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Letter of Offer
February 27, 2013
For our Equity Shareholders only
HITACHI HOME & LIFE SOLUTIONS (INDIA) LIMITED
Our Company was incorporated on December 7, 1984 as Acquest Air-conditioning Systems Private Limited and subsequently our Company was converted
into a deemed public limited company on April 18, 1990. On September 14, 1990, the name of our Company was changed to Amtrex Appliances Limited and
further to Amtrex Hitachi Appliances Limited on January 25, 1999. On March 12, 2003, the name of our Company was further changed to our present name
Hitachi Home & Life Solutions (India) Limited. For details of change of our name, please see the chapter “History and Other Corporate Matters” on page 64.
Registered Office: 9
th Floor, Abhijeet-I, Mithakhali Six Roads, Ahmedabad - 380 006, Gujarat, India. Tel: +91 79 3041 4800; Fax: +91 79 3041 4999
Contact Person: Mr. Parag Dave, Company Secretary and Compliance Officer
E-mail: [email protected] Website: http://www.hitachi-hli.com
FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF HITACHI HOME & LIFE SOLUTIONS (INDIA) LIMITED
(THE “COMPANY” OR THE “ISSUER”) ONLY
ISSUE OF 45,99,882 FULLY PAID-UP EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“RIGHTS ISSUE EQUITY SHARES”)
FOR CASH AT A PRICE OF ` 130 PER EQUITY SHARE INCLUDING A SHARE PREMIUM OF ` 120 PER EQUITY SHARE
AGGREGATING TO ` 5,979.85 LAKHS TO THE EXISTING EQUITY SHAREHOLDERS OF HITACHI HOME & LIFE SOLUTIONS
(INDIA) LIMITED ON A RIGHTS BASIS IN THE RATIO OF 1 (ONE) FULLY PAID-UP EQUITY SHARE(S) FOR EVERY 5 (FIVE)
FULLY PAID-UP EQUITY SHARE(S) HELD BY THE EXISTING EQUITY SHAREHOLDERS ON THE RECORD DATE, I.E. MARCH
06, 2013 (“THE ISSUE”). THE ISSUE PRICE FOR THE EQUITY SHARE IS 13 TIMES THE FACE VALUE OF THE EQUITY SHARE.
FOR FURTHER DETAILS, PLEASE SEE THE CHAPTER “TERMS OF THE ISSUE” ON PAGE 144.
GENERAL RISKS
Investment in equity and equity related securities involve a degree of risk and Investors should not invest any funds in the Issue unless they can
afford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision in the
Issue. For taking an investment decision, Investors must rely on their own examination of the Issuer and the Issue including the risks involved. The
securities being offered in the Issue have not been recommended or approved by Securities and Exchange Board of India (“SEBI”) nor does SEBI
guarantee the accuracy or adequacy of this Letter of Offer. Investors are advised to refer to the section “Risk Factors” on page XI before making
an investment in this Issue.
ISSUER’S ABSOLUTE RESPONSIBILITY
The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard
to the Issuer and the Issue, which is material in the context of the Issue, that the information contained in this Letter of Offer is true and correct in all
material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no
other facts, the omission of which makes this Letter of Offer as a whole or any such information or the expression of any such opinions or intentions
misleading in any material respect.
LISTING
The existing Equity Shares are listed on the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), (together
the “Stock Exchanges”). We have received “in-principle” approvals from BSE and NSE for listing the Rights Issue Equity Shares to be allotted
in the Issue vide their letters dated January 17, 2013 and December 27, 2012, respectively. For the purposes of the Issue, the Designated Stock
Exchange is BSE.
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
ICICI Securities Limited ICICI Centre
H. T. Parekh Marg
Churchgate, Mumbai 400 020
Maharashtra, India
Tel: +91 22 2288 2460
Fax: +91 22 2282 6580
Website: www.icicisecurities.com
E-mail: [email protected]
Investor Grievance E-mail: [email protected]
Contact Person: Mr. Sumit Agarwal
SEBI Registration No.: INM000011179
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex
Sakinaka Telephone Exchange Lane
Off Andheri-Kurla Road, Sakinaka
Andheri (East), Mumbai – 400 072
Maharashtra, India.
Tel: +91 22 6191 5400
Fax: +91 22 6191 5444
Website: www.shareproservices.com
Investor Greivance E-mail: [email protected]
Contact Person: Mr. Prakash Khare / Mr. Anand Moolya
SEBI Registration No: INR000001476
ISSUE PROGRAMME
ISSUE OPENS ON LAST DATE FOR RECEIPT OF REQUEST FOR
SPLIT APPLICATION FORMS ISSUE CLOSES ON
March 14, 2013 March 21, 2013 March 28, 2013
2
TABLE OF CONTENTS
SECTION I – GENERAL .............................................................................................................................. I DEFINITIONS AND ABBREVIATIONS ............................................................................................... I NOTICE TO OVERSEAS SHAREHOLDERS ...................................................................................... VI CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND MARKET DATA
AND CURRENCY OF PRESENTATION ............................................................................................ VII FORWARD LOOKING STATEMENTS................................................................................................ X
SECTION II - RISK FACTORS ................................................................................................................. XI
SECTION III- INTRODUCTION ............................................................................................................. 31 SUMMARY OF THE ISSUE ............................................................................................................... 31 SUMMARY OF FINANCIAL INFORMATION .................................................................................. 32 GENERAL INFORMATION ................................................................................................................ 37 CAPITAL STRUCTURE ...................................................................................................................... 41 OBJECTS OF THE ISSUE .................................................................................................................... 45
SECTION IV –STATEMENT OF TAX BENEFITS ............................................................................... 50
SECTION V – ABOUT US ......................................................................................................................... 61 OUR BUSINESS ................................................................................................................................... 61 HISTORY AND OTHER CORPORATE MATTERS........................................................................... 64 OUR MANAGEMENT ......................................................................................................................... 65
SECTION VI – FINANCIAL INFORMATION ...................................................................................... 73 FINANCIAL STATEMENTS ............................................................................................................... 73 ACCOUNTING RATIOS AND CAPITALISATION STATEMENT ................................................ 112 STOCK MARKET DATA FOR EQUITY SHARES .......................................................................... 114 MATERIAL DEVELOPMENTS ........................................................................................................ 116 FINANCIAL INDEBTEDNESS ......................................................................................................... 122
SECTION VII – LEGAL AND OTHER INFORMATION ................................................................... 129 OUTSTANDING LITIGATIONS AND DEFAULTS ........................................................................ 129 GOVERNMENT AND OTHER APPROVALS .................................................................................. 132 OTHER REGULATORY AND STATUTORY DISCLOSURES ....................................................... 133
SECTION VIII – OFFERING INFORMATION ................................................................................... 144 TERMS OF THE ISSUE ..................................................................................................................... 144
SECTION IX – STATUTORY AND OTHER INFORMATION .......................................................... 176 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ............................................. 176 DECLARATION ................................................................................................................................. 177
i
SECTION I – GENERAL
DEFINITIONS AND ABBREVIATIONS
Definitions
In this Letter of Offer, unless the context otherwise requires, the terms defined and abbreviations expanded
below shall have the same meaning as stated in this section. References to statutes, rules, regulations,
guidelines and policies will be deemed to include all amendments and modifications notified thereto.
In this Letter of Offer, unless otherwise indicated or the context otherwise requires, all references to “Hitachi
Home & Life Solutions (India) Limited”, the/ our “Company”, “Issuer”, “we”, “our” and “us” are to Hitachi
Home & Life Solutions (India) Limited and references to “you” are to the prospective investors in the Issue.
Conventional and General Terms/ Abbreviations
Term Description
AIF A fund in terms of section 2(1)(b) of the Securities and Exchange Board of
India (Alternative Investment Funds) Regulations, 2012
Act/ Companies Act The Companies Act, 1956
AGM Annual General Meeting
AS Accounting Standards notified pursuant to the Companies (Accounting
Standards) Rules, 2006, as amended
BR Base Rate
BSE BSE Limited
CDSL Central Depository Services (India) Limited
Depositories Act The Depositories Act, 1996
Depository A depository registered with SEBI under the SEBI (Depositories and
Participant) Regulations, 1996
Depository Participant/
DP
A depository participant as defined under the Depositories Act
DIN Director Identification Number
DP ID Depository Participant Identity
EPS Earnings per Share
FDI Foreign Direct Investment
FEMA The Foreign Exchange Management Act, 1999, including the regulations
framed thereunder
FII Foreign Institutional Investor as defined under the Securities and
Exchange Board of India (Foreign Institutional Investors) Regulations,
1995, registered with SEBI under applicable laws in India
Financial Year/ Fiscal/ FY Period of 12 months ended March 31 of that particular year
FVCI Foreign Venture Capital Investors as defined under the Securities and
Exchange Board of India (Foreign Venture Capital Investors) Regulations,
2000 registered with SEBI under applicable laws in India
FCNR (B) Foreign Currency Rupee Loan
GAAP Generally Accepted Accounting Principles
GDR Global Depository Receipts
GoI Government of India
HUF Hindu Undivided Family
ICAI Institute of Chartered Accountants of India
IFRS International Financial Reporting Standards
IFSC Indian Financial System Code
ISIN International Securities Identification Number
ii
Term Description
IT Act The Income Tax Act, 1961
IT/ ITeS Information Technology/ Information Technology enabled Services
Indian GAAP Generally accepted accounting principles followed in India
MICR Magnetic Ink Character Recognition
Mutual Fund/ MF A mutual fund registered with SEBI under the SEBI (Mutual Funds)
Regulations, 1996
NECS National Electronic Clearing Services
NEFT National Electronic Funds Transfer
NR Non-Resident
NRI Non-Resident Indian
NRE Account Non-Resident External Account
NRO Account Non-Resident Ordinary Account
NSDL The National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB Overseas Corporate Body
p.a Per annum
PAN Permanent Account Number under the IT Act
RBI Reserve Bank of India
Registrar of Companies/
RoC
Registrar of Companies, Ahmedabad, Gujarat
Regulation S Regulation S under the Securities Act
Rupees/ INR/ `/ Rs. Indian Rupees
RTGS Real Time Gross Settlement
SEBI Securities and Exchange Board of India
SEBI Act Securities and Exchange Board of India Act, 1992
SEBI ICDR Regulations/
SEBI Regulations
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009, as amended
Securities Act U.S. Securities Act of 1933
Takeover Regulations Securities and Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011
U.S./ US/ USA United States of America
Issue Related Terms
Term Description
Abridged Letter of Offer The abridged letter of offer to be sent to the Equity Shareholders with respect
to the Issue in accordance with the SEBI ICDR Regulations
Allot / Allotted
/Allotment
Unless the context otherwise requires, the allotment of Rights Issue Equity
Shares pursuant to the Issue
Allottees Persons to whom our Rights Issue Equity Shares will be allotted pursuant to
the Issue
Application
Unless the context otherwise requires, refers to an application for Allotment
of Rights Issue Equity Shares in this Issue.
Application Supported by
Blocked Amount/ ASBA
The application (whether physical or electronic) used by ASBA Investors to
make an application authorizing the SCSB to block the amount payable on
application in ASBA Account
ASBA Account Account maintained with a SCSB and specified in the CAF or plain paper
application, as the case may be, for blocking the amount mentioned in the
CAF, or the plain paper application, as the case may be
ASBA Investor Equity Shareholders proposing to subscribe to the Issue through ASBA
process and:
iii
Term Description
a. Who are holding our Equity Shares in dematerialized form as on the
Record Date and have applied for their Rights Entitlements and/ or
additional Equity Shares in dematerialized form;
b. Who have not renounced their Rights Entitlements in full or in part;
c. Who are not Renouncees; and
d. Who are applying through blocking of funds in a bank account
maintained with SCSBs.
All (i) QIBs, (ii) Non-Insitutional Investors, complying with the above
conditions, must mandatorily invest through the ASBA process.
Bankers to the Issue ICICI Bank Limited
Composite Application
Form/ CAF
The form used by an Investor to make an application for the Allotment of
Rights Issue Equity Shares in the Issue
Consolidated Certificate In case of holding of Equity Shares in physical form, the certificate that we
would issue for the Rights Issue Equity Shares Allotted to 1 folio
Controlling Branches of
the SCSBs
Such branches of the SCSBs which coordinate with the Lead Manager, the
Registrar to the Issue and the Stock Exchanges, a list of which is available on
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-
Intermediaries and/or such other website(s) as may be prescribed by the
SEBI / Stock Exchange(s) from time to time.
Designated Stock
Exchange
BSE
Designated Branches Such branches of the SCSBs which shall collect application forms used by
ASBA Investors and a list of which is available on
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-
Intermediaries and/or such other website(s) as may be prescribed by the
SEBI / Stock Exchange(s) from time to time.
Draft Letter of Offer The draft letter of offer dated December 13, 2012 filed with SEBI for its
observations which does not contain complete particulars of the Issue
Equity Shareholders/
Eligible Equity
Shareholder(s)
A holder/beneficial owner of our Equity Shares as on the Record Date
Investor(s) The Equity Shareholders(s) on the Record Date, applying in this Issue, and
the Renouncees who have submitted an Application to subscribe to the Issue
Issue/ Rights Issue Issue of 45,99,882 fully paid-up Equity Shares of face value of ` 10 each for
cash at a price of ` 130 per Equity Share including a share premium of ` 120
per Equity Share aggregating to ` 5,979.85 lakhs to our existing Equity
Shareholders on a rights basis in the ratio of 1 (One) fully paid-up Equity
Shares for every 5 (Five) fully paid-up Equity Shares held by them on the
Record Date (i.e. March 06, 2013).
Issue Closing Date March 28, 2013
Issue Opening Date March 14, 2013
Issue Price ` 130 per Rights Issue Equity Share
Issue Size This Issue of 45,99,882 Rights Issue Equity Share aggregating up to `
5,979.85 lakhs Issue Proceeds The gross proceeds to be raised through this Issue
Lead Manager/ ISEC ICICI Securities Limited
Letter of Offer This final letter of offer dated February 27, 2013 filed with the Stock
Exchanges
Listing Agreement The listing agreements entered into between us and the Stock Exchanges
Net Proceeds The Issue Proceeds less the Issue related expenses. For further details, please
see the chapter “Objects of the Issue” on page 45.
Non Institutional
Investors
All Investors, whether resident in India or otherwise, including sub-accounts
of FIIs registered with SEBI, which are foreign corporate or foreign
iv
Term Description
individuals, that are not QIBs or Retail Individual Investors and who have
applied for Rights Issue Equity Shares for an cumulative amount more than ` 2,00,000.
Qualified Foreign
Investors/ QFI
QFI shall mean a person who fulfills the following criteria:
i. Resident in a country that is a member of Financial Action Task Force
(“FATF”) or a member of a group which is a member of FATF; and
ii. Resident in a country that is a signatory International Organization of
Securities Commission’s Multilateral Memorandum of Understanding
or a signatory of a bilateral Memorandum of Understanding with SEBI
Provided that the person is not resident in a country listed in the public
statements issued by FATF from time to time on-(i) jurisdictions having a
strategic Anti-Money Laundering/ Combating the Financing of Terrorism
(“AML/CFT”) deficiencies to which counter measures apply, (ii)
jurisdictions that have not made sufficient progress in addressing the
deficiencies or have not committed to an action plan developed with the
FATF to address the deficiencies;
Provided further such person is not resident in India;
Provided further that such person is not registered with SEBI as Foreign
Institutional Investor or Sub-account or Foreign Venture Capital Investor.
QIBs or Qualified
Institutional Buyers
Public financial institutions as specified in section 4A of the Companies Act,
scheduled commercial banks, mutual fund registered with SEBI, FIIs and
subaccount registered with SEBI, other than a sub-account which is a foreign
corporate or foreign individual, multilateral and bilateral development
financial institution, AIF registered with SEBI, foreign venture capital
investor registered with SEBI, state industrial development corporation,
insurance company registered with the Insurance Regulatory Development
Authority, provident fund with minimum corpus of ` 250 million, pension
fund with minimum corpus of ` 250 million, National Investment Fund set
up by the Government of India and insurance funds set up and managed by
the army, navy or air force of the Union of India and insurance funds set up
and managed by the Department of Posts, India
Record Date March 06, 2013
Registrar of Companies The Registrar of Companies, Ahmedabad, Gujarat
Registrar to the Issue/
Registrar and Transfer
Agent/ RTA
Sharepro Services (India) Private Limited
Renouncee(s) Any person(s) who has/ have acquired Rights Entitlements from Equity
Shareholders
Retail Individual
Investors
Individual Investors who have applied for Rights Issue Equity Share for an
amount not more than ` 2 lakhs (including HUFs applying through their
Karta)
Rights Entitlement The number of Rights Issue Equity Share that an Investor is entitled to in
proportion to the number of Equity Shares held by the Investor on the
Record Date
SAF(s) Split Application Form(s)
SCSB(s) A Self Certified Syndicate Bank, registered with SEBI, which acts as a
banker to the Issue and which offers the facility of ASBA. A list of all
SCSBs is available at
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-
Intermediaries and/or such other website(s) as may be prescribed by the
SEBI / Stock Exchange(s) from time to time.
Share Certificate The certificate in respect of the Rights Issue Equity Shares allotted to a folio
Stock Exchange(s) BSE and NSE, where our Equity Shares are presently listed
v
Company Related Terms
Term Description
Articles/ AoA/ Articles of
Association
Our articles of association, as amended
Auditors Our auditors, S. R. Batliboi & Associates, Chartered Accountants
Board of Directors/Board Our board of directors or any duly constituted committees thereof
Equity Shares Equity shares of face value of ` 10 each
Group Companies Includes those companies, firms and ventures that are promoted by our
Promoter, irrespective of whether these entities are covered under section
370(1) (B) of the Companies Act.
Memorandum/ MoA/
Memorandum of
Association
Our memorandum of association, as amended
Promoter and Promoter
Group
Hitachi Appliances Inc. and Hitachi India Private Limited
Registered Office Our registered office located at 9th
Floor, Abhijeet-I, Mithakhali Six Roads,
Ahmedabad 380 006, Gujarat, India
Technical/ Industry Related Terms
Term Description
FOB Free on Board
HP Horse power
HVAC Heating, Ventilating and Air conditioning
NOD No. of Days
PAC Packaged Air Conditioner
SAC Split Air Conditioner
Tr. Tons of refrigeration
VRF Variable refrigerant flow
WAC Window Air Conditioner
The words and expressions used but not defined herein shall have the same meaning as is assigned to such
terms under the Companies Act, the Securities Contracts (Regulation) Act, 1956, the Depositories Act,
1996 and the rules and regulations made thereunder.
Notwithstanding the foregoing, terms defined in the chapters “Statement of Tax Benefits”, “Financial
Statements” and “Terms of the Issue” on pages 50, 73 and 144, respectively, shall have the meanings given
to such terms in these respective sections.
vi
NOTICE TO OVERSEAS SHAREHOLDERS
The distribution of this Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain
jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons
into whose possession the Draft Letter of Offer, Letter of Offer, Abridged Letter of Offer or CAF may
come are required to inform themselves about and observe such restrictions. We are making this Issue of
Equity Shares on a rights basis to the Equity Shareholders and will dispatch the Letter of Offer/ Abridged
Letter of Offer and CAFs to such shareholders who have provided an Indian address. Those overseas
shareholders who do not update our records with their Indian address or the address of their duly authorized
representative in India, prior to the date on which we propose to dispatch the Letter of Offer / Abridged
Letter of Offer and CAFs, shall not be sent this Letter of Offer / Abridged Letter of Offer and CAFs. No
action has been or will be taken to permit this Issue in any jurisdiction where action would be required for
that purpose, except that the Draft Letter of Offer has been filed with SEBI for observations. Accordingly,
the rights or Equity Shares may not be offered or sold, directly or indirectly, and this Letter of Offer may
not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such
jurisdiction. Receipt of this Letter of Offer will not constitute an offer in those jurisdictions in which it
would be illegal to make such an offer and, under those circumstances, this Letter of Offer must be treated
as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a
copy of this Letter of Offer should not, in connection with the issue of the rights or Equity Shares,
distribute or send the same in or into the United States or any other jurisdiction where to do so would or
might contravene local securities laws or regulations. If this Letter of Offer is received by any person in any
such territory, or by their agent or nominee, they must not seek to subscribe to the rights or Equity Shares
referred to in this Letter of Offer. Envelopes containing a CAF should not be dispatched from any
jurisdiction where it would be illegal to make an offer, and all persons subscribing for the Equity Shares in
this Issue must provide an Indian address.
Any person who makes an application to acquire rights and the Equity Shares offered in this Issue will be
deemed to have declared, represented, warranted and agreed that he is authorised to acquire the rights and
the Equity Shares in compliance with all applicable laws and regulations prevailing in his jurisdiction. We,
the Registrar, the Lead Manager or any other person acting on behalf of us reserve the right to treat any
CAF as invalid where we believe that CAF is incomplete or acceptance of such CAF may infringe
applicable legal or regulatory requirements and we shall not be bound to allot or issue any Equity Shares or
Rights Entitlement in respect of any such CAF. Neither the delivery of this Letter of Offer nor any sale
hereunder, shall under any circumstances create any implication that there has been no change in the
Company’s affairs from the date hereof or that the information contained herein is correct as at any time
subsequent to the date of this Letter of Offer.
The contents of this Letter of Offer should not be construed as legal, tax or investment advice.
Prospective investors may be subject to adverse foreign, state or local tax or legal consequences as a
result of the offer of Equity Shares. As a result, each investor should consult its own counsel, business
advisor and tax advisor as to the legal, business, tax and related matters concerning the offer of
Equity Shares. In addition, neither our Company nor the Lead Manager is making any
representation to any offeree or purchaser of the Equity Shares regarding the legality of an
investment in the Equity Shares by such offeree or purchaser under any applicable laws or
regulations.
vii
CERTAIN CONVENTIONS, USE OF FINANCIAL, INDUSTRY AND MARKET DATA AND
CURRENCY OF PRESENTATION
Certain Conventions
References in this Letter of Offer to “India” are to the Republic of India and the “Government” or the
“Central Government” is to the Government of India (“GoI”).
Financial Data
Unless stated otherwise, the financial data in this Letter of Offer is derived from our audited financial
statements. Our Financial Year commences on April 1 for a year and ends on March 31 of the next year. In
this Letter of Offer, the audited financial statements for the FY 2011-12 and the Unaudited statement of
assets and liabilities as at September 30, 2012 and unaudited statement of profit & loss for six months
ended September 30, 2012, duly limited reviewed by the auditors, have been included. For details of such
financial statements, please see the chapter “Financial Statements” on page 73. For details of limited review
financial results for the quarter ended December 31, 2012 please see the chapter titled “Material
Developments” on page 116.
We publish our financial statements in Indian Rupees.
In this Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed
are due to rounding off, and unless otherwise specified, all financial numbers in parenthesis represent
negative figures. Numerical values have been rounded off to two decimal places.
Any percentage amounts, as set forth in “Risk Factors”, “Our Business” and elsewhere in this Letter of
Offer, unless otherwise indicated, have been calculated on the basis of our audited financial statements
prepared in accordance with Indian GAAP.
Unless stated otherwise, throughout this Letter of Offer, all figures have been expressed in Rupees in lakhs.
For definitions, see the chapter “Definitions and Abbreviations” on page I.
Currency of Presentation
All references in this Letter of Offer to “Rupees”, “`”, “Rs.”, “Indian Rupees” and “INR” are to Indian
Rupees, the official currency of India. All references to “U.S.$”, “U.S. Dollar”, “USD” or “$” are to United
States Dollars, the official currency of the United States of America. All references to “Yen” and “¥” are to
the Japanese Yen, the official currency of Japan. All references to “Euro” or “€ ” or ”EUR” are to the Euro,
the single currency of the participating member states in the third stage of the European Economic and
Monetary Union of the Treaty establishing the European Community, as amended.
Please Note:
One million is equal to 10 Lakhs
One billion is equal to 1,000 million
One Lakh / Lakhs is equal to 100 thousand
One crore is equal to 10 million/100 Lakhs
Exchange Rates
Fluctuations in the exchange rate between the Rupee and the U.S. Dollar will affect the U.S. Dollar
equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also
affect the conversion into U.S. Dollars of any cash dividends paid in Rupees on the Equity Shares. The following table sets forth, for the periods indicated, information with respect to the exchange rate
viii
between the Rupee, the U.S. Dollar, Japanese Yen and Euro based on the reference rates released by the
RBI. No representation is made that the Rupee amounts actually represent such amounts in U.S. Dollars,
Japanese Yen and Euro or could have been or could be converted into U.S. Dollars, Japanese Yen, Euro at
the rates indicated, at any other rates or at all.
USD - INR
Year ended March 31 Period End (in `)
Average* (in `)
High* (in `)
Low* (in `)
2012 51.16** 47.95 54.24 43.95
2011 44.65 45.58 47.57 44.03
2010 45.14 47.42 50.53 44.94
Month ended Period End (in `)
Average* (in `)
High* (in `)
Low* (in `)
January, 2013 53.29 54.32 55.33 53.29
December, 2012 54.78 54.65 55.09 54.20
November, 2012 54.53 54.78 55.70 53.66
October, 2012 54.12 53.02 54.17 51.62
September, 2012 52.70 54.61 55.97 52.70
August, 2012 55.72 55.56 56.08 55.15
1. Source: RBI website at www.rbi.org.in 2. *Note: High, low and average are based on the RBI reference rate
3. ** As on March 30, 2012
100 JPY Yen – INR
Year ended March 31 Period End (in `)
Average* (in `)
High* (in `)
Low* (in `)
2012 62.43** 60.81 69.49 51.75
2011 54.02 53.30 57.14 46.93
2010 48.44 51.12 54.38 48.12
Month ended Period End (in `)
Average* (in `)
High* (in `)
Low* (in `)
January, 2013 58.66 61.18 63.33 58.66
December, 2012 63.66 65.28 66.94 63.46
November, 2012 66.17 67.60 69.13 66.17
October, 2012 67.99 67.23 68.22 65.83
September, 2012 68.00 69.91 71.39 68.00
August, 2012 71.04 70.68 71.68 70.01
1. Source: RBI website at www.rbi.org.in 2. *Note: High, low and average are based on the RBI reference rate 3. ** As on March 30, 2012
EURO – INR
Year ended March 31 Period End (in `)
Average* (in `)
High* (in `)
Low* (in `)
2012 68.34** 65.90 71.08 62.26
ix
2011 63.24 60.21 63.98 56.07
2010 60.56 67.08 71.06 60.52
Month ended Period End (in `)
Average* (in `)
High* (in `)
Low* (in `)
January, 2013 72.23 72.13 73.13 71.32
December, 2012 72.26 71.67 72.77 70.13
November, 2012 70.89 70.37 72.35 69.24
October, 2012 70.15 68.75 70.17 67.17
September, 2012 68.15 70.13 71.62 68.15
August, 2012 69.66 68.87 69.92 68.03
1. Source: RBI website at www.rbi.org.in 2. *Note: High, low and average are based on the RBI reference rate 3. ** As on March 30, 2012
x
FORWARD LOOKING STATEMENTS
Certain statements in this Letter of Offer are not historical facts but are “forward-looking” in nature.
Forward looking statements appear throughout this Letter of Offer, including, without limitation, under the
chapters “Risk Factors” and “Our Business”. Forward-looking statements include statements concerning
our plans, objectives, goals, strategies, future events, future revenues or financial performance, capital
expenditures, financing needs, plans or intentions relating to acquisitions, our competitive strengths and
weaknesses, our business strategy and the trends we anticipate in the industries and the political and legal
environment, and geographical locations, in which we operate, and other information that is not historical
information.
Words such as “aims”, “anticipate”, “believe”, “could”, “continue”, “estimate”, “expect”, “future”, “goal”,
“intend”, “is likely to”, “may”, “plan”, “predict”, “project”, “seek”, “should”, “targets”, “would” and
similar expressions, or variations of such expressions, are intended to identify forward-looking statements
but are not the exclusive means of identifying such statements.
By their nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, and risks exist that the predictions, forecasts, projections and other forward-looking statements
will not be achieved.
These risks, uncertainties and other factors include, among other things, those listed under “Risk Factors”,
as well as those included elsewhere in this Letter of Offer. Prospective investors should be aware that a
number of important factors could cause actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward-looking statements. These factors include,
but are not limited, to:
increase in the interest rates with respect to our borrowings; financial instability in Indian financial markets; significant competition in markets could have a material adverse effect on our business, financial
condition and results of operations;
seasonality of the nature of our business;
regional hostilities, terrorist attacks or social unrest in India;
adverse political, social and economic developments in India. and
any adverse outcome in the material legal proceedings in which we are involved.
For a further discussion of factors that could cause our actual results to differ, please see the chapters “Risk
Factors” and “Our Business” on pages XI and 61 respectively. By their nature, certain market risk
disclosures are only estimates and could be materially different from what actually occurs in the future. As
a result, actual future gains or losses could materially differ from those that have been estimated.
Neither we nor the Lead Manager nor any of their respective affiliates make any representation, warranty or
prediction that the results anticipated by such forward-looking statements will be achieved, and such
forward-looking statements represent, in each case, only one of many possible scenarios and should not be
viewed as the most likely or standard scenario. Neither we nor the Lead Manager nor any of their
respective affiliates or advisors have any obligation to update or otherwise revise any statements reflecting
circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the
underlying assumptions do not come to fruition. In accordance with SEBI/ Stock Exchanges requirements,
we and Lead Manager will ensure that Investors in India are informed of material developments until the
time of the grant of listing and trading permissions by the Stock Exchanges for the Equity Shares allotted
pursuant to this Issue.
xi
SECTION II - RISK FACTORS
An investment in equity and equity related securities involves a high degree of risk and you should not
invest any funds in this offer unless you can afford to take the risk of losing your investment. You should
carefully consider all of the information in this Letter of Offer, including the risks and uncertainties
described below, before making an investment in the Equity Shares. The financial and other implications of
material impact of risks concerned, wherever quantifiable, have been disclosed in the risk factors
mentioned below. To obtain a complete understanding, you should read this section in conjunction with the
sections titled “Our Business” and the section titled “Financial Information” beginning on page 61 and 73
respectively, as well as the other financial and statistical information contained in this Letter of Offer.
For taking an investment decision, investors must rely on their own examination of the Issuer and the Issue
including the risks involved. The occurrence of any of the following events could have a material adverse
effect on our business, results of operations, financial condition and prospects and cause the market price
of the Equity Shares to fall significantly, and you may lose all or part of your investment. Additionally, our
business operations could also be affected by additional factors that are not presently known to us or that
we currently consider as immaterial to our operations. The following factors have been considered for
determining the materiality:
1. Some events may not be material individually but may be found material collectively;
2. Some events may have material impact qualitatively instead of quantitatively;
3. Some events may not be material at present but may have material impact in future.
RISKS ASSOCIATED WITH OUR BUSINESS
1. We are involved in certain legal and regulatory proceedings that, if determined against us, could have a
material adverse impact on our business, financial conditions and results of operations.
There are outstanding material legal proceedings involving our Company, which may adversely affect our
business and operations. These legal proceedings are pending at different levels of adjudication before
various courts and tribunals. Should any new developments arise, such as a change in law or rulings against
us by courts or tribunals, we may need to make provisions in our financial statements, which could
adversely impact our reported financial condition and results of operations. Furthermore, if significant
claims are determined against us and we are required to pay all or a portion of the disputed amounts, there
could be a material adverse effect on our business and profitability.
A classification of the material legal proceedings in terms of clause XII(b) of Part E of Schedule VIII
instituted against and by us, and the monetary amount involved, wherever quantifiable, in these cases is
mentioned in brief below:
Litigation against our Company
Sr. No. Brief Description No. of Cases Amount Involved (In ` Lakhs)
1. Securities related Case 1 Non Quantifiable
2. Tax Cases 3 2314.86* *The amount mentioned includes interest. The matters also include appeals filed by the Company and Income Tax Department.
Litigation by our Company
Nil
For further details of the legal proceedings, please see the section “Outstanding Litigations and Defaults”
on page 129.
2. The loss or shutdown of operations at any of our manufacturing facilities or any accidents or
damage to our manufacturing equipment, plant and machinery or information technology systems
xii
due to which our manufacturing facilities may become non-operational, may have a material
adverse effect on our business, financial condition and results of operations
We operate two manufacturing facilities for finished products across India at Kadi in Gujarat and in
Jammu. The total number of units of each product manufactured at (i) Kadi and (ii) Jammu unit(s) from
April 01, 2012 to December 31, 2012 are as follows:
Particulars Kadi Jammu Total
WAC 48,921 0 48,921
SAC 47,216 28,011 75,227
PAC (Including Spacemaker) 17,360 4,040 21,400
Chillers 13 13
Setfree 2 2
Total 1,13,512 32,051 1,45,563
Our manufacturing facilities are subject to operating risks, such as breakdowns or accidents or failure of
equipment, power supply or processes, performance below expected levels of output or efficiency,
obsolescence, labour disputes, strikes, lock-outs, natural disasters and industrial accidents. Our
manufacturing facilities are also subject to operating risk arising from compliance with the directives of
relevant government authorities. There was a major fire at unit 2 Kadi facility on July 18, 2012 due to
which it has become non-operational. The occurrence of any of these risks could significantly affect our
operations by causing production to shut down or slow down. Furthermore, we are dependent on our
information technology systems for managing key business processes such as product design and
development, customer and dealer management, transaction processing, accounting and production. Any
failure in our information technology systems may adversely impact our ability to manufacture our
products, manage our dealers and provide service to our customers, any of which may have a material
adverse effect on our reputation, business, financial condition and results of operations.
3. Demand for our products is affected by global and national economic conditions. Any development
which decelerates the demand for our products would have an adverse impact on our Company.
The air conditioning industry in India in general and our business and results of operations in particular are
affected by various global and national economic conditions. Changes or a downturn in the global or
national economy could add uncertainty to currency inflation or deflation, interest rates, taxation, stock
market performance, consumers' confidence and consumers' perception of economic conditions, which in
turn may affect the consumers' willingness to purchase our products. Our revenue from the sale of our
products in India accounted for 99.98% (based on FOB value of exports) in fiscal 2010 and 100% in fiscal
2011 and 2012. As we sell a majority of our products to the domestic market, continued financial weakness
amongst corporates or exceptional circumstances like bankruptcy etc. in any large company, would
exacerbate the negative trend in market conditions and would result in protracted declines in demand for
our products.
Any global or national economic distress would cause a material adverse effect on the demand for our
products and hence on our business and results of operations. There can be no assurance that the air
conditioning industry in India and our Company can sustain growth in business and operations if the global
economic conditions continue to be fragile.
4. We are dependent on certain technology collaboration agreements for the technology and
consulting agreements to manufacture our products. Termination or alteration of the terms of these
agreements would materially affect our total income and operations.
In the past we have relied upon, and in the future will continue to rely upon, the provision of technology
from certain technology collaboration agreements and consulting agreement which we have executed for
our manufacturing business with our Promoter. Through these agreements, we have been granted a non-
xiii
exclusive, non-transferable and non-sub-licensable right and license to design, manufacture, use and/or sell
our products in India during the term of such agreements. Most of these agreements are valid for a period
of ten years. For the year ending, March 31, 2011 and March 31, 2012, we incurred expenses (towards
royalty, technical knowhow, consultancy fee) in foreign currency aggregating to ` 1,902.19 lakhs and ` 2,708.92 lakhs, respectively. While, we try to maintain amicable business relationships with our Promoter
to ensure access to future technology and to ensure support from them when needed, we cannot assure you
that these agreements will not be terminated or that we will be able to obtain access to such future
technologies. If any of these agreements are terminated, we may not be able to manufacture our products or
if the terms of the license of these technologies are altered, there can be no assurance that we would be able
to comply with all the conditions of the license or we may not be able to manufacture such products in a
commercially viable manner. If our ability to use such technology was restricted, our total income and
operations would be materially affected. Further, most of our technology collaboration agreements and
consulting agreement have not been stamped and hence may face certain deficiencies such as inadequate
stamping. The effect of inadequate stamping is that the document is not admissible as evidence in legal
proceedings, and parties to that agreement may not be able to legally enforce the same, except after paying
a penalty for inadequate stamping. In event, in future there is dispute in relation to brand value agreement,
we may not be able to produce the same in legal proceedings without paying penalty which may have a
material adverse effect to our business.
5. Our Company faces exchange rate fluctuation risk, which may adversely affect our business, results
of operations and financial condition.
For the year ended March 31, 2011 and March 31, 2012, our consumption of imported raw material was to
the extent of 54.80% and 58.75% respectively of our total raw material cost. The fluctuations in foreign
exchange rates might have an impact on the financial performance of the Company. If the Indian rupee
value moves in unfavorable direction it will make an adverse impact on our import cost and may adversely
affect our business, results of operations and financial condition. While we use forward exchange contracts
to hedge our exposure in foreign currency, as on March 31, 2011, the value of foreign exchange contracts
remaining outstanding are USD 197.08 lakhs and JPY 292.63 lakhs and as of March 31, 2012, the value of
foreign exchange contracts remaining outstanding are USD 66.92 lakhs. Our inability to hedge this foreign
exchange exposure may result in an adverse impact on our financial condition.
