given to any person or persons without the sanction of the Company in the General Meeting. CERTIFICATE Article 18 Subject the provisions of the Companies (Issue of Share Certificates) Rules, 1960, or any statutory modification or re-enactment thereof share scripts shall be issued as follows (a) The certificate of the shares and duplicate thereof, when necessary, shall be issued under the Seal of the Company which shall be affixed in the presence of (i) Two Directors or a Director and a person acting on behalf of another Director under a duly registered power of attorney or two persons acting as attorneys for two Directors as aforesaid; and (ii) the Secretary or some other person appointed by the Board for the purpose, all of whom shall sign such share certificate; provided that if the composition of the Board permits of it, at least, one of the aforesaid two directors shall be a person other than a Managing or whole time director. (b) Every member shall be entitled, without payment, to one or more Certificates in marketable lots, for all the shares of each class or denomination registered in his name, or if the Directors so approve (upon paying such fee as the Directors may from time to time determine) to several certificates, each for one or more of such shares and the Company shall complete and have ready for delivery such certificates within three months from the date of allotment, unless the conditions of issue thereof otherwise provide, or within one month of the receipt of application of registration of transfer, transmission, sub-division, consolidation or renewal of any of its shares as the case maybe. Every certificate of shares shall be under the seal of the Company and shall specify the numbers and distinctive numbers of shares in respect of which it is issued and amount paid up thereon and shall be in such form as the Directors may prescribe or approve, provided that in respect of a share or shares held jointly by several persons, the Company shall not be bound to issue more than one certificate and delivery of a certificate of shares to one of several joint holders shall be sufficient delivery to all such holder. (c) If any certificate be worn out, defaced, mutilated or torn or if there be no further space on the back thereof for endorsement of transfer, then upon production and surrender thereof to the Company, a new Certificate may be issued in lieu thereof, and if any certificate is lost or destroyed, then upon proof thereof to the satisfaction of the Company and on execution of such
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indemnity as the Company deem adequate, being given, a new Certificate in lieu thereof shall be given to the party entitled to such lost or destroyed Certificate. Every Certificates under the Article shall be issued without payment of fees if the Directors so decide, or on payment of such fees(not exceeding Rs.2/- for each Certificate) as the Directors shall prescribe. Provided that no fee shall be charged for issue of new certificates in replacement of those which are old, decrepit or worn out or where there is no further space on the back thereof for endorsement of transfer. Provided that notwithstanding what is stated above the Directors shall comply with such Rules or Regulation or requirements of any Stock Exchange or the Rules made under the Act or the rules made under Securities Contracts (Regulation) Act, 1956 or any other Act, or rules applicable in this behalf. The provisions of this Article shall mutatis mutandis apply to debentures of the Company. In the case of loss. Where a certificate has been issued, in place of a certificate which has been defaced, torn or old, decrepit, worn-out, lost or destroyed, or where the cages in reverse for recording transfers have been duly utilised, it shall state on the face of it and against the stub or counter-foil that it is issued in lieu of a share certificate or is a duplicate issued for the one so defaced, torn or old, decrepit, worn-out, lost or destroyed, or where the cages in the reverse for recording transfers have been duly utilised, as the case may be, and, in the case of a certificate issued in place of one which has been lost or destroyed the word "duplicate" shall be stamped or punched in bold letters. across the face thereof. For every certificate issued under this Article except for a certificate issued in place of an old, decrepit, or worn-out certificate or in place of a certificate the cages in the reverse whereof for recording transfers have been duly utilised, there shall be paid to the Company the sum of Rs. 2/- or such smaller sum together with such out of pocket expenses incurred by the Company in investigating evidence the Board may determine provided that no fee shall be charged for issuing new certificates when sub-division or consolidation of share certificate is made into lots of market unit. (d) Where a new share certificate has been issued in pursuance of the last preceding Article, particulars of every such certificate shall also be entered in a Register of Renewed and Duplicate Certificate indicating against the name of the person to whom the certificate in lieu of which the new certificate is issued and the necessary changes indicated in the Register of Members by suitable cross-references in the "Remarks" column. All entries made in the Register or Renewed and Duplicate Certificates shall be authenticated by the Secretary or such other person as may be appointed by the Board for purposes of sealing and signing the share certificate under paragraph (a) hereof. DEMATERIALISATION OF SECURITIES Article 19 Definition for the purpose of this Article: (i) Depositories Act means the Depositories Act, 1996, including any statutory modifications or reenactment thereof for the time being in force and it includes where appropriate, the Rules made there under. (ii) SEBI means the Securities and Exchange Board of India Securities and Exchange Board of India Act, 1992. established under Section 3 of the
Words expressions used and not defined in this Article shall have the meaning assigned to them in the Depositories Act. The provisions contained in this Article shall prevail notwithstanding anything to the contrary in any other Article. (iii) Dematerialisation / Rematerialisation of Securities.
The Company shall be entitled to dematerialise its securities and offer fresh securities in physical or dematerialised form in terms of and in conformity with the Depositories Act and extant Regulations in force and confirming to the Bye laws of the Depositories. (iv) Provisions of Articles to apply to securities held in depository
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Except specifically provided in these Articles, the provisions relating to Joint-holders of shares, calls, lien on shares forfeiture of shares and transfer and transmission of shares shall be applicable to shares held in depository. (v) Transfer of securities
Transfer of securities held in Depository shall be governed by the Depositories Act and extant Regulations in force. (vi) Board to Decide on Depository The Board in its discretion shall decide the effective date from which depository option will be made available to the members. CALLS Article 20 The Board may with the sanction of the general Meeting, from time to time, subject to the terms on which any shares may have been issued, and subject to the provisions of Section 91 of the Act, make such calls as the Board thinks fit upon the members in respect of all moneys unpaid on the shares held by them respectively and not by the conditions of allotment thereof made payable at fixed times, and each member shall pay the amount of every call so made on him to the persons and at the times and places appointed by the Board. A call may be made payable by instalments and shall be deemed to have been made when the resolution of the Board authorising such call was passed. Article 21 If the sum payable in respect of any call or instalment be not paid on or before the day appointed for payment thereof, the member for the time being in respect of the share for which the call shall have been made or the instalment shall be due shall pay interest for the same at the rate of 12 per cent per annum from the day appointed for the payment thereof to the time of the actual payment or at such lower rate (if any) as the Board may determine. Article 22 No call shall exceed one-half of the nominal amount of a share, or be made payable within one month after the last preceding call was payable. Not less than fourteen days' notice of any call shall be given specifying the time and place of payment and to whom such call shall be paid. Article 23 If by the term of issue of any share or otherwise any amount is made payable at any fix time or by instalments at fixed times, whether on account of the amount or instalment shall be payable as if it were a call duly made by the Board and of which due notice had been given, and all the provision herein contained in respect of calls shall relate to such amount or instalment accordingly. Article 24 On the trial or hearing of any action or suit brought by the Company against any member or his representative to recover and debt or money claimed to be due to the Company in respect of his share, it shall be sufficient to prove that the name of the defendant is, or was, when the claim arose on the Register as a holder, or one of the members in respect of the share for which such claim is made, and that the amount claimed is not entered as paid in the books of the Company and it shall not be necessary to prove the appointment of the Board who made any call, nor that, a quorum was present at the Board meeting at which any call was made was duly convened or constitU1ed, nor any other matter whatsoever, but the proof of the matters aforesaid shall be conclusive evidence of the debt. Article 25 The Directors may, if they think fit, subject to the provisions of Section 92 of the Act, agree to and receive from any member willing to advance the same, whole or any part of he moneys due upon the shares held by him beyond the sums actually called for, and upon the amount so paid or satisfied in advance, or so much thereof as from time to time exceeds the amount of the calls then made upon the shares in respect of which such advance has been made, the Company may pay interest at such rate, as the member paying such sum in advance and the Directors agree upon, provided that money paid in advance of calls shall not confer a right to participate in profits or dividends. The Directors may at any time repay the amount so advanced.
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The members shall not be entitled to any voting rights in respect of the moneys so paid by him until the same would, but for such payment, become presently payable. The provisions of these Articles shall mutatis mutandis apply to the calls on debentures of the Company. Article 26 A call may be revoked or postponed at the discretion of the Board. FORFEITURE AND LIEN Article 27 If any member fails to pay any call or instalment on or before the day appointed for the payment of the same the Board may at any time thereafter during such time as the call of instalments remains unpaid, serve a notice on such member requiring him to pay the same, together with any interest that may have accrued and all expenses that may have been incurred by the Company by reason of such non-payment. Article 28 The notice shall name a day (not being less than fourteen days from the date of the notice) and a place or places on and at which such call or instalment and such interest and expenses as aforesaid are to be paid. The notice shall also state that in the event of non-payment at or before the time and at the place appointed, the shares in respect of which such call was made or instalment is payable will be liable to be forfeited. Article 29 If the requisitions of any such notice as aforesaid be not complied with any shares in respect of which such notice has been given may, at any time thereafter, before payment of all calls or instalments, interest and expenses, due in respect thereof, be forfeited by a resolution of the Board to that effect. Article 30 Such forfeiture shall include all dividends declared in respect of the forfeited shares and not actually paid before the forfeiture. Article 31 When any share shall have been forfeited, notice of the resolution shall be given to the member in whose name it stood immediately prior to the forfeiture -and an entry of the forfeiture, with the date thereof, shall forthwith be made in the Register, but no forfeiture shall be in any manner invalidated by any omission or neglect to give such notice or to make such entry as aforesaid. Article 32 Any share so forfeited shall be deemed to be the property of the Company, and the Board may sell, re-allot or otherwise dispose of the same in such manner as it thinks fit. Article 33 The Board may, at any time before any share so forfeited shall have been sold, re-allotted or otherwise disposed of annual the forfeiture there6f upon such conditions as it thinks fit. Article 34 A person whose share has been forfeited shall cease to be a member in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay, and shall without any deduction or allowance for the value of shares at the time of forfeiture, but shall not be under any obligation to do so. Article 35 A duly verified declaration in writing that the declarant is a Director of the Company, and that certain shares in the Company have been duly forfeited on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the shares and such declaration and the receipt of the Company for the consideration, if any, given for the shares on the sale or disposition thereof shall constitute a good title to such shares; and the person to whom any such shares is sold shall be registered as the member in respect of such share and shall not be bound to see to the application of the purchase money. nor shall his title to such share be affected by any irregularity or invalidity in the proceedings in reference to such forfeiture sale or disposition. Article 36 The Company shall have a first and paramount lien upon all the shares/debentures (other than fully paid-up shares/debentures) registered in the name of each member (whether solely or jointly with others) and upon the proceeds of sale thereof for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such shares/debentures and no equitable interest in any share shall be created except upon the footing and condition that this Article will have full effect. And such lien shall extend to all dividends and bonuses from time to time declared in respect of such shares/debentures. Unless otherwise agreed, the registration of a transfer of shares/debentures shall operate as a waiver of the Company's lien if any, on such shares/debentures. The Directors may at any time declare any shares/debentures wholly or in part to be exempt from the provisions of this clause.
