Embed Size (px)
Citation preview
capital
Draft Letter of Offer May 17, 2011
For Equity Shareholders of our Company only
FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY
ISSUE OF [•] EQUITY SHARES WITH A FACE VALUE OF `1 EACH AT A PREMIUM OF `[•] PER EQUITY SHARE (“RIGHTS ISSUE EQUITY SHARES”) FOR AN AMOUNT AGGREGATING `18,200 MILLION ON A RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF BAJAJ HINDUSTHAN LIMITED (“COMPANY”) IN THE RATIO OF [•] EQUITY SHARE(S) FOR EVERY [•] FULLY PAID-UP EQUITY SHARE(S) HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE, THAT IS ON [•], 2011 (THE “ISSUE”). THE ISSUE PRICE IS [•] TIMES THE FACE VALUE OF THE EQUITY SHARES. FOR FURTHER DETAILS, PLEASE SEE “TERMS OF THE ISSUE” ON PAGE 342 OF THIS DRAFT LETTER OF OFFER.
GENERAL RISK
Investment in equity and equity related securities involves 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 our Company and the Issue including the risks involved. The securities being offered in the Issue have not been recommended or approved by Securities and Exchange Board of India (“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Letter of Offer. Investors are advised to refer to the “Risk Factors” on page 12 of this Draft Letter of Offer before making an investment in the Issue.
OUR COMPANY’S ABSOLUTE RESPONSIBILITY
Our Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to our Company and the Issue, which is material in the context of the Rights Issue, that the information contained in the Draft Letter of Offer 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 make this Draft Letter of Offer as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING
Our existing Equity Shares are listed on the Bombay Stock Exchange Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”) (the BSE and the NSE together, the “Stock Exchanges”). We have received “in-principle” approvals from BSE and the NSE for listing the Equity Shares arising from the Issue vide their letters dated [•] and [•], respectively. For the purposes of the Rights Issue, the Designated Stock Exchange is [•].
SBI CAPITAL MARKETS LIMITEDSEBI Reg. No.: INM000003531202, Maker Tower ‘E’Cuffe ParadeMumbai 400 005Tel: +91 22 2217 8300Fax: +91 22 2218 8332Investor Grievance Email: [email protected]: [email protected]: www.sbicaps.comContact Person: Ms. Sylvia Mendonca / Mr. Anish Shrimankar
BAJAJ HINDUSTHAN LIMITEDOur Company was incorporated in India on November 24, 1931 as “The Hindusthan Sugar Mills Limited” under the Companies Act, 1913. The name of our Company was changed to “Bajaj Hindusthan Limited” on June 27, 1988. For further details of our corporate history and
changes in structure, please see “History and Other Corporate Matters” on page 136 of this Draft Letter of OfferThe corporate identification number of our Company is L15420MH1931PLC001797
ndRegistered Office: Bajaj Bhavan, 2 Floor, 226 Jamnalal Bajaj Marg, Nariman Point, Mumbai 400 021
Tel. : +91 22 2202 3626, 2284 2110 • Fax : +91 22 2202 2238Corporate Office: Bajaj Bhawan, B-10, Sector 3, Jamnalal Bajaj Marg, Noida 201 301
Tel. : +91 120 2543 939 • Fax : +91 120 254 3949Contact Person: Mr. Kausik Adhikari, Deputy Company Secretary and Compliance OfficerCompany Secretary: Mr.Pradeep Parakh, Group President (GRC) and Company Secretary
E-mail: [email protected] Website: www.bajajhindusthan.com
IDBI CAPITAL MARKET SERVICES LIMITEDSEBI Reg. No.: INM0000108665th Floor, Mafatlal CentreNariman Point, Mumbai 400 021Tel: +91 22 4322 1212 Fax: +91 22 2283 8782 Investor Grievance Email: [email protected]: [email protected] Website: www.idbicapital.comContact Person: Mr. Rishi Tiwari / Mr Subodh Mallya
SERVICES LIMITEDSEBI Reg. No.: INM00001161710, Rakesh Deep Building Yusuf Sarai Commercial Complex,Gulmohar Enclave New Delhi 110 049 Tel.: +91 11 4103 5051-55 Fax: +91 11 4103 5057Investor Grievance Email: [email protected]: [email protected] Website: www.pnbisl.comContact Person: Mr. Narender Thakran
PNB INVESTMENT
SEBI Reg. No.: INR000001476 13AB, Samita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange LaneAndheri Kurla Road, Sakinaka, Andheri (East)Mumbai 400 072Tel: +91 22 6191 5402 / 04 • Fax: +91 22 6191 5444Investor Grievance Email : [email protected]: [email protected]: www.shareproservices.comContact Person: Mr. Kumaresan V / Mr. Satheesh HK
SHAREPRO SERVICES (INDIA) PRIVATE LIMITED
LEAD MANAGERS REGISTRAR TO THE ISSUE
ISSUE OPENS ON
ISSUE PROGRAMME
LAST DATE FOR RECEIVING REQUESTSFOR SPLIT FORMS
ISSUE CLOSES ON
[•][•][•]
(A wholly owned subsidiary of Punjab National Bank)
1
TABLE OF CONTENTS
SECTION I – GENERAL ................................................................................................................................. 1 DEFINITIONS AND ABBREVIATIONS ........................................................................................................ 1 NOTICE TO OVERSEAS SHAREHOLDERS ................................................................................................ 6 PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA ............................. 10 FORWARD LOOKING STATEMENTS ....................................................................................................... 11 SECTION II - RISK FACTORS ..................................................................................................................... 12 SECTION III – INTRODUCTION ................................................................................................................. 37 THE ISSUE ..................................................................................................................................................... 37 SUMMARY FINANCIAL INFORMATION ................................................................................................. 39 GENERAL INFORMATION ......................................................................................................................... 49 CAPITAL STRUCTURE................................................................................................................................ 56 OBJECTS OF THE ISSUE ............................................................................................................................. 66 STATEMENT OF TAX BENEFITS ............................................................................................................... 84 SECTION IV – ABOUT US ............................................................................................................................ 92 INDUSTRY OVERVIEW ............................................................................................................................... 92 BUSINESS .................................................................................................................................................... 115 HISTORY AND OTHER CORPORATE MATTERS ................................................................................. 136 MANAGEMENT .......................................................................................................................................... 141 KEY INDUSTRY REGULATIONS ............................................................................................................. 148 SECTION V – FINANCIAL INFORMATION ............................................................................................ 149 MARKET PRICE INFORMATION ............................................................................................................ 245 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS .............................................................................................................................................. 247 ACCOUNTING RATIOS AND CAPITALISATION STATEMENT .......................................................... 266 MATERIAL DEVELOPMENTS ................................................................................................................. 270 FINANCIAL INDEBTEDNESS ................................................................................................................... 276 SECTION VI – LEGAL AND OTHER INFORMATION ............................................................................ 305 OUTSTANDING LITIGATIONS AND DEFAULTS .................................................................................. 305 GOVERNMENT AND OTHER APPROVALS ........................................................................................... 326 OTHER REGULATORY AND STATUTORY DISCLOSURES ................................................................ 334 SECTION VII – OFFERING INFORMATION ........................................................................................... 342 TERMS OF THE ISSUE ............................................................................................................................... 342 SECTION VIII – STATUTORY AND OTHER INFORMATION .............................................................. 369 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ...................................................... 370 SECTION IX - DECLARATION.................................................................................................................. 372
1
SECTION I – GENERAL
DEFINITIONS AND ABBREVIATIONS Definitions In this Draft Letter of Offer, unless the context otherwise requires, indicates or implies, the terms defined and abbreviations expanded herein below shall have the same meaning as stated in this Section. Conventional/ General Terms
Term Description Act / Companies Act The Companies Act, 1956 and amendments thereto Depositories Act The Depositories Act, 1996 and amendments thereto EPS Earnings Per Share IT Act The Income Tax Act, 1961 and amendments thereto Indian GAAP Generally Accepted Accounting Principles In India NAV Net Asset Value PAT Profit After Tax SEBI Act, 1992 Securities and Exchange Board of India Act, 1992 and amendments thereto SEBI Regulations / SEBI ICDR Regulations
The SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments thereto
Securities Act The United States Securities Act of 1933, as amended Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and
amendments thereto Issue related terms Term Description Abridged Letter of Offer The abridged letter of offer to be sent to our Equity Shareholders as on the Record
Date with respect to this Issue in accordance with SEBI ICDR Regulations Allotment Unless the context requires, the allotment of Rights Issue Equity Shares pursuant to
the Issue Allottees Persons to whom Rights Issue Equity Shares are issued pursuant to the Issue Application Supported by Blocked Amount / ASBA
The application (whether physical or electronic) used by an Investor to make an application authorizing the SCSB to block the amount payable on application in their specified bank account
ASBA Investor An applicant who: a) holds the Equity Shares of our Company in dematerialized form as on the record
date and has applied for entitlements and / or additional Equity Shares in dematerialized form;
b) has not renounced his/her entitlements in full or in part; c) is not a Renouncee; d) is applying through a bank account maintained with SCSBs
Bankers to the Issue [●] Composite Application Form / CAF
The form used by an Investor to apply for the Allotment of Rights Issue Equity Shares in the Issue and for application by Renouncees
2
Term Description Consolidated Certificate In case of holding of Equity Shares in physical form, the certificate that our Company
would issue for the Equity Shares Allotted to one folio Controlling Branches of the SCSBs
Such branches of the SCSBs which coordinate with the Lead Managers, the Registrar to the Issue and the Stock Exchanges, a list of which is available on http://www.sebi.gov.in/pmd/scsb.pdf
Designated Stock Exchange
[●]
Draft Letter of Offer This Draft Letter of Offer of our Company filed with SEBI on May 17, 2011 ECS Electronic Clearing Services Eligible Equity Shareholder
A holder(s) of Equity Shares as on the Record Date
Equity Shareholder / Shareholder
A holder of Equity Shares of our Company
Financial Year / Fiscal / Fiscal Year / FY
Any period of twelve months ended September 30 of that particular year, unless otherwise stated
Investor(s) Equity Shareholders as on Record Date and/or Renouncees applying in the Issue Investor Representation Letter
The investor representation letter in the form attached as Appendix A to the Offering Memorandum
Issue / Rights Issue Issue of [●] Equity Shares with a face value of `1 each at a premium of `[●] per Equity Share for an amount not exceeding `18,200 million on a rights basis to the existing Equity Shareholders in the ratio of [●] Equity Share(s) for every [●] fully paid-up Equity Share(s) held by the existing Equity Shareholders on the Record Date. The issue price is [●] times the face value of the Equity Shares
Issue Closing Date [●] Issue Opening Date [●] Issue Price `[●] per Equity Share Issue Proceeds The gross proceeds of the Issue that are available to our Company Issue Size The issue of [●] Equity Shares not exceeding `18,200 million Lead Managers SBI Capital Markets Limited, IDBI Capital Market Services Limited and PNB
Investment Services Limited Letter of Offer The letter of offer filed with the Stock Exchanges after incorporating SEBI comments
on this Draft Letter of Offer Listing Agreement The listing agreements entered into between our Company and the Stock Exchanges MICR Magnetic Ink Character Recognition Net Proceeds The Issue Proceeds less the Issue related expenses. For further details, please see the
“Objects of the Issue” on page 66 of this Draft Letter of Offer Offering Memorandum The Letter of Offer together with the international wrap Record Date [●] Refund through electronic transfer of funds
Refunds through ECS, Direct Credit, RTGS or NEFT, as applicable
Registrar of Companies/ RoC
The Registrar of Companies, Mumbai, Maharashtra
Registrar to the Issue Sharepro Services (India) Private Limited Renouncees Any persons, other than ASBA Investor who have acquired Rights Entitlements from
the Equity Shareholders
3
Term Description Rights Entitlement [●] Equity Share(s) that an Equity Shareholder is entitled to under the Issue for every
[●] fully paid-up Equity Share(s) held on the Record Date Rights Issue Equity Shares Equity Share(s) issued to shareholders in this Issue RTGS Real Time Gross Settlement SAF(s) Split Application Form(s) SCSB(s) A Self Certified Syndicate Bank registered with SEBI under the SEBI (Bankers to an
Issue) Regulations, 1994 and offers the facility of ASBA, including blocking of bank account. A list of all SCSBs is available at http://www.sebi.gov.in/pmd/scsb.pdf
Share Certificate The certificate in respect of the Equity Shares allotted to a folio with a split performance
Stock Exchange(s) BSE and NSE where the Equity Shares are presently listed and traded Company Related Terms
Term Description “our Company”, “the Issuer”or “BHL”
Unless the context requires, refers to Bajaj Hindusthan Limited, a public limited company incorporated under the provisions of the Companies Act, 1913 having its registered office at Bajaj Bhavan, 2nd Floor, 226 Jamnalal Bajaj Marg Nariman Point, Mumbai 400 021
“We”, “us”, “our” Unless the context requires, Bajaj Hindusthan Limited along with its Subsidiaries on a consolidated basis
Articles of Association The articles of association of our Company
Auditor M/s Chaturvedi & Shah, our statutory auditors
BHSIL Bajaj Hindusthan Sugar and Industries Limited
Board / Board of Directors Board of Directors of our Company including any committees thereof Corporate Office Our corporate office located at Bajaj Bhawan, B-10, Sector 3, Jamnalal Bajaj Marg,
Noida 201 301 Corporate Promoter Bajaj Capital Ventures Private Limited Equity Share(s) or Share(s)
Equity shares of our Company having a face value of `1 unless otherwise specified in the context thereof
ESOP The Employee Stock Options Plan, framed by BHSIL, and subsequently transferred to our Company pursuant to the Scheme of Amalgamation. For further details please see “Capital Structure” on page 56 of this Draft Letter of Offer
Individual Promoters Mr. Shishir Bajaj, Mrs. Minakshi Bajaj, Mr. Kushagra Bajaj, Mr. Apoorva Bajaj Lalitpur Power Lalitpur Power Generation Company Limited MoA / Memorandum of Association
The memorandum of association of our Company, as amended
Promoters The Promoters of our Company, being Mr. Shishir Bajaj, Mrs. Minakshi Bajaj, Mr. Kushagra Bajaj, Mr. Apoorva Bajaj and Bajaj Capital Ventures Private Limited
Promoter Group Unless the context requires otherwise, the entities forming part of our promoter group in accordance with the SEBI Regulations. Subsequent to the implementation of a family settlement in the nature of a separation
4
Term Description in 2008 the effective control and management of our Company and our group entities have remained with one segment of the Bajaj family, i.e. the Shishir Bajaj group. Entities forming part of the other segment of the Bajaj family are not considered to be a part of our Promoter Group consequent to the said family settlement. However, the shareholding of two entities namely Bajaj Holdings and Investments Limited and Bajaj Auto Limited – Employees Welfare Trust, which hold in aggregate 5.91% of the paid-up equity share capital of our Company, are controlled by the said other segment of the Bajaj family. The shareholding of these two entities is included as part of the shareholding of the Promoter and Promoter Group of our Company.
Scheme / Scheme of Amalgamation
Scheme of Amalgamation between Bajaj Hindusthan Sugar and Industries Limited and Bajaj Hindusthan Limited approved by the Hon’ble High Court of Judicature at Bombay
Subsidiaries The subsidiaries of Bajaj Hindusthan Limited, namely Bajaj Aviation Private Limited, Bajaj Eco-Tec Products Limited, Bajaj Energy Private Limited, Bajaj Internacional Participações Ltda., Bajaj Hindusthan (Singapore) Private Limited, Lalitpur Power Generation Company Limited and Bajaj Power Generation Private Limited
Abbreviations
Term Description ADR American Depository Receipts AGM Annual General Meeting AS Accounting Standard notified by Companies (Accounting Standards) Rules, 2006 (as
amended) AY Assessment Year BHEL Bharat Heavy Electricals Limited BIDCO Bajaj Infrastructure Development Company Limited BPLR Benchmark Prime Lending Rate BSE Bombay Stock Exchange Limited CDSL Central Depository Services (India) Limited CEPS Cash Earnings Per Share CERC Central Electricity Regulatory Commission DP Depository Participant DR Depository Receipts ECB External Commercial Borrowings EGM Extraordinary General Meeting FCCB(s) Foreign Currency Convertible Bond(s) FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999, read with rules and regulations
promulgated thereunder and any amendments thereto FII(s) Foreign Institutional Investors as defined under the SEBI (Foreign Institutional
Investors) Regulations, 1995, as amended FIPB Foreign Investment Promotion Board FRP Fair and Remunerative Price GDP Gross Domestic Product
5
Term Description GDR Global Depository Receipt GoI Government of India GW Gigawatt HUF Hindu Undivided Family IEP Integrated Energy Policy IEX Indian Energy Exchange ISIN International Securities Identification Number ISMA Indian Sugar Mills Association KW Kilowatt LIC Life Insurance Corporation of India MPP Merchant Power Plant MW Megawatt MWh Megawatt hour NR Non Resident NRI(s) Non Resident Indian(s) as defined under Foreign Exchange Management (Transfer or
issue of security by a person resident outside India) Regulations, 2000, as amended NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited OCB 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 the FEMA regulations and which was in existence on October 3, 2003 and immediately before such date had taken benefits under the general permission granted to Overseas Corporate Bodies under the FEMA.
p.a. Per Annum PAN Permanent Account Number allotted under the Income Tax Act PPA Power Purchase Agreement RBI Reserve Bank of India Re./`/Rupees/INR Indian Rupees SAP State advised price SDF Sugar Development Fund SEBI Securities and Exchange Board of India SERC State Electricity Regulatory Commission SMP Statutory Minimum Price TCD Tonnes of cane per day UPERC Uttar Prasesh Electricity Regulatory Comission UPPCL Uttar Pradesh Power Corporation Limited
6
NOTICE TO OVERSEAS SHAREHOLDERS The distribution of the Draft Letter of Offer and the issue of our Rights Issue Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession the Draft Letter of Offer may come are required to inform themselves about and observe such restrictions. Our Company is making this Issue of Rights Issue Equity Shares on a rights basis to its Rights Equity Shareholders, and will dispatch the Letter of Offer, the Offering Memorandum and CAF to overseas shareholders who have an Indian address and QIBs who have provided to our Company (and from whom our Company has accepted) a duly executed Investor Representation Letter. Those overseas shareholders who do not update our records with their Indian address or the address of their duly authorized representative in India, prior to the date on which we propose to dispatch the Letter of Offer, the Offering Memorandum and the CAF, shall not be sent the Letter of Offer, the Offering Memorandum and the CAF. No action has been or will be taken to permit the Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with the SEBI for observations. Accordingly, the Rights Issue Equity Shares may not be offered or sold, directly or indirectly, and the Draft Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of the Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, the Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of the Draft Letter of Offer should not, in connection with the issue of the Rights Issue Equity Shares or the Rights Entitlements, distribute or send the Draft Letter of Offer in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. A shareholder shall not renounce his entitlement to any person resident in the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. Neither the delivery of the Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to the date of the Draft Letter of Offer. The contents of the Draft Letter of Offer and the Offering Memorandum should not be construed as legal, tax or investment advice. Prospective investors may be subject to adverse foreign, state or local tax or legal consequences as a result of the offer of Rights Entitlements or Rights Issue Equity Shares. As a result, each investor should consult its own counsel, business advisor and tax advisor as to the legal, business, tax and related matters concerning the offer of Rights Entitlements or Rights Issue Equity Shares. In addition, neither our Company nor any Lead Manager is making any representation to any offeree or purchaser of the Rights Entitlements or Rights Issue Equity Shares regarding the legality of an investment in the Rights Entitlements or Rights Equity Shares by such offeree or purchaser under any applicable laws or regulations. NOTICE TO U.S. SHAREHOLDERS AND U.S. PERSONS The Rights Entitlements and Rights Issue Equity Shares have not been recommended by any U.S. federal or state securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of the Draft Letter of Offer, the CAF or the Offering Memorandum. Any representation to the contrary is a criminal offence in the United States. The Rights Entitlements and Rights Issue Equity Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “US Securities Act”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions
7
thereof, except in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act. The offering to which the Draft Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any Rights Issue Equity Shares or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said Rights Issue Equity Shares or rights. Accordingly, the Draft Letter of Offer or the Offering Memorandumand the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time, except to Qualified Institutional Buyers (as defined in the US Securities Act) who have provided to our Company (and from whom our Company has accepted) a duly executed Investor Representation Letter. None of our Company, the Lead Managers or any person acting on their behalf will accept subscriptions from any person or his agent, if to whom an offer is made, would require registration of this Draft Letter of Offer with the United States Securities and Exchange Commission. The Rights Entitlements and Rights Issue Equity Shares are being offered and sold (i) within the United States to “Qualified Institutional Buyers”, as defined in Rule 144A under the U.S. Securities Act in transactions exempt from the registration requirements of the Securities Act, and (ii) outside the United States in offshore transactions in reliance on Regulation S under the Securities Act, so long as such persons (other than persons in India) have provided to our Company (and from whom our Company has accepted) a duly executed Investor Representation Letter in the form attached to the Offering Memorandum. Neither our Company nor any person acting on behalf of our Company will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who our Company or any person acting on behalf of our Company has reason to believe is in the United States but not a Qualified Institutional Buyer (as defined in the US Securities Act) when the buy order is made or such investor has not provided our Company (or from whom our Company has not accepted) a duly executed Investor Representation Letter in the form attached as Appendix A to the Offering Memorandum. Any person who acquires Rights Entitlements and the Rights Issue Equity Shares will be deemed to have declared, represented, warranted and agreed, (i) that it is either a Qualified Institutional Buyer (as defined in the US Securities Act) or that it is not, and that at the time of subscribing for the Rights Issue Equity Shares or the Rights Entitlements it will not be, in the United States when the buy order is made, and (ii) it is acquiring the rights and the Rights Issue Equity Shares in compliance with all applicable laws and regulations. Our Company reserves the right to treat as invalid any CAF which: (i) does not affirm the certification set out in the CAF; (ii) appears to our Company or its agents to have been executed in or dispatched from the United States but not from a Qualified Institutional Buyer (as defined in the US Securities Act); or (iii) where our Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and our Company shall not be bound to allot or issue any Rights Issue Equity Shares or Rights Entitlement in respect of any such CAF. Notice to GDR holders Our GDRs are listed on the London Stock Exchange and the Luxembourg Stock Exchange. The Depositary for the Equity Shares underlying the GDRs will deal with the rights entitlements corresponding to the GDRs in the manner specified in the offering circular and the deposit agreement, entered into for the issuance of the GDRs.
8
TRANSFER RESTRICTIONS Our Company is making this issue of Rights Issue Equity Shares on a rights basis to its Eligible Equity Shareholders, and the Letter of Offer and CAF will be despatched to Eligible Equity Shareholders. Any person who acquires Rights Entitlements and the Rights Issue Equity Shares (other than QIBs who have provided to our Company (and from whom our Company has accepted) a duly executed Investor Representation Letter) will be deemed to have declared, represented, warranted and agreed with our Company and the Lead Managers that it has received a copy of this Letter of Offer and such other information as it deems necessary to make an informed investment decision and that: (i) it is authorised to acquire the Rights Entitlements and the Rights Issue Equity Shares in compliance with all applicable laws and regulations; (ii) it acknowledges that the Rights Entitlements and the Rights Issue Equity Shares have not been and will not be registered under the US Securities Act or with any securities regulatory authority of any state of the United States and are subject to restrictions on transfer; (iii) it is acquiring the Rights Entitlements and/or Rights Issue Equity Shares in an offshore transaction in compliance with the requirements of Regulation S under the US Securities Act; (iv) it and the person, if any, for whose account or benefit it is acquiring the Rights Entitlements and/or Rights Issue Equity Shares, is not and that at the time of subscribing for the Rights Entitlements and/or Rights Issue Equity Shares, it will not be, in the United States when the buy order is made and it has not and will not subscribe for the Rights Entitlements and/or Rights Issue Equity Shares for the account or benefit of any person in the United Sates or enter into any arrangement for the transfer of such Rights Entitlements and/or Rights Issue Equity Shares or any economic interest therein to any person in the United States; (v) it is not an affiliate of our Company or a person acting on behalf of an affiliate; (vi) if, in the future, it decides to offer, resell, renounce, pledge or otherwise transfer such Rights Entitlements and/or Rights Issue Equity Shares, or any economic interest therein, such Rights Entitlements and/or Rights Issue Equity Shares or any economic interest therein may be offered, sold, renounced, pledged or otherwise transferred only (A) in an offshore transaction complying with Rule 903 or Rule 904 of Regulation S under the Securities Act and (B) in accordance with all applicable laws, including the US Securities Act and the securities laws of the states of the United States; (vii) our Company will not recognize any offer, sale, renunciation, pledge or other transfer of such Rights Entitlements and/or Rights Issue Equity Shares made other than in compliance with the above-stated restrictions; and (viii) it acknowledges that our Company, the Lead Managers, their respective affiliates and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements and agrees that, if any of such acknowledgements, representations and agreements deemed to have been made by virtue of its acquisition of Rights Entitlements and the Rights Issue Equity Shares are no longer accurate, it will promptly notify our Company, and if it is acquiring any of such Rights Entitlements and/or Rights Issue Equity Shares as a fiduciary or agent for one or more accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account.
9
Our Company reserves the right to treat as invalid from any such investor any CAF which: (i) does not affirm the certification set out in the CAF; (ii) appears to our Company or its agents to have been executed in or dispatched from the United States but not from a Qualified Institutional Buyer (as defined in the US Securities Act); or (iii) where our Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and our Company shall not be bound to allot or issue any Rights Issue Equity Shares or Rights Entitlement in respect of any such CAF.
10
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA Unless stated otherwise, the financial data in this Draft Letter of Offer is derived from our financial information which has been prepared in accordance with Indian GAAP. Our financial year commences on October 1 and ends on September 30. In this Draft Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off, and unless otherwise specified, all financial numbers in parenthesis represent negative figures. Except as may be specified otherwise, all financial numbers are represented in Re./`/Rupees/INR and ` in million. Unless stated otherwise, industry data used throughout this Draft Letter of Offer has been obtained from industry publications. 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 we believe that industry data used in this Draft Letter of Offer is reliable, it has not been independently verified.
11
FORWARD LOOKING STATEMENTS We have included statements in this Draft Letter of Offer which contain words or phrases such as “will”, “may”, “aim”, “is likely to result”, “believe”, “expect”, “continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “pursue” and similar expressions or variations of such expressions, that are “forward looking statements”. All forward looking statements are subject to risks, uncertainties and assumptions about us 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, but are not limited to: • Pricing and availability of sugarcane; • Volatility in the sale price of sugar and by-products; • General economic conditions; • Changes in political and social conditions in India; • The outcome of legal or regulatory proceedings that we are or might become involved in; • Contingent liabilities, environmental problems and uninsured losses; • Developments affecting the Indian economy; • Uncertainty in global financial markets. For a further discussion of factors that could cause our actual results to differ, please refer to the sections titled “Risk Factors” on page 12 of this Draft Letter of Offer. 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 us nor the Lead Managers nor any of their respective affiliates or advisors 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 and Stock Exchanges’ requirements, we and Lead Managers shall ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.
12
SECTION II - RISK FACTORS
An investment in equity shares involves a high degree of risk. You should carefully consider all the information in this Draft Letter of Offer, including the risks and uncertainties described below, before making an investment in our Equity Shares. The risks and uncertainties described in this section are not the only risks that we currently face. If any of the following risks, or other risks that are not currently known or are now deemed immaterial, actually occur, our business, results of operations and financial condition could suffer, the price of our Equity Shares could decline, and you may lose all or part of your investment. The financial and other related implications of risks concerned, wherever quantifiable, have been disclosed in the risk factors mentioned below. However, there are risks where the effect is not quantifiable and hence has not been disclosed in the applicable risk factors. We have numbered the risk factors to facilitate ease of reading and reference, and such numbering should not indicate the importance, relative or otherwise, of any risk factor over another.
Investors are advised to read the risk factors described below carefully before making an investment decision in this offering. In making an investment decision, prospective investors must rely on their own examination of our business and operations and the terms of the Issue, including the merits and risks involved. This Draft Letter of Offer also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ from those anticipated in these forward-looking statements as a result of certain factors, including considerations described below and under “Forward Looking Statements” on page 11.
INTERNAL RISK FACTORS
1. We are involved in certain litigation proceedings and we cannot assure you that we will be successful in all of these actions. In the event we are unsuccessful in litigating any or all of the disputes described below, our business and results of operations may be adversely affected.
Our Company and Bajaj Eco Tec Products Limited are party to certain litigations. No assurances can be given that these proceedings will be determined in our favour. If a claim is determined against us, it could have an adverse effect on our results of operations and cash flows. The following is a classification of the material legal proceedings instituted against and by our Company and Bajaj Eco Tec Products Limited and the monetary amount involved, wherever ascertainable:
a. Material proceedings initiated against our Company
Type of cases Number
of cases Quantum
involved (` in million)
Nature of disputes
Civil Litigation 1 NA Writ petition relating to improper waste management at the units at Palia Kalan, Golagokarannath and Khambarkhera
8 31 Land disputes against our Company
Criminal Litigation 47 NA Complaints against irregularity in weighing of sugarcane 4 NA Complaints against irregularities in purchase records and availability of
sugarcane from the reserved area 8 NA Complaints against failure to establish and operate cane purchase
centres 1 3.15 Complaint relating to excessive release of effluents from our
Company’s unit at Golagokarannath 1 NA Labour dispute involving permanent disability of a child labour
Total ascertainable amount 34.15
13
b. Material proceedings initiated by our Company
Type of cases Number of cases
Quantum involved (` in million)
Nature of dispute
Civil Litigation 3 NA Claims in respect of government policies
c. Material proceedings initiated by Bajaj Eco Tec Products Limited
Type of cases Number of cases uantum involved (` in million) Nature of dispute
Civil Litigation 1 NA Claim in respect of an Uttar Pradesh State Government policy
Criminal Litigation 7 3.03 Complaints under section 138 of the Negotiable Instruments Act, 1881
3 0.98 Complaints under sections 406, 415, 418 and 420 of the Indian Penal Code, 1860
Total ascertainable amount 4.01
Note: The amounts indicated in the columns above are approximate amounts.
For further details, please see “Outstanding Litigations and Defaults” beginning on page 305.
2. Our contingent liabilities that have not been provided for in our financial statements may have an adverse impact our financial condition.
The table below sets out our consolidated contingent liabilities that have not been provided for as of December 31, 2010.
Nature of Contingent Liability Not Provided For (` in million)
In respect of disputed demands/claims against the Company not acknowledged as debts:
• Central excise matters 330.8 • Trade tax matters 32.2 • Income tax matters - • Other claims 460.4
A subsidiary has procured imported as well as indigenous capital goods under export promotion and capital goods scheme (“EPCG”). The export obligation pending against such EPCG licenses 281.2
Total 1,104.6
Any or all of these contingent liabilities may become actual liabilities. For details, see “Financial Information” and “Outstanding Litigations and Defaults” on pages 149 and 305, respectively. If these contingent liabilities materialise, our business and financial condition could be adversely affected.
14
3. We are not in compliance with certain financial and other covenants in a number of our loan agreements, which could result in the acceleration of the payment obligations on some or all of our outstanding indebtedness.
As of March 31, 2011, the aggregate outstanding amount of our Company’s indebtedness was approximately ` 58,767.1 million. The agreements governing certain of our Company’s debt obligations include various financial and non-financial covenants. We are not in compliance with some of the financial covenants, and such non-compliance constitutes an event of default under relevant loan agreements. In addition, we are in violation of certain non-financial covenants, including, among others, not seeking the approval of our lenders for undertaking obligations on behalf of our subsidiaries or prior to making investments in our subsidiaries. On account of these financial and non-financial covenant breaches, some of our Company’s total indebtedness is currently in default. As a result, the lenders under each of these respective loan agreements may, at their discretion, accelerate payment and declare the entire outstanding amounts under their respective loan due and payable, and in certain instances, enforce their security which has been constituted over our various assets and take possession of those assets, such as our sugar mills, machinery and current assets, which would adversely affect our liquidity, business and results of operations. In addition, on account of cross-default provisions, our financial and non-financial covenant breaches could result in the cross-acceleration of some or all of our other outstanding indebtedness and payment of penalty interest, which would adversely affect our liquidity, business and results of operations. To date, none of our lenders have accelerated payment of any of our loans; however, such lenders may exercise these rights under our loan agreements at any time. For details, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Financial Indebtedness” on pages 247 and 275, respectively.
4. Our indebtedness, including various conditions and restrictions imposed on us by our financing agreements, could adversely affect our ability to react to changes in our business. Moreover, if we are unable to comply with the terms of our loan agreements, our liquidity, business and results of operations could be adversely affected.
As of March 31, 2011, our Company’s total indebtedness was ` 58,767.1 million. Our substantial indebtedness could, among other things:
• require us to dedicate a substantial portion of our cash flow from operations to payments in respect of our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate expenditures;
• increase our vulnerability to adverse general economic or industry conditions;
• limit our flexibility in planning for, or reacting to, competition and/or changes in our business or our industry;
• limit our ability to borrow or raise additional funds;
• restrict us from making strategic acquisitions, introducing new products or services or exploiting business opportunities; and
• place us at a competitive disadvantage relative to competitors that have less debt or greater financial resources.
15
We cannot guarantee that we will be able to generate enough cash flow from operations or that we will be able to obtain enough capital to service our debt or fund our planned capital expenditures. In addition, we may need to refinance some or all of our indebtedness on or before maturity. We cannot guarantee that we will be able to refinance our indebtedness on commercially reasonable terms or at all. In addition, adverse changes in the business conditions affecting us could cause the amount of refinancing proceeds to be insufficient to meet our interest payments or fully repay any existing debt upon maturity and we may be unable to fund the payment of such shortfalls. If we cannot obtain alternative sources of financing or our costs of borrowings become significantly more expensive, then our results of operations and financial condition will be adversely affected.
Moreover, the agreements governing certain of our debt obligations include terms that, in addition to the financial covenants mentioned above, restrict our ability to make capital expenditures and investments, declare dividends, merge with other entities, incur further indebtedness and incur liens on, or dispose of, our assets, undertake new projects, form a subsidiary, undertake guarantees on behalf of a third party, change our management and board of directors, allow any director on our board of directors who has been identified as a wilful defaulter, materially amend or terminate any material contract or document, prepay any long term debt, require us to hire certain lenders as merchant banks for capital raising activities and modify our capital structure. Pursuant to such agreements, certain of our lenders also have the right to appoint nominee directors on our Board, in case of default. Any failure on our part to comply with these terms in our loan agreements would generally result in events of default under these loan agreements. In such a case, the lenders under each of these respective loan agreements may, at their discretion, accelerate payment and declare the entire outstanding amounts under these loans due and payable, and in certain instances, enforce their security which has been constituted over our various assets and take possession of those assets, which could adversely affect our liquidity, business and results of operations. In addition, to the extent that we cannot make payments on accelerated amounts, such non-payment could result in the cross-default and/or cross-acceleration of some or all of our other outstanding indebtedness, and payment of penalty interest, which could likewise adversely affect our liquidity, business and results of operations.
Internal Risks Related to our Sugar Business
5. Farmers are not required to grow sugarcane and the levels of sugarcane grown in our Cane Area are subject to various uncertainties, which may affect our raw material security. We do not own any land for the cultivation of sugarcane and we purchase all of our sugarcane requirements from approximately 350,000 farmers. Under Indian law, we have an obligation to purchase sugarcane from farmers in areas reserved and assigned to us by the Cane Commissioner, referred to as the “Cane Area”. However, the farmers within our Cane Area have no legal or contractual obligation to cultivate sugarcane and may choose to grow other profitable crops. If the farmers within our Cane Area cultivate other crops, or otherwise limit their cultivation of sugarcane, we may have a shortage of raw material. For example, the increase in the number of farmers who cultivated other crops such as wheat and paddy in the fiscal year 2008 as a result of an increase in prices for wheat and paddy was one of the reasons for the decrease in India’s overall sugar production for that year. Consequently, India’s total sugar production decreased from 26.36 MMT in the fiscal year 2007 to 14.54 MMT in the fiscal year 2008. Low sugarcane realisation, attractiveness of agricultural alternatives or late payments may prompt farmers to shift to alternative crops, threatening our significant investment in assets and infrastructure. Any reduction in the supply of sugarcane will adversely affect our sugar production as well as our production of value added products such as industrial alcohol, ethanol and bagasse-based power generation, and may adversely affect our results of operations and financial condition.
16
6. The sugar industry is heavily regulated in India and change in government policies may adversely affect our business, results of operation and financial condition.
Sugar is considered an essential commodity, and is included within the purview of the Essential Commodities Act, 1955, as amended and consequently, its production, supply and distribution are regulated by the Government of India and state governments. The Government of India can regulate or prohibit the production, supply, distribution, trade and commerce in sugar, if it deems it necessary or expedient for maintaining or increasing supplies, or for securing equitable distribution and availability at fair prices, or for securing any essential commodity for the defence of India or the efficient conduct of military operations. Further, the Government of India may also order any person engaged in the production of an essential commodity, such as sugar, to sell such commodities to the Government of India or the state governments. The decisions of the Ministry of Consumer Affairs of the Government of India can affect the amount of sugar which may be produced in a sugar mill during any year through the regulation of the sale of sugar. Currently, sugar mills may sell 90.0% of the sugar produced from sugarcane as “free sale sugar” in the open market. However, all “free sale sugar” is subject to a monthly release mechanism governed by the Ministry of Consumer Affairs of the Government of India, which determines the aggregate supply of sugar in the market. The remaining 10.0% of a sugar mill’s production from sugarcane, commercially termed as “levy sugar”, is required to be sold as per the directions of the Government of India through fair price shops and the public distribution system at prices notified by the Government of India, which could be below our cost of production. For the fiscal year 2010, the levy sugar requirement was 20.0% of a sugar mill’s production. Any change in applicable governmental or legal policies or the application of the present regulations and policies to our detriment, can adversely affect our business, results of operations and financial condition. The Cane Area allocation, reserved area, Fair and Remunerative Price (“FRP”) mechanism and release mechanisms are all used to regulate the price and supply of sugar at levels that may be unsustainable to our business. We purchase all of the sugarcane that we use in our production of sugar directly from the independent sugarcane growers and sugarcane growers’ societies located in our Cane Area. The State Government of Uttar Pradesh annually declares the sugarcane procurement price where our mills are located which is known as the State Advised Price (“SAP”). The SAP is a minimum price we must pay to farmers for procuring sugarcane. The determination of SAP is not related to the market price of sugar or the recovery rate of sugarcane. Rising SAPs, particularly if sugar prices remain stable or decrease during the same period, may adversely affect our results of operations and financial condition. In addition, various taxes and levies are also imposed on the purchase, use, consumption and sale of sugarcane. The export of sugar is also regulated by the Government of India and it can fix the quantity of sugar that may be exported from time to time. Consequently, changes to state and central regulations could adversely affect our business, results of operations and financial condition.
Value added products in the sugar industry are also heavily regulated. For example, the demand and price of ethanol largely depends on the Government of India’s biofuels policy. The Government of India has mandated Indian oil companies in certain states to blend ethanol in petrol up to 5%. However, the Government of India’s policy may change. If Government regulations mandate oil companies to blend less ethanol in petrol, the demand for ethanol may decrease which may adversely affect our ethanol operations and may have an adverse impact on our results of operations and our profitability.
17
7. Sugarcane grown within our Cane Area may be sold to other users of sugarcane or other sugar manufacturers instead of us, which may reduce the sugarcane available to us and may adversely affect our financial condition and results of operation. We are required by law to purchase sugarcane from farmers within our Cane Area, and farmers are also required by law to sell their sugarcane to the mill to which they have been assigned, although they may file for an exemption. The Cane Area is a stipulated area around a sugar mill in which farmers are required to supply their sugarcane to that particular sugar mill over any other sugar mill, and the sugar mill is required to purchase the sugarcane and make payment to the farmer within 14 days of purchase. Consequently, we work with the farmers within our Cane Area to determine the harvesting schedule of sugarcane. However, farmers may wish to harvest their sugarcane crop earlier than scheduled, which could adversely affect our operations. The early harvest of sugarcane can lead to lower sugar recoveries. Further, if farmers are able to realise a higher price from the sale of sugarcane to other sugarcane users, they may have an incentive to sell sugarcane to other sugarcane users including manufacturers of alternative sweeteners such as jaggery and khandsari, which are forms of crude sugar. Diversion of sugarcane within our Cane Area to the production of jaggery and khandsari reduces the sugarcane available to us and may adversely affect our financial condition and results of operations.
8. The profitability of our business depends significantly on the cost of our primary raw material, sugarcane, and the selling price that we are able to obtain for sugar and value added products of the sugar manufacturing process. We are unable to determine the cost of sugarcane or the selling price for our sugar due to the highly regulated nature of the Indian sugar industry. Rising sugarcane prices could adversely affect our sugar business in the event of a decrease in the selling price of sugar or a reduction in the quantity of sugar permitted to be sold in the open market, which is determined by the Ministry of Consumer Affairs of the Government of India. The wholesale price of sugar has a significant impact on our profits. Like other agricultural commodities, sugar is subject to price fluctuations resulting from weather, natural disasters, crop diseases, domestic and foreign trade policies, shifts in supply and demand and other factors beyond our control. In addition, a significant amount of total worldwide sugar production is traded on commodity exchanges and is thus subject to speculation, which could affect the price of sugar worldwide and our results of operations. Any prolonged decrease in sugar prices could have an adverse effect on us and our results of operations. In addition, other factors such as drawal rates, yield rates, recovery rates from sugarcane and processing, conversion, distribution, warehousing and financing costs can also affect the profitability of our sugar business. Further, a decline in the market prices of value added products of the sugar manufacturing process such as industrial alcohol, ethanol and bagasse-based power generation may adversely affect our results of operations and financial condition.
9. The Cane Commissioner determines the Cane Area on an annual basis and may allot an area to us that is smaller than our requirement and hence our sugar production may be lower than expected, thereby affecting our results of operations.
The Cane Commissioner allots sugar producers a reserved area depending upon several factors including the quantity of sugarcane supplied from such area to sugar producers in the previous year, previous reservation and assignment orders, efforts made by sugar producers in developing the reserved or assigned areas and the crushing capacity of sugar producers. Any additional area assigned to us by the Cane Commissioner is referred to as the “assigned area”, and in aggregate with the reserved area, as the Cane Area. The decision of the Cane Commissioner regarding the estimate of the quantities of sugarcane required by the factories and allocation of
18
Cane Area may be appealed against to the state government, who may revise the same. Further, the Cane Commissioner may also cancel any order reserving or assigning an area, or alter the boundaries of the area so reserved or assigned. Our Cane Area constitutes the total cane areas in which we are obligated to purchase cultivated sugarcane. If there are any changes to our reserved or assigned areas or if we are allotted an area that is insufficient to meet our sugarcane requirement, our sugar production may be lower than expected, thereby affecting our results of operations and financial condition.
10. Adverse weather conditions, crop disease and certain sugarcane crop varieties grown by farmers may adversely affect sugarcane crop yields and sugar recovery rates for any given harvest, in turn adversely affecting our sugar production levels.
Our sugar production depends on the volume and sucrose content of the sugarcane that is supplied to us. Crop yields and sucrose content depend primarily on the variety of sugarcane grown, the presence of any crop disease and weather conditions such as adequate rainfall and temperature, which vary. Adverse weather conditions have caused crop failures and reduced harvests and have resulted in volatility in sugar and industrial alcohol production and consequently in our operating results. Flood, drought or frost can adversely affect the supply and pricing of sugarcane, our primary raw material used in our business. For example, in 2008, severe flooding in certain regions of Uttar Pradesh resulted in a decrease in overall sugarcane crop yield which resulted in a decrease in our overall sugar production. There can be no assurance that future weather patterns, crop disease or the cultivation of certain sugarcane crop varieties will not reduce the amount of sugarcane or sugar that we can recover in any given harvest. Any reduction in the amount of sugar recovered could have an adverse effect on our results of operations.
11. Our results of operations could be adversely affected by a disruption of operations at our sugar mills. Our sugar mills are subject to operational risks, including: • equipment failure or breakdown; • failure to comply with applicable regulations and standards and to maintain necessary licenses; • disruptions in the supply of raw material and/or energy; • continued availability of services of temporary and seasonal employees and external contractors; • labour force shortages or work stoppages; • industrial accidents; and • earthquakes and other natural disasters. The occurrence of any of these risks could significantly affect our results of operations and financial condition.
12. All of our sugar mills are located within Uttar Pradesh, where recovery rates are typically lower than the national average and we may be unable to compete with other domestic sugar mills that achieve higher recovery rates.
All of our 14 sugar mills are located within the state of Uttar Pradesh, which has experienced sugar recovery rates below that of the national average. For the fiscal years 2009 and 2010, the national recovery rate was 10.03% and 10.19%, respectively, as compared with Uttar Pradesh’s average recovery rate of 8.94% and 9.13% for the respective periods. Recovery rates have a direct impact on the sucrose we obtain and our overall sugar production. If recovery rates remain below the national average, we may be unable to compete with other
19
domestic sugar mills that achieve higher recovery rates as we may be unable to produce and sell comparable levels of sugar in the future.
13. Our sugar recovery rates depend upon how efficiently we process sugarcane delivered to us and lower recovery rates will typically lead to lower sugar production. High sucrose levels in sugarcane result in better sugar recovery rates. Sucrose levels are at their highest immediately after harvesting and decrease with the passage of time. Accordingly, our sugar recovery rates depend upon how efficiently we process the sugarcane delivered to us. Any delay in crushing the sugarcane, or any adverse change in the expected volume or delivery schedule of sugarcane being delivered, results in a reduction of sucrose content and as such, adversely affects our business and results of operations.
14. The sugar industry is affected by commodity cycles, which may lead to volatility in our revenues.
The sugar industry has historically been subject to commodity cycles and is sensitive to changes in domestic market prices, supply and demand. The market in India has experienced periods of limited supply, causing sugar prices and industry profit margins to increase, in the absence of imports of sugar. Sugar imports are governed by the Government of India's policy, and the Government of India may waive customs duty on imported plantation white sugar. For example, the Government of India recently waived customs duty on imported refined sugar until June 30, 2011. In addition, the freight costs for import of sugar are also very high. In the event of any changes in import policies and the rationalisation of freight costs, it may be possible to import sugar into India at competitive prices, which may affect our financial condition and profitability. Conversely, years of low production and declining stocks of sugar may be followed by years of excess production that may result in oversupply of sugar to the domestic markets, causing a decline in sugar prices and profit margins. In the past, the Government of India regulations have specifically disallowed the export of sugar. The price of sugar in the global market and Government of India policy would determine whether we could realise higher prices by exporting sugar. For further details on the sugar cycle, see “Industry Overview” on page 92.
15. Our industrial alcohol business exposes us to certain risks, some of which are distinct from those relating to our sugar production operations.
We produce industrial alcohol at the distilleries located at six of our sugar mills. Our industrial alcohol production is dependent on molasses as the principal raw material. The availability of molasses is dependent on the amount of sugarcane that we crush each year. Any constraint in the availability of sugarcane or a decrease in the amount of sugarcane that we crush, for any reason whatsoever, will result in lower quantities of molasses, which would have an adverse effect on our industrial alcohol production and operations. Furthermore, operating distilleries involves many significant hazards that could result in fires, explosions, spills, discharge, leaks, release of hazardous materials, and other unexpected or dangerous conditions, accidents and environmental risks. If such hazards occur at our distilleries, our business and operations could be adversely affected.
16. We may face significant competition in our business from both domestic and international sugar manufacturers, which may adversely affect our profitability.
The sugar industry is highly competitive. Despite increased consolidation, the Indian sugar industry remains highly fragmented. Domestically, we compete with numerous small to medium size producers. Our major
20
competitors in India are sugar producers based in the north Indian state of Uttar Pradesh and nearby states. Our competition in this industry revolves around securing sugarcane. Our competitors are also expanding their capacities and their requirement for sugarcane is likely to increase in the future. As a result, it may become difficult for us to procure enough sugarcane to meet our raw material requirements, which may adversely affect our business and results of operations.
Historically, we have not had substantial competition from imported sugar in India. Imports of sugar into India have been low in the past primarily due to tariff and non-tariff barriers such as transportation costs, lack of suitable storage facilities at ports and quota limits. However, Government policies have changed, and in 2005, the Government reduced the tariff on raw sugar imported for the purposes of refinement to nil. As a result, several domestic sugar manufacturers commenced refining operations using imported raw sugar. In addition, the Government of India recently waived customs duty on all imported raw sugar until June 30, 2011. The Government’s lowering of tariffs and any introduction of additional incentives in relation to the import of raw sugar into India may result in increased competition in the domestic sugar market from foreign sugar producers. This increased competition from imported raw sugar could cause a reduction in domestic sugar prices. Any increased competition or reduction in domestic sugar prices may have an adverse effect on our financial condition and results of operation.
17. Bajaj Eco-Tec Products Limited, one of our subsidiaries, manufactures particle boards and medium-density fibre boards, which exposes us to certain risks, some of which are distinct from those relating to our sugar production operations.
We have established three manufacturing plants for particle and medium-density fibre boards through one of our wholly-owned subsidiaries, Bajaj Eco-Tec Products Limited. These products are made from bagasse. The availability of bagasse is dependent on the amount of sugarcane that is crushed each year. The bagasse supply available for particle and medium-density fibre board production is also affected by the bagasse requirements of our power co-generation facilities. Constraints in the availability of sugarcane, a lower volume of sugarcane crushed or an increase in the bagasse requirements of our power co-generation facilities will result in lower quantities of bagasse available for manufacturing particle and medium density fibre boards. Any reduction in the availability of sugarcane, a corresponding decrease in the volume of sugarcane we crush or any increase in the bagasse requirements of our co-generation power business, would impact our board business raw material security and could have an adverse effect on our income from the particle and medium-density fibre board business.
18. Our medium-density fibre board business faces stiff competition from the organised and unorganised sectors, which may offer their products at highly competitive prices. In the event we are unable to compete effectively with them, our results of operation and financial condition may be adversely affected.
The medium-density fibre board industry in India is highly fragmented, with the majority of the industry constituted by the unorganised sector. The unorganised sector offers their products at highly competitive prices which we may be unable to match. In this business segment, we also face competition from the organised sector. Important factors affecting competition in the organised sector are the ability to introduce innovative products, exclusive designs, product branding, logistic advantages and the extent of distribution network. In the event we are unable to compete effectively in this segment, our results of operations may be adversely affected.
21
19. We face competition from alternative sweeteners, which may have an adverse effect on our results of
operations. We believe that the use of alternative sweeteners, particularly artificial sweeteners such as saccharine and high fructose corn syrup, has impacted the global demand for sugar. Soft drink bottlers and confectioners in many markets have increased consumption of alternative sweeteners. A substantial decrease in sugar consumption or the increased use of alternative or artificial sweeteners could have an adverse effect on our results of operations and financial condition.
20. We have outstanding claims due from the Government based on certain policy incentives from which we expected to benefit and which remain outstanding; if we are not able to benefit from such incentives, our expected results of operations and financial condition could be adversely affected.
The State Government of Uttar Pradesh, with a view to promote growth of the sugar industry, announced The Uttar Pradesh Sugar Industry Promotion Policy, 2004 providing certain fiscal incentives to sugar mills set up in Uttar Pradesh, including reimbursement of certain transportation costs and exemption or reimbursement of certain taxes. The policy was originally announced to be effective until March 31, 2007 and was extended until March 31, 2008. However, the policy was withdrawn by the state government on June 4, 2007 with immediate effect and is no longer available for any sugar mill in Uttar Pradesh. We had already invested significant funds to complete the expansion of several of our sugar mills and distilleries prior to the policy withdrawal date. Accordingly, we proceeded to claim the benefits granted under this policy. For certain of our claims which remained pending, in December 2007 we petitioned the Lucknow Bench of the Allahabad High Court for the granting of such benefits and reimbursements pending with the state government. The High Court directed the state government to grant certain limited exemptions that were applicable to our Company until the day the policy was withdrawn, but we have still not received these benefits and reimbursements. Although we continue to claim other benefits such as exemptions on entry tax, purchase tax and administrative charges, among others, there can be no assurance that our other claims which have not been settled by the state government will be realised in the near future or at all. If we are not able to claim benefits from the incentives upon which we relied in expanding our business, our results of operations and financial condition could be adversely affected.
21. Any disruptions in our transportation or freight arrangements or increase in transportation or freight costs may adversely affect our results of operations.
We typically use third party transportation providers for the supply of our finished goods, such as sugar, industrial alcohol and bagasse boards to our customers. Transportation strikes by members of various Indian truckers’ unions have had in the past, and could have in the future, an adverse effect on our ability to timely and cost-effectively deliver our products. In addition, transportation costs have been steadily increasing. Continuing increases in transportation costs or unavailability of transportation services for our products may have an adverse effect on our results of operations.
22. Our business and results of operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees. Certain of our mills have unions that are registered under the Trade Union Act, 1926. As of March 31, 2011, 17.0% of our total employees were members of unions. We have eleven recognised labour unions at our sugar mills located at Palia Kalan, Golagokarannath and Pratappur. Any reduction in strength of our unionised
22
workforce through voluntary retirement schemes may be subject to consultation with the employee union. While we consider our current labour relations to be satisfactory, there can be no assurance that we will not experience future disruptions to our operations due to disputes or other problems with our work force, which may adversely affect our business and results of operations.
Internal Risks Related to our Power Business
23. We have no track record in developing and operating coal-based power projects, we may be unable to effectively manage the development of such power projects. We currently have no operational coal-based power projects. We currently operate 14 bagasse-based co-generation and / or captive power projects with an aggregate installed capacity of 428.0 MW. However, we have five coal-based power projects under development, which will increase our combined power generation capacity by 450.0 MW and we are also planning to develop two mega coal-based power projects through SPVs with a combined power generation capacity of 3,960.0 MW. We have no track record in implementing and operating coal-based power projects. We may face managerial, technical and logistical challenges during the development of such power projects. Any failure on our part to effectively meet such challenges may have an adverse effect on our business and results of operations. Additionally, such challenges may lead to delays in our development schedules and commencement of commercial operations of one or more of our thermal power projects. Further, disruptions could occur at one or more of our power projects after commercial operations have commenced. Any of the foregoing may have an adverse effect on our business, prospects, results of operations and financial condition.
24. We face considerable execution risks with respect to our coal-based power projects under development and our planned power projects. If we are unable to commence operations of these projects as expected or at all, our business prospects, financial position and results of operations may be adversely affected. We, through our subsidiaries, are currently developing five power projects, aggregating 450.0 MW, and also plan to develop two mega power projects of 1,980 MW each, at Lalitpur and Bargarh. Prior to financial closure or commencing construction, we need certain key approvals from various government entities at the Indian central and state government level. These include memoranda of understanding, letters of intent, approvals for land acquisition, environmental clearances, entering into fuel supply, plant and equipment procurement, or financing agreements. For example: •• We do not have environmental approvals and a detailed project report for our Bargarh Power Project, nor
have achieved financial closure for both of our planned power projects; • We may be unable to acquire sufficient land for our Bargarh Power Project in a timely manner or at all and
may be in breach of our obligations under the PPAs; • We may be unable to identify or correct any defects or irregularities in title to lands upon which we intend
to develop our new projects; • We have provided bank guarantees of up to ` 990.00 million each in relation to our two mega power
projects at Lalitpur and Bargarh, and our failure to implement such projects under the terms agreed with the State Government of Uttar Pradesh may lead to the invocation of such guarantees;
23
•• We have committed to provide at least 26.0% of the equity for our coal-based mega power projects until their commissioning, and such equity contributions will require large amounts of financial resources and may require financing through debt or the issuance of equity; and
• We have not entered into binding arrangements for fuel supply in respect of our planned power projects,
plant and equipment procurement and off-take for the Bargarh power project. We cannot assure you that we will obtain these approvals, consents, memoranda or letters or enter into binding documentation which means that our power projects under development and planned power projects are at risk of being delayed or not proceeding at all. The scheduled completion targets for our power projects are estimates and are subject to delays as a result of, among other things, contractor performance shortfalls, equipment and supply shortages, unforeseen engineering problems, disputes with workers, force majeure events, availability of financing, unanticipated cost increases or changes in scope and inability in obtaining certain property rights, fuel supply and government approvals, any of which could give rise to cost overruns or the termination of a power project’s development. We cannot assure you that all potential liabilities that may arise from delays or shortfall in performance will be covered or that the damages that may be claimed from such contractors shall be adequate to cover any loss of profits resulting from such delays, shortfalls or disruptions. In addition, failure to complete a power project according to its original specifications or schedule, may give rise to potential liabilities and could render certain benefits available under various government statutes, such as deduction of 100.0% of the profits derived from the power generation being unavailable and concession customs duties on imports being unavailable, as a result, our returns on investments may be lower than originally expected.
25. The construction and operation of our power projects may face significant opposition from local communities and other parties, which may adversely affect our results of operations and financial condition. The construction and operation of power projects may face opposition from local communities and special interest groups. In particular, local communities, the forest authorities and other authorities may oppose our operations due to the perceived negative impact that they may have on the environment. Significant opposition by local communities, non-governmental organisations and other parties to the construction of our power projects may adversely affect our results of operations and financial condition.
26. We are dependent on Uttar Pradesh Power Company Limited (“UPPCL”) and its subsidiaries, for the sale of power that we currently produce. Lack of timely payment for supplies made by us or lack of adjustment in power rates may adversely affect our results of operations.
We have entered into power purchase agreements with UPPCL and its subsidiaries in relation to the excess power produced by ten of our co-generation plants, as well as 90.0% of the power to be generated by our five power projects under development. In addition, we have entered into memoranda of understanding and a power purchase agreement with respect to our two mega power projects at Lalitpur and Bargarh, pursuant to which we have agreed to sell 90.0% and 100.0%, respectively, of the power generated at each project to UPPCL and its subsidiaries. UPPCL and its subsidiaries are currently our sole customers for our excess power, and there can be no assurance that UPPCL and its subsidiaries will be able to continue meeting their payment obligations under the power purchase agreements in the future. If any or all of UPPCL and its subsidiaries fail to pay or experience any difficulty paying us for the power we supply, we may not have a commercially viable number of customers for our excess power, which would have an adverse effect on our results of operations and financial condition.
24
In addition, the power rates payable to us for some portion of our power may be based on merchant tariffs, which are currently undetermined. There can be no assurance that such tariffs will be commercially acceptable. Also, the power rates payable to us that are set out in the power purchase agreements are intended to cover our production cost incurred in the generation of electricity; however, the power rates in our power purchase agreements do not take into account certain production costs we may incur or certain increases in our operating expenses, with respect to our co-generation power business. If we incur any significant increase in production costs or operating expenses, and there is no corresponding adjustment in the power rates payable to us under the power purchase agreements, we will achieve a lower rate of return under the power purchase agreements and, our results of operations may be adversely affected.
27. We depend or will depend on various contractors and agencies to construct, develop, operate and maintain our power projects, some of whom supply or will supply sophisticated and complex machinery to us and we are exposed to risks relating to the timing, quality and cost of their services, equipment and supplies.
We depend on the availability of skilled third party contractors for the development, construction, operation and maintenance of our power projects and supply of certain key equipment, including boilers, turbines and generators. We do not have direct control over the timing or quality of services, equipment or supplies provided by these contractors. In addition, as a result of increased industrial development in India in recent years, the demand for contractors with specialist design, engineering and project management skills and services has increased, resulting in a shortage of and increasing costs of such contractors. We cannot assure you that such skilled and experienced contractors will continue to be available at reasonable rates in the areas in which we conduct our operations, and we may be exposed to risks relating to the quality of their services, equipment and supplies. Moreover, we require the continued support of certain original equipment manufacturers to supply necessary services and parts to maintain our power projects at affordable cost. If we are not able to procure the required services or parts from these manufacturers, or if the cost of these services or parts exceeds the budgeted cost, there may be an adverse effect on our business, results of operations and financial condition.
28. Significant increases in prices or shortages of building materials and key equipment could increase our costs of construction for the projects under development and the projects planned by our subsidiaries, which will have an adverse effect on our business, results of operations and financial condition. The costs of construction of our power projects are significantly affected by the availability, cost and quality of raw materials and equipment. The prices and supply of raw materials and equipment depends on factors beyond our control, including general economic conditions, competition, production levels, transportation costs and import duties. Price increases or shortages of raw materials and equipment could adversely affect our ability to develop our power projects in line with our projected budget and we may not be able to complete our power projects as scheduled. Such delays and any applicable penalties may have an adverse impact on our business, results of operations and financial condition.
29. Our power projects will require diverse types of fuel to generate electricity and any failure to acquire such fuels in a timely manner or at competitive prices may have an adverse effect on our business, results of operations and financial condition. Our operational co-generation power projects use coal and bagasse. A key factor in the success of our projects is the ability to source fuel at competitive prices and in sufficient quantities. Our thermal power projects under development and our planned power projects are coal-based power projects. Consequently, the future success of our power business will significantly depend on, among other things, our ability to source coal at competitive prices and from varied sources. Any delay in the delivery of coal for which we are unable to make alternative
25
arrangements in a timely and cost-efficient manner could adversely affect the operations of our power plants, which, in turn, could have an adverse effect on our financial condition, results of operations and business prospects. Moreover, domestic coal allocations are regulated by the Government of India. We cannot assure you that we will be allocated an adequate quantity of coal to satisfy the necessary fuel requirements of our power plants. In addition, we may not be successful in entering into a binding fuel supply agreement in relation to the letters of assurance that we have received for our power projects under development. Further, if we are unable to comply with the conditions laid down in the letter of assurance, the Ministry of Coal may cancel the letter of assurance for fuel supply, which could disrupt the operations of our power plants. General Internal Risks
30. We are involved in litigation regarding the price we paid for sugarcane in previous years and we may be required to pay higher prices for past procurement of sugarcane. Such payments may be significant and could have an adverse affect on our financial condition.
We had challenged the State Advised Price that was previously fixed by the State of Uttar Pradesh and we prevailed on the petitions at the Allahabad High Court which had the effect of reducing our raw material procurement prices for sugarcane during the fiscal years 2007 and 2008. However, the decisions in these matters were appealed by the State Government of Uttar Pradesh before the Supreme Court of India and these appeals are currently pending. If the appeals are successful, we would be liable to pay higher rates accounting for the differential in the SAP paid for the procurement of sugarcane that we acquired during those years, as well as any legal costs associated with our challenge. Such payments may be significant and could have an adverse affect on our financial condition. For details, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Outstanding Litigation and Defaults” on pages 247 and 305, respectively.
31. Increases in interest rates on our borrowings may affect our results of operations, business and financial condition.
As of December 31, our floating rate indebtedness was ` 66,074.7 million, and as of March 31, 2011, our Company had floating interest rate indebtedness of ` 56,431.6 million. The interest rate on our floating rate indebtedness ranges from 4.0% to 13.5% per annum. A significant portion of our secured borrowings are subject to floating interest rates, which exposes us to interest rate risk. Our current debt facilities also include provisions for the periodic reset of interest rates. Further, we do not currently enter into any swap or interest rate hedging transactions in connection with our loan agreements or other agreements. We cannot assure you that we will be able to enter into interest hedging contracts or other financial arrangements on commercially reasonable terms, or whether any such agreements would protect us fully against our interest rate risk. For the fiscal years 2009 and 2010, our interest expense as a percentage of our total expenditure amounted to 12.5% and 10.5%, respectively. Any increase in interest expense may have an adverse effect on our business, prospects, results of operations and financial condition.
32. Our operations are subject to national and state environmental laws and regulations, and any failure to comply with existing and new environmental laws could adversely affect our results of operations. We may also be exposed to liability as a result of our handling of hazardous materials and potential costs for environmental compliance.
Our operations are subject to national and state environmental laws and regulations, which govern the discharge, emission, storage, handling and disposal of a variety of substances that may be used in or result from
26
our operations. We are subject to a Government of India requirement that by 2014, 100.0% of the fly ash produced through our thermal power generation activities, which are currently under development, must be gainfully utilised. We expect to generate a considerable amount of ash in some of our power projects. There are limited options for utilising ash and therefore the demand for ash is currently low. Compliance with this requirement, as well as any future norms with respect to ash utilisation, may add to our capital expenditures and operating expenses. We could be subject to substantial civil and criminal liability and other regulatory consequences in the event that an environmental hazard is found at the site of any of our mills or power projects, or if the operation of any of our mills or power projects results in contamination of the environment. We may also be the subject of public interest litigation in India relating to allegations of environmental pollution by our mills or power projects, as well as incurring potential criminal or civil liability on account of cases initiated by state pollution control authorities. If such cases are determined against us, there could be an adverse effect on our business and operations. We are also subject to Indian laws and regulations concerning the discharge of effluent water and solid particulate matter during our manufacturing processes. We are required to obtain certain clearances and authorisations from government authorities for the collection, treatment, storage and disposal of hazardous waste. The Government may take steps towards the adoption of more stringent environmental regulations and we cannot assure you that we will be at all times in full compliance with these regulatory requirements. Any violation of these regulations may result in fines, criminal sanctions, revocations of operating permits and/or shutdown of our facilities. Due to the possibility of unanticipated regulatory or other developments, the amount and timing of future environmental expenditures may vary substantially from those currently anticipated. We cannot assure you that our costs of complying with current and future environmental laws and our liabilities arising from the release of hazardous substances will not adversely affect our business, results of operations or financial condition.
33. Our inability to successfully implement some or all of our key strategies in a timely manner is likely to have an adverse effect on our business. We intend to improve our market position through the implementation of certain key strategies, which include the following: • achieve greater raw material security; • capitalise on favourable changes in sugar and sugarcane prices; • capitalise on the energy deficit in India; • develop our value-added product capabilities; and • focus on cost control and enhance our operational efficiency. We cannot assure you that we will be successful in implementing any or all of these key strategies. For details, see “Business” on page 115. If we are unable to successfully implement some or all of our key strategies in an effective and timely manner, our business, prospects, results of operations and financial condition may be adversely affected.
27
34. Our inability to successfully manage our growth and diversification could have an adverse effect on our business, results of operations, financial condition and prospects.
Since the implementation of our growth strategy, which involved substantial investments into the expansion of the capacities of our existing sugar mills and industrial alcohol distilleries, as well as the establishment of new sugar mills, industrial alcohol distilleries, power co-generation facilities and factories for the manufacture of particle boards and medium-density fibre boards, we have since made substantial investments in the development of our power business. Our success in managing our growth and diversification and maximising the return from our investments will depend on, among other factors, our ability to successfully manage our financing obligations in relation to these investments, control costs and maintain sufficient operational and financial controls. Furthermore, the expansion and diversification of our business requires significant management attention that would otherwise be available for our core sugar business. Any failure by us to adequately manage our expansion, exercise controls over our different businesses or allocate our managerial resources could have an adverse effect on our overall business, results of operations, financial condition and prospects.
35. We do not own the properties at which our corporate offices and one of our production facilities are located and certain rental arrangements have not been renewed.
Our Company does not own certain parts of land at our sugar mills at Budhana, Utraula and Kundarkhi. Our land in Budhana is subject to a long-term lease arrangement with the State Government of Uttar Pradesh and is valid until 2036. In addition, the State Government of Uttar Pradesh has granted us certain portions of land at our sugar mills in Utraula and Kundarkhi and the execution of these lease agreements is pending. We may be unable to execute these lease agreements in a timely manner or at all, and our property rights pending execution of such agreements may be especially limited. Our Company has entered into leave and license agreements in relation to its corporate office located in Noida, Uttar Pradesh and certain office premises in Mumbai. Such agreements are set to expire between 2011 and 2014. Our Company also entered into rental agreements for three premises in Lucknow which expired between 2003 and 2009. These rental agreements have not been renewed since and our Company continues to pay rent and occupy these premises on a month-to-month basis. There can be no assurance that we will be able to renew our property arrangements on commercially acceptable terms and if such arrangements are not renewed and we are required to vacate the property our production or overall business may be disrupted.
36. Our success depends in large part upon our senior management and key personnel and our ability to attract and retain them and any failure to do so will adversely affect our business and results of operations. We are highly dependent on our senior management and other key personnel. Our future performance will depend upon the continued services of these persons. We may not be able to retain our senior management personnel or attract and retain new senior management personnel in the future. We do not maintain any key man insurance. In addition, certain aspects of our production processes depend upon highly skilled employees. It is possible that in the future we may experience personnel changes and may have difficulty in retaining sufficient numbers of skilled employees. The loss of any of these key personnel may adversely affect our business and results of operations.
37. Accidents at our facilities could lead to property damage, production loss or accident claims.
Any accident in any of our facilities could result in claims being brought against us for damages. As a result, we could suffer reduced production, receive adverse publicity and experience diversion of management
28
attention and resources to defend any such claims. Such an event, if material, could have an adverse effect on our business, results of operations and financial condition. In addition, our power business will require us to work under potentially dangerous circumstances, with highly flammable and explosive materials. Despite compliance with requisite safety requirements and standards, our operations may be subject to the hazards associated with handling of such dangerous materials. If improperly handled or subjected to unsuitable conditions, these materials could hurt our employees or other persons, cause damage to our properties and properties of others and harm the environment. Due to the nature of these materials, we may be liable for certain costs related to hazardous materials, including the cost of health related claims, or the cost of removal or treatment of such substances, including claims and litigation from our current or former employees for injuries arising from their occupational exposure to materials or other hazards at our power plants.
38. The insurance coverage taken by us may not be adequate to protect against certain business risks. This may adversely affect our financial condition and result of operations.
Operating and managing a business involves many risks that may adversely affect our operations, and the availability of insurance is therefore important to our operations. However, to the extent that any uninsured risks materialise or if we fail to effectively cover ourselves against any risks, we could be exposed to substantial costs and losses that would adversely affect our financial condition. In addition, we cannot be certain that the coverage will be available in sufficient amounts to cover one or more large claims, or that our insurers will not disclaim coverage as to any claims. A successful assertion of one or more large claims against us that exceeds our available insurance coverage or that leads to adverse changes in our insurance policies, including premium increases or the imposition of a large deductible or coinsurance requirement, could adversely affect our financial condition and results of operations.
39. We require certain approvals and licenses for executing our projects and operating our business, and any failure to obtain, renew or maintain such licenses or approvals in a timely manner, or at all, may adversely affect our operations. We require certain approvals, licenses, registrations and permissions for executing our projects and operating our business, some of which may have expired and for some of which we may have either made or are in the process of making an application for obtaining the approval or its renewal. For details, see “Government and Other Approvals” on page 326. While we believe we will be able to obtain, maintain and renew such approvals or permits, as required, there can be no assurance that this will take place in the time frames anticipated by us or at all. If we fail to obtain, maintain or renew any of these approvals or licenses, in a timely manner, it may disrupt the schedule of development of our projects, impede the execution of our business plans and may result in an adverse effect on our business and financial condition. Furthermore, our government approvals and licenses are subject to numerous conditions, some of which are onerous and require us to make substantial expenditures. If we fail to comply or a regulator alleges that we have not complied with these conditions, our business, prospects, results of operations and financial condition may be adversely affected.
29
40. We have experienced negative cash flows in prior periods. Any negative cash flows in the future would
adversely affect our results of operations and financial condition.
The table below sets forth our negative cash flows on a consolidated basis for the periods indicated:
(` in million) FY 2009 FY 2010 Three Months
Ended December 31, 2010
Net cash (used in)/ generated from operating activities - (7,592.9) - Net cash (used in)/ generated from investing activities (1,248.2) (9,706.8) (2,220.3) Net cash (used in)/ generated from financing activities (955.2) - - Net (decrease)/ increase in cash and cash equivalents at the end of the year (467.6) - -
If we continue to experience negative cash flows, our results of operations and financial condition may be adversely affected.
41. Some of our Subsidiaries and Group Companies have incurred losses or have had negative net worth during the last three years, some of which do not have any business operations presently.
Some of our Subsidiaries, viz. Bajaj Eco-Tec Products Limited, Bajaj Hindusthan (Singapore) Private Limited, and some of our Group Companies, viz. A.N. Bajaj Enterprises Private Limited, Bajaj Allwyn Realty Private Limited, Bajaj Capital Ventures Private Limited, Bajaj Corp Limited, Bajaj Infrastructure Development Company Limited, Bajaj Trustee Company Private Limited, Bhoomvijay Properties Private Limited, Bhoomipooja Shelters Private Limited, Jagruti Chinni Private Limited, Kalakruti Real Estates Private Limited, KNB Enterprises Private Limited, Kruti Real Estate Private Limited, Megha Khandsari Private Limited, Krishnavijay Agro Products (India) Private Limited, Ambar Shelters Private Limited and SKB Roop Commercial Private Limited have incurred losses during the last three financial years. Bajaj Hindusthan (Singapore) Private Limited and Ambar Shelters Private Limited also had negative net worth during the last three financial years. This may have an adverse effect on our operations and financial performance.
42. We may face conflicts of interest in transactions with related parties.
We have engaged in the past, and may engage in the future, in transactions with related parties, including with our associate companies, directors and their relatives, key management personnel and enterprises that may be significantly influenced by our directors and their relatives or our key management personnel. For details, see “Financial Information” on page 149. Our shareholders, directors, and executive officers may have an interest in pursuing transactions that, in their judgment, enhance the value of their equity investment, even though such transactions may involve risks to the holders of our Equity Shares. We cannot assure you that our directors and executive officers will be able to address these or other conflicts of interests in an impartial manner.
43. There are potential conflicts of interest with our Group Companies which may have an adverse effect on our operations.
Some of our Group Companies, including SKB Roop Commercial Private Limited, Jagruti Chinni Private Limited, KNB Enterprises Private Limited, Megha Khandsari Private Limited, Lambodar Sugars Private
30
Limited and A.N. Bajaj Enterprises Private Limited, are authorised by their respective memoranda of association to undertake operations in the same or similar line of business to that of our Company, which could lead to potential conflicts of interest in the future. There can be no assurance that these companies will not provide comparable services, expand their presence or acquire interests in competing ventures in the locations in which we operate. We are also unable to assure you that our Promoters will not develop their business ventures through these companies and not through our Company. Consequently, a conflict of interest may occur between our business and the business of our Group Companies that could have an adverse effect on our operations. Further, there may be conflicts of interest in addressing business opportunities and strategies where other companies in which our Promoters, our Promoter Group and Group Companies have equity interests are also involved. In addition, new business opportunities may be directed to these affiliated companies instead of us. We may also be prevented from entering into certain businesses which relate to our business and which may be important for our future growth, as our Promoters, members of our Promoter Group or Group Companies may already have interests in such businesses. EXTERNAL RISK FACTORS
44. Our scrip also trades in the F&O segment and we are currently not subject to a daily “circuit breaker” imposed by all stock exchanges in India. There cannot be any assurance that our scrip will continue to remain in F&O segment and circuit breaker will not apply to our scrip
There can be two types of circuit breakers applicable to the stocks listed on the Stock Exchanges (i) daily “price based circuit breaker” which specifies the band within which the price of a particular stock is allowed to move freely; and (ii) index based market wide circuit breaker which applies to a stock at three stages of the index movement either way at 10%, 15% and 20%. While the daily price based circuit breaker is applicable to a stock depending on whether it is traded in the F&O segment, an index based market wide circuit breaker is applicable to all the stocks listed on all the Stock Exchanges. Further, the daily “price based circuit breaker” operates independently of the index based market wide circuit breakers imposed by SEBI on Indian stock exchanges. Our scrip is traded in the F&O segment and we are currently not subject to a daily “price based circuit breaker” imposed by the Stock Exchanges in India, which does not allow transactions beyond specified increases or decreases in the price of the Equity Shares. There cannot be any assurance that our scrip will continue to remain in F&O segment and that the daily “price based circuit breaker” will not apply to our scrip in future. However, the index based market-wide circuit breaker system are still applicable to our scrip and these circuit breakers bring about a coordinated trading halt in trading on all equity and equity derivatives markets across the country. The breakers are triggered by movements in either Nifty 50 or Sensex, whichever is breached earlier. For instance, Stock Exchanges halted trading due to the index-based market-wide circuit breaker on May 18, 2009 after the index crossed the threshold of such circuit breaker. There cannot be any assurance that the Stock Exchanges will not halt trading due to the index-based market-wide circuit breaker in future and closure of, or trading stoppage on, either the BSE or the NSE could adversely affect the trading price of our Equity Shares.
45. Terrorist attacks, communal disturbances, civil unrest and other acts of violence or war involving India and other countries may adversely affect the financial markets and our business. Terrorist attacks and other acts of violence or war may adversely affect the Indian financial markets, on which our Equity Shares are listed and traded, and may also adversely affect the worldwide financial markets. These
31
acts may also result in a loss of business confidence, and adversely affect our business. In addition, any deterioration in relations between India and its neighbouring countries might result in investor concern about stability in the region, which may adversely affect the price of our Equity Shares. India has also witnessed civil unrest, including communal disturbances, in recent years and future civil unrest, as well as other adverse social, economic and political events in India, may have a negative impact on our business and results of operations. Such incidents may also create a greater perception that investment in Indian companies involves a higher degree of risk and may have an adverse impact on our business and the price of our Equity Shares.
46. Political instability and significant changes in Government policy could adversely affect economic conditions in India generally and our business in particular.
Changes in exchange rates and controls, interest rates, Government policies, taxation, social and ethnic instability and other political and economic developments in and affecting India may have an adverse effect on our results of operations.
India has a mixed economy with a large public sector and an extensively regulated private sector. The role of the Government of India and that of the state governments in the Indian economy and their effect on producers, consumers, service providers and regulators has remained significant over the years. Both state and central governments have, in the past, among other things, imposed controls on the prices of a broad range of goods and services, restricted the ability of businesses to expand existing capacity and reduce the number of their employees and determined the allocation to businesses of raw materials and foreign exchange. Since 1991, successive Governments have pursued policies of economic liberalisation, including significantly relaxing restrictions in the private sector. Nevertheless, the role of the Government of India and state governments in the Indian economy as producers, consumers and regulators has remained significant. The current coalition-led Government came into power in May 2009. There can be no assurance that the Government’s past liberalisation policies or political stability will continue in the future. Elimination or substantial change of such policies or the introduction of policies that negatively affect the sugar and power industries could have an adverse effect on our business. Any significant change in India’s economic liberalisation and deregulation policies could disrupt business and economic conditions in India generally and our business in particular.
47. A slowdown in economic growth in India could cause our business to suffer. Substantially all of our assets are located in India and substantial portion of our total income originated from India for the fiscal year 2010 and the three months ended December 31, 2010, respectively. Consequently, our performance and growth are dependent on the health of the Indian economy. Various factors, such as political or regulatory action, including adverse changes in liberalisation policies, social disturbances, terrorist attacks and other acts of violence or war, natural calamities, interest rates, commodity and energy prices, could adversely affect the Indian economy. Any slowdown in the Indian economy may adversely affect our business and financial performance and the price of our Equity Shares.
48. Future issues or sales of our Equity Shares may significantly affect the trading price of our Equity Shares and dilute your shareholding.
A future issue of Equity Shares by us or the disposal of Equity Shares by any of our significant shareholders, or the perception that such issues or sales will occur, may significantly affect the trading price of our Equity Shares. Currently, there are 100 outstanding foreign currency convertible bonds (convertible into approximately
32
2.45 million Equity Shares) issued by our Company. In addition, we have adopted certain ESOPs for our employees, pursuant to which we have allocated options to certain of our employees for our Equity Shares. You will experience dilution upon the issue and allotment of additional Equity Shares upon the conversion of these instruments. There are no restrictions on our ability to issue further Equity Shares, including any securities to the Promoters, other than (i) the agreements to be entered into by certain of our shareholders to not offer, pledge, sell, contract to sell, purchase any option or contract to sell, grant or sell any option, right, contract or warrant to purchase, lend, make any short sale or otherwise transfer or dispose of any Equity Shares for a certain period of time as a result of this Issue, or (ii) any regulatory consent that may be required under applicable law, and there can be no assurance that we will not issue further Equity Shares in the future. The issue or sale of a large number of our Equity Shares by us or any of our significant shareholders, or the perception that such issues or sales may occur, could adversely affect the market price of our Equity Shares.
Any future equity issuances by us, including a primary offering, may lead to the dilution of investors’ shareholdings in our Company. Any future equity issuances by us, or sales of our Equity Shares by our Promoters or other major shareholders, may adversely affect the trading price of our Equity Shares, which may lead to other adverse consequences for us, including difficulty in raising debt. In addition, any perception by investors that such issuances or sales might occur may also affect the trading price of our Equity Shares.
49. Natural calamities could adversely affect the Indian economy, our business and the price of our Equity Shares.
India has experienced natural calamities such as earthquakes, floods, drought and a tsunami in recent years. The extent and severity of these natural disasters determine their impact on the Indian economy. For example, in 2003, many parts of India received significantly less than normal rainfall. Floods in Uttar Pradesh were one of the reasons for lower sugar production in the region where our businesses operate. The growth in the agricultural sector declined to 1.6% in 2009 and was contracted by 0.2% in 2010. (Source: Ministry of Agriculture, Government of India, Annual Report 2009-2010)This was due to the impact of overall deficit of 23% in rainfall during the southwest monsoon, which adversely affected kharif production. Prolonged spells of below or above normal rainfall or other natural calamities could adversely affect the Indian economy and our business.
50. You may be subject to Indian taxes arising out of capital gains.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock exchange held for more than 12 months will not be subject to capital gains tax in India if Securities Transaction Tax (“STT”) has been paid on the transaction. STT will be levied on and collected by a domestic stock exchange on which our Equity Shares are sold. Any gain realised on the sale of equity shares in an Indian company held for more than 12 months that are sold other than on a recognised stock exchange and on which no STT has been paid, will be subject to long term capital gains tax in India. Any gain realised on the sale of listed equity shares held for a period of 12 months or less will be subject to short term capital gains tax in India. Further, Indian tax on capital gains may be relieved under certain tax treaties. For details, see “Statement of Tax Benefits” on page 84.
33
51. Any downgrade of India’s debt rating by an independent agency may adversely affect our ability to raise financing. Any adverse revisions to India’s credit ratings for domestic and international debt by international rating agencies may adversely affect our ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our capital expenditure plans, business, financial condition and the price of our Equity Shares.
52. Depreciation of the Indian rupee against foreign currencies may have an adverse effect on our results of operations.
As of December 31, 2010, we had foreign currency exposures comprising borrowings and other financing arrangements of US$ 211.7 million and JPY 10,233.9 million (` 15,193.5 million), and as of March 31, 2011, our Company had foreign currency exposures comprising borrowings and other financing arrangements of US$ 102.8 million and JPY 9,191.2 million (` 9,553.9 million). Substantially all of our revenues are denominated in Indian rupees. Depreciation of the Indian rupee against the U.S. dollar may increase the Indian rupee cost to us of servicing and repaying our foreign currency borrowings and other financing arrangements, and any such increase may have an adverse effect on our results of operations and financial condition.
53. There is no guarantee that our Equity Shares proposed to be issued will be listed on the BSE and the NSE in a timely manner or at all.
In accordance with Indian law and practice, final approval for the listing of our Equity Shares in the Issue will not be granted until after those Equity Shares have been issued and allotted. Approval will require all other relevant documents authorising the issuing of Equity Shares to be submitted. There could be a failure or a delay in listing our Equity Shares being offered under Rights Issue on the BSE and the NSE. Any failure or delay in obtaining the approval would restrict your ability to dispose of your Equity Shares.
54. If the rate of price inflation in India increases, our business and results of operations may be adversely affected.
In the recent past, due to the global economic downturn, India has experienced fluctuating wholesale price inflation, as compared to historical levels. However, in recent months, India has experience high rates of inflation. An increase in inflation in India could cause a rise in the price of raw materials and wages, or any other expenses that we incur. If this trend continues, we may be unable to accurately estimate or control our costs of production and this could have an adverse effect on our business and results of operations.
55. Our failure to successfully adopt IFRS could have an adverse effect on the price of our Equity Shares. The Institute of Chartered Accountants of India, the accounting body that regulates accounting firms in India, has announced a road map for the adoption and convergence of Indian accounting standards with IFRS. The Ministry of Corporate Affairs of the Government of India, through a press release dated January 22, 2010, has prescribed a roadmap for convergence of Indian Accounting Standards with IFRS. We have not determined with any degree of certainty the impact that such adoption will have on our financial reporting. As there are differences between Indian GAAP and IFRS, there might be substantial differences in our results of operations, cash flows and financial position if we were to prepare our financial statements in accordance with IFRS. As we
34
transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems and internal controls. Moreover, there is increasing competition for the small number of IFRS-experienced accounting personnel available as more Indian companies begin to prepare IFRS financial statements. Prospective investors should consult their own professional advisers for an understanding of the differences between the professional standards applicable in India and IFRS and how such differences might affect the financial information contained in the Draft Letter of Offer. There can be no assurance that our adoption of IFRS will not adversely affect our reported results of operations or financial condition and any failure to successfully adopt IFRS could have an adverse effect on the price of our Equity Shares.
56. Our ability to pay dividends in the future will depend upon our future earnings, financial condition, cash flows, working capital requirements, capital expenditures and restrictive covenants in our financing arrangements. Our future ability to pay dividends will depend on the earnings, financial condition and capital requirements of our Company. Dividends distributed by us will attract dividend distribution tax at rates applicable from time to time. We cannot assure you that we will generate sufficient income to cover our operating expenses and pay dividends to our shareholders, or at all. Our ability to pay dividends could also be restricted under certain financing arrangements that we may enter into. In addition, dividends that we have paid in the past may not be reflective of the dividends that we may pay in a future period. We may be unable to pay dividends in the near or medium term, and our future dividend policy will depend on our capital requirements, financing arrangements, results of operations and financial condition.
Prominent Notes 1. This is an Issue of [●] Equity Shares at a premium of ` [●] per Equity Share for an amount not exceeding `
18,200 million on a rights basis to the existing Equity Shareholders of our Company in the ratio of [●] Equity Share(s) for every [●] fully paid-up Equity Share(s) held by the existing Equity Shareholders on the Record Date.
2. The standalone net worth of our Company as on September 30, 2010 and December 31, 2010 was ` 31,369.6
million and ` 31,942.2 million respectively. The consolidated net worth of our Company as on September 30, 2010 and December 31, 2010 was ` 28,838.1 million and ` 29,624.9 million respectively.
3. Details of related party transactions for the year ended September 30, 2010 (Standalone):
(` in million)
Nature of Transactions Enterprises over which key management personnel and their relatives have significant influence
1. Purchase of Capital Goods 54.6
2. Rent Paid 7.2
3. Equity Share Capital Issued (Including Premium) 756.0
4. Investment Sold 0.2
5. Advance given (Project) 5684.2
35
Details of related party transactions for the three months ended December 31, 2010 (Standalone): (` in million)
Nature of Transactions Enterprises over which key management personnel and their relatives have significant influence
1. Purchase of Capital Goods 0.0 2. Rent Paid 1.8
Details of related party transactions for the year ended September 30, 2010 (Consolidated):
(` in million)
Nature of Transactions Enterprises over which key management personnel and their relatives have significant influence
1. Purchase of Capital Goods 1,239.8 2. Rent Paid 7.2 3. Equity Share Capital Issued (Including Premium) 756.0 4. Investment Sold 0.2 5. Advance given (Project) 6,069.5
Details of related party transactions for the three months ended December 31, 2010 (Consolidated):
(` in million)
Nature of Transactions Enterprises over which key management personnel and their relatives have significant influence
1. Purchase of Capital Goods 1,699.8 2. Rent Paid 1.8
For further details of related party transactions for the year ended September 30, 2010 and three months ended December 31, 2010, please see “Related Party Transactions” on pages 182 - 187, 236 - 240 of this Draft Letter of Offer.
4. There has been no financing arrangement whereby the Promoter Group, the Directors of our Company who are our Promoters and our Directors and their relatives have financed the purchase by any other person of securities of our Company other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of the Draft Letter of Offer with SEBI.
5. Our Company is eligible to make disclosures in the Draft Letter of Offer as per Part E of Schedule VIII of the SEBI Regulations as it is in compliance with the following:
a. our Company has been filing periodic reports, statements and information in compliance with the listing
agreement for the last three years immediately preceding the date of filing this Draft Letter of Offer with SEBI;
b. the reports, statements and information referred to in sub-clause (a) above are available on the website of
any recognised stock exchange with nationwide trading terminals or on a common e-filing platform specified by SEBI;
36
c. our Company has investor grievance-handling mechanism which includes meeting of the Shareholders’ or
Investors’ Grievance Committee at frequent intervals, appropriate delegation of power by the Board of Directors as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.
6. All information shall be made available by the Lead Managers and our Company to the public and investors at
large and no selective or additional information would be available only to a section of investors in any manner whatsoever.
7. The Lead Managers and our Company shall update this Draft Letter of Offer and keep our shareholders / public
informed of any material changes till listing and trading permission in respect of the Rights Issue Equity Shares is received.
37
SECTION III – INTRODUCTION
THE ISSUE The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in “Terms of the Issue” on page 342 of this Draft Letter of Offer.
Rights Issue Equity Shares [●] Equity Shares
Equity Shares outstanding prior to the Issue
228,357,111 Equity Shares
Equity Shares outstanding after the Issue (assuming full subscription for and allotment of the Rights Entitlement)
[●] Equity Shares
Rights Entitlement [●] Equity Share(s) for every [●] fully paid-up Equity Share(s) held on the Record Date
Record Date [●] Face Value per Equity Share `1 each Issue Price per Equity Share `[●] each Terms of the Issue For more information, please see “Terms of the Issue” on page 342 of this
Draft Letter of Offer. Use of Issue Proceeds For further information, please see “Objects of the Issue” on page 66 of
this Draft Letter of Offer. Terms of Payment The full amount of `[●] per Equity Share is payable on application. Note on Outstanding Instruments Global Depository Receipts As on date, 1,600,600 GDRs are outstanding. For details, please see “Notice to Overseas Shareholders” on page 6 of this Draft Letter of Offer. Foreign Currency Convertible Bonds As on date, there are 100 outstanding FCCBs. As per the FCCB Subscription Agreement dated April 26, 2007 between BHSIL and IFC (“FCCB Agreement”), in the event our Company issues Equity Shares by way of a rights issue and the Issue Price is higher than the average market price (average of the high and low closing price of the Equity Shares for the previous ten days on the stock exchange where the Equity Shares are most frequently traded) calculated as of the date of the announcement of the Issue Price, the conversion price of the FCCBs would be adjusted as per the formula provided for in the FCCB Agreement. Consequently, the FCCB holders would not be eligible to participate in the Issue and the conversion price of the FCCBs shall be adjusted accordingly.