6. We have not placed orders for the machinery and equipment, as disclosed in “Objects of the Issue”
and as a result, we may face time and cost overruns. The completion of installation of the plant and
machineries is dependent on performance of external agencies and any shortfall in the performance
of these external agencies may adversely affect our growth plans.
We are yet to enter into definitive agreements or are yet to place orders for the machinery and equipment
proposed to be acquired with the Issue proceeds and as disclosed in “Objects of the Issue” on page 45. The
completion of installation of the machineries is dependent on performance of external agencies, which are
responsible for supply, installation, commissioning and testing of the machineries. We cannot assure you
that the performance of external agencies will meet the required specifications, performance parameters
and shall deliver the plant and machineries on time. If the performance of these agencies is inadequate in
terms of these requirements, this may result in incremental cost and time overruns, which in turn may
adversely affect our growth plans. Further, some of the quotations in foreign currency denominations and
the cost of the machineries have been estimated at the prevailing conversion rate. Following is a breakup
of the quotations we have received from domestic and international suppliers:
(` in Lakhs)
Item Domestic Supplier International supplier Total
IT Infrastructure 130.38 0.00 130.38
VRF Development 207.80 1,792.20 2,000.00
Other Plant & Machineries 836.52 1,669.62 2,506.14
Total 1,174.70 3,461.82 4,636.52
xiv
For the purposes of arriving at the total cost estimate of the above machineries, we have assumed the
conversion rates prevailing as at November 30, 2012:
Sr. No. Foreign Currency Conversion Rate*
1. Japanese Yen (JPY) 1 JPY = ` 0.65665
2. United States Dollar (USD) 1 USD = ` 54.275
* Source: Bloomberg
The payment for the machinery has to be made in the currency of the quotation and at the exchange rates
prevailing on the date of the actual payment. The respective conversion rates may undergo a change at the
time of delivery of the machinery and consequent payment. Such a change in conversion rate may affect
the value of the machinery and consequently the estimated cost of the machineries. These factors may
increase the overall cost of the machineries and in order to fund such additional expenditure, we may have
to raise additional funds by way of additional debt or equity placement, which may have an adverse effect
on our business and results of operations.
7. We do not own our logo as mentioned on the cover page of this Letter of Offer and our ability to use
the trademark, name and logo may be impaired.
Our trademark, name and logo as mentioned on the cover page of this Letter of Offer do not belong to us.
The Hitachi trademark belongs to Hitachi Limited which has licensed it to our Promoter Hitachi Appliances
Inc. We have entered into a brand value agreement dated April 01, 2010 with our Promoter under which we
have obtained the usage rights to brand Hitachi, logo and trademark for period of five years ending on
March 31, 2015. If the Hitachi Limited or our Promoter withdraws, refuses to renew or terminates this
arrangement, we will not be able to make use of our trademark, name or logo in connection with our
business and consequently, we may be unable to capitalize on the brand recognition associated with the
Hitachi Group.
Further the brand value agreement executed by us with our Promoter, Hitachi Appliances Inc. has not been
stamped and hence may face certain deficiencies such as inadequate stamping. The effect of inadequate
stamping is that the document is not admissible as evidence in legal proceedings, and parties to that
agreement may not be able to legally enforce the same, except after paying a penalty for inadequate
stamping. In event, in future there is dispute in relation to brand value agreement, we may not be able to
produce the same in legal proceedings without paying penalty which may have a material adverse effect to
our business.
8. We are dependent in part on production we outsource to third parties on non-exclusive basis and
any significant loss or disruption of production from our third party manufacturers for any reasons
could adversely affect our business, results of operations and financial conditions.
We outsource manufacture of certain components to third parties with whom we do not have exclusive
arrangements. As a result, such vendors may manufacture components similar or identical to ours for our
competitors or manufacture entirely for such competitors, which may have an adverse effect on our
business and results of operation.
Production at facilities of these third party manufacturers are beyond our control and any significant loss or
disruption of production at these facilities for any reasons may adversely affect our business, results of
operations and financial conditions.
9. Our business is seasonal in nature. Any substantial decrease in our sales during this period can
have a material adverse effect on our financial performance.
The sale of our products is seasonal in nature. This unevenness in seasonal sales is largely due to the
buying cycles of the customers and weather cycles of locations to which we cater. The sales of the
Company are higher during the summers and festival seasons. Any disturbances/disruptions in production
during this period may lead to reduction in sales and have an impact on the financial performance of the
xv
Company.
10. We are subject to stringent labour laws and trade union activity or any work stoppage could have an
adverse effect on our business, financial condition and results of operations.
India has stringent labour legislation that protects the interests of operators, including legislation that sets
forth detailed procedures for employee removal and dispute resolution and imposes financial obligations on
employers. This makes it difficult for us to maintain flexible human resource policies, discharge employees
or downsize, which though not quantifiable, may adversely affect our business and results of operations.
We have collective wage settlement with our trade union. Although we consider our relations with our
operators to be cordial, most of our operators are unionised and our failure to effectively negotiate with the
trade union representing our operators or any union activity could result in work stoppages. Recently there
was a strike by fixed term employees and contract workers from June 08, 2012. The main demands of the
striking workers were to give permanency to fixed term employees, regularization of contract workers and
reinstatement of ten fixed term employees whose contract were not renewed. The Government by
notification dated July 09, 2012, prohibited the strike and referred the dispute to the Industrial Court,
Ahmedabad. The Industrial Court on October 13, 2012 issued an interim order that the Company is legally
bound to provide work to such workers on basis of their seniority and before appointing new workers,
Company is to take prior approval of the Industrial Court. On receipt of interim relief of Tribunal, parties
have agreed for out of court settlement and on January 12, 2013, all fixed term employees and contract
labour concerned in the reference court matter have resumed the duty. The settlement will be placed before
the Court and an award on the settlement arrived at shall be obtained from the Court. Any such work
stoppage, though not quantifiable, could have an adverse effect on our business, financial condition and
results of operations.
11. We are dependent on our research and development for our success and the failure to keep
developing/ improving products/ processes could adversely affect our business.
Our success depends on our ability to continue to develop and improve our products and processes for
which we make continuous investments in our research and development. Our research and development
expenditure along with in percentage terms is as follows:
Sr.
No.
Financial
Year
Capital
R &D
Expenditure (`
In Lacs) (A)
Revenue
R &D
Expenditure (`
In Lacs) (B)
Total R&D
Expenditure
(` In Lacs)
(A+B)
Total Revenue
from
Operations
(Gross) (` In
Lacs)
(C)
%
(B/C)
1 2009-10 15.21 297.21 312.42 68,799.94 0.43
2 2010-11 17.78 335.03 352.81 82,988.99 0.40
3 2011-12 11.03 371.65 382.68 86,731.93 0.43
We cannot assure you whether we will be able to enhance our research and development investments or
continue the current level of research and development investments in our business, or that our research and
development investments will yield satisfactory results, if at all. The upgradation and development of new
processes could be a lengthy and costly affair and there can be no assurance that a new/ improved product
or process developed by us will be commercially successful. Further, research undertaken by our
competitors may lead to the launch of a competing or improved product or process that may affect the sales
of our products and adversely affect our business, results of operations and financial condition.
12. As of March 31, 2011, we had negative cash flows from operating activities. Any negative cash flows
in the future could adversely affect our results of operations and financial condition.
Our cash flows as of year ending March 31, 2012 and March 31, 2011 are summarised below:
xvi
(Amount in ` lakhs)
Particulars Fiscal 2012 Fiscal 2011
Net cash from / (used in) operating activities 2,619.10 (891.61)
Net cash from / (used in) investing activities (2,053.43) (3,096.62)
Net cash flow from / (used in) financing activities (488.98) 1871.27
Net increase (decrease) in Cash & Cash Equivalents 76.69 (2,116.96)
As of year ending March 31, 2011, we had negative net cash from operating activities, if our revenues do
not grow as expected or if our expenses and working capital requirements increase at a greater rate than we
expect, we may not be able to achieve positive operating cash flow. If we do not maintain positive cash
flow, we cannot assure you that we will be able to sustain our growth or achieve profitability in future
periods.
13. Our Promoter and members of the Promoter Group will continue jointly to retain majority control
over our Company after the Issue, which will allow them to determine the outcome of matters
submitted to shareholders for approval.
We are controlled by our Promoter and Promoter Group who, as at November 30, 2012, beneficially owns
69.90% of our Equity Shares. As a result of their interest, our Promoter and Promoter Group has the ability
to exert significant influence over our business and certain actions requiring shareholders’ approval,
including, but not limited to, the election of directors, the declaration of dividends, the appointment of
management and other policy decisions. The interests of our Promoter and Promoter Group could conflict
with the interests of our other shareholders. Such a concentration of ownership may also have the effect of
delaying, preventing or deterring a change in control of our Company. In addition, our Promoter and
Promoter Group will continue to have the ability to cause us to take actions that are not in, or may conflict
with, our interests or the interests of some or all of our creditors or minority shareholders, and we cannot
assure you that such actions will not have an adverse effect on our future financial performance or the price
of our Equity Shares.
14. Our manufacturing facility at Jammu is obtained on leave and license basis. In the event we are
unable to renew the lease agreement, or if such agreement is terminated, we may suffer a disruption
in our operations.
Our manufacturing facility at Jammu has been set up on premises that has been acquired on leave and
license basis from a third party. The term of this agreement which ends on January 29, 2015 may or may
not be renewed. In the event the licensor terminates or does not renew the lease on commercially
acceptable terms, or at all, and we are required to vacate the premises, in such an event, we may be
compelled to identify alternative premises and enter into a fresh agreement. Such a situation could result in
loss of business and may adversely affect our results of operations and profitability.
15. We do not have long term contracts with our dealers and our revenues are dependent on the sales
made to and orders booked by our dealers. The loss of our major dealers or a decrease in the volume
of products they source from us may adversely affect our revenues and results of operations.
As there are no arrangements for sale of a minimum quantity of our products to the distributors, the number
of products procured by our dealers varies from month to month. There are a number of factors that impact
customer demand from these dealers, which may not be predictable. Our dealers may decide to reduce the
quantity of products sourced from us because of changing market conditions and other factors, internal and
external, relating to their business.
Further, with increased competition, the dealers now have increased choice of entities from whom to source
products. Some of our competitors may have advantages that enable them to offer products similar to ours
at a lower price, respond more quickly and effectively than we do to specific demands of the dealers, which
xvii
may lead to dealers entering into tie-ups with our competitors, forcing us to reduce prices and hence lower
our margins and limit our growth potential, in which case our business, financial condition and results of
operations will be harmed.
The loss of any of the major dealers or a decrease in the volume of the products they source from us or
reduction of price of our products may adversely affect our revenue and results of operations.
16. Our insurance coverage may not adequately protect us against certain operating hazards and this
may have a material adverse effect on our business.
The operation of each of our businesses involves many risks and hazards, including the breakdown, failure
or substandard performance of equipment, delay in delivery of equipment or improper installation or
operation of equipment, difficulties in upgrading or expanding existing facilities, labour disturbances, fire,
natural disasters such as earthquakes, adverse weather conditions or flooding, environmental hazards and
industrial accidents. In addition, the insurance coverage for our facilities is subject to periodic renewal.
Numerous factors outside our control can affect market conditions, which in turn can affect the availability
of insurance coverage as well as premium levels for policies. Our insurance coverage is also subject to
certain exclusions, limitations and deductibles. If the availability of insurance coverage is reduced
significantly, we may become exposed to certain risks for which we are not or could not be insured. Also, if
premiums for the insurance coverage required for these facilities increase significantly, we could incur
substantially higher costs for such coverage or may decide to reduce the coverage amounts, either of which
could have an adverse effect on their financial condition and results of operations.
We maintain insurance which we believe is typical in our industry at their respective locations in India and
in amounts that we believe to be commercially appropriate. Such insurance, however, may not provide
adequate coverage in certain circumstances. We do not carry business interruption insurance with respect to
our operations. The occurrence of a significant event for which we are not adequately insured against could
materially adversely affect our operations and financial condition. In addition, in the future, some or all of
our insurance coverage may become unavailable or may not be available on commercially reasonable
terms.
There have been instances in the past where we have not been able to recover claims from insurance
companies towards claims for damage to our products for reasons such as accidents during transit, theft in
transit, damage to goods due to storm and heavy rains and fire in full or in part for example in FY 2010-11,
there were three cases where we got only 85% of the product value. We cannot be certain that such
rejections of our insurance claims in full or in part, will not be repeated in future and which may have a
material adverse effect to our business.
17. As a manufacturing business, our success depends on efficiently managing the supply chain
logistics. Transportation of our products from our manufacturing facilities to our logistics service
provider and finally to our dealers and retailers need to be efficiently managed. Such supply chain
logistics are subject to various uncertainties and risks, and delays in delivery may result in rejected
or discounted deliveries.
We depend on trucking to deliver our products from our manufacturing facilities to our warehouses of our
logistics service provider and finally to our dealers and retailers. Disruptions of transportation services due
to heavy rains, storm, theft, inadequacies in road infrastructure; or due to labour problems like strikes, lock-
outs; or other events could impair our ability to manage the supplies of our products. For instance, the
dispatch of our products was affected due to heavy rains and water logging in Rajasthan, Chhattisgarh and
Orissa in August 2012 and Mumbai in September 2012. There can be no assurance that such disruptions
will not occur again. Any such disruptions could materially adversely affect our business, financial
condition and results of operations.
Further, we do not have long term agreements with our logistics service providers. In event such
agreements are terminated or such logistics service provider does not renew the agreements on
commercially acceptable terms, or at all, we may be compelled to identify alternative logistics service
xviii
providers and enter into a fresh agreement. Such a situation could result in loss of business and may
adversely affect our results of operations and profitability.
18. We face significant competition in the air conditioning industry. Any failure to compete effectively
may have a material adverse effect on our business and operations.
The air conditioning industry in India is highly competitive with several other domestic and foreign brands
present in the market and we expect that competition will continue to increase with entry of new companies
(both domestic and international) in this industry. In such a competitive environment, our brand may face
considerable pressure to sustain customer loyalty and brand equity.
With number of domestic and international brands entering Indian air conditioning industry, the industry is
witnessing substantial change in dynamics. Many of our competitors have access to considerable financial
and technological resources with which they are able to compete aggressively, including by funding future
growth and expansion and improving on the product quality and in acquisitions.
We face a variety of competitive challenges including:
• anticipating and quickly responding to changing consumer demands and preferences;
• maintaining favourable brand recognition;
• developing innovative, high-quality products that appeal to consumers;
• pricing our products effectively and achieving customer perception of value; and
• providing strong and effective marketing support;
Our competitors may expend financial and other resources to improve their market share to compete more
aggressively. With increase in competition, we may inter alia witness lower demand for our products,
pressure on pricing, loss in market share, which may impact our business and results of operations. Our
inability to withstand competitive pressures and respond to changing business dynamics may have a
material adverse effect on our business prospects, financial condition and results of operations.
19. Significant increases in prices of key raw materials or our inability to continue to procure raw
materials from our suppliers at favourable terms could have an adverse effect on our Company's
results of operations and financial position.
We are dependent on external suppliers for the timely supply of raw materials. We purchase compressors,
metal like copper, steel, aluminum and plastic material, wooden packaging boxes etc. from third party
suppliers, and have to depend on them to procure these raw materials. Accordingly, our profits are sensitive
to changes in raw material prices. Volatility in the prices of raw materials, including mismatches between
trends in prices for raw materials and our products, as well as limitations on or disruptions in the supply of
raw materials, could adversely affect our results of operations.
Our inability to procure these raw materials terms more favourable, or at all, may constrain our raw
material supply, resulting in an adverse effect on our business, financial condition and results of operations.
Further, we do not have exclusive arrangements with our suppliers and they can supply raw materials to our
competitors, which may increase competition for us and may result in an adverse effect on our financial
condition.
Further, any substantial delay in supply or non-conformance to quality requirements by our suppliers can
impact our ability to meet our customer requirements and thus impact our business and results of
operations.
In case we fail to correctly analyse our product requirement or non-availability of required raw materials or
any other item of production in desired quantity and quality at the right time, it may impact our sales
commitments resulting in having adversely effect on our business and results of operations.
xix
20. We rely on our distribution network for marketing, sale and distribution of our products and
underperformance of our distribution network may adversely affect our sales and results of
operations
Our products are sold and serviced through a network of distribution system consisting of 5 regional
offices, 21 branch offices, over 200 exclusive sales and service dealers and over 1,500 sales points and we
rely on this network of distribution system for marketing, sale and distribution of our products and
providing after sales service. Any failure on the part of our distribution and service network in performing
their functions and providing high quality service to customers could adversely affect our reputation, sales
and results of operations. If we do not succeed in maintaining the stability of our distribution network and
expanding our distribution network, our market share may decline, which may affect the results of our
operations and financial condition.
21. Our business and results of operations depends on consumer spending patterns could be adversely
affected by the impact of economic conditions in India.
Our business is sensitive to a number of factors that influence the levels of consumer spending, including
political and economic conditions such as recessionary environments, the levels of disposable consumer
income, consumer debt, interest rates. Declines in consumer spending on air conditioners or home
appliances could have an adverse effect on our operating results.
Purchases by consumer of our products generally decline during recessionary periods and other periods in
which disposable income is adversely affected. While adverse economic and business conditions are
harmful to all companies, companies such as ours are particularly sensitive to them, particularly declining
levels of disposable consumer income, higher consumer debt, higher interest rates, higher taxation, increase
in unemployment because of their direct impact on discretionary consumer spending.
Unfavorable changes in business and economic conditions affecting our consumers could result in decrease
in demand for our products or lower our profit margins, and have a material adverse effect on our financial
condition and results of operations.
22. Our success depends upon our ability to sustain effective implementation of our business and
growth strategy.
The success of our business depends greatly on our ability to effectively implement our business and
growth strategy. Whilst we believe that we have successfully executed our business strategy in the past,
there can be no assurance that we will be able to execute our strategy on time and within the estimated
budget, or that we will meet the expectations of targeted customers. We expect our growth strategy to place
significant demands on our management, financial and other resources and require us to continue
developing and improving our operational, financial and other internal controls. Our inability to manage
our business and growth strategy could have a material adverse effect on our business, financial condition
and results of operations.
23. Sales and profitability of our business depend on our ability to develop new products that appeal to
consumers, and any failure to do the same could have a material adverse effect on our business.
We compete in home appliance industry characterised by continual change, product introductions, changes
in consumer demands and evolving industry standards. While we continually endeavor to cater to the
changing preferences of consumers, we cannot guarantee that we will be successful in these efforts.
Additionally, lack of innovation in developing new products could adversely affect our business. Our
ability to successfully develop new products is also subject to numerous uncertainties, including our ability
to anticipate and successfully respond to rapidly changing consumer preferences. Any failure to develop
new products which appeal to customers could have a material adverse effect on our business and financial
condition.
24. Our Company has limited ability to protect its intellectual property and may be subject to third party
xx
claims and if we are unable to protect such intellectual property, our business could be adversely
affected.
We regard our intellectual property rights such as trademarks, important to our success. Generating and
maintaining brand recognition is a significant element of the business strategy of our Company. We may be
subject to legal proceedings and claims in the ordinary course of business, including claims of alleged
infringement of the trademarks and other intellectual property rights of third parties. In addition, litigation
may be necessary in the future to enforce our intellectual property rights, protect trade secrets or to
determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature,
regardless of outcome or merit, could result in substantial costs and diversion of management and technical
resources, any of which could adversely affect our business, financial condition and results of operations.
Our Company has also applied for the registration of 5 trademarks, but is yet to receive registration for
same. For further details regarding applications pending with appropriate authorities, please refer to the
section titled “Government and Other Approvals” on page 132. There is no assurance that these
applications shall result in us being granted registration in a timely manner or at all or that third parties
would not infringe upon our intellectual property, causing damage to our business prospects, reputation and
goodwill.
Our Company may need to litigate in order to protect our intellectual property or to prevent unauthorized
use of the same. Any such litigation could be time consuming and costly and a favourable outcome cannot
be guaranteed. In addition, Our Company may not be able to detect any unauthorized use or take
appropriate and timely steps to protect our intellectual property rights. Our inability to protect the same
could adversely affect our business. We cannot provide any assurance that third parties will not infringe
upon our trademark, trade names, logos or brand names and thereby cause damage to our business
prospects, reputation or goodwill.
25. Our Contingent Liabilities could adversely affect our financial condition. Any crystallization of our
contingent liabilities could materially and adversely affect our business, financial conditions, result
of operations and prospects.
Most of the contingent liabilities have been incurred during the normal course of business, in the event of
there being a crystallization of any of the above liabilities, we may be required to honour the demands
raised. This may materially and adversely impact our business, financial conditions, result of operations
and prospects. Our contingent liabilities where quantifiable as on March 31, 2011 and March 31, 2012 are
as follows:
(Amount in ` lakhs)
Particulars As of March 31,
2011
As of March 31,
2012
As a % of
networth* on
March 31,
2012
Legal Matters under dispute:
Service Tax 192.02 199.57 1.17
Sales Tax 326.15 264.77 1.55
Customs Duty 0.92 0.92 0.01
Excise Duty - 0.50 0.00
Guarantees given by the bankers on behalf of the
Company 24.30
44.09
0.26
Claims against the Company not acknowledged
as debts 50.35
59.21 0.35
Total 593.74 569.06 3.32
*Our networth on March 31, 2012 was ` 17,121.63 Lakhs
xxi
For further information on our contingent liabilities as per AS 29, see the section titled “Financial
Information” beginning on page 73.
26. We are dependent on our senior management team and the loss of key members or failure to attract
skilled personnel may adversely affect our business.
Our business depends largely on the efforts, expertise and abilities of our senior management, as well as
other skilled personnel which oversees the day-to-day operations, strategy and growth of our business. If
one or more members of our key management team are unable or unwilling to continue in their present
positions, such persons may be difficult to replace and our business, prospects, financial condition and
results of operations could be adversely affected. In addition, our success in expanding our business will
also depend, in part, on our ability to attract, retain and motivate appropriately qualified personnel. Our
failure to successfully manage our personnel needs could materially adversely affect our business,
prospects, financial condition and results of operations. If we are unable to address these risks, our
business, financial condition and results of operations could be adversely affected.
27. We have not identified alternate sources for financing the ‘Objects of the Issue’. If we fail to
mobilize the resources as per our plans, our growth plans may be affected.
We have not identified any alternate source of funding the cost of acquisition of the plant and machineries
proposed to be purchased as part of our objects of this Issue. Any failure or delay on our part to mobilize
the required resources or any shortfall in the Issue Proceeds may delay the implementation schedule of our
objects of the issue and could adversely affect our growth plans.
28. In the event there is any delay in the completion of the Issue, there would be a corresponding delay
in the completion of the objects of this Issue which would in turn affect our revenues and results of
operations.
The funds that we receive would be utilized for the objects of the Issue as has been stated in the section
“Objects of the Issue” on page 45. The proposed schedule of implementation of the objects of the Issue is
based on our management’s estimates. If the schedule of implementation is delayed for any other reason
whatsoever, including any delay in the completion of the Issue, we may face time and cost overruns and
this may affect our revenues and results of operations.
29. The security of our IT systems may fail and adversely affect our business, operations, financial
condition and reputation.
Our Company is dependent on the effectiveness of our information security policies, procedures and
capabilities to protect our computer and telecommunications systems and the data such systems contain or
transmit. Any delay in implementation or disruption of the functioning of our information technology
systems could disrupt our ability to track record and analyse work in progress or cause loss of data and
disruption to our operations, process financial information or manage creditors/debtors or engage in normal
business activities. Our computer systems, software and networks may be vulnerable to unauthorised
access, computer viruses or other malicious code and other events that could compromise data integrity and
security. Although we maintain procedures and policies to protect our IT systems, such as a data back-up
system, disaster recovery and business continuity system, any failure of our IT systems as mentioned above
could result in business interruption, material financial loss, initiation of regulatory actions and legal
proceedings and harm to our reputation.
30. Any inability to manage our growth could disrupt our business and reduce our profitability.
The success of our business will depend greatly on our ability to effectively implement our business and
growth strategies. We may not be able to execute our strategies in the future. Further, our growth strategies
could place significant demand on our management team and other resources and would require us to
continuously develop and improve our operational, financial and other controls, none of which can be
assured. Any failure on our part to scale up our infrastructure and management could cause disruptions to
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our business and could be detrimental to our long-term business outlook.
31. We cannot assure you that we will be able to secure adequate financing in the future on acceptable
terms, in time, or at all. To satisfy our capital needs, we may raise additional funds through the
incurrence of debt or further equity issuances. We cannot assure you that we will be able to procure
such financing on time or at all. Further, any future issuance of Equity Shares by us may dilute
your shareholding and adversely affect the trading price of the Equity Shares. Also, we cannot
assure you that, for the debt financing secured by us, we will be able to continue servicing the
principal amount, interest or both.
We may need to raise additional capital from time to time depending on our business requirements. In
addition to the net proceeds of this Issue and our internally generated cash flow, we may need additional
sources of funding, which may include entering into new debt facilities with lending institutions or raising
additional debt in the capital markets, to meet the business requirements including (i) business growth
beyond what the current balance sheet can sustain, (ii) additional capital requirements imposed due to
changes in regulatory regime or new guidelines, and (iii) significant depletion in our existing capital base
due to unusual operating losses.
We cannot assure that we will be able to raise the full amount we believe is necessary to fund our capital
expenditure and working capital requirements on time or at all, or that such amounts will be available at
costs acceptable to us.
If we decide to raise additional funds through the incurrence of debt, our interest obligations will increase,
and we may be subject to additional covenants. Such financings could cause our debt to equity ratio to
increase or require us to create charges or liens on our assets in favour of lenders.
Further, any future issuance of Equity Shares by us may dilute your shareholding in us, adversely affecting
the trading price of our Equity Shares and our ability to raise capital through an issue of our securities. In
addition, any perception by investors that such issuances or sales might occur could also affect the trading
price of our Equity Shares. Additionally the disposal, pledge or encumbrance of Equity Shares by any of
our major shareholders, or the perception that such transactions may occur may affect the trading price of
the Equity Shares. We are unable to assure you that such shareholders will not dispose of, pledge or
encumber their Equity Shares in the future.
Our failure to obtain sufficient financing in manner beneficial to our Company and the Shareholders could
result in the delay or abandonment of any of our business development plans and this may affect our
business and future results of operations.
32. We have in the past entered into related party transactions and may continue to do so in the future.
We have, in the course of our business, entered into transactions with related parties including entities
forming part of our Promoter Group and our key managerial personnel. Such related party transactions may
give rise to potential conflicts of interest with respect to dealings between us and the related parties.
Furthermore, it is likely that we will continue to enter into related party transactions in the future and such
transactions, individually or in the aggregate, will not have an adverse effect on our financial condition and
results of operations.
For details of related party transactions as per AS 18 entered into by us please refer to the section
“Financial Information” beginning on page 73.
33. We are subject to restrictive covenants under our credit facilities that could limit our flexibility in
managing the business.
The agreements governing our existing indebtedness contain restrictions and limitations, such as restriction
on, utilization of facility solely for the purpose sanctioned, incurring further indebtedness, creating further
encumbrances on our assets, effecting any scheme of amalgamation or restructuring and undertaking
xxiii
guarantee obligations. In addition, some of these borrowings may contain financial covenants, which
require us to maintain, among other matters, positive net worth. We cannot assure you that we will be able
to comply with these financial or other covenants or that we will be able to obtain the consents necessary to
take the actions we believe are necessary to operate and grow our business. Further, under one of our loan
agreements, in the event of a default the lender has the right to appoint a nominee director. In any event, an
event of default under any debt instrument, if not cured or waived, could have a material adverse effect on
us.
34. We have not entered into any definitive agreements to monitor the utilization of the Issue Proceeds.
As per the SEBI ICDR Regulation, appointment of monitoring agency is required only for Issue size above
` 50,000 lakhs. Hence we have not appointed any monitoring agency and the deployment of Net Proceeds
as stated in the “Objects of the Issue” beginning on page 45 is not subject to monitoring by any independent
agency.
Further, pending utilization of the Net Proceeds of the Issue, the management of our Company, in
accordance with the policies formulated by it from time to time, will have flexibility in deploying the same.
Our Company intends to temporarily invest the funds in interest bearing deposits with banks as may be
approved by the Board. For further details please refer the section titled “Objects of the Issue” beginning on
page 45.
35. Our future success depends on our ability to reduce our cost of production and thereby increase our
operational efficiency. Our inability to manage our cost may adversely impact our business and
thereby our results of operations
Reducing our cost of production is essential to our business strategy in a highly competitive market
environment. Our cost reduction strategy focuses on, among other things, increasing the levels of
localization for our new product introductions, improving raw material and component sourcing and
reducing selling, general and administrative costs. Our measures to increase our operational efficiency may
not yield results in the future, which may adversely affect our results of operations. The consumer
electronic products and household appliances businesses are highly competitive. The markets for consumer
electronic products and household appliances are highly competitive and we have experienced pressure on
our prices and margins. We expect that technological advances and aggressive pricing strategies developed
by our competitors will intensify competition in respect of our products. We have numerous domestic and
foreign competitors, some of which may have greater financial, technical and other resources than we do.
36. Our manufacturing facilities are located in few geographical areas. Any breakdown of services in
such areas could have a material and adverse effect on our results of operations and financial
conditions.
Our manufacturing facilities are located in Kadi, Gujarat and Jammu (in Jammu & Kashmir). As a result,
we are exposed to risks including any change in policies relating to these states, any localized social unrest,
any natural disaster and any event or development which could make our manufacturing facilities in such
states less economically beneficial. Any such risk, if materializes, could have material adverse effect on the
business, financial position and results of operations of our Company.
37. Non availability of tax benefits in the future may adversely affect our profitability.
We receive certain tax benefits at our facility at our Jammu including partial excise exemption under
notification 56/2002 and income tax deduction under Section 80IB(4) on profit from our facility at Jammu
which are valid up to year 2015. In the event these benefits are no longer available to the Company due to
any change in the regulatory framework or Government of India does not increase the validity of such tax
benefits, the effective tax rates payable by us will increase and consequently its financial condition may be
adversely affected.
38. We do not own our regional offices, branch offices (except our Ahmedabad branch which is owned
xxiv
by us) and other premises out of which we operate. Any dispute in relation to the lease of our
premises would have a material adverse effect on our business and results of operations.
We do not own our regional offices, branch offices (except our Ahmedabad branch which is owned by us)
and other premises out of which we operate. We cannot assure you whether the leases for such properties
would be renewed in favourable terms or at all. If the owners of any of these premises do not renew the
agreements under which we occupy the premises or renew such agreements on terms and conditions that
are not favorable to us, we may suffer a disruption in our operations or may have to pay increased rentals
which could have an adverse effect on our business and results of operations.
39. We are subject to product liability claims in relation to the quality and use of our products. Any
claims arising from such liabilities may harm our reputation and/or have an adverse impact on our
business, financial conditions and results of operations.
Our products are covered under warranty and we are subject to risks and costs associated with product
liability, warranty and recall. If any of our products are found to be defective, it may generate adverse
publicity and we may be required to undertake corrective actions or recall our products. As a result, our
business, results of operations and financial condition may be adversely affected. Further, any defect in our
products or after-sales services provided by authorized dealers or third parties could also result in customer
claims for damages. Such actions and claims could require us to expend considerable resources in
correcting these problems and could adversely affect demand for our products.
We have procured consolidated public liability insurance cover up to ` 5,00,00,000 for our operations
across India which constituted 0.63% of our sales revenue for fiscal 2012. In the event that our insurance
does not adequately cover the liability arising from such accidents, our financial performance and results of
operations may be adversely affected. Further, due to uncertain nature of claims, adequate insurance cover
cannot be availed. For defending any product liability claim, we may have to incur substantial legal costs
and may also have to divert our management's attention away from business operations. Further, any
judgment/award or findings, against us in such claim, may harm our reputation, and may have an adverse
impact on our revenue and profitability.
40. Our business entails high working capital requirements and cash flows and if we are not able to
arrange for the same, in a timely manner or at all, may adversely impact the results of our
operations.
Our business demands substantial fund and non-fund based working capital facilities. In case there is
insufficient cash flows to meet our working capital requirement or if we are not able to arrange for the same
from other sources or due to other factors including delay in disbursement of arranged funds, resulting in
our inability to finance our working capital needs when needed or there is any increase in interest rate on
our borrowings, it may adversely affect our performance.
If we decide to raise additional funds through the incurrence of debt, our interest and debt repayment
obligations will increase, and could have a significant effect on our profitability and cash flows and we may
be subject to additional covenants, which could limit our ability to access cash flows from operations. If we
decide to raise additional funds through the issuance of equity, your shareholding in our Company may be
diluted.
Our working capital requirements may increase if the payment terms in our agreements include reduced
advance payments or longer payment schedules. These factors may result in increases in the amount of our
receivables and short-term borrowings.
Continued increases in our working capital requirements may have an adverse effect on our business,
financial condition and results of operations and we cannot assure that we will be able to raise the full
amount we believe is necessary to fund our capital expenditure and working capital requirements, or that
such amounts will be available at costs acceptable to us.
xxv
41. We are dependent on our Promoter Hitachi Appliances Inc., for their expertise in the air
conditioning business and our separation from our Promoter may adversely affect our business.
Hitachi Appliances Inc. as a result of its many years of experience in the air conditioning and home
appliance business is one of the leading air conditioning and home appliances manufacturers in Japan. We
believe that our association with the Hitachi Appliances Inc. lends strength to the trust and reliability
reposed in us and enables us to attract and retain fresh talent. Consequently, our separation from Hitachi
Appliances Inc. for any reason whatsoever may adversely affect our business and results of operations.
42. Our ability to pay dividends in the future will depend upon our future earnings, financial condition,
cash flows, working capital requirements, capital expenditures and restrictive covenants in our
financing arrangements.
Our revenues are dependent on various factors such as future earnings, financial condition, cash flows,
working capital requirements, capital expenditures and restrictive covenants in our financing arrangements.
Our business is capital intensive and we may plan to make additional capital expenditures for our objects of
the Issue or to undertake new projects. Our ability to pay dividends is also restricted under certain financing
arrangements that we have entered into and expect to enter into.
The combination of these factors may result in variations in our revenues and profits and thereby may
impact our ability to pay dividends. Therefore, we believe that period-to-period comparisons of our results
of operations are not necessarily meaningful and should not be relied upon as indicative of our future
performance. If in the future our results of operations are below market expectations, the price of our
Equity Shares could decline.
43. Our operations are subject to various environmental, employees, health and safety laws and
regulations. Our failure to comply with environmental laws and similar regulations in India,
including improper handling of raw materials, may result in significant damages and may have an
adverse effect our business, financial condition and results of operations.
Our operations are subject to laws and regulations governing relationships with employees in such areas a
minimum wage and maximum working hours, overtime, working conditions, hiring and terminating of
employees, contract labour and work permits. Further, our business and prospects are contingent upon,
among other things, receipt of all required health and safety permits, and our ability to comply with any
conditions specified in such permits and registrations, on a continuous basis. Changes or concessions
required by regulatory authorities may involve significant compliance costs and also result in the loss of an
existing license, which may adversely affect our business and results of operations.
Further, we are subject to various environmental laws and regulations relating to environmental protection
in various locations in India. For example, the discharge or emission of chemicals, dust or other pollutants
into the air, soil or water that exceed permitted levels and cause damage may give rise to liabilities towards
the government, especially the state pollution control boards and third parties, and may result in expenses
to remedy any such discharge or emissions and in form of fines and payouts which may have an adverse
effect our business, financial condition and results of operations. We have also installed various types of
anti-pollution equipment and systems at our manufacturing facilities, which we believe satisfy local
regulatory requirements, for the treatment of waste chemicals, gases and liquid effluent and the disposal of
solid waste. However, we cannot be certain that no environmental claims will be brought against us in the
future or that local or national governments will not increase the applicable environmental standards. Any
failure to comply with present or future environmental regulations could result in the imposition of fines
against us, or in orders requiring the suspension of production or cessation of operations. In addition, new
regulations could require significant capital expenditure on equipment or other expenses that may
negatively affect our results of operations.
44. Any failure to obtain required regulatory approvals, licenses, registrations or permits to develop and
operate our business or are unable to renew them in a timely manner, or comply with applicable
xxvi
legislations, could materially and adversely affect our business and our ability to operate.
Being a manufacturing company, we are required to maintain certain necessary licenses, approvals and
permits in relation to our business requirements. Our business require us to obtain and renew from time to
time, certain approvals, licenses, registrations and permits, some of which have expired and for which we
have either made or are in the process of making an application for obtaining the approval or its renewal.