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Article 37 For the purpose of enforcing such lien the Board may sell the share subject thereto in such manner as it thinks fit, but no sale shall be made until such time for payment as aforesaid shall have arrived and until notice in writing of the intention to sell shall have arrived and until notice in writing of the intention to sell shall have been served on such member his executor or administrator or his committee, curator bonis or other legal representative as the case may be and default shall have been made by him or them in the payment of the moneys called or payable at a fixed time in respect of such share for seven days after the date of such notice. Article 38 The net proceeds of the sale shall be received by the Company and applied in or towards payment of such part of the amount in respect of which the lien exists as is presently payable, and the presently payable as existed upon the share before the sale) be paid to the person entitled to the share at the date of the sale. Article 39 Upon any sale after forfeiture or for enforcing a lien in purported exercise of the powers hereinbefore given, the Board may appoint some person to execute an instrument of transfer of the share sold and cause the purchaser's name to be entered in the Register in respect of the share sold, and the purchaser shall not be bound to see to the regularity of the proceedings nor to the application of the purchase money, and after his name has been entered in the Register in respect of such share and validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively. Article 40 Where any share under the powers in that behalf herein contained is sold the Board and the certificate in respect thereof has not been delivered up to the Company by the former holder of such share the Board may issue a new certificate for such share distinguishing it in such manner as it may think fir from the certificate not so delivered up. TRANSFER AND TRANSMISSION Article 41 Save as provided in Section 108 of the Act, no transfer of a share shall be registered unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee has been delivered to the Company together with the certificate or, if no such certificate is in existence, the Letter of Allotment of the share. The instrument of and occupation (if any) of the transferee, and the transferor shall be deemed to remain the member in respect of such share until the name of transferee is entered in the Register the respect of thereof. Each signature to such transfer shall be duly attested by the signature of one credible witness who shall add his address. Article 42 Applications for the registration of the transfer of a share may be made either by the transferor or the transferee, provided that, where such application is made by the transferor, no registration shall in the case of partly paid share be effected unless the Company gives notice of the application to the transferee in the manner prescribed by Section 110 of the Act, and subject to the provisions of these Articles the Company shall, unless objection is made by the transferee within two weeks from the date of receipt of the notice, enter in the Register the name of transferee in the same mariner and subject to the same conditions as if the application of the transfer was made by the transferee. Article 43 The instrument of transfer shall be in writing and all the and provisions of Section 108 of the Act, and of any statutory modifications thereof for the time being shall be duly complied with in respect of all transfers of shares and registration thereof. Article 44 Subject to the provisions of Section 111 of the Act, the Board without assigning any reason for such refusal, may, within one month from the date on which the instrument of transfer was delivered to the Company refuse to register any transfer of a share. Provided that registration of a transfer shall not be refused on the ground of the transferor being, either alone or jointly with any other person or persons, indebted to the Company or any account whatsoever except a lien. Article 45 No transfer shall be made to a minor or person of unsound mind. Article 46 Every instrument of transfer shall be left at the office for registration, accompanied by the certificate of the share to be transferred, or, if no such certificate is in existence, by the letter of allotment of the share and such other evidence as the Board may require to prove the title of the transferor or his right to transfer the share. Every instrument of transfer, which shall be registered, shall be retained by the Company, but any instrument of transfer, which the Board may refuse to register, shall be returned to the person depositing the same.
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Article 47 If the Board refuses to register the transfer of any share the Company shall, within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and the transferor notice of the refusal. Article 48 A fee not exceeding As. 2/- may be charged for the registration of each transfer and shall, if required by the Board, be paid before the registration thereof. The above fee may be waived if so decided by the Board or so advised by stock exchange with which Company's shares may have been listed. Article 49 The executor or administrator of a deceased member (not being one of several members registered jointly in respect of a share) shall be the only person recognised by the Company as having any title to the share registered in the name of such member, and, in case of the death of anyone or more off the members registered jointly in respect of any share the survivor shall be the only person recognised by the Company as having any title to or interest in such share, but nothing herein contained shall be taken to release the estate of a deceased member from any liability on the share held by him jointly with any other person. Before recognising any executor or administrator the Board may require him to obtain to Grant of Probate or Letters of Administration or other legal representation, as the case may be, from a competent court in India and having effect in Bombay. Provided nevertheless that in any case where the Board in its absolute discretion thinks fit it shall be lawful for the Board to dispense with the production of Probate of Letters of Administration or such other legal representation upon such terms as to indemnity or otherwise as the Board, in its absolute discretion, may consider adequate Article 50 Any committee of guardian of a lunatic or minor member or any person becoming entitled to or to transfer a share in consequence of the death or bankruptcy or insolvency of any member upon producing such evidence that he sustains the character in respect of which he proposes to act under this Article or his title as the Board thinks sufficient, may, with the consent of the Board (Which the Board shall not be bound to give), be registered as a member in respect of such share, or may, subject to the regulations as to transfer hereinbefore contained, transfer such share. This Article is hereunder referred to as "The Transmission Article". Article 51 (1) If the person so becoming entitled under the Transmission Article shall elect to be registered as member in respect of the share himself, he shall delivered or send to the Company a notice in writing signed by him stating that he so elects. (2) (3) If the person aforesaid shall elect to transfer the share, he shall testify his election by executing an instrument of transfer of the share. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of instruments of transfer of a share shall be applicable to any such notice or transfer as aforesaid as if the death lunacy, bankruptcy or insolvency of the member had not occurred and the notice of transfer signed by that member.
Article 52 A person so becoming entitled under the Transmission Article to a share by reason of the death, lunacy, bankruptcy or insolvency of a member shall, subject to the provisions of Article 84 and of Section 206 of the Act, be entitled to the same dividends and other advantages to which he would be entitled if he were the registered member in respect of the share. Provided that the Board may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the share, until the requirements of the notice have been complied with. INCREASE AND REDUCTION OF CAPITAL Article 53 The Company in general meeting may from time to time increase the capital by the creation of new shares of such amount as may be deemed expedient. Article 54 Subject to any special rights or privileges for the time being attached to any hares in the capital of the Company then issued, the new shares may be issued upon such terms and conditions, and with such rights and privileges
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attached hereto as the general meeting resolving upon the creation thereof, shall direct, arid, if no direction be given, as the Board shall determine, and in particular such shares may be issued with a preferential or qualified right to dividends and n the distribution of assets of the Company. Article 55 Before the issue of any new shares, the Company in general meeting may make provisions as to the allotment and issue of the new shares, and in particular may determine to whom the same shall be offered in the first instance the provisions of Section 79 of the Act, at a discount in default of any such provision, or so far as same shall not extend, the new shares may be issued in conformity with the provisions of Article Article 56 Except so far as otherwise provided by the conditions of issue or by these presents, any capital raised by the creation of new shares shall be considered part of the then existing Capital of the Company, and shall be subject to the provisions herein contained with reference to the payment of calls and instruments, transfer and transmission forfeiture lien and otherwise. Article 57 If owing to any inequality in the number of new shares to be issued, and the number of shares held by members entitled to have the offer of such new shares any difficulty shall arise in the apportionment of such new shares or any of them amongst the members, such difficulty shall, in the absence of any direction in the resolution creating the shares or by the Company in general meeting, be determined by the Board. Article 58 The Company may from time to time by Special Resolution, reduce its capital and any capital Redemption Reserve Found or share Premium Account in any manner and with and subject to any incident authorised and consent required by law. ALTERATION OF CAPITAL Article 59 The Company in General Meeting may (a) Consolidate and divide all or any of its share capital into shares of large amount than its existing shares. (b) Sub-divide its existing shares; or any of them into shares of smaller amount than is fixed by the Memorandum so however, that in the subdivision the proportion between the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived. Cancel any shares which at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount its share capital by the amount of the shares so cancelled. (d) Convert all or any of its fully paid shares into stock and re-convert that stock into fully paid up shares of any denomination. Article 60 The resolution whereby any share is sub-divided may determine that, as between the holders of the shares resulting from such sub-division, one or more of such shares shall have some preference or special advantage as regards dividend, capital, voting, or otherwise over or as compared with the others or other, subject, nevertheless to the provisions of Sections 85, 87, 88 and 106 of the Act. Article 61 Subject to the provision.3 of Sections 100 to 105 inclusive of the Act, the Board may accept from any number the surrender on such terms and conditions as shall be regard of all or any of his shares. MODIFICATION OF RIGHTS Article 62 Whenever the capital (by reason of the issue of Preference Shares or otherwise is divided into different classes of shares, all or any of the rights and privileges attached to each class may, subject to the provisions of Sections 106 and 107 of the Act, the modified, commuted, effected, abrogated varied or dealt with by agreement between the Company and any person such agreement is (A)consented to in writing by the holders of at least threefourths of the issued shares of that class or (B) sanctioned by resolution passed at a separate general meeting of the holders of Shares of that class in accordance with Section 106(1 ) (b) of the Act and all the provisions hereinafter contained as to general meetings shall, mutatis, mutandis, apply to every such meeting, except that the quorum thereof shall be not less than two persons holding or representing to proxy one-fifth of the nominal amount of the issued shares of the class. This Article is not by implications to curtail the power of modification which the Company would have if this Article were omitted. The Company shall comply with the provisions of Section 192 of the Act to forwarding a copy of any such agreement or resolution to the Register.