38
In case all or part of any such FCCBs are converted into Equity Shares prior to the Record Date, the outstanding issued, subscribed and paid-up share capital of our Company will increase by the additional Equity Shares issued and such holders of the Equity Shares shall be entitled to subscribe to the Issue. Employee Stock Options As on date, 1,100,000 options have been granted and 1,100,000 options have vested. The Remuneration and Compensation Committee of our Company shall, in accordance with the SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 (“SEBI ESOP Guidelines”), formulate the procedure, terms and conditions for making a fair and reasonable adjustment to the number of options and price of stock options.
39
SUMMARY FINANCIAL INFORMATION Summary of Standalone Financial Statements Balance Sheet as at December 31 and September 30 As at As at As at Dec. 31,
2010 Sept. 30,
2010 Sept. 30, 2009
Schedule
Rs. Million Rs. Million
Rs. Million Reviewed Audited Audited I. Sources of Funds: Shareholders' Funds
Capital 1
191.4
191.4
176.9
Equity Warrants
-
-
189.0
Equity Share Suspense
37.0
37.0
-
Stock Options Outstanding
153.0
153.0
-
Reserves & Surplus 2
31,566.8
30,988.2
22,570.8
31,948.2
31,369.6
22,936.7 Loan Funds
Secured Loans 3
51,318.9
44,297.7
19,567.3
Unsecured Loans 4
6,229.4
11,133.6
11,184.2
57,548.3
55,431.3
30,751.5
Deferred Tax Liability
1,008.6
834.3
1,080.4
Total
90,505.1
87,635.2
54,768.6 II. Application of Funds: Fixed Assets 5
Gross Block
65,542.0
65,098.7
34,074.8
Less: Depreciation
11,153.8
10,299.6
7,749.8
40
Net Block
54,388.2
54,799.1
26,325.0
Capital Work in progress
511.8
912.8
1,312.8
54,900.0
55,711.9
27,637.8
Investments 6
11,134.5
11,133.9
5,491.1 Current Assets, Loans & Advances 7
Inventories
16,490.7
19,213.6
8,004.5
Sundry Debtors
2,037.1
1,631.0
285.7
Cash & Bank Balances
5,580.0
4,792.0
1,123.5
Loans & Advances
17,021.5
14,242.1
20,930.5
41,129.3
39,878.7
30,344.2 Less : Current Liabilities & Provisions 8
Current Liabilities
14,738.9
17,169.5
6,830.3
Provisions
1,919.8
1,919.8
1,874.2
16,658.7
19,089.3
8,704.5
Net Current Assets
24,470.6
20,789.4
21,639.7
Total
90,505.1
87,635.2
54,768.6 Significant Accounting Policies and Notes 16
41
Profit & Loss Account for the period ended December 31 and year ended September 30
2010-2011 2009-2010 2008-2009 (3 Months) (12 Months) (12 Months)
Schedule
Rs. Million Rs. Million
Rs. Million Reviewed Audited Audited Income
:
Gross Sales /Income from Operations 9
15,146.0
29,702.7
16,557.5
Less: Excise Duty
389.4
966.7
720.1
Net Sales /Income from Operations
14,756.6
28,736.0
15,837.4
Other Income 10
73.6
1,553.8
2,311.5
14,830.2
30,289.8
18,148.9 Expenditure :
Raw Materials Consumed 11
11,049.8
27,656.4
8,167.6
Manpower Cost 12
400.7
1,468.2
1,208.3
Other Expenses 13
976.9
2,462.7
1,382.8
Interest & Finance charges (Net) 14
1,069.9
3,013.4
1,870.8
Depreciation & Amortization
856.3
2,574.4
2,022.1
(Increase) / Decrease in Stocks 15
(276.3)
(7,435.7)
1,437.3
14,077.3
29,739.4
16,088.9
Profit for the period before Taxation
752.9
550.4
2,060.0 Less: Provision for Taxation:
Current Tax
149.9
163.5
330.9
Deferred Tax (Net)
174.3
31.9
491.1
Wealth Tax
-
1.0
1.0
Fringe Benefit Tax
-
-
5.6
42
324.2 196.4 828.6
Less: MAT credit entitlement
149.9
163.5
330.9
174.3
32.9
497.7
Profit for the period/year
578.6
517.5
1,562.3 Add:
Balance Brought Forward
1,785.8
790.0
65.3
Excess / (Short) provision for tax
-
-
(16.2)
Dividend paid of earlier year
-
(10.2)
- Corporate Dividend Tax on Dividend
paid
-
(1.7)
- Debenture Redemption Reserve (no
longer required)
625.0
750.0
-
2,410.8
1,528.1
49.1
2,989.4
2,045.6
1,611.4 Transfers to:
Reserve for Molasses Storage Tanks
0.6
3.3
1.6
General Reserve
-
100.3
400.0
Debenture Redemption Reserve
-
-
275.0
Proposed Dividend
-
134.0
123.8 Corporate Dividend Tax on Proposed
Dividend
-
22.2
21.0
Balance carried to Balance Sheet
2,988.8
1,785.8
790.0
Basic Earning per Share:
Net Profit
578.6
517.5
1,546.1
Weighted Average No. of Shares*
228,357,111
206,133,823
150,148,207 Basic Earning per Share in Rupees (Face Value Re.
1/- each)
2.53
2.51
10.30 Diluted Earning per Share: Net Profit
43
578.6 517.5 1,546.1
Weighted Average No. of Shares*
228,357,111
206,133,823
164,648,207 Diluted Earning per Share in Rupees (Face Value
Re 1/- each)
2.53
2.51
9.39 * Including equity shares to be issued on
amalgamation.
Significant Accounting Policies and Notes 16
44
Summary of the Consolidated Financial Statements
Consolidated Balance Sheet as at December 31 and September 30 As at As at As at Dec . 31, 2010 Sept. 30, 2010 Sept. 30, 2009 Schedules Rs. Million Rs. Million Rs. Million Reviewed Audited Audited I. Sources of Funds: Shareholders' Funds
Capital 1
191.4
191.4
176.9
Equity Share Suspense
37.0
37.0
-
Equity Warrants
-
-
189.0
Stock option outstanding
153.0
153.0
161.8
Reserves & Surplus 2
29,243.5
28,456.7
20,607.4
29,624.9
28,838.1
21,135.1
Minority interest
2,909.8
2,029.7
650.6 Loan Funds
Secured Loans 3
62,436.3
50,763.8
28,657.8
Unsecured Loans 4
6,229.4
12,733.7
11,904.8
68,665.7
63,497.5
40,562.6
Deferred Tax Liability
1,013.5
838.5
486.1
Total
102,213.9
95,203.8
62,834.4 II. Application of Funds: Fixed Assets 5
Gross Block
69,096.3
68,668.0
52,951.3
Less: Depreciation
12,033.3
11,097.7
10,598.3
Net Block
57,063.0
57,570.3
42,353.0
45
Capital Work in progress
10,629.5
9,306.1
1,548.0
67,692.5
66,876.4
43,901.0
Investments 6
6,939.0
6,939.0
1.2
Current Assets, Loans & Advances 7
Inventories
16,993.4
19,674.3
9,564.4
Sundry Debtors
1,859.9
1,528.7
498.6
Cash & Bank Balances
9,747.5
5,257.7
1,272.7
Loans & Advances
16,084.8
14,351.0
18,593.9
44,685.6
40,811.7
29,929.6
Less : Current Liabilities & Provisions 8
Current Liabilities
15,178.7
17,491.8
9,027.0
Provisions
1,936.0
1,931.5
1,970.4
17,114.7
19,423.3
10,997.4
Net Current Assets
27,570.9
21,388.4
18,932.2
Miscellaneous Expenses (to the extent not written off)
11.5
-
Total
102,213.9
95,203.8
62,834.4 Notes Forming part of the accounts 16
46
Consolidated Profit & Loss Account for the period ended December 31 and year ended September 30 2010-11 2009-10 2008-09 3 Months 12 Months 12 Months
Schedules Rs. Million Rs. Million Rs. Million Reviewed Audited Audited
Income :
Gross Sales /Income from Operations 9
15,863.2
33,048.0
21,152.9
Less: Excise Duty
389.5
1,033.7
893.4
Net Sales /Income from Operations
15,473.7
32,014.3
20,259.5
Other Income 10
81.5
1,392.5
3,075.7
15,555.2
33,406.8
23,335.2 Expenditure :
Raw Materials Consumed 11
11,182.8
32,190.8
10,734.6
Manpower Cost 12
448.1
1,838.9
1,653.3
Other Expenses 13
1,190.7
3,871.6
2,184.4
Interest & Finance charges (Net) 14
1,161.7
3,681.2
2,781.3
Depreciation
936.2
3,440.3
3,456.6
(Increase) / Decrease in Stocks 15
(307.4)
(9,986.7)
1,473.5
14,612.1
35,036.1
22,283.7
Profit/ (Loss) for the year before Exceptional Items & Taxation
943.1
(1,629.3)
1,051.5
Exceptional items:
Surplus on cessation of subsidiary
-
(1,949.3)
-
Profit / Loss for the year before Taxation
943.1
320.0
1,051.5
Less: Provision for Taxation:
Current Tax
150.6
166.0
331.8
Deferred Tax
175.0
(94.0)
446.8
47
Wealth Tax
-
1.1
1.0
Fringe Benefit Tax
-
-
7.8
325.6
73.1
787.4
Less: MAT credit entitlement
150.4
165.2
331.3
175.2
(92.1)
456.1
Profit for the year
767.9
412.1
595.4
Less: Minority interest
-
(28.5)
(22.4)
Income attributed to consolidated group
767.9
440.6
617.8
Add: Balance Brought Forward
(842.6)
(1,761.0)
(1,540.8)
Excess / (Short) provision for tax
(8.1)
(0.3)
(16.2)
Dividend paid of earlier year
-
(10.2)
-
Corporate Dividend Tax on Dividend paid
-
(1.7)
-
Debenture Redemption Reserve (no longer required)
625.0
750.0
-
(225.7)
(1,023.2)
(1,557.0)
542.2
(582.6)
(939.2)
Transfers to:
Reserve for Molasses Storage Tanks
0.6
3.5
2.0
General Reserve
-
100.3
400.0
Debenture Redemption Reserve
-
-
275.0
Proposed Dividend
4.8
134.0
123.8
Corporate Dividend Tax on Proposed Dividend
-
22.2
21.0
Balance carried to Balance Sheet
536.8
(842.6)
(1,761.0) Basic Diluted Earning per Share:
Net Profit
759.8
440.3
601.6
48
Weighted Average No. of
Shares*
228,357,111
206,133,823
150,148,207
Basic Earning per Share in Rupees (Face Value Re. 1/- each)
3.33
2.14
4.01
Diluted Earning per Share:
Net Profit
759.8
440.3
601.6
Weighted Average No. of
Shares*
228,357,111
206,133,823
164,648,207
Diluted Earning per Share in Rupees (Face Value Re 1/- each)
3.33
2.14
3.65
* Including equity shares to be issued on amalgamation.
Notes Forming part of the accounts 16
49
GENERAL INFORMATION
Pursuant to the resolution under section 81 (1) of the Companies Act, approved by our Board of Directors at its meeting held on April 30, 2011, it has been decided to make the following offer to our Equity Shareholders, with a right to renounce: ISSUE OF [●] EQUITY SHARES WITH A FACE VALUE OF `1 EACH AT A PREMIUM OF `[●] PER EQUITY SHARE FOR AN AGGREGATE AMOUNT NOT EXCEEDING `18,200 MILLION ON A RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF [●] EQUITY SHARE(S) FOR EVERY [●] FULLY PAID-UP EQUITY SHARE(S) HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE THAT IS ON [●]. THE ISSUE PRICE IS [●] TIMES THE FACE VALUE OF THE EQUITY SHARES. For further details please refer to “Terms of the Issue” on page 342 of this Draft Letter of Offer. Registered Office of our Company Bajaj Hindusthan Limited Bajaj Bhavan, 2nd Floor 226 Jamnalal Bajaj Marg Nariman Point Mumbai 400021 Tel: +91 22 2202 3626/2284 2110 Fax: +91 22 2202 2238 Website: www.bajajhindusthan.com Email: [email protected] Corporate Office of our Company Bajaj Hindusthan Limited Bajaj Bhawan, B-10 Jamnalal Bajaj Marg, Sector 3 Noida 201 301 Tel: + 91 120 2543 939 Fax: + 91 120 254 3949 Corporate Identification No.: L15420MH1931PLC001797 Address of the Registrar of Companies 100, Everest Marine Drive Mumbai 400002 Maharashtra, India The Equity Shares of our Company are listed on the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. The GDRs are listed on the Luxembourg Stock Exchange and the London Stock Exchange. The FCCBs are not listed.
50
Company Secretary Mr. Pradeep Parakh Group President (GRC) and Company Secretary Bajaj Hindusthan Limited Bajaj Bhavan, 2nd Floor 226 Jamnalal Bajaj Marg Nariman Point Mumbai 400 021 Tel: +91 22 2204 9056/58 Fax: +91 22 2204 8681 Email: [email protected] Compliance Officer Mr. Kausik Adhikari Deputy Company Secretary and Compliance Officer Bajaj Hindusthan Limited Bajaj Bhavan, 2nd Floor 226 Jamnalal Bajaj Marg Nariman Point Mumbai 400 021 Tel: +91 22 2204 9056 / 58 Fax: +91 22 2204 8681 E-mail: [email protected] Lead Managers to the Issue SBI Capital Markets Limited 202, Maker Tower ‘E’ Cuffe Parade Mumbai 400 005 Telephone: +91 22 2217 8300 Fax: +91 22 2218 8332 E-mail: [email protected] Investor Grievance Email: [email protected] Website: www.sbicaps.com Contact Person: Ms. Sylvia Mendonca / Mr. Anish Shrimankar SEBI Registration Number: INM000003531 IDBI Capital Market Services Limited 5th Floor, Mafatlal Centre Nariman Point Mumbai – 400 021 Tel: +91 22 4322 1212 Fax: +91 22 2283 8782 Investor Grievance Email: [email protected]
51
Email Id: [email protected] Website: www.idbicapital.com Contact Person: Mr. Rishi Tiwri / Mr. Subodh Mallya SEBI Registration number: INM000010866 PNB Investment Services Limited 10, Rakesh Deep Building Yusuf Sarai Commercial Complex Gulmohar Enclave New Delhi 110 049 Tel.: +91 11 41035051-55 Fax: +91 11 41035057 Investor Grievance E-mail: [email protected] Email: [email protected] Website: www.pnbsil.com Contact Person: Mr. Narender Thakran SEBI Registration No: INM000011617 Domestic Legal Counsel to the Issue Khaitan & Co One Indiabulls Centre, 13th Floor 841, Senapati Bapat Marg Elphinstone Road Mumbai 400 013 Maharashtra, India Tel: + 91 22 6636 5000 Fax: + 91 22 6636 5050 International Legal Counsel to the Lead Managers Jones Day 3 Church Street #14-02 Samsung Hub Singapore 049483 Tel: + 65 6538 3939 Fax: + 65 6536 3939 Registrar to the Issue Sharepro Services (India) Private Limited Samhita Warehousing Complex 2nd Floor, Sakinaka Telephone Exchange Lane Off Andheri Kurla Road Sakinaka, Andheri (East) Mumbai 400 072 Tel: + 91 22 6772 0300 Fax: +91 22 2859 1568 Investor Grievance E-mail: [email protected]
52
Email: [email protected] Website: www.shareproservices.com Contact Person: : Mr. Kumaresan V / Mr. Satheesh HK Registration Number: INR000001476 Auditors M/s Charturvedi & Shah 714 - 715, Tulsiani Chambers 212, Nariman Point Mumbai 400 021 Tel: + 91 22 3021 8609 Fax: + 91 22 4009 0666 Bankers to the Issue [●] Self Certified Syndicate Banks All Equity Shareholders who hold Equity Shares in dematerialized form may apply in this Issue through the ASBA process. The Equity Shareholders are required to fill the CAF and submit the same to their Self Certified Syndicate Banks (“SCSB”) which in turn will block the amount as per the authority contained in the CAF and undertake other tasks as per the specified procedure. On allotment, the amount would be unblocked and the account would be debited only to the extent required to pay for the Rights Issue Equity Shares allotted. The list of banks that have been notified by SEBI to act as SCSBs for the Applications Supported by Blocked Amount (“ASBA”) Process are available at the SEBI website (URL reference: http://www.sebi.gov.in/pmd/scsb.pdf). Details relating to designated branches of SCSBs collecting the CAF are available at the above mentioned link. For further details on the ASBA process, please refer to details given in CAF and also refer to the section “Terms of the Issue” on page 342 of this Draft Letter of Offer. Investors may please contact the Registrar to the Issue or our Compliance Officer or the Lead Managers for any pre-issue / post-issue related matter such as non-receipt of Abridged Letter of Offer / CAF / letter of allotment / share certificate(s) / credit of allotted shares in the respective beneficiary account / refund orders etc. All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch of the SCSB where the CAF was submitted and the details of the Lead Manager through whom the CAF was submitted (in the event the CAF was submitted through a Lead Manager).
53
Inter-se allocation of responsibilities SBI Capital Markets Limited, IDBI Capital Market Services Limited and PNB Investment Services Limited are the Lead Managers to this issue. The inter-se allocation of responsibilities of Lead Managers is as follows:
S. No. Activity Responsibility Coordinator 1 Capital structuring with the relative
components and formalities such as composition of debt and equity, type of instruments of the Issue in conformity with the ICDR Regulations, undertaking liaison with SEBI and the Stock Exchanges (including obtaining in-principle listing approval), as may be required under the prevailing framework of regulations / rules / guidelines issued by the SEBI and the Stock Exchanges.
Lead Managers SBI Capital Markets Limited
2 Assisting our Company and its legal advisors in drafting the draft and final Letter of Offer; conduct due diligence as may be required on our Company and assist in compliance with regulatory requirements of the SEBI and the Stock Exchanges. The Lead Managers shall ensure compliance with the ICDR Regulations, other stipulated requirements, completion of prescribed formalities with the Stock Exchanges and the SEBI and securing all necessary regulatory approvals for the issue.
Lead Managers SBI Capital Markets Limited
3 Drafting and design of Abridged Offer Document and CAF.
Lead Managers SBI Capital Markets Limited
4 Drafting and design of statutory and non-statutory advertisement / publicity material including newspaper advertisements and brochure
Lead Managers IDBI Capital Market Services Limited
5 Selection of agencies connected with the issue – finalizing printers, advertisement agency, and monitoring agency
Lead Managers SBI Capital Markets Limited
6 Selection of agencies connected with the issue – finalizing banker to the issue (selecting collection centers) and Registrar
Lead Managers IDBI Capital Market Services Limited
7 Institutional marketing strategy which will cover, inter alia: � Finalising the list and division of investors
for one to one meetings; � Finalising road show schedule and
investor meeting schedules; and � Preparation of Investor Presentation and
FAQ’s.
Lead Managers SBI Capital Markets Limited
54
S. No. Activity Responsibility Coordinator 8 Retail / Non-Institutional marketing strategy
which will cover inter-alia, preparation of publicity budget, arrangement for selection of (i) ad-media, (ii) centres of holding conferences of brokers, investors etc., (iii) distribution of publicity and Issue materials including application form and Letter of Offer.
Lead Managers SBI Capital Markets Limited
9 Follow-up with the Bankers to the Issue to get quick estimates of collection and advising such Banks about closure of the Issue, based on the correct figures.
Lead Managers IDBI Capital Market Services Limited
10 Assisting in the listing of the Equity Shares issued pursuant to the Issue on the Stock Exchanges.
Lead Managers IDBI Capital Market Services Limited
11 The post-Issue activities will involve essential follow-up steps, which include finalization of basis of allotment or weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as the Registrar to the Issue, the Bankers to the Issue, and the bank handling refund business. Whilst, many of the post issue activities will be handled by other intermediaries, the designated Lead Manager shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge this responsibility through suitable agreements with the Issuer Company.
Lead Managers IDBI Capital Market Services Limited
Debenture trustee This being an issue of equity shares, a debenture trustee is not required. Issue Schedule
Issue Opening Date: [●] Last date for receiving requests for split forms: [●] Issue Closing Date: [●]
Monitoring Agency Our Company will appoint a Monitoring Agency and update the details thereof, prior to filing the Letter of Offer with the Stock Exchanges. The appointment of the Monitoring Agency is pursuant to Regulation 16 of the SEBI Regulations.
55
Appraisal Reports The Net Proceeds are not proposed to be utilized for any project hence our Company has not obtained any appraisal of the use of proceeds of the Issue by any bank or financial institution. Underwriters [●] Underwriting Agreement Our Company is currently contemplating entering into an underwriting agreement with underwriters for underwriting the Rights Issue Equity Shares. The details of such underwriting agreement, if entered into, shall be included in the Letter of Offer to be filed with the Stock Exchanges pursuant to receipt of SEBI’s observations on this Draft Letter of Offer. Our Company shall ensure that the underwriters appointed shall have sufficient resources to enable them to discharge their underwriting obligations in full. If our Company does not receive minimum subscription of 90% of the Issue including devolvement of underwriting and participation by the Promoters of the undersubscribed portion of the Issue, the entire subscription shall be refunded to the Applicants within 15 days from the Issue Closing Date. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), our Company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act. Principal Terms of Loan and Assets charged as security For details of the principal terms of loans and assets charged as security, please see “Financial Indebtedness” on page 276 of this Draft Letter of Offer.
56
CAPITAL STRUCTURE The capital structure of our Company and related information as on date of this Draft Letter of Offer is set forth below:
Aggregate
Nominal Value (` in million)
Aggregate Value at Issue
Price (` in million)
A. Authorised share capital(1): 1,800,000,000 Equity Shares of Re. 1 each 1,800.00
B. Issued, subscribed and paid up capital(2),(3) 228,357,111 Equity Shares of Re. 1 each fully paid-up 228.36
C. Present Issue in terms of this Draft Letter of Offer* [●] Equity Shares at an Issue Price of `[●] per Equity Share (premium of `[●] per Equity Share)
[●] [●]
D. Issued, subscribed and paid up capital after the Issue (assuming full subscription for and allotment of the Rights Entitlement)
[●] Equity Shares of Re. 1 each fully paid-up [●] E. Securities premium account Before the Issue 24,501.30
After the Issue [●]
*The Issue has been authorized by the Board of Directors under section 81(1) of the Companies Act pursuant resolution dated April 30, 2011
(1) The Authorised Share Capital of our Company increased from `800,000,000 to `1,800,000,000 pursuant to the Scheme of Amalgamation of Bajaj Hindusthan Sugar and Industries Limited with Bajaj Hindusthan Limited with effect from December 20, 2010 under Section 391 to 394 of the Companies Act which was approved by the members at a court-convened meeting held on September 7, 2010 and sanctioned by the Hon'ble High Court of Judicature at Bombay on November 26, 2010.
(2) The paid up capital of our Company increased from `191,357,111 to `228,357,111 pursuant to the Scheme
of Amalgamation of Bajaj Hindusthan Sugar and Industries Limited with Bajaj Hindusthan Limited.
(3) As on date, our Company has 100 outstanding FCCBs, which may be converted into Equity Shares, upon conversion at the discretion of the option holder, during the conversion period. In case all or part of any such FCCBs are converted into Equity Shares prior to the Record Date, the outstanding issued, subscribed and paid-up share capital of our Company will increase by the additional Equity Shares issued and such holders of the Equity Shares shall be entitled to subscribe to the Issue. As on date, 1,600,600 GDRs are outstanding. For details of participation of GDR holders in the Issue, please see “Notice to Overseas Shareholders – Notice to GDR holders” on page 7 of this Draft Letter of Offer.
57
As on date, there are 1,100,000 options which have been granted, 1,100,000 options that are vested and 210,000 options that have been exercised.
As on date, there are no outstanding instruments that are convertible / exchangeable into Equity Shares other than the GDRs, FCCBs and the ESOPs. Notes to the Capital Structure 1. The shareholding pattern of our Company as on March 31, 2011 is as follows: Categ
ory code
Category of Shareholder
Number of
Shareholders
Total number of shares
Number of shares held
in demateriali
zed form
Total Shareholding as a percentage of total No of
shares
Shares pledged or otherwise
encumbered
As a percentage of(A+B)1
As a percentag
e of (A+B+C)
Number of shares
As a percentage
(A) Shareholding of Promoter and Promoter Group 1 Indian
(a) Individuals/ Hindu Undivided Family
6 7,360,896 7,360,896 3.25 3.22 7,358,334 99.97
(b) Central Government/ State Government(s)
0 0 0 0.00 0.00 0 0.00
(c) Bodies Corporate 2 13,118,511 13,118,511 5.79 5.74 0 0.00
(d) Financial Institutions/ Banks
0 0 0 0.00 0.00 0 0.00
(e) Any Others (Specify)
Trust 3 59,489,958 59,057,958 26.24 26.05 35,872,240 60.30 Any Other
Total 3 59,489,958 59,057,958 26.24 26.05 35,872,240 60.30
Sub Total A(1) 11 79,969,365 79,537,365 35.27 35.02 43,230,574 54.06
2 Foreign
58
(a) Individuals (Non-Residents Individuals/ Foreign Individuals)
0 0 0 0.00 0.00 0 0.00
(b) Bodies Corporate 0 0 0 0.00 0.00 0 0.00
(c) Institutions 0 0 0 0.00 0.00 0 0.00 (d) Any Others
(Specify) Any Other
Total 0 0 0 0.00 0.00 0 0.00
Sub Total(A)(2) 0 0 0 0.00 0.00 0 0.00
Total
Shareholding of Promoter and Promoter Group (A)= (A)(1)+(A)(2)
11 79,969,365 79,537,365 35.27 35.02 43,230,574 54.06
(B) Public Shareholding3 1 Institutions
(a) Mutual Funds/ UTI 12 323,788 318,088 0.14 0.14 0 0.00
(b) Financial Institutions /
Banks 15 812,484 804,884 0.36 0.36 0 0.00
(c) Central Government / State Government(s)
1 1,500 1,500 0.00 0.00 0 0.00
(d) Venture Capital Funds 0 0 0 0.00 0.00 0 0.00
(e) Insurance Companies 5 14,642,340 14,642,340 6.46 6.41 0 0.00
(f) Foreign Institutional Investors
70 31,669,327 31,668,827 13.97 13.87 0 0.00
(g) Foreign Venture Capital Investors
0 0 0 0.00 0.00 0 0.00
59
(h) Any Other (specify)
Any Other Total 0 0 0 0.00 0.00 0 0.00
Sub Total B(1) 103 47,449,439 47,435,639 20.93 20.78 0 0.00
2 Non Institutions
(a) Bodies Corporate 1,802 25,102,148 24,785,155 11.07 10.99 0 0.00
(b) Individuals
I
Individual shareholders holding nominal share capital up to `.1 lakh
116,659 31,143,058 29,430,947 13.73 13.64 0 0.00
II Individual shareholders holding nominal share capital in excess of Rs. 1 lakh.
15 6,548,262 5,840,762 2.89 2.87 0 0.00
(c) Any Other (specify) (c-i) Directors /
Relatives 6 28,680 28,480 0.01 0.01 NA NA
(c-ii) Foreign Corporate Bodies
1 24,000 0 0.01 0.01 NA NA
(c-iii) Clearing member 191 354,028 354,028 0.16 0.16 NA NA
(c-iv) Hindu Undivided Families
2,366 1,228,909 1,228,909 0.54 0.54 NA NA
(c-v) Trusts 10 33,384,825 32,884,825 14.72 14.62 NA NA (c-vi) NRI / OCB 1,267 1,523,686 1,508,726 0.67 0.67 NA NA
Any Other Total 3,842 36,544,239 36,005,079 16.12 16.00 0 0.00
Sub Total B(2) 122,318 99,337,707 96,061,943 43.81 43.50 0 0.00
(B)
Total Public Share Holding (B)= B(1) + B(2)
122,421 146,787,146 143,497,582 64.73 64.28 0 0.00
60
Total (A) + (B) 122,432 226,756,511 223,034,947 100.00 99.30 43,230,574 19.06
(C) Shares held by Custodians and against which Depository Receipts have been issued
C1
Promoters and Promoters group
0 0 0 0.00 0 0.00
C2 Public 1 1,600,600 1,600,600 0.70 0 0.00
Total C=C1+C2 1 1,600,600 1,600,600 0.70 0 0.00
GRAND TOTAL (A)+(B)+(C)
122,433 228,357,111 224,635,547 N.A. 100.00 43,230,574 18.93
2. Shareholding of Promoter and Promoter Group:
The shareholding belonging to the category “Promoter and Promoter Group” as on March 31, 2011 is as follows:
Sr. No. Name of the Shareholder
Total Shares held Shares pledged or otherwise encumbered
Number As a % of
grand total (A)+(B)+(C)
Number % of Total shares held
As a % of grand total
(A)+(B)+(C) 1. Kushagra Bajaj 1,787,005 0.78 1,787,005 100.00 0.78 2. Minakshi Bajaj 1,310,250 0.57 1,310,250 100.00 0.57 3. Shishir Bajaj 40,487 0.02 40,487 100.00 0.02 4. Bajaj Holdings And Investment
Ltd 13,068,511 5.72 0 0.00 0.00
5. Bajaj Hindusthan Limited - Employees Welfare Trusts 8,685,718 3.80 0 0.00 0.00
6. Bajaj Auto Limited - Employees Welfare Trusts 432,000 0.19 0 0.00 0.00
7. Bajaj Capital Ventures Pvt Ltd (Formerly known as Anunita Investments Private Limited)
50,000 0.02 0 0.00 0.00
8. Shishir Bajaj 2,562 0.00 0 0.00 0.00 9. Shishirkumar Bajaj 3,988,841 1.75 3,988,841 100.00 1.75
10. Apoorva Bajaj 231,751 0.10 231,751 100.00 0.10 11. Shishir Bajaj Minakshi Bajaj
And Kushagra Bajaj (As Trustee Of Shishir Bajaj Family Trust)
50,372,240 22.06 35,872,240 71.21 15.71
Total 79,969,365 35.02 43,230,574 54.06 18.93 Subsequent to the implementation of a family settlement in the nature of a separation in 2008 the effective control and management of our Company and our group entities have remained with one segment of the Bajaj family, i.e. the Shishir Bajaj group. Entities forming part of the other segment of the Bajaj family are not considered to be a part
61
of our Promoter Group consequent to the said family settlement. However, the shareholding of two entities namely Bajaj Holdings and Investments Limited and Bajaj Auto Limited – Employees Welfare Trust, which hold in aggregate 5.91% of the paid-up equity share capital of our Company, are controlled by the said other segment of the Bajaj family. The shareholding of these two entities is included as part of the shareholding of the Promoter and Promoter Group of our Company. 3. Statement showing the category of “Public” And Holding more than 1% of total no of Equity Shares:
Each person or entity known to our Company, other than the Promoters and Promoter Group entities, which beneficially own more than 1% of the outstanding Equity Shares as on March 31, 2011 is listed below. Each shareholder identified below is both the holder on record and the beneficial owner with sole power to vote and invest the Equity Shares listed next to its name below:
Sr. No. Name of Shareholder Number of Shares Shares as % of Total Number of Shares
1 Life Insurance Corporation Of India 13,674,734 5.99 2 Janus Overseas Fund 12,253,642 5.37 3 Janus Aspen Series Overseas Portfolio 2,612,014 1.14 4 Trustees - BHL Securities Trust 31,100,000 13.62
Total 59,640,390 26.12 4. The statement showing details of convertible instruments as on March 31, 2011 is as follows:
Partly paid-up shares No. of partly paid-up shares
As a % of total no. of partly paid-up shares
Held Promoter / Promoter Group Nil Nil Held by public Nil Nil Total Nil Nil
Outstanding convertible securities No. of outstanding securities
As a % of total no. of outstanding convertible
securities Held Promoter / Promoter Group Nil Nil Held by public 100 100.00 Total 100 100.00
Warrants No. of warrants As a % of total no. of warrants
Held Promoter / Promoter Group Nil Nil Held by public Nil Nil Total Nil Nil Total paid-up capital of our Company, 230,807,061*
62
assuming full conversion of convertible securities *Details of Convertible Instruments:
a) Pursuant to the Scheme of Amalgamation in FY 2010, the FCCBs issued by BHSIL were transferred to the books of our Company. As on date, 100 FCCBs were outstandingFor eligibility of the FCCB holders please refer to the section on “Terms of the Issue” on page 342.
As per the FCCB Subscription Agreement dated April 26, 2007 between BHSIL and IFC (“FCCB Agreement”), in the event our Company issues Equity Shares by way of a rights issue and the Issue Price is higher than the average market price (average of the high and low closing price of the Equity Shares for the previous ten days on the stock exchange where the Equity Shares are most frequently traded) calculated as of the date of the announcement of the Issue Price, the conversion price of the FCCBs would be adjusted as per the formula provided for in the FCCB Agreement. Consequently, the FCCB holders would not be eligible to participate in the Issue and the conversion price of the FCCBs shall be adjusted accordingly.
b) As on date, there are 1,600,600 GDRs outstanding which may be exchanged with 1,600,600 Equity Shares
prior to the Record Date which constitute 0.70% of our Company’s paid-up equity share capital. For eligibility of the GDR holders please refer to section “Notice to Overseas Shareholders – Notice to GDR Holders” on page 7.
The GDRs are listed on the London and Luxembourg stock exchanges.
c) Pursuant to the Scheme of Amalgamation, the ESOPs adopted by BHSIL were transferred to our Company
for the benefit of our employees. As on date, there are 1,100,000 options which have been granted, 1,100,000 options that are vested and 210,000 options that have been exercised. The vesting period for the options is 1 year and the exercise period for the vested options is 7 years. As on date, 280,000 options have lapsed. The Remuneration and Compensation Committee of our Company shall, in accordance with the SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 (“SEBI ESOP Guidelines”), formulate the procedure, terfms and conditions for making a fair and reasonable adjustment to the number of options and price of stock options.
As on date of this Draft Letter of Offer, other than the GDRs, FCCBs and outstanding ESOPs (the details of which are given in this section), there are no instruments or options which would allow any existing shareholder to receive any Equity Shares on a future date. 6. Statement showing details of Locked-in-shares as on March 31, 2011 is as follows:
Sr. No
Name of the shareholder
Category of Shareholders
(Promoters / Public)
Number of locked-in shares
Locked-in shares as a percentage of
total of shares {i.e., Grand Total
(A)+(B)+(C) indicated in
Statement at para
63
(I)(a) above}
1.
Shishir Bajaj, Minakshi Bajaj and Kushagra Bajaj (As Trustees Of Shishir Bajaj Family Trust)
Promoter and Promoter Group Shareholding
14,500,000 6.35
Total 14,500,000 6.35
The above-mentioned 14,500,000 Equity Shares shall be released from lock-in on January 4, 2013. As on March 31, 2011, 43,230,574 Equity Shares held by the Promoter and Promoter Group were pledged. Subsequently on May 2, 2011, 34,897,109 Equity Shares were released. As on date, 8,333,465 Equity Shares held by the Promoter and Promoter Group remain pledged.
7. The Promoters and constituents of the Promoter Group, either by themselves or through a combination of
entities belonging to the Promoter Group, holding Equity Shares in our Company have undertaken to fully subscribe for their Rights Entitlement in the Issue being [●]% of the Issue size. Such persons reserve the right to subscribe to any portion of the Issue, which may remain undersubscribed after allotment pursuant to the exercise of Rights Entitlements by Equity Shareholders of our Company on the Record Date and by the Renouncees. Such subscription and acquisition of the undersubscribed portion of the Issue by the Promoters and Promoter Group, if any, will not result in change of control of the management of our Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. Our Company hereby certifies that the subscription to any undersubscribed portion of the Issue by the Promoters and the Promoter Group, in the manner contemplated above, shall be subject to compliance with Rule 19(2)(b) of the SCRR and clause 40A of the Listing Agreement with respect to the requirement of minimum public shareholding of 25% of the post-Issue paid-up capital of our Company.
8. Our Company proposes to enter into an underwriting agreement, prior to the filing of the Letter of Offer with
the Stock Exchanges, with the underwriters in relation to the Issue. The details of such underwriting agreement, if entered into, shall be included in the Letter of Offer to be filed with the Stock Exchanges pursuant to receipt of SEBI’s observations on this Draft Letter of Offer. Our Company shall ensure that the underwriters appointed shall have sufficient resources to enable them to discharge their underwriting obligations in full.
9. If our Company does not receive minimum subscription of 90% of the Issue, including devolvement of
underwriting obligations of and participation by the Promoters of the undersubscribed portion of the Issue, the entire subscription shall be refunded to the Applicants within 15 days from the Issue Closing Date. If there is any delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), our Company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act.
10. Our Company is in compliance with clause 40A of the listing agreement and is required to maintain public shareholding of atleast 25% of the total number of its listed Equity Shares.
64
11. The details of Equity Shares acquired by the Promoters or Promoter Group in the last one year:
Date of transaction
Details of the transaction Number of Equity
Shares
Remarks
13/08/2010 Shares acquired by: Bajaj Hindusthan Limited Employees Sports and Cultural Activities Welfare Fund
1,385,600 Inter-se-transfer of shares amongst the Promoters through a market transaction
13/08/2010 Shares acquired by: Bajaj Hindusthan Limited Employees Education Welfare Fund
1,228,800 Inter-se-transfer of shares amongst the Promoters through a market transaction
13/08/2010 Shares acquired by: Bajaj Hindusthan Limited Employees Managerial Staff Medical Aid Fund
1,377,100 Inter-se-transfer of shares amongst the Promoters through a market transaction
13/08/2010 Shares acquired by: Bajaj Hindusthan Limited Employees General Medical Aid Fund
635,600 Inter-se-transfer of shares amongst the Promoters through a market transaction
13/08/2010 Shares acquired by: Bajaj Hindusthan Limited Employees Family Planning Welfare Fund
1,377,100 Inter-se-transfer of shares amongst the Promoters through a market transaction
13/08/2010 Shares sold by: Mr. Shishir Bajaj, Mrs. Minakshi Bajaj & Mr. Kuashagra Bajaj (Trustees of Shishir Bajaj Family Trust)
6,004,200 Inter-se-transfer of shares amongst the Promoters through a market transaction
Other than the above, our Promoters and members of the Promoter Group have not acquired any Equity Shares in the last one year.
12. Except as stated on page 62 and 63 of this Draft Letter of Offer, no Equity Shares are subject to lock-in, pledged or encumbered. The present Issue being a rights issue, as per regulation 34(c) of the SEBI ICDR Regulations, the requirement of the promoters contribution and lock-in are not applicable.
13. The capital structure of our Company was restructured pursuant to the Scheme of Amalgamation effective
from December 20, 2010. For further details of the Scheme of Amalgamation, please see “History and Other Corporate Matters” on page 136 of this Draft Letter of Offer.
14. The Issue will remain open for a minimum of 15 days. However, the Board will have the right to extend the
Issue period as it may determine from time to time, in consultation with the Lead Managers, but not exceeding 30 days from the Issue Opening Date.
15. The authorised share capital of our Company during FY 2009-2010 aggregating to ` 800 million was divided
into 300 million Equity Shares and 500 million unclassified shares of Re. 1 each. The Board of Directors reclassified the said unclassified shares into 500 million Equity Shares and the shareholders at the Annual General Meeting held on March 18, 2010 approved the same. Accordingly, the capital clause of the MoA was altered.
65
16. We shall intimate the Stock Exchanges about any transactions in Equity Shares by the Promoter and the
Promoter Group during the period between the date of filing of the Letter of Offer with the Stock Exchanges and the date of closure of the Issue within 24 hours of the transaction.
66
OBJECTS OF THE ISSUE Our Company intends to deploy the Net Proceeds of the Issue to finance the fund requirements for: 1. Repayment / pre-payment, in full or in part, of certain loans availed by our Company; and 2. General corporate purposes. The loans availed by our Company, which are proposed to be repaid / pre-paid, in full or in part, from the Net Proceeds of the Issue, are for activities carried out by us as enabled by the objects clause of our Memorandum of Association. We may have to revise our fund requirements and deployment as a result of changes in commercial and other external factors, which may not be within the control of our management. This may entail rescheduling, revising or cancelling the fund requirements and increasing or decreasing the fund requirements for a particular purpose from its fund requirements mentioned below, at the discretion of our management. Accordingly, the Net Proceeds of the Issue would be used to meet all or any of the uses of the funds described herein. In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other purposes for which funds are being raised in this Issue. The Net Proceeds of the Issue:
(` in millions) Particulars Estimated Amount
Issue Proceeds 18,200 Issue related expenses [●] Net Proceeds of the Issue [●]
We intend to utilise the Net Proceeds of the Issue for financing the objects as set forth below:
(` in millions)
Expenditure Items Amount to be utilized from the Net Proceeds
Repay/prepay, in full or in part, certain loans
17,200
General corporate purposes [●] Total [●]
The requirements of the objects detailed above are intended to be funded from the Net Proceeds of the Issue. Accordingly, our Company confirms that there is no requirement for it to make firm arrangements of finance through verifiable means towards at least 75% of the stated means of finance, excluding the amount to be raised through the Issue.
67
Details of the Objects of the Rights Issue 1. Repayment/prepayment, in full or in part, of certain loans
Our Company has availed of loan facilities from various banks and financial institutions, including certain loan facilities mentioned below with sanctioned amount aggregating to `39,974.9 million as at March 31, 2011 and the amount outstanding under these facilities as at March 31, 2011 aggregating to ` 36,510.6 million.
We propose to utilize an amount of `17,200 million out of the Net Proceeds of the Issue for the repayment/pre-payment, in full or in part, of the outstanding loans.
The following table provides the details of the various loan amounts availed by our Company. Our Company may repay / pre-pay entirely or partially all or any of the loans stated below subject to the maximum of `17,200 million from the Net Proceeds of the Issue:
Name of the
Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
External Commercial Borrowings (Foreign currency loans) ECB Agreement dated December 8, 2006 between Bajaj Hindusthan Limited, ABN Amro Bank N.V., BNP Paribas, Bank of Tokyo-Mistubishi UFJ Limited, Cooperative Centrale Raiffesisen – Boerenleenbank B.A. (Rabobank International) Singapore Branch, DBS Limited and Standard Chartered Bank
General Capital Expenditure, importation of capital goods, refinancing of existing foreign currency loans, new projects, modernization and/or expansion of existing facilities, investment in overseas Subsidiaries and repurchasing
Yen 9,191.2 (`3449.2 million)
Yen 9,191.2 (`4,965.0 million)
All tangible movable property of our Company at its sugar and distilleries located at Golagokarnath and Palia Kalan, and our Company's immovable properties situated at Golagokarannath, Kinauni, Thanabhawan, Budhana, Bilai, together with all building and structures thereon and all plant & machinery
5 years after the weighted average utilisation date, i.e. from the date of availing of the loan
Rate of interest for each loan for each interest period is the percentage rate per annum which is the aggregate of the applicable margin and LIBOR. The present rate of
NA
68
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
of existing FCCBs
attached interest is 0.9975% p.a.
Amended and Restated Loan Agreement dated July 9, 2007 between Bajaj Hindusthan Sugar and Industries Limited and International Finance Corporation (“IFC”)
To be utilized towards the construction of three green field sugar plants, a distillery and expansion of a brown field sugar plant located in India
USD 125 million divided into three parts: Loan A of USD 35 million; Loan B1 of USD 71.50 million and Loan B2 of USD 18.50 million (`5325.7 million)
Total outstanding - USD 87.8 million (`3919.2 million) Loan A – USD 31 million Loan B – USD 42.90 million Loan B2 – USD 13.88 million
a) First ranking charge over the fixed assets of our Company located at its sites in Kundarki, Radauli and Utraula, including the distilleries of such units;
b) First ranking charge over the fixed assets of our Company located at its site in Pratappur;
c) Second ranking charge over the current assets of our Company (other than bank accounts), including receivables and inventories; and
d) First ranking charge over the retention
Loan A to be repaid in 16 installments, Loan B to be repaid in 10 equal istallments and Loan C to be repaid in 16 equal installments
Please see Note 1.
A pre-payment premium of 0.75% for pre-payment between September 15, 2010 and September 15, 2011. In case of pre-payment after September 15, 2011, no pre-payment premium will be charged.
69
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
account created pursuant to the Retention Account Agreement.
Secured Loans (Rupee denominated loans)
Allahabad Bank Sanction Letter dated April 22, 2010 Term Loan Agreement (Hypothecation of Movables) dated June 14, 2010
Term loan for the payment of non- convertible debentures issued to LIC Mutual Fund.
2000.00
2000.00 First pari passu charge by way of hypothecation of all present and future movable assets such as all machinery, plant, tools and accessories of the units located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh. Additionally, first pari passu charge by way of mortgage of the whole immovable fixed assets and properties, both present and future;
Loan is repayable in 14 equal quarterly intallments after moratorium period of 30 months from the date of the first disbursement
Base Rate plus 2.75% p.a. Presently 12.25% p.a.
Prepayment of the term loan may be permitted without prepayment charges subject to at least one month prior notice.
Allahabad Bank
Term Loan for the
1000.00 666.60 First pari passu charge on the
12 equal quarterly
Base Rate plus
Prepayment penalty
70
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
Sanction letters dated March 6, 2009 and March 28, 2009. Term Loan Agreement dated March 30, 2009
payment of short term debentures and normal working capital
movable fixed assets (both present and future) and the immovable property of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
installments commencing 12 months after the first date of disbursement.
4.00%p.a., presently 13.50% p.a.
will be charged at the rate of 1% p.a.
Central Bank of India Sanction Letters dated October 20, 2009 and April 17, 2010 Articles of Association, dated June 14, 2010.
For capital expenditure and repayment of short term loans raised from LIC Mutual Funds through NCDs
2000.00 2000.00 First pari passu charge on the present and future fixed assets of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
10 half yearly installments which will fall due on April 1 and October 1 of every year. Repayment shall begin after a moratorium period of 1 year
BPLR Minus 2%, with annual reset., presently 11.75% p.a.
Pre-payment penalty at the rate of 1% of the outstanding loan amount.
State Bank of Hyderabad Sanction Letter dated May 10, 2010.
Corporate Loan for replacement of existing short term
1000.00 1000.00 First charge on all movable fixed assets located at Golagokarnnath, Palia Kalan,
20 equal quarterly installments of after an initial moratorium of
Base Rate Plus 2.75% p.a., presently
Company to have the option of prepayment at every
71
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
Term loan agreement dated June 14, 2010.
loan and shoring of working capital
Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh, on a pari passu basis with other term lenders.
one year. 11.75% p.a.
interest reset date without any prepayment penalty. Pre-payment at any other occasion will attract a pre-payment penalty of 2% on the amount being pre-paid.
State Bank of Hyderabad Sanction Letter dated April 20, 2009 Agreement of Loan for Overall Limit dated August 17, 2009
Corporate loan for normal capex and shoring up of working capital. Our Company is required to submit a certificate from a chartered accountant in confirmation of the end use of the funds.
500.00 458.33 First pari passu charge on immovable properties of our Company, comprising of land and building, present and future, located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, Uttar Pradesh.
To be repaid in 12 quarterly installments after an initial moratorium period of one year from the date of first disbursement. Interest debited to be serviced monthly by our Company.
Base Rate Plus 3.25% p.a., presently 12.25% p.a.
Company to have the option of prepayment at every interest reset date without any prepayment penalty. Pre-payment at any other occasion will attract a pre-payment penalty of 1% on the amount being pre-paid.
72
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
Oriental Bank of Commerce Sanction Letter dated April 19, 2010 and letter dated July 14, 2010 Agreement of Term Loan dated July 21, 2010, Common Agreement dated July 21, 2010
Corporate loan for the repayment of existing short term loan and shoring of net working capital
2000.00 2000.00 First pari passu charge on all the existing and future fixed assets of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
60 monthly installments with the first installment payable in August 2011.
Base Rate Plus 2.00% p.a. with monthly rests, presently 11.50% p.a.
NA
Canara Bank Sanction letter dated June 23, 2010, July 20, 2010 and August 27, 2010 Agreement for term loan dated September 9, 2010
Short term loan to augment the long term working capital of our Company.
2000.00 2000.00 All fixed assets of our Company, present and future, including equitable mortgage of factory, land and building, hypothecation of plant and machinery, furniture and fixtures, capital work in progress.
20 equal quarterly installments after the moratoriam period of 1 year from the date of the first disbursement
Base Rate Plus 3.00% p.a., presently 12.50% p.a.
Prepayment penalty of 2% if prepaid by way of takeover by other bank/ Financial Institution (s) and 1% if prepaid from internal accruals before the expiry of 2 years, with a minimum prior intimation of 30 days
73
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
.
Bank of Baroda Sanction Letter dated June 24, 2010 and July 7, 2010 Agreement for term loan dated August 16, 2010
Corporate loan for the payment of short term loan raised by our Company from LIC Mutual Fund
2000.00 2000.00 First pari-passu charge on all the tangible movable plant and machinery and movable fixed assets, together with spares, tools, accessories, and other movables both present and future, and all the furniture and fittings and office equipment located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
20 quarterly installments with the first installment due on June 30, 2011
Base Rate plus 2.50% p.a., presently 12.00% p.a.
Company is allowed pre-payment without prepayment of monthly charges subject to one month prior notice and from internal accruals.
Bank of India Sanction letters dated May 10, 2010 and July 17, 2010 and September 25, 2010. Term Loan Agreement, undertakings from our Company and Agreement for the Term Loan and the
Repayment of non-convertible debentures
2000.00 2000.00 First pari passu charge over the fixed block of our Company including plant and machinery, furniture and fixtures, equipment, weighing scales, electronic fittings.
10 half yearly installments commencing 1 years after the date of the first disbursement
3% above the Banks’s base rate with monthly rests, presently 12.50% p.a.
NA
74
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
Hypothecation of Movable Asstets/Goods/Property/ Plant and Machinery dated September 25, 2010 Bank of India Sanction letter dated May 14, 2009 and letter dated September 24, 2010 Term Loan Agreement dated July 8, 2009
To replace short term loans raised for expansion with long term loans
2000.00 1333.27 Pari passu charge on immovable properties (both present and future) and the fixed assets of the sugar units of our Company, including in particular plant and machinery, fixtures and fittings, office equipments, vehicles, weighing scales, electrical fittings etc., located at the premises of our Company at Thanabhawan, Bilai, Budhana, Gangnauli, Kinauni, Khambarkhera, Palia, Barkheda, Golagokarnnath, Maqsoodapur all in Uttar Pradesh.
6 half yearly installments commencing from 12 months after the first date of disbursement. Door to door tenure of 4 years
3% above the Banks’s base rate, with monthly rests, presently 12.50% p.a.
NA
IDBI Bank Limited Sanction Letters dated May 29, 2010 and August 4, 2010
Refinancing short term loans availed by our Company
2000.00 1800.00 First charge on all immovable properties of our Company, on pari passu basis with existing charge
16 equal quarterly installments commencing 1 years from the date of the first
IDBI BPLR minus 1.75% p.a., presently
Pre-payment premium of 1% p.a. on the outstandin
75
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
Loan Agreement dated October 26, 2010
holders, except those specific assets charged to specific lenders.
disbursement 12.25% p.a.
g loan to be prepaid, up to the maturity / reset / put and call option date
State Bank of Patiala Sanction letter dated June 1, 2010 and August 29, 2010 Agreement dated June 28, 2010
Corporate Loan
1000.00 1000.00 Primary – 1st charge on pari-passu basis on the entire immovable properties (present and future) of our Company. Collateral – 2nd pari-passu charge on current assets.
Repayable in 12 quarterly installments.
2.75% above Base Rate, with annual reset from the date of first disbursement), presently 11.75% p.a.
In case of pre-payment of loan, penal interest at the rate of 2% on the amount pre-paid would be charged. However, no penal interest would be levied in case our Company proposes to repay loan amount at the time of reset of interest rate if the proposed rate of interest is not acceptable to our Company.
76
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
Corporation Bank Sanction letter dated June 1, 2010 Agreement for Term Loans dated June 17, 2010
Term loan to part finance the capex of our Company incurred or to be incurred during the period of October 2008 to September 2010 The Loan proceeds to be utilized for the repayment of short term loans availed of from LIC Mutual Funds and IDBI Bank Limited and the balance amount towards capital expenditure
2000.00 1500.00 First pari passu charge on the entire movable fixed assets of our Company (both present and future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Not to exceed 72 months including an initial moratorium period of 12 months. To be paid in 20 quarterly installments commencing from August 2011.
Base Rate plus 3.25% p.a., presently 12.65% p.a.
Pre-payment penalty of 1% on the amount prepaid for the balance tenure of the loan.
Corporation Bank Sanction letter dated May 28, 2009 and modification dated June 3, 2009 Agreement dated June
Corporate loan to repay short term loans of our Company and augment the liquidity
2000.00 1666.60 First pari passu charge over the immovable property of our Company, including land, building (both present and
To be repaid in12 quarterly installments after initial moratorium of 12 months. The first installment commences
Base Rate Plus 3.25% p.a., presently 12.65% p.a.
Pre-payment is subject to the pre-payment penalty of 1%p.a. on the
77
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
9, 2009 position future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
from November 2010.
outstanding amount. Prepayment Penalty is waived if the loan is paid pout of internal accruals
Punjab National Bank Agreement for the Hypothecation of Assets and Term Loan Agreement, both dated March 16, 2009
Repayment of short term loans and NCDs
3500.00 2624.93 First pari-passu charge on the movable assets /block asset of our Company and mortgage of immovable properties of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
12 equal quarterly installments after a moratorium period of one year, including 11 quarterly installments and the balance to be paid in the last installment
Base Rate Plus 3.50% p.a., presently 13.00% p.a.
Prepayment charges at the rate of 2% shall be levied if the term loan is repaid before 2 years.
Bank of Rajasthan Limited Sanction Letter dated October 9, 2009
To meet working capital requirements capex and repayment obligation
700.00 466.67 First pari passu charge on all our Company’s immovable property comprising of land and building,
Repayment in 24 months including 1 year moratorium period i.e. 1/3rd after 12 months, 1/3rd after 18
5.00% below the BPLR, presently 11.75% p.a.
NA
78
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
both present and future, located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and of Maqsoodapur, all located in Uttar Pradesh.
months and 1/3rd after 24 months.
State Bank of Mysore Corporate Loan vide sanction letters dated May 25, 2009, June 29, 2009 and August 18, 2009 Agreement of Loan for Overall Limit dated August 20, 2009
General corporate purposes
500.00 422.50 First pari passu charge on the immovable property of our Company comprising of land and building (present and future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Loan to be repaid in 12 ballooning quarterly installments (after a moratorium period of one year from the date of the disbursement.
1.50% below SBMPLR (floating) with a minimum of 11.00% p.a. (Interest to be serviced monthly), presently 12.00% p.a.
NA
State Bank of India Sanction letter dated April 28, 2009 Agreement dated May 23, 2009
Corporate loan for general corporate purpose
3000.00 2687.60 Primary: 1st pari passu charge on the entire fixed assets of our Company with other term lenders by way of
Installments payable every three months from October 31, 2010 to July 31, 2013. Additionally,
Base rate Plus 3% p.a., presently 11.25% p.a.
NA
79
Name of the Lender and nature and date of the loan
agreement
Purpose Of the loan
Amount Sanctione
d and availed
(in ` million)*
Amount Outstanding on March 31, 2011 (in ` million)*
Security Repayment Date/ Schedule
Rate of Interest
Prepayment
Penalty (if any)
hypothecation of the whole of the present and future fixed assets of our Company including mortgage by deposit of title deeds of all immovable properties of our Company. Collateral: 2nd charge on entire current assets of our Company on pari passu basis with other term lenders.
the last installment is payable on September 20, 2013.
*As certified by the Auditors vide their certificate dated May 16, 2011. Further, the Auditors have confirmed that, our Company has substantially utilised the above said loan amounts for the purposes for which the loans were availed. The certificate also confirms (a) the conversion price to be ` 37.53 for 100 Yen, and ` 42.61 for 1 USD as on date of disbursement of the respective foreign currency loans (b) the conversion price to be ` 54.02 for 100 Yen, and ` 44.65 for 1 USD as per the RBI reference rate as on March 31, 2011. Notes:
Note 1:
The applicable interest rate shall be the sum of the interest rate applicable to each Loan A, Loan B1 and Loan B2, which is: Loan Prior to the
financial project completion
After the financial project completion
Conditions applicable on the Interest Rate
Loan A 1.6% p.a 2.25% p.a. The interest rate may be adjusted downwards to the following levels to the extent that the current ratio is equal to or greater than 1.3:1 and the Net Long-term Debt to EBITDA Ratio is:
80
Loan Prior to the financial project completion
After the financial project completion
Conditions applicable on the Interest Rate
a) less than or equal to 2.0:1, in which case the relevant spread shall be 1.75% per annum; and
b) greater than 2.0:1 but less than or equal to 2.5:1, in which case the Relevant Spread shall be 2% per annum,
adjusted annually after the date of the financial project completion.
Loan B1 1.25 % p.a. 1.75% p.a. The interest rate may be adjusted downwards to the following levels to the extent that the Current Ratio is equal to or greater than 1.3:1 and the Net Long-term Debt to EBITDA Ratio is: a) less than or equal to 2.0:1, in which case the
relevant spread shall be 1.25% per annum; and b) greater than 2.0:1 but less than or equal to 2.5:1,
in which case the Relevant Spread shall be 1.5% per annum,
adjusted annually beginning on the interest payment date immediately following the delivery of the audited financial statements of our Company to IFC.
Loan B2 1.6 % 2.25% The interest rate may be adjusted downwards to the following levels to the extent that the Current Ratio is equal to or greater than 1.3:1 and the Net Long-term Debt to EBITDA Ratio is: a) less than or equal to 2.0:1, in which case the
relevant spread shall be 1.75% per annum; and b) greater than 2.0:1 but less than or equal to 2.5:1,
in which case the Relevant Spread shall be 2% per annum,
adjusted annually after the financial project completion date beginning on the date on which the interest is due, when audited financial statements for the relevant financial year in have been delivered to IFC by our Company.
Additionally, the interest rate applicable shall be LIBOR on the second business day prior to the beginning of each interest period, rounded upward to the nearest three decimal places. Each interest period is six months. The agreement further stipulates that the determination of the interest rate by IFC, from time to time, shall be final, conclusive and binding on our Company.
Out of the Net Proceeds of the Issue, we may repay or prepay, in full or in part, outstanding loans to any combination of the above Banks or Financial Institutions, without any obligation to any particular Bank. Our Company may repay loans which have been availed from State Bank of India, Punjab National Bank and IDBI Bank Limited, each of which are associates / affiliates of the Lead Managers. Some of our loan agreements proposed to be repaid from the Net Proceeds provide for the levy of pre-payment penalties or premium in certain cases. We will take such provisions into consideration in repaying
81
and/or pre-paying our debt from the Net Proceeds of the Issue. Payment of such prepayment penalty or premium, if any, shall be made by our Company out of the Net Proceeds of the Issue. In the event the Net Proceeds of the Issue are not sufficient for the said payment of prepayment penalty / premium, our Company shall make such payment from its internal accruals. We may also be required to provide notice to some of our lenders prior to repayment and / or pre-payment. On receipt of the Issue proceeds, we would initiate discussions with the above banks for reduction / waiver of the pre-payment penalty clause, and accordingly take decision in the best interests of our Company. For further details of the above loan facilities availed by our Company, please see “Financial Indebtedness” on page 276.
2. General corporate purposes
Our Company intends to utilize the balance Net Proceeds aggregating ` [●] million towards general corporate purposes including but not restricted to, corporate overheads, finance and general administrative costs, meeting exigencies which our Company in ordinary course of business may face, or any other purposes as may be approved by the Board of Directors.
Schedule of Utilisation of Funds The selection of loans proposed to be repaid and/or pre-paid from our loan facilities provided above shall be based on various factors including, (i) any conditions attached to the loans restricting our ability to repay/ pre-pay the loans, (ii) receipt of consents for pre-payment or waiver from any conditions attached to such pre-payment, from the respective lenders, (iii) terms and conditions of such consents and waivers; (iv) levy of any pre-payment penalties (v) provisions of any law, rules, regulations governing such borrowings; and (vi) other commercial considerations. Based on these considerations, our estimated schedule of utilisation of the Net Proceeds of the Issue is set forth below:
Particulars Estimated Net Proceeds utilization (` in millions) March 31, 2012
Repayment / Prepayment in full or in part of certain loans
17,200
General corporate purposes [●] Total [●]
Our Company proposes to repay / pre-pay the loan funds at the earliest from the date of receipt of Issue proceeds.
Issue Related Expenses The expenses of this Issue include, among others, management fees, printing and distribution expenses, legal fees, advertisement expenses and listing fees etc. The estimated Issue expenses are as follows:
Particulars Amount (` in millions)
As percentage of total expenses
As a percentage of Issue size
Fees payable to intermediaries including Lead Managers and Registrar to the Issue
[●] [●] [●]
Underwriting Commission [●] [●] [●] Fees payable to SCSBs for processing ASBA forms [●] [●] [●] Advisors and Statutory Auditors [●] [●] [●]
82
Bankers to the Issue [●] [●] [●] Others: [●] [●] [●] - Printing and stationery [●] [●] [●] - Listing fees [●] [●] [●] - Others [●] [●] [●] Total estimated Issue expenses [●] [●] [●] Appraisal Report The Net Proceeds are not proposed to be utilized for any project hence our Company has not obtained any appraisal of the use of proceeds of the Issue by any bank or financial institution. Interim use of funds The management of our Company, in accordance with the policies established by our Board from time to time, will have flexibility in deploying the Net Proceeds. Pending utilization for the Objects of the Issue described above, we intend to temporarily invest the funds in high quality interest/dividend bearing liquid instruments including investments in mutual funds, deposits with banks and other investment grade interest bearing securities or deploy the Net Proceeds of the Issue to temporarily reduce our exposure to working capital borrowings from banks and financial institutions, which amounts will be redrawn as and when necessary to meet expenditure towards the objects of the Issue. Such interim use of funds would be in accordance with investment policies approved by our Board from time to time. Our Company confirms that pending utilization of the Net Proceeds it shall not use the funds for any investments in the equity markets. Bridge Financing Facilities Our Company has not raised any bridge loans from any bank or financial institution as on the date of this Draft Letter of Offer, which are proposed to be repaid from the Issue Proceeds. Monitoring of the utilization of funds Our Company has appointed [●] as the monitoring agency, to monitor the utilization of the Net Proceeds. Our Company will disclose the utilization of the Net Proceeds under a separate head along with details, if any in relation to all such Issue Proceeds that have not been utilised thereby also indicating investments, if any, of such unutilized Issue Proceeds in our Company’s financial statements for the relevant Financial Years commencing from Financial Year 2011. Pursuant to clause 49 of the Listing Agreement, our Company shall on a quarterly basis disclose to the Audit Committee the uses and applications of the Net Proceeds of the Issue. On an annual basis, our Company shall prepare a statement of funds utilised for purposes other than those stated in this Draft Letter of Offer and place it before the Audit Committee. Such disclosure shall be made only until such time that the Net Proceeds of the Issue have been utilised in full. The statement shall be certified by the statutory auditors of our Company. Furthermore, our Company shall place before the Audit Committee the Monitoring report of the Monitoring Agency, upon receipt, without delay. The Audit Committee shall make appropriate recommendations to the Board to take steps in the appropriate manner. Furthermore, in accordance with clause 43A of the Listing Agreement our Company shall furnish to the Stock Exchanges on a quarterly basis, a statement including material deviations if any, in the utilisation of the proceeds of
83
the Issue from the objects of the Issue as stated above. This information will also be published in newspapers simultaneously with the interim or annual financial results, after placing the same before the Audit Committee. Other Confirmations No part of the Issue Proceeds will be paid by our Company as consideration to the Promoters, the Directors, our Company’s key management personnel or companies promoted by the Promoters, except in the usual course of business.
84
STATEMENT OF TAX BENEFITS To The Board of Directors, Bajaj Hindusthan Limited, 2nd Floor, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai - 400021 Dear Sirs, We hereby certify that the enclosed annexure states the possible tax benefits/ consequences available to Bajaj Hindusthan Limited (‘Bajaj Hindusthan Limited’ or the ‘Company’) and to its shareholders under the Income Tax Act, 1961 and the Wealth Tax Act, 1957, presently in force in India. The benefits outlined in the statement will be dependent upon the Company or its shareholders fulfilling the conditions prescribed under the relevant provisions of the statue. Hence, the ability of the Company or its shareholders to derive the tax benefits will be dependent upon such conditions being fulfilled. Additionally, in respect of the Company benefits listed, the business imperatives faced by the Company in the future will also affect the benefits actually claimed. The benefits discussed in the enclosed annexure are not exhaustive in nature. This annexure 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 and the changing tax laws, each investor is advised to consult his or her 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: i) the Company will continue to avail these benefits in future; or ii) the Company’s shareholders will avail these benefits in future; or iii) the conditions prescribed for availing the benefits have been / would be met with. The contents of the enclosed statement are based on information, explanations and representations obtained from the Company which are based on their understanding of the business activities and operations of the Company and our views are based on an interpretation of the current tax laws in force in India which are subject to change from time to time. This report is intended solely for informational purposes for the inclusion in the Offer Document in connection with the proposed Right Issue by the Company and is not to be used or distributed for any other purpose. For Chaturvedi & Shah Chartered Accountants, Firm Registration No.: 101720W Amit Chaturvedi Partner M.No. 103141
Place : Mumbai Dated : May 16, 2011
85
ANNEXURE TO STATEMENT OF TAX BENEFIT This statement lists out the possible key tax benefits that may be available to the Company and the prospective shareholders under the current direct tax laws in India. The tax benefits listed below are the possible tax benefits available under the current direct tax laws presently in force in India. 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 the business imperatives it faces in the future, which the Company may or may not choose to fulfil. This Statement is intended to provide the tax benefits to the Company and its shareholders in a general and summary manner and does not purport to be a complete analysis or listing of all the provisions of potential tax consequences of the subscription, purchase, ownership or disposal etc. of equity shares. In view of the individual nature of tax consequences and the changing tax laws, each investor is advised to consult his or her or their own tax consultant with respect to the specific tax implications arising out of their participation in the issue. SPECIAL TAX BENEFITS 1. SPECIAL TAX BENEFITS AVAILABLE TO THE COMPANY
There are no special tax benefits available to the company.
2. SPECIAL TAX BENEFITS AVAILABLE TO THE SHAREHOLDERS OF THE COMPANY
There are no special tax benefits available to the shareholders of the company. GENERAL TAX BENEFITS 1. KEY BENEFITS AVAILABLE TO THE COMPANY UNDER THE INCOME-TAX ACT, 1961
(“THE ACT”) A. Computation of Business Income: I. Depreciation The company is entitled to claim depreciation on specific tangible and intangible assets owned by it and used for the purpose of its business under Section 32 of the Act. In case of any new plant and machinery (other than ships and aircraft) that will be acquired by the company and is put to use for 180 days or more, the company may be entitled to a further sum equal to twenty percent of the actual cost of such machinery or plant subject to conditions specified in Section 32 of the Act in the year in which it is first put to use. Unabsorbed depreciation, if any, for an Assessment Year (AY) can be carried forward without any time limit and set off against any source of income in the subsequent AYs as per section 32 of the Act. II. Preliminary expenses As per Section 35D, the company is eligible for deduction in respect of specified preliminary expenses incurred by the company, in connection with extension of its undertaking or in connection with setting up a new unit of an amount equal to 1/5th of such expenses over 5 successive AYs subject to conditions and limits specified in the said section.
86
III. Expenditure incurred on amalgamation or demerger As per Section 35 DD, expenditure on amalgamation or demerger of any undertaking is allowed to be amortised over a period of 5 successive accounting years beginning with the year in which the amalgamation/demerger takes place. VI. Expenditure incurred on voluntary retirement scheme As per Section 35DDA, the company is eligible for deduction in respect of payments made to its employees in connection with their voluntary retirement in accordance with any scheme or schemes of an amount equal to 1/5th of such payments over 5 successive AYs subject to conditions and limits specified in that section. V. Expenditure on Scientific Research As per Section 35, the company is eligible for deduction in respect of any expenditure (not being expenditure on the acquisition of any land) on scientific research related to the business subject to conditions specified in that section. Under section 35(2AB), subject to fulfillment of conditions specified therein, by extending weighted deduction ( a sum equal to two times of expenditure not being expenditure on the acquisition of any land or building) for in-house research & development for companies engaged in any business of manufacture or production of any article or thing except those provided in the Eleventh Schedule of the Act. VI. Set off & Carry forward of business loss Business losses (not from speculation business), if any, can be set off against any income of that year & the balance would be carried forward and set off against business profits for eight subsequent AYs. VII. MAT Credit The Company would be required to pay tax on its book profits under the provisions of section 115JB in case where tax on its “total income” [the term defined under section 2(45) of the IT Act] is less than 18% w.e.f. FY 1st April, 2010 of its book profit (the term defined under section 115JB of the IT Act). Such tax is referred to as Minimum Alternate Tax (MAT.) The difference between the MAT payable under section 115JB of the IT Act and the tax on its total income payable for that assessment year shall be allowed to be carried forward as “MAT credit” upto tenth assessment year (effective from FY 2009-10) immediately succeeding the assessment year in which the tax credit becomes allowable. The MAT credit can be utilized to be set off against taxes payable on the total income computed under the provisions of the IT Act other than 115JB thereof if any, in the subsequent assessment years in accordance with the provisions & limit specified in section 115JAA of the IT Act. B. CAPITAL GAINS: I. a. Long Term Capital Gain (LTCG)
LTCG means Capital Gain arising from the transfer of a capital asset being share held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of section 10 or a Zero-coupon bond, held by an assessee for more than 12 months. In respect of any other capital assets, LTCG means capital gain arising from the transfer of an asset, held by an assessee for more than 36 months.
87
b. Short Term Capital Gain (STCG)
STCG means Capital gain arising from the transfer of capital asset being share held in a company or any other security listed in a recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund specified under clause (23D) of section 10 or a Zero-coupon bond, held by an assessee for 12 months or less.
In respect of any other capital assets, STCG means capital gain arising from the transfer of an asset, held by an assessee for 36 months or less.
II. a. LTCG arising on transfer of equity share of a company or units of an equity oriented fund (as
Defined) which has been set up under a scheme of a mutual fund specified under section 10(23D), on a recognized stock exchange on or after October 1, 2004 are exempt from tax under section 10(38) of the Act provided the transaction is chargeable to securities transaction tax (STT) and subject to conditions specified in that section.
b. With effect from AY 2007-08, income by way of LTCG exempt u/s 10(38) of a company is taken
into account in computing book profit and income tax is payable under section 115JB. III. As per second proviso read with third proviso to Section 48, LTCG arising on transfer of capital assets,
which is chargeable to tax other than bonds and debentures (excluding capital indexed bonds issued by the Government), is to be computed by deducting the indexed cost of acquisition and indexed cost of improvement from the full value of consideration.
a. As per section 112, LTCG is taxed @ 20% plus applicable surcharge thereon and 3% Education
and Secondary & Higher education cess on tax plus Surcharge (if any) (hereinafter referred to as applicable Surcharge + Education and Secondary & Higher Education Cess)
b. However as per proviso to section 112(1), if such tax payable on transfer of listed securities / units
/ Zero coupon bond which is chargeable to tax, exceeds 10% of the LTCG, without availing benefit of indexation, then the excess tax shall be ignored.
IV. As per section 111A of the Act, STCG arising on sale of equity shares of company or units of equity
oriented mutual fund [as defined under Section 10(23D)], on a recognized stock exchange are subject to tax at the rate of 15%(plus applicable surcharge + Education and Secondary & Higher Education cess), provided the transaction is chargeable to STT. In other case, i.e. where the transaction is not subjected to STT, the short term capital gains would be chargeable as a part of the total income.
V. As per section 70 read with section 74, short term capital loss arising during a year is allowed to be setoff
against short term as well as long term capital gain arising in that year. Balance loss if any, should be carried forward and available for set-off against subsequent year’s short term or long term capital gains for subsequent 8 years.
VI. As per section 70 read with section 74, long term capital loss arising during a year is allowed to be setoff
only against long term capital gains. Balance loss if any, should be carried forward and available for set-off against subsequent year’s long term capital gains for subsequent 8 years.
VII. Under section 54EC of the Act, capital gains arising on transfer of a long term capital asset is exempt from
capital gains tax if such capital gains are invested within a period of six months after the date of such transfer in specified bond issued by the following and subject to the conditions specified therein:-
• National Highway Authority of India constituted under section 3 of National Highway Authority
of India Act, 1988.
88
• Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956.
If only part of the long term capital gain is reinvested, the exemption shall be proportionately reduced.
However, if the new bonds are transferred or converted into money within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier, shall be taxable as Capital gains in the year of transfer or conversion.
With effect from 1st April, 2007 the investment in the Long Term Specified Asset made by the company during a financial year should not exceed 50 Lakh rupees.
C. INCOME FROM OTHER SOURCES Dividend income: Under Section 10(34) of the IT Act, income by way of dividend referred to in Section 115-O received by the Company on its investments in shares of another Domestic company is exempt from income tax in the hands of the Company. Income received in respect of units of a mutual fund specified under Section 10(23D) of the Act (other than income arising from transfer of units in such mutual fund) shall be exempt from tax under section 10(35) of the Act. However, it is pertinent to note that section 14A of the IT Act provides that no deduction shall be allowed in respect of any expenditure incurred in relation such exempt income. 2. Key benefits available to the Members of the Company 2.1 Resident Members a. Dividend income: Dividend (both interim and final) income, if any, received by the resident shareholders from a Domestic Company shall be exempt from tax under Section 10(34) read with Section 115O of the Act. However, it is pertinent to note that section 14A of the IT Act provides that no deduction shall be allowed in respect of any expenditure incurred in relation such exempt income. b. Capital gains: i) Benefits outlined in Paragraph 1(B) excluding sub-paragraph II(b) thereof, are also applicable to resident
shareholders. Levy of surcharge in case of individuals has been removed from FY 2009-10. In addition to the same, the following benefits are also available to resident shareholders.
ii) As per Section 54F of the Act, LTCG arising from transfer of shares will be exempt from tax if net
consideration from such transfer is utilized within a period of one year before, or two years after the date of transfer, for purchase of a new residential house, or for construction of residential house within three years from the date of transfer subject to fulfillment of conditions & limits specified therein.
2.2 Key Benefits available to Non-Resident Member ( other than FIIs) a. Dividend Income:
Dividend (both interim and final) income, if any, received by the non-resident shareholders from a Domestic Company shall be exempt from tax under Section 10(34) read with Section 115-O of the Act. However, it is pertinent to note that section 14A of the IT Act provides that no deduction shall be allowed in respect of any expenditure incurred in relation such exempt income.
89
b. Capital gains:
Benefits outlined in Paragraph 2.1(b) above are also available to a non-resident shareholder except that as per first proviso to Section 48 of the Act, the capital gains arising on transfer of capital assets being shares of an Indian Company need to be computed by converting the cost of acquisition, expenditure in connection with such transfer and full value of the consideration received or accruing as a result of the transfer into the same foreign currency in which the shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be at the prescribed rates prevailing on dates stipulated. Further, the benefit of indexation as provided in second proviso to section 48 is not available to non-resident shareholders.
c. Tax Treaty Benefits:
As per Section 90 of the Act, the shareholder can claim relief in respect of double taxation if any as per the provision of the applicable double taxation avoidance agreements.
d. Special provision in respect of income / LTCG from specified foreign exchange assets available to non-
resident Indians under Chapter XII-A. i. Non-Resident Indian (NRI) means a citizen of India or a person of Indian origin who is not a resident of
India. Person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, were born in undivided India.
ii. Specified foreign exchange assets include shares of an Indian company acquired/purchased/ subscribed by
NRI in convertible foreign exchange. iii. As per section 115E, income [other than dividend which is exempt under Section 10(34)] from investments
and LTCG from assets (other than specified foreign exchange assets) shall be taxable @ 20% (plus applicable Surcharge + Education and Secondary & Higher Education Cess). However, indexation benefit will not be available for computation of capital gain. Further, no deduction in respect of any expenditure allowance from such income will be allowed and no deductions under chapter VI-A will be allowed from such income. Levy of surcharge in case of individuals has been removed from FY 2009-10..
iv. As per section 115E, LTCG arising from transfer of specified foreign exchange assets shall be taxable @
10% (plus applicable Surcharge + Education and Secondary & Higher Education Cess). However indexation benefit will not be available for determining the amount of capital gain chargeable to tax. Levy of surcharge in case of individuals has been removed from FY 2009-10.
v. As per section 115F, LTCG on transfer of specified foreign exchange asset shall be exempt under Section
115F, in the proportion of the net consideration from such transfer being invested in specified assets or savings certificates within six months from date of such transfer, subject to further conditions specified under Section 115F.
vi. As per section 115G, if the income of an NRI taxable in India consists only of income/LTCG from such
shares and tax has been properly deducted at source in respect of such income in accordance with the Act, it is not necessary for the NRI to file return of income under Section 139.
vii. As per section 115H, where the NRI becomes assessable as a resident in India, he may furnish a declaration
in writing to the Assessing Officer, along with his return of income, for the assessment year, in which he is first assessable as a resident, under section 139 of the Act to the effect that the provisions of the chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent years until such assets are transferred or converted into money.
90
viii. As per section 115I, the NRI can opt not to be governed by the provisions of chapter XII-A for any AY by declaring the same in the return of income filed under Section 139 in which case the normal benefits as available to non-resident shareholders will be available.
2.3 Key Benefits available to Foreign Institutional Investors (FIls) 1. Dividend Income: i. Dividend (both interim and final) income, if any, received by the shareholder from the domestic company
shall be exempt from tax under Section 10(34) read with Section 115-O of the IT Act. However, it is pertinent to note that section 14A of the IT Act provides that no deduction shall be allowed in respect of any expenditure incurred in relation such exempt income.
ii. Under Section 115AD, income (other than income by way of dividends referred in Section 115O) received
in respect of securities (other than units referred to in Section 115AB i.e. units of mutual fund specified under Section 10(23D) or of the Unit Trust of India) shall be taxable at the rate of 20% (plus applicable Surcharge + Education and Secondary & Higher Education Cess). No deduction in respect of any expenditure/allowance shall be allowed from such income.
2. Capital Gains: i. The characterization of gain or loss i.e. whether business income or capital gain would depend on the
nature of holding in hands of members and various other factors. ii. Under Section 115AD, capital gains arising from transfer of securities (other than units referred to in
Section 115AB), shall be taxable as follows:
• As per section 111A, STCG arising on transfer of securities where such transaction is chargeable to STT, shall be taxable at the rate of 15% (plus applicable Surcharge + Education and Secondary & Higher Education Cess). STCG arising on transfer of securities where such transaction is not chargeable to STT, shall be taxable at the rate of 30% (plus applicable Surcharge + Education and Secondary & Higher Education Cess).
• LTCG arising on transfer of securities where such transaction is not chargeable to STT, shall be
taxable at the rate of 10% (plus applicable Surcharge & Education and Secondary & Higher Education Cess). The benefit of indexation and benefit of foreign exchange fluctuation, as mentioned under 1st and 2nd proviso to section 48 would not be allowed while computing the capital gains.
3. Exemption of capital gains from income-tax: i. LTCG arising on transfer of a long term capital asset, being an equity share in a company or a unit of an
equity oriented fund, where such transaction is chargeable to STT is exempt from tax under Section 10(38) of the Act.
ii. Benefit of exemption under Section 54EC shall be available as outlined in Paragraph 1(B) (vii) above. 4. Tax Treaty Benefits:
As per Section 90 of the Act, a shareholder can claim relief in respect of double taxation, if any, as per the provision of the applicable double taxation avoidance agreements.
2.4 Key Benefits available to Mutual Funds
As per the provisions of Section l0 (23D) of the Act, any income of mutual funds registered under the Securities and Exchange Board of India Act, 1992 or Regulations made there under, mutual funds set up by
91
public sector banks or public financial institutions and mutual funds authorized by the Reserve Bank of India, would be exempt from income-tax, subject to the prescribed conditions.
2.5 Key Benefits available to Venture Capital Companies/ Fund
As per Section 10(23FB) of the Act, all Venture Capital Companies / Funds registered with the Securities and Exchange Board of India, subject to the conditions specified, are eligible for exemption from income tax on their entire income, including income from sale of shares of the company. However, income received by a person out of investment made in a venture capital company or in a venture capital fund will shall be chargeable to tax in the hands of such person. As per section 90(2) if the I.T. Act, the provisions of the I.T. Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non Resident shareholder. Thus a non-resident shareholder can opt to be governed by the beneficial provisions of an applicable tax treaty.
3. Benefits available to the shareholders of the Company under Wealth Tax Act, 1957
Shares in a company, held by a shareholder are not treated as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957; hence, wealth tax is not leviable on shares held in a company.
4. Benefits available 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 are not liable to Gift Tax since abolished. Notes: a) All the above benefits are as per the current tax law and will be available only to the sole/first named holder
in case the shares are held by joint holders unless otherwise provided in the Act. b) In respect of non-residents, the tax rates and the consequent taxation mentioned above will be further
subject to any benefits available under the relevant Double Tax Avoidance Agreement (DTAA), if any, between India and the country in which the non-resident has fiscal domicile.
c) Wherever applicable, the benefits mentioned hereinabove are subject to fulfillment of the specified
conditions and up to the limits as mentioned in the relevant provisions. d) 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.
92
SECTION IV – ABOUT US
INDUSTRY OVERVIEW
The information in this section is taken from Government publications, industry organisations, public sources and industry reports, including, among others, the Central Electricity Authority and Indian Sugar Mills Association, and has not been independently verified by us, the Lead Managers or any of our or their respective affiliates or advisors. The information may not be consistent with other information compiled by third parties within or outside India. Industry sources and publications generally state that the information contained therein has been obtained from sources they believe to be reliable, but their accuracy, completeness and underlying assumptions are not guaranteed and their reliability cannot be assured. Industry and government publications are also prepared based on information as of specific dates and may no longer be current or reflect current trends. Industry and government sources and publications may also base their information on estimates, forecasts and assumptions which may prove to be incorrect. Accordingly, investment decisions should not be based on such information. Certain data has been reclassified for the purpose of presentation and should be treated with appropriate caution. Overview of the Indian Economy India is the world’s largest democracy by population, and one of the fastest growing economies in the world. According to the CIA World Factbook, India’s estimated population was 1.19 billion as of March 2011. India has the fifth largest economy in terms of purchasing power, estimated at US$ 4.05 trillion, after the European Union, the United States, China and Japan. (Source: CIA World Factbook) India follows a system of successive five year plans (each, a “Plan”) that establish targets for economic development in various sectors. A comparison of estimates of the real GDP growth rate of India with that of certain other countries for the calendar years indicated is set out below:
Country 2008 2009 2010
Australia 2.2 1.2 3.3
Brazil 5.1 (0.2) 7.5
China 9.0 9.1 10.1
India 7.4 7.4 8.3
Japan (1.2) (5.2) 3.0
Malaysia 4.7 (1.7) 7.1
Russia 5.2 (7.9) 3.8
Thailand 2.5 (2.2) 7.6
UK (0.1) (5.0) 1.6
USA 0.0 (2.6) 2.8 (Source: CIA World Factbook) Indian Real GDP Growth The third quarter review of the monetary policy of the Reserve Bank of India (“RBI”) released in January 2011 placed real GDP growth for the first half of the fiscal year 2011 at 8.9%, reflecting strong domestic demand, particularly private consumption and investment, and improving external demand (Source: RBI Third Quarter Review of Monetary Policy for the Year 2010-11, January 25, 2011). The quarterly estimates of GDP growth for the second quarter of the fiscal year 2011 (with fiscal year 2005 prices as the base) and the corresponding quarter of the fiscal year 2010 are set out below:
93
Percentage change over second quarter of the previous fiscal year
Industry Fiscal Year 2010 Fiscal Year 2011
Agriculture, Forestry and Fishing 0.9 4.4 Mining and Quarrying 10.1 8.0 Manufacturing 8.4 9.8 Electricity, Gas and Water Supply 7.7 3.4 Construction 8.3 8.8 Trade, Hotels, Transport & Communication 8.2 12.1 Financing, Insurance, Real Estate and Business Services 11.3 8.3 Community, Social and Personal Services 14.0 7.3 Total GDP 8.7 8.9
(Source: Central Statistics Office, Government of India) Inflation is a dominant concern in India and after some moderation between August and November 2010, inflation rose again in December 2010 on account of a sharp increase in the prices of primary food articles and global oil prices. According to the RBI, the current rate of inflation is affected by the food price situation both, domestically and globally and by global commodity prices. Domestic food price inflation has witnessed high volatility in the recent past due to structural and transitory factors and prices of commodities have risen sharply. The rise in food inflation has persisted for over two years and had some spill-over effects on generalised inflation. Year-on-year primary food articles inflation spiked to 13.5% in December 2010 from 9.4% per cent in November 2010 due to severe supply constraints in respect of some food items. Year-on-year fuel inflation, which had moderated from 14.4% in May 2010 to 10.3% in November 2010, rose again to 11.2% in December 2010 due to a rise in non-administered domestic fuel prices, reflecting the sharp increase in international prices. (Source: RBI Third Quarter Review of Monetary Policy for the Year 2010-11, January 25, 2011)
SUGAR
World Scenario
The total sugar production in the world is estimated to increase by 4.6% in the fiscal year 2011, over the previous fiscal, and reach a record high of 168.04 million tons, raw value. Global sugar consumption is expected to increase by 2.0%, slower than the 10 year average of 2.6% due to historically high prices globally and in the domestic market. (Source: Indian Sugar Mills Association (“ISMA”))
A summary of the third assessment of the world sugar balance for the fiscal year 2011 is as follows:
(October - September) ( figures in million tons (MT), raw value)
Sugar FY 2011 FY 2010 Change in MT Change in % Production 168.05 160.57 7.48 4.66 Consumption 167.85 164.55 3.30 2.01 Surplus / (Deficit) 0.20 (3.98) -4.18 -105.03 Import demand 50.31 53.39 -3.08 5.78 Export availability 50.50 53.02 -2.52 4.75 End stocks 58.81 58.80 0.01 0.02 Stocks / consumption ratio (%) 35.04 35.73 -0.69 1.93
(Source: ISMA) The following table sets forth the top 10 sugarcane producers in the world: (000 Metric tons, raw value)
Country FY 2008 FY 2009 FY 2010 Brazil 30691 35124 39375 India 28876 15290 20450 China 16130 13585 11690 Thailand 8060 7478 7131 U.S.A 7392 6595 7080 Mexico 5753 5169 5025 Pakistan 5100 3500 3350 Australia 4832 5314 4100 Germany 3789 3665 4300 France 4026 4090 4465
(Source: ISMA)
94
Indian Scenario
Sugar production in India has been cyclic in nature. Due to a good monsoon and increase in sugarcane area under cultivation, sugar production from sugarcane during the fiscal years 2007 and 2008 increased substantially to 28.2 MMT and 26.3 MMT, respectively. However, sugar production declined to about 14.7 million tons in the fiscal year 2009. Sugar production in the fiscal year 2010 was 20.4 million tons. (Source: Department of Food and Public Distribution, Government of India, Annual Report 2010 (“Annual Report 2010, Department of Food and Public Distribution”) and ISMA) Large domestic surpluses during the fiscal years 2007 and 2008 led to lower domestic sugar prices, weakened incentives for sugarcane growers, and sharply reduced plantings for crops in the fiscal years 2009 and 2010. Indian domestic sugar prices witnessed an increase since early 2009 due to reduced supplies. There was a cyclical decline in sugar production during the fiscal year 2010 and thus India became a net importer of sugar, as compared to a net exporter. However, sugar production is expected to rebound in the fiscal year 2011, as higher government price supports and open-market prices are likely to improve incentives to deliver sugarcane to sugar mills. (Source: United States Department of Agriculture, Outlook April 2010 (“USDA Outlook April 2010”))
Production and Consumption Sugarcane and sugar production in India typically follow a six to eight year cycle, wherein three to four years of higher production are followed by two to three years of lower production. The following graph represents a typical sugar cycle in India:
After two consecutive years of declining sugar production in the fiscal years 2008 and 2009, production resurged in the fiscal year 2010, and is expected to gain strongly in the fiscal year 2011. There were 651 installed sugar factories in India during the fiscal year 2010. The sector wise break up is as follows:
Sector Number of factories Cooperative 320 Private 269 Public 62 Total 651
(Source: ISMA)
95
The following graph represents India’s sugarcane and sugar production:
(Source: USDA Outlook April 2010)
The following table represents the per capita consumption of sugar, gur and khandsari in India:
Fiscal Year Estimated population
as on March 1 (millions)
Estimated per capita consumption (Kgs/annum)
Sugar Gur and Khandsari* Total
2000 1,005 16.0 8.7 24.7 2001 1,029 15.8 8.4 24.2 2002 1,043 16.1 8.0 24.1 2003 1,060 17.3 5.4 22.7 2004 (P) 1,077 16.0 7.1 23.1 2005 (P) 1,093 16.9 7.7 24.6 2006 (P) 1,106 16.7 5.3 22.0 2007 (P) 1,122 18.7 3.0 21.7 2008 (P) 1,138 19.8 4.4 24.2 2009 (P) 1,154 19.9 4.5 24.4 2010 (P) 1,170 19.2 3.3 22.5
*the entire production is taken to be consumed internally. (P): Provisional (Source: ISMA) Refined centrifugal sugar from sugarcane is the dominant sweetener in India, with the two traditional sugarcane-based sweeteners, gur and khandsari, accounting for smaller shares of overall use. Khandsari has been declining in terms of production and consumption, and it presently accounts for only about 3% of the market, but gur maintains a significant, albeit variable, 25% share of the market. Gur production and consumption are unregulated and tend to rise in years when higher gur prices or payment arrears by sugar mills create incentives for farmers to divert sugarcane to production of gur. During the fiscal years 2009 and 2010, gur’s market share rose to about 35% when growers diverted sugarcane from the financially distressed mills, magnifying the drop in centrifugal sugar production caused by reduced sugarcane plantings. (Source: USDA Outlook April 2010)
96
The following graph represents the use of sugarcane in India:
(Source: USDA Outlook April 2010) India’s total centrifugal sugar production in the fiscal year 2011 is forecast at 24.7 million tons (including 435,000 tons of khandsari sugar), an increase of 27% over the fiscal year 2010, on expected improved sugarcane supplies due to higher cane planting and yields. (Source: Global Agricultural Information Network Report, USDA (“GAIN Report”)) All of India’s sugar is produced from sugarcane, and the swings in production have been driven primarily by similarly large swings in the harvested area of sugarcane. Although more than 90% of sugarcane area in India is irrigated, yields are affected by the share of area that is relatively high-yielding first-year growth and, to a lesser extent, by variation in rainfall. Relatively small shares of first-year growth in the fiscal years 2009 and 2010, as well as below-normal monsoon rainfall in 2009, likely contributed to reduced average sugarcane yields in the fiscal year 2009. (Source: USDA Outlook April 2010)
97
The following graph represents the sugarcane area and production in India:
(Source: USDA Outlook April 2010) India has significant potential to expand its sugarcane production by increasing both, planted area and yield. While India’s area planted to sugarcane averaging about 4.5 million hectares per year of primarily irrigated land, is the second largest in the world, it accounts for a relatively small share of India’s cropped area and net irrigated area. (Source: USDA Outlook April 2010) Sugarcane, however, is a year-round crop that typically remains in the field for 3 years, and returns to sugarcane production must be competitive for irrigated land on which two, and in some areas three crops are taken in one year. A comparison shows generally higher returns to sugarcane based on both average SAPs and the lower SMPs, although there has been a convergence in recent years due to the relatively large increases in wheat and paddy MSPs. However, cost of cultivation data indicate that labor costs for sugarcane are roughly double those for wheat and paddy, suggesting that labor availability and costs may be constraints to growth in sugarcane area. The following graph represents the gross returns from sugarcane, wheat and paddy production in India:
(Source: USDA Outlook April 2010)
98
India also appears to have the potential to improve sugarcane yields, and the average sugar content of harvested sugarcane, through a continued shift of planted area from northern states, where the climate is subtropical, to southern states, where the climate is tropical and conducive to higher sugarcane yields and sugar recovery rates. Sugarcane yields in India average about 68 tons per hectare, about the same as China but below other major producers, such as Australia, Brazil, and Mexico. (Source: USDA Outlook April 2010) The following graph represents the top ten world sugarcane producers ranked by 2005-07 average yield:
(Source: USDA Outlook April 2010) An increasing share of India’s sugarcane is being planted in southern states, where yields average about 83 tons per hectare, rather than in north India, where yields average about 58 tons per hectare. However, the northern state of Uttar Pradesh which is the historical center of the Indian sugar industry still accounted for about 46% of sugarcane area and 39% percent of output during the fiscal years 2006 to 2008. The state of Maharashtra, where both average yields and the sugar content of sugarcane are higher, is now the largest producer of sugar. Most Indian sugarcane is grown under irrigation in all major producing states, providing favorable conditions for improving average yields. (Source: USDA Outlook April 2010) The following table represents the state-wise sugarcane acreage in India: (000 hectares)
State FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 (P) Assam 23 27 26 29 28 Andhra Pradesh 230 264 247 196 158 Bihar 101 130 109 112 119 Gujarat 197 214 211 221 192 Haryana 127 140 140 90 74 Karnataka 219 326 306 281 326 Kerala 7 5 2 2 2 Madhya Pradesh 56 64 75 71 60 Maharashtra 501 1,049 1,093 768 736 Orissa 16 20 20 11 8 Punjab 84 99 110 81 60 Rajasthan 8 11 10 7 4 Tamil Nadu and Pondicherry
338 393 354 311 314
Uttar Pradesh 2,156 2,247 2,179 2,084 1,977 Uttarakhand 101 121 124 107 96 Others 38 41 49 44 46 Total 4,202 5,151 5,055 4,415 4,202
(P): Provisional (Source: ISMA)
99
The following table represents the state-wise production of sugarcane in India: (million tons)
State FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 (P) Assam 0.9 1.1 1.0 1.1 1.1 Andhra Pradesh 17.6 21.7 20.3 15.4 11.7 Bihar 4.3 5.9 3.9 5.0 5.0 Gujarat 14.6 15.6 15.2 15.5 13.4 Haryana 8.2 9.6 8.9 5.1 5.3 Karnataka 18.3 28.7 26.2 23.3 21.9 Kerala 0.9 0.4 0.2 0.3 0.1 Madhya Pradesh 2.4 2.8 3.2 3.0 2.4 Maharashtra 38.8 78.6 88.4 60.6 56.6 Orissa 1.1 1.3 1.1 0.6 0.5 Punjab 4.9 6.0 6.7 4.7 3.7 Rajasthan 0.5 0.6 0.6 0.4 0.3 Tamil Nadu and Pondicherry
35.3 41.3 38.1 33.0 31.8
Uttar Pradesh 125.5 133.9 124.7 109.0 108.7 Uttarakhand 6.1 6.1 7.7 5.6 5.8 Others 1.8 1.9 2.0 2.4 2.2 Total 281.2 355.5 348.2 285.0 277.7
(P): Provisional (Source: ISMA) The following table represents the state-wise yield of sugarcane in India: ( tons per hectare)
State FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 (P) Assam 37.2 39.1 38.5 38.4 38.4 Andhra Pradesh 76.8 82.2 82.2 78.4 74.1 Bihar 42.8 45.9 35.8 44.3 41.8 Gujarat 74.0 73.0 72.0 70.2 70.0 Haryana 64.4 68.4 63.6 57.0 72.1 Karnataka 83.4 87.9 85.6 83.0 89.3 Kerala 134.8 88.0 109.0 125.2 62.1
( tons per hectare) State FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 (P) Madhya Pradesh 43.7 43.6 42.4 42.2 39.6 Maharashtra 77.5 74.9 80.9 79.0 76.8 Orissa 65.8 63.4 53.5 59.8 60.8 Punjab 57.8 60.8 60.4 57.6 61.6 Rajasthan 61.1 57.8 59.4 59.7 57.3 Tamil Nadu and Pondicherry
104.4 105.0 107.6 106.0 101.1
Uttar Pradesh 58.2 59.6 57.2 52.3 55.0 Uttarakhand 60.7 50.4 62.0 52.2 60.8 Others 47.3 46.3 42.5 51.0 47.8 Total 66.9 69.0 68.9 64.5 66.1
(P): Provisional (Source: ISMA) Sugar consumption is primarily driven by population growth and the rise in per capita consumption. The consumption of sugar in India is generally urban based. In rural areas, alternate sweeteners such as jaggery and khandsari are consumed in larger quantities. The consumption of white sugar in urban areas in some Indian states with higher GDP and income levels, matches favorably with a number of developed countries. In contrast to the volatility of production, Indian sugar consumption has continued to expand relatively steadily due to rising per capita incomes and government interventions to adjust stocks, facilitate trade, and assure adequate monthly availability. Despite the sharp drop in sugar production in the fiscal year 2009 and continued low output in the fiscal year 2010, sugar consumption has remained relatively stable due to monthly releases of free-sale sugar into the open market and allocations of subsidized levy sugar.