Failure to obtain and maintain necessary licenses, approvals and permits in a timely manner or at all and the
introduction of new laws or regulations pertaining to licensing requirements, renewal requirements,
certification requirements and consumer protection may further restrict our ability to operate and adversely
affect our business operations and results of operations. We cannot assure you that we will be able to obtain
approvals in respect of such applications or any application made by us in the future. For more information
about the licenses required by us, see the section titled “Government and Other Approvals” beginning on
page 132.
45. We engage contract labour for carrying out certain of our operations (other than Production) and
we are responsible for paying the wages of such workers, if the independent contractors through
whom such workers are hired default on their obligations, which could have an adverse effect on
our results of operations and financial condition.
In order to retain operational efficiencies, we engage independent contractors who in turn engage on-site
employees on a contract basis for performance of certain of our ancillary operations. Although we do not
engage these employees directly, we are responsible for any wage payments to be made to such employees
in the event of default by such independent contractors. Any requirement to fund their wage requirements
may have an adverse impact on our results of operations and financial condition. In addition, under the
Contract Labour (Regulation and Abolition) Act, 1970, as amended, we may be required to absorb a
number of such employees on contractual basis as permanent employees. Thus, any such order from a
regulatory body or court may have an adverse effect on our business, financial condition and results of
operations.
46. Misconduct or fraud by our employees or failure to comply with laws or regulations by our
distributors could result in reduced revenues and loss of goodwill.
Misconduct or fraud by our employees or failure to comply with laws and regulations by our distributors or
other improper activities by any of our employees or distributors could have a significant negative impact
on our business and reputation. Such misconduct could include the failure to comply with government
regulations regarding the protection of classified information, regulations prohibiting bribery and other
foreign corrupt practices, regulations regarding the pricing of labour, regulations pertaining to the internal
controls over financial reporting, environmental laws, and any other applicable laws or regulations. The
precautions we take to prevent and detect these activities may not be effective, and we could face unknown
risks or losses. Our failure to comply with applicable laws or regulations or acts of misconduct could
subject us to fines and penalties, loss of security clearance could have a material adverse impact on our
business, financial condition and results of operations.
47. Taxes and other levies imposed by the central or state Governments, as well as other financial
policies and regulations, may have an adverse effect on our business, results of operations, financial
condition and prospects.
We are subject to taxes and other levies imposed by the central or state Governments, including customs
duties, excise duties, central sales tax, state sales tax, service tax, income tax, value added tax and other
taxes, duties or surcharges introduced on a permanent or temporary basis from time to time. The central and
state tax scheme in India is extensive and subject to change from time to time. Any adverse changes in any
of the taxes levied by the central or state Governments may adversely affect our competitive position and
results of operations. Further, we cannot assure you that tax incentives will continue to be available in the
future. Changes in, or elimination of, tax incentives could adversely affect our financial condition and
results of operations.
xxvii
48. Third party statistical and financial data in this Letter of Offer may be incomplete or unreliable.
We have not independently verified the data in this Letter of Offer derived from industry publications and
other third party sources and therefore we cannot assure you that they are complete or reliable. Such data
may also be produced on different bases from those used in other countries. Therefore, in discussions of
matters relating to India, its economy and our industry in this Letter of Offer, the statistical and other data
upon which such discussions are based may be incomplete or unreliable.
EXTERNAL RISK FACTORS
49. There could be political, economic or other factors that are beyond our control but may have a
material adverse impact on our business and results of operations should they materialize.
The following external risks may have a material adverse impact on our business and results of
operations should any of them materialize:
Political instability, a change in the Government or a change in the economic and deregulation policies
could adversely affect economic conditions in India in general and our business in particular;
A slowdown in economic growth in India could adversely affect our business and results of operations.
The growth of our business and our performance is linked to the performance of the overall Indian
economy. We are also impacted by consumer spending levels and businesses such as ours would be
particularly affected should Indian consumers in our target segment have reduced access to disposable
income;
Civil unrest, acts of violence, terrorist attacks, regional conflicts or situations or war involving India or
other countries could materially and adversely affect the financial markets which could impact our
business. Such incidents could impact economic growth or create a perception that investment in
Indian companies involves a higher degree in risk which could reduce the value of our Equity Shares;
Natural disasters in India may disrupt or adversely affect the Indian economy, the health of which our
business depends on;
Any downgrading of India's sovereign rating by international credit rating agencies may negatively
impact our business and access to capital. In such event, our ability to grow our business and operate
profitably would be severely constrained;
Instances of corruption in India have the potential to discourage investors and derail the growth
prospects of the Indian economy. Corruption creates economic and regulatory uncertainty and could
have an adverse effect on our business, profitability and results of operations; and
The Indian economy has had sustained periods of high inflation. Should inflation continue to increase
sharply, our profitability and results of operations may be adversely impacted. High rates of inflation
in India could increase our employee costs, decrease the disposable income available to our customers
and decrease our operating margins, which could have an adverse effect on our profitability and results
of operations.
50. The proposed adoption of IFRS could result in our financial condition and results of operations
appearing materially different than under Indian GAAP.
We may be required to prepare annual and interim financial statements under IFRS in accordance with the
roadmap for the adoption of, and convergence with, IFRS announced by the Ministry of Corporate Affairs,
GoI in January 2010. The convergence of certain Indian Accounting Standards with IFRS was notified by
the Ministry of Corporate Affairs on February 25, 2011. The date of implementing such converged Indian
xxviii
accounting standards has not yet been determined, and will be notified by the Ministry of Corporate Affairs
in due course. Our financial condition, results of operations, cash flows or changes in shareholders’ equity
may appear materially different under IFRS than under Indian GAAP. This may have a material effect on
the amount of income recognised during that period and in the corresponding period in the comparative
period. In addition, in our transition to IFRS reporting, we may encounter difficulties in the ongoing
process of implementing and enhancing our management information systems.
51. Investors may not be able to enforce a judgment of a foreign court against us.
The enforcement by investors in the Equity Shares of civil liabilities, including the ability to affect service
of process and to enforce judgments obtained in courts outside of India may be affected adversely by the
fact that we are incorporated under the laws of the Republic of India and almost all of our executive
officers and directors reside in India. Nearly all of our assets and the assets of our executive officers and
directors are also located in India. As a result, it may be difficult to enforce the service of process upon us
and any of these persons outside of India or to enforce outside of India, judgments obtained against us and
these persons in courts outside of India.
India is not a party to any international treaty in relation to the recognition or enforcement of foreign
judgments. Recognition and enforcement of foreign judgments are provided for under Section 13 and
Section 44A of the Civil Procedure Code respectively. The Government of India has under Section 44A of
the Civil Procedure Code notified certain countries as reciprocating countries, as discussed below. Section
13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive regarding any matter
directly adjudicated upon except: (i) where the judgment has not been pronounced by a court of competent
jurisdiction, (ii) where the judgment has not been given on the merits of the case, (iii) where it appears on
the face of the proceedings that the judgment is founded on an incorrect view of international law or a
refusal to recognize the law of India in cases in which such law is applicable, (iv) where the proceedings in
which the judgment was obtained were opposed to natural justice, (v) where the judgment has been
obtained by fraud, or (vi) where the judgment sustains a claim founded on a breach of any law in force in
India.
Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a
court in any country or territory outside India, which the Government has by notification declared to be a
reciprocating territory, it may be enforced in India by proceedings in execution as if the judgment had been
rendered by the relevant court in India. However, Section 44A of the Civil Procedure Code is applicable
only to monetary decrees not being in the nature of any amounts payable in respect of taxes or other
charges of a similar nature or in respect of a fine or other penalties and does not include arbitration awards.
The United Kingdom and some other countries have been declared by the Government to be a reciprocating
territory for the purposes of Section 44A. However, the United States has not been declared by the
Government to be a reciprocating territory for the purposes of Section 44A. A judgment of a court in the
United States may be enforced in India only by a suit upon the judgment, subject to Section 13 of the Civil
Procedure Code and not by proceedings in execution.
The suit must be brought in India within three years from the date of the judgment in the same manner as
any other suit filed to enforce a civil liability in India. Generally, there are considerable delays in the
disposal of suits by Indian courts. It is unlikely that a court in India would award damages on the same
basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court
would enforce foreign judgments if it viewed the amount of damages awarded as excessive or inconsistent
with public policy in India. A party seeking to enforce a foreign judgment in India is required to obtain
prior approval from the RBI under FEMA to repatriate any amount recovered pursuant to execution and
any such amount may be subject to income tax in accordance with applicable laws. Any judgment or award
in a foreign currency would be converted into Indian Rupees on the date of the judgment or award and not
on the date of the payment. Generally, there are considerable delays in the processing of legal actions to
enforce a civil liability in India, and therefore it is uncertain whether a suit brought in an Indian court will
be disposed off in a timely manner or be subject to considerable delays.
52. Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries
xxix
could adversely affect our business and the Indian financial markets.
Public places like theaters could and have in the past been targets for terrorist attacks and rioting. Any
violence in public places such as theaters could cause damage to life and property, and also impact
customer sentiment and their willingness to visit theaters, which would have a material adverse effect on
our business and results of operations. Our insurance policies for assets cover, among other things,
terrorism, fire and earthquakes. However, our insurance policies may not be adequate to cover the loss
arising from these events, which could adversely affect our results of operations and financial condition.
India has also witnessed civil disturbances in recent years and it is possible that future civil unrest as well
as other adverse social, economic and political events in India could have an adverse impact on us.
Regional or international hostilities, terrorist attacks or other acts of violence of war could have a
significant adverse impact on international or Indian financial markets or economic conditions or on
Government policy. Such incidents could also create a greater perception that investment in Indian
companies involves a higher degree of risk and could have an adverse impact on our business and the price
of the Equity Shares.
53. There are restrictions on daily movements in the price of the Equity Shares, which may adversely affect
your ability to sell, or the price at which you can sell, Equity Shares at a particular point in time.
We are subject to a daily “circuit breaker” imposed by all Stock Exchanges in India, which does not allow
transactions beyond specified increases or decreases in the price of the Equity Shares. This circuit breaker
operates independently of the index-based market-wide circuit breakers generally imposed by SEBI on
Indian Stock Exchanges. The percentage limit on our circuit breakers is set by the Stock Exchanges based
on the historical volatility in the price and trading volume of our Equity Shares.
The Stock Exchanges do not inform us of the percentage limit of the circuit breaker in effect from time to
time, and may change it without our knowledge. This circuit breaker limits the upward and downward
movements in the price of the Equity Shares. As a result of this circuit breaker, no assurance may be given
regarding your ability to sell your Equity Shares or the price at which you may be able to sell your Equity
Shares at any particular time.
54. There is no guarantee that the Equity Shares will be listed on the BSE and the NSE in a timely
manner or at all, and any trading closures at the BSE and the NSE may adversely affect the trading
price of the Equity Shares.
In accordance with Indian law and practice, permission for listing of the Equity Shares will not be granted
until after those Equity Shares have been issued and allotted. Approval will require all other relevant
documents authorising the issuing of Equity Shares to be submitted. There could be a failure or delay in
listing the Equity Shares on the BSE and / or the NSE. Any failure or delay in obtaining the approval would
restrict your ability to dispose of your Equity Shares.
The regulation and monitoring of Indian securities markets and the activities of investors, brokers and other
participants differ, in some cases significantly, from those in Europe and the U.S. Indian Stock Exchanges
have in the past experienced problems, including temporary exchange closures, broker defaults, settlements
delays and strikes by brokerage firm employees, which, if continuing or recurring, could affect the market
price and liquidity of the securities of Indian companies, including the Equity Shares, in both domestic and
international markets. A closure of, or trading stoppage on, the BSE and / or the NSE could adversely affect
the trading price of the Equity Shares. Historical trading prices, therefore, may not be indicative of the
prices at which the Equity Shares will trade in the future.
55. You may be subject to Indian taxes arising out of capital gains. Any gain realised on the sale of
equity shares held for more than 12 months to an Indian resident, which are sold other than on a
recognised stock exchange and as result of which no Securities Transaction Tax (STT) has been
paid, will be subject to capital gains tax in India.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian
company are generally taxable in India. Any gain realised on the sale of listed equity shares on a stock
xxx
exchange held for more than 12 months will not be subject to capital gains tax in India if the STT has been
paid on the transaction. The STT will be levied on and collected by a domestic stock exchange on which
equity shares are sold. Any gain realised on the sale of equity shares held for more than 12 months to an
Indian resident, which are sold other than on a recognised stock exchange and as result of which no STT
has been paid, will be subject to capital gains tax in India. Further, any gain realised on the sale of listed
equity shares held for a period of 12 months or less will be subject to capital gains tax in India.
Capital gains arising from the sale of the Equity Shares will be exempt from tax in India in cases where
such exemption is provided under the tax treaty between India and the country of which the seller is a
resident. Generally, Indian tax treaties do not limit India’s ability to impose tax on capital gains. As a
result, residents of certain countries may be liable for tax in India, as well as in their own jurisdictions on
gain upon a sale of the Equity Shares.
PROMINENT NOTES
1. Issue of 45,99,882 fully paid-up Equity Shares of face value of ` 10 each for cash at a price of `
130 per Equity Share including a share premium of ` 120 per Equity Share aggregating to ` 5,979.85 lakhs to the existing Equity Shareholders on a rights basis in the ratio of 1 (One) fully
paid-up Equity Shares for every 5 (Five) fully paid-up Equity Shares held by them on the Record
Date (i.e. March 06, 2013).
2. As on March 31, 2012, our net worth was ` 17,121.63 Lakhs (excluding revaluation reserves) as
described in the chapter “Financial Information” on page 73.
3. For details of our transactions with the related parties during FY 2011-12 as per AS 18, the nature
of such transactions and the cumulative value of such transactions, please see the chapter
“Financial Information” on page 73. 4. There has been no financing arrangement whereby the Promoter Group, the Directors of our
corporate Promoters, the our Directors and their relatives have financed the purchase by any other
person of our securities other than in the normal course of business of the financing entity during
the period of six months immediately preceding the date of filing of this Letter of Offer with
SEBI.
Investors may contact the Lead Manager for any complaint, clarifications and information pertaining to the
Issue. Any clarification or information relating to this Issue shall be made available by the Lead Manager to
the public and investors at large and no selective or additional information would be made available only to
a section of the investors in any manner. All grievances relating to ASBA process may be addressed to the
Registrar to the Issue, with a copy to the relevant SCSBs, giving full details such as name, address of the
applicants, application number, number of Equity Shares applied for, Bid Amounts blocked, ASBA
Account number and the Designated Branch of the SCSBs where the ASBA Bid-cum-Application Form
has been submitted by the ASBA Bidder. For contact details please refer to the section titled “General
Information” beginning on page 37.
31
SECTION III- INTRODUCTION
SUMMARY OF THE ISSUE
The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified in
its entirety by, more detailed information in the chapter “Terms of the Issue” on page 144.
This issue of Equity Shares is being made by us as set forth below:
Equity Shares offered in this Issue 45,99,882 Equity Shares
Rights Entitlement 1 (One) Equity Share(s) for every 5 (Five) fully paid-up
Equity Share(s) held on the Record Date.
Record Date March 06, 2013
Face Value per Equity Share ` 10
Issue Price per Equity Share ` 130
Equity Shares outstanding prior to the Issue 22,960,008 Equity Shares*
Equity Shares outstanding after the Issue
(assuming full subscription for and Allotment
of the Rights Entitlement)
2,75,52,010 Equity Shares**
Terms of the Issue For more information, please see the chapter “Terms of
the Issue” on page 144.
Use of Issue Proceeds For further information, please see the chapter “Objects
of the Issue” on page 144. * As on March 31, 2012, in addition to the paid up capital of 22,960,008 equity shares, 39,401 equity shares have been kept
in abeyance on account of earlier rights issue. ** In addition to the post Issue equity share capital of 2,75,52,010 equity shares, 47,281 equity shares have been kept in
abeyance on account of earlier rights issue and the current rights issue.
Terms of Payment
Due Date Amount
On the Issue application (i.e. alongwith the CAF) ` 130 per Equity Share, which constitutes 100% of the
Issue Price payable
32
SUMMARY OF FINANCIAL INFORMATION
The following tables set forth the summary financial information derived from our audited financial statements
as on and for FY 2011-12 prepared in accordance with Indian GAAP and the Companies Act and the limited
reviewed financial results for six months ended September 30, 2012 (consisting of Statement of Assets and
Liabilities as at September 30, 2012 and Statement of Profit and Loss for six month ended September 30, 2012),
prepared in accordance with Indian GAAP and the SEBI ICDR Regulations.
Our summary financial information presented below, is in ` in Lakhs and should be read in conjunction with the
financial statements and the notes thereto included in the chapter “Financial Statements”, respectively, of this
Letter of Offer.
Summary statement of assets and liabilities as at March 31, 2012 ` in lakhs
As at As at
31st March, 2012 31st March, 2011
Equity and liabilities
Shareholders’ funds
(a) Share capital 2,296.00 2,296.00
(b) Reserves and surplus 14,825.63 14,899.73
17,121.63 17,195.73
Non-current liabilities
(a) Long-term borrowings - 2,502.87
(b) Deferred tax liabilities (net) - 40.75
(c) Other long-term liabilities 4.59 3.53
(d) Long-term provisions 1,032.73 888.70
1,037.32 3,435.85
Current liabilities
(a) Short-term borrowings 7,031.36 3,995.11
(b) Trade payables 25,868.81 30,723.54
(c) Other current liabilities 7,723.19 6,262.63
(d) Short-term provisions 729.35 623.77
41,352.71 41,605.05
TOTAL 59,511.66 62,236.63
Assets
Non-current assets
(a) Fixed assets
(i) Tangible assets 11,240.31 11,545.30
(ii) Intangible assets 1,715.81 1,549.00
(iii) Capital work-in-progress 603.74 288.79
(iv) Intangible Asset under development 670.52 280.38
(b) Deferred tax asset (net) 257.82 -
(c) Long-term loans and advances 1,660.43 1,396.29
(d) Other non-current assets 0.51 0.99
16,149.14 15,060.75
Current assets
(a) Inventories 26,807.37 32,672.98
(b) Trade receivables 14,813.77 12,520.77
(c) Cash and Bank balances 264.05 206.44
(d) Short-term loans and advances 1,436.77 1,726.08
(e) Other current assets 40.56 49.61
43,362.52 47,175.88
TOTAL 59,511.66 62,236.63
33
Summary statement of profit and loss for the year ended March 31, 2012
` Lakhs
For the year ended For the year ended
31st March, 2012 31st March, 2011
Income
Revenue from operations (gross) 86,731.93 82,988.99
Less : Excise duty recovered 6,923.02 6,588.24
Revenue from operations (net) 79,808.91 76,400.75
Other income 87.41 467.31
Total Revenue 79,896.32 76,868.06
Expenses
Cost of raw material and components consumed 43,093.44 50,425.95
Purchase of stock-in-trade 5,715.63 6,561.76
Decrease / (Increase) in inventories of finished goods,
work-in-progress and stock-in-trade
3,362.25 (7,172.23)
Employee benefits expense 5,278.50 4,406.50
Finance costs 891.04 737.54
Depreciation and amortization expense 1,831.74 1,605.20
Other expenses 19,444.45 16,309.97
Total Expenses 79,617.05 72,874.69
Profit before tax 279.27 3,993.37
Tax expense
Current tax [Including ` 22.97 Lakhs (Previous year:
`12.00 Lakhs) pertaining to earlier years]
251.67 1,080.09
Deferred tax (298.57) (19.29)
(46.90) 1,060.80
Profit for the year 326.17 2,932.57
Basic and diluted (`) earnings per share 1.42 12.77
[Nominal value of share `10 (Previous year: `10)]
34
Summary statement of cash flow for the year ended March 31, 2012
` in lakhs
For the year ended For the year ended
31st March, 2012 31st March, 2011
A. Cash Flow from Operating Activities
Net profit before Tax 279.27 3,993.37
Adjustments For :
Profit on sale of assets (net) (7.29) (2.36)
Unrealised foreign exchange (gain)/loss (net) 52.81 (101.64)
Depreciation and amortisation 1,831.74 1,605.20
Provision for doubtful debts 94.27 14.17
Interest income (30.88) (237.73)
Finance Costs 891.04 737.54
Operating profit before working capital changes 3,110.96 6,008.55
Adjustments for :
Increase in trade receivables (2,387.27) (2,936.88)
Decrease/(Increase) in loans and advances 240.43 (740.26)
Decrease/(Increase) in other current assets 8.54 (37.76)
Decrease/(Increase) in inventories 5,865.61 (14,632.66)
(Decrease)/Increase in current liabilities (4,061.58) 12,081.59
Increase in other provisions 249.60 206.81
Cash from / (used in) operating activities 3,026.29 (50.61)
Direct Taxes paid (407.19) (841.00)
Net cash from / (used in) operating activities 2,619.10 (891.61)
B. Cash flow from investing activities
Purchase of tangible assets (1,708.30) (3,105.08)
Proceeds from sale of fixed assets 67.47 41.20
Purchase of intangible assets (463.55) (784.17)
Decrease in deposits (with maturity more than three months) 19.56 513.37
Interest received 31.39 238.06
Net cash used in investing activities (2,053.43) (3,096.62)
C. Cash flow from financing activities
Repayment of long-term borrowings (2,502.86) -
Proceeds from short term borrowings (net) 3,036.25 2,462.80
Interest paid (626.36) (194.46)
Dividend paid (including tax provision thereon) (396.01) (397.07)
Net cash flow from / (used in) financing activities (488.98) 1,871.27
Net increase / (decrease) in cash and cash equivalents
(A+B+C)
76.69 (2,116.96)
Cash and cash equivalents at the beginning of the year 150.36 2,267.32
Cash and cash equivalents at the end of the year 227.05 150.36
Components of Cash and Cash Equivalents:
Cash on hand 6.22 6.23
Bank balance in current accounts 122.39 97.22
Unclaimed dividend account 8.79 4.54
Balance in cash credit accounts 89.65 42.37
Balance in margin Accounts 37.51 57.07
Total 264.56 207.43
Less: Balance in margin accounts 37.51 57.07
Cash and Cash Equivalents 227.05 150.36
35
CONDENSED STATEMENT OF PROFIT AND LOSS FOR SIX MONTHS PERIOD ENDED 30TH
SEPTEMBER, 2012
(`in Lakhs)
Sr. No.
Particulars Six month
ended on
30.09.2012
Six month
ended on
30.09.2011
(Unaudited) (Unaudited)
1 Income from operations
Sales/Income from operations 56,201.06 49,004.70
Less : Excise duty recovered 5,036.36 3,931.50
(a) Net Sales/Income from operations (Net of excise duty) 51,164.70 45,073.20
(b) Other Operating Income 428.43 436.60
Total income from operations (net) 51,593.13 45,509.80
2 Expenses
(a) Cost of materials consumed 21,332.05 19,105.64
(b) Purchase of stock-in-trade 7,681.89 2,955.41
(c) Changes in inventories of finished goods, work-in-
progress and stock-in-trade
4,942.59 8,312.95
(d) Employee benefits expense 2,719.56 2,429.79
(e) Depreciation and amortisation expense 909.44 903.25
(f) Other expenses 11,924.31 10,590.38
Total expenses (a to f) 49,509.84 44,297.42
3
Profit/(Loss) from operations before other income,
finance costs and exceptional items (1-2)
2,083.29 1,212.38
4 Other income 111.77 37.65
5 Profit/(Loss) from ordinary activities before finance
cost and exceptional items (3+4)
2,195.06 1,250.03
6 Finance costs 254.94 421.24
7
Profit/(Loss) from ordinary activities after finance
cost but before exceptional items (5+6)
1,940.12 828.79
8 Exceptional Items - -
9
Profit/(Loss) from ordinary activities before tax
(7+8)
1,940.12 828.79
10 Tax Expenses
a Current tax (net) 785.84 496.74
b Deferred tax (credit) (235.96) (253.41)
Total (a+b) 549.88 243.33
11
Net Profit/(Loss) from ordinary activities after tax
(9+10)
1,390.24 585.46
12 Extraordinary items - -
13 Net Profit/(Loss) for the period (11+12) 1,390.24 585.46
14 Basic and Diluted Earnings Per Share (of `10 each)
(Not annualised) (`)
6.06 2.55
36
CONDENSED STATEMENT OF ASSET AND LIABILITIES AS AT 30TH SEPTEMBER 2012
(` in Lacs)
Particulars As at
30.09.2012
(Unaudited)
As at
31.03.2012
(Audited)
EQUITY AND LIABILITIES
Shareholders’ funds
(a) Share capital 2,296.00 2,296.00
(b) Reserves and surplus 16,215.88 14,825.63
Sub-total - Shareholders' fund 18,511.88 17,121.63
Non-current liabilities
(a) Long-term borrowings 3,167.81 -
(b) Other long-term liabilities 0.30 4.59
(c) Long-term provisions 1,148.17 1,032.73
Sub-total - Non-current liabilities 4,316.28 1,037.32
Current liabilities
(a) Short-term borrowings 2,026.60 7,031.36
(b) Trade payables 20,878.81 25,868.81
(c) Other current liabilities 2,719.29 7,723.19
(d) Short-term provisions 1,046.54 729.35
Sub-total - Current liabilities 26,671.24 41,352.71
TOTAL - EQUITY AND LIABILITIES 49,499.40 59,511.66
ASSETS
Non-current assets
(a) Fixed assets 8,964.36 14,230.38
(b) Deferred tax assets (Net) 493.78 257.82
(c) Long-term loans and advances 3,728.14 1,660.43
(d) Other non-current assets 0.51 0.51
Sub-total Non - Current assets 13,186.79 16,149.14
Current assets
(a) Inventories 14,005.15 26,807.37
(b) Trade receivables 8,485.60 14,813.77
(c) Cash and Bank balances 2,917.37 264.05
(d) Short-term loans and advances 1,145.55 1,436.77
(e) Other current assets 9,758.94 40.56
Sub-total - Current assets 36,312.61 43,362.52
TOTAL - ASSETS 49,499.40 59,511.66
37
GENERAL INFORMATION
Registered Office
Hitachi Home & Life Solutions (India) Limited
9th Floor, Abhijeet-I,
Mithakhali Six Roads,
Ahmedabad - 380 006, Gujarat, India.
Tel: +91 79 3041 4800
Fax: +91 79 3041 4999
Website: http://www.hitachi-hli.com
Email: [email protected]
Corporate Identification Number: L29300GJ1984PLC007470
Address of the Registrar of Companies
Registrar of Companies,
Ahmedabad, Gujarat
RoC Bhavan,
Opposite Rupal Park Society,
Behind Ankur Bus Stop,
Naranpura, Ahmedabad-380013
Gujarat, India.
Tel: +91 79 27437597
Fax: +91 79 27438371
Email: [email protected]
Company Secretary and Compliance Officer
Mr. Parag Dave
Hitachi Home & Life Solutions (India) Limited
9th Floor, Abhijeet,
Mithakhali Six Roads,
Ahmedabad 380006,
Gujarat, India.
Email: [email protected], [email protected]
Tel: +91 79 3041 4800
Fax: +91 79 3041 4999
Investors may contact the Registrar to the Issue or the Company Secretary and Compliance Officer for any pre-
Issue/ post-Issue related matter. All grievances relating to the ASBA process may be addressed to the Registrar
to the Issue, with a copy to the SCSB, giving full details such as name, address of the applicant, number of
Equity Shares applied for, Amount blocked, ASBA Account number and the Designated Branch of the SCSB
where the CAF was submitted by the ASBA Investors.
Lead Manager to the Issue
ICICI Securities Limited
ICICI Centre
H.T. Parekh Marg
Churchgate, Mumbai 400020, India
Tel: +91 22 2288 2460
Fax: +91 22 2282 6580
Website: www.icicisecurities.com
Email: [email protected]
Investor Grievance E-mail: [email protected]
Contact Person: Mr. Sumit Agarwal
SEBI Registration Number: INM000011179
38
Legal Counsel to the Issue
Khaitan & Co
One Indiabulls Centre,
Tower 1, 13th
Floor,
841 Senapati Bapat Marg,
Mumbai – 400 013,
Maharashtra, India.
Tel: +91 22 6636 5000
Fax: +91 22 6636 5050
Registrar to the Issue
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex
Sakinaka Telephone Exchange Lane
Off Andheri-Kurla Road, Sakinaka
Andheri (East), Mumbai – 400 072
Maharashtra, India.
Tel: +91 22 6191 5400
Fax: +91 22 6191 5444
Website: www.shareproservices.com
Investor Greivance E-mail: [email protected]
Contact Person: Mr. Prakash A. Khare / Mr. Anand Moolya
SEBI Registration No: INR000001476
Auditors
S.R. Batliboi & Associates
Chartered Accountants,
2nd Floor, Shivalik Ishaan Building,
Near C. N. Vidhyalaya, Ambawadi,
Ahmedabad – 380 015, India
Tel: + 91 79 6608 3800
Fax: +91 79 6608 3900
Firm Registration No.:101049W
Email: [email protected]
Bankers to the Issue
ICICI Bank Limited
Capital Markets Division
30, Mumbai Samachar Marg
Mumbai 400 001
Contact Person
Tel: +91 22 6631 0322
Fax: +91 22 6631 0350 / 2261 1138
Website: www.icicibank.com
Contact Person: Mr. Anil Gadoo
E-mail: [email protected]
SEBI Registration* No: INBI 00000004
*The SEBI registration of ICICI Bank Limited was valid up to October 31, 2012. The application for renewal of
the certificate of registration has been made by ICICI Bank Limited on July 13, 2012, to SEBI. The approval of
SEBI in this regard is currently awaited.
Self Certified Syndicate Banks
39
The list of banks that have been notified by SEBI to act as SCSB for the ASBA process is provided on
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries and/or such other website(s) as
may be prescribed by the SEBI / Stock Exchange(s) from time to time.
Credit rating
As the Issue is a rights issue of Equity Shares, no credit rating is required. No ratings have been received by us
in the past for any issuance of equity shares of the Company.
Statement of responsibility of the Lead Manager
As there is only one Lead Manager, inter-se allocation of responsibilities is not applicable. However, the list of
major responsibilities of ICICI Securities Limited, inter alia, is as follows:
S. No Activities
1. Capital structuring with relative components and formalities such as type of instruments, etc.
2. Undertaking due diligence documents and together with legal counsels assist in drafting of the Offer
Documents and of advertisement/publicity material including newspaper advertisements and
brochure/ memorandum containing salient features of the Offer Document. Compliance with the
SEBI Regulations and other stipulated requirements and completion of prescribed formalities with
Stock Exchanges and SEBI.
3. Selection of various agencies connected with the Issue, namely Registrars to the Issue, printers,
Bankers to the Issue and advertisement agencies.
4. Assisting, together with other advisors and legal counsels in securing all necessary regulatory
approvals for the Issue and assisting in filing of the Issue related documents with SEBI, Stock
Exchanges or any other regulatory authorities.
5. The post-issue activities will involve essential follow-up steps, which must include finalization of
basis of allotment/ weeding out of multiple applications, listing of instruments and dispatch of
certificates and refunds, with the various agencies connected with the work such as Registrars to the
Issue, Bankers to the Issue, and bank handling refund business. Even if many of these post-issue
activities would be handled by other intermediaries, the Lead Manager shall be responsible for
ensuring that these agencies fulfill their functions and enable him to discharge this responsibility
through suitable agreements with the Issuer.
Listing of Equity Shares
The existing Equity Shares are listed on the Stock Exchanges. We have received in-principle approvals for
listing of the Equity Shares to be issued pursuant to this Issue from the BSE and the NSE by letters dated
January 17, 2013 and December 27, 2012, respectively. We will make applications to the Stock Exchanges for
final listing and trading approvals in respect of the Equity Shares being offered in terms of this Letter of Offer.
If the final listing and trading approvals is not granted for the Equity Shares by the Stock Exchanges, we shall
forthwith repay, without interest, all monies received from the Investors pursuant to this Letter of Offer. If such
money is not repaid within eight days after we become liable to repay it (i.e. 15 days after Issue Closing Date or
the date of refusal by the Stock Exchanges, whichever is earlier), we and every Director who is an officer in
default shall, on and from expiry of eight days, be jointly and severally liable to repay the money, with interest
as prescribed under Section 73 of the Companies Act.
Debenture trustee
This being an issue of equity shares, a debenture trustee is not required.
Monitoring Agency
As the Issue size is less than ` 50,000 Lakhs, under the SEBI Regulations, we are not required to appoint a
monitoring agency. However, the Audit Committee of the Board will monitor the utilization of Issue Proceeds.
Appraisal Agency
40
None of the purposes for which the Net Proceeds are proposed to be utilised have been financially appraised by
any bank or financial institution.
Underwriters and details of Underwriting Agreement
This Issue is not underwritten and our Company has not entered into any underwriting arrangement.
If we do not receive the minimum subscription of 90% of the Issue, the Company shall refund the entire
subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the
subscription amount by more than eight days after our Company becomes liable to pay the subscription amount
(i.e. 15 days after the Issue Closing Date), our Company will pay interest for the delayed period at 15% per
annum as prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act.
Principal Terms of Loans and Assets charged as security
For details of the principal terms of loans and assets charged as security, please see the chapter “Financial
Indebtedness” on page 122.
Issue Schedule
Issue Opening Date: March 14, 2013
Last date for receipt of request for SAFs: March 21, 2013
Issue Closing Date: March 28, 2013
The Board of Directors or a duly authorized committee thereof will have the right to extend the Issue period as it
may determine from time to time, provided that the Issue will not be kept open in excess of 30 days from the
Issue Opening Date.
41
CAPITAL STRUCTURE
Our share capital and related information as on the date of this Letter of Offer, prior to and after the proposed
Issue, is set forth below:
(in `) Aggregate
Nominal Value
Aggregate
Value at
Issue Price
Authorised Share Capital
3,00,00,000 Equity Shares 30,00,00,000
Issued, subscribed and paid up capital before the Issue
2,29,60,008 Equity Shares fully paid-up (#Note 1) 22,96,00,080
Present Issue in terms of this Letter of Offer
45,99,882 Equity Shares at an Issue Price of ` 130 per Equity Share (#Note
2) 4,59,98,820 59,79,84,660
Issued, subscribed and paid up capital after the Issue (assuming full
subscription for and allotment of the Rights Entitlement)
2,75,52,010 Equity Shares (##Note 3)
27,52,20,100 3,58,17,61,300
Securities premium account
Securities Premium Account before the Issue 38,76,91,828
Securities Premium Account after the allotment of the Rights Issue Equity
Shares (assuming full subscription for and allotment of the Rights
Entitlement)
93,87,32,068
Note: This Issue has been authorised by the Board of Directors under section 81(1) and other provisions of the Companies
Act pursuant to a circular resolution dated October 18, 2012.
Pre Issue (Note 1)
In addition to the present paid up capital of 22,960,008 equity shares, 39,401 equity shares have been kept in abeyance on
account of earlier rights issue.
Present Issue (Note 2)
a. The present Issue of equity shares on a rights basis is in the ratio of 1 (One) equity shares of ` 10 each for every 5 (Five)
equity shares held by our existing equity shareholders on the Record Date i.e. March 06, 2013.
b. The present Issue of equity shares also includes rights entitlement of 7,880 equity shares on 39,401 equity shares, which
have been kept in abeyance on account of earlier rights issue and which are also being considered for determining the
number of shares to be offered in the Rights Issue.
Post Issue (Note 3)
In addition to the post Issue equity share capital of 2,75,52,010 equity shares, 47,281 equity shares have been kept in
abeyance on account of earlier rights issue and the current rights issue.
As on the date of this Letter of Offer, the Company does not have any outstanding options or convertible
securities.