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BORROWING POWERS Article 63 The Board may, from time to time, as its discretion, subject to the provisions of Sections 292 and 370 of the Act, raise or borrow from the Directors or from elsewhere and secure the payment of any sum or sums of moneys for the purposes of the Company; provided that the Board shall not, without the sanction of the Company in general meeting, borrow by the Company (apart from temporary loans obtained from the Company's bankers in the ordinary course of business) will exceed the aggregate for the time being of the paid-up capital of the Company and its free reserves, that is too say, reserve not set aside for any specific purpose. Article 64 The Board may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in ail respects as it thinks fit, and in particular, by the issue of bonds, perpetual or redeemable, debentures or debenture-stock, or any mortgage, or other security on the undertaking of the whole or any part of the property of the Company (both present and future) including its uncalled capital for the time being. Article 65 Any debentures, debenture-stock, bonds or other securities may be issued at a discount, premium or otherwise and with any special privileges as to redemption, surrender, drawings, allotment of shares, appointment, of Directors and otherwise. Debentures, debenture-stock, bonds and other securities may be made assignable free from any equities between the Company and the person to whom the same may be issued. Provided that debenture with the right to the allotment of or conversion into shares shall not be issued except in conformity with the provisions of Section 81 (3) of the Act. Article 66 Save as provided in Section 108 of the Act no transfer of debentures shall be registered unless a proper instrument of transfer duly stamped and executed by the transferor and transferee has been delivered to the Company together with the certificate or certificates of the debentures. Article 67 If the Board refuses to register the transfer of any debentures the Company shall, within one month from the date on which the instrument of transfer was lodged with the Company, send to the transferee and to the transferor. Article 68 Any debentures, debenture-stock or other Issue of securities may be issued at a discount, premium Debenture or otherwise and may be issued on condition that they shall be convertible into shares of any denomination and with any privileges and conditions as to redemption, surrender, drawing, allotment of shares, attending (but not voting) at the General Meeting, appointment of Directors and otherwise, Debentures with the right to conversion into or allotment of shares shall be issued only with the consent of the Company in the General Meeting by a Special Resolution. GENERAL MEETINGS Article 69 The Statutory Meeting of the Company shall, as required by Section 165 of the Act, be held at such time being less than one month nor more than six months from the date at which the Company shall be "entitled to commence business and at such place as the Board may determine, and the Board shall comply with the other requirements of that Section as to the report to be submitted and otherwise. Article 70 In addition to any other meetings, general meeting of the Company shall be held within such intervals as are specified in Section 166(1) of the Act and, subject to the provisions of Section 166(2) of the Act, at such times and places as may be determined by the Board. Each such general meeting shall be called an "Annual General Meeting" and shall be specified as such in the notice convening the meeting Any other meeting of the Company shall, except in the case where as Extraordinary General Meeting is covered under the provisions of the next following Article, be called a "General Meeting". Article 71 The Board may, whenever it thinks fit, call a general meeting and it shall, on the requisition of such number of members as hold, at the date of the deposit of the requisition not less than one-tenth of such of the paid up capital of the Company as at the date carried the right of voting in regard to the manner to be considered at the meeting, forthwith proceed to call an Extraordinary General Meeting, and in the case of such requisition the following provisions shall apply :(1) The requisition shall state the matters for the consideration of which the meeting is to be called, shall be signed by the requisitions and shall be deposited at the office. The requisition may consist of several documents in like form each signed by one or more requisitionists.
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2.
Where two or more distinct matters are specified in the requisition the acquisition shall be valid only in respect of those matters in regard to which the requisition has been signed by the member or members hereinbefore specified. If the Board does not within twenty-one days from the date of deposit of a valid requisition in regard to any matters, proceed duly to call a meeting for the consideration of these matters on day on a day not later than forty-five days from the date of deposit, the requisitionists or such of them as are enabled so to do by virtue of Section 169 (6) (b) of the Act may themselves call the meeting but any meeting so called shall not be commenced after three months from the date of deposit. Any meeting called under this Article by the requisitionists shall be called in the same manner as nearly as possible as that in which meetings are to be called by the Board shall be held at the office. Where two or more persons hold any shares jointly a requisition or notice calling a meeting signed by one or some of them shall for the purposes. Any reasonable expenses incurred by the requisitionists by reason of the failure of the Board duly to call a meeting shall be repaid to the requisitionists by the Company and any sum so repaid shall be retained by the Company out of any sums due or to become due from the Company by way of fees or other remuneration for their services to such of the Directors as are in default.
3.
4.
5. 6.
Article 72 The Company shall comply with the provisions of Section 188 of the Act as to giving notice of resolutions and circulating statements on the requisition of members. Article 73 Save as provided in sub-section (2) of Section 171 of the Act not less than twenty-one days' notice shall be given of every general meeting of the Company. Every notice of a meeting shall specify the place and the day and hour of the meeting and shall contain a statement of the business to be transacted thereat. Where any such business consists of "Special Business" a hereinafter defined there shall be annexed to the notice a statement complying with Section 173(2) and (3) of the Act. Nothing of every meeting of the Company shall be given to every member of the Company, to the Company, to the Auditors of the Company and to persons entitled to share in consequence of the death or insolvency of a member in any manner hereinafter authorised for the giving of notice to such persons. The accidental omission to give any such notice to or the non-receipt by any member or other person to whom it should be given shall not invalidate the proceedings of the meeting. PROCEEDINGS AT GENERAL MEETINGS Article 74 The ordinary business of an Annual General Meeting shall be to receive and consider the Profit and Loss Account, the Balance sheet and the reports of the directors and of the auditors and fix their remuneration and to declare dividends. All other business transacted at an annual general meeting and all business transacted at any other general meeting shall be deemed special business. Article 75 No business shall be transacted at any general meeting unless a quorum of members is present at the time when the meeting proceeds to business. Save as herein otherwise provided five members present in person shall be a quorum. Article 76 Any act or resolution which, under the provisions of these Articles or of the Act, is permitted or required to be done or passed by the Company in general meeting shall be sufficiently so done or passed if elected by an Ordinary Resolution as defined in Section 189(1) of the Act unless either the Act or these Articles specifically require such act to be done or resolution passed by a Special Resolution as defined in Section 189(2) of the Act.
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Article 77 The Chairman of the Board shall be entitled to take the chair at every general meeting. If there be no such Chairman, or if at any meeting he shall not be present within fifteen minutes after the time appointed for holding such meeting, or in unwilling to act, the members present shall choose another Director as Chairman, and if no Director be present, or if all the Directors present decline to take the chair then the members present shall, on a show of hands or on a poll if properly demanded, elect one of their members being a member entitled to vote, to be Chairman. Article 78 If within half-an-hour from the time appointed for the meeting a quorum be not present, the meeting, if conveyed upon such requisition as aforesaid, shall be dissolved; but in any other case it stand adjourned to the same day in the next week, at the time and place, or to such other day and at such time and place as the Board may be notice appoint and if at such adjourned meeting a quorum be not present, those members who are present and not being less than two shall be a quorum and may transact the business for which the meeting was called. Article 79 Every question submitted to a meeting, shall be decided in the first instance by a show of hands, and in the case of an equality of votes, both on a show of hands and on a poll, the Chairman of the meeting shall have a casting vote in addition to the vote to which he may be entitled as a member. Article 80 At any general meeting, unless a poll is (before or on the declaration of the result of the show of hands) demanded by Chairman of his own motion, or by members having not less than one tenth of the total voting power or having paid up share capital of not less than Rs. 1,00,000/- and having the right to vote on the resolution in question and present in the person or by any member or members present in person or by proxy and holding shares in the Company conferring aright to vote on such resolution, a declaration by the Chairman that the resolution has or has not been carried, either unanimously, or by a particular majority, and an entry to that effect in book containing the minutes of the proceeding of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes cast in favour of, or against the resolution. Article 81 (1) If a poll demanded as aforesaid it shall be taken forthwith on a question of adjournment or election of a Chairman and in any other case in such manner and such time. not being later than forty-eight hours from the time when the demanded was made, and at such place at the Chairman of the meeting directs, and, subject as aforesaid either at once or after an interval or adjournment or otherwise, and th9 result of the poll shall be deemed to be the decision of the meeting on the resolution on which the poll was demanded. (2) The demand of a poll may be withdrawn at any time. (3) Where a poll is to be taken the Chairman of the meeting shall appoint two scrutineers, one at least of whom shall be a member (not being an officer or employee of the Company) present at the meeting provided such member is available and willing to be appointed, to scrutinise the votes given on the poll and to report to him thereon. (4) On a poll a member entitled to more than one vote, or his proxy or other person entitled to vote form him, as the case may be, need not, if he votes, use all his votes or cast in the same way all the votes. (5) The demand of a poll shall not prevent the continuance of a meeting for the transaction, of any business other than the question on which a poll has been demanded. Article 82 (1) The Chairman of a general meeting may adjourn the same from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. (2) When a meeting is adjournment it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
