GMR Ferro Alloys & Industries Limited Ferro.pdf · GMR Ferro Alloys & Industries Limited INFORMATION MEMORANDUM 5 All forward looking statements are subject to risks, uncertainties

GMR Ferro Alloys & Industries Limited INFORMATION MEMORANDUM

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GMR FERRO ALLOYS & INDUSTRIES LIMITED

Registered Office: 6-3-866/1/G2, Greenlands, Begumpet, Hyderabad- 500016 Tel.: +91 040 234 10 191, 194, Fax: +91 040 234 10 184 Website: www.gfil.co.in &

www.gmrindustries.in Contact person: Mr. U. Naresh Kumar, Executive Director, [email protected],

(GMR Ferro Alloys & Industries Limited (GFIL) was incorporated on 23rd March 2006. GFIL manufactures a range of ferro alloys like high carbon ferrochrome, extra low phosphorus ferrochrome and a few other speciality products. These products are used as inputs in the manufacture of stainless steel. It has a manufacturing unit at Tekkali in Srikakulam District, Andhra Pradesh. The ISO 9001 certified plant has an installed capacity of 25, 000 metric tons per annum).

INFORMATION MEMORANDUM FOR LISTING OF 12285295 EQUITY SHARES OF RS.10 EACH

NO EQUITY SHARES ARE PROPOSED TO BE SOLD OR OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM

GENERAL RISKS Investment in equity and equity-related securities involve a degree of risk and investors should not invest in the equity shares of GMR Ferro Alloys & Industries Limited Ltd 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 the shares of GMR Ferro Alloys & Industries Limited. For taking an investment decision, investors must rely on their own examination of the Company including the risks involved.

ABSOLUTE RESPONSIBILITY OF GMR FERRO ALLOYS & INDUSTRIES LIMITED

GMR Ferro Alloys & Industries Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all information with regard to GMR Ferro Alloys & Industries Limited, which is material, that the information contained in the Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

LISTING

The Equity Shares of GMR Ferro Alloys & Industries Limited are proposed to be listed on Bombay Stock Exchange Limited (BSE) and National Stock Exchange Limited (NSE) .

SHARE TRANSFER AGENT Share Transfer Agent & Registrar: Karvy Computershare Private Ltd., Plot No. 17 to 24, Vittal Rao Nagar, Madhapur, Hyderabad – 500 081

Tel: 040 – 234 20 815 to 824, Fax: 040 – 234 20 814 Contract Person: Mr. S.V. Raju, Assistant General Manager,


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TABLE OF CONTENTS SECTION I GENERAL ............................................................................................................................. 3

DEFINITIONS, ABBREVATIONS & INDUSTRY RELATED TERMS .................................................. 3

CERTAIN CONVENTIONS: USE OF FINANCIAL DATA .................................................................... 4

FORWORD LOOKING STATEMENTS ................................................................................................ 4

SECTION II RISK FACTORS ................................................................................................................... 5 RISKS: INTERNAL & EXTERNAL ....................................................................................................... 5

SECTION III INTRODUCTION ................................................................................................................. 6 SUMMARY ........................................................................................................................................... 6

GENERAL INFORMATION .................................................................................................................. 8

CAPITAL STRUCTURE ....................................................................................................................... 9

SCHEME OF ARRANGEMENT ......................................................................................................... 12

STATEMENT OF TAX BENEFITS ..................................................................................................... 13

SECTION IV – ABOUT GMR FERRO ALLOYS & INDUSTRIES LIMITED .......................................... 26 HISTORY OF THE COMPANY .......................................................................................................... 26

THE FUTURE PLANS OF THE COMPANY ...................................................................................... 29

PROMOTERS & THEIR BACKGROUND .......................................................................................... 30

OBJECTS OF THE COMPANY ......................................................................................................... 31

MANAGEMENT .................................................................................................................................. 32

CURRENCY OF PRESENTATION .................................................................................................... 36

DIVIDEND POLICY ............................................................................................................................ 36

SECTION V FINANCIAL INFORMATION ............................................................................................. 36 FINANCIAL INFORMATION OF THE COMPANY ............................................................................. 36

GROUP COMPANIES FINANCIAL AND OTHER INFORMATION ................................................... 61

MANAGEMENT DISCUSSION & ANALYSIS. ................................................................................... 64

SECTION VI - LEGAL AND OTHER INFORMATION ........................................................................... 65 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS .................................................. 65

GOVERNMENT APPROVALS ........................................................................................................... 67

SECTION VII – REGULATORY AND STATUTORY DISCLOSURES .................................................. 67 REGULATORY AND STATUTORY DISCLOSURES ........................................................................ 67

MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATIONS ........................................................ 70

SECTION VIII – OTHER INFORMATION ............................................................................................ 101 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................... 101

DECLARATION ................................................................................................................................ 102


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SECTION I GENERAL DEFINITIONS, ABBREVATIONS & INDUSTRY RELATED TERMS

Articles/ Articles of Association Articles of Association of GMR Ferro Alloys &

Industries Limited

Auditors The Statutory Auditors of GMR Ferro Alloys &

Industries Limited

Banker(s) to the Company The Bankers of GMR Ferro Alloys & Industries Limited

Board of Directors/ Board The Board of Directors of GMR Ferro Alloys &

Industries Limited

BSE Bombay Stock Exchange Limited

NSE National Stock Exchange of India of India Limited

CDSL Central Depository Services (India) Limited

Companies Act The Companies Act, 1956, as amended from time to

time

EPS Earnings per equity share

Equity Shares Equity shares of the Company of Rs.10 each unless

otherwise specified in the context thereof

Financial year/ fiscal/FY The twelve months ended March 31 of a particular

year, unless otherwise stated

Information Memorandum This document as filed with the Stock Exchanges is

known as and referred to as the Information

Memorandum

I. T. Act The Income-tax Act, 1961, as amended from time to

time, except as stated otherwise

Memorandum/ Memorandum of

Association

The Memorandum of Association of GMR Ferro Alloys

& Industries Limited

NAV Net Asset Value

NSDL National Securities Depository Limited.

RBI Reserve Bank of India.

ROC Registrar of Companies, Andhra Pradesh

Rupees or Rs Indian Rupees, the legal Indian Currency of Republic

of India

Scheme Scheme of Arrangement between Bharat Sugar Mills

Limited, GMR Industries Limited and GMR Ferro

Alloys & Industries Limited


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SEBI The Securities and Exchange Board of India

constituted under the SEBI Act, 1992

SEBI Act The Securities and Exchange Board of India Act,

1992, as amended from time to time

SEBI Guidelines SEBI (Disclosure and Investor Protection) Guidelines,

2000 issued by SEBI effective from January 27, 2000,

as amended, including instructions and clarifications

issued by SEBI from time to time.

Stock Exchanges BSE and NSE

Transferor/Demerged Company GMR Industries Limited (GIDL)

Resultant Company GMR Ferro Alloys & Industries Limited (GFIL)

CERTAIN CONVENTIONS: USE OF FINANCIAL DATA

Unless stated otherwise the financial data in this information Memorandum is derived from our financial

statements prepared in accordance with Indian GAAP. Our last financial year commenced on March

23, 2006 and ended 31st March 2007. In this Information Memorandum any discrepancies in any table

between the total and the sums of the amounts listed are due to rounding off.

For definitions please see the section titled “Definitions, Abbreviations and Industry Related Terms”.

All references to “India” contained in this Information Memorandum are to be the Republic of India. All

references to “Rupees” or “Rs.” are to Indian Rupees, the legal currency of the Republic of India.

Unless stated otherwise, industry data used throughout this Information Memorandum has been

obtained from industry publications. It is generally stated that the information contained in those

publications has been obtained from sources believed to be reliable but their accuracy and

completeness is not guaranteed and their reliability cannot be assured. Although we believe that

industry data used in this information Memorandum is reliable, it has not been independently verified.

The information included in this Information Memorandum about the various other companies is based

on their respective Annual Reports and Information made available by the respective Companies.

FORWORD LOOKING STATEMENTS

We have included statements in this information Memorandum that contain words or phrases such as

“will” “aim”, “will continue”, “anticipate”, “estimate” “intend”’ “plan”, “contemplate”, “seek to”, “future”,

“objective”, “goal”, “project”, “should”, “will pursue”, and similar expressions or variations of such

expressions that are “forward looking statements”.


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All forward looking statements are subject to risks, uncertainties and assumptions that could cause

actual results to differ materially from those contemplated by the relevant forward looking statement,

Important factors that could cause actual results to differ materially from our expectations include,

among others:

• General economic and business conditions in India and other countries;

• Our ability to successfully implement our strategy, our growth and expansion plans and

technological changes;

• Changes in the value of rupee and other currency changes;

• Changes in Indian or international interest rates;

• Changes in laws and regulations in India;

• Changes in political conditions in India;

• Changes in the foreign exchange control regulations in India

For further discussion of factors that could cause our actual results to differ, see the section titled “Risk

Factors”. By their nature, certain risk disclosures are only estimates and could be materially different

from what actually occur in the future.

We do not have any obligation to and do not intend 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.

SECTION II RISK FACTORS

RISKS: INTERNAL & EXTERNAL

Power: Manufacture of Ferrochrome being a power intensive operation, is significantly affected by the

power cost. A spiraling power cost can pose a major problem in cost control. Special power tariff is

announced every year in the State Budget plan.

Raw materials: One of the major raw materials is Chrome ore. This is the basic raw material for

manufacture of Ferrochrome. It is to be noted, that we do not own mines and are dependent on major

suppliers for this raw material. Domestically the major suppliers are Orissa Mining Corporation and

Tata Steel. However, currently Tata Steel has taken a policy decision not to sell this ore except for their

captive consumption. A steep increase in the price of chrome ore will adversely affect the profitability.

The monopolistic pricing of chrome ore and the absence of long term agreement on power cost are

some of the risks.


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Future Plans

Market trends indicate that with the growth of the infrastructure industry globally, there would be a

sustained increase in the demand and production of stainless steel. Ferro Chrome is a major

ingredient in manufacture of stainless steel. Currently we are witnessing a huge surge in demand for

ferro chrome products and this trend is likely to continue for the next four to five years. The demand for

stainless steel is expected to see an increased growth of around 5% every year during the period

2007-2012.

A continuing domestic demand for stainless steel coupled with international demand will throw open

significant opportunities to the company. The company will be focusing on quality output, which will

translate into rising export turnover.

The company has been and will continuously make efforts in cost optimization and effective inventory

management.

Quality control measures such as 6 Sigma, Sprint Sigma, 5S, TQM, PCMM and EFQM and Cost

Leadership will gear the company to maintain the high quality while curtailing costs. The skilled and

experienced team at the unit is also better equipped to face the market realities. The various cost

synergies from its integration policy and insistence on quality are making the company an aggressive

player in the increasingly cost conscious markets of the future.

In order to better integrate the various functions in the future, ERP packages are under evaluation.

Managements Perception thereof

The company is working to ensure profitability inspite of the high ore and power cost. This is being

done by balancing both the domestic and exports to ensure better price realizations. The company’s

products are well accepted both for its quality and delivery by customers especially in the stringent

European markets. The company will be catering to both Domestic and Export market to ensure full

capacity utilization and profitability.

SECTION III INTRODUCTION

SUMMARY

The following summary information should be read together with the risk factors and the detailed

information about us and our financial results included elsewhere in this Information Memorandum


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Industry and Business Overview

M/s GMR Industries Limited had two divisions, Sugar division and Ferro Alloys division and a wholly

owned subsidiary M/s Bharat Sugar Mills Limited. In order to ensure operational efficiency and

conveniences a scheme of arrangement was proposed between all the share holders wherein Bharat

Sugar mills Limited was merged with GMR Industries Limited and Ferroalloys division of GMR

Industries Limited was demerged and vested in GMR Ferro Alloys and Industries Limited. As GMR

industries limited is a listed company, no objection certificate was obtained from the stock exchanges

namely BSE and NSE which had stipulated a clearance under Rule 19(2)(b) of Securities Contracts

Regulation Rules.

We would like to bring to your kind notice an application under Rule 19(2)(b) of Securities Contracts

Regulation Rules had been made and the SEBI vide its letter No.

CFD/DIL/19(2)(b)/PB/RA/12576/2008 dated May 15 2008 granted relaxation under the said Rule.

We furnish below the details in respect of the Listing.

Listing of 12285295 Equity Shares

GMR Ferro Alloys & Industries Ltd (GFIL) was incorporated on March 23, 2006. GFIL manufactures a

range of Ferro Alloys like high carbon ferrochrome, extra low phosphorus ferrochrome and a few other

speciality products. These products are used as inputs in the manufacture of stainless steel. It has a

manufacturing unit at Tekkali in Srikakulam District, Andhra Pradesh. The ISO 9001 certified plant has

an installed capacity of 25, 000 metric tons per annum.

GFIL was incorporated for the purpose of the Scheme of Arrangement which, inter-alia, comprise of

the demerger of the Ferro Alloys Division of GMR Industries Limited (GIDL) into GFIL.

Accordingly, the Scheme of Arrangement was proposed to merge Bharat Sugar Mills Limited with

GMR Industries Limited and demerge the Ferro business of GMR Industries Limited into GMR Ferro

Alloys & Industries Limited. The merging of Bharat Sugar Mills Limited with GMR Industries Limited

would accord savings in cost and administrative convenience.

The Honorable High court of Andhra Pradesh had sanctioned the Scheme of Arrangementt vide its

Order dated 19th April 2007. On filing of certified true copies of the high court order with the Registrar of

companies, Andhra Pradesh by the respective companies, the scheme has become effective from 15th

May 2007.


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As per Scheme of Arrangement, the paid up share capital of (GFIL), hereinafter referred to as

resulting company, has been restructured, and new shares have been issued and allotted to the

shareholders of GIDL on 30th July, 2007, whose names appeared on the record date viz., 20th July,

2007, as per the entitlement ratio i.e., 38 equity shares of the face value of Rs 10/- each in GFIL in lieu

of every 100 equity shares of face value of Rs. 10/- each held in GMR Industries Limited.

The Authorised capital consists of 80,00,000 8% redeemable preference shares of Rs 11- each, out of

which 78,64,700 8% redeemable preference shares of Rs 11/- each are being paid up for which listing

is not being sought.

12285295 Equity Shares of Rs 10/- each are sought to be listed on the Stock Exchanges. GENERAL INFORMATION

Incorporated as Limited Company on 23rd March 2006 under Companies Act, 1956 as “GMR Ferro

Alloys & Industries Limited”. The Company is incorporated for the purpose of vesting Ferro Alloys

Division, which has been demerged from GIDL and formed as a separate entity.

Share Transfer Agent

M/s. Karvy Computershare Private Limited

(Unit: GMR Ferro Alloys & Industries Limited)

Plot No. 17 to 24, Vittal Rao Nagar,

Madhapur,

Hyderabad – 500 081

Auditors

M/s. S. Venkatadri & Co., Chartered Accountants,

404, 14th Babukhan Estate,

Basheerbagh,

Hyderabad 500 004

Tel: 040-23237461,040-23296341

Bankers to the Company

Andhra Bank

State Bank of Mysore

Compliance Officer

Sri U. Naresh Kumar,

Executive Director.

Investors can contact the Compliance Officer in case of any share transfer related issues.


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CAPITAL STRUCTURE

Pre Scheme

No. of Shares

Value (in Rs)

Authorised Share Capital

Equity Shares of Rs.10/- each 10,00,000 1,00.00,000

Total 10,00,000 1,00.00,000

Issued Share Capital

Equity Shares of Rs.10/- each 50,700 5,07.000

Total 50,700 5,07,000

Subscribed & Paid Up Share Capital

Equity Shares of Rs.10/- each 50,700 5,07.000

Total 50,700 5,07,000

Post Scheme (as on date)

No. of Shares Value (in Rs)

Authorised Share Capital Equity Shares of Rs.10/- each

1,32,00,000 13,20,00,000

Preference Shares of Rs.11/-each 80,00,000

8,80,00,000

Total 2,12,00,000 22,00,00,000

Issued Share Capital

Equity Shares of Rs.10/- each

Preference Shares of Rs. 11/- each

1,22,85,295

78,64,700

12,28,52,950

8,65,11,700

Total 2,01,49,995 20,93,64,650

Subscribed & Paid Up Share capital

Equity Shares of Rs.10/- each

Preference Shares of Rs. 11 each/-

1,22,85,295

78,64,700

12,28,52,950

8,65,11,700

Total 2,01,49,995 20,93,64,650

The Scheme of Arrangement was approved by the Honorable High Court of Andhra Pradesh, as under:

• Every equity share holder holding 100 equity shares of Rs. 10/- each in GMR Industries

Limited as on the record date of 20th July, 2007 would be issued and allotted 38 equity shares

of Rs. 10/- each in GMR Ferro Alloys & Industries Limited and further every 100 equity shares


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of Rs. 10/- each in GMR Industries Limited would be reduced and consolidated into 62 new

equity shares of Rs. 10/- each as fully paid up.

• Every preference shareholder holding 100 (8%) preference shares of Rs. 11/- each in GMR

Industries Limited would be getting 38 (8%) preference shares of Rs. 11/- each in GMR Ferro

Alloys & Industries Limited and further every 100 (8%) preference shares of Rs. 11/- each in

GMR Industries Limited would be reduced and consolidated into 62 (8%) new preference

shares of Rs. 11/- each as fully paid up.

1. The authorised share capital of the Company at the time of incorporation was Rs.1,

00,00,000/- (divided into 10,00,000 Equity Shares of Rs. 10/- each.)

2. Post scheme, the authorised capital is Rs.22,00,00,000/- (divided into 1,32,00,000 Equity

Shares of Rs. 10/- each and 80,00,000 Preference Shares of Rs. 11/- each)

Notes to the Capital Structure: i. Share Capital History of our Company

Sl. No.

Date of Allotment

Date when fully paid

up

Consideration(Cash, Bonus

Kind etc.)

Numberof

Shares

FaceValue (Rs.)

Issue Price (Rs.)

% of Post

Arrangement

paid-up capital

Lock-inPeriod

1 23/03/2006 (on

Incorporation)

23/03/2006 Cash 50,700 10 10 Nil Nil

2 30/07/2007 30/07/2007 Issuance of

Equity

Shares

pursuant to

Scheme

1,22,34,595 10 10 100%

(491520

shares

upto

30.04.20

08)

(250775

9 shares

upto

30.06.20

11)


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3 30/07/2007 30/07/2007 Issuance of

Preference

Shares

pursuant to

Scheme

78,64,700 11 11 100%

ii. Shareholding pattern of Equity Shares of the Company before and after the Scheme (as on date)

Category

Pre Demerger Post Demerger

No. of Shares

% of Share holding No. of Shares

% of Share holding

A Promoter's Holding Promoters Indian Promoters 50,700 100.00% 8,709,489 70.89% Foreign Promoters Nil Nil Nil Nil

Person Acting in concert Nil Nil Nil Nil Sub-Total 50,700 100.00% 8,709,489 70.89% B Non-Promoters Holdings Institutional Investors Nil Nil Nil Nil Mutual Funds and UTI Banks, Nil Nil 44,232 0.36%

Financial Institutions, Insurance Companies (Central/ State Govt. Institutions/ Non-Government Institutions) Nil Nil 237,617 1.93%

FIls Nil Nil Nil Nil Sub-Total Nil Nil 281,849 2.29% C Others Corporate Bodies Nil Nil 1,689723 13.76% Individuals Nil Nil 1344235 10.94% Trust Nil Nil 182,601 1.49% Clearing Members Nil Nil 690 0.01% Fractional entitlement Nil Nil 2129 0.02% HUF Nil Nil 22722 0.18% NRIs/OCBs Nil Nil 51,857 0.42% Sub-Total Nil Nil 3,293957 26.82% GRAND TOTAL 50,700 100.00% 12,285,295 100.00%


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iii. List of Top 10 Shareholders of the company and the Number of Equity Shares held by them.

Sl.No. Name of the Share Holder No. of Shares Percentage

1 GMR Holdings Pvt. Ltd. 8250526 67.1577

2 Satabdi Investments Private Ltd. 505633 4.1158

3 Shrine Finance & Investments Pvt. Ltd. 448341 3.6494

4 BRP Stock Broking Services Ltd. 414727 3.3758

5 GVL Investments Private Ltd. 407329 3.3156

6 PGN Trust 182601 1.4863

7 United India Insurance Co. Ltd. 161503 1.3146

8 General Insurance Corporation of India 76000 0.6186

9 GMR Industries Limited 50000 0.4070

10 Religare Finvest Ltd. 41841 0.3406

Total 10538501 85.7814

1. As on the date of this Information Memorandum, there are no outstanding Warrants, options or

rights to convert debentures, loans or other instruments into equity shares of the company.

2. There shall be only one denomination for the Equity Shares of the Company, subject to applicable

regulations and the company shall comply with such disclosure and accounting norms specified by

SEBI, from time to time.

3. The Company has about 20,451 Approx members as on the date of filing this Information

Memorandum.