Notes to the Capital Structure
1. Our shareholding pattern as on December 31, 2012 is as follows:
Category
code
(I)
Category of
Shareholder
(II)
Number of
Share
holders
(III)
Total number
of shares
(IV)
Number of
shares held in
dematerialized
form
(V)
Total shareholding as
a percentage of total
number of shares
Shares Pledged or
otherwise encumbered
As a % of
(A+B)
(VI)
As a % of
(A+B+C)
(VII)
Number
of shares
(VIII)
As a %
(IX)=(VIII)
/ (IV)*100
(A) Shareholding of Promoter and Promoter Group
1 Indian
(a) Individuals/ Hindu
Undivided Family
0 0 0 0 0 0 0.00
(b) Bodies Corporate 0 0 0 0 0 0 0.00
(c) Any Others(Trust) 0 0 0 0 0 0 0.00
42
Category
code
(I)
Category of
Shareholder
(II)
Number of
Share
holders
(III)
Total number
of shares
(IV)
Number of
shares held in
dematerialized
form
(V)
Total shareholding as
a percentage of total
number of shares
Shares Pledged or
otherwise encumbered
As a % of
(A+B)
(VI)
As a % of
(A+B+C)
(VII)
Number
of shares
(VIII)
As a %
(IX)=(VIII)
/ (IV)*100
Sub-Total (A)(1) 0 0 0 0 0 0 0.00
2 Foreign
(a) Individuals (Non-
Residents
Individuals/ Foreign
Individuals)
0 0 0 0 0 0 0.00
(b) Bodies Corporate 2 1,60,50,000 1,60,50,000 69.90 69.90 0 0.00
(c) Institutions 0 0 0 0.00 0.00 0 0.00
(d) Any Others (Specify) 0 0.00 0.00 0 0.00
Sub Total(A)(2) 2 1,60,50,000 1,60,50,000 69.90 69.90 0 0.00
Total Shareholding of
Promoter and Promoter
Group (A)= (A)(1)+(A)(2)
2 1,60,50,000 1,60,50,000 69.90 69.90 0 0.00
(B) Public shareholding
B1 Institutions
(a) Mutual Funds/ UTI 7 2,86,369 2,82,769 1.25 1.25 0 0.00
(b) Financial Institutions/
Banks 2 275 175 0.00 0.00 0 0.00
(c) Central Government/
State Government(s)
0 0 0 0.00 0.00 0 0.00
(d) Venture Capital
Funds
0 0 0 0.00 0.00 0 0.00
(e) Insurance Companies 1 800 0 0.00 0.00 0 0.00
(f) Foreign Institutional
Investors 2 72,712 72,712 0.32 0.32 0 0.00
(g) Foreign Venture
Capital Investors
0 0 0 0.00 0.00 0 0.00
(h) Any Other (specify) 0 0 0 0.00 0.00 0 0.00
Sub-Total (B)(1) 12 3,60,156 3,55,656 1.60 1.60 0 0.00
B 2 Non-institutions
(a) Bodies Corporate 542 19,65,052 19,53,951 8.56 8.56 0 0.00
(b) Individuals
I Individual
shareholders holding
nominal share capital
up to `1 lakh
16,478 35,88,306 29,99,701 15.63 15.63 0 0.00
II Individual
shareholders holding
nominal share capital
in excess of ` 1lakh.
36 8,13,439 8,13,439 3.54 3.54 0 0.00
(c) Any other (specify) 319 1,83,055 1,82,655 0.80 0.80 0 0.00
Any Other Total 319 1,83,055 1,82,655 0.80 0.80 0 0.00
Sub-Total (B)(2) 17,375 65,49,852 59,49,746 28.53 28.53 0 0.00
Total Public Shareholding
(B)= (B)(1)+(B)(2) 17,387 69,10,008 63,05,402 30.10 30.10 0 0.00
TOTAL (A)+(B) 17,389 2,29,60,008 2,23,55,402 100.00 100.00 0 0.00
Shares held by Custodians
and against which Depository
Receipts have been issued(C)
0 0 0 NA 0.00 NA NA
1 Promoter Group 0 0 0 0.00 0.00 0 0.00
2 Public Group 0 0 0 0.00 0.00 0 0.00
GRAND TOTAL
(A)+(B)+(C) 17,389 2,29,60,008 2,23,55,402 100.00 100.00 0 0.00
The list of Equity Shareholders belonging to the category “Promoter and Promoter Group” as on
December 31, 2012 is detailed in the table below:
43
Name of the shareholder Details of Shares held Encumbered shares
Number of
shares held
As a % of total
number of shares
No. of
Shares
As a
%
As a % of total number
of shares
1 Hitachi Appliances Inc. 1,55,50,000 67.73 0 0.00 0.00
2 Hitachi India Private Limited 5,00,000 2.18 0 0.00 0.00
Total 1,60,50,000 69.90 0 0.00 0.00
Statement showing holding of securities (including shares, warrants, convertible securities) of persons
(together with PAC) belonging to the category “public” and holding more than 5% of the total number of
shares of the Company as on December 31, 2012 is detailed in the table below:
Sr.
No.
Name(s) of the
shareholder(s) and
the Persons Acting in
Concert (PAC) with
them
Number
of shares
Shares as
a % of
total
number
of shares
Details of warrants Details of convertible
securities
Total
shares
as a % of
diluted
share
capital
No of
warrants
As a %
total
number of
warrants
of the
same class
Number of
convertible
securities
held
% w.r.t total
number of
convertible
securities
of the same
class
1 Nil 0 0 0 0 0 0 0
TOTAL 0 0 0 0 0 0 0
The list of Equity Shareholders, other than the Equity Shareholders belonging to the category
“Promoters and Promoter Group”, holding more than 1% of our paid-up capital as on December 31,
2012 is detailed in the table below:
Sr.
No.
Name of the
shareholder
Number
of shares
held
Shares as a
percentage of total
number of shares
Details of Warrants Details of convertible
securities
Total
Shares
as a %
of
diluted
share
capital*
Number
of
warrants
held
As a %
total
number of
warrants
of the
same class
Number of
convertible
securities
held
% w.r.t total
number of
convertible
securities of
the same
class
1 Bajaj Alliance
Life Insurance
Company Limited
10,17,677 4.43 0 0.00 0 0.00 4.43
TOTAL 10,17,677 4.43 0 0.00 0 0.00 4.43
* including underlying shares assuming full conversion of warrants and convertible securities
Statement showing details of Depository Receipts as on December 31, 2012 is detailed in the table below:
Sr.
No.
Type of outstanding
Depository Receipts
(ADRs, GDRs, etc.)
Number of
outstanding DRs
Number of shares
underlying
outstanding DRs
Shares underlying outstanding DRs as a
percentage of total number of shares
1 Nil Nil Nil Nil
2. There have been no acquisition of Equity Shares by the Promoters and the members of the Promoter
Group within the last one year preceding the date of this Letter of Offer.
3. Our Promoter, Hitachi Appliances Inc., has confirmed vide its letter dated November 01, 2012 that it
intends to subscribe to the full extent of its Rights Entitlement in the Issue, in compliance with
regulation 10 (4) of Takeover Regulations. Further, it has confirmed that it intends to subscribe for
(i) additional Right Issue Equity Shares, and (ii) Rights Issue Equity Shares, if any, which remain
unsubscribed. Such subscription to additional Rights Issue Equity Shares and the unsubscribed portion,
if any, to be made by the it, shall be in accordance with regulation 10 (4) of Takeover Regulations.
Further, such subscription shall not result in breach of minimum public shareholding requirement as
stipulated in the Listing Agreements. Further, our Promoter, Hitachi India Private Limited has vide its
letter dated February 11, 2013 inter alia confirmed that they do not intend to subscribe either in full or
part of its entitlement of Equity Shares in the Issue.
44
4. The present Issue being a rights issue, as per regulation 34(c) of the SEBI Regulations, the
requirements of promoters’ contribution and lock-in are not applicable.
5. The Equity Shares are fully paid-up and as on the date of this Letter of Offer, there are no partly paid-
up Equity Shares.
6. There will be no further issue of capital whether by way of issue of bonus shares, preferential
allotment, rights issue or in any other manner during the period commencing from submission of this
Letter of Offer with the Stock Exchanges until the Equity Shares to be issued pursuant to the Issue have
been listed.
7. The ex-rights price of the Equity Shares as per regulation 10(4) (b) of the Takeover Regulations is `
147.87.
45
OBJECTS OF THE ISSUE
We intend to deploy the Net Proceeds of the Issue to:
1. Fund the capital expenditure.
2. Fund working capital requirements.
3. Fund expenditure for general corporate purposes.
The main objects set out in our Memorandum of Association enables us to undertake our existing activities and
the activities for which the funds are being raised by us through this Issue.
Net Proceeds of the Issue (` in Lakhs)
Particulars Amount
Gross proceeds of the Issue 5,979.85
Issue related expenses 105.00
Net Proceeds of the Issue 5,874.85
Schedule of Implementation and Use of Net Proceeds
We intend to utilise the Net Proceeds for financing the objects as set forth below: (` in Lakhs)
Particulars Amount proposed to be financed from Net
Proceeds
Fund the capital expenditure# 4,350
Fund working capital requirements# 1,100
General Corporate Purposes 424.85
Total 5,874.85 #
As per the certificate dated February 09, 2013 issued by Urjit Ravat & Co, Chartered Accountants, no amount has been spent upto
February 08, 2013 on stated objects of the issue
We intend to utilise the Net Proceeds in FY 14 and in the event of a surplus, we will use such surplus towards
general corporate purposes, including meeting future growth requirements.
Means of finance
Except for ` 336.52 Lakhs which is proposed to be financed through internal accruals towards capital
expenditure and as mentioned under working capital requirements, the entire requirements of the objects
detailed below are intended to be funded from the Net Proceeds of the Issue. Accordingly, we confirm that there
is no addititional requirement for us to make firm arrangements of finance through verifiable means towards at
least 75% of the stated means of finance, excluding the amount to be raised through the Issue.
The fund requirement and deployment are based on internal management estimates and have not been appraised
by any bank or financial institution. These are based on current conditions and are subject to change in light of
changes in external circumstances or costs, or in our financial condition, business or strategy, as discussed
further below. Our management, in response to the competitive and dynamic nature of the industry, will have
the discretion to revise its business plan and estimates from time to time and consequently our funding
requirements and deployment of funds may also change. This may also include rescheduling the proposed
utilization of Net Proceeds and increasing or decreasing expenditure for a particular object vis-à-vis the
utilization of Net Proceeds, subject to compliance with applicable law.
In case of variations in the actual utilization of funds earmarked for the purposes set forth above, increased fund
requirements for a particular purpose may be financed by surplus funds, if any, available in respect of the other
purposes for which funds are being raised in this Issue. If surplus funds are unavailable or in case of cost
overruns, we expect that the shortfall will be met from internal accruals and/or entering into debt or equity
arrangements as required.
We may have to revise our expenditure and fund requirements as a result of variations in the cost structure,
changes in estimates and external factors, which may not be within the control of our management. This may
46
entail rescheduling, revising or canceling the planned expenditure and fund requirements and increasing or
decreasing the expenditure for a particular purpose from its planned expenditure mentioned below at the
discretion of our management. In addition, the estimated dates of completion of the installation of the plants and
machineries, as described in this section, are based on management’s current expectations and are subject to
change due to various factors including those described above, some of which may not be in our control.
Accordingly, the net proceeds of the Issue would be used to meet all or any of the uses of the funds described
herein.
Details of the Objects
1. Capital Expenditure
In line with our strategy of increasing our product portfolio, we propose to upgrade, purchase IT infrastructure,
tools and moulds for new product line, technical know-how for purchase of new products, setting up of top
discharge manufacturing facility and test lab at Kadi facility for new product line of VRF, metal forming press,
bending machines and other machinery. We propose to acquire equipment which is ready to use.
The break-up of the machinery proposed to be acquired and other incidental expenses is as follows:
Sr. No. Item Particulars Estimated
Cost
(` in
Lakhs)
Details of Quotations
1. IT
infrastructure
Server,
Laptops,
Printers,
Software
License(s)
130.38 Based on:
a) quotations dated December 04, 2012 and December
06, 2012 received from Silver Touch Technologies
Limited
b) quotation dated December 07, 2012 received from
Wipro Limited
c) quotation dated December 05, 2012 from Magic
Systems Private Limited
d) quotation dated December 07, 2012 from Megastar
Computer Services
2. VRF
Development
VRF
Testing
Labs and
machinery
for top
discharge
VRF
2,000.00 Based on:
e) quotation dated December 03, 2012 from Essentec
Industries Co. Ltd., Hong Kong
f) quotation dated December 01, 2012 received from
Chi Wo Plastic Moulds Fty. Ltd, Hong Kong
g) quotation for set free unit dated December 03,
2012 from Mehta Engineers Limited
h) quotation dated December 01, 2012 received from
Dawoo Delta Co. Ltd., Korea
3. Other Plant
and
Machineries
New
Models
tooling,
Pressure
Gauge,
CNC Tube
Bender,
Press
Machines,
Indoor unit
of split air
conditioners
2,506.14 Based on:
a) quotations dated November 30, 2012 received
from Chi Wo Plastic Moulds Fty. Ltd, Hong Kong
b) quotation dated November 14, 2012 received from
Unity Enterprise Corporation, Japan
c) quotation dated December 01, 2012 from Aims
Corporation, Japan
d) quotation dated December 01, 2012 from
Zhongshan OMS Industrial Co. Ltd., China
e) quotation dated November 21, 2012 from Essentec
Industries Co. Ltd., Hong Kong
f) quotation dated February 01, 2013 from
Ferromatik Milacron India Private Limited, India
4. Contingencies 50.00 Towards any contingencies that may arise in the
implementation including increase in cost of
equipments/ machinery and other reasons.
47
Total 4,686.52*
* The estimated total cost of the Capital Expenditure is ` 4,686.52 Lakhs, of which ` 336.52 Lakhs is proposed to be
financed through internal accruals and ` 4,350 Lakhs is proposed to be financed from the Net Proceeds.
Some of the above quotations are in foreign currency denominations such as U.S. Dollar and JPY. For the
purposes of arriving at the total cost estimate of the above machineries, we have assumed the conversion rates
prevailing as at November 30, 2012:
Sr. No. Foreign Currency Conversion Rate*
1. Japanese Yen (JPY) 1 JPY = ` 0.65665
2. United States Dollar (USD) 1 USD = ` 54.275
* Source: Bloomberg
Approvals
The proposed installation of the machineries at Kadi facility does not require us to take any new approvals or
licenses or modification of existing licenses and approvals. The existing approvals under labour laws and
environment protection laws allow the installation of the new machineries stated in this section at Kadi facility.
Labour
We estimate that we would require approximately 20 to 30 additional workers for the planned installation of the
machineries at Kadi facility. This addition is within the permitted limits under our factory license.
We do not intend to utilize the Net Proceeds of the Issue to procure any second hand equipment/ machinery. The
Promoters or the Directors or the Promoter Group entities do not have any interest in the proposed procurement
of any equipment/ machinery as stated above or any of the entities from whom we have obtained quotations/
machinery.
2. Working capital requirements
Our business is working capital intensive and we fund majority of our working capital requirements in the
ordinary course of our business from internal accruals and financing from various banks and financial
institutions.
As of November 30, 2012, our working capital facility consisted of an aggregate fund based limit of ` 11,850
Lakhs, an aggregate non-fund based limit of ` 24,500 Lakhs (Non-Fund based limit of ` 6,000 Lakhs can be
interchangeable to fund based limit) and Buyers credit limit of USD 22,00,000. For further details of the
working capital facilities currently availed by us, see “Financial Indebtedness” on page 122.
Basis of estimation of working capital requirement and estimated working capital requirement
(` in Lakhs unless otherwise stated)
Sr
No.
Particulars FY 2011-12 FY 2012-13
Holding levels
(No. of days)
(` in
Lakhs)
Holding levels
(No. of days)
(` in
Lakhs)
I Current Assets
1 Inventories 87 26,807.37 87 33,046.63
2 Sundry Debtors 52 14,761.10 50 22,103.93
3 Other Current Assets 3,565.26 4,308.77
Total Current Assets 45,133.73 59,459.33
II Current Liabilities
1 Sundry Creditors 99 18,513.10 85 24,929.05
2 Other Current Liabilities 13,947.90 14,213.01
Total Current Liabilities 32,461.00 39,142.06
III Total Working Capital Requirement 12,672.73 20,317.27
IV Funding Pattern
Increase in working capital
7,644.54
- Working capital facilities from Bank 2,997.55
- Internal Accruals 3,546.99
-Net Proceeds of the Issue 1,100.00
48
Based on internal estimates and projections as reflected above, we would require total working capital to the
tune of ` 7,644.54 Lakhs during the financial year 2012-13. We propose to avail additional working capital
facility of ` 2,997.55 Lakhs from various banks. We propose to utilise ` 1,100 Lakhs of the Net Proceeds
towards working capital requirements for meeting our future business requirements.
Justification for holding period levels:
Inventories and
Sundry Debtors
While we expect an increase in sales and our growth, we propose to maintain the inventory
level as per FY 2011-2012. Sundry debtors will get improved by 2 NODs by further improving
credit monitoring
Sundry Creditors To ensure smooth supplies from our vendors, we would like to reduce our creditors level from
last year
Urjit Ravat & Co, Chartered Accountants, have by a certificate dated February 09, 2013, certified the working
capital requirements of the Company.
3. General Corporate purposes
We, in accordance with the policies set up by our Board, will have flexibility in utilising the remaining Net
Proceeds of this Issue for general corporate purposes to drive our business growth including to meet our branch
office renovation / expansion, acquire technical knowhow, strategic initiatives, strengthening our marketing
capabilities, brand building exercises as well as meeting exigencies which we may face in the ordinary course of
business, or any other purposes as may be approved by the Board of Directors.
The Promoters or the Directors or the Promoter Group entities do not have any interest in the proposed
utilization of Issue Proceeds from General Corporate Purposes, except towards acquiring technical knowhow in
our ordinary course of business.
4. Issue Expenses
The Issue related expenses include, among others, fees to various advisors, printing and distribution expenses,
advertisement expenses, and registrar and depository fees. The estimated Issue related expenses are as follows:
Activity Expense
(in ` Lakhs) Expense
(% of total expenses)
Expense
(% of Issue Size)
Fees of Lead Manager, Bankers to the Issue, Legal
Advisor, Registrar and other Intermediaries including
Brokerage Commission and out of pocket expenses
57 54.29 0.96
Advertising, Printing, Distribution, Marketing and
Stationery expenses 18 17.14 0.30
Regulatory Fees, Filing Fees, Listing Fees, Depository
Fees, Statutory Fees, Auditors Fees and Miscellaneous
expenses
30 28.57 0.50
Total estimated Issue expenses 105 100.00 1.76
Interim Use of Funds
The management, in accordance with the policies set up by the Board, will have flexibility, in deploying the Net
Proceeds. Pending utilization for the purposes described above, we intend to temporarily invest the funds in
interest / dividend bearing deposits with banks, for the necessary duration. Our Company confirms that pending
utilization of the Net Proceeds it shall not use the funds for any investments in the equity markets.
Monitoring of the utilization of funds
There is no requirement for a monitoring agency as the Issue size is less than ` 50,000 Lakhs. Our audit
committee shall monitor the utilization of the proceeds of the Issue. We will disclose the utilization of the Net
Proceeds, including interim use, under a separate head specifying the purpose for which such proceeds have
been utilized along with details, if any in relation to all such proceeds of the Issue that have not been utilised
thereby also indicating investments, if any, of such unutilized proceeds of the Issue in our annual report.
We will disclose the details of the utilization of the Net Proceeds of the Issue, including interim use, under a
49
separate head in our financial statements specifying the purpose for which such proceeds have been utilized or
otherwise disclosed as per the disclosure requirements of our listing agreements with the Stock Exchanges. As
per the requirements of Clause 49 of the listing agreement, we will disclose to the audit committee the uses/
applications of funds on a quarterly basis as part of our quarterly declaration of results. Further, on an annual
basis, we shall prepare a statement of funds utilized for purposes other than those stated in this Letter of Offer
and place it before the audit committee. The said disclosure shall be made till such time that the full proceeds
raised through the Issue have been fully spent. The statement shall be certified by our Auditors. Further, in terms
of Clause 43A of the listing agreement, we will furnish to the Stock Exchanges on a quarterly basis, a statement
indicating material deviations, if any, in the use of proceeds from the objects stated in this Letter of Offer.
Further, this information shall be furnished to the Stock Exchanges along with the interim or annual financial
results submitted under Clause 41 of the listing agreement and be published in the newspapers simultaneously
with the interim or annual financial results, after placing it before the audit committee in terms of Clause 49 of
the listing agreement.
The key industry regulations for the proposed objects of the Issue are not different from our existing business.
No part of the Issue Proceeds will be paid by us as consideration to the Promoters, the Directors, our key
management personnel or companies promoted by the Promoters, except in the usual course of business.
The Promoters or the Directors or the Promoter Group entities do not have any interest in the proposed
utilization of Issue Proceeds from General Corporate Purposes, except towards acquiring technical knowhow in
our ordinary course of business.
50
SECTION IV –STATEMENT OF TAX BENEFITS
To,
The Board of Directors
Hitachi Home & Life Solutions Limited
9th Floor, Abhijeet-I,
Mithakhali Six Roads,
Ahmedabad - 380 006,
Gujarat,
India
Dear Sirs,
Sub: Certification of statement of Possible Tax Benefits in connection with Rights Issue by Hitachi
Home and Life Solutions Limited (“the Company”) under Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations 2009 (“the Regulations”)
We, the statutory auditors of the Company have been requested by the management of the Company having its
registered office at the above mentioned address to certify the statement of tax benefits available to the Company
and its shareholders under the provisions of the Income-tax Act, 1961 and Wealth Tax Act, 1957 presently in force
in India as of date in connection with the proposed Rights Issue of the Company.
The Direct Tax Code (which consolidates the prevalent direct tax laws) is proposed to come into effect from
April 1, 2013. However, it may undergo a few more changes by the time it is actually introduced and hence, at the
moment, it is unclear what the effect the proposed Direct Tax Code would have on the Company and the investors.
The benefits discussed in the enclosed statement are neither exhaustive nor conclusive. The contents stated in the
Annexure are based on the information, explanations and representations obtained from the Company.
This statement is only intended to provide general information to guide the investors and is neither designed
nor intended to be a substitute for professional tax advice. A shareholder is advised to consult his/ her/ their own
tax consultant with respect to the tax implications of an investment in the equity shares particularly in view of the
fact that certain recently enacted legislations may not have a direct legal precedent or may have a different
interpretation on the benefits, which an investor can avail. We do not express any opinion or provide any
assurance as to whether:
the Company or its Shareholders will continue to obtain these benefits in future;
the conditions prescribed for availing the benefits have been / would be met with; or the revenue authorities/
courts will concur with the views expressed herein.
Our views are based on the existing provisions of law and its interpretations, which are subject to change from
time to time. We do not assume responsibility to up-date the views of such changes.
This statement is intended solely for your information and for inclusion in the Letter of Offer in connection with
the proposed Rights Issue of the Company and is not to be used, referred to or distributed for any other purpose
without our prior written consent.
51
For S.R. Batliboi & Associates
Firm registration number: 101049W
Chartered Accountants
per Arpit K. Patel
Partner
Membership No.: 34032
Place: Ahmedabad
Date: February 11, 2013
52
ANNEXURE
Statement of Special Tax Benefits available to the Company & its shareholders under the Income-tax and
other Direct Tax Laws presently in force in India:
I. Benefits available to the Company
1. Deduction under Section 35(2AB) of IT Act
The Company's research facility has been granted initial recognition and in principle approval under
section 35(2AB) of the Act by Department of Scientific and Industrial Research. Accordingly, the Company is
eligible for weighted deduction under section 35(2AB) of the IT Act on the 200% of the expenditure incurred
on scientific research (excluding cost of land or building) on approved in-house R&D facility. It may be noted
that the said approval is valid upto Assesment Year AY 2013-14.
2. Deduction under Section 80IB of IT Act
The Company has a unit at Jammu which is eligible for deduction under Section 80IB of the IT Act at 30% of
the profits and gains of the said unit. This benefit will be available upto Assessment Year 2015-16.
II. Benefits available to the Shareholders
NIL
Statement of General Tax Benefits available to the Company & its Shareholders under the IT Act and
other Direct Tax Laws presently in force in India:
I. Benefits available to the Company
1. Dividends
As per Section 10(34) of the IT Act, any income by way of dividends referred to in Section 115 -O
(i.e. dividends declared, distributed or paid on or after 1st April, 2003 by domestic companies)
received on the shares of any company is exempt from tax. However, such income will be subject to
the provision of section 14A and section 94 sub-section( 7) and (8) of the IT Act.
As per Section 10(35) of the IT Act, the following income will be exempt in the hands of the
Company;
(a) Income received in respect of the units of a Mutual Fund specified under clause (23D) of
Section 10; or
(b) Income received in respect of units from the Administrator of the specified undertaking; or
(c) Income received in respect of units from the specified company.
However, this exemption does not apply to any income arising from transfer of units of the
Administrator of the specified undertaking or of the specified Company or of a mutual fund, as the
case may be. However such income will be subject to the provision of section 14A of the IT Act.
2. Capital Gains
53
As per section 2(42A) of the Act, shares held in a company or any other security listed in a
recognized stock exchange in India or unit of the Unit Trust of India or a unit of a mutual fund
specified under section 10(23D) or a zero coupon bonds will be considered as short term capital asset
if the period of holding of such security is 12 months or less. If the period of holding is more than 12
months, it will be considered as long term capital assets. In respect of other assets the
determinative period of holding is 36 months as against 12 months mentioned above. Further, gain
/ loss arising from short term capital asset and long term capital asset is regarded as short term
capital gain and long term capital gain respectively.
As per Section 10(38) of the IT Act, long term capital gains arising to the company from the transfer
of long term capital asset being an equity share in a company or a unit of an equity oriented fund
where such transaction is chargeable to Securities Transaction Tax (STT) will be exempt in the hands
of the Company. However, such income shall be taken into account in computing Minimum
Alternative Tax on book profit under section 115JB of the IT Act.
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 sixty five percent 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 ITA.
As per Section 54EC of the IT Act, capital gains up to ` 50 Lakhs per annum, arising from the
transfer of a long term capital asset are exempt from capital gains tax provided such capital gains
are invested within a period of 6 months after the date of such transfer in specified bonds issued
by National Highways Authority of India and Rural Electrification Corporation Ltd.
As per Section 111A of the IT Act, short term capital gains arising to the Company from the sale of
equity share or a unit of an equity oriented fund transacted through a recognized stock
exchange in India, where such transaction is chargeable to securities transaction tax, will be
taxable at the rate of 15% (plus applicable surcharge and education cess).
As per Section 112 of the IT Act, long term capital gains which are not exempt in terms of the
provisions of section 10(38) of the IT Act is liable to tax at the rate of 20% (plus applicable
surcharge and education cess) with indexation benefits. However, if such tax payable on transfer of
listed securities or units or zero coupon bonds exceed 10% (plus applicable surcharge and education
cess) of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of
computing the tax payable by the company. Further, long term capital gains arising on transfer of
unlisted securities is liable to tax at the rate of 10% (plus applicable surcharge and education cess)
without indexation benefits.
As per Section 70 read with Section 74 of the IT Act, short term capital loss arising during a year
is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall
be carried forward and set-off against any capital gains arising during subsequent 8 assessment years
in terms of the provisions of section 74 of the IT Act.
Long term capital loss arising during a year is allowed to be set-off only against long term capital gains
in terms of section 70 of the IT Act. Balance loss, if any, shall be carried forward and set-off against
54
long term capital gains arising during subsequent 8 assessment years in terms of the provisions of
section 74 of the IT Act. Long term capital loss arising on sale of share or units of equity oriented fund
subject to STT may not be carried forward for set off.
3. Minimum Alternate Tax MAT
Under Section 115JAA(1A) of the IT Act, credit is allowed in respect of any tax paid under Section 115JB of
the IT Act for any assessment year commencing on or after April 1, 2006. Tax credit eligible to be carried
forward will be the difference between MAT paid and the tax computed as per the normal provisions of the
IT Act for that assessment year. Such MAT credit is allowed to be carried forward for set off purposes for up
to 10 Assessment Years immediately succeeding the Assessment Year in which the MAT credit is allowable.
MAT credit can be set off in a year when tax is payable under the normal provisions of the IT Act. Tax credit
to be allowed shall be the excess between MAT payable and the tax computed as per the normal provisions
of the IT Act for that assessment year.
4. Business Losses
Business losses (other than speculative loss), if any, arising during a year can be set off
against the income under any other head of income, other than income under the head salaries in terms of the
provisions of section 71 of the ITA. Balance business loss can be carried forward and set off against business
profits for 8 subsequent years in terms of the provisions of section 72 of the IT Act.
5. Depreciation
The Company is entitled to claim depreciation on specified tangible and intangible assets owned and used by
it for the purpose of its business as per provisions of Section 32 of the IT Act. Unabsorbed depreciation, if
any, under section 32(2) of the IT Act can be carried forward and set off against any source of income in
subsequent years as per provisions of the IT Act.
6. Securities Transaction Tax
Under Section 36(1)(xv) of the IT Act, STT paid in respect of the taxable securities transactions entered into
in the course of the business is allowed as a deduction if the income arising from such taxable securities
transactions is included in the income computed under the head ‘Profit and gains of business or profession’.
Where such deduction is claimed, no further deduction in respect of the said amount is allowed while
determining the income chargeable to tax as capital gains.
7. Section 115-O- Tax on distributed profits of domestic companies.
The tax rate is 15% (plus applicable surcharge and education cess). As per sub-section (1A) to section 115O,
the domestic company will be allowed to setoff the dividend received from its subsidiary company during the
financial year against the dividend distributed by it, while computing the Dividend Distribution Tax (DDT)
if:
the dividend is received from its subsidiary;
the subsidiary has paid the DDT which is payable on the dividend distributed;
Provided that the same amount of dividend shall not be taken into account for reduction more than once. For
the purpose of this sub-section, a company shall be a subsidiary of another company, if such other company
55
holds more than half in nominal value of the equity share capital of the company. Further dividend paid to
any person for the New Pension System Trust referred to in clause (44) of section 10 of the IT Act will be
reduced from the distributed profits of the domestic company.
8. Donations:
As per provisions of Section 80G of the Act, the Company is entitled to claim deduction of as
specified amount in respect of eligible donations, subject to the fulfillment of the conditions
specified in that section.
II. Tax Benefits available to shareholders of the Company under the IT Act
A. Resident shareholders
1. Dividends
Under Section 10(34) of the IT Act, dividends (both interim and final), if any, received by the resident
members / shareholders from the Company is exempt from tax. However, such income will be subject to the
provision of section 14A and section 94 sub-section (7) and (8) of the IT Act.
2. Minor Children
Under Section 10(32) of the IT Act, any income of minor child who is a shareholder of the Company is
clubbed in the total income of the parent under Section 64(1A) of the IT Act. Such income will be exempt
from tax to the extent of ` 1,500 per minor child whose income is so included in the income of the parent.
3. Capital Gains
The long-term capital gains (under section 2(29B) of the IT Act) accruing to the shareholders of the
Company on sale of Company’s shares in a transaction carried out through a recognized stock exchange
in India, and where such transaction is chargeable to Securities Transaction Tax (“STT”), is exempt from
tax as per provisions of Section 10(38) of the Act.
As per Section 111A of the IT Act, short term capital gains arising to the Company from the sale of
equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in India,
where such transaction is chargeable to securities transaction tax, will be taxable at the rate of 15% (plus
applicable surcharge and education cess).
As per Section 112 of the IT Act, LTCG not exempt under Section 10(38) of the IT Act are subject to tax
at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However, if
such tax payable on transfer of listed securities or units or zero coupon bonds exceed 10% (plus
applicable surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall
be ignored for the purpose of computing the tax payable by the assessee. Further, long term capital gains
arising on transfer of unlisted securities is liable to tax at the rate of 10% (plus applicable surcharge and
education cess) without indexation benefits.
As per Section 54EC of the Act, capital gains up to ` 50 Lakhs, per annum arising from the transfer of a
long term capital asset are exempt from capital gains tax provided such capital gains are invested within a
period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and
56
subject to the conditions specified therein.
Shareholders that are individuals or Hindu undivided families can avail of an exemption under Section
54F of the IT Act, by utilization of the net consideration arising from the transfer of the Company’s
shares held for a period of more than 12 months (which is not exempt under Section 10(38)), for purchase
/ construction of a residential house within the specified time period and subject to the fulfillment of the
conditions specified therein.
As per Section 70 read with Section 74 of the IT Act, short term capital loss arising during a year is
allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be
carried forward and set-off against any capital gains arising during subsequent 8 assessment years. Long
term capital loss arising during a year is allowed to be set-off only against long term capital gains.
Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during
subsequent 8 assessment years. Long term capital loss arising on sale of share or units of equity oriented
fund subject to STT may not be carried forward for set off.
As per provisions of Section 56(2)(vii) of the Act and subject to exception provided in second proviso
therein, where an individual or HUF receives shares and securities without consideration or for a
consideration which is less than the aggregate fair market value of the shares and securities by an amount
exceeding fifty thousand rupees, the excess of fair market value of such shares and securities over the said
consideration is chargeable to tax under the head “income from other sources.”
B. Tax Treaty Benefits
As per provisions of Section 90(2) of the Act, non-resident shareholders can opt to be taxed in India as per
the provisions of the Act or the double taxation avoidance agreement entered into by the Government of
India with the country of residence of the non-resident shareholder (including Non-Resident Indian) or the
Act, whichever is more beneficial.
Any person wanting to claim benefits under any such Tax Treaty will not be able to claim any benefits unless
a certificate, containing such particulars as are prescribed of his being a resident in any country outside India
or a territory outside India, is obtained by him from the Government of that country or specified territory.
The characterization of the gain / losses, arising from sale / transfer of shares as business income or capital
gains would depend on the nature of holding and various other factors.
C. Non-resident shareholders other than Foreign Institutional Investors
a. Non-resident Indian
As per provisions of Section 115E of the IT Act, LTCG arising to a NRI from transfer of specified
foreign exchange assets is taxable at the rate of 10% (plus applicable surcharge and education cess).
Also, the income (other than dividend which is exempt under Section 10(34)) from investments and
LTCG (other than gain exempt under Section 10(38)) from assets (other than specified foreign
exchange assets) arising to a NRI is taxable at the rate of 20% (plus applicable surcharge and
education cess). No deduction is allowed from such income in respect of any expenditure or allowance
or deductions under Chapter VI-A of the IT Act.
As per Section 115F of the IT Act, LTCG arising to a NRI on transfer of a foreign exchange asset is
57
exempt from tax if the net consideration from such transfer is invested in the specified assets or
savings certificates within six months from the date of such transfer, subject to the extent and
conditions specified in that section.
As per provisions of Section 115G of the IT Act, where the total income of a NRI consists only of
income / LTCG from such foreign exchange asset / specified asset and tax thereon has been deducted
at source in accordance with the Act, the NRI is not required to file a return of income.
As per provisions of Section 115H of the IT Act, where a person who is a NRI in any previous year,
becomes assessable as a resident in India in respect of the total income of any subsequent year, he /
she may furnish a declaration in writing to the assessing officer, along with his / her return of income
under Section 139 of the IT Act for the assessment year in which he / she is first assessable as a
resident, to the effect that the provisions of the Chapter XII-A shall continue to apply to him / her in
relation to investment income derived from the specified assets for that year and subsequent years
until such assets are transferred or converted into money.
As per provisions of Section 115I of the IT Act, a NRI can opt not to be governed by the provisions of
Chapter XII-A for any assessment year by furnishing return of income for that assessment year under
Section 139 of the IT Act, declaring therein that the provisions of the chapter shall not apply for that
assessment year. In such a situation, the other provisions of the IT Act shall be applicable while
determining the taxable income and tax liability arising thereon.
In accordance with proviso to section 48 of the IT Act, capital gains arising out of transfer of capital
assets being shares in the company acquired in foreign currency, shall be computed by converting the
cost of acquisition, expenditure in connection with such transfer and the full value of the consideration
received or accruing as a result of the transfer into the same foreign currency as was initially utilised in
the purchase of the shares and the capital gains computed in such foreign currency shall be
reconverted into Indian currency, such that the aforesaid manner of computation of capital gains shall
be applicable in respect of capital gains accruing/arising from every reinvestment thereafter and sale of
shares or debentures of an Indian company including the Company.
As per Section 111A of the IT Act, short term capital gains arising to the Company from the sale of
equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in
India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of
15% (plus applicable surcharge and education cess).
As per Section 112 of the IT Act, LTCG not exempt under Section 10(38) of the Act are subject to tax
at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However,
LTCG arising from the transfer of unlisted securities are subject to tax at the rate of 10% (Plus
applicable surcharge and education cess) without indexation benefits and the adjustment with respect
to foreign exchange rate fluctuations. Further, if such tax payable on transfer of listed securities or
units or zero coupon bonds (where no security transaction tax is paid) exceed 10% (plus applicable
surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall be
ignored for the purpose of computing the tax payable by the assessee.
As per Section 54EC of the IT Act, capital gains arising up to ` 50 Lakhs per annum from the transfer
of a long term capital asset are exempt from capital gains tax. Such capital gains are invested within a
period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and
subject to the conditions specified therein.
58
Shareholders that are individuals or Hindu undivided families can avail of an exemption under Section
54F of the IT Act, by utilization of the net consideration arising from the transfer of the Company’s
share held for a period of more than 12 months (which is not exempt under Section 10(38)), for
purchase / construction of a residential house within the specified time period and subject to the
fulfillment of the conditions specified therein.
As per Section 71 read with Section 74 of the IT Act, short term capital loss arising during a year is
allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be
carried forward and set-off against any capital gains arising during subsequent 8 assessment years.
Long term capital loss arising during a year is allowed to be set-off only against long term capital
gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising
during subsequent 8 assessment years. Long term capital loss arising on sale of share or units of equity
oriented fund subject to STT may not be carried forward for set off.
Under Section 10(34) of the IT Act, dividends (both interim and final), if any, received by the
members / shareholders from the Company is exempt from tax. However such income will be subject
to the provision of section 14A of the IT Act.
b. Non Resident
Under Section 10(34) of the IT Act, dividends (both interim and final), if any, received by the resident
members / shareholders from the Company is exempt from tax. However such income will be subject
to the provision of section 14A and section 94 sub-section( 7) and (8) of the IT Act.