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VOTES OF MEMBERS Article 83 (a) Save as hereinafter provided, on a show of hands every member present in person and being a member registered in respect of Ordinary Shares shall have one vote and every person present either as a General Proxy (as defined in Article 87) on behalf of a member registered in respect of Equity Shares, if he is not entitled to vote in his own right, or as a duly authorised representative of a body corporate, being a member registered in respect of Equity Shares, shall have one vote. (b) Save as hereinafter provided, on a poll the voting rights of a member the registered in respect of Equity Shares shall be specified in Section 87 of the Act. The members registered in respect of the Preference Shares shall not be entitled to vote at general meetings of the Company except :(i) One any resolution placed before the Company at a general meeting at the date of which the dividend due or any part thereof remains unpaid in respect of an aggregate period of not less than two years proceeding the date of commencement of such meeting and for this purpose the dividend shall be deemed to be due yearly on the 30th day of September in each year in respect of the yearly period ending on the preceding 31st day of March whether or not such dividend has been declared by the Company or On any resolution placed before the Company which directly affects the rights attached to the Preference Shares and for his purpose any resolution for the winding up of the Company or for the repayment or reduction of its share capital shall be deemed to effect the rights attached to such shares. Where the members registered in respect of any Preference Shares has aright to vote on any resolution in accordance with the provisions of this Article, his voting rights on a poll as such member shall, subject to any statutory provision for the time being, applicable, be in the same proportion as the capital paid up on the Preference Shares bears to the total paid up Equity Share Capital of the Company for the time being as defined in Section 87(2) of as a resolution of its Board of Directors under the Provision of Section 187 of the Act is in force and the representative named in such resolution is present at the general meeting at which the vote by proxy is tendered.
(ii)
Article 84 Where a Company or to body corporate (hereinafter called "Member Company") is a member of the Company, a person, duly appointed by resolution in accordance with the provisions of Section 187 of the Act to represent such member Company at a meeting of the Company, shall not by reason of such appointment, be deemed to be a proxy, and the production at the meeting of a copy of such resolution duly signed by one Director of such member Company and certified by him as being a true copy of the resolution shall, on production at the meeting, the validity of his appointment. Such person shall be entitled to exercise the same rights and power, including the rights to vote by proxy on behalf of the member Company which he represents, as that member Company could exercise. Article 85 Any person entitled under the Transmission Article to transfer any shares may vote at any general meeting in respect thereof in the same manner as if he were the member registered in respect of such shares, provided that forty eight hours at least before the time of holding the meeting or adjourned meeting, as the case may be, at which he proposed to vote he shall satisfy the Board of his right to transfer such shares, unless the Board shall have previously admitted his right to vote at such meeting in respect thereof. If any member be a lunatic, idiot or noncoposementis he may vote whether on a show of hands or at a poll by his committes curator bonis or other legal curator and such last mentioned persons may give their votes by proxy. Article 86 Where there are members registered jointly in respect of any share anyone of such person may vote at any meeting either personality or by proxy in respect of such shares as if he were solely entitled thereto, and if more than one of such members be present at any meeting either personally or by proxy, that on of the said members so present whose name stands first on the Register in respect thereof. Several executors or administrators of a
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deceased member in whose name any share is registered shall for the purpose of this Article be deemed to be members registered jointly in respect thereof . Article 87 On a poll vote may be given either personally or by proxy, or, in the case of a body corporate, by a representative duly authorised as aforesaid. Article 88 The instrument appointing a proxy shall be in writing under the hand of the appointer or of his Attorney duly authorised in writing or if such appointer is a body corporate be under its common seal or the hand of its officer or Attorney duly authorised. A proxy who is appointed for a specified meeting only be called a special Proxy Any other proxy shall be called a General Proxy. Article 89 A person may be appointed a proxy though he is not a member of the Company and every notice convening a meeting of the Company shall state this and that a member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him or authority, shall be deposited at the office not less than forty-eight hours before the time for holding the meeting at which the person named in the instrument purports to vote in respect thereof and in default the instrument of proxy shall not be treated as valid. Article 90 A vote given in accordance with the terms of an instrument pointing a proxy shall be valid notwithstanding the previous death or insanity of the principal, or revocation of the instrument, or transfer of the share in respect of which the vote is given, provided no intimation in writing of the death, insanity, revocation or transfer of the share shall have been received by the Company at the office before the vote is given. Provided nevertheless that the Chairman of any meeting shall be entitled to require such evidence as he may in his discretion think fit of the due execution of an instrument of proxy and that the same has not been revoked. Article 91 Every instrument appointing a special proxy shall be retained by the Company and shall, as nearly as circumstances will admit, be in any of the forms set out in Schedule IX of the Act. Article 92 No member shall be entitled to exercise any voting rights either personally or by proxy at any meeting of the Company in respect of any shares registered in his name on which any calls or other sums presently payable by him have not been paid or in regard to which the Company has, and has exercised, any right of lien. Article 93 (a) Any objections as to the admission or rejection of a vote, either, on a show of hands, or on a poll made in due time, shall be referred to the Chairman who shall forthwith determine the name, and such determination made in good faith shall be final and conclusive. (b) No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is given or tendered and every vote not allowed at such meeting shall be valid for all purposes. DIRECTORS Article 94 (i) Subject to the provisions of Section 252 of the Companies Act, 1956 and until otherwise determined by special Resolution the number of the Directors of the Company shall not be less than three or more than twelve. (ii) If at any time the Company obtains any loans from any financial institution and/or any Central or State Government referred to in this Article as "The Corporation" or enters into underwriting arrangements with the Corporation and it is a term of such loan or of the underwriting arrangement that the Corporation shall have the right to appoint one or more Directors, then subject to the terms and conditions of such loans, or underwriting arrangements the Corporation shall be entitled to appoint one or more Directors, as the case may be to the Board of Directors of the. Company and to remove from office any Directors, so appointed and to appoint another in his place or in the place of a director so appointed who resigns or otherwise vacates his office. Any such appointment or removal shall be made in writing and shall be signed by the Corporation or by any person
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duly authorised by it and shall be served at the office of the Company. The Director or Directors so appointed shall not be liable to retire by rotation of Directors in accordance with the provisions of these Articles. Article 95 Not less than two-thirds of the total number of Directors shall be persons whose period of office is liable to determination by retirement of Directors by rotation. Article 96 The present directors of the Company are : Mr. Rakeshkumar Hariram Agarwal Mr. Mukeshkumar Hariram Bansal Mr. Hariram Budhram Agarwal Mr. Sarvesh Hariram Agarwal . Mr. Rajesh Sanghavi Mr. Mukti Ram Agarwal Mr. Anand Kumar JainMr. Jasbir Singh Article 97 The Board shall have power at any time and from time to time to appoint any person as a Director as an addition to the Board but so that the total number of Directors shall not at any time exceed the maximum number fixed by these Articles. Any Directors so appointed shall hold office only until the next Annual General Meeting of the Company and shall then be eligible for re-election. Article 98 The Director shall not be required to hold any qualification shares. Article 99 Each Director shall be entitled to receive out of the funds of the Company for attending meeting of the board or committee of the board or any of these adjourned sittings, for each meeting of the board or committee respectively attended by him a sum not exceeding the limits prescribed under Section 301 of the Act or such smaller sum as may be determined by the Board. Article 100 The Directors shall be entitled to receive a commission (to be divided between them in such manner as they shall from time to time determined and in default of determination, equally) of one per cent of the Company (computed in the manner referred to in subsection (1) of Section 198 of the Act in any financial year. All other remuneration, if any, payable by the Company to each Director, whether in respect of his services as a Managing Director or a Director in the whole or part time employment of the Company shall be determined in accordance with the subject to the provisions of these Articles and of the Act. The Directors shall be entitled to be paid their reasonable travelling and hotel and other expenses incurred in consequence of their attending Board and Committee meetings, and otherwise incurred in the execution of their duties as Directors. Article 101 If any Director, being willing, shall be called upon to perform extra services or to make any special exertion in going or residing away from Bombay for any of the purposes of the Company or in giving special attention to the business of the Company or as a member of a Committee of the Board then subject to Section 198, 309 and 31 0 of the Act, the Board may remunerate the Director so doing either by a fixed sum or by a percentage of profits or otherwise and such remuneration to which he may be entitled Article 102 The continuing Directors may act notwithstanding any vacancy in their body; but so that if the number fails below the minimum above fixed the Board shall not, except for the purpose of filling vacancies, act so long as the number is below the minimum. Article 103 The Office of a Director shall ipso facto be vacated if at any time he commits any of the acts as set out in Section 283 of the Act. Article 104 No Director, no partner, or relative of a Director no firm in which a Director or his relative is a partner, no private Company of which a Director is a Director or member and no Director, or Manager of such a private