4. None of Equity shares of the resulting company were under lock in prior to the Scheme.

SCHEME OF ARRANGEMENT

Approvals with respect to the Scheme of Arrangement

The Hon’ble High Court of Andhra Pradesh at Hyderabad vide its order dated April 19, 2007 has

approved the Scheme of Arrangement amongst GMR Industries Ltd., Bharat Sugar Mills Ltd. and GMR

Ferro Alloys & Industries Limited and their respective shareholders (the “ Scheme”). Pursuant to this

Scheme the Ferro Alloys Division of GMR Industries Ltd. have been transferred to and vested into

GFIL w.e.f. April 1, 2006 (i.e. the appointed date under the scheme) under section 391 to 394 of the

companies Act 1956. In accordance with the said Scheme, the equity shares of GFIL issued pursuant


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to the scheme, subject to applicable regulations, shall be listed and admitted to trading on BSE and

NSE . Such listing and admission for trading is not automatic and will be subject to such other terms

and conditions as may be prescribed by the stock exchanges at the time of application for listing by

GFIL. The aforesaid Order of the Hon’ble High Court of Andhra Pradesh at Hyderabad was filed by

GIDL & GFIL on 15th May 2007, with the Registrar of Companies (“ROC”), Andhra Pradesh, which is

the effective date of the Scheme. Subsequently, application is was made to SEBI for granting

relaxation from the strict enforcement of requirement of Rule 19(2)(b) of the Securities Contract

Regulation (Rules) 1957 (SCRR) for the purpose of listing of shares of GFIL subject to complying with

all provisions of Clause 8.3.5 of the SEBI (DIP) Guidelines 2000. SEBI has vide their letter no

CFD/DIL/19(2)(b)/PB/RA/12576/2008 DATED May 15 2008 has relaxed the applicability of Rule 19(2)

of the Securities Contract Regulation Rules,1957 subject to the Company complying with all the

provisions of Clause 8.3.5 of the SEBI(Disclosure and Investor Protection)Guidelines,2000.GFIL has

submitted its Information Memorandum containing information and disclosures in line with the

disclosures requirement for public issues, as applicable, to BSE & NSE for making the said Information

Memorandum available to public through their websites. The Information Memorandum will be made

available on the Websites of GFIL i.e. www.gfil.co.in and also www.gmrindustries.in. GFIL had

published an advertisement in the newspapers on 28.05.2008 containing the details in line with the

details required as per the clause 8.3.5.4 of SEBI (DIP) Guidelines. GFIL also undertakes that all

material information about itself shall be disclosed to stock exchanges on a continuous basis so as to

make the same available to the public, in addition to the requirements if any, specified in the listing

agreement for disclosure about the company.

STATEMENT OF TAX BENEFITS

As per the present provisions of Income Tax Act, 1961 (hereinafter referred to as “the Act”) and other

laws as applicable for the time being in force in India, the following tax benefits are available to the

Company and to the Shareholders of the Company, subject to fulfillment of prescribed conditions.

A. BENEFITS AVAILABLE TO THE COMPANY:

1. Dividends

Dividends (whether interim or final) declared, distributed or paid by a domestic company are exempt in

the hands of the Company, in its capacity as a registered shareholder, as per the provisions of Section

10(34) of the Act, if the same is subject to dividend distribution tax under section 115-O of the Act.

However section 94(7) of the Act provides that losses arising from the sale/transfer of shares

purchased up to three months prior to the record date and sold within three months after such date will


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be disallowed to the extent dividend on such shares is tax exempt in the hands of the company, in its

capacity as shareholder.

2. Credit of Minimum Alternate Tax (‘MAT’)

Under section 115JAA(1A) of the Act, credit shall be allowed for any tax paid under section 115JB of

the Act (MAT) for any assessment year commencing on or after April 1, 2006 against the tax payable

under the provisions of the Act other than section 115JB. Such set off is however restricted to the

difference between tax on income computed in accordance with the provision of the Act other than

section 115JB and tax payable under section 115JB. Credit eligible for carry forward is the difference

between MAT paid and tax computed as per the provision of the Act excluding section 115JB. Such

MAT credit shall not be available for set-off beyond seven years succeeding the year in which the MAT

credit initially arose. Income exempt u/s 10A and 10B are not included in computation of book profits till

assessment year 2007-2008 and income exempt u/s 10AA of unit in SEZ commencing operation on or

after 01/04/2005 is not included in computation of book profits

3. Capital Gains

3.1 Capital assets may be categorized into short term capital assets and long term capital assets

based on the period of holding. Shares held in companies, any other securities listed in recognized

stock exchanges in India, units of UTI or Mutual Funds specified under section10 (23D) and zero

coupon bonds, will be considered as short-term capital assets if they are held for a period not

exceeding 12 months immediately preceding the date of their transfer. Other capital assets are

considered to be short-term assets if they are held for a period not exceeding 36 months immediately

preceding the date of transfer. In case the period of holding exceeds the 12 months or 36 months, as

the case may be, the capital assets will be classified as long-term capital assets. Capital gains arising

on transfer of short term capital assets are considered as short term capital gains while those arising

on transfer of long term capital assets are considered as long term capital gains.

3.2. Section 48 of the I.T. Act, which prescribes the mode of computation of capital gains, provides for

deduction of cost of acquisition/ improvement and expenses incurred in connection with the transfer of

a capital asset, from the sale consideration to arrive at the amount of capital gains. In respect of long-

term capital gains, it offers a benefit by permitting substitution of cost of acquisition/ improvement with

the indexed cost of acquisition/ improvement, which adjusts the cost of acquisition/ improvement by a

cost inflation index as prescribed from time to time.


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3.3. As per the provisions of section 112 of the I.T. Act, long-term capital gains arising to the Company

are subject to tax at the rate of 20% (plus applicable surcharge and education cess). However, as per

proviso to that section, the long-term capital gains resulting from transfer of listed securities or units or

zero coupon bonds (not covered under section 10(38 )of the I.T. Act), are subject to tax at the rate of

20% (plus applicable surcharge and education cess) on long-term capital gains after considering the

indexation benefit, which would be restricted to 10% (plus applicable surcharge and education cess) of

long term capital gains without considering indexation benefit at the option of the Company. Under

section 48 of the I.T. Act, the long term capital gains arising out of sale of capital assets excluding

bonds and debentures (except Capital Indexed Bonds issued by the Government) will be computed

after indexing the cost of acquisition/ improvement.

3.4 As per the provisions of section 111A of the I.T. Act, short-term capital gains arising to the

Company from the transfer of equity shares in any other company or units of equity oriented fund

transacted through a recognised stock exchange in India are subject to tax @ 10% (plus applicable

surcharge and education cess) if such a transaction is subjected to securities transaction tax (“STT”).

For this purpose “Equity Oriented Fund” means a fund –

i. Where the investible funds are invested by way of equity shares in domestic companies to the extent

of more than fifty per-cent of the total proceeds of such funds; and

ii. Which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the I.T.

Act.

3.5. Exemption of Capital Gain:

i. Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer of equity shares in

any other company or units of equity oriented fund, which is chargeable to STT, is exempt from tax in

the hands of the Company.

ii. Under section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein,

long term capital gains (not covered under section10(38) of the I.T. Act) arising on the transfer of a

long term capital asset by the Company will be exempt from tax if the capital gains are invested in

notified bonds within a period of six months after the date of such transfer and held for a minimum

period of three years. Where only a part of the capital gains is so invested, the exemption is

proportionately available. However, if the said 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


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would become chargeable to tax as long term capital gains in the year in which the bonds are

transferred or converted into money.

iii. As per the provisions of section 90, 91 the Act, where the Tax Treaty has been signed between

India and another country for the purposes of avoiding double taxation, then the taxpayer has option to

be governed by the provisions of the Tax Treaty to the extent they are more beneficial. Thus, the

taxpayer can avoid double taxation of the same income by using the tax treaty.

Where the income is taxed by a country with which India does not have a tax treaty, then the taxpayer

is entitled to get a deduction from the Indian income tax payable of the taxes paid in the other country.

However, if the tax rate is higher in the other country, the credit will be restricted to the tax payable as

per the Indian tax rate.

4. Rebate under Section 88E

As per the provisions of Section 88E of the I.T. Act, where the business income of the company

includes profits and gains from sale of securities liable to STT, a rebate is allowable from the amount of

income tax on such business income to the extent of the STT paid on such transactions. The amount

of rebate shall, however, be limited to the amount of income tax arrived at by applying the average rate

of income tax on such business income. As such, no deduction will be allowed in computing the

income chargeable to tax as “capital gains” or under the head “Profits and gains of Business or

Profession” for such amount paid on account of STT.

5. Depreciation

Depreciation on plant or machinery used for the purposes of business is allowed at the rate of 15% on

written down value basis. Further, where new plant or machinery has been acquired and installed by a

taxpayer engaged in business of manufacture or production of any article or thing, additional

depreciation of 20% is allowed in the year of installation subject to compliance of certain conditions laid

down in section 32 of the Act. In respect of tangible assets at the rates prescribed under the Income

tax Rules, 1962, In respect of intangible assets being in the nature of know-how, patents, copyrights,

trademarks, Licenses, franchises or any other business or commercial right of similar nature acquired

on or after April 01, 1998 at the rates prescribed under the Income tax Rules, 1962.

6. Unabsorbed depreciation and business losses.


17

As per the provisions of section 32(2) of the Act, where full allowance cannot be given to the

depreciation allowance in any year, the same can be carried forward and claimed in the subsequent

year(s). Further, as per the provisions of section 72 of the Act, unabsorbed business losses which is

not set off in any previous year can be carried forward and set off against the business profits of the

subsequent assessment year(s) subject to a maximum of eight assessment years. However, the carry

forward and set off of business losses are subject to restrictions specified in section 79 and section 80.

7. Amortization of Preliminary Expenses

Under section 35D of the Act, a deduction equal to one-fifth of certain specified expenditure, including

specified expenditure incurred in connection with the issue of shares for the extension of the industrial

undertaking, for a period of five successive years subject to the limits provided and the conditions

stated Under the said section.

B. BENEFITS AVAILABLE TO SHAREHOLDERS :

B.I RESIDENT SHAREHOLDERS :

1. Dividends


the hands of shareholder, as per the provisions of Section 10(34) of the Act, if the same is subject to

dividend distribution tax under section 115-O of the Act. However section 94(7) of the Act provides that

losses arising from the sale/transfer of shares purchased up to three months prior to the record date

and sold within three months after such date will be disallowed to the extent dividend on such shares is

tax exempt in the hands of shareholders.

2. Capital gains

2.1 Capital assets may be categorized into short term capital assets and long-term capital assets

based on the period of holding. Shares held in companies, any other securities listed in a recognized

stock exchanges in India, units of UTI or Mutual Funds specified under section 10(23D) and zero

coupon bonds, will be considered as short term capital assets if they are held for a period not






18



2.2 Section 48 of the I.T. Act, which prescribes the mode of computation of capital gains, provides for






2.3. As per the provisions of section 112 of the I.T. Act, long-term capital gains arising to the

shareholders are subject to tax at the rate of 20% (plus applicable surcharge and education cess).

However, as per proviso to that section, the long-term capital gains resulting from transfer of listed

securities or units or zero coupon bonds (not covered under section 10(38) of the I.T. Act), are subject

to tax at the rate of 20% (plus applicable surcharge and education cess) on long-term capital gains

after considering the indexation benefit, which would be restricted to 10% (plus applicable surcharge

and education cess) of long term capital gains without considering indexation benefit at the option of

the Shareholder. Under section 48 of the I.T. Act, the long term capital gains arising out of sale of

capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the

Government) will be computed after indexing the cost of acquisition/ improvement.


Shareholders from the transfer of equity shares in any other company or units of equity oriented fund

transacted through a recognised stock exchange in India are subject to tax @10% (plus applicable

surcharge and education cess) if such a transaction is subjected to securities transaction tax (“STT”).


I. Where the invisible funds are invested by way of equity shares in domestic companies to the extent


ii. Which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the I.T.

Act.


19

2.5. Exemption of Capital Gain

i Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer of equity shares in


the hands of the Shareholders. ii. Under section 54EC of the I.T. Act and subject to the conditions and

to the extent specified therein, long term capital gains (not covered under section 10(38) of the I.T. Act)

arising on the transfer of a long term capital asset by the Company will be exempt from tax if the

capital gains are invested in notified bonds within a period of six months after the date of such transfer

and held for a minimum period of three years. Where only a part of the capital gains is so invested, the

exemption is proportionately available. However, if the said 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 would become chargeable to tax as long term capital gains in the year in which the

bonds are transferred or converted into money.

iii. As per the provisions of Section 54F of the Act and subject to the conditions specified therein, Long-

term capital gains (other than those covered in point 2.5 (i) above) arising to an individual or a HUF on

transfer of shares are exempt from capital gains tax if the net consideration from transfer of such

shares are used for purchase of residential house property within a period of 1 year before or 2 years

after the date on which the transfer took place or for construction of residential house property within a

period of 3 years after the date of such transfer. If part of the net consideration were invested within the

prescribed period in a residential house, such gains would be exempt from tax on a proportionate basis.

The minimum holding period for the new purchased/constructed house to remain eligible for exemption

is 3 years.

iv. As per the provisions of section 90, 91 the Act, where the Tax Treaty has been signed between



taxpayer can avoid double taxation of the same income by using the tax treaty. Where the income is

taxed by a country with which India does not have a tax treaty, then the taxpayer is entitled to get a

deduction from the Indian income tax payable of the taxes paid in the other country. However, if the tax

rate is higher in the other country, the credit will be restricted to the tax payable as per the Indian tax

rate.


As per the provisions of Section 88E of the I.T. Act, where the business income of the shareholder



20






4. Income of minor exempt up to a certain limit.

Under Section 10(32) of the Act, any income of minor children clubbed in the total income of the parent

under Section 64(1A) of the Act will be exempt from tax to the extent of Rs.1,500 per minor child.

B.II NON-RESIDENT SHAREHOLDERS/ NON-RESIDENT INDIANS (Other than FIIs and Venture Capital Companies/Funds.)

1. Dividends


the hands of the shareholder, as per the provisions of Section 10(34) of the Act, if the same is subject

to dividend distribution tax under section 115-O of the Act. However section 94(7) of the Act provides

that losses arising from the sale/transfer of shares purchased up to three months prior to the record

date and sold within three months after such date will be disallowed to the extent dividend on such

shares is tax exempt in the hands of the shareholder.

2. Capital gains

2.1 Capital assets may be categorized into short term capital assets and long-term capital assets

based on the period of holding. Shares held in companies, any other securities listed in a recognized

stock exchanges in India, units of UTI or Mutual Funds specified under section 10(23D) and zero

coupon bonds, will be considered as short term capital assets if they are held for a period not








21

2.2. Section 48 of the I.T. Act, which prescribes the mode of computation of capital gains, provides for






2.3. As per the provisions of section 112 of the I.T. Act, long-term capital gains arising to the

Shareholder are subject to tax at the rate of 20% (plus applicable surcharge and education cess).

However, as per proviso to that section, the long-term capital gains resulting from transfer of listed

securities or units or zero coupon bonds (not covered under section 10(38) of the I.T. Act), are subject

to tax at the rate of 20% (plus applicable surcharge and education cess) on long-term capital gains

after considering the indexation benefit, which would be restricted to 10% (plus applicable surcharge

and education cess) of long-term capital gains without considering indexation benefit at the option of

the Shareholder. Under section 48 of the I.T. Act, the long term capital gains arising out of sale of

capital assets excluding bonds and debentures (except Capital Indexed Bonds issued by the

Government) will be computed after indexing the cost of acquisition/ improvement.


Shareholder from the transfer of equity shares in any other company or units of equity oriented fund

transacted through a recognized stock exchange in India are subject to tax @10% (plus applicable

surcharge and education cess) if such a transaction is subjected to securities transaction tax(“STT”).


i. where the investible funds are invested by way of equity shares in domestic companies to the extent


ii. which has been set up under a scheme of a Mutual Fund specified under section 10(23D) of the I.T.

Act.

2.5. Exemption of Capital Gain

i. Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer of equity shares in


the hands of the Shareholders.


22

ii. Under section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein,

long term capital gains (not covered under section 10(38) of the I.T. Act) arising on the transfer of a

long term capital asset by the Company will be exempt from tax if the capital gains are invested in

notified bonds within a period of six months after the date of such transfer and held for a minimum

period of three years. Where only a part of the capital gains is so invested, the exemption is

proportionately available. However, if the said 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

would become chargeable to tax as long term capital gains in the year in which the bonds are

transferred or converted into money.

iii. As per the provisions of Section 54F of the Act and subject to the conditions specified therein, Long-

term capital gains (other than those covered in point 2.5 (i) above) arising to an individual or a HUF on

transfer of shares are exempt from capital gains tax if the net consideration from transfer of such

shares are used for purchase of residential house property within a period of 1 year before or 2 years

after the date on which the transfer took place or for construction of residential house property within a

period of 3 years after the date of such transfer. If part of the net consideration were invested within the

prescribed period in a residential house, such gains would be exempt from tax on a proportionate basis.

The minimum holding period for the new purchased/constructed house to remain eligible for exemption

is 3 years.

iv. As per the provisions of section 90, 91 the Act, where the Tax Treaty has been signed between







rate.

2.6 Options available under Chapter XIIA of the Act to Non Resident Indians

i. Non-Resident Indians [as defined in Section 115C (e) of the Act], being shareholders of an Indian

Company, have the option of being governed by the provisions of Chapter XII-A of the Act, which inter

alias entitles them to the following benefits in respect of income from shares of an Indian company

acquired, purchased or subscribed to in convertible foreign exchange:


23

ii. As per the provisions of section 115D read with section 115E of the I.T. Act and subject to the

conditions specified therein, long-term capital gains (in cases not covered under Section 10(38) of the

I.T. Act) arising on transfer Company’s shares, will be subject to tax at the rate of 10 percent (plus

applicable surcharge and education cess), without indexation benefit.

iii. As per the provisions of section 115F of the I.T. Act and subject to the conditions specified therein,

gains arising on transfer of a long-term capital asset (in cases not covered under Section 10(38) of the

I.T. Act) being shares of the Company shall not be chargeable to tax if the entire net consideration

received on such transfer is invested within the prescribed period of six months in any specified asset

or savings certificates referred to in Section 10(4B) of the I.T. Act. If part of such net consideration is

invested within the prescribed period of six months in any specified asset or savings certificates

referred to in Section 10(4B) of the I.T. Act, then such gains would be exempt from tax on a

proportionate basis. For this purpose, net consideration means full value of the consideration received

or accrued as a result of the transfer of the capital asset as reduced by any expenditure incurred

wholly and exclusively in connection with such transfer. Further, if the specified asset or savings

certificates in which the investment has been made is transferred within a period of three years from

the date of investment, the amount of capital gains tax exempted earlier would become chargeable to

tax as long term capital gains in the year in which such specified asset or savings certificates are

transferred.

iv. As per the provisions of section 115G of the I.T. Act, non-resident Indians are not obliged to file a

return of income under section 139 of the I.T. Act, if their only source of income is income from

investments or long-term capital gains earned on transfer of such investments or both, provided tax

has been deducted at source from such income as per the provisions of Chapter XVII-B of the I.T. Act.

v. Under section 115H of the I.T. Act, where the non-resident Indian becomes assessable as a resident

in India, he may furnish a declaration in to the Assessing Officer, along with his return of income for

that year under section 139 of the I.T. 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 assessment years until such assets are converted into money.

vi. As per the provisions of section 115I of the I.T. Act, a non-resident Indian may elect not to be

governed by the provisions of Chapter XII-A for any assessment year by furnishing his return of

income for that assessment year under section 139 of the I.T. Act, declaring therein that the provisions

of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for

that assessment year will be computed in accordance with the other provisions of the I.T. Act.


24


As per the provisions of Section 88E of the I.T. Act, where the business income of the shareholder







B. III SHAREHOLDERS BEING MUTUAL FUNDS :

In case of a shareholder being a Mutual fund, as per the provisions of section 10(23D) of the I.T. 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 public sector banks or public financial

institutions and Mutual Funds authorized by the Reserve Bank of India is exempt from income-tax,

subject to the conditions notified by Central Government in this regard.

B. IV SHAREHOLDERS BEING VENTURE CAPITAL COMPANIES/ FUNDS :

In case of a shareholder being a Venture Capital Company/ Fund, any income of a Venture Capital

Company/ Fund registered with the Securities and Exchange Board of India, is exempt from income

tax, subject to the conditions specified in section 10(23FB) of the I.T. Act.

B.V. SHAREHOLDERS BEING Foreign Institutional Investors (FIIs)

1. DIVIDENDS


the hands of the FIIs, in its capacity as a registered shareholder, as per the provisions of Section 10(34)

of the Act, if the same is subject to dividend distribution tax under section 115-O of the Act. However

section 94(7) of the Act provides that losses arising from the sale/transfer of shares purchased up to

three months prior to the record date and sold within three months after such date will be disallowed to

the extent dividend on such shares is tax exempt in the hands of the FIIs, in its capacity as shareholder.

2. CAPITAL GAINS

2.1. As per the provisions of section 111A of the I.T. Act, short-term capital gains arising to FII from the

transfer of equity shares of the company transacted through a recognized stock exchange, are subject

to tax @ 10% (plus applicable surcharge and education cess) if such a transaction is subjected to STT.


25

2.2. Under section 115AD, capital gains arising from transfer of shares of the Company, which are not

exempt under Section 10(38), shall be taxable as follows: Capital gains on shares, which are held for

the period of more than twelve months, shall be taxable at the rate of 10% (plus applicable surcharge

and education cess). Capital gains on other shares shall be taxable at the rate of 30% (plus applicable

surcharge and education cess).

2.3. Exemption of capital gain

i. Under section 10(38) of the I.T. Act, the long-term capital gain arising on transfer of equity shares of

the Company, which are chargeable to STT, are exempt from tax in the hands of FIIs. Under Section

54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital

gains. 10(38) of the I.T. Act) arising on the transfer of shares of the Company will be exempt from

capital gains tax if the capital gains are invested in notified bonds within a period of six months after

the date of such transfer and held for a minimum period of three years. Where only a part of the capital

gains is so invested, the exemption is proportionately available. However, if the said 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 would become chargeable to tax as long term capital gains in

the year in which the bonds are transferred or converted into money.

iii. Under section 54ED of the I.T. Act and subject to the conditions and to the extent specified therein,

long term capital gain (not covered under section 10(38) of the I.T. Act) on the transfer of shares of the

Company will be exempt from capital gains tax if the capital gain is invested in shares of an Indian

Company forming part of a eligible public issue, within a period of six months after the date of such

transfer and held for a period of at least one year. Where only a part of the capital gains is so invested,

then the exemption is proportionately available.

2.4 As per the provisions of section 90, 91 the Act, where the Tax Treaty has been signed between







rate.

3. Rebate under section 88E

As per the provisions of Section 88E of the I.T. Act, where the business income of the FIIs includes

profits and gains from sale of securities liable to STT, a rebate is allowable from the amount of income

tax on such business income to the extent of the STT paid on such transactions. The amount of rebate


26

shall, however, be limited to the amount of income tax arrived at by applying the average rate of

income tax on such business income. As such, no deduction will be allowed in computing the income

chargeable to tax as “capital gains” or under the head “Profits and gains of Business or Profession” for

such

amount paid on account of STT.

UNDER THE WEALTH TAX ACT, 1957

Shares in a Company held by a shareholder will not be treated as an asset within the meaning of

Section 2(ea) of Wealth-tax Act, 1957; hence, wealth tax is not leviable on shares held in a 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.