100
The following graph represents the supply and use of centrifugal sugar in India:
(Source: USDA Outlook April 2010) The following table represents the sugar balance in India: (1,000 tons, raw value)
Fiscal Year Opening stocks Production Imports Consumption Exports Ending stocks 2008 9,464.2 28648.9 0.2 23691.0 6095.3 8327.0 2009 8327.0 15765.0 3500.0 24500.0 285.0 2807.0 2010 2807.0 18480.0 6000.0 25550.0 75.0 1662.0
(Source: ISMA) Factors affecting Sugar Production Sugarcane availability depends on many factors including the following: • Area under sugarcane cultivation: The area under sugarcane cultivation in the proximity of the sugar mill
determines the amount of sugarcane that can be made available. Crop switching from sugarcane to other crops effectively lowers the area under sugarcane cultivation.
• Climate and irrigation facilities: Sugarcane is a tropical crop which requires adequate water and sunshine.
In addition, monsoons can affect the crop yield and quality of the crop. The state of Uttar Pradesh is supplied with water from the river Ganga, which along with its tributaries and associated canal system accounts for 34% of the total river water available in the country (Source: Ministry of Water). This perennial water source reduces the state’s reliance on seasonal monsoons.
• Crop diseases and pests: Crop diseases affect both the quantity and quality of sugarcane. Harvests have
been impacted severely by insects and pests such as woolly aphid infestations. Several sugar factories are currently investing in research and development in the field of entomology to control such pest outbreaks.
• Sugarcane yield: Sugarcane yield is the total sugarcane output per hectare of land. It depends upon several
factors such as climate, soil, variety of sugarcane, and development measures undertaken by sugarcane farmers, agencies, co-operatives, government, and sugar manufacturers. Agricultural engineering and extension services, usually undertaken by individual sugar mills, have played an important role in increasing sugarcane yields
101
• Diversion of sugarcane to other products: The sugarcane farmers may not supply the sugarcane that is grown to a sugar manufacturer and may divert the production to other products like jaggery and khandsari.
The rate of sugar production is also dependant on the drawal rate, which is the percentage of sugarcane from a Cane Area that we crush as well as the sugar recovery rate. Sugar recovery
Sugar recovery is the amount of sugar recovered from a fixed amount of sugarcane during the crushing process. The recovery depends upon several factors:
• Sugarcane quality: The quality of sugarcane directly determines the sugar recovery. For example, farmers
are encouraged to bring less binding material to improve overall sugar recovery. • Operational efficiencies of the manufacturer: Operating efficiencies and technology used in the crushing
process impact the recovery of sugar to a large extent. • Sugarcane Variety: Higher recovery is possible from high-sugared sugarcane varieties. • Delay in crushing after harvesting of sugarcane: Sugarcane quality declines rapidly once the sugarcane
has been harvested. To maintain high recovery it is essential to minimise the delay in crushing after the sugarcane is harvested.
• Weather: Late or insufficient rains or frost reduces sugar recovery. Sugar Trade
Like sugar production, sugar trade in India is cyclical, with exports of primarily refined sugar during periods of surplus and imports of mostly raw sugar during periods of deficit. Consistent with the increased volatility of sugar production since the early 2000s, swings in sugar trade have also become more volatile. Since 2000, India’s sugar trade has fluctuated between average net exports of 1.3 MMT during the fiscal years 2001 to 2003, net imports of 1.2 MMT during the fiscal years 2004 to 2005, net exports of 3.3 MMT during the fiscal years 2006 to 2008, and forecast net imports of 4.3 MMTduring the fiscal years 2009 to 2010. The shifts in India’s sugar trade are increasingly significant for world markets, contributing to periods of both undersupply and oversupply. India’s record exports in the fiscal year 2008 accounted for about 11% of global exports, and record imports in the fiscal year 2010 are forecast to account for 12 % of world imports. India’s current shift to large net importer is further tightening a world sugar market that continues to adjust to European Union (EU) sugar policy reforms begun in 2006. The EU reforms, including reduced price supports, have led to sharp declines in sugar production and exports by member nations. During the fiscal years 2007 and 2008, the EU averaged net sugar exports of 4.6 million tons, but by the fiscal year 2009, the EU became a net importer of 2.1 million tons of sugar. (Source: USDA Outlook April 2010)
102
The following graph represents sugar trade in India:
(Source: USDA Outlook April 2010) The major sugar import markets affected by the instability of Indian supplies are mostly nearby countries in South and Southeast Asia and the Middle East, including Bangladesh, Sri Lanka, the United Arab Emirates, Pakistan, Malaysia, Indonesia, and Yemen. India is a small supplier of sugar to the U.S. market, with annual exports averaging 8,082 tons during the fiscal years 2001 to 2008. Brazil, the world’s largest sugar exporter, is India’s major supplier during years of deficit. (Source: USDA Outlook April 2010) The following graph represents India’s share of world sugar:
(Source: USDA Outlook April 2010) Pricing of Sugarcane and Sugar The Central Government used to fix the Statutory Minimum Price (SMP) of sugarcane under the Sugarcane (Control) Order, 1966. However, the Central Government has amended the Sugarcane (Control) Order, 1966 in
103
October 2009 and the concept of SMP of sugarcane has been replaced with the ‘fair and remunerative price’ (FRP) of sugarcane from the fiscal year 2010 and for subsequent crushing seasons. The cane price fixed by the Central Government is fixed on the basis of the recommendations of the Commission for Agricultural Costs and Prices (CACP) and after consulting the State Department of Food & Public Distribution Governments and associations of sugar industry. The Central Government fixed the SMP of sugarcane for the fiscal year 2009 at ` 81.18 per quintal linked to a basic recovery rate of 9%, subject to a premium of Re. 0.90 for every 0.1% point increase in recovery above that level. The SMP of sugarcane payable by sugar factories for each sugar season since the fiscal year 2002 has been shown in the following table:
Fiscal Years SMC Base Recovery Rate 2002 62.05 8.5% 2003 69.50 8.5% 2004 73.00 8.5% 2005 74.50 8.5% 2006 79.50 9% 2007 80.25 9% 2008 81.18 9% 2009 81.18 9%
(Source: Annual Report 2010, Department of Food and Public Distribution) The Central Government has fixed the FRP of sugarcane for the fiscal year 2010 at ` 129.84 per quintal linked to basic recovery rate of 9.5% subject to a premium of Re. 1.37 for every 0.1% increase in recovery above that level. However, certain state governments have been advising the sugar factories to pay cane price generally at a level higher than the SMP. (Source: Annual Report 2010, Department of Food and Public Distribution) The FRP of sugarcane for the fiscal year 2011 has been fixed at ` 1391.2 per quintal. However, individual states may advise sugar mills to pay a state advised price (“SAP”). The state of Uttar Pradesh, where all 14 of our sugar mills are located, notifies sugar manufacturers to pay a SAP, which is not linked to recovery rates. The base FRP increased from ` 1,298.4 per metric ton during the fiscal year 2010 to ` 1,391.2 per metric ton during the fiscal year 2011, while the SAP for sugarcane in the state of Uttar Pradesh for the fiscal year 2010 was ` 1,650 per metric ton for general varieties at the gates of the sugar mills and ` 50 extra per metric ton for early maturing varieties. The SAP for sugarcane in the state of Uttar Pradesh for the fiscal year 2011 was ` 2,050 per metric ton for general varieties at the gates of the sugar mills and ` 50 extra per metric ton for early maturing varieties. The following table represents the month wise ex-factory prices of free sale sugar for the months indicated below during the fiscal year 2010: (` per quintal)
State February March April May June July August Bihar 3,608 3,133 2,825 2,851 2,752 2,751 2,615 Uttar Pradesh East U.P. 3,571 3,143 2,816 2,713 2,761 2,616 2,524 Central U.P. 3,544 3,096 2,795 2,804 2,537 2,634 2,517 West U.P. 3,737 3,211 2,897 2,851 2,614 2,757 2,620
Punjab 3,818 3,357 2,922 2,916 2,809 2,856 2,753 Haryana 3,576 3,233 2,876 2,848 2,739 2,676 2,570
(Source: ISMA) The following table represents the sugar policy over a period of time:
Year Policy Levy % Free Sale 1967-68 Partial Control 60 40 1968-69 Partial Control 70 30 1969-70 Partial Control 60 40 1970-71 Decontrol 0 100
104
Year Policy Levy % Free Sale 1972-78 Partial Control 70 30 1978-79 Decontrol 0 100 1979-84 Partial Control 65 35 1985-86 Partial Control 55 45 1986-87 Partial Control 50 50 1987-92 Partial Control 45 55 1992-99 Partial Control 40 60
Year Policy Levy % Free Sale 1999-00 Partial Control 30 70 2000-01 Partial Control 15 85 2001-09 Partial Control 10 90
2009 – 10 Partial Control 20 80 2010 - 11 Partial Control 10 90
(Source: ISMA) Despite various measures taken by the Government of India (GOI) to control sugar prices, sugar prices escalated during calendar year 2009 on fears of short domestic supplies and strong international sugar prices. Sugar prices have eased significantly from February 2010 on improved expectations of domestic production in the fiscal year 2010 and forecast higher production in the fiscal year 2011. Recent Policy Initiatives:
• Amendment of the Essential Commodities Act, 1955
The Essential Commodities Act, 1955 has been amended by issuing an Ordinance under the title 'The Essential Commodities (Amendment and Validation) Ordinance, 2009' in October 2009. The Act has been amended with a view to remove the defects and ambiguity in the existing law and to clarify the provisions pertaining to the determination of price of levy sugar and also to validate actions taken by the Central Government for fixation of price of levy sugar under the specified orders. A bill was introduced in the last winter session of the Parliament to replace the Ordinance and the Bill has since been passed in both Houses of Parliament. The relevant Act i.e. 'The Essential Commodities (Amendment and Validation) Act, 2009' has been notified on December 22, 2009.
• Amendment of the Sugarcane (Control) Order, 1966
The Sugarcane (Control) Order, 1966 has been amended on 22.10.2009 and the words "Minimum Price" have been substituted by the words "Fair and Remunerative Price" (FRP). The amendment has been made to provide reasonable margin to sugarcane farmers on account of 'risk' and 'profit', a concept included for the first time, which is to be uniformly applicable to all states.
• Reintroduction of release order system for export of sugar
The fiscal years 2007 and 2008 saw high production of sugar. Hence, in order to promote export of sugar, the Government had done away with the requirement of release order for export of sugar. However, sugar production scenario changed drastically in the fiscal year 2009. Keeping in view the estimated lower production of sugar in the fiscal year 2009, the Central Government has reintroduced the requirement of obtaining release order for export of sugar with effect from January 2009 under an open general license and from February 2009 in respect of export under advance authorization scheme.
• Increase in levy obligation
Given the drop in sugar production in the fiscal year 2009 to about 14.7 million tons, which has resulted in low accrual of levy sugar at the rate of 10% of production, and keeping in view that sugar production in the fiscal year 2010 is likely to be about 16.0 million tons, the levy obligation on sugar factories has been
105
enhanced from 10% to 20% of production for the fiscal year 2010 only. This would ensure adequate availability of levy sugar for distribution under the public distribution system.
(Source: Annual Report 2010, Department of Food and Public Distribution) INDIAN POWER SECTOR Industry Demand-Supply Overview The Indian power sector has historically been characterised by energy shortages which have been increasing over the years. In the fiscal year 2010, peak energy deficit was estimated to be at 10.1%. For the purposes of the Indian power sector, the fiscal year refers to the period from April 1st to March 31st of the following year. The following table sets forth the shortage of power in the peak demand and normative energy requirement in India from 2003 to 2010: Demand Supply Scenario
Period Peak Demand Energy Requirement
Demand (MW)
Availability (MW)
Deficit Demand (MU*)
Availability (MU)
Deficit (MW) (%) (MU) (%)
FY 2002 -03 81,492 71,547 9,945 12.2 545,983 497,890 48,093 8.8
FY 2003-04 84,574 75,066 9,508 11.2 559,264 519,398 39,866 7.1
FY 2004-05 87,906 77,652 10,254 11.7 591,373 548,115 43,258 7.3
FY 2005-06 93,255 81,792 11,463 12.3 631,554 578,819 52,735 8.4
FY 2006-07 100,715 86,818 13,897 13.8 690,587 624,495 66,092 9.6
FY 2007-08 108,866 90,793 18,073 16.6 739,343 666,007 73,336 9.9
FY 2008-09 109,809 96,785 13,024 11.9 777,039 691,038 86,001 11.1
FY 2009-10 119,166 104,009 15,157 12.7 830,594 746,644 83,950 10.1
FY 2010-11** 119,437 107,286 12,151 10.2 638,181 582,225 55,956 8.8
December 2010 117,409 105,060 12,349 10.5 71,363 65,529 5,834 8.2 *Million Units ** From April 2010 –December 2010 (Source: CEA, “Power Scenario at a Glance”, January 2011) Regional Demand-Supply Scenario The following table sets forth the shortage of power in the peak demand and normative energy requirement in India from April 2010 to December 2010 across different regions:
Region Peak Demand Energy Requirement
Demand (MW)
Availability (MW)
Deficit Demand (MU)
Availability (MU)
Deficit (MW) (%) (MU) (%)
North
April – December 2010 37,431 34,101 3,330 8.9 196,439 179,927 16,512 8.4
December 2010 34,570 30,881 3,689 10.7 21,490 19,885 1,605 7.5
West April – December 2010 39,621 32,763 6,858 17.3 195,361 169,017 26,344 13.5
December 2010 39,621 32,711 6,910 17.4 23,795 20,391 3,404 14.3
South April – December 2010 32,214 29,054 3,160 9.8 167,097 157,921 9,176 5.5
December 2010 29,022 28,057 965 3.3 17,831 17,394 437 2.5
106
Region Peak Demand Energy Requirement
Demand (MW)
Availability (MW)
Deficit Demand (MU)
Availability (MU)
Deficit (MW) (%) (MU) (%)
East April – December 2010 13,767 13,085 682 5.0 71,770 68,574 3,196 4.5
December 2010 12,520 11,882 638 5.1 7,433 7,091 342 4.6
North-East April – December 2010 1,913 1,560 353 18.5 7,514 6,786 728 9.7
December 2010 1,676 1,529 147 8.8 814 768 46 5.7 (Source: CEA, “Power Scenario at a Glance”, January 2011) Energy deficits vary widely across India, with the western region having the highest normative energy requirement shortage followed by the northern region, and the north-eastern region having the highest peak demand shortage followed by the western region. According to the 17th Electric Power Survey, by the fiscal year 2017, peak demand is expected to reach 218,209 MW with an energy requirement of 1,392 billion units. Large Energy Deficit Results in Low Per Capita Consumption of Electricity The per capita consumption of power in India has increased from 566.7 kWh/ year in the fiscal year 2003 to 733.5 kWh/ year in the fiscal year 2009, at a compounded annual growth rate of 4.4% for the same period. The following chart highlights the growth in per capita consumption of power. Per Capita Consumption (kWh/year)
566.7592.0
612.5631.5
671.9717.1 733.5
0
100
200
300
400
500
600
700
800
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
(kWh)
(Source: CEA, Monthly Review of Power Sector, October 2010) Due to inadequate supply and distribution infrastructure, the per capita consumption of energy in India is extremely low in comparison to most other parts of the world. The following chart shows the per capita consumption of electricity in 2007 in various developed and developing countries.
107
02000400060008000
1000012000140001600018000
Canad
a
United
States
Austra
liaJa
pan
France
German
y
United
Kingdo
mRus
siaBraz
ilChin
aInd
ia
Elec
trici
ty C
onsu
mpt
ion
per c
apita
(kw
H)
(Source: CIA Factbook website) Any increase in per capita consumption of electricity in India necessitates an increase in the accessibility of electricity in rural India. The central government has set a target of 1,000 kWh per capita consumption by the fiscal year 2012, as envisaged in its National Electricity Policy. Historical Capacity Additions The energy deficit in India is a consequence of slow progress in the development of additional energy capacity. The Indian economy is based on planning through successive five-year plans that set out targets for economic development in various sectors, including the power sector. During the implementation of the last three Five-Year Plans (the Eighth, Ninth, and Tenth Five-Year Plans, covering the fiscal years 1992 to 2006), less than 50.0% of the targeted additional energy capacity was added. India added an average of approximately 20,000 MW to its energy capacity in each of the Ninth and Tenth Five-Year Plan periods (the fiscal years 1997 to 2001 and 2002 to 2006, respectively). (Source: White Paper on Strategy for Eleventh Plan, prepared by CEA and Confederation of Indian Industry (the “White Paper”). The following chart sets forth the targeted energy capacity addition for the Five-Year Plans, the installed capacity actually achieved at the end of those Five-Year Plans and the installed capacity actually achieved as a percentage of the targeted capacity additions for each of those Five-Year Plans:
(Source: The White Paper)
22
31
40 41
2119
21
14
79
13
20
1 25 5
10
14 16
96%
54%48%
52%
85%
66% 64%
49%
82%
72%
0
5
10
15
20
25
30
35
40
I II III IV V VI VII VIII IX X
Five-Year Plan
GW
0%10%20%30%40%50%60%70%80%90%100%
Targeted Installed % Achieved
108
The total capacity addition during the past 25 years between the Sixth and the Tenth Five-Year Plans was approximately 91,000 MW. A total capacity addition of 78,700.4 MW is planned for the Eleventh Five-Year Plan (2007-12) and the 12th Plan has envisaged a capacity addition of 1,00,000 MW, which should result in substantial investments in the power generation sector. (Source: CEA, “Power Scenario at a Glance”, January 2011) Installed Generation Capacity by Sector and Fuel The following table and diagrams set forth a summary of India’s energy generation capacity as of December 31, 2010 in terms of fuel source and ownership: (figures in MW)
Sector Hydro Thermal
Nuclear Renewable
Energy Sources
Total Coal Gas Diesel Total
State 27,257.00 47,477.00 4,077.12 602.61 52,156.73 0.00 2,822.32 82,236.05
Private 1,425.00 12,481.38 6,677.00 597.14 19,755.52 0.00 13,964.66 35,145.18
Central 8,685.40 32,420.00 6,702.23 0.00 39,122.23 4,560.00 0.00 52,367.63
Total 37,367.40 92,378.38 17,456.35 1,199.75 111,034.48 4,560.00 16,786.98 169,748.86 (Source: CEA, Monthly Review of Power Sector, January 2011) The Central and State governments together own and operate approximately 80.2% of the installed power capacity in India. The private sector has historically been reluctant to enter the market for power plants because of onerous governmental regulations on the construction and operation of power plants and sourcing of fuel for such plants. However, the participation of the private sector has been increasing over time owing to power sector reforms. Thermal Power Generation As of October 31, 2010, thermal power plants account for 65.4% of India’s installed capacity, within which 83.2% of the capacity is accounted for by coal-based plants, based on total available thermal capacity. (Source: CEA, “Power Scenario at a Glance”, January 2011) Future Demand-Supply Scenario and Capacity Additions According to the CEA Executive Summary, as of December 31, 2010, India had an installed generation capacity of 169,748.9 MW. A key risk to the continued growth of the Indian economy is inadequate infrastructure. Infrastructure investment in India is on the rise, but growth may be constrained without further improvements. The central government has identified the power sector as a key sector of focus to promote sustained industrial growth by embarking on an aggressive mission – “Power for All” by 2012, backed by extensive reforms to make the power sector more attractive for private sector investment. According to the Integrated Energy Policy (“IEP”) report, dated August 2006, issued by the Planning Commission, India would require additional capacity of about 55-68 gigawatts (“GW”) by 2012, 141-172 GW by 2017 and 260-323 GW by 2022, respectively, based on normative parameters in order to sustain a 8.0-9.0% GDP growth rate (Source: IEP, Expert Committee on Power). The following table sets forth the additional capacity required by 2012, 2017 and 2022 under different GDP growth rate scenarios and the current capacity as of October 31, 2010:
Assumed GDP
Growth
Electricity Generation Required
Peak Demand Installed Capacity
Capacity Addition
Required(1) (%) (BU) (GW) (GW) (GW) By FY 2012 8.0 1,097 158 220 53 9.0 1,167 168 233 66 By FY 2017 8.0 1,524 226 306 139
109
9.0 1,687 250 337 170 By FY 2022 8.0 2,118 323 425 258 9.0 2,438 372 488 321
Note: (1) Based on the installed capacity of 167 GW in India as of October 31, 2010. (Source: IEP Report, Expert Committee on Power and CEA, “Power Scenario at a Glance”, October 2010) The capacity addition envisaged during the Eleventh Five-Year Plan is 78,700.0 MW as illustrated in the following table:
Sector Hydro Thermal Nuclear Total
Central 8,654.0 24,840.0 3,380.0 36,874.0 State 3,482.0 23,301.4 0.0 26,783.4 Private 3,491.0 11,552.0 0.0 15,043.0 All-India Total 15,627.0 59,693.0 3,380.0 78,700.4
(Source: CEA, “Power Scenario at a Glance”, January 2011) Power Scenario in Uttar Pradesh The total installed capacity in the state of Uttar Pradesh as of December 31, 2010 was 10,384.1 MW. Details of the installed capacity in Uttar Pradesh are given below: Installed Capacity as of December 31, 2010 in Uttar Pradesh:
Sector Hydro Thermal
Nuclear Renewable
Energy Sources
Total Coal Gas Diesel Total
State 524.1 4,072.0 0.0 0.0 4,072.0 0.0 25.1 4,621.2 Private 0.0 600.0 0.0 0.0 600.0 0.0 587.1 1,187.1 Central 1,100.3 2,589.8 550.0 0.0 3139.8 335.7 0.0 4,575.9 Total 1624.4 7,261.8 550.0 0.0 7,811.8 335.7 612.2 10,384.1
(Source: CEA, “Power Scenario at a Glance”, January 2011) Demand Supply Scenario The following table sets forth the shortage of power in the peak demand and normative energy requirement in Uttar Pradesh from 2003 to 2010:
Period Peak Demand Energy Requirement
Demand (MW)
Availability (MW)
Deficit Demand (MU)
Availability (MU)
Deficit (MW) (%) (MU) (%)
FY 2002 -03 6700 5750 950 14.2 44777 36789 7988 17.8
FY 2003-04 7218 6029 1189 16.5 46552 40399 6153 13.2
FY 2004-05 7877 6268 1609 20.4 52017 41585 10432 20.1
FY 2005-06 8175 6588 1587 19.4 55682 44033 11649 20.9
FY 2006-07 9184 7531 1653 18.0 57441 48370 9071 15.8
FY 2007-08 11104 8568 2536 22.8 62628 51335 11293 18.0
FY 2008-09 10587 8248 2339 22.1 69207 54309 14898 21.5
FY 2009-10 10,856 8,563 2,293 21.1 75,930 59,508 16,422 21.6
FY 2010-11* 10,731 10,672 59 0.5 57,173 48,234 8,939 15.6
December 2010 10,299 8,584 1,715 16.7 6,468 5,544 924 14.3 * From April 2010 – December 2010 (Source: CEA, “Power Scenario at a Glance”, January 2011)
110
Outlook for Fuel Supply Coal Given India’s large coal reserves, coal is expected to continue to dominate as a source of fuel for power plants in India. India has the fourth largest coal reserves in the world. However, in the past, there were restrictions on the entry of private sector players into coal mining, which had caused India’s coal production to remain low in comparison to its reserves. According to the BP Statistical Review of World Energy 2010, China has 13.9% of the world’s proven coal reserves and accounts for 45.6% of world’s coal production, while India has 7.1% of the world’s proven coal reserves but accounts only for 6.2% of the world’s coal production. (Source: BP Statistical Review of World Energy 2010) The following graphs set forth the total proven coal reserves in various countries and each country’s proven coal reserves and coal production as a percentage of the world’s proven coal reserves and coal production, respectively.
International Proven Coal Reserves (Billions of Tons)
238
157
115
7659
34 31 30
–
50
100
150
200
250
300
USA Russia China Australia India Ukraine Kazakhstan South Africa
USA Russia China Australia India Ukraine Kazakhstan South Africa (Source: BP Statistical Review of World Energy, 2010)
Coal Reserves Utilisation (%)
29%
19%
14%
9%7%
4% 4% 4%
16%
4%
46%
7% 6%
1% 2%4%
–
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
USA Russia China Australia India Ukraine Kazakhstan South Africa
% of World Reserve % of World Production
(Source: BP Statistical Review of World Energy, 2010) In 2004, the Government set up a committee on coal sector reforms that led to several new initiatives to encourage coal-based independent power plants in India. The Government has allocated coal blocks for the power sector that are expected to support additional power generation capacity of 68,000 MW. 12 coal blocks, with geological reserves of approximately 6.4 billion tons have been allotted to 18 central and state government owned companies.
111
Weighted Average Price of Electricity Traded by Licensees and Power Exchanges BU
These coal blocks are expected to sustain power generation of approximately 30,000 MW. In addition, 31 private companies have been allocated 15 coal blocks, with geological reserves of approximately 3.6 billion tons, to support additional power generation of approximately 16,000 MW. More than 900 applications were received for the allocation of these coal blocks. (Source: Ministry of Coal) The Ministry of Coal has identified 81 coal blocks, with geological reserves of approximately 20 billion tons, for allocation to companies, both Government and private, for permissible end uses. Out of these, 41 coal blocks, with geological reserves of approximately 15.7 billion tons, have been earmarked for the power sector. (Source: Ministry of Coal) Power Trading Historically the main suppliers and consumers of bulk power in India have been the various government controlled generation and distribution companies who typically contracted power on a long term basis by way of power purchase agreements (“PPAs”) with regulated tariffs. However, in order to encourage the entry of merchant power plants and private sector investment in the power sector, the Electricity Act recognised power trading as a distinct activity from generation and T&D and has facilitated the development of a trading market for electricity in India by providing for open access to transmission networks for normative charges. Power trading involves the exchange of power from suppliers with surpluses to suppliers with deficits. Seasonal diversity in generation and demand, as well as the concentration of power generation facilities in the resource-rich eastern region of India, has created ample opportunities for the trading of power. Recent regulatory developments include the announcement of rules and provisions for open access and licensing related to interstate trading in electricity. Several entities have started trading operations or have applied for trading licenses. With the aid of the reforms, the trading price and volume of power traded has grown rapidly over the last few years. The following graph shows the increasing volume of power traded in India for the periods indicated:
(Source: Central Electricity Regulatory Commission (“CERC”)) The following chart shows prices of power traded for the periods indicated:
112
Note: The Price in 2008-09 represents the Weighted Average Price of electricity transacted through trading licensees and power exchanges and the price in the rest of the years represents the price of electricity transacted through licensees only. (Source: CERC) Tariffs The main objectives of the National Tariff Policy (“NTP”) notified by the GOI on January 6, 2006, include promoting competition, efficiency in operations and improvements in the quality of supply and ensuring the availability of electricity to consumers at reasonable and competitive rates. The NTP reiterates the importance of implementing competition in different segments of the electricity industry as highlighted in the Electricity Act and that competition will lead to significant benefits to consumers through reduction in capital costs and improved efficiency of operations. It will also facilitate the determination of price through competition. The NTP stipulates that all future power requirements should be procured competitively by distribution licensees except in cases of expansion of existing projects or where there is a state controlled or state-owned developer involved, in which case, regulators will need to resort to tariffs determined by reference to standards of the CERC, provided that expansion of generating capacity by private developers for this purpose will be restricted to a one-time addition of not more than 50.0% of the existing capacity. Under the NTP, even for public sector projects, tariffs for all new generation and transmission projects will be decided on the basis of competitive bidding after a certain period of time. Merchant Power Plants Merchant power plants (“MPPs”) generate electricity for sale at market driven rates in the open wholesale market. Typically, the MPPs do not have long term PPAs and are built and owned by private developers. Merchant sales include sale of power under PPAs in which the tariff commitments are for a period of less than one year and on spot basis. Many new private sector players are beginning to adopt the MPP model for their projects to generate higher returns as opposed to selling power through a long term PPA, as the off-take risk is perceived to be low in view of significant power shortages in the country. The MPPs can sell power to the power trading companies (such as Power Trading Corporation), the SEBs and industrial and bulk customers. Indian Energy Exchange (IEX) Indian Energy Exchange (“IEX”) is India’s first nationwide automated and online electricity trading platform. IEX seeks to catalyze the modernisation of electricity trade in India by allowing trading through a technology enabled platform. On June 9, 2008, IEX received CERC approval for commencing operations. IEX is a demutualised exchange that will enable efficient price discovery and price risk management in the power trading market. IEX offers a broader choice to generators and distribution licensees for sale and purchase of power facilitating trade in smaller quantities. IEX enables participants to precisely adjust their portfolio as a function of consumption or generation. (Source: http://www.iexindia.com). Short-Term Market for Power The short-term market for power refers to contracts of less than one year period for electricity transacted through interstate trading licensees and directly by the distribution licensees, power exchanges such as IEX and unscheduled interchange (“UI”). Although unscheduled interchange is not a market mechanism, electricity transacted under UI is often considered a short-term transaction. Regulatory Control In India, control over the development of the power industry is shared between the central and the state governments. The Ministry of Power is the highest authority governing the power industry in India. The CEA, a statutory organisation constituted under the Supply Act (as defined hereinafter), is the technical branch of the Ministry of Power assisting in technical, financial and economic matters relating to the electricity industry. The CEA is responsible for giving concurrence to schemes involving capital expenditure beyond a certain limit fixed by the GOI from time to time, and it is also responsible for the development of a sound, adequate and uniform power
113
policy in relation to the control and utilisation of national power resources. The CERC constituted under the Electricity Regulatory Commissions Act, 1998 is an independent statutory body with quasi-judicial powers. Its main functions include the formulation of policy and the framing of guidelines with regard to electricity tariffs. Several states have set up State Electricity Regulatory Commissions (“SERCs”). The SERCs are engaged in regulating the purchase, distribution, supply and utilisation of electricity, tariff and charges payable, as well as the quality of service. State governments have set up SEBs at the state level, which are responsible for ensuring that the supply, transmission and distribution of electricity in such states is carried out in the most economical and efficient manner. These SEBs are required to coordinate with power generating companies, as well as the government entities that control the relevant power grids. Some states have amalgamated their respective SEBs to form Regional Electricity Boards, to ensure that electricity supply, transmission and distribution policies are consistently applied. Private sector companies operating in the electricity supply, transmission and distribution industry report to the Ministry of Power, as well as their respective SEBs and their SERCs. Mega Power Projects The Government of India revised its mega power policy in December 2009. In accordance with the terms of the new policy, the following mega power projects shall be eligible for the benefits of the mega power policy:
• A thermal power plant with a capacity of 1000 MW or more; • A thermal power plant with a capacity of 700 MW or more located in the States of Jammu and Kashmir,
Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura; • A hydroelectric power plant with a capacity of 500 MW or more; and • A hydroelectric power plant with a capacity of 350 MW or more, located in the States of Jammu and
Kashmir, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura.
The Government has also decided to extend mega policy benefits to brownfield (expansion) projects. In case of brownfield (expansion) phase of the existing mega project, the size of the expansion units should not be not less than that provided in the earlier phase of the project granted a mega power project certificate. The mandatory provision of inter-state sale of power for obtaining mega power status has been abolished and goods required for setting up a mega power project would be entitled to certain fiscal benefits. Captive Power Generation in India Captive power refers to power generation from a project set up for captive industrial consumption. Due to the continuing shortage of power and India’s economic growth, there has been an increase in the requirement for captive power projects in India. As most captive units are based on diesel generator sets, the cost of generation has increased sharply with rising crude oil and diesel prices. CO-GENERATION INDUSTRY
Co-generation is the concept of simultaneously producing two forms of energy. One of the forms of energy must always be heat and the other may be electricity or mechanical energy. In a conventional power plant, fuel is burnt in a boiler to generate steam. This steam is used to drive a turbine, which in turn drives an alternator through a high speed gear box to produce electric power. The exhaust steam is generally condensed to water which goes back to the boiler. However, in a co-generation plant, some amount of steam may be extracted from the turbine at the required pressure and temperature for use in the process.
The power produced by co-generation is used in internal industry processes, and excess power is sold to state utilities or distribution companies. Long-term power purchase agreements (“PPAs”) are signed with these buyers based on terms and conditions as decided by the State Electricity Regulatory Commissions (“SERCs”).
Since co-generation can meet both power and heat needs, it has advantages in the form of significant cost savings for the plant and reduction in emissions of pollutants. The potential for co-generation lies in industries which have a requirement of both heat and electricity, primarily sugar and rice mills, distilleries, petrochemical, chemical, pulp
114
and paper, aluminium, etc. Since India is the second largest producer of sugar in the world, bagasse-based co-generation is being promoted. Co-generation of power by sugar mills in India began in 1993-94 with the Ministry of New & Renewable Energy (formerly the Ministry of Non-conventional Energy Sources (“MNRE”)) formulating its guidelines for fixation of the rate of power produced from non-conventional sources including by the sugar mills and supplied to the Electricity Boards.
One of the objectives of the National Electricity Policy issued by the GoI is to promote co-generation and generation from renewable sources of energy. The urgent need to promote generation of power from such sources of energy, and the significant potential for co-generation in the sugar industry is well observed. There has been appreciable growth in this segment and this trend can be expected to continue in the future as well because of growing demand for power in India.
Benefits of Co-generation Systems: • Provides economic competitive advantages through a maximized return on investment by utilizing the same fuel
to provide heat and electricity; • Environment friendly because of reduced emissions of green house gases, sulphur dioxide, nitrogen oxides, and
particulate matters; • A reliable source of power and process steam or heat; • Onsite electricity generation can reduce transmission and distribution losses; and • Low gestation period. The MNRE notified a scheme in April 2010, for the implementation of grid interactive biomass power and bagasse cogeneration projects for the fiscal year 2011 and the remaining period of the 11th Plan. The scheme provides subsidies for the setting up of biomass combustion based power projects and bagasse cogeneration projects in private/cooperative/public sector sugar mills.
ETHANOL PRODUCTION
Molasses is extensively used for the manufacture of ethanol. Molasses are fermented with yeast to get ethyl alcohol or ethanol. The mixture is then distilled to separate the alcohol from the mixture. Normally for every 1 ton of sugar produced, around 0.45 tons of molasses is generated as a by-product. One ton of molasses can produce around 225 litres of ethanol. Ethanol is 99.5% pure alcohol and is used as feedstock for alcohol-based downstream chemicals like paints, inks and to manufacture potable alcohol. Ethanol is also used as an additive in petrol to lessen vehicular pollution as it contains 35% oxygen, which helps complete combustion of fuel thus reducing harmful emissions. With a view to providing an incentive to the agricultural sector and reduce environmental pollution, the Government mandated 5% blending of ethanol with petrol across India except for certain states.
115
BUSINESS
Overview
We are an integrated sugar manufacturing company, with value-added products such as co-generated power, industrial alcohol (primarily ethanol), particle boards and medium-density fibre boards and bio-fertilisers. We are the largest sugar manufacturer in India, based on production capacity, with 9.947 MMT of crushed sugarcane during the year ended September 30, 2010. (Source: Government of India, Sugar Release Order – March 2011) We believe that we are also one of the largest industrial alcohol producers in India, based on production capacity.
We own and operate 14 sugar mills with an aggregate sugarcane crushing capacity of 136,000 TCD. For the fiscal year 2010 and the three months ended December 31, 2010, we crushed 9.947 MMT and 3.645 MMT of sugarcane with sugar recovery rates of 9.23% and 8.96%, respectively. In addition, six of our sugar mills have distilleries, which have a combined production capacity of 800 KLPD, including one of our distilleries with a capacity 60 KLPD, which we lease to a third party. Our total production of industrial alcohol was 104,521 KL and 15,378 KL for the fiscal year ended September 30, 2010 and the three months ended December 31, 2010, respectively.
We also have co-generation facilities which have an aggregate installed capacity of 428 MW. We use power co-generated by us. In addition, for the fiscal year ended September 30, 2010 and the three months ended December 31, 2010, we sold approximately 125,793 MWh and 44,131 MWh, respectively, of power to the state grid of Uttar Pradesh. All of our sugar mills, distilleries and co-generation facilities are located in the north Indian state of Uttar Pradesh.
We are currently developing five thermal power projects with a combined installed capacity of 450 MW on land adjacent to our sugar manufacturing facilities through our subsidiary, Bajaj Energy Private Limited. We have entered into power purchase agreements to sell the power generated from these projects to the state grid of Uttar Pradesh. Further, we have been awarded two mega power projects of 1,980 MW each, at Lalitpur and Bargarh, which are both located in Uttar Pradesh. For the fiscal year 2010, we had total income of ` 33,406.8 million and a net profit after tax and minority interest of ` 440.6 million compared to total income of ` 23,335.2 million and a net profit after tax and minority interest of ` 617.8 million for the fiscal year 2009. For the three months ended December 31, 2010, we had total income of ` 15,555.2 million and a net profit after tax of ` 767.9 million. Our Competitive Strengths We believe that our primary competitive strengths include the following: We are a leader in the sugar industry in India. We are the largest sugar manufacturer in India, based on production capacity. We have an operating history of over seven decades and have declared dividends in 74 out of the 79 years of our operation. All of our existing sugar mills have a crushing capacity of more than 5,000 TCD, which is generally considered to be the minimum size for sustainability, according to the Government of India’s Revitalisation Report of 2004. We believe that the size of our sugar mills enables us to enjoy economies of scale. For example, some of the determining factors in the allocation of Cane Area (defined below) are historic production levels and sugar crushing capacities. Consequently, our large size allows us to request for larger allocations of Cane Area than some of our competitors. We believe that we are one of the largest producers of industrial alcohol in India, based on production capacity. In addition, our operations involve processes that have enabled us to achieve relatively high rates of sugar recovery from sugarcane as compared with the average recovery rate in Uttar Pradesh. Our sugar mills are strategically located in one of the largest sugarcane growing areas in India and near major sugar consuming markets. Our operations are located in India, the largest market in the world, in terms of consumer demand, for centrifugal sugar, which is raw sugar that contains 96% - 98% sucrose. (Source: United States Department of Agriculture
116
Economic Research Service available at http://www.ers.usda.gov/Briefing/Sugar/Data.htm as accessed on March 24, 2011) Additionally, all of our manufacturing facilities are located in the north Indian state of Uttar Pradesh, which is one of the largest sugarcane growing areas in India. (Source: ISMA) As a result of our proximity to sugarcane growing areas, we have access to significant quantities of sugarcane. This proximity also enables us to crush sugarcane within a very short time of harvest ensuring higher recovery rates. Uttar Pradesh is located on the Gangetic river belt and is well irrigated. As a result, sugarcane farmers in Uttar Pradesh are less dependent upon the unpredictability of monsoons, as compared with farmers in other parts of India. The location of our sugar mills also enables us to access the markets which have high demand for sugar, such as Uttar Pradesh, Delhi, Haryana, Bihar and Punjab, which are also our primary markets. As a result we minimise our transportation and distribution costs and are generally able to realise better prices for sugar in these markets as compared to other regions in India. We have strong relationships with sugarcane farmers. We maintain a good record of timely payments to farmers for sugarcane procured despite the cyclical nature of the sugar industry. For the crushing season 2010-2011, we procured sugarcane from approximately 350,000 farmers. Although farmers are under no legal obligation to grow sugarcane, we believe that our track record of sustained purchases from farmers and timely payments provides an incentive for farmers to continue cultivating sugarcane in our reserved areas. In addition, we facilitate the sale of sugarcane by farmers through an extensive network of over 800 sugarcane collection centres. These collection centres are located in our Cane Area hence farmers are not required to transport their crop to our sugar mills. We believe these factors culminate in a strong relationship with farmers, which is a significant competitive advantage because farmers have no obligation to grow sugarcane and may switch to crops that may be more profitable or may sell their sugarcane to producers of alternative sweeteners, such as jaggery and khandsari. Our sugar processing operations are efficient. We have equipped our facilities with modern technology to ensure efficient operations and maximise output. We have achieved relatively high sugar recovery rates, which is the key profit driver for sugar mills. We experienced sugar recovery rate of 9.23% for the fiscal year 2010, which was higher than the average recovery rate of sugar mills in Uttar Pradesh. Our information technology system, which is run through SAP’s Enterprise Resource Planning, assists us in achieving higher operational efficiencies. We maintain an electronic database which helps us to plan and manage our procurement of sugarcane from farmers and to monitor various activities, including scheduling sugarcane deliveries from farmers, making payment to sugarcane farmers and coordinating other developmental activities in our Cane Area. We have adopted an integrated business model to balance the cyclical effects of the sugar business. We have adopted a business model that integrates the sugar manufacturing process with the production of value added products to improve our profit margins. For example:
• we convert molasses into value added products such as industrial alcohol, primarily ethanol;
• the bagasse produced from sugarcane is used for producing co-generated power, which is used at our sugar mills for captive consumption, reducing our energy costs and dependence on third parties, and surplus power is sold to the state grid of Uttar Pradesh;
• the excess bagasse is also used for manufacturing particle boards and medium-density fibre boards;
• the methane produced during our distillery operations is used in the combustion of bagasse during the co-generation process; and
• the press mud from our sugar mills and effluent from our distillery operations are converted into bio-fertiliser.
We believe that given the nature of the sugar industry, integration of operations also enables us to mitigate the effects of cyclicality of sugar prices. Our ethanol production is intended to coincide with an increase in ethanol demand as Government regulations in certain states require a fixed percentage of ethanol to be blended with petrol.
117
Further, we have installed multi-fuel boilers at three of our sugar mills, which can also use a mix of bagasse and coal for the generation of power.
We have a qualified and experienced management team.
Our qualified and experienced management team provides us with a key competitive advantage. Our senior management team has been instrumental in anticipating and addressing various risks and challenges of the sugar and power industries. Our Chairman and Managing Director, Mr. Shishir Bajaj, has over 37 years of extensive experience in the sugar industry and has also served as the President of the Indian Sugar Mills Association, the premier sugar industry association in India. In addition to our senior management team, we believe that our middle-management team provides us with the operational depth needed to manage our growth. For further details of our management, please see “Management” on page 141. We believe that our management team is well placed to provide strategic leadership and direction to explore new emerging opportunities as well as constantly improve our current operations.
Our Strategy
The sugar industry in India is highly fragmented with manufacturers having limited pricing power. However, we believe that our large scale operations provides us with economies of scale contributing to lower operating costs, while our ongoing pursuit of a diverse product line, based on an integrated business model, provides us with the ability to perform optimally during various phases of the sugar business cycle. The following is our strategy to achieve steady cash flows and optimal results of operations:
We are taking steps to achieve greater raw material security.
In the sugar industry, ensuring a steady supply of sugarcane is critical as it is the principal raw material. An increase in the availability of sugarcane allows for higher capacity utilisation at our sugar mills and also positively impacts the availability of molasses and bagasse. We are taking steps to ensure greater raw material security for our requirements based on our current capacities. This is based on a multi-pronged strategy involving:
• Increase in the Allocation of Cane Area: Under the provisions of the Uttar Pradesh Sugarcane (Regulation of
Supply and Purchase) Act, 1953, there are two kinds of areas allotted by the Cane Commissioner of Uttar Pradesh to each sugar mill. The first is termed “reserved area” which is allotted to a sugar mill on an annual basis. If the requirement of a particular sugar mill is in excess of the sugarcane available in the reserved area, the Cane Commissioner of Uttar Pradesh, may, on application, assign another area from outside the reserved area. This second area is termed “assigned area”. The reserved area and the assigned area are together termed the “Cane Area”. The Cane Area is allocated in proportion to the certified capacities of a sugar mill. We intend to seek increase in the allocation of Cane Area to satisfy the raw material requirements of our sugar mills.
• Increase in Drawal Rates: The percentage of sugarcane from a Cane Area that we crush is referred to as the drawal rate. Our competition within an allocated Cane Area comes from manufacturers of alternate sweeteners. The price realisation for alternate sweeteners is typically lower than price of sugar. Consequently, manufacturers of alternate sweeteners are limited in their ability to match the price of sugarcane paid by sugar mills. Further, alternate sweetener manufacturers typically have relatively smaller operations than established sugar mills, which also restrict their ability to match the price of sugarcane paid by sugar mills. In addition, our relationship with farmers is based on our track record of timely payments to farmers and cane development initiatives that we undertake from time to time. Overall, we believe that we have witnessed the benefits of this strategy through our sustained cane availability for the fiscal years 2008, 2009 and 2010.
• Locational Advantage and Economies of Scale: Our establishment of new sugar mills has increased the aggregate Cane Area available to us and enhanced our control over the supply of our primary raw material. Further, we believe that the restrictions regarding Cane Areas, such as the exclusivity provisions, will also create barriers of entry for our competition.
118
We intend to capitalise on future upward pricing trends in the sugar cycle based on the large crushing capacity of our sugar mills.
Since 2004, we have expanded our sugarcane crushing capacity through a combination of greenfield sugar mills, capacity expansions and an acquisition. Our expanded crushing capacity has enabled us to become the largest sugar manufacturer in India, based on production capacity, with an aggregate sugarcane crushing capacity of 136,000 TCD. We have increased our geographical presence in Uttar Pradesh from three locations in 2004 to 14 locations and expanded our presence to access markets in eastern India. As a result of this expansion, we believe that our ability to produce such a high volume of sugar puts us in an advantageous position to benefit from any upward price trend in the Indian sugar cycle.
We plan to capitalise on the energy deficit in India.
The power sector in India has historically been characterised by power shortages that have consistently increased over time and we believe that anticipated economic growth and lack of adequate power infrastructure may continue to lead to greater demand for electricity in India. The state of Uttar Pradesh had an energy requirement deficit of 15.6% from April 2010 to December 2010. (Source: Central Electricity Authority, Power Scenario at a Glance, January 2011) To capitalise on the opportunity in the power sector, in addition to co-generation facilities of 428 MW, we are currently developing five thermal power projects with a combined installed capacity of 450 MW in Uttar Pradesh, through our subsidiary, Bajaj Energy Private Limited. We have entered into power purchase agreements to sell the power generated from these projects to the Government of Uttar Pradesh. Further, we have been awarded two mega power projects with an aggregate power generation capacity of 3,960 MW, at Lalitpur and Bargarh in Uttar Pradesh. We have signed a power purchase agreement with the Government of Uttar Pradesh, in respect of our Lalitpur mega power project, pursuant to which we can sell up to 90.0% of the generated power at that plant to the state.
We intend to focus on developing our value added products capabilities.
We have diversified our revenue streams to mitigate the effects of over reliance on sugar sales, particularly during downward price trends and seasonal variations in the Indian sugar industry. Our diversified product line consists of industrial alcohol, power, particle and medium-density fibre boards and bio-fertilisers.
• We have forward integrated into value-added products by setting up a distillery for converting molasses, a by-product of the sugar production process, into industrial alcohol, primarily ethanol. Ethanol is a cleaner fuel than petrol, in terms of emissions, and is increasingly being blended with petrol. We expect to be well-positioned to take advantage of any increased demand for ethanol in India in the future.
• In addition, bagasse, another by-product of our sugar manufacturing process, is used by us as a fuel to generate steam, which is in turn used to generate the electric power required to run our operations. We sell the excess power generated to the state grid of Uttar Pradesh.
• We also convert bagasse to particle board and medium-density fibre board, which is used in a number of applications, including furniture.
• We use waste products from our distillery and sugar operations, such as effluent and press mud, respectively, to produce bio-fertilisers, which are then sold. We will continue to focus on developing our value added product range.
We intend to enhance our operational efficiency. We intend to continue to pursue the following initiatives, among others, to reduce costs and enhance our operational efficiency: • improving the technology used in our integrated sugar mills by automating the production process, which will
enable us to minimise sucrose loss after sugarcane is harvested by speeding up production processes and resulting in the production of more and better quality sugar from sugarcane;
• utilizing power banked with the state grid of Uttar Pradesh during the off-season, which was initially generated
by our co-generation plants during the crushing season; and
119
• organized planning and managing of our procurement of sugarcane from farmers, including monitoring and scheduling sugarcane deliveries from farmers.
Description of Our Business and Operations
The following map and table shows the location of our sugar mills, distilleries, plants for the manufacture of particle and medium-density fibre boards, co-generation plants and thermal power projects under development:
Unit District Sugar Crushing Capacity (TCD) Distillery (KL) Co-generated Power (MW)
Thermal Power (MW)2
Medium Density Fibre and
Particle Boards
(m3) Maqsoodapur Shahjahanpur 7,000 - 30 90
Thanabhawan Muzaffarnagar 9,000 - 35
Budhana Muzaffarnagar 9,000 - 40
Kinauni Meerut 12,000 160 35 50,000
120
Unit District Sugar Crushing Capacity (TCD) Distillery (KL) Co-generated Power (MW)
Thermal Power (MW)2
Medium Density Fibre and
Particle Boards
(m3) Bilai Bijnore 9,000 - 35
Barkhera Pilibhit 7,000 - 35 90
Gangnauli Saharanpur 9,000 160 25
Golagokarannath Lakhimpur Kheri 13,000 100 30
Palia Kalan Lakhimpur Kheri 11,000 601 40 80,000
Khambarkhera Lakhimpur Kheri 10,000 160 35 90
Utraula Balrampur 12,000 - 21 90
Kundarkhi Gonda 15,000 - 43 90 80,000
Rudauli Basti 7,000 160 16
Pratappur Deoria 6,000 - 8
Total Capacity 136,000 800 428 4502 210,000 1 Our facility at Palia Kalan is leased to a third party. 2 Currently under development. Sugar Business
Sugar Production
We are the largest sugar manufacturer in India, based on production capacity. Sugar production is dependent upon the quantity of sugarcane available for crushing and the recovery percentage of sugar from sugarcane. In India, sugar production is seasonal and commences in October and generally ceases by the end of April, by which time the sugarcane available in the Cane Area is exhausted. The duration of the crushing period also determines the amount of sugar that is produced.
We have 14 sugar mills located in Uttar Pradesh, with an aggregate crushing capacity of 136,000 TCD. We produced 1.21 MMT, 0.61 MMT and 1.25 MMT of sugar during the fiscal years 2008, 2009 and 2010, respectively.
Sugar Production Process
The sugar production process involves three steps: (i) crushing, (ii) clarification and crystallisation, and (iii) separation. First, sugarcane is crushed to extract the sugarcane juice. Then, the juice is filtered to remove any impurities, a process known as clarification, and subsequently, the juice is boiled until the sugar crystallises, forming a syrup. These impurities are recycled into soil conditioners and fertilisers known as press mud. Finally, the syrup is spun in a centrifuge which separates the sugar crystals (also called plantation white sugar) to produce sugar and molasses. In our Kinauni sugar mill, we have refining facilities where we produce refined sugar. Our other sugar mills produce plantation white sugar. The plantation white sugar and the refined sugar are dried, graded according to the size of the crystals and packaged at our sugar mills. We use the molasses generated from the production process to produce industrial alcohol, particularly ethanol. A small quantity of molasses is also sold directly to third parties. Another by-product of the sugar production process is bagasse, the fibrous residue, or sugarcane stalk, left over after crushing the sugarcane and extracting its juice. We use bagasse as a fuel to generate power in our sugar mills and manufacture particle and medium-density fibre boards. During the crushing season, all of our power needs are satisfied from burning bagasse and we sell the excess power that we produce to the state grid of Uttar Pradesh.
121
Crushing Output
The following table indicates the sugarcane crushed and sugar production at our 14 sugar mills for the past three fiscal years.
Sugarcane Crushed and Sugar Production
Sugarcane Crushed Average Recovery Rate Sugar Production Total No. of Days in Operation (MMT) (% of sugarcane crushed) (MMT)
FY 2008
FY 2009
FY 2010
FY 2008
FY 2009
FY 2010
FY 2008
FY 2009
FY 2010
FY 2008
FY 2009
FY 2010
Western Zone Thanabhawan ..... 1.01 0.54 0.78 9.84 8.77 9.03 0.10 0.05 0.07 128 118 126 Budhana .............. 1.17 0.58 0.98 10.01 8.84 9.37 0.12 0.05 0.09 139 120 131
Bilai ..................... 0.97 0.47 0.87 10.44 10.04 10.15 0.10 0.04 0.09 128 118 135 Gangnauli ........... 0.64 0.19 0.45 9.41 8.47 9.07 0.06 0.02 0.04 114 86 128
Kinauni ............... 1.49 0.79 1.22 9.97 8.72 9.00 0.15 0.07 0.11 142 122 134 Central Zone
Palia Kalan ......... 1.26 0.86 1.16 9.95 9.31 8.69 0.13 0.08 0.10 123 94 115 Golagokarannath ...........................
1.55 0.86 1.18 10.30 9.53 9.68 0.16 0.08 0.11 131 98 119
Khambarkhera .... 0.86 0.53 0.80 9.82 9.16 9.11 0.08 0.05 0.07 107 91 112 Barkhera.............. 0.68 0.34 0.64 9.76 8.79 8.95 0.07 0.03 0.06 108 76 110 Maqsoodapur ...... 0.41 0.27 0.38 9.86 8.46 9.20 0.04 0.02 0.03 92 68 78
Eastern Zone
Pratappur............. 0.42 0.19 0.16 9.90 9.20 9.42 0.04 0.02 0.02 109 68 61 Kundarkhi ........... 0.90 0.49 0.67 9.85 8.49 9.04 0.09 0.04 0.06 122 75 91 Utraula ................ 0.28 0.43 0.49 10.04 8.78 9.39 0.03 0.04 0.05 63 86 85 Rudauli................ 0.40 0.19 0.16 9.12 9.20 9.23 0.04 0.02 0.02 107 57 61 Total .................. 12.04 6.73 9.94 9.88 8.98 9.23 1.21 0.61 0.921 – - -
1 We produced an additional 0.33 MMT of sugar during the fiscal year 2010 from imported raw sugar.
Products
We produce plantation white sugar at all our existing sugar mills with the exception of Kinauni where we produce only refined sugar. Refined sugar, which is preferred in international sugar markets, undergoes further processing than plantation white sugar and typically commands a higher price.
Use of Technology We focus on increasing our yield and controlling our sugar losses in the production process with the use of modern and efficient equipment and process automation although the actual amount of recoverable sugar is largely dependent on the quality and variety of the sugarcane grown by farmers. All of our sugar mills have fully automated manufacturing processes that maximise the extraction of juice from sugarcane. Customers
We primarily sell sugar in the wholesale domestic market through a network of several agents. We also sell refined sugar directly to end-customers without the use of agents. Our customers in India include wholesalers as well as food and beverage companies. No single customer accounts for more than 5% of our total sugar sales.
122
Sales and Distribution
Our sales volume of sugar for the fiscal years 2008, 2009 and 2010 and the three months ended December 31, 2010 were 1.07 MMT, 0.82 MMT, 0.99 MMT and 0.36 MMT, respectively. During the fiscal year 2010, our total gross sales (including excise duty) from white sugar were ` 29,191.7 million, or 88.3% of our total gross sales, compared to total gross sales (including excise duty) of ` 18,346.1 million during the fiscal year 2009, or 86.7% of our total gross sales in that year. For the three months ended December 31, 2010, our total gross sales, including excise duty, from white sugar were ` 10,269.9 million, or 64.8% of our total gross sales for the same period.
The following table indicates our sales of sugar by different states as a percentage of total sales:
(in percentage) Region FY 2008 FY 2009 FY 2010 Uttar Pradesh ......................... 29.5 31.1 27.6 Delhi ...................................... 13.8 18.7 25.5 Haryana ................................. 9.8 16.3 17.0 Bihar ...................................... 12.4 11.3 9.5 Punjab .................................... 7.5 3.9 9.1 West Bengal .......................... 16.6 8.8 3.8 Jharkhand .............................. 2.1 1.3 1.2 Madhya Pradesh .................... 1.0 0.7 0.3 Assam .................................... 0.9 0.3 0.0 Others .................................... 6.4 7.6 6.0 Total ...................................... 100.0 100.0 100.0
We sell nearly all of our sugar in the wholesale market through selling agents. Our agents primarily procure purchase orders in the wholesale market, and we invoice purchasers directly. To mitigate the risk of non-payment, we generally dispatch orders only after we receive payment although we extend credit in limited circumstances. We do not have written contractual agreements with our selling agents and they do not sell our sugar exclusively. We pay our selling agents a commission based on each metric ton of plantation white sugar they sell. Sugarcane Pricing The price of sugarcane is governed by notifications of the Ministry of Consumer Affairs of the Government of India and of the various state governments. The Government of India determines the minimum price payable to farmers, known as the Fair and Remunerative Price (“FRP”). The FRP is linked to a basic recovery rate and provides for a premium over the FRP if recovery rates are greater than the basic recovery rate. However, individual states may advise sugar mills to pay a state advised price (“SAP”), which was at a premium of up to 50%-60% over the FRP during the fiscal year 2010. The state of Uttar Pradesh, where all 14 of our sugar mills are located, notifies sugar manufacturers to pay a SAP, which is not linked to recovery rates. The base FRP increased from ` 1,298.4 per metric ton during the fiscal year 2010 to ` 1,391.2 per metric ton during the fiscal year 2011, while the SAP for sugarcane in the state of Uttar Pradesh for the fiscal year 2010 was ` 1,650 per metric ton for general varieties at the gates of the sugar mills and ` 50 extra per metric ton for early maturing varieties. The SAP for sugarcane in the state of Uttar Pradesh for the fiscal year 2011 was ` 2,050 per metric ton for general varieties at the gates of the sugar mills and ` 50 extra per metric ton for early maturing varieties. Pricing of Sugar Sugar has been classified as an essential commodity under the Essential Commodities Act, 1955. The pricing of a certain percentage of sugar is fixed by the Ministry of Food and Civil Supplies, Government of India for different levy price zones. This is called the “levy price” and the sugar which is classified to be sold under the levy price is termed “levy sugar”. The sugar which is not classified as levy sugar is termed “free sale sugar”. For details of sugar pricing, see “Management's Discussion and Analysis of Financial Condition and Results of operations—Factors Affecting our Results of Operations—Revenue—Sugar—Pricing of sugar”.
123
Levy Sugar Pursuant to sugar levy requirements imposed by the Government of India, we are currently required (for crushing season 2010-11) to sell 10% of the sugar we produce from sugarcane to the Government of India at a pre-determined price, known as a levy price. For the crushing season 2009-10, we were required to sell 20% of our sugar at levy prices. Levy prices are declared by season and by region and are based on the mode of transport. Levy prices are applicable to all sugar produced within the corresponding crushing season, regardless in which crushing season the sugar may actually be sold. The crushing season refers to the part of the year when sugarcane is harvested and crushed. Levy prices fixed by the Government of India in respect of our sugar mills for the 2008-09, 2009-10 and 2010-11 crushing seasons ranged from ` 12,759 per metric ton to ` 13,850 per metric ton, ` 17,430 per metric ton to ` 18,277 per metric ton, and ` 18,326 per metric ton to ` 19,188 per metric ton, respectively. The current levy price for road transported sugar excluding any duties and taxes is ` 19,172 per metric ton for eastern Uttar Pradesh, ` 19,009 per metric ton for central Uttar Pradesh and ` 18,326 per metric ton for western Uttar Pradesh. Free Sale Sugar Prices of free sale sugar vary across the country. Although sugar sold in the open market is not subject to a levy, the Government of India continues to regulate sales through a release mechanism. Through the release mechanism, the Government of India determines the amount of sugar that we can sell every month. We primarily sell our sugar in the north Indian states where prices are typically higher than the rest of India. Customers arrange to pick up their sugar orders from our sugar mills or our storage facilities. Sugar collected from our storage facilities has a higher price, based on the cost of delivery from our sugar mills to the relevant facilities. Our average selling price (exclusive of excise duty) was ` 15,633, ` 22,051, ` 29,723 and ` 28,434 per metric ton for the fiscal years 2008, 2009, 2010 and the three months ended December 31, 2010, respectively. Industrial Alcohol Industrial Alcohol Production Process We produce ethanol and other industrial alcohol products from molasses through fermentation and distillation. We first convert the molasses into fermented wine by diluting the molasses with water and then adding yeast to encourage fermentation. After the fermentation process, the yeasted wine is centrifuged to separate the yeast from the liquid. We then boil the wine at different temperatures in a vacuum, which causes the alcohol to separate from the other liquids. After a number of distillation stages, the concentration of alcohol rises to 95% by volume to produce rectified spirit. To produce ethanol, the 5% water content in rectified spirit is removed through a molecular sieve. The ethanol obtained contains 99.7% - 99.8% alcohol by volume. Production Capacity and Output Our distilleries have a combined capacity of 800 KLPD, which we believe makes us one of the largest industrial alcohol producers in India. Our combined capacity includes one of our distilleries, which has a capacity of 60 KLPD that we have leased to a third party. We currently produce industrial alcohol at our Golagokarannath, Kinauni, Gangnauli, Khambharkhera and Rudauli distilleries. Our total production of industrial alcohol was 139,260 KL, 52,469 KL, 104,521 KL and 15,378 KL for the fiscal years 2008, 2009, 2010 and the three months ended December 31, 2010, respectively.
Our Company has entered into a lease agreement and supplementary lease agreement, each dated April 25, 2006, to lease our 60 KL distillery at Palia Kalan, Uttar Pradesh to a third party. The lease is currently valid until May 31, 2016. The lease is renewed automatically for subsequent terms of five years unless a notice of intention for non-renewal of lease is received, at least six months before the lease period ends.
124
Customers, Sales and Distribution
In October 2007, the Central Government, pursuant to its “Bio-fuels for Surface Transportation” scheme, required Indian oil companies in certain states to blend 5% ethanol into their fuel products, and there have been proposals for the blending requirement to be increased to 20%. We sell our ethanol to Indian oil companies through a competitive tender mechanism, which was finalised in August 2010. The price of ethanol is also regulated through state excise duties. The prices of the other industrial alcohol that we sell are determined by local market prices.
The Government of India tender price for ethanol is currently ` 27.0/L. Our average price realisations for ethanol were ` 22.0/L, ` 22.0/L, and ` 22.0/L during the fiscal years 2008, 2009 and 2010, respectively. Average prices of other types of industrial alcohol realised during the fiscal years 2008, 2009 and 2010 and the three months ended December 31, 2010 were ` 19.0/L, ` 28.3/L, ` 24.4/L and ` 25.3/L, respectively.
Ethanol sales constituted 3.9% and 16.9% of our industrial alcohol sales during the fiscal year 2010 and the three months ended December 31, 2010, respectively, by volume. We also produce other industrial alcohol products such as special denatured spirit and extra neutral alcohol, which together constituted approximately 96.1% and 83.1% of our industrial alcohol sales during the fiscal year 2010 and three months ended December 31, 2010. The table below sets forth our gross sales and sales volumes for industrial alcohol including ethanol and other industrial alcohol products, for the periods indicated.
Product FY 2009 FY 2010 Three Months Ended December 31, 2010
Industrial Alcohol Gross Sales (` in million) 1,273.9 1,717.9 838.5 Percent of Consolidated Total Gross Sales
6.0 5.2 5.3
Sales Volume (in KL) 49,330 66,841 31,124 A. Ethanol Gross Sales (` in million) 759.6 61.6 156.9 Percent of Consolidated Total Gross Sales
3.6 0.2 1.0
Sales Volume (in KL) 31,644 2,589 5,267 B. Other Industrial Alcohol Products
Gross Sales (` in million) 514.3 1,656.3 681.6 Percent of Consolidated Total Gross Sales
2.4 5.0 4.3
Sales Volume (in KL) 17,686 64,252 25,857 The majority of our ethanol and other industrial alcohol products customers in India collect shipments from our distilleries. If a customer requires for us to arrange delivery, the cost is typically borne by the customer.
Co-Generation Power Projects
Power Generation Process
We produce electricity for our sugar mill operations. The amount of electric power we generate exceeds our operational needs, and during the fiscal year 2007, we began to sell our surplus power to the state grid of Uttar Pradesh. We generate electric power through the burning of bagasse, a primary by-product of our sugar production process. Bagasse is a combustible material which when burned produces steam, which in turn is used to generate electric power.
Production Capacity and Output
We have established co-generation facilities at all of our sugar mills, which have a total installed capacity of 428 MW of power. Ten of these co-generation facilities export power to the state grid of Uttar Pradesh. During the fiscal
125
year 2010, we converted the bagasse fired boilers into multi-fuel boilers at our Gangnauli, Kinauni and Maqsoodapur sugar mills. We now have the option to run these boilers on alternate fuels (i.e. either with coal, or with bagasse or jointly with coal and bagasse).
Customers, Sales and Distribution
We sell all of our surplus power to the state grid of Uttar Pradesh through power purchase agreements with its distribution companies. Our gross sales from power operations for the fiscal years 2009 and 2010 and the three months ended December 31, 2010 were ` 130.2 million, ` 411.3 million and ` 181.1 million, respectively, or approximately 0.6%, 1.2% and 1.1%, respectively, of our total gross sales for the same periods. For the fiscal years 2009 and 2010 and the three months ended December 31, 2010, the average price at which we sold our excess power was approximately ` 3.09 per kWh, ` 3.26 per kWh and ` 4.11 per kWh, respectively.
Bio-Gas from Press Mud In addition to the bagasse and molasses, our sugar mills also generate sufficient amount of press mud. At six out of our 14 units, distilleries are attached to the sugar mill where press mud is partly utilised in making compost with bio-methane effluent and allowing our distilleries to accomplish zero discharge and the remaining press mud is sold at a nominal price. At our remaining sugar mills, the entire quantity of press mud is sold at nominal prices. With around 30-35% biomass content, press mud has the potential to be converted into biogas, which in turn can also be consumed advantageously in power generation through gas engines. Bio-Fertilisers from Press Mud We also manufacture bio-fertilisers, which may be used to replenish the level of organic carbon in the soil to enhance the productivity and fertility of soil. Bio-fertiliser is manufactured by the process of composting press mud received from the filtration of cane juice and spent wash received from our distilleries. Our total production of bio-compost was 104,303 MT, 43,930 MT, 64,559 MT and 11,966 MT for the fiscal years 2008, 2009, 2010 and the three months ended December 31, 2010, respectively. Particle Board and Medium-Density Fibre Board
Our subsidiary, Bajaj Eco-Tec Products Limited manufactures particle boards and medium-density fibre boards from bagasse, the primary by-product of our sugar production activities. We realise higher margins by converting our bagasse to particle board and medium-density fibre board, as compared to burning the bagasse to generate and sell power.
Manufacturing Process
Particle board and medium-density fibre board are environmentally-friendly substitutes for timber and plywood, and are produced by bonding resin with cellulose materials, such as bagasse, under pressure. Our subsidiary, Bajaj Eco-Tec Products Limited established three manufacturing plants for this purpose. We believe that excess bagasse provides us with the opportunity to provide a cost effective and sustainable alternative for wood, plywood and other similar panel products while maximising the utility of the by-products of our sugar production process.
Production Capacity and Output
We established three manufacturing plants for our particle board and medium-density fibre board business in the fiscal year 2008 in Uttar Pradesh, and commercial production of these products commenced in April 2008. Our three plants have a current production capacity of 210,000 cubic metres per annum.
Customers
We typically sell our particle boards and medium-density fibre boards to whole salers and various clients throughout India, such as hospitals, hotels, colleges and universities as well as other commercial establishments.
126
Sales and Distribution
For sale and marketing of our products we established a country-wide marketing and distribution network to market the products under the name “Bajaj Boards”. We plan to expand distribution of these products to overseas markets by establishing partnerships with foreign customers, such as furniture manufacturers.
Power
Thermal Power Projects under Development Introduction
We are presently developing five coal-based power projects, with two units generating 45 MW each, at five locations through our subsidiary, Bajaj Energy Private Limited (“Bajaj Energy”). These projects will be located on the unused land available in the vicinity of our sugar mills at Khambarkhera, Barkhera, Maqsoodapur, Kundarkhi and Utraula, all located in Uttar Pradesh. We expect that the power projects will be fully commissioned by November 2011. The power projects have an aggregate estimated development cost of ` 23,200 million. As of March 31, 2011, Bajaj Energy has spent approximately ` 15,290.0 million for developing the power projects. Financing The total cost of the projects is expected to be approximately ` 23,200 million. The power projects are being financed through a 6.5% equity contribution by our Company and an 18.5% equity contribution by our Promoter Group with the remaining 75% provided through secured debt funding.
Bajaj Energy has entered into a facility agreement dated August 25, 2010 for financing of ` 17,400 million from a syndicate of lenders comprising Allahabad Bank, Bank of Baroda, Bank of India, Corporation Bank, Dena Bank, IDBI Bank Limited, Oriental Bank of Commerce, Punjab National Bank, PTC India Financial Services Limited, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, Union Bank of India and State Bank of India. As of March 31, 2011, we had ` 12,849.2 million in principal amount outstanding. Procurement/Implementation
For the development of the power projects, our Company has awarded five contracts on December 24, 2009 to Bajaj Infrastructure Development Company Limited (“BIDCO”) for an aggregate price of ` 18,980 million. Our Company subsequently transferred the responsibility for implementation of these projects to our subsidiary Bajaj Energy. Each contract is for the development of a 90 MW power plant, switchyard, transformer and associated works. Under the terms of the letters, BIDCO is required to complete the development and testing of the five power projects within 22 months from the commencement of development of each project. BIDCO must also ensure that the power plants meet certain performance benchmarks and failure to do so may result in the assessment of liquidated damages that are to be payable to Bajaj Energy, up to a maximum of 7.5% of the contract price. BIDCO is also liable for a warranty period of 24 months from the performance test or 30 months from the date of last supply, whichever is earlier.
BIDCO, in turn, has awarded boiler contracts to two prominent third-party EPC contractors for two and three units, respectively, on December 26, 2009 at an aggregate contract cost of ` 5,880.0 million, to be payable in separate milestones, which includes a 10.0% advance. In addition, BIDCO has also awarded contracts for steam turbines, generators and other associated auxiliaries for five units to a third prominent third-party EPC contractor on December 26, 2009, at an aggregate contract cost of ` 2,275.0 million, to be payable in separate milestones, which includes a 10.0% advance.
Each of the contracts with the third-party EPC contractors contains liquidated damages clauses, up to a maximum of 7.5% of the contract price, for any delay in the commissioning of the projects, at a rate of 0.5% of the contract price per week. In addition, each of the third-party EPC contractors are required to meet certain performance benchmarks and any failure to do so may result in the assessment of further liquidated damages to be payable to BIDCO, up to a
127
maximum of 7.5% of the contract price. Each of the boilers, steam turbines, generators and other auxiliaries are covered by a warranty of 24 months from the date of first synchronization or 30 months from the date of last material receipt, whichever is earlier.
Regulatory Approvals
We have received clearance from the Uttar Pradesh Pollution Control Board for our five power projects under development in May 2010. These clearances were reissued to Bajaj Energy during September to November 2010. We have received clearance from the State Level Expert Appraisal Committee for environment clearance on July 9, 2010, and these clearances were transferred to Bajaj Energy in January 2011. We have received clearance from the Airports Authority of India on November 23, 2010 for the construction of a chimney. Since no forest land is involved in the development of the projects, we do not require any clearance from the Ministry of Environment and Forests.
Fuel Supply
The primary fuel for our power projects will be coal. The power projects are expected to have an aggregate coal consumption of approximately 1.95 million tons per annum with an average gross calorific value of 4,200 kcal/kg at 85% plant load factor.
We have received five letters of assurance, each dated August 23, 2010 and valid for 24 months, from Central Coalfield Limited, each for the supply of 0.3899 million tonnes per annum of Grade E coal to be used at each of the 90 MW units. However, we are required to complete certain milestones within 24 months of the date of issue of the letters of assurance. In the event that we do not complete any of the required milestones and fail to furnish an additional commitment guarantee, or if we fail to fulfil all the required milestones, Central Coalfields shall have the right to cancel or withdraw the letter of assurance. In addition, if we fail to sign the fuel supply agreement with Central Coalfields within three months of the expiry of the letter of assurance or satisfactory achievement of the required milestones, Central Coalfields shall have the right to invoke the commitment guarantee.
Water Supply
The amount of water required for the projects is estimated to be approximately 6,984 cubic metres per day per site. The entire water requirement is proposed to be met through the extraction of ground water. Water is proposed to be drawn through two bore-wells at each project site. We have received letters dated January 27, 2010 and February 4, 2010 from the Central Ground Water Authority giving us their approval to draw ground water for our projects.
Off-take Arrangements
Bajaj Energy has entered into five power purchase agreements with Uttar Pradesh Power Corporation Limited (“UPPCL”), each dated December 10, 2010, for the sale of power generated at each of the five thermal power projects under development. Pursuant to the agreements, UPPCL is authorised to act on behalf of procuring entities that represent various grid companies. The agreements are valid for 25 years from the date of commercial operations of the power projects. Commissioning of the power projects will be certified by an independent engineer upon the successful completion of the required tests.
Pursuant to the agreements, Bajaj Energy is required to meet a number of conditions by June 9, 2011, including:
• receive of initial consents from state governments and other authorities;
• obtain coal linkages from the Standing Linkage Committee;
• award EPC contracts for the development of the power projects; and
• achieve financial closure, which entails the execution of all financing documents and fulfilment of their respective conditions precedent including those conditions with respect to the initial drawdown of funds.
128
If Bajaj Energy fails to meet any of these conditions, it may be liable to pay liquidated damages, as determined by the Uttar Pradesh Electricity Regulatory Commission (“UPERC”).
The tariff under the power purchase agreements is payable monthly and consists of a fixed portion and a variable portion. In consideration for the monthly tariff, which may also include late payment surcharges of 1.25%, Bajaj Energy agrees to provide at least 90% of the available capacity of power, on a pro rata basis to the various procurers. The remaining 10% may be sold to third parties. In addition, in the event that a particular procurer does not purchase its allocated quantity, Bajaj Energy must offer the unsold power to the other procurers at the same rate. Only if the other procurers refuse to purchase the power shall this power be available to third parties.
Under the terms of the power purchase agreements, the procurers are responsible for the provision of transmission infrastructure and the associated transmission and interface costs. Fuel is also governed by the power purchase agreements, pursuant to which Bajaj Energy must source its coal from a domestic coal linkage and must seek the permission of the procurers to purchase coal from any other source. If the procurers withhold their permission, Bajaj Energy is permitted to sell available power to any third party.
Power Evacuation
In accordance with the terms of the PPAs signed with UPPCL, power generated from our 90 MW projects shall be fed to the UPPCL grid at the switchyard bus located at our projects. It shall then be the responsibility of UPPCL to transmit the power to the state grid. We do not envisage any additional cost for the purposes of power evacuation.
Property
The entire land requirement of 141.59 acres was met from surplus land available within the premises of our existing sugar units. Our Company has leased this land to Bajaj Energy pursuant to lease deeds entered in September 2010, which expire in 29 years. Our Planned Power Projects We plan to develop two coal-based mega power projects. Mega power projects are eligible for various fiscal incentives including zero customs duty, deemed export benefits and income tax holidays under Section 80-IA of the Income Tax Act. We intend to apply for such benefits. Lalitpur Power Project We are currently planning to develop a 1,980 MW (three units of 660 MW each) coal-based power project at Lalitpur, Uttar Pradesh (the “Lalitpur Power Project”). This project is proposed to be implemented through Lalitpur Power Generation Company Limited (“Lalitpur Power”), a SPV created for this purpose by the Government of Uttar Pradesh. Our Company owns 76.0% of Lalitpur Power, pursuant to a share purchase agreement dated December 10, 2010. A Promoter Group Company owns the remaining shares of Lalitpur Power. Memorandum of Understanding Our Company has entered into a memorandum of understanding with the Government of Uttar Pradesh on April 22, 2010, as the lead member of a consortium to develop a 1980 MW (3 x 660 MW) coal based power project at Lalitpur district, Uttar Pradesh. Pursuant to the memorandum, the State Government’s nominated agency will have the right to purchase up to 90.0% of the saleable energy at a price to be determined by the Uttar Pradesh Electricity Regulatory Commission (“UPERC”). The remaining power may be sold to third parties. A power purchase agreement of a term of 25 years will govern the terms of such sales. The State Government will assist in the procurement of land for the project but the full cost of the purchase of land will be borne by the consortium. The consortium is also responsible for any transmission infrastructure to connect the power project to the designated sub-station. The consortium has provided a ` 990.00 million bank guarantee pursuant to the terms of the memorandum of understanding. The memorandum of understanding is valid until October 21, 2011.
129
Procurement/Implementation
Lalitpur Power has issued a letter of award on March 21, 2011 to Bharat Heavy Electricals Limited (“BHEL”) for the development of the Lalitpur Power Project. The contract price is the sum of US$ 135.00 million, € 246.00 million and ` 25,529.00 million. The contract covers the main plant package comprising boiler, steam turbine, auxiliaries and associated works. Under the terms of the award, the scheduled completion of trial operations shall be 45 months, 49 months and 53 months from the date of the letter of award, for each of the three 660 MW units of the power project, respectively. BHEL must also ensure that the power plants meet certain performance benchmarks and failure to do so may result in the assessment of liquidated damages that are to be payable to Lalitpur Power, in amounts up to 15% of the unit-wise contract price. BHEL is also liable for a warranty period of 24 months for the main plant and equipment from the successful completion of trial operations for each unit. For supplies obtained from BHEL’s collaborators, the warranty period is 18 months from the date of successful completion of trial operations for each unit.
Power Purchase Agreement
Lalitpur Power has entered into a power purchase agreement with Uttar Pradesh Power Corporation Limited (“UPPCL”), dated December 10, 2010. Pursuant to the agreement, UPPCL is authorised to act on behalf of four procuring entities. The agreement is valid for a term of 25 years from the date of commercial operations of the power station. Commissioning of the power station is certified by an independent engineer upon the successful completion of the required tests.
Pursuant to the agreement, Lalitpur Power is required to meet a number of conditions by June 9, 2012, including:
• receipt of initial consents from state governments and other authorities;
• coal linkage from the Standing Linkage Committee;
• awarding an EPC contract for the development of the power project;
• achievement of financial closure, which entails the execution of all financing documents and fulfilment of their respective conditions precedent including those conditions with respect to the initial drawdown of funds; and
• providing a letter to the procuring entities that indicates the commercial operations date of the first, second and third 660 MW units are no later than 52 months, 58 months and 64 months, respectively, from the achievement of financial closure.
If Lalitpur Power fails to meet any of these conditions, it may be liable to pay liquidated damages, as determined by the UPERC, but only up to the amount of the bank guarantee of ` 990.00 million, which was provided by our Company pursuant to a memorandum of understanding dated April 22, 2010.
The tariff under the power purchase agreement is payable monthly and consists of a fixed portion and a variable portion. In consideration for the monthly tariff, which may also include late payment surcharges of 1.25%, Lalitpur Power agrees to provide at least 90% of the available capacity of power, on a pro rata basis to the four procuring entities. The remaining 10% may be sold to third parties. In addition, in the event that a particular procurer does not purchase its allocated quantity, Lalitpur Power must offer the unpurchased power to the other procurers at the same rate. Only if the other procurers refuse to purchase the power shall this power be available to third parties.
Under the terms of the power purchase agreement, the procurers are responsible for the provision of transmission infrastructure and the associated transmission and interface costs. Fuel is also governed by the power purchase agreement, pursuant to which Lalitpur Power must source its coal from a domestic coal linkage and must seek the permission of the procurers to purchase coal from any other source. If the procurers withhold their permission, Lalitpur Power is permitted to sell available power to any third party.
130
Regulatory Approvals
We have received clearance from the Ministry of Environment and Forests on March 31, 2011. We have applied for a clearance from the Defence Authorities on July 24, 2010. We are yet to receive clearance from the Defence Authorities. Water We have also received a clearance from Uttar Pradesh Irrigation Department, dated November 19, 2010, for the supply of up to 80 cubic feet per second of water, or approximately 195,000 cubic metres of water per day, for operational use at the Lalitpur Power Project. Pursuant to the clearance, we may extract up 80 cubic feet day. We also received a clearance from the Central Ground Water Authority, Ministry of Water Resources dated February 22, 2011 for the withdrawal of ground water in respect of the Lalitpur Power Project. Pursuant to the clearance, we may extract 1,200 cubic metres of water a day through three proposed bore wells. This clearance is valid for the construction period only. As a condition of the clearance, we are required to implement groundwater recharge measures of 4.08 million cubic metres of water per year. Bargarh Power Project We are also planning to develop a 1,980 MW (three units of 660 MW each) coal-based power project at Bargarh, district Chitrakoot, Uttar Pradesh. This project is proposed to be implemented through a SPV, Bajaj Power Generation Private Limited, a subsidiary of our Company. Memorandum of Understanding Our Company has entered into a memorandum of understanding with the Government of Uttar Pradesh on December 14, 2010, as the lead member of a consortium to develop a 1980 MW (3 x 660 MW) coal based power project at Bargarh, district Chitrakoot, Uttar Pradesh. Pursuant to the memorandum, the State Government of Uttar Pradesh’s nominated agency will have the right to purchase 100.0% of the saleable energy at a price to be determined by UPERC. A power purchase agreement of a term of 25 years will govern the terms of such sales. The State Government of Uttar Pradesh will assist in the procurement of land for the project but the full cost of the purchase of land will be borne by the consortium. The consortium is also responsible for any transmission infrastructure to connect the power project to the designated sub-station. The consortium has provided a ` 990.00 million bank guarantee pursuant to the terms of the memorandum of understanding. The memorandum of understanding is valid until June 13, 2012.
Regulatory Approvals
We applied for an environmental clearance from the Ministry of Environment and Forests on December 23, 2010. We are yet to receive the terms of reference. Raw Materials The most important raw material for the sugar industry is sugarcane. Procuring regular and prompt supplies of sugarcane is critical during the crushing season, as any delays or shortfall in supply could have a negative bearing on capacity utilisation, resulting in decline in production. Hence, sugarcane procurement and development are fundamental to our sugar business. In Uttar Pradesh, sugar mills purchase sugarcane from Cane Societies, which are government entities that act as intermediaries between sugar manufacturers and sugarcane farmers. Both, purchases of sugarcane and payments to farmers are directed through the Cane Society. The sugarcane farmer, however, will deliver the sugarcane directly to our sugar mill or one of our approximately 800 collection centres. There is a marginal difference in price between sugarcane that is purchased and then delivered at our sugar mill and sugarcane that is purchased and then delivered at our collection centre, to offset any associated transportation costs. Any farmer growing sugarcane within a certain distance around a sugar mill, also known as the reserved area, is required to supply the sugarcane to that sugar mill, and the sugar mill is required under law to purchase the
131
sugarcane and make payment to the farmer within 14 days of purchase. If the requirement of a particular sugar mill is in excess of the sugarcane available in the reserved area, the Cane Commissioner of Uttar Pradesh, may, on application, assign another area from outside the reserved area, which is known as the assigned area. The purchase price of the sugarcane we procure is fixed by the State Government of Uttar Pradesh. If the sugar mill is unable to crush all of the sugarcane within its reserved area, the reserved area is reallocated to a sugar mill that is able to crush the cane. Reserved areas are allocated on an annual basis. The annual sugarcane harvesting period in the northern region of India generally begins in October and ends in April or May. Once sugarcane is harvested, farmers in the vicinity of the sugar mills transport their respective yields directly to the sugar mill. We have set up several collection centres within our reserved areas to which local farmers bring their sugarcane, which is then weighed and transported to our sugar mills. We organise the farmers’ harvesting and supply schedules and payments are managed electronically using an electronic database. Data from our entire production process, ranging from sugarcane supply to sugarcane crushed per day, is stored in an electronic database. Our sugarcane development program educates farmers regarding modern agricultural practices in sugarcane cultivation, supplies farmers with seeds, encourages replacement of inferior sugarcane varieties with varieties which are high yielding, have high sucrose content and are early maturing, encourages measures to eliminate diseases, insects and pests in sugarcane, recommends fertilisers based on soil testing, contributes for construction and repair of link roads and culverts, and maintenance of drainage systems. We use information technology for classification and indexing of sugarcane in our sugarcane procurement system. Such systems enable us to access information about the land holdings, such as areas under sugarcane cultivation and recent supply history of sugarcane to the mill, which are used to plan sugarcane procurement and development. Farmers are advised on sowing of the sugarcane varieties based on information collected by us regarding, among other data, land type and soil details. In addition, we use technology to enhance our relationship with sugarcane farmers in our reserved area. For example, we have set up an online dispute resolution centre and we have begun utilising SMS notifications to sugarcane farmers at the time of purchase or payment of sugarcane which describe the quantity and price of any transaction. In addition, we use weighing systems that are connected to central servers to reduce any possible discrepancies in weights across our collection centres. The tables below set forth our estimates of details of our culturable area, reserved area, cane area, sugarcane yield and sugarcane drawal for each of our existing sugar mills. Culturable Area is the area of land in the vicinity of our sugar mills suitable for the cultivation of sugarcane. Reserved area is the area around a sugar mill within which sugarcane grown must be purchased by such sugar mill, subject to a minimum distance of 7.5 kilometres between sugar mills. Cane Area includes our reserved area and any other culturable area that is assigned to us by the sugarcane commissioner of a particular area on an annual basis. Sugarcane yield is the amount of sugarcane produced by the Cane Area. Sugarcane drawal is the percentage of sugarcane available to us from the sugarcane yield which we crush.