In accordance with proviso to section 48, capital gains arising out of transfer of capital assets being
shares in the company acquired in foreign currency, shall be computed by converting the cost of
acquisition, expenditure in connection with such transfer and the full value of the consideration
received or accruing as a result of the transfer into the same foreign currency as was initially utilised in
the purchase of the shares and the capital gains computed in such foreign currency shall be
reconverted into Indian currency, such that the aforesaid manner of computation of capital gains shall
be applicable in respect of capital gains accruing/arising from every reinvestment thereafter and sale of
shares or debentures of an Indian company including the Company.
As per Section 111A of the IT Act, short term capital gains arising to the Company from the sale of
equity share or a unit of an equity oriented fund transacted through a recognized stock exchange in
India, where such transaction is chargeable to securities transaction tax, will be taxable at the rate of
15% (plus applicable surcharge and education cess).
As per Section 112 of the IT Act, LTCG not exempt under Section 10(38) of the Act are subject to tax
at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However,
LTCG arising from the transfer of unlisted securities are subject to tax at the rate of 10% (Plus
applicable surcharge and education cess) without indexation benefits and the adjustment with respect
to foreign exchange rate fluctuations. Further, if such tax payable on transfer of listed securities or
units or zero coupon bonds(where no security transaction tax is paid) exceed 10% (plus applicable
surcharge and education cess) of the LTCG (without indexation benefit), the excess tax shall be
ignored for the purpose of computing the tax payable by the assessee.
As per Section 54EC of the IT Act, capital gains not exceeding ` 50 Lakhs per annum arising from the
transfer of a long term capital asset are exempt from capital gains tax. Such capital gains are invested
59
within a period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC
and subject to the conditions specified therein.
As per Section 70 read with Section 74 of the IT Act, short term capital loss arising
during a year is allowed to be set-off against short term as well as long term capital gains.
Balance loss, if any, shall be carried forward and set-off against any capital gains arising
during subsequent 8 assessment years. Long term capital loss arising during a year is
allowed to be set-off only against long term capital gains. Balance loss, if any, shall be
carried forward and set-off against long term capital gains arising during subsequent 8 assessment
years. Long term capital loss arising on sale of share or units of equity
oriented fund subject to STT may not be carried forward for set off.
D. Non-resident shareholders Foreign Institutional Investors
1. Dividend
As per provisions of Section 10(34) of the Act, dividend (both interim and final), if any, received by a
shareholder from a domestic Company is exempt from tax. However such income will be subject to the
provision of section 14A of the IT Act.
2. Capital gains
As per provisions of Section 115AD of the Act, income (other than income by way of dividends
referred to Section 115-O) received in respect of securities (other than units referred to in Section
115AB) is taxable at the rate of 20% (plus applicable surcharge and education cess and secondary &
higher education cess). No deduction is allowed from such income in respect of any expenditure or
allowance or deductions under Chapter VI-A of the Act.
The long-term capital gains accruing to the shareholders of the Company on sale of the Company’s
shares in a transaction carried out through recognized stock exchange in India, and where such
transaction is chargeable to STT, is exempt from tax as per provisions of Section 10(38).
The short-term capital gains accruing / arising to the members of the Company on sale of the
Company’s equity shares in a transaction carried out through recognized stock exchange in India and
where such transaction is chargeable to STT, tax will be chargeable at 15% (plus applicable surcharge
and education cess) as per provisions of Section 111A. In other case, i.e. where the transaction is not
subjected to STT, as per the provisions of Section 115AD of the Act, the short term capital gains
would be chargeable to tax at 30% plus applicable surcharge and education cess.
As per the provisions of Section 115AD of the Act, long term gains accruing to the shareholders of the
Company from the transfer of shares of the Company being listed in recognized stock exchanges and
purchased in foreign currency, are chargeable to tax at 10% (plus applicable surcharge and education
cess). The benefit of indexation and the adjustment with respect to fluctuation in foreign exchange rate
would not be allowed to such shareholders. Long term capital gains arising from sale of shares or units
of equity oriented fund which has been subjected to security transaction tax are exempt u/s. 10(38)
even in the hands of FII.
As per Section 54EC of the IT Act, capital gains arising up to ` 50 Lakhs per annum from the transfer
of a long term capital asset are exempt from capital gains tax. Such capital gains are invested within a
60
period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and
subject to the conditions specified therein.
As per section 196D(2) of the Act, no deduction of tax at source will be made in respect of income by
way of capital gain arising from the transfer of securities referred to in section 115AD.
3. Tax Treaty
As per provisions of Section 90(2) of the Act, FIIs can opt to be taxed in India as per the
provisions of the Act or the double taxation avoidance agreement entered into by the Government of
India with the country of residence of the FII, whichever is more beneficial.
Any person wanting to claim benefits under any such Tax Treaty will not be able to claim any benefits
unless a certificate, containing such particulars as are prescribed of his being a resident in any country
outside India or a territory outside India, is obtained by him from the Government of that country or
specified territory.
III. Benefits available to Mutual Funds
Dividend income : Dividend income, if any, received by the shareholders from the investment of
mutual funds in shares of a domestic Company will be exempt from tax under section 10(34) read
with section 115O of the Act.
As per provisions of Section 10(23D) of the Act, any income of mutual funds registered under the
Securities and Exchange Board of India, Act, 1992 or Regulations made there under, mutual funds
set up by 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 prescribed conditions.
IV. Venture Capital Companies / Funds
In accordance with section 10(23FB) any income of a venture capital company or venture capital fund
(registered under the Securities and Exchange Board of India Act, 1992 and regulations made there under
and notified in this behalf) from investment in a venture capital undertaking will be exempt from income
tax.
V. Benefits available to the shareholders under the Wealth Tax Act, 1957
Wealth tax is chargeable on prescribed assets. Shares in a company, held by a shareholder are not treated
as an asset within the meaning of Section 2(ea) of the Wealth Tax Act, 1957 and hence, wealth tax is not
applicable on shares held in a company.
VI. Gift Tax Act, 1958
Gift tax is not leviable in respect of any gifts made on or after October 1, 1998.
Note: All the above benefits are as per the current tax laws and will be available only to the sole / first
name holder where the shares are held by joint holders.
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SECTION V – ABOUT US
OUR BUSINESS
Overview
We are a subsidiary of Hitachi Appliances Inc., Japan and are engaged in the manufacturing of commercial and
residential air-conditioners, commercial and industrial chillers and the trading of refrigerators and VRF systems.
Established in 1984 and headquartered in Ahmedabad, we conduct our manufacturing operations from our two
units based in Kadi, Gujarat and Jammu with a total installed capacity of 2,30,000 units per year on a single shift
basis.
We believe that we operate an extensive distribution network in India. Our products are sold and serviced
through our own offices and a network of dealers and authorized service centers across India. As of December
1, 2012, we had a nation-wide distribution system consisting of 5 regional offices, 21 branch offices, over 200
exclusive sales and service dealers and over 1,500 sales points. In addition, we also have 33 service centers that
are operated by us and 600 other service points across the nation.
Our total revenue from operations for the six months ended September 30, 2012 and the fiscal years 2012, 2011
and 2010 was ` 51,593.13 lakh, ` 79,808.91 lakh, ` 76,400.75 lakh, ` 64,302.99 lakh, respectively. The revenue
mix from the sale of our major products for the six months ended September 30, 2012 and the last three fiscal
years is as follows:
(` in lakh)
Sales of: Six months ended
September 30,
2012
Fiscal year 2012 Fiscal year 2011 Fiscal year 2010
Air Conditioners* 46,257.29 71,988.93 70,576.46 59,979.70
Refrigerators 2,984.25 4,464.47 5,092.46 3,957.13
*includes chillers, spacemakers and VRF systems.
Our Products
Air Conditioners
We manufacture air conditioners for residential and commercial premises and in 2011, we believe that we
launched India’s first five star rated window air conditioner under our ‘Summer’ series of products. While our
residential air conditioners comprise of window and split air conditioners, our commercial air conditioners can
be classified as follows:
Cassette air conditioners
Our cassette air conditioners are easy to install ceiling air conditioners that do not require any ducting and range
from 1.5 Tr. To 4 Tr.
Ductable air conditioners
We sell our ductable air conditioners under our brand ‘Takumi’ and our units in this series range from 1.5 Tr to
16.5 Tr. Our ductable air conditioners are suited to meet the cooling requirements of larger spaces such as
auditoriums, conference rooms and factories.
Refrigerators
We sell two door, three door and four door frost free refrigerators with capacities ranging from 318 litres to 655
litres. In September 2012, we launched six models of inverter refrigerators which use energy efficient inverter
compressors.
Chillers
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We started manufacturing water cooled chillers in 2010 in the 40 HP to 180 HP range and we currently sell
water cooled, air cooled and heat reclaim chillers which are suited to meet the cooling requirements of malls,
industrial plants and hospitals.
VRF Systems
Our variable refrigerant flow air conditioning systems comprise of different numbers of air handling units which
are connected to an external condensing unit. This enables us to vary the refrigerant flow either by using an
inverter controlled variable speed compressor or by using more than one compressor resulting in energy
efficient systems. Our VRF systems are sold as indoor and outdoor units with capacities ranging from 6 HP to
54 HP and are suited to meet the cooling requirements of residential complexes, villas and large office spaces.
Spacemakers
This specialized air conditioning system is designed for unmanned telecom shelters / telecom base transceiver
station sites. In March 2012, we began the manufacturing of free cooling units which is a non-compressor based
product for saving energy. Our spacemaker range is available from 0.9 Tr. To 4.0 Tr. Capacities.
The percentage of sales revenue for last three years from finished goods manufactured by third party
manufacturers are as follows:
Year Trading Sales (In Lakhs) Total Sales (in Lakhs) %
2009-10 5,061.31 65,503.44 7.73
2010-11 7,389.57 77,966.03 9.48
2011-12 8,627.38 80,616.31 10.70
Central Airconditioning Projects
We also undertake HVAC projects which comprise of design, supply, installation, testing, commissioning and
maintenance of central airconditioning plants and contracting services. Such projects are mainly carried out at
hotels, malls, hospitals and industries for comfort and process cooling.
Quality control
Our Kadi manufacturing facility is certified to QMS ISO 9001:2008, EMS ISO 14001 and BS OHSAS
18001:2007 certifications.
Design and Development
Our focus is on developing existing technologies and product engineering innovation, aimed at improving
production efficiency and lowering the cost of production. In our pursuit to create energy efficient products, we
have entered into various consulting and technical collaboration agreements with Hitachi Appliances Inc.,
whereby they provide us with technical information and assistance in manufacturing our products and setting up
our manufacturing lines.
Environmental Protection
In order to comply with Indian laws and regulations in respect of environmental protection, we have taken
internal environmental protection control and monitoring measures. We also support the e-waste initiatives
taken by the Ministry of Environment and Forests of the Government of India and believe that manufacturers of
goods listed as e-waste are responsible for facilitating the eco-friendly disposal of the products after their life
span. Our customers can contact us on our help lines in order to recycle our products and we arrange to collect
the products from our customers’ locations and recycle them through authorized recycling agencies at no cost to
our customers.
In December 2011, we were awarded a ‘Certificate of Merit’ at the National Energy Conservation Awards
Ceremony by the Bureau of Energy Efficiency (BEE), Ministry of Power
Competition
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We face competition across all our product lines. Our primary competitors include Samsung, Voltas, Panasonic,
Daikin, Carrier, Blue Star, LG and Sharp.
Insurance
We maintain a number of insurance policies in respect of the fixed assets and inventories that we own or operate
and that we consider would be exposed to material operational risks. The coverage of the insurance in respect of
our facilities and equipment includes various risks including fire and burglary. The insured amount is normally
expected to cover the cost that is necessary for replacement of the plants and equipment concerned. We also
maintain a public liability insurance policy.
Property
Our registered office is located at 9th
Floor, Abhijeet Mithakhali Six Roads, Ahmedabad, Gujarat 380006 which
is owned by us. Our manufacturing unit at Kadi, Gujarat is owned by us while our manufacturing unit at Jammu
has been been obtained on lease which is valid till January 29, 2015.
Employees
As of January 31, 2013, we employed 797 personnel across our Company. Our permanent operators at our Kadi
and Jammu facilities have a registered trade union in the name of Hitachi Home and Life Solution Employees
Association.
64
HISTORY AND OTHER CORPORATE MATTERS
Our Company was incorporated on December 7, 1984 as Acquest Air-conditioning Systems Private Limited and
subsequently our Company was converted into a deemed public limited company on April 18, 1990. On
September 14, 1990, the name of our Company was changed to Amtrex Appliances Limited and further to
Amtrex Hitachi Appliances Limited on January 25, 1999. On March 12, 2003, the name of our Company was
further changed to our present name Hitachi Home & Life solutions (India) Limited.
Our Company was initially promoted by the Lalbhai Group in Ahmedabad. In 1991, our Company made a
public issue of 5,00,000 Equity Shares of ` 10 each for cash at par and 2,64,000 Debentures of ` 125 each for
cash at par. Presently equity shares of our Company are listed at BSE and NSE.
Our registered office is situated at 9th
Floor, Abhijeet, Mithakhali Six Roads, Ahmedabad 380 006, Gujarat,
India.
Main Objects
The main objects of our Company as set out in our Memorandum of Association are as follows:
1. To carry on business of fabricating, designing, manipulating, die-making, processing, producing, erecting
and manufacturing, manufacture of and dealing in all types, kinds, varieties of air-conditioning,
refrigeration plant and temperature control equipments, components and accessories and similar and
relevant equipments including central stations, cooling towers, gases for air-conditioning, equipments,
compressors and grill and also to carry on the business of importing, exporting, buying, selling, indenting
and otherwise dealing in such implements.
2. To carry on the business of buying, selling, manufacturing, servicing, repairing, importing, exporting,
altering and erecting of air conditioners, refrigerators, water coolers, bottle coolers, deep freezers, all types
of refrigerations, equipments, industrial and consumer cooling and heating temperature controlling plants,
cold storage, fabricating, erecting, repairs.
Major events
Year Event
1990 Our Company executed technical collaboration agreement with Hitachi, Japan
1991 Initial Public Issue of our Company
1994 Our Company started a manufacturing facility at Silvassa, Dadra & Nagar Haveli
1994 Rights Issue by our Company
1998 Our Company executed technical collaboration agreement with Hitachi Limited, Japan for various
Window and split models
1999 Equity shares were allotted to Hitachi Appliances Inc., Japan on preferential basis
2003 Hitachi Appliances Inc., Japan acquired equity shares from Lalbhai Group and became the Promoter
2003 Manufacturing facility at Silvassa shifted to Kadi manufacturing facility
2004 Rights Issue by our Company
2004 Our Company commissioned a manufacturing plant at Jammu
2009-
10
Our Company expanded manufacturing facility at Kadi, Gujarat by increasing installed capacity from
1.50 lakhs to 2.30 lakhs (on single shift basis)
65
OUR MANAGEMENT
Board of Directors
The Articles of Association provides that we shall not have less than three Directors and not more than twelve
Directors. We currently have twelve Directors on our Board of Directors.
The following table sets forth details of the Board of Directors as of the date of filing of this Letter of Offer with
SEBI:
Name, Designation, Occupation,
DIN, Address, Date of appointment
and Term
Nationality Age
(Years)
Other Directorships
Mr. Shinichi Iizuka
Designation: Chairman
Occupation: Service
DIN: 00266660
Address: 220-9, Nishinoda, Ohira-Machi,
Tochigi-shi-Tochigi-ken, Japan:
3294421
Date of appointment: June 21, 2010
Term: Liable to retire by rotation
Japanese 56 -
Mr. Motoo Morimoto
Designation: Managing Director
Occupation: Service
DIN: 03033050
Address: B-502, Panchamvrut,
Behind Akashneem Bunglows,
Vastrapur, Ahmedabad 380 053
Date of appointment: April 1, 2010
Term: Not liable to retire by rotation
Japanese 50 -
Mr. Amit Doshi
Designation: Executive Director
Occupation: Service
DIN: 01603380
Address: B-2,Gulmour Apts., Gulbai
Tekra, Ahmedabad 380 015
Indian 53 -
66
Name, Designation, Occupation,
DIN, Address, Date of appointment
and Term
Nationality Age
(Years)
Other Directorships
Date of appointment: June 1, 2007
Term: Liable to retire by rotation
Mr. Anil Shah
Designation: Executive Director
Occupation: Service
DIN: 01603039
Address: 303,Shaswat Apartments,
B/H Dhananjay Tower, Satellite,
Ahmedabad
380 015
Date of appointment: June 6, 2007
Term: Liable to retire by rotation
Indian 54 1. -
Mr. Vinay Chauhan
Designation: Executive Director
Occupation: Service
DIN: 00267806
Address: A-12, Kadamb Bungalows,
Opp. Sukriti Bungalows, Thaltej-Shilaj
Road, Ahmedabad 380 059
Date of appointment: May 15, 2006
Term: Liable to retire by rotation
Indian 53 -
Mr. Ashok Balwani
Designation: Non Executive and
Independent Director
Occupation: Management Consultant
DIN: 02292791
Address: 2, Paliputra, 16th Road, Khar
West, Mumbai 400 052
Date of appointment: July 28, 2008
Term: Liable to retire by rotation
Indian 61 -
67
Name, Designation, Occupation,
DIN, Address, Date of appointment
and Term
Nationality Age
(Years)
Other Directorships
Dr. Devender Nath
Designation: Non Executive and
Independent Director
Occupation: Management Consultant
DIN: 02310301
Address: C6 Metropolitan 12 Pali Hill
Rd Bandra W, Nr Dilip Kumar
Banglow, Mumbai 400 050
Date of appointment: July 28, 2008
Term: Liable to retire by rotation
Indian 67 -
Mr. L. G. Ramakrishnan
Designation: Non Executive Director
Occupation: Service
DIN: 00106302
Address: Flat C-17,Om Apartments,
33/77 Punjabi Bagh, New Delhi 110
026
Date of appointment: May 20, 2004
Term: Liable to retire by rotation
Indian 62 -
Mr. Mukesh Patel
Designation: Non Executive and
Independent Director
Occupation: International Tax
Consultant
DIN: 00053892
Address: "Prakruti", 11, Ashwamegh
Bunglow, Part- II, Satellite Road,
Ahmedabad 380 015
Date of appointment: March 27, 2003
Term: Liable to retire by rotation
Indian 59 1. Desai Brothers Ltd
2. Cadila Healthcare Limited
3. Zydus Pharmaceuticals Limited
4. German Remedies Limited
5. Zydus Wellness Limited
6. Cliantha Research Limited
7. The Sandesh Limited
8. Baap Diagnostics Limited
Mr. R S Mani Indian 62 Partnerships:
68
Name, Designation, Occupation,
DIN, Address, Date of appointment
and Term
Nationality Age
(Years)
Other Directorships
Designation: Non Executive and
Independent Director
Occupation: Management Consultant
DIN: 00645097
Address: 1102, Glen Heights,
Hiranandani Gardens, Powai, Mumbai,
400 076
Date of appointment: December 15,
2010
Term: Liable to retire by rotation
1. Bizval Decision Consulting LLP
2. Innovative Ecosolutions LLP
Mr. Ravindra Jain
Designation: Non Executive and
Independent Director
Occupation: Service
DIN: 00281279
Address: Flat No 3 Tulsi Villa, 67
Vithal Nagar Society, Road No. 12,
JVPD Scheme Juhu, Mumbai 400 049
Date of appointment: May 15, 2006
Term: Liable to retire by rotation
Indian 55 Shree Shubham Logistics Limited
Mr. Vinesh Sadekar
Designation: Non Executive and
Independent Director
Occupation: Management Consultant
DIN: 00046815
Address: 501, Shree Yashraj Paranjape
Scheme 'A', Road No.3, Vile Parle,
Mumbai 400 057
Date of appointment: December 15,
2010
Term: Liable to retire by rotation
Indian 56 KBK Chem-Engineering Private Limited
Shree Renuka Agri Ventures Limited
None of our Directors hold current and/ or past directorship(s) for a period of five years in listed companies
whose shares have been or were suspended from being traded on the BSE or the NSE or in listed companies
who have been / were delisted from stock exchanges.
69
Relationship between Directors
None of the Directors are related to each other.
Brief Profile of our Directors
Mr. Shinichi Iizuka
Mr. Shinichi Iizuka, aged 56 years, graduated from Sophia University, Japan in the faculty of Electronics
Engineering in 1979. He was deputed to our Company as Chief Operating Officer and has served our Company
as its managing director from October 01, 2006 to March 28, 2010.
Mr. Motoo Morimoto
Mr. Motoo Morimoto, aged 50 years, graduated from Kyoto University, Japan in the faculty of Science in the
year 1987. He has been working in the fields of design and production and was appointed as the managing
director of our Company in April 01, 2010.
Mr. Amit Doshi
Mr. Amit Doshi, aged 53 years, graduated from the Maharaja Sayajirao University of Baroda with a B.E.
Mechanical in 1983 and obtained a post graduate diploma in business management from Rajendra Prasad
Institute of Communication and Management, Bombay in 1985. He has experience in the fields of sales,
marketing, logistics and human resources and has been associated with our Company since 1994.
Mr. Anil Shah
Mr. Anil Shah, aged 54 years, graduated with a B.Com degree from Gujarat University in 1978 and is a member
of the Institute of Chartered Accountants of India. He has experience in the fields of finance, accounts,
budgeting, costing, legal functions and direct and indirect taxation. He has been associated with the Company
since 1984.
Mr. Vinay Chauhan
Mr. Vinay Chauhan, aged 53 years, graduated with a B.E. in mechanical engineering from Madras University in
1981 and obtained a post graduate diploma in Industrial Engineering from the National Institute of Industrial
Engineering, Mumbai in 1983. He has experience in the field of design and development, quality management,
manufacturing and project management. He has been associated with our Company since 1993.
Mr. Ashok Balwani
Mr. Ashok Balwani, aged 61 years, graduated with a B.E. (Hons) in Electrical Engineering from BITS, Pilani in
1972 and obtained an M.B.A. from the Faculty of Management Studies, University of Delhi in 1974. He has
over 30 years of experience in the field of sales and marketing, human resources and general management. He
has also served at organisations like Larsen & Toubro Limited, Det Norske Veritas and Man Industries (India)
Limited and is currently working as an independent management consultant.
Dr. Devender Nath
Dr. Devender Nath, aged 67 years, has obtained a Ph.D (Honorary) in 2003 and a B.Tech in Electrical
Engineering (Honours) from IIT Kharagpur in 1966. He has more than four decades of experience in the fields
of research and development, human resources, technology and strategy. He is presently serving on the
advisory boards of ICFAI-Management School at Mumbai and the Institute of Technology and Management,
Kharagpur (Deemed University). He was also the President of the Bombay Management Association during
2003-04.
Mr. L. G. Ramakrishnan
70
Mr. L.G. Ramakrishnan, aged 62 years, is a graduate in Science Faculty from Delhi University in 1969 and has
obtained a Diploma in Electronics Engineering from Madras Institute of Technology, Madras in 1973. He has
37 years of experience in the field of design, engineering, sales, marketing, business planning and corporate
communications and has been associated with the Hitachi group since the last 30 years. Prior to joining our
Company, he was associated with design and engineering of communication equipments with Bharat
Electronics Limited, Ghaziabad.
Mr. Mukesh Patel
Mr. Mukesh Patel, aged 59 years, graduated with an LL.B. degree from Gujarat University in 1977 and has been
enrolled with the Bar Council of Gujarat since 1977. He has been associated with our Company since March
2003.
Mr. R. S. Mani
Mr. R. S. Mani, aged 62 years, is a businessman who graduated with a B.E. in mechanical engineering from
Madurai University in 1971 and has 40 years of experience in the fields of manufacturing, logistics, project
planning and implementation and business development. He has served corporates such as Kodak India Limited
as a managing director, Wendt India Limited as a works manager and Greaves Cotton India Limited as a
production manager.
Mr. Ravindra Jain
Mr. Ravindra Jain, aged 55 years, has an experience of 32 years across the fields of sales, marketing,
manufacturing, operations, strategic planning and brand development. He has a post graduate diploma in
management from the Indian Institute of Management, Ahmedabad in 1980 and a B. Tech from NIT, Jaipur in
1978. He was formerly the chief operation officer of Calcom Cement and has also served as President of Adani
Agrifresh.
Mr. Vinesh Sadekar
Mr. Vinesh Sadekar, aged 56 years, graduated with a B.E. in chemical engineering from University Department
of Chemical Technology (UDCT), Mumbai in 1979 and has 32 years of experience in the fields of production,
project management, strategy and business planning. He presently serves as the group head of corporate strategy
with Shree Renuka Sugars Limited.
Borrowing Powers of the Board
The Articles of Association, subject to the provisions of the Companies Act, authorise the Board, at its
discretion, to generally raise or borrow or secure the payment of any sum or sums of money for our purposes.
However, the Board of Directors shall not without the sanction of the Shareholders exceed the aggregate of our
paid up capital and free reserves.
The consent of the Shareholders was accorded, vide resolution passed at the Annual General Meeting held on
July 23, 2009, authorizing the Board of Directors to borrow at any time amount not exceeding ` 40,000 lakh.
Details of Service Contracts
We have not entered into any service contracts with the present Board of Directors.
Remuneration of the Directors
During the Financial Year 2011-12, we have not paid any remuneration and sitting fees to the present Board of
Directors except
(` in Lakhs)
Name of Director Salary Sitting Fee Total Remuneration
Mr. Motoo Morimoto 46.84 - 46.84
71
Mr. Vinay Chauhan 58.57 - 58.57
Mr. Amit Doshi 56.77 - 56.77
Mr. Anil Shah 57.37 - 57.37
Mr. Mukesh Patel - 2.20 2.20
Mr. Ravindra Jain - 1.20 1.20
Mr. Ashok Balwani - 0.80 0.80
Dr. Devender Nath - 1.60 1.60
Mr. Vinesh Sadekar - 0.60 0.60
Mr. R S Mani - 0.80 0.80
ESOP granted to the Directors
We have not issued any ESOP.
Shareholding of Directors in our Company
Except as disclosed below, none of our Directors hold any Equity Shares:
Name Number of Equity Shares held
Mr. Vinay Chauhan 200
Mr. Mukesh Patel 1000
Payment or benefit to Directors
Except as disclosed in the “Related Party Transactions” as per AS 18 under “Financial Information” on page 73,
no amount or benefit has been paid or given within the two preceding years or is intended to be paid or given to
any of our officers except the normal remuneration for services rendered as Directors, officers or employees.
Interest of the Directors
All of our Directors may be deemed to be interested to the extent of fees payable to them for attending meetings
of the Board or a committee thereof as well as to the extent of other remuneration and reimbursement of
expenses payable to them under our Articles of Association, and to the extent of remuneration paid to them for
services rendered as our officer or employee. Some of the Directors may be deemed to be interested to the
extent of consideration received/paid or any loan or advances provided to anybody corporate including
companies and firms and trusts, in which they are interested as directors, members, partners or trustees.
There are no service contracts between us and any of the Directors for payment of benefit upon termination of
employment.
As of the date of this Letter of Offer, except Mr. Shinichi Iizuka, Mr. Motoo Morimoto and Mr. L.G.
Ramakrishnan who have been appointed by our Promoter(s), there are no arrangements or understanding with
major shareholders, customers, suppliers or others, pursuant to which we appointed any of our Directors.
Our Directors may also be regarded as interested in the Equity Shares, if any, held by them or that may be
subscribed by and allotted to the companies, firms, and trusts, if any, in which they are interested as directors,
members, promoters, and /or trustees pursuant to this Issue.
1. Except as stated in this section “Management” or “Related Party Transactions” under “Financial
Information” on page 73, our Directors do not have any other interest in our business.
2. Our Directors have no interest in any property acquired by us within two years of the date of this Letter of
Offer.
3. Our Directors are not interested in the appointment of or acting as Registrar and Bankers to the Issue or any
such intermediaries registered with SEBI.
Changes in the Board in the last three years
The following changes have occurred in Board of Directors in the last three years:
72
Name Date of Appointment
(Re-appointment) / Cessation
Reason for change
Mr. Shinichi Iizuka March 28, 2010 Cessation due to his new assignment at Hitachi
Appliances Inc., Japan
Mr. Motoo Morimoto April 01, 2010 Appointed
Mr. Kenichi Munakata June 20, 2010 Cessation as Chairman of the Company
Mr. Shinichi Iizuka June 21, 2010 Appointed as Chairman of the Company
Mr. Anwar Ali June 25, 2010 Cessation on sad demise
Mr. Tarun Sheth July 18, 2010 Cessation on sad demise
Mr. Vinesh Sadekar December 15, 2010 Appointed as Director of the Company
Mr. R S Mani December 15, 2010 Appointed as Director of the Company
Mr. Amit Doshi June 1 , 2010 Re-appointment
Mr. Anil Shah June 1 , 2010 Re-appointment
Mr. Vinay Chauhan May 15, 2012 Re-appointment
Loans taken by Directors
None of the Directors have taken loans from us.
73
SECTION VI – FINANCIAL INFORMATION
FINANCIAL STATEMENTS
Limited Review Report on Interim Financial Information
The Board of Directors,
Hitachi Home and Life Solutions (India) Limited
Introduction
We have reviewed the accompanying statement of assets and liabilities of Hitachi Home and Life Solutions
(India) Limited (‘the Company’) as at September 30, 2012 and the related unaudited statement of profit and loss
for the six months period ended September 30, 2012 (together referred to as “the Statements”), prepared by the
management and signed by us for identification and annexed to this report for the purpose of inclusion in the
offer document by the Company in connection with its proposed Rights Issue of equity shares (“Rights Issue”).
The Statements have been prepared in accordance with recognition and measurement principles of Accounting
Standard 25 “Interim Financial Reporting”, [notified pursuant to the Companies (Accounting Standards) Rules,
2006, (as amended)] and other relevant requirements of Clause (5)(X)(A) of Part E of the Securities and
Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended.
Scope of Review
We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute of
Chartered Accountants of India. This standard requires that we plan and perform the review to obtain moderate
assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries
of company personnel and analytical procedures applied to financial data and thus provide less assurance than
an audit. We have not performed an audit and accordingly, we do not express an audit opinion.
Conclusion
Based on our review conducted as above, nothing has come to our attention that causes us to believe that the
accompanying Statements of unaudited financial information have not been prepared in accordance with
recognition and measurement of Accounting Standard 25 “Interim Financial Reporting”, [notified pursuant to
the Companies (Accounting Standards) Rules, 2006, (as amended)] and other relevant requirements of Clause
(5)(X)(A) of Part E of the Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009.
Restriction of use
This report is intended solely for the use of the Company for filing with Securities and Exchange Board of India,
Bombay Stock Exchange and National Stock Exchange and for inclusion in the draft letter of offer in
connection with the proposed rights issue of the Company under Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009 (as amended) and should not be used,
referred to or distributed for any other purpose without our prior written consent.
For S.R. Batliboi & Associates
Firm registration number: 101049W
Chartered Accountants
per Arpit K. Patel
Partner
Membership No.: 34032
Place: Ahmedabad
Date: December 10, 2012
74
UNAUDITED CONDENSED STATEMENT OF PROFIT AND LOSS FOR SIX MONTHS PERIOD
ENDED 30TH SEPTEMBER, 2012
(` in Lacs)
Sr. No.
Particulars Six month
ended on
30.09.2012
Six month
ended on
30.09.2011
(Unaudited) (Unaudited)
PART - I
1 Income from operations
Sales/Income from operations 56,201.06 49,004.70
Less : Excise duty recovered 5,036.36 3,931.50
(a) Net Sales/Income from operations (Net of excise duty) 51,164.70 45,073.20
(b) Other Operating Income 428.43 436.60
Total income from operations (net) 51,593.13 45,509.80
2 Expenses
(a) Cost of materials consumed 21,332.05 19,105.64
(b) Purchase of stock-in-trade 7,681.89 2,955.41
(c) Changes in inventories of finished goods, work-in-
progress and stock-in-trade
4,942.59 8,312.95
(d) Employee benefits expense 2,719.56 2,429.79
(e) Depreciation and amortisation expense 909.44 903.25
(f) Other expenses 11,924.31 10,590.38
Total expenses (a to f) 49,509.84 44,297.42
3
Profit/(Loss) from operations before other income,
finance costs and exceptional items (1-2)
2,083.29 1,212.38
4 Other income 111.77 37.65
5 Profit/(Loss) from ordinary activities before finance
cost and exceptional items (3+4)
2,195.06 1,250.03
6 Finance costs 254.94 421.24
7
Profit/(Loss) from ordinary activities after finance
cost but before exceptional items (5+6)
1,940.12 828.79
8 Exceptional Items - -
9
Profit/(Loss) from ordinary activities before tax
(7+8)
1,940.12 828.79
10 Tax Expenses
a Current tax (net) 785.84 496.74
b Deferred tax (credit) (235.96) (253.41)
Total (a+b) 549.88 243.33
11
Net Profit/(Loss) from ordinary activities after tax
(9+10)
1,390.24 585.46
12 Extraordinary items - -
13 Net Profit/(Loss) for the period (11+12) 1,390.24 585.46
14 Basic and Diluted Earnings Per Share (of ` 10 each)
(Not annualised) (`)
6.06 2.55
75
UNAUDITED CONDENSED STATEMENT OF ASSET AND LIABILITIES AS AT 30TH
SEPTEMBER 2012
(` in Lacs)
Particulars As at
30.09.2012
(Unaudited)
As at
31.03.2012
(Audited)
EQUITY AND LIABILITIES
Shareholders’ funds
(a) Share capital 2,296.00 2,296.00
(b) Reserves and surplus 16,215.88 14,825.63
Sub-total - Shareholders' fund 18,511.88 17,121.63
Non-current liabilities
(a) Long-term borrowings 3,167.81 -
(b) Other long-term liabilities 0.30 4.59
(c) Long-term provisions 1,148.17 1,032.73
Sub-total - Non-current liabilities 4,316.28 1,037.32
Current liabilities
(a) Short-term borrowings 2,026.60 7,031.36
(b) Trade payables 20,878.81 25,868.81
(c) Other current liabilities 2,719.29 7,723.19
(d) Short-term provisions 1,046.54 729.35
Sub-total - Current liabilities 26,671.24 41,352.71
TOTAL - EQUITY AND LIABILITIES 49,499.40 59,511.66
ASSETS
Non-current assets
(a) Fixed assets 8,964.36 14,230.38
(b) Deferred tax assets (Net) 493.78 257.82
(c) Long-term loans and advances 3,728.14 1,660.43
(d) Other non-current assets 0.51 0.51
Sub-total Non - Current assets 13,186.79 16,149.14
Current assets
(a) Inventories 14,005.15 26,807.37
(b) Trade receivables 8,485.60 14,813.77
(c) Cash and Bank balances 2,917.37 264.05
(d) Short-term loans and advances 1,145.55 1,436.77
(e) Other current assets 9,758.94 40.56
Sub-total - Current assets 36,312.61 43,362.52
TOTAL - ASSETS 49,499.40 59,511.66
76
Notes:
1 The above condensed financial statements have been prepared on the accounting policies applied for the
last audited financial statements (i.e. financial for year ended 31st March 2012). There has been no
change in the accounting policies during the current six months period ended 30 September 2012.
2 The Company is engaged in the business of manufacturing, trading and other related services of Air
Conditioners, Chillers and Refrigerators. Since the Company’s business falls within a single business
segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard
(AS) 17 - Segment Reporting are not reported upon separately.
3 There was a major fire on 18th July, 2012 at unit 2 in Kadi plant due to which it has become non-
operational. The loss incurred by the Company is adequately covered under insurance claim. The
written down value of fixed assets and costs of inventories destroyed / damaged has been appropriately
adjusted in the books of accounts. Further, the insurance claim receivable, included in "Other Current
assets" above, is net of Rs 5,000 lacs received from the Insurance Company by way of an “on account”
payment.
4 The Company predominantly operates in air conditioning business which is seasonal in nature, major
sales / income from operations is generated during the first and last quarter of every accounting year and
accordingly, results of current six months are not indicative of overall performance of the year.
5 The above condensed interim financial statements have been prepared in accordance with recognition
and measurement principles laid down in Accounting Standard 25 “Interim Financial Reporting”,
[notified pursuant to the Companies (Accounting Standards) Rules, 2006, (as amended)] and other
relevant requirements of Clause (5)(X)(A) of Part E of the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009 (as amended).
For Hitachi Home & Life Solutions (India) Limited
Anil Shah, Executive Director (Finance)
77
Auditors’ Report
To
The Members of Hitachi Home and Life Solutions (India) Limited
1. We have audited the attached Balance Sheet of Hitachi Home and Life Solutions (India) Limited (‘the
Company’) as at March 31, 2012 and also the Statement of Profit and Loss and 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 (as amended) (‘the Order’) issued by the
Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956
(‘the Act’), 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 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, Statement of profit and loss and cash flow statement dealt with by this report are in
agreement with the books of account;
(iv) In our opinion, the Balance Sheet, Statement of Profit and Loss 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
Act.