Notes:

1. All the above benefits are as per the current laws. Legislation, its judicial interpretation and the

policies of the regulatory authorities are subject to change from time to time, and these may have a

bearing on the benefits listed above. Accordingly, any change or amendment in the law or relevant

regulations would necessitate a review of the above.

2. In view of the individual nature of tax consequences, being based on all the facts, in totality, of the

investors, each investor is advised to consult his/ her/ its own tax advisor with respect to specific tax

consequences of his/ her/ its investments in the shares of the company.

3. The above statement of possible tax benefits sets out the provisions of law in a summary manner

only and is not a complete analysis or listing of all potential tax consequences of the purchase,

ownership and disposal of ordinary shares. The statements made above are based on the tax laws in

force as interpreted by relevant taxation authorities as of date. Investors are advised to consult their

tax advisors with respect to the tax consequences.

SECTION IV – ABOUT GMR FERRO ALLOYS & INDUSTRIES LIMITED HISTORY OF THE COMPANY


27

GMR Ferro Alloys & Industries Limited is an ISO 9001 certified plant located in Tekkali, Srikakulam

district, Andhra Pradesh. It manufactures internationally accepted high carbon Ferro-chrome for the

stainless steel industry.

The installed capacity of the plant is 25,000 MT with one 6 MVA and one 9 MVA furnace. The

manufacture of Ferro chrome is done through continuous smelting of chrome ore, coal, coke and

quartz in the submerged Arc Furnace (SAF) at 1600 – 1700 degree C. The chrome ore gets reduced

by carbon to form Ferro chrome.

Two standard grades of Ferro Chrome are manufactured, i.e., High Silicon (4% Max) and Low silicon

(2% Max) Ferrochrome grade. Standard supplies are in the size range of 10- 50 mm and 10- 150.

Grade and size is as per customer’s specification.

The company’s customer profile includes domestic and overseas customers. Exports contribute to

around 75% of the total sales and the products are exported mainly to Europe, Far East and Middle

East.

Company’s philosophy on the code of Governance

“We at GMR Ferro Alloys & Industries Limited believe that good corporate governance is a key driver

of sustainable corporate growth and long-term value creation to our stakeholders. For us, Corporate

Governance does not only mean ensuring compliance with regulatory requirements, it involves being

responsive to aspirations of our stakeholders.

In the process of achieving corporate goals, the company has always been taking the spirit of various

legislations as guiding principles and proposes to go well beyond statutory compliance by estimating

such systems and procedures as are required to make the management completely transparent and

institutionally sound. We are committed to conduct the business upholding the core values like

transparency, integrity, honesty, accountability and in compliance of all statutes.

We recognize that this a conscious and continuous process across the organization, which enables the

company to adopt best practices as we incorporate improvements based on the past experience”.

Board of Directors

Serial Director’s Name Designation


28

No

1 Mr. B.V,Nageshwara Rao Chairman

2 Mr. N.V. Varadarajulu Director

3 Mr. N.C.Sarabeswaran Director

4 Mr. U. Naresh Kumar Executive Director

5 Mr. Prem Kumar Amar Director

Key Personal

Sl No Name Designation Contact Details

1 Mr. Naresh Kumar CEO & Executive

Director

[email protected]

2 Mr. V. Srinivasan General

Manager(marketing)

[email protected]

3 Mr. Ch. Nagaraju General Manager

(production)

[email protected]

Location Details

Sr. No Name Location

1 Registered Office & corporate office 6-3-866/1/G2, Greenlands

Begumpet,

Hyderabad- 500016

Tel: 040- 23410191 to 195

Fax: 040-23410184

2 Factory / plant Ravivalasa village

Tekkali Mandal

Srikakulam District-

532212(A.P)

Tel: 08945-244323, 244312

Fax: 08945-244545

Major Customers

CUSTOMER COUNTRY

Brokermet SL Spain

Bulk Trading Switzerland


29

Stemcor Ferro alloys AG Switzerland

KMR Stainless Steels Germany

KTC Korea Co. LTd Korea

PT Makmur Indonesia

BNF Engineering Malaysia

Ask Resopurces Hongkong

United Co. for Foundaries Egypt

Metaal Europe U A E

Al jaber Iron & steel Plant U A E

Ni-Met Metals & Minerals Inc Canada

Visakhapatnam Steel Plant India

Kaybee Industrial Alloys India

Oswal Minerals India

Alsthom Projects India Ltd India

Premier Industries Corporation India

GMR Ferro Alloys & Industries Limited is mainly focused on the following: THE FUTURE PLANS OF THE COMPANY

Market trends indicate that with the growth of the infrastructure industry globally, there would be a

sustained increase in the demand and production of stainless steel. Ferro Chrome is a major

ingredient in manufacture of Stainless Steel. Currently we are witnessing a huge surge in demand for

Ferro Chrome products and this trend is likely to continue for the next four to five years. The demand

for stainless steel is expected to see an increased growth of around 5% every year during the period

2007-2012.

A continuing domestic demand for stainless steel coupled with international demand will throw open

significant opportunities to the company. The company will be focusing on quality output, which will

translate into rising export turnover.

The company has been and will continuously make efforts in cost optimization and effective inventory

management. Quality control measures such as 6 Sigma, Sprint Sigma, 5S, TQM, PCMM and EFQM

and Cost Leadership will gear the company to maintain high quality while curtailing costs. The skilled

and experienced team at the unit is also better equipped to face the market realities. The various cost

synergies from its integration policy and insistence on quality are making the company an aggressive

player in the increasingly cost conscious markets of the future.


30

In order to better integrate the various functions in the future, ERP packages are under evaluation.

PROMOTERS & THEIR BACKGROUND

The Company is being managed by the Promoter Companies, M/s GMR Holdings Pvt. Ltd. and M/s

GVL Investments Pvt. Ltd. GMR Holdings Pvt. Ltd. is a Holding Company and holds 67.16% in GMR

Ferro Alloys & Industries Ltd. and other Promoter Company GVL Investments Private Limited holds

3.32% in GMR Ferro Alloys & Industries Limited. GMR Industries holds 0.41% in the Company. The

company is a professionally managed Company under the management of well-qualified and

professional Board of Directors.

Profile of Promoters

Mr. G. M. Rao

Mr. G. M. Rao, 58 is the Executive Chairman of GMR Infrastructure Limited. He is a graduate in

mechanical engineering from Andhra University. He is the Founder Chairman of the GMR group. Mr.

Rao started the GMR group of companies with a small jute unit in 1977 and led the group’s expansion

into Ferro Alloys in 1983. Mr. Rao ventured into the finance sector when he bought a small stake in the

Vysya Bank in the year 1985. He has later spread his operations into the insurance sector through a

joint venture with ING to start the ING Vysya Life Insurance. In 1997, the group forayed into sugar and

related industry. In 1998, he led the group’s diversification into infrastructure development beginning

with the investment in GMR Power. He was awarded the Doctorate in Philosophy in 2005 by the

Jawaharlal Nehru Technological University, Hyderabad in recognition of his services to industry. He is

also the founder and Chairman of the GMR Varalakshmi Foundation, the Corporate Social

Responsibility arm of the Group, engaged in the four strategic areas of Education, Health, Community

Welfare and Empowerment of the less privileged. Mr. Rao received the prestigious “Entrepreneur of

the Year Award” from the Country’s premier Financial Paper Economic Times in October 2007 in

recognition of his pioneering work as an Entrepreneur in the area of Infrastructure Development.

He has also been awarded the ‘Most promising Entrant to the Big League’ by CNBC TV 18 at its

‘Indian Business Leader Awards 2007. The award has been given to him in recognition of his

remarkable qualities and performance as a Star in the Indian Corporate scene.

Till recently, he held the position of the Managing Director of GMR Infrastructure Limited.. Currently, in

the capacity of Group chairman he drives external relations and mentor and develops the senior

leaders.


31

Mr. Srinivas Bommidala

Mr. Srinivas Bommidala, 44, Group Director of GMR Infrastructure Limited has been a member of the

Board since 1996. He has over 22 years of experience in the agriculture, fast moving consumer goods

and services sector. He led the GMR Group’s foray into the infrastructure sector and was the

managing director of GMR Power. He also held the position of Managing Director of Vemagiri Power

and led the implementation of the project. He has in the past held the position of Managing Director of

Delhi International Airport Private Limited. Currently, in the capacity of Chairman - Urban Infrastructure

and Highways he oversees our forays into roads, properties, construction and SEZ businesses.

Mr. G.B.S. Raju

Mr. G.B.S. Raju, 33, is the Managing Director, Group Chief Financial Officer of GMR Infrastructure

Limited and has been on the Board since 1999. He completed his bachelors degree in commerce from

Vivekananda College, Chennai, University of Madras in 1995. He began his career as Managing

Director in GMR Energy. It was under his leadership that GMR Energy’s barge-mounted power plant

was established ahead of schedule. In the past, as the sector head of the GMR Groups’ road business,

he led the Group’s foray in the roads sector. Mr. Raju also heads the Group’s shared services and

Corporate Departments. Currently, in the capacity of Chairman – Corporate and International business

he is responsible for the identification and execution of global infrastructure business opportunities and

corporate affairs.

Mr. G. Kiran Kumar

Mr. G. Kiran Kumar, 32, Group Director of GMR Infrastructure Limited has been on the Board since

1999. He also heads the Group’s business development in airports sector. Prior to heading GHIAL, he

headed the Group’s finance function and the shared services. Currently, in the capacity of Chairman -

Airport business he oversees our initiatives in the airport and related businesses.

OBJECTS OF THE COMPANY

The objects of the Company as stated in the Memorandum of Association are:

•To carry on the business of manufactures and/or sellers/exporters of any or all types of Ferrous and

Non-Ferrous metals, Alloy Steels, Ferro Alloys, Manganese Alloys and other metals alloys, pig iron,

wrought iron, steel converters, rolled steel or other metal or alloys makers, miners, smelters, engineers,

iron and steel founders in all or any of their respective branches, metallurgists, prospectors, explorers,

contractors, agents and to establish worships for the manufacture of any equipment required for any of

the industries which the Company can undertake and to deal in such equipment.


32

•To establish provide maintain and operate factories for the manufacture of Electro-Chemical and

Electro-Metallurgical products, such as Calcium Carbide, Silicon Manganese, Ferro Chrome, all Ferro

allied products, Caustic Soda, Calcium Silicate, etc. and to carry on business of manufacturer,

explorers, importers, exporters, dealers and stockiest in ferrous and non-ferrous metals, Ferro alloys,

Alloy steel and all other Electro-metallurgical and Electro-chemical products.

•To search for ores, minerals, mines, quarries and secure licenses for mining or offer on sub-lease or

rent any land or place which may be acquired by the Company and to lend any such land or place or

agriculture, building or other use, to sell or otherwise dispose off any lands, mines or other property of

the Company.

•To buy, sell, manufacture and deal in all or any minerals, charcoal, coal wood plants, machinery,

implements, appliances, conveniences, and to take on lease or license, concessions or otherwise in

India or elsewhere. Mines, Mining rights and land to explore, work export, develop, turn to account the

same and to crush, win, get, carry, smite, calcite, refine, dress, amalgamate, manipulate or prepare for

market ore, metal and mineral substances of all kinds and to carry on any other metallurgical

operations of all kinds and which may seen conducive to any of the objects of the Company.

•To Carry on the business of merchandise activity including domestic/export sale/purchase of all

commodities, goods, materials, minerals, ferrous and non/ferrous metals, ores, agricultural products,

fisheries, prawns, equipment, appliances, machinery including parts, spares,

telecommunication/electrical/electronic equipment including towers, radios, cables, etc. and all other

items of merchandise value.

Change in Memorandum of Association of the Company since its Inception

Date (effected)

Particulars

20-02-2007 Increase in Authorised Capital from Rs. 1 Crore to Rs. 22 Crores.

MANAGEMENT

Board of Directors

The Following table sets forth details regarding our Board of Directors as on date:

Name of the Directors Address Occupation Other Directorship

Sri Nakka Venkata Varadarajulu

Designation: Director

H.No. 3-6-147

Himayat Nagar,

Professional GMR Industries Limited


33

HYDERABAD – 500 029

Sri U. Naresh Kumar


# 1-1-385/8, Gandhinagar,

Hyderabad-500080

Professional

None

SriN.C.Sarabeswaran,


# 7, (Old No.35),

Luz Avenue,

Mylapore,

Chennai

Professional

GMR Energy Ltd.,

GMR Badrinath Hydro Electrical Ltd.

GMR Ambala-Chandighar Expressways Pvt.

Ltd.

GMR Pochampally Expressways Pvt. Ltd.

GMR Jadcherla Expressways Pvt. Ltd.

GMR Ulundurpur Expressways Pvt. Ltd.

Madura Micro Finance Ltd.

Indo-Australian Chamber of Commerce

R.Subramaniam & Co. Pvt. Ltd.

Mr. B.V.Nageswara Rao

Designation: Chairman

# 98, Next to NAL Layout,

Behind FCI Building, East

End Main Road, 4th Block,

Jayanagar, Bangalore – 560

041

Professional GMR Industries Ltd.

GMR(Badrinath) Hydro Power Generation Pvt Ltd GMR Mining & Energy Private Limited GMR Ferro Alloys & Industries Limited GMR Kamalanga Energy Limited GMR Infrastructure Limited GMR Power Corporation Pvt. Ltd GMR Energy Limited Vemagiri Power Generation Limited GMR Varalakshmi Foundation GMR Hyderabad International Airport Limited GMR Holdings Private Limited Himtal Hydropower Company Pvt Ltd, Nepal GMR Energy (Mauritius) Limited, Mauritius GMR Consulting Engineers Private Limited GMR Lion Energy Limited, Mauritius

Mr. Prem Kumar Amar # B-107, Ashok Vihar

Phase – I

NEW EELHI – 100 052

Professional None

Brief Biography of the Directors Mr. Nakka Venkata Varadaraju aged 69 years has an experience 48 years and is associated with the

company for the past 2 years .

Mr. U. Naresh Kumar aged 54 years, is a Chemical Engineer and Finance & Marketing Professional

has over 31 years of experience of running small scale Industries with a US partner; Industrial and

Marketing for Thermal; International Marketing of Engineering Equipments .


34

Mr. N.C. Sarabeswaran aged 53 years, is a chartered Accountant with over 32 years of experience in

an Audit Firm .

Mr. B.V. Nageswara Rao aged 53 years is in the Senior Management with over 33 years of

experience and he is in-charge of the Corporate Relationship function at the Group level. During his

stint with Andhra Bank before joining the group, he gained extensive experience in the banking sector

with specific focus in Industrial Finance. He is a graduate in Mechanical Engineering.

Mr. Prem Kumar Amar aged 62 years is a Cost Accountant with 42 years of rich experience in

Finance & Accounts, sales and costing. He has worked in various companies including MNC’s and

Government of India undertakings. He also has rich experience in HRD and personnel Management.

His Areas of interest are Finance & Accounts, Personnel & HRD, Arbitration and International

contracting.

CORPORATE GOVERNANCE

The Status of the Company’s Compliance with the Provisions of Clause 49 of the Listing Agreement is

given below:

The Chairman of the Board of Directors is a Non-Executive Director. The Board comprises of five

directors out of whom three directors are independent Directors.

Audit Committee

The Board of the Company has constituted an Audit Committee consisting of Three Non-Executive

independent Directors viz., Mr. N.C. Sarabeswaran, Mr. Nakka Venkata Varadaraju, and Mr. B.V.

Nageswara Rao (Non Executive-Non Independent). Mr. N.C. Sarabeswaran is the Chairman of the

Committee.

The responsibilities of the Audit Committee, inter-alia, include:

1. Overseeing the financial reporting process to ensure proper disclosure of financial statements;

2. Recommending appointment/ Removal of external auditors and fixing their remuneration;

3. Reviewing the annual and quarterly financial statements before submission to the Board;

4. Reviewing adequacy of internal control systems;

5. Adequacy, structure and staffing of the internal audit function;

6. Reviewing findings of internal investigation, discussing the scope of audit with external auditors and

looking into reasons of substantial default, if any, of non-payment to shareholders.


35

Remuneration Committee

The Board of the Company has constituted Remuneration Committee comprising of Three Non-

Executive independent Directors viz., Mr. N.C. Sarabeswaran, Mr. Nakka Venkata Varadaraju, and Mr.

B.V. Nageswara Rao (Non Executive – Non Independent). Mr. N.C. Sarabeswaran is the Chairman of

the Committee.

Shareholders’ & Investor Grievance Committee

The Board of the Company has constituted Shareholders/Investors Grievances Committee comprising

ofMr. U.Naresh Kumar and Mr. N.V. Varadaraju as Members of the Committee. Mr.N.V.Varadarajulu is

the Chairman of the Committee.

CHANGE IN BOARD OF DIRECTORS OF THE COMPANY SINCE ITS INCEPTION

NAME PERIOD

Mr. K. Balasubramanian Since Incorporation to 29-10-2007

Mr. Dr. V. Raghunathan 28-06-2007 to 04.06.2008

Mr. Nakka Venkata Varadarajulu Since Incorporation.

Mr. Mr. U. Naresh Kumar Appointed on 28-06-2007

Mr. N,C. Sarabeswaran Appointed on 28-06-2007

Mr. B.V. Nageswara Rao Appointed on 29-10-2007

Mr. K. Narayana Rao Since incorporation to 29-10-2007

Mr. Prem Kumar Amar Appointed on 30-01-2008

Interest of the Directors

Other than their respective shareholdings in the Company, if any, and reimbursement of expenses

incurred and normal remuneration/ sitting fee from the Company as stated above, the directors of the

Company have no other interest in the Company.

Key Employee:-

S.No Name Designation

1. Mr. V. Srinivasan General Manager (Marketing)

2. Mr. M. Ravi Manager (Finance & Accounts)

3. Mr. Ch. Nagaraju General Manager (Production)

4. Mr. T. Adinarayana Protection & Quality Controller


36

CURRENCY OF PRESENTATION

In this information Memorandum all reference to “Rupees or “Rs” are to Indian Rupees, the legal

currency of the Republic of India.

DIVIDEND POLICY Dividend is intended to be declared based on the quantum and availability of future profits and will be

disbursed on after approval of the shareholders based on the recommendation of the Board of

Directors.

SECTION V FINANCIAL INFORMATION

FINANCIAL INFORMATION OF THE COMPANY

Auditors’ Report To, The Members, GMR Ferro Alloys & Industries Ltd. 1. We have audited the attached Balance sheet of GMR Ferro Alloys & Industries Ltd as at 31st

March 2008, the Profit & Loss Account and also the Cash Flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, Issued by the Central Government of India in terms of Sub Section (4A) of Section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said order

4. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: i) We have obtained all the information and explanations, which to the best of our knowledge and

belief were necessary for the purposes of our Audit;

ii) In our opinion, proper books of account, as required by law, have been kept by the company so far as appears from our examination of those books;

iii) The Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report are in agreement with the books of account;

iv) In Our Opinion, the Balance Sheet, Profit and Loss Account and cash flow statement dealt with by this report comply with the accounting Standards referred to in Sub section (3C) of Section 211 of the Companies Act, 1956;

v) On the basis of written representations received from the directors, and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2008 from being appointed as director in terms of Clause (g) of Sub section (1) of Section 274 of the Companies Act, 1956;


37

Vi) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:

a) In the case of the Balance Sheet, of the State of affairs of the Company as at 31st March, 2008;

b) In the case of the Profit and Loss Account, of the Profit for the Year ended on that date; and

C) In the case of Cash flow statement, of the Cash Flows for the year ended on that date.

Place : Hyderabad Date : 14.06.2008

For S.Venkatadri & Co., Chartered Accountants

(K.SRINIVASA RAO) P A R T N E R

M.No.201470

Annexure to Auditor’s Report

(Referred to in Paragraph 3 of Our Report of Even Date) (i). (a) The Company has maintained proper records showing full particulars including quantitative

details and situation of fixed assets. b) As explained to us, the fixed assets have been physically verified by the management during the

year in a phased periodical manner, which in our opinion is reasonable, having regard to the size of the company and the nature of its assets. No material discrepancies were noticed on such verification.

c) During the year, the company has not disposed off any substantial part of its fixed assets, affecting the going concern status of the company.

(ii). a) The inventory has been physically verified during the year by the management at reasonable intervals. In our opinion, the frequency of verification is reasonable and adequate.

(b) The procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the company and the nature of its business.

c) The company is maintaining proper records of inventory and material discrepancies between the physical stocks and book records of Raw Materials at factory were noticed for which adjustments have been made in the accounts.

(iii). a) The company has not granted any loan, secured or unsecured to companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (b), (c) and (d) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

b) The company has not taken any loan, secured or unsecured from companies, firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956. Therefore, the provisions of clause 4 (iii) (f), (g) and (h) of the Companies (Auditor’s Report) Order, 2003 (as amended) are not applicable to the company.

iv). In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory, fixed assets and for sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in internal control system.

v). a) According to the information and explanations provided by the management, we are of the opinion that the particulars of contracts or arrangements referred to in section 301 of the Act that need to be entered into the register maintained under section 301 have been so entered.

b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements exceeding value of Rupees five lakhs have


38

been entered into during the financial year at prices which are reasonable having regard to the prevailing market prices at the relevant time.

vi). In our opinion and according to the explanations given to us, the Company has complied with the directives issued by the Reserve Bank of India and the provisions of Sections 58A, 58AA or any other relevant provisions of the Act and the rules framed there under with regard to the deposits accepted from the public. No order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other Tribunal.

vii). In our opinion, the company has an internal audit system commensurate with the size and nature of its business.

viii). The Central Government has not prescribed maintenance of cost records U/s 209 (1) (d) of the companies Act, 1956 for this company.

ix). a) According to the information and explanations given to us and the records of the company examined by us, in our opinion, the company is regular in depositing undisputed statutory dues including income tax, Provident Fund, sales tax, wealth tax, custom duty, excise duty, cess, Service Tax and other material statutory dues as applicable, with the appropriate authorities. Investor education and protection fund and Employees state insurance scheme are not applicable to the company for the current year.

b) According to the information and explanations given to us, no undisputed amounts payable in respect of Provident fund, employees state insurance, investor education and protection fund, income tax, wealth tax, sales tax, Service Tax, customs duty, excise duty and cess were in arrears, as at 31.03.2008 for a period of more than six months from the date they became payable.

c) According to the information and explanations given us, the disputed statutory dues aggregating to Rs. 42.58 Lakhs, that have not been deposited on account of matters pending before appropriate authorities are as under :

Sl. No.