Culturable Area Cane Area Reserved Area
(hectare) (hectare) (hectare) Sugar Mills under operation FY 2008 FY 2009 FY 2010 FY 2008 FY 2009 FY 2010 FY 2008 FY 2009 FY 2010 Golagokarannath . 65,310 47,443 60,008 49,986 29,658 34,356 49,224 29,658 34,356 Palia Kalan ........... 49,887 40,913 40,913 40,392 25,437 24,047 31,983 21,247 19,806 Kinauni ................. 55,000 37,883 27,646 40,797 24,210 20,289 37,369 22,504 17,491 Thanabhawan ....... 31,349 20,644 21,180 25,749 14,216 17,306 15,486 11,217 9,171 Budhana ............... 33,975 18,150 23,781 27,724 14,116 18,495 27,241 14,116 18,495 Bilai ...................... 41,500 23,163 30,890 34,047 17,456 19,952 30,461 17,456 18,633 Khambarkhera ..... 53,000 35,272 37,343 39,000 22,103 22,432 28,883 19,974 19,375 Gangnauli ............. 32,560 15,095 20,274 24,555 9,798 11,205 11,210 4,607 6,340 Barkhera ............... 39,264 31,107 34,487 28,426 16,864 15,507 23,639 16,171 13,511 Maqsoodapur ....... 43,400 30,539 41,728 18,965 9,877 9,152 11,862 7,578 6,247 Pratappur .............. 40,469 40,469 40,469 25,469 14,481 7,905 8,275 4,570 3,862 Kundarkhi ............ 96,000 79,000 79,000 45,923 25,442 20,221 28,007 19,716 14,034
132
Culturable Area Cane Area Reserved Area
(hectare) (hectare) (hectare) Sugar Mills under operation FY 2008 FY 2009 FY 2010 FY 2008 FY 2009 FY 2010 FY 2008 FY 2009 FY 2010 Utraula .................. 32,000 28,760 30,100 21,551 14,814 10,987 15,853 10,213 8,665 Rudauli ................. 103,000 103,000 103,000 21,112 10,961 6,339 14,059 8,854 5,034
Sugarcane Yield Sugarcane Drawal
Sugar Mills under operation
(metric tons/hectare) (%) FY 2008 FY 2009 FY 2010 FY 2008 FY 2009 FY 2010
Golagokarannath .. 59.1 53.6 49.6 52.4 61.0 80.6 Palia Kalan............ 59.1 53.2 49.7 52.2 63.3 97.2 Kinauni.................. 70.2 69.5 69.1 52.0 52.0 87.0 Thanabhawan........ 66.1 65.1 58.7 57.6 58.4 68.7 Budhana ................ 69.7 65.7 60.7 60.0 62.3 87.8 Bilai ....................... 62.1 57.8 53.8 46.5 46.6 80.5 Khambarkhera ...... 59.1 53.2 49.6 37.1 45.0 72.0 Gangnauli.............. 63.2 63.0 54.7 43.0 30.0 73.1 Barkhera ................ 60.7 56.1 51.6 49.2 36.4 80.2 Maqsoodapur ........ 56.9 56.1 52.4 36.3 51.3 78.3 Pratappur ............... 48.4 50.2 44.4 34.2 23.0 45.2 Kundarkhi ............. 45.9 46.8 40.0 42.4 41.1 83.0 Utraula .................. 54.7 49.0 40.3 32.0 74.4 82.5 Rudauli .................. 53.1 51.7 46.3 37.0 32.7 54.0
Due to floods in the state of Uttar Pradesh in 2008, a lower volume of sugarcane was harvested that year.
Each of our facilities has packaging facilities, distribution capabilities and inventory storage facilities. During the off-season period from May or June to September, the sugar mills do not operate and are subject to routine equipment maintenance, repairs and upgrades.
Properties
We own all the land occupied by our sugar mills, other than certain parts of land at our sugar mills in Budhana, Utraula and Kundarkhi. Our land at Budhana is subject to a long-term lease arrangement with the State Government of Uttar Pradesh. In addition, the State Government of Uttar Pradesh has granted us certain portions of land at our sugar mills in Utraula and Kundarkhi and the execution of these lease agreements is pending. Our lease arrangement for land at our sugar mill at Budhana is valid until 2036. This lease is renewable for an additional 60 years. In addition, we have entered into leave and license agreements in relation to our corporate office located in Noida, Uttar Pradesh and certain office premises in Mumbai, Maharashtra. Pursuant to a leave and license agreement dated January 11, 2011, entered into between our Company and Abhitech Developers Private Limited, certain office premises have been granted on a license to us for a period of eleven months, and is valid until November 30, 2011. Pursuant to a leave and license agreement dated April 9, 2009, entered into between us and Bajaj Capital Ventures Private Limited, certain office premises in Mumbai have been granted on a license to us for a period of 60 months valid until March 15, 2014. We entered into rent agreements for three premises in Lucknow, Uttar Pradesh, which expired in 2003 and 2009. These rent agreements have not been renewed, however we continue to pay rent and occupy these premises. Competition
There were 651 installed sugar factories in India during the fiscal year 2010, with 62 factories in the public sector, 269 factories in the private sector and 320 factories in the cooperative sector. (Source: ISMA) Our major competitors include Balrampur Chini Mills Limited, The Dhampur Sugar Mills Limited, Mawana Sugars Limited and Triveni Engineering and Industries Limited.
133
We currently do not face any significant competition from international sugar producers in the Indian sugar market because there are limited imports of plantation white sugar in India due to high freight costs. However, the Government of India recently waived import tariffs on plantation white sugar until June 30, 2011. The refined sugar that we produce is required to meet stringent international standards.
Research and Development
Sugar
We operate the Jamnalal Bajaj Institute of Applied Agricultural Research, Golagokarannath, whose facilities are being used for testing and evaluation of sugarcane varieties, by both us and by third parties.
We are currently engaged in the following research and development activities:
We engage in the micro propagation of sugarcane seeds through the Hessian bag single bud tillering process. This process involves a technique to accelerate the growth of seeds in which a single bud is specially germinated in the seed nursery and then transplanted into the fields after 30 to 35 days.
We engage in multiple ratooning. This is a practice in which the first sugarcane crop is cut at the ground level and the bottom section of the sugarcane is retained in the soil. The section sprouts into a full crop which we cut again and retain the bottom section in the soil. Repeating this process of ratooning eliminates the need for new seeds and reduces the cost of sugarcane cultivation for growers.
We engage in bio-manure production. We produce press mud when we crush sugarcane. We convert the press mud into bio-manure by adding spent wash from our distillery and decomposition facility. The bio-manure from the press mud is a natural fertiliser for our sugarcane growers and contributes to the control of discharge from our distillery.
We use thermo-therapy processes to prolong seed life when the seeds are in storage. This involves a moist hot air treatment at 48 degrees centigrade for four hours to prevent the sugarcane seeds from losing their vigour and to build up seed resistance against pests.
To increase our sugar recovery, we actively develop high sugar content varieties of sugarcane in our research stations and distribute the successfully tested varieties to sugarcane growers.
Employees
Work Force and Wage Settlements
We employ two categories of employees in our sugar mills: wage board employees and non-wage board employees. Wage board employees are those employees whose wages, nature of employment and grades, among other aspects of employment, are governed by the Sugar Wage Board. Wage board employees’ employment terms are governed by standing orders of the Tripartite Committee, a committee which consists of workers, sugar mill owners and state government representatives. Upon a recommendation of the Tripartite Committee, the Governor of Uttar Pradesh may pass an order to enforce the committee’s recommendations. In addition, their working conditions are also governed by standing orders applicable to non-wage board employees.
The Sugar Wage Board makes decisions concerning various issues including permanent and seasonal categories of workers, grades, details of salary, designation, essential qualifications, experience required, duties to be assigned, variable allowances, retainer allowances to seasonal workers and housing. Pursuant to an order of the Sugar Wage Board dated December 17, 2009, the minimum wage and allowance is fixed for skilled, semi-skilled and unskilled labourers, from October 1, 2008 to September 30, 2013. The minimum wages are defined in ranges from ` 5,400 to ` 8,100 a month and are differentiated across employee ability.
134
Our managerial staff constitutes our non-wage board employees. Their employment terms are contractual. As of March 31, 2011, we had 5,788 wage board and 3,269 non-wage board employees. Of our wage board employees, 697 were permanent, 4,242 were seasonal and 849were trainees or temporary employees.
We had a total of 9,271, 9,209, 8,907 and 9,057 employees as of September 30, 2008, 2009 and 2010 and March 31, 2011, respectively. The following table sets forth our employee details, as of September 30, for the last three fiscal years and as of March 31, 2011:
Wage Board
Non–Wage Board Permanent Seasonal Trainee/Temporary
2008 2009 2010
March 31,
2011 2008 2009 2010
March 31,
2011 2008 2009 2010
March 31,
2011 2008 2009 2010
March 31,
2011 Total 3,942 3,747 4,144 3,269 929 794 739 697 2,884 2,944 2,881 4,242 1,516 1,724 1,143 849 All dates as of September 30, unless indicated otherwise.
We provide the following welfare facilities to our employees: canteen facilities, medical facilities, recreation facilities, schools for workers’ children or logistic services related to school admission and attendance, scholarships for higher education and primary education, premises for organising various functions, subsidised laundry services, telephone booths, banks in the sugar mill premises and cooperative stores. In addition, we organise cultural and religious programs, visits to temples and jogging and sports activities, among other things. Retirement benefit schemes are one of the significant elements of our employee remuneration package. Our retirement benefit schemes include, among others, provident funds, superannuation/pension fund and gratuity fund. For the provident fund, we have created separate registered trusts to which monthly contributions, equivalent to 12% of basic salary, are made.
Superannuation and pension benefits are provided only to those non-wage board employees who joined us prior to April 1, 2001. For such benefits we make an annual contribution, equivalent to 15% of the basic salary of the eligible employee, to a scheme administered by Life Insurance Corporation of India (“LIC”). These contributions earn interest and the accumulated balance of contributions and interest is used to pay the retirement benefit to the employee. For non-wage board employees who joined on or after April 1, 2001, 15% of their basic salaries are paid to them every month in lieu of Superannuation benefits.
Gratuity benefits are provided by us in the nature of a defined benefit when an employee leaves our Company. We have made an arrangement with LIC whereby we make annual contributions, calculated actuarially. Gratuity benefits to employees are then paid by the insurer.
In addition, we also provide a minimum bonus to our employees of 8.33% per annum wherever applicable under the Bonus Act, 1965.
Human Resources Policy
Our human resources policies are applicable to all of our non-wage board employees. These policies were formulated after discussions with employees across departments and locations and now form the basis of our human resources policy manual, which came into effect on April 1, 2005. The policies cover our objectives, eligibility and coverage, policy and procedures. We review, revise and update our human resources policies from time to time to make them relevant, effective and useful to the employees as well as to us.
Industrial Relations
Non-managerial employees of sugar mills and distilleries in India have historically been members of trade unions. Membership fees are paid by the employee members. We believe that we have good industrial relations in our sugar mills and distilleries. We have not experienced any significant disagreements with any trade unions. We have not experienced any loss of work days due to any labour unrest in the past five years.
135
There are four recognised trade unions at our Palia Kalan sugar mill and six recognised trade unions at our Golagokarannath sugar mill and one recognised trade union at our Pratappur sugar mill. There are no other recognised trade unions at any of our other sugar mills.
We periodically inform the unions of the situation at our mills to facilitate ongoing communication with our employees and amicable settlements of any issues or disputes that arise with our unionised employees. Any problems, as and when they arise, are discussed and resolved mutually.
Insurance
We maintain insurance policies covering all our inventory of sugar, industrial alcohol, particle and medium-density fibre boards, packing materials and consumables against fire, earthquake, and allied perils aggregating to ` 40,809.9 million and transit insurance aggregating to ` 51,419.7 million. However, our business interruption insurance is only for loss due to fire. Our inventories of sugar, industrial alcohol and particle and medium-density particle boards located in different sugar mills and warehouses are covered by different insurance policies with varying expiration dates and are typically renewable annually. We also maintain an industrial all-risk policy for buildings and equipment at all of our sugar mills, distillery plants, co-generation plants and other facilities, aggregating to ` 83,549.8 million. We also maintain money policies covering annual transit, personal insurance, cash in transit and cash in safes. In particular, we carry insurance on the equipment and products that serve as collateral in our financing transactions.
136
HISTORY AND OTHER CORPORATE MATTERS Our Company was incorporated on November 24, 1931 as The Hindusthan Sugar Mills Limited. Our first sugar mill was established at Golagokarannath in the Lakhimpur Kheri district in the Terai region of Uttar Pradesh, India, an area rich in sugarcane. The original capacity of the factory was 400 TCD of sugarcane. We set up a distillery at Golagokarannath in 1944, which currently has the capacity to produce 100 KL of industrial alcohol per day. During the first few years, our distillery’s major product was industrial alcohol, which was used as an additive to gasoline. In 1967, we set up Sharda Sugar and Industries Limited as a subsidiary of The Hindusthan Sugar Mills Limited. In 1972, we set up a mill with a sugarcane crushing capacity of 1,400 TCD at Palia Kalan, a sugarcane supply centre approximately 70 kilometers from Golagokarannath. In 1988, The Hindusthan Sugar Mills Limited was renamed Bajaj Hindusthan Limited and Sharda Sugar and Industries Limited was merged with BHL in 1990. In 2004, we commenced operations at a new distillery at Palia Kalan with a capacity of 60 KL of industrial alcohol per day. In 2004, we commenced operations at our sugar mill located at Kinauni with a capacity of 7,000 TCD which was subsequently increased to 8,000 TCD in 2005. From 2005 to 2008, we continued to expand our sugar and industrial alcohol production capacities through organic and inorganic growth. In 2005, we commenced operations at three new sugar mills, each having a crushing capacity of 7,000 TCD, located at Thanabhawan and Budhana in the Muzaffarnagar district and Bilai in the Bijnore district of Uttar Pradesh. In 2005, we acquired a majority interest in Pratappur Sugar and Industries Limited. Pratappur Sugar and Industries Limited was subsequently renamed as Bajaj Hindusthan Sugar and Industries Limited in 2006. In 2006, we commenced operations at three new sugar mills. Two of the sugar mills, with a crushing capacity of 9,000 TCD and 10,000 TCD, respectively, were set up at Gangnauli in the Saharanpur district and Khambarkhera in the Lakhimpur Kheri district of Uttar Pradesh. The third sugar mill was set up at Barkhera in the Pilibhit district of Uttar Pradesh and has a crushing capacity of 7,000 TCD. Between 2006 and 2007, we increased the crushing capacity of our Kinauni sugar mill from 8,000 TCD to 12,000 TCD, and we increased the respective capacities of our Thanabhawan, Bilai and Budhana sugar mills from 7,000 TCD to 9,000 TCD each. In 2008, we commenced operations at a sugar mill at Maqsoodapur in the Shahjahanpur district of Uttar Pradesh with a crushing capacity of 7,000 TCD. Through the amalgamation of BHSIL, we came to own four sugar mills with an aggregate crushing capacity of 40,000 TCD. As on date, the total crushing capacity of our sugar mills is 136,000 TCD. We also set up new distilleries in 2006 and 2007. In 2006, we commenced operations at a distillery at our Kinauni mill with a capacity to produce 160 KL of industrial alcohol per day and subsequently commenced distillery operations at additional three mills viz. Gangnauli, Khambarkhera and Radauli. In addition to this, two distilleries were set up at our Golagokarannath and Palia Kalan mill thereby raising the combined capacity of the six distilleries to 800 KL of industrial alcohol per day including a capacity of 60 KL per day which has been given by our Company on lease to a third party. During fiscal 2006-2007, we established additional co-generation facilities at eight of our sugar mills (Palia Kalan, Kinauni, Thanabhawan, Budhana, Bilai, Gangnauli, Khambharkhera and Barkhera) which have a combined installed capacity of 428 MW with approximately 90 MW of surplus power being sold to the Uttar Pradesh State grid. In 2006, we established a wholly-owned subsidiary, Bajaj Eco-Tec Products Limited and set up three mills in Uttar Pradesh, which manufacture environmentally-friendly particle boards and medium-density fibre boards from bagasse. Commercial production at these three mills commenced in 2008. In 2010, BHSIL was merged with our Company pursuant to a scheme of amalgamation sanctioned by the High Court of Judicature at Bombay. Scheme of Amalgamation between Bajaj Hindusthan Sugar and Industries Limited (the “Transferor Company”) with Bajaj Hindusthan Limited (the “Transferee Company”) approved by the Hon’ble High Court of Judicature at Bombay. Our subsidiary BHSIL was amalgamated with our Company pursuant to the order of the Hon’ble High Court of Bombay dated November 26, 2010. The Scheme provided for the transfer of the entire undertakings, assets and liabilities, deeds and documents of the Transferor Company to the Transferee Company as a going concern with effect from the appointed date, i.e., April 1, 2010. BHSIL was engaged in the business of manufacturing sugar,
137
alcohol and allied products. The effective date of the Scheme was December 20, 2010 (“Effective Date”). Set forth below are certain key features of the Scheme: With effect from the Effective Date, the Transferee Company issued Equity Shares of the Transferee Company to each equity shareholder of the Transferor Company in the following ratios: 1. One Equity Share of the Transferee Company credited as fully paid up to the members of Transferor
Company for every five fully paid up equity shares of the Transferor Company. 2. 88,500,000 equity shares of face value of `1 each held by the Transferee Company in the Transferor
Company shall stand cancelled but shall be deemed to be held by an independent trustee or board of trustees who shall be unrelated to the promoters of the Transferee Company (Trustee).
3. The FCCBs issued by the Transferor Company shall be deemed to have been issued by the Transferee
Company. 4. All agreements entered into by the Transferor Company shall be deemed to have been entered into by the
Transferee Company. 5. The principal amount of the unsecured loan granted by the Transferee Company to the Transferor Company
would not stand discharged but would be deemed to be converted into 67,000,000 equity shares of the face value of Re. 1 each of the Transferor Company and deemed to be held by the Trustee. As on date, the Trustee holds a cumulative of 31,100,000 equity shares of the Transferee Company.
6. The ESOP framed by the Transferor Company shall be binding on the Transferee Company on the same
terms and conditions except for the consequential changes persuant to the share exchange ratio, which is as follows:
a. Entitlement of equity share per option: two Equity Shares of the Transferee Company in place of ten equity shares of the Transferor Company.
b. Exercise price: `50 per Equity Share of the Transferee Company in place of `10 per equity share of the Transferor Company
c. On the Effective Date, the Transferee Company shall allot the equity shares under the ESOP to the Trustee. The terms of allotments of the shares under the ESOP shall be determined by the compensation committee constituted for execution of the ESOP.
7. The authorised capital of the Transferor Company shall stand transferred and combined with the authorised capital of the Transferee Company and the capital clause of the MoA shall stand substituted accordingly.
8. Pursuant to the sanction of the High Court to this Scheme, the Board of Directors of the Transferee
Company shall re-assess its assets and liabilities at their respective fair values, as on the Appointed Date and the difference, if any, shall be transferred to the “Amalgamation Reserve Account”. For further details, please refer the section “Financial Information” on page 149 of this Draft Letter of Offer.
9. The Transferor Company was dissolved without winding up.
138
Awards and Achievements Some of the key awards received by our Company in the past are as follows: 1. Our Company was awarded the “National Award for Excellence in Water Management 2010” from the
Confederation of Indian Industry. 2. Our Company’s mill at Palia Kalan was awarded the “Water Efficient Unit Award 2010” from the
Confederation of Indian Industry. 3. Our Company’s distillery at the Golagokarannath mill was awarded the Gold Award for outstanding
achievement in safety management from the Directorate General, Factory Advice Service and Labour Institutes for the year 2009.
4. Our Company was awarded the Dun & Bradstreet-American Express Corporate Award 2008 for the sugar
sector. Our Main Objects The main objects of our Company as contained in the Memorandum of Association are as set forth below: 1. To carry on business of manufacturers of and dealers in all kinds of sugar, gur and sugar and gur
preparations.
2. To plant, grow, buy, sell, refine, prepare for market, manipulate, import, export and deal in sugar and gur of all kinds.
3. To carry on the business of planters and cultivators of sugar plants and any other plants producing
anything of a similar character. 3A. Subject to the sanction of the shareholders by an ordinary resolution:
a) To carry on business as manufacturers of and dealers and merchants in chemicals and manures,
distillers, dye-makers, gas-makers, metallurgists and mechanical engineers, ship owners and charterers and carriers by land and sea, wharfingers, warehousemen, bargeowners, planters and farmers.
b) To carry on all or any of the businesses as of soap and candle-makers, tallow merchants,
chemists, druggists, oilmerchants and manufacturers of dyes, paints, chemicals, starch, manufacturers of and dealers in pharmaceutical, chemical, medical and other preparations or compounds, perfumery and proprietary articles of every description.
c) To carry on the business of extracting oil either by crushing or by chemical or any other process
from copra, cotton seed, linseed, castor-seed, groundnuts or any other nut or seed or other oilbearing substance whatsoever.
d) To carry on business of manufacturers refiners, importers and exporters of and dealers and
merchants in copra, cottonseed, linseed, castorseed, groundnuts or any other nut or seed or oil bearing substance whatsoever and oils and cakes manufactured therefrom, makers and manufacturers of cattle food and feeding and fattening preparations of every description, makers and manufacturers of manures and fertilizers of every description and corn merchants, millers, flour merchants, hay straw and fodder merchants and nurserymen, dairymen and owners, traders and dealers in livestock.
139
e) To carry on the trades or business of ironmasters, steel makers, steel converters, manufacturers of
ferromanganese, colliery proprietors, coke manufacturers, miners, smelters, engineers, tin plate makers and iron founders, in all their respective branches.
f) To search for, get, work, raise, make merchantable, sell and deal in iron, coal, ironstone,
limestone, manganese, ferromanganese, magnesite, clay, fire-clay, brick earth, bricks and other metals, minerals and substances and to manufacture and sell briquettes and other fuel and generally to undertake and carry on any business, transaction or operation commonly undertaken or carried on by explorers, prospectors, or concessionaires and to search for, win, work, get, calcine, reduce, amalgamate, dress, refine and prepare for the market any quartz and ore and mineral substances and to buy, sell, manufacture and deal in minerals and mineral products, plant and machinery and other things capable of being used in connection with mining or metallurgical operations or required by the workmen and others employed by the Company.
g) To carry on business of planters, farmers, growers of all kinds of corn, cereals, vegetables and
other produce of the soil and to prepare and render marketable any such produce and to sell dispose of and deal in any such produce either in its prepared or raw state and to manufacture and deal in provisions of all kinds there from.
h) To carry on the business of spinning, weaving or manufacturing or dealing in cotton or other
fibrous substances and the preparation, dyeing or colouring of any of the said substances and the sale of yarn, cloth or other manufactured fibrous products.
i) To carry on all or any of the businesses following namely cotton spinners and doublers, flax, hemp
and jute spinners, linen manufacturers, flax,hemp, jute and wool merchants, wool combers, worsted spinners, woolen spinners, yarn merchants, worsted stuff manufacturers, bleachers dyers and makers of vitriol, bleaching and dyeing materials and to purchase, comb, prepare, spin, dye and deal in flax, hemp, jute, wool, cotton, silk and other fibrous substances and to weave or otherwise manufacture, buy and sell and deal in linen cloth and other goods and fabrics, whether textile, felted, netted or looped and supply power and to carry on or be interested in the businesses of pressing and ginning mill proprietors.
j) To carry on in all its branches the business of producers, manufacturers, purchasers, refiners,
importers, exporters, sellers of and dealers in cement, asbestos, alumine cement, Portland cement, lime and limestone, kankar, plasters, artificial stone and materials of every kind used in the manufacture thereof, whiting, clay, gravel, sand, sacks, bricks, tiles, building materials of all kinds and all materials analogous to or connected therewith and the business of miners, metallurgists, builders, contractors and to purchase and vend all materials, raw processed or otherwise and all articles in any way connected with the said business.
k) To carry on in all its branches the business of producers, manufacturers, importers and exporters
of and dealers in all kinds and classes of paper, cardboards, strawboards and pulp and all other allied and bye-products thereof including all raw materials requisite or necessary for the same.
l) To promote, develop, generate, distribute, accumulate, transmit, supply, sell electricity and/or
power by installing power plant/s, whether based on thermal, hydel, gas, solar, windmill, diesel, furnace oil or any other source and to lay down, establish power stations, cables, transmission lines or towers, sub-stations, terminal and other works for the aforesaid purposes and to acquire, run or manage any company or undertaking engaged in similar business and/or activities.
m) To engage in the business of engineering, contracting and construction including the design,
manufacture, construction, erection, alteration, repair and installation of plants, buildings, structures, ways, works, systems and mechanical electrical and electronic machineries, equipments, apparatus and devices.
140
n) To explore, prospect, take on lease or on royalty basis or otherwise acquire mines, mining rights and lands or any interest therein and to quarry, mine, dress, reduce, draw, extract, alcine, smelt, refine, manufacture, process, and otherwise acquire, buy, sell or otherwise dispose of and deal in all types, qualities and description of ore, metal and mineral substances and to carry on any metallurgical operations.
o) To carry on the business of construction of roads, bridges, tunnels, dams, canals, jetties, setting up
of other infrastructural facilities and / or running them on lease, rentals, toll, etc. and to engage in repairing and/or maintenance thereof.
p) To carry on all or any of the business of buyers, sellers, suppliers, traders, merchants, importers, exporters, indentors, brokers, agents, cultivators, growers, manufacturers, producers, assemblers, packers, hirers, repairers, stockists, distributors of and / or dealers in all types of goods, commodities, produce and merchandise of any type and description subject to trade laws.
141
MANAGEMENT As per our Articles of Association, our Company shall not have less than three or more than twelve Directors on our Board. We currently have eight Directors on our Board. The following table sets forth details regarding the Board of Directors as on the date of this Draft Letter of Offer:
Sr. No.
Name, Father’s Name, Designation, Address, Occupation, Date of Appointment, Tenure and
DIN
Nationality Age (years)
Other directorships, partnerships and trusteeships
1. Mr. Shishir Bajaj S/o Late Mr. Kamalnayan Bajaj Designation: Chairman and Managing Director Address: Mount Unique, Flat No. 100, 13th Floor, Pedder Road, Mumbai 400 026, Maharashtra, India Occupation: Industrialist Term: 5 years with effect from July 1, 2008 DIN: 00017612
Indian 63 1) Bajaj Capital Ventures Private Limited
2) Bajaj Consumer Care Limited 3) Bajaj Power Ventures Private
Limited 4) Bajaj Trustee Company Private
Limited 5) SKB Roop Commercial Private
Limited (formerly Roop Sugars Private Limited)
6) Global World Power Projects Private Limited
7) Kushagra Trust 8) Kushagra Trust No. 2 9) Apoorva Trust 10) Anandamayi Trust 11) Yugadikrit Trust 12) Vishwarupe Trust 13) Shishir Bajaj Family Trust 14) Bajaj Hindusthan Limited Employees
General Medical Aid Fund 15) Bajaj Hindusthan Limited Employees
Educational Welfare Fund 16) Bajaj Hindusthan Limited Employees
Sports and Cultural Activities Welfare Fund
17) Bajaj Hindusthan Limited Employees Family Planning Welfare Fund
18) Bajaj Hindusthan Limited Employees Managerial Staff Medical Aid Fund
19) Bajaj Consumer Care Employees Welfare Fund, Varanasi
20) Bajaj Consumer Care Employees Welfare Fund, Udaipur
2. Mr. Kushagra Bajaj S/o Mr. Shishir Bajaj Designation: Vice Chairman and Joint Managing Director Address: 100, Mount Unique, 62 A, Pedder Road, Mumbai 400 026, Maharashtra, India
Indian 34 1) Bajaj Capital Ventures Private Limited
2) Bajaj Consumer Care Limited 3) Bajaj Eco-Tec Products Limited 4) Bajaj Energy Private Limited 5) Bajaj Power Ventures Private
Limited 6) Bajaj Trustee Company Private
Limited 7) Bajaj Corp Limited
142
Sr. No.
Name, Father’s Name, Designation, Address, Occupation, Date of Appointment, Tenure and
DIN
Nationality Age (years)
Other directorships, partnerships and trusteeships
Occupation: Industrialist Term: 5 years with effect from April 24, 2007 DIN: 00017575
8) KNB Enterprises Private Limited (formerly Parvati Chinni Private Limited)
9) Global World Power Projects Private Limited
10) Kushagra Trust No. 2 11) Anandamayi Trust 12) Yugadikrit Trust 13) Vishwarupe Trust 14) Shishir Bajaj Family Trust 15) Bajaj Hindusthan Limited Employees
General Medical Aid Fund 16) Bajaj Hindusthan Limited Employees
Educational Welfare Fund 17) Bajaj Hindusthan Limited Employees
Sports and Cultural Activities Welfare Fund
18) Bajaj Hindusthan Limited Employees Family Planning Welfare Fund
19) Bajaj Hindusthan Limited Employees Managerial Staff Medical Aid Fund
3. Dr. Sanjeev Kumar S/o Late Mr. Bhagwati Prasad Awasthi Designation: Director (Corporate and Legal Affairs), Whole–time Director Address: 116, Samachar Apartments, Mayur Vihar Phase-I, Delhi 110 091, India Occupation: Service Term: 5 years with effect from March 12, 2009 DIN: 00364416
Indian 52 1) Bajaj Aviation Private Limited 2) Bajaj Eco-Tec Products Limited 3) Bajaj Power Generation Private
Limited (formerly Kashyap Properties Private Limited)
4) BPA Estates Private Limited 5) Lalitpur Power Generation Company
Limited 6) Raunaq International Limited
143
Sr. No.
Name, Father’s Name, Designation, Address, Occupation, Date of Appointment, Tenure and
DIN
Nationality Age (years)
Other directorships, partnerships and trusteeships
4. Mr. Dhirajlal Shantilal Mehta S/o Late Mr. Shantilal Mehta Designation: Non-Executive Director Address: 301/302, Gora Gandhi Apartments, 3, Laburnam Road, Gamdevi, Mumbai 400 007, Maharashtra, India Occupation: Business Term: Liable to retire by rotation DIN: 00038366
Indian 74 1) Benchmark Asset Management Company Private Limited
2) Niche Financial Services Private Limited
3) Bajaj Auto Limited 4) Bajaj Auto Finance Limited 5) Maharashtra Scooters Limited 6) Mukand Limited 7) Bhoopati Shikshan Pratisthan 8) Janmabhoomi Newspapers Education
Foundation 9) Mahakalp Arogya Pratisthan 10) Sikkim Janaseva Pratisthan Private
Limited
5. Mr. Madhav Laxman Apte S/o Late Mr. Laxman Vaman Apte Designation: Independent, Non-Executive Director Address: 24/B Woodlands, Pedder Road, Mumbai 400 026, Maharashtra, India Occupation: Industrialist Term: Liable to retire by rotation DIN: 00003656
Indian 78 1) V. S. Apte & Son (Partner) 2) Apte Amalgamations Limited 3) The Bombay Burmah Trading
Corporation Limited 4) Grasim Industries Limited 5) Kulkarni Power Tools Limited 6) The Raja Bahadur International
Limited 7) Standard Industries Limited 8) Zodiac Clothing Company Limited 9) Tata Asset Management Limited 10) The Indian Sugar Mills Association 11) Victoria Memorial School for the
Blind 12) Mahalaxmi Temple Charities 13) AAL Employee’s Group Gratuity
Assurance Fund 14) Apte Industrial House Condominium
6. Mr. Ravindrakumar V. Ruia S/o Late Mr. Vinaykumar Ruia Designation: Independent, Non-Executive Director Address: 211, Samudra Mahal, Dr. Annie Besant Road, Worli, Maharashtra, Mumbai 400 018 Occupation: Industrialist Term: Liable to retire by rotation DIN: 00035853
Indian 49 1) DCW Limited 2) Ravinay Trading Company Limited 3) Breezewell Homes & Holdings
Private Limited 4) Dawn Apparels Private Limited 5) RNR Trading Private Limited 6) Ruia Industries Private Limited 7) Special Paints Limited
144
Sr. No.
Name, Father’s Name, Designation, Address, Occupation, Date of Appointment, Tenure and
DIN
Nationality Age (years)
Other directorships, partnerships and trusteeships
7. Mr. Alok Krishna Agarwal S/o Late Mr. K. C. Agarwal Designation: Independent, Non-Executive Director Address: A 56, Gulmohar Park, New Delhi 110 049, India Occupation: Professional Term: Liable to retire by rotation DIN: 00127273
Indian 47 1) Advanced Law College of India Private Limited
2) Lawz Media Private Limited 3) PNP Technologies (India) Private
Limited 4) SPBP Tea (India) Limited 5) Wearit Global Limited 6) Milestone Global Limited
8. Mr. Dinesh Kumar Shukla S/o Late Mr. Narmadeshwar Shukla Designation: Independent, Non-Executive Director Address: HP 2, Palakmati Park, Nehru Nagar, Bhopal, Madhya Pradesh 462 003, India Occupation: Professional Term: Liable to retire by rotation DIN: 00025409
Indian 68 Nil
Further, except as the information disclosed below with respect to Mr. Madhav Laxman Apte, the Directors of our Company do not hold any current and past directorship(s) during the preceeding five years in listed companies whose shares have been or were suspended from being traded on the Bombay Stock Exchange Limited or the National Stock Exchange of India Limited or in companies who have been / were delisted from stock exchanges:
Name of the Company
Listed on Date of Suspension on
Stock Exchange(s)
Suspended more than
three months: [Yes/No/N.A.]
Whether suspension revoked:
[Yes/No/N.A.]
Term (along with relevant
dates) of directorship in
the above company(ies):
The Raja Bahadur International Limited (Formerly Raja Bahadur Motilal Poona Limited)
Bombay Stock Exchange Limited
October 31, 2002
Yes No Liable to retire by rotation
145
Relationship between Directors inter-se
Name of the Directors Relationship between Directors
Mr. Shishir Bajaj
Father of Mr. Kushagra Bajaj
Mr. Kushagra Bajaj
Son of Mr. Shishir Bajaj
Except as stated above, none of the other Directors are related to each other. Brief biography of our Directors Mr. Shishir Bajaj, Chairman and Managing Director Mr. Shishir Bajaj, one of our Promoters, is an industrialist and has been actively involved in the affairs of our Company since 1974. After completion of his Masters in Business Administration from New York University in June 1974, in which he majored in finance, he joined our Company in 1974. He was inducted to the Board as the Joint Managing Director in 1986 and as the Managing Director in 1988. He has been our Chairman and Managing Director since October 1999. He has over three decades of experience in sugar and cement industries, all of which has been with our Company and with the Group Companies of our Promoters. Mr. Kushagra Bajaj, Vice Chairman and Joint Managing Director Mr. Kushagra Bajaj is one of our Promoters. He graduated with a Bachelor’s of Science degree in Eonomics, Political Philosophy and Finance from Carnegie Mellon University, Pittsburgh, USA. He received his Master of Science degree in Marketing from the Northwestern University, Chicago, USA. He was the Chief Executive of the Company from August 2001 to April 2007 and was appointed as Joint Managing Director with effect from April 24, 2007. He was re-designated as the Vice Chairman and Joint Managing Director with effect from April 30, 2011 and is responsible for overall operations of our Company and its Subsidiaries. He has over one decade of experience in sugar and FMCG industries, all of which has been with our Company and with the Group Companies of our Promoters. Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs), Whole–time Director Dr. Sanjeev Kumar, our Director in charge of corporate and legal affairs since March 2009 was formerly the Group President of corporate and legal affairs since June 2004. He received a Masters degree in Commerce in 1979 from Kanpur University, a doctorate in 1997 from Kanpur University, an Bachelors degree in Law in 2001 from Delhi University, a diploma in intellectual property rights laws in 2001 from the Indian Law Institute, Delhi. In addition, he qualified as a cost accountant in June 1981 and as a company secretary in December 1983. He has approximately 33 years of professional experience. Prior to joining us, he worked with Transasia Packaging Limited as a Company Secretary and HB Stockholdings Limited, New Delhi as a Vice President (Legal) and Company Secretary. He has authored books on corporate mergers, amalgamations and takeovers, corporate criminology - corporate offences, economic laws and practice, company law and procedures, industrial and labour laws, indirect tax laws, producer companies, legal and regulatory framework, business laws etc. He has also been revising editor to the Ramaiya’s Companies Act, 1956 (17th edition) and K. V. Shanbhogue Company Resolutions, Notices, Meetings and Minutes (7th edition) and assisted in the editing of MJL’s Civil Law Manuals. He has also been a visiting faculty to various professional as well as management institutes. Mr. Dhirajlal Shantilal Mehta – Non-Executive Director Mr. Dhirajlal Shantilal Mehta has been a member of our Board of Directors since January 1986. He is a fellow member of both the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. Mr. Mehta holds a B.Com (Hons) degree from Mumbai University. He is associated with a number of social,
146
educational and welfare organizations. He has been associated with the Bajaj group of companies since 1966 and has more than 45 years experience in corporate law, taxation, finance and investment. Mr. Madhav Laxman Apte – Independent, Non-Executive Director Mr. Madhav Laxman Apte has been a member of our Board of Directors since July 1970. He is also the Chairman of the Apte group of companies. He is a former Sheriff of Mumbai, a former President of the Maharashtra Chamber of Commerce, the Bombay Chamber of Commerce, the Cricket Club of India and the Indian Sugar Mills Association, a former member of the Indian Cotton Mills Federation and a former Chairman of the Textiles Committee. Mr. Ravindrakumar V. Ruia Independent, Non-Executive Director Mr. Ravindrakumar Ruia has been a member of our Board of Directors since April 2001. He received a Bachelors Degree in commerce from Mumbai University in 1982. He is a director of Dawn Apparels Private Limited. Mr. Ravindrakumar was a committee member at the Bombay Mill Owners’ Association, Indian Cotton Mills Federation and Bombay Textile Research Association and was a trustee of various public charity trusts. Mr. Alok Krishna Agarwal - Independent, Non-Executive Director Mr. Alok Krishna Agarwal has been a member of our Board of Directors since April 2007. He is the founder of Juris Consultus, Law office now called Sheldon Law Firm at New Delhi. He is also the editor of the monthly Law Magazine “LAWZ”. He graduated in law from the Delhi University in the year 1988. He was admitted to the rolls of Bar Council in the year 1989. He is a member of the Supreme Court Bar Association He is also a life member of the Indian Council of Arbitration. Mr. Dinesh Kumar Shukla - Independent, Non-Executive Director Mr. Dinesh Kumar Shukla has been a member of our Board of Directors since 2001. He received a Bachelor’s degree in Arts from Lucknow University in 1963 and a Masters degree in Social Work from Lucknow University in 1965. He served as a nominee director for the Life Insurance Corporation of India (“LIC”) on our Board until November 11, 2008. Mr. Shukla was re-inducted in the Board with effect from December 21, 2008 as an Independent Director. Interest of Directors As on date, the details of Directors’ shareholding are as follows:
Sr. No. Name of the Director Number of Shares % of the paid up share capital
1. Mr. Shishir Bajaj 3,988,841 1.75 2. Mr. Kushagra Bajaj 1,787,005 0.78 3. Mr. Dhirajlal Shantilal Mehta 20,580 0.01 4. Mr. Madhav Laxman Apte 600 0.00 5. Mr. Ravindrakumar V. Ruia 2,250 0.00 6. Mr. Dinesh Kumar Shukla 0 0.00 7. Mr. Alok Krishna Agarwal 0 0.00 8. Dr. Sanjeev Kumar 200 0.00
Except as mentioned above and in the section on “Financial Statements - Related Party Disclosures” on page 182, none of the Directors have any interest in the Company. No service contracts have been entered into with Directors providing benefits or payments of any amount upon termination of employment. The Company has not paid its Directors any payments or reimbursements of expenses other than the normal remuneration and reimbursement, divident and sitting fees as applicable in each case.
147
Organization structure
148
KEY INDUSTRY REGULATIONS
The key industry regulations for the proposed objects of the Issue, as stated in the section “Objects of the Issue” on page 66 of this Draft Letter of Offer, is not different from existing business of our Company.
149
SECTION V – FINANCIAL INFORMATION
Auditors’ Report on Standalone Financial Statements
To The Board of Directors, Bajaj Hindusthan Limited, 2nd Floor, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai - 400021 Dear Sirs, 1. We have examined the attached financial information of Bajaj Hindusthan Limited (the ‘Company’)
comprising Balance Sheet as at December 31, 2010, September 30, 2010 and September 30, 2009 and the related Profit & Loss Account and Cash Flow Statement for the three month period ended December 31, 2010 and year ended on September 30, 2010 and September 30, 2009 (collectively, together with the schedules and notes thereto, the “Standalone Financial Statements”) as attached to this report and initialled by us for identification. These Standalone Financial Statements are approved by the Board of Directors of the Company, and has been prepared in terms of the requirements of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended to date (the ‘ICDR Regulations’) in connection with the proposed “ Right Issue of Equity Shares” by the Company. The preparation and presentation of these financial information is the responsibility of the Company’s Management. Our responsibility is to express an opinion on these Standalone Financial Statement based on our examination. We have examined these Standalone Financial Statement taking into consideration the terms of our engagement agreed upon with you in accordance with our engagement letter dated May 2, 2011 in connection with the proposed Right Issue of equity shares of the Company.
2. These financial information have been extracted by the Management from the Company’s Audited Standalone Financial Statements for the years ended on September 30, 2010 and September 30, 2009 approved by the Board of Directors at their meeting held on December 20, 2010 and December 15, 2009 respectively and Unaudited Financial Statements for three months period ended December 31, 2010 subjected to limited review approved by the Board of Directors at their meeting held on April 30, 2011, after making such regroupings as considered appropriate. Financial Statement for the financial year ended on September 30, 2010 and September 30, 2009 are approved by the shareholders in the Annual General Meeting held on March 22, 2010 and March 18, 2009 respectively. The financial statements of the Company for the year ended on September 30, 2010 were audited by us. The financial Statements of the Company for the year ended on September 30, 2009 were audited by M/s. Dalal & Shah, Chartered Accountants, whose reports have been furnished to us and accordingly relied upon by us. The Unaudited Standalone Financial Statements for three months period ended December 31, 2010 were subjected to Limited Review carried out by us.
3. We have not audited any financial statements of the Company as of any date or for any period subsequent
to September 30, 2010. Accordingly, we express no opinion on the financial position, results of operations or cash flows of the Company as of any date or for any period subsequent to September 30, 2010.
4. We have performed such tests and procedures, which in our opinion, were necessary for the examination of these financial information. These procedures, mainly involved comparison of the attached financial information with the Company’s audited/unaudited financial statements for the respective years/periods.
150
5. We report that the Standalone Financial Statement are correctly extracted from the audited/unaudited financial statements of the Company for relevant year/period and are prepared and presented in accordance with the Accounting Standards notified by the Companies (Accounting Standard) Rules, 2006, accounting policies of the Company and with the ICDR Regulations as amended from time to time relating to Right Issue of the Equity Shares by the Company.
6. In accordance with the requirements of the ICDR Regulations, and the terms of our engagements agreed
with you, we have also examined the other financial information prepared by the Management and approved by the Board of Directors of the Company for the purpose of inclusion in the Draft Letter of Offer as mentioned below:- a. Statement of Dividend paid for financial year 2010 and 2009 and three month period ended December
31, 2010 as given in Annexure A b. Statement of Accounting Ratios for financial year 2010, 2009 and three month period ended December
31, 2010 as given in Annexure B c. Capitalization Statement as of December 31, 2010 as given in Annexure C d. Statement of Secured Loans as as of December 31, 2010 as given in Annexure D e. Statement of Unsecured Loans as of December 31, 2010 as given in Annexure E
7. In our opinion the attached financial information of the Company, as mentioned in paragraph 1 and 6 above
have been extracted and prepared in accordance with the ICDR Regulations and applicable provisions of the Companies Act as amended from time to time, and Indian GAAP and in terms of our engagement as agreed with you.
8. This report should not be in any way construed as a re-issuance or redrafting of any of the previous audit reports issued by us.
9. This report is intended solely for use of the Management for inclusion in the Draft Letter of Offer in
connection with Right Issue of the Equity Shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.
For Chaturvedi & Shah Chartered Accountants, Firm Registration No.: 101720W Amit Chaturvedi Partner Membership. No.: 103141 Place: Mumbai Dated: May 16, 2011
151
BAJAJ HINDUSTHAN LIMITED Balance Sheet as at December 31 and September 30 As at As at As at Dec. 31,
2010 Sept. 30,
2010 Sept. 30,
2009
Schedule
Rs. Million Rs. Million
Rs. Million Reviewed Audited Audited I. Sources of Funds: Shareholders' Funds
Capital 1
191.4
191.4
176.9
Equity Warrants
-
-
189.0
Equity Share Suspense
37.0
37.0
-
Stock Options Outstanding
153.0
153.0
-
Reserves & Surplus 2
31,566.8
30,988.2
22,570.8
31,948.2
31,369.6
22,936.7 Loan Funds
Secured Loans 3
51,318.9
44,297.7
19,567.3
Unsecured Loans 4
6,229.4
11,133.6
11,184.2
57,548.3
55,431.3
30,751.5
Deferred Tax Liability
1,008.6
834.3
1,080.4
Total
90,505.1
87,635.2
54,768.6 II. Application of Funds:
Fixed Assets 5
Gross Block
65,542.0
65,098.7
34,074.8
Less: Depreciation
11,153.8
10,299.6
7,749.8
Net Block
54,388.2
54,799.1
26,325.0
Capital Work in progress
511.8
912.8
1,312.8
54,900.0
55,711.9
27,637.8
Investments 6
11,134.5
11,133.9
5,491.1 Current Assets, Loans & Advances 7
Inventories
16,490.7
19,213.6
8,004.5
152
Sundry Debtors
2,037.1
1,631.0
285.7
Cash & Bank Balances
5,580.0
4,792.0
1,123.5
Loans & Advances
17,021.5
14,242.1
20,930.5
41,129.3
39,878.7
30,344.2
Less : Current Liabilities & Provisions 8
Current Liabilities
14,738.9
17,169.5
6,830.3
Provisions
1,919.8
1,919.8
1,874.2
16,658.7
19,089.3
8,704.5
Net Current Assets
24,470.6
20,789.4
21,639.7
Total
90,505.1
87,635.2
54,768.6 Significant Accounting Policies and Notes 16
153
BAJAJ HINDUSTHAN LIMITED Profit & Loss Account for the period ended December 31 and year ended September 30
2010-2011 2009-2010 2008-2009 (3 Months) (12 Months) (12 Months)
Schedule
Rs. Million Rs. Million
Rs. Million Reviewed Audited Audited
Income :
Gross Sales /Income from Operations 9
15,146.0
29,702.7
16,557.5
Less: Excise Duty
389.4
966.7
720.1
Net Sales /Income from Operations
14,756.6
28,736.0
15,837.4
Other Income 10
73.6
1,553.8
2,311.5
14,830.2
30,289.8
18,148.9 Expenditure :
Raw Materials Consumed 11
11,049.8
27,656.4
8,167.6
Manpower Cost 12
400.7
1,468.2
1,208.3
Other Expenses 13
976.9
2,462.7
1,382.8
Interest & Finance charges (Net) 14
1,069.9
3,013.4
1,870.8
Depreciation & Amortization
856.3
2,574.4
2,022.1
(Increase) / Decrease in Stocks 15
(276.3)
(7,435.7)
1,437.3
14,077.3
29,739.4
16,088.9
Profit for the period before Taxation
752.9
550.4
2,060.0 Less: Provision for Taxation:
Current Tax
149.9
163.5
330.9
Deferred Tax (Net)
174.3
31.9
491.1
Wealth Tax
-
1.0
1.0
Fringe Benefit Tax
-
-
5.6
324.2
196.4
828.6
Less: MAT credit entitlement
149.9
163.5
330.9
174.3
32.9
497.7
Profit for the period/year
578.6
517.5
1,562.3 Add:
Balance Brought Forward
1,785.8
790.0
65.3 Excess / (Short) provision for tax
154
- - (16.2)
Dividend paid of earliers year
-
(10.2)
- Corporate Dividend Tax on Dividend
paid
-
(1.7)
- Debenture Redemption Reserve (no
longer required)
625.0
750.0
-
2,410.8
1,528.1
49.1
2,989.4
2,045.6
1,611.4 Transfers to:
Reserve for Molasses Storage Tanks
0.6
3.3
1.6
General Reserve
-
100.3
400.0
Debenture Redemption Reserve
-
-
275.0
Proposed Dividend
-
134.0
123.8 Corporate Dividend Tax on Proposed
Dividend
-
22.2
21.0
Balance carried to Balance Sheet
2,988.8
1,785.8
790.0
Basic Earning per Share:
Net Profit
578.6
517.5
1,546.1
Weighted Average No. of Shares*
228,357,111
206,133,823
150,148,207 Basic Earning per Share in Rupees (Face Value
Re. 1/- each)
2.53
2.51
10.30 Diluted Earning per Share:
Net Profit
578.6
517.5
1,546.1
Weighted Average No. of Shares*
228,357,111
206,133,823
164,648,207 Diluted Earning per Share in Rupees (Face Value
Re 1/- each)
2.53
2.51
9.39 * Including equity shares to be issued on
amalgamation.
Significant Accounting Policies and Notes 16
155
BAJAJ HINDUSTHAN LIMITED Cash Flow Statement for the period ended December 31 and year ended September 30
2010-2011 2009-2010 2008-2009 (3 Months) (12 Months) (12 Months) Rs. Million Rs. Million Rs. Million Reviewed Audited Audited
A. Cash Flow from operating activities:
Net Profit before Exceptional item and Taxation
752.9
550.4
2,060.0 Adjustment for:
Depreciation & Amortization
856.3
2,574.4
2,022.1 (Gain) / Loss due to Foreign Exchange
Fluctuation
109.0
(140.0)
- Provision for Foreign Exchange Gain written
back
-
-
(836.5)
Loss/ (Surplus) on sale of Fixed Assets (Net)
(0.1)
(1.5)
12.6
Interest and Finance Charges
1,304.9
4,152.0
2,950.6 Dividend / Income from Current Investment
Received
(0.1)
(35.9)
(4.7)
Profit on sale of investment
-
(166.1)
-
Interest Received
(235.0)
(1,138.6)
(1,079.8)
Employee's Compensation Expenses (ESOP Cost)
-
(8.8)
-
2,035.0
5,235.5
3,064.3
Operating Profit before working capital changes
2,787.9
5,785.9
5,124.3 Adjustment for:
Trade and other receivables
(1,648.4)
487.4
(2,068.7)
Inventories
2,722.9
(12,093.8)
(1,632.1)
Trade payables
(2,264.8)
82.3
768.5
Cash generated from operations
1,597.6
(5,738.2)
2,192.0
Direct taxes paid
166.1
(402.5)
(130.4)
Net Cash from/ (used in) operating activities
1,763.7
(6,140.7)
2,061.6
156
B. Cash Flow from investing activities:
Purchase of Fixed Assets
(155.4)
(2,196.7)
(608.1)
Sale of Fixed Assets
7.5
26.9
55.4
Purchase of Investments
(201.6)
(47,005.0)
(6,501.3)
Sale of Investments
201.0
45,128.3
5,892.8
Loans and Advances
(1,703.2)
(614.4)
(554.7)
Dividend Received
0.1
35.9
4.7
Interest Received
235.0
1,138.6
1,079.8
Net cash used in investing activities
(1,616.6)
(3,486.4)
(631.4)
C. Cash Flow from financing activities:
Proceeds from borrowings (Net of repayments)
2,006.5
16,741.8
(4,662.1)
Issue of Convertible Warrants
-
-
189.0 Issue of Equity Shares & Premium thereon:
On issue of QIP
-
-
7,231.8
On conversion of Equity Warrants
-
567.0
-
Issue expenses (QIP)
-
-
(198.7)
Interest paid
(1,365.6)
(3,919.5)
(3,165.6)
Dividend paid (including tax thereon)
-
(155.8)
(98.3)
Net cash from/ (used in) financing activities
640.9
13,233.5
(703.9) Net increase/(decrease) in cash and cash
equivalents
788.0
3,606.4
726.3 Cash and Cash equivalents (Opening Balance)
Earmarked for specific purposes
31.8
348.2
16.1
Other Balances
4,760.2
775.3
381.1
4,792.0
1,123.5
397.2
Cash and Cash equivalents on Amalgamation
-
62.1
- Cash and Cash equivalents (Closing Balance)
Earmarked for specific purposes
34.6
31.8
348.2
Other Balances
5,545.4
4,760.2
775.3
157
5,580.0
4,792.0
1,123.5
Notes:
1
The above cash flow statement has been prepared under the "Indirect Method" as set out in Accounting Standard - 3 on Cash Flow Statement. Figures in brackets indicate cash outflow and without brackets indicate cash inflow.
2
158
BAJAJ HINDUSTHAN LIMITED SCHEDULES FORMING PART OF ACCOUNTS Schedules 1 to 16 annexed to and forming part of the Balance Sheet as at December 31 and September 30 and Profit and Loss Account for the period/year ended on that date.
As at As at As at Dec. 31,
2010 Sept. 30,
2010 Sept. 30, 2009 Rs. Million Rs.
Million Rs. Million Reviewed Audited Audited Schedule 1 - Capital
Authorised:
1,800,000,000 (2010-800,000,000), (2009-300,000,000)
Equity Shares of Re 1/- each.
1,800.0
800.0
300.0 Nil, (2010-Nil),(2009-500,000,000) Unclassified Shares
of Re. 1/- each.
-
-
500.0
1,800.0
800.0
800.0 Issued, Subscribed & Paid up: 191,357,111, (2010-191,357,111), (2009-176,857,111) Equity
Shares of Re 1/- each.
191.4
191.4
176.9
191.4
191.4
176.9
Of the above shares 53,100,000, (2010-53,100,000), (2009-53,100,000) Equity Shares were allotted as fully paid Bonus Shares by way of Capitalisation of Reserves.
Schedule 2 - Reserves and Surplus
Dec. 31,
2010 Sept. 30,
2010 Sept. 30, 2009
Capital Redemption Reserve
0.5
0.5
0.5
Contingency Reserve
-
-
100.0
Securities Premium
24,501.3
24,501.3
16,435.0
General Reserve
4,000.9
4,000.0
3,799.7
Debenture Redemption Reserve
37.5
662.5
1,412.5
Reserve for Molasses Storage Tanks
37.8
38.1
33.1
Balance as per Profit & Loss Account
2,988.8
1,785.8
790.0
31,566.8
30,988.2
22,570.8
159
Schedule 3 - Secured Loans Debentures 15 - 11% Secured Redeemable Non- Convertible
Debentures
of Rs.10,000,000 each series 30 of 2007-08 (redeemable at par on June 19, 2011)
150.0
150.0
150.0
Loans & Advances from Banks
45,582.9
38,510.5
18,853.8
Other Loans & Advances
5,586.0
5,637.2
563.5
51,318.9
44,297.7
19,567.3 Schedule 4 - Unsecured Loans
Short Term Debentures
-
2,500.0
5,500.0
Zero Coupon Foreign Currency Convertible Bonds (FCCBs)*
5,223.8
5,228.0
4,783.4
Short Term Loan from Banks
1,000.0
3,400.0
900.0
Fixed Deposits
0.8
0.8
0.8
Loan from Others
4.8
4.8
-
6,229.4
11,133.6
11,184.2
*FCCB's of Rs.4,551.7 Million issued by the Company in the financial year 2005-2006 can be converted at the option of the bond holder into one equity share at Rs.465.40 per equity share, at a pre determine exchange rate of US$ 1=Rs.44.08 at any time upto 02.02.2011. FCCB's of Rs.672.1 Million issued by amalgamated company (Bajaj Hindusthan Sugar and Industries Ltd.) in the financial year 2006-07 can be converted at the option of the bond holder into one equity share at Rs.250 per equity share, at a pre determine exchange rate of US$ 1=Rs.42.42 at any time upto 26.04.2014.
160
201
0-11
Rs.M
illio
n
Sch
edul
e 5
- Fix
ed A
sset
s
R
evie
wed
D
ESC
RIPT
ION
G
ROSS
BLO
CK
(AT
CO
ST/B
OO
K V
ALU
E)
DEP
REC
IATI
ON
N
ET
BLO
CK
Sr.
P
artic
ular
s
As a
t
Add
ition
s D
educ
tions
&
A
s at
As a
t F
or th
e ye
ar
Ded
uctio
ns
&
Upt
o
As a
t
No.
Oct
. 1,
2010
A
djus
tmen
ts
Dec
. 31,
20
10
Oct
. 1,
2010
A
djus
tmen
t s D
ec. 3
1,
2010
D
ec. 3
1,
2010
1
L
and
4,42
2.5
-
1.
1
4,
421.
4
-
-
-
-
4,
421.
4
2
L
ease
hold
Lan
d
6.
8
-
-
6.
8
0.
5
0.
1
-
0.
6
6.
2
3
B
uild
ings
10,4
40.4
149.
9
1.
1
10
,589
.2
1,
689.
3
16
6.7
-
1,
856.
0
8,
733.
2
4
P
lant
& M
achi
nery
47,7
61.9
294.
3
4.
4
48
,051
.8
7,
969.
8
64
6.8
-
8,
616.
6
39
,435
.2
5
F
urni
ture
, Fix
ture
s &
Offi
ce E
quip
men
ts
46
4.7
5.6
0.1
470.
2
31
9.8
9.0
0.2
328.
6
14
1.6
6
Veh
icle
s & A
ircra
ft
1,
418.
2
2.
5
2.
8
1,
417.
9
16
7.6
25.0
1.9
190.
7
1,
227.
2
7
L
ease
d A
sset
s:
Dis
tille
ry D
ivis
ion:
- L
and
84
.8
0.
4
-
85
.2
-
-
-
-
85
.2
- B
uild
ings
115.
1
-
-
11
5.1
21.5
2.2
-
23
.7
91
.4
- P
lant
& M
achi
nery
350.
4
-
-
35
0.4
109.
0
4.
8
-
11
3.8
236.
6
-
Furn
iture
, Fix
ture
s &
Offi
ce E
quip
men
ts
0.
8
-
-
0.
8
0.
7
-
-
0.
7
0.
1
8
In
tang
ible
Ass
ets-
Com
pute
r Sof
twar
e
33
.1
0.
1
-
33
.2
21
.4
1.
7
-
23
.1
10
.1
T
otal
65,0
98.7
452.
8
9.
5
65
,542
.0
10
,299
.6
85
6.3
2.1
11,1
53.8
54,3
88.2
9
Cap
ital W
ork
in p
rogr
ess
91
2.8
43.2
444.
2
51
1.8
-
-
-
-
51
1.8
T
otal
66,0
11.5
496.
0
45
3.7
66,0
53.8
10,2
99.6
856.
3
2.
1
11
,153
.8
54
,900
.0
161
Not
e:
(i) B
uild
ing
incl
udes
an
amou
nt o
f Rs.
500/
- bei
ng v
alue
of 1
0 sh
ares
of R
s. 50
/- ea
ch in
a c
o-op
erat
ive
soci
ety.
(ii
) The
ass
ets o
f Dis
tille
ry D
ivis
ion
at P
alia
Kal
an w
ere
leas
ed w
.e.f.
30t
h M
ay, 2
006.
(ii
i) Pa
rticu
lars
of C
apita
l wor
k-in
-pro
gres
s:
As a
t
Add
ition
s D
educ
tions
&
A
s at
C
apita
l Wor
k in
Pro
gres
s:
Oct
. 1,
2010
A
djus
tmen
ts
Dec
. 31,
20
10
A
dvan
ce to
Sup
plie
rs /
Con
tract
ors
61
.6
0.
1
-
61
.7
P
lant
& M
achi
nery
/ C
ivil
wor
k in
pro
gres
s
85
1.2
43.1
444.
2
45
0.1
T
otal
912.
8
43
.2
44
4.2
511.
8
162
200
9-10
Rs.M
illio
n
Sch
edul
e 5
- Fix
ed A
sset
s
A
udite
d
D
ESC
RIPT
ION
G
ROSS
BLO
CK
(AT
CO
ST/B
OO
K V
ALU
E)
DEP
REC
IATI
ON
N
ET
BLO
CK
Sr.
P
artic
ular
s
As a
t A
dditi
ons
Ded
uctio
ns
&
As a
t A
s at
For
the
year
D
educ
tions
&
U
pto
A
s at
No.
Oct
. 1,
2009
A
djus
tmen
t s S
ept.
30,
2010
O
ct. 1
, 20
09
A
djus
tmen
t s S
ept.
30,
2010
S
ept.
30,
2010
1
F
reeh
old
Land
763.
7
3,
662.
4
3.
6
4,
422.
5
-
-
-
-
4,
422.
5
2
L
ease
hold
Lan
d
-
3.
2
(3
.6)
6.
8
-
0.
5
-
0.
5
6.
3
3
B
uild
ings
6,48
5.7
3,99
7.4
42.7
10,4
40.4
1,21
1.0
482.
0
3.
7
1,
689.
3
8,
751.
1
4
P
lant
& M
achi
nery
25,7
98.8
22,0
54.8
91.7
47,7
61.9
6,00
2.0
1,97
0.5
2.7
7,96
9.8
39,7
92.1
5
Fur
nitu
re, F
ixtu
res &
Offi
ce
Equi
pmen
ts
43
4.1
36.1
5.5
464.
7
28
9.5
35.1
4.8
319.
8
14
4.9
6
Veh
icle
s & A
ircra
ft
19
0.3
1,24
6.4
18.5
1,41
8.2
128.
0
53
.0
13
.4
16
7.6
1,25
0.6
7
Lea
sed
Ass
ets:
D
istil
lery
Div
isio
n:
- L
and
18
.9
65
.9
-
84
.8
-
-
-
-
84
.8
- B
uild
ings
92.7
22.4
-
11
5.1
13.6
7.9
-
21
.5
93
.6
- P
lant
& M
achi
nery
259.
4
91
.0
-
35
0.4
90.1
18.9
-
10
9.0
241.
4
-
Furn
iture
, Fix
ture
s &
Offi
ce E
quip
men
ts
0.
8
-
-
0.
8
0.
7
0.
0
-
0.
7
0.
1
8
In
tang
ible
Ass
ets-
Com
pute
r So
ftwar
e
30
.4
2.
7
-
33
.1
14
.9
6.
5
-
21
.4
11
.7
T
otal
34,0
74.8
31,1
82.3
158.
4
65
,098
.7
7,
749.
8
2,
574.
4
24
.6
10
,299
.6
54
,799
.1
9
C
apita
l Wor
k in
pro
gres
s
1,31
2.8
7,22
4.8
7,62
4.8
912.
8
-
-
-
-
91
2.8
163
T
otal
35,3
87.6
38,4
07.1
7,78
3.2
66,0
11.5
7,74
9.8
2,57
4.4
24.6
10,2
99.6
55,7
11.9
N
ote:
(i)
Build
ing
incl
udes
an
amou
nt o
f Rs.
500/
- bei
ng v
alue
of 1
0 sh
ares
of R
s. 50
/- ea
ch in
a c
o-op
erat
ive
soci
ety.
(i
i) Th
e as
sets
of D
istil
lery
Div
isio
n at
Pal
ia K
alan
wer
e le
ased
w.e
.f. M
ay 3
0, 2
006.
(i
ii) D
educ
tions
& A
djus
tmen
ts in
clud
e Rs
. 84.
4 M
illio
n D
ecap
italis
ed to
war
ds e
xcha
nge
fluct
uatio
n ga
in o
n fo
reig
n cu
rrenc
y lo
ans a
s per
the
Not
ifica
tion
date
d 31
.03.
2009
issu
ed b
y th
e M
inis
try o
f Cor
pora
te
Affa
irs.
(iv)
Ded
uctio
ns &
Adj
ustm
ents
incl
ude
Rs.2
4.0
Mill
ion
rece
ived
on
acco
unt o
f cap
ital s
ubsi
dy fr
om M
inis
try o
f New
and
Ren
ewal
Ene
rgy
(U &
I G
roup
) G
over
nmen
t of I
ndia
. (v
) A
s per
Sch
eme
of A
mal
gam
atio
n an
d ba
sed
on th
e rep
orts
of i
ndep
ende
nt v
alue
r, C
ompa
ny h
as fa
ir va
lued
its c
erta
in fi
xed
asse
ts a
s at A
pril
01, 2
010
resu
lting
into
add
ition
s to
gros
s blo
ck a
ggre
gatin
g to
Rs.
14,
066.
3 M
illio
n (in
clud
ed in
add
ition
s col
umn
- Lan
d Rs
.2,8
39.3
Mill
ion,
Bui
ldin
g Rs
.1,3
74.2
Mill
ion
and
Plan
t and
Mac
hine
ry R
s.9,8
52.8
Mill
ion)
. The
add
ition
al d
epre
ciat
ion
on a
ccou
nt o
f fai
r val
uatio
n of
fixe
d as
sets
agg
rega
ting
to R
s.310
.0 M
illio
n ha
s bee
n de
bite
d to
the
Prof
it &
Los
s acc
ount
. (v
i) A
dditi
ons i
nclu
de R
s.14,
784.
5 M
illio
n on
acc
ount
of a
mal
gam
atio
n of
Baj
aj H
indu
sthan
Sug
ar a
nd In
dustr
ies L
td. w
.e.f.
Apr
il 01
, 201
0 as
per
Sch
eme
of
amal
gam
atio
n .
(v
ii) P
artic
ular
s of C
apita
l wor
k-in
-pro
gres
s:
As a
t A
dditi
ons
Ded
uctio
ns
&
As a
t
C
apita
l Wor
k in
Pro
gres
s:
Oct
. 1,
2009
A
djus
tmen
t s S
ept.
30,
2010
A
dvan
ce to
Sup
plie
rs /
Con
tract
ors
12
8.8
6,14
6.8
6,21
4.0
61.6
P
lant
& M
achi
nery
/ C
ivil
wor
k in
pro
gres
s
1,
184.
0
1,
078.
0
1,
410.
8
85
1.2
T
otal
1,31
2.8
7,22
4.8
7,62
4.8
912.
8
164
200
8-09
Rs.M
illio
n
Sch
edul
e 5
- Fix
ed A
sset
s
A
udite
d
DES
CRI
PTIO
N
G
ROSS
BLO
CK
(AT
CO
ST/B
OO
K V
ALU
E)
D
EPRE
CIA
TIO
N
NET
BL
OC
K
Sr.
P
artic
ular
s
As a
t
Add
ition
s D
educ
tion &
As a
t A
s at
For
the
year
Ded
uctio
n &
Upt
o
As a
t
No.
Oct
. 1,
2008
A
djus
tmen ts
Sep
t. 30
, 20
09
Oct
. 1,
2008
A
djus
tme
nts
Sep
t. 30
, 20
09
Sep
t. 30
, 20
09
1
L
and
754.
2
9.
5
-
76
3.7
-
-
-
-
76
3.7
2
Bui
ldin
gs
5,
677.
1
83
3.3
24.7
6,48
5.7
842.
9
37
1.5
3.4
1,21
1.0
5,27
4.7
3
Pla
nt &
Mac
hine
ry
22
,372
.2
2,
729.
1
22
.5
25
,078
.8
4,
216.
9
1,
486.
5
4.
7
5,
698.
7
19
,380
.1
4
F
urni
ture
, Fix
ture
s & O
ffice
Eq
uipm
ents
431.
5
9.
7
7.
1
43
4.1
252.
5
41
.8
4.
8
28
9.5
144.
6
5
V
ehic
les
20
9.5
6.5
25.6
190.
4
12
3.5
22.3
17.8
128.
0
62
.4
6
R
ailw
ay S
idin
g &
Lig
ht
Railw
ays
2.
0
-
-
2.
0
1.
9
-
-
1.
9
0.
1
7
W
eigh
ing
Scal
es &
Wei
gh
Brid
ges
27
3.0
0.2
36.0
237.
2
99
.5
23
.4
17
.3
10
5.6
131.
6
8
E
lect
rical
Fitt
ings
480.
7
-
-
48
0.7
149.
7
46
.1
-
19
5.8
284.
9
9
L
ease
d A
sset
s:
-
-
D
istil
lery
Div
isio
n:
-
-
- L
and
18
.9
-
-
18
.9
-
-
-
-
18
.9
- B
uild
ings
58.5
34.2
-
92
.7
7.
8
5.
7
-
13
.5
79
.2
- P
lant
& M
achi
nery
239.
0
-
-
23
9.0
66.7
16.6
-
83
.3
15
5.7
-
Furn
iture
, Fix
ture
s &
Offi
ce E
quip
men
ts
0.
8
-
-
0.
8
0.
7
-
-
0.
7
0.
1
165
- E
lect
rical
Fitt
ings
20.4
-
-
20
.4
4.
6
2.
2
-
6.
8
13
.6
10
In
tang
ible
Ass
ets-
Com
pute
r So
ftwar
e
26
.0
4.
4
-
30
.4
8.
9
6.
1
-
15
.0
15
.4
T
otal
30,5
63.8
3,62
6.9
115.
9
34
,074
.8
5,
775.
6
2,
022.
2
48
.0
7,
749.
8
26
,325
.0
11
Cap
ital W
ork
in p
rogr
ess
1,
386.
9
3,
537.
1
3,
611.
2
1,
312.
8
-
-
-
-
1,
312.
8
T
otal
31,9
50.7
7,16
4.0
3,72
7.1
35,3
87.6
5,77
5.6
2,02
2.2
48.0
7,74
9.8
27,6
37.8
N
ote:
(i) B
uild
ing
incl
udes
an
amou
nt o
f Rs.
500/
- bei
ng v
alue
of 1
0 sh
ares
of R
s. 50
/- ea
ch in
a c
o-op
erat
ive
soci
ety.
(i
i) Th
e as
sets
of D
istil
lery
Div
isio
n at
Pal
ia K
alan
wer
e le
ased
w.e
.f. 3
0th
May
, 200
6.
(iii)
Add
ition
s du
ring
the
year
incl
udes
an
amou
nt o
f Rs.
2,74
4.24
Mill
ion
tow
ards
Exc
hang
e flu
ctua
tion
loss
on
fore
ign
curr
ency
loan
s as
per
the
Not
ifica
tion
date
d 31
.03.
2009
issu
ed b
y th
e M
inis
try o
f Cor
pora
te A
ffairs
. (i
v) P
artic
ular
s of C
apita
l wor
k-in
-pro
gres
s:
As a
t
Add
ition
s
D
educ
tion
s &
As a
t
C
apita
l Wor
k in
Pro
gres
s:
Oct
. 1,
2008
Adj
ustm
en ts
Sep
t. 30
, 20
09
A
dvan
ce to
Sup
plie
rs /
Con
tract
ors
67
.9
71
.1
10
.2
12
8.8
P
lant
& M
achi
nery
/ C
ivil
wor
k in
pro
gres
s
1,
319.
0
3,
466.
0
3,
601.
0
1,
184.
0
T
otal
1,38
6.9
3,53
7.1
3,61
1.2
1,31
2.8
166
BAJAJ HINDUSTHAN LIMITED As at As at As at Dec. 31, 2010 Sept. 30,
2010 Sept. 30,
2009 Rs. Million Rs.
Million Rs. Million Reviewed Audited Audited Schedule 6 - Investments (I) Long Term Investments (At Cost) : A. Other than Trade Quoted, Fully Paid Equity Shares:
Nil, (2010-Nil), (2009-48,000) Shares of Bajaj Holding & Investment Ltd. (BHIL) of Rs.10/- each (formerly known as Bajaj Auto Ltd.)
-
-
0.2
Nil, (2010-Nil), (2009-48,000) Shares of Bajaj Auto Ltd (BAL) of 10/- each
-
-
0.1
Nil, (2010-Nil), (2009-48,000) Shares of Bajaj Finserv Ltd (BFSL) of Rs. 5/- each
-
-
0.1
9,750 (2010-9,750), (2009-9,750) Shares of Mukand Ltd. of Rs.10/- each
0.3
0.3
0.3
Quoted, Fully Paid Preference Shares
2,437 (2010-2,437), (2009-2,437) 0.01% Cumulative Redeemable Preference Shares of Mukand Ltd. of Rs. 10/- each
0.0
0.0
0.0
Rs.24,370/-( 2010- Rs. 24,370/-), ( 2009- Rs. 24,370/-)
Interest in a Beneficiary Trust
6,937.2
6,937.2
- B. Trade In Subsidiary Companies: Quoted, Fully Paid Equity Shares:
Nil, (2010-Nil), (2009-88,500,000) Shares of Bajaj Hindusthan Sugar and Industries Ltd. of Re. 1/- each
-
-
3,587.2
Unquoted Fully Paid Equity Shares:
11,500,000 (2010-11,500,000), (2009-11,500,000) Shares of Bajaj Eco-Tec Products Ltd. of Rs. 10/- each.
1,149.1
1,149.1
1,149.1
2,161,461 (2010-2,161,461), (2009-2,161,461) Shares of Bajaj International Participacoes Ltda., Brazil of BRL 1/- each.
45.5
45.5
45.5
27,001,000 (2010-27,001,000), (2009-1,000) Shares in Bajaj Hindusthan (Singapore) Pte Ltd., Singapore of S$ 1/- each.(2009-Rs.27,270/-)
923.2
923.2
0.0
7,800,000 (2010-7,800,000), (2009-810,000) Shares of Bajaj Energy Pvt. Ltd.(Formerly known as Bajaj Eco-Chem Products Pvt. Ltd.) of Rs. 10/- each.
1,378.1
1,378.1
8.1
38,000 (2010-Nil), (2009-Nil) Shares of Lalitpur Power Generation Co.Ltd. of Rs.10/- each
0.4
-
-
20,000 (2010-Nil), (2009-Nil) Shares of Bajaj Power
167
Generation Pvt. Ltd. of Rs.10/- each 0.2 - - Unquoted Fully Paid Preference Shares:
10,000,000 (2010-10,000,000), (2009-10,000,000) 7% Redeemable Cumulative Non Convertible Preference Shares of Bajaj Eco-Tec Products Ltd. of Rs. 10/- each
100.0
100.0
100.0
60,000,000 (2010-60,000,000),(2009-60,000,000) 7% Redeemable Cumulative Optionally Convertible Preference Shares of Bajaj Eco-Tec Products Ltd. of Rs. 10/- each
600.0
600.0
600.0
In Others:* Unquoted Fully Paid Equity Shares:
1,148,400 (2010-1,148,400), (2009-1,148,400) Shares of Bajaj Ebiz Pvt. Ltd. of Rs.10/- each
11.5
11.5
11.5
5,000 (2010-5,000),(2009-5,000) Shares of Esugarindia Clearing Corporation Ltd. of Rs.10/- each
0.1
0.1
0.1
(II) Current Investments (At lower of cost and fair value): Investment in Mutual Funds (Unquoted fully paid):
4,316.172 (2010-4316.172), (2009-4316.172) Nos. Unit of Franklin India Prima Plus -Growth Plan of Rs 100/- each
0.5
0.5
0.5
11,146.1
11,145.5
5,502.7
*Less: Provision for diminution in value of investments
11.6
11.6
11.6
11,134.5
11,133.9
5,491.1
Dec . 31, 2010 Sept. 30,
2010 Sept. 30,
2009
Book Value Book
Value Book Value
Quoted Investments
0.3
0.3
3,587.9
Unquoted Investments
11,134.2
11,133.6
1,903.2
11,134.5
11,133.9
5,491.1
Market Value Market
Value Market
Value
Quoted Investments
0.6
0.7
3,097.3
Unquoted Investments
-
-
-
0.6
0.7
3,097.3
168
BAJAJ HINDUSTHAN LIMITED As at As at As at Dec. 31, 2010 Sept. 30,
2010 Sept. 30,
2009 Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 7 - Current Assets, Loans & Advances Current Assets : (a) Inventories (At cost or net realisable value whichever is
lower, unless otherwise stated, as certified and valued by the Management)
(i) Stores, Spare Parts and Packing Materials
952.3
788.6
590.0
(ii) Raw Material
2,527.9
5,742.4
3,056.6
(iv) Finished Stock
11,974.3
12,223.5
3,953.7
(v) Materials-in-Process
450.2
13.1
4.0
(vi) By-Products
586.0
446.0
400.2
16,490.7
19,213.6
8,004.5
(b) Sundry Debtors (Unsecured, considered good unless otherwise stated)
Debts outstanding for a period exceeding six months
Good
607.9
646.3
8.7
Doubtful
4.6
4.3
4.3
Less : Provision
(4.6)
(4.3)
(4.3)
-
-
-
Other Debts
1,429.2
984.7
277.0
2,037.1
1,631.0
285.7 (c) Cash and Bank Balances
Cash on hand (including cheques & drafts Rs 11.9 Million,
98.1
312.3
199.9
(2010- Rs.297.2 Million ), (2009- Rs.189.5 Million )
Balance with Scheduled Banks:
(i) In Current Accounts
1,071.9
1,080.8
573.6
169
(ii) In Fixed Deposits (Including interest accrued Rs. 43.6 Million, (2010-Rs.29.0 Million), (2009-6.1 Million)
4,405.2
3,397.8
348.2
Balance with Non Scheduled Banks - In Current Accounts
4.8
1.1
1.8
5,580.0
4,792.0
1,123.5
Loans and Advances: (d) Loans and Advances (Unsecured, considered good
unless
otherwise stated)
Bajaj Hindusthan Sugar and Industries Ltd. (Subsidiary Company)
-
-
4,011.6
Bajaj Eco-Tec Products Ltd. (Subsidiary Company)
1,016.8
-
-
Bajaj Hindusthan (Singapore) Pte Ltd. (Subsidiary Company)
1.8
1.8
1.4
Other Companies
6,849.5
6,163.1
5,549.1
Other Company - Doubtful
22.9
22.9
22.9
Less: Provision
(22.9)
(22.9)
(22.9)
-
-
-
Advances recoverable in cash or in kind or for
value to be received
5,761.1
4,260.8
9,092.4
Deposits #
144.5
127.7
127.0
Balance with Excise Department including Cenvat credits
1,880.0
2,154.8
1,046.9
MAT credit entitlement
960.9
811.0
647.5
Tax paid in advance (net of Provisions)
406.9
722.9
454.6
17,021.5
14,242.1
20,930.5
41,129.3
39,878.7
30,344.2
# Includes National Savings Certificate of the face value of Rs. 1.3 Million (2010- Rs.0.8 Million), (2009- Rs.0.7 Million) and Pass books of Post Office Savings Bank Account having an aggregate balance of Rs. 0.1 Million (2010- Rs.0.1 Million), (2009- Rs.0.1 Million) pledged with Government Authorities.
170
BAJAJ HINDUSTHAN LIMITED As at As at As at Dec. 31,
2010 Sept. 30,
2010 Sept. 30,
2009 Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 8 - Current Liabilities and Provisions A. Current Liabilities:
Sundry Creditors (Including Capital Suppliers Rs.55.0 crore,
14,288.6
16,668.0
6,573.5
(2010- Rs.158.7 Million ), (2009-Rs.447.9 Million)
Interest Accrued but not due
365.1
425.8
193.3
Deposits from Stockists and others
80.3
70.8
59.5
Investor Education & Protection Fund (IEPF) shall be credited by the following:
(Amounts to be transferred to said fund shall be determined on the respective due dates)
Unclaimed Dividend
4.9
4.9
4.0
14,738.9
17,169.5
6,830.3 B. Provisions:
For Employee Benefits
128.1
128.1
123.2
For Premium on redemption of FCCBs
1,635.5
1,635.5
1,606.2
Proposed Dividend
134.0
134.0
123.8
Corporate Dividend Tax
22.2
22.2
21.0
1,919.8
1,919.8
1,874.2
16,658.7
19,089.3
8,704.5
171
BAJAJ HINDUSTHAN LIMITED 2010-2011 2009-2010 2008-2009 (3 Months) (12 Months) (12 Months) Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 9 - Gross Sales/ Income from operations Sales:
Manufactured Goods
11,108.4
28,947.7
15,975.2
By Products
238.8
235.3
354.8
Power
206.2
519.7
226.2
Export
3,592.6
-
-
Export Incentives
-
-
1.3
15,146.0
29,702.7
16,557.5 Schedule 10 - Other Income
Dividend on Long term Investment
-
0.1
1.6
Dividend on Current Investment
0.1
35.8
3.1
Surplus on Sale of Assets
0.2
2.5
3.5
Lease Rent
36.4
158.4
19.2
Gain due to Foreign Exchange Fluctuation (Net)
-
477.3
744.7
Scrap / Stores sales
23.4
64.3
62.8
Profit on sale of Long term Investment
-
166.1
-
Extinguishment of liability on buyback of FCCBs
-
-
337.1
Provisions no longer required / Credit balances appropriated
2.5
321.9
1,041.4
Miscellaneous Receipts
11.0
327.4
98.1
73.6
1,553.8
2,311.5
172
Schedule 11 - Raw Materials Consumed*
Opening Stock
5,742.4
3,056.6
-
Purchases
7,835.3
30,342.2
11,224.2
13,577.7
33,398.8
11,224.2
Less: Closing Stock
2,527.9
5,742.4
3,056.6
11,049.8
27,656.4
8,167.6
* 2010-11 -Includes cost of Raw
al sold.
Schedule 12 - Manpower Cost
Salaries & Wages
359.7
1,280.0
1,054.7
Contribution to P.F.,Superannaution and Pension funds
24.0
84.3
65.1
Contribution to Other funds
0.6
51.0
31.4
Employee's Welfare Expenses
16.4
61.7
57.1
Employee's Compensation Expenses (ESOP cost)
-
(8.8)
-
400.7
1,468.2
1,208.3
173
BAJAJ HINDUSTHAN LIMITED 2010-2011 2009-2010 2008-2009 (3 Months) (12 Months) (12 Months) Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 13 - Other Expenses
Stores, Spares and Packing Materials consumed
288.0
849.7
354.6
Power and Fuel
75.9
425.2
149.7
Rent
15.2
60.5
38.1
Rates and Taxes
2.6
10.4
8.5
Repairs :
Building
7.5
28.0
17.3
Machinery
154.6
285.7
149.2
Others
10.7
39.7
32.3
172.8
353.4
198.8 Payment to Auditors for:
Audit fees
-
2.8
1.8
Tax audit fees
-
0.4
0.2
Certification work
0.2
1.1
0.9
Out of pocket expenses
-
0.3
0.1
0.2
4.6
3.0
Payment to Cost Auditor (Cost Audit Fees)
-
0.3
0.2
Insurance
28.2
61.9
47.4
Selling Commission
28.8
69.6
35.8
Selling & Distribution Expenses
85.2
102.9
130.4
Director fees
0.2
0.9
0.7
Donations (2009-Rs.39,547/-)
-
0.4
0.0
Loss due to Foreign Exchange Fluctuation (Net)
145.1
-
- Miscellaneous Expenses
174
134.3 521.9 395.7
Bad debts written off
-
-
3.7
Provision for Doubtful Debts / Advances
0.3
-
-
Loss on Assets Sold / Discarded
0.1
1.0
16.2
976.9
2,462.7
1,382.8
175
BAJAJ HINDUSTHAN LIMITED 2010-
2011 2009-2010
2008-2009 (3
Months) (12 Months)
(12 Months) Rs.
Million Rs. Million
Rs. Million
Reviewed Audited Audited
Schedule 14 - Interest and Finance Charges (Net) Interest :
On Term Loans
48.4
167.2
322.2
On Debentures
8.4
285.2
533.5
On Working Capital Loans
423.4
839.8
813.4
On Others
710.2
2,265.1
1,158.4
1,190.4
3,557.3
2,827.5 Less: Interest Income
On Loans
216.3
1,043.3
972.5
On Others
18.7
95.3
107.3
235.0
1,138.6
1,079.8
955.4
2,418.7
1,747.7
Add: Finance charges
114.5
594.7
123.1
1,069.9
3,013.4
1,870.8 Schedule 15 - (Increase)/Decrease in Stocks
Opening Stock:
Finished Goods
12,223.5
3,953.7
5,840.6
Materials in process
13.1
4.0
-
By-product
446.0
400.2
82.8
12,682.6
4,357.9
5,923.4 Add: Stock on Amalgamation
Finished Goods
-
563.4
- Materials in process
176
- 0.2 -
By-product
-
245.4
-
-
809.0
- Less: Closing Stock:
Finished Goods
11,974.3
12,223.5
3,953.7
Materials in process
450.2
13.1
4.0
By-product
586.0
446.0
400.2
13,010.5
12,682.6
4,357.9
(327.9)
(7,515.7)
1,565.5
Add/(Less): Excise Duty on Increase/Decrease in stocks
51.6
80.0
(128.2)
(276.3)
(7,435.7)
1,437.3
177
BAJAJ HINDUSTHAN LIMITED Schedule 16 - Statement on Significant Accounting Policies and Notes forming part of the Accounts for the period ended December 31, 2010:
1. Significant Accounting Policies 1.1 System of Accounting:
(i) The Company follows the mercantile system of accounting and recognises income and
expenditure on an accrual basis except in case of significant uncertainties and interest on delayed payment by parties.
(ii) Financial statements are based on historical cost except certain fixed assets which are valued at fair value.
1.2 Revenue recognition:
(i) Revenue is recognised when the significant risk and rewards of ownership of the goods
have been passed to the buyers. Sale of goods is exclusive of sales tax/VAT. Sales excludes captive consumption.
(ii) Sales made on high seas basis delivered to the customers directly and not held in stocks are
not included in the Sales / Turnover and are included on net basis in other income or as the case may be other expenses.
(iii) Sugar sold under levy quota for each season, is accounted at the price as notified by the Govt. as available till such time, pending final notification for each season. The difference in price pending final notification is accounted on estimation by the management taking into account factors affecting the calculation of levy sugar price.
(iv) Export incentive in the nature of duty draw back or "Duty Entitlement Pass Book" under "Duty Exemption Scheme" is accounted for in the year of Export.
1.3
Fixed Assets and Depreciation:
(a) Fixed Assets:
(i) Fixed assets are carried at cost of acquisition or construction cost and includes amount added on fair valuation, less accumulated depreciation (except free hold land), amortisation and impairment loss if any.
(ii) Expenditure during construction period incurred on the projects under implementation are treated as Pre-operative Expenses pending allocation to the assets, and are included under "Capital Work in Progress". These expenses are apportioned to fixed assets on commencement of commercial production. Capital Work in Progress is stated at the amount expended upto the date of Balance Sheet.
(b) Depreciation:
(i) Depreciation on fixed assets (including on revalued portion on fair value) has been provided
as under: - (a) Plant & Machinery: On straight-line method basis at
the rates and in the manner specified in Schedule XIV to the Companies Act, 1956.
(b) Other Assets (except clause c below): On written down value basis at the rates and in the manner specified in Schedule XIV to
178
the Companies Act, 1956. (c) Intangible assets represented by computer software is being amortised over a period of
five years. Leasehold land is amortised over the lease period.
(ii) Depreciation on assets added, sold or discarded during the year has been provided on pro-
rata basis.
1.4 Investments:
Long term investments are stated at cost of acquisition. Diminution in value of such long
term investments is not provided for except where determined to be of permanent nature. Current investments are stated at lower of cost or fair market value.
1.5
Inventories:
(i) Stock of Raw Materials is valued at cost or net realisable value whichever is lower. Cost is arrived at on FIFO Basis.
(ii) Stock of Materials-in-Process and Finished goods is valued at cost or net realisable value
whichever is lower. *
(iii) Stores, Spares and Packing material are valued at cost. Cost is arrived at on Weighted Average Basis.
(iv) Obsolete stores and spares when identified and technically determined, are valued at estimated realisable value.
(v) By-products - Molasses and Bagasse has been valued at estimated realisable value. (vi) Trial run inventories are valued at cost or estimated realisable value whichever is lower. *
* Cost is arrived at on full absorption basis as per Accounting Standard AS-2 "Valuation of Inventories".
1.6 Research and Development:
Revenue expenditure on Research and Development is charged against the profit for the year. Capital expenditure on Research and Development is shown as an addition to Fixed Assets. 1.7 Government Grants:
Government grants / subsidies received towards specific Fixed assets have been deducted from the
Gross value of the concerned Fixed assets and grant / subsidies received during the year towards revenue expenses have been reduced from respective expenses. Capital Subsidies under Sugar Promotion Policy, 2004 is recognised to the extent the claims are accepted and settled.
1.8
Foreign Currency Transactions:
Foreign Currency transactions are recorded at the rates of exchange prevailing on the date of
transaction. Monetary foreign currency assets and liabilities outstanding at the close of the financial year are revalorised at the exchange rates prevailing on the balance sheet date. Exchange differences arising on account of fluctuation in the rate of exchange is recognised in the Profit & Loss Account.
In case of items which are covered by forward exchange contracts, the difference between the year
end rate and rate on the date of the contract is recognized as exchange difference and the premium paid on forward contract is recognized over the life of the contract. In case of financial derivative
179
contracts, premiums paid, gains/losses on settlement and provision for losses, are recognized in the profit and loss account except gains/losses and provisions relating to acquisition of capital assets, in which case, they are adjusted to carrying cost of fixed assets.
1.9 Employee Benefits:
(a) Short Term Employee Benefits:
(i) Short term employee benefits are recognised as expenditure at the undiscounted value in the Profit and Loss Account of the year in which the related service is rendered.
(b) Post Employment Benefits:
(i) Defined Contribution Plans: Company's contribution to the superannuation scheme, pension under Employees' Pension
Scheme, 1995 etc. are recognised during the year in which the related service is rendered. (ii) Defined Benefit Plans: - Gratuity: Gratuity liability is covered under the Gratuity-cum-Insurance Policy of Life Insurance
Corporation of India (LIC) by BHL Employees' Gratuity Fund. The present value of the obligation is determined based on an actuarial valuation, using the Projected Unit Credit Method. Actuarial gains and losses arising on such valuation are recognised immediately in the Profit and Loss Account. The amount funded by the Trust administered by the Company under the aforesaid Policy, is reduced from the gross obligation under the defined benefit plan, to recognise the obligation on a net basis.