(v) On the basis of the written representations received from the directors, as on March 31, 2012, and
taken on record by the Board of Directors, we report that none of the directors is disqualified as on
March 31, 2012 from being appointed as a director in terms of clause (g) of sub-section (1) of section
274 of the Act.
(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 Act, 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 March 31, 2012;
(b) in the case of Statement of Profit and Loss, 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.
For S. R. Batliboi & Associates
Firm Registration Number: 101049W
Chartered Accountants
per Arpit K Patel
Partner
Membership No.: 34032
Place: Ahmedabad
Date: May 24, 2012
78
Annexure referred to in paragraph 3 of our report of even date
Re: Hitachi Home and Life Solutions (India) Limited (‘the Company’)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets.
(b) Fixed assets are physically verified by the management during the year and no material
discrepancies identified on such verification.
(c) There was no disposal of a substantial part of fixed assets during the year.
(ii) (a) The management has conducted physical verification of inventory at reasonable intervals during
the year.
(b) The procedures of physical verification of inventory 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 no material discrepancies were
noticed on physical verification.
(iii) (a) According to the information and explanations given to us, the Company has not granted any
loans, secured or unsecured to companies, firms or other parties covered in the register maintained
under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(a) to (d) of the Order are
not applicable to the Company and hence not commented upon.
(e) According to information and explanations given to us, the Company has not taken any loans,
secured or unsecured, from companies, firms or other parties covered in the register maintained
under section 301 of the Act. Accordingly, the provisions of clause 4(iii)(e) to (g) of the Order are
not applicable to the Company and hence not commented upon.
(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 and fixed assets and for the sale of goods and services. During the course of our audit, we
have not observed any major weakness in the internal control system in respect of these areas.
(v) In our opinion, there are no contracts or arrangements that need to be entered in the register maintained
under Section 301 of the Companies Act, 1956. Accordingly, the provisions of clause 4(v)(b) of the Order
is not applicable to the Company and hence not commented upon.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with the size and nature of its
business.
(viii) We have broadly reviewed the books of accounts maintained by the Company pursuant to the rules made
by the Central Government for the maintenance of cost records under section 209(1) (d) of the Act, related
to the manufacturing of air conditioners and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained.
(ix) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues
including provident fund, investor education and protection fund, employees’ state insurance,
income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material
statutory dues applicable to it.
(b) According to the information and explanations given to us, no undisputed amounts payable in
respect of provident fund, investor education and protection fund, employees’ state insurance,
income-tax, wealth-tax, service tax, sales-tax, custom duty, excise duty, cess and other material
statutory dues were outstanding, at the year end, for a period of more than six months from the
date they became payable.
(c)
According to the records of the Company, the dues outstanding of sales tax, service tax, excise
duty, custom duty and cess on account of any dispute that have not been deposited, are as follows:
Name of the
statute
Nature of dues
Amount (`
in lakhs)
Period to
which the
amount
relates
Forum where dispute is
pending
Sales Tax Act
(Central & States)
Demand raised in
assessments at
various locations
212.53 1998-99 to
2007-08
Deputy Commissioner
Appeals / Joint
Commissioner Appeals
79
Finance Act, 1994
(Service tax)
Demand raised on
advertisement
expenses
including interest
and penalty
110.12 2005-06 to
2010-11
CESTAT, Ahmedabad
Demand raised on
Consulting
Engineers
Services
including interest
and penalty
48.61 2000-01 to
2003-04
CESTAT, Ahmedabad
Demand raised on
Commission
including interest
and penalty
8.76 2004-05 CESTAT, Ahmedabad
Demand raised for
wrong service tax
credit including
interest and
penalty
32.12 2003-04 and
2004-05
CESTAT, Ahmedabad
Central Excise Act,
1944
Interest on delayed
payment of excise
duty
0.50 2008-09 Commissioner Appeals,
Ahmedabad
Customs Act, 1962 Dispute over
classification
0.92 2000-01 Deputy Commissioner
Appeals
Dispute over
classification
171.44 2008-09 CESTAT, Mumbai
(x) The Company has no accumulated losses at the end of the financial year and it has not incurred cash losses
in the current and immediately preceding financial year.
(xi) Based on our audit procedures and as per the information and explanations given by the management, we
are of the opinion that the Company has not defaulted in repayment of dues to banks. The Company has no
outstanding dues to debenture holders and financial institutions.
(xii) According to the information and explanations given to us and based on the documents and records
produced to us, the Company has not granted loans and advances on the basis of security by way of pledge
of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual benefit fund / society. Therefore, the
provisions of clause 4(xiii) of the Order 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 Order are not applicable to the Company.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for
loans taken by others from banks or financial institutions.
(xvi) Based on the information and explanations given to us by the management, term loans were applied for the
purpose for which the loans were obtained.
(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) The Company has not made any preferential allotment of shares to parties or companies covered in the
register maintained under section 301 of Act.
(xix) The Company did not have any outstanding debentures during the year.
(xx) The Company has not raised any money through a public issue during the year.
(xxi) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the
financial statements and as per the information and explanations given by the management, we report that
no fraud on or by the Company has been noticed or reported during year.
80
For S. R. Batliboi & Associates
Firm Registration Number: 101049W
Chartered Accountants
per Arpit K Patel
Partner
Membership No.: 34032
Place: Ahmedabad
Date: May 24, 2012
81
Balance sheet as at 31st March, 2012
` in lakhs
As at As at
Notes 31st March, 2012 31st March, 2011
Equity and liabilities
Shareholders’ funds
(a) Share capital 3 2,296.00 2,296.00
(b) Reserves and surplus 4 14,825.63 14,899.73
17,121.63 17,195.73
Non-current liabilities
(a) Long-term borrowings 5 - 2,502.87
(b) Deferred tax liabilities (net) 6(b) - 40.75
(c) Other long-term liabilities 7 4.59 3.53
(d) Long-term provisions 8 1,032.73 888.70
1,037.32 3,435.85
Current liabilities
(a) Short-term borrowings 9 7,031.36 3,995.11
(b) Trade payables 10 25,868.81 30,723.54
(c) Other current liabilities 11 7,723.19 6,262.63
(d) Short-term provisions 8 729.35 623.77
41,352.71 41,605.05
TOTAL 59,511.66 62,236.63
Assets
Non-current assets
(a) Fixed assets 12
(i) Tangible assets 11,240.31 11,545.30
(ii) Intangible assets 1,715.81 1,549.00
(iii) Capital work-in-progress 603.74 288.79
(iv) Intangible Asset under development 670.52 280.38
(b) Deferred tax asset (net) 6(b) 257.82 -
(c) Long-term loans and advances 13 1,660.43 1,396.29
(d) Other non-current assets 17 0.51 0.99
16,149.14 15,060.75
Current assets
(a) Inventories 14 26,807.37 32,672.98
(b) Trade receivables 15 14,813.77 12,520.77
(c) Cash and Bank balances 16 264.05 206.44
(d) Short-term loans and advances 13 1,436.77 1,726.08
(e) Other current assets 17 40.56 49.61
43,362.52 47,175.88
TOTAL 59,511.66 62,236.63
Statement of significant accounting
policies
2
82
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For S.R. Batliboi & Associates For and on behalf of the Board of Directors
Firm Registration No.101049W
Chartered Accountants
per Arpit K. Patel Motoo Morimoto Anil Shah
Partner Managing Director Executive Director
Membership No: 34032
Place: Ahmedabad Parag Dave Place: Ahmedabad
Date: 24th May, 2012 Company Secretary Date: 24th May, 2012
83
Statement of profit and loss for the year ended 31st March, 2012
` Lakhs
For the year ended For the year ended
Notes 31st March, 2012 31st March, 2011
Income
Revenue from operations (gross) 18 86,731.93 82,988.99
Less : Excise duty recovered (refer note 42) 6,923.02 6,588.24
Revenue from operations (net) 79,808.91 76,400.75
Other income 19 87.41 467.31
Total Revenue 79,896.32 76,868.06
Expenses
Cost of raw material and components consumed 20 43,093.44 50,425.95
Purchase of stock-in-trade 21 5,715.63 6,561.76
Decrease / (Increase) in inventories of finished goods,
work-in-progress and stock-in-trade
22 3,362.25 (7,172.23)
Employee benefits expense 23 5,278.50 4,406.50
Finance costs 24 891.04 737.54
Depreciation and amortization expense 12 1,831.74 1,605.20
Other expenses 25 19,444.45 16,309.97
Total Expenses 79,617.05 72,874.69
Profit before tax 279.27 3,993.37
Tax expense
Current tax [Including ` 22.97 Lakhs (Previous
year: `12.00 Lakhs) pertaining to earlier years]
(refer note 6(a))
251.67 1,080.09
Deferred tax (298.57) (19.29)
(46.90) 1,060.80
Profit for the year 326.17 2,932.57
Basic and diluted (`) earnings per share 26 1.42 12.77
[Nominal value of share `10 (Previous year: `10)]
Statement of significant accounting policies 2
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For S.R. Batliboi & Associates For and on behalf of the Board of Directors
Firm Registration No.101049W
Chartered Accountants
per Arpit K. Patel Motoo Morimoto Anil Shah
Partner Managing Director Executive Director
Membership No: 34032
Place: Ahmedabad Parag Dave Place: Ahmedabad
Date: 24th May, 2012 Company Secretary Date: 24th May, 2012
84
Cash flow statement for the year ended 31st March, 2012
` in lakhs
For the year ended For the year ended
31st March, 2012 31st March, 2011
A. Cash Flow from Operating Activities
Net profit before Tax 279.27 3,993.37
Adjustments For :
Profit on sale of assets (net) (7.29) (2.36)
Unrealised foreign exchange (gain)/loss (net) 52.81 (101.64)
Depreciation and amortisation 1,831.74 1,605.20
Provision for doubtful debts 94.27 14.17
Interest income (30.88) (237.73)
Finance Costs 891.04 737.54
Operating profit before working capital changes 3,110.96 6,008.55
Adjustments for :
Increase in trade receivables (2,387.27) (2,936.88)
Decrease/(Increase) in loans and advances 240.43 (740.26)
Decrease/(Increase) in other current assets 8.54 (37.76)
Decrease/(Increase) in inventories 5,865.61 (14,632.66)
(Decrease)/Increase in current liabilities (4,061.58) 12,081.59
Increase in other provisions 249.60 206.81
Cash from / (used in) operating activities 3,026.29 (50.61)
Direct Taxes paid (407.19) (841.00)
Net cash from / (used in) operating activities 2,619.10 (891.61)
B. Cash flow from investing activities
Purchase of tangible assets (1,708.30) (3,105.08)
Proceeds from sale of fixed assets 67.47 41.20
Purchase of intangible assets (463.55) (784.17)
Decrease in deposits (with maturity more than three
months)
19.56 513.37
Interest received 31.39 238.06
Net cash used in investing activities (2,053.43) (3,096.62)
C. Cash flow from financing activities
Repayment of long-term borrowings (2,502.86) -
Proceeds from short term borrowings (net) 3,036.25 2,462.80
Interest paid (626.36) (194.46)
Dividend paid (including tax provision thereon) (396.01) (397.07)
Net cash flow from / (used in) financing activities (488.98) 1,871.27
Net increase / (decrease) in cash and cash equivalents
(A+B+C)
76.69 (2,116.96)
Cash and cash equivalents at the beginning of the year 150.36 2,267.32
Cash and cash equivalents at the end of the year (refer
note 2 below)
227.05 150.36
Components of Cash and Cash Equivalents:
Cash on hand 6.22 6.23
Bank balance in current accounts 122.39 97.22
Unclaimed dividend account 8.79 4.54
Balance in cash credit accounts 89.65 42.37
85
` in lakhs
For the year ended For the year ended
31st March, 2012 31st March, 2011
Balance in margin Accounts 37.51 57.07
Total 264.56 207.43
Less: Balance in margin accounts 37.51 57.07
Cash and Cash Equivalents 227.05 150.36
Notes :
1. Cash Flow Statement has been prepared under the indirect method.
2. Includes ` 20.34 Lakhs (Previous year: ` 17.27 Lakhs), being balances with restricted use towards unpaid
dividend & employee deposits.
As per our report of even date
For S.R. Batliboi & Associates For and on behalf of the Board of Directors
Firm Registration No.101049W
Chartered Accountants
per Arpit K. Patel Motoo Morimoto Anil Shah
Partner Managing Director Executive Director
Membership No: 34032
Place: Ahmedabad Parag Dave Place: Ahmedabad
Date: 24th May, 2012 Company Secretary Date: 24th May, 2012
86
1. Background
Hitachi Home and Life Solutions (India) Limited (‘the Company’) was incorporated in December 1984 as
“Acquest Air conditioning Systems Private Limited” under the provisions of Companies Act, 1956.
The Company is engaged in the business of manufacturing, selling and trading of ‘Hitachi’ brand of air
conditioners, refrigerators and chillers. Manufacturing facility for air conditioners is set up at Kadi (North
Gujarat) and Jammu. The Company performs its marketing activities through eighteen branches and thirty four
service centers spread across India.
The Company is a subsidiary of Hitachi Appliances Inc., Japan.
2. Statement of Significant Accounting Policies
2.1 Basis of preparation
The financial statements have been prepared to comply in all material respects with the notified accounting
standards by Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the
Companies Act, 1956. The accounting policies applied by the Company are consistent with those used in the
previous year, except for change in accounting policy explained in note 2.2.
2.2 Change in accounting policy
Presentation and disclosure of financial statements
During the year ended 31st March 2012, the revised Schedule VI notified under the Companies Act 1956, has
become applicable to the company, for preparation and presentation of its financial statements. The adoption of
revised Schedule VI does not impact recognition and measurement principles followed for preparation of
financial statements. However, it has significant impact on presentation and disclosures made in the financial
statements. The company has also reclassified the previous year figures in accordance with the requirements
applicable in the current year.
2.3 Accounting estimates
The preparation of the financial statements in accordance with generally accepted accounting principles
(‘GAAP’) requires that management makes best estimates and assumptions that affect the reported amount of
assets and liabilities and disclosure of contingent liabilities as of the date of financial statements and the reported
amounts of revenue and expenses during the reporting period. Management believes that the estimates used in
the preparation of the financial statements are prudent and reasonable. Actual results could differ from these
estimates. Any difference between the actual result and estimates are recognized in the period in which the
results are known or materialize.
2.4 Fixed assets and depreciation
Fixed assets are stated at cost less accumulated depreciation and impairment losses, if any. Cost comprises the
purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Financing costs relating to acquisition of fixed assets which takes substantial period of time to get ready for its
intended use are also included to the extent they relate to the period till such assets are ready to be put to use.
Machine spares which are specific to a particular item of fixed asset and their use is expected to be irregular
have been capitalized.
Depreciation is provided on the straight line method at the rates and in the manner prescribed in Schedule XIV
to the Companies Act, 1956 on all assets except for the following assets which are depreciated at the higher
rates based on management’s estimate of the useful life:
a. Moulds and Tools : 3 years b. Computers : 3 to 4 years
c. Furniture & Fittings : 5 to 8 years d. Office Equipments : 3 to 5 years
e. Electrical Fittings : 7 years f. Toolkits : 3 years
87
g. Vehicles : 4 to 6 years
For the assets added during the financial year under review, depreciation is charged on pro-rata basis from the
date of commissioning.
Intangible assets are amortised, based on management’s estimate of its useful economic life using straight line
method, on pro-rata basis as under:
a. Technical Know-how fees : 5 years b. Software : 3 years
Depreciation on individual tangible assets costing up to ` 5,000 are provided at the rate of 100% in the month of
purchase.
Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date if there is any indication of impairment
based on internal or external factors. An impairment loss is recognised wherever the carrying amount of an
asset exceeds its recoverable amount. The recoverable amount is the greater of the asset’s net selling price and
value in use. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and risk
specific to the asset.
After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful
life.
2.5 Inventories
Inventories are valued as follows:
1. Raw materials and stores and spare parts are valued at lower of cost and net realizable value. However,
materials and other items held for use in the production of inventories are not written down below cost
if the finished products in which they will be utilised are expected to be sold at or above cost.
2. Work in progress is valued at lower of cost and net realizable value. Costs include material cost, direct
expenses and a proportion of manufacturing overheads.
3. Manufactured finished goods are valued at lower of cost and net realizable value. Cost includes
material cost, excise duty, direct expenses and a proportion of manufacturing overheads based on
normal operating capacity. Traded finished goods are valued at lower of cost and estimated net
realizable value.
4. Goods in transit are valued at lower of cost and net realizable value.
Cost is determined on the basis of weighted average method and includes all costs incurred in bringing the
inventories to their present location and condition. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated cost necessary to make the sale.
5. Custom duty on goods where title has passed to the Company and material has reached Indian ports is
included in the value of inventories.
2.6 Revenue recognition
Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured.
(i) Sale of Goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the
buyer. Sales are inclusive of freight, octroi and insurance, installation charges in some cases, and net of sales
returns, trade discounts and cash discounts. Excise duty deducted from the sales (gross) is the amount that is
included in the amount of sales (gross) and not the entire amount of liability arised during the year.
(ii) Service Income
Revenue from service operations is recognised as and when services are rendered in accordance with the terms
of the contract. Maintenance revenue is recognised over the period of respective contracts.
88
(iii) Commission Income
Commission income is recognized as and when earned, unless there is significant uncertainty regarding
realization thereof.
(iv) Interest
Interest Income is recognised on a time proportion basis taking into account the outstanding amount and the
applicable rate.
2.7 Employee benefits
(i) Retirement benefits in the form of Provident and superannuation Fund is a defined contribution scheme
and the contributions are charged to the Statement of profit and loss of the year when the contributions
to the respective funds are due. There are no other obligations other than the contribution payable to the
respective fund.
(ii) Gratuity liability is defined benefit obligation and is provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of each financial year.
(iii) Short term compensated absences are provided for based on estimates. Long term compensated
absences are provided for based on actuarial valuation. The actuarial valuation is on projected unit
credit method made at the end of each financial year. The bifurcation of compensated absences into
Current & Non-current as shown in financial statements is as per actuary certificates.
(iv) Actuarial gains/losses are immediately taken to Statement of profit and loss and are not deferred.
2.8 Foreign currency transactions
(i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency
amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
(ii) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in
terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the
transaction.
(iii) Exchange Differences
Exchange differences arising on account of settlement of monetary items or exchange differences arising on
monetary items at rates different from those at which they were initially recorded during the year, or reported in
previous financial statements, are recognised as income or as expenses in the year in which they arise.
(iv) Forward Exchange Contracts not intended for trading or speculation purpose
The premium or discount arising at the inception of forward exchange contracts is amortised as expense or
income over the life of the contract. Exchange differences on such contracts are recognised in the statement of
profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or
renewal of forward exchange contract is recognised as income or as expense for the year.
2.9 Provisions
A provision is recognised when an enterprise has a present obligation as a result of past event; it is probable that
an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be
made. Provisions are not discounted to its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates.
2.10 Income Taxes
89
Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Income Tax Act 1961. Deferred income tax reflects the impact
of current year timing differences between taxable income and accounting income for the year and reversal of
timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or
substantively enacted at the Balance Sheet date. Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax
assets and deferred taxes relate to the same taxable entity and the same taxation authority.
Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets can be realised. If the Company has
carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognised only if there is
virtual certainty backed by convincing evidence that such deferred tax assets can be realised against future
taxable profits. Unrecognised deferred tax assets of earlier years are re-assessed at the balance sheet date and
recognised to the extent that it has become reasonably certain that future taxable income will be available
against which such deferred tax assets can be realised.
2.11 Earnings Per Share (EPS)
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders by the weighted average number of equity shares outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to
equity shareholders and the weighted average number of shares outstanding during the period are adjusted for
the effects of all dilutive potential equity shares.
2.12 Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased
term, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement
of profit and loss on a straight-line basis over the lease term.
2.13 Cash and Cash equivalents
Cash and cash equivalents in the cash flow statement and Balance Sheet comprise cash at bank and in hand and
short-term investments with an original maturity of three months or less.
2.14 Segment Reporting
Identification of Segment
The Company’s operating businesses are organised and managed separately according to the nature of products
and services provided, with each segment representing a strategic business unit that offers different products and
serves different markets. The analysis of geographical segments is based on the locations of Customers.
2.15 Capital work in progress & intangible asset under development
All expenditure incurred towards tangible assets are accumulated and shown as capital work in progress and not
depreciated until such assets are ready for commercial use.
Intangible asset under development consists of expenditure towards assets which are not yet operational as on
the balance sheet date.
2.16 Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily
takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the
respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of
interest and exchange differences arising from foreign currency borrowings to the extent they are regarded as an
adjustment to the interest and any other cost that an entity incurs in connection with the borrowing of funds.
90
2.17 Research and Development Costs
All revenue expenses pertaining to research and development costs are charged to statement of profit and loss in
the year in which they are incurred and development expenditure of a capital nature is capitalized as fixed
assets.
3. Share capital
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Authorized shares
30,000,000 (Previous year: 30,000,000) Equity shares of ` 10
each
3,000.00
3,000.00
Issued, subscribed and fully
paid-up shares
22,960,008 (Previous year: 22,960,008) Equity shares of ` 10
each fully paid up
2,296.00
2,296.00
45,671 (Previous year 45,671) Equity shares of ` 10/- each have been kept in abeyance pending final
allotment of right issue.
(a) Reconciliation of the Equity shares outstanding at the beginning and at the end of the reporting
period
At the beginning of the period 22,960,008 2,296.00 22,960,008 2,296.00
Add : Issued during the period - - - -
Outstanding at the end of the
period
22,960,008
2,296.00
22,960,008
2,296.00
(b) Terms / rights attached to Equity shares
The Company has only one class of Equity shares having a face value of `10/- per share. Each holder
of Equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian
Rupees. The dividend recommended by the Board of Directors is subject to the approval of the
Shareholders in the ensuing Annual General Meeting.
During the year ended 31st March, 2012, the amount per share recognised as dividend distributions to
Equity shareholders is `1.50 (Previous year: `1.50).
In the event of liquidation of the company, the holders of equity shares will be entitled to receive
remaining assets of the company, after distribution of all preferential amounts. The distribution will be
in proportion to the number of equity shares held by the shareholders.
(c) Shares held by Holding Company and Ultimate holding Company and/or their
subsidiaries/associates
Out of Equity shares issued by the Company, Equity shares held by Holding Company and subsidiary
of Ultimate holding Company are as below:
Hitachi Appliances Inc., Japan - Holding Company
(formerly known as Hitachi Home & Life Solutions Inc., Japan)
15,550,000 (Previous year: 15,550,000) Equity Shares of `10/-
each fully paid up
1,555.00
1,555.00
Hitachi India Pvt. Ltd. - Subsidiary of Ultimate holding
Company
500,000 (Previous year: 500,000) Equity Shares of `10/- each
fully paid up
50.00
50.00
91
` Lakhs
As at As at
31st March,
2012
31st March,
2011
(d) Details of shareholders holding more than 5% shares in the
Company
Equity shares of `10 each fully paid (Nos.)
Hitachi Appliances Inc., Japan - Holding Company 15,550,000 15,550,000
% holding 67.73% 67.73%
4. Reserves and surplus
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Capital Reserve
Balance as per last financial statements 6.66 6.66
Securities Premium account
Balance as per last financial statements 3,876.92 3,876.92
General Reserve
Balance as per last financial statements 754.66 461.40
Add: Amount transferred from surplus balance in Statement of
profit and loss
32.62
293.26
Closing balance
787.28
754.66
Surplus in Statement of profit and loss
Balance as per last financial statements 10,261.49 8,022.45
Profit for the year
326.17
2,932.57
Less: Appropriations
Proposed dividend on Equity
shares
(344.40)
(344.40)
Tax on dividend (55.87) (55.87)
Transferred to general reserve (32.62) (293.26)
Net Surplus in Statement of profit and loss 10,154.77 10,261.49
Total Reserves and surplus
14,825.63
14,899.73
5. Long-term borrowings
` Lakhs
As at As at
31st March, 2012 31st March, 2011
Non-current Current Non-current Current
External commercial borrowing
(ECB) from the Holding
Company (Unsecured)
-
2,885.09
2,502.87
2,502.86
92
Amount disclosed under the head
"Other Current Liabilities" (refer
note 11)
-
(2,885.09)
-
(2,502.86)
- - 2,502.87 -
Above ECB, carrying interest @ 1.65% p.a., was availed in financial year 2008-09 and 2009-10 from the
Holding Company. The same was repayable in two equal installments, out of which one has been repaid
in financial year 2011-12 and another is repayable in financial year 2012-13.
6. Income Tax
(a) Current Tax
The Company has taxable earnings. Provision for tax has been computed under normal taxation after claiming
deductions under section 80-IB of Income Tax Act, 1961 for Jammu unit.
(b) Deferred tax Asset / (Liabilities) (net)
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Deferred tax liabilities
Differences in depreciation and other differences in block of fixed
assets as per tax books and financial books
(221.85) (385.44)
Gross deferred tax liabilities (221.85) (385.44)
Deferred tax asset
a. Deferment of foreign exchange fluctuation loss under Income
Tax Act
149.14 37.27
b. Expenditure debited in Statement of profit and loss but allowed
under Income Tax Act on payment basis in subsequent years
258.88 266.35
c. Provision for doubtful debts 71.65 41.07
Gross deferred tax assets 479.67 344.69
Net deferred tax asset / (liabilities) 257.82 (40.75)
7. Other long-term liabilities
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Deposits (from employees) 4.59 3.53
4.59 3.53
93
8. Provisions
` Lakhs
As at As at
31st March, 2012 31st March, 2011
Long-term Short-term Long-term Short-term
Provision for employee benefits
- Compensated absences 210.95 61.28 188.19 41.54
Other provisions
- 5 years warranty provision
(refer note 41)
535.37
267.80
460.84
181.96
- VAT related matters (refer note
41)
286.41
-
239.67
-
- Provision for proposed dividend -
344.40
-
344.40
- Provision for tax on proposed
dividend
-
55.87
-
55.87
1,032.73 729.35 888.70 623.77
9. Short-term borrowings
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Loans repayable on demand
from banks:
-Working capital loan (secured) 1,149.20 220.77
-Working capital loan (unsecured) 2,000.00 -
Others:
Buyers' credit (secured) 3,882.16 3,774.34
7,031.36 3,995.11
Aggregate amount of secured borrowings 5,031.36 3,995.11
Aggregate amount of unsecured borrowings 2,000.00 -
Working capital loan (Rate of Interest ranging from 10.5% to 14% per annum) and Buyers' Credit (Rate of
Interest 1.8% per annum) facilities from banks are secured by hypothecation of inventories, book debts,
movable fixed assets and by equitable mortgage of certain immovable fixed assets of the Company.
10. Trade payables
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Trade payables (including
Acceptances)
94
- Outstanding dues of micro and small enterprises (refer note 40)
-
-
- Outstanding dues of other than micro and small enterprises 25,868.81 30,723.54
25,868.81 30,723.54
11. Other current liabilities
` Lakhs
As at As at
31st March,
2012
31st March,
2011
Current maturities of long-term borrowings (refer note 5) 2,885.09 2,502.86
Advance from customers 456.99 400.41
Service income received in advance 308.43 251.72
Interest accrued but not due on borrowings 35.74 32.93
Unclaimed dividends* 8.79 4.54
Others:
Deposits (from dealers and others) 178.22 168.72
Forward contracts - 189.15
Payable for capital goods 779.39 442.03
Statutory dues payable 2,811.87 2,008.18
Other payables 258.67 262.09
7,723.19 6,262.63
* Investor education and protection fund shall be credited as and
when due.
12. Tangible and Intangible assets
Particulars
GROSS BLOCK (AT COST) DEPRECIATION AND AMORTISATION NET BLOCK
As at Addi-
tions
Dedu-
ctions
As at As at For the
year
Dedu-
ctions
As at As at
1st April,
2011
31st
March,
2012
1st April,
2011
31st
March,
2012
31st
March,
2012
31st
March,
2011
Tangible assets:
Freehold Land
2,084.71
-
-
2,084.71
-
-
-
-
2,084.71
2,084.71
Buildings
3,482.58
41.39
-
3,523.97
360.35
114.57
-
474.92
3,049.05
3,122.23
Plant & Machinery
8,714.59
577.08
58.64
9,233.03
3,540.37
904.18
47.69
4,396.86
4,836.17
5,174.22
Computers
720.81
46.63
71.89
695.55
511.23
70.32
65.44
516.11
179.44
209.58
Furniture, fixture
425.17
101.73
4.64
522.26
239.92
47.88
2.18
285.62
236.64
185.25
Office equipments
311.75
67.92
20.92
358.75
167.43
52.17
12.97
206.63
152.12
144.32
Electrical
installations
538.06
36.27
574.33
155.65
72.34
227.99
346.34
382.41
Vehicles
461.53
220.21
101.61
580.13
218.95
74.57
69.23
224.29
355.84
242.58
Total Tangible
assets
16,739.20
1,091.23
257.70
17,572.7
3
5,193.90
1,336.03
197.51
6,332.42
11,240.3
1
11,545.30
95
Particulars
GROSS BLOCK (AT COST) DEPRECIATION AND AMORTISATION NET BLOCK
As at Addi-
tions
Dedu-
ctions
As at As at For the
year
Dedu-
ctions
As at As at
1st April,
2011
31st
March,
2012
1st April,
2011
31st
March,
2012
31st
March,
2012
31st
March,
2011
Intangible assets:
Trade mark
210.00
-
-
210.00
210.00
-
-
210.00
-
-
Software
capitalisation
498.06
6.88
-
504.94
413.26
42.62
-
455.88
49.06
84.80
Technical know
how
2,416.00
655.64
-
3,071.64
951.80
453.09
-
1,404.89
1,666.75
1,464.20
Total Intangible
assets
3,124.06
662.52
-
3,786.58
1,575.06
495.71
-
2,070.77
1,715.81
1,549.00
TOTAL
19,863.26
1,753.75
257.70
21,359.3
1
6,768.96
1,831.74
197.51
8,403.19
12,956.1
2
13,094.30
Previous year
15,885.55
4,281.21
303.50
19,863.2
6
5,428.42
1,605.20
264.66
6,768.96
13,094.3
0
Capital Work in
Progress
603.74
288.79
Intangible assets
under development
670.52
280.38
Notes:
1. Plant & Machinery includes testing equipment and moulds and tools with net block of `845.56 Lakhs (Previous year: `1,287.13 Lakhs)
gross block ` 3,239.35 Lakhs (Previous year: ` 3,196.29 Lakhs).
2. Buildings include ` 130.36 lakhs (Previous year: ` 130.36 lakhs) in respect of ownership of premises in co-operative housing society and
non trading corporations. Shares with face value of ` 1 (Previous year: ` 1) are fully paid up and unquoted.
13. Loans and Advances (Unsecured)
` Lakhs
As at As at
31st March, 2012 31st March, 2011
Long-term Short-term Long-term Short-term
Capital advances
- Considered good (A) 135.02 - 84.67 -
Deposits
- Considered good
306.99
43.65
317.36 70.11
- Considered doubtful - - 0.30 -
306.99 43.65 317.66 70.11
Provision for doubtful advances - - (0.30) -
(B) 306.99 43.65 317.36 70.11
Advances recoverable in cash
or kind
- Considered good 245.80 1,310.22 324.33 1,115.06
- Considered doubtful 1,144.01 - 901.85 -
1,389.81 1,310.22 1,226.18 1,115.06
Provision for doubtful advances
(refer note 44)
(1,144.01) - (901.85) -
96
` Lakhs
As at As at
31st March, 2012 31st March, 2011
Long-term Short-term Long-term Short-term
(C) 245.80 1,310.22 324.33 1,115.06
Other loans and advances
- Advance income-tax (net of
provision for taxation)
247.37 - 91.85 -
- VAT credit receivable (refer
note 43)
725.25 - 578.08 -
- Balances with statutory /
government authorities
- 82.90 - 540.91
(D) 972.62 82.90 669.93 540.91
Total (A+B+C+D) 1,660.43 1,436.77 1,396.29 1,726.08
14. Inventories (valued at lower of cost and net realizable value) ` Lakhs
As at As at
31st March, 2012 31st March, 2011
Raw material [including goods in transit ` 2719
Lakhs (Previous year ` 5321 Lakhs)]
12,903.31 15,262.88
Work-in-progress (refer note 22) 1,723.09 2,258.32
Finished goods (refer note 22) 9,588.54 11,899.07
Stock-in-trade [including goods in transit ` 503 lakhs (Previous
year ` 555 Lakhs)] (refer note 22)
2,535.58 3,188.60
Stores and spares 56.85 64.11
26,807.37 32,672.98
15. Trade receivables
` Lakhs
As at As at
31st March, 2012 31st March, 2011
Debts outstanding for a period
exceeding six months from the
date they are due for payment
Unsecured, Considered good 391.56 271.76
Considered doubtful 220.86 126.59
Provision for doubtful debts (220.86) (126.59)
(A) 391.56 271.76
Other debts
Secured, Considered good 169.75 158.52
Unsecured, Considered good 14,252.46 12,090.49
(B) 14,422.21 12,249.01
Total (A+B) 14,813.77 12,520.77
97
Out of the total provision existing as at March 31, 2011, the management has identified and written off bad
debts aggregating to ` Nil (Previous year: ` 63.54 Lakhs) 16. Cash and Bank balances
` Lakhs
As at As at
31st March, 2012 31st March, 2011
Non-current Current Non-current Current
Cash and cash equivalents
Cash on hand (A) - 6.22 - 6.23
Balances with bank
- on current account - 122.39 - 97.22
- on unpaid dividend account - 8.79 - 4.54
- on cash credit account - 89.65 - 42.37
(B) - 220.83 - 144.13
Other bank balances
- Margin money deposit 0.51 37.00 0.99 56.08
(C) 0.51 37.00 0.99 56.08
Total (A+B+C) 0.51
264.05
0.99 206.44
Amount disclosed under the
head "Non-current Assets"
(refer note 17)
(0.51) - (0.99) -
- 264.05 - 206.44
17. Other assets Lakhs
As at As at
31st March, 2012 31st March, 2011
Non-current Current Non-current Current
Unamortised premium on
forward contract
- 17.86 - 48.80
Interest accrued on margin
money deposits
- 0.30 - 0.81
Foreign currency receivable
(on forward contract)
- 22.40 - -
Non-current bank balances
(refer note 16)
0.51 - 0.99 -
0.51 40.56 0.99 49.61
98
18. Revenue from operations
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Sale of products 80,616.31 77,966.03
Sale of services 5,162.50 4,277.18
Other operating revenue
Scrap sales 730.05 510.26
Commission income 218.15 231.75
Miscellaneous income 4.92 3.77
Revenue from operations (gross) 86,731.93 82,988.99
Details of products sold
Air conditioners 71,988.93 70,576.46
Refrigerators 4,464.47 5,092.46
Spares and accessories 3,734.65 1,897.62
Others 428.26 399.49
80,616.31 77,966.03
Details of Services rendered
Annual Maintenance Contract service 4,215.34 3,433.10
Repair & Installation service 947.16 844.08
5,162.50 4,277.18
19. Other income
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Interest income
from banks 3.34 204.45
from others 27.54 33.28
Net gain on sale of fixed assets 7.29 2.36
Gain on foreign exchange fluctuations (net) - 138.79
Miscellaneous income 49.24 88.43
87.41 467.31
20. Cost of raw-material and components consumed
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Cost of raw material and other components
consumed
43,093.44 50,425.95
Details of raw material consumed
99
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Compressors 11,670.67 11,285.47
Copper 6,297.15 5,243.48
Others (Including packing materials) 25,125.62 33,897.00
43,093.44 50,425.95
21. Purchase of stock-in-trade ` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Purchase of stock-in-trade 5,715.63 6,561.76
Details of purchase of stock-in-
trade
Refrigerators 2,384.41 4,342.18
Spares and accessories 2,990.25 1,904.39
Others 340.97 315.19
5,715.63 6,561.76
22. Decrease / (Increase) in inventories of finished goods, work-in-progress and stock-in-trade
` Lakhs
For the year ended
31st March, 2012 31st March, 2011 Decrease /
(Increase)
Inventories at the end of the year
Work-in-progress 1,723.09 2,258.32 535.23
Finished goods 9,588.54 11,899.07 2,310.53
Stock-in-trade 2,535.58 3,188.60 653.02
13,847.21 17,345.99 3,498.78
Inventories at the beginning of the
year
Work-in-progress 2,258.32 1,399.44 (858.88)
Finished goods 11,899.07 6,274.23 (5,624.84)
Stock-in-trade 3,188.60 1,785.86 (1,402.74)
17,345.99 9,459.53 (7,886.46)
Excise duty on change in
inventories
(136.53) 714.23
3,362.25 (7,172.23)
Details of inventories
Work-in-progress
Coils (Heat exchangers) 759.87 920.79
Others 963.22 1,337.53
1,723.09 2,258.32
Finished goods
Air conditioners 9,588.54 11,899.07
Stock-in-trade
Refrigerators 858.94 1,633.93
100
` Lakhs
For the year ended
31st March, 2012 31st March, 2011 Decrease /
(Increase)
Spares and accessories 1,661.90 1,533.28
Others 14.74 21.39
2,535.58 3,188.60
23. Employee benefits expense
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Salaries, wages and bonus 4,788.24 4,000.62
Contribution to provident and other funds 241.80 208.82
Gratuity expenses (refer note 28) 8.98 17.72
Workmen and staff welfare expenses 239.48 179.34
5,278.50 4,406.50
24. Finance costs
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Interest 386.97 135.82
Bank charges 63.77 68.83
Exchange difference as an adjustment to
borrowing cost
440.30 532.89
891.04 737.54
25. Other expenses (Refer note 45)
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Consumption of stores and spares 25.32 25.67
Power and Fuel 287.41 294.20
Rent 1,024.84 744.02
Repairs & Maintenance - Building 14.12 9.19
Repairs & Maintenance - Machinery 197.04 190.59
Repairs & Maintenance - Others 90.92 111.22
Insurance 56.51 58.17
Rates & Taxes 147.52 136.58
Advertisement and sales promotion (net of
recoveries)
4,218.54 2,739.04
Annual Maintenance Contract (AMC) expenses 2,917.46 2,545.96
Freight and forwarding expenses 2,853.71 2,423.78
Legal and professional fees 185.20 237.98
Provision for doubtful debts 94.27 14.17
Contract labour charges 1,149.35 981.25
101
` Lakhs
For the year ended
31st March, 2012 31st March, 2011
Loss on Foreign Exchange Fluctuations (net) 553.71 -
Payment to Auditors* 28.59 29.13
Royalty 1,745.12 1,697.20
Warranty expenses 1,009.25 1,426.83
Miscellaneous expenses 2,845.57 2,644.99
19,444.45 16,309.97
*Payment to Auditors
As auditor:
-Statutory Audit fees 12.50 12.50
-Tax audit fees 4.00 4.00
-Fees for Limited reviews 10.50 10.50
In other capacity:
-Certification fees 1.20 1.50
Reimbursement of expenses 0.39 0.63
28.59 29.13
26. Earnings per share (EPS)
` Lakhs
31st March, 2012 31st March, 2011
Net profit after tax for calculation of
basic EPS
326.17 2,932.57
Weighted average number of Equity shares considered
in calculating basic and diluted EPS
22,960,008 22,960,008
Earning per share (Basic and
Diluted) `
1.42 12.77
27. Segment reporting
Business segment:
The Company is engaged in the business of manufacturing, trading and other related services of Air
Conditioners, Chillers and Refrigerators. Since the Company’s business falls within a single business segment
of Cooling Products for comfort and commercial use, disclosures under Accounting Standard (AS) 17 –
Segment Reporting are not required.