Nature of the Dues Forum where Dispute is pending

(Rs. In Lakhs) 1. Sales Tax D.C.S.T.

S.T.A.T. High Court

5.513.516.25

2. Customs Duty Commissioner of Customs 27.31 42.58 x). The company has no accumulated losses and has not incurred any cash losses during the financial

year covered by our audit and in the immediately preceding financial year. xi). In our opinion and according to the information and explanations given to us, the company has not

defaulted in repayment of dues to financial institutions, banks or debenture holders. xii). In our opinion and according to the information and explanations given to us, no loans and

advances have been granted by the Company on the basis of security by way of pledge of shares, debentures and other securities.

xiii). In our opinion, and according to the information and explanations given to us, the company is not a chit fund or a nidhi/mutual benefit fund/society. Therefore, the provisions of clause 4(xiii) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

xiv). In our opinion, the company is not dealing in or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Companies (Auditor’s Report) Order, 2003 are not applicable to the company.

xv). The company has not given guarantees for loans taken by others from banks or financial institutions.

xvi). During the year company has not raised any term loans.


39

xvii). According to the information and explanations given to us and on an overall examination of the balance sheet of the company, we report that no funds raised on short-term basis have been used for long-term investment.

xviii). According to the information and explanations given to us, the company has not made any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Act during the year.

xix). According to the information and explanations given to us, during the period covered by our audit report, the company has not issued any debentures.

xx). The company has not raised any money by way of public issue during the year. xxi). In our opinion and according to the information and explanations given to us, no fraud on or by the

company has been noticed or reported during the year. Place : Hyderabad Date : 14.06.2008

For S.Venkatadri & Co., Chartered Accountants

(K.SRINIVASA RAO) P A R T N E R

M.No.201470


40

BALANCE SHEET AS AT 31st MARCH, 2008

Rs. In lakhs

Schedule As at 31st March

2008 As at 31st March

2007 I. Sources of Funds: 1. Shareholders’ Funds

a) Share Capital 1 2,093.65

2,093.65

b) Reserves and Surplus 2 1,865.23 1,599.93

3,958.88

3,693.58

2. Loan Funds

a) Secured Loans 3 2,267.55

2,487.89

b) Unsecured Loans 4 - -

2,267.55

2,487.89

3. Deferred Tax Liability 529.47

560.03

Total 6,755.90

6,741.50

II. Application of Funds: 1. Fixed Assets 5

a) Gross Block 4,722.59

4,707.45

b) Less: Depreciation 2,223.21

1,996.28

c) Net Block 2,499.38

2,711.17

d) Capital Work in Progress - -

2,499.38

2,711.17

2. Investments 6 0.75 0.20

3. Current Assets, Loans and Advances

a) Inventories 7 3,189.42

4,411.76

b) Sundry Debtors 8 1,466.88

1,774.58

307.91

c) Cash and Bank Balances 9

27.07

135.18

d) Other Current Assets 10 19.39

19.60


41

e) Loans and Advances 11 1,224.74

867.75

5,927.50

7,208.87

Less : Current Liabilities and Provisions 12

a) Current Liabilities 1,338.63

3,023.26

b) Provisions 333.11

155.48

1,671.73

3,178.74

Net Current Assets 4,255.77

4,030.13

Total

6,755.90 6,741.50

Notes to the Accounts 18

The Schedules referred to above form an integral part of the Balance Sheet.

as per our report attached for S. Venkatadri & Co For and on behalf of the Board Chartered Accountants K. Srinivasa Rao Partner M No. 201470 N V Vardarajulu U.Naresh Kumar Place: Hyderabad Director Executive Director Date : 14.06.2008

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st MARCH, 2008

(Rs. in Lakhs )

Schedule For the Year ended

31st March 2008 For the Year ended

31st March 2007

I. Income

Sales (Gross) 14,415.50

14,532.06

Less: Duties & Taxes 315.02

956.91

Sales (Net) 14,100.47 13,575.15

Other Income 14 42.69 38.35

Total

14,143.16 13,613.50

II. Expenditure Materials and Other Consumption 15 8,807.61


42

8,670.32

Manufacturing, Selling and Administrative Expenses 16

4,280.82 4,180.53

Interest and Finance Charges 17 391.76 258.44

Depreciation 5 226.93 225.23

Amortisation of Miscellaneous Expenditure

Total

13,569.83 13,471.81 III. Profit Before Prior Period Expenses & Taxation

573.33 141.69

Prior Period Income/Expenses

IV. Profit Before Taxation 573.33 141.69

Provision for Taxation - Current 240.77

74.51

- Deferred (28.70)

(27.02)

- FBT 11.37

5.69

223.44 53.18

V. Profit After Taxation 349.89 88.51

Balance brought forward 7.54 -

VI. Available for Appropriation 357.43 88.51

Preference Dividend 69.21 69.21

Income Tax on Preference Dividend 11.76 11.76

VII. Available surplus carried to Balance Sheet

276.46 7.54

Notes to the Accounts 18

The Schedules referred to above form an integral part of the Profit and Loss Account

as per our report attached for S. Venkatadri & Co For on behalf of the Board Chartered Accountants K. Srinivasa Rao Partner N V Vardarajulu U. Naresh Kumar M No. 201470 Director

Executive Director

Place: Hyderabad Date : 14.06.2008


43

Schedules forming part of the Balance Sheet as at 31st March, 2008

(Rs. in Lakhs )

Schedule 1 As At 31st March 2008 As At 31st March 2007

Share Capital Authorised

1,32,00,000 Ordinary Equity Shares of Rs. 10/- each.

1,320.00

1,320.00

Preference Shares

80,00,000 Ordinary Equity Shares of Rs. 11/- each.

880.00

880.00

Total

2,200.00

2,200.00

Issued, Subscribed and Paid up

1,21,90,000 Ordinary Equity Shares of Rs. 10/- each fully paid

1,228.53

1,228.53

Preference Shares

78,36,033 8 % Preference Shares of Rs.11/- each

865.12

865.12

2,093.65

2,093.65

(Rs. in Lakhs )

Schedule 2 As At 31st March

2008 As At 31st March

2007 Reserves and Surplus General Reserve Balance as at April 01, 2006 - -

Add: Transfer from Profit and Loss

Account - -


44

- -

Capital Reserve

1,592.39 1,592.39

Capital Redemption Reserve - Balance as on 1 st April 2006 - -

Transferd from Profit & Loss Account

Total

-

-

Share Premium

- -

Profit & Loss Account

Balance at the beginning of the year

7.54 7.54

Surplus as per profit and loss Account

268.91

Less: adjusted on account of transitional provisions of AS 15 "Employee Benefits"

3.61

272.85

Total 1,865.23

1,599.93


(Rs. in Lakhs ) Schedule 3 As At 31st March 2008 As At 31st March 2007

Term Loans - - - - Cash Credits and Demand Loans from Banks Rupee Loans 2,217.47 2,023.17 Foreign Currency Loans 49.60 454.20

2,267.07

2,477.37

Vehicle Loans

0.48 10.52


45

Total 2,267.55

2,487.89

(Rs. in

Lakhs )


Unsecured Loans - -

Total -

-

GMR FERRO ALLOYS & INDUSTRIES LTD

STATEMENT OF FIXED ASSETS SHCEDULE AS ON 31.03.2008 Schedule 5

SL NO

GROSS BLOCK DEPRECIATION NET BLOCK

AS AT ADDITIONS DELETIONS TOTAL UPTO FOR THE DELETIONS UPTO AS AT

DESCRIPTION 01.04.07

DURING THE

DURING THE AS AT 31.03.07 YEAR FOR THE 31.03.08 31.03.08

YEAR YEAR 31.03.08 YEAR

RS. RS. RS. RS. RS. RS. RS. RS. RS.

1 LAND

47.42 - -

47.42

-

-

47.42

2 BUILDINGS

997.39 6.35 - 1,003.74

330.30

32.60

362.90

640.84

3 PLANT & MACHINERY

3,508.31 5.04 -

3,513.35

1,578.72

182.68

1,761.40

1,751.95

4

FURNITURE AND FIXTURES

108.24 3.75 -

111.99

62.35

8.08 -

70.43

41.57

5 VEHICLES

46.09 - - 46.09

24.91

3.57

28.48

17.61

TOTAL 4,707.45 15.14 -

4,722.59

1,996.28

226.93 -

2,223.21

2,499.38

Capital Work in progress

Grand Total 4,707.45 15.14 -

4,722.59

1,996.28

226.93 -

2,223.21

2,499.38


(Rs. in

Lakhs )


Investments


46

Government Securities - National Savings Certificates 0.75 0.20

Total

0.75

0.20



2007 Inventories (As Valued and certified by the Management)

Raw Materials

2,047.94

3,930.92

Work-in-Progress

38.32

44.66

Finished Goods

1,067.06

385.27

Stores & Spares

36.10

50.91

Total 3,189.42

4,411.76



2007 Sundry Debtors Unsecured and considered good

Debts outstanding for a period

exceeding six months

Other Debts

1,466.88

1,774.58

Sub-total - (A)

1,466.88

1,774.58 Unsecured and considered doubtful

Debts outstanding for a period

exceeding six months Other Debts

-

- Less: Provision for Doubtful Debts Sub-total - (B)


47

Total - (A + B) - 1,466.88 -

1,774.58


(Rs. in Lakhs ) Schedule 9 As At 31st March 2008 As At 31st March 2007

Cash and Cheques on Hand 15.26 7.11 Balance with Scheduled Banks Current Accounts 5.18 12.62 Fixed Deposit Accounts 6.63 115.45 Unclaimed Dividend Accounts

Total 27.07

135.18

(Rs. in Lakhs )


Other Current Assets (Unsecured - Considered Good)

Interest accrued but not due

19.39

19.60

Total 19.39

19.60



2007 Loans and Advances (Unsecured and considered good)

Advances recoverable in cash or in kind or for value to be received

369.33

277.54

Income Tax Recoverabale

222.30

11.90

Deposits with Government Authorities

630.42

491.57

Deposits with Others -

79.12


48

Balances with Excise and Customs Authorities

2.69

7.62

1,224.74

867.75 LESS : Provision for doubtful advances

Total - 1,224.74 -

867.75

(Rs. in Lakhs )



2007 Current Liabilities Sundry Creditors

Dues to Small Scale Industrial

Undertakings

Dues to other than Small Scale Industrial

Undertakings

214.61

1,288.34

Advances from Customers

32.58

19.76

Other Liabilities

1,091.44

1,715.15

1,338.63

3,023.26

Provisions

Taxation

252.14

74.51

Dividend and tax thereon

80.97

80.97

333.11

155.48

Total 1,671.73

3,178.74

Schedules forming part of the Profit and Loss Account for the year ended 31st March, 2008

(Rs. in Lakhs )

Schedule 14

For the Year ended 31st March 2008


Other Income


49

Scrap Sales & Misc Receipts

42.69 38.35

Total 42.69 38.35

Rs. In lakhs

Schedule 15



Materials Consumption Raw Materials Consumed

Opening Stock 3,930.88 4,040.19

Add: Purchase 7,462.84 6,413.60

11,393.71 10,453.79

Less: Closing Stock 2,047.94 3,930.92

9,345.77 6,522.87

(Increase) / Decrease in Finished Goods

Opening Stock 385.27 2,615.18

Less: Closing Stock 1,067.06 385.27

(681.79)

2,229.91

(Increase) / Decrease in Work-in-Progress

Opening Stock 44.66 99.49

Less: Closing Stock 38.32 44.66

6.34 54.83

- -

Total 8,670.32

8,807.61


50

Schedules forming part of the Profit and Loss Account for the year ended 31st

March, 2008 (Rs. in Lakhs )

Schedule 16



Manufacturing, Selling and Administrative Expenses

Material Handling Expenses 16.07

21.56

Distribution Expenses 936.72

662.53

Power and Fuel 2,089.90

2,344.74

Stores and Spares 278.42

307.15

Repairs and Maintenance - -

Plant and Machinery 64.92

82.42

Buildings 1.79

2.59

Others 3.04

2.87

Salaries, Wages and Bonus 353.25

352.50

Contribution to Provident and Other Funds

27.43

26.64

Staff Welfare Expenses 20.73

17.66

Travelling and Conveyance 201.87

36.83

Communication Expenses 6.91

8.80

Other Administrative Expenses 32.88

257.08

Consultancy and Other Professional Charges

190.41

28.76

Printing & Stationary 2.26

1.87

License & Fee 12.49

3.25

Insurance 16.64

19.11

Donations 21.59

2.95

Auditor's Remuneration - -

Statutory Audit 3.30

1.00


51

Tax Audit 0.20

0.20

Total

4,280.82

4,180.53

Schedule 17



Interest and Finance Charges

Interest on Working Capital

308.95 169.56

Interest - Others

63.85 60.28

Bank / Other Finance Charges

18.95 28.59

Total 391.76

258.44

SCHEDULE - 18 SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS 1. Basis of Financial Statements: a. The Financial Statements are prepared under the historical cost convention in accordance with the Generally Accepted Accounting Principles In India and the Provisions of Companies Act, 1956. b. The Company follows Mercantile System of Accounting and recognises significant items of income and expenditure on accrual basis. 2. Fixed Assets, Depreciation and Capital Work-In-Progress: a. Fixed Assets are stated at cost Net of CENVAT wherever applicable less accumulated depreciation. All costs directly attributable to bring the assets to their working conditions for the intended use are capitalized b. Depreciation on the Fixed Assets of the Company is provided on straight line method at the rates and in the manner specified in Schedule XIV of the Companies Act, 1956. 3. Investments: Investments are stated at cost. 4. Inventories: Inventories are valued as follows:


52

a. Raw-materials: At cost on FIFO basis and stores on weighted average basis. b. Finished goods and Work-in-process:

Work- in- Process is valued at Cost of Production and Finished Goods at lower of cost of production or realizable value. The cost of production includes value of material, stores, direct and indirect expenses.

5. Foreign Exchange Transactions: a. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. b. Monetary Items denominated in Foreign Currency not covered by Forward Contracts and remaining unsettled at the end of the year are translated at year end rates. c.Monetary Items denominated in Foreign Currency covered by Forward Cover are recorded at the Forward Cover contract rate. 6. Contingent Liabilities Mentioned separately by way of notes to accounts. 7. Sales: Sales includes Excise Duty and Sales Tax. 8. Provision for Current and Deferred Tax Provision for current tax is made after taking into consideration benefits admissible under the provisions of the Income-tax Act, 1961. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that are enacted or substantively enacted as on the balanace sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future.

Schedule -19

Current Year Previous Year

Qty Rs. In Lakhs Qty

Rs. In Lakhs

1 Licenced and Installed Capacity :

a) Licenced Capacity i) Bulk Ferro Alloys (MT Per Year) 25,000 25,000 2 Production :

i) High Carbon Ferro Chrome (MT)

27,934.43

27,152.00

Merchandise Purchases

Pig iron MT 1,826.60 302.08


53

High Carbon Ferro Crome MT - 2,437.00

447.48

Anthracite Coal MT - 5,500.00

310.76

Teak Wood CFT - 1,933.51

337.25

302.08 1,095.5 3 Sales : a. Manufacturing Sales:

i)Ferro Alloy Products (MT) 26,499.57 13,829.86

34,733.76 13,194.81

ii) DEPB benefit/SIL 282.41 219.98 vii) Others Total (A) 14,112.26 13,414.79 b. Merchandise Sales : High Carbon Ferro Crome MT 2,437.00 440.55 Anthracite Coal MT 5,500.00 335.21 Teak Wood CFT 1,933.51 341.52 Pig iron Mt 1,826.60 303.23 Total (B) (b) 303.23 1,117.28 Total (A+B) 14,415.49 14,532.07 4 Opening and Closing Stock a) Opening Stocks

i) Finished Goods - Ferro Alloys MT 1,468.60

385.27

9,050.00

2,615.17

ii) Work in Process- Ferro Alloys MT 150.00

44.66

360.00

99.49

429.93 2,714.66 b) Closing Stocks

i) Finished Goods - Ferro Alloys MT 2,903.46 1,067.06

1,468.60 385.27

ii) Work in Process- Ferro Alloys MT 135.00 38.32

150.00 44.66

1,105.39 429.93

5 VALUE OF MATERIALS CONSUMED

Raw Material consumption a. Manufacturing i) Ores MT 69124.27 6,525.20 74802.43 3,867.59


54

ii) Coke & Coal MT 19903.37 2,181.62 16560.04 1,231.26 iii) Others (in different units of measurement) 336.89 328.51 (a) 9,043.70 (a) 5,427.36 b. Merchandise Consumption

High Carbon Ferro Crome MT - 2,437.00

447.48

Anthracite Coal MT - 5,500.00

310.76

Teak Wood CFT - 1,933.51

337.27

Pig Iron MT 1826.60 303.23 (b) 303.23 (b) 1,095.51

Total (a+b) 9,346.93 Total (a+b) 6,522.87

Schedule -19

2007-08 2006-07

6 Percentage of Raw Material Percentage Amount Percentage Amount

Consumed % Rs. In Lakhs % Rs. In Lakhs

i) Indigenous 95.73% 8,946.76 90.07%

5,874.84

ii) Imported 4.27% 399.01 9.93%

648.03

100.00% 9,345.77 100.00%

6,522.87

7 Stores & Spares Consumed

i) Indigenous 100.00% 278.42 100.00%

307.15

100.00% 278.42 100.00% 307.15

8 Auditors' Remuneration

i) Statutory Audit 3.30

1.00

ii) Tax Audit 0.20

0.20

3.50

1.20


55

Current year

Current year

Rs. In Lakhs

Rs. In Lakhs

9 Managerial Remuneration

i) Salary 29.22 -

ii) Perquisites -

-

iii) Contribution to Providend Fund 0.99 -

- 30.21 -

-

10 Foreign exchange Earnings / Out Go a) FOB Value of Exports

Metallurgical Division 10,588.85

6,837.95

Merchandise Division 303.23

416.99

b) Income on Investments

c) CIF Value of Imports(material) : 469.21

d) Expenditure in Foreign Currency on account of

Foreign Travel (Directors) 0.77

-

Foreign Travel (Staff)


56

Schedule-19

Rs.in lakhs

2007-08 2006-07

11 Contingent Liabilities not provided

for on account of :

a) Bank Guarantees 45.52 52.52

b) Claims made by Govt Departments against the Company not acknowledged as debts.

30.82 99.57

12 Interest Payment was shown after set off of interest received.

13 Loans

a) Working Capital loans

From Andhra Bank and State Bank of Mysore are secured by way of hypothecation of finished goods, Raw materials stores & spares,stock in process,receivables and secured by second charge on fixed assets.

14 Related Party Disclosure

Name of the

Person Nature of

Transaction

Amt. Rs. In Lakhs

a) Key Management Personal U Naresh

Kumar Manageial 30.21

b) Relatives of Individuals having signficant influence - Nil -

B

Ramadevi Rent 1.08

G

Varalakshmi Rent 0.90

c) Fellow Subsidery

GMR Industries

Ltd Commission & Services 838.10

d) Balance Outstanding As on 31st March 2008.( Rs in Lakhs )

B Ramadevi 0.08

G Varalakshmi 0.06

GMR Industries Ltd 630.2

15 Total Assets of the Company as on 31.03.2008 amounting to Rs.4722.59 Lakhs are situated within India only.

16 Segment Report

The company operates in only one segment of manufacturing / trading of metal alloys.


57

Schedule-19

18 Earnings Per Equity Share

2007-08

2006-07

Rs. In lakhs

Rs. In

lakhs

a) Net Profit after Tax 349.90 88.51

b) Preference Dividend Accrued for the year 80.97 80.97

c) Net Profit After Tax available for Equity Shareholders ( a-b) 268.92 7.54

d) Weighted average No. of Equity Shares of Rs. 10 each

12,285,295

12285295

outstanding during the year ( No. of Equity shares)

e) Basic/Diluted Earnings per Equity Share 2.19 0.06

19 As on 31.03.2008, the timing difference has resulted in deffered tax liability/assets amounting to Rs.529.47 Lakhs

The break up of deferred tax assets/liabilities is as follows;

Deffered Tax Liability on account of timing difference in Depreciation : Rs.

53,760,054

Deferred Tax Asset on account of Section 43B of IT Act : Rs.

(812,633)

20 Balance with Central Excise Department includes unavailed Modvat credit of Rs. 184.36 of which there is no dispute

by the Central Excise Department

21 There are no Small Scale Industrial Undertakings to whom the company owes

amounts for more than 30 days, as at Balance sheet date.

22 Excise duty estimated at Rs.153.86 Lakhs on Finished goods lying in the Factory Premises. However the company has

not provided Excise Duty as a Liability and the Excise duty is not considered in valuation of closing stock, because of

this there is no impact on the Profit for the year.