- Provident Fund: Monthly contributions are made to a Trust administered by the Company. The interest rate
payable by the Trust to the beneficiaries is notified by the Government. The Company has an obligation to make good the shortfall, if any, between the return on the investments of the Trust and the notified interest rate.
(c ) Long term compensated absences are provided on the basis of actuarial valuation.
(d) Compensation to employees under Voluntary Retirement Scheme is charged to Profit and Loss Account in the year of accrual.
1.10 Borrowing Cost:
(i)
Borrowing cost attributable to acquisition and construction of assets are capitalised as part of the cost of such assets upto the date when such assets are ready for intended use and other borrowing costs are charged to profit & loss account.
(ii) Expenses on issue of shares, debentures and foreign currency convertible bonds (FCCBs) ,
premium on redemption of FCCBs, which is being provided entirely on issuance as well as exchange rate difference arising on revalorisation of such premium are charged to "Securities Premium Accounts" in accordance with Section 78 of the Companies Act, 1956.
1.11 Provision for Current and Deferred Tax:
(i) Provision for Current tax is made with reference to taxable income computed for the
accounting period for which the financial statements are prepared by applying the tax rates relevant to the respective ‘Previous Year’. Minimum Alternate Tax (MAT) eligible for set-off in subsequent years (as per tax laws), is recognised as an asset by way of credit to the Profit and Loss Account only if there is convincing evidence of its realisation. At each Balance Sheet date, the carrying amount of MAT Credit Entitlement receivable is reviewed to reassure realisation.
180
(ii) Deferred Tax resulting from ‘timing difference’ between book and taxable profit for the year is accounted for using the current tax rates. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the assets will be adjusted in future. However, in case of deferred tax assets (representing unabsorbed depreciation or carry forward losses) are recognised, if and only if there is a virtual certainty that there would be adequate future taxable income against which such deferred tax assets can be realised.
1.12 Impairment of Assets:
The Carrying amount of assets are reviewed at each Balance Sheet date if there is any indication of impairment based on internal/external factors. An asset is impaired when the carrying amount of the asset exceeds the recoverable amount. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. An impairment loss recognised in prior accounting periods is reversed if there has been change in the estimate of the recoverable amount.
1.13 Provisions, Contingent Liabilities and Contingent Assets: Provisions involving a substantial degree of estimation in measurement are recognised when
there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the Financial Statements. Contingent Assets are neither recognised nor disclosed in the Financial Statements.
1.14 Employee Stock options and Shares Plan (ESOP): In accordance with SEBI guidelines, the excess of the market price of the shares, at the date
of grant of options under the ESOP, over the exercise price, is treated as Employee Compensation Expense.
181
As at As at As at
Dec. 31,
2010
Sept. 30, 2010
Sept. 30,
2009
Rs.
Million
Rs. Million
Rs. Millio
n
2. Contingent Liabilities not provided for:
(a) In respect of disputed demands/claims against the Company
not acknowledged as debts:
(i) Central Excise matters
329.4
267.7
318.7
(ii) Trade Tax matters
31.8
25.3
5.8
(iii)
Income Tax matters (2009-Rs.17,074/-)
-
-
0.0
(iii) Other Claims
460.4
298.3
412.2
(b) The Company has furnished following guarantees on behalf of subsidiary companies:
Dec. 31, 2010 Sept. 30, 2010 Sept. 30, 2009
Name of Company
Amount of Guarantees
Amount Utilised
Amount of Guarantees
Amount Utilised
Amount of Guarantees
Amount Utilised
Bank Guarantees
1 Bajaj Energy Pvt.Ltd.(Subsidiary Company)
- In favour of Governor of State of U.P.,Lucknow
225.0 N.A.
225.0 N.A.
- N.A.
- In favour of Central Coalfields Ltd
193.0 N.A.
193.0 N.A.
- N.A.
- In favour of U.P. Pollution Control Board
5.0 N.A.
5.0 N.A.
- N.A.
Corporate Guarantees
1 Bajaj Energy Pvt.Ltd.(Subsidiary
Company)
-
In favour of Banks
2,765.2
2,738.
1
8,565.2
7,112.1
-
-
2 Bajaj Eco-Tec Products
Ltd.(Subsidiary Company)
-In favour of Bank
1,040.0
275.0
1,040.0
300.0
740.0
556.9
3.(a) Estimated amount of contracts remaining to be executed on
capital account and not provided for (net of Advances).
57.9
141.7 264.8
182
(b)
Lease Rental Income:
- Not later than one year
128.0
132.8 19.2
- Later than one year but not later than five years
278.7
308.7 12.8
- Later than five years
-
-
-
General description of lease term: - Lease income is recognized based on the leased terms. - Assets are given on lease for the period of 4 to 5 years. The company has the option to renew the lease for secondary
period. There are no exceptional/restrictive covenants in the lease agreements.
4. The disclosures in respect of Related Parties as required under Accounting Standard 18 (AS18) ‘Related Party
Disclosures’ is stated herein below / set out in a separate statement annexed hereto.
a) Related parties and relationships for which disclosure is required under AS18:
For the period ended Dec.31, 2010 :
A. Subsidiary Companies 1. Bajaj Aviation Private Ltd. (Step Down Subsidiary)
Bajaj Eco-Tec Products Ltd. (Wholly owned) Bajaj Energy Private Ltd. (Formerly known as Bajaj Eco-Chem Products Private Ltd.) Bajaj International Participações Ltda., Brazil (Wholly owned) Bajaj Hindusthan (Singapore) Pte Ltd., Singapore (Wholly owned) Lalitpur Power Generation Co.Ltd.(w.e.f.December 10, 2010) Bajaj Power Generation Pvt. Ltd.(w.e.f December 20, 2010)
2. 3. 4. 5. 6.
7. B. Associates and Joint Ventures Bajaj E-biz Private Ltd. – Associate C. Directors and their relatives Mr. Shishir Bajaj - Chairman & Managing Director (Also key management personnel)
Mrs.Minakshi Bajaj (Wife of Mr.Shishir Bajaj) Mr. Kushagra Bajaj - Joint Managing Director (Also key management personnel) and also son of Mr. Shishir Bajaj. Mr.Apoorva Bajaj (Son of Mr.Shishir Bajaj) Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs) (Also key management personnel).
Enterprises over which any person described in (C) above is able to exercise significant influence D.
Bajaj Capital Ventures Private Limited
For the year ended Sept.30, 2010 : A. Subsidiary Companies 1. Bajaj Aviation Private Ltd. (Step Down Subsidiary)
Bajaj Eco-Tec Products Ltd. (Wholly owned) 2.
183
3. Bajaj Energy Private Ltd. (Formerly known as Bajaj Eco-Chem Products Private Ltd.) Bajaj Hindusthan Sugar and Industries Ltd. (up to 31.03.2010) Bajaj International Participações Ltda., Brazil (Wholly owned) Bajaj Hindusthan (Singapore) Pte Ltd., Singapore (Wholly owned)
4. 5. 6. B. Associates and Joint Ventures Bajaj E-biz Private Ltd. – Associate C. Directors and their relatives Mr. Shishir Bajaj - Chairman & Managing Director (Key management personnel)
Mrs.Minakshi Bajaj (Wife of Mr.Shishir Bajaj) Mr. Kushagra Bajaj - Joint Managing Director (Key management personnel) and also son of Mr. Shishir Bajaj. Mr.Apoorva Bajaj (Son of Mr.Shishir Bajaj) Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs) (Key management personnel).
D. Enterprises over which any person described in (C) above is able to exercise significant influence 1. Bajaj Capital Ventures Private Ltd. 2. Bajaj Holding & Investment Ltd.
3. Bajaj Infrastructure Development Company Ltd.
4. Shishir Bajaj family Trust For the year ended Sept.30, 2009 : A. Subsidiary Companies 1. Bajaj Aviation Private Ltd. (Step Down Subsidiary)
Bajaj Eco-Tec Products Ltd. (Wholly owned) Bajaj Eco-Chem Products Private Ltd. (Wholly owned) Bajaj Hindusthan Sugar and Industries Ltd. Bajaj International Participações Ltda., Brazil (Wholly owned) Bajaj Hindusthan (Singapore) Pte Ltd., Singapore (Wholly owned)
2. 3. 4. 5. 6. B. Associates and Joint Ventures Bajaj E-biz Private Ltd. – Associate C. Directors and their relatives Mr. Shishir Bajaj - Chairman & Managing Director (Also key management personnel)
Mrs.Minakshi Bajaj (Wife of Mr.Shishir Bajaj) Mr. Niraj Bajaj - Non Executive Director (resigned w.e.f.December 31, 2008) Mr. Kushagra Bajaj - Joint Managing Director (Also key management personnel) and also son of Mr. Shishir Bajaj Mr.Apoorva Bajaj (Son of Mr.Shishir Bajaj) Mr. I. D. Mittal - Chief Executive Director (Also key management personnel) (resigned w.e.f. February 6, 2009) Mrs. Sureshtha Mittal - Wife of Mr. I. D. Mittal (upto February 05, 2009) Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs) (Also key management personnel) (Appointed w.e.f.March 12, 2009)
D.
Enterprises over which any person described in (C) above is able to exercise significant influence
184
1. Bajaj Capital Ventures Private Limited Bajaj Electricals Limited (upto December 31, 2008) Bajaj Holding & Investment Ltd. The Hindusthan Housing Co. Ltd. (upto December 31, 2008) Hind Musafir Agency Ltd. (upto December 31, 2008) Mukand Ltd. (upto December 31, 2008)
2. 3. 4. 5. 6.
b) Disclosure as required under AS-18 in respect of Related Party Transactions:
Rs. Million
Transactions Year Subsidiaries
Directors/Key
Relatives of
Enterprises Total
Management
Directors/Key
described in
Personnel Management
(D) above
Personnel
I. Transactions during the period
Purchase of Goods 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
21.8
-
-
-
21.8
2008-09
(12 Months)
4.8
-
-
-
4.8
Purchase of Capital Goods
2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
54.6
54.6
2008-09
(12 Months)
-
-
-
-
-
Sale of Goods 2010-11
(3 Months)
2,556.5
-
-
-
2,556.5
2009-10
(12 Months)
1,622.6
-
-
-
1,622.6
2008-09
(12 Months)
211.9
-
-
-
211.9
Sale of Capital Goods 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
Rs. 26,500/-
-
-
-
Rs. 26,500/-
2008-09
(12 Months)
-
-
-
-
-
Rendering of Services 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
-
-
2008- (12
185
09 Months) - - - 0.9 0.9
Interest received 2010-11
(3 Months)
23.5
-
-
-
23.5
2009-10
(12 Months)
344.6
-
-
-
344.6
2008-09
(12 Months)
301.5
-
-
-
301.5
Rent received 2010-11
(3 Months)
1.6
-
-
-
1.6
2009-10
(12 Months)
87.9
-
-
-
87.9
2008-09
(12 Months) Rs.2/-
-
-
- Rs.2/-
Rent Paid 2010-11
(3 Months)
-
-
-
1.8
1.8
2009-10
(12 Months)
-
-
-
7.2
7.2
2008-09
(12 Months)
-
-
-
3.3
3.3
Remuneration 2010-11
(3 Months)
-
11.3
-
-
11.3
2009-10
(12 Months)
-
42.9
-
-
42.9
2008-09
(12 Months)
-
71.7
1.0
-
72.7
Dividend Received 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
-
-
2008-09
(12 Months)
-
-
-
1.1
1.1
Equity Warrant Issued 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
-
-
2008-09
(12 Months)
-
189.0
-
-
189.0
Equity Share Capital Issued (Including Premium)
2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
756.0
756.0
2008-09
(12 Months)
-
-
-
-
-
Investment made 2010-11
(3 Months)
0.6
-
-
-
0.6
2009-10
(12 Months)
2,293.2
-
-
-
2,293.2
186
2008-09
(12 Months)
608.0
-
-
-
608.0
Investment Sold 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
0.2
0.2
2008-09
(12 Months)
-
-
-
-
-
Assignment of Project 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
6,214.0
-
-
-
6,214.0
2008-09
(12 Months)
-
-
-
-
-
Advance given (Project) 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
-
-
-
5,684.2
5,684.2
2008-09
(12 Months)
-
-
-
-
-
Loans given 2010-11
(3 Months)
1,016.8
-
-
-
1,016.8
2009-10
(12 Months)
18,045.2
-
-
-
18,045.2
2008-09
(12 Months)
779.5
-
-
-
779.5
Loans given repaid 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
17,909.5
-
-
-
17,909.5
2008-09
(12 Months)
685.4
-
-
-
685.4
Guarantees Given 2010-11
(3 Months)
-
-
-
-
-
2009-10
(12 Months)
9,288.2
-
-
-
9,288.2
2008-09
(12 Months)
-
-
-
-
-
II. Amounts Outstanding at Balance Sheet date
Loans given outstanding 2010-11
1,018.6
-
-
-
1,018.6
2009-10
1.8
-
-
-
1.8
2008-09
4,013.0
-
-
-
4,013.0
Other Debtors 2010-11
386.9
-
-
-
386.9
187
2009-10
204.1
-
-
-
204.1
2008-09
-
-
-
-
-
Guarantees Given 2010-11
4,228.2
-
-
-
4,228.2
2009-10
10,028.2
-
-
-
10,028.2
2008-09
740.0
-
-
-
740.0
Deposits given 2010-11
-
-
-
3.6
3.6
2009-10
-
-
-
3.6
3.6
2008-09
-
-
-
3.6
3.6
Investments 2010-11
4,196.5
-
-
-
4,196.5
2009-10
4,195.9
-
-
-
4,195.9
2008-09
5,489.9
-
-
-
5,489.9
Notes:
1. Related Party relationship is as identified by the Company based on the available information and relied upon by the Auditors.
2. No amount has been written off or written back during the period/year in respect of debts due from or to related parties.
3. Significant transactions during the respective period/year are given below.
For the period ended Dec.31, 2010 :
1. Sale of goods includes Rs.2,370.8 Million to M/s Bajaj Hindusthan Singapore Private Limited. 2. Interest received includes Rs.23.5 Million from Bajaj Eco Tec Products Limited on loan given.
3. Remuneration Includes Rs.5.5 Million to Mr. Shishir Bajaj,Rs.3.6 Million to Mr. Kushagra Bajaj and Rs.2.1 Million to Dr. Sanjeev Kumar.
4. Rent Received includes Rs. 1.6 Million from Bajaj Energy Pvt. Ltd. 5. Rent Paid includes Rs.1.8 Million to Bajaj Capital Ventures Pvt. Ltd.
6. Investment made includes Rs.0.4 Million in Lalitpur Power Generation Co.Ltd.and Rs.0.2 Million in Bajaj Power Generation Pvt. Ltd.
7. Loan given includes Rs.1,016.8 Million to Bajaj Eco-Tec Products Ltd.
For the year ended Sept.30, 2010 : 1. Purchase of Goods includes Rs.21.8 Million from Bajaj Hindusthan Sugar and Industries Ltd. 2. Purchase of Capital Goods includes Rs.54.6 Million from Bajaj Infrastructure Development Company Ltd.
188
3. Sale of goods includes Rs.1456.7 Million to M/s Bajaj Hindusthan Sugar and Industries Ltd. 4. Sale of capital goods includes Rs.26,500/- to M/s Bajaj Eco-Tec Products Ltd.
5. Interest received includes Rs.150.3 Million from Bajaj Hindusthan Sugar and Industries Ltd,and Rs.161.6 Million from Bajaj Energy Pvt.Ltd.on loan given to them.
6. Remuneration Includes Rs.20.6 Million to Mr. Shishir Bajaj,Rs.14.9 Million to Mr. Kushagra Bajaj and Rs.7.4 Million to Dr. Sanjeev Kumar.
7. Equity Share capital issued (including Premium) Rs.756.0 Million to promoter group. 8. Rent Received includes Rs.87.9 Million from Bajaj Energy Pvt. Ltd. 9. Rent Paid includes Rs. 7.2 Million to Bajaj Capital Ventures Pvt. Ltd. 10.
Investment made includes Rs.1,370.0 Million in Bajaj Energy Pvt. Ltd.and Rs.923.1 Million in Bajaj Hindusthan (Singapore) Pte Ltd., Singapore
11. Investment sold of Rs.2.0 Million of Bajaj Holding & Investment Ltd.
12. Assignment of Project Rs. 6,214.0 Million to Bajaj Energy Pvt. Ltd.
13. Advances given (Project) of Rs. 5,684.2 Million to Bajaj Infrastructure Development Company Ltd.
14.
Loan given includes Rs.17,006.3 Million to Bajaj Energy Pvt. Ltd, Rs.903.2 Million to Bajaj Eco-Tec Products Ltd. and Rs.4.0 Million to Bajaj Hindusthan (Singapore) Pte Ltd., Singapore.
15.
Loan given repaid includes Rs.17,006.3 Million from Bajaj Energy Pvt. Ltd and Rs.903.2 Million from Bajaj Eco-Tec Products Ltd.
16. Guarantees given includes Rs.8,988.2 Million for Bajaj Energy Pvt. Ltd.
For the year ended Sept.30, 2009 : 1. Purchase of Goods includes Rs.4.8 Million from Bajaj Hindusthan Sugar and Industries Ltd.
2. Sale of goods includes Rs.96.3 Million to M/s Bajaj Eco-Tec Products Ltd. and Rs.115.0 Million to Bajaj Aviation Pvt.Ltd.
3. Rendering of services includes Rs.0.5 Million to Hind Musafir Agency Ltd. and Rs.0.4 Million to The Hindusthan Housing Co.Ltd.
4. Interest received includes Rs.301.5 Million from Bajaj Hindusthan Sugar and Industries Ltd on loan given. 5. Rent received includes Rs.2/- from Bajaj Eco-Tec Products Ltd.
6. Remuneration Includes Rs.32.1 Million to Mr. Shishir Bajaj,Rs. 28.4 Million to Mr. Kushagra Bajaj and Rs.7.7 Million to Mr.I.D. Mittal.
7. Dividend received includes Rs.1.1 Million from Bajaj Holding & Investment Ltd. 8. Equity Warrant issued includes Rs.189.0 Million to Promoter Group. 9. Rent Paid includes Rs.3.3 Million to Bajaj Capital Ventures Pvt. Ltd. 10. Investment made includes Rs. 600.0 Million in Bajaj Eco-Tec Products Ltd.
11.
Loan given includes Rs. 497.4 Million to Bajaj Eco-Tec Products Ltd. and Rs.281.7 Million to Bajaj Hindusthan Sugar and Industries Ltd.
12. Loan given repaid includes Rs.677.4 Million from Bajaj Eco-Tec Products Ltd.
189
5.
Segment Information:
The Company has identified its Business Segments as its Primary Reportable Segments comprising
of Sugar, Distillery, Power. Primary Segment Information:
Particulars Dec. 31, 2010 Sept. 30,
2010 Sept. 30, 2009
(3 Months) (12 Months) (12 Months) Rs. Million Rs. Million Rs. Million 1. Segment Revenue
a. Sugar
13,935.9
27,935.9
15,394.6
b. Distillery
805.7
1,566.3
834.5
c. Power
686.6
1,750.2
821.5
Total
15,428.2
31,252.4
17,050.5
Less : Inter- segment Revenue
671.6
2,516.4
1,213.1
Net Sales / Income from Operations
14,756.6
28,736.0
15,837.4 2. Segment Results (Profit (+)/ Loss(-) before tax and interest)
a. Sugar
1,188.8
2,322.2
1,594.4
b. Distillery
334.5
261.5
(68.4)
c. Power
516.3
1,267.7
484.0
Total
2,039.6
3,851.4
2,010.1
Less: (i) Interest (Net)
1,069.9
3,013.4
1,870.8
(ii) Other Un-allocable Expenditure net off
Un-allocable Income
216.8
287.6
(1,920.7)
Total Profit before Tax
752.9
550.4
2,060.0
3. Segment Assets:
a. Sugar
71,013.7
74,624.6
37,050.7
b. Distillery
5,709.6
5,824.7
3,239.0
c. Power
5,823.2
5,667.3
2,795.7
Total
82,546.5
86,116.6
43,085.4
Add: Unallocated Corporate Assets
24,617.3
20,607.9
20,387.7
190
Total Assets
107,163.8
106,724.5
63,473.1
4. Segment Liabilities:
a. Sugar
10,342.6
7,639.0
2,227.1
b. Distillery
188.5
161.5
123.0
c. Power
22.1
8.4
77.4
Total
10,553.2
7,808.9
2,427.5
Add: Unallocated Corporate Liabilities
6,105.5
11,280.4
6,277.0
Total Liabilities
16,658.7
19,089.3
8,704.5
5. Capital Expenditure:
a. Sugar
41.1
609.3
2,634.0
b. Distillery
1.8
84.5
538.1
c. Power
5.3
29.4
359.1
e. Unallocated
3.6
1,208.3
21.5
Total
51.8
1,931.5
3,552.7
6. Depreciation:
a. Sugar
676.9
2,046.6
1,619.1
b. Distillery
70.8
215.3
194.6
c. Power
82.7
248.9
166.0
e. Unallocated
25.9
63.6
42.5
Total
856.3
2,574.4
2,022.1
7.
Non Cash Expenditure other than Depreciation:
a. Sugar Nil Nil Nil b. Distillery Nil Nil Nil c. Power Nil Nil Nil d. Trading Nil Nil Nil Total Nil Nil Nil Other disclosure: 1. The Company caters mostly to Indian markets and as such there are no reportable geographical
segments. All the assets are also located in India.
2. Segments have been identified in line with the Accounting Standard - 17 "Segment Reporting" taking
into account the organisation structure as well as differing risks and returns.
191
3. The Segment Revenue, Results, Assets and Liabilities include respective amounts identifiable to each of
the segment and amounts allocated on reasonable basis.
4. The segment performance has been worked out after attributing the realisable value of inter segment
transfer of material. 6. Deferred Taxation : As at As at As at
Dec. 31,
2010
Sept. 30,
2010
Sept. 30,
2009 Deferred Tax Liabilities:
Depreciation
5,134.3
5,155.2
3,042.5
Total
5,134.3
5,155.2
3,042.5 Deferred Tax Assets:
Provision for Employee Benefits
44.6
44.6
43.0
Provision for doubtful debts / advances
0.9
0.8
0.8
Carry Forward loss and unabsorbed Depreciation
4,080.2
4,275.5
1,918.3
Total
4,125.7
4,320.9
1,962.1
Net Deferred Tax Liability / (Asset)
1,008.6
834.3
1,080.4
192
7. As required by paragraph 46 inserted vide notification dated March 31, 2009 to the Accounting Standard AS-11 "The Effect of Changes in Foreign Exchange Rates", the Company had opted to adjust the exchange fluctuations on Long Term Monetary Items to the carrying cost of fixed assets. As per the notification, option for such accounting treatment is available for financial year ending on or before 31st March, 2011. Accordingly, 3 months period ended Dec.31, 2010, Company has adjusted the exchange fluctuation on long term monetary items in Profit and Loss account. Had the change not done, the profit for the current quarter would have been higher by Rs. 110.5 Million.
As at As at As at Dec. 31, 2010 Sept. 30, 2010 Sept. 30, 2009 8. Disclosures in respect of derivative
instruments:
Forward Forwar
d Forward
Contract Option Contra
ct Option Contract Option
USD JPY/USD
USD JPY/USD
USD JPY/USD
(i) Derivative instruments outstanding are as under:
Million Million Million Million Million Million
Loans taken -
8,042.3
-
8,042.3
-
8,042.3
Creditors (USD) -
-
96.1
-
14.1
-
FCCB (USD) 77.0
56.0
77.0
56.0
-
-
ECB (USD) -
9.3
-
-
-
(All the derivative instruments have been acquired for hedging purposes.)
USD/JPY
USD/JPY
USD/JPY
(ii) Foreign currency exposures that are not hedged
Million Million Million
Creditors (USD) 13.3
13.3
47.0
FCCB (USD) 15.0
15.0
99.6
ECB (USD) 184.1
174.7
87.0
ECB (JPY) 1,148.9
1,148.9
1,148.9
9. For the year ended Sept.30, 2010 : (i) Pursuant to the Scheme of Amalgamation (“the Scheme”) under Sections 391 to 394 of the Companies Act,
1956, the Hon’ble High Court of Bombay pronounced an Order on November 26, 2010, sanctioning the Scheme of amalgamation of Bajaj Hindusthan Sugar and Industries Limited (BHSIL or amalgamating company), a subsidiary company with the company with effect from the appointed date 1st April, 2010. BHSIL is engaged in the business of manufacturing of sugar, alcohol and it’s allied products.
193
The Scheme became effective on December 20, 2010 upon filing the said Order with the Registrar of Companies, Maharashtra, Mumbai as required under Section 394(3) of the Companies Act, 1956. In accordance with the Scheme and as per the approval of the Hon’ble High Court of Bombay : a) All the assets, liabilities, rights and obligations of BHSIL have been transferred to and vested with the Company with effect from 1st April, 2010 and have been recorded at their respective fair values, under the purchase method of accounting for amalgamation. b) 37,000,000 Equity shares of Re. 1/- each fully paid up are to be issued to the equity share holders of the amalgamating Company whose names are registered in the register of members on record date and to the Trust created as per the terms of the Scheme by the company against it’s investments in and advances to amalgamating company, without payment being received in cash. Pending allotment, the face value of such shares has been shown as “Equity Share Suspense”. c) Excess of the fair value of net assets taken over by the Company over the paid up value of Equity Shares to be issued and allotted of Rs.8756.3 Million has been credited to Amalgamation Reserve Account except the Statutory Reserve which has been credited to the similar reserve of the company; Beneficial Interest in the Trust referred to in (b) above has been recorded at the book value of the underlying assets i.e. Rs. 6937.2 Million; net effect on fair valuation of assets and liabilities of the Company identified by the Board as prescribed by the Scheme to be fair valued based on the reports by an independent valuer / management estimates of Rs. 1448.8 Million has been debited to Amalgamation Reserve Account; the balance in Amalgamation Reserve Account after netting off the cost of Rs. 87.0 Million being the stamp duty and other expenditure payable on Amalgamation an amount of Rs.7220.5 Million is credited to Securities Premium Account. The additional depreciation on account of fair valuation of fixed assets of the company aggregating to Rs.310.0 Million has been debited to the Profit & Loss account. Had the Scheme not prescribed this accounting treatment, the aggregate amount of Rs. 14,066.3 million being the effect of fair valuation of fixed assets of the company would have been credited to Revaluation Reserve and Rs.1,5602.1 Million being expenses on amalgamation and fair valuation of current assets would have been debited to Profit & Loss account with a corresponding effect on the profit for the year. d) From the effective date the authorised share capital will stand increased to Rs. 180,00,00,000 consisting of 180,00,00,000 Equity Shares of Re.1/- each without any further act or deed on the part of the Company, including payment of stamp duty and Registrar of Companies fees and the Memorandum of Association and Articles of Association of the Company stand amended accordingly without any further act or deed on the part of the Company. e) BHSIL stands dissolved without being wound up from the Effective Date.
(ii) The Company has allotted 14,500,000 new Equity Shares on January 4, 2010, upon receipt of the entire
remaining sum of Rs.567.0 Million representing 75% of the total value for such warrants and exercise of the rights by a promoter group entity of the Company on all the 14,500,000 warrants allotted earlier on May 18, 2009 on preferential basis carrying right to subscribe for and be allotted one (1) fully paid equity share of face value Re. 1 each per warrant, at a price of Rs. 52.14 per equity share in accordance with the SEBI Preferential Issue Guidelines. Subsequently, after the allotment of these new Equity Shares, the paid up Equity Share Capital and Securities Premium Account have increased by Rs. 14.5 Million and Rs.741.5 Million respectively.
10. For the year ended Sept.30, 2009 : (i) Out of outstanding Foreign Currency Convertible Bonds (FCCBs) aggregating to US$ 119.50 million, FCCBs
of the aggregate face value of US$ 19.93 million were repurchased at discount and cancelled during the year. The resultant gain (net of expenses) of Rs. 337.15 Million on account of the extinguishment of corresponding liability has been accounted for under the head "Other Income".
194
(ii) The Company has allotted 14,500,000 warrants on preferential basis to the promoter group of the Company on May 18, 2009 after receipt of a sum of Rs. 189.01 Million representing 25% of the total value for such warrants in accordance with the SEBI Preferential Issue Guidelines. Each warrant entitles the holder to subscribe for and be allotted one (1) equity share of the company any time within a period of 18 months from the date of allotment of the warrants. The issue proceeds in this regard have been utilised for repayment of debts.
(iii)
In compliance with the Notification dated March 31, 2009 issued by Ministry of Corporate Affairs, the Company has exercised the option as inserted by Paragraph 46 to the Accounting Standard AS-11 "The Effect of Changes in Foreign Exchange Rates". Accordingly Foreign Exchange Loss of Rs.1,322.84 Million for the year ended September 30, 2009 has been adjusted to Capital Assets. For the accounting year ended September 30, 2008, foreign exchange loss of Rs. 584.87 Million (net of Provision Rs. 836.53 Million, Gross Rs. 1,421.40 Million) was debited to profit and loss account. In terms of the said notification, while the gross loss of Rs. 1,421.40 Million has been carried to the capital assets and credited to General Reserve, Provision for Exchange Fluctuation of Rs. 836.53 Million now not required, has been written back to the Profit and Loss Account as Provision no Longer required and reflected under the head “Other Income”.
11. The previous year’s figures have been regrouped, rearranged and reclassified wherever necessary and are to be read in relation to the amounts and other disclosures relating to the current year.
195
Annexure A to the Standalone Audit Report
STATEMENT OF DIVIDEND
Particulars
Three months ended December
31, 2010
Year ended September 30,
2010
Year ended September 30,
2009 (Reviewed) (Audited) (Audited)
No. of Equity Shares of Re.1 each 191,357,111 191,357,111 176,857,111 Rate of Dividend - 70% 70% Face Value per Share (Re.) 1 1 1 Amount of Dividend (Rs.in Millions.) ** - 144.2 123.8 Dividend Tax (Rs. in Millions) ** - 23.9 21.0 Total Payout (Rs. in Millions) - 168.1 144.8
** Dividend paid for year ended September 30, 2010 includes appropriation of Rs.10.2 million and Dividend Tax Rs.1.7 million pertaining to Financial year 2009 on the 14.5 million equity shares issued after September 30, 2009 but before the record date
Annexure D to the Standalone Audit Report
Statement of Secured Loan (Standalone)
Particulars
Sanctioned
Amount (Rs. in Mn.)
Amount Outstanding as on December 31, 2010
(Rs. in Mn.)
Security details Repayment Schedule Tenure Rate of
Interest
Non Convertible Debentures
GIC 150.0
150.0
1st pari passu Charge on Fixed Assets on the company
Bullet payment in June 2011 3 years Fixed 11% p.a.
Total Non Convertible Debentures
150.0
150.0
Working Capital Loan from Banks
State Bank of India 7,500.0
7,110.7
Hypothecation of stocks of sugar, molasses, consumables stores/spare, industrial alcohol and other current assets of all the sugar and distillery units of the company, including book debts, on pari passu charge and 3rd pari passu charge on entire fixed assets of the company and
On Demand 1 Year
Base Rate + 250 BPS p.a., presently 10.75% p.a.
196
all other moveable and immoveable assets of the comapny.
State Bank of Patiala 1,500.0
1,308.2
Hypothecation of stocks of sugar, molasses, consumables stores/spare, industrial alcohol and other current assets of all the sugar and distillery units of the company, including book debts, on pari passu charge. 3rd pari passu charge on entire fixed assets of the company and all other moveable and immoveable assets of the comapny.
On Demand 1 Year
Base Rate + 300 BPS p.a., presently 12.00% p.a.
Punjab National Bank 7,000.0
2,779.8
Ist pari passu charge by way of hypothecation of stocks of sugar, molasses , consumable stores/ spares , industrial alcohol and book debts arising out of genuine trade transactions upto 90 days old, not drawn on associate/ allied concerns and all other current assets of the sugar and distillery units. 3rd charge on pari passu basis on entire fixed assets and all other moveable and immoveable assets of all the units of the company.
On Demand 1 Year
Base Rate + 300 BPS p.a., presently 12.50% p.a.
Oriental Bank of Commerce
2,000.0
125.2
Hypothecation of stocks of sugar, molasses, consumables stores/spare, industrial alcohol and other current assets. 3rd pari passu charge over the entire fixed assets of the company.
On Demand 1 Year
Base Rate+175 BPS p.a., presently 11.25%p.a.
IDBI Bank Ltd 1,700.0
41.4
First Hypothecation charge on the current assets of the company both present and future. 3rd pari passu charge over the entire fixed assets of the company, both present and future.
On Demand 1 Year
250 BPS Below BPLR p.a., presently 11.50% p.a.
Allahabad Bank 1,000.0
536.0
First Hypothecation charge on the current assets of the company both present and future. 3rd pari passu charge over the entire fixed assets of the company, both
On Demand 1 Year
Base Rate+ 250 BPS p.a., presently 12.00% p.a.
197
present and future.
Central Bank of India 1,500.0
531.3
Ist pari passu charge on current assets of the company and 3rd pari passu charge on fixed assets of the company.
On Demand 1 Year
Base Rate+ 250 BPS p.a., presently 12.00% p.a.
Total Working Capital Loan
22,200.0
12,432.6
Term Loans from Banks
ECB Loan from BNP Paribas
3,449.2
5,060.7
1st pari passu Charge on Fixed Assets of the company
will be repaid in Jan.2012 6 years LIBOR+65
BPS
State Bank of Patiala 174.7
116.5
1st pari passu Charge on entire Fixed Assets of the company and second pari passu charge on current assets.
The loan would be repayable in 6 half yearly instalments(fist instalment of Rs. 29.10 Mn and last instalment of Rs. 29.20 Mn)
3 years
Base Rate Plus 3.25% p.a., presently 12.25% p.a.
State Bank of India 902.5
639.3
Residual Charge on Fixed assets of the company
Repaid in 24 monthly instalment after a moratorium of 2 years
4 years
12% p.a. Full interest subvention shall be provided by the Government of India. The interest subvention will be available for the entire duration of the loan (i.e. 4 years including 2 years moratorium)
Punjab National Bank 378.7
205.1
Punjab National Bank 175.1
102.1
IDBI Bank Ltd 160.0
120.3
Oriental Bank of Commerce
200.0
108.3
Yes bank 300.0
237.5
State Bank of Patiala 34.1
22.7
Allahabad Bank 2,000.0
2,000.0
1st pari passu charge on the entire fixed assets of the company.
Door-to- Door tenure of the facility shall be six years including moratorium period of 30 months. Loan is repayable in 14 equal quarterly instalments of Rs. 143.0 Mn. each after moratorium period of 30 months from the date of first disbursement.
6 years
Base Rate Plus 2.75% p.a., presently 12.25% p.a.
Central Bank of India 2,000.0
2,000.0
1st pari passu Charge on Fixed Assets of the company
10 half yearly instalments of Rs. 200 Mn which will fall due on 1 April,
6 years
BPLR Less 200 BPS p.a., presently 11.75%p.a.
198
1 October every year.
State Bank of Hyderabad
1,000.0
1,000.0
1st pari passu Charge on Fixed Assets of the company
20 equal quarterly instalments of Rs. 50 Mn each after an initial moratorium of one year.
6 years
Base Rate Plus 275 BPS p.a., presently 11.75% p.a.
Oriental Bank of Commerce
2,000.0
2,000.0
1st pari passu charge on entire fixed assets of the company.
Repayable in 6 years including moratorium of one year.
6 years
Base Rate Plus 2.00% p.a., presently 11.50% p.a.
Bank of Baroda 2,000.0
2,000.0
1st pari passu Charge on Fixed Assets of the company
1st instalment will fall on 30.6.2011 and last instalment will fall on 31.3.2016. (20 quarterly instalments)
6 years
Base Rate Plus 2.50% p.a., presently 12.00% p.a.
Canara Bank 2,000.0
2,000.0
1st pari-pasu charge by EMT/Hypothecation on all F.A.
20 equal quarterly instalments of Rs. 100 Mn each after an initial moratorium of one year.
6 years
Base Rate Plus 3.00% p.a., presently 12.50%p.a.
Bank Of India 2,000.0
2,000.0
1st pari passu charge over fixed block of the company.
10 half yearly instalments of Rs. 200 Mn.each commencing from 12 months after first date of disbursement. Door to Door tenor is 6 years.
6 years
300 BPS over and above of Base rate of the Bank p.a., presently 12.50% p.a.
IDBI Bank Ltd 2,000.0
1,000.0
1st pari passu charge on immoveable properties
16 quarterly instalments after 12 months from the date of drawal.
5 years
BPLR Less 175 BPS p.a., presently 12.25% p.a.
State Bank of Patiala 1,000.0
1,000.0
1st pari passu charge on the entire fixed assets & 2nd charge on the current assets .
12 quarterly instalments after moratorium of one year
6 years
Base Rate Plus +2.75% p.a., presently 11.75% p.a.
Term loans From Banks
21,774.3
21,612.5
Corporate Loans
Bank of Rajasthan 700.0
466.7
Equitable mortgage of land & building and hypothecation charge on moveable fixed assets on pari passu basis with other lenders.
24 months including 12 months moratorium period i.e. 1/3 after 12 months 1/3 after 18 months & 1/3 after 24 months.
3 years
500 BPS Below BPLR p.a., presently 11.75% p.a.
Punjab National Bank 3,500.0
2,916.6
1st pari passu Charge on Fixed Assets of the company
12 Equal instalments after a moratorium of period of 12 months
4 years
Base Rate Plus 3.50% p.a., presently 13.00% p.a.
199
from the date of disbursement.(Total Tenure 4 years)
Allahabad Bank 1,000.0
833.4
1st pari passu Charge on Fixed Assets of the company
Repaid in 12 equal quarterly instalments of Rs.83.4 Mn after a moratorium period of 12 months from the date of first disbursement
4 years
Base Rate Plus 4% p.a., presently 13.50% p.a.
State Bank of Mysore 500.0
477.5
1st pari passu Charge on Fixed Assets of the company
12 ballooning quarterly instalments after moratorium of one year.
4 years
150 BPS Below SBMPLR Minimum of 11% p.a, Presently 12.00% p.a.
State Bank of Hyderabad
500.0
500.0
Pari passu Charge on Fixed Assets of the company
12 equal quarterly instalments of after an initial moratorium of one year.
4 years
Base Rate Plus 325 BPS p.a., presently12.25%p.a.
Bank Of India 2,000.0
1,666.6
Pari passu Charge on Fixed Assets of the company
Repayable in 6 half yearly instalments commencing from 12 months after the date of disbursement
4 years
300 BPS over and above of Base rate of the Bank p.a., presently 12.50% p.a.
Corporation Bank 2,000.0
1,833.3
1st pari passu Charge on entire Fixed Assets of the company, by way of hypothecation of whole of the present and future fixed assests of the company including mortgage by way of deposit of title deeds of the company.
To be repaid in 12 equal Quarterly instalments with initial repayment holiday of 12 months.
4 years
Base Rate Plus 3.25% p.a.. Presently 12.65% p.a.
State Bank of India 3,000.0
2,843.8
1st pari passu charge on entire fixed assets of the company by way of hypothecation of the whole of the present and future fixed assets of the company including mortgage by deposit of the title deeds of the immoveable properties of the company. 2nd pari passu charge on current assets on pari passu basis.
To be repaid in 13 Quarterly instalments. The first instalment will be payable on 31.10.2010 & last instalment will be payable on 30.9.2013
4 years
Base Rate Plus 3% p.a., presently 11.25% p.a.
Total Corporate Loans
13,200.0
11,537.9
Total Term Loan From Banks
34,974.3
33,150.4
Term Loans from Others
200
ECB Loan from IFC 5,325.7
4,350.2
Exclusive Ist charges basis, by hypothecation of co. movable fixed assets (present & Future) and co. immovable assets ( present & Future) at its factories at Rudauli,Kundarki and Utraula together with all building and structures thereon and all P & M attached thereto. Further secured by a Ist Pari Passu charge basis on all its immovable fixed assets at the factory at Pratappur , Distt Deioria by joint equitable Mortgage and hypo of movable Fixed assets. also further secured on second pari passu charges basis , by hypothecation of all the current assets (present & Future) of the Co.
16 half yearly Instalment after initial moratorium period of 2.5 years. Commencing from 15 Sep 09, last instalment due on Mar'17.
10 years including Moratorium period of 2.5 Year from the date of first disbursement
Loan A- 6M Libor + 1.60% p.a Loan B1-6M Libor + 1.25% p.a Loan B2-6M Libor + 1.60% p.a
Loan from Sugar Development Fund (SDF)
574.5
543.7
Second exclusive charge on fixed assets of respective sugar unit
10 half yearly equal instalment after moratorium period of 2.5 year from the date of first Disbursement
7.5 Years
200 BPS Below Bank rate p.a., Presently 4% p.a.
Loan from Sugar Development Fund (SDF)
805.2
427.2
Second exclusive charge on fixed assets of respective sugar unit
8 half yearly equal instalment after moratorium period of one year from the date of first Disbursement
4.50 Years
200 BPS Below Bank rate p.a., Presently 4% p.a.
Loan from Sugar Development Fund (SDF)
283.6
264.8
Second exclusive charge on fixed assets of respective sugar unit / Bank Guarantee
4 Equal yearly instalment after moratorium period of one year from the date of first Disbursement
4.00 Years
200 BPS Below Bank rate p.a., Presently 4% p.a.
Total Loan from Others
6,989.0
5,585.9
Total Secured Loans 64,313.3
51,318.9
Note: "Presently" words indicates effective rate as on 31.03.2011.
201
Annexure E to the Standalone Audit Report
Statement of Unsecured Loan (Standalone)
Unsecured Loan
Sanctioned Amount (Rs. in Mn.)
Amount Outstanding as on December
31, 2010 (Rs. in Mn.)
Security details
Repayment Schedule Tenure Rate of
Interest
Fixed Deposit from Public
0.8
0.8
Unsecured
With in One Year
1 Year Interest Free
Total FD Receipt
0.8
0.8
Syndicate Bank
1,000.0
1,000.0
Unsecured
Bullet Payment after 1 year from the date of first disbursement commencing on Sept 2011
1 Year 9.50% p.a. Fixed
Loan from Department of Commercial Taxes, Government of Uttar Pradesh.
4.8
4.8
Unsecured
Bullet Payment after 5 Year from the date of first disbursement.
5 Year Interest Free
Total Short Term Loan
1,004.8
1,004.8
Short Term Loans from Others
FCCB-BHL
5,492.2
4,551.7
Unsecured
Bullet Payment after 5 Year from the date of first disbursement.
5 Year Default Interest will accrue (Both before and after any judgement) on such payment @ 5.875% Per Annum
FCCB-BHSIL
612.5
672.1
Unsecured
Bullet Payment after 7 Year from the date of first disbursement.
7 Year 100 BPS over and above 6 Months LIBOR Per Annum
Total FCCB
6,104.7
5,223.8
Total Unsecured
7,110.3
6,229.4
Annexure B and C to the Standalone Audit Report has been included in the section “Accounting Ratios and Capitalisation Statement” on page 266 of the Draft Letter of Offer.
202
Auditors’ Report on Consolidated Financial Statements To The Board of Directors, Bajaj Hindusthan Limited, 2nd Floor, Jamnalal Bajaj Marg, 226, Nariman Point, Mumbai - 400021 Dear Sirs, 1. We have examined the attached consolidated financial information of Bajaj Hindusthan Limited (the
‘Company’) and it’s subsidiaries (collectively referred to as ‘Group’) comprising Consolidated Balance Sheet as at December 31, 2010, September 30, 2010 and September 30, 2009 and the related Consolidated Profit & Loss Account and Consolidated Cash Flow Statement for the three month period ended December 31, 2010 and year ended on September 30, 2010 and September 30, 2009 (collectively, together with the schedules and notes thereto, the “Consolidated Financial Statements”) as attached to this report and initialled by us for identification. These Consolidated Financial Statements are approved by the Board of Directors of the Company, and has been prepared in terms of the requirements of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended to date (the ‘ICDR Regulations’) in connection with the proposed “ Right Issue of Equity Shares” by the Company.
The preparation and presentation of these consolidated financial information is the responsibility of the Company’s Management. Our responsibility is to express an opinion on these Consolidated Financial Statement based on our examination. We have examined these Consolidated Financial Statement taking into consideration the terms of our engagement agreed upon with you in accordance with our engagement letter dated May 2, 2011 in connection with the proposed Right Issue of equity shares of the Company.
2. These financial information have been extracted by the Management from the Company’s Audited Consolidated Financial Statements for the years ended on September 30, 2010 and September 30, 2009 approved by the Board of Directors at their meeting held on December 20, 2010 and December 15, 2009 respectively and Unaudited Consolidated Financial Statements for three months period ended December 31, 2010 subjected to limited review approved by the Board of Directors at their meeting held on April 30, 2011, after making such regroupings as considered appropriate. The Consolidated Financial Statements of the Company for the year ended on September 30, 2010 were audited by us. The Consolidated Financial Statement of the Company for the year ended on September 30, 2009 were audited by M/s. Dalal & Shah, Chartered Accountants (‘D&S’), whose reports have been furnished to us and accordingly relied upon by us. The Unaudited Consolidated Financial Statements for three months period ended December 31, 2010 were subjected to Limited Review carried out by us.
3. In audit of the Consolidated Financial Statement of the Company for the financial year ended on September 30, 2010, we did not audit the financial statements of one subsidiary company whose financial statements reflect total assets of Rs.135.5 millions as at September 30, 2010, total revenues of Rs.17.4 millions and cashflows amounting to Rs.(3.6) millions for the year then ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other auditors. We have relied on the management certified financial statements of the four subsidiary companies whose financial statement reflect total assets of Rs.12,545.9 millions as at
203
September 30, 2010, total revenue of Rs.1458.4 millions and cashflows amounting to Rs.438.2 millions for the year ending September 30, 2010. In audit of the Consolidated Financial Statement of the Company for the financial year ended on September 30, 2009, D&S did not audit the financial statements of three subsidiary companies whose financial statements reflect total assets of Rs.186.9 millions as at September 30, 2009 and total revenues of Rs.10.7 millions for the year then ended. D&S opinion, insofar as it relates to these subsidiaries is based solely on the report of their auditors. In respect of financial statements of other two subsidiaries of which D&S were auditors, their accounts ending financial year coinciding with that of Holding Company have been prepared and certified by the management for the purposes of consolidated accounts and relied upon by D&S. In conducting the limited review of the Consolidated Financial Statements of the Company for the three months ended December 31, 2010, we have relied on the management certified financial statements of the six subsidiary companies whose financial statement reflect total assets of Rs.14,680.8 millions as at December 31, 2010 and total revenue of Rs.2,792.2 millions for the year ending September 30, 2010.
4. We have not audited any consolidated financial statements of the Group as of any date or for any period subsequent to September 30, 2010. Accordingly, we express no opinion on the consolidated financial position, results of operations or cash flows of the Group as of any date or for any period subsequent to September 30, 2010.
5. We have performed such tests and procedures, which in our opinion, were necessary for the examination of these financial information. These procedures, mainly involved comparison of the attached consolidated financial information with the Company’s audited/unaudited consolidated financial statements for the respective years/periods.
6. We report that the Consolidated Financial Statement are correctly extracted from the audited/unaudited consolidated financial statements of the company for relevant year/period and are prepared and presented in accordance with requirements of the Accounting Standard (AS) 21, Consolidated Financial Statements and Accounting Standard (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements notified by the Companies (Accounting Standards) Rules, 2006 and with the ICDR Regulations as amended from time to time relating to Right Issue of the Equity Shares by the Company.
7. In accordance with the requirements of the ICDR Regulations, and the terms of our engagements agreed with
you, we have also examined the other financial information prepared by the Management and approved by the Board of Directors of the Company for the purpose of inclusion in the Draft Letter of Offer as mentioned below:- f. Statement of Accounting Ratios (Consolidated) for financial year 2010, 2009 and three months period
ended December 31, 2010 as given in Annexure A g. Capitalization Statement (Consolidated) as of December 31, 2010 as given in Annexure B
8. In our opinion the attached financial information of the company, as mentioned in paragraph 1 and 7 above
have been extracted and prepared in accordance with the ICDR Regulations and applicable provisions of the Companies Act as amended from time to time, and Indian GAAP in terms of our engagement as agreed with you.
9. This report should not be in any way construed as a re-issuance or redrafting of any of the previous audit reports issued by us.
10. This report is intended solely for use of the Management for inclusion in the Draft Letter of Offer in connection
with Right Issue of the Equity Shares of the Company and is not to be used, referred to or distributed for any other purpose without our prior written consent.
204
For Chaturvedi & Shah Chartered Accountants, Firm Registration No.: 101720W Amit Chaturvedi Partner Membership.No.: 103141 Place : Mumbai Dated : May 16, 2011
205
BAJAJ HINDUSTHAN LTD. Consolidated Balance Sheet as at December 31 and September 30 As at As at As at Dec . 31, 2010 Sept. 30, 2010 Sept. 30, 2009 Schedules Rs. Million Rs. Million Rs. Million Reviewed Audited Audited I. Sources of Funds: Shareholders' Funds
Capital 1
191.4
191.4
176.9
Equity Share Suspense
37.0
37.0
-
Equity Warrants
-
-
189.0
Stock option outstanding
153.0
153.0
161.8
Reserves & Surplus 2
29,243.5
28,456.7
20,607.4
29,624.9
28,838.1
21,135.1
Minority interest
2,909.8
2,029.7
650.6 Loan Funds
Secured Loans 3
62,436.3
50,763.8
28,657.8
Unsecured Loans 4
6,229.4
12,733.7
11,904.8
68,665.7
63,497.5
40,562.6
Deferred Tax Liability
1,013.5
838.5
486.1
Total
102,213.9
95,203.8
62,834.4 II. Application of Funds: Fixed Assets 5
Gross Block
69,096.3
68,668.0
52,951.3
Less: Depreciation
12,033.3
11,097.7
10,598.3
Net Block
57,063.0
57,570.3
42,353.0
Capital Work in progress
10,629.5
9,306.1
1,548.0
67,692.5
66,876.4
43,901.0
Investments 6
6,939.0
6,939.0
1.2
206
Current Assets, Loans & Advances 7
Inventories
16,993.4
19,674.3
9,564.4
Sundry Debtors
1,859.9
1,528.7
498.6
Cash & Bank Balances
9,747.5
5,257.7
1,272.7
Loans & Advances
16,084.8
14,351.0
18,593.9
44,685.6
40,811.7
29,929.6
Less : Current Liabilities & Provisions 8
Current Liabilities
15,178.7
17,491.8
9,027.0
Provisions
1,936.0
1,931.5
1,970.4
17,114.7
19,423.3
10,997.4
Net Current Assets
27,570.9
21,388.4
18,932.2
Miscellaneous Expenses (to the extent not written off)
11.5
-
Total
102,213.9
95,203.8
62,834.4 Notes Forming part of the accounts 16
207
BAJAJ HINDUSTHAN LTD. Consolidated Profit & Loss Account for the period ended December 31 and year ended September 30 2010-11 2009-10 2008-09 3 Months 12 Months 12 Months
Schedules Rs. Million Rs. Million Rs. Million Reviewed Audited Audited
Income :
Gross Sales /Income from Operations 9
15,863.2
33,048.0
21,152.9
Less: Excise Duty
389.5
1,033.7
893.4
Net Sales /Income from Operations
15,473.7
32,014.3
20,259.5
Other Income 10
81.5
1,392.5
3,075.7
15,555.2
33,406.8
23,335.2 Expenditure :
Raw Materials Consumed 11
11,182.8
32,190.8
10,734.6
Manpower Cost 12
448.1
1,838.9
1,653.3
Other Expenses 13
1,190.7
3,871.6
2,184.4
Interest & Finance charges (Net) 14
1,161.7
3,681.2
2,781.3
Depreciation
936.2
3,440.3
3,456.6
(Increase) / Decrease in Stocks 15
(307.4)
(9,986.7)
1,473.5
14,612.1
35,036.1
22,283.7
Profit/ (Loss) for the year before Exceptional Items & Taxation
943.1
(1,629.3)
1,051.5
Exceptional items:
Surplus on cessation of subsidiary
-
(1,949.3)
-
Profit / Loss for the year before Taxation
943.1
320.0
1,051.5
Less: Provision for Taxation:
Current Tax
150.6
166.0
331.8
Deferred Tax
175.0
(94.0)
446.8
Wealth Tax
-
1.1
1.0
Fringe Benefit Tax
-
-
7.8
325.6
73.1
787.4
Less: MAT credit entitlement
150.4
165.2
331.3
208
175.2
(92.1)
456.1
Profit for the year
767.9
412.1
595.4
Less: Minority interest
-
(28.5)
(22.4)
Income attributed to consolidated group
767.9
440.6
617.8
Add: Balance Brought Forward
(842.6)
(1,761.0)
(1,540.8)
Excess / (Short) provision for tax
(8.1)
(0.3)
(16.2)
Dividend paid of earlier year
-
(10.2)
-
Corporate Dividend Tax on Dividend paid
-
(1.7)
-
Debenture Redemption Reserve (no longer required)
625.0
750.0
-
(225.7)
(1,023.2)
(1,557.0)
542.2
(582.6)
(939.2)
Transfers to:
Reserve for Molasses Storage Tanks
0.6
3.5
2.0
General Reserve
-
100.3
400.0
Debenture Redemption Reserve
-
-
275.0
Proposed Dividend
4.8
134.0
123.8
Corporate Dividend Tax on Proposed Dividend
-
22.2
21.0
Balance carried to Balance Sheet
536.8
(842.6)
(1,761.0) Basic Diluted Earning per Share:
Net Profit
759.8
440.3
601.6
Weighted Average No. of
Shares*
228,357,111
206,133,823
150,148,207
Basic Earning per Share in Rupees (Face Value Re. 1/- each)
3.33
2.14
4.01
Diluted Earning per Share:
Net Profit
759.8
440.3
601.6
Weighted Average No. of
Shares*
228,357,111
206,133,823
164,648,207
Diluted Earning per Share in Rupees (Face Value Re 1/- each)
3.33
2.14
3.65
* Including equity shares to be issued on amalgamation.
Notes Forming part of the accounts 16
209
BAJAJ HINDUSTHAN LTD. Consolidated Cash Flow Statement for the period ended December 31 and year ended September 30 2010-11 2009-10 2008-09 3 Months 12 Months 12 Months Rs. Million Rs. Million Rs. Million Reviewed Audited Audited A. Cash Flow from operating activities:
Net Profit/ (Loss) before Exceptional item and Taxation
943.1
(1,629.3)
1,051.5
Adjustment for:
Depreciation
936.2
3,440.3
3,456.6
(Gain) / Loss due to Foreign Exchange Fluctuation
114.7
(140.0)
-
Provision for Foreign Exchange Gain written back
-
-
(1,211.2)
Loss/ (Surplus) on sale of Fixed Assets (Net)
(0.1)
(2.5)
12.7
Interest and Finance Charges
1,374.9
4,481.3
3,587.4
Dividend Received
(0.1)
(37.1)
(4.7)
Profit on sale of investment
-
(166.2)
-
Interest Received
(213.2)
(800.1)
(806.1)
Employee's Compensation Expenses (ESOP Cost)
-
(8.8)
-
2,212.4
6,766.9
5,034.7
Operating Profit before working capital changes
3,155.5
5,137.6
6,086.2
Adjustment for:
Trade and other receivables
(1,544.3)
(341.0)
(2,258.0)
Inventories
2,680.9
(15,955.3)
(1,640.7)
Trade payables
(2,254.1)
3,962.1
(309.5)
Cash generated from operations
2,038.0
(7,196.6)
1,878.0
Direct taxes paid
157.5
(396.3)
(142.2)
Net Cash from/ (used in) operating activities
2,195.5
(7,592.9)
1,735.8
210
B. Cash Flow from investing activities:
Purchase of Fixed Assets
(1,786.5)
(10,118.0)
(1,660.0)
Sale of Fixed Assets
7.5
27.8
56.0
Purchase of Investments
(201.0)
(45,712.9)
(5,892.8)
Sale of Investments
201.0
45,878.4
5,892.3
Loans and Advances
(686.5)
(614.0)
(460.7)
Dividend Received
0.1
37.1
4.7
Interest Received
213.2
800.1
806.1
Exchange Fluctuation Reserve on consolidation
31.9
(5.3)
6.2
Net cash used in investing activities
(2,220.3)
(9,706.8)
(1,248.2)
C. Cash Flow from financing activities:
Proceeds from borrowings (Net of repayments)
5,078.8
23,026.8
(4,276.7)
Issue of Convertible Warrants
-
-
189.0
On conversion of Equity Warrants
-
567.0
-
Minority interest
880.1
2,118.8
-
Issue of Equity Shares & Premium
-
-
7,231.8
Issue Expenses
-
-
(198.7)
Incorporation expenses
(11.5)
-
-
Interest paid
(1,432.8)
(4,272.1)
(3,802.3)
Dividend paid
-
(155.8)
(98.3)
Net cash from/(used in) financing activities
4,514.6
21,284.7
(955.2)
Net increase/(decrease) in cash and cash equivalents
4,489.8
3,985.0
(467.6)
Cash and Cash equivalents - (Opening Balance)
Earmarked for specific purposes
145.1
359.8
29.2 Other Balances
211
5,112.6 912.9 1,711.1
5,257.7
1,272.7
1,740.3
Cash and Cash equivalents - (Closing Balance)
Earmarked for specific purposes
257.4
145.1
359.8
Other Balances
9,490.1
5,112.6
912.9
9,747.5
5,257.7
1,272.7
Notes:
1 The above cash flow statement has been prepared under the "Indirect Method" as set out in Accounting Standard - 3 on Cash Flow Statement.
2 Figures in brackets indicate cash outflow and without brackets indicate cash inflow.
212
BAJAJ HINDUSTHAN LTD. SCHEDULES FORMING PART OF CONSOLIDATED ACCOUNTS Schedules 1 to 16 annexed to and forming part of the Consolidated Balance Sheet as at December 31, 2010 and September 30 and Consolidated Profit and Loss Account for the period/ year ended on that date. As at As at As at
Dec. 31, 2010 Sept. 30, 2010 Sept. 30,
2009 Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 1 - Capital Authorised:
1,800,000,000 (2010- 800,000,000) (2009-300,000,000) Equity Shares of Re 1/- each.
1,800.0
800.0
300.0
Nil (2010-Nil) (2009-500,000,000) Unclassified Shares of Rs. 1/- each.
-
-
500.0
1,800.0
800.0
800.0 Issued, Subscribed & Paid up:
191,357,111 (2010-191,357,111) (2009-176,857,111) Equity Shares of Re 1/- each.
191.4
191.4
176.9
191.4
191.4
176.9
Of the above shares 53,100,000, (2010-53,100,000), (2009-53,100,000) Equity Shares were allotted as fully paid Bonus Shares by way of Capitalisation of Reserves.
Schedule 2 - Reserves and Surplus
Capital Redemption Reserve
0.5
0.5
0.6
Capital Reserve
89.1
89.1 -
Contingency Reserve
-
-
100.0
Securities Premium
24,501.3
24,501.3
16,375.2
Exchange Fluctuation Reserve on Consolidation of overseas subsidiaries
39.7
7.8
13.1
General Reserve
4,000.9
4,000.0
4,432.4
Debenture Redemption Reserve
37.5
662.5
1,412.5
Reserve for Molasses Storage Tanks
37.8
38.1
34.6
Balance as per Profit & Loss Account
536.7
(842.6)
(1,761.0)
29,243.5
28,456.7
20,607.4
213
Schedule 3 - Secured Loans Debentures
15 - 11% Secured Redeemable Non- Convertible Debentures
of Rs.1,00,00,000 each series 30 of 2007-08 (redeemable at par on June 19, 2011)
150.0
150.0
150.0
Loans & Advances from Banks
56,262.4
44,976.6
22,323.3
Other Loans & Advances
6,023.9
5,637.2
6,184.5
62,436.3
50,763.8
28,657.8
214
BAJAJ HINDUSTHAN LTD. As at As at As at Dec . 31, 2010 Sept. 30, 2010 Sept. 30, 2009 Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 4 - Unsecured Loans
Short Term Debentures
-
2,500.0
5,500.0
Zero Coupon Foreign Currency Convertible Bonds (FCCBs)
5,223.8
5,228.0
5,504.0
Short Term Loan from Banks
1,000.0
5,000.1
900.0
Fixed Deposits
0.8
0.8
0.8
Loan from Others
4.8
4.8 -
6,229.4
12,733.7
11,904.8 *FCCB's of Rs.4,551.7 Million issued by the Company in the financial year 2005-2006 can be converted at the option of
the bond holder into one equity share at Rs.465.40 per equity share, at a pre determine exchange rate of US$ 1=Rs.44.08 at any time upto 02.02.2011. FCCB's of Rs.672.1 Million issued by amalgamated company in the financial year 2006-07 can be converted at the option of the bond holder into one equity share at Rs.250 per equity share, at a pre determine exchange rate of US$ 1=Rs.42.42 at any time upto 26.04.2014.
215
Sche
dule
5 -
Fixe
d A
sset
s (C
onso
lidat
ed)
Rs.
Mill
ion
201
0-11
R
evie
wed
D
ESC
RIPT
ION
G
ROSS
BLO
CK
(AT
CO
ST/B
OO
K V
ALU
E)
DEP
REC
IATI
ON
N
ET
BLO
CK
Sr.
P
artic
ular
s
As a
t
Add
ition
s D
educ
tions
&
A
s at
As a
t F
or th
e ye
ar
D
educ
tions
&
U
pto
A
s at
No.
Oct
. 1,
2010
Adj
ustm
ents
D
ec. 3
1,
2010
O
ct. 1
, 201
0
A
djus
tmen
t s D
ec. 3
1,
2010
D
ec. 3
1,
2010
1
Goo
dwill
on
cons
olid
atio
n
-
-
-
2
Fre
ehol
d La
nd
4,
442.
2
-
1.
1
4,
441.
1
-
-
-
-
4,
441.
1
3
Lea
seho
ld L
and
8.0
-
-
8.
0
1.
3
0.
1
-
1.
4
6.
6
4
Bui
ldin
gs
11
,369
.4
15
6.0
1.1
11,5
24.3
1,88
9.9
185.
4
-
2,
075.
3
9,
449.
0
5
Pla
nt &
Mac
hine
ry
50
,341
.3
29
4.5
31.0
50,6
04.8
8,54
9.9
708.
1
-
9,
258.
0
41
,346
.8
6 F
urni
ture
, Fix
ture
s &
Offi
ce E
quip
men
ts
49
6.2
11.0
0.2
507.
0
33
1.5
10.2
0.2
341.
5
16
5.5
7
V
ehic
les
1,
426.
7
2.
5
2.
8
1,
426.
4
17
2.5
25.3
1.9
195.
9
1,
230.
5
8
Lea
sed
Ass
ets:
a
. Dis
tille
ry D
ivis
ion:
- L
and
84
.8
0.
4
-
85
.2
-
-
-
-
85
.2
- B
uild
ings
115.
1
-
-
11
5.1
21.5
2.1
-
23
.6
91
.5
- P
lant
& M
achi
nery
350.
4
-
-
35
0.4
109.
0
4.
8
-
11
3.8
236.
6
-
Furn
iture
, Fix
ture
s &
Offi
ce E
quip
men
ts
0.
8
-
-
0.
8
0.
7
-
-
0.
7
0.
1
9
Inta
ngib
le A
sset
s-C
ompu
ter
Softw
are
33.1
0.1
-
33
.2
21
.4
1.
7
-
23
.1
10
.1
216
T
otal
68,6
68.0
464.
5
36
.2
69
,096
.3
11
,097
.7
93
7.7
2.1
12,0
33.3
57,0
63.0
10
C
apita
l Wor
k in
pro
gres
s
9,30
6.1
1,76
8.8
445.
4
10
,629
.5
-
-
-
-
10
,629
.5
T
otal
77,9
74.1
2,23
3.3
481.
6
79
,725
.8
11
,097
.7
93
7.7
2.1
12,0
33.3
67,6
92.5
Not e:
(i)
Bui
ldin
g in
clud
es a
n am
ount
of R
s. 50
0/- c
o- b
eing
val
ue o
f 10
shar
es o
f Rs.
50/-
each
in a
op
erat
ive
soci
ety.
(ii
) The
ass
ets o
f Dis
tille
ry D
ivis
ion
at P
alia
Kal
an w
ere
leas
ed w
.e.f.
30t
h M
ay, 2
006.
(i
ii) D
educ
tions
& A
djus
tmen
ts in
clud
e Rs
. 26.
7 M
illio
n to
war
ds E
xcha
nge
fluct
uatio
n ga
in o
n fo
reig
n cu
rren
cy lo
ans a
s per
the
Not
ifica
tion
date
d 31
.03.
2009
issu
ed b
y th
e M
inis
try o
f Cor
pora
te
Affa
irs.
(iv)
Par
ticul
ars o
f Cap
ital w
ork-
in-p
rogr
ess:
As a
t F
or th
e ye
ar
C
apita
lise d
A
s at
C
apita
l Wor
k in
Pro
gres
s:
Oct
. 1,
2010
D
ec. 3
1,
2010
A
dvan
ce to
Sup
plie
rs /
Con
tract
ors
6,
181.
7
(2
16.9
)
1.1
5,96
3.7
P
lant
& M
achi
nery
/ C
ivil
wor
k in
pro
gres
s
2,
766.
6
1,
595.
9
44
4.3
3,91
8.2
P
reop
erat
ive
Expe
nses
M
anpo
wer
Cos
t
24.7
23.7
-
48
.4
P
ower
and
Fue
l
1.7
0.9
-
2.
6
R
ent
1.
6
1.
8
-
3.
4
R
ates
and
Tax
es
7.
4
0.
2
-
7.
6
R
epai
rs -
othe
rs
-
0.
7
-
0.
7
In
sura
nce
72.8
-
-
72
.8
217
T
rial R
un E
xpen
ses /
Loss
*
-
-
-
-
M
isce
llane
ous E
xpen
ses
73
.1
23
7.1
-
31
0.2
In
tere
st
10
9.9
122.
3
-
23
2.2
F
inan
ce C
harg
es
65
.7
1.
6
-
67
.3
D
epre
ciat
ion
0.9
1.5
-
2.
4
S
ub T
otal
Pre
oper
ativ
e Ex
pens
es
35
7.8
389.
8
-
74
7.6
T
otal
9,30
6.1
1,76
8.8
445.
4
10
,629
.5
218
Sche
dule
5 -
Fixe
d A
sset
s (C
onso
lidat
ed)
Rs.
Mill
ion
200
9-10
A
udite
d
D
ESC
RIPT
ION
G
ROSS
BLO
CK
(AT
CO
ST/B
OO
K V
ALU
E)
DEP
REC
IATI
ON
N
ET
BLO
CK
Sr.
P
artic
ular
s
As a
t A
dditi
ons
D
educ
tions
&
A
s at
As a
t F
or th
e ye
ar
D
educ
tions
&
Upt
o
As a
t
No.
Oct
. 1, 2
009
A
djus
tmen
t s S
ept.
30,
2010
O
ct. 1
, 20
09
A
djus
tme
nts
Sep
t. 30
, 20
10
Sep
t. 30
, 20
10
1
Goo
dwill
on
cons
olid
atio
n
1,
049.
8
-
1,
049.
8
-
72
0.1
164.
8
88
4.9
-
-
2
F
reeh
old
Land
1,26
8.2
3,66
3.7
489.
7
4,
442.
2
-
-
-
-
4,
442.
2
3
L
ease
hold
Lan
d
-
4.
4
(3
.6)
8.
0
-
1.
5
0.
2
1.
3
6.
7
4
B
uild
ings
9,30
2.0
4,00
5.7
1,93
8.3
11,3
69.4
1,54
4.5
614.
5
26
9.1
1,88
9.9
9,47
9.5
5
Pla
nt &
Mac
hine
ry
40
,191
.0
22
,102
.5
11
,952
.2
50
,341
.3
7,
735.
9
2,
527.
1
1,
713.
1
8,
549.
9
41
,791
.4
6 F
urni
ture
, Fix
ture
s &
Offi
ce
Equi
pmen
ts
51
1.9
48.5
64.2
496.
2
33
2.6
42.2
43.3
331.
5
16
4.7
7
Veh
icle
s
226.
2
1,
246.
4
45
.9
1,
426.
7
14
6.0
57.7
31.2
172.
5
1,
254.
2
8
L
ease
d A
sset
s:
a
. Dis
tille
ry
Div
isio
n:
- L
and
18
.9
65
.9
-
84
.8
-
-
-
-
84
.8
- B
uild
ings
92.7
22.4
-
11
5.1
13.5
8.0
-
21
.5
93
.6
- P
lant
&
Mac
hine
ry
25
9.4
91.0
-
35
0.4
90.1
18.9
-
10
9.0
241.
4
-
Furn
iture
, Fi
xtur
es &
Offi
ce
0.
8
-
-
0.
8
0.
7
-
-
0.
7
0.
1
219
Equi
pmen
ts
9
In
tang
ible
Ass
ets-
Com
pute
r Sof
twar
e
30
.4
2.
7
-
33
.1
14
.9
6.
5
-
21
.4
11
.7
T
otal
52,9
51.3
31,2
53.2
15,5
36.5
68,6
68.0
10,5
98.3
3,44
1.2
2,94
1.8
11,0
97.7
57,5
70.3
10
Cap
ital W
ork
in
prog
ress
1,54
8.0
15,6
37.1
7,87
9.0
9,30
6.1
-
-
-
-
9,
306.
1
T
otal
54,4
99.3
46,8
90.3
23,4
15.5
77,9
74.1
10,5
98.3
3,44
1.2
2,94
1.8
11,0
97.7
66,8
76.4
N
ote:
(i) B
uild
ing
incl
udes
an
amou
nt o
f Rs.
500/
- bei
ng v
alue
of 1
0 sh
ares
of R
s. 50
/- ea
ch in
a c
o-op
erat
ive
soci
ety.
(i
i) Th
e as
sets
of D
istil
lery
Div
isio
n at
Pal
ia K
alan
wer
e le
ased
w.e
.f. 3
0th
May
, 200
6.
(iii)
Ded
uctio
ns &
Adj
ustm
ents
incl
ude
Rs. 7
2.0
Mill
ion
tow
ards
Exc
hang
e flu
ctua
tion
gain
on
fore
ign
curr
ency
loan
s as
per
the
Not
ifica
tion
date
d 31
.03.
2009
issu
ed b
y th
e M
inis
try o
f Cor
pora
te A
ffairs
. (i
v) D
educ
tions
& A
djus
tmen
ts in
clud
e Rs
.24.
0 M
illio
n re
ceiv
ed o
n ac
coun
t of c
apita
l sub
sidy
from
Min
istry
of N
ew a
nd R
enew
al E
nerg
y (U
&
I Gro
up) G
over
nmen
t of I
ndia
. (v
) As
per S
chem
e of
Am
alga
mat
ion
and
base
d on
the
repo
rts o
f ind
epen
dent
val
uer,
Com
pany
has
fair
valu
ed it
s cer
tain
fixe
d as
sets
as a
t Apr
il 01
, 201
0 re
sulti
ng in
to a
dditi
ons
to g
ross
blo
ck a
ggre
gatin
g to
Rs.
14,0
66.3
Mill
ion
(incl
uded
in a
dditi
ons
colu
mn
- La
nd R
s.2,8
39.3
Mill
ion,
Bu
ildin
g Rs
.1,3
74.2
Mill
ion
and
Plan
t and
Mac
hine
ry R
s.9,8
52.8
Mill
ion)
. The
add
ition
al d
epre
ciat
ion
on a
ccou
nt o
f fa
ir va
luat
ion
of f
ixed
as
sets
agg
rega
ting
to R
s.310
.0 M
illio
n ha
s bee
n de
bite
d to
the
Prof
it &
Los
s acc
ount
. (v
i) A
dditi
ons i
nclu
de R
s.14,
784.
5 M
illio
n on
acc
ount
of a
mal
gam
atio
n of
Baj
aj H
indu
sthan
Sug
ar a
nd In
dustr
ies L
td. w
.e.f.
Apr
il 01
, 201
0 as
pe
r Sch
eme
of a
mal
gam
atio
n
(vii)
The
ded
uctio
n to
gro
ss b
lock
and
acc
umul
ated
dep
reci
atio
n in
clud
e Rs
.14,
953.
5 M
illio
n an
d Rs
. 2,0
65.9
Mill
ion
resp
ectiv
ely
on a
ccou
nt o
f ce
ssat
ion
of su
bsid
iary
(BH
SIL)
whi
ch h
as b
een
mer
ged
with
the
Com
pany
w.e
.f.A
pril
01, 2
010.
(ii
i) Pa
rticu
lars
of C
apita
l wor
k-in
- pro
gres
s:
As a
t F
or th
e ye
ar
C
apita
lise
d
As a
t
C
apita
l Wor
k in
Pro
gres
s:
Oct
. 1,
2009
Sep
t. 30
, 20
10
A
dvan
ce to
Sup
plie
rs /
Con
tract
ors
17
7.8
12,2
93.5
6,28
9.6
6,18
1.7
P
lant
& M
achi
nery
/ C
ivil
wor
k in
pro
gres
s
1,
362.
6
2,
993.
4
1,
589.
4
2,
766.
6
P
reop
erat
ive
Expe
nses
Man
pow
er C
ost
220
-
24.7
-
24
.7
P
ower
and
Fue
l -
1.
7
-
1.
7
R
ent
-
1.
6
-
1.
6
R
ates
and
Tax
es
-
7.
4
-
7.
4
R
epai
rs -
othe
rs
-
-
-
-
In
sura
nce
-
72
.8
-
72
.8
M
isce
llane
ous E
xpen
ses
7.
6
65
.5
-
73
.1
In
tere
st
-
10
9.9
-
10
9.9
F
inan
ce C
harg
es
-
65
.7
-
65
.7
D
epre
ciat
ion
-
0.
9
-
0.
9
S
ub T
otal
Pre
oper
ativ
e Ex
pens
es
7.
6
35
0.2
-
35
7.8
T
otal
1,54
8.0
15,6
37.1
7,87
9.0
9,30
6.1
221
Sche
dule
5 -
Fixe
d A
sset
s (C
onso
lidat
ed)
Rs.
Mill
ion
200
8-09
A
udite
d
D
ESC
RIPT
ION
G
ROSS
BLO
CK
(AT
CO
ST/B
OO
K V
ALU
E)
DEP
REC
IATI
ON
N
ET
BLO
CK
Sr.
P
artic
ular
s
As a
t A
dditi
ons
Ded
uctio
ns
&
As a
t A
s at
For
the
year
D
educ
tions
&
U
pto
A
s at
No.
Oct
. 1,
2008
Adj
ustm
ents
S
ept.
30,
2009
O
ct. 1
, 20
08
A
djus
tmen ts
S
ept.
30,
2009
S
ept.
30,
2009
1
G
oodw
ill o
n co
nsol
idat
ion
1,04
9.8
-
-
1,
049.
8
39
0.4
329.
7
-
72
0.1
329.
7
2
L
and
1,23
3.9
34.2
-
1,
268.
1
-
-
-
-
1,
268.
1
3
B
uild
ings
8,19
8.5
1,12
8.2
24.7
9,30
2.0
969.
4
57
8.4
3.4
1,54
4.4
7,75
7.6
4
Pla
nt &
Mac
hine
ry
35
,047
.1
4,
378.
9
22
.5
39
,403
.5
5,
072.
0
2,
354.
0
4.
7
7,
421.
3
31
,982
.2
5
F
urni
ture
, Fix
ture
s & O
ffice
Eq
uipm
ents
498.
6
20
.4
7.
1
51
1.9
277.
9
59
.5
4.
8
33
2.6
179.
3
6
V
ehic
les
24
4.0
10.2
28.0
226.
2
13
7.3
28.2
19.4
146.
1
80
.1
7
R
ailw
ay S
idin
g &
Lig
ht
Railw
ays
2.
0
-
-
2.
0
1.
9
-
-
1.
9
0.
1
8
W
eigh
ing
Scal
es &
Wei
gh
Brid
ges
33
1.9
2.6
35.9
298.
6
10
3.8
29.6
17.3
116.
1
18
2.5
9
Ele
ctric
al F
ittin
gs
48
2.8
4.2
-
48
7.0
149.
9
46
.7
-
19
6.6
290.
4
10
L
ease
d A
sset
s:
-
Dis
tille
ry D
ivis
ion:
-
-
-
- L
and
18
.9
-
-
18
.9
-
-
-
-
18
.9
- B
uild
ings
58.5
34.2
-
92
.7
7.
8
5.
7
-
13
.5
79
.2
- P
lant
& M
achi
nery
222
239.
0
-
-
239.
0
66.7
16
.6
-
83.3
15
5.7
- F
urni
ture
, Fix
ture
s &
Offi
ce E
quip
men
ts
0.8
-
-
0.
8
0.
7
-
-
0.
7
0.
1
- E
lect
rical
Fitt
ings
20.4
-
-
20
.4
4.
6
2.
2
-
6.
8
13
.6
11
In
tang
ible
Ass
ets-
Com
pute
r So
ftwar
e
26
.0
4.
4
-
30
.4
8.
9
6.
0
-
14
.9
15
.5
T
otal
47,4
52.2
5,61
7.3
118.
2
52
,951
.3
7,
191.
3
3,
456.
6
49
.6
10
,598
.3
42
,353
.0
12
C
apita
l Wor
k in
pro
gres
s
1,58
7.5
5,33
7.7
5,37
7.2
1,54
8.0
-
-
-
1,54
8.0
T
otal
49,0
39.7
10,9
55.0
5,49
5.4
54,4
99.3
7,19
1.3
3,45
6.6
49.6
10,5
98.3
43,9
01.0
(i)
Build
ing
incl
udes
an
amou
nt o
f Rs.
500
bein
g va
lue
of 1
0 sh
ares
of R
s. 50
/- ea
ch in
a c
o-op
erat
ive
soci
ety.
(i
i) Th
e as
sets
of D
istil
lery
Div
isio
n in
Baj
aj H
indu
sthan
Lim
ited
at P
alia
Kal
an w
ere
leas
ed w
.e.f.
30t
h M
ay, 2
006.
(i
ii) A
dditi
ons d
urin
g th
e ye
ar in
clud
es a
n am
ount
of R
s. 4,
268.
5 M
illio
n to
war
ds E
xcha
nge
fluct
uatio
n lo
ss o
n fo
reig
n cu
rren
cy lo
ans a
s per
the
Not
ifica
tion
date
d 31
.03.
2009
issu
ed b
y th
e
Min
istry
of C
orpo
rate
Affa
irs.
Not
e:
(iv) P
artic
ular
s of C
apita
l wor
k-in
-pro
gres
s:
A
s at
For
the
year
C
apita
lis ed
As a
t
Cap
ital
Wor
k in
Pr
ogre
ss:
Oct
. 1, 2
008
S
ept.
30, 2
009
Adv
ance
to
Supp
liers
/ C
ontra
ctor
s
204
.9
50
7.5
534.
6
17
7.8
Pla
nt &
M
achi
nery
/ C
ivil
wor
k in
pr
ogre
ss
1,
375.
8
4,
829.
4
4,
842.
6
1,
362.
6
223
P
reop
erat
ive
Expe
nses
Mis
cella
neou
s Exp
ense
s
6.8
0.8
-
7.
6
T
otal
1,5
87.5
5,33
7.7
5,37
7.2
1,54
8.0
224
BAJAJ HINDUSTHAN LTD. As at As at As at
Dec . 31,
2010 Sept. 30,
2010 Sept. 30,
2009
Rs.
Million Rs.
Million Rs.
Million Reviewed Audited Audited Schedule 6 - Investments (At Cost) Long Term Investments : A. Other than Trade Quoted, Fully Paid Equity Shares:
Nil (2010- Nil) (2009-48,000) Shares of Bajaj Holding & Investment Ltd. (BHIL) of Rs.10/- each (formerly known as Bajaj Auto Ltd.)
-
-
0.2
Nil (2010- Nil) (2009- 48,000) Shares of Bajaj Auto Ltd (BAL) of 10/- each (on Demerger of Bajaj Holding & Investment Ltd. on 25.03.08)
-
-
0.1
Nil (2010- Nil) (2009-48,000) Shares of Bajaj Finserv Ltd (BFSL) of Rs. 5/- each (on Demerger of Bajaj Holding & Investment Ltd. on 25.03.08)
-
-
0.1
9,750 (2010-9,750) (2009-9,750) Shares of Mukand Ltd. of
Rs.10/- each
0.3
0.3
0.3 Quoted, Fully Paid Preference Shares
Nil (2010-Nil) (2009 - 2,437) 0.01% Cumulative Redeemable Preference Shares of Mukand Ltd. of Rs. 10/- each(2009-Rs.24,370/-)
-
-
0.0
Interest in a Beneficiary Trust
6,937.2
6,937.2
- B. Trade
In Others * Unquoted Fully Paid Equity Shares:
1,148,400 (2010-1,148,400) (2009-1,148,400) Shares of Bajaj Ebiz Pvt. Ltd. of Rs.10/- each
11.5
11.5
11.5
5,000 (2010-5,000) (2009-5,000) Shares of Esugarindia
Clearing Corporation Ltd. of Rs.10/- each
0.1
0.1
0.1
(II) Current Investments (At lower of cost and fair value); Investment in Mutual Funds (Quoted fully paid):
4,316.172 (2010-4,316.172) (2009-4,316.172) Nos. Unit of Franklin India Prima Plus -Growth Plan of Rs 100/- each
0.5
0.5
0.5
94,802.660 (2010-94,802.660) (2009- Nil) Nos. Unit of Punjab National Bank, Principal Monthly Income Plan-Dividend Reinvestment Monthly of Rs.10/- each
1.0
1.0
-
6,950.6
6,950.6
12.8
*Less: Provision for diminution in value of investments
11.6
11.6
11.6
6,939.0
6,939.0
1.2
225
Dec . 31,
2010 Sept. 30,
2010 Sept. 30,
2009
Book Value
Book Value
Book Value
Quoted Investments
0.3
0.3
0.7
Unquoted Investments
6,938.7
6,938.7
0.5
6,939.0
6,939.0
1.2
Market
Value Market
Value Market
Value
Quoted Investments
0.6
0.7
110.4
Unquoted Investments
-
-
-
0.6
0.7
110.4 BAJAJ HINDUSTHAN LTD. As at As at As at
Dec . 31, 2010 Sept. 30,
2010 Sept. 30,
2009
Rs. Million Rs. Million Rs.
Million Reviewed Audited Audited Schedule 7 - Current Assets, Loans & Advances Current Assets :
(a) Inventories (At cost or net realisable value whichever is lower, unless otherwise stated, as certified and valued by the Management)
(i) Stores, Spare Parts and Packing Materials
953.1
849.8
809.7
(ii
) Raw Material
2,819.1
5,962.4
3,219.7
(iii) Finished Stock
12,119.1
12,327.2
4,884.6
(iv) Materials in process
516.1
88.9
104.3
(v
) By-Product
586.0
446.0
546.1
16,993.4
19,674.3
9,564.4
(b) Sundry Debtors (Unsecured, considered good unless
otherwise stated)
Debts outstanding for a period exceeding six months
Good
523.8
569.6
20.2
226
Doubtful
4.6
4.3
4.3
Less : Provision
(4.6)
(4.3)
(4.3)
Other Debts
1,336.1
959.1
478.4
1,859.9
1,528.7
498.6 (c) Cash and Bank Balances
Cash on hand
99.1
313.3
224.0 Balance with Scheduled Banks:
(i) In Current Accounts
1,726.8
1,369.8
687.1
(ii) In Fixed Deposits
7,916.8
3,573.5
359.8
Balance with Non Scheduled Banks - In Current Accounts
4.8
1.1
1.8
9,747.5
5,257.7
1,272.7 Loans and Advances:
(d) Loans and Advances (Unsecured, considered good unless
otherwise stated)
Other Companies
6,849.5
6,163.1
5,549.1
Other Company - Doubtful
22.9
22.9
22.9
Less: Provision
(22.9)
(22.9)
(22.9)
-
-
- Advances recoverable in cash or in kind or for
value to be received
5,838.0
4,366.8
9,639.8
Deposits
146.2
129.5
129.2
Balance with Excise Department including Cenvat credits
1,880.0
2,154.8
2,133.1
MAT credit entitlement
963.5
813.1
647.9
Tax paid in advance (net of Provisions)
407.6
723.7
494.8
16,084.8
14,351.0
18,593.9
44,685.6
40,811.7
29,929.6
227
BAJAJ HINDUSTHAN LTD. As at As at As at
Dec . 31, 2010 Sept. 30, 2010 Sept. 30,
2009 Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 8 - Current Liabilities and Provisions A. Current Liabilities:
Sundry Creditors 14,725.1
16,990.0
8,732.8
Interest Accrued but not due 368.2
426.1
216.9
Deposits from Stockists and others 80.5
70.8
73.3
Unclaimed Dividend 4.9
4.9
4.0
15,178.7
17,491.8
9,027.0 B. Provisions:
For Employee Benefits 139.5
139.8
159.6
For Premium on redemption of FCCBs 1,635.5
1,635.5
1,666.0
Proposed Dividend 138.8
134.0
123.8
Corporate Dividend Tax 22.2
22.2
21.0
1,936.0
1,931.5
1,970.4
17,114.7
19,423.3
10,997.4
228
BAJAJ HINDUSTHAN LTD. 2010-11 2009-10 2008-09 3 Months 12 Months 12 Months Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 9 - Gross Sales/ Income from Operations
Sales:
Manufactured Goods
11,552.0
32,336.9
20,595.6
By Products
116.2
282.3
416.0
Power
181.1
411.4
130.1
Export
4,009.6
-
-
Export Incentives
-
-
1.3 Services:
Air Transport
4.3
17.4
9.9
15,863.2
33,048.0
21,152.9 Schedule 10 - Other Income
Dividend
-
0.1
1.6
Income from current investments
0.1
37.0
3.1
Surplus on Sale of Assets
0.2
3.6
3.5
Lease Rent
34.8
70.5
19.2
Gain due to Foreign Exchange Fluctuation
-
479.8
952.6
Scrap / Stores sales
24.7
65.8
122.7
Profit from sale of Investment
-
166.2
-
Extinguishment of liability on buyback of FCCBs
-
-
337.1
Provisions no longer required / Credit balances appropriated
10.2
321.9
1,522.3
Miscellaneous Receipts
11.5
247.6
113.6
81.5
1,392.5
3,075.7
229
Schedule 11 - Raw Materials Consumed*
Opening Stock
5,962.4
3,219.7
129.5
Purchases
8,039.5
36,106.5
13,824.8
14,001.9
39,326.2
13,954.3
Less: Stock on cessation of subsidiary
-
1,173.0
-
Less: Closing Stock
2,819.1
5,962.4
3,219.7
11,182.8
32,190.8
10,734.6
* 2010-11 -Includes cost of Raw Material sold.
Schedule 12 - Manpower Cost
Salaries & Wages
403.4
1,605.6
1,451.5
Contribution to Provident and other funds and schemes
25.7
101.0
84.5
Contribution to other funds
0.8
63.3
32.5
Employee's Welfare Expenses
18.2
77.8
84.8
Employee's Compensation Expenses (ESOP Cost)
-
(8.8)
-
448.1
1,838.9
1,653.3
230
BAJAJ HINDUSTHAN LTD. 2010-11 2009-10 2008-09 3 Months 12 Months 12 Months Rs. Million Rs. Million Rs. Million Reviewed Audited Audited Schedule 13 - Other Expenses
Stores, Spares and Packing Materials consumed
330.8
965.0
511.5
Power and Fuel
156.3
522.6
292.4
Rent
15.2
61.0
38.7
Rates and Taxes
2.7
11.2
10.4
Repairs :
Building
8.6
32.1
22.8
Machinery
163.3
367.6
241.0
Others
11.2
48.9
38.7
183.1
448.6
302.5 Payment to Auditors for:
Audit fees
-
3.1
2.5
Tax audit fees
-
0.5
0.3
Certification work
0.2
1.3
1.2
Out of pocket expenses
-
0.4
0.2
0.2
5.3
4.2
Payment to Cost Auditor
-
0.3
0.2
Insurance
31.1
89.4
79.2
Selling Commission
28.8
71.6
45.4
Selling & Distribution Expenses
141.4
317.2
350.1
Director fees
0.2
1.1
0.9
Donations (2009-Rs.39,547/- )
-
0.4
0.0
Loss due to Foreign Exchange Fluctuation (Net)
156.5
-
-
Miscellaneous Expenses
144.0
1,376.8
528.9
Bad debts written off
-
-
3.7 Provision for Doubtful Debts / Advances
231
0.3 - -
Loss on Assets Sold / Discarded
0.1
1.1
16.3
1,190.7
3,871.6
2,184.4
232
BAJAJ HINDUSTHAN LTD. 2010-11 2009-10 2008-09
3 Months 12 Months 12
Months
Rs. Million Rs. Million Rs.
Million Reviewed Audited Audited Schedule 14 - Interest and Finance Charges (Net)
Interest :
Term Loans
71.9
316.6
705.7
Debentures
8.4
285.2
533.5
Working Capital Loans
445.3
957.0
857.2
Others
711.1
2,287.0
1,346.3
1,236.7
3,845.8
3,442.7 Less: Interest Income Gross
On Loans
192.7
698.7
671.0
On Others
20.5
101.4
135.1
213.2
800.1
806.1
1,023.5
3,045.7
2,636.6
Add: Finance charges
138.2
635.5
144.7
1,161.7
3,681.2
2,781.3 Schedule 15 - (Increase)/Decrease in Stocks Opening Stock:
Finished Goods
12,327.2
4,884.6
6,937.3
Materials in process
88.9
104.3
97.7
By-product
446.0
546.1
124.7
12,862.1
5,535.0
7,159.7 Add: Stock on amalgamation
Finished Goods
-
563.4
-
Materials in process
-
0.2
-
By-product
-
245.4
-
-
809.0
- Less: Stock on cessation of subsidiary
233
Finished Goods
-
3,412.1
-
Materials in process
-
0.2
-
By-product
-
245.4
-
-
3,657.7
- Less: Closing Stock:
Finished Goods
12,119.1
12,327.2
4,884.6
Materials in process
516.1
88.9
104.3
By-product
586.0
446.0
546.1
13,221.2
12,862.1
5,535.0
(359.1)
(10,175.8)
1,624.7
Add/(Less): Excise Duty on Increase/Decrease in stocks.
51.7
189.1
(151.2)
(307.4)
(9,986.7)
1,473.5
234
BAJAJ HINDUSTHAN LTD. Schedule 16 - Statement on Significant Accounting Policies and Notes forming part of the Consolidated Accounts
1.