Geographical segment:
Secondary segment reporting is based on the geographical areas of operations. The geographical segments have
been identified based on revenues within India (sales to customers within India) and revenues outside India
(sales to customers located outside India).
Since the export market revenue, results and assets constitute less than 10% of the total revenue, results and
assets, the same has not been disclosed.
28. Disclosure as per Accounting Standard-15 (Revised) on Employee Benefits Gratuity:
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of
service gets a gratuity on departure at 15 days' salary (last drawn salary) for each completed year of service. The
scheme is funded with Life Insurance Corporation in the form of a qualifying insurance policy.
102
The following tables summarise the components of net benefit expense recognised in the Statement of profit and
loss and the funded status and amounts recognised in the balance sheet for the plan.
Statement of profit and loss
` Lakhs
31st March, 2012 31st March, 2011
Net employee benefit expense (recognised in
Employee benefits expense)
Current service cost 35.70 36.17
Interest cost on benefit obligation 24.56 20.54
Expected return on plan assets 32.48 24.45
Net actuarial (gain) recognised in the year (18.80) (14.54)
Net benefit expense 8.98 17.72
Actual return on plan assets 32.29 26.34
Balance sheet
` Lakhs
Benefit asset / liability 31st March, 2012 31st March, 2011
Fair value of plan assets 402.60 330.43
Present value of defined benefit obligation 315.39 297.71
Plan asset 87.21 32.72
Changes in the present value of the defined benefit obligation are as follows
` Lakhs
31st March, 2012 31st March, 2011
Opening defined benefit obligation 297.71 248.94
Interest cost 24.56 20.54
Current service cost 35.70 36.17
Benefits paid 22.04 12.53
Actuarial (gains) / losses on obligation (20.54) 4.59
Closing defined benefit obligation 315.39 297.71
Changes in the fair value of plan assets are as follows
` Lakhs
31st March, 2012 31st March, 2011
Opening fair value of plan assets 330.44 250.23
Expected return 32.48 24.45
Contributions by employer 41.42 36.63
Benefits paid - -
Actuarial gains / (losses) (1.74) 19.12
Closing fair value of plan assets 402.60 330.43
The Company expects to contribute ` Nil to gratuity fund in the next Financial year (Previous year: ` Nil).
103
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
31st March, 2012 31st March, 2011
Investments with insurer 100% 100%
The overall expected rate of return on assets is determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.
The principle assumption used in determining the gratuity obligations for the Company’s plans are shown below
31st March, 2012 31st March, 2011
Discount rate 8.50% 8.25%
Expected rate of return on assets 9.25% 8.50%
Increase in Compensation cost 6.00% 7.00%
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority,
promotion and other relevant factors, such as supply and demand in the employment market.
Amounts for the current year and last four years are as follows:
` Lakhs
31st March,
2012
31st March,
2011
31st
March,
2010
31st
March,
2009
31st
March,
2008
Defined benefit obligation
315.39
297.71
248.94
163.81
179.89
Plan assets
402.60
330.43
250.23
175.78
126.82
Surplus / (deficit)
87.21
32.72
1.29
11.97
(53.07)
Experience adjustments on plan
liabilities
7.12
(11.61)
33.40
(41.90)
33.87
Experience adjustments on plan
assets
1.74
(19.12)
4.28
12.86
(0.35)
Defined Contribution Plan:
Amount recognised as expense for the period towards contribution to the following funds:
` Lakhs
31st March, 2012 31st March, 2011
Employer’s Contribution to Provident Fund 156.48 133.40
Employer’s Contribution to ESIC 41.04 37.42
Employer’s Contribution to Super Annuation 19.34 18.06
216.86 188.88
29. Leases
Certain premises are obtained on cancellable and non-cancellable operating lease that are renewable either at the
option of lessor or lessee or both. Further, there are no subleases nor any restrictions imposed in lease
agreements. Lease rentals debited to Statement of profit and loss for the year is ` 1024.84 Lakhs (Previous year
` 744.02 Lakhs).
The future minimum lease rentals payable at the balance sheet date in respect of non-cancellable operating
leases are as follows:
104
` Lakhs
31st March, 2012 31st March, 2011
Not later than one year 183.83 241.72
Later than one year but not later than five years 386.51 322.94
Later than five years 267.86 -
30. Capital Commitments
Estimated amount of contracts remaining to be executed on capital account and not provided for (net of
advances) as on March 31, 2012: ` 643.68 Lakhs (Previous year: ` 285.16 Lakhs). 31. Contingent Liabilities
` Lakhs
31st March, 2012 31st March, 2011
Legal matters under dispute *:
Service tax 199.57 192.02
Sales tax 264.77 326.15
Customs duty 0.92 0.92
Excise duty 0.50 -
Guarantees given by the bankers on behalf of the
Company
44.09 24.30
Claims against the Company not acknowledged as
debts
59.21 50.35
569.06 593.74
* The company is contesting the demands and the management believe that its position will likely be
upheld in the appellate process. It is not practicable to estimate the timing of cash outflows, if any in
respect of legal matters, pending resolution of the proceedings with the appellate authorities.
32. Research & Development Expenditure
` Lakhs
31st March, 2012 31st March, 2011
Revenue expenditure 371.65 335.03
Capital expenditure 11.03 17.78
33. Related Party Disclosures
(a) List of related Parties and Relationship
Relation Parties
A. Related parties exercising control Hitachi Ltd., Japan, (Ultimate Holding Company)
Hitachi Appliances Inc., Japan (Holding Company)
B. Parties under common control
(Fellow Subsidiaries)
Hitachi Air Conditioning Products (M) Sdn. Bhd.
Hitachi Asia Ltd. – Singapore
Hitachi Household Appliances (Wuhu) Co. Ltd.
Hitachi Procurement Service Co. Ltd.
Hitachi Metglass (India) Private Ltd.
105
Luvata Hitachi Cable (Thailand) Ltd.
Shanghai Hitachi Electrical Appliances Co. Ltd.
Hitachi Consumer Products (Thailand) Ltd.
Hitachi Koki India Ltd.
Hitachi Air Conditioning & Refrigerating Products (Guangzhou) Co.
Ltd.
Hitachi India Private Ltd.
Hitachi Lift India Private Ltd.
Hitachi Transport System India Private Ltd.
Shizuoka Hitachi Co., Ltd
Hitachi Consulting Software Services
Hitachi Data Systems
Hitachi India Trading Private Ltd.
Hitachi Hi-rel Power Electronics Private Ltd. (w.e.f. 5th October, 2011)
C. Key Managerial personnel Mr. Motoo Morimoto (Managing Director)
Mr. Vinay Chauhan (Executive Director)
Mr. Amit Doshi (Executive Director)
Mr. Anil Shah (Executive Director)
(b) Related Party Transactions
(Figures in parenthesis represent previous year numbers)
Sr.
No.
Transactions Holding Company Fellow Subsidiaries Key Management
Personnel
1 Purchase of raw material
Shanghai Hitachi Electrical
Appliances Co. Ltd. - (-) 9,478.07 (9,925.39) - (-)
Hitachi Household Appliances
(Wuhu) Co. Ltd. - (-) 1,710.56 (4,457.25) - (-)
Luvata Hitachi Cable
(Thailand) Ltd. - (-) 4,551.65 (6,029.78) - (-)
Hitachi Appliances Inc. 13.39 (-) - (-) - (-)
Others - (-) 393.48 (408.11) - (-)
2 Purchase of stock-in-trade
Hitachi Asia Ltd., Singapore - (-) 487.75 (464.86) - (-)
Hitachi Consumer Products
(Thailand) Ltd. - (-) 1,632.65 (3,094.79) - (-)
Hitachi Appliances Inc. - (7.92) - (-) - (-)
3 Technical know-how fees
(capitalised)
Hitachi Appliances Inc. 995.99 (60.75) - (-) - (-)
4 Software Charges
Hitachi Appliances Inc. -
(14.22) - (-)
-
(-)
5 Consultancy fees paid
(capitalised)
Hitachi Appliances Inc. 311.48 (276.80) - (-) - (-)
6 Commission income
Hitachi Asia Ltd., Singapore - (-) 218.15 (231.75) - (-)
7 Sale of products
Hitachi Koki India Ltd. - (-) 8.02 (0.27) - (-)
Hitachi India Private Ltd. - (-) 4.08 (-) - (-)
106
Sr.
No.
Transactions Holding Company Fellow Subsidiaries Key Management
Personnel
Hitachi Hi-rel Power
Electronics Private Ltd. - (-) 24.37 (-) - (-)
Hitachi Transport System India
Private Ltd. - (-) 1.53 (11.42) - (-)
Others - (-) 1.24 (1.45) - (-)
8 Sale of services
Hitachi Metglass (India) Private
Ltd. - (-) 8.61 (-) - (-)
Hitachi India Private Ltd. - (-) - (0.10)
Hitachi Transport System India
Private Ltd. - (-) - (0.09)
Others - (-) 6.54 - - (-)
9 Interest expenses on external commercial
borrowings
Hitachi Appliances Inc. 82.09 (80.17) - (-) - (-)
10 Advertisement recovery
Hitachi Asia Ltd., Singapore - (-) - (2.69) - (-)
Hitachi Consumer Products
(Thailand) Ltd. - (-) 127.36 (182.79) - (-)
11 Remuneration paid
Mr. Motoo Morimoto - (-) - (-) 46.84 (44.93)
Mr. Vinay Chauhan - (-) - (-) 58.57 (55.81)
Mr. Amit Doshi - (-) - (-) 56.77 (54.79)
Mr. Anil Shah - (-) - (-) 57.37 (55.32)
12 Royalty paid
Hitachi Appliances Inc. 1,702.44 (1,684.43) - (-) - (-)
13 Purchase of capital goods
Hitachi Procurement Service
Co. Ltd. - (-) 1.40 (-) - (-)
Shizuoka Hitachi Co., Ltd - (-) 2.55 (-) - (-)
Hitachi Appliances Inc. - (225.63) - (-) - (-)
14 Reimbursement paid
Hitachi Appliances Inc. 70.93 (50.37) - (-) - (-)
15 Import freight, local freight
and custom clearing expenses
Hitachi Transport Systems India
Private Ltd. - (-) 484.73 (1,240.19) - (-)
16 Repayment of External
Commercial Borrowings
Hitachi Appliances Inc. 3,125.11 (-) - (-) - (-)
17 Other Income
Hitachi Appliances Inc 0.55 (-) - (-) - (-)
18 Dividend Payment
Hitachi Appliances Inc. 233.25 (233.25) - (-) - (-)
Hitachi India Private Ltd. - (-) 7.50 (7.50) - (-)
19 External Commercial Borrowings outstanding as at
Balance sheet date
Hitachi Appliances Inc. 2,885.09 (5,005.73)
20 Debit balance outstanding as
at Balance sheet date
Hitachi Asia Ltd. - (-) 12.56 (-) - (-)
Others - (-) 7.40 (-) - (-)
107
Sr.
No.
Transactions Holding Company Fellow Subsidiaries Key Management
Personnel
21 Credit balance outstanding as
at Balance sheet date
Hitachi Appliances Inc. 1,333.16 (121.10) - (-) - (-)
Shanghai Hitachi Electrical
Appliances Co. Ltd. - (-) 4,778.40 (5,713.45) - (-)
Luvata Hitachi Cable
(Thailand) Ltd. - (-) 2,092.87 (1,676.89) - (-)
Others - (-) 1,218.78 (2,438.53) - (-)
Note: The Company does not have transactions with enterprises over which key management personnel can exercise
significant influence.
34. Derivative instruments and unhedged foreign currency exposure
(a) Particulars of unhedged foreign currency exposure
` Lakhs
Currency 31st March, 2012 31st March, 2011
Trade payables (including
acceptances)
USD 133.34 125.35
JPY 21.66 68.28
Equivalent INR 6,798.68 5,628.12
Payables for capital goods USD - 0.01
JPY 1,129.19 -
Equivalent INR 700.38 0.53
Buyers' credit USD 57.70 -
Equivalent INR 2,935.86 -
Loans and Advances (including
Capital Advances)
USD 3.60 7.19
JPY - 12.40
EURO 0.38 -
Equivalent INR 209.07 327.15
Trade Receivables USD 1.03 0.62
JPY - 5.00
Equivalent INR 52.47 30.26
External Commercial Borrowings JPY 4,650.00 9,300.00
Equivalent INR 2,885.09 5,005.73
ECB Interest (accrued but not due) JPY 23.84 46.54
Equivalent INR 14.79 25.05
Buyers' credit interest USD 0.22 0.18
Equivalent INR 11.24 7.88
(b) Forward Contracts outstanding
The company uses forward exchange contracts to hedge its exposure in foreign currency. The information on
outstanding forward exchange contracts is given below:
108
` Lakhs
Currency 31st March, 2012 31st March, 2011
Trade payables USD 48.32 112.42
JPY - 292.63
Buyers' Credit USD 18.60 84.66
35. Earnings in foreign exchange (accrual basis)
` Lakhs
31st March, 2012 31st March, 2011
Export of trading goods (on FOB basis) 0.02 1.48
Commission income 218.15 231.75
Reimbursement of advertisement and other
expenses
127.92 185.48
346.09 418.71
36. Expenditure in foreign currency (accrual basis)
` Lakhs
31st March, 2012 31st March, 2011
Interest 103.06 88.17
Royalty 1,532.20 1,515.98
Technical know how (capitalised) 896.39 54.67
Salaries 70.93 50.37
Consultancy fees and other expenses
(capitalised)
280.33 331.54
Others 25.33 66.67
2,908.24 2,107.40
37. Value of imports calculated on CIF basis
` Lakhs
31st March, 2012 31st March, 2011
Capital goods 339.39 1,725.83
Raw materials, components & spare parts 22,238.99 29,172.49
Stock-in-trade 2,304.67 3,908.07
24,883.05 34,806.39
38. Net dividend remitted in foreign exchange
` Lakhs
31st March, 2012 31st March, 2011
Amount remitted (in JPY) 393.01 426.26
Number of non-resident shareholders 1.00 1.00
Number of equity shares held on which 15,550,000 15,550,000
109
dividend was due
Year to which dividend relates to 2010-11 2009-10
110
39. Imported and indigenous raw material and spare parts consumed
` Lakhs
% of total
consumption
Value % of total
consumption
Value
31st March, 2012 31st March, 2012 31st March, 2011 31st March, 2011
Consumption of
raw materials
Indigenous 41.25% 17,775.59 45.20% 22,792.41
Imported 58.75% 25,317.85 54.80% 27,633.54
100.00% 43,093.44 100.00% 50,425.95
Consumption of
stores and spares
Indigenous 83.85% 21.23 100.00% 25.67
Imported 16.15% 4.09 0.00% -
100.00% 25.32 100.00% 25.67
40. Details of dues to Micro & Small enterprises as defined under MSMED Act, 2006
Based on information available with the Company, there are no suppliers who are registered as micro, small or
medium enterprise under “The Micro, Small and Medium Enterprise Development Act, 2006” (Act) till 31st
March, 2012. Accordingly, no disclosures are required to be made under said Act.
41. Provisions
The movement in the product warranty and other provisions during the year is as under:
(Figures in parenthesis represent previous year numbers) ` Lakhs
31st March,
2011
Provision
during
the year
Utilised
during the
year
Reversal
during the
year
31st March,
2012
Provision for 5 Years Warranty 642.80 366.71 206.34 - 803.17
(501.33) (337.98) (191.56) (4.95) (642.80)
Other Provision 239.67 46.74 - - 286.41
(183.97) (55.70) - - (239.67)
Notes:
(a) The Company gives 5 years warranty on compressors at the time of sale to purchasers of its products.
Product warranty expense is calculated based on past historical data of replacement of compressors and cost
incurred thereon and is provided for in the year of sale. It is expected that the most of expenses against the
provision will be incurred within next five years.
(b) Other provision includes likely claims against the Company in respect of VAT related matters, whose
outcome depends on ultimate settlement / conclusion with relevant authorities.
42. The Company is eligible for refund of excise duty paid on goods manufactured and removed from
Jammu unit, other than the amount of duty paid by utilisation of CENVAT credit, in terms of
Notification No. 56/2002-CE dated 14-11-2002. Excise duty recovered as disclosed in the Statement of
profit and loss is net of such refund of ` 414.44 Lakhs (Previous year ` 525.51 Lakhs)
111
43. The Company avails input tax credit on purchases made by it from the dealers availing VAT Remission
Scheme under the Jammu and Kashmir Value Added Tax Act, 2005 (J&K VAT Act) since FY 2005-
06. During the year, the Company has accounted input tax credit as per section 21 & 22 of J&K VAT
Act of ` 147.15 Lakhs (aggregated till date ` 725.25 Lakhs) net of ` 39.77 Lakhs (aggregated till date
` 420.39 Lakhs), being the amount adjusted against the payment of Central Sales Tax and Value
Added Tax liabilities on sales made from Jammu and Kashmir unit (“VAT Set off”). In respect of the
said matter, the Company has received a demand of `17.79 Lakhs being the VAT set off claimed in
FY 2005-06, which has been challenged by the Company in High Court of Jammu & Kashmir and the
matter is subjudise till the date of balance sheet. The Company, based on the external opinion, has
considered the entire input tax credit of `725.25 Lakhs (net of VAT setoff claimed of `420.39 Lakhs)
as recoverable.
44. The Company has paid custom duty under protest of `231.89 Lakhs (Previous year `268.19 Lakhs)
during the year for which provision has been created which is included in the purchase of stock-in-
trade.
45. The Company accrues certain sales related expenses on an estimated basis, which are reviewed at the
each period end and any excess or short provisions are reversed or accounted for in respective expense
heads. Accordingly, Other Expenses are net of write back of excess provision of earlier years
amounting to `788.73 Lakhs (Previous year `704.91 Lakhs).
46. Prior year comparatives
Till the year ended 31st March, 2011, the company was using pre-revised Schedule VI to the Companies Act
1956 for preparation and presentation of its financial statements. During the year ended 31st March, 2012, the
revised Schedule VI notified under the Companies Act 1956, has become applicable to the company. The
Company has reclassified previous year figures to conform to this year’s classification. The adoption of revised
Schedule VI does not impact recognition and measurement principles followed for preparation of financial
statements. However, it significantly impacts presentation and disclosures made in the financial statements,
particularly presentation of balance sheet.
As per our report of even date
For S.R. Batliboi & Associates For and on behalf of the Board of Directors
Firm Registration No.101049W
Chartered Accountants
per Arpit K. Patel Motoo Morimoto Anil Shah
Partner Managing Director Executive Director
Membership No: 34032
Place: Ahmedabad Parag Dave Place: Ahmedabad
Date: 24th May, 2012 Company Secretary Date: 24th May, 2012
112
ACCOUNTING RATIOS AND CAPITALISATION STATEMENT
Accounting Ratios
The following tables present certain accounting and other ratios on basis derived from our audited financial
statements as at and for the Fiscal 2011 and Fiscal 2012 and the unaudited condensed financial statements for
the six months ended September 30, 2012 included in the chapter “Financial Statements” on page 73.
(` in Lakhs)
Particulars Six months ended
September 30,
2012
March 31, 2012 March 31, 2011
Net profit after Tax 1,390.24 326.17 2,932.57
Net worth 18,511.88 17,121.63 17,195.73
No. of Shares outstanding at the end of the year
(Units)
2,29,60,008 2,29,60,008 2,29,60,008
Weighted No. of Equity Shares outstanding at the
end of year (Units) as per AS 20:
Basic 2,29,60,008 2,29,60,008 2,29,60,008
Diluted 2,29,60,008 2,29,60,008 2,29,60,008
Earning per Share – Basic(Face Value ` 10/- per
share)
6.06 1.42 12.77
Earning per Share - Diluted (Face Value ` 10/- per
share)
6.06 1.42 12.77
Return of Net worth (%) 7.51 1.91 17.05
Net Assets Value per Equity Share (`) 80.63 74.57 74.89
The Ratios have been computed as below:
Net worth: Subscribed Equity Share Capital + reserves and surplus (reserves and surplus
does not include revaluation reserve)
Earning Per Share (Basic)
(`):
Net profit attributable to Equity Shareholders
Weighted average number of equity shares outstanding during the year
Earning Per Share (Diluted)
(`):
Net profit attributable to equity shareholders
Weighted average number of diluted equity shares outstanding during the
year
Return On Net worth (%): Net Profits
Net Worth at the end of the year (excluding revaluation reserves, if any)
Net Asset Value per Share
(`):
Net Worth at the end of the year
Number of equity shares outstanding at the end of the year
Capitalisation Statement:
The statement on our capitalisation is as set out below:
(` in Lakhs)
Particulars Pre-issue as at
March 31, 2012
As Adjusted
for the Issue
Borrowing
- Short Term Debt 7,031.36 7,031.36
- Long Term Debt 2,885.09 2,885.09
113
Particulars Pre-issue as at
March 31, 2012
As Adjusted
for the Issue
Total Borrowing 9,916.45 9,916.45
Shareholders’ funds
Equity Share Capital 2,2961 2,755.20
2
Reserves and Surplus 14,825.63 20,336.03
Total Shareholders’ Funds 17,121.63 23,091.23
Long-term Debt/Shareholders funds 0.17 0.12
Note: Debts repayable within one year from March 31, 2012 are considered as short term funds.
1 As on March 31, 2012, in addition to the paid up capital of 22,960,008 equity shares, 39,401 equity shares have
been kept in abeyance on account of earlier rights issue. 2 In addition to the post Issue equity share capital of 2,75,52,010 equity shares, 47,281 equity shares have been
kept in abeyance on account of earlier rights issue and the current rights issue.
114
STOCK MARKET DATA FOR EQUITY SHARES
The Equity Shares of the Company are listed on the BSE from June 02, 1991 and the NSE with effect from
January 03, 2000. Stock market data for our Equity Shares has been given separately for the BSE and the NSE.
As our Equity Shares are actively traded on both BSE and NSE, stock market data has been given separately for
each of these Stock Exchanges.
The high and low closing prices recorded on the BSE and the NSE for the preceding three Financial
Years and the number of Equity Shares traded on the days the high and low prices were recorded are
stated below.
BSE
Year
ending
March
31
High (`) Date of
High
No. of
Shares
traded on
date of
high
Total Volume
of traded on
date of high
(` in million)
Low (`) Date of
Low
No. of
Shares
traded on
date of low
Total Volume
of traded on
date of low
(` in million)
Average
price for
the year
(`)*
2012 247.70 Apr 18,
2011
76,687 18.68 93.30 Dec 30,
2011
2,957 0.28 159.28
2011 402.00 Jul 27,
2010
21,337 7.27 170.15 Feb 9,
2011
12,451 2.17 268.63
2010 258.90 Mar 25,
2010
208,254 52.65 33.50 Apr 2,
2009
26410 0.93 112.52
(Source: www.bseindia.com)
* Average of the daily closing prices.
NSE
Year
ending
March
31
High (`) Date of
High
No. of
Shares
traded on
date of
high
Total
Volume of
traded on
date of high
(` in million)
Low (`) Date of
Low
No. of
Shares
traded on
date of
low
Total Volume
of traded on
date of low
(` in million)
Average
price for
the year
(`)*
2012 247.80 Apr 18,
2011
101,293 24.57 93.65 Jan 4,
2012
17,715 1.70 159.53
2011 373.70 Aug 11,
2010
1,346,464 478.92 170.00 Feb 9,
2011
28,704 5.01 268.64
2010 258.90 Mar 25,
2010
255,257 64.605 33.20 Apr 2,
2009
35,465 1.255 112.56
(Source: www.nseindia.com)
* Average of the daily closing prices.
The high and low prices and volume of the Equity Shares traded on the respective dates during the last
six months is as follows:
BSE
Month Date of High High
(`)
Volume
(No. of
Shares)
Date of Low Low
(`)
Volume
(No. of
Shares)
Average
Price for
the Month
(`)
Total No
of
Trading
Days
January, 2013 Jan 9, 2013 171.00 67366 Jan 31, 2013 139.70 5656 154.81 23
December, 2012 Dec 21, 2012 161.00 94779 Dec 4, 2012 124.00 4161 139.01 20
November, 2012 Nov 8, 2012 139.80 8,319 Nov 20, 2012 118.50 50,472 128.42 20
October, 2012 Oct 5, 2012 145.00 256,651 Oct 5, 2012 125.55 256,651 135.31 21
September, 2012 Sept 20, 2012 135.25 135,659 Sept 3, 2012 113.40 11,754 122.49 20
August, 2012 Aug 27, 2012 122.00 5,238 Aug 13, 2012 107.10 4,818 113.62 21
(Source: www.bseindia.com)
* Average of the daily closing prices.
115
NSE
Month Date of High High
(`)
Volume
(No. of
Shares)
Date of Low Low
(`)
Volume
(No. of
Shares)
Average
Price for
the Month
(`)
Total No
of
Trading
Days
January, 2013 Jan 9, 2013 171.00 209,931 Jan 31, 2013 140.10 10,654 154.71 23
December, 2012 Dec 21, 2012 161.05 232,349 Dec 4, 2012 123.95 30,145 139.08 20
November, 2012 Nov 7, 2012 139.50 40,010 Nov 20, 2012 117.95 87,479 128.40 20
October, 2012 Oct 5, 2012 143.90 402,452 Oct 5, 2012 125.25 402,452 135.23 21
September, 2012 Sep 20, 2012 135.40 241,365 Sep 5, 2012 113.05 10,017 122.47 20
August, 2012 Aug 6, 2012 122.00 19,839 Aug 1, 2012 104.30 5,693 113.63 21
(Source: www.nseindia.com)
* Average of the daily closing prices.
In the event the high or low or closing price of the Equity Shares are the same on more than one day, the day on
which there has been higher volume of trading has been considered for the purposes of this chapter.
The closing price of the Equity Shares was ` 139.30 on the BSE on October 19, 2012, the trading day
immediately following the day on which Board approved the Issue. The closing price of the Equity Shares was `
139.25 on NSE on October 19, 2012, the trading day immediately following the day on which Board approved
the Issue.
Week end closing prices of the Equity Shares for the last four weeks on the BSE and NSE are as below:
Week Ended on BSE (`) NSE (`)
February 22, 2013 135.50 135.05
February 15, 2013 133.05 133.90
February 8, 2013 137.30 137.20
February 1, 2013 141.05 140.70
(Source: www.bseindia.com; www.nseindia.com)
Highest and lowest price of the Equity Shares on BSE and NSE for the last four weeks:
Closing Market
Price
Highest (`)
Date Closing Market
Price
Lowest (`)
Date
BSE 147.05 Jan 28, 2013 130.65 February 14, 2013
NSE 147.10 Jan 28, 2013 130.35 February 14, 2013
(Source: www.bseindia.com; www.nseindia.com)
The closing market price of our Equity Shares as on, February 22, 2013 was `135.50 and `135.05 on the BSE
and the NSE, respectively.
116
MATERIAL DEVELOPMENTS
In accordance with circular no. F.2/ 5/ SE/ 76 dated February 5, 1977 issued by the Ministry of Finance,
Government of India, as amended by Ministry of Finance, Government of India through its circular dated March
8, 1977 and in accordance with sub-item (B) of item X of Part E of the SEBI ICDR Regulations, the following
information is provided below:
Our working results:
Financial Results for the period between
April 1, 2012 to December 31, 2012
` in Lakhs
Sales/Turnover (including other operating income) 65,963.32
Other Income 137.79
Total Income 66,101.11
Gross Profit / loss (excluding depreciation and taxes) 2,352.80
Provision for depreciation 1,342.50
Provision for Taxes:
Provision for Income Tax 250.47
Provision for Deferred Tax 8.56
Net Effect of Provision for Taxation 259.03
Net profit after tax for the period 751.27
Material changes and commitments, if any, affecting our financial position
There are no material changes and commitments, other than as disclosed below, which are likely to affect our
financial position since March 31, 2012 till date of this Letter of Offer:
There was a major fire on July 18, 2012 at unit 2 in Kadi facility due to which it has become non-operational.
The loss incurred by the Company is adequately covered under insurance claim. There has been no loss of life
or injury to employees or workers. In the interim period, Company managed to meet the demand through its
Unit 1 in Kadi and Jammu facility. The Company also arranged outsourcing of certain finished goods from other
manufacturing facilities of Hitachi Appliances Inc.
The unit 2 has been reconstructed and production has recommenced from January 13, 2013.
Our Company has filed its limited reviewed financial results for the quarter ended December 31, 2012 with the
Stock Exchanges in accordance with the requirements under clause 41 of the listing agreement:
117
UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED 31ST
DECEMBER, 2012
(` in Lacs)
Sr.
No.
Particulars 3 months
ended
31/12/2012
Preceding 3
months
ended
30/09/2012
Corres-
ponding
3 months
ended
31/12/2011
Year to date
figures for
current
period
ended
31/12/2012
Year to date
figures for
previous
period
ended
31/12/2011
Previous
year ended
31/03/2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
PART - I
1 Income from
operations
Sales/Income from
operations
15,301.47 14,857.90 11,269.43 71,502.53 60,274.13 85,778.81
Less : Excise duty
recovered
1,090.92 1,034.20 750.13 6,127.28 4,681.63 6,867.17
(a) Net Sales/Income from
operations (Net of
excise duty)
14,210.55 13,823.70 10,519.30 65,375.25 55,592.50 78,911.64
(b) Other Operating
Income
159.64 163.26 195.68 588.07 632.28 897.27
Total income from
operations (net)
14,370.19 13,986.96 10,714.98 65,963.32 56,224.78 79,808.91
2 Expenses
(a) Cost of materials
consumed
6,325.49 5,393.63 4,343.36 27,657.54 23,449.00 43,093.44
(b) Purchase of stock-in-
trade
2,079.25 4,117.51 799.66 9,761.14 3,755.07 5,715.63
(c) Changes in inventories
of finished goods,work-
in-progress and stock-
in-trade
1,142.57 (627.78) 1,590.71 6,085.16 9,903.66 3,362.25
(d) Employee benefits
expense
1,605.18 1,427.26 1,365.42 4,324.74 3,795.21 5,278.50
(e) Depreciation and
amortisation expense
433.06 428.80 455.62 1,342.50 1,358.87 1,831.74
(f) Foreign Exchange
(Gain)/Loss
(128.20) (355.04) 486.68 860.78 1,180.46 553.71
(g) Other expenses 3,703.31 3,602.01 2,887.48 14,638.49 12,781.85 18,890.74
Total expenses (a to g) 15,160.66 13,986.39 11,928.93 64,670.35 56,224.12 78,726.01
3 Profit/(Loss) from
operations before
other income, finance
costs and exceptional
items (1-2)
(790.47) 0.57 (1,213.95) 1,292.97 0.66 1,082.90
4 Other income 26.17 79.37 31.85 137.79 67.27 87.41
5 Profit/(Loss) from
ordinary activities
before finance cost
and exceptional items
(3+4)
(764.30) 79.94 (1,182.10) 1,430.76 67.93 1,170.31
6 Finance costs 165.52 92.45 214.74 420.46 635.98 891.04
7 Profit/(Loss) from
ordinary activities
after finance cost but
(929.82) (12.51) (1,396.84) 1,010.30 (568.05) 279.27
118
Sr.
No.
Particulars 3 months
ended
31/12/2012
Preceding 3
months
ended
30/09/2012
Corres-
ponding
3 months
ended
31/12/2011
Year to date
figures for
current
period
ended
31/12/2012
Year to date
figures for
previous
period
ended
31/12/2011
Previous
year ended
31/03/2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
before exceptional
items (5-6)
8 Exceptional Items - - - - - -
9 Profit/(Loss) from
ordinary activities
before tax (7+8)
(929.82) (12.51) (1,396.84) 1,010.30 (568.05) 279.27
10 Tax Expenses
(a) Current tax (net) (535.37) 54.25 (308.26) 250.47 188.48 251.67
(b) Deferred tax (credit) 244.52 (95.77) (93.13) 8.56 (346.54) (298.57)
Total (a+b) (290.85) (41.52) (401.39) 259.03 (158.06) (46.90)
11 Net Profit/(Loss) from
ordinary activities
after tax (9-10)
(638.97) 29.01 (995.45) 751.27 (409.99) 326.17
12 Extraordinary items - - - - - -
13 Net Profit/(Loss) for
the period (11+12)
(638.97) 29.01 (995.45) 751.27 (409.99) 326.17
14 Paid-up Equity Share
Capital
2,296.00 2,296.00 2,296.00 2,296.00 2,296.00 2,296.00
(Face value `10/- per
share)
15 Reserves excluding
revaluation reserves as
per balance sheet of
previous accounting
year
14,825.63
16 Basic and Diluted
Earnings Per Share (of
` 10 each) (Not
annualised) (`)
(2.78) 0.13 (4.34) 3.27 (1.79) 1.42
PART – II
A. PARTICULARS OF SHAREHOLDING
Sr.
No.
Particulars 3 months
ended
31/12/2012
Preceding 3
months
ended
30/09/2012
Corres-
ponding
3 months
ended
31/12/2011
Year to date
figures for
current
period
ended
31/12/2012
Year to date
figures for
previous
period
ended
31/12/2011
Previous
year ended
31/03/2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
1 Public shareholding:
-Number of shares 6,910,008 6,910,008 6,910,008 6,910,008 6,910,008 6,910,008
-Percentage of
shareholding
30.10 30.10 30.10 30.10 30.10 30.10
2 Promoters and
promoter group
Shareholding
(a) Pledged/Encumbered
- Number of shares - - - - - -
- Percentage of shares
(as a % of the total
- - - - - -
119
Sr.
No.
Particulars 3 months
ended
31/12/2012
Preceding 3
months
ended
30/09/2012
Corres-
ponding
3 months
ended
31/12/2011
Year to date
figures for
current
period
ended
31/12/2012
Year to date
figures for
previous
period
ended
31/12/2011
Previous
year ended
31/03/2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
shareholding of
promoter and promoter
group)
- Percentage of shares
(as a% of the total share
capital of the company)
- - - - - -
(b) Non-encumbered
- Number of shares 16,050,000 16,050,000 16,050,000 16,050,000 16,050,000 16,050,000
- Percentage of shares
(as a% of the total
shareholding of
promoter and promoter
group)
100.00 100.00 100.00 100.00 100.00 100.00
- Percentage of shares
(as a % of the total
share capital of the
company)
69.90 69.90 69.90 69.90 69.90 69.90
B. INVESTOR COMPLAINTS
Pending at the
beginning of the
quarter
Received
during the
quarter
Disposed off
during the
quarter
Remaining
unresolved at the
end of the quarter
3 months ended 31.12.2012 Nil 2 2 Nil
Notes:
1. The above financial results as reviewed by Audit Committee were taken on record by the Board of
Directors at their meeting held on 25th January, 2013.