58

23 Additional information pursuant to provisions of Part IV of Schedule VI of the Companies Act, 1956 is furnished

in Annexure

as per our report attached for S. Venkatadri & Co

Chartered Accountants

for and on behalf of the board

for and on behalf of the Board

K. Srinivasa Rao Partner M No. 201470 Place: Hyderabad. N V Vardarajulu U Naresh KumarDate : 14.06.2008 Director Executive Director

Employees Benefits

The Following table sets forth the status of gratutity plan of the company and the amount recognized in the balance sheet and profit and loss account

(Rs. in Lakhs)

Change in Projected benefit obligation 2008

Obligations at period beginning (01-04-2007) 49.36

Service Cost 9.58

Interest cost 3.95

Benefits settled (3.62)

Actuarial (gain)/loss 1.31

Obligations at period end 57.96

Change in plan assets


59

Plans assets as on 01-04-2007, at fair value 43.88

Expected return on plan assets (estimated) 3.51

Actuarial gain/(loss) 0.72

Contributions (less risk prem. etc.) 6.88

Benefits settled (3.62)

Plans assets as on 31-03-2008, at fair value 51.36

Funded status of the plan (6.60)

Gratuity cost Service cost

9.58 Interest cost

3.95 Expected return on plan assets

(3.51)Actuarial (gain)/loss

(0.59)Net gratuity cost

9.24 Assumptions Discount rate 8.00%Expected return on assets 8.00%Rate of compensation increase 6.00%Attrition Rate 5.00%Retirement expectancy 58

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2008

Year Ended Year Ended 3/31/2008 3/31/2007 A. Net profit before tax and extraordinary items 573.33

141.69

Adjustments for:

Depreciation 226.93 225.23

Interest and Financial charges 391.76 258.44

OPERATING PROFIT BEFORE WORKING 1,192.01


60

CAPITAL CHANGES 625.36

Adjuestments for :

Trade & Other receivables (49.09) (863.98)

Inventories 1,222.34 2,398.16

Trade Payables (1,845.58) 808.57

Cash generated from operations 519.68

2,968.10

Direct Taxes paid

Net Cash from Operation Activiities 519.68

2,968.10

B. Cash flow from investing activities

Purchase of fixed assets (15.14) (118.18)

(Purchase)/Sale of Investments (0.55) 0.10

(15.69) (118.08)

C. Cash flow from financing activities Proceeds from secured borrowings(Net) (220.34)

(1,090.81)

Interest Paid (391.76) (258.44)

Unsecured Loans - (1,400.00)

(612.10) (2,749.25)

D. Net increase in cash & cash equivalents (A+B+C) (108.11)

100.77

Cash & Cash equivalents (Opening Balance) 135.18

34.41

Cash & Cash equivalents (Closing Balance) 27.07

135.18

as per our report attached 0.00 (0.00)

for S. Venkatadri & Co Chartered Accountants for and on behalf of the Board K. Srinivasa Rao Partner


61

M No. 201470 N V Vardarajulu U Naresh Kumar

Place: Hyderabad. Director Executive

DirectorDate : 14.06.2008

GROUP COMPANIES FINANCIAL AND OTHER INFORMATION The details of the Listed Companies in the group are as under:

1. GMR Infrastructure Limited

GMR Infrastructure Limited was incorporated on 10th May 1996. The Company is engaged in

development of various infrastructure projects in Power, Road and Airport Business through several

special purpose vehicles. It is Listed on the Bombay Stock Exchange Ltd. and National Stock

Exchange of India Ltd.

Shareholding pattern of GMR Infrastructure Ltd As On 31.03.2008

Category No. Shares Held % Holding

Promoters Holding 1334236595 73.28

Non Promoters Holding 486421493 26.72

Total 1820658088 100.00

Board of Directors of GMR Infrastructure Limited

Shri. G.M. Rao Executive Chairman

Shri. Srinivas Bommidala Group Director

Shri. G.B.S. Raju Managing Director

Shri. G. Kiran Kumar Group Director

Shri B.V, Nageswara Rao Group Director

Shri K. Balasubramanian Director

Shri Arun K. Thiagarajan Independent Director

Dr. Prakash G Apte Independent Director


62

Shri K. R. Ramamurthy Independent Director

Shri R.S.S.L.N Bhaskarudu Independent Director

Shri T.R. Prasad Independent Director

Shri Udaya Holla Independent Director

Shri Uday M. Chitale Independent Director

Mr.O.B.Raju Director

Financial Performance of GMR Infrastructure for the past 3 years:

Particulars 31-03-2008

(Rs mn)

31-03-2007

(Rs mn)

31-03-2006

(Rs mn)

Sales & Other

Income

1122.00 341.34 612.87

PAT 626.90 28.78 355.45

Equity Capital 3641.30 3310.79 2644.37

Reserves 52404.60 13087.03 1040.40

EPS (Rs.) 0.37 0.09 1.34

Details of Listing and Highest & Lowest market price during the preceding Six Months on BSE & NSE:

Month High (Rs.) & Low (Rs.)

BSE NSE

Month High (Rs) Low (Rs) High (Rs.) Low (Rs.)

November 2007 259.80 170.25 259.90 170.40

December 2007 268.70 220.50 269.80 220.00

January 2008 260.90 115.00 260.40 111.10

February 2008 190.40 141.00 190.90 141.00

March 2008 179.00 125.00 173.40 125.05

April, 2008 164.80 138.60 164.70 139.00

2. GMR Industries Limited

GMR Industries Limited was incorporated on 30th June 1986. The Company is engaged in Sugar and

Ferro alloys. The Ferro Alloys Division has been hived off as a separate company through a demerger.

It is listed on the Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. .

Shareholding pattern of GMR Industries Ltd As On 31.03.2008


63

Category No. Shares Held % Shareholding

Promoters Holding 14126968 70.77

Non Promoters Holding 5834739 29.23

Total 19961707 100.00

Board of Directors of GMR Industries Limited

Shri. B.V.Nageshwara Rao Chairman

Shri. R. Ramakrishnan Managing Director

Shri. T.C.S. Reddy Director (Technical)

Shri A. Sankara Rao Director

Shri N.V. Varadarajulu Director

Shri Viswanath Prasad Singh Director

Shri S. Sandilya Director

Shri Uday M. Chitale Director

Financial Performance of GMR Industries for the past 3 years (In Rs. Million except for share data)

Particulars 31-03-2008

(Rs mn)

31-03-2007

(Rs mn)

31-03-2006

(Rs mn)

Sales & Other Income 1618.87 1986.90 2832.66

PAT 65.07 198.74 345.23

Equity Capital 199.62 199.62 321.96

Reserves 928.87 901.01 909.75

EPS (Rs.) 2.60 9.29 10.08

Details of Listing and Highest & Lowest market price during the preceding Six Months:

Month High (Rs.) & Low (Rs.)

BSE NSE

November, 2007 198.00 120.00 199.95 115.00

December, 2007 169.70 145.00 170.10 144.55

January, 2008 176.00 107.70 175.80 111.40

February, 2008 128.90 99.70 133.05 99.45

March, 2008 107.70 64.00 111.70 65.20

April, 2008 97.25 77.00 96.90 76.20


64

MANAGEMENT DISCUSSION & ANALYSIS. Industry Structure: The main product Ferro Chrome is a basic input for the stainless steel industry and is directly

connected to its fortunes. Stainless Steel Industry was in a slump till recently and this had an adverse

effect on the Ferro Alloy Industry. Now with China again opening up its imports, the demand for ferro

chrome is showing signs of picking up.

The Company produced 645375 MTs during the year 2007-08

Financial Performance

FINANCIAL HIGHLIGHTS 2007-08(in Rs. Lakhs)

Sales Income 15,254.62

Other Income 934.04

Total Income 16188.66

Profit before Interest, Depreciation and

Extraordinary items

3900.30

Interest & finance charges 1289.46

Depreciation 1431.47

Extraordinary items (34.39)

Profit before Tax 1144.98

Provision for Current Tax 494.34

Profit after Tax 650.64

Future Outlook

Availability of mining lease along with captive power generation would go a long way in making this

business insulated from the vagaries of this industry. Till such time, high energy cost and fluctuating

market will make this division more prone to cyclical operations.

Opportunities and Threats:

A continuing demand for stainless steel coupled with international demand will throw open significant

opportunities to this division. Spiraling of power cost poses as major threat because of which problems

may start to balloon in times of low production.


65

Internal Control Systems and Adequacy

The Company has adequate internal control procedure commensurate with the size and nature of its

business. These business control procedures ensure efficient use and protection of resources and

compliance with policies, guidelines, authorizations and approval procedures. The Board has also

constituted an Audit Committee, which meets periodically to review the financial performance and the

accuracy of the financial records.

Human Resources/ Industrial Relations The Company has always bestowed the highest priority on its Human Resources. During the year, a

number of initiatives were launched including Balance Score Card, PCMM, %S, Sprint Sigma, Values

and Beliefs, Quality Control Circles etc. In order to develop and augment its human resources talent

pool, and structure initiatives for employee satisfaction, a number of initiatives including employee

satisfaction survey, Town Hall Meetings and harmonization of hierarchy were initiated.

The Company would continue to focus on talent management and their retention . While the Company

today delivers what the customer wants and is consciously charting its growth with the objective of

meeting the aspirations of all its stakeholders, it has at the same time been further strengthening the

professionalization of its key functions, through better empowerment of people. The employees had

been cordial throughout the year.

Cautionary Statement

Statements in the Management Discussion and Analysis report describing the Company’s objectives,

projections and estimates and expectation may constitute certain statements, which are forward

looking within the meaning of applicable laws and regulations. Actual results may differ materially from

those expressed or implied in the statement. The Company’s operation may inter alias be affected by

the supply and demand situations input price and changes in the government regulations, tax laws

and other factors. The Company cannot guarantee the accuracy of the assumptions and perceived

performance of the Company in future. The investors should bear the above in mind.

SECTION VI - LEGAL AND OTHER INFORMATION

OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS Save as stated herein, there are no outstanding or pending material litigations, suit criminal or civil prosecution, proceeding initiated for offence (irrespective of whether specified in paragraph (I) of Part 1


66

of Schedule XIII of Companies Act) or litigations for tax liabilities against the Company, and there are no material defaults, non payments or over dues or statutory dues, institutional or bank dues or dues towards holders of debentures, bonds and fixed deposits and arrears of preference shares other than unclaimed liabilities of the Company • A writ appeal (W.A. No. 1145 of 2005) has been filed in the High Court of Andhra Pradesh by

the Company against National Thermal Power Corporation Limited, APTRANSCO and others against the order of the single judge dated April 1, 2005 in WP No. 6287 of 2001. The said order had directed the petitioner to pay the revised supplementary demands in respect of the power supplied to them from out of the 15% unallocated portion of power from NTPC, as per the notifications fixing the NTPC tariff by the Ministry of Power and modified from time to time. The writ appeal is admitted and notice is served to the respondents. The matter shall be taken up for hearing as per the discretion of the court.

• The Company had made a deposit of Rs. 6 million by way of fixed deposit receipt during the pendency of WP. No. 5713 of 2000, which was realised by APTRANSCO. The case is posted onwards in the list.

• A writ appeal (W.A. No. 1146 of 2005) has been filed in the High Court of Andhra Pradesh by the Company against National Thermal Power Corporation Limited, APTRANSCO and others against the order of the single judge dated April 1, 2005 in WP No. 5713 of 2000. The said order had directed the petitioner to pay the revised supplementary demands in respect of the power supplied to them from out of the 15% unallocated portion of power from NTPC, as per the notifications fixing the NTPC tariff by the Ministry of Power and modified from time to time. The writ appeal is admitted and notice is served to the respondents. The matter shall be taken up for hearing as per the discretion of the court.

• GMR Industries had made a deposit of Rs. 15.4 million by way of fixed deposit receipt during

the pendency of WP. No. 5713 of 2000, which was realised by APTRANSCO. The case is posted onwards in the list.

• A writ petition (No. 19706 of 2003) has been filed by GMR Industries against APTRANSCO,

Eastern Power Distribution Company of AP Limited (“APEPDCL”), the Superintending Engineer and Senior Accounts Officer of APEPDCL in the High Court of Andhra Pradesh praying for issue of a writ of mandamus to declare as unauthorized the demand made by APEPDCL of Rs. 4,816,386/- allegedly arising out of delayed payments to NTPC for supplementary arrears and penal interest for the period November 2002 to July 2003. GMR Industries contends that this action is unjustified as payment of the principal amount was pending adjudication in WP 5713 of 2000 and writ petition No. 6287 of 2001. An order dated September 18, 2003 was passed in miscellaneous petition (M.P. No. 24711 of 2003) filed in this suit granting suspension of operation of the letter issued by APEPDCL demanding payment of the additional amount. APTRANSCO filed counter. The matter shall be taken up for hearing as per the discretion of the court.

• A suit (O.S. No 181 of 2005) has been filed in the court of the Chief Judge, City Civil Court

Hyderabad, by the Company against Shree Mahalaxmi Coke Distributors under the provisions of the Code of Civil Procedure. The Company had paid an advance of Rs. 832,000/- to the defendants for the supply of low ash metallurgical coke but the same were not delivered. Over time the defendants have at irregular intervals paid small amounts of money to the plaintiff but they have not repaid the full amount and thus the suit has been filed to recover the outstanding amount of Rs. 0.78 million including interest.

• A industrial dispute (ID No. 101 of 2004) has been filed before the Chairman, Industrial Tribunal and Presiding Officer Labour Court, Visakhapatnam by Mr. Sampala Seetharama


67

Murthy stating that he was wrongly dismissed from service and seeking re-instatement into service and claiming back wages and all other consequential benefits. The counter has been filed by the Company and the plaintiff has filed a rejoinder in response to the same.

GOVERNMENT APPROVALS

As per the Scheme of Arrangement the Ferro Alloys Division of the Demerged Company with all its

approvals, permissions, benefits, rights, registrations, consents etc. has been transferred to the

transferee Company that would be carried on by the resulting Company on a going concern basis.

SECTION VII – REGULATORY AND STATUTORY DISCLOSURES

REGULATORY AND STATUTORY DISCLOSURES

Authority for Listing

The Hon’ble High Court of Andhra Pradesh at Hyderabad vie its order dated 19/04/2007 has

approved the Scheme of Arrangement amongst GMR Industries Ltd., Bharat Sugar Mills Ltd. and GFIL

and their respective shareholders (the “ Scheme”) which, inter-alia, include demerger of Ferro Alloys

Division of GMR Industries Limited (GIDL) into GMR Ferro Alloys & Industries Limited (GFIL).

The Scheme of Arrangement also proposed to merge Bharat Sugar Mills limited with GMR Industries

Limited The merger of Bharat Sugar Mills limited with GMR Industries limited would accord savings in

cost and administrative convenience.

The Hon’ble High Court of Andhra Pradesh had sanctioned the Scheme of Arrangement vide its Order

dated 19th April 2007. On filing of certified true copies of the High Court Order with the Registrar of

companies, Andhra Pradesh by the respective Companies, the Scheme has become effective from

15th May 2007.

As per scheme of arrangement, the paid up share capital of (GFIL), hereinafter referred to as resulting

company, has been restructured, and new shares have been issued and allotted to the shareholders of

GFIL on 30th July, 2007, whose names appeared on record date of 20th July, 2007, as per the

entitlement ratio i.e. 38 equity shares of face value of Rs 10/- each in GFIL in lieu of every 100 equity

shares of face value of Rs. 10/- each held in GMR Industries Limited.

The Authorised capital consists of 8000000 8% redeemable preference shares of Rs 11/- eachout of

which 78,64,700 shares 8% redeemable preference shares of Rs 11/- each is being paid up for which

listing is not being sought.

122,85,295 of Equity Shares of Rs 10 /- each are sought to be listed on the Stock Exchanges.


68

As enshrined in the Scheme of Arrangement duly approved by all stake holders and ordered by

hon’ble High court of Andhra Pradesh a copy of which has been filed with the Registrar of Companies,

Andhra Pradesh, listing documents duly executed have been filed with the Stock Exchanges.

Eligibility Criterion

There being no Initial Public Offering or Rights Issue, the eligibility criteria in terms of Clause 2.2.1 of

SEBI (DIP) Guidelines, 2000 does not become applicable. The company had made application for

approval of Securities Exchange Board of India (SEBI) for relaxation from the applicability of Rule 19(2)

(b) of Securities Contract (Regulations) Rules, 1957. SEBI has vide their letter no

CFD/DIL/19(2)(b)/PB/RA/12576/2008 dated May 15 2008 has relaxed the applicability of Rule 19(2) of

the Securities Contract Regulation Rules,1957 subject to the Company complying with all the

provisions of Clause 8.3.5 of the SEBI(Disclosure and Investor Protection)Guidelines,2000.

The Company is submitting its Information Memorandum, containing information about itself, making

disclosures in line with the disclosure requirement for public issues, as applicable, to BSE/NSE for

making the said Information Memorandum available to public through their websites.

The Company has published an advertisement in the newspapers containing its details in line with the

details required as per clause 8.3.5.4 of SEBI (DIP) Guidelines..

Prohibition by SEBI

The Company, its directors, its promoters, other companies promoted by the promoters and

companies with which the company’s directors are associated as directors have not been prohibited

from accessing the capital markets under any order or direction passed by SEBI.

Caution

The Company accepts no responsibility for statements made otherwise than in the Information

Memorandum or in the advertisements published in terms of Clause 8.3.5.4 of SEBI (DIP) Guidelines,

2000 or any other material issued by or at the instance of the Company and anyone placing reliance

on any other source of information would be doing so at his or her own risk. The Company shall make

all information available to the public and investors at large and no selective or additional information

would be available for a section of the investors in any manner.

Disclaimer Clause of BSE

The Hon’ble High court of Andhra Pradesh had sanctioned the scheme of agreement vide its order

dated: 19th April 2007. On filing of certified True copies of the high court order with the Registrar of


May 2007.

The BSE does not in any manner:


69

• warrant, certify or endorse the correctness or completeness of any of the contents of this

Information Memorandum; or

• warrant that this Company’s securities will be listed or will continue to be listed on the BSE; or

• take any responsibility for the financial or other soundness of this Company, its promoters, its

management or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that this Information Memorandum

has been cleared or approved by the BSE. Every person who desires to apply for or otherwise acquire

any securities of this Company may do so pursuant to independent inquiry, investigation and analysis

and shall not have any claim against the BSE whatsoever by reason of any loss which may be suffered

by such person consequent to or in connection with such subscription acquisition whether by reason of

anything stated or omitted to be stated herein or for any other reason whatsoever.

Disclaimer Clause of NSE

The Hon’ble High court of Andhra Pradesh had sanctioned the scheme of agreement vide its order

dated : 19th April, 2007. On filing of certified true copies of the High court order with the Registrar of


May 2007.

The NSE does not in any manner:

• warrant, certify or endorse the correctness or completeness of any of the contents of this

Information Memorandum; or

• warrant that this Company’s securities will be listed or will continue to be listed on the NSE; or

• take any responsibility for the financial or other soundness of this Company, its promoters, its

management or any scheme or project of this Company;

and it should not for any reason be deemed or construed to mean that this Information Memorandum

has been cleared or approved by the NSE. Every person who desires to apply for or otherwise acquire

any securities of this Company may do so pursuant to independent inquiry, investigation and analysis

and shall not have any claim against the NSE whatsoever by reason of any loss which may be suffered

by such person consequent to or in connection with such subscription acquisition whether by reason of

anything stated or omitted to be stated herein or for any other reason whatsoever.

Filing Copies of this Information Memorandum have been filed with BSE & NSE in due compliance

Listing


70

Applications have been made to BSE & NSE for permission to deal in and for an official

quotation of the Equity Shares of the Company. , The Company has nominated BSE as the

Designated Stock Exchange for the aforesaid listing of the shares. The Company has already taken

steps for the completion of necessary formalities for listing and commencement of trading at the Stock

Exchanges mentioned above.

Demat Credit

The Company has entered into tripartite agreements with both the depositories viz. National Securities

Depository Limited and Central Depository (India) Limited. The Company’s securities shall be eligible

for dematerialization under ISIN No. INE592101011 subject to necessary approvals as may be

applicable from Stock Exchange(s)

Stock Market Data for Equity Shares of the Company

Equity Shares of the Company are not listed on any Stock Exchanges. The Company is seeking

approval for listing of its shares through this Information Memorandum.

Particulars Regarding Previous Public or Rights Issues during this year

The Company has not made any previous public or rights issue during this year. There is no issue of

shares otherwise than for cash and there are no outstanding debentures and redeemable preference

shares. There has been no revaluation of assets of the Company since incorporation.

MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATIONS

SHARES

Division of Capital 3. The share capital of the company is as mentioned in clause (V) of the

Memorandum of Association of the Company Redeemable preference shares 4 Subject to the provisions of Section 80 of the Act and these Articles,

the Company shall have power to issue preference shares carrying a

right to redemption out of profits or out of the proceeds of a fresh issue

of shares made for the purposes of such redemption or liable to be so

redeemed at the option of the Company.

Shares at discount 5 With the previous authority of the Company in General Meeting and the

sanction of the Court and upon otherwise complying with Section 79 of

the Act, it shall be lawful for the Board of Directors to issue at a

discount shares of a class already issued.


71

Further issue of same class of

shares

6 The rights conferred upon the holders of the shares of any class with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.

Issue of shares with voting rights 7 Subject to applicable law, the directors may issue shares with

differential rights as to dividend, voting or otherwise or without voting

rights attached to them upon such terms and conditions and with such

rights and privileges annexed thereto as thought fit.

Shares at the disposal of the

Directors

8 Subject to the provisions of the Companies Act, 1956 and these

Articles, the shares shall be under the control of the Directors, who may

allot or otherwise dispose off the same to such persons, on such terms

and conditions, and at such times as the Directors think fit. Provided

that option or right to call off shares shall not be given to any person or

persons without the sanction of the Company in General Meeting and

where at any time it is proposed to increase the subscribed capital of

the Company by the issue of new shares then, subject to the provisions

of Section 81 of the Act, the Board shall issue such shares in the

manner provided therein

Liability of Joint holder of shares 9 The joint holders of a share shall be severally as well as jointly liable for

the payment of all installments and calls and interest on installments

and calls due in respect of such shares

Address of Shareholders

10 Every shareholder shall name to the Company a place in India to be

registered as his address, and such address shall for all purposes be

deemed his registered address

In whose name share may be

registered

11 Shares may be registered in the name of any person, the joint holders

or any limited Company, but not in the name of a minor, nor shall more

than four persons be registered as joint holders of any share.

Trust not recognized 12 Subject to the provisions of Sections 153A, 153B and 187B of the Act,

and except as required by law, no person shall be recognised by the

Company as holding any shares upon any trust, and the Company

shall not, save as ordered by some court of competent jurisdiction, be

bound by or be compelled in any way to recognise (even when having

notice thereof) any benami, equitable contingent, future or partial

interest in any share or any interest in any fractional part of a share

(except only as by these regulations or by law otherwise provided) or

any other rights in respect of any share except an absolute right thereto

in the person or persons from time to time registered as the holder or

holders thereof.