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Company shall, without the previous consent of the Company of profit under the Company or under any subsidiary in respect of such office or place is paid over to the Company or its holding Company in so far as such remuneration is over and above the remuneration to which he is entitled as a Director of such subsidiary) except that of a Managing Director, Secretaries and Treasurers, Manager, legal or Technical adviser, banker or trustee for the holders of debentures. Article 105 No Director of this Company may be or become a Director of any other Company promoted by this Company or in which it may be interested as a vendor, shareholder or otherwise, and no such Director shall be accountable for any benefits received as a Director or member of such Company. Article 106 Subject to the provisions of Section 297, of the Act a Director neither shall be disqualified from contracting with the Company either as vendor, purchase or otherwise for goods, materials or services or for underwriting the subscription of any shares in or debentures of the Company nor shall any such contract or arrangement entered into by or on behalf of the Company with a relative of such Director, or a firm in which such Director or relative is a partner or with any other partner in such firm or with a private Company of which such Director is a member or Director be avoided nor shall any Director so contracting or being such member or so interested be payable to account of the Company for any profit realised by any such contract or arrangement by reason of such Director holding office or of the fiduciary relation thereby established. Article 107 Every Director who is in any way whether directly or indirectly concerned or interested in a contract or arrangement, entered into or to be entered into. By or on behalf of Company shall disclose the nature of his concern or interest at a meeting of the Board as required by Section 299 of the Act. A general notice renewable in the last month of each financial year of the Company, that a Director is a Director or a member of any specified body corporate or is member of any specified firm and is to be regarded as concerned or interested in any subsequent contract or arrangement with that body corporate or firm shall be sufficient disclosure or concern or interest in relation to any contract or arrangement so made and. after such general notice, it shall not be necessary to give special notice relating to any or firm. provided such general notice is given at a meeting of the Board or the Director concerned takes reasonable steps to secure that it is brought up and read at the first meeting of the Board after it is given. Article 108 No Director shall, as a Director, take any part in the discussion of or vote on any contract or arrangement in which he is any way, whether directly or indirectly concerned or interested, nor shall his presence count for the purpose of forming a quorum at the time of such discussion or vote. This prohibition shall not apply to (a) any contract or indemnity against any loss which the Directors or any of them may suffer by reason of becoming or being sureties or a surety for the Company; or (b) any contract or arrangement entered into or to be entered into by the Company with a public Company, or with a private Company which is a subsidiary of a public Company, in which the interest of the Director consist solely in his being a director of such Company or value therein as is requisite to qualify him for appointment as a Director thereof, he having been nominated as such director by the Company. ROTATION OF DIRECTORS Article 109 At each Annual General Meeting of the Company one-third of such of the Directors for the time being as are liable to retire by rotation. or if their number is not three or a multiple of three, then the number nearest to one third shall retire from office. An additional Director appointed by the Board under Article 96 hereof shall not be liable to retire by rotation within the meaning of this Article. Article 110 The Directors to retire by rotation at every Annual General Meeting shall be those who have been longest in office since their last appointment. but as between persons who become Directors on the same day those to retire, shall, in default of and subject to any agreement among themselves, be determined by lot. Article 111 Save as permitted by Section 263 of the Act, every resolution of a General Meeting for the appointment of a Director shall relate to one named individual only.
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Article 112 The Company at the Annual General Meeting at which a Director retires by rotation in manner aforesaid may fill up the vacated office by appointing the retiring Director or some other person thereto. If the place of the retiring Director is not so filled up and the meeting has not expressly resolved not to fill the vacancy, the meeting shall stand adjourned till the same day in the next week, at the same time and place, or if that day is public holiday, till the next succeeding day which is not a public holiday. at the same time and place. If at the adjourned meeting also. the place of the retiring Director is not filled up and that meeting also has not expressly resolved not to fill that meeting also has not expressly resolved not to fill the vacancy, the retiring Director shall be deemed to have been re-appointed at the adjourned meeting unless: (a) at the meeting or at the previous meeting a resolution for the reappointment or such Director has been put to the vote and lost; or (b) the retiring Director has by notice in writing addressed to the Company or the Board expressed his unwillingness to be reappointed, or he is not qualified for appointment; or (d) resolution, whether & special or ordinary is .required for his appointment or re-appointment in virtue of any provisions of the Act; or (e) the provision of sub-section (2) of section 263 of the Act is applicable to the case. Article 113 The Company may, subject to the provisions of Section 284 of the Act, by ordinary resolution of which Special Notice has been given, remove any Director before the expiration of his period of office and may by ordinary resolution of which Special Notice has been given appoint another person in his stead, if the Director so removed was appointed by the Company in general meeting or by the Board under Article 109. The person so appointed shall hold office if he had not been so removed. If the vacancy created by the removal of a Director under the provisions of this Article is not so filled by the meeting at which he is removed the Board may at any time thereafter fill such vacancy under the provisions of Article 114. Article 114 If any Director appointed by the Company in general meeting vacates office as a Director before his term of office will expire in the normal course the resulting casual vacancy may be filled up by the Board at a meeting of the Board but any person so appointed shall retain his office so long only as the vacating Director would have retained the same if no vacancy had occurred. Provided that the Board may not fill such a vacancy be appointing thereto any person who has been removed from his of Director under Article 113. Article 115 No person not being a retiring Director shall be eligible for appointment to the office of Director at any general meeting unless he or some member intending to propose him has not less than fourteen days before the meeting left at the office a notice in writing under his hand signifying his candidature for the office of director or the intention of such member to propose him as a candidate for that office as the case may be and has deposited a sum of As. 500 with the Company which shall be refunded in case the candidate is elected as Director otherwise the same will be forfeited. ALTERNATE DIRECTORS Article 116 The Board may appoint any person to act as Alternate Director for a Director during the latter's absence for a period not less than three months from the State in which meetings of the Board are ordinarily held and such appointment shall have effect and such appointment shall have effect and such appointee, whilst he holds office as an alternate Director, shall be entitled to notice of meetings of the Board and to attend and vote thereat accordingly, but he shall not require any qualification and shall ipso factor, vacate office if and when the absent Director returns to the State in which meetings of the Board are ordinarily held or the absent Director vacates office as a Director.
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PROCEEDINGS OF DIRECTORS Article 117 The Board shall meet together at least once in every three months for the despatch of business and may adjourn and otherwise regulate its meetings and proceedings as it thinks fit. Notice in writing of every meeting of the Board shall be given to every Director for the time being in India, and at his usual address in India to every other Director. Unless otherwise determined from time to time at any time by the consent of all Directors for the time being in India, meetings of the Board shall take place at the office. Article 118 A Director may, at any time, convene a meeting of the Board. Article 119 If at any meeting of the Board, the Chairman be not present within five minutes after the time appointed for holding the same, the Directors present shall choose some one of their members to be Chairman of such meeting. Article 120 The quorum for a meeting of the Board shall be determined from time to time in accordance with the provisions of Section 287 of the Act. If a quorum shall not be present within fifteen minutes from the time appointed for holding a meeting of the Board, it shall be adjourned until such date and time as the Chairman of the Board shall appoint. Article 121 A meeting of the Board at which a quorum be present shall be competent to exercise all or any of the authorities, power and discretions by or under these Articles for the time being vested in or exercisable by the Board. Article 122 Subject to the provisions of Sections 316, 372(4) and 336 of the Act, questions arising at any meeting shall be decided by a majority of votes, and in case of an equality of votes, the Chairman shall have a second or casting vote. Article 123 The Board may, subject to the provisions of the Act, from time to time and at any delegate any of its powers to a Committee consisting of such Director or Directors as it thinks fit, and may from time to time revoke such delegation. Any Committee so formed shall, in the exercise of the powers so delegated, conform to any regulations that may from time to time be imposed upon it by the Board. Article 124 The meetings and proceedings of any Committee consisting of two or more members shall be government by the provisions herein contained for regulating the meetings and proceedings of the Board so far as the same are applicable thereto, and are not superseded by any regulations, made by the Board under the last preceding Article. Article 125 Acts done by a person as a Director shall be valid, notwithstanding that it may afterwards be discovered that his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provisions contained in the Act or in these Articles. Provided that nothing in this Article shall be deemed to give validity to acts done by a Director after his appointment has been shown to the Company to be invalid or to have terminated. Article 126 Save in these cases where a resolution is required by Sections 262, 292, 297, 316, 372(4) and 386 of the Act, to be resolution shall be as valid and effectual if it had been passed at a meeting of the Board or Committee of the Board, as the case may be, duly called and constituted, if a draft thereof in writing is circulated, together with the necessary papers, if any, to all the Directors, or to all the members of the Committee of the Board, as the case may be, then in India (not being less in number than the quorum fixed for a meeting of the Board or Committee, as the case may be) and to all other Directors or members of the Committee at their usual address in India, and has been approved by such majority of such of them, as are entitled to vote on the resolution