System of Accounting:
(i) The financial statements of Bajaj Hindusthan Ltd. ('the Company'), its Subsidiary Companies and Associate
(the Group) have been prepared in compliance with the mandatory Accounting Standards notified by the Companies (Accounting Standards) Rules 2006.
(ii
) The financial statements are based on historical cost convention and are prepared on accrual basis except certain fixed assets which are valued at fair value.
2.
Principles of Consolidation:
(i) The consolidated financial statements of the Group have been prepared on the following basis: - The consolidated financial statements of the Group are prepared in accordance with the Accounting Standard
- 21 "Consolidated Financial Statements" and Accounting Standard - 23 "Accounting for Investments in Associates in Consolidated Financial Statements" notified by the Companies (Accounting Standards) Rules 2006.
- The financial statements of the Company and its Subsidiary Companies have been consolidated on a line - by - line basis by adding together the book value of like items of assets, liabilities, income and expenses, after eliminating intra - group balances and intra - group transactions resulting in unrealised profits or unrealised cash losses.
- Investment in the Associate has been accounted as per the equity method as prescribed in Accounting Standard - 23.
- The consolidated financial statements have been prepared using uniform accounting policies for like transactions and other events in similar circumstances and are presented, to the extent possible, in the same manner as the Company's separate financial statements.
- The excess of cost of investment in the Subsidiary Companies over the Company's portion of equity of the Subsidiary at the date of investment made is recognised in the financial statements as goodwill, which is written off over a period of five years. The excess of Company's portion of equity of the Subsidiary over the cost of investment therein is treated as capital reserve.
- The financial statements of non - integral foreign operation are translated as follows: - The assets and liabilities are translated at the closing rate. - Income and Expenses items are translated at average rate prevailing during the year. (ii
) Companies considered in the consolidated financial statements are:
Name of the Company Country
of Holding as on Financial
incorporation
Dec. 31, 2010
Sept. 30, 2010
Sept. 30, 2009
Year ends on
Subsidiary:
Bajaj Hindusthan Sugar and Industries Ltd.(up to March 31, 2010)
India - 75.0% 75.0% September,30
Bajaj Eco-tic Products Ltd. # India 100.0%
100.0%
100.0%
March, 31
Bajaj Aviation Private Ltd. $ India 100.0 100.0 100.0 September,30
235
% % % (Formerly known as Bajaj Hindusthan
Holdings Private Ltd.)
Bajaj Energy Private Ltd. (Formerly known as Bajaj Eco-Chem Products Private Ltd.)#
India 51.0% 51.0% 100.0%
March, 31
Bajaj International Participações Ltda. # Brazil 100.0%
100.0%
100.0%
April, 30
Bajaj Hindusthan (Singapore) Pte Ltd. # Singapore
100.0%
100.0%
100.0%
March, 31
Lalitpur Power Generation Co.Ltd. # (w.e.f.December 10, 2010)
India 76.0% - - March, 31
Bajaj Power Generation Pvt. Ltd. # (w.e.f.December 20, 2010)
India 100.0%
- - March, 31
Associate: Bajaj Ebiz Pvt. Ltd. * India 49.5% 49.5% 49.5% March, 31
# Management has compiled the accounts as at December 31, and September 30 in order to consolidate the accounts with that of the Holding Company.
$ It is a 100% subsidiary of wholly owned subsidiary namely Bajaj Eco-tec Products Ltd. * The company has made provision for permanent diminution in the value of its investment in Bajaj Ebiz Pvt.
Ltd. (An associate company). Hence no further adjustment in the value of investment is required to be made in the consolidated financial statement.
(ii
i) Other significant accounting policies are set out in the respective notes to account under "Statement on Significant Accounting Policies" of the Financial Statements of the Company and Subsidiary Companies.
2010-11 2009-10 2008-09
3 Months 12 Months 12
Months
Rs. Million Rs.
Million Rs.
Million
3. Contingent Liabilities not provided for:
(a)
In respect of disputed demands/claims against the Company
not acknowledged as debts:
(i) Central Excise matters
330.8
267.7
326.4
(ii) Trade Tax matters
32.2
25.3
5.8
(iii)
Other Claims 460.4
298.3
412.2
(iv) Income-tax matters 2008-09 Rs.17,074/-
-
-
0.0 (b) A subsidiary has procured Imported as well as Indigenous
Capital Goods under Export Promotion and Capital Goods Scheme (EPCG). The Export Obligation pending against such EPCG licenses.
281.2
281.2
281.2
4. Estimated amount of contracts remaining to be
236
executed on
capital account and not provided for (net of advances).
10,733.7
10,551.4
446.8
5. The disclosures in respect of Related Parties as required under Accounting Standard 18 (AS18) ‘Related
Party Disclosures’ is stated herein below / set out in a separate statement annexed hereto.
a) Related parties and relationships for which disclosure is required under AS-18:
For the period ended Dec.31, 2010 :
A. Associates and Joint Ventures
Bajaj E-biz Private Ltd. – Associate
B. Directors and their relatives
Mr. Shishir Bajaj - Chairman & Managing Director (Also key management personnel)
Mrs.Minakshi Bajaj (Wife of Mr.Shishir Bajaj) Mr. Kushagra Bajaj - Joint Managing Director (Also key management personnel) and also son of Mr. Shishir Bajaj Mr.Apoorva Bajaj (Son of Mr.Shishir Bajaj) Dr. Sanjeev Kumar ,Director (Corporate and Legal Affairs)(Also key management personnel)
C. Key Management Personnel
Mr. Himanshu Shah, Managing Director, Bajaj Eco-Tec Products Ltd.
D.
Enterprises over which any person described in (B) or (C) above is able to exercise significant influence
1. Bajaj Capital Ventures Private Limited
2. Bajaj Infrastructure Development Company Ltd
For the year ended Sept.30, 2010 :
A. Associates and Joint Ventures
Bajaj E-biz Private Ltd. – Associate
B. Directors and their relatives
Mr. Shishir Bajaj - Chairman & Managing Director (Key management personnel)
Mrs.Minakshi Bajaj (Wife of Mr.Shishir Bajaj) Mr. Kushagra Bajaj - Joint Managing Director (Key management personnel) and also son of Mr. Shishir Bajaj. Mr.Apoorva Bajaj (Son of Mr.Shishir Bajaj)
237
Dr. Sanjeev Kumar, Director (Corporate and Legal Affairs) (Key management personnel).
C. Key Management Personnel
Mr. Himanshu Shah, Managing Director, Bajaj Eco-Tec Products Ltd.
Mr. Chandresh Chhaya - Manager & Company Secretary, Bajaj Hindusthan Sugar and Industries Ltd. (Up to 31.03.2010)
D.
Enterprises over which any person described in (B) or (C) above is able to exercise significant influence
1. Bajaj Capital Ventures Private Ltd 2. Bajaj Holding & Investment Ltd.
3. Bajaj Infrastructure Development Company Ltd
4. Shishir Bajaj family Trust
For the year ended Sept.30, 2009 : A. Associates and Joint Ventures Bajaj E-biz Private Ltd. – Associate B. Directors and their relatives Mr. Shishir Bajaj - Chairman & Managing Director (Also key management personnel)
Mrs.Minakshi Bajaj (Wife of Mr.Shishir Bajaj) Mr. Niraj Bajaj - Non Executive Director (resigned w.e.f.December 31, 2008) Mr. Kushagra Bajaj - Joint Managing Director (Also key management personnel) and also son of Mr. Shishir Bajaj Mr.Apoorva Bajaj (Son of Mr.Shishir Bajaj) Mr. I. D. Mittal - Chief Executive Director (Also key management personnel) (resigned w.e.f. February 6, 2009) Mrs. Sureshtha Mittal - Wife of Mr. I. D. Mittal (Up to February 5, 2009) Dr. Sanjeev Kumar ,Director (Corporate and Legal Affairs)(Also key management personnel) (appointed w.e.f. March 12, 2009)
C. Key Management Personnel Mr. Himanshu Shah, Managing Director, Bajaj Eco-Tec Products Ltd. Mr.Yogesh Arora-Whole Time Director,Bajaj Eco-Tec Products Ltd.(resigned w.e.f.March 17, 2009) Mr. Chandresh Chhaya - Manager & Company Secretary, Bajaj Hindusthan Sugar and Industries Ltd. D. Enterprises over which any person described in (B) or (C) above is able to exercise significant influence 1. Bajaj Capital Ventures Private Limited 2. Bajaj Electricals Ltd.(Up to December 31, 2008) 3. Bajaj Holding & Investment Ltd. 4. The Hindusthan Housing Co. Ltd.(Upto December 31, 2008) 5. Hind Musafir Agency Ltd.(Upto December 31, 2008) 6. Mukand Ltd.(Upto December 31, 2008)
238
5 b) Disclosure as required under AS-18 in respect of Related Party Transactions: Rs. Million
Transactions Directors Relatives of Enterprises Total
/Key Directors/Key
described in
Management
Management (D) above
Personnel Personnel
I. Transactions during the period/year
Purchase of Capital Goods 2010-11
(3 Months)
-
-
1,699.8
1,699.8
2009-10
(12 Months) - -
1,239.8
1,239.8
2008-09
(12 Months)
-
-
-
-
Rendering of Services 2010-11
(3 Months)
-
-
-
-
2009-10
(12 Months) - -
-
-
2008-09
(12 Months)
-
-
0.9
0.9
Remuneration 2010-11
(3 Months)
13.4
-
-
13.4
2009-10
(12 Months)
56.9
- -
56.9
2008-09
(12 Months)
85.0
1.0
-
86.0
Dividends received 2010-11
(3 Months)
-
-
-
-
2009-10
(12 Months) - -
-
-
2008-09
(12 Months)
-
-
1.1
1.1
Equity Warrant Issued 2010-11
(3 Months)
-
-
-
-
2009-10
(12 Months)
-
-
-
-
2008-09
(12 Months)
189.0
-
-
189.0
Rent Paid 2010-11
(3 Months)
-
-
1.8
1.8
2009-10
(12 Months)
-
-
7.2
7.2
2008-09
(12 Months)
-
-
3.3
3.3
239
Sitting fees paid 2010-11
(3 Months)
-
-
-
-
2010-Rs.20,000/- 2009-10
(12 Months)
0.0 - -
0.0
2009-Rs.41,000/- 2008-09
(12 Months)
0.0
-
-
0.0
Equity Share Capital Issued (Including Premium)
2010-11
(3 Months)
-
-
-
-
2009-10
(12 Months)
-
-
756.0
756.0
2008-09
(12 Months)
-
-
-
-
Investment Sold 2010-11
(3 Months)
-
-
-
-
2009-10
(12 Months) - -
0.2
0.2
2008-09
(12 Months) - -
-
-
Advance Given (Project) 2010-11
(3 Months)
-
-
-
-
2009-10
(12 Months) - -
6,069.5
6,069.5
2008-09
(12 Months) - -
-
-
II. Amounts Outstanding at Balance Sheet date
Deposits Outstanding 2010-11
-
-
3.6
3.6
2009-10 - -
3.6
3.6
2008-09
-
-
3.6
3.6
Advance Given (Project) 2010-11
-
-
5,673.4
5,673.4
2009-10 - -
6,069.5
6,069.5
2008-09
-
-
-
240
Notes: 1. Related Party relationship is as identified by the Company based on the available information and relied upon
by the Auditors. 2. No amount has been written off or written back during any of the year in respect of debts due from or to
related parties. 3. Significant transactions during the respective period/year are given below.
For the period ended Dec.31, 2010 :
(i) Purchase of Capital Goods includes Rs.1,699.8 Million from Bajaj Infrastructure Development Company Ltd. (ii) Remuneration Includes Rs.5.5 Million to Mr. Shishir Bajaj,Rs.3.6 Million to Mr. Kushagra Bajaj, Rs.2.1
Million to Dr. Sanjeev Kumar and Rs.2.1 Million to Mr.Himanshu Shah.
(iii) Rent Paid includes Rs.1.8 Million to Bajaj Capital Ventures Pvt. Ltd.
For the year ended Sept.30, 2010 :
(i) Purchase of Capital Goods includes Rs.1,239.8 Million from Bajaj Infrastructure Development Company Ltd. (ii) Remuneration Includes Rs.20.6 Million to Mr. Shishir Bajaj,Rs.14.9 Million to Mr. Kushagra Bajaj, Rs.7.4
Million to Dr. Sanjeev Kumar and Rs.10.8 Million to Mr.Himanshu Shah. (iii) Equity Share capital issued (including Premium) Rs.756.0 Million to promoter group. (iv) Rent Paid includes Rs.7.2 Million to Bajaj Capital Ventures Pvt. Ltd. (v) Advances given (Project) of Rs. 6,069.5 Million to Bajaj Infrastructure Development Company Ltd.
For the year ended Sept.30, 2009 :
(i) Remuneration Includes Rs.32.1 Million to Mr. Shishir Bajaj,Rs. 28.4 Million to Mr. Kushagra Bajaj, Rs.7.7 Million to Mr.I.D. Mittal and Rs.8.3 Million to Mr.Himanshu Shah
(ii) Dividend received includes Rs.1.1 Million from Bajaj Holding & Investment Ltd. (iii) Equity Warrants issued Rs.189.0 Million to promoter group. (iv) Rent Paid includes Rs.3.3 Million to Bajaj Capital Ventures Pvt. Ltd. (v) Rendering of services includes Rs.0.5 Million to Hind Musafir Agency Ltd. and Rs.0.4 Million to The
Hindusthan Housing Co.Ltd.
6. Segment Information: The Company has identified its Business Segments as its Primary Reportable Segments comprising of Sugar,
Distillery and Power Divisions. Primary Segment Information: Particulars 2010-11 2009-10 2008--2009 3 Months 12 Months 12 Months Rs. Million Rs. Million Rs. Million
1. Segment Revenue a. Sugar 14,230.3 29,908.1 18,743.9 b. Distillery 805.7 1,657.1 1,226.3 c. Power 661.5 1,754.5 793.1 d. Bagasse Board 443.5 1,427.3 976.9 e. Others 4.3 17.4 9.9 Total 16,145.3 34,764.4 21,750.1 Less : Inter- segment Revenue 671.6 2,750.1 1,490.6 Net Sales / Income from Operations 15,473.7 32,014.3 20,259.5 2. Segment Results (Profit (+)/ Loss(-) before tax and interest)
241
a. Sugar 1,599.2 1,980.0 1,349.8 b. Distillery 334.5 227.6 8.3 c. Power 516.3 1,235.0 385.3 d. Bagasse Board (129.9) (328.0) (380.8) e. Others 1.4 (748.4) 174.9 Total 2,321.5 2,366.2 1,537.5 Less: (i) Interest (Net) 1,161.6 3,681.2 2,781.3
(ii) Other Un-allocable Expenditure net off
Un-allocable Income 216.8 (1,635.0) (2,295.3) Total Profit / (Loss) before Tax 943.1 320.0 1,051.5 3. Segment Assets: a. Sugar 70,626.1 74,362.4 51,105.5 b. Distillery 5,709.6 5,824.6 4,442.8 c. Power 19,447.1 14,337.9 3,404.4 d. Bagasse Board 3,451.2 3,443.6 3,902.2 e. Others 742.3 363.2 196.1 Total 99,976.3 98,331.7 63,051.0 Add: Unallocated Corporate Assets 19,352.3 16,295.4 10,780.8 Total Assets 119,328.6 114,627.1 73,831.8 4. Segment Liabilities: a. Sugar 10,342.6 7,639.0 4,216.5 b. Distillery 188.5 161.5 188.0 c. Power 213.9 188.2 112.6 d. Bagasse Board 255.7 151.5 202.1 e. Others 8.5 2.7 1.2 Total 11,009.2 8,142.9 4,720.4 Add: Unallocated Corporate Liabilities 6,105.5 11,280.4 6,277.0 Total Liabilities 17,114.7 19,423.3 10,997.4 5. Capital Expenditure: a. Sugar 39.5 359.8 3,893.7 b. Distillery 1.8 84.5 608.9 c. Power 1,734.6 8,678.2 434.2 d. Bagasse Board 8.6 15.4 502.8 e. Others - - 116.8 f. Unallocated 3.4 1,208.3 21.5 Total 1,787.9 10,346.2 5,577.9 6. Depreciation: a. Sugar 675.9 2,539.2 2,649.3 b. Distillery 70.8 236.8 237.8 c. Power 82.7 264.2 200.0 d. Bagasse Board 79.4 329.9 322.1 e. Others 1.6 6.5 4.9 f. Unallocated 25.8 63.7 42.5 Total 936.2 3,440.3 3,456.6 7. Non Cash Expenditure other than Depreciation: a. Sugar Nil Nil Nil b. Distillery Nil Nil Nil c. Power Nil Nil Nil d. Bagasse Board Nil Nil Nil e. Unallocated Nil Nil Nil Total - - - Other disclosures:
242
1. The Company caters mostly to Indian markets and as such there are no reportable geographical segments. All the assets are also located in India.
2. Segments have been identified in line with the Accounting Standard - 17 "Segment Reporting" taking into account the organisation structure as well as differing risks and returns.
3. The Segment Revenue, Results, Assets and Liabilities include respective amounts identifiable to each of the segment and amounts allocated on reasonable basis.
4. The segment performance has been worked out after attributing the realisable value of inter segment transfer of material.
7. Deferred Taxation : As at As at As at Dec ,10 Sep ,10 Sep ,09
Rs. Million Rs. Million Rs. Million
Deferred Tax Liabilities:
Depreciation
5,156.8
5,175.9
4,450.2
Total
5,156.8
5,175.9
4,450.2 Deferred Tax Assets:
Provision for Employee Benefits 44.6
44.6
53.3
Expenses allowed on payment basis -
-
3.7
Provision for doubtful debts / advances 0.9
0.8
0.8
Carry Forward loss and unabsorbed Depreciation
4,097.8
4,292.0
3,906.3
Total 4,143.3
4,337.4
3,964.1
Net Deferred Tax Liability / (Asset) 1,013.5
838.5
486.1
8.
Disclosures in respect of derivative instruments:
2010-11 2009-10 2008-09
Forward Option Forward Option Forward Option
Contract Contract Contract
(i)
Derivative instruments outstanding as at December 31 and Sept. 30, are as under:
USD JPY/USD USD JPY/US
D USD/
JPY JPY/U
SD
(Million) (Million) (Million) (Million) (Millio
n) (Millio
n)
Loans taken-JPY
-
9,085.0
-
9,432.6
-
10,127
.7
ECB-USD
-
9.3
9.0
FCCB-USD
77.0
56.0
77.0
56.0
-
Creditors-USD
-
96.1
14.1 (All the derivative instruments have been acquired for hedging
243
purposes.)
(ii)
Foreign currency exposures that are not hedged as at December 31 and Sept. 30,
USD/JPY
USD/JPY
USD/JPY
(Million) (Million) (Millio
n)
Creditors-USD
13.3
13.3
47.0
FCCB-USD
15.0
15.0
114.6
ECB-USD
184.1
191.4
215.7
ECB-JPY
1,148.9
1,148.9
1,148.
9
Buyers Credit-EURO
-
-
2.1
Buyers Credit-USD
-
-
8.6
9. For the year ended Sept.30, 2010 : (i) Pursuant to the Scheme of Amalgamation (“the Scheme”) under Sections 391 to 394 of the Companies
Act, 1956, the Hon’ble High Court of Bombay pronounced an Order on November 26, 2010, sanctioning the Scheme of amalgamation of Bajaj Hindusthan Sugar and Industries Limited (BHSIL or amalgamating company), a subsidiary company with the company with effect from the appointed date 1st April, 2010. BHSIL is engaged in the business of manufacturing of sugar, alcohol and it’s allied products.
The Scheme became effective on December 20, 2010 upon filing the said Order with the Registrar of
Companies, Maharashtra, Mumbai as required under Section 394(3) of the Companies Act, 1956. In accordance with the Scheme and as per the approval of the Hon’ble High Court of Bombay : a) All the assets, liabilities, rights and obligations of BHSIL have been transferred to and vested with the
Company with effect from 1st April, 2010 and have been recorded at their respective fair values, under the purchase method of accounting for amalgamation.
b) 37,000,000 Equity shares of Re. 1/- each fully paid up are to be issued to the equity share holders of
the amalgamating Company whose names are registered in the register of members on record date and to the Trust created as per the terms of the Scheme by the company against it’s investments in and advances to amalgamating company, without payment being received in cash. Pending allotment, the face value of such shares has been shown as “Equity Share Suspense”.
c) Excess of the fair value of net assets taken over by the Company over the paid up value of Equity
Shares to be issued and allotted of Rs.8756.3 Million has been credited to Amalgamation Reserve Account except the Statutory Reserve which has been credited to the similar reserve of the company; Beneficial Interest in the Trust referred to in (b) above has been recorded at the book value of the underlying assets i.e. Rs. 6937.2 Million; net effect on fair valuation of assets and liabilities of the Company identified by the Board as prescribed by the Scheme to be fair valued based on the reports by an independent valuer / management estimates of Rs. 1448.8 Million has been debited to Amalgamation Reserve Account; the balance in Amalgamation Reserve Account after netting off the cost of Rs. 87.0 Million being the stamp duty and other expenditure payable on Amalgamation an amount of Rs.7220.5 Million is credited to Securities Premium Account. The additional depreciation on account of fair valuation of fixed assets of the company aggregating to Rs.310.0 Million has been debited to the Profit & Loss account.
Had the Scheme not prescribed this accounting treatment, the aggregate amount of Rs. 14,066.3 Million
being the effect of fair valuation of fixed assets of the company would have been credited to Revaluation Reserve and Rs.1,5602.1 Million being expenses on amalgamation and fair valuation of current assets would have been debited to Profit & Loss account with a corresponding effect on the profit for the year.
d) From the effective date the authorised share capital will stand increased to Rs. 180,00,00,000 consisting
244
of 180,00,00,000 Equity Shares of Re.1/- each without any further act or deed on the part of the Company, including payment of stamp duty and Registrar of Companies fees and the Memorandum of Association and Articles of Association of the Company stand amended accordingly without any further act or deed on the part of the Company.
e) BHSIL stands dissolved without being wound up from the Effective Date. (ii) The Company has allotted 14,500,000 new Equity Shares on January 4, 2010, upon receipt of the entire
remaining sum of Rs.567.0 Million representing 75% of the total value for such warrants and exercise of the rights by a promoter group entity of the Company on all the 14,500,000 warrants allotted earlier on May 18, 2009 on preferential basis carrying right to subscribe for and be allotted one (1) fully paid equity share of face value Re. 1 each per warrant, at a price of Rs. 52.14 per equity share in accordance with the SEBI Preferential Issue Guidelines. Subsequently, after the allotment of these new Equity Shares, the paid up Equity Share Capital and Securities Premium Account have increased by Rs. 14.5 Million and Rs.741.5 Million respectively.
10. For the year ended Sept.30, 2009 :
(i) Out of outstanding Foreign Currency Convertible Bonds (FCCBs) aggregating to US$ 134.50 million,
FCCBs of the aggregate face value of US$ 19.93 million were repurchased at discount and cancelled during the year. The resultant gain (net of expenses) of Rs. 337.15 Million on account of the extinguishment of corresponding liability has been accounted for under the head "Other Income".
(ii) The Company has allotted 14,500,000 warrants on preferential basis to the promoter group of the
Company on May 18, 2009 after receipt of a sum of Rs. 189.01 Million representing 25% of the total value for such warrants in accordance with the SEBI Preferential Issue Guidelines. Each warrant entitles the holder to subscribe for and be allotted one (1) equity share of the company any time within a period of 18 months from the date of allotment of the warrants. The issue proceeds in this regard have been utilised for repayments of debts.
(iii) In compliance with the Notification dated March 31, 2009 issued by Ministry of Corporate Affairs, the
Company has exercised the option as inserted by Paragraph 46 to the Accounting Standard AS-11 "The Effect of Changes in Foreign Exchange Rates". Accordingly Foreign Exchange Loss of Rs.1,839.13 Million for the year ended September 30, 2009 has been adjusted to Capital Assets. For the accounting year ended September 30, 2008, foreign exchange loss of Rs. 1218.25 Million (net of Provision Rs. 1,211.15 Million, Gross Rs. 2,429.40 Million) was debited to profit and loss account. In terms of the said notification, while the gross loss of Rs. 2,429.40 Million has been carried to the capital assets and credited Rs.1,218.25 Million to General Reserve, Provision for Exchange Fluctuation of Rs. 1,211.15 Million now not required, has been written back to the Profit and Loss Account as Provision no Longer required and reflected under the head “Other Income”.
As a result of this change, depreciation for the year is higher by Rs. 213.20 million, loss on foreign
currency fluctuation is lower by Rs. 1839.13 million and profit for the year is higher by Rs. 1625.93 million.
11. Previous year figures have been regrouped wherever necessary and have been shown in brackets. Figures
pertaining to subsidiary companies have been regrouped / rearranged wherever required to bring them in line with Company's financial presentation.
Annexure A and B to the Consolidated Audit Report has been included in the section “Accounting Ratios and Capitalisation Statement” on page 266 of the Draft Letter of Offer.
245
MARKET PRICE INFORMATION
The Equity Shares are listed on BSE and NSE. The high and low market prices of the Equity Shares during the preceding three years were recorded, as stated below:
BSE
Year* Date of High High (`)
Volume on Date of High
(No. of Shares) Date of Low Low (`)
Volume on Date of Low
(No. of Shares)
2010 January 7, 2010 242.90 1,853,483 December 10,
2010 97.50 315,343
2009 October 21, 2009 241.80 3,031,676 March 12,
2009 39.00 354,259
2008 January 9, 2008 399.50 2,957,839 November 21,
2008 38.25 898,878
(Source: www.bseindia.com)
NSE
Year* Date of High High (`)
Volume on Date of High
(No. of Shares) Date of Low Low (`)
Volume on Date of Low
(No. of Shares)
2010 January 7, 2010 242.75 6,843,843 December 10,
2010 95.85 1,090,222
2009 October 21, 2009 241.55 9,045,220 March 12,
2009 39.15 1,166,678
2008 January 9, 2008 399.00 7,354,159 December 2,
2008 38.00 791,455
(Source: www.nseindia.com) *Based on calendar year. Monthly high and low prices and trading volumes on the Stock Exchanges for the six calendar months preceding the date of filing of the Draft Letter of Offer is as stated below:
BSE
Month Date of High High (`)
Volume (No. of Shares) Date of Low Low
(`) Volume (No. of
Shares) April, 2011 April 7, 2011 85.35 590,911 April 1, 2011 71.5 545,272 March, 2011 March 23,
2011 73.15 424,858 March 15, 2011 67.00 223,108
February, 2011 February 4, 2011
86.40 481,607 February 25, 2011
65.65 423,144
January, 2011 January 5, 2011
123.90 311,265 January 31, 2011 80.30 556,075
December, 2010 December 30, 2010
123.40 405,808 December 10, 2010
97.50 315,343
November, 2010 November 10, 2010
144.00 587,099 November 29, 2010
98.30 452,773
(Source: www.bseindia.com)
246
NSE
Month Date of High High (`)
Volume (No. of Shares) Date of Low Low
(`) Volume (No. of
Shares) April, 2011 April 7, 2011 85.35 1,903,670 April 1, 2011 60.15 2,001,178
March, 2011 March 4, 2011 73.40 1,617,337 March 15, 2011
66.80 963,537
February, 2011 February 3, 2011
86.30 2,237,174 February 25, 2011
65.70 2,031,034
January, 2011 January 5, 2011
123.95 1,104,509 January 31, 2011
80.20 1,732,890
December, 2010 December 30, 2010
124.90 2,304,024 December 10, 2010
95.85 1,090,222
November, 2010 November 10, 2010
143.95 1,985,458 November 29, 2010
98.00 2,099,676
(Source: www.nseindia.com) The closing prices of Equity Shares as on May 2, 2011 (the trading day immediately following the day on which the resolution of the Board of Directors was passed approving the Rights Issue) on BSE and the NSE were `76.50 and `76.60, respectively.
a. The week end closing prices of the Equity Shares for last four weeks on BSE and NSE are provided in
the table below:
Week# ended on Closing Price (In `) BSE* NSE** May 13, 2011 69.55 69.30 May 6, 2011 70.90 71.05 April 29, 2011 74.90 75.00 April 21, 2011 81.85 81.95 # Based on calendar week *Source: www.bseindia.com ** Source: www.nseindia.com b. The highest and lowest prices of the Equity Shares on BSE and NSE during the last four weeks# are
provided in the table below:
Name of the stock exchange
Highest (`) Date Lowest
(`) Date
BSE* 83.65 April 21, 2011 68.15 May 12, 2011 and May 13, 2011
NSE** 83.70 April 21, 2011 68.00 May 12, 2011 and May 13, 2011
# Based on calendar week *Source: www.bseindia.com ** Source: www.nseindia.com The Issue Price of ` [●] has been arrived at by our Company in consultation with the Lead Managers.
247
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS The following discussion and analysis of our financial condition is based on our audited consolidated financial statements as of and for the years ended September 30, 2009 and 2010 and the three months ended December 31, 2010, including the notes thereto and the reports thereon, prepared in accordance with Indian GAAP, and included in this Draft Letter of Offer. This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those set forth under “Risk Factors” and elsewhere in this Draft Letter of Offer. We prepare our consolidated financial statements in accordance with Indian GAAP, which differs in some respects from IFRS and U.S. GAAP. In compliance with the ICDR, we have neither included audited consolidated financial statements as of and for the year ended September 30, 2008 nor provided a discussion or analysis of results of operations for such year as compared to the subsequent fiscal year in this Draft Letter of Offer. Overview
We are an integrated sugar manufacturing company, with value-added products such as co-generated power, industrial alcohol (primarily ethanol), particle boards and medium-density fibre boards and bio-fertilisers. We are the largest sugar manufacturer in India, based on production capacity, with 9.947 MMT of crushed sugarcane during the year ended September 30, 2010. (Source: Government of India, Sugar Release Order – March 2011) We believe that we are also one of the largest industrial alcohol producers in India, based on production capacity.
We own and operate 14 sugar mills with an aggregate sugarcane crushing capacity of 136,000 TCD. For the fiscal year 2010 and the three months ended December 31, 2010, we crushed 9.947 MMT and 3.645 MMT of sugarcane with sugar recovery rates of 9.23% and 8.96%, respectively. In addition, six of our sugar mills have distilleries, which have a combined production capacity of 800 KLPD, including one of our distilleries with a capacity 60 KLPD, which we lease to a third party. Our total production of industrial alcohol was 104,521 KL and 15,378 KL for the fiscal year ended September 30, 2010 and the three months ended December 31, 2010, respectively.
We also have co-generation facilities which have an aggregate installed capacity of 428 MW. We use power co-generated by us. In addition, for the fiscal year ended September 30, 2010 and the three months ended December 31, 2010, we sold approximately 125,793 MWh and 44,131 MWh, respectively, of power to the state grid of Uttar Pradesh. All of our sugar mills, distilleries and co-generation facilities are located in the north Indian state of Uttar Pradesh.
We are currently developing five thermal power projects with a combined installed capacity of 450 MW on land adjacent to our sugar manufacturing facilities through our subsidiary, Bajaj Energy Private Limited. We have entered into power purchase agreements to sell the power generated from these projects to the state grid of Uttar Pradesh. Further, we have been awarded two mega power projects of 1,980 MW each, at Lalitpur and Bargarh, which are both located in Uttar Pradesh. Amalgamation of Bajaj Hindusthan Sugar and Industries Limited Pursuant to a scheme of amalgamation (the “Scheme of Arrangement”), sanctioned by the High Court of Bombay, through its order dated November 26, 2010, our 75.0% owned-subsidiary Bajaj Hindusthan Sugar and Industries Limited was amalgamated with our Company, with effect from the appointed date, i.e., April 1, 2010. BHSIL was engaged in the business of manufacturing sugar, alcohol and allied products. All the assets, liabilities, rights and obligations of BHSIL have been transferred to and vested with our Company and have been recorded at their respective fair values, under the purchase method of accounting for amalgamation. Pursuant to the Scheme of Arrangement, ` 7,220.5 million, was credited to Securities Premium Account being excess of fair value of net assets of BHSIL taken over by our Company over the paid up value of equity shares issued and allotted, net effect on fair valuation of assets and liabilities of our Company, and reduced by the cost of stamp duty and other expenditure on amalgamation. Should such an accounting treatment not have been prescribed by the Scheme of Arrangement, the aggregate amount of ` 14,066.3 million, amounting to the effect of fair valuation of fixed assets of our Company, would have been credited to the revaluation reserve account
248
and ` 15,602.1 million, amounting to the expenses on amalgamation and fair valuation of current assets and liabilities, would have been debited to the consolidated profit and loss account. For the fiscal year 2009 and the six months ended March 31, 2010, BHSIL’s total income was ` 4,157.8 million and ` 2,061.9 million and loss after tax was ` 89.3 million and ` 113.7 million, respectively. As BHSIL was in the same line of business as our Company, we expect that the amalgamation will provide benefits related to economies of scale, sharing of resources and streamlined operations. For further details of our Scheme of Arrangement, see Schedule 16, Note 9 of our consolidated financial statements. Recent Developments
Our Company has recently published unaudited unconsolidated non-cumulative interim financial results for the three months ended March 31, 2011 and unaudited unconsolidated cumulative interim financial results for the six months ended March 31, 2011. For further details, see “Material Developments” on page 270.
Significant Factors Affecting our Results of Operations
Our results of operations have been influenced and will continue to be influenced by the following significant factors:
Sales Volume of Sugar and Industrial Alcohol
The sugar industry in India is highly fragmented and as a result, our pricing power is limited. Achieving high sales volumes in sugar and industrial alcohol is critical to maintaining and increasing our revenues. We currently have sugar production capacity of 136,000 TCD and distillery capacity of 800 KL/day. Most of our sugar sales are in Uttar Pradesh, Delhi and Haryana. Our sales volume of sugar increased from 0.82 MMT in the fiscal year 2009 to 0.99 MMT in the fiscal year 2010 and revenue from our sugar business, excluding excise duty, accounted for, 80.3% and 89.5% of our total income from operations, in the fiscal years 2009 and 2010, respectively. In the three months ended December 31, 2010, our sugar sales volume was 0.36 million tons and revenue from our sugar business, excluding excise duty, constituted 91.5% of our total income from operations, during such period.
Higher production of sugar results in higher quantities of molasses. We have been expanding our industrial alcohol production capacity to process the increased quantities of molasses we produce. Our sales volume of industrial alcohol increased from 49,330 KL in the fiscal year 2009 to 66,841 KL in the fiscal year 2010 and constituted approximately 5.3% and 5.0% of our total income from operations in the fiscal years 2009 and 2010, respectively. In the three months ended December 31, 2010, our industrial alcohol sales volume was 31,124 KL, amounting to ` 805.7 million, which constituted 5.2% of our total income from operations during that period. Our industrial alcohol sales volume has increased primarily as a result of the Government of India’s finalisation of the ethanol tender price in August 2010. Consequently, we began production and delivery of ethanol in October 2010.
249
Selling Price of Sugar and Industrial Alcohol
Sugar has been classified as an essential commodity under Essential Commodities Act, 1955, as amended. The pricing of a certain percentage of all sugar is fixed by the Ministry of Food and Civil Supplies, Government of India for different levy price zones. This is called the 'levy price' and the sugar which is classified to be sold under the levy price is termed 'levy sugar'. Levy sugar prices are usually lower than market prices. Sugar sales are also subject to release orders from time to time. The sugar which is not classified as levy sugar is termed 'free sale sugar'. The current ratio of free sale sugar to levy sugar is 90:10, i.e., 10% of all sugar produced from sugarcane is to be sold at prices fixed by Government for different levy price zones in the country. Every month, fixed quantities of levy and free sale sugar are released to each factory. In respect of levy sugar, specified buyers are nominated by the Government of India. Demand for sugar has been generally increasing as a result of the increase in population and a shift in preference from traditional sweeteners such as jaggery and khandsari to sugar. The per capita consumption of sugar has increased from 16.0 kilograms per annum in the fiscal year 2000 to 19.2 kilograms per annum in the fiscal year 2010. Sugar production from sugarcane during the fiscal years 2007 and 2008 was 28.2 million tons and 26.3 million tons, respectively. However, sugar production declined to about 14.7 million tons in the fiscal year 2009 due to poor weather and sugarcane availability. Sugar production in the fiscal year 2010 was 20.4 million tons. The table below sets out our average sugar selling prices and government levy prices for the periods indicated.
Period Our average selling price, net of excise duty Government levy price, net of excise duty
(`/metric ton) Fiscal Year 2009 22,051 13,328 Fiscal Year 2010 29,723 14,869
Three Months ended December 31, 2010 28,434 17,845
Demand for industrial alcohol products, especially ethanol, is generated by oil companies for use as an additive to petrol. The price for ethanol we sell in India is set in accordance with tenders floated by state-owned oil companies. In August 2010, the tender price for ethanol was set by Government of India to ` 27.0/L. We sell industrial alcohol, other than ethanol, to chemical and liquor manufacturing companies in spot market. Fluctuations in price are largely the result of fluctuations in supply. The table below sets out our average selling prices for our other types of industrial alcohol for the periods indicated.
Period Our average selling price
(`/L) Fiscal Year 2009 28.3 Fiscal Year 2010 24.4
Three Months ended December 31, 2010 25.3 Industrial alcohol production depends on molasses and sugar production which in turn depends on availability of sugarcane.
Production Cost
Our cost of production principally comprises raw material costs, other expenses and salaries and related costs. The availability of sugarcane, our key raw material, is affected by weather conditions, government policies and regulations and the amount of sugarcane planted by farmers, which may be affected by substitution of other agricultural commodities for sugarcane by farmers.
In Uttar Pradesh, sugarcane is procured through co-operative societies formed by sugarcane growers in our reserved or assigned zone as fixed by relevant Cane Commissioner. The co-operative societies, based on estimates of sugarcane production by their members, enter into agreements with us for the supply of sugarcane at prices determined in accordance with applicable laws. This enables us to estimate the amount of sugarcane available for crushing and to plan our operations accordingly.
The price of sugarcane is governed by the Government of India and the respective state governments. The Government of India determines the minimum price payable to farmers, known as the fair and remunerative
250
price. The base FRP for the fiscal years 2010, 2011 and 2012 was fixed at ` 1,298.4 per metric ton, ` 1,391.2 per metric ton and ` 1,450.0 per metric ton, respectively. FRP is linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 14.60 per metric ton for every 0.1 percentage point increase in recovery above 9.5 per cent. However, the sugar mills are free to offer any price above the FRP. Several states advise a higher cane price, called the State Advised Price, to be paid by the sugar mills. The state of Uttar Pradesh, where all of our sugar mills are located, notifies sugar mills to pay a common SAP, which has no link with recovery rates. The SAP in Uttar Pradesh for the fiscal year 2010 was fixed at ` 1,700.0 per metric ton, ` 1,650.0 per metric ton and ` 1,625.0 per metric ton for the early, normal and rejected varieties of sugarcane, respectively. The SAP in Uttar Pradesh for the fiscal year 2011 was fixed at ` 2,100.0 per metric ton, ` 2,050.0 per metric ton and ` 2,025.0 per metric ton for the early, normal and rejected varieties of sugarcane, respectively. The SAP for fiscal year 2012 has not been announced as yet and is typically declared before start of the season.
Our existing mills and other facilities are located in Uttar Pradesh. Our operations also are in close proximity to our customers, sugarcane fields owned by farmers and other transportation infrastructure and warehouses. These factors help us to manage our operating costs.
Working Capital Costs Sugar production is working capital intensive. The entire sugar production takes place during the crushing season, which lasts approximately 180 days, while the sales of finished products take place throughout the year. Volume of sales of sugar by us are controlled by the Ministry of Consumer Affairs through a monthly release mechanism based on the total availability of sugar in India and the total demand for sugar in India. Further, we are required to pay farmers for the sugarcane they sell to us within the statutory time limits. Hence, considerable working capital is required to fund the inventories of sugar produced by us. The interest component of the working capital is dependent on the average period of inventory holding. If there are surplus stocks in the country, the liquidation of inventory takes longer and average holding of inventory increases and thus, the interest on working capital is higher. We use long-term and short-term loans in conjunction with cash generated from operations to meet our working capital requirements.
As of March 31, 2011, our Company’s total indebtedness was ` 58,767.1 million, which included working capital loans. For details, refer to “Financial Indebtedness” on page 276. For further details, refer to “Risk Factors – Internal Risk Factors - We are not in compliance with certain financial and other covenants in a number of our loan agreements, which could result in the acceleration of the payment obligations on some or all of our outstanding indebtedness” on page 14.
Development Status of our Power Projects We currently have an operational power generation capacity of 428 MW for our co-generation plants. In addition, we have five thermal power projects under development aggregating 450 MW and two thermal mega power projects aggregating 3,960 MW under planning at Lalitpur and Bargarh. Our five thermal power project under development are expected to be fully commissioned by November 2011 and we expect our planned power projects to be fully commissioned over the next five to six years. The failure to complete development as planned, on schedule or in accordance with agreed specifications, could result in higher costs, penalties and liquidated damages, lower returns on capital or reduced future earnings, which could, in certain circumstances, be partially offset by recoveries from EPC contractors. Therefore, our results of operations would continue to be linked to the development status of our projects under development and planning and our ability to meet our power project development schedule. Significant Accounting Policies
System of Accounting
Our Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis, except in case of significant uncertainties and interest on delayed payments by our customers. Our financial statements are based on historical cost except certain fixed assets which are valued at fair value.
Revenue Recognition We recognize revenue when the significant risk and reward of ownership of the products is passed on to the customer. Sale of goods is exclusive of sales tax / VAT. Sales exclude captive consumption.
251
Sales made on high seas basis that are delivered to the customer directly and not held in stocks are not included in sales or turnover and are instead included on a net basis in other income or, if applicable, other expenses. Sugar sold under levy quota for each season is accounted at the price notified by the government as available pending final notification for each season. The difference in price pending final notification is estimated by management, taking into account factors affecting the calculation of levy sugar price. Export incentives such as “Duty Entitlement Pass Book” under the “Duty Exemption Scheme” are accounted for in the year of export. Fixed Assets Our fixed assets are stated at their cost of acquisition or construction, as applicable, and include any amount added on fair valuation, less any accumulated depreciation (except freehold land), amortisation and impairment loss, if any. Expenditure incurred during the construction period on projects under development is treated as pre-operative expenses pending allocation to the assets, and are included under “Capital Work in Progress”. These expenses are apportioned to fixed assets on the commencement of commercial production. Capital Work in Progress is stated at the amount expended up to the date of the balance sheet. Depreciation Depreciation on fixed assets (including on revalued portion on fair value) is as follows: • Plant and Machinery: on straight-line method basis at the rates and in the manner specified in Schedule
XIV of the Companies Act, 1956. • Other Assets: on written down value basis at the rates and in the manner specified in Schedule XIV of
the Companies Act, 1956; except for • Intangible Assets: including computer software are amortized over a period of five years, whereas
leasehold land is amortized over the lease period.
Depreciation on assets added, sold or discarded during the year has been provided on a pro-rata basis. Investments Long term investments are stated at the cost of acquisition. Diminution in the value of such long term investments is not provided for, except where determined to be of a permanent nature. Current investments are stated at the lower of cost or fair market value. Inventories Stock of raw materials is valued at cost or net realizable value, whichever is lower. Cost is arrived at on a “first-in-first out” basis. Stock of materials-in-process and finished goods is valued at cost or net realizable value, whichever is lower*. Stores, spares and packing material are valued at cost. Cost is arrived at on weighted average basis. Obsolete stores and spares when identified and technically determined, are valued at estimated realizable value. Molasses and bagasse have been valued at estimated realizable value. Trial run inventories are valued at cost or estimated realizable value, whichever is lower*. *Cost is arrived at on full absorption basis as per Accounting Standard AS-2 “Valuation of Inventories”. Research and Development Revenue expenditure on research and development is charged against the profit for the year. Capital expenditure on research and development is shown as an addition to fixed assets. Government Grants
252
Government grants and subsidies received towards specific fixed assets have been deducted from the gross value of the concerned fixed assets. Grant and subsidies received during the year towards revenue expenses have been reduced from respective expenses. Capital subsidies under the Sugar Promotion Policy, 2004 are recognized to the extent the claims are accepted and settled. Foreign Currency Transactions Foreign currency transactions are recorded at the rates of exchange prevailing on the date of the transaction. Monetary foreign currency assets and liabilities outstanding at the close of the financial year are revalued at the exchange rates prevailing on the balance sheet date. Exchange differences arising on account of fluctuation in the rate of exchange is recognized in the profit and loss account. However, in respect of long term foreign currency monetary items, the exchange difference relating to acquisition of capital assets, in line with notification is adjusted to the capital assets. For items which are covered by forward exchange contracts, the difference between the year end rate and the rate on the date of the contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of the contract. In the case of financial derivative contracts, premiums paid, gain / losses on settlement and provision for losses, are recognized in the profit and loss account , except gain / losses and provisions relating to the acquisition of capital assets, in which case, they are adjusted to carrying cost of fixed assets. Employee Benefits
Short term employee benefits are recognized as expenditure at an undiscounted value in the profit and loss account of the year in which the related service was rendered.
Post employment benefits
• Defined Contribution Plans: Our contribution to the superannuation scheme and pensions under the Employees Pension Scheme, 1995, are recognized during the year in which the related service was rendered.
• Defined Benefit Plans:
i. Gratuity: Gratuity liability is covered under the gratuity-cum-insurance policy of the Life Insurance Corporation of India (LIC) by the BHL Employees’ Gratuity Fund. The present value of the obligation is determined based on an actuarial valuation, using the projected unit credit method. Actuarial gains and losses arising on such valuation are recognized immediately in the profit and loss account. The amount funded by the trust we administer under the aforesaid policy, is reduced from the gross obligation under the defined benefit plan, to recognize the obligation on a net basis.
ii. Provident Fund: monthly contributions are made to a trust that we administer. The interest rate payable by the trust to the beneficiaries is notified by the government. We are obligated to make good the shortfall, if any, between the return on the investments of the trust and the notified interest rate.
Long term compensated absences are provided on the basis of actuarial valuation. Compensation to employees under the Voluntary Retirement Scheme is charged to the profit and loss account in the year of accrual
Borrowing Cost Borrowing cost attributable to acquisition and construction of assets are capitalized as part of the cost of such assets, until the date when those assets areas for their intended use. Other borrowing costs are charged to the profit and loss account. Expenses incurred on issue of shares, debentures, FCCBs and other related costs are provided entirely on issuance.
253
Provision for Current and Deferred Tax We provide for current tax by computing taxable income based on historic tax rates relevant to the applicable year. Minimum alternate tax is eligible for set-off as and may be recognized as any asset if there is convincing evidence of its realization. Deferred taxes which arise out of timing difference between book and taxable profits are calculated using current tax rates. Impairment of Assets Carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal or external factors. Impairment occurs when the carrying value of the asset exceeds the recoverable value of the asset. Impairment amounts are charged to the profit and loss account of the year in which the asset is identified as impaired and may be reversed if there is any change in the estimated recoverable amount. Provisions, Contingent Liabilities and Contingent Assets Provisions involving a substantial degree of estimation are recognized as present obligations if it is deemed that there is a probable outflow of resources. Contingent liabilities are not recognized but are disclosed in our financial statements. Contingent assets are neither recognized nor disclosed in our financial statements. Employee Stock Options and Shares Plan In accordance with SEBI guidelines, the excess of the market price of the shares, at the date of the grant of the options under the ESOP, over the exercise price, is treated as an employee compensation expense. Segmental Revenue and Summary Operating Data
The following table sets out our segment revenue and results across our primary reportable segments, comprising the sugar, distillery, power and bagasse board businesses, for the periods indicated:
Fiscal Year 2009 Fiscal Year 2010 Three Months Ended December 31, 2010
` in million % of Total
Income
` in million % of Total
Income
`in million % of Total
Income Segment Revenue: Sugar* 18,743.9 80.3 29,908.1 89.5 14,230.3 91.5 Distillery 1,226.3 5.3 1,657.1 5.0 805.7 5.2 Power 793.1 3.4 1,754.5 5.3 661.5 4.2 Bagasse Boards** 976.9 4.2 1,427.3 4.3 443.5 2.8 Others*** 9.9 - 17.4 0.1 4.3 0.0 Total Segment Revenue 21,750.1 93.2 34,764.4 104.1 16,145.3 103.8 Less: Inter-segment Revenue 1,490.6 6.4 2,750.1 8.2 671.6 4.3 Total Net Income from Operations 20,259.5 86.8 32,014.3 95.8
15,473.7
99.5 Total Income 23,335.2 100.0 33,406.8 100.0 15,555.2 100.0 Segment Results (Profit /(Loss) before Tax and Interest):
Sugar* 1,349.8 5.8 1,980.0 5.9 1,599.2 10.3 Distillery 8.3 0.0 227.6 0.7 334.5 2.1 Power 385.3 1.7 1,235.0 3.7 516.3 3.3 Bagasse Boards** (380.8) (1.6) (328.0) (1.0) (129.9) (0.8) Others*** 174.9 0.7 (748.4) (2.2) 1.4 0.0 Total Segment Profit/(Loss) before Tax and Interest 1,537.5 6.6 2,366.2 7.1 2,321.5 14.9
Less: Interest (Net) 2,781.3 11.9 3,681.2 11.0 1,161.6 7.4 Less: Other Un-allocable Expenditure net off Un-allocable Income
(2,295.3) (9.8) (1,635.0) (4.9)
216.8 1.4
Profit before Taxation 1,051.5 4.5 320.0 1.0 943.1 6.1 * Includes sales of raw sugar, and sales of bagasse and molasses, which are by-products of the sugar production process. ** Refers to particle board and medium-density fibre board business. *** Others include operations of our subsidiaries, primarily, Bajaj Aviation Private Limited, and such operations comprise leasing of aircraft.
254
Sugar
We are the largest sugar producer in India, based on production capacity. We own and operate 14 sugar mills with an aggregate sugarcane crushing capacity of 136,000 TCD. We produced 0.61 MMT and 1.25 MMT of sugar, including sugar produced from raw sugar, in the fiscal years 2009 and 2010, respectively. The summary operational data for our sugar operations are set forth below:
Fiscal Year
2009 Fiscal Year
2010 Three months ended December 31, 2010
Capacity (in TCD) 136,000 136,000 136,000 Weighted Average Crushing Season Duration (Days) 91 106 38 Total Sugarcane Crushed (in MMT) 6.732 9.947 3.645 Price of Sugarcane per Metric Ton SMP/FRP 811.8 1,298.4 1,391.2 State Advised Price (general variety) 1,400 1,650 2,,050 Recovery of Sugar (Percentage of Sugarcane Crushed) 8.98 9.23 8.96 By-products generated/savings as a percentage of sugarcane crushed in fiscal year: Molasses Generated 5.01 5.25 5.01 Sugar Production (metric ton) From Sugarcane 608,131 918,513 310,590 From Raw Sugar 0 326,938 38,838 Sugar Production Total 608,131 1,245,451 349,428 Sugar Sales (metric ton) Free Sale Sugar Sold in India 707,785 896,132 329,865 Levy Sugar Sold in India 104,772 89,108 31,584 Exports of Sugar 2,470 0 0 Sugar Sales Total 815,027 985,240 361,449 Realization Price (in `/ metric ton) (net of excise) Free sale sugar 22,051 29,723 28,434 Levy sugar 13,328 14,869 17,845 Exports of sugar 16,724 0 0
Sugar recovery is one of the major factors affecting financial performance. Our recovery from sugarcane increased to 9.23% in the fiscal year 2010 from 8.98% in the fiscal year 2009, leading to increased sugar production. In addition, our increased sugar production during the fiscal year 2010 was on account of processing imported raw sugar, as a result of lower sugarcane availability during the fiscal year 2010 and relatively low imported raw sugar prices.
Our sugar produced was sold for an average price of ` 29,723 per metric ton in the fiscal year 2010, which is an increase of 34.8% over the average price of ` 22,051 per metric in the fiscal year 2009. This was despite the levy sugar quota being increased from 10% for the fiscal year 2009 to 20% for the fiscal year 2010, i.e., 20% of all sugar produced from sugarcane, was sold at prices fixed by the government for different levy price zones in the country. The levy quota for the current season has been reduced to 10%. Our average selling price of free sale sugar was ` 28,434 per metric ton for the three months ended December 31, 2010.
Co-generation
We have co-generation facilities at all of our fourteen sugar mills, with an aggregate installed capacity of 428 MW. The number of units of power generated for prior periods is set forth below:
Period ended
Number of units of power generated (in MWh)
255
Fiscal Year 2009 ............................................................................................ 313,542 Fiscal Year 2010 ............................................................................................. 500,301 Three months ended December 31, 2010 173,837
Of this installed capacity, for the fiscal years 2009 and 2010 and the three months ended December 31, 2010, we sold approximately 76,301 MWh, 125,793 MWh and 44,131 MWh, respectively, of power in excess of the amount required to operate our business to the state grid of Uttar Pradesh.
Distillery
Our distilleries have a combined capacity of 800 KL of industrial alcohol per day, which we believe makes us the one of the largest industrial alcohol producers in India. Our combined capacity includes one of our distilleries, which has a capacity of 60 KL per day that we have leased to a third party. We currently produce industrial alcohol at our Golagokarannath, Kinauni, Gangnauli, Khambharkhera and Rudauli distilleries. The summary operational data for our distillery operations are set forth below:
Products Manufactured Quantity in Kilo-Litres
Fiscal Year 2009 Fiscal Year 2010 Three Months Ended
December 31, 2010 Other Industrial Alcohol Products 21,012 101,799 9,706 Ethanol 31,457 2,722 5,672
As per the bio-fuel policy, the Government of India has plans to increase the blending percentage from current 5% to 20% by the year 2017. The ethanol blending program benefits our Company as it is expected to cushion the impact of the cyclicality of sugar prices.
For the three months ended December 31, 2010, we produced 15,378 KL of alcohol for the industrial market, comprising 5,672 KL of ethanol for blending and 9,706 KL of other industrial alcohol products, thus maintaining a product-mix of alcohol which we believe fetches optimum realizations.
Bagasse Boards
We manufacture particle boards and medium-density fibre boards, which are environmentally-friendly substitutes for timber and plywood from bagasse, the primary by-product of our sugar production activities. We established three manufacturing plants for our particle board and medium-density fibre board business with a total production capacity of 210,000 cubic metres per annum.
Other Operations
Our other operations mainly include trading in raw sugar and leasing of aircraft by our subsidiaries.
RESULTS OF OPERATIONS
The following table sets out our income statement, the components of which are expressed as a percentage of total income from our operations for the periods indicated:
Fiscal Year 2009 Fiscal Year 2010 Three months ended December
31, 2010
` in million % of Total Income ` in million % of
Total Income ` in million % of Total Income
Income: Income from Operations 21,152.9 90.6 33,048.0 98.9 15,863.2 102.0 Less: Excise Duty 893.4 3.8 1,033.7 3.1 389.5 2.5 Net Income from Operations 20,259.5 86.8 32,014.3 95.8 15,473.7 99.5 Other Income 3,075.7 13.2 1,392.5 4.2 81.5 0.5 Total Income 23,335.2 100.0 33,406.8 100.0 15,555.2 100.0 Expenditure:
256
Raw Materials Consumed 10,734.6 46.0 32,190.8 96.4 11,182.8 71.9 Manpower Cost 1,653.3 7.1 1,838.9 5.5 448.1 2.9 Other Expenses 2,184.4 9.4 3,871.6 11.6 1,190.7 7.6 Interest and Finance Charges (Net) 2,781.3 11.9 3,681.2 11.0 1,161.7 7.5 Depreciation and Amortisation 3,456.6 14.8 3,440.3 10.3 936.2 6.0 (Increase) / Decrease in Stocks 1,473.5 6.3 (9,986.7) (29.9) (307.4) (2.0) Total Expenditure 22,283.7 95.5 35,036.1 104.9 14,612.1 93.9 Profit / (Loss) before Exceptional Items and Taxation 1,051.5 (1,629.3) 943.1
Exceptional Item: Profit on Cessation of Subsidiary - - 1,949.3 5.8 - - Profit before Taxation 1,051.5 4.5 320.0 0.9 943.1 6.1 Less: Provision for Taxation: Current Tax 331.8 1.4 166.0 0.5 150.6 1.0 Deferred Tax 446.8 1.9 (94.0) (0.3) 175.0 1.1 Wealth Tax 1.0 - 1.1 - - - Fringe Benefit Tax 7.8 0.1 - - - - Less: MAT Credit Entitlement 331.3 1.4 165.2 0.5 150.4 1.0 Provision for Taxation (net) 456.1 2.0 (92.1) (0.3) 175.2 1.1 Profit after Tax 595.4 2.5 412.1 1.2 767.9 5.0 Less: Minority Interest (22.4) (0.1) (28.5) (0.1) - - Profit after Tax and Minority Interest 617.8 2.6 440.6 1.3 767.9 5.0
Income. Substantially all of our revenue is derived from the sale of sugar, industrial alcohol, power and particle and medium-density fibre boards. We also receive proceeds from the sale of molasses, bagasse, press mud, and store and scrap material. Scrap material is occasionally generated from our maintenance and repair activities. We recognize our revenue upon transfer of ownership, which typically occurs at the time of delivery of our products to our customers. Payment terms for our industrial alcohol products vary based on the terms of the tender.
Expenditure. Our expenditure consists of raw material cost, which consists of the cost of sugarcane, and employee expenses, which include salaries, wages, allowances, bonuses and other statutory benefits. Our other expenses mainly consist of, among others, stores, spares and packing material consumed, power and fuel expenses, rent, rates and taxes, repair and maintenance, insurance, selling commission, selling and distribution expenses, miscellaneous expenses, and loss due to foreign exchange fluctuation. Changes in stock-in-trade and work-in-progress relates to changes in the value of our inventories and excise duties. Depreciation relates primarily to plant and equipment we own and is calculated on a straight-line basis. We have amalgamated our former subsidiary, BHSIL during the fiscal year 2010, and the consequent revaluation of assets has increased the value of our fixed assets. Our finance costs represent our interest on debentures, term loans and other interest, comprising interest on working capital loans, offset by interest received on long-term loans and interest received on loans and advances, if any.
Provision for Taxation. Our provision for taxation encompasses income tax, wealth tax and deferred tax. Deferred tax arises mainly due to the timing differences in the depreciation rates applicable to the books of accounts and under the Income Tax Act, as well as credit for certain depreciation and tax losses. MAT credit entitlement arises mainly due to losses carried forward and higher depreciation under the Income Tax Act. Our corporate tax rate is currently 32.4%. We provide for both current and deferred taxes.
Three Months ended December 31, 2010
We have provided our results of operations for the three months ended December 31, 2010 without including the corresponding period in the prior year’s financial statements or providing a comparative analysis, and such interim financial information may therefore be of limited use.
Our results of operations for the three months ended December 31, 2010 were particularly affected by:
• the seasonality of our business because the sugarcane crushing season typically begins in October and reaches its peak in January; and
257
• exports of raw sugar of ` 4,009.6 million.
Total Income. Our total income was ` 15,555.2 million for the three months ended December 31, 2010 consisting of net income from operations of ` 15,473.7 million and other income of ` 81.5 million.
Net Income from Operations. Our net income from operations was ` 15,473.7 million for the three months ended December 31, 2010.
Net income from our sugar operations, prior to adjustment for inter-segment revenue, was ` 14,230.3 million for the three months ended December 31, 2010, which was primarily as a result of sales of 361,449 MT of sugar and export of raw sugar of ` 4,009.6 million through sales directly to foreign buyers and through our trading subsidiary in Singapore. Our income from sugar operations is also as a result of sales of other by-products of the sugar production process, including bagasse and molasses. Average realization prices (net of excise duty) for the three months ended December 31, 2010 were ` 28,434 per metric ton and ` 17,845 per metric ton for free sale sugar and levy sugar, respectively. Net income from our industrial alcohol operations prior to adjustment for inter-segment revenue, was ` 805.7 million, for the three months ended December 31, 2010, on account of sales of 31,124 KL of industrial alcohol for the three months ended December 31, 2010. The average realization prices of ethanol and other industrial alcohol products were ` 27/L and ` 25.3/L, respectively, for the three months ended December 31, 2010. Net income from sale of co-generated power was ` 661.5 million, prior to adjustment for inter-segment revenue, for the three months ended December 31, 2010, on account of an export of power to the grid of 44,131 MWh. The net realization price of power sold was ` 4.11 per kWh for the three months ended December 31, 2010. Net income from sale of bagasse boards, prior to adjustment for inter-segment revenue, was ` 443.5 million for the three months ended December 31, 2010. Other Income. Our other income was ` 81.5 million for the three months ended December 31, 2010. Our other income constituted 0.5% of our total income for the three months ended December 31, 2010. Our other income for the three months ended December 31, 2010, primarily consisted of lease rent of ` 34.8 million, scrap and store sales of ` 24.7 million, miscellaneous receipts of ` 11.5 million and provisions no longer required and credit balances appropriated of ` 10.2 million. Expenditure. Our total expenditure was ` 14,612.1 million for the three months ended December 31, 2010, constituting 93.9% of our total income for the three months ended December 31, 2010. The primary factors affecting our total expenditure were cost of raw materials consumed, other expenses, interest and finance charges and depreciation and amortization charges. Raw Materials Consumed. Our raw materials consumed were ` 11,182.8 million, including cost of raw materials sold, for the three months ended December 31, 2010, constituting 71.9% of our total income for the three months ended December 31, 2010. Our raw materials consumed consisted of changes of stock from ` 5,962.4 million to ` 2,819.1 million and purchases of ` 8,039.5 million. Our raw materials consumed primarily consisted of sugarcane, raw sugar and bagasse. Manpower Costs. Our manpower costs were ` 448.1 million for the three months ended December 31, 2010, constituting 2.9% of our total income for the three months ended December 31, 2010, primarily as a result of payments towards salaries and wages and contributions towards provident and other funds and schemes. Other Expenses. Our other expenses were ` 1,190.7 million for the three months ended December 31, 2010, constituting 7.6% of our total income for the three months ended December 31, 2010. Our other expenses primarily consisted of expenses towards stores, spares and packing materials consumed of ` 330.8 million, machine repair costs of ` 163.3 million, a loss due to net foreign exchange fluctuation of ` 156.5 million, power and fuel expenses of ` 156.3 million, miscellaneous expenses of ` 144.0 million and selling and distribution expenses of ` 141.4 million, primarily on account of freight expenses on sugar sale and expenses incurred on export of raw sugar. Interest and Finance Charges (Net). Our interest and finance charges were ` 1,161.7 million for the three months ended December 31, 2010, constituting 7.5% of our total income for the three months ended December
258
31, 2010. Our interest and finance charges primarily consisted of interest paid on other instruments including short-term secured and unsecured non-bank working capital loans of ` 711.1 million, interest paid on working capital loans of ` 445.3 million and finance charges of ` 138.2 million. Depreciation and Amortisation. Our depreciation and amortisation expense was ` 936.2 million for the three months ended December 31, 2010, constituting 6.0% of our total income for the three months ended December 31, 2010. (Increase)/Decrease in Stocks. Our stocks increased by ` 307.4 million for the three months ended December 31, 2010, on account of higher inventory. Provision for Taxation. Our provision for taxation was ` 175.2 million for the three months ended December 31, 2010, constituting 1.1% of our total income for the three months ended December 31, 2010. This was because of a deferred tax provision of ` 175.0 million and a current tax provision of ` 150.6 million, partially offset by a MAT credit entitlement of ` 150.4 million. Net Profit after Taxation. For the reasons stated above, our net profit after taxation was ` 767.9 million for the three months ended December 31, 2010. Fiscal Year 2010 Compared to Fiscal Year 2009
Our results of operations for the fiscal year 2010 were particularly affected by the following factors:
• an increase in income from operations on account of increase in sugar production due to higher recoveries, increase in sale of industrial alcohol, primarily ethanol, and sale of power produced from co-generation plants;
• an increase in finance charges, consistent with an increase in borrowings to finance our working capital requirements; and
• profit on cessation of business of our subsidiary, BHSIL, pursuant to the accounting treatment prescribed in the Scheme of Amalgamation.
Total Income. Our total income increased by 43.2% to ` 33,406.8 million for the fiscal year 2010 from ` 23,335.2 million for the fiscal year 2009, as a result of an increase in net income from our operations.
Net Income from Operations. Our net income from operations increased by 58.0% to ` 32,014.3 million for the fiscal year 2010 from ` 20,259.5 million for the fiscal year 2009, as a result of an increase in income from the production and sale of sugar and industrial alcohol, primarily ethanol, and sale of co-generated power. Net income from our sugar operations, prior to adjustment for inter-segment revenue, increased by 59.6% from ` 18,743.9 million in the fiscal year 2009 to ` 29,908.1 million in the fiscal year 2010, on account of higher recoveries of sugar, higher sugar production, an increase in sales of by-products, such as molasses and bagasse, and an increase in the quantity of sugar sold by us from 815,027 MT in the fiscal year 2009 to 985,240 MT in the fiscal year 2010, as well as an increase in the average realization price (net of excise duty) of free sale sugar from ` 22,051 per metric ton in the fiscal year 2009 to ` 29,723 per metric ton in the fiscal year 2010, which is an increase of 34.8%, primarily as a result of high sugar prices between November 2009 and January 2010. Net income from our industrial alcohol operations, prior to adjustment for inter-segment revenue, increased by 35.1% from ` 1,226.3 million in the fiscal year 2009 to ` 1,657.1 million in the fiscal year 2010, due to an increase in sales of industrial alcohol from 49,330 KL in the fiscal year 2009 to 66,841 KL in the fiscal year 2010. This increase was in line with increase in production of industrial alcohol from 52,469 KL in the fiscal year 2009 to 104,521 KL in the fiscal year 2010, on account of higher levels of sugarcane processing, which increased raw material availability, as well as an increase in average realization price of ethanol from ` 22/L to ` 27/L as per the tender for sale of ethanol finalized by the Government of India in August 2010, which resulted in an increase in the price of ethanol and consequently, other industrial alcohol.
Net income from sale of co-generated power, prior to adjustment for inter-segment revenue, increased from ` 793.1 million in the fiscal year 2009 to ` 1,754.5 million in the fiscal year 2010 due to an increase in export of power to the grid from 76,301 MWh for the fiscal year 2009 to 125,793 MWh for the fiscal year 2010 and an increase in net realization due to increase in tariffs.
259
Net income from sale of bagasse boards, prior to adjustment for inter-segment revenue, increased by 46.1% from ` 976.9 million in the fiscal year 2009 to ` 1,427.3 million in the fiscal year 2010 as a result of increased raw material availability on account of higher levels of sugarcane processed during the period and marginal increases in sales price of bagasse boards. Other Income. Our other income decreased by 54.7% to ` 1,392.5 million for the fiscal year 2010 from ` 3,075.7 million for the fiscal year 2009, primarily as a result of provisions no longer required of ` 321.9 million for the fiscal year 2010 as compared with ` 1,522.3 million for the fiscal year 2009, a decrease in gains due to foreign exchange fluctuation of ` 479.8 million for the fiscal year 2010 from ` 952.6 million for the fiscal year 2009. In the fiscal year 2009, as per the RBI guidelines, we redeemed outstanding FCCBs from investors and consequently recorded an extinguishment of liability on buyback of FCCBs of ` 337.1 million.
Expenditure. Our total expenditure increased by 57.2% to ` 35,036.1 million for the fiscal year 2010 from ` 22,283.7 million for the fiscal year 2009, primarily as a result of significantly higher quantity of sugarcane crushed in the fiscal year 2010 (9.947 MMT) as compared to the fiscal year 2009 (6.732 MMT), which resulted in increase in expenditure incurred on purchasing sugarcane and other related expenditures. In addition, we spent ` 6,541.4 million towards cost of raw sugar processed in the fiscal year 2010, which did not take place during the fiscal year 2009.
Raw Materials Consumed. Our raw materials consumed increased to ` 32,190.8 million for the fiscal year 2010 from ` 10,734.6 million for the fiscal year 2009, as a result of increase in sugarcane procured, which resulted in greater levels of cane crushed by us and higher sugarcane prices during the period. Our cost of raw materials constituted 96.4% of our total income for the fiscal year 2010 as compared with 46.0% of our total income in the fiscal year 2009. Our increase in cost of raw materials was primarily due to purchases of raw sugar for processing. In addition to raw sugar, we also purchased bagasse for manufacturing bagasse boards.
Manpower Costs. Our manpower costs increased by 11.2% to ` 1,838.9 million for the fiscal year 2010 from ` 1,653.3 million for the fiscal year 2009. This was primarily because of an increase in salaries and wages to ` 1,605.6 million for the fiscal year 2010 as compared with ` 1,451.5 million for the fiscal year 2009.
Other Expenses. Our other expenses increased by 77.2% to ` 3,871.6 million for the fiscal year 2010 from ` 2,184.4 million for the fiscal year 2009, primarily as a result of an increase in miscellaneous expenses to ` 1,376.8 million for the fiscal year 2010 as compared with ` 528.9 million for the fiscal year 2009 primarily because of trading losses of ` 755.6 million incurred by our subsidiary, Bajaj Singapore, on account of volatility in the price of raw sugar, as well as an increase in expenses towards stores, spares and packing materials consumed to ` 965.0 million for the fiscal year 2010 as compared with ` 511.5 million for the fiscal year 2009 as a result of an increase in the production of sugar and industrial alcohol and co-generation of power. In addition, there was an increase in power and fuel expenses to ` 522.6 million for the fiscal year 2010 as compared with ` 292.4 million for the fiscal year 2009 as a result of higher levels of sugarcane crushed and processing of raw sugar during the year, which were in line with our increase in sugar production.
Interest and Finance Charges (Net). Our interest and finance charges increased by 32.4% to ` 3,681.2 million for the fiscal year 2010 from ` 2,781.3 million for the fiscal year 2009, as a result of an increase in interest paid on other instruments including short-term secured and unsecured non-bank working capital loans, to ` 2,287.0 million for the fiscal year 2010 from ` 1,346.3 million for the fiscal year 2009, an increase in finance charges to ` 635.5 million for the fiscal year 2010 from ` 144.7 million for the fiscal year 2009 and an increase in interest paid on working capital loans to ` 957.0 million for the fiscal year 2010 from ` 857.2 million for the fiscal year 2009.
Depreciation and Amortisation. Our depreciation and amortisation expense decreased by 0.5% to ` 3,440.3 million for the fiscal year 2010 from ` 3,456.6 million for the fiscal year 2009.
(Increase)/Decrease in Stocks. Our stocks increased by ` 9,986.7 million for the fiscal year 2010 as compared with a decrease in stocks of ` 1,473.5 million for the fiscal year 2009, as a result of higher closing inventories of sugar and industrial alcohol.
Exceptional Items: An exceptional profit of ` 1,949.3 million was credited, being the difference between net assets of the subsidiary and sale price of investment after recouping of past losses incurred, goodwill write-offs and capitalized interest. See “- Amalgamation of Bajaj Hindusthan Sugar and Industries Limited” on page 247.
260
Provision for Taxation. Our provision for taxation decreased to a credit of ` 92.1 million for the fiscal year 2010 from a provision of ` 456.1 million for the fiscal year 2009. This was because of a decrease in current tax to ` 166.0 million for the fiscal year 2010 from ` 331.8 million for the fiscal year 2009, a deferred tax credit of ` 94.0 million for the fiscal year 2010 as compared with a provision for deferred tax of ` 446.8 million, partially offset by a decrease in MAT credit entitlement to ` 165.2 million for the fiscal year 2010 from ` 331.3 million for the fiscal year 2009.
Net Profit after Taxation. For the reasons stated above, our net profit after taxation, decreased by 28.7% to ` 440.6 million for the fiscal year 2010 as compared with a net profit after taxation, of ` 617.8 million for the fiscal year 2009.
Liquidity and Capital Resources
We finance our working capital requirements primarily through funds generated from operations, issuance of securities and financing from banks and other financial institutions. We had an increase in combined cash and cash equivalents of ` 3,985.0 million and ` 4,489.8 million for the year ended September 30, 2010 and the three months ended December 31, 2010, respectively. The following is a summary of our combined cash flow data for the periods indicated:
Cash Flows (` in million)
Fiscal Year 2009 Fiscal Year 2010 Three Months Ended December
31, 2010
Net cash (used in)/ generated from operating activities 1,735.8 (7,592.9) 2,195.5 Net cash (used in)/ generated from investing activities (1,248.2) (9,706.8) (2,220.3) Net cash (used in)/ generated from financing activities (955.2) 21,284.7 4,514.6 Net (decrease)/ increase in cash and cash equivalents for the period (467.6) 3,985.0 4,489.8
Operating Activities Three Months Ended December 31, 2010 Net cash generated from operating activities for the three months ended December 31, 2010 was ` 2,195.5 million after excluded non-cash items of depreciation of ` 936.2 million, interest paid (net of interest received) of ` 1,161.7 million and net loss due to foreign exchange fluctuation of ` 114.7 million. Our operating profit before working capital changes was primarily adjusted by trade and other receivables of ` 1,544.3 million on account of the sale of raw sugar, decrease in inventories to ` 2,680.9 million, primarily on account of sale of raw sugar, and decrease in trade payables of ` 2,254.1 million as a result of payment of credit from buyers of raw sugar.
Fiscal Year 2010 Net cash used in operating activities was ` 7,592.9 million for the fiscal year 2010 as compared to net cash generated from operating activities of ` 1,735.8 million for the fiscal year 2009, primarily as a result of a net loss, before exceptional items and tax, of ` 1,629.3 million for the fiscal year 2010 as compared with a net profit, before tax, of ` 1,051.5 million for the fiscal year 2009. Our net loss, before exceptional items and tax, for the fiscal year 2010 as compared with a net profit, before exceptional items and tax, for the fiscal year 2009, was primarily on account of:
• an increase in interest and finance charges to ` 4,481.3 million in the fiscal year 2010 from ` 3,587.4 million in the fiscal year 2009, as a result of an increase in average outstanding debt, additional working capital utilised for making early cane price payments to sugarcane farmers and higher stocks of sugar and alcohol due to higher production;
• write back of provision for foreign exchange of nil for the fiscal year 2010 as compared with ` 1,211.2 million for the fiscal year 2009 on account of provisions of foreign exchange fluctuations written back being no longer required;
261
• an increase in inventories to ` 15,955.3 million for the fiscal year 2010 as compared to ` 1,640.7 million for the fiscal year 2009, primarily as a result of an increase in inventory of sugar and raw materials;
• an increase in trade payables for the fiscal year 2010 of ` 3,962.1 million, as compared with a decrease in trade payables for the fiscal year 2009 of ` 309.5 million, primarily on account of raw sugar purchases made by our subsidiary, Bajaj Singapore, during the fiscal year 2010; and
• the increase in cash used in our operations to ` 7,196.6 million for the fiscal year 2010 as compared with cash generated from our operations of ` 1,878.0 million for the fiscal year 2009.
Investing Activities Net cash used in investing activities for the three months ended December 31, 2010 was ` 2,220.3 million, primarily as a result of the purchase of fixed assets of ` 1,786.5 million in relation to development of our thermal power projects and loans and advances of ` 686.5 million extended to other companies. Net cash used in investing activities was ` 9,706.8 million for the fiscal year 2010 as compared to ` 1,248.2 million for the fiscal year 2009, primarily as a result of the purchase of fixed assets, including machinery and plant materials used in the development of our thermal power projects of ` 10,118.0 million for the fiscal year 2010, as compared with ` 1,660.0 million for the fiscal year 2009.
Financing Activities Net cash generated from financing activities for the three months period ended December 31, 2010 was ` 4,514.6 million, primarily as a result of cash generated from borrowings of ` 5,078.8 million and sale of minority interest of ` 880.1 million primarily as a result of reduction in holding percentage in our subsidiary, Bajaj Energy Private Limited. Net cash generated from financing activities for the fiscal year 2010 was ` 21,284.7 million, as compared with ` 955.2 million used in financing activities for the fiscal year 2009, primarily as a result of: • cash generated from borrowings of ` 23,026.8 million for the fiscal year 2010 as a result of loans
taken for working capital requirements and investment in our subsidiaries, primarily Bajaj Energy Private Limited and Bajaj Singapore, as compared with net repayments of borrowings of ` 4,276.7 million for the fiscal year 2009 from net proceeds of institutional placement of Equity Shares to certain investors; and
• cash generated from minority interest of ` 2,118.80 million for the fiscal year 2010, as compared with
nil for the fiscal year 2009 as a result of the consolidation of our new subsidiary, Bajaj Energy Private Limited, which is involved in setting up of thermal power projects;
The increase in net cash generated from financing activities in the fiscal year 2010 as compared with the fiscal year 2009 was partially offset by, among others, issue of equity shares and premium thereon of ` 7,231.8 million for the fiscal year 2009 on account of our qualified institutional placement, as compared with nil for the fiscal year 2010 and cash used in payment of interest of ` 4,272.1 million for the fiscal year 2010 as compared with ` 3,802.3 million for the fiscal year 2009. Off-Balance Sheet Arrangements Except the foreign currency hedging transactions undertaken with respect to foreign currency borrowings in U.S. dollars and Japanese Yen, we do not have any off-balance sheet arrangements, derivative instruments, swap transactions or relationships with unconsolidated entities or financial partnerships that would have been established for facilitating off-balance sheet arrangements.
262
Capital Expenditures
Historical and Planned Capital Expenditures
The table below sets out our significant capital expenditures for the fiscal years 2009 and 2010 on a segment basis.
(` in million) Segment
Historical Capital Expenditure
Fiscal Year 2009 Fiscal Year 2010 Three Months Ended
December 31, 2010 Sugar 3893.7 359.8 39.5 Distillery 608.9 84.5 1.8 Power 434.2 8,678.2 1,734.6 Bagasse Board 502.8 15.4 8.6 Others 116.8 - - Unallocated 21.5 1,208.3 3.4 Total 5,577.9 10,346.2 1,787.9
We currently have planned capital expenditures towards the development of thermal power projects. Our planned capital expenditure for the development of our thermal power projects is expected to be ` 25,710 million and ` 14,220 million for the fiscal years 2011 and 2012, respectively. Indebtedness
As of December 31, 2010, we had outstanding secured loans of ` 62,436.3 million and unsecured loans of ` 6,229.4 million. Our borrowings include external commercial borrowings (“ECBs”) of JPY 10,233.9 million and US$ 97.1 million. Our borrowings, as of December 31, 2010, also included foreign currency convertible bonds (“FCCBs”) issued by BHSIL due April 26, 2014 and FCCBs issued by our Company due February 2, 2011. Our Company’s FCCBs were redeemed as of February 2, 2011. Our total amount of FCCBs outstanding as of December 31, 2010 was ` 5,223.8 million.
As of March 31, 2011, our Company had outstanding secured loans of ` 57,035.5 million and unsecured loans of ` 1,731.6 million on a standalone basis. Our Company’s standalone borrowings include ECBs of JPY 9,191.2 million and an ECB of US$ 87.8 million, initially incurred by BHSIL. Our Company’s total amount of FCCBs outstanding as of March 31, 2011 was US $15.0 million incurred by BHSIL on a standalone basis. We currently have no other outstanding instruments that are convertible or exchangeable into Equity Shares other than existing GDRs, FCCBs and employee stock options. For further details, refer to “Capital Structure” and “Financial Indebtedness” on pages 56 and 276, respectively.
Loan Covenant Breaches and Possible Consequences of Loan Covenant Breaches
Certain of our loan agreements include covenants that require us to maintain financial ratios for the respective durations of the agreements. As of March 31, 2011, the aggregate outstanding amount of our Company’s loans was approximately ` 58,767.1 million. Some amount of our Company’s total indebtedness is currently in default. We are not in compliance with some of the financial covenants, and such non-compliance constitutes an event of default under relevant loan agreements. In addition, we are in violation of certain non-financial covenants, including, among others, not seeking the approval of our lenders for undertaking obligations on behalf of our subsidiaries or prior to making investments in our subsidiaries. As a result, the lenders under each of these respective loan agreements may, at their discretion, accelerate payment and declare the entire outstanding amounts under the respective loan due and payable, and in certain instances, enforce their security constituted over our various assets and take possession of those assets. In addition, on account of cross-default provisions, our financial and non-financial covenant breaches could result in the cross-acceleration of some or all of our other outstanding indebtedness and payment of penalty interest, which would adversely affect our liquidity, business and results of operations.
To date, none of our lenders have accelerated payment of any of our loans; however, such lenders may exercise these rights under our loan agreements at any time unless they have issued the relevant consent or waiver, as the case may be. Any of the foregoing events would have a material effect on our liquidity, and could also have a material adverse effect on our business, financial condition and results of operations. See “Risk Factors —
263
General Internal Risks — We are not in compliance with certain financial and other covenants in a number of our loan agreements, which could result in the acceleration of the payment obligations on some or all of our outstanding indebtedness” on page 14.
Inventories
The inventory of sugar as of December 31, 2010 was 447,701 MT as compared with 460,097 MT as of September 30, 2010. Industrial alcohol inventory as of December 31, 2010 was 28,895 KL as compared to 45,038 KL as of September 30, 2010.
Debtors
In line with the Company's focus on effective working capital management, efforts are made to recover dues from debtors and the debtors as of December 31, 2010 were equivalent to 11 days of sales as compared to 17 days of sales as of September 30, 2010 and as compared to 9 days of sales as of September 30, 2009.
Systematic liquidation of inventory and close monitoring of receivables has helped us to limit the overall working capital requirement. After taking into account the net proceeds of the Issue and available banking facilities, we believe that our Company has sufficient working capital for its present requirements.
Debt Service
We service our debts primarily through cash generated from operations and we also plan to service our debts with the net proceeds from this Issue. Our interest coverage ratios for the three months ended December 31, 2010 and the fiscal years 2010 and 2009 were 38.2%, 67.0% and 38.2%, respectively.
Contractual Obligations and Commercial Commitments
The following table summarizes our contractual obligations as of December 31, 2010 and the effect such obligations and commitments are expected to have on our liquidity and cash flows in future periods. We have no capital lease obligations or operating leases and we own all of our plants, properties and equipment.
Contractual Obligations As of December 31, 2010 Less than 1 Year 1-3 Years 3-5 Years More than
5 Years
(` in million) Long-Term Debt ............................ 49,834.6 8,090.6 22,463.1 7,634.9 11,646.0 Purchase Obligations..................... 10,733.7 10,733.7 - - - Contingent Liabilities
The table below sets out our contingent liabilities that have not been provided for as of December 31, 2010.
Nature of Contingent Liability Not Provided For (` in million)
In respect of disputed demands/claims against our Company not acknowledged as debts:
• Central excise matters 330.8 • Trade tax matters 32.2 • Other claims 460.4
A subsidiary has procured imported as well as indigenous capital goods under export promotion and capital goods scheme (“EPCG”). The export obligation pending against such EPCG licenses. 281.2
Total 1,104.6
Related Party Transactions
We have engaged in the past, and may engage in the future, in transactions with related parties, including with our associate companies, directors and their relatives, key management personnel and enterprises that may be significantly influenced by our directors and their relatives or our key management personnel, which we refer to as related enterprises. We believe that such transactions were and will continue to be made on an arm’s length
264
basis. Our significant related party transactions during the fiscal year 2010 included the purchase of capital goods from our related enterprise, Bajaj Infrastructure Development Company Limited of ` 1,239.8 million on account of plant and machinery, equity share capital issued (including premium) to our Promoter Group of ` 756.0 million and advances given to Bajaj Infrastructure Development Company Limited of ` 6,069.5 million for development of power project. As of September 30, 2010 our receivables from related parties on account of payments on project work were ` 6,069.5 million and our receivables, relating to deposits from our related parties, were ` 3.6 million.
For further details on such transactions, see “Financial Statements –– Related Party Disclosures” on 182 - 187, 236 - 240.
Quantitative and Qualitative Disclosures about Market Risk
Risk Management
We consider market risk to be the potential loss arising from adverse changes in market rates and prices of our end-products, namely sugar and industrial alcohol. We are exposed to a number of market risks arising from our normal business activities. Such market risks principally involve the possibility that changes in commodity prices, interest rates or exchange rates will adversely affect the value of our financial assets and liabilities or future cash flows and earnings. We periodically review our exposure to market risks and determine at the senior management level how to manage and reduce the impact of these risks. We use derivative financial instruments solely for the purpose of managing fluctuations in foreign exchange. The counterparties to these contractual arrangements are primarily major financial institutions and banks in the case of foreign exchange derivative instruments. As a result, we do not believe that we are subject to any material credit risk arising from these contracts, and accordingly, we do not anticipate any material credit related losses. We do not enter into derivative or other hedging instruments for speculative purposes.
Commodities Risk
We are exposed to fluctuations in the price and availability of the sugarcane we require for the production of our sugar and industrial alcohol products. The availability of agricultural commodities fluctuates widely due to unpredictable factors such as weather, level of crop plantings, government agricultural programs and policies, changes in global demand resulting from population growth and migration, changes in standards of living and global production of similar, competitive products. Our sugarcane prices are controlled by the State Government of Uttar Pradesh and have generally increased every year while sugar prices may not follow a similar upward trend. We do not have any hedging mechanism linked to sugar futures to mitigate lower selling prices of our end-products. Historically, we have also purchased raw sugar for manufacturing of refined sugar. In addition, we currently purchase coal for our co-generation power plants and bagasse for manufacturing boards. Fluctuations in the price and availability of sugarcane, raw sugar, coal and bagasse required for our operations could have a significant effect on our results of operations.
Interest Rate Risk
We have fixed and floating rate indebtedness, so we are exposed to market risk as a result of changes in interest rates. As of December 31, 2010, ` 66,074.7 million, or 96.2% of our total indebtedness, consisted of variable rate debt obligations. As of March 31, 2011, ` 56,431.6 million, or 96.0% of our Company’s total indebtedness on a standalone basis, consisted of variable rate debt obligations. Interest rates on our floating rate indebtedness range from 4.0% to 13.5% per annum. We undertake debt obligations to support general corporate purposes including capital expenditures and working capital needs. Upward fluctuations in interest rates increase the cost of new debt and interest cost of outstanding variable rate borrowings. We do not currently use any derivative instruments to modify the nature of our debt so as to manage our interest rate risk.
Foreign Currency Exchange Rate Risk
We are exposed to market risk related to exchange movements between the Indian rupee and foreign currencies such as the US dollar and Japanese yen. As of December 31, 2010, US$ 211.7 million and JPY 10,233.9 million (` 15,193.5 million), or 22.1% of our total indebtedness (including our outstanding FCCBs and ECBs) was denominated in foreign currencies. As of March 31, 2011, US$ 102.8 million and JPY 9,191.2 million (` 9,553.9 million), or 16.3% of our Company’s debt (including our Company’s outstanding FCCBs and ECB) on a standalone basis, was denominated in foreign currencies.
265
We have options and forward contracts denominated in US dollars and Japanese yen, aggregating ` 9,538.6 million as of December 31, 2010, all of which have been acquired for hedging our foreign currency risk. ` 5,654.9 million of our total foreign currency exposure was not hedged as of December 31, 2011. Our Company has options and forward contracts denominated in US dollars and Japanese yen aggregating ` 4,344.4 million as of March 31, 2011 and on a standalone basis, all of which have been acquired for hedging our foreign currency risk. On a standalone basis, ` 5,209.5 million of our Company’s foreign currency exposure was not hedged as of March 31, 2011.
266
ACCOUNTING RATIOS AND CAPITALISATION STATEMENT
Significant Accounting Ratios (Standalone) – Annexure B to the Standalone Audit Report
Particulars
Three months ended
December 31, 2010
Year ended September
30, 2010
Year ended September
30, 2009
(Rs. in Millions) (Reviewed) (Audited) (Audited)
Net Profit 578.6 517.5 1,562.3 Less: Short Provision of Tax for earlier years - - (16.2) Net Profit 578.6 517.5 1,546.1 Net Worth 31,948.2 31,369.6 22,936.7 No. of Equity Shares outstanding at the end of the year (units)
191357111 191357111 176857111
Weighted No. of Equity Shares outstanding at the end of the year (units)
Basic 228357111 206133823 150148207 Diluted 228357111 206133823 150148207 Earning per share - Basic (Face Value Re.1) 2.5 2.5 10.3 Earning per share - Diluted (Face Value Re.1) 2.5 2.5 10.3 Return on Net Worth (%) 1.8% 1.6% 6.7% Net Asset Value per Equity Share (Rs.) 167.0 163.9 129.7 Notes:- Ratios have been computed as below: Earning per share – Basic (Rs.)
= Net Profits attributable to equity shareholders/ Weighted average number of equity shares outstanding during the year.
Earning per share – Diluted (Rs.) = Net Profits attributable to equity shareholders/ Weighted average number of diluted potential equity shares outstanding during the year.
Return on Networth (%) = Net Profits after Extra-Ordinary Items/ Networth at the end of the year excluding revaluation reserve, if any.
Net asset value per equity share (Rs.) = Net Worth at the end of the year/ Number of equity shares outstanding at the end of the year.
267
Significant Accounting Ratios (Consolidated) – Annexure A to the Consolidated Audit Report
Particulars
Three months ended
December 31, 2010
Year ended September 30,
2010
Year ended September
30, 2009
(Rs. in Millions) (Reviewed) (Audited) (Audited)
Consolidated Net Profit
767.9
440.6
617.8
Less: Short Provision of Tax for earlier years
(8.1)
(0.3)
(16.2)
Consolidated Net Profit
759.8
440.3
601.6
Consolidated Net Worth
29,613.4
28,838.1
21,135.1 No. of Equity Shares outstanding at the end of the year (units)
191357111 191357111 176857111
Weighted No. of Equity Shares outstanding at the end of the year (units)
Basic 228357111 206133823 150148207 Diluted 228357111 206133823 150148207
Earning per share - Basic (Face Value Re.1)
3.3
2.1
4.0
Earning per share - Diluted (Face Value Re.1)
3.3
2.1
4.0 Return on Net Worth (%) 2.6% 1.5% 2.8%
Net Asset Value per Equity Share (Rs.)
154.8
150.7
119.5 Notes:- Ratios have been computed as below: Earning per share – Basic (Rs.)
= Consolidated Net Profits attributable to equity shareholders/ Weighted average number of equity shares outstanding during the year.
Earning per share – Diluted (Rs.) = Consolidated Net Profits attributable to equity shareholders/ Weighted average number of diluted potential equity shares outstanding during the year.
Return on Networth (%) = Consolidated Net Profits after Extra-Ordinary Items/ Consolidated Networth at the end of the year excluding revaluation reserve, if any.