Directors may allot shares as fully

paid-up

13 The Directors may allot and issue shares in the capital of the Company

in payment or part payment for any property sold or transferred, goods

or machinery supplied or for services rendered to the Company in or

about the formation or promotion of the Company, or the conduct of its

business and any shares, which may be so allotted, may be issued as

fully paid-up shares and if so issued shall be deemed to be fully paid-

up shares


72

BROKERAGE AND COMMISSION

Brokerage 14 The Company may on any issue of shares or debentures pay such

brokerage as may be reasonable and lawful

Commission

15 In addition to the payment of any reasonable sums as brokerage, the

Company may, at any time, pay a commission to any person for

subscribing or agreeing to subscribe (whether absolutely or

conditionally) for any shares, debenture or debenture stock in the

Company, or procuring or agreeing to procure subscriptions (whether

absolutely or conditionally) for any shares, debenture or debenture

stock in the Company but so that (if the commission shall be paid or

payable out of the capital) the commission shall not exceed 5 per cent

of the price at which the shares are issued or 2 Y2 % of the price at

which debentures are issued.

Method of payment of commission 16 The commission may be satisfied by the payment of cash or the

allotment of fully or partly paid shares or partly in one way and partly in

the other.

CERTIFICATES

17 Every person whose name is entered as a member in the register of

members shall be entitled to receive within two months after allotment

or one month after the application for the registration of the transfer of

any share (or within such other period as the conditions of issue shall

provide).

a) One certificate for all his shares of each class without

payment, or

b) Several certificates, each for one or more of such shares,

upon payment of one rupee for every certificate after the first,

or such less sum as the Directors may determine. The

expression "transfer" for the purpose of this article means a

transfer duly stamped and otherwise valid and does not

include any transfer which the Company is for any reason

entitled to refuse to register and does not register

Signature on Certificates 18 Subject to Companies (issue of Share Certificate) Rules, every share

certificate shall be issued under the common seal of the Company and

shall be signed by (i) two Directors, (Ii) a secretary or any other person

authorised for the purpose by the Board of Directors, every Certificate

shall specify the shares to which it relates and the amount paid up

thereon

One Certificate for joint shareholders 19 In respect of any share or shares held jointly by several persons, the

Company shall not be bound to issue more than one certificate, and

delivery of a certificate for share to one of several joint holders shall be

sufficient delivery to all such holders.

Renewal of Certificate 20 If any certificate be worn out or defaced, or if there is no further cages

on the back thereof for the endorsements of transfer, then upon

production thereof to the Directors, they may order the same to be


73

cancelled and may issue a new certificate in lieu thereof and if any

certificate is proved to have been lost or destroyed, then upon proof

thereof to the satisfaction of the Directors and on such indemnity as the

Directors deem adequate being given, a new certificate in lieu thereof

may be given to the party entitled to such lost or destroyed certificate.

Fee for new Certificate 21 The sum of two rupees, the out of pocket expenses incurred by the

Company in investigation for evidence and the advertisement cost or

such less sum as the Directors may determine shall be paid to the

Company for every such new certificate and the like fee shall be

payable in respect of each sub-division of certificates

Provided that no fee shall be charged for sub-division or consolidation

of certificates into lots of the market unit or for issue of new certificates

in replacement of those which are old, decrepit or worn out or where

cages on the reverse for the endorsements for transfer have been fully

utilised.

Company's shares not purchased 22 None of the funds of the Company shall be employed in the purchase

of, or lent on shares of the Company, and the Company shall not

except as permitted by Section 77 of the Act give any financial

assistance for the purpose of, or in connection with any purchase of

shares in the Company.

Buy back of shares 23 Notwithstanding anything contained in these articles, but subject to the

provisions of Sections 77 A, 77 AA and 77B of the Act the Company

may purchase its own shares or other specified securities out of free

reserves or securities premium account or proceeds of issue of any

shares or others specified securities in accordance with

Rules/Regulations prescribed by Central Government, Securities and

Exchange Board of India or any other appropriate authority in this

behalf.

CALLS ON SHARES

Calls 24 The Board of Directors may by a resolution passed at a meeting of the

Board from time to time, subject to any terms on which any shares may

have been issued, make such calls if they think fit upon the

shareholders in respect of all moneys unpaid on the shares held by

them respectively; and each member shall pay the amount of every call

so made on him to the persons and at the time and place appointed by

the Board. A call may be made payable by installments.

When call deemed to have been

made

25 A call shall be deemed to have been made at the time when the

resolution of the Board of Directors authorising such call was passed

Notice of call 26 At least fourteen clear days notice of any call shall be given by the

Company (either by letter to the members or by advertisement)

specifying the time and place of payment, and to whom such shall be

paid

Amount payable at fixed time or by

installments payable as calls

27 If by the terms of issue of any share or otherwise any amount is made

payable on allotment or at any fixed time or by installments at fixed

times, whether on account of the nominal amount of the share or by


74

way of premium every such amount of installment shall be payable as if

it were a call duly made by the Directors and of which due notice had

been given, and all the provisions herein contained in respect of calls

shall relate to such amount or installment, accordingly

In the case of non-payment of such sum all the relevant provisions of

these Articles to payment of interest and expenses, forfeiture or

otherwise shall apply as if such sum had become payable by virtue of a

call duly made and notified

When interest on call or installment

payable

28 If the sum payable in respect of and call or installment be not paid on or

before the day appointed for the payment thereof, the holder for the

time being of the share in respect of which the call shall have been

made of the installment shall be due shall pay interest for the same at

the rate of 9 percent per annum or at such rate as the Directors may

determine from time to time, from the day appointed for the payment

thereof to the time of actual payment. The Directors shall be at liberty

to waive payment of and such interest, wholly or in part

Payment of calls in advance 29 The Directors may, subject to Section 92 and 58A of the Act receive

from any member willing to advance the same all or any part of money

unpaid upon the shares held by him beyond the sums actually called

for and upon the money so paid in advance or so much thereof as from

time to time exceeds the amounts of class then made upon the shares

in respect of which such advance has been made, the Company may

pay interest at such rate as the member paying such sum in advance

and the Directors agree upon. Money so paid in excess of the amount

of call shall not rank for dividend or participate in profits until it is

appropriated towards satisfaction of any call. The Directors may at any

time repay the amount so advanced.

Amount and time of call 30 No call shall exceed one fourth of the nominal value of a share, or be

payable at less than one month from the date fixed for the payment of

the last preceding call. A call may be revoked or postponed at the

discretion of the Board

Evidence in action for call 31 On the trail or hearing of any action for the recovery of any money due

for any call, it shall be sufficient to prove that the name of the member

used is entered in the register as the holder, or one of the holders, of

the shares in respect of which such debt accrued; that the resolution

making the call is duly recorded in the minute book; and that notice of

such call was duly given to the member, in pursuance of these

presents; and it shall not be necessary to prove the appointment of the

Directors who made such call nor any other matter whatsoever, but the

proof of the matters aforesaid shall be conclusive evidence of the debt

FORFEITURE, SURRENDER & LIEN

If call or installment not paid, notice

to be given

32 If any member fails to pay any call, or installment, on or before the day

appointed for payment thereof, the Directors may at any time thereafter

during such time as the call or installment remains unpaid, serve notice


75

on him to pay the same together with any interest that may have

accrued, and any expenses that may have been incurred by the

Company by reason of such non-payment, and stating that in the event

of non-payment on or before some day to be named in the notice (such

day not being less than fourteen days from the date of service of such

notice) and at some place (either the office or a bank) named in such

notice, the shares in respect of which the call was made or installment

is payable will be liable to be forfeited If notice not complied with shares

may be forfeited

33 If the requisitions of such notice are not complied with, any share in

respect of which such notice has been given may at any time

thereafter, before payment of all calls, installments, interest and

expenses due in respect thereof, may be forfeited by a resolution of the

Board of Directors, and the forfeiture shall be recorded in the Directors'

Minutes Book; and the holder of such share shall thereupon cease to

have any interest, therein and his name shall be removed from the

register as such holder, and thereupon notice shall be given to him of

such removal, and an entry of the forfeiture with the date thereof shall

forthwith be made in the register, but not forfeiture shall be in the

manner invalidated by any commission or neglect to give such notice to

or to make such entry as aforesaid

Effect of forfeiture 34 The forfeiture of a share shall involve the extinction of all interest in and

also of all claims and demands against the Company in respect of the

share and all other rights incidental to the share, except only such of

those rights as by these Articles are expressly saved

Arrears to be paid notwithstanding

forfeiture

35 Any person whose shares shall be so forfeited shall cease to be a

member in respect of the forfeited share, but shall, notwithstanding the

forfeiture, be liable to pay and shall forthwith pay to the Company all

calls or installments, interests and expenses owing upon or in respect

of such shares at the time of forfeiture until payment at the rate of 12

percent per annum or at such rate as the Directors may determine. The

liability of such person shall cease if and when the Company shall have

received payment in full of all such in respect of such shares.

Forfeited share to become property

of the Company

36 Any share so forfeited shall be deemed to be the property of the

Company and the Board of Directors may sell, re-allot, or otherwise

dispose off the same in such manner as they think fit

Power to annual forfeiture 37 The Directors may at any time annul forfeiture before any share so

forfeited shall have been sold, re-allotted upon such conditions as they

think fit

Declaration for forfeiture of shares 38 A duly verified declaration in writing that the declarant is a Director or

the Secretary of the Company, and that a share in the Company has

been duly forfeited on a date stated in the declaration; shall be

conclusive evidence of the facts therein stated as against all persons

claiming to be entitled to the share

Lien on shares 39 The Company shall have a first and paramount lien upon all the shares

(other than fully paid up shares) registered in the name of each


76

member (whether solely or jointly with others) and upon the proceeds

of the sale thereof for all moneys (whether presently payable or not)

called or payable at a fixed time in respect of such shares and no

equitable interest in any shares shall be created except upon the

footing and condition that this Article will have full effect. And such lien

shall extend to all dividends and bonus from time to time declared in

respect of such shares. Unless otherwise agreed, the registration of a

transfer of shares shall operate as a waiver of the Company's lien if

any on such shares. The Directors may at any time declare any share

wholly or in part to be exempt from the provisions of this clause

As to enforcing a lien by sale 40 The Director shall be entitled to give effect to such lien by sale or

forfeiture and reissue of the shares subject thereto or by retaining all

dividends and profits in respect thereof or by any combination of the

said means but no sale or forfeiture shall be made, until such period as

aforesaid shall have arrived, and unless a sum in respect of which the

lien exists is presently payable and until notice in writing of the intention

to sell or forfeit shall have been served on such member, his executors

or administrators and default shall have been made by him or by, them

in the payment, fulfillment, or discharge of such debts liabilities or

engagements for seven days after such notice.

Validity of Sale 41 Upon any sale after forfeiture or for enforcing a lien in purported

exercise of the powers herein before given, the Directors may cause

the purchaser's name to be entered in the register in respect of the

share sold, and the purchaser shall not be bound to see to the

regularity of the proceedings, or to the application of the purchase

money, and after his name has been entered in the register in respect

of such shares, the validity of the sale shall not be impeached by any

person

Application of proceeds of sale 42 I) The net proceeds of the sale shall be received by the Company and

applied in payment of such part of the amount in respect of which the

lien exists as is presently payable

ii) The residue, if any, subject to a like lien for sums and presently

payable as existed upon the shares before the sale be paid to the

person entitled to the shares at the date of the sale, or to his executors,

administrators, committee, curator or other representative

Directors may issue new certificates 43 Where any shares under the powers in that behalf herein contained are

sold by the Directors, and the certificate thereof has not been delivered

to the Company by the former holder of the said shares, the Directors

may issue a new certificate for such shares distinguishing it in such

manner as they think fit from certificate not so delivered up

Surrender of Shares 44 Subject to the provisions of the Act, the Board may accept from any

member the surrender on such terms and conditions as shall be agreed

of all or any of his shares.

Power to issue share warrants 45 With the previous approval of the Central Govemment the Company

may issue share warrants subject to and in accordance with the


77

provisions of Sections 114 and 115 of the Act; and accordingly, the

Board may in its discretion, with respect to any share which is fully paid

up, on application in writing signed by the person registered as holder

of the share and authenticated by such evidence (if any), as the Board

may from time to time, require as to the identity of the person signing

the application and on receiving the certificate (if any) of the share, and

the amount of the stamp duty on the warrant and such fee as the Board

may from time to time require, issue a share warrant.

Rights of depositors of share

warrants

46 The bearer of a share warrant may at any time deposit the warrant at

the office of the Company, and so long as the warrant remaining so

deposit, the depositor shall have the same right of signing a requisition

for calling a meeting of the Company, and of attending and voting and

exercising the other privileges of a member at any meeting held after

the expiry of two clear days from the date of deposit, as if his name

were inserted in the register of members as the holder of the shares

included in the deposited warrant.

Not more than one person shall be recognised as depositor of the

share warrant

The Company shall, on two days written notice, return the deposited

share warrant to the depositor

Rights of bearer of share warrant 47 Subject as herein otherwise expressly provided, no person shall, as

bearer of a share warrant, sign a requisition for calling a meeting of the

Company, or attend, or vote to exercise any other privilege of member

at a meeting of the Company, or be entitled to receive any notices from

the Company, nor shall share warrants be taken into account for

purposes of share qualification of a director

The bearer of a share warrant shall be entitled in other respects to the

same privileges and advantages as if he were named in the register of

members as the holder of a share included in the warrant, and he shall

be a member of the Company.

Renewal of share warrant 48 The Board may, from time to time, make rules as to the terms on which

(if it shall think fit) a new share warrant or coupon may be issued by

way of renewal in case of defacement, loss or destruction

TRANSFER & TRANSMISSION OF SHARES

Transfer of share 49 a) The transfer of shares and debentures shall be effected by

an instrument in writing duly stamped, in the usual common

form, modified so as to suit the circumstances of the parties,

and shall be executed both by the transferor and the

transferee, whose executions shall be attested by at least

one witness who shall add his address and occupation, and

the transferor shall be deemed to remain the holder of such

shares until the name of the transferee shall have been


78

entered in the register in respect thereof b) The instrument of transfer shall be in form 7 -B of the

Companies Act, 1956. The instrument of transfer shall be in

writing and all the provisions of Section 108 of the

Companies Act, 1956 and of any statutory modifications

thereof for the time being shall be duly complied with in

respect of all transfers of shares and registration thereof. c) No fee shall be charged for the following

• for registration of transfers, sub-division and

consolidation, certificates and for letters of

allotment for split, consolidation, renewal and

pucca transfer receipts into denominations

corresponding to the market units of trading;

• for sub-division of renouncable letter of right

• for registration of any power of attorney, probate,

letters of administration or death certificates or for

similar other documents d) The Company shall issue certificates within one month of the

date of lodgment for transfer

Instrument of Transfer to be

deposited

50 Every instrument of transfer shall be deposited with the Company, and

no transfer shall be registered until such instrument shall be deposited

together with the certificate of the shares or debentures to be

transferred and together with any other evidence the Director may

require to prove the title of the transferor, or his right to transfer the

shares or debentures. The instrument of transfer shall, after registration

be kept by the Company, but all instruments of transfer, which the

Directors may decline to register, shall be returned to the person

depositing the same. One instrument of transfer should be in respect of

only one class of shares. The Director may waive the production of the

instrument of transfer to any certificate upon evidence satisfactory to

them of its loss or destruction, and on such terms as to indemnity as

the Board of Directors may think fit.

Power of Board to refuse registration

to transfer

51 The Board may, without assigning any reasons but subject to Section

111 of the Act, decline to register any transfer of shares or debentures

upon which the Company has a lien, and in the case of shares which

are not fully paid up, may refuse to register a transfer to a transferee of

whom the Board does not approve. No transfer shall be made to an

infant or person of unsound mind provided that registration of transfer

shall not be refused on the ground of the transferor being, either alone

or jointly with any other person or persons, indebted to the Company

on any account whatsoever except a lien on shares.

Notice of refusal 52 If registration of the transfer of share or debenture of the Company is

refused, the Directors shall within one month from the date on which

the instrument of transfer was lodged with the Company, send to the

transferee and the transferor notice of the refusal.


79

Closing of Share transfer books and

register

53 The Directors may, on giving seven days prior notice by advertisement

in some newspaper circulating in the District in which the Registered

Office of the Company is situated, close the register of members for

any time or times not exceeding thirty days at a time, but not exceeding

in the whole forty five days in each year.

Transmission of registered shares 54 The executors or administrators or the holder of a succession

certificate in respect of shares of a deceased member (not being one of

several recognise as holders) shall be the only person, whom the

Company shall recognise as having any title to the shares registered in

the name of such member, and in case of the death of anyone more of

the joint-holders of any registered shares, the survivors shall be the

only persons recognised by the Company as having any title to or

interest in such shares, but nothing herein contained shall be taken to

release the estate of a deceased joint holder from any liability on

shares held by him jointly with any other person. Before recognising

any executor or administrator or legal heir, the Directors may require

him to obtain a grant of probate or letters of administration or

succession certificate or other legal representation, as the case may

be, from some competent court provided nevertheless that in any case

where the Directors in their absolute discretion think fit, it shall be lawful

for the Directors to dispense with the production of probate or letters of

administration upon such terms as to indemnity or otherwise as the

Directors may consider desirable. Provided, also that if the member

was a member of a joint Hindu Mitakshara family, the Directors on

being satisfied to the effect, and on being satisfied that the shares

standing in his name if fact belonged to the joint family, may recognise

the survivors thereof as having title to the shares registered in the

name of such member but this provision shall in no way be deemed to

modify or nullify the provisions contained in Articles 10 and 11 hereof.

As to transfer of shares of deceased

or bankrupt member

55 Any committee or guardian of a lunatic or infant member, or any person

becoming entitled to or to transfer shares or debentures in

consequence of the death, bankruptcy or insolvency of any member, or

otherwise than by transfer may, with consent of the Directors (which

they shall not be under any obligation to give); be registered as a

member upon such evidence of his title being produced, as may, from

time to time, be required by the Directors, or such person, instead of

being registered himself, may, subject to the regulations as to transfer

herein before contained, transfer such shares. The Board shall, in

either case, have the same right to decline or suspend registrations as

it would have had if the deceased or insolvent member had transferred

the share before or insolvency.

As to notice of election on

transmission

56 I)If the person aforesaid shall elect to transfer the share; he shall testify

his election by executing a transfer of the share

(ii) If the person so becoming entitled shall elect to be registered as


80

holder of the share himself, he shall deliver or send to the Company a

notice in writing signed by him stating that he so elects.

iii) All the limitations, restrictions and provisions of these regulations

relating to the transfer and the registration of the transfers of share

shall be applicable to any such notice or transfer as aforesaid, as if the

death or insolvency of the member had not occurred, and the notice or

transfer were a transfer signed by that member

Transmission clause 57 A person becoming entitled to a share by reason of the death or

insolvency of the holder shall be entitled to the same dividends and

other advantages to which he would be entitled if he were the

registered holder of the shares. Provided that the Board may, at any

time, give notice requiring any such person to elect either to be

registered himself or to transfer, and if the notice is not complied with

within ninety days, the Board may thereafter withhold payment of all

dividends bonus or other money payable in respect of the share, until

the requirements of the notice have been compiled with

ALTERATION OF CAPITAL

Increase of capital 58 The Company in General Meeting may from time to time, increase the

capital by creating and/or issuing new shares. The new capital may be

divided into preference shares or equity shares and may be issued

upon such terms and conditions, and with such rights and privileges

annexed thereto, as the General Meeting resolving upon the creation

and/or issuing thereof shall direct, and if not direction be given, as the

Board of Directors shall determine, and in particular such shares may

be issued with a preferential or qualified right to dividends and in the

distribution of assets of the Company

Shall prescribe and in particular, such shares may be issued with a

preferential or qualified right to dividends and in the distribution of

assets of the Company and with a right of voting at General Meetings

of the Company in conformity with Sections 86 and 87 of the Act.

Whenever of this Article, the Directors shall company with the

provisions of Section 97 of the Act Same as original capital 59 Any capital raised by the creation and/or issue of new shares shall be

considered as part of the original capital in all respects, so far as may

be subject to the foregoing provisions, with reference to the payment of

calls and installments, transfer and transmission, forfeiture, lien and

surrender, unless it may be otherwise resolved by the General Meeting

sanctioning the increase

Reduction of capital 60 The Company may, subject to confirmation by the court, from time to

time, by special resolution, reduce its capital in any way, and in

particular and without prejudice to the generality of the foregoing

powers by exercising the powers mentioned in Section 1 00 of the

Companies Act, 1956.


81

61 The Company may, by special resolution, reduce in any manner and

with, and subject to, any incident authorised and consent required by

law:

its share capital

any capital redemption reserve fund; or

any share premium account

Consolidation of shares 62 The Company may consolidate and divide all or any of its share capital

into shares to larger amount than its existing shares.

Conversion of shares 63 The Company may convert all or any of its fully paid up shares into

stock, and re-convert that stock into fully paid up shares of any

denomination.

Transfer of stock 64 The holders of stock may transfer the same or any part thereof in the

same manner as, and subject to the same regulation under which, the

shares from which the stock arose might before the conversion have

been transferred or as near thereto as circumstances admit; provided

that the Board, may from time to time, fix the minimum amount of stock

transferable, so however that such minimum shall not exceed the

nominal amount of shares from which the stock arose.

Right of Stock-holders 65 The holders of stock shall, according to the amount of stock held by

them, have the same rights, privileges and advantages as regards

dividend, voting at meetings of the Company and other matters as if

they held the shares from which the stock arose, but not such privilege

or advantage (except participation in the dividends and profits of the

Company and in the assets on winding up) shall be conferred by an

amount of stock which would not, if existing in shares have conferred

that privilege or advantage.

Such of the regulations of the Company (other than those relating to

share warrants) as are applicable to paid-up shares shall apply to stock

and the words "shares" and "shareholders" in those regulations shall

include "stock" and "stockholders" respectively.

Sub-division of shares 66 The Company may sub-divide its shares or any of them into shares of

smaller amount than is fixed by the Memorandum so however, that in

the sub-division, the proportion between amount paid and the amount,

if any, unpaid on each reduced share shall be the same as it was in the

case of the share from which the reduced share is delivered.