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POWERS TO THE BOARD Article 128 Subject to the provisions of the Act, the control of the Company shall be vested in the Board who shall be entitled to exercise shall not exercise any power or do any act or thing which is directed or required, whether by the Act or any other statue or by the Memorandum of the Company in general meeting. Provided further that .in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions in that behalf contained in the Act or any other statute or in the Memorandum of the Company or in these Articles or in any regulations not inconsistent therewith and duly made there under, including regulations made by the Company in general meeting, but not regulation made by the Company in general meetings shall invalidate any prior act of the Board which would have been valid if that regulation had not been made. LOCAL MANAGEMENT Article 129 Subject to the provisions of the Act, the following regulations shall have effect. .(1)The Board may, from time to time, provide for the management of the affairs of the Company outside India (or in any specific locality in India) in such manner as it shall think fit and the provisions contained in the four next following paragraph shall be without prejudice to the general powers conferred by this paragraph. (2)The Board may, from time to time and at any time, establish any Local Directorates or agencies for managing any of the affairs of the Company outside India, or in any specified locality in India, and may appoint any persons to be members of such local Directorate or any managers or agents and may fix their remuneration and, save as provided in Section 292 of the Act, the Board may, from time to time and at any time, delegate to any person so appointed any of the powers, authorities and discretions for the time being vested in the Board and may authorise the members for the time being of any such Local Directorate or any of them to fill up any vacancies therein and to act notwithstanding vacancies; and any such appointment or delegation may be made on such terms and subject to such conditions as the Board may think fit and the Board may, at any time, remove any person so appointed and may annual or vary any such delegation. (3)The Board may, at any time and from time to time by power-of-Attorney under Seal, appoint any person to be the Attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those which may be delegated by the Board under the Act) and for such period and subject to such conditions as the Board may, from time to time think fit; any such appointment may, if the Board thinks fit, be made in favour of the members or any of the members of any Local Directorate established as aforesaid, or in favour of any Company or for the members, directors, nominees, or officers of any Company or firm, or in favour of any fluctuating body of persons in favour of any fluctuating body of persons whether nominated directly or indirectly by the Board, and any such Power- of-Attorney may contain such provisions for the protection of convenience of dealing with such Attorneys as the Board thinks fit. (4) Any such delegates or Attorneys as aforesaid may be authorised by the Board to sub-delegate all or any of the powers, authorities and discretions for the time being vested in them. (5) The Company may exercise the powers conferred by Section 50 of the Act with regard to having an Official Seal for the use abroad, and such powers shall be vested in the Board, and the Company may cause to be kept in any state or country outside India, as may be permitted by the Act a Foreign Register of members or debentureholders resident in any such State or country and the Board may from time to time make such regulations as it may think fit respecting the keeping of any such Foreign Register, such regulations not being inconsistent with the provisions of Section 157 and 158 of the Act: and the Board may, from time to time, make such provisions as it may think fit relating thereto and may comply with the requirements of any local law and shall, in any case, comply with the provisions of Sections 157 and 158 of the. Act. MANAGING DIRECTORS Article 130 Subject to provisions of Section 316 and 317 of the Act the Board may from time to time appoint one or more Directors to be Managing Director or Managing Directors of the Company, either for a fixed term or without any intimation as to the period for which he or they is or are to hold such office, and may from time to time (Subject to the provisions of any contract between him or them and the Company) remove or dismiss him or them from office and appoint another or others in his or their place or places.
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Article 131 Subject to the provisions of Section 255 of the Act, a Managing Director shall not, while he continues to hold that office, to be subject to retirement by rotation, and he shall not be reckoned as a Director for the purpose of determining the rotation or retirement of Directors or in fixing the number of Directors to retire, but (subject to the provisions of any contract between him and the Company) he shall be subject to the same provisions as to resignation and removal as the other Directors, and he shall ipso facto and immediately cease to be a Managing Director. if he ceases to hold office of Director from any cause. If at any time the total number of Managing Directors is more than one third of the total number of Directors, the Managing Directors who shall not retire shall be determined by and in accordance with their respective seniorities. For the purpose of this Article the seniorities of the Managing Directors shall be determined by the dates of their respective appointments as Managing Directors by the Board. Article 132 Subject to the provisions of Sections 309, 310 and 311 of the Act, a Managing Director shall, in additional to the remuneration payable to him as a Director of the Company under these Articles, receive such additional remuneration perquisites as may from time to time be sanctioned by the Company. Article 133 Subject to the provisions of the Act in particular to the prohibitions and restrictions contained in Section 292 thereof, the Board may from time to time, entrust to and confer upon a Managing Director for the time being such of the powers exercisable under these presents by the Board as it may think fit, and may confer such powers for such time, and to be exercised for such objects and purposes, and upon such terms and conditions, and with such restrictions as it thinks fit, and the Board may confer such powers, either collaterally with, or to the exclusion of, and in substitution for all or any of the powers of the Board in that behalf: and may from time to time revoke, withdraw alter or vary all or any of such powers. RESERVES Article 136 The Board may, from time to time before recommending any dividend set apart any such portion of the profits of the Company as it thinks fit as Reserve to meet contingencies or for the liquidation of any debentures, debts or other liabilities of the Company, for equalisation of dividends, for repairing, improving or maintaining any of the property of the Company and for such other purpose of the Company as the Board in its absolute discretion thinks conducive to the interests of the Company; and may, subject to the provisions of Section 372 of the Act, invest the several sums so set aside upon such investments (other than shares of the Company) as it may think fl!, and from time to time deal with and vary such investments and dispose of all or any part thereof for the benefit of the Company and may divide the Reserves into such special funds as it thinks fit, with full power to employ the Reserve or any part thereof in the business of Company, and that without being bound to keep separate from the other assets. Article 137 All moneys carried to the reserves shall nevertheless remain and be profits of the Company applicable, subject to due provisions being made for actual loss or depreciation, for the payment of dividends and such moneys and all the other moneys of the Company not immediately required for the purpose of the Company, may subject to the provisions of Sections 370 and 372 of the Act, be invested by the Board in or upon such investments or securities as it may select or may be used as working capital or may be kept at any Bank on deposit or otherwise as the Board may from time to time think proper. CAPITALISATION OF RESERVES Article 138 Any general meeting may resolve that any moneys, investments, or other assets, forming part of the undivided profits of the Company standing to the credit of the Reserves or any Capital Redemption Reserve Fund, or in the hands of the Company and available for dividend or representing premium received on the issue of shares and standing to the credit of the Share Premium Account be capitalised and distributed amongst such of the members as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalised fund be applied on behalf of such members in paying up in full and unissued shares, debentures or debenture-stock of the Company which shall be distributed accordingly or in towards payment of the uncalled liability on any issued shares, and that such distribution or payment shall be accepted by such members in full satisfaction of their interest in the said capitalised sum. Provided that any sum standing to the credit of a Share Premium
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Account or a Capital Redemption Reserve Fund may, for the purposes of this Article, only be applied in the paying up of unissued shares to be issued to members of the Company as fully paid bonus shares. Article 139 A general meeting may resolve that any surplus moneys arising from the realisation of any capital assets of the Company or any investments representing the same, or any other undistributed profits of the Company not subject to charge for income-tax, be distributed among the members on the footing that they receive the same as capital. Article 140 For the purpose of giving effect to any resolution under the two last preceding Articles and Article 149 hereof the Board may settle any difficulty which may arise in regard to the distribution as it thinks expedient and in particular may issue fractional certificates and may fix the value for distribution of any specific assets, and may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of all parties and may vest such cash or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalised fund as may seem expedient to the Board. Where requisite a proper control shall be filled in accordance with Section 75 of the Act, and the Board may appoint any person to sign such a control on be behalf of the persons entitled to the dividend or capitalised fund, and such appointment shall be effective. DIVIDENDS Article 141 Subject to the rights of members entitled to shares (if any with preferential or special rights attached thereto, the profits of the Company which it shall from time to time be determined to divide in respect of any year or other period shall be applied in the payment of a dividend on the ordinary shares of the Company but so that a partly paid up share shall only entitle the member in respect thereof such a proportion of the distribution upon a fully paid up share as the amount paid thereon bears to the nominal amount of such share and so that where capital is paid up in advance of calls upon the footing that the same shall carry interest, such capital shall not, whilst carrying interest. rank for dividend confer a right to participate in profits. Article 142 The Company in general meeting may declare a dividend to be paid to the members according to their rights and interest in the profits and may, subject to the provisions of Section 207 of the Act, fix the time for payment. Article 143 No longer dividend shall be declared than is recommended by the Board, but the Company in general meeting may declare a smaller dividend. Article 144 No dividend shall be payable except out of the profits of the Company or out of moneys provided by the General or State Government for the payment of the dividend in pursuance of any guarantee given by such Government. Article 145 The declaration of the Board as to the amount of the net profits of the Company shall be conclusive. Article 146 The Board may, from time to time, pay to the members such interim dividends as appears to the Board to be justified by the profits of the Company. Article 147 The Board may deduct from any dividend payable to any member all sums of moneys. if any, presently payable by him to the Company on account of calls or otherwise in relation to the Shares of the Company. Article 148 Any general meeting declaring a dividend may make a call on the members of such amount as the meeting fixes, but so, that the call on each member shall not exceed the dividend payable to hi, and so that the call be made
154