Net asset value per equity share (Rs.) = Consolidated Net Worth at the end of the year/ Number of equity shares outstanding at the end of the year.
268
Capitalisation Statement (Standalone) - Annexure C to the Standalone Audit Report
Particulars
Pre-Issue as at Post-Issue
December 31, 2010
(Rs. in Millions) (Reviewed)
Borrowings : Short Term Debt 18,139.7 Long Term Debt 39,408.6 Total Borrowings 57,548.3 Shareholders Funds Share Capital 191.4 Equity Share Suspense 37.0 Stock Option Outstanding 153.0
Reserves and Surplus (4) 31,566.8
Total Shareholders Funds 31,948.2 Long Term Debt / Shareholders Funds 1.23 Notes: 1) Debts repayable within one year from 31-12-2010 are considered as short term funds 2) Reserves and Surplus includes the profit for the three month ended December 31, 2010 as per the Limited Reviewed Accounts.
269
Capitalisation Statement (Consolidated) - Annexure B to the Consolidated Audit Report
Particulars
Pre-Issue as at Post-Issue
December 31, 2010
(Rs. in Millions) (Reviewed)
Borrowings : Short Term Debt
18,835.9
Long Term Debt
49,829.8
Total Borrowings 68,665.7
Shareholders Funds
Share Capital
191.4
Equity Share Suspense
37.0
Stock Option Outstanding
153.0
Reserves and Surplus (4)
29,232.0
Total Shareholders Funds
29,613.4
Long Term Debt / Shareholders Funds 1.68 Notes: 1) Debts repayable within one year from 31-12-2010 are considered as short term funds 2) Reserves and Surplus includes the profit for the three month ended December 31, 2010 as per the Limited Reviewed Accounts.
270
MATERIAL DEVELOPMENTS
1. The shareholders of our Company at the AGM dated March 22, 2011 have, inter alia, authorized a further issue of capital under section 81(1A) of the Companies Act. The Board of Directors at the board meeting dated April 30, 2011 have, inter alia, authorised the issue of shares to the shareholdes of our Company as per section 81 (1) of the Companies Act.
2. Working Results of the Company on a standalone basis for the period from October 1, 2010 to March 31,
2011:
Sr. No.
Particulars Amount (in ` million)
1. Sales / turnover (net of excise) 27281.5 2. Other income 178.8 3. Total Income 27460.3 4. PBIDT 5860.0 5. Interest and Finance Charges 2377.0 6. Provision for Depreciation 1676.3 7. Provision for Tax (net) 499.9 8. Profit /(Loss) after Tax 1306.8
3. On February 2, 2011, 99,572 FCCBs were redeemed. Currently, 100 FCCBs are outstanding of a value of
`669.75 million. These outstanding FCCBs are unlisted. The said 99,572 FCCBs which were redeemed are of a different series from the outstanding 100 FCCBs.
4. Our Company may initiate the process for dissolution of Bajaj Internacional Participações Ltda. (“BIPL”), a subsidiary of our Company incorporated in Brazil. BIPL is our wholly owned subsidiary. BIPL contributes 0.00 % to our consolidated revenues. However, as on date, BIPL is not formally under the process of winding up or dissolution.
5. For details in connection with the week-end prices and highest and lowest prices of Equity Shares, please
see “Market Price Information” beginning on page 245 of this Draft Letter of Offer.
6. Limited Review results (provisional) along with the Results for the quarter and six months ended March 31, 2011:
UNAUDITED FINANCIAL RESULTS (PROVISIONAL) FOR THE QUARTER ENDED MARCH 31, 2011
(Rs. Million)
Unaudited Unaudited Audited
Current Previous Current Previous Previous
Particulars Year Year Year Year Year
3 Months 3 Months 6 Months 6 Months 12 Months
31.03.2011
31.03.2010
31.03.2011
31.03.2010 30.09.2010
1. (a) Gross Sales /Income from Operations
12,880.8
5,847.2
28,026.8
12,184.9
29,702.7
Less: Excise Duty
355.9
172.8
745.3
356.5
966.7
1. (b) Net Sales /Income from Operations
12,524.9
5,674.4
27,281.5
11,828.4
28,736.0
1. (c) Other Operating Income
99.2
645.1
172.7
782.4
1,351.8
Total Income (1)
12,624.1
6.319.5
27,454.2
12,610.8
30,087.8
2. Expenditure
a) (Increase)/decrease in stock in trade & work in progress
(8,317.5)
(13,094.9)
(8,593.8)
(16,527.8)
(7,435.7)
271
b) Consumption of raw materials * 16,295.8 16,698.0 27,345.6 23,371.5 27,656.4
c) Employees cost
553.3
436.2
954.0
751.3
1,468.2
d) Depreciation
820.0
460.8
1,676.3
971.2
2,574.3
e) Other Expenditure
917.6
845.0
1,894.5
1,438.6
2,462.7
f) Total (2)
10,269.2
5,345.1
23,276.6
10,004.8
26,725.9
3. Profit/ (Loss) from Operations before Other Income,
Interest and Exceptional Items (1-2)
2,354.9
974.4
4,177.6
2,606.0
3,361.9
4. Other Income
6.0
0.8
6.1
32.3
202.0
5. Profit/ (Loss) before Interest and Exceptional Items (3+4)
2,360.9
975.2
4,183.7
2,638.3
3,563.9
6. Interest (Net)
1,307.1
650.0
2,377.0
1,106.3
3,013.4
7. Profit/ (Loss) after Interest but before Exceptional Items (5-6)
1,053.8
325.2
1,806.7
1,532.0
550.5
8. Exceptional Items
-
-
-
-
-
9. Profit / (Loss) from Ordinary Activities before tax (7-8)
1,053.8
325.2
1,806.7
1,532.0
550.5
10.(a) Tax expense**
325.7
7.3
500.0
362.1
32.9
10.(b) (Excess) / Short provision for tax
(0.1)
-
(0.1)
-
-
11. Net Profit / (Loss) from Ordinary Activities after tax (9-10)
728.2
317.9
1,306.8
1,169.9
517.6
12. Extraordinary items (net of tax expense Rs. Nil)
-
-
-
-
-
13. Net Profit / (Loss) for the period (11-12)
728.2
317.9
1,306.8
1,169.9
517.6
14. Paid-up equity share capital (Face Value - Re.1/- per share)
228.4
191.4
228.4
191.4
191.4
15. Reserves excluding Revaluation Reserve
30,988.2
16. Earnings Per Share (EPS) (Rs. per share)
Before and after Extraordinary items (Not annualised)
(a) Basic
3.19
1.66
5.72
6.11
2.51
(b) Diluted
3.19
1.66
5.72
6.11
2.51
17. Public shareholding
- Number of shares
146,787,146
109,787,14
6
146,787,14
6
109,787,14
6
109,787,146
- Percentage of Shareholding 64.28% 57.37% 64.28% 57.37% 57.37%
18. Promoters and promoter group Shareholding
a) Pledged/Encumbered
- Number of shares
43,230,574
-
43,230,574
-
-
- Percentage of shares (as a % of the total shareholding of promoter and promoter group) 54.06%
- 54.06%
-
-
- Percentage of shares (as a % of the total share capital of the company) 18.93%
- 18.93%
-
-
b) Non-encumbered
- Number of Shares
36,738,791
79,969,365
36,738,791
79,969,365
79,969,365
272
- Percentage of shares (as a % of the total shareholding of promoter and promoter group) 45.94% 100.00% 45.94% 100.00% 100.00%
- Percentage of shares (as a % of the total share capital of the company) 16.09% 41.79% 16.09% 41.79% 41.79%
* Including cost of raw material sold. ** Tax expense includes deferred tax of Rs.324.5 Million, Rs.7.1 Million, Rs.498.8 Million, Rs.361.6 Million and Rs.31.9 Million for the quarter ended March 31, 2011, quarter ended March 31, 2010, half year ended March 31, 2011, half year ended March 31, 2010 and year ended September 30, 2010 respectively.
UNAUDITED SEGMENT- WISE REVENUE, RESULTS AND CAPITAL EMPLOYED (PROVISIONAL) FOR THE QUARTER ENDED MARCH 31, 2011
(Rs. Million)
Unaudited Unaudited Audited
Current Previous Current Previous Previous
Particulars Year Year Year Year Year
3 Months 3 Months 6 Months 6 Months 12 Months
31.03.2011
31.03.2010 31.03.2011 31.03.2010 30.09.2010
1. Segment Revenue
a. Sugar
11,691.5
5,644.7
25,627.4
11,660.9
27,935.9
b. Distillery
894.3
351.5
1,700.0
504.6
1,566.3
c. Power
1,380.6
1,047.4
2,067.2
1,471.6
1,750.2
Total
13,966.4
7,043.6
29,394.6
13,637.1
31,252.4
Less : Inter- segment Revenue
1,441.5
1,369.2
2,113.1
1,808.7
2,516.4
Net Sales / Income from Operations
12,524.9
5,674.4
27,281.5
11,828.4
28,736.0
2.
Segment Results (Profit/(Loss) before tax and interest)
a. Sugar
898.1
271.9
2,086.9
1,626.0
2,322.2
b. Distillery
272.2
102.6
606.7
66.5
261.5
c. Power
1,172.6
900.6
1,688.9
1,224.9
1,267.7
Total
2,342.9
1,275.1
4,382.5
2,917.4
3,851.4
Less: (i) Interest (Net)
1,307.1
650.0
2,377.0
1,106.3
3,013.4
(ii) Other Un-allocable Expenditure net off Un-allocable Income
(18.0)
299.9
198.8
279.1
287.5
Total Profit / (Loss) before Tax
1,053.8
325.2
1,806.7
1,532.0
550.5
3.
Capital Employed (Segment Assets-Segment Liabilities)
a. Sugar
67,678.2
49,265.2
67,678.2
49,265.2
66,985.4
b. Distillery
5,779.6
3,569.6
5,779.6
3,569.6
5,663.2
c. Power
5,909.8
2,932.8
5,909.8
2,932.8
5,658.9
273
d. Unallocated
13,438.8
9,571.7
13,438.8
9,571.7
9,327.7
Total
92,806.4
65,339.3
92,806.4
65,339.3
87,635.2
Notes: 1.
Given the seasonal nature of the industry, the results of any quarter may not be a true and/or proportionate reflection of the annual performance of the Company.
The results of the quarter/ 6 months ended March 31, 2011 have been prepared incorporating the results of erstwhile BHSIL (amalgamating company) with BHL and hence the same are not comparable with the corresponding figures of previous year.
2.
3.
As required by paragraph 46 inserted vide notification dated March 31, 2009 to the Accounting Standard AS-11 "The Effect of Changes in Foreign Exchange Rates", the Company had opted to adjust the exchange fluctuations on Long Term Monetary Items to the carrying cost of fixed assets. As per the notification, option for such accounting treatment is available for financial year ending on or before 31st March, 2011. Accordingly, from the current financial year, Company has adjusted the exchange fluctuation on long term monetary items in Profit and Loss account. Had the change not done, the profit for the current quarter would have been lower by Rs.82.4 Million.
4.
In respect of the Zero Coupon Foreign Currency Convertible Bonds (FCCBs) aggregating to US$ 120 million issued by the Company and of which FCCBs of US$ 99.572 million were outstanding, after conversion/repurchase from time to time, the Company has made repayment of an aggregate amount of US$ 133.006 million, including the redemption premium of US$ 33.434 million on the due date (February 02, 2011) in accordance with the terms and conditions of the said FCCBs.
274
5. Statement of assets and liabilities (provisional) as at the end of half year ended on March 31, 2011 is provided below:-
Unaudited Audited
Current Previous Previous
Period Period Year
6 Months 6 Months 12 Months
Particulars 31.03.2011 31.03.2010 30.09.2010
1. Share Holders' Funds
a. Capital
228.4
191.4
191.4
b. Equity Suspense
-
-
37.0
c. Stock Option Outstanding
153.0
-
153.0
d. Reserves & Surplus
32,324.8
24,567.2
30,988.2
2. Loan Funds
58,767.1
39,138.6
55,431.3
3. Deferred Tax Liability (Net)
1,333.1
1,442.1
834.3
Total
92,806.4
65,339.3
87,635.2
4. Fixed Assets
54,900.4
30,834.9
55,711.9
5. Investments
11,134.5
11,491.5
11,133.9
6. Current Assets, Loans and Advances
a. Inventories
22,700.7
32,571.6
19,213.6
b. Sundry Debtors
2,241.3
2,353.4
1,631.0
c. Cash & Bank Balances
8,893.3
1,388.8
4,792.0
d. Loans and Advances
16,646.6
23,626.8
14,242.1
Less: Current Liabilities & Provisions
a. Liabilities
23,423.0
35,312.5
17,169.5
b. Provisions
287.4
1,615.2
1,919.8
Net current Assets
26,771.5
23,012.9
20,789.4
Total
92,806.4
65,339.3
87,635.2
6. Figures have been regrouped/ rearranged wherever necessary.
7. There were zero investor complaints pending as at the beginning of the quarter. During the quarter Company has received 2 complaints from the investors and these complaints were disposed off during the quarter. There was zero complaints pending at the close of the quarter.
8. The Statutory Auditors have carried out the "Limited Review" of the results for the quarter ended March 31, 2011.
9. The above results have been reviewed by the audit committee and approved by the Board of Directors at their respective meetings held on April 30, 2011.
275
Other than the above there are no material developments involving our Company or any of its Subsidiaries subsequent to the Audited Financial Statements for the period ended September 30, 2010 and Limited Reviewed Financial Statements for the period ended December 31, 2011 incoporated in this Draft Letter of Offer.
276
FINANCIAL INDEBTEDNESS As on March 31, 2011, our Company has significant outstanding secured borrowing of approximately ` 57,035.5 million and unsecured borrowing of approximately ` 1,731.6 million. A summary of such significant outstanding secured borrowing together with a brief description of certain significant terms of such financing arrangements is as under: Non - Convertible Debentures In order to meet the working capital requirements our Company has, pursuant to the sanction letter dated May 28, 2008 and the subscription agreement dated June 19, 2008 (“Subscription Agreement”), issued 15 11% Secured Redeemable Non-Convertible Debentures of `10,000,000 each (“NCDs”) on a private placement basis to General Insurance Corporation of India (“GIC”). IDBI Trusteeship Services Limited has been appointed as the Debenture Trustee vide agreement dated September 4, 2009. The NCDs outstanding as on date are:
Issued and Paid-up Value
(in ` million)
Date of Allotment
Date of Redemption
Rate of Interest (% per annum
Credit Rating
Security Prepayment
150 June 24, 2008
June 19, 2011 11% p.a. “F1(ind)” from Fitch Ratings India Private Limited
First charge on the fixed assets of our Company with a minimum assets cover of 1.25 times.
Premium to be decided at the sole discretion of GIC.
277
Rupee Denominated Facilities Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Allahabad Bank Sanction Letter dated April 22, 2010 Term Loan Agreement (Hypothecation of Movables) dated June 14, 2010
Term loan for the payment of non- convertible debentures issued to LIC Mutual Fund.
2000.00
2000.00
First pari passu charge by way of hypothecation of all present and future movable assets such as all machinery, plant, tools and accessories of the units located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh. Additionally, first pari passu charge by way of mortgage of the whole immovable fixed assets and properties, both present and future.
Loan is repayable in 14 equal quarterly installments after moratorium period of 30 months from the date of the first disbursement.
Base Rate plus 2.75% p.a presently 12.25%
Prepayment of the term loan may be permitted without prepayment charges subject to at least one month prior notice.
Working Capital – Cash Credit
1000.00 893.47 First pari passu charge on the entire current assets of our Company both present and future, including but not limited to book debts and other current assets. Third pari passu charge on the whole of the movable fixed assets and properties and by way mortgage of the whole of the immovable fixed assets and properties of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Repayable on demand.
Base Rate plus 2.50%p.a., presently at 12.00% p.a.
NA
278
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Allahabad Bank Sanction letters dated March 6, 2009 and March 28, 2009. Term Loan Agreement dated March 30, 2009
Term Loan for the payment of short term debentures and normal working capital
1000.00 666.60 First pari passu charge on the movable fixed assets (both present and future) and the immovable property of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
12 equal quarterly installments, commencing 12 months after the first date of disbursement.
Base Rate plus 4.00%p.a. presently at 13.50% p.a.
Prepayment penalty will be charged at the rate of 1% p.a.
Central Bank of India Sanction Letters dated October 20, 2009 and April 17, 2010 Articles of Association, dated June 14, 2010.
For capital expenditure and repayment of short term loans raised from LIC Mutual Funds through NCDs
2000.00 2000.00 First pari passu charge on the present and future fixed assets of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
10 half yearly installments, which will fall due on April 1 and October 1 of every year. Repayment shall begin after a moratorium period of 1 year.
BPLR minus 2% with annual reset, presently 11.75% p.a.
Pre-payment penalty @1% of the outstanding loan amount.
Cash Credit for working capital purposes
1500.00 169.57 First pari passu charge by way of hypothecation of present and future stock specifically, stocks of sugar, molasses, consumable stores and spares, industrial alcohol, and all other current assets of the sugar and distillery mills and all book debts. Third residual charge with all working capital lenders on entire fixed block assets and all other movable and immovable assets of all the units of the company both present and future located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera,
Repayable on demand.
Base Rate Plus 2.50% p.a., presently 12.00% p.a.
NA
279
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
State Bank of Hyderabad Sanction Letter dated May 10, 2010. Term loan agreement dated June 14, 2010.
Corporate Loan for replacement of existing short term loan and shoring of working capital
1000.00 1000.00 First charge on all movable fixed assets located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh, on a pari passu basis with other term lenders.
20 equal quarterly installments, after an initial moratorium of one year.
Base Rate Plus 2.75% p.a., presently 11.75% p.a.
Company to have the option of prepayment at every interest reset date without any prepayment penalty. Pre-payment at any other occasion will attract a pre-payment penalty of 2% on the amount being pre-paid.
State Bank of Hyderabad Sanction Letter dated April 20, 2009 Agreement of Loan for Overall Limit dated August 17, 2009
Corporate loan for normal capex and shoring up of working capital.
500.00 458.33 First pari passu charge on immovable properties of our Company, comprising of land and building, present and future, located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, Uttar Pradesh.
To be repaid in 12 quarterly installments after an initial moratorium period of one year from the date of first disbursement. Interest debited to be serviced monthly by our Company.
Base Rate Plus 3.25% p.a., presently 12.25% p.a.
Company to have the option of prepayment at every interest reset date without any prepayment penalty. Pre-payment
280
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
at any other occasion will attract a pre-payment penalty of 1% on the amount being pre-paid.
Oriental Bank of Commerce Sanction Letter dated April 19, 2010 and letter dated July 14, 2010 Agreement of Term Loan dated July 21, 2010, Common Agreement dated July 21, 2010
Corporate loan for the repayment of existing short term loan and shoring of net working capital
2000.00 2000.00 First pari passu charge on all the existing and future fixed assets of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
60 monthly installments, with the first installment payable in August 2011.
Base Rate Plus 2.00% p.a. with monthly rests, presently at 11.50% p.a.
NA
Oriental Bank of Commerce Sanction Letter dated December 2, 2010 Supplemental Agreement to Secure Credit/Loan Facilities dated February 24, 2011
Working Capital – Cash Credit facility
2000.00 1987.79 Hypothecation of stock of sugar, molasses, comsumable stores, spares including industrial alcohol and all other current assets lying at all units of our Company or at any other place, including book debts, ranking pari-passu with other lenders and third pari passu charge over the entire movable fixed assets of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana,
Repayable on demand.
Base Rate Plus 1.75% p.a., presently at 11.25% p.a.
NA
281
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Oriental Bank of Commerce Sanction Letter dated January 31, 2008 Common Loan Agreement and Agreement of Term Loan, both dated February 1, 2008
For the clearance of cane price arrears for the sugar season 2007-08 relatable to Statutory Minimum Price (“SMP”) fixed, to be fixed by the Government. This loan has been taken under the ‘Scheme for extending Financial Assistance to Sugar Undertakings’.
200.00 83.33 Residual charge on the fixed assets of the Kinauni unit of our Company, ranking pari-passu with the other working capital financing banks
24 equal monthly installments, starting from February 2010.
12% p.a. Full interest subvention shall be provided by the Government of India. The interest subvention will be available for the entire duration of the loan (i.e. 4 years including 2 years moratorium)
NA
Canara Bank Sanction letter dated June 23, 2010, July 20, 2010 and August 27, 2010 Agreement for term loan dated September 9, 2010
Short term loan to augment the long term working capital of our Company.
2000.00 2000.00 All fixed assets of our Company, present and future, including equitable mortgage of factory, land and building, hypothecation of plant and machinery, furniture and fixtures, capital work in progress on a pari passu basis.
20 equal quarterly installments after the moratoriam period of 1 year from the date of the first disbursement.
Base Rate Plus 3.00% p.a., presently 12.50% (floating) to be paid separately on monthly basis as and when due.
Prepayment penalty of 2% if prepaid by way of takeover by other bank/ Financial Institution(s) and 1% if prepaid from
282
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
internal accruals before the expiry of 2 years, with a minimum prior intimation of 30 days.
Bank of Baroda Sanction Letter dated June 24, 2010 and July 7, 2010 Agreement for term loan dated August 16, 2010
Corporate loan for the payment of short term loan raised by our Company from LIC Mutual Fund
2000.00 2000.00 First pari-passu charge on all the tangible movable plant and machinery and movable fixed assets, together with spares, tools, accessories, and other movables both present and future, and all the furniture and fittings and office equipment located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
20 quarterly installments with the first installment due on June 30, 2011.
Base Rate plus 2.50% p.a., presently at 12.00% p.a
Company is allowed pre-payment without prepayment of monthly charges subject to one month prior notice and from internal accruals
Bank of India Sanction letters dated May 10, 2010 and July 17, 2010 and September 25, 2010. Term Loan Agreement, undertakings from our Company and Agreement for the Term Loan and the
Repayment of non-convertible debentures
2000.00 2000.00 First pari passu charge over the fixed block of our Company including plant and machinery, furniture and fixtures, equipment, weighing scales, electronic fittings.
10 half yearly installments commencing 1 years after the date of the first disbursement.
3% above the Banks’s base rate with monthly rests, presently 12.50% p.a.
NA
283
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Hypothecation of Movable Asstets/Goods/Property/ Plant and Machinery dated September 25, 2010 Bank of India Sanction letter dated May 14, 2009. Term Loan Agreement dated July 8, 2009
To replace short term loans raised for expansion with long term loans
2000.00 1333.27 Pari passu charge on immovable properties (both present and future) and the fixed assets of the sugar units of our Company, including in particular plant and machinery, fixtures and fittings, office equipments, vehicles, weighing scales, electrical fittings etc., located at the premises of our Company at Thanabhawan, Bilai, Budhana, Gangnauli, Kinauni, Khambarkheda, Palia, Barkheda, Golagokarnnath, Maqsoodapur all in Uttar Pradesh.
6 half yearly installments commencing from 12 months after the first date of disbursement. Door to door tenure of 4 years.
NA
IDBI Bank Limited Sanction Letters dated May 29, 2010 and August 4, 2010 Loan Agreement dated October 26, 2010
Refinancing short term loans availed by our Company
2000.00 1800.00 First charge on all immovable properties of our Company, on pari passu basis with existing charge holders, except those specific assets charged to specific lenders.
16 equal quarterly installments commencing 1 years from the date of the first disbursement.
IDBI BPLR minus 1.75% p.a., presently at 12.25% p.a.
Prepayment premium of 1% p.a. on the outstanding loan to be prepaid, up to the maturity / reset / put and call option date.
IDBI Bank Limited Sanction
Working capital loan – cash
1700.00 333.77 Primary: First charge by way of hypothecation of the current assets of our Company (both present
Repayable on demand.
IDBI BPLR minus 2.50% p.a., presently
NA
284
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Letter dated August 1, 2008 and the Loan Agreement dated December 19, 2008
credit and future), ranking pari-passu with the other working capital lenders. Collateral: Third charge on a pari passu basis on the fixed assets of our Company, both present and future
11.50% p.a.
IDBI Bank Limited Sanction Letter dated March 24, 2008
Excise Loan for the purpose of meeting cane price arrears for 2006-07 and cane price of 2007-08 sugar seasons
160.00 94.94 Residual charge on all fixed assets of our Company (both present and future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Repayment to be in 24 monthly installments after a moratorium period of 2 years from the date of first disbursement.
12% p.a. full interest subvention shall be provided by the Governmentof India. The interest subvention will be for the entire duration of the loan
The outstanding principle amount shall not be prepaid on any date other than those dates scheduled by the bank, and only after obtaining the prior approval of the Bank.
State Bank of Patiala Sanction Letter dated June 1, 2010 and June 19, 2010 Agreement dated June 28, 2010
Cash Credit facility for working Capital purposes
1500.00 1257.48 Primary – Hypothecation of Stocks of Sugar, molasses, consumable stores/ spare industrial alcohol and other current assets of all sugar and distillery units of our Company, including book debts, on pari-passu basis with other working capital bankers. Collateral – 3rd pari-passu charge with other working capital bankers on entire fixed assets and all other movable and
Repayable on demand.
Base Rate plus 3.00% p.a., presently at 12.00% p.a.
NA
285
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
immovable assets of our Company (existing and future), subject to 1st pari-passu charge of Term Lenders on our Company’s entire fixed assets (existing and future). 2nd charge with SDF.
State Bank of Patiala Sanction letter dated June 1, 2010 and August 29, 2010 Agreement dated June 28, 2010
Corporate Loan
1000.00 1000.00 Primary – 1st charge on pari-passu basis on the entire immovable properties (present and future) of our Company. Collateral – 2nd pari-passu charge on current assets.
Repayable in 12 quarterly installments.
2.75% above Base Rate, with annual reset from the date of first disbursement), presently 11.75% p.a.
In case of pre-payment of loan, penal interest at the rate of 2% on the amount pre-paid would be charged. However, no penal interest would be levied in case our Company proposes to repay loan amount at the time of reset of interest rate if the proposed rate of interest is not acceptable to our Company.
286
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
State Bank of Patiala Sanction letter dated May 29, 2008 Letter regarding the grant of individual limit within the overall limit dated June 25, 2008
Excise Loan for the purpose of meeting cane price arrears for 2006-07 and cane price of 2007-08 sugar seasons
34.10 18.47 Residual charge on all immovable properties of our Company (both present and future)
Repayment to be in 24 monthly installments after a moratorium period of 2 years from the date of first disbursement.
12% p.a. full interest subvention shall be provided by the Government of India. The interest subvention will be for the entire duration of the loan.
NA
State Bank of Patiala Sanction letter dated May 27, 2009 Agreement of Loan for Overall Limit dated July 9, 2009
Term loan to set up co-generation plant at Maqsoodapur
174.70 87.40 Primary: 1st charge on pari passu basis on the entire fixed assets movable and immovable of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh. Collateral: 2nd charge on current assets of our Company
Repayable in 6 half yearly installments. First installment would fall on June 30, 2009 and the last installment on December 31, 2011.
Base Rate plus 3.25% p.a., presently at 12.25% p.a.
Pre-payment penal interest @ 2% on the amount being pre-paid for the remaining period of the loan. Penal interest not to be charged if our Company repays at the time of reset of interest.
Corporation Bank Sanction Letter dated June 1, 2010
Cash credit facility for working capital finance
1150.00 171.73 Primary – Hypothecation of stocks of sugar, molasses, consumable stores/spares, industrial alcohol and other current assets of all the sugar and distillery units of our Company, including book debts on pari-passu
Repayable on demand subject to annual renewal.
Base Rate plus 2.75% p.a., presently 12.15% p.a.
N.A.
287
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
charge with other working capital bankers. Collateral – Third pari passu charge with other working capital bankers on the entire fixed assets and all other movable and immovable assets of our Company (existing and future), subject to first pari-passu charge of Term Lenders and Second exclusive charge of SDF.
Corporation Bank Sanction letter dated June 1, 2010 Agreement for Term Loans dated June 17, 2010
Term loan to part finance the capex of our Company incurred or to be incurred during the period of October 2008 to September 2010 The Loan proceeds to be utilized for the repayment of short term loans availed of from LIC Mutual Funds and IDBI Bank Limited and the balance amount towards capital expenditure
2000.00 1500.00 First pari passu charge on the entire movable fixed assets of our Company (both present and future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Not to exceed 72 months including an initial moratorium period of 12 months. To be paid in 20 quarterly installments commencing from August 2011.
Base Rate plus 3.25% p.a., presently at 12.65% p.a.
Prepayment penalty of 1% on the amount prepaid for the balance tenure of the loan.
288
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Corporation Bank Sanction letter dated May 28, 2009 and modification dated June 3, 2009 Agreement dated June 9, 2009
Corporate loan to repay short term loans of our Company and augment the liquidity position
2000.00 1666.60 First pari passu charge over the immovable property of our Company, including land, building (both present and future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
To be repaid in12 quarterly installments after initial moratorium of 12 months. The first installment commences from November 2010.
Base Rate plus 3.25% p.a., presently at 12.65% p.a.
Pre-payment is subject to the pre-payment penalty of 1%p.a. on the outstanding amount. Prepayment Penalty is waived if the loan is paid pout of internal accruals
Punjab National Bank Sanction letter dated February 6, 2008 Term Loan Agreement dated February 13, 2008
Term loan for the payment of cane price arrears for the 2006-07 sugar season and 2007-08 relatable to statutory minimum price (“SMP”) fixed, to be fixed by the Government. This loan has been taken under the ‘Scheme for
378.70 157.79 Residual charge on the fixed assets of our Company and residual charge on the immovable property of our Company located at Maqsoodapur, Uttar Pradesh
24 monthly installments after moratorium of 2 years from the date of disbursement.
12% p.a. full interest subvention shall be provided by the Government of India. The interest subvention will be for the entire duration of the loan.
NA
289
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
extending Financial Assistance to Sugar Undertakings’
Punjab National Bank Sanction letter dated February 6, 2008 Term Loan Agreement dated March 3, 2008
For the payment of cane price arrears for the 2006-07 sugar season and 2007-08 relatable to statutory minimum price (“SMP”) fixed, to be fixed by the Government. This loan has been taken under the ‘Scheme for extending Financial Assistance to Sugar Undertakings’
175.1 80.25 Residual charge on the fixed assets of our Company
24 monthly installments after moratorium of 2 years from the date of disbursement.
12% p.a. full interest subvention shall be provided by the Government of India. The interest subvention will be for the entire duration of the loan.
NA
290
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Punjab National Bank Agreement for the Hypothecation of Assets and Term Loan Agreement, both dated March 16, 2009
Repayment of short term loans and NCDs
3500.00 2624.93 First pari-passu charge on the movable assets /block asset of our Company and mortgage of immovable properties of our Company located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
12 equal quarterly installments, after a moratorium period of one year.
Base Rate plus 3.50% p.a., presently at 13.00% p.a.
Prepayment charges at the rate of 2% shall be levied if the term loan is repaid before 2 years
Punjab National Bank Sanction letter dated March 7, 2009 Sanction letter dated March 2, 2010
Working capital purposes
Cash credit – 7000.00
3714.59 First pari passu charge with all working capital lenders by way of hypothecation of stocks of sugar, molasses, consumable stores/spares, industrial alcohol and book debts arising out of genuine trade transactions up to 90 days old, not drawn on associate/allied concerns, and all other current assets (present and future) of the sugar and distillery units.
Repayable on demand.
Base Rate plus 3% p.a., presently at 12.50% p.a.
NA
Yes Bank Sanction Letter dated March 16, 2009
Loan agasinst excise duty for clearance of cane arrears under the ‘Scheme for extending Financial Assistance to Sugar Undertakings’ of the Government of India.
300.00 200.00 Primary: Fixed Deposit in the name of our Company to be placed with Yes Bank Limited under the Bank’s lien equivalent to the loan amount plus two months interest. Collateral: Residual charge on the fixed assets of our Company
24 equal monthly installments after a moratorium period of 2 years.
12% p.a. full interest subvention shall be provided by the Government of India. The interest subvention will be for the entire duration of the loan.
NA
291
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Bank of Rajasthan Limited Sanction Letter dated October 9, 2009
To meet working capital requirements capex and repayment obligation
700.00 466.67 First pari passu charge on all our Company’s immovable property comprising of land and building, both present and future, located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and e of Maqsoodapur, all located in Uttar Pradesh.
Repayment in 24 months including 1 year moratorium period i.e. 1/3rd after 12 months, 1/3rd after 18 months and 1/3rd after 24 months.
5.00% below the BPLR, presently 11.75% p.a.
NA
State Bank of Mysore Corporate Loan vide sanction letters dated May 25, 2009 and August 18, 2009 and June 29, 2009 Agreement of Loan for Overall Limit dated August 20, 2009
General corporate purposes
500.00 422.50 First pari passu charge on the immovable property of our Company comprising of land and building (present and future) located at Golagokarnnath, Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni and Maqsoodapur, all located in Uttar Pradesh.
Loan to be repaid in 12 ballooning quarterly installments (after a moratorium period of one year from the date of the disbursement.
1.50% below SBMPLR (floating) with a minimum of 11.00% p.a. (Interest to be serviced monthly), presently 12.00% p.a.
NA
State Bank of India Sanction letter dated April 28, 2009 Agreement dated May 23, 2009
Corporate loan for general corporate purpose
3000.00 2687.60 Primary: 1st pari passu charge on the entire fixed assets of our Company with other term lenders by way of hypothecation of the whole of the present and future fixed assets of our Company including mortgage by deposit of title deeds of all immovable properties of our Company. Collateral: 2nd charge on entire current assets of our Company on pari passu basis with other term lenders.
Equal installments payable every three months from October 31, 2010 to July 31, 2013. Last installment to be paid on September 20, 2013.
Base rate plus 3% p.a., presently at 11.25% p.a.
NA
292
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
State Bank of India Sanction letter dated March 11, 2010
Working capital requirements
7500.00 7477.83 Primary – Hypothecation of stocks of sugar and molasses, consumable stores/spares, industrial alcohol and other current assets of all the sugar and distillery units of our Company, including book debts, on pari passu basis with other working capital bankers. 2nd charge on the entire current assets, present and future, ceded in favour of term lenders on reciprocal basis. Secondary – 3rd pari passu charge with other working capital bankers on the entire fixed assets and all other movable and immovable assets of our Company (existing and future), subject to 1st pari passu charge of term lenders and 2nd exclusive charge of SDF.
On demand. Base Rate plus 2.50% p.a., presently 10.75% p.a.
NA
State Bank of India Sanction letter dated February 25, 2008 and January 19, 2011 Supplemental Agreement of Loan for Increase in Overall Limit dated February 28, 2008
General corporate purpose
902.50 488.90 Primary: Nil Collateral: Residual charge on the fixed assets of the sugar units.
Twenty three equal installments and the remaining to be paid through one last installment.
12% p.a. full interest subvention shall be provided by the Government of India. The interest subvention shall be for the entire duration of the loan.
NA
293
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` million)
Amount Outstanding on March 31,
2011 ( ̀million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Syndicate Bank Sanction letter dated September 20, 2010 Agreement dated September 27, 2010
Short term corporate loan for general corporate purposes
1000.00 1000.00 Unsecured Bullet repayment on completion of one year from the date of 1st release/ disbursement.
9.50% p.a. fixed interest to be paid monthly
Penalty of 1% on the pre-paid amount to be charged.
Small Industries Development Bank of India (“SIDBI”) Sanction Letter dated January 7, 2011
To be used for the purpose of covering purchases of components, spares, parts, sub-assemblies, accessories, packing materials etc.
400.00 52.33 Bills of exchange accepted by our Company; acceptance of LOI; demand promissory note of `400.00 million
On demand. 9.25% p.a. fixed
NA
UCO Bank Sanction letter dated January 19, 2011 Short Term Loan Agreement dated February 10, 2011
Short term loan for working capital purposes
2000.00 2000.00 (1) Subservient charge on current and fixed assets (both present and future) of our Company to the extent of 1.25 times of the facility amount plus outstanding interest.
Bullet repayment at the end of the tenor of 6 months.
2.25% above the base rate, presently 11.75% p.a.
Nil, if paid out of the cash flows of the Company. Else as per the bank’s extant guidelines.
294
Sugar Development Loans from the Government of India
The Sugar Development Act, 1982 was enacted for the purpose of setting up the Sugar Development Fund (“SDF”) with the objective of rendering financial assistance through loans for the rehabilitation and modernization of sugar factories as well as for sugarcane development. The scope has subsequently been enlarged to cover projects involving bagasse based co-generation of power and production of anhydrous alcohol or ethanol from molasses undertaken by sugar mills.
The table below summarizes the SDF Loans availed of by our Company:
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` in millions)
Amount Outstanding on March
31, 2011 (` in
millions)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
SDF Loan taken for the purpose of Cane Development Deed of Hypothecation dated May 4, 2010, executed individually for each unit of our Company, viz. Thanabhawan, Palia Kalan, Buddhana, Bilai, Maqsoodapur, Golagokarnnath, Barkhera, Gangnauli, Khambarkheaa and Kinauni. Memorandum of Deposit dated March 10, 2010, executed individually for each of the units mentioned above.
Rearing cane seeds nurseries, incentive to cultivators to switch over to improved varieties of cane, ratoon management and integrated pest and disease management.
`25.00 mn per unit for our Company’s units at Palia Kalan, Barkhera, Khambarkhera, Thanabhawan, Budhana, Bilai, Gangnauli, Kinauni, Maqsoodapur, Kundarkhi, Utraula and `20.00 mn for the unit at Rudauli.
227.50 Second charge by way of hypothecation of movable assets of our Company (except book debts) and immovable property (both present and future) located at our Company’s various units
The repayment of loan sanctioned together with interest shall be made in four equal installments and shall commence on expiry of one year from the date of disbursement of loan.
The loan advanced shall carry a simple interest of 2% below the bank rate Prevailing on the date of disbursement of loan which at present is 4% p.a.
NA
SDF Loan – Distillery Sanction letter dated March 12, 2009;
For meeting the shortfall in the Promoters’ contribution for setting up a
243.94 152.47 Second charge by way of hypothecation of movable assets of our
Repayment of the loan shall commence after the expiry of 1
Each installment of the loan advanced shall carry a
NA
295
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` in millions)
Amount Outstanding on March
31, 2011 (` in
millions)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Deed of Hypothecation dated June 17, 2008 Memorandum of Deposit dated July 19, 2008
plant for the production of ethanol at Khambarkhera.
Company (except book debts) and exclusive charge on the immovable property (both present and future) located at our Company’s Khambarkhera unit
year from the date of each disbursement and shall be repaid in half yearly installments not exceeding 8 in number.
simple interest of 2% p.a. below the bank rate Prevailing on the date of disbursement of the each installment of the loan. which at present is 4% p.a.
SDF Loan – Distillery Sanction Letter dated June 19, 2008 and February 3, 2010 Deed of Hypothecation dated January 7, 2009 and Tripartite Agreement dated January 7, 2009 Memorandum of Deposit dated February 14, 2009
To meet the shortfall in the Promoters’ contribution for implementing project for production of 150 KL per day anhydrous alcohol or ethanol from molasses at Gangnauli Unit.
257.13
246.70 Second charge by way of hypothecation of movable assets of our Company (except book debts) and immovable property (both present and future) ,located at our Company’s Gangnauli Unit.
Repayment of the loan shall commence after the expiry of 1 year from the date of each disbursement and shall be repaid in half yearly installments not exceeding 8 in number.
Each installment of the loan advanced shall carry a simple interest of 2% p.a. below the bank rate Prevailing on the date of disbursement of the each installment of the loan. which at present is 4% p.a.
NA
SDF Loan – Co-generation Sanction letter dated March 18, 2008 Deed of Hypothecation and Tripartite Agreement, both dated June 17, 2008
For meeting the shortfall in the Promoters’ contribution for setting up a 20MW bagasse based co-generation power project located at Bilai.
58.65 53.91 Second charge by way of hypothecation of movable assets of our Company (except book debts) and the immovable property of our Company located at our Company’s Bilai unit
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
The loan advanced shall carry a simple interest of 2% below the bank rate Prevailing on the date of disbursement of loan which at present is 4% p.a.
NA
296
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` in millions)
Amount Outstanding on March
31, 2011 (` in
millions)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Memorandum of Deposit dated July 19, 2008
SDF Loan – Co-generation Sanction Letter dated May 28, 2007 Deed of Hypothecation dated February 7, 2008 and Tripartite Agreement dated January 8, 2008 Memorandum of Deposit dated March 10, 2008
For meeting the shortfall in the Promoters’ contribution for setting up a 22MW bagasse based co-generation power project located at Budhana.
115.84 107.60 Second charge by way of hypothecation of movable assets of our Company (except book debts) and immovable property (both present and future) located at our Company’s Budhana unit
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
2% below the bank rate on the date of disbursement of the loan, which at present is 4% p.a.
NA
SDF Loan – Co-generation Sanction Letter dated September 4, 2008; Deed of Hypothecation dated January 7, 2009 and Tripartite Agreement dated January 7, 2009 Memorandum of Deposit dated February 14, 2009
For meeting the shortfall in the Promoters’ contribution for setting up a 12MW bagasse based co-generation power project located at Barkhera.
41.06 34.79 Second charge by way of hypothecation of movable assets of our Company (except book debts) and immovable property (both present and future) located at our Company’s Barkhera unit
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
2% below the bank rate on the date of disbursement of the loan, which at present is 4% p.a.
NA
297
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` in millions)
Amount Outstanding on March
31, 2011 (` in
millions)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
SDF Loan – Co-generation Sanction Letter dated May 28, 2007 Deed of Hypothecation dated February 7, 2008 and Tripartite Agreement dated January 8, 2008 Memorandum of Deposit dated March 10, 2008
For meeting the shortfall in the Promoter’s contribution for setting up a 20MW bagasse based co-generation power project located at Thanabhawan.
70.48 70.48 Second charge by way of hypothecation of movable assets of our Company (except book debts) and immovable property located at our Company’s Thanabhawan unit
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
2% below the bank rate on the date of disbursement of the loan, which at present is 4% p.a.
NA
SDF Loan – Co-generation Sanction Letter dated June 19, 2008 Deed of Hypothecation dated January 7, 2009 and Tripartite Agreement dated January 7, 2009 Memorandum of Deposit dated February 14, 2009
For meeting the shortfall in the Promoters’ contribution for setting up a 12 MW bagasse based co-generation power project located at Khambharkhera.
75.49 69.55 Second charge by way of hypothecation of movable assets of our Company (except book debts) and immovable property (both present and future) located at our Company’s Khambharkhera unit.
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
Each installment of the loan advanced shall carry a simple interest of 2% p.a. below the bank rate Prevailing on the date of disbursement of the each installment of the loan. which at present is 4% p.a.
NA
SDF Loan – Co-generation Sanction Letter dated November 27, 2009
For meeting the shortfall in the promoter’s contribution for setting up a 10 MW bagasse based co-generation
67.52 61.95 Second charge by way of hypothecation of movable assets of our Company (except book debts) and
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement
Each installment of the loan advanced shall carry a simple interest of 2% p.a. below the
NA
298
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` in millions)
Amount Outstanding on March
31, 2011 (` in
millions)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Deed of Hypothecation dated June 17, 2008 and Tripartite Agreement dated June 17, 2008 Memorandum of Deposit dated December 3, 2008
power project located at Kinauni Unit.
immovable property (both present and future) located at our Company’s Kinauni unit.
and shall be repaid in half yearly installments not exceeding 10 in number.
bank rate Prevailing on the date of disbursement of the each installment of the loan. which at present is 4% p.a.
SDF Loan – Co-generation Sanction Letter dated August 10, 2009 (first installment ) and April 30, 2010 (second installment); Deed of Hypothecation dated February 8, 2008 and Tripartite Agreement January 8, 2008. Memorandum of Deposit dated June 25, 2008
For meeting the shortfall in the Promoters’ contribution for setting up a 12 MW bagasse based co-generation power project located at Palia Kalan Unit.
90.08 81.60 Second charge by way of hypothecation of movable assets of our Company (except book debts) and the immovable property located at our Company’s Palia Kalan unit.
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
Each installment of the loan advanced shall carry a simple interest of 2% p.a. below the bank rate Prevailing on the date of disbursement of the each installment of the loan. which at present is 4% p.a.
NA
299
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed
(In ` in millions)
Amount Outstanding on March
31, 2011 (` in
millions)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
SDF Loan – Co-generation Sanction Letter dated January 30, 2008 Deed of Hypothecation dated June 17, 2008 and Tripartite Agreement dated June 17, 2008 Memorandum of Deposit dated July 19, 2008
For meeting the shortfall in the promoter’s contribution for setting up a 10 MW bagasse based co-generation power project located at Gangnauli Unit.
55.38 50.97 Second charge by way of hypothecation of movable assets of our Company (except book debts) and the immovable property (both present and future) located at our Company’s Gangnauli unit.
Repayment of the loan shall commence after the expiry of 3 years from the date of each disbursement and shall be repaid in half yearly installments not exceeding 10 in number.
Each installment of the loan advanced shall carry a simple interest of 2% p.a. below the bank rate Prevailing on the date of disbursement of the each installment of the loan. which at present is 4% p.a.
NA
300
External Commercial Borrowings
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed (in million)
Amount Outstanding
on March 31, 2011 (in
million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
ECB Agreement dated December 8, 2006 between Bajaj Hindusthan Limited, ABN Amro Bank N.V., BNP Paribas, Bank of Tokyo-Mistubishi UFJ Limited, Cooperative Centrale Raiffesisen – Boerenleenbank B.A. (Rabobank International) Singapore Branch, DBS Limited and Standard Chartered Bank
General Capital Expenditure, importation of capital goods, refinancing of existing foreign currency loans, new projects, modernization and/or expansion of existing facilities, investment in overseas subsidiaries and repurchasing of existing FCCBs
Yen 9,191.20 (`3,449.18 million)
Yen 9,191.20 (`4,964.99 million)
All tangible movable property of our Company at its sugar and distilleries located at Golagokarnath and Palia Kalan, and our Company's immovable properties situated at Golagokarannath, Kinauni, Thanabhawan, Budhana, Bilai, together with all building and structures thereon and all plant and machinery attached
5 years after the weighted average utilisation date, i.e. from the date of availing of the loan
Rate of interest for each loan for each interest period is the percentage rate per annum which is the aggregate of the applicable margin and LIBOR. The present rate of interest is 0.9975% p.a.
NA
301
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed (in million)
Amount Outstanding
on March 31, 2011 (in
million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
Amended and Restated Loan Agreement dated July 9, 2007 between Bajaj Hindusthan Sugar and Industries Limited and International Finance Corporation (“IFC”)
To be utilized towards the construction of three green field sugar plants, a distillery and expansion of a brown field sugar plant located in India
USD 125 million divided into three parts: Loan A of USD 35 million; Loan B1 of USD 71.50 million and Loan B2 of USD 18.50 million (`5325.73)
Total outstanding - USD 87.78 million (`3919.15) Loan A – USD 31 million Loan B – USD 42.90 million Loan B2 – USD 13.88 million
a) First ranking charge over the fixed assets of our Company located at its sites in Kundarki, Rudauli and Utraula, including the distilleries of such units;
b) First ranking charge over the fixed assets of our Company located at its site in Pratappur;
c) Second ranking charge over the current assets of our Company (other than bank accounts), including receivables and inventories; and
d) First ranking charge over the retention account
Loan A to be repaid in 16 installments, Loan B to be repaid in 10 equal istallments and Loan C to be repaid in 16 equal installments
Please see Note 1.
A pre-payment premium of 0.75% for pre-payment between September 15, 2010 and September 15, 2011. In case of pre-payment after September 15, 2011, no pre-payment premium will be charged.
302
Name of the Lender and nature and date of the
loan agreement
Purpose Of the loan
Amount Sanctioned and availed (in million)
Amount Outstanding
on March 31, 2011 (in
million)
Security Repayment Date/
Schedule
Rate of Interest (%
per annum)
Prepayment
Clause (if any)
created pursuant to the Retention Account Agreement.
The conversion price is (a) ` 37.53 for 100 Yen, and ` 42.61 for 1 USD as on date of disbursement of the respective foreign currency loans (b) the conversion price is ` 54.02 for 100 Yen, and ` 44.65 for 1 USD as per the RBI reference rate as on March 31, 2011. Note 1:
The applicable interest rate shall be the sum of the interest rate applicable to each Loan A, Loan B1 and Loan B2, which is:
Loan Prior to the financial project completion
After the financial project completion
Conditions applicable on the Interest Rate
Loan A 1.6% p.a 2.25% p.a. The interest rate may be adjusted downwards to the following levels to the extent that the current ratio is equal to or greater than 1.3:1 and the Net Long-term Debt to EBITDA Ratio is: a) less than or equal to 2.0:1, in which
case the relevant spread shall be 1.75% per annum; and
b) greater than 2.0:1 but less than or equal to 2.5:1, in which case the Relevant Spread shall be 2% per annum,
adjusted annually after the date of the financial project completion.
Loan B1 1.25 % p.a. 1.75% p.a. The interest rate may be adjusted downwards to the following levels to the extent that the Current Ratio is equal to or greater than 1.3:1 and the Net Long-term Debt to EBITDA Ratio is: a) less than or equal to 2.0:1, in which
case the relevant spread shall be 1.25% per annum; and
b) greater than 2.0:1 but less than or equal to 2.5:1, in which case the Relevant Spread shall be 1.5% per annum,
adjusted annually beginning on the interest payment date immediately following the delivery of the audited financial statements of our Company to IFC.
Loan B2 1.6 % 2.25% The interest rate may be adjusted downwards to the following levels to the extent that the Current Ratio is equal to or greater than 1.3:1 and the Net Long-term Debt to EBITDA Ratio
303
is: a) less than or equal to 2.0:1, in which
case the relevant spread shall be 1.75% per annum; and
b) greater than 2.0:1 but less than or equal to 2.5:1, in which case the Relevant Spread shall be 2% per annum,
adjusted annually after the financial project completion date beginning on the date on which the interest is due, when audited financial statements for the relevant financial year in have been delivered to IFC by our Company.
Additionally, the interest rate applicable shall be LIBOR on the second business day prior to the beginning of each interest period, rounded upward to the nearest three decimal places. Each interest period is six months. The agreement further stipulates that the determination of the interest rate by IFC, from time to time, shall be final, conclusive and binding on our Company.
Restrictive Covenants
Many of our financing agreement including various restrictive conditions and covenants restricting certain corporate actions, and our Company is required to take the prior approval of the lender before carrying out such activities. For instance, our Company is required to obtain the prior written consent of the lenders in the following instances:
� Change in the capital structure of our Company;
� Drastic changes in the management set up;
� Make any fundamental changes such as the financial year of our Company;
� Enter into any borrowing or non-borrowing arrangements, either secured or unsecured, with any other lender or financial institution;
� Formulate any scheme for merger, amalgamation or re-organization;
� Implement any scheme of expansion or diversification or capital expenditure except normal replacement indicated in funds flow statement submitted, to and approved, by the lender;
� Approaching the capital markets for mobilising additional resources either in the form of debt or equity;
� Create or form a subsidiary of our Company;
� Undertake guarantee obligations on behalf of any other company, firm or person, including in certain cases, to the Subsidiaries of our Company;
Our Company has from time to time, obtained the consent of its lenders to undertake certain corporate actions and enter into various transactions. Our Company has obtained the requisite consents from its lenders in order to undertake the present rights issue. For further information on restrictive covenants, please see “Risk Factors” on page 12 of this Draft Letter of Offer.
Under certain facility agreements and sanction letters, the facilities availed of by our Company are repayable on demand.
Loans against VAT and CST payable on sale of molasses
Our Company is eligible to avail a facility of refund / deferment on payment of Value Added Tax (“VAT”) on sale of molasses under section 42 of the Uttar Pradesh Value Added Tax Act, 2008 and rule 70 of the Uttar Pradesh Value Added Tax Rules, 2008. Our Company is eligible to avail a loan facility from the State Government of Uttar Pradesh of the same amount as the VAT paid by us. This loan is interest free and for a period of five years. Our Company has availed of this facility and as on March 31, 2011 `8.78 million is outstanding.
304
Fixed Deposits
Our Company accepted deposits from the public under section 58A of the Companies Act. Our Company accepted certain deposits in FY2003 and FY 2004 amounting to `764,000 which have matured in FY 2006 and FY 2007. These deposits have not been claimed by the beneficiaries. Foreign Currency Convertible Bonds As on date, 100 FCCBs are outstanding of value of `669.75 million. These outstanding FCCBs are unlisted. For further details of the FCCBs, please see “The Issue” on page 37 of the Draft Letter of Offer.
305
SECTION VI – LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND DEFAULTS Except as described below, there are no outstanding litigations including, suits, criminal or civil prosecutions and taxation related proceedings against the Company and its Subsidiaries that would have a material adverse effect on our business. Further, there are no defaults, non-payment of statutory dues including, institutional / bank dues and dues payable to holders of any debentures, bonds and fixed deposits that would have a material adverse effect on our business other than unclaimed liabilities against the Company as of the date of this Letter of Offer. Further, except as disclosed below, the Company and its Subsidiaries are not aware of any litigation involving moral turpitude, material violations of statutory regulations and or proceedings relating to economic offences which have arisen in the last ten years. Further, except as disclosed below, the Company and its Subsidiaries are not subject to: a. Any outstanding litigations which does not impact the future revenues of our Company and any of the Subsidiaries,
on a several basis, which impacts more than one percent of the networth of our Company or the networth of the respective Subsidiary, for the last completed financial year.
b. Any outstanding litigations which impacts the future revenues of our Company and any of the Subsidiaries, on a
several basis, which impacts more than one percent of the revenue of our Company or the revenue of the respective Subsidiary, for the last completed financial year.
Further from time to time, we have been and continue to be involved in legal proceedings filed by and against us, arising in the ordinary course of our business. These legal proceedings are both in the nature of civil and criminal proceedings. We believe that the number of proceedings in which we are / were involved is not unusual for a company of our size doing business in India. Criminal Cases involving our Company 1. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 16/2010 against Mr. Shishir Bajaj, Mr. Vijendra Singh, Zonal Head (West) of our Company and Mr. D.P. Sharma, Unit Head of our Kinauni unit (the “Respondents”), with respect to the Kinauni unit of our Company, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridges under section 22B of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420, 418, 264, 265, 465, 467, 468, 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 1986/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order February 5, 2010 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
2. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 16/2010 against Mr. Satendra Singh, weighment clerk of our Kinauni unit (the “Respondent”), with respect to our Kinauni unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridges under section 22B of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420, 418, 264, 265, 465, 467, 468, 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 2138/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order February 11, 2010 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
3. The Senior Cane Development Inspector, Bilai (the “Complainant”) filed a first information report no.
16/2010, against Mr. Kushagra Bajaj and Mr. Akhilesh Mishra, Unit Head of our Bilai unit (the “Respondents”), with respect to our Bilai unit, alleging non-availability of sugarcane purchase records and irregularities in purchase of sugarcane under sections 15, 16, 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 417, 418, 420, 468,
306
471, 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955.
The Respondents filed writ petition no. 1237/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order January 27, 2010 directing the Complainant to file counter affidavits and the Respondents to file a rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
4. The Special Secretary, Cooperative Cane Development Society, Thanabhawan, (the “Complainant”)
has filed a first information report no. 25/2010 against Mr. Shishir Bajaj and Mr. Kushagra Bajaj (the “Respondents”), with respect to our Thanabhawan unit, alleging fabrication of records and purchase of sugarcane from un-reserved areas under sections 15, 16, 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and sections 6(1) (A) and (F) of the Sugarcane Control Order, 1966 and sections 5 (1), (2), (3) and (6) of the Uttar Pradesh Sugarcane (Supply and Purchase) Order, 1954, leading to offences under sections 420, 468, 471, 120B of the Indian Penal Code, 1860, section 3 and section 7 of the Essential Commodities Act, 1955.
The Respondents filed writ petition no. 1678/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order February 2, 2010 directing the Complainant and the counsel to the state to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
5. The Special Secretary, Cooperative Cane Development Society, Thanabhawan, (the “Complainant”)
has filed a first information report no. 25/2010 against Mr. Parminder Arya General Manager (Cane) and Mr. Ashok Kumar, Unit Head of our our Thanabhawan unit (the “Respondents”), with respect to our Thanabhawan unit, alleging fabrication of records and purchase of sugarcane from un-reserved areas under sections 15, 16, 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and sections 6(1) (A) and (F) of the Sugarcane Control Order, 1966 and sections 5 (1), (2), (3) and (6) of the Uttar Pradesh Sugarcane (Supply and Purchase) Order, 1954, leading to offences under sections 420, 468, 471, 120B of the Indian Penal Code, 1860, section 3 and section 7 of the Essential Commodities Act, 1955.
The Respondents filed writ petition no. 1383/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order January 8, 2010 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
6. The Senior Cane Development Inspector, Walterganj (the “Complainant”) has filed a first information
report no. 26/2010 against Mr. Pradeep Parakh, director, BHSIL, Mr. Kushagra Bajaj, Dr. Swatantra Singh Kothari, director, BHSIL, Dr. Sanjeev Kumar, director, BHSIL and Mr. Purushottam Lal Dadhich, director, BHSIL, with respect to the Rudauli unit, alleging irregularities in purchase records and availability of sugarcane from the reserved area under section 8 of Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 419, 420 and 120B of Indian Penal Code, 1860. The Respondents filed writ petition no. 1681/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated February 2, 2010 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
7. The Senior Cane Development Inspector, Walterganj (the “Complainant”) has filed a first information
report no. 26/2010 against Mr. Rajendra Kumar Agrawal, Unit Head of the Rudauli unit (the “Respondent”), with respect to the Rudauli unit, alleging irregularities in purchase records and availability of sugarcane from the reserved area under section 8 of Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 419, 420 and 120B of Indian Penal Code, 1860.
The Respondents filed writ petition no. 1019/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January
307
28, 2010 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
8. The Senior Cane Development Inspector, Walterganj (the “Complainant”) has filed a first information
report no. 26/2010 against Mr. Manish Dokania, Director, BHSIL, (the “Respondent”), with respect to the Rudauli unit, alleging irregularities in purchase records and availability of sugarcane from the reserved area under section 8 of Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 419, 420 and 120B of Indian Penal Code, 1860.
The Respondent filed writ petition no. 1984/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated February 5, 2010 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
9. The Senior Cane Development Inspector, Bilai (the “Complainant”) has filed a first information report
no. 27/2010 against Mr. Jagdesh Singh, weighment clerk of the Bilai unit (the “Respondent”), with respect to the Bilai unit, alleging irregularities in purchase records and availability of sugarcane from the reserved area under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 30, 31, 32, 33 and 38(A) (1), (2) and (3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 418, 420, 264 and 265 of Indian Penal Code, 1860.
The Respondent filed writ petition no. 1253/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 27, 2010 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
10. The Senior Cane Development Inspector, Bilai (the “Complainant”) has filed a first information report
no. 27/2010 against Mr. Akhilesh Mishra, Unit Head of our Bilai unit and Mr. Kushagra Bajaj (the “Respondents”), with respect to the Bilai unit, alleging irregularities in purchase records and availability of sugarcane from the reserved area under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 30, 31, 32, 33 and 38(A) (1), (2) and (3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 418, 420, 264 and 265 of Indian Penal Code, 1860.
The Respondents filed writ petition no. 1679/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated February 2, 2010 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
11. The Senior Cane Development Inspector, Bilai (the “Complainant”) has filed a first information report
no. 400/2010 against Mr. Akhilesh Mishra, Unit Head, Mr. Lokendra Singh Lamba, General Manager (Cane) and Mr. Narendra Singh, weighment clerk of our Bilai unit (the “Respondents”), with respect to the Bilai unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 31, 32, 33A, 38A(2), 20(D), 102 and 38A(3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 264, 265 and 427 of the Indian Penal Code, 1860. The Respondents filed writ petition no. 23621/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 4, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 4, 2010 and the matter is currently pending.
12. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 674/2010 against Mr. Shishir Bajaj, Mr. Akhilesh Mishra, Unit Head, Mr. Lokendra Singh Lamba, General Manager (Cane) and Mr. Rakesh Kumar, weighment clerk of our Bilai unit (the “Respondents”), with respect to the Bilai unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 31, 32, 33A, 38A(2), 20(D), 102
308
and 38A(3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 264, 265 and 427 of the Indian Penal Code, 1860. The Respondents filed writ petition no. 748/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 13, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 13, 2011 and the matter is currently pending.
13. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 674/2010 against Mr. Shishir Bajaj, Mr. Akhilesh Mishra, Unit Head, Mr. Lokendra Singh Lamba, General Manager (Cane) and Mr. Rakesh Kumar, weighment clerk of the Bilai unit (the “Respondents”), with respect to the Bilai unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 31, 32, 33A, 38A(2), 20(D), 102 and 38A(3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 264, 265 and 427 of the Indian Penal Code, 1860. The Respondents filed writ petition no. 347/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 10, 2011 directing the complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was February 28, 2011 and the matter is currently pending.
14. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 132/2011 against Mr. Alok Srivastava Occupier, Mr. Rajendra Prasad Singh, weighment clerk of our Utraula unit (the “Respondents”), alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 3 and 7 of the Essential Commodities Act, 1955 and sections 420, 120B of Indian Penal Code, 1860. The Respondents filed writ petition no. 1484/2011 before the Lucknow Bench of High Court of Judicature, Allahabad (the “Lucknow Bench”) seeking stay on arrest. The Lucknow Bench granted stay on arrest vide order dated February 14, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was February 14, 2011 and the matter is currently pending.
15. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 132/2011 against Mr. Kushagra Bajaj (the “Respondent”), with respect to our Utraula unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 3 and 7 of the Essential Commodities Act, 1955 and sections 420, 120B of Indian Penal Code, 1860. The Respondent filed writ petition no. 1569/2011 before the Lucknow Bench of High Court of Judicature, Allahabad seeking stay on arrest. The High Court granted stay on arrest vide order dated February 17, 2011 directing the Complainant and the counsel to the state to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was February 17, 2011 and the matter is currently pending.
16. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 21/2011 against Mr. Lokendra Singh, General Manager (Cane), Mr. Mukesh Kumar, weighment clerk of the Bilai unit (the “Respondents”), with respect to the Bilai unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 31, 32, 33A and 38A(2), 38A(3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 3 and 7 of the Essential Commodities Act, 1955 and sections 420, 427, 264, 265, 120B of Indian Penal Code, 1860. The Respondents filed writ petition no. 1651/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 27, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder
309
thereafter. The last date of hearing was January 27, 2011 and the matter is currently pending. 17. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 21/2011 against Mr. Shishir Bajaj, Mr. Akhilesh Mishra, occupier, Bilai unit, (the “Respondents”), with respect to the Bilai unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and rules 31, 32, 33A and 38A(2), 38A(3) of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 3 and 7 of the Essential Commodities Act, 1955 and sections 420, 427, 264, 265, 120B of Indian Penal Code, 1860.. The Respondents filed writ petition no. 1750/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 28, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 28, 2011 and the matter is currently pending.
18. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 23/2011 against Mr. Khoob Karan Singh, weighment clerk, Mr. O.P Chauhan, General Manager (Cane) of our Maqsoodapur unit (the “Respondents”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 3 and 7 of the Essential Commodities Act, 1955 and section 120B of Indian Penal Code, 1860,. The Respondents filed writ petition no. 1566/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 25, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 25, 2011 and the matter is currently pending.
19. The Cane Development Inspector and Assistant Cane Commissioner, Shahjahanpur (the
“Complainant”) has filed a first information report no. 23/2011 against Mr. Rakesh Yadav, Unit Head of our Maqsoodapur unit and Mr. Kushagra Bajaj (the “Respondents”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 120B of Indian Penal Code, 1860, section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 1634/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 27, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 27, 2011 and the matter is currently pending.
20. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 96/2011 against Mr. K.P. Singh, Manager (Cane) and Mr. Surendra Singh, weighment clerk of our Palia Kalan unit (the “Respondents”), with respect to the Palia Kalan unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 471, 468, 467, 420, 418, 417 and 120B of Indian Penal Code, 1860. The Respondents filed writ petition no. 1846/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 29, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 29, 2011 and the matter is currently pending.
21. Senior Cane Development Inspector (the “Complainant”) has filed a first information report no.
378/2010 against Mr. Parminder Singh, General Manager (Cane) and Mr. Dinesh Pal, weighment clerk of our Thanabhawan unit (the “Respondents”), with respect to the Thanabhawan unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under
310
sections 420 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 624/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 12, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 12, 2011 and the matter is currently pending.
22. Senior Cane Development Inspector (the “Complainant”) has filed a first information report no.
378/2010 against Mr. Ashok Kumar, Unit Head of our Thanabhawan unit and Mr. Kushagra Bajaj (the “Respondents”), with respect to the Thanabhawan unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 753/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 13, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 13, 2011 and the matter is currently pending.
23. Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first information report no. 592/2010 against Mr. Kushagra Bajaj and Mr. D.P Sharma, Unit Head of our Kinauni unit (the “Respondents”), with respect to the Kinauni unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420, 264, 265, 465, 467, 468 and 120B of Indian Penal Code, 1860, and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 750/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 13, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 13, 2011 and the matter is currently pending.
24. Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first information
report no. 592/2010 against Mr. Ayub, Assistant (Cane) and Mr. Subhash Chandra Khokhar, General Manager (Cane) at our Kinauni unit (the “Respondents”), with respect to the Kinauni unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420, 264, 265, 465, 467, 468 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 627/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 12, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 12, 2011 and the matter is currently pending.
25. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 10/2011 against Mr. Kushagra Bajaj and Mr. D.P Sharma, Unit Head of our Kinauni unit (the “Respondents”), with respect to the Kinauni unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 418, 420, 264, 265, 465, 467, 468 and 120B of Indian Penal Code, 1860and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 1635/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 27, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 27, 2011 and the matter is currently pending.
311
26. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first information report no. 10/2011 against Mr. Nagendra Kumar, Assistant (Cane) at our Kinauni unit (the “Respondent”), with respect to the Kinauni unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 418, 420, 264, 265, 465, 467, 468 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 1567/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 25, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 25, 2011 and the matter is currently pending.
27. Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first information
report no. 666/2010 against Mr. Sangina Yadav, weighment clerk and Mr. Sukhvir Singh Malik, Occupier of our Pratabpur unit (the “Respondents”), with respect to the Pratappur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under sections 420 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 1338/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 24, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 24, 2011 and the matter is currently pending.
28. Special Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 18/2011 against Mr. Shishir Bajaj and Mr. Tejvir Singh Dhaka, Unit Head of our Gangnauli unit (the “Respondents”), with respect to the Gangnauli unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane, leading to offences under sections 420 and 120B of Indian Penal Code, 1860, section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 1648/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 27, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 27, 2011 and the matter is currently pending.
29. Special Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 18/2011 against Mr. Prem Shankar, weighment clerk of our Gangnauli unit (the “Respondent”), with respect to the Gangnauli unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under, section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 1565/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 25, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 25, 2011 and the matter is currently pending.
30. Senior Cane Development Inspector (the “Complainant”) has filed a first information report no.
16/2011 against Mr. Kushagra Bajaj, Mr. Raj Singh, Unit Head and Mr. S.C. Sangal, Zonal Head (West) of our Budhana unit (the “Respondents”), with respect to the Budhana unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under sections 420 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955.
312
The Respondents filed writ petition no. 1652/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 27, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 27, 2011 and the matter is currently pending.
31. Senior Cane Development Inspector (the “Complainant”) has filed a first information report no.
16/2011 against Mr. Brajpal Singh, seasonal employee (wage board) and Mr. Jang Bahadur Tomar, General Manager (Cane) at our Budhana unit (the “Respondents”), with respect to the Budhana unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane, leading to offences under sections 420 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 1542/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 25, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 25, 2011 and the matter is currently pending.
32. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 2/2011 against Mr. Shishir Bajaj and Mr. Veer Pal Singh, Unit Head of our Barkhera unit (the “Respondents”), alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 471, 468, 467, 420, 418, 417 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 768/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 13, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 13, 2011 and the matter is currently pending.
33. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 2/2011 against Mr. Anil Kumar Pandey, weighment clerk and Mr. Kuldeep Pilania, Deputy General Manager (Cane) of our Barkhera unit (the “Respondents”), with respect to the Barkhera unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 471, 468, 467, 420, 418, 417 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 625/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 12, 2011 directing the Complainant to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 12, 2011 and the matter is currently pending.
34. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 144/2011 against Mr. Pankaj Kumar, weighment clerk, Mr. Veer Pal Singh, Occupier and Mr. Kuldeep Pilania, Deputy General Manager (Cane) at our Barkhera unit (the “Respondents”), with respect to the Barkhera unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 471, 468, 467, 420, 418, 417, 120 and 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 4641/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated March 14, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 14, 2011 and the matter is currently pending.
35. The Cane Inspector and Assistant Sugar Commissioner (the “Complainant”) has filed a first information report no. 523/2011 against Mr. Kushagra Bajaj (the “Respondent”), with respect to the
313
Kundarkhi unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane, leading to offences under sections 418, 420, 264, 265, 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 123/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 7, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 7, 2011 and the matter is currently pending.
36. The Cane Inspector and Assistant Sugar Commissioner (the “Complainant”) has filed a first
information report no. 523/2011 against Mr. Amrendra Singh, Abhayaskar Dev Singh, weighment clerk (the “Respondents”), with respect to the Kundarkhi unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane leading to offences under sections 418, 420, 264, 265, 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 151/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 7, 2011 directing the Complainant and the counsel to the state to file counter affidavits and the Respondents to file rejoinder thereafter. The last date of hearing was January 7, 2011 and the matter is currently pending.
37. The Cane Inspector and Assistant Sugar Commissioner (the “Complainant”) has filed a first
information report no. 523/2011 against Mr. Sukhvir Singh Malik, Occupier of our Kundarkhi unit (the “Respondent”), with respect to the Kundarkhi unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane leading to offences under sections 418, 420, 264, 265, 120B of Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 20/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 5, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 5, 2011 and the matter is currently pending.
38. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 984/2010 against Mr. R.T. Verma, Deputy General Manager (Cane), Mahendra Pratap Singh, weighment clerk and Mr. R.K. Agarwal, Unit Head of our Rudauli unit (the “Respondents”), with respect to the Rudauli unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953. The Respondents filed writ petition no. 346/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 10, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 10, 2011 and the matter is currently pending.
39. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1268/2010 against Mr. Kushagra Bajaj and Mr. Rakesh Yadav, Unit Head of our Maqsoodapur unit (the “Respondents”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane leading to offences under section 418, 420, 421, 422, and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 755/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 13, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 13, 2011 and the matter is currently pending.
40. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1268/2010 against Mr. O.P. Chauhan, General Manager (Cane) of our
314
Maqsoodapur unit (the “Respondent”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane, leading to offences under section 418, 420, 421, 422, and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 626/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 12, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 12, 2011 and the matter is currently pending.
41. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1871/2010 against Mr. Kushagra Bajaj and Mr. Rakesh Yadav, Unit Head of our Maqsoodapur unit (the “Respondents”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 15 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, rule 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 419, 420, 421, 422, 467 and 468 of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 754/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 13, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 13, 2011 and the matter is currently pending.
42. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1871/2010 against Mr. Sunil Tomar, Manager (Cane), Mr. O.P. Chauhan, General Manager (Cane) and Mr. B.K. Pal, Deputy Manager (Cane) of our Maqsoodapur unit (the “Respondents”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 15 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, rule 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1954, leading to offences under sections 419, 420, 421, 422, 467 and 468 of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondents filed writ petition no. 628/2011 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 12, 2011 directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 12, 2011 and the matter is currently pending.
43. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1552/2010 against Mr. Kushagra Bajaj (the “Respondent”), with respect to Palia Kalan unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 8 of the Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 264, 265, 420, 425 and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 126/2010 before the Lucknow Bench of High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 7, 2011, directing the Complainant to the state to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 7, 2011 and the matter is currently pending.
44. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1552/2010 against Mr. Vimal Kumar Awasthi, weighment clerk at our Palia Kalan unit (the “Respondent”), with respect to Palia Kalan unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 8 of the Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 264, 265, 420, 425 and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955.
315
The Respondent filed writ petition no. 136/2010 with the Lucknow Bench of High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated January 7, 2011, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 7, 2011 and the matter is currently pending.
45. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 1552/2010 against Mr. Jogendra Singh, Occupier of our Palia Kalan unit (the “Respondent”), with respect to the Palia Kalan unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 8 of the Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 264, 265, 420, 425 and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 149/2010 before the Lucknow Bench of High Court of Judicature, Allahabad (the “Lucknow Bench”) seeking stay on arrest. The Lucknow Bench granted stay on arrest vide order dated January 7, 2011, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 7, 2011 and the matter is currently pending.
46. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 270/2011 against Mr. Kushagra Bajaj (the “Respondent”), with respect to the Khambarkhera unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 8 of the Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 264, 265, 418, 420, 425 and 120B of the Indian Penal Code, 1860, and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 660/2011 before the Lucknow Bench of High Court of Judicature, Allahabad (the “Lucknow Bench”) seeking stay on arrest. The Lucknow Bench granted stay on arrest vide order dated January 21, 2011, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 21, 2011 and the matter is currently pending.
47. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 270/2011 against Mr. Alok Saxena, Occupier of our Khambarkhera unit (the “Respondent”), with respect to the Khambarkhera unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 8 of the Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 264, 265, 418, 420, 425 and 120B of the Indian Penal Code, 1860, and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 601/2011 before the Lucknow Bench of High Court of Judicature, Allahabad (the “Lucknow Bench”), seeking stay on arrest. The Lucknow Bench granted stay on arrest vide order dated January 19, 2011, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 19, 2011 and the matter is currently pending.
48. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 270/2011 against Mr. Shiv Narain Giri, weighment clerk of our Khambarkhera unit (the “Respondent”), with respect to the Khambarkhera unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 8 of the Uttar Pradesh Vacuum Pan Sugar Factories Licensing Order, 1969, leading to offences under sections 264, 265, 418, 420, 425 and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 770/2011 before the Lucknow Bench of High Court of Judicature, Allahabad (the “Lucknow Bench”) seeking stay on arrest. The Lucknow Bench granted stay on arrest vide order dated January 25, 2011, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was January 25, 2011 and the matter is currently pending.
316
49. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first information report no. 56/2010 against Mr. Kushagra Bajaj (the “Respondent”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under sections 418, 420 and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 1988/2010 before the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated February 5, 2010, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
50. The Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first
information report no. 56/2010 against Mr. S.C. Sangal, Unit Head of our Maqsoodapur unit (the “Respondent”), with respect to the Maqsoodapur unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane, leading to offences under sections 418, 420 and 120B of the Indian Penal Code, 1860 and sections 3 and 7 of the Essential Commodities Act, 1955. The Respondent filed writ petition no. 1584/2010 with the High Court of Judicature, Allahabad (the “High Court”) seeking stay on arrest. The High Court granted stay on arrest vide order dated February 5 2010, directing the Complainant to file counter affidavits and the Respondent to file rejoinder thereafter. The last date of hearing was March 8, 2010 and the matter is currently pending.
51. Secretary, Cooperative Cane Development Society (the “Complainant”) has filed a first information
report no. 162/2011 against Mr. Virendra Kishore Singh, weighment clerk, Mr. C.D. Pandey, Cane Manager, Mr. Sanju Singh, Cane Development Officer of our Uttaraola unit (the “Respondents”), with respect to the Uttaraola unit, alleging irregularities in the weighment of sugarcane and manipulation of the weigh bridge of sugarcane under section 22 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, leading to offences under sections 420 and 120B of the Indian Penal Code, 1860. The Respondents filed a bail application before the Court of the Chief Judicial Magistrate, Balrampur, seeking stay on arrest. The Chief Judicial Magistrate, Balrampur, granted bail and stay on arrest vide order dated February 24, 2011. The last date of hearing was February 24, 2011 and the matter is currently pending.
52. Guddu Barsi, the Bureau Chief of Bihari Khabar (the “Complainant”) has filed a criminal complainant
no. 1147/2010 at the Court of Chief Judicial Magistrate, Lakhimpur Kheri against Mr. Mehtab Singh, General Manager, Golagokarannath mill, Mr. A.K. Gupta, Zonal Head and Mr. Kushagra Bajaj (the “Accused”) alleging that the Company has employed a child below the age of 18 at their mill. The Complainant has further alleged that the child was working on a bagasse carrier and was permanently disabled due to an accident. The matter is currently pending.
53. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first
information report bearing no. 9/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and it was alleged that our Company failed to establish and start the Mushahari cane purchase centre allotted therein within the requisite time. Case No. 2629 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 18, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 29/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay
317
vide order dated January 12, 2009. The last date of hearing was November 12, 2009 and the matter is currently pending.
54. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first
information report bearing no. 15/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Pakariyar cane purchase centre allotted therein within the requisite time. Case No. 2684 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 19, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 1129/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay vide order dated February 2, 2009. The last date of hearing was July 9, 2009 and the matter is currently pending.
55. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first information report bearing no. 16/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Narayanpur cane purchase centre allotted therein within the requisite time. Case No. 2679 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 19, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 1130/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay vide order dated February 2, 2009. The last date of hearing was July 9, 2009 and the matter is currently pending.
56. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first information report bearing no. 18/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Bankata cane purchase centre allotted therein within the requisite time. Case No. 2682 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 19, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 1131/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay
318
vide order dated February 2, 2009. The last date of hearing was July 9, 2009 and the matter is currently pending.
57. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first information report bearing no. 8/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Baghauch Ghat cane purchase centre allotted therein within the requisite time. Case No. 2685 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 19, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 2673/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay vide order dated February 5, 2009. The last date of hearing was July 6, 2009 and the matter is currently pending.
58. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first information report bearing no. 14/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Shahpur cane purchase centre allotted therein within the requisite time. Case No. 2630 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 18, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 2674/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay vide order dated February 5, 2009. The last date of hearing was April 13, 2009 and the matter is currently pending.
59. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first
information report bearing no. 17/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Dularpatti cane purchase centre allotted therein within the requisite time. Case No. 2681 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 19, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 2676/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay
319
vide order dated February 5, 2009. The last date of hearing was August 12, 2009 and the matter is currently pending.
60. The Cane Inspector and Assistant Sugar Commissioner, Deoria (the “Opposite Party”) filed a first
information report bearing no. 19/2008 dated January 10, 2008 against R.N. Sharma, Unit Head of our Company (the “Applicant”), with respect to the Pratappur unit, alleging an offence under section 3 and section 7 of the Essential Commodities Act, 1955 due to non-compliance with Reservation Order no. 208 dated October 27, 2007 (the “Reservation Order”) issued by the Cane Commissioner, Uttar Pradesh (the “Cane Commissioner”) in accordance with the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953, Uttar Pradesh (Regulation of Supply and Purchase) Rules, 1954 and the Sugarcane (Control) Order, 1966. Our Company had been allotted various cane purchase centres by the Cane Commissioner vide the Reservation Order and failed to establish and start the Baghauch Ghat cane purchase centre allotted therein within the requisite time. Case No. 2683 of 2008 (the “Proceedings”) was filed against the Applicant in respect of the alleged offence. The Additional Chief Judicial Magistrate, Deoria took cognizance of the alleged offence and issued summons to the Applicant vide its order dated September 19, 2008 (the “Impugned Order”). R.N. Sharma has filed Miscellaneous Criminal Petition no. 2678/2009 before the High Court of Judicature, Allahabad (the “High Court”), seeking quashing of the Impugned Order and grant of stay on the operation of the Impugned Order as well as on the Proceedings. The High Court granted stay vide order dated February 5, 2009. The last date of hearing was August 12, 2009 and the matter is currently pending.
61. The Forest Department, Government of Uttar Pradesh filed an appeal no. 389/2003 before the Lucknow
Bench of High Court of Judicature, Allahabad (the “Lucknow Bench”) against the order of the Court of Special Judge, Lakhimpur Kheri, Uttar Pradesh dated May 12, 2000. The Forest Department had filed a case against our Company before the Court of the Additional Chief Judicial Magistrate under section 26 of the Indian Forests Act, 1927 stating that excessive release of effluents from our Company’s unit at Golagokarannath had caused direct damage worth `590,000 and indirect damages of `2,545,000 to forest lands adjoining the unit. The Court of the Additional Chief Judicial Magistrate vide order dated July 9, 1998 imposed a fine of `500 and ordered our Company to pay `60,000 as compensation to the Forest Department (the “Impugned Order”).
Being aggrieved and dissatisfied by the Impugned Order, our Company filed an appeal before the Court of Special Judge, Lakhimpur Kheri. The Special Judge allowed the appeal of our Company and vide order dated May 12, 2000 dismissed the order of the Additional Chief Judicial Magistrate dated July 9, 1998.
The Forest Department filed the present appeal before the Lucknow Bench against the order of the Special Judge dated May 12, 2000. The matter is currently pending.
Civil Cases involving our Company 1. Shree Ramlila Committee, Palia Kalan and others (the “Petitioners”) have filed writ petition no.
787/2009 with the Lucknow Bench of the High Court of Judicature, Allahabad (the “Lucknow Bench”) against the State of Uttar Pradesh, our Company and others (the “Respondents”). The Petitioners have alleged that due to improper waste management at the units at Palia Kalan, Golagokarannath and Khambarkhera, the lives of the farmers in the vicinity were affected. It was also alleged that the fly ash produced at the units was damaging the crops of the farmers and environment. The Petitioners have prayed that writ in the nature of mandamus be passed directing the Respondents to ensure proper management of waste water and fly ash. Our Company filed a counter affidavit with the Lucknow Bench stating that the units of our Company had installed machinery to arrest fly ash from the boilers to reduce pollution and such machinery is functional at all times. It was also stated that the entire waste water was treated at an effluent treatment plant and no waste water or effluent is being discharged over the lands of the farmers. Our Company also stated that all requisite consents required from the Uttar Pradesh Pollution Control Board were received and the treatment plants were continuously monitored by the Uttar Pradesh Pollution Control Board. The matter is currently pending.
320
2. Sugar mills in the State of Uttar Pradesh are required to procure sugarcane at the State Advised Price (the “SAP”) which is announced by the State Government of Uttar Pradesh during each crushing season in exercise of the powers conferred upon it by Section 16 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953.
The SAP fixed by the State Government of Uttar Pradesh for the crushing seasons of 2002-2003 and 2003-2004, which were fixed retrospectively, was challenged by the Western Uttar Pradesh Sugar Mills Association, inter alia, on the ground of arbitrariness and lack of authority of the State Government to fix the SAP retrospectively. Our Company is one of the several sugar mills operating in the same area and was thus included as a party to this litigation, which is now pending as a civil appeal before the Supreme Court of India (the “Supreme Court”). Since payments to the farmers have been made, it is unlikely that any liability will arise in any manner on any sugar mills including those of our company.
In another matter, the State Government of Uttar Pradesh announced the SAP of `125 per quintal for the crushing season of 2006-2007. Pursuant to writ petition No. 38967 of 2007, our Company challenged the manner of fixation of SAP, inter alia, on the ground that the determination of SAP was without any specified norms, criteria and guidelines and accordingly, arbitrary and invalid. On December 19, 2007, the High Court of Judicature, Allahabad (the “High Court”), inter alia, quashed the order of the State Government of Uttar Pradesh fixing the SAP for the crushing season 2006-2007 and further directed the State Government of Uttar Pradesh to form an expert committee represented by all the stakeholders, including representatives of cane growers, sugar producing factories and Government employees, within a period of three months and formulate a scientific and transparent cane pricing policy and re-assess the SAP for the crushing season of 2006-2007.
The State Government of Uttar Pradesh filed a petition for special leave to appeal (civil) No. 372-381 of 2008 before the Supreme Court challenging the High Court’s order. The Supreme Court stayed the operation of the judgment. On February 27, 2008, the Supreme Court pursuant to an interim order directed the payment of dues to cane growers relating to the sale and purchase of sugarcane for the crushing season of 2006-2007 at the rates of `115 for declined unsuitable variety, `118 for general variety, and `123 for early variety, in each case per quintal, which has been done by our Company.
The State Government of Uttar Pradesh announced SAP for the crushing season 2007-2008 at `125 per quintal. In November 2007, certain sugar factories filed writ petitions before the Lucknow Bench of the High Court of Judicature, Allahabad (the “Lucknow Bench”), challenging the constitutional validity of Section 16 of the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 and sought quashing of the decision of the State Government of Uttar Pradesh fixing the SAP for the 2007-2008 crushing season. On November 15, 2007, an interim order was passed by the Lucknow Bench directing the sugar factories to pay the price of sugarcane to the cane growers at the rate of `110 per quintal for the crushing season 2007- 2008.
The State Government of Uttar Pradesh subsequently filed a petition for special leave to appeal before the Supreme Court. Simultaneously, our Company filed writ petition No. 5210 of 2008 before a different bench of the High Court, which, on January 17, 2008 passed an interim order directing the payment for sugarcane at the rate of Statutory Minimum Price (“SMP”) of `81.18 per quintal, as fixed by the Central Government for the 2007-2008 crushing season.
Subsequently, respectively on January 23, 2008 and February 5, 2008, our Company filed writ petition Nos. 5210 of 2008 and 7827 of 2008 before the High Court for identical reliefs as prayed for in the writ petition No. 3271 of 2008 in relation to the purchase price for sugarcane. On March 31, 2008, the High Court passed an interim order directing the payment of sugarcane price for the 2007-2008 crushing season at the rate of SMP, and on August 18, 2008, passed judgment and final order, reiterating its interim order. This was also challenged before the Supreme Court through a special leave petition. On September 8, 2008, the Supreme Court pursuant to an interim order directed that the SAP for the crushing season of 2007-2008 would be `110 per quintal and listing all the 17 pending matters before it.
All the appeals in relation to SAP are currently pending before the Supreme Court. Our Company will be liable to make further payment to farmers for the crushing seasons 2006-2007 and 2007-2008 if the Supreme Court decides the matter against it.
321
3. The Sugarcane (Control) Order, 1966 (the “Order”), inter alia, provides for fixation of the Fair and
Remunerative Price by the Central Government. Clause 3A of the Order, inserted pursuant to Notification No. GSR 185 (E) dated September 24, 1976, further provides for recovery of cost incurred by the owner of a sugar mill in connection with the transportation of sugarcane. This provision places a mandatory statutory limit on the transportation rebate that could be claimed by the owner of a sugar mill. The State Government of Uttar Pradesh had revised the transport rebate in 2002 to a maximum of `5.83 per quintal pursuant to an interim order passed by the High Court of Judicature, Allahabad (the “High Court”). Our Company filed a civil writ petition No. 7885 of 2008 seeking further revision in transport rebate. The High Court admitted the appeal and determined deduction at an amount of `10.58 per quintal as a reasonable transportation rebate by its order dated April 21, 2008 until further orders in this regard were issued.
The State Government of Uttar Pradesh has filed a special leave petition (“SLP”) (Civil) No. 15465 of 2008 challenging this decision of the High Court, and such proceedings are presently pending before the Supreme Court of India (the “Supreme Court”). However, the prayer for a stay on the orders of the High Court has been rejected by the Supreme Court.
Pursuant to orders published in Notification Nos. GSR 528 (E), GSR 529 (E) and GSR 530 (E), each dated July 16, 2009, the Order has been modified as set out below:
a. for the fiscal years 2006-2007 and 2007-2008, the transport rebate for certain states, including the
state of Uttar Pradesh, has been fixed at the rate of `0.34 per quintal per kilometer subject to a maximum of `6.82 per quintal; and
b. for the fiscal year 2008-2009, the transport rebate for certain states, including the state of Uttar Pradesh, has been fixed at the rate of `0.37 per quintal per kilometer subject to a maximum of `7.36 per quintal.
Upon the issuance of the above notification, the SLP filed by the Government of Uttar Pradesh has become infructuous as further orders consolidating the transport rebate have been fixed but the same is pending final disposal.
4. The District Forest Officer (“DFO”) filed an application with the Sub-Divisional Magistrate, Kheri, to
evict our Company from the lands admeasuring 19.36 acres and 7.78 acres claiming that these lands were illegally possessed by our Company. The application also sought the recovery of penalty. The principal allegation in the application was unauthorized possession of the forest land. Subsequently, the DFO filed an application dated March 18, 2009 with the Sub-Divisional Magistrate, Kheri stating that such eviction matter now fell within the jurisdiction of DFO.
The DFO issued a show cause notice being SCN No. 01/2009 dated April 16, 2009 alleging encroachment on the land admeasuring 19.36 acres. Pending such adjudication, our Company paid the rent and the premium for the disputed land. DFO acknowledged the receipt of rent and premium from our Company and further clarified the position with respect to the land that the matter relating to the lease is pending before the applicable administrative authorities of State of Uttar Pradesh. A show cause notice SCN No. 2/2009) was issued to our Company on February 25, 2009 alleging unauthorized possession of land admeasuring 7.78 acres and non-payment of lease rent and premium pursuant to an order issued by the applicable administrative authorities of the State of Uttar Pradesh. The Company was also directed to renew such lease by December 31, 2009. The lease has not been renewed so far.
The DFO further advised our Company to withdraw the Writ Petition No. 4217/MP/2003 (which has been withdrawn by our Company) as a precondition for renewal of such lease. Further, the DFO stated that until the cases pending against our Company are disposed off, any proposal for renewal of lease of such forest land will not be considered. Our Company has applied for extension of time for complying with the conditions. The matter is currently pending.
5. The State Government of Uttar Pradesh had implemented the Sugar Industry Promotion Policy, 2004
(the “Policy”) on August 24, 2004, granting certain exemptions and subsidies to the sugar industry as follows:
a. Exemption from Entry Tax on sugar
322
b. Exemption from Purchase Tax on sugarcane c. Exemption from Uttar Pradesh Trade Tax and Central Sales Tax on sale of molasses d. Zero rate of administrative charges on molasses e. Reimbursement of expenses on transportation of sugar and sugarcane f. Reimbursement of society commission g. Reimbursement of 10 % subsidy on capital investment h. Exemption from stamp duty i. Exemption from registration charges
The aforementioned benefits would be available for 5 years to those who invested `3,500 million or more in the sugar industry and for 10 years to those who invested `5,000 million or more. BHSIL invested over `12,518 million in the sugar industry from April 1, 2004 to March 31, 2008. The Policy was originally announced to be effective until March 31, 2007 and was extended until March 31, 2008. However, the Policy was withdrawn on June 4, 2007. BHSIL filed three writ petitions bearing numbers 9402/07, 9258/08 and 6252/09 at the Lucknow Bench of the High Court of Judicature, Allahabad (the “Lucknow Bench”) praying for continuance of the benefits and incentives extended under the Policy. The Lucknow Bench granted BHSIL the limited protection of exemptions applicable to BHSIL on the date the Policy was withdrawn. BHSIL subsequently filed writ petition number 24929/08 at the High Court of Judicature, Allahabad (the “High Court”) challenging withdrawal of the Policy and praying for grant of the benefits under the Policy. BHSIL claimed that it had invested over `5,565 million before withdrawal of the Policy and was thus entitled to the benefits of the Policy for 10 years under the principles of estoppel. The said petition was dismissed by the High Court on grounds that BHSIL had made an improper application in respect of availing the benefits under the Policy. The High Court further left it open for BHSIL to make a new application in this respect. BHSIL thus applied afresh vide its application dated December 31, 2009, which was rejected by the Cane Commissioner vide its order dated March 3, 2010, stating that BHSIL had not made an application during the subsistence of the Policy. Aggrieved by such rejection, BHSIL filed writ petition number 17118/2010 at the High Court, praying the High Court to order the Cane Commissioner to reconsider BHSIL’s application. The High Court passed its judgment dated November 16, 2010 in favour BHSIL and further furnished certain parameters and guidelines, on the basis of which, the benefits under the Policy would have to be granted to BHSIL. The State of Uttar Pradesh filed a Special Leave Petition (Civil) number 567 of 2010 with the Supreme Court of India to set aside the judgment of the High Court dated November 16, 2010. The last date of hearing was March 14, 2011. The matter is currently pending.