Cancellation of shares 67 The Company may cancel shares which, at the date of the passing of

the resolution in that behalf, have not been or agreed to be taken by

any person, and diminish the amount of its share capital by the amount

of the shares so cancelled

Sub-division into preferred and

equity

68 The resolution whereby any share is sub-divided may determine that as

between the holders of the shares resulting from such division one or

more or such class of shares shall have some preference or special


82

advantages as regards dividend, capital, or otherwise over or as

compared with the others or other, subject to Companies Act, 1956

Modification of shares 69 Whenever the capital by reason of the issue of preference shares or

otherwise is divided into different classes of shares, all or any of the

rights & privileges attached to each class in the capital for the time

being of the Company may be modified, commuted, affected or dealt

with by agreement between the Company and any person purporting to

contract on behalf of that class, provided that such agreement is ratified

in writing by the holders of at least 75% in nominal value of issued of

the class, or is confirmed by a special resolution passed at a separate

General Meeting of the holders of shares of that class. The powers

conferred upon the Company by this Article are subject to Sections 106

and 1 07 of the Act

DEMATERIALISATION OF SECURITIES

Definitions 70 (1) For the purpose of this Article:-

"Beneficial Owner" means a person a persons whose name is recorded as such with depository.

"SEBI" means the Securities & Exchange Board of India. "Depository" means a Company formed and registered under the Companies Act, 1956 which has been granted a certificate of registration to act as a depository under the Securities & Exchange Board of India Act, 1992 and

"Security" means such security as may be specified by SEBI from time to time.

Dematerilisation of Securities (2) Notwithstanding anything contained in these Articles, the Company

shall be entitled to dematerilise its securities and to offer securities in a

dematerialised form pursuant to the Depositories Act, 1996.

Options for Investors (3) Every person subscribing to securities offered by the Company shall

have the option to receive security certificates or to hold the securities

with a depository. Such a person who is the beneficial owner of the

securities can at any time opt out of a depository, if permitted by the

law, in respect of any security in the manner provided by the

Depositories Act, and the Company shall, in the manner and within the

time prescribed, issue to the beneficial owner the required Certificates

of Securities

If a person opts to hold his security with a depository, the Company

shall intimate such depository the details of allotment of the security,

and on receipt of the information, the depository shall enter in its record

the name of the allottee as the beneficial owner of the security

Securities in Depositories to be in

fungible form (4) All securities held by a depository shall be dematerialised and be in

fungible form. Nothing contained in Sections 153, 153A, 153B, 187B,

187C and 372A of the Act shall apply to a depository in respect of the

securities held by it on behalf of the beneficial owner

Rights of Depositories and Beneficial (5)(a) Notwithstanding anything to the contrary contained in the Act or


83

Owners Articles, a depository shall be deemed to be the registered owner for

the purposes of effecting transfer of ownership of security on behalf of

the beneficial owner

(b) Save as otherwise provided in (a) above, the depository as the

registered owner of the securities shall not have any voting rights or

any other rights in respect of the securities held by it.

(c) Every person holding securities of the Company and whose name is

entered as the beneficial owner in the records of the depository shall be

deemed to be a member of the Company. The beneficial owner of

securities shall be entitled to all the rights and benefits and be subject

to all the liabilities in respect of his securities which are held by a

depository

Service of Documents (6) Notwithstanding anything in the Act or these Articles to the contrary,

where securities are held in depository, the records of the beneficial

ownership may be served by such depository on the Company by

means of electronic mode or by delivery of floppies or discs

Transfer of Securities (7) Nothing contained in Section 108 of the Act or these Articles shall

apply to a transfer of securities effected by transfer and transferee both

of whom are entered as beneficial in the records of a depository

Allotment of Securities dealt within a

Depository (8) Notwithstanding anything in the Act or these Articles, where

securities are dealt with by a depository, the Company shall intimate

the details thereof to the depository immediately on allotment of such

securities.

Distinctive Numbers of Securities

held in a Depository (9) Nothing contained in the Act or these Articles regarding the

necessary of having distinctive numbers for securities issued by the

Company shall apply to securities held with a depository

Register and index of Beneficial

Owners (10) The Register and Index of beneficial owners maintained by a

depository under the Depositories Act, 1996 shall be deemed to be the

Register and Index of Members and Security holders for the purpose of

these Articles

BORROWING POWERS

Power to borrow 71 Subject to the provisions of the Act, and without prejudice to the

powers conferred by any other article or articles, the Directors may,

from time to time, at their discretion, borrow or secure the payment of

any sum or sums of money for the purpose of the Company either from

any Director or elsewhere on security or otherwise and may secure the

repayment or payment of any sum or sums in such manner, and upon

such terms and conditions in all respects as they think fit, and in

particular by the creation of any mortgage or charge on the undertaking

or the whole or any part of the property, present or future or the

uncalled capital, perpetual or redeemable, charged upon the


84

undertaken or all or any part of the property of the Company, both

present and future, including its uncalled capital for the time being and

the Directors or any of them may guarantee the whole or any part of

the loans or debts raised or incurred by or on behalf of the Company or

any interest payable thereon, and shall be entitled to receive such

payment as consideration for the giving of any such guarantee as may

be determined by the Directors from or against liability under their

guarantees by means of a mortgage or charge on the undertaking of

the Company or upon any of its property or assets or otherwise

Provided that the debentures/bonds, debenture stock bonds or other

securities conferring right to allotment or conversion into shares or the

option to right to call or allotment of shares shall not be given except

with sanction of the Company in General Meeting.

(b) The Directors may at any time by a Resolution passed at a Board

Meeting delegate to any category or managerial personnel or any

Committee of Directors or any other principal officer of the Branch

office of the Company, the powers specified in sub clause (a) above

provided the Resolution delegating powers to such managerial

personnel or committee to borrow moneys shall specify the total

amount up to which the moneys may be borrowed by him or them.

Consent of the Company is hereby accorded to the Board of Directors,

under Section 293(1 )(d) of the Companies Act, 1956 to borrow any

sum or sums of money from time to time (apart from temporary loans

obtained from the Companies Bankers in ordinary course of Business)

which may exceed the aggregate of the paid-up capital of the Company

and its free reserves, that is to say any reserves not set apart for any

specific purposes, provided however that the total amount so borrowed

shall not be exceeded Rs. 50 crores (Rupees Fifty crores only)

Restriction on borrowing powers 72 The Directors may, subject to the provisions of Section 293(1 )(d) of the

Act, borrow any sum of money and where the moneys to be borrowed

together with the moneys already borrowed by the Company (apart

from temporary loans obtained from the Company's bankers in the

ordinary course of business) exceeds the aggregate of the paid up

capital of the Company and its free reserves, that is to say, reserve not

set apart for any specific purpose, the sanction of the General Meeting

should be obtained and every resolution passed by the Company in

relation to the exercise of the power referred to in the Article shall

specify the total amount up to which money may be borrowed by the

Board of Directors

Director's loans & guarantees 73 The Directors shall be entitled to receive interest on loans made by

them to the Company as may be agreed between the Company and

the Directors. The Directors, including the Managing Director may

guarantee any loans made to the Company and shall be entitled to


85

receive such payment on account of his having given any such

guarantee as may be determined by the Board, and such payment

shall not be remuneration in respect of his services as Director.

Mortgage of uncalled capital 74 If any uncalled capital of the Company be included in or charged by

any mortgage or other security, the Directors may by on instrument

under the company's seal, authorise the person in whose favour such

mortgage or security is executed, or any other person in trust for him,

to make calls on the members in respect of such uncalled capital, and

the provisions herein before contained in regard to call shall mutatis

mutandis apply to calls made under such authority and such authority

may be made exercisable either conditionally or unconditionally and

either to the exclusion of the Director's power or otherwise and shall be

assignable if expressed so to be

GENERAL MEETING

Annual General Meeting 75 The Board of Directors shall hold Annual General Meetings of the

Company in accordance with the provisions of Section 166 of the Act.

The Board of Directors may, suo moto, call any other General Meeting,

besides the Annual General Meeting. Distinction between Annual & other

General Meeting

76 The meetings referred to in Article 75(a) shall be called Annual General

Meetings and all other Meetings of shareholders shall be called

Extraordinary General Meetings.

Extraordinary General Meeting 77 The Board of Directors of the Company, shall on the requisition of such

number of members of the Company as is specified in Section 169(4)

of the Act, forthwith proceed duly to call an Extraordinary General

Meeting of the Company and the provisions of Section 169 of the Act

shall apply thereto.

Quorum 78 Five members personally present shall be the quorum for a General

Meeting. No business shall be transacted at any general meeting

unless the quorum requisite shall be present at the commencement of

Meeting.

Chairman of General Meeting 79 The Chairman of the Board of Directors shall be to take the chair at

every General Meeting and if be not such Chairman or if at any

Meeting he shall not be present within fifteen minutes after the time

appointed for holding such Meeting or is unwilling to act, the Members

present shall choose another Director as Chairman and if no Director

be present or if all the Directors present decline to take the Chair, then

the Members present shall choose one among them, being a member

entitled to vote to be the Chairman

When if quorum not present Meeting

to be dissolved & when to be

adjourned

80 If within half an hour from the time appointed for the Meeting a quorum

be not present, the meeting, if convened upon such requisition as

aforesaid, shall be dissolved; but in any other case, if shall stand

adjourned to the same day in the next week, at the same time and

place, or to such other day and such time and place, as the Board may

by notice appoint and if at such adjourned meeting a quorum be not


86

present, those members who are present shall be a quorum and may

transact the business for which the meeting was called.

Business to be transacted at

adjourned meeting

81 The Chairman with the consent of the meeting, may adjourn any

General Meeting from time to time and place to place, but no business

shall be transacted at any adjourned General Meeting other than the

business left unfinished at the General Meeting from which the

adjournment took place, and which might have been transacted at that

meeting, it shall not be necessary to give any notice of any

adjournment of the business to be transacted at any adjourned meeting

How question to be decided at

meeting

82 Except where otherwise provided by the Act or by these presents every

question to be decided by any General Meeting shall, in the first

instance, be decided by a show of hands. In case of an equality of

votes, the chairman shall both on a show of hands and at a poll have a

casting vote, in addition to the vote or votes to which he may be entitled

as a member.

When poll may be demanded 83 Poll may be demanded and taken in accordance with and subject to the

provisions of Sections 179, 184 and 185 of the Companies Act, 1956.

What is to be evidence of the

passing of a resolution where poll not

demanded

84 Unless a poll is demanded in accordance with Section 179 of the Act

before or on the declaration of the result by the show of hands a

declaration of the Chairman, that a resolution has been carried or

carried by a particular majority or lost or not carried by a particular

majority and an entry to that effect in the minutes of the proceedings of

the meeting shall be sufficient evidence of the fact so declared, without

proof of the number of proportion of the votes given for or against the

resolution

M2 Poll 85 If a poll is demanded as aforesaid, it shall be taken subject to Sections

180 to 185 of the Act in such manner and at such time and place as the

Chairman of the meeting directs, and either at one or after an interval

or adjournment or otherwise, and the result of the poll shall be deemed

to the resolution of the meeting at which demanded. The demand for a

poll may be withdrawn

Minutes 86 The Company shall cause minutes of all proceedings of every General

Meeting and of its Board of Directors or of every Committee of the

Board, to be kept by making within thirty days of the conclusion of

every such meeting concerned, entries thereof in books kept for that

purpose with their pages consecutively numbered. Each page of every

such book shall be initialed or signed and the last page of the record or

proceedings of each meeting in each books shall be dated and signed

In the case of minutes of proceedings of a Meeting of the Board or of a

Committee thereof, by the Chairman of the said Meeting or the

Chairman of the next succeeding Meeting.

In the case of minutes of proceedings of a General Meeting by the

Chairman of the same Meeting within the aforesaid period of thirty days

or in the event of the death or inability of that Chairman within that


87

period, by a Director duly authorised by the Board for the purpose.

In no case the minutes of proceedings of a Meeting shall be attached to

any such book as aforesaid by pasting or otherwise

Vote for Member 87 On a show of hands, every member present in person, or by a proxy, or

attorney, and being a holder of equity (ordinary) shares, and entitled to

vote shall be as laid down in the Act, preference shareholders shall

have right to vote in accordance with the provisions of Section 87 of the

Act

Joint holders 88 If two or more persons are jointly registered as holders of anyone

share, and of such persons may vote at any meeting, either personally,

or by proxy, or attorney, as if he were solely entitled thereto, and if

more than one so such joint holders be present at any meeting

personally or by proxy or attorney, one of such person so present

whose name stands first in the register in respect of such shares, shall

alone be entitled to vote in respect of the same. Several executors or

administrators of a deceased member in whose names any share

stands shall, for the purpose of this clause be deemed joint holders.

Right of vote under transmission

clause

89 Any guardian, or other person entitled under the transmission Clause

(Article hereof) to transfer shares, may vote at any General Meeting in

respect thereof, as if he was the registered holder of such shares

provided that at least 24 hours before the holding of the meeting he

shall satisfy the Directors of his right to act in that capacity, unless the

Directors shall have previously admitted his right to vote at such

meeting in respect thereof.

No member entitled to vote etc. while

call due to company

90 No member shall be entitled to be present or to vote at any General

Meeting, either personally, or by proxy, or attorney whilst any call or

other sum is due and presently payable to the Company, or in regard to

which the Company has, and has exercised, any right to lien

Right to vote to a member of

unsound mind

91 A member of unsound mind or in respect of whom an order has been

made by any Court having jurisdiction in lunacy may vote, whether on a

show of hands or on poll, by his committee or other legal guardian, and

any such committee or guardian may, on a poll, vote by proxy

As to objection to a voter 92 No objection shall be raised to the qualification of any voter except at

the meeting or adjourned meeting at which the vote objected is given or

tendered and every vote not disallowed at such meeting shall be valid

for all purposes

Any such objection made in due time shall be referred to the Chairman

of the meeting, whose decision shall be final and conclusive.

Proxy 93 Subject to Section 176 of the Act votes may be given either personally

or by proxy or by agent under a duly executed power of attorney

Time for deposit of instrument of

proxy

94 The instrument appointing a proxy, and every power of attorney or

other authority (if any) under which it is signed, or notarially certified

copy of that power or authority, shall be deposited at the Registered

Office of the Company, not less than 48 hours before the time of


88

holding the meeting at which the person named in such instrument

proposes to vote, and in default the instrument of proxy shall not be

treated as valid.

Forms of Proxy 95 An instrument appointing a proxy shall be in either of the forms in

Schedule IX to the Act or a form as near thereto as circumstances

admit.

Proxy need not be a member 96 Any member of the Company entitled to attend and vote at the meeting

of the Company shall be entitled to appoint another person (whether a

member or not) as his proxy to attend and vote instead of himself, but a

proxy so appointed shall not have any right to speak at the meeting

As to validity of vote given by proxy 97 A vote given in accordance with the terms of an instrument of proxy or

a power of attorney shall be valid notwithstanding the previous death of

the principal, or revocation of the proxy or power of attorney, or transfer

of share in respect of which the vote is given, unless in intimation in

written of the death, revocation or transfer, shall have been received at

the office of the Company before the meeting

MANAGEMENT

Directors 98 The business of the Company shall be managed by the Directors who

may exercise all such powers of the Company as are not, by the

Companies Act, 1956 or any statutory modification thereof for the time

being in force, or by these Articles, required to be exercised by the

Company in General Meeting subject nevertheless to such regulations,

not inconsistent with the aforesaid provisions, as may be prescribed by

the Company in General Meeting, but no such regulation as shall

invalidate any prior act of the Directors which would have been valid if

that regulation had not been made.

Number of Directors 99 Unless otherwise determined by the Company in General Meeting the

number of Directors shall not be less than 3 or not more than 12,

including Technical, Nominated, Special Director and Debenture

Director, if any.

First Directors 100 The following persons shall be the first Directors of the Company

1) Mr. K. Balasubramanian

2) Mr. K. Narayana Rao

3) Mr. N.V. Varadarajulu Appointment of Directors 101 The Directors shall have power from time to time; and at any time, to

appoint any other persons to be Directors, but so that total number of

Directors shall not at any time exceed the maximum number fixed as

above. But any Director so appointed shall hold office only until the

next following Annual General Meeting of the Company and shall then

be eligible for re-election

Qualification Shares 102 A director shall not be required to hold any qualification shares

Directors fee & other remuneration 103 Until otherwise determined by the General Meeting, each Director shall

receive out of other funds of the Company by way of remuneration a

sum not exceeding the limit prescribed by Government of India under

Section 310 of the Act for each Meeting of the Board or a Committee or


89

any General Meeting thereof attended by him. The Board of Directors

may allow and pay any Director who is having his residence at a place

outside the place at which any meeting of the Directors may be held

and who shall come to the place for the purpose of attending such

meeting such sum as the Directors may considered fair and reasonable

for his expenses in connection with his attending the Meeting in

addition to his remuneration as above specified

Directors commission 104 The Directors may subject to the provisions of Sections 198 & 309 of

the Act also receive remuneration or commission, or participation of

profits partly in one way or partly in another and such remuneration

shall be divided among the Directors equally or in such other proportion

as they may determine from time to time.

As to extra service performed 105 If any Director, being Willing, shall be called upon to perform extra

services or to make any special exertions in going or, residing away

from the place of the Company, or giving attendance to the business of

the Company, the Company may pay to the Directors so doing either

by a fixed sum, or by a percentage on profits or otherwise, as may be

determined by the Directors, subject to obtaining the sanction of the

Central Government.

Debenture Director 106 Any trust deed for securing debentures or debenture-stock may if so

arranged provide for the appointment from time to time by the trustee

thereof or by the holders of debentures or debenture-stock of some

person to be a director of the Company and may empower such trustee

or holders of debenture or debenture-stock of some person to be a

Director of the Company and may empower such trustee or holders of

debenture or debenture-stock from time to time to remove any Director

so appointed. A Director appointed under this article is herein referred

to as a "Debenture Director" and the Debenture Director means a

Director for the time being in office under this article. A debenture

director shall not be bound to hold any qualification shares and shall

not be liable to retire by rotation or be removed by the Company. The

trust deed may contain such ancillary provisions as may be arranged

between the Company and the trustees and all such provisions shall

have effect notwithstanding any of the other provisions herein

contained.

Special Directors 107 In the event of the Company entering into an agreement or agreements

for the purchase of machinery and/or for promoting technical

collaboration and or assistance for the purchase of machinery,

installation etc. or for any mining rights, lease or concessions or other

contract or agreement for assistance in any form like power supply,

water supply, grant of loans, underwriting and/or subscribing for shares

of the Company, with any State Government or any industrial finance

and development corporation or financing institution and if the terms of

the agreement or contracts or arrangement provide for the appointment

of a person or persons as Director or Directors, such person or persons


90

including any State Government, Central Government or any industrial

finance and development corporation or financing institution with whom

the said agreements are entered into shall be entitled to appoint such

number of Directors hereinafter referred to as special incorporation

Directors as may be agreed upon from time to time, and from time to

time remove any such Director or Directors so appointed and to appoint

others in his or their place and to fill in vacancy caused by death or

resignation of such Director or Directors or otherwise ceasing to hold

office and that such special Directors shall not be required to hold any

qualification shares and shall not be liable to retire by rotation or be

removed by the Company in General Meeting.

Alternate Director 108 The Board of Directors may appoint an alternate Director act for a

director (hereinafter called the original Director) during his absence for

a period of not less than three months from the state in which the

Meeting of the Board are ordinarily held

An altemate Director appointed under sub clause (1) above shall

vacate office if and when the original Director returns to the State in

which the Meetings of the Board are ordinarily held

If the term of the original Director is determined before he so returns to

the state aforesaid any provision for the automatic reappointment shall

apply to the original and not to the alternate Director.

Additional Director 109 Subject to the provisions of Section 260 of the Act the Directors may

appoint additional Director

Removal of Director 110 The Company may, by ordinary resolution, remove an ordinary Director

other than a Director appointed by the Central Government in

pursuance of Section 408, before the expiry of his period of office and

fill up the vacancy thus created in the manner and subject to the

provisions of Section 284 of the Act.

Casual Vacancy may be filled by

Directors

111 Any casual vacancy occurring among the Directors may be filled up by

the Directors, but any person so chosen shall retain his office so long

only as the vacating Director would have retained the same if no

vacancy had occurred, provided that the Directors may not fill a casual

vacancy by appointing any person who has been removed from the

office of Directorship of the Company under the preceding Article

Failure to fill casual vacancy 112 The continuing Directors may act, notwithstanding any vacancy in their

body; but so that if the number falls below the minimum fixed, the

Director shall not, except for the purpose of filling vacancies, act so

long as the number is below the minimum.

Rotation & Retirement of Directors. 113 At the Annual General Meeting of the Company to be held in every

year, one-third of such of the Directors as are liable to retire by rotation

for the time being or, if their number is not three or a multiple of three

then the number nearest to one third shall retire from office, and they


91

will be eligible for re-election

Provided nevertheless that the Managing Director or Director appointed

under Article 114 or the Directors appointed as a Debenture Director,

Special Director or Ex-Officio Director or an Additional Director under

Article 106, 107 and 109 hereof shall not retire by rotation under this

article nor shall they be included in calculating the total number of

Directors of whom one third shall retire from office under this Article

Directors may contract with

Company

114 Subject to the provisions of Sections 297, 299, 300, 302 and 314 of the

Act, the Directors shall not be disqualified by reason of his or their

office as such from contracting with the Company either as vendor,

purchaser, lender, agent, broker, lessor or otherwise, nor shall any

such contract or any contract or arrangement entered into by or on

behalf of the Company with such Director or with any Company or

partnership form in which he shall be a member or otherwise interested

be avoided nor shall any Director so contracting or being such member

or so interested be liable to account to the Company for any profit

realised by such contract or arrangement by reason only of such

Director holding that office or of fiduciary relation thereby established,

but the nature of the interest must be disclosed by him or them at the

meeting of Directors at which the contract or arrangement is

determined if the interest then exists or in any other case at the first

Meeting of the Directors after the acquisition of the interest

When Director of this Company

appointed Director of a subsidiary

Company

115 A Director of this Company may be or become a Director any Company

promoted by this Company or in which it may be interested as a

vendor, shareholder, or otherwise, and no such Director shall be

accountable for any benefits received as a Director or Member of such

Company

Meeting of Directors 116 The Directors shall meet together once in every three months and at

least four such meetings shall be held in every year. Two Directors or

one third of the total strength of the Directors, whichever is higher as

provided in Section 287 of the Act shall be a quorum. Where at any

time, the number of interested Directors exceeds or is equal to two-

third of the total strength the number of remaining Directors not so

interested present at the Meeting being not less than two shall be the

quorum during such time. Any Director or Managing Director may at

any time and the Managing Director shall upon the request of any

Director at any time convene a Meeting of Directors. Questions arising

at any Meeting shall be decided by a majority of votes. In case of an

equality of votes the Chairman shall have a second or casting vote.