payable at the same time as the dividend and the dividend may, if so arranged between the Company and the member, be set off again the call. Article 149 Any general meeting declaring a dividend may resolve that such dividend be paid wholly or in part by the distribution of specific-assets, and in particular of paid up shares; debentures or debenture-stock of the Company or paid up shares, debentures or debenture-stock of any other Company, or in anyone or more of such ways. Article 150 A transfer of shares shall not pass the rights to any dividend declared thereon before the registration of the transfer by the Company. Article 151 No dividend shall be paid respect of any share except to the member registered in respect of such shares or to his orders or to his bankers but nothing contained in this Article shall be deemed to require the bankers of a member to make a separate application to the Company for the payment of the dividend. Article 152 Anyone of several persons who are members registered jointly in respect of any share may give effectual receipts for all dividends. bonuses and other payments in respect of such share. Article 153 Notice of any dividend whether interim or otherwise, shall be given to the persons entitled to share there in the manner hereinafter provided. Article 154 Unless otherwise directed in accordance with Section 206 of the Act. any dividend. interest or other moneys payable in cash in respect of a share may be paid by cheque or warrant sent through the post to the registered address of the member For in the case of members registered jointly to the registered address of the first named in the Register or to such person and such address as the member or members, as the case may be. may direct and every cheque or warrant so sent f shall be made payable to the order of the person to whom it is sent. Article 155 Where the Company has declared a dividend but which has not been paid or the dividend warrant in respect thereof has not been posted within 30 days from the date of declaration to any shareholder entitled to the payment of the dividend, the Company shall within 5 days from the date of expiry of the said period of 30 days, open a special account in that behalf in any scheduled bank called "Unpaid Dividend Account" and transfer to the said account, the total amount of dividend which remains unpaid or in relation to which no dividend warrant has been posted. Any money transferred to the unpaid dividend account of the Company which remains unpaid or unclaimed for a period of three years from the date of such transfer, shall be transferred by the Company to the general revenue account of the Central Government. A claim to any money so transferred to the general revenue account may be preferred to the Central Government by the shareholders to whom the money is due. No unclaimed or unpaid dividend shall be forfeited by the Board. SERVICE OF NOTICE AND DOCUMENTS Article 170 (1) A notice or other document may be given by the Company to any member personally of by sending it by post to him to his registered address or (if he has no registered address in India) to the address if any, within India supplied by him to the Company for the giving of notices to him. (a) (b) Where a notice or other document is sent by post. Service hereof shall be deemed to be effected by properly addressing, prepaying and posting a letter containing the notice or document, provided that where a member has intimated to the Company in advance that notice or documents should be sent to him under a certificate of posting or by registered post with Company a sufficient sum to defray the expenses of doing so, or without acknowledgement due and
155
has deposited with the service of the notice or document shall not be deemed to be effected unless it is sent in the manner intimated by the member; and unless the contrary is proved, such service shall be deemed to have been effected : (i) in the case of a notice of a meeting at the expiration of forty-eight hours after the letter containing the same is posted, and (ii) in any other case, at the time at which the letter would be delivered in the ordinary course of post. Article 171 A notice or other document advertised in a newspaper circulating in the neighbourhood of the office shall be deemed to be duly served on the day on which the advertisement appears on every member of the Company who has no registered address in India and has not supplied to the Company an address within India a for the giving of notices to him. Any member who has no registered address in India shall, if so required to do by the Company, supply the Company with an address in India for the giving of notices to him. Article 172 A notice or other document may 1 be served by the Company on the members registered jointly in respect of a share by giving the notice to the joint-holder, named first in the Register. Article 173 A notice or other document may be served by the Company on the persons entitled to a share in consequence of the death or insolvency of a member by sending it through the post in a prepaid letter addressed to them by name, or by the title representative of the deceased, or assignee of the insolvent or by any like description, at the address in India supplied for the purpose by the persons claiming to be so entitled, or until such and address has been so supplied, by giving the notice in any manner in which the same might have been given if the death or insolvency had not occurred. Article 174 Any notice required to be given by the Company to the members or any of them and not expressly provided for by these Articles or by the Act shall be sufficiently given if given by advertisement. Article 175 Any notice required to be or which may be given by advertisement shall be advertised once in one or more newspapers circulating in the neighbourhood of the office. Article 176 Any notice given by advertisement shall be deemed to have been given on the day on which the advertisement shall first appear. Article 177 Every person who by operation of law, transfer or other means whatsoever shall become entitled to any share shall be bound by every notice in respect of such share which previously to his name and address being entered on the Register shall be duly given to the person from whom the derives his title to such share. Article 178 Subject to the provisions of Article 173 any notice or document delivered or sent by post to or left at the registered address of any member in pursuance of these Articles shall, notwithstanding such member be then deceased and whether or not the Company have notice of his decease, be deemed to have been duly served in respect of any share, whether registered solely or jointly with other persons, until some other persons be registered in his stead as the member in respect thereof and such service shall for all purposes of these presents be deemed a sufficient service of such notice or document on his or her heirs, executors or administrators and all persons, if any, jointly interested with him or her in any such share. Article 179 Subject to the provisions of Section 497 and 509 of the Act, in the event of a winding up of the Company, every member of the Company who is not for the time being in Bombay shall be bound, within eight weeks after the passing of an effective resolution to wind up the Company voluntarily or the making of an order for the winding
156
up of the Company to serve notice in writing on the Company appointing some householder residing in the neighbourhood of the office upon whom all summonses, notices process, orders and judgements in relation to or order the winding up of the Company may be served and in default of such nomination, the Liquidator of the Company shall be at liberty, on behalf of such member, to appoint some such person, and service upon any such appointee whether appointed by the member or the Liquidator of shall be deemed to be good personal service on such member for all purposes, and where the Liquidator makes any such appointment he shall, with all convenient speed, give notice thereof to such member by advertisement in some daily newspaper circulating in the neighbourhood of the office or by a registered letter sent by post and addressed to such member at his address as registered in the Register and such notice shall be deemed to be served on the day on which the advertisement appears or the letter would be delivered in the ordinary course of the post. The provisions of this Article shall not prejudice the right of the Liquidator of the Company to serve any notice or other document in any other manner prescribed by these Articles. WINDING UP Article 186 If the Company shall be wound up and the assets available for distribution among the members as such shall be insufficient to repay the whole of the paid up capital such assets shall be distributed so that as nearly-as mayor which ought to have been paid up at the commencement of the winding up on the shares held by them respectively. And if in a winding up the assets available for distribution among the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the members in proportion to the capital at the commencement of the winding up paid up or which ought to have been paid up on the shares held by them respectively. But this Article is to be without prejudice to the rights of members registered in respect of shares issued upon special terms and conditions. Article 187 If the Company shall be wound up, whether voluntarily or otherwise, the Liquidators, may with the sanction of a Special Resolution, divide among the contributories, in specie or kind, any part of the assets of the Company and may, with the like sanction, vest any part of the assets of the Company in Trustees upon such trusts for the Liquidators, with the like sanction shall think fit. INDEMNITY Article 188 Every Director, Manager, Secretary or officer of the Company or any person (whether an officer of the Company or not) employed by the Company and any person appointed Auditor shall be indemnified out of the funds, of the Company against all liability incurred by him as such Director, Manager, Secretary, Officer, Employee or Auditor in defending any proceedings, whether civil or criminal, or in connection with any application under Section 633 of the Act in which relief is granted to him by the Court.
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SECTION X - MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION The following contracts (not being contracts entered into in the ordinary course of business carried on by the Company) which are or may be deemed material have been entered or to be entered into by the Company. These contracts, copies of which have been attached to the copy of the Draft Red Herring Prospectus, have been delivered to the Registrar of Companies, Maharashtra, Mumbai for registration and also the documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company, from 10.00 a.m. to 4.00 p.m. on any working day from the date of the Draft Red Herring Prospectus until the date of closing of the Issue. MATERIAL CONTRACTS 1. 2. 3. 4. Memorandum of Understanding dated December 15, 2005 signed between the Company and Allianz Securities Limited, the Book Running Lead Managers to the Issue. Memorandum of Understanding dated January 12, 2006, signed between the Company and Intime Spectrum Registry Limited, the Registrar to the Issue. Copy of the Tri-partite Agreement dated [] between NSDL, the Company and Intime Spectrum Registry Limited. Copy of the Tri-partite Agreement dated [] between CDSL, the Company and Intime Spectrum Registry Limited.
Documents for Inspection 1. 2. 3. 4. 5. 6. 7. 8. 9. Memorandum and Articles of Association of Shirdi Industries Ltd., as amended from time to time. Certificate of Incorporation of Shirdi Industries Ltd. dated May 9, 1997. Copy of resolution passed at general meeting dated July 23, 2005 u/s 81 (1A) authorizing the Issue of Equity Shares. Copies of letters to BSE & NSE regarding In-principle approval for Listing. Copies of In-principle approvals from BSE & NSE dated [] and dated [] respectively. Copies of Annual Reports of the Company for the last 5 accounting periods i.e. FY 2001, FY 2002, FY 2003, FY 2004, FY 2005 and for the period ended October 31, 2005. Certificate by Statutory Auditors of the Company dated January 12, 2006 regarding the deployment of funds in relation to the project cost till date. Copy of Tax Benefits Certificate issued by Statutory Auditors of the Company M/s. M.P. Kala & Co., Chartered Accountants, dated December 17, 2005. Copy of letter dated January 21, 2006 from Legal Advisors for the vetting and approval of the Draft Red Herring Prospectus.
10. Copy of Appraisal Report of Union Bank of India 11. Copies of Agreement entered into with suppliers of Plant & Machinery viz. Klinkert and Sanghai Wood Based Panel Machinery Company Limited 12. Copy of Shareholders agreement and Supplementary Agreement with Klinkert Limited 13. Consent letters from Promoters, Directors, Book Running Lead Managers to the Issue, Bankers to the Issue, Bankers to the Company, Auditors, Legal Advisors to the Issue, Registrar to the Issue, Company Secretary & Compliance Officer to act in their respective capacities and for inclusion of their names in the Draft Red Herring Prospectus. 14. Copies of Annual Reports of Promoter Group Companies 15. Due Diligence Certificate dated January 21, 2006 issued by Book Running Lead Managers to the Issue, Allianz Securities Limited. 16. A copy of the SEBI Final observation letter no. [] dated [], 2006 received from SEBI, Mumbai in respect of the Public Issue of Shirdi Industries Ltd.
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SECTION XI - DECLARATION All the relevant provisions of the Companies Act, 1956, and the guidelines issued by the Government of India or the guidelines issued by Securities and Exchange Board of India, established under Section 3 of the Securities and Exchange Board of India Act, 1992, as the case may be, have been complied with and no statement made in this Draft Red Herring Prospectus is contrary to the provisions of the Companies Act, the Securities and Exchange Board of India Act, 1992 or rules made thereunder or guidelines issued, as the case may be. We further certify that all statements in this Draft Red Herring Prospectus are true and fair. SIGNED BY ALL THE DIRECTORS OF SHIRDI INDUSTRIES LIMITED
Rakesh Agarwal Chairman cum Managing Director
Mukesh Bansal Director
Hariram Agarwal Director
Sarvesh Agarwal Director
Jasbeer Singh Director
Rajesh Sanghavi Director
Ashok Ladda Director
Sujay Kantawala Director
Kanta P. Joshi Manager (Finance) Date: January 21, 2006 Place: Mumbai
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Draft Red Herring Prospectus ________________________________________________________________________________________________________________