6. Banwari Lal, America and Chandrabhal (the “Complainants”) filed original suit 797/2005 against Mr.
Bhikari and Mr. Shrikrishna in the court of Civil Judge (Junior Division), Lakhimpur Kheri. The Complainants claim ownership over a piece in the plot of land being plot no. 59 admeasuring 0.25 acres. The Complainants have contended that they had purchased the said land from Mr. Bhikari in 1985 and constructed houses on the same for residential purposes. Later the said land was allegedly transferred by Mr. Bhikari to Mr. Shrikrishna, who is an employee of our Company. The Complainants have filed the injunction application dated August 22, 2005 for the cancellation of the sale deed executed for the purpose of the transfer and also prayed for permanent injunction to restrain our Company from possessing the land. The matter is currently pending.
7. Mr. Chote Lal (the “Complainant”) filed original suit 718/2006 against Mr. Moolchandra and our Company before the court of Civil Judge (Junior Division), Lakhimpur Kheri. The Complainant has claimed ownership over the piece in the plot of land being plot no. 1127 admeasuring 1.49 acres. The Complainant and Mr. Moolchandra are brothers and they allegedly had an equal share in the abovementioned plot of land. The Complainant contended that Mr. Moolchandra had illegally transferred the land to our Company. The Complainant has filed an affidavit dated July 26, 2006 for the cancellation of the sale deed executed for the purpose of the transfer and also prayed for permanent injunction to restrain our Company from possessing of the land.
323
8. The Gram Sabha, Gulhara Gram, Machwapur (the “Complainant”) has filed complaint no. 25/2005-2006 with the Assistant Collector, Bisalpur, against our Company under section 122B of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950. The Complainant has claimed unauthorised posession of land, alleged owned by the Complainant, by our Company. The Assistant Collector passed an order dated March 12, 2008 in favour of our Company. However the matter was restored on July 21, 2008 since the permission from the relevant department of the Government of Uttar Pradesh is awaited.
9. The Gram Sabha, Muradabad (the “Complainant”) has filed complaint no. 26/2005-2006 with the Assistant Collector, Bisalpur, against our Company under section 122B of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950. The Complainant has claimed unauthorised posession of land, alleged owned by the Complainant, by our Company. The Assistant Collector passed an order dated March 12, 2008 in favour of our Company. However the matter was restored on July 21, 2008 since the permission from the relevant department of the Government of Uttar Pradesh is awaited.
10. Krishna Kumar Tyagi (the “Complainant”) has filed complaint no. 142/2005 with the Civil Judge
(Senior Division), Muzaffarnagar against our Company. The Complainant claimed ownership of land admeasuring 0.59 acres at Budhana village which was leased by the Government of Uttar Pradesh to our Company for establishing the sugar mill. The matter is currently pending.
11. Parveen Tyagi (the “Complainant”) has filed complaint no. 380/2007 before the Civil Judge (Senior Division), Muzaffarnagar against our Company. The Complainant claimed ownership of land admeasuring 0.71 acres at Budhana village which was leased by the Government of Uttar Pradesh to our Company for establishing the sugar mill. Our Company has filed reply dated May 29, 2007. The matter is currently pending.
12. The Tehsildar issued a notice to our Company regarding illegal possession of the land admeasuring 3.50 acres of the Gram Sabha, Palia Kalan. The Tehsildar also imposed a penalty of `31 million. Our Company filed a revision petition no. 18/2007 before the District Magistrate, Lakhimpur Kheri. The Tehsildar agreed to record the exchange certain lands between the Gram Sabha, Palia Kalan and our Company. However, the District Magistrate cancelled the exchange of land between the parties and imposed a penalty on our Company.The matter is currently pending.
Criminal cases involving Bajaj Eco Tec Products Limited (“BETPL”)
1. BETPL filed a criminal complaint no. 16591/2009 in the Court of Chief Judicial Magistrate, Gautam
Budh Nagar against Brij Lal Gupta, proprietor of M/s Business Square (the “Defendant”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that a cheque dated October 8, 2009 amounting to `1,000,000 issued by the Defendant as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
2. BETPL filed a criminal complaint no. 16590/2009 in the Court of Chief Judicial Magistrate, Gautam
Budh Nagar against Brij Lal Gupta, proprietor of M/s Business Square (the “Defendant”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that a cheque dated August 21, 2009 amounting to `1,000,000 issued by the Defendant as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
3. BETPL filed a criminal complaint no. 3572/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Md. Asad Rahman, proprietor of Janta Ply n’ Glass (the “Defendant”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that cheques dated July 14, 2010 amounting to `238,869 issued by the Defendant as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
4. BETPL filed a criminal complaint no. 3606/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Shrinath and Chakradhar, partners of M/s Fusion Design and Build (the “Defendants”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that a cheque dated March 27, 2010 amounting to `210,300 issued by the Defendants as
324
payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
5. BETPL filed a criminal complaint no. 3954/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Nikhilbhai Thakkar, proprietor of M/s Monarch Industries (the “Defendant”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that a cheque dated September 13, 2010 amounting to `98,127 and another cheque dated September 20, 2010 amounting to `65,443 issued by the Defendant as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
6. BETPL filed a criminal complaint no. 3996/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Nikhilbhai Thakkar, proprietor of M/s Monarch Industries (the “Defendant”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that a cheque dated September 27, 2010 amounting to `65,444 and another cheque dated October 4, 2010 amounting to `130,888 issued by the Defendant as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
7. BETPL filed a criminal complaint no. 4017/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Surender Kumar, proprietor of M/s S.K. Traders (the “Defendant”) under sections 406, 415, 418 and 420 of the Indian Penal Code, 1860, whereby BEPL has claimed that the Defendant refused to pay `220,882 as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
8. BETPL filed a criminal complaint no. 4018/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Raman Murgaie and Ramesh Kumar, partners of M/s S.P. Trading Company (the “Defendants”) under sections 406, 415, 418 and 420 of the Indian Penal Code, 1860, whereby BETPL has claimed that the Defendants refused to pay `270,065 as payment in consideration of purchase of medium density and particle boards manufactured by BEPL had been dishonoured. The matter is currently pending.
9. BETPL filed a criminal complaint no. 4122/2010 in the Court of 1st Additional Chief Judicial
Magistrate, Gautam Budh Nagar against Kunal Malik, proprietor of M/s Malik Enterprises and Pradeep, proprietor of M/s Suryans (the “Defendants”) under sections 406, 415, 418 and 420 of the Indian Penal Code, 1860, whereby BEPL has claimed that the Defendants refused to pay `492,135 as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
10. BETPL filed a criminal complaint no. 991/2011 in the Court of 1st Additional Chief Judicial Magistrate, Gautam Budh Nagar against Jatinder Guleria, proprietor of M/s Jai Jwala Industries (the “Defendant”) under section 138 of the Negotiable Instruments Act, 1881, whereby BEPL has claimed that a cheque dated November 20, 2010 amounting to `223,405 issued by the Defendant as payment in consideration of purchase of medium density and particle boards manufactured by BETPL had been dishonoured. The matter is currently pending.
Civil Cases involving Bajaj Eco Tec Products Limited 1. The State Government of Uttar Pradesh (the “State Government”) had implemented a policy (number
2660(1)/77-6-2006) dated June 1, 2006 (the “Policy”), granting various benefits such as capital subsidy, conversion of tax liability to interest free loans, transport subsidy, concessions regarding land acquisition and continuance of all benefits under the Industrial and Service Sector Investment Policy, 2004. Benefits under the Policy could be availed upon investment of `1,000 million and the same would be escalated upon investment of `2,000 million or more. Upon declaration of the Policy, Bajaj Eco Tec Products Limited (“BEPL”) planned a project for setting up of three bagasse based medium density fibre board (“MDF”) and particle board plants. Further, BEPL apprised the State Government of BEPL’s intention to invest in MDF plants and avail the benefits of the policy vide BEPL’s letter dated September 11, 2006 Further, vide letter dated February
325
6, 2007, BEPL further informed the State Government that they had acted on the Policy and had invested over `1,120 million in the MDF plants and had thus substantially altered their position. BEPL had invested approximately `1,470 million by August 3, 2007, and over `2,690 million was invested overall on the MDF project. The Policy was withdrawn by the State Government vide an order dated August 3, 2007. BEPL filed writ petition number 29420/2008 with the High Court of Judicature, Allahabad (the “High Court”) praying for grant of the benefits extended under the Policy in respect of its overall investment of `2,690 million on the ground that BEPL had altered its position based on the Policy and the State Government was thus bound by the principles of estoppel. The State Government further refused to grant BEPL the benefits of the Policy accrued in respect of the investment of `1,470 million before its withdrawal, claiming that the order dated August 3, 2007 had withdrawn the Policy retrospectively. The last date of hearing was March 10, 2011. The matter is currently pending.
326
GOVERNMENT AND OTHER APPROVALS
Our Company has received the necessary consents, licenses, permissions and approvals from the Government of India and various governmental agencies required for its present business and to undertake the Issue and no further material approvals are required for carrying on its present activities. In addition, except as mentioned in this chapter “Government and Other Approvals”, as on the date of the Draft Letter of Offer, there are no pending regulatory and government approvals and no pending material renewals of licenses or approvals in relation to the activities undertaken by the Company or in relation to the Issue. I. Approvals for the Issue: 1. Board resolution dated April 30, 2011 approving the Issue. 2. In-principle approval from the BSE dated [●]. 3. In-principle approval from the NSE dated [●]. General Permanent Account Number: AAACB4351J Tax Identification Number: 09454000217 Tax Deduction Account Number: MUMB11307C Approvals for its business: Our Company requires various approvals to carry on its business in India. II. Pending Approvals and Registrations:
Our Company has obtained the requisite approvals for its business and the same are valid as of the date of the Draft Letter of Offer. Some of these have expired in the ordinary course of business and applications for their renewal have been submitted. Further, there are certain licenses which have expired as of the date of this Draft Letter of Offer for which our Company is yet to make applications. Further, our Company operates under some licenses, which are valid for one crushing season. Our Company renews these licenses before every crushing season. These licenses have been enumerated under the head “Seasonal Licenses” for each unit. Our Company also operates pressure vessels at its mills which are re-inspected before crushing season. Golagokarannath (Sugar, Distillery and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
1. Application made to the Chief Food Inspector, Kheri dated March 16, 2011 for renewal of license for
manufacture and sale of sugar under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Chief Food Inspector, Kheri dated March 16, 2011 for renewal of license for manufacture and sale of molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
3. Application made to the Chief Food Inspector, Kheri dated March 16, 2011 for renewal of license for manufacture and sale of milk under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
4. Application to the Excise Commissioner, Uttar Pradesh dated March 3, 2011 for renewal of PD-2 (License to operate a distillery).
327
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Sitapur.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Kheri.
Barkhera (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
1. Application made to the Chief Food Inspector, Pilibhit dated March 23, 2011 for renewal of license for
manufacture and storage of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Chief Food Inspector, Pilibhit dated March 23, 2011 for renewal of canteen license under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
Applications required to be made:
Our Company is required to get its pressure vessels re-examined by a competent person under the Factories Act, 1948.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Pilibhit.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Pilibhit.
Bilai (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
1. Application made to Food Inspector, Bijnor dated May 2, 2011 for renewal of its license for
manufacture and sale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the District Magistrate, Bijnor dated December 18, 2010 for storage of sulphur under Indian Arms Act, 1959.
3. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated March 8, 2011 for Air Consent under Section 21/22 of the Air (Prevention and Control of Pollution) Act, 1981 for its sugar and co-generation unit.
4. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated March 8,
2011 for Water Consent under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 for its sugar and co-generation unit.
5. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated January 29, 2011 for storage of hazardous wastes under the Environment (Protection) Act, 1986.
6. Application made to Director of Electrical Safety, Lucknow dated September 7, 2010 for inspection of our Company’s installed electrical equipments.
328
Applications required to be made:
Our Company is required to get its pressure vessels re-examined by a competent person under the Factories Act, 1948. Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Bijnor.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Bijnor.
Palia Kalan (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
1. Application made to the Local Health Authority, Kheri dated March 18, 2011 for renewal of license for
manufacture and sale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Local Health Authority, Kheri dated May 2, 2011 for renewal of canteen license under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
3. Application made to the Director of Electrical Safety, Lucknow dated March 17, 2011for inspection of its installed electrical equipments under the Indian Electricity Act, 2003.
4. Application made to the Director of Boilers, Kanpur dated September 3, 2010 for renewal of our boiler license.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Sitapur.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Sitapur.
Maqsoodapur (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
1. Application made to Chief Food Inspector, Shahjahanpur dated March 4, 2011 for renewal of its
license for manufacture and sale of sugar under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to Chief Food Inspector, Shahjahanpur dated March 4, 2011 for renewal of its canteen license under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
Applications required to be made:
1. Our Company is required to get its pressure vessels re-examined by a competent person under the
Factories Act, 1948.
329
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge (day and night) under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Shahjahanpur.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Shahjahanpur.
Gangnauli (Sugar, Distillery and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to the Company’s business: 1. Application made to the Assistant Labour Commissioner, Government of Uttar Pradesh dated
November 10, 2010 for Contractor’s License issued to Babli Contractors under Section 12 (1) of the Contract Labour (Regulation and Abolition) Act, 1970.
2. Application made to the Assistant Labour Commissioner, Government of Uttar Pradesh dated January 28, 2011 for Contractor’s License issued to Yashpal Contractors under Section 12 (1) of the Contract Labour (Regulation and Abolition) Act, 1970.
3. Application made to the Assistant Labour Commissioner, Government of Uttar Pradesh dated January 28, 2011 for Contractor’s License issued to Leaning Security Services under Section 12 (1) of the Contract Labour (Regulation and Abolition) Act, 1970.
4. Application made to the Chief Medical Officer, Saharanpur dated March 28, 2011 for renewal of license for wholesale of sugar under the Uttar Pradesh Prevention of Food Adulteration Act, 1976 from the Licensing Officer, Saharanpur.
5. Application made to the Fire Safety Officer dated December 31, 2010 for renewal of fire safety certificate for our Company’s sugar unit.
6. Application made to the Fire Safety Officer dated December 31, 2010 for renewal of fire safety certificate for our Company’s distillery unit.
7. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 22, 2010 for storage of hazardous wastes under the Environment (Protection) Act, 1986.
8. Application to the Excise Commissioner, Uttar Pradesh dated February 10, 2011 for renewal of PD-2 (License to operate a distillery).
Applications required to be made: 1. Our Company is required to get its pressure vessels re-examined by a competent person under the
Factories Act, 1948.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Saharanpur.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Saharanpur.
Thanabhawan (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
330
1. Application made to the Chief Food Inspector, Muzaffarnagar dated March 22, 2011 for renewal of license for manufacture and sale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Chief Food Inspector, Muzaffarnagar dated May 16, 2011 for renewal of canteen license under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
Applications required to be made:
1. Our Company is required to get its pressure vessels re-examined by a competent person under the Factories Act, 1948.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Muzaffarnagar.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Muzaffarnagar.
Khambarkhera (Sugar, Distillery and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
1. Application made to Chief Food Inspector, Lakhimpur dated March 14, 2011 for renewal of license for
sale and storage of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 25, 2010 for Air Consent under Section 21/22 of the Air (Prevention and Control of Pollution) Act, 1981 for our Company’s distillery unit.
3. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November
25, 2010 for Water Consent under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 for our Company’s distillery unit.
4. Application to the Excise Commissioner, Uttar Pradesh dated February 26, 2011 for renewal of PD-2 (License to operate a distillery).
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Kheri.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Kheri.
Rudauli (Sugar, Distillery and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business: 1. Application made to the Local Health Authority dated February 25, 2011 for manufacture and
wholesale trade of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Applications (5) made to the Inspector of Legal Metrology dated November 29, 2010 for verification of instruments under the Weights and Measures (Enforcement) Act, 1985.
331
3. Applications (2) made to the Inspector of Legal Metrology dated September 20, 2010 for verification of
instruments under the Weights and Measures (Enforcement) Act, 1985.
4. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 26, 2010 for Air Consent under Section 21/22 of the Air (Prevention and Control of Pollution) Act, 1981 for our Company’s distillery unit.
5. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 26, 2010 for Water Consent under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 for our Company’s distillery unit.
6. Application to the Excise Commissioner, Uttar Pradesh dated February 21, 2011 for renewal of PD-2 (License to operate a distillery).
Applications required to be made: 1. Our Company is required to get its pressure vessels re-examined by a competent person under the
Factories Act, 1948. Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Basti.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Basti.
Utraula (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business: 1. Application made to the Local Health Authority, Balrampur dated March 4, 2011 for renewal of license
for manufacture, storage and wholesale trade of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Local Health Authority, Balrampur dated May 5, 2011 for renewal of canteen license under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
Applications required to be made:
Our Company is required to get its pressure vessels re-examined by a competent person under the Factories Act, 1948. Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Balrampur.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Balrampur.
Budhana (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business: Application made to the Chief Health Authority, Muzaffarnagar dated March 17, 2011 for renewal of license for manufacture and sale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
332
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Balrampur.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Balrampur.
Kinauni (Sugar, Distillery and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business: 1. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 2,
2010 for Air Consent under Section 21/22 of the Air (Prevention and Control of Pollution) Act, 1981 for our Company’s sugar and co-generation unit.
2. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 2, 2010 for Air Consent under Section 21/22 of the Air (Prevention and Control of Pollution) Act, 1981 for our Company’s distillery.
3. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 2,
2010 for Water Consent under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 for our Company’s sugar and co-generation unit.
4. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated November 2, 2010 for Water Consent under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 for our Company’s distillery.
5. Application made to the Chief Health Inspector, Meerut dated February 25, 2011 for renewal of license for manufacture of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
6. Application made to the Chief Health Inspector, Meerut dated February 25, 2011 for renewal of license for wholesale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
7. Application made to the Chief Health Inspector, Meerut dated February 22, 2011 for renewal of canteen license under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
8. Application to the Excise Commissioner, Uttar Pradesh dated February 28, 2011 for renewal of PD-2 (License to operate a distillery).
Applications required to be made:
1. Our Company is required to get its pressure vessels re-examined by a competent person under the
Factories Act, 1948.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Meerut.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Meerut.
Pratappur (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business:
333
1. Application made to the Chief Food Inspector, Deoria dated February 25, 2011 for renewal of license for manufacture, storage and sale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976 from the Licensing Authority, Pratappur.
2. Application made to the Chief Food Inspector, Deoria dated February 25, 2011 for renewal of canteen license Uttar Pradesh Prevention of Food Adulteration Act, 1976 from the Licensing Authority, Pratappur.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh
Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Deoria.
2. Our Company is required to get its pressure vessels re-examined by a competent person under the Factories Act, 1948.
Kundarkhi (Sugar and Co-generation) As on date of the Draft Letter of Offer the following applications are pending renewal with respect to our Company’s business: 1. Application made to the Local Health Authority, Gonda dated March 14, 2011 for renewal of license
for manufacture and sale of sugar and molasses under Uttar Pradesh Prevention of Food Adulteration Act, 1976.
2. Application made to the Member Secretary, Uttar Pradesh Pollution Control Board dated December 4, 2010 for Water Consent under Section 25/26 of the Water (Prevention and Control of Pollution) Act, 1974 for our Company’s sugar and co-generation unit.
Applications required to be made: 1. Our Company is required to get its pressure vessels re-examined by a competent person under the
Factories Act, 1948.
2. Our Company is required to get its installed electrical equipments inspected by the Director of Electricity, Lucknow under the Indian Electricity Act, 2003.
Seasonal Licenses:
1. Our Company is required to renew its permission for using weigh-bridge under the Uttar Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1953 from the Sugarcane Inspector, Gonda.
2. Our Company is required to renew the licenses for its weighment clerks from the District Collector, Gonda.
334
OTHER REGULATORY AND STATUTORY DISCLOSURES Authority for the Issue This Issue of Equity Shares to the Equity Shareholders of our Company as on the Record Date is being made in accordance the resolution passed by our Board of Directors under Section 81(1) of the Companies Act, at its meeting held on April 30, 2011. Prohibition by SEBI Our Company, our Promoters, our Promoter Group, Directors, persons in control of our Corporate Promoter, the companies with which the Promoters or the Directors are or were associated as directors or promoters, have not been prohibited from accessing or operating in the capital markets or restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Further, none of our Company, the Promoters or the group companies, the members and relatives of the Promoters have been declared willful defaulters by the RBI or any Government authority and no violations of securities laws have been committed by them in the past and no proceedings in relation to such violations are currently pending against them. Except as disclosed below, none of our Directors are associated in any manner with any entity which is engaged in securities market related business and is registered with SEBI for the same:
1. Name of our Director Mr. Dhirajlal Shantilal Mehta
Mr. Dhirajlal Shantilal Mehta
Mr. M. L. Apte
2. Name of the Entity Benchmark Asset Management Company Private Limited
Benchmark Asset Management Company Private Limited
Tata Asset Management Limited
3. a. Previously associated as b. Currently associated as Director Director Director
4. Category of registration Portfolio manager as per SEBI (Portfolio Manager) Regulations, 1993
Benchmark Asset Management Company Private Limited is the Asset Management Company to Benchmark Mutual Fund
Mutual Fund
5. Registration no. of companies which are / were registered with SEBI
INP000000647 dated 15.05.2008
Benchmark Mutual Fund has been registered with SEBI under SEBI (Mutual Fund) Regulations, 1996 under Registration No. MF/045/01/6 dated June 12, 2001
MF/023/95/9 dated 30th June, 1995
6. If registration has expired, reasons for non renewal
N.A N.A N.A.
7. Details of any enquiry/ investigation conducted by SEBI at any time
N.A N.A N.A.
335
8. Penalty imposed by SEBI (Penalty includes deficiency / warning letter, adjudication proceedings, suspension / cancellation / prohibition orders)
N.A N.A N.A
9. Outstanding fees payable by SEBI by these persons/ entities, if any
N.A N.A N.A.
Other than the following information with respect to Mr. Madhav Laxman Apte, none of our Directors hold current or have held directorship(s) in the last five years in a listed company whose shares have been or were suspended from trading on BSE or the NSE or in a listed company which has been / was delisted from any stock exchange:
Name of the Company
Listed on Date of Suspension on
Stock Exchange(s)
Suspended more than
three months: [Yes/No/N.A.]
Whether suspension revoked:
[Yes/No/N.A.]
Term (along with relevant
dates) of directorship in
the above company(ies):
The Raja Bahadur International Limited (Formerly Raja Bahadur Motilal Poona Limited)
Bombay Stock Exchange Limited
October 31, 2002
Yes No Liable to retire by rotation
Eligibility for the Issue Our Company is an existing listed company registered under the Companies Act whose Equity Shares are listed on BSE and NSE. It is eligible to make this Rights Issue in terms of Chapter IV of the SEBI Regulations. Our Company is eligible to make disclosures in the Draft Letter of Offer as per Part E of Schedule VIII of the SEBI Regulations as it is in compliance with the following: (a) our Company has been filing periodic reports, statements and information in compliance with the listing
agreement for the last three years immediately preceding the date of filing this Draft Letter of Offer with SEBI;
(b) the reports, statements and information referred to in sub-clause (a) above are available on the website of
BSE and NSE which are recognised stock exchange with nationwide trading terminals; (c) our Company has an investor grievance-handling mechanism which includes meeting of the Shareholders’
or Investors’ Grievance Committee at frequent intervals, appropriate delegation of power by the Board of Directors as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.
DISCLAIMER CLAUSE OF SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS DRAFT LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED / 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 THIS DRAFT LETTER OF OFFER. THE LEAD MANAGERS, SBI CAPITAL MARKETS LIMITED, IDBI CAPITAL MARKET SERVICES LIMITED AND PNB INVESTMENT SERVICES LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN
336
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 LETTER OF OFFER, THE LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGERS, SBI CAPITAL MARKETS LIMITED, IDBI CAPITAL MARKET SERVICES LIMITED AND PNB INVESTMENT SERVICES LIMITED HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED MAY 17, 2011 WHICH READS AS FOLLOWS: 1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATIONS LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID ISSUE;
2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE ISSUER,
ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES AND INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:
a) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN CONFORMITY
WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
b) ALL THE LEGAL REQUIREMENTS TO THE ISSUE AS ALSO THE
REGULATIONS, GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND
c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE,
FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN
THE DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND THAT TILL DATE SUCH REGISTRATION IS VALID.
4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE
UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOTED FOR COMPLIANCE
5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED
FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER. – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD
OF INDIA (ISSUES OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION
337
OF PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C)
AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER FOR WHICH THE
FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE “MAIN OBJECTS” LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR OTHER CHARTER OF THE ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION. – COMPLIED WITH. THE OBJECTS OF THE ISSUE ARE REPAYMENT OF DEBT RAISED FOR THE PURPOSES OF OBJECTS WHICH ARE PART OF THE MAIN OBJECTS OF THE ISSUER.
9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE
THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURHTER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF
OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.
11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN SECURITIES
AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN THE ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.
12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE
DRAFT LETTER OF OFFER:
a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE ISSUER AND
b) AN UNDERTAKING FROM THE ISSUER THAT IT SHALL COMPLY WITH SUCH
DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE BOARD FROM TIME TO TIME.
13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO THE
ADVERTISMENT IN TERMS OF SECURITIES AND EXCHANGE BOARD OF INDIA
338
(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE MAKING THE ISSUE.
14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS
BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS BACKGROUND OF THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE ETC.
15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH
THE APPLICABLE PROVISIONS OF SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.
THE FILING OF THIS DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT 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 ANY IRREGULARITIES OR LAPSES IN THIS DRAFT LETTER OF OFFER. Disclaimer clauses from our Company and the Lead Managers Our Company and the Lead Managers accept no responsibility for statements made otherwise than in this Draft Letter of Offer or in any advertisement or other material issued by our Company or by any other persons at the instance of our Company and anyone placing reliance on any other source of information would be doing so at his own risk. The Lead Managers and our Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of this Draft Letter of Offer with SEBI. Investors who invest in the Issue will be deemed to have represented to our Company and Lead Managers and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire Rights Issue Equity Shares, and are relying on independent advice / evaluation as to their ability and quantum of investment in this Issue. Disclaimer with respect to jurisdiction This Draft Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only. Designated Stock Exchange The Designated Stock Exchange for the purpose of the Issue will be [●]. Disclaimer Clause of BSE As required, a copy of this Draft Letter of Offer shall be submitted to the BSE. The Disclaimer Clause as intimated by the BSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer prior to filing with the Stock Exchanges. Disclaimer Clause of the NSE As required, a copy of this Draft Letter of Offer shall be submitted to the NSE. The Disclaimer Clause as intimated by the NSE to us, post scrutiny of this Draft Letter of Offer, shall be included in the Letter of Offer
339
prior to filing with the Stock Exchanges. Selling Restrictions The distribution of the Letter of Offer and the issue of Rights Issue Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Our Company is making the issue of Rights Issue Equity Shares on a rights basis to the Equity Shareholders and the Letter of Offer, Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India. Any person who acquires Rights Entitlements or Rights Issue Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Letter of Offer, that it will acquire such Rights Issue Equity Shares in compliance with the US Securities Act and the rules and regulations thereunder, and the laws of the jurisdiction in which the person is located. No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with SEBI. Accordingly, the Rights Issue Equity Shares may not be offered or sold, directly or indirectly, and this Draft Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the issue of the Rights Issue Equity Shares, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the Rights Issue Equity Shares. Neither the delivery of this Draft Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in our Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date. For further details, please see “Notice to Overseas Shareholders” on page 6 of this Draft Letter of Offer. Filing This Draft Letter of Offer has been filed with the Corporation Finance Department of the SEBI, located at SEBI Bhavan, C-4-A, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai 400 051, India for its observations. After SEBI gives its observations, the final Letter of Offer will be filed with the Designated Stock Exchange as per the provisions of the Companies Act.
Listing The existing Equity Shares are listed on BSE and NSE. Our Company has made applications to BSE and NSE for permission to deal in and for an official quotation in respect of the Equity Shares being offered in terms of this Draft Letter of Offer. Our Company has received in-principle approvals from BSE by letter dated [●] and NSE by letter dated [●]. Our Company will apply to BSE and NSE for listing of the Rights Issue Equity Shares to be issued pursuant to this Issue. If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock Exchanges mentioned above, we shall forthwith repay, without interest, all monies received from applicants in pursuance of this Draft Letter of Offer. If such money is not paid within 8 days after we become liable to repay it , then our Company and every Director of our Company who is an officer in default shall, on and from expiry of 8 days, be jointly and severally liable to repay the money with interest as prescribed under the Section 73 of the Companies Act.
Issue Expenses
The Issue related expenses include, among others, fees payable to intermediaries including Lead Managers, printing and distribution expenses, advertisement and marketing expenses and registrar, legal and depository fees among others and are estimated at `[●] million (approximately [●] per cent of the total Issue size) and will be met out of the proceeds of the Issue.
Particulars Amount (` in millions)
As percentage of total expenses
As a percentage of Issue size
340
Fees payable to intermediaries including Lead Managers and Registrar to the Issue
[●] [●] [●]
Underwriting Commission [●] [●] [●] Fees payable to SCSBs for processing ASBA forms
[●] [●] [●]
Advisors and Statutory Auditors [●] [●] [●] Bankers to the Issue [●] [●] [●] Others: [●] [●] [●] - Printing and stationery [●] [●] [●] - Listing fees [●] [●] [●] - Others [●] [●] [●] Total estimated Issue expenses [●] [●] [●] Investor Grievances and Redressal System Our Company has adequate arrangements for redressal of Investor complaints as well as a well-arranged correspondence system developed for letters of routine nature. The share transfer and dematerialization for our Company is being handled by the Sharepro Services (India) Private Limited, Registrar and Share Transfer Agent, which is also the Registrar to the Issue. Letters are filed category wise after being attended to. The Redressal norm for response time for all correspondence including shareholders complaints is within 7 (seven) to 10 (ten) days.
All investor grievances received by our Company have been handled by the Registrar and Share Transfer agent in consultation with the compliance officer. The contact details of the Registrar and Share Transfer agent to our Company are as follows: Sharepro Services (India) Private Limited 13AB, Samita Warehousing Complex, 2nd Floor, Sakinaka Telephone Exchange Lane Andheri Kurla Road Sakinaka, Andheri (East) Mumbai 400 072 Tel: +91 22 6772 0300 Fax: +91 22 2859 1568 Email: [email protected] Website: www.shareproservices.com Contact Person: Mr. Kumaresan V / Mr. Satheesh HK Registration Number: INR000001476 Investor grievances arising out of this Issue Our Company’s investor grievances arising out of the Issue will be handled by Sharepro Services (India) Private Limited, who is the Registrar to the Issue. The Registrar will have a separate team of personnel handling only post-Issue correspondence. The agreement between our Company, the Registrar and the Lead Managers will provide for retention of records with the Registrar for a period of at least one year from the last date of dispatch of Allotment Advice/ share certificate / refund order / demat credit to enable the Registrar to redress grievances of Investors. All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio no., DP ID, Client ID, DP name, name and address, contact telephone / mobile numbers, email id of the first applicant, number and type of shares applied for, whether applied on plain paper, CAF serial number, amount paid on application and the name of the bank / SCSB and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished. The average time taken by the Registrar for attending to routine grievances will be 7-10 days from the date of receipt of complaints. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. Our Company undertakes to resolve the Investor grievances in a time bound manner.
341
Investors may contact the Compliance Officer at the below mentioned address and/ or Registrar to the Issue at the above mentioned address in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment advice/share certificates/ demat credit/refund orders etc. Mr. Kausik Adhikari Deputy Company Secretary and Compliance Officer Bajaj Hindusthan Limited Bajaj Bhavan, 2nd Floor 226 Jamnalal Bajaj Marg Nariman Point Mumbai 400021 Tel: +91 22 2204 9056 / 58 Fax: +91 22 2204 8681 Website: www.bajajhindusthan.com Email: investors @bajajhindusthan.com
342
SECTION VII – OFFERING INFORMATION
TERMS OF THE ISSUE The Rights Issue Equity Shares proposed to be issued are subject to the terms and conditions contained in the Draft Letter of Offer, the Letter of Offer, the Abridged Letter of Offer and the enclosed CAF, the Memorandum of Association and Articles of Association of our Company, the provisions of the Companies Act, the terms and conditions as may be incorporated in the Foreign Exchange Management Act, 1999, as amended (“FEMA”), applicable guidelines and regulations issued by SEBI, or other statutory authorities and bodies from time to time, the Listing Agreements entered into by our Company, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time. All rights/obligations of Equity Shareholders in relation to application and refunds pertaining to this Issue shall apply to the Renouncee(s) as well. Basis for the Issue The Rights Issue Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the Depositories for the purpose of this Rights Issue in respect of the Equity Shares held in the electronic form and on the register of members of our Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, fixed in consultation with the Designated Stock Exchange. Rights Entitlement As your name appears as a beneficial owner in respect of the Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder of our Company as on the Record Date, i.e., [●], you are entitled to the number of Rights Issue Equity Shares as set out in Part A of the enclosed CAFs. The distribution of the Letter of Offer and the issue of Rights Issue Equity Shares on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Our Company is making the issue of Rights Issue Equity Shares on a rights basis to the Equity Shareholders and the Letter of Offer, Abridged Letter of Offer and the CAFs will be dispatched only to those Equity Shareholders who have a registered address in India. Any person who acquires Rights Entitlements or Rights Issue Equity Shares will be deemed to have declared, warranted and agreed, by accepting the delivery of the Letter of Offer, that it will acquire such Rights Issue Equity Shares in compliance with the US Securities Act and the rules and regulations thereunder, and the laws of the jurisdiction in which the person is located. As on date, there are 100 outstanding FCCBs. As per the FCCB Subscription Agreement dated April 26, 2007 between BHSIL and IFC (“FCCB Agreement”), in the event our Company issues Equity Shares by way of a rights issue and the Issue Price is higher than the average market price (average of the high and low closing price of the Equity Shares for the previous ten days on the stock exchange where the Equity Shares are most frequently traded) calculated as of the date of the announcement of the Issue Price, the conversion price of the FCCBs would be adjusted as per the formula provided for in the FCCB Agreement. Consequently, the FCCB holders would not be eligible to participate in the Issue and the conversion price of the FCCBs shall be adjusted accordingly. In case all or part of any such FCCBs are converted into Equity Shares prior to the Record Date, the outstanding issued, subscribed and paid-up share capital of our Company will increase by the additional Equity Shares issued and such holders of the Equity Shares shall be entitled to subscribe to the Issue. Our GDRs are listed on the London Stock Exchange and the Luxembourg Stock Exchange. The Depositary for the Equity Shares underlying the GDRs will deal with the rights entitlements corresponding to the GDRs in the manner specified in the offering circular and the deposit agreement, entered into for the issuance of the GDRs. The Remuneration and Compensation Committee of our Company shall, in accordance with the SEBI (Employee Stock Option Scheme And Employee Stock Purchase Scheme) Guidelines, 1999 (“SEBI ESOP Guidelines”), formulate the procedure, terms and conditions for making a fair and reasonable adjustment to the number of options and price of stock options.
343
PRINCIPAL TERMS OF THE RIGHTS ISSUE EQUITY SHARES Face Value Each Rights Issue Equity Share will have the face value of `1. Issue Price Each Equity Share shall be offered at an Issue Price of `[●] for cash at a premium of `[●] per Equity Share. The Issue Price has been arrived at by our Company in consultation with the Lead Managers prior to determination of the Record Date. Entitlement Ratio The Rights Issue Equity Shares are being offered on a rights basis to the Equity Shareholders in the ratio of [●] Equity Shares for every [●] Equity Shares held on the Record Date. Terms of Payment The full amount of `[●] per Equity Share is payable on application. Fractional Entitlements If the shareholding of any of the Equity Shareholders is less than [●] Equity Shares or not in the multiple of [●] as on the Record Date, the fractional entitlement of such Equity Shareholders would be given preference in allotment of one additional Rights Issue Equity Share each if they apply for additional Equity Shares. An illustration stating the Rights Entitlement for number of Equity Shares is set out below: Number of Equity Shares* Rights Entitlement* [●] [●] [●] [●] [●] [●]
* To be finalised on determination of ratio of Rights Entitlement. The illustration would be updated at the Letter of Offer stage. Ranking The Rights Issue Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The Rights Issue Equity Shares shall rank pari passu, in all respects including dividend, with our existing Equity Shares. Listing and trading of Rights Issue Equity Shares proposed to be issued Our Company’s existing Equity Shares are currently listed and traded on BSE (Scrip Code: 500032) and the NSE (Scrip Code – BAJAJHIND) under the ISIN - INE306A01021. The listing and trading of the Rights Issue Equity Shares shall be based on the current regulatory framework applicable thereto. Accordingly, any change in the regulatory regime would affect the schedule. Our Company has made an application for “in-principle” approval for listing of the Rights Issue Equity Shares respectively to BSE and the NSE through letters dated [●] and [●] and has received such approval from BSE pursuant to the letter no. [●], dated [●] and from the NSE pursuant to letter no. [●], dated, [●]. Our Company will apply to the Stock Exchanges for final approval for the listing and trading of the Equity Shares. All steps for the completion of the necessary formalities for listing and commencement of trading of the Equity Shares to be allotted pursuant to the Issue shall be taken within seven working days from the finalisation of the basis of allotment. The fully paid up Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the Stock Exchanges under the existing ISIN for fully paid up Equity Shares of our Company.
344
Rights of the Equity Shareholder Subject to applicable laws, the Equity Shareholders of our Company 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 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 to free transferability of Equity Shares; and
� Such other rights as may be available to a shareholder of a listed public company under the Companies Act and Memorandum of Association and Articles of Association.
General Terms of the Issue Market Lot The market lot for the Equity Shares of our Company in dematerialised mode is one Equity Share. In case an Equity Shareholder holds Equity Shares in physical form, our Company would issue to the allottees one certificate for the Equity Shares allotted to each folio (“Consolidated Certificate”). In respect of Consolidated Certificates, our Company will upon receipt of a request from the respective holder of Equity Shares, split such Consolidated Certificates into smaller denominations within one weeks time from the receipt of the request in respect thereof. Our Company shall not charge a fee for splitting any of the Share Certificates. Joint Holders Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the same as joint holders with the benefit of survivorship subject to the provisions contained in the Articles of Association. Nomination In terms of Section 109A of the Companies Act, nomination facility is available in respect of the Equity Shares. An Investor can nominate any person by filling the relevant details in the CAF in the space provided for this purpose. In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity Shareholder, along with other joint Equity Shareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Rights Issue Equity Shares. A person, being a nominee, becoming entitled to the Rights Issue Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the Equity Shares by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. Fresh nominations can be made only in the prescribed form available on request at the Registered Office of our Company or such other person at such addresses as may be notified by our Company. The Investor can make the nomination by filling in the relevant portion of the CAF. In terms of Section 109B of the Companies Act, any person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, 1956, shall upon the production of such evidence as may be required by the Board, elect either: ● to register himself or herself as the holder of the Equity Shares; or ● to make such transfer of the Equity Shares, as the deceased holder could have made.
345
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 moneys payable in respect of the Equity Shares, until the requirements of the notice have been complied with. Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with our Company, no further nomination needs to be made for Rights Issue Equity Shares that may be allotted in this Issue under the same folio. In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depositary Participant (“DP”) of the investor would prevail. Any investor desirous of changing the existing nomination is requested to inform their respective DP. Notices All notices to the Equity Shareholder(s) required to be given by our Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and one regional language daily newspaper with wide circulation in the state within which our Company’s registered office is located or, will be sent by ordinary post / registered post / speed post to the registered holders of the Equity Shares from time to time. Additional Subscription by the Promoters The Promoters and constituents of the Promoter Group, either by themselves or through a combination of entities belonging to the Promoter Group, holding Equity Shares in our Company have undertaken to fully subscribe for their Rights Entitlement in the Issue being [●]% of the Issue size. Such persons reserve the right to subscribe to any portion of the Issue, which may remain undersubscribed after allotment pursuant to the exercise of Rights Entitlements by Equity Shareholders of our Company on the Record Date and by the Renouncees. Such subscription and acquisition of the undersubscribed portion of the Issue by the Promoters and Promoter Group, if any, will not result in change of control of the management of our Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.
Our Company hereby certifies that the subscription to any undersubscribed portion of the Issue by the Promoters and the Promoter Group, in the manner contemplated above, shall be subject to compliance with Rule 19(2)(b) of the SCRR and clause 40A of the Listing Agreement with respect to the requirement of minimum public shareholding of 25% of the post-Issue paid-up capital of our Company. For details, please see the chapter “Terms of the Issue - Basis of Allotment” on page 350 of this Draft Letter of Offer. Procedure for Application The CAF for Rights Issue Equity Shares would be printed for all Equity Shareholders. In case the original CAFs are not received by the Investor or is misplaced by the Investor, the Investor may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Equity Shareholder(s) does not match with the specimen registered with our Company, the application is liable to be rejected. The CAF consists of four parts: Part A: Form for accepting the Rights Equity Shares and for applying for additional Rights Equity Shares; Part B: Form for renunciation of Equity Shares; Part C: Form for application for renunciation of Equity Shares by Renouncee(s); Part D: Form for request for split Application forms.
346
Acceptance of the Issue You may accept the offer to participate and apply for the Rights Issue Equity Shares offered, either in full or in part, by filling Part A of the enclosed CAFs and submit the same along with the application money payable to the collection branches of the Bankers to the Issue as mentioned on the reverse of the CAFs before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of our Company in this regard. Investors at centres not covered by the branches of collecting banks can send their CAFs together with the cheque drawn at par on a local bank at Mumbai/demand draft payable at Mumbai to the Registrar to the Issue by registered post. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. For further details on the mode of payment, see “Mode of Payment for Resident Equity Shareholders / Investors” and “Mode of Payment for Non-Resident Equity Shareholders/Investors” on page 364 of this Draft Letter of Offer. Option available to the Equity Shareholders The CAFs will clearly indicate the number of Rights Issue Equity Shares that the Shareholder is entitled to. If the Equity Shareholder applies for an investment in Rights Issue Equity Shares, then he can: • Apply for his Rights Entitlement of Rights Issue Equity Shares in full; • Apply for his Rights Entitlement of Rights Issue Equity Shares in part;
• Apply for his Rights Entitlement of Rights Issue Equity Shares in part and renounce the other part of the
Rights Issue Equity Shares; • Apply for his Rights Entitlement in full and apply for additional Rights Issue Equity Shares; • Renounce his Rights Entitlement in full. Additional Rights Issue Equity Shares You are eligible to apply for additional Rights Issue Equity Shares over and above your Rights Entitlement, provided that you are eligible to apply under applicable law and have applied for all the Rights Issue Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Rights Issue Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 350 of this Draft Letter of Offer. If you desire to apply for additional Rights Issue Equity Shares, please indicate your requirement in the place provided for additional Rights Issue Equity Shares in Part A of the CAF. The Renouncee applying for all the Rights Issue Equity Shares renounced in their favour may also apply for additional Rights Issue Equity Shares. Where the number of additional Rights Issue Equity Shares applied for exceeds the number available for Allotment, the Allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange. Renunciation This Issue includes a right exercisable by you to renounce the Rights Issue Equity Shares offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that our Company shall not Allot and / or register and Rights Issue Equity Shares in favour of more than three persons (including joint holders), partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to societies or trusts and is authorized under its constitution or bye-laws to hold equity shares, as the case may be). Additionally, existing Equity Shareholders may not renounce in favour of persons or entities in the United States, who are not Qualified Institutional Buyers (as defined the US Securities Act), or who would otherwise be prohibited from being offered or subscribing for Rights Issue Equity Shares or Rights Entitlement under applicable securities laws. By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs))
347
Regulations, 2003. Accordingly, the existing Equity Shareholders of our Company who do not wish to subscribe to the Rights Issue Equity Shares being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s). The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh investments as incorporated non-resident entities in terms of Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by case basis. Shareholders renouncing their rights in favour of OCBs may do so provided such Renouncee obtains a prior approval from the RBI. On submission of such approval to our Company at our Registered Office, the OCB shall receive the Abridged Letter of Offer and the CAF. Part ‘A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for our Company of the person(s) applying for Rights Issue Equity Shares in Part ‘C’ of the CAF to receive Allotment of such Rights Issue Equity Shares. The Renouncees applying for all the Rights Issue Equity Shares renounced in their favour may also apply for additional Rights Issue Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any Rights Issue Equity Shares in favour of any other person. Procedure for renunciation To renounce all the Rights Issue Equity Shares offered to an Equity Shareholder in favour of one Renouncee If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been made should complete and sign Part ‘C’ of the CAF. In case of joint Renouncees, all joint Renouncees must sign Part ‘C’ of the CAF. To renounce in part / or renounce the whole to more than one person(s) If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of SAFs in the space provided for this purpose in Part ‘D’ of the CAF and return the entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date of receiving requests for SAFs. On receipt of the required number of SAFs from the Registrar, the procedure as mentioned in paragraph above shall have to be followed. In case the signature of the Equity Shareholder(s), who has renounced the Rights Issue Equity Shares, does not match with the specimen registered with our Company, the application is liable to be rejected. Renouncee(s) The person(s) in whose favour the Rights Issue Equity Shares are renounced should fill in and sign Part ‘C’ of the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full. The Renouncee cannot further renounce. Change and/or introduction of additional holders If you wish to apply for Rights Issue Equity Shares jointly with any other person(s), not more than three, who is / are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed. However, this right of renunciation is subject to the express condition that the Board of Directors of our Company shall be entitled in its absolute discretion to reject the request for Allotment from the Renouncee(s) without assigning any reason thereof.
348
Instructions for Options The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the Rights Issue Equity Shares offered, using the enclosed CAF:
Option Available Action Required 1. Accept whole or part of your Rights
Entitlement without renouncing the balance.
Fill in and sign Part A (All joint holders must sign)
2. Accept your Rights Entitlement in full and apply for additional Rights Issue Equity Shares
Fill in and sign Part A including Block III relating to the acceptance of entitlement and Block IV relating to additional Rights Issue Equity Shares (All joint holders must sign)
3. Accept a part of your Rights Entitlement and renounce the balance to one or more Renouncee(s)
OR
Renounce your Rights Entitlement to all the Rights Issue Equity Shares offered to you to more than one Renouncee
Fill in and sign Part D (all joint holders must sign) requesting for SAFs. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for SAFs. Splitting will be permitted only once. On receipt of the SAF take action as indicated below. For the Rights Issue Equity Shares you wish to accept, if any, fill in and sign Part A. For the Rights Issue Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Rights Issue Equity Shares renounced and hand it over to the Renouncee. Each of the Renouncee should fill in and sign Part C for the Rights Issue Equity Shares accepted by them.
4. Renounce your Rights Entitlement in full to one person (Joint Renouncees are considered as one).
Fill in and sign Part B (all joint holders must sign) indicating the number of Rights Issue Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All joint Renouncees must sign)
5. Introduce a joint holder or change the sequence of joint holders
This will be treated as a renunciation. Fill in and sign Part B and the Renouncee must fill in and sign Part C.
Please note that:
• Part ‘A’ of the CAF must not be used by any person(s) other than the Equity Shareholder to whom this Draft Letter of Offer has been addressed. If used, this will render the application invalid.
• Request for Split Application Forms / SAF should be made for a minimum of one Equity Share or, in
either case, in multiples thereof and one SAF for the balance Rights Issue Equity Shares, if any.
• Request by the Investor for the SAFs should reach the Registrar on or before [●].
• Only the Equity Shareholder to whom this Draft Letter of Offer has been addressed shall be entitled to renounce and to apply for SAFs. Forms once split cannot be split further.
• SAFs will be sent to the Investor (s) by post at the applicant’s risk.
• Equity Shareholders may not renounce in favour of persons or entities in the United States, who are not
Qualified Institutional Buyers (as defined the US Securities Act), or who would otherwise be prohibited from being offered or subscribing for Rights Issue Equity Shares or Rights Entitlement under applicable securities laws.
349
Availability of duplicate CAF In case the original CAF is not received, or is misplaced by the Investor, the Registrar to the Issue will issue a duplicate CAF on the request of the Investor who should furnish the registered folio number / DP and Client ID number and his / her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within eight days from the Issue Opening Date. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the Investor violates such requirements, he / she shall face the risk of rejection of both the applications. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Issue on plain paper, along with demand draft (after deducting banking and postal charges) payable at Mumbai which should be drawn in favour of “Bajaj Hindusthan Limited – Rights Issue - R” in case of resident shareholders and non-resident shareholders applying on non-repatriable basis and in favour of “Bajaj Hindusthan Limited – Rights Issue – NR” in case of non-resident shareholders applying on repatriable basis and send the same by registered post directly to the Registrar to the Issue so as to reach Registrar to the Issue on or before the Issue Closing Date. The envelope should be superscribed “Bajaj Hindusthan Limited – Rights Issue - R” in case of resident shareholders and Non-resident shareholders applying on non-repatriable basis, and “Bajaj Hindusthan Limited – Rights Issue – NR” in case of non-resident shareholders applying on repatriable basis. The application on plain paper, duly signed by the applicant(s) including joint holders, in the same order as per specimen recorded with our Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars: • Name of Issuer, being Bajaj Hindusthan Limited; • Name and address of the Equity Shareholder including joint holders; • Registered Folio Number/ DP and Client ID no.; • Number of Equity Shares held as on Record Date; • Number of Rights Issue Equity Shares entitled to; • Number of Rights Issue Equity Shares applied for; • Number of additional Rights Issue Equity Shares applied for, if any; • Total number of Rights Issue Equity Shares applied for; • Total amount paid at the rate of `[●] per Equity Share; • Particulars of cheque/demand draft/pay order; • Savings/Current Account Number and name and address of the bank where the Equity Shareholder will
be depositing the refund order. In case of Equity Shares allotted in demat form, the bank account details will be obtained from the information available with the Depositories;
• Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Rights Issue Equity Shares applied for pursuant to the Issue;
• Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company; and
• Additionally, all such applicants are deemed to have accepted the following: “I/We understand that neither the Rights Entitlement nor the Rights Issue Equity Shares have been, or will be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof (the “United States”), except in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act I/we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Rights Issue Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Rights Issue Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand that this application should not be forwarded to or transmitted in or to the United States at any time, except to Qualified Institutional Buyers (as defined in the US Securities Act). I/we understand that none of our Company, the Registrar, the Lead Managers or any other person acting on behalf of our Company will accept
350
subscriptions from any person, or the agent of any person, who appears to be, or who our Company, the Registrar, the Lead Managers or any other person acting on behalf of our Company has reason to believe is in the United States and is not a Qualified Institutional Buyer (as defined in the US Securities Act), or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/We will not offer, sell or otherwise transfer any of the Rights Issue Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/We understand and agree that the Rights Entitlement and Rights Issue Equity Shares may not be reoffered, resold, pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement, and/or the Equity Shares, is/are outside the United States or a Qualified Institutional Buyer (as defined in the US Securities Act), and (ii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S or in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act. I/We acknowledge that our Company, the Lead Managers, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” Please note that those who are making the application otherwise than on original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Investor violates such requirements, he/she shall face the risk of rejection of both the applications. Our Company shall refund such application amount to the Investor without any interest thereon. Last date for Application The last date for submission of the duly filled in CAF is [●]. If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board/ Committee of Directors, the invitation to offer contained in the Letter of Offer shall be deemed to have been declined and the Board/ Committee of Directors shall be at liberty to dispose off the Rights Issue Equity Shares hereby offered, as provided under the chapter “Terms of the Issue – Basis of Allotment” on page 350 of this Draft Letter of Offer. Basis of Allotment Subject to the provisions contained in the Draft Letter of Offer, the Articles of Association of our Company and the approval of the Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following order of priority: (a) Full Allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their favour, in full or in part; (b) Allotment pertaining to fractional entitlements, in the manner discussed under “Fractional Entitlements” on page 343 of this Draft Letter of Offer; (c) Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as part of the Issue and have also applied for additional Equity Shares. The Allotment of such additional Equity Shares will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full Allotment in (a) and
351
(b) above. The Allotment of such Equity Shares will be at the sole discretion of the Board / Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and will not be a preferential Allotment; (d) Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have applied for additional Equity Shares provided there is surplus available after making full Allotment under (a), (b) and (c) above. The Allotment of such Equity Shares will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential Allotment; (e) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus available after making full Allotment under (a), (b) (c) and (d) above. After taking into account Allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code. The Promoters and Promoter Group have confirmed that they intend to subscribe to the full extent of their Rights Entitlement in the Issue. The Promoters and constituents of the Promoter Group, either by themselves or through a combination of entities belonging to the Promoter Group, holding Equity Shares in our Company have undertaken to fully subscribe for their Rights Entitlement in the Issue being [●]% of the Issue size. Such persons reserve the right to subscribe to any portion of the Issue, which may remain undersubscribed after allotment pursuant to the exercise of Rights Entitlements by Equity Shareholders of our Company on the Record Date and by the Renouncees. Such subscription and acquisition of the undersubscribed portion of the Issue by the Promoters and Promoter Group, if any, will not result in change of control of the management of our Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code.
Our Company hereby certifies that such subscription to any undersubscribed portion of the Issue by the Promoters and the Promoter Group, in the manner contemplated above, shall be subject to compliance with the provisions of Rule 19(2)(b) of the SCRR and clause 40A of the Listing Agreement with respect to the requirement of minimum public shareholding of 25% of the post-Issue paid-up capital of our Company. Underwriting Our Company is currently contemplating entering into an underwriting agreement with underwriters for underwriting the Rights Issue Equity Shares. The details of such underwriting agreement, if entered into, shall be included in the Letter of Offer to be filed with the Stock Exchanges pursuant to receipt of SEBI’s observations on this Draft Letter of Offer. Our Company shall ensure that the underwriters appointed shall have sufficient resources to enable them to discharge their underwriting obligations in full. PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA Process. Our Company and the Lead Managers are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Draft Letter of Offer. Equity Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is correctly filled up, specifying the number of the bank account maintained with the Self Certified Syndicate Bank (“SCSB”) in which the Application Money will be blocked by the SCSB. The Lead Managers, our Company, its directors, affiliates, associates and their respective directors and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc. in relation to applications accepted by SCSBs, Applications uploaded by SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account. The list of banks which have been notified by SEBI to act as SCSBs for the ASBA Process is provided on http://www.sebi.gov.in/pmd/scsb.pdf. For details on designated branches of SCSBs collecting the CAF, please
352
refer the above mentioned SEBI link. Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Rights Issue Equity Shares through the ASBA Process is available only to the Equity Shareholders of our Company on the Record Date. To qualify as ASBA Applicants, eligible Equity Shareholders:
• are required to hold Equity Shares in dematerialized form as on the Record Date and apply for (i) their Rights Entitlement or (ii) their Rights Entitlement and Equity Shares in addition to their Rights Entitlement in dematerialized form;
• should not have renounced their Right Entitlement in full or in part; • should not have split the CAF; • should not be Renouncees; and • should apply through blocking of funds in bank accounts maintained with SCSBs.
CAF The Registrar will dispatch the CAF to all Equity Shareholders as per their Rights Entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism will have to select for this mechanism in Part A of the CAF and provide necessary details. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in Part A of the CAF. Application in electronic mode will only be available with such SCSBs who provide such facility. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB. Acceptance of the Issue You may accept the Issue and apply for the Rights Issue Equity Shares either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of our Company in this regard. Mode of payment The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB. After verifying that sufficient funds are available in the bank account details of which are provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per the Registrar’s instruction from the bank account maintained with the SCSB, as mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into the separate bank account maintained by our Company as per the provisions of section 73(3) of the Companies Act. The balance amount remaining after the finalisation of the basis of Allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB. The Equity Shareholders applying under the ASBA Process would be required to block the entire amount payable on their application at the time of the submission of the CAF. The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, our Company would have a right to reject the application only on technical grounds.
353
Options available to the Equity Shareholders applying under the ASBA Process The summary of options available to the Equity Shareholders are presented below. You may exercise any of the following options with regard to the Rights Issue Equity Shares, using the respective CAFs received from Registrar:
Option Available Action Required 1. Accept whole or part of your Rights Entitlement
without renouncing the balance. Fill in and sign Part A of the CAF (All joint holders must sign)
2. Accept your Rights Entitlement in full and apply for
additional Rights Issue Equity Shares Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Rights Issue Equity Shares (All joint holders must sign)
The Equity Shareholders applying under the ASBA Process will need to select the ASBA process option in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSBs with the relevant details required under the ASBA process option and the SCSBs block the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option. Additional Rights Issue Equity Shares You are eligible to apply for additional Rights Issue Equity Shares over and above the number of Rights Issue Equity Shares that you are entitled to, provided that you are eligible to apply for Rights Issue Equity Shares under applicable law and you have applied for all the Rights Issue Equity Shares (as the case may be) offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Rights Issue Equity Shares shall be considered and Allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 350 of this Draft Letter of Offer. If you desire to apply for additional Rights Issue Equity Shares please indicate your requirement in the place provided for additional Rights Issue Equity Shares in Part A of the CAF. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on plain paper. The envelope should be superscribed “Bajaj Hindusthan Limited – Rights Issue”. The application on plain paper, duly signed by the Investors including joint holders, in the same order as per the specimen recorded with our Company, must reach the SCSBs before the Issue Closing Date and should contain the following particulars: • Name of Issuer, being Bajaj Hindusthan Limited; • Name and address of the Equity Shareholder including joint holders; • Registered Folio Number/ DP and Client ID no.; • Number of Equity Shares held as on Record Date; • Number of Rights Issue Equity Shares entitled to; • Number of Rights Issue Equity Shares applied for; • Number of additional Rights Issue Equity Shares applied for, if any; • Total number of Rights Issue Equity Shares applied for; • Total amount to be blocked at the rate of `[●] per Equity Share; • Except for applications on behalf of the Central or State Government and the officials appointed by the
courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the Rights Issue Equity Shares applied for pursuant to the Issue; and
354
• Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the records of our Company.
• Additionally, all such applicants are deemed to have accepted the following: “I/We understand that neither the Rights Entitlement nor the Rights Issue Equity Shares have been, or will be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”) or any United States state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories or possessions thereof (the “United States”), except in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act I/we understand the offering to which this application relates is not, and under no circumstances is to be construed as, an offering of any Rights Issue Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said Rights Issue Equity Shares or Rights Entitlement in the United States. Accordingly, I/we understand that this application should not be forwarded to or transmitted in or to the United States at any time, except to Qualified Institutional Buyers (as defined in the US Securities Act). I/we understand that none of our Company, the Registrar, the Lead Managers or any other person acting on behalf of our Company will accept subscriptions from any person, or the agent of any person, who appears to be, or who our Company, the Registrar, the Lead Managers or any other person acting on behalf of our Company has reason to believe is in the United States and is not a Qualified Institutional Buyer (as defined in the US Securities Act), or is ineligible to participate in the Issue under the securities laws of their jurisdiction. I/We will not offer, sell or otherwise transfer any of the Rights Issue Equity Shares which may be acquired by us in any jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our residence. I/We understand and agree that the Rights Entitlement and Rights Issue Equity Shares may not be reoffered, resold, pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act. I/We (i) am/are, and the person, if any, for whose account I/we am/are acquiring such Rights Entitlement, and/or the Equity Shares, is/are outside the United States or a Qualified Institutional Buyer (as defined in the US Securities Act), and (ii) is/are acquiring the Rights Entitlement and/or the Equity Shares in an offshore transaction meeting the requirements of Regulation S or in a transaction exempt from, or not subject to, the registration requirements of the US Securities Act. I/We acknowledge that our Company, the Lead Managers, their affiliates and others will rely upon the truth and accuracy of the foregoing representations and agreements.” Option to receive Rights Issue Equity Shares in Dematerialized Form EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE HELD BY SUCH ASBA APPLICANT ON THE RECORD DATE. General instructions for Equity Shareholders applying under the ASBA Process (a) Please read the instructions printed on the CAF carefully. (b) Application should be made on the printed CAF only and should be completed in all respects. The CAF
found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of the Letter of Offer, Abridged Letter of Offer are liable to be rejected. The CAF must be filled in English.
(c) The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose bank
account details are provided in the CAF and not to the Bankers to the Issue/Collecting Banks (assuming that such Collecting Bank is not a SCSB), to our Company or Registrar or Lead Managers to the Issue.
355
(d) All applicants, and in the case of application in joint names, each of the joint applicants, should mention
his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. Except for applications on behalf of the Central or State Government, the residents of Sikkim and the officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be rejected. With effect from August 16, 2010, the demat accounts for Investors for which PAN details have not been verified shall be “suspended for credit” and no allotment and credit of Rights Issue Equity Shares shall be made into the accounts of such Investors.
(e) All payments will be made by blocking the amount in the bank account maintained with the SCSB. Cash
payment or payment by cheque / demand draft / pay order is not acceptable. In case payment is affected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.
(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to
the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company and/or Depositories.
(g) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as per
the specimen signature(s) recorded with the depository / our Company. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant.
(h) All communication in connection with application for the Rights Issue Equity Shares, including any change
in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of Allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.
(i) Only the person or persons to whom the Rights Issue Equity Shares have been offered shall be eligible to
participate under the ASBA Process. (j) Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights Entitlement and
Rights Issue Equity Shares under applicable securities laws are eligible to participate.
(k) Only the Equity Shareholders holding shares in demat are eligible to participate through ASBA process.
(l) Equity shareholders who have renounced their entitlement in part/ full are not entitled to apply using ASBA process.
Do’s: (a) Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled in. (b) Ensure that the details about your Depository Participant and beneficiary account are correct and the
beneficiary account is activated as Rights Issue Equity Shares will be allotted in the dematerialized form only.
(c) Ensure that the CAFs are submitted (i) with the Designated Branch of the SCSBs and details of the correct
bank account have been provided in the CAF. (d) Ensure that there are sufficient funds (equal to {number of Rights Issue Equity Shares as the case may be
applied for} X {Issue Price of Rights Issue Equity Shares, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.
(e) Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on
application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.
356
(f) Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.
(g) Except for CAFs submitted on behalf of the Central or State Government, the residents of Sikkim and the
officials appointed by the courts, each applicant should mention their PAN allotted under the I. T. Act. (h) Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary
account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF.
(i) Ensure that the Demographic Details are updated, true and correct, in all respects.
(j) Ensure that the account holder in whose bank account the funds are to be blocked has signed authorising
such funds to be blocked.
(k) Apply and accept as a renouncee, only if you are a Qualified Institutional Buyer (as defined under the US Securities Act) in the United States or are eligible to participate in the Issue under the securities laws applicable to your jurisdiction.
Don’ts: (a) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB. (b) Do not pay the amount payable on application in cash, by money order or by postal order. (c) Do not send your physical CAFs to the Lead Managers to Issue / Registrar / Collecting Banks (assuming
that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.
(d) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground.
(e) Do not apply if the ASBA account has been used for five applicants. Grounds for Technical Rejection under the ASBA Process In addition to the grounds listed under “Grounds for Technical Rejection for non-ASBA Investors” on page 363 of this Draft Letter of Offer, applications under the ABSA Process are liable to be rejected on the following grounds: (a) Application on a SAF.
(b) Application for allotment of Rights Entitlements or additional shares which are in physical form.
(c) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with
the Registrar.
(d) Sending CAF to a Lead Managers / Registrar / Collecting Bank (assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company.
(e) Insufficient funds are available with the SCSB for blocking the amount.
(f) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen pursuant to regulatory orders.
(g) Account holder not signing the CAF or declaration mentioned therein.
(h) CAFs that do not include the certification set out in the CAF to the effect that the subscriber does not have a registered address (and is not otherwise located) in restricted jurisdictions and is authorized to acquire the rights and the securities in compliance with all applicable laws and regulations.
357
(i) CAFs which have evidence of being executed in/dispatched from restricted jurisdiction.
(j) A Renouncee applying under the ASBA process. Depository account and bank details for Equity Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity Shareholders, Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Equity Shareholders including mailing of the letters intimating unblocking of bank account of the respective Equity Shareholder. The Demographic Details given by the Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records. Letters intimating Allotment and unblocking the funds would be mailed at the address of the Equity Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. The Registrar to the Issue will give instrucuctions to the SCSBs for unblocking funds in the bank account utilised under the ASBA process to the extent equity shares are not allotted to such shareholders. Equity Shareholders applying under the ASBA Process may note that delivery of letters intimating unblocking of the funds 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 Equity Shareholder in the CAF would be used only to ensure dispatch of letters intimating unblocking of the funds. Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process and none of our Company, the SCSBs or the Lead Managers shall be liable to compensate the Equity Shareholder applying under the ASBA Process for any losses caused 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, (a) names of the Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary account number, then such applications are liable to be rejected. Issue Schedule
Issue Opening Date: [●] Last date for receiving requests for SAFs: [●] Issue Closing Date: [●]
358
The Board may however decide to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date. Allotment Advices / Refund Orders Our Company will issue and dispatch Allotment advice/ share certificates/demat credit and/or letters of regret along with refund order or credit the allotted Rights Issue Equity Shares to the respective beneficiary accounts, if any, within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act. Investors residing at centers where clearing houses are managed by the RBI will get refunds through Electronic Clearing Service (“ECS”) except where Investors have not provided the details required to send electronic refunds. In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using electronic credit under the depository system, advice regarding their credit of the Rights Issue Equity Shares shall be given separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within 15 days of the Issue Closing Date. In case of those Investors who have opted to receive their Rights Entitlement in physical form and our Company issues letter of allotment, the corresponding share certificates will be kept ready within three months from the date of Allotment thereof or such extended time as may be approved by our Company Law Board under Section 113 of the Companies Act or other applicable provisions, if any. Investors are requested to preserve such letters of allotment, which would be exchanged later for the share certificates. For more information, please see the chapter “Terms of the Issue” on page 342 of this Draft Letter of Offer. The letter of allotment / refund order would be sent by registered post/speed post to the sole/first Investor’s registered address. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first Investor. Adequate funds would be made available to the Registrar to the Issue for this purpose. Payment of Refund Mode of making refunds The payment of refund, if any, would be done through any of the following modes: 1. ECS – Payment of refund would be done through ECS for Investors having an account at any of the 68
centres where such facility has been made available. This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories/the records of the Registrar. The payment of refunds is mandatory for Investors having a bank account at any centre where ECS facility has been made available (subject to availability of all information for crediting the refund through ECS).
2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has been assigned
the Indian Financial System Code (IFSC), which can be linked to a MICR, allotted to that particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have registered their nine digit MICR number and their bank account number with the registrar to our Company or with the depository participant while opening and operating the demat account, the same will be duly mapped with the IFSC Code of that particular bank branch and the payment of refund will be made to the Investors through this method.
3. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to receive
refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by our Company.
359
4. RTGS – If the refund amount exceeds `0.2 million, the investors have the option to receive refund through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be made through ECS or any other eligible mode. Charges, if any, levied by the refund bank(s) for the same would be borne by our Company. Charges, if any, levied by the Investor’s bank receiving the credit would be borne by the Investor.
5. For all other Investors the refund orders will be despatched through Speed Post/ Registered Post. Such
refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first Investor and payable at par.
6. Credit of refunds to Investors in any other electronic manner permissible under the banking laws, which are
in force, and is permitted by the SEBI from time to time. Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the Investor’s bank account are mandatorily required to be given for printing on the refund orders. Bank account particulars, where available, will be printed on the refund orders/refund warrants which can then be deposited only in the account specified. Our Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud. Allotment advice / Share Certificates/ Demat Credit Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address of the first named Investor or respective beneficiary accounts will be credited within 15 days, from the Issue Closing Date. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates. Option to receive Rights Issue Equity Shares in Dematerialized Form Investors shall be allotted the Rights Issue Equity Shares in dematerialized (electronic) form at the option of the Investor. Our Company has signed a tripartite agreement with NSDL on July 28, 2004 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. Our Company has also signed a tripartite agreement with CDSL on July 2, 2004 which enables the Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the form of physical certificates. In this Issue, the allottees who have opted for Rights Issue Equity Shares in dematerialized form will receive their Rights Issue Equity Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such Rights Issue Equity Shares to the Investor’s depository account. CAFs, which do not accurately contain this information, will be given the Rights Issue Equity Shares in physical form. No separate CAFs for Rights Issue Equity Shares in physical and/or dematerialized form should be made. INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES OF OUR COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED FORM. The procedure for availing the facility for Allotment of Rights Issue Equity Shares in this Issue in the electronic form is as under: • Open a beneficiary account with any depository participant (care should be taken that the beneficiary
account should carry the name of the holder in the same manner as is registered in the records of our Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as registered in the records of our Company). In case of Investors having various folios in our Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such beneficiary account(s) need not adhere to this step.
360
• For Equity Shareholders already holding Equity Shares in dematerialized form as on the Record Date, the
beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Rights Issue Equity Shares by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the Allotment of Rights Issue Equity Shares arising out of this Issue may be made in dematerialized form even if the original Equity Shares are not dematerialized. Nonetheless, it should be ensured that the depository account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of our Company.
The responsibility for correctness of information (including Investor’s age and other details) filled in the CAF vis-à-vis such information with the Investor’s depository participant, would rest with the Investor. Investors should ensure that the names of the Investors and the order in which they appear in CAF should be the same as registered with the Investor’s depository participant. If incomplete / incorrect beneficiary account details are given in the CAF, the Investor will get Rights Issue Equity Shares in physical form. The Rights Issue Equity Shares allotted to applicants opting for issue in dematerialized form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository participant will provide to the applicant the confirmation of the credit of such Rights Issue Equity Shares to the applicant’s depository account. Renouncees will also have to provide the necessary details about their beneficiary account for Allotment of Rights Issue Equity Shares in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected. General instructions for non-ASBA Investors (a) Please read the instructions printed on the enclosed CAF carefully. (b) Application should be made on the printed CAF, provided by our Company except as mentioned under
the head “Application on Plain Paper” on page 349 of this Draft Letter of Offer and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer or Abrigded Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters.
The CAF together with the cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or to the Registrar to the Issue and not to our Company or Lead Managers to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by our Company for collecting applications, will have to make payment by demand draft payable at Mumbai of an amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered post. If any portion of the CAF is/are detached or separated, such application is liable to be rejected.
Applications where separate cheques/demand drafts are not attached for amounts to be paid for Rights Issue Equity Shares are liable to be rejected.
(c) Except for applications on behalf of the Central and State Government, the residents of Sikkim and the
officials appointed by the courts, all Investors, and in the case of application in joint names, each of the joint Investors, should mention his/her PAN number allotted under the I.T. Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected.
(d) Investors, holding Equity Shares in physical format, are advised that it is mandatory to provide
361
information as to their savings/current account number and the name of the bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected.
(e) All payment should be made by cheque/demand draft only. Application through the ASBA process as
mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon.
(f) Signatures should be either in English or Hindi or in any other language specified in the Eighth
Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with our Company.
(g) In case of an application under power of attorney or by a body corporate or by a society, a certified true
copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Issue and to sign the application and certified true a copy of the Memorandum and Articles of Association and / or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with our Company, the same need not be a furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue.
(h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as
per the specimen signature(s) recorded with our Company. Further, in case of joint Investors who are Renouncees, the number of Investors should not exceed three. In case of joint Investors, reference, if any, will be made in the first Investor’s name and all communication will be addressed to the first Investor.
(i) Application(s) received from NRs/NRIs, or persons of Indian origin residing abroad for Allotment of
Rights Issue Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the matter of refund of application money, Allotment of Equity Shares, subsequent issue and Allotment of Equity Shares, interest, export of share certificates, etc. In case a NR or NRI Equity Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose a copy of such approval with the CAF. Additionally, applications will not be accepted from NRs/NRIs in the United States or its territories and possessions, or any other jurisdiction where the offer or sale of the Rights Entitlements and Rights Issue Equity Shares may be restricted by applicable securities laws.
(j) All communication in connection with application for the Rights Issue Equity Shares, including any
change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of Allotment in this Issue quoting the name of the first/sole Investor, folio numbers and CAF number. Please note that any intimation for change of address of Equity Shareholders, after the date of Allotment, should be sent to the Registrar and Transfer Agents of our Company, in the case of Rights Issue Equity Shares held in physical form and to the respective depository participant, in case of Rights Issue Equity Shares held in dematerialized form.
(k) SAFs cannot be re-split. (l) Only the person or persons to whom Rights Issue Equity Shares have been offered and not
Renouncee(s) shall be entitled to obtain SAFs. (m) Investors must write their CAF number at the back of the cheque /demand draft. (n) Only one mode of payment per application should be used. The payment must be by cheque / demand
draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted.
362
(o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-dated
cheques and postal / money orders will not be accepted and applications accompanied by such outstation cheques / outstation demand drafts / money orders or postal orders will be rejected.
(p) No receipt will be issued for application money received. The Bankers to the Issue / Collecting Bank/
Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
(q) The distribution of the Draft Letter of Offer and issue of Rights Issue Equity Shares and Rights
Entitlements to persons in certain jurisdictions outside India may be restricted by legal requirements in those jurisdictions. Persons in the United States and such other jurisdictions are instructed to disregard the Draft Letter of Offer and not to attempt to subscribe for Rights Issue Equity Shares.
Do’s for non-ASBA Investors: (a) Check if you are eligible to apply i.e. you are an Equity Shareholder on the Record Date; (b) Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of the
CAF and necessary details are filled in; (c) In the event you hold Equity Shares in dematerialised form, ensure that the details about your
Depository Participant and beneficiary account are correct and the beneficiary account is activated as the Rights Issue Equity Shares will be allotted in the dematerialized form only;
(d) Ensure that your Indian address is available to our Company and the Registrar, in case you hold Equity
Shares in physical form or the depository participant, in case you hold Equity Shares in dematerialised form;
(e) Ensure that the CAFs are submitted at the collection centres of the syndicate only on forms bearing the
stamp of the Lead Managers; (f) Ensure that the value of the cheque/ draft submitted by you is equal to the (number of Rights Issue
Equity Shares applied for) X (Issue Price of Rights Issue Equity Shares, as the case may be) before submission of the CAF;
(g) Ensure that you receive an acknowledgement from the collection centers of the collection bank for your
submission of the CAF in physical form; (h) Ensure that you mention your PAN allotted under the I.T. Act with the Bid cum Application Form, except
for Bids on behalf of the Central and State Governments, residents of the state of Sikkim and officials appointed by the courts;
(i) Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary
account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the beneficiary account is also held in same joint names and such names are in the same sequence in which they appear in the CAF;
(j) Ensure that the demographic details are updated, true and correct, in all respects.
Don’ts for non-ASBA Investors: (a) Do not apply if you are in the United States, unless you are a Qualified Institutional Buyer (as defined
under the US Securities Act), or are not eligible to participate in the Issue under the securities laws applicable to your jurisdiction;
(b) Do not apply on duplicate CAF after you have submitted a CAF to a collection center of the collection
bank;
363
(c) Do not pay the amount payable on application in cash, by money order or by postal order; (d) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this
ground; (e) Do not submit Bid accompanied with Stock invest; Grounds for Technical Rejections for non-ASBA Investors. Investors are advised to note that applications are liable to be rejected on technical grounds, including the following: • Amount paid does not tally with the amount payable; • Bank account details (for refund) are not given and the same are not available with the DP (in the case
of dematerialized holdings) or the Registrar (in the case of physical holdings); • Age of Investor(s) not given (in case of Renouncees); • Except for CAFs on behalf of the Central or State Government, the residents of Sikkim and the
officials appointed by the courts, PAN number not given for application of any value; • In case of CAF under power of attorney or by limited companies, corporate, trust, relevant documents
are not submitted; • If the signature of the Equity Shareholder does not match with the one given on the CAF and for
renounce(s) if the signature does not match with the records available with their depositories; • CAFs are not submitted by the Investors within the time prescribed as per the CAF and the Letter of
Offer; • CAFs not duly signed by the sole/joint Investors; • CAFs by OCBs without specific RBI approval; • CAFs accompanied by Stockinvest / outstation cheques / post-dated cheques / money order / postal
order / outstation demand draft; • In case no corresponding record is available with the depositories that matches three parameters,
namely, names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity (DP ID) and the beneficiary’s identity;
• CAFs that do not include the certifications set out in the CAF to the effect that, among other thing, the subscriber is not located in restricted jurisdictions and is authorized to acquire the Rights Entitlements and Rights Issue Equity Shares in compliance with all applicable laws and regulations;
• CAFs which have evidence of being executed in/dispatched from restricted jurisdictions; • CAFs by ineligible non-residents (including on account of restriction or prohibition under applicable
local laws); • CAFs where our Company believes that CAF is incomplete or acceptance of such CAF may infringe
applicable legal or regulatory requirements; • In case the GIR number is submitted instead of the PAN; • Applications by Renouncees who are persons not competent to contract under the Indian Contract Act,
1872, including minors; and • Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper application.
Please read the Letter of Offer or Abridged Letter of Offer and the instructions contained therein and in the CAF carefully before filling in the CAF. The instructions contained in the CAF are an integral part of the Letter of Offer and must be carefully followed. The CAF is liable to be rejected for any non-compliance of the provisions contained in the Letter of Offer or the CAF. Mode of payment for Resident Equity Shareholders/ Investors • All cheques / drafts accompanying the CAF should be drawn in favour of the Collecting Bank
(specified on the reverse of the CAF), crossed ‘A/c Payee only’ and marked “Bajaj Hindusthan Limited – Rights Issue”;
• Investors residing at places other than places where the bank collection centres have been opened by
364
our Company for collecting applications, are requested to send their CAFs together with Demand Draft for the full application amount, net of bank and postal charges favouring the Bankers to the Issue, crossed ‘A/c Payee only’ and marked “Bajaj Hindusthan Limited – Rights Issue” payable at Mumbai directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.
Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs: No single FII can hold more that 10% of our Company’s post-Issue paid-up share capital. In respect of an FII investing in the Rights Issue Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed 5% of the total paid-up share capital of our Company, in case such sub-account is a foreign corporate or an individual. However, as per RBI letter dated June 12, 2009, the total purchases of FIIs shall not exceed the applicable overall ceiling limits of 74% of the total paid-up equity capital of our Company. Applications will not be accepted from FIIs in restricted jurisdictions (other than QIBs resident in the United States). Investment by NRIs Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000. Applications will not be accepted from FIIs in restricted jurisdictions. Procedure for Applications by Mutual Funds A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Mode of payment for Non-Resident Equity Shareholders/ Investors As regards the application by non-resident Equity Shareholders, the following conditions shall apply: • Individual non-resident Indian applicants who are permitted to subscribe for Rights Issue Equity Shares
by applicable local securities laws can obtain application forms from the following address:
Sharepro Services (India) Private Limited Samhita Warehousing Complex 2nd Floor, Sakinaka Telephone Exchange Lane Off Andheri Kurla Road Sakinaka, Andheri (East) Mumbai 400 072 Tel: +91 22 6772 0300 Fax: +91 22 2859 1568 Contact Person: Mr. Kumaresan V / Mr. Satheesh HK Investor Grievance Email: [email protected]
• Payment by non-residents must be made by demand draft payable at Mumbai/cheque payable drawn on
a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways: Application with repatriation benefits • By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad
(submitted along with Foreign Inward Remittance Certificate); or
365
• By cheque/draft on a Non-Resident External Account (NRE) or FCNR Account maintained in India; or • By Rupee draft purchased by debit to NRE/FCNR Account maintained elsewhere in India and payable
in Mumbai; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
• Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of
‘Bajaj Hindusthan Limited – Rights Issue - NR’ and must be crossed ‘account payee only’ for the full application amount.
• Non-resident Indian applicants may please note that only such applications as are accompanied by payment in free foreign exchange shall be considered for allotment under the reserved category. The non-resident Indians who intend to make payment through NRO accounts shall use the form meant for Resident Indians and shall not use the forms meant for reserved category.
Application without repatriation benefits • As far as non-residents holding Equity Shares on non-repatriation basis are concerned, in addition to
the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in India or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the Allotment of Rights Issue Equity Shares will be on non-repatriation basis.
• All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in
favour of Bajaj Hindusthan Limited – Rights Issue - NR and must be crossed ‘account payee only’ for the full application amount. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
• Investors may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts
as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF. Otherwise the application shall be considered incomplete and is liable to be rejected.
• New demat account shall be opened for holders who have had a change in status from resident Indian
to NRI. Notes: • In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment
in Rights Issue Equity Shares can be remitted outside India, subject to tax, as applicable according to the IT Act.
• In case Rights Issue Equity Shares are allotted on a non-repatriation basis, the dividend and sale proceeds of
the Rights Issue Equity Shares cannot be remitted outside India. • The CAF duly completed together with the amount payable on application must be deposited with the
Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
• In case of an application received from non-residents, Allotment, refunds and other distribution, if any,
will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such Allotment, remittance and subject to necessary approvals.
Impersonation As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (1) of section 68A of the Companies Act which is reproduced below:
366
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or 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”. Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue. Disposal of application and application money No acknowledgment will be issued for the application moneys received by our Company. However, the Bankers to the Issue / Registrar to the Issue / SCSBs receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part, and in either case without assigning any reason thereto. In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on Rights Issue Equity Shares allotted, will be refunded to the Investor within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day our Company becomes liable to repay it, our Company and every Director of our Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act. For further instructions, please read the CAF carefully. Utilisation of Issue Proceeds The Board of Directors declares that: (i) All monies received out of this Issue shall be transferred to a separate bank account referred to sub-
section (3) of Section 73 of the Companies Act; (ii) Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head
in the balance sheet of our Company indicating the purpose for which such monies have been utilised;
(iii) Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate
separate head in the balance sheet of our Company indicating the form in which such unutilized monies have been invested; and
(iv) Our Company may utilize the funds collected in the Issue only after listing and trading permission is
received from the Stock Exchanges in respect of this Issue. Undertakings by our Company Our Company undertakes the following: 1. The complaints received in respect of the Issue shall be attended to by our Company expeditiously
and satisfactorily.
367
2. All steps for completion of the necessary formalities for listing and commencement of trading at all Stock exchanges where the Rights Issue Equity Shares are to be listed will be taken within seven working days of finalization of basis of Allotment.
3. The funds required for making refunds to unsuccessful applicants as per the modes disclosed shall
be made available to the Registrar to the Issue by our Company. 4. Our Company undertakes that where refunds are made through electronic transfer of funds, a
suitable communication shall be sent to the Investor within 15 days of the Issue Closing Date, giving details of the banks where refunds shall be credited along with amount and expected date of electronic credit of refund.
5. Adequate arrangements shall be made to collect all ASBA applications and to consider them
similar to non-ASBA applications while finalising the basis of Allotment.
6. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within the specified time.
7. No further issue of securities affecting equity capital of our Company shall be made till the securities issued/offered through the Letter of Offer Issue are listed or till the application money are refunded on account of non-listing, under-subscription etc.
8. At any given time there shall be only one denomination of equity shares of our Company. 9. Our Company accepts full responsibility for the accuracy of information given in this Draft Letter
of Offer and confirms that to the best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Draft Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.
10. All information shall be made available by the Lead Managers and the Issuer to the Investors at large and no selective or additional information would be available for a section of the Investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.
11. Our Company shall comply with such disclosure and accounting norms specified by SEBI from time to time.
Minimum Subscription If our Company does not receive minimum subscription of 90% of the Issue including devolvement of Underwriting and participation by the Promoters of the undersubscribed portion of the Issue, the entire subscription shall be refunded to the Applicants within 15 days from the Issue Closing Date. If there is delay in the refund of subscription by more than 8 days after our Company becomes liable to pay the subscription amount (i.e., 15 days after the Issue Closing Date), our Company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act. Important • Please read this Draft Letter of Offer carefully before taking any action. The instructions
contained in the accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.
• All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for
SAFs must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘Bajaj Hindusthan-Rights Issue’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:
368
Sharepro Services (India) Private Limited Samhita Warehousing Complex 2nd Floor, Sakinaka Telephone Exchange Lane Off Andheri Kurla Road Sakinaka, Andheri (East) Mumbai 400 072 Tel: +91 22 6772 0300 Fax: +91 22 2859 1568 Contact Person: Mr. Kumaresan V / Mr. Satheesh HK
• It is to be specifically noted that this Issue of Rights Issue Equity Shares is subject to the risk factors
mentioned in the section “Risk Factors” on page 12 of this Draft Letter of Offer. The Issue will remain open for a minimum 15 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.
369
SECTION VIII – STATUTORY AND OTHER INFORMATION
Option to subscribe Other than the present Issue, and except as disclosed in the section “Terms of the Issue” on page 342 of this Draft Letter of Offer, our Company has not given any person any option to subscribe to the Rights Issue Equity Shares. The Investors shall get the Rights Issue Equity Shares in dematerialized form.
370
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The contracts referred to in para (A) below (not being contracts entered into in the ordinary course of business carried on by our Company) which are or may be deemed material have been entered or are to be entered into by our Company. The contracts together with the documents referred to in para (B) below may be inspected at the registered office of our Company situated at Bajaj Bhavan, 2nd Floor, 226 Jamnalal Bajaj Marg Nariman Point, Mumbai 400 021 between 11.00 a.m. to 2.00 p.m. on any working day from the date of this Draft Letter of Offer until the Issue Closing Date. (A) MATERIAL CONTRACTS 1. Issue Agreement dated May 16, 2011 between our Company and SBI Capital Markets Limited, IDBI
Capital Market Services Limited and PNB Investment Services Limited, Lead Managers to the Issue.
2. Memorandum of Understanding dated May 16, 2011 between our Company and Sharepro Services (India) Private Limited, Registrar to the Issue and SBI Capital Markets Limited, IDBI Capital Market Services Limited and PNB Investment Services Limited, Lead Managers to the Issue.
3. Tripartite Agreement dated July 28, 2004 between our Company, National Securities Depository
Limited (NSDL) and Sharepro Services (India) Private Limited.
4. Tripartite Agreement dated July 2, 2004 between our Company, Central Depository Services (India) Limited (CDSL) and Sharepro Services (India) Private Limited.
(B) DOCUMENTS FOR INSPECTION 1. Memorandum and Articles of Association of our Company; 2. Certificate of incorporation of our Company dated November 24, 1931 and subsequent fresh certificate
of incorporation consequent on change of name dated June 27, 1988; 3. Resolution of the Board of Directors under section 81(1) of Companies Act passed in its meeting dated
April 30, 2011 authorising the Issue and related matters;
4. Annual reports of our Company for the year ended September 30, 2006, September 30, 2007, September 30, 2008, September 30, 2009 and September 30, 2010;
5. Auditors’ Report on the Standalone Financial Statements dated May 16, 2011 by M/s. Chaturvedi &
Shah, Chartered Accountants & Statutory Auditors of our Company for the financial year ended September 30, 2009 and September 30, 2010 and the three month period ended December 31, 2010;
6. Auditors’ Report on Consolidated Financial Statements dated May 16, 2011 by M/s. Chaturvedi &
Shah, Chartered Accountants & Statutory Auditors of our Company for the financial year ended September 30, 2009 and September 30, 2010 and the three month period ended December 31, 2010;
7. A statement of tax benefits dated May 16, 2011 received from M/s. Chaturvedi & Shah, Chartered
Accountants & Statutory Auditors of our Company regarding tax benefits available to our Company and its shareholders;
8. Letter of Offer dated October 16, 1991 in respect of immediately preceding Rights Issue made by our
Company; 9. Scheme of Amalgamation between Bajaj Hindusthan Sugar and Industries Limited (“Transferor
Company”) with Bajaj Hindusthan Limited (“Transferee Company”) approved by the Hon’ble High Court of Judicature at Bombay. The Scheme provided for the transfer of the entire undertakings, assets and liabilities, deeds and documents of the Transferor Company to the Transferee Company as a going concern;
371
10. Consents of the Directors, Company Secretary and Compliance Officer, Statutory Auditors, Lead
Managers to the Issue, Domestic Legal Counsel to the Issue, International Legal Counsel to the Issue and Registrar to the Issue to include their names in the Draft Letter of Offer to act in their respective capacities;
11. Certificate dated May 16, 2011 from our Company as regards compliance with conditions enumerated
in Para 1 of Part E under Schedule VIII of SEBI Regulations; 12. Due Diligence Certificate dated May 17, 2011 by SBI Capital Markets Limited, IDBI Capital Market
Services Limited and PNB Investment Services Limited, Lead Managers to the Issue; 13. In-principle listing approval(s) dated [•] and [•] from BSE and NSE respectively; 14. Observation letter no. [•] dated [•] received from SEBI. Any of the contracts or documents mentioned in this Draft Letter of Offer may be amended or modified at any time if so required in the interest of our Company or if required by the other parties, without reference to the Equity Shareholders, subject to compliance with applicable law.
372
SECTION IX - DECLARATION We hereby certify that no statement made in this Draft Letter of Offer contravenes any of the provisions of the Companies Act and the rules made thereunder. All the legal requirements connected with this Issue as also the guidelines, instructions, etc., issued by SEBI, Government and any other competent authority in this behalf, have been duly complied with. We further certify that all disclosures made in the Draft Letter of Offer are true and correct.
Name Signature Shishir Bajaj Chairman and Managing Director
Kushagra Bajaj Vice Chairman & Joint Managing Director
Dr. Sanjeev Kumar Director (Corporate and Legal Affairs) Whole – time Director
Dhirajlal Shantilal Mehta Non-Executive Director
Madhav Laxman Apte Non-Executive Director (Independent Director)
Ravindrakumar V. Ruia Non-Executive Director (Independent Director)
Alok Krishna Agarwal Non-Executive Director (Independent Director)
Dinesh Kumar Shukla Non-Executive Director (Independent Director)
Manoj Maheshwari Chief Finance Officer
Place: Mumbai Date: May 17, 2011
������� (022) - 6614 [email protected]