Chairman of Directors 117 The Company shall have the power to hold Board or Committee

meetings through the means of video or tele-conferencing, and also

allow Directors to participate in the Board or Committee meetings

through the means of video or tele-conferencing, subject to the

applicable provisions, if any, of the Act and other regulatory provisions,


92

if any, and all relevant articles dealing with Board or Committee

meetings shall be read mutatis mutandis and all such Board or

Committee meetings held as above shall be considered to have been

properly convened and held and the Directors who participate in such

Board meetings through video or through teleconferencing facilities

shall be considered as Directors who have attended such Board or

Committee meetings.

Election of Chairman 118 a) The Board of Directors may elect a Director as Chairman of the

Board.

b)If no such Chairman is elected, or if at any meeting the Chairman is

not present within 15 minutes after the time is appointed for holding the

Meeting, the Directors present may choose one of their member to be

Chairman of Meeting Delegation of Powers by Board 119 Subject to the provisions of Section 292 of the Act, the Directors may

delegate any of their powers to a committee consisting of such member

or members of their body as they think fit, or to any category of

managerial personnel or to any principal officer of the Company or to

principal officer of the branch office of the Company. Any such

committee or delegates shall, in exercise of the powers so delegated,

confirm to any regulations that may from time to time be imposed on

them by the Directors

Meetings, etc. of Committee 120 The Meetings and proceedings of any such committee consisting of

two or more members shall be governed by the provisions herein

before contained for regulating the meeting and proceedings of the

Directors, so far as the same are applicable thereto and are not

superseded by any regulations made by the Directors; under the last

preceding clause

Minutes 121 All minutes shall be signed by the Chairman of the Meeting at which

the same are recorded or by the person who shall preside as Chairman

at the next ensuing meeting, and all minutes to be purporting to be so

signed shall for all purposes whatever be prima facie evidence of the

actual passing of the resolutions recorded, and actual and regular

transaction or occurrence of the proceedings to be so recorded, and of

the regularity of the meeting at which the same shall appear to have

taken place.

Resolution without Board Meeting 122 Save in these cases where a resolution is required by Sections 262,

292, 297, 316, 372A and 386 of the Act, to be passed at a Meeting of

the Board, a resolution shall be as valid and effectual as if it had been

passed at a Meeting of the Board or Committee of the Board, as the

case may be duly called and constituted, if a draft thereof in writing is

circulated together with the necessary papers, if any, to all the

Directors, or to all the Members of the Committee of the Board, as the

case may be then in India (not being less in number than the quorum

fixed, for a meeting of the Board of committee, as the case may be)


93

and to all other Directors or members of the Committee their usual

address and has been approved by such of them as are then in India,

or by a majority of such of them as are entitled to vote on the resolution

Managing Director 123 The Board may, from time to time and at any time appoint one or more

of their body to be a Whole-time or Managing Director or Directors to

manage and conduct the business of the Company subject to their

control, discretion and superintendence and subject to the provisions of

the act and the articles. The whole time or Managing Directors will not

be liable to retire by rotation.

THE SEAL Custody of the seal 124 The Directors shall provide a Common Seal for the purpose of the

Company, and shall have power from time to time to destroy the same

and substitute a new seal in lieu thereof. The Directors shall provide for

the safe custody of the Seal for the time being and the seal shall never

be used, except by the authority of the Directors or a Committee of the

Directors previously given, and anyone Director or Secretary or any

other executive specifically authorised by the Board for this purpose

shall sign every instrument to which the seal is affixed, provided

nevertheless, that any instrument bearing the seal of the Company and

issued for valuable consideration shall be binding on the Company

notwithstanding any irregularity touching the authority of the Directors

to issue the same.

Seal for use in foreign territory 125 The Company may have for use in any territory, district or place not

situated in India an official seal which shall be a facsimile of its

common seal with the addition on the face of the name of the territory,

district or place.

FOREIGN REGISTER

Foreign register 126 The Company may keep in any state or country outside India, a branch

register of members or debenture holders resident in that state or

country (herein after called as "Foreign Register") and shall, within one

month from the date of the opening of any foreign register, file with the

Registrar notice of the situation of the office where such register is kept

and in the event of any change of situation of such office or of its

discontinuance shall within one month from the date of such change or

discontinuance. As regards the provisions relating to foreign register,

the Company shall have regard to Section 158 of the Act.

Books where kept 127 Books of account shall be kept at the registered office of the Company,

or at such other place in India as the Directors may think fit

Inspection by members 128 The Directors shall, from time to time, determine whether and to what

extent and at what times and places and under what condition or

regulation the accounts and books of the Company or any of them shall

be open to inspection of members not being Directors. No member (not

being a Director) shall have any right to inspect the same except as

conferred by the Companies Act, or authorised by the Board of

Directors, or by any resolution of the Company in General Meeting.


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AUDIT

Auditors 129 Once at least in every year the accounts of the Company shall be

examined and the correctness thereof and of the Balance Sheet and

Profit & Loss Account ascertained by one or more Auditor or Auditors.

Appointment etc. of Auditors 130 As regards the appointment and remuneration, qualification and

disqualification, removal, powers, rights and duties of Auditors, the

Directors and the Auditors shall have regard to Section 224 to 231 of

the Companies Act, 1956

Approval of Accounts 131 Every account of the Company when audited and approved by a

General Meeting shall be conclusive, except so far as regards any error

discovered therein before or at the audit of the then next account, and

whenever such error is discovered within that period of account shall

be forthwith corrected and henceforth shall be conclusive

CAPITALISATION OF PROFITS

132 (1) The Company in General Meeting may upon the recommendation

of the Board of Directors resolve

:

• that it is desirable to capitalise any part of the amount for the

time being standing to the credit of any of the Company's

reserve accounts or to the credit of the Profit & Loss Account

or otherwise available for distribution, and;

•

• that such sum be accordingly set free for distribution in the

manner specified in clause (2) amongst the members who

would have been entitled thereto, if distributed by way of

dividend and in the same proportions.

•

(2) The sum aforesaid shall not be paid in cash but shall be applied,

subject to the provision contained in clause (3) either in or towards

• paying up any amounts for the time being unpaid on any

shares held by such member respectively

• paying up in full, unissued shares of the Company to be

allotted and distributed, credited as fully paid up to and

amongst such members in the proportions aforesaid, or

• partly in the way specified in sub-clause (a) and partly, in that

specified in sub-clause (b) (3) A share premium account and a capital redemption reserve fund

may, for the purpose of this article, only be applied in the paying up of

unissued shares to be issued to members of the Company as fully paid


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up bonus shares.

4) The Board of Directors shall give effect to the resolution passed by

the Company in pursuance of this article. Application of profits 133 Whenever such a resolution as a aforesaid shall have been passed,

1. the Board of Directors shall

a) make all appropriations and applications of the undivided

profits resolved to be capitalised thereby; and all allotments

and issue of fully paid-up shares, if any, and;

b) generally do all acts and things required to give effect thereto

2. The Board of Directors shall have full power

a) to make such provision by the issue of fractional certificates

or by payment in cash or otherwise as it thinks fit, in the case

of shares becoming distributable in fractions, and also;

b) to authorise any person to enter on behalf of all the members

entitles thereto into an agreement with the Company

providing for the allotment to them respectively credited as

fully paid-up, of any further shares to which they may be

entitled upon such capitalisation or (as the case may require)

for the payment by the Company on their behalf, by the

application thereto of their respective proportions of the

profits resolved to be capitalised of the amounts or any part

of the amounts remaining unpaid on their existing shares

3. Any agreement made under such authority shall be effective and

holding on all such members

RESERVE AND DEPRECIATION FUNDS

Reserve Fund 134 The Directors may from time to time set apart any and such portion

of the profits of the Company as they think fit, as reserve fund

applicable, at their discretion for the liquidation of any debentures,

debts or other liabilities of the Company, for equalisation of

dividends, or for any other purposes of the Company, with full

power to employ the assets constituting the reserve fund in the

business of the Company and without being bound to keep the

same separate from the other assets

Carry forward of Profits 135 The Directors may also carry forward any profits, which they may think

prudent not to divide, without setting them aside as a reserve. Depreciation Funds 136 The Directors may from time to time set apart any and such portion of

the profits of the Company as they think fit, as a depreciation fund

applicable at the discretion of the Directors, for rebuilding, restoring,

replacing or altering any part of the building, works, plant, machinery or

other property of the Company destroyed or damaged by fire, flood,

storms, tempest, accident, riot, wear and tear, or to other means, or for

repairing, altering and keeping in good condition the property of the


96

Company, or for extending and enlarging the buildings, machinery and

a property of the Company, with full power to employ the assets

constituting such depreciation fund in the business of the Company,

and that without being bound to keep the same separate from the other

assets

Application of Funds 137 All moneys carried to the reserve fund and depreciation fund

respectively shall nevertheless subject to provision of law remain and

be applicable, subject to due provision being made for actual loss or

depreciation, for the payment of dividends, and such moneys and all

the other moneys of the Company, may be invested by the Board of

Directors in or upon such investments or securities, as they may select

or may be used as working capital or may be kept at any bank on

deposit or otherwise as they may from time to time think proper.

(5) DIVIDENDS

Dividends 138 The Company in Annual General Meeting may declare a dividend to be

paid to the member according to their right and interests in the profits,

and for the purpose of the equalisation of dividends any sums from

time to time in accordance with these presents carried to the reserve,

depreciation, or other special funds may be applied in payment thereof.

The dividends so declared by the general body shall not exceed the

amount so recommended by the Board of Directors

Shareholders of any particular class of Equity Shares having differential

equity rights, are eligible for dividends only to the extent of profits

contributed by the respective project or the profit after tax contributed

by such division after considering the required common expenses to be

shared with the company, and Subject to the provisions of the of

transfer to the Reserve Fund and the Act and other regulations of the

Company.

The dividends so declared by the general body shall not exceed the

amounts so recommended by the Directors

Dividend in proportion to amounts

paid up on shares

139 Subject to the rights of person, if any, entitled to shares with special

rights as to dividends shall be declared and paid according to the

shares in respect whereof the dividend is paid, but if and so long as

nothing if paid upon any of the shares in the Company, dividends may

be declared and paid according to the amounts of the shares

Bonus 140 (a)The members of any particular class of shares shall be entitled to

bonus shares of the same class of shares only

(b)If and whenever any bonus on shares is declared out of the profits,

and whether alone or in addition to any dividend thereon, the bonus

shall for all purposes whatsoever be deemed to be dividend on the

shares subject to Companies (Transfer of profits to Reserves) Rules.


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Debts may be deducted 141 When any shareholder is indebted to the Company for calls or

otherwise, all dividends payable to him, or a sufficient part thereof, may

be retained and applied by the Directors in or towards satisfaction of

the debt liabilities of engagements.

Dividends out of profits only 142 No dividends shall be payable except out of the profits of the year or

any other undistributed profits, and no larger dividend shall be declared

that is recommended by the Directors, but, the Company in General

Meeting may declare a smaller dividend. Before declaring any dividend,

the Company shall have regard to the provisions of Section 205 of the

Act

Interest out of capital 143 Subject to the provisions of Section 208 of the Act, the Company may

pay interest on so much of the share capital as is for the time being

paid-up, for the period and subject to the conditions and restriction

mentioned in Section 208 and charge the sum so paid by way of

interest, to capital as part of the cost of construction of the work of

building or the provision of the plant

Dividend in specie 144 No dividend shall be payable except in cash provided that nothing shall

be deemed to prohibit the capitalisation of profits or reserves of the

Company for the purpose of issuing fully paid up bonus shares or

paying up any amount for the time being unpaid on any shares held by

the members of the Company.

Joint holders receipt 145 In case two or more persons are registered as the joint-holders of any

share, any of such persons may give effectual receipts for all dividends

and payments on account of dividends in respect of such share

Set off of dividends 146 Any General Meeting declaring dividend, may make a call on the

members of such amount as the meeting fixes but so that the call on

each member shall not exceed the dividend payable to him and so that

the call be made payable at the same time as the dividend may, if so

arranged between the company and the member, be set off against the

call. The making of a call under this article shall be deemed ordinary

business of any ordinary meeting which declares a dividend

Right to dividend on transfer of share 147 A transfer of shares shall not pass the rights to any dividend declared

thereon before the registration of the transfer

Mode of Payment of Dividend 148 Unless otherwise directed by the Company in General Meeting any

dividend may be paid in cash or by cheque or warrant or money order

sent through the post within 30 (Thirty) days of the date of such

declaration to the registered address of the member entitled, or in case

of joint holders, to the registered address of that one whose name

stands first on the register of that one whose name stands first on the

register in respect of the joint holding and every cheque so sent shall

be made payable to the order of the person to whom it is sent.

Dividend not to carry interest 149 Unpaid dividends shall never bear interest as against the Company

Unclaimed Dividend 150 No unclaimed or unpaid dividend shall be forfeited by the Board unless

the claim thereto becomes barred by law and the Company shall

comply with all the provisions of Section 205A of the Act in respect of


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unclaimed or unpaid dividend

SERVICE OF DOCUMENTS AND NOTICE

How notice & documents to be

served on Members

151 A document may be served by the Company to Members either

personally or by sending it by post to him to his registered address or if

he has not registered address in India to the address, if any, within

India supplied by him to the Company for the giving of notices to him

Service by Post 152 Where a document is sent by post service of the notice shall be

deemed to be effected by properly addressing, prepaying and posting a

letter containing the documents provided that where a member has

intimated to the Company in advance that the document should be sent

to him under certificate of posting or by registered post with or without

acknowledgment due and has deposited with the Company a sum

sufficient to defray the expenses of doing so, service of the document

shall not be deemed to be effected unless it is sent in the manner

intimated by the manner; and such service shall be deemed to have

been effected.

Notice of Meeting by advertisement

in Newspaper

153 If a member has no registered address in India and has not supplied to

the Company an address within India for the giving of notice to him a

document or notice of meeting advertised in a newspaper circulating in

the neighborhood of the registered office of the Company shall be

deemed to be duly given to him on the day on which the advertisement

appears.

Notice to joint holder 154 A document may be served by the Company on the joint holders of a

share by serving it on the joint holder named first in the register in

respect of the share

Notice to person entitled by

transmission

155 A document may be given by the Company to the persons entitled to a

share in consequence of the death or insolvency of a member by

sending it through the post in a prepaid letter addressed to them by

name, or by the title of representative of the deceased of assign of the

insolvent or by any like description at the address (if any) in India

supplied for the purpose by the persons, claiming to be so entitled or

until such an address has been so supplied by giving notice in any

manner in which the same might have been given if the death or

insolvency had not occurred

Notice of General Meeting 156 Notice of every meeting shall be given to every member of the

Company in any manner authorised by Articles 154 to 156 hereof and

also to every person entitled to a share in consequence of the death, of

insolvency of a member who but for his death or insolvency would be

entitled to receive notice of the meeting.

When notice may be given by

advertisement

157 Any notice required to be given by the Company to the members or any

of them and not expressly provided for by the Act or by these presents,

shall be sufficiently if given by advertisements.

Transferee etc. bound by prior notice 158 Every person who by operation of law, transfer or other means

whatsoever shall become entitled to any share shall be bound by every

notice in respect of such share which previously to his name and


99

address being entered in the register shall be duly given to the person

from whom he derives his title to such share

Notice valid though member

deceased

159 Any notice or document delivered or sent by post or left at the

registered address of any member in pursuance of these presents

shall, notwithstanding such member be then deceased and whether or

not the Company have notice of his decease be deemed to have been

duly served in respect of any registered shares whether held solely or

jointly with other persons by such member, until some other person be

registered in his stead as the holder of joint holder thereof and such

service shall, for the purpose of these presents, be deemed a sufficient

service of such notice or document on his or her heirs, executors, or

administrators and all persons, if any, jointly interested with him or her

in any such shares

Validity at the Notice 160 The accidental omission to give notice to or non receipt of notice by

any member or other person to whom it would be given shall not

invalidate the proceedings at the meeting

How notice to be signed 161 The signature in any notice to be given by the Company may be written

or printed

WINDING UP

Notice 162 If the Company shall be wound-up and the surplus assets shall be more

than sufficient to repay the whole of the paid-up capital, the excess

shall be distributed among the members in proportion to the capital

paid-up or which ought to have been paid-up on equity shares held by

them respectively at the commencement of the winding up, but, the

clause is to be without prejudice to the rights of the holders of shares

issue upon special conditions.

Powers of Liquidator 163 In a winding up liquidator may, irrespective of the powers conferred on

him by the Companies Act, and as an additional power, with the

authority of a Special Resolution, sell the undertaking of the Company

or the whole or any part of its assets, for shares fully or partly paid up

or the obligations of or other interests in any other company and may

buy the contract of sale agree for the allotment to the members direct

of the proceeds of sale in proportion to their respective interests in the

Company. Any such sale or arrangement of the Special Resolution

confirming the same may, subject to the provisions of Article 13 hereof,

provide for the distribution or appropriation of the shares or other

benefits to be received in compensation otherwise than in accordance

with the legal rights of the contributories of the Company, and in

particular, any class may be given preferential or special rights, or may

be excluded altogether or in part, and further by the contract a time

may be limited at the expiration of which shares, obligations or other

interests not accepted or required to be sold shall be deemed to have

been refused, and be at the disposal of the liquidator or the purchasing

Company.

164 a) If the Company shall be wound-up, the liquidator may, with


100

the sanction of a Special Resolution and any other sanction

required by the Companies Act, 1956 divide amongst the

members in specie or in kind the whole or any part of the

assets of the Company whether or not they shall consist of

property of the same kind

b) For the purpose aforesaid, the liquidator may set such value

as he deems fair upon any property to be divided as

aforesaid and may determine how such division shall be

carried out as between the members or different classes or

members c) The liquidator may, with the like sanction invest the whole or

any part of such assets in trustees upon such trusts for the

benefit of the contributories as the liquidator, with the like

sanction, shall think fit, but so that no member shall be

compelled to accept any shares or other securities whereon

there is any liability

SECRECY

165 Every Director, Manager, Trustee, Member or Committee, Officer,

Servant, Agent, Accountant, or other persons employed in the

business of the Company, shall if so required by the Directors or

Managing Agents sign a declaration pledging himself to observe a

strict secrecy respecting all transactions of the Company with its

customers and the state of accounts with individuals and in

matters relating thereto, and shall by such declaration pledge

himself not to reveal any of the matters which may come to his

knowledge in the discharge of his duties except when required to

do so by the Directors or by meeting or by any Court of Law and

except so far as may be necessary in order to comply with any of

the provisions in these presents contained

No shareholder to enter the premises

of the Company without permission

166 No member or other person (not being a Director) shall be entitled

to enter the property of the Company or to inspect or examine the

Company's premises or properties of the Company without the

permission of the Directors of the Company for time being or

subject to these Articles to require discovery of any information

respecting any detail of the Company's trading of any matter

which is or may be in the nature of a trade secret, mystery of

trades or secret process or of any matter whatsoever which may

relate to the conduct of the business of the Company and which in

the opinion of the Directors or Managing Agents it will be

inexpedient of the Company to communicate to the public

INDEMNITY

167 Every Director, Auditor, Officer or Servant of the Company shall

subject to Section 201 of the Act be indemnified out of its funds for

all costs, charges, traveling or other expenses losses and

liabilities incurred by them or him in the conduct of the Company's


101

business or in the discharge of their or his duties, and neither any

director nor Officer or servant of the Company shall be held liable

for joining in any receipt or other act for conformity's sake or for

any loss or expenses happening to the Company by insufficiency

or deficiency of any security on if or upon with can any of the

moneys, of the Company shall be invested, of for any loss or

damages, arising from the bankruptcy, insolvency or tortuous act

of any person with whom any moneys, securities or effects, shall

be deposited, or for any other loss, or damage or misfortune

whatsoever which shall happen in the execution of their or his

office or in regulation thereto, unless the same shall happen

through their or his own dishonesty. 168 Every Director, Auditor, Secretary, Agent and Officer of the

Company shall also be indemnified out of the assets of the

Company against any liability incurred by him in defending any

proceedings whether civil or criminal, in which judgment is given

in his favour or in which is acquitted or in connection with any

application under Section 633 of the Act in which relief is granted

to him by the Court

SECTION VIII – OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION

1. Memorandum and Articles of Association of the Company as amended from time to time.

2. Scheme of Arrangement between Bharat Sugar & Industries Limited, GMR Industries Limited

and GMR Ferro Alloys & Industries Limited.

3. Orders of the Hon’ble High Court of Judicature at Hyderabad sanctioning the Scheme of

Arrangement between Bharat Sugar & Industries Limited GMR Industries Limited & GMR

Ferro Alloys & Industries Limited.

4. In-principle approval of BSE for listing of the securities.

5. In-principle approval of NSE for listing of the securities

6. Copy of Tripartite Agreement entered into with NSDL & CDSL.

7. Copy of Annual Report of GMR Ferro Alloys & Industries Limited Ltd for the financial year

ended 31/03/2008.

8. Copy of Consent letters from Auditors, Registrars.


102

SEBI has vide their letter no CFD/DIL/19(2)(b)/PB/RA/12576/2008 dated May 15, 2008 has relaxed

the applicability of Rule 19(2) of the Securities Contract Regulation Rules,1957 subject to the

Company complying with all the provisions of Clause 8.3.5 of the SEBI(Disclosure and Investor

Protection)Guidelines, 2000.

DECLARATION

No statement made in this Information Memorandum contravenes any of the provisions of the

Companies Act 1956, and the rules made thereunder. All the legal requirements as also the guidelines,

instructions etc., issued by SEBI, Government or any other competent authority in respect of listing of

securities have been duly complied with.

Yours faithfully BY ORDER OF THE BOARD OF DIRECTORS GMR FERRO ALLOYS & INDUSTRIES LIMITED EXECUTIVE DIRECTOR Hyderabad