SHIRDI INDUSTRIES LIMITED

BOOK RUNNING LEAD MANAGER

REGISTRARS TO THE ISSUE

97 100 103 110 112 114 134 159 160

SECTION XI: DECLARATION

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Regulations Stock Exchanges U.S. GAAP

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Red Herring Prospectus or RHP

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

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Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

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24. Sr. No.

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

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Draft Red Herring Prospectus ________________________________________________________________________________________________________________

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Draft Red Herring Prospectus ________________________________________________________________________________________________________________

1,804.86 1,598.75 1,364.85 4,768.46

1,630.66 608.06 505.67 2,744.39

1,450.66 118.38 387.66 1,956.70

950.66 84.73 247.57 140.00 1,422.96

303.37 381.04 66.88

261.69 313.12 1,287.74 1,064.41

2,663.76 76.47 2,587.29 136.28

988.56 63.60 924.96 167.61

819.85 52.18 767.67 212.79

77.30 38.77 38.53 688.27

70.19 29.05 41.14 443.18

103.35 19.82 83.53 187.75

44.38 368.34 438.31 35.64 886.67 73.10 14.43 87.53 799.14

65.14 465.72 269.43 98.26 898.55 85.28 20.30 105.58 792.97

4.28 0.16 1,287.74 1,064.41

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Non Institutional Portion

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

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Date of allotment/ Fully paid up 15.12.93

Draft Red Herring Prospectus ________________________________________________________________________________________________________________

Cash Capital isation of Plant Capital isation of Plant

of 163065800 of 180485800 of 184405800 of 12,95,54,560 11,23,69,280 3,60,00,000

Mr. Rakesh Hariram Agarwal

Mr. Mukesh Bansal

Mr. Sarvesh Agarwal

Mr. Hariram Agarwal Mrs. Bansal Anita

Mrs. Rukhmani Agarwal

28.03.94 12.02.98 04.02.02

28.03.94 12.02.98 04.02.02

Allotment Allotment Allotment

1 yr. 1 yr. 1 yr.

650.00 [] 3390.00 2256.00 [] ** 142.00 30.00 12741.00