2. The Company is engaged in the business of manufacturing, trading and other related services of Air
Conditioners, Chillers and Refrigerators. Since the Company’s business falls within a single business
segment of Cooling Products for comfort and commercial use, disclosures under Accounting Standard
(AS) 17 - Segment Reporting are not reported upon separately.
3. There was a major fire on 18th July, 2012 at unit 2 in Kadi plant due to which it had become non-
operational. The loss incurred by the Company is adequately covered under insurance claim. The written
down value of fixed assets and costs of inventories destroyed / damaged have been appropriately adjusted in
the books of accounts. Further, the company has received Rs 5,000 lacs from the Insurance Company by
way of an “on account” payment. The unit 2 has been reconstructed and production has recommenced from
13th January 2013.
4. The Company predominantly operates in air conditioning business which is seasonal in nature, major sales /
income from operations is generated during the first and last quarter of every accounting year and
accordingly, results of current quarter are not indicative of overall performance of the year.
5. Foreign exchange loss/(gain) on external commercial borrowings are included in following heads for the
respective periods.
Quarter Ended Nine months ended Year
Ended
31/12/2012 30/09/2012 31/12/2011 31/12/2012 31/12/2011 31/03/2012
120
Foreign Exchange
(Gain)/Loss
(155) (154) 265 0 936 564
Finance Costs (to the
extent considered as
adjustment to interest
costs)
(44) 65 105 83 374 440
6. Employee benefits expense is net of write back of excess provision of earlier periods amounting to ` 19.21
lacs, ` Nil, ` 3.89 lacs, ` 156.46 lacs, ` 76.69 lacs and ` 72.80 lacs for the quarter ended 31.12.2012,
30.09.2012, 31.12.2011, nine months ended 31.12.2012, 31.12.2011 and year ended 31.03.2012
respectively.
7. Figures for the previous periods have been regrouped, wherever necessary, to make them comparable with
the figures of current period.
For and on behalf of the Board of Directors
Place : Ahmedabad, Gujarat
Date : January 25, 2013
Motoo Morimoto
Managing Director
121
Limited Review Report
The Board of Directors
Hitachi Home & Life Solutions (India) Limited
1. We have reviewed the accompanying statement of unaudited financial results of Hitachi Home and Life
Solutions (India) Limited (‘the Company’) for the quarter ended December 31, 2012 (the “Statement”),
except for the disclosure regarding ‘Public Shareholding’ and ‘Promoter and Promoter Group Shareholding’
which have been traced from disclosures made by the management and have not been reviewed by us. This
Statement is the responsibility of the Company’s management and has been approved by the Board of
Directors / Committee of Board of Directors. Our responsibility is to issue a report on the Statement based
on our review.
2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2410, “Review of
Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Institute
of Chartered Accountants of India. This standard requires that we plan and perform the review to obtain
moderate assurance as to whether the Statement is free of material misstatement. A review is limited
primarily to inquiries of Company personnel and analytical procedures applied to financial data and thus
provides less assurance than an audit. We have not performed an audit and accordingly, we do not express
an audit opinion.
3. Based on our review conducted as above, nothing has come to our attention that causes us to believe that
the accompanying Statement of unaudited financial results prepared in accordance with recognition and
measurement principles laid down in Accounting Standard 25 “Interim Financial Reporting”, [notified
pursuant to the Companies (Accounting Standard) Rules, 2006, (as amended) and other recognized
accounting practices and policies has not disclosed the information required to be disclosed in terms of
Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains
any material misstatement.
For S. R. Batliboi & Associates
Firm registration number: 101049W
Chartered Accountants
per Arpit K. Patel
Partner
Membership No.: 34032
Place: Ahmedabad
Date: January 25, 2013
122
FINANCIAL INDEBTEDNESS
Set forth below is a brief summary of our current significant outstanding financing arrangements, as on January 31, 2013:
Sr.
No.
Agreement with Lender Nature of
borrowin
g
Term /
Tenure
Sanctioned
Amount
Limit utilized
as at January
31, 2013
Rate of Interest /
Commission /
Charges
Repayment Prepayment Security
1. Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Sublimits:
Letters of
Credit
1 year ` 50 crore
(inland letter
of credit
limited to ` 25 crore)
Nil 0.35% p.a payable
upfront for import
letter of credit and
0.40% p.a.
payable upfront
for inland letter of
credit
On demand - -
Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Letters of
Credit
6 months ` 50 crore
(inland letter
of credit
limited to `
25 crore)
Nil 0.35% p.a payable
upfront for import
letter of credit and
0.40% p.a.
payable upfront
for inland letter of
credit.
On demand - -
Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Buyer’s
Credit
180 Days ` 50 crore Nil All inclusive
0.45% p.a.
payable upfront
On demand - -
Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Bank
guarantee
(Performa
nce)
24 Months ` 15 crore Nil 0.50% p.a (all
inclusive) to be
recovered for
actual no. of
months guarantee
On demand -
123
Sr.
No.
Agreement with Lender Nature of
borrowin
g
Term /
Tenure
Sanctioned
Amount
Limit utilized
as at January
31, 2013
Rate of Interest /
Commission /
Charges
Repayment Prepayment Security
is issued
Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Purchase
Bill
Discountin
g
Up to 6
Months ` 25 crore Nil To be decided at
the time of
drawdown
On demand - -
Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Sales Bills
Discountin
g
Up to 4
months ` 25 crore Nil To be decided at
the time of
drawdown
On demand - -
2. Addendum to Facility
Letter between our
Company and Yes Bank
dated December 24, 2011
Cash
Credit
1 year ` 50 lakh Nil To be decided at
the time of
drawdown
On demand - -
3. Working Capital Credit
Facilities Between our
Company and Citibank,
N.A. dated December 20,
2011
Working
capital
` 60 crore ` 35.43 crore At the rate
mutually agreed
p.a.
On demand -
4. Renewal of Credit and
Market Risk Facilities
between our Company
and The Bank of Tokyo –
Mitsubishi UFJ, Limited
dated July 19, 2012
Short
Term
Loan
1 year ` 20 crore ` 20 crore Applicable short
term rate
Bullet on
Maturity of
each draw
down
Subject to prior
notice of
minimum 3
working days
and break
funding cost
and prepayment
penalty as
determined by
the bank at the
-
124
Sr.
No.
Agreement with Lender Nature of
borrowin
g
Term /
Tenure
Sanctioned
Amount
Limit utilized
as at January
31, 2013
Rate of Interest /
Commission /
Charges
Repayment Prepayment Security
Sublimits:
time of
prepayment.
Renewal of Credit and
Market Risk Facilities
between our Company
and The Bank of Tokyo –
Mitsubishi UFJ, Limited
dated July 19, 2012
Overdraft Up to July
31, 2013 ` 20 crore Nil Base rate + 5% - - -
Renewal of Credit and
Market Risk Facilities
between our Company
and The Bank of Tokyo –
Mitsubishi UFJ, Limited
dated July 19, 2012
Letter of
Credit
Maximum
term of
each LC is
6 months
` 10 crore Nil 0.35% p.a. till
expiry of LC in
case of sight and
0.35% till tenor of
LC in case of
usance
- - -
5. Renewal of Credit and
Market Risk Facilities
between our Company
and The Bank of Tokyo –
Mitsubishi UFJ, Limited
dated July 19, 2012
Buyer’s
Credit
Upto July
31, 2013
with a
maximum
draw
down
period of
180 days
and within
360 days
from the
date of
USD 0.22
crore
Nil LIBOR + Margin Bullet on
Maturity on
each draw
down
- -
125
Sr.
No.
Agreement with Lender Nature of
borrowin
g
Term /
Tenure
Sanctioned
Amount
Limit utilized
as at January
31, 2013
Rate of Interest /
Commission /
Charges
Repayment Prepayment Security
shipment
6. Facility agreement
between our Company
and and The Bank of
Tokyo – Mitsubishi UFJ,
Limited dated November
14, 2012
Foreign
currency
term loan
4 years USD 1 crore USD 1 crore USD Libor +
1.25% p.a.
50% at the
end of two
years from
the first
draw down
date and
50% at the
end of four
years from
the first
draw down
date
- -
7. Money Borrowing and
Lending Agreement
between our Company
and Hitachi Appliances
Inc. dated November 12,
2008
Long term
loan
JPY 93 crore JPY 46.50 crore 1.65% Final
repayment
date of
November
27, 2013*
- -
Note: * Our company had obtained an ECB of JPY 930 million by entering into a Money Borrowing and Lending Agreement dated November 12, 2008 with Hitachi Appliances Inc
(“Agreement”). Pursuant to the agreement, the repayment was to be made in two equal yearly instalments on November 27, 2011 and November 27, 2012. With all other terms and conditions of
the Agreement remaining the same, we sought and obtained an extension from Hitachi Appliances Inc. to postpone the second instalment to November 27, 2013. We also obtained a no-
objection from the Reserve Bank of India vide their letter dated August 23, 2012.
Set forth below is a brief summary of the Supplemental Working Capital Consortium Agreement between our Company and State Bank of India, Standard Chartered Bank
and ICICI Bank dated July 31, 2012:
State Bank of India
126
A. Nature of facility Sanctioned
Limits
(` In Lakh)
Limit utilized as
at January 31,
2013 (` In Lakh)
Repayment Security
1. Cash Credit 1800@ Nil On demand Pari passu first charge by way of extension of hypothecation and/or
pledge of the company’s Current Assets, namely Stocks of Raw
Materials, Semi – finished and Finished Goods, Stores and Spares not
relating to plant and machinery [consumable stores & spares], Bills
receivable and book debts and all other movables of the Company/of the
Company pertaining to the said division, both present and future,
excluding such movables and may be permitted by the said bank from
time to time.
Also by extension of Mortgage by way of pari Passu first basis in favour
of the said Banks ranking after the charges created and/or to be created in
favour of the said banks to the Company on the Company’s immovable
and movable properties [other than Current Assets] located at ‘Survey
No. 176p, Survey No. 182 and Survey No.177p (total admeasuring 9960
Square Meters) of Karananagar (Sim), Taluka Kadi, District Mehesana
and Sub District Kadi: and all the movable fixed assets both present and
future in a form and manner acceptable to the said Banks.
EPC/PCFC (Within overall CC limit)
1(100)
Nil
2. Letter of Credit
*4600 1,017
3. Bank Guarantee
*400 8
4. Forward Contract Limit
189 Nil
Total 6989 1,025
@ One way inter changeability from FB limits to NFB limits up to ` 10.00 crore
* 100% interchangeability between LC and BG limit.
1. within overall CC limit
Standard Chartered Bank
B. Nature of Facility Sanctioned
Limits
(` In Lakh)
Limit utilized as at
January 31, 2013
(` In Lakhs)
Repayment Security
1. Cash Credit (A) -- On demand Pari passu first charge by way of extension of hypothecation
and/or pledge of the company’s current assets, namely Stocks of
raw materials, semi – finished and finished goods, stores and
spares not relating to plant and machinery [consumable stores &
spares], bills receivable and book debts and all other movables of
the Company/of the Company pertaining to the said division, both
present and future, excluding such movables and may be
permitted by the said bank from time to time.
WCDL 6000 Nil
EPC/PCFC/PSCFC/PSC/Export Bills
Discounting/Purchase (Within overall
WCDL Limit)
1(6000) Nil
Overdraft 1(6000) Nil
Letter of credit 1(6000)
2. Letter of Credit (B) 7000
198
127
B. Nature of Facility Sanctioned
Limits
(` In Lakh)
Limit utilized as at
January 31, 2013
(` In Lakhs)
Repayment Security
Bond and Guarantee/ Financial
Guarantees/SBLC (Trade)
2(2500) 1 Also by extension of Mortgage by way of Pari Passu first basis in
favour of the said Banks ranking after the charges created and/or
to be created in favour of the said banks to the Company on the
Company’s immovable and movable properties [other than
Current Assets] located at ‘Survey No. 176p, Survey No. 182 and
Survey No.117p (total admeasuring 9960 Square Meters) of
Karananagar (Sim), Taluka Kadi, District Mehesana and Sub
District Kadi: and all the movable fixed assets both present and
future in a form and manner acceptable to the said Banks.
Bond and Guarantee 2(200)
Payment Undertaking --
Import Invoice Financing 2(3000)
Local Bills Discounted 2(3000)
Import Loan/ Buyer’s Credit --
Financial Guarantees/Standby LC
(trade)/ Payment Undertaking
2(7000) 3,661
Receivables Services 2(3000)
Total (A+B) 13000 3,960
1. within Overall WCDL Limit
2. Sub Limit of Letter of Credit
ICICI Bank Limited
C. Nature of Facility Sanctioned
Limits
(` In Lakh)
Limit utilized as at
January 31, 2013
(` In Lakhs)
Repayment Security
1. Cash Credit (A) 2000 573 On Demand Pari passu first charge by way of extension of hypothecation
and/or pledge of the company’s Current Assets, namely Stocks
of Raw Materials, Semi – finished and Finished Goods, Stores
and Spares not relating to plant and machinery [consumable
stores & spares], Bills receivable and book debts and all other
movables of the Company/of the Company pertaining to the
said division, both present and future, excluding such movables
and may be permitted by the said bank from time to time.
Also by extension of Mortgage by way of Pari Passu first basis
in favour of the said Banks ranking after the charges created
and/or to be created in favour of the said banks to the Company
on the Company’s immovable and movable properties [other
than Current Assets] located at ‘Survey No. 176p, Survey No.
182 and Survey No.117p (total admeasuring 9960 Square
Letter of Credit 1(2000) Nil
Import Loan/Buyers’ Credit 3(2000)
WCDL 1(2000) Nil
EPC/FUBD/PCFC/FBP/IBP/IBD/PS CFC
(Within overall CC limit)
1(2000) Nil
2. Letter of Credit (B) 1500 Nil
Bond and Guarantee/Financial
Guarantees/SBLC (Trade)
-- Nil
Bank Guarantees 2(1500) 447
Import Loan/Buyers’ Credit 2(1500)
Nil
Buyers’ Credit
Nil
Total (A+B) 3500.00 1,020
128
C. Nature of Facility Sanctioned
Limits
(` In Lakh)
Limit utilized as at
January 31, 2013
(` In Lakhs)
Repayment Security
Meters) of Karananagar (Sim), Taluka Kadi, District Mehesana
and Sub District Kadi: and all the movable fixed assets both
present and future in a form and manner acceptable to the said
Banks.
1. Within overall CC Limit
2. Sub Limit of Letter of Credit
3. Sub Limit of Letter of Credit of ` 2000.00
* Both ways interchangeability between LC and BG limit
Note: Our Company has entered into a Supplemental Joint Deed of Hypothecation with State Bank of India, Standard Chartered Bank and ICICI Bank dated July 31, 2012.
129
SECTION VII – LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND DEFAULTS
Except as described below, there are no outstanding litigations including, suits, criminal or civil prosecutions
and taxation related proceedings against us that would have a material adverse effect on our business. Further,
there are no defaults, non-payment of statutory dues including, institutional/ bank dues and dues payable to
holders of any debentures, bonds and fixed deposits that would have a material adverse effect on our business
other than unclaimed liabilities against us as of the date of this Letter of Offer.
Further, except as disclosed below, we are not aware of any litigation involving moral turpitude, material
violations of statutory regulations and or proceedings relating to economic offences which have arisen in the
last ten years.
Further, except as disclosed below, we are not subject to:
a. Any outstanding litigations which do not impact our future revenues which impact more than 1% of our
networth, for the last completed financial year.
b. Any outstanding litigations which impact our future revenues, which impacts more than 1% of our revenue,
for the last completed financial year.
Further from time to time, we have been and continue to be involved in legal proceedings filed by and against
us, arising in the ordinary course of our business. These legal proceedings are both in the nature of civil, labour
and tax proceedings. We believe that the number of proceedings in which we are/ were involved is not unusual
for a company of our size doing business in India.
Cases filed against our Company
1. Mr. N. K. Choudhury, Mr. S.K. Choudhury and Financial Management Services Limited (“Plaintiffs”)
filed a title suit bearing No. 1810 of 2003 and 1834 of 2003 before City Civil Court, Kolkata for
declaration, injunction etc. against the Company, SEBI and Ind Global Corporate Finance Limited, alleging
that the Company was not entitled to make the rights issues of equity shares to the equity shares holders
until the Company comply with the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 and/or until the final disposal of show cause notice issued on June 13, 2003 to Promoter(s) of the
Company. The Plaintiffs also prayed for a declaration that Hitachi Home & Life Solutions Inc., Japan (now
Hitachi Appliances Inc., Japan) was bound to make an open offer to public for acquisition of 20% equity
shares of the Company, which was paid to Asman Investments Limited, a company of Lalbhai Group by the
Promoters of the Company for acquisition of 19.37% of the paid up equity shares of the Company. The
Plaintiffs also moved an application under order 39 rule 1 & 2 read with Section 151 Civil Procedure Code
before the City Civil Court, Kolkata for ex-party order/injunction on December 16, 2003, wherein the Court
granted an ad-interim order on December 17, 2003 in the form of status quo in terms of prayer of the
Plaintiffs and issued a show cause notice to the Company. The Company preferred an appeal against the
order dated December 17, 2003 and December 20, 2003 being. F.A.M.T. No. 59 of 2004 and F.A.M.T No.
62 of 2004 before the Calcutta High Court, praying to stay the impugned order dated December 17, 2003
and December 20, 2003. The Calcutta High Court on January 15, 2004 stayed the operation of the order of
City Civil Court, Kolkata for a period of 12 weeks from date of the order. The Plaintiffs also moved another
application for mandatory injunction before the City Civil Court, Calcutta on October 08, 2004 praying that
the Company be directed to allow the Plaintiffs to exercise their rights to under the rights issue and by
accepting Plaintiffs application and cheque towards their rights entitlement. Both the suit and appeal at City
Civil Court, Kolkata and Calcutta High Court, respectively are pending for hearing.
2. The Assessing Officer, ACIT (OSD), Circle – 4, Ahmedabad issued a notice dated March 28, 2007 to the
Company regarding reopening of the assessment for the assessment year 2000 – 2001 under section 148 of
Income Tax Act, 1961. The Company vide its letter dated April 9, 2007 requested the copy of reasons
recorded for the reopening of the case. The Assessing Officer provided its reasons vide a letter dated
August 24, 2007. Post receipt of copy of reasons, the Company filed its detailed submission on September
25, 2007 on the allowing sales and warranty commission and other items as mentioned in the assessment
order. The Assessing Officer overruled the objections vide its letter dated December 19, 2007 and directed
the Company to comply the direction given by him on very next day i.e. December 20, 2007. Further, the
130
said letter was served on the Company only on the December 20, 2007. The Assessing Officer passed order
dated December 24, 2007 under Section 144 read with Section 147 of the Income Tax Act, 1961
disallowing various claims of expenses made by the Company and raised demand of ` 5,95,50,824
assessing income at ` 7,77,51,670. Being aggrieved of which the Company filed an appeal bearing No. CIT
(A) - VIII/AC – 4/218/2007-08 on January 25, 2008 before the Commissioner of Income Tax, (Appeals) –
VIII, Ahmedabad. The Commissioner of Income Tax (Appeals) after hearing the Company passed an order
dated March 25, 2008 partly allowing the appeal and directed the concerned Assessing Officer to rework
the interest while giving effect to the order of Commissioner of Income Tax (Appeals). The Assessing
Officer, ACIT (OSD), Circle – 4, Ahmedabad has filed an appeal bearing No.2361/Ahd/2008 before
Income Tax Appellate Tribunal Ahmedabad on June 20, 2008 against the order of Commissioner of Income
Tax (Appeals) on grounds that it erred in law and facts of the case and the order dated March 25, 2008 be
cancelled and that of Assessing Officer be restored. The next date of hearing on the matter is March 14,
2013.
3. The Assessing Officer, ACIT (OSD), Circle – 4, Ahmedabad issued a notice dated March 28, 2007 to the
Company regarding reopening of the assessment for the assessment year 2001 – 2002 under section 148 of
the Income Tax Act, 1961 The Company vide its letter dated April 9, 2007 requested the copy of reasons
recorded for the reopening of the case. The Assessing Officer provided its reasons vide a letter dated
August 24, 2007. Post receipt of copy of reasons, the Company filed its detailed submission on September
25, 2007 on the allowing sales and warranty commission and other items as mentioned in the assessment
order. The Assessing Officer overruled the objections vide its letter dated December 19, 2007 and directed
the Company to comply the direction given by him on very next day i.e. December 20, 2007. Further, the
said letter was served on the Company only on the December 20, 2007. The Assessing Officer passed order
dated December 24, 2007 under Section 144 read with Section 147 of the Income Tax Act, 1961
disallowing various claims of expenses made by the Company and raised demand of ` 8,73,37,561
assessing income at ` 11,78,53,474. Being aggrieved of which the Company filed an appeal bearing No.
CIT (A) - VIII/AC – 4/219/2007-08 on January 25, 2008 before the Commissioner of Income Tax,
(Appeals) – VIII, Ahmedabad. The Commissioner of Income Tax (Appeals) after hearing the Company
passed an order dated March 25, 2008 partly allowing the appeal and directed to the concerned assessing
officer to allow deduction u/s 80 IA on the revised income and directed to rework the interest while giving
effect to the order of Commissioner of Income Tax (Appeals). The Assessing Officer, ACIT (OSD), Circle
– 4, Ahmedabad has filed an appeal bearing No.2362/Ahd/2008 before Income Tax Appellate Tribunal
Ahmedabad on June 20, 2008 against the order of Commissioner of Income Tax (Appeals) on grounds that
it erred in law and facts of the case and the order dated March 25, 2008 be cancelled and that of Assessing
Officer be restored. The next date of hearing on the matter is March 14, 2013.
4. The Assessing Authority, Commercial Taxes, Circle – 1, Jammu issued four demand notices dated June 30,
2008 to the Company pursuant to the order under Section 39 (5) of VAT ACT, 2005 for the period 2005 -
2006. The Company had claimed input tax credits on the purchases done during period 2005 – 2006.
Pursuant to the notice dated February 08, 2008 the assessing authority had directed the Company to produce
the documents or actual payment of tax on the purchases done for the period 2005 – 2006 in support of the
claim. It was alleged by the assessing authorities that Section 21 (1) of Jammu & Kashmir VAT Act, 2005
provided that for the purpose of calculating the net tax payable by a registered dealer for any tax period
after being registered, an input tax allowed to such registered dealer for the tax paid or payable in respect of
all taxable sales other than the sales as may be prescribed or purchases under Section 14 during that period.
Since input tax credit claims are on the bills raised by the industries in Jammu registered under Remission
Scheme under SRO 91, the VAT charged in these invoices are after allowing an equal amount of price
adjustment, the input tax credits claims were disallowed and demand notice issued for the taxes adjusted
with such input tax credit claims. Company had produced C forms only for ` 1,71,38,631.46 and as such
under SRO 24 dated January 30, 2004, exemption was allowed on the said sales and for remaining sales
unsupported with C forms was taxed which were sold after collecting full central sales tax being equal to
value added tax amount. The accessing authority vide its order dated June 30, 2008 allowed the exemption
under SRO 24 Dated January 30, 2004 and for remaining sales unsupported with C forms were stated to be
taxed along with interest. The aggregate demand made in the matter received by the Company is ` 17.79
Lakhs. The Company preferred an appeal bearing No. 140/2009, 958/2008 and 1403/2008 before the High
Court of Jammu & Kashmir at Jammu, wherein vide order dated February 25, 2009, the High Court passed
an conditional interim stay order effective only after depositing the aggregate amount of demand notices
with the Judicial Registrar Jammu & Kashmir High Court for three months in first instant. Since the petition
has not yet come up for hearing and the order has not been challenged by the Assessing Authority, the
Registrar has not refunded the deposit and the stay is continuing in the matter.
131
The Assessing Authority, Sales Tax Circle – 1, Jammu and Kashmir had also issued notice(s) bearing No.
2401/010/1 dated February 01, 2010 for the assessment year 2006 – 2007 under section 39 of the Jammu &
Kashmir Value Added Tax Act, 2005 and bearing No. 2404/010/1dated February 01, 2010 under section
(a) Sub Sec. (8) (9) and (10) (b) of sub section (18) of section 7 of the Jammu & Kashmir General Sales
Tax ACT, 1962 to the Company, directing to appear before the assessing authority on March 02, 2010
along with books of accounts, tax invoices and other documents/ evidence. The Company has filed an
original writ petition bearing number 288/2010 before the Jammu & Kashmir High Court on March 19,
2010 alleging that similar issue was challenged by the Company and was stayed by the Jammu & Kashmir
High Court by an order dated February 25, 2009 in OWP No. 958/2008 filed by the Company. The
Company has prayed that in view of OWP No. 958/2008 being outstanding, the hearing of the notices
issued by the department be stayed till the final hearing of the OWP No. 958/2008. The High Court by an
order dated March 20, 2010 directed to both the parties to maintain status quo till next date of hearing and
issued notice within four weeks. The matter is currently pending for hearing.
132
GOVERNMENT AND OTHER APPROVALS
We have received the necessary consents, licenses, permissions and approvals from the Government of India
and various governmental agencies required for our present business and to undertake the Issue and no further
material approvals are required for carrying on our present activities. In addition, except as mentioned in this
chapter “Government and Other Approvals”, as on the date of this Letter of Offer, there are no pending
regulatory and government approvals and no pending material renewals of licenses or approvals in relation to
the activities undertaken by us or in relation to the Issue.
I. Approvals for the Issue:
1. Board resolution dated October 18, 2012 approving the Issue.
2. In-principle approval from BSE dated January 17, 2013.
3. In-principle approval from NSE dated December 27, 2012.
4. RBI approval dated January 23, 2013 received from RBI in relation to renunciation of rights
entitlement by and to persons resident outside India.
II. Approvals for its business:
Except as stated below under the heading “Government Approvals”, we have received the necessary
consents, licenses, permissions and approvals from the Government of India and various governmental
agencies required for our present business and no further material approvals are required for carrying
on our present activities.
III. Pending Approvals and Registrations:
As on date of this Letter of Offer the following applications are pending with respect to our business:
1. Application dated December 10, 2010 addressed to the Registrar of Trademarks for granting
registration of trademark i-clean under class 11.
2. Application dated December 20, 2010 addressed to the Registrar of Trademarks for granting
registration of trademark Summer QC under class 11.
3. Application dated December 22, 2011 addressed to the Registrar of Trademarks for granting
registration of trademark Kampa under class 11.
4. Application dated April 08, 2011 addressed to the Registrar of Trademarks for granting
registration of trademark Ryoku under class 9.
5. Application dated December 22, 2011 addressed to the Registrar of Trademarks for granting
registration of trademark Sugoi under class 11.
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OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
The Issue of Equity Shares to the Eligible Equity Shareholders is being made in accordance with the resolution
passed by our Board of Directors under Sections 81(1) and other provision of the Companies Act, through
circular resolution on October 18, 2012.
The Executive Committee of the Board of Directors in their meeting held on February 22, 2013 have determined
the Issue Price as ` 130 per Equity Share and the Rights Entitlement as 1 (One) Equity Share for every 5 (Five)
fully paid up Equity Share(s) held on the Record Date. The Issue Price has been arrived at in consultation with
the Lead Manager.
Prohibition by SEBI or RBI
Neither we, the Promoters, the Promoter Group entities, the Directors nor the persons in control of the corporate
Promoters or any other company to which the above persons are associated as promoters, directors or persons in
control, have been prohibited from accessing or operating in the capital markets, or restrained from buying,
selling or dealing in securities under any order or direction passed by the SEBI.
None of the Directors of the Company are associated with the capital markets in any manner. SEBI has not
initiated action against any entities with which the Director are associated.
Further neither us, the Promoters, the Promoter Group entities, the Group Companies nor the relatives of the
Promoters have been declared willful defaulters by the RBI or any other authority and no violations of securities
laws have been committed by them in the past and no proceedings in relation to such violations are currently
pending against them.
Except as stated in the chapter titled “Our Management” on page 65, none of our directors hold current or have
held directorships in the last five years in a listed company whose shares have been suspended from trading on
BSE or NSE or in a listed company that has been/ was delisted from any stock exchange.
Eligibility for the Issue
We are an existing company registered under the Companies Act and our Equity Shares are listed on BSE and
NSE. We are eligible to undertake the Issue in terms of Chapter IV of the SEBI ICDR Regulations.
We are eligible to make disclosures in this Letter of Offer as per clause (5) Part E of Schedule VIII of the SEBI
ICDR Regulations as we are in compliance with the following:
(a) we have been filing periodic reports, statements and information in compliance with the listing agreement
for the last three years immediately preceding the date of filing this Letter of Offer with SEBI;
(b) the reports, statements and information referred to in sub-clause (a) above are available on the website of
the BSE and the NSE which are recognised stock exchange with nationwide trading terminals;
(c) we have an investor grievance-handling mechanism which includes meeting of the Shareholders’ or
Investors’ Grievance Committee at frequent intervals, appropriate delegation of power by the Board as
regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of
investor grievances.
Further, during the financial year immediately preceding the date of the Letter of Offer we have complied with
respect to the following:
provisions of the Listing Agreement with respect to reporting and compliance under clauses 35, 40A, 41
and 49;
provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997/ the Takeover
Regulations, especially with respect to reporting pertaining to disclosure of changes in shareholding and
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pertaining to disclosure of pledged shares; and
provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992, with respect to reporting in
terms of regulation 13.
DISCLAIMER CLAUSE OF SEBI
AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI.
IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THIS LETTER OF
OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME
HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY
EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH
THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE CORRECTNESS OF THE STATEMENTS
MADE OR OPINIONS EXPRESSED IN THIS LETTER OF OFFER. THE LEAD MANAGER, ICICI
SECURITIES LIMITED, HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THIS LETTER
OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF
CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE
TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED
DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS
PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF
ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE LEAD MANAGER IS
EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES
ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE
LEAD MANAGER, ICICI SECURITIES LIMITED, HAVE FURNISHED TO SEBI A DUE
DILIGENCE CERTIFICATE DATED DECEMBER 13, 2012 WHICH READS AS FOLLOWS:
(1) WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH
COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH THE
FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE ISSUE;
(2) ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE COMPANY,
ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND INDEPENDENT
VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE,
PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS AND OTHER
PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:
(a) THE DRAFT LETTER OF OFFER FILED WITH SEBI IS IN CONFORMITY WITH
THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
(b) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO THE
REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ ISSUED BY SEBI,
THE GOVERNMENT OF INDIA AND ANY OTHER COMPETENT AUTHORITY IN
THIS BEHALF HAVE BEEN DULY COMPLIED WITH; AND
(c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR
AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL INFORMED
DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE AND SUCH
DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE
COMPANIES ACT, 1956, THE SECURITIES AND EXCHANGE BOARD OF INDIA
(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009
AND OTHER APPLICABLE LEGAL REQUIREMENTS.
(3) WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN
THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND THAT UNTIL DATE
SUCH REGISTRATION IS VALID.
(4) WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE UNDERWRITERS
TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOT APPLICABLE
135
(5) WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN OBTAINED
FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF PROMOTERS’
CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED SECURITIES PROPOSED
TO FORM PART OF PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN SHALL NOT
BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTERS DURING THE PERIOD
STARTING FROM THE DATE OF FILING THE DRAFT RED HERRING PROSPECTUS/ RED
HERRING PROSPECTUS WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-
IN PERIOD AS STATED IN THE DRAFT RED HERRING PROSPECTUS/ RED HERRING
PROSPECTUS – NOT APPLICABLE
(6) WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009,
WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE FOR COMPUTATION OF
PROMOTERS CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE
DISCLOSURES AS TO COMPLIANCE WITH THE SAID REGULATION HAVE BEEN MADE
IN THE DRAFT RED HERRING PROSPECTUS / RED HERRING PROSPECTUS – NOT
APPLICABLE
(7) WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C)
AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND
EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT
ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION
SHALL BE RECEIVED AT LEAST ONE DAY BEFORE THE OPENING OF THE ISSUE. WE
UNDERTAKE THAT AUDITORS’ CERTIFICATE TO THIS EFFECT SHALL BE DULY
SUBMITTED TO SEBI. WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN
MADE TO ENSURE THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN
ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE
RELEASED TO THE ISSUER ALONG WITH THE PROCEEDS Of THE PUBLIC ISSUE – NOT
APPLICABLE
(8) WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE COMPANY FOR WHICH THE
FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE OBJECTS
LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION OR
OTHER CHARTER OF THE COMPANY AND THAT THE ACTIVITIES WHICH HAVE BEEN
CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS
MEMORANDUM OF ASSOCIATION.
(9) WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE
THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE
BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF SECTION 73 OF
THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE
SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK
EXCHANGES MENTIONED IN THE DRAFT LETTER OF OFFER. WE FURTHER CONFIRM
THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND
THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION. – NOTED FOR
COMPLIANCE, SUBJECT TO COMPLIANCE WITH REGULATION 56 OF THE SEBI ICDR
REGULATIONS
(10) WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF
OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN
DEMAT OR PHYSICAL MODE.
(11) WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE
SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO
DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE
INVESTOR TO MAKE A WELL INFORMED DECISION.
136
(12) WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE
DRAFT LETTER OF OFFER:
(a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME, THERE
SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES OF THE
COMPANY; AND
(b) AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITH SUCH
DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI FROM TIME TO
TIME.
(13) WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO
ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF INDIA
(ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 WHILE
MAKING THE ISSUE.
(14) WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE HAS
BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS
BACKGROUND OR THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS
STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE, ETC.
(15) WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH
THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009,
CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS
OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE
REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.
(16) WE ENCLOSE STATEMENT ON ‘PRICE INFORMATION OF PAST ISSUES HANDLED BY
MERCHANT BANKER BELOW (WHO IS RESPONSIBLE FOR PRICING THIS ISSUE)’, AS
PER FORMAT SPECIFIED BY SEBI THROUGH THE CIRCULAR DATED SEPTEMBER 27,
2011 – NOT APPLICABLE
(17) WE CERTIFY THAT PROFITS FROM RELATED PARTY TRANSACTIONS HAVE ARISED
FROM LEGITIMATE BUSINESS TRANSACTIONS.
THE FILING OF THIS LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY
FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT OR
FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCE AS
MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER
RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER
ANY IRREGULARITIES OR LAPSES IN THIS LETTER OF OFFER.
Caution
Disclaimer clauses from the Company and the Lead Manager
We and the Lead Manager accept no responsibility for statements made otherwise than in this Letter of Offer or
in any advertisement or other material issued by us or by any other persons at our instance and anyone placing
reliance on any other source of information would be doing so at his own risk.
We and the Lead Manager shall make all information available to the Equity Shareholders and no selective or
additional information would be available for a section of the Equity Shareholders in any manner whatsoever
including at presentations, in research or sales reports etc. after filing of this Letter of Offer with SEBI.
No dealer, salesperson or other person is authorized to give any information or to represent anything not
contained in this Letter of Offer. You must not rely on any unauthorized information or representations. This
Letter of Offer is an offer to sell only the Equity Shares and rights to purchase the Equity Shares offered hereby,
but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this
Letter of Offer is current only as of its date.
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Investors who invest in the Issue will be deemed to have represented to us and Lead Manager and their
respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable
laws, rules, regulations, guidelines and approvals to acquire Equity Shares, and are relying on independent
advice/ evaluation as to their ability and quantum of investment in the Issue.
Disclaimer with respect to jurisdiction
This Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and
regulations thereunder. Any disputes arising out of the Issue will be subject to the jurisdiction of the appropriate
court(s) in Mumbai, India only.
Designated Stock Exchange
The Designated Stock Exchange for the purpose of the Issue will be BSE.
Disclaimer Clause of BSE
“BSE Limited (the “Exchange”) have given vide its letter Ref. No. DCS/PREF/AK-RT/756/12-13 dated
January 17, 2013, permission to this Company to use the Exchange’s name in this Letter of Offer as one of the
stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized
this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission
to this Company. The Exchange does not in any manner:
i. warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer; or
ii. warrant that this company’s securities will be listed or will continue to be listed on the Exchange; or
iii. 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 that this Letter of Offer has been cleared or approved
by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company
may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the
Exchange 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
“As required, a copy of this Letter of Offer has been submitted to National Stock Exchange of India Limited
(hereinafter referred to as NSE). NSE has given vide its letter Ref. No. NSE/LIST/190097-8 dated December
27, 2012 permission to the Issuer to use the Exchange’s name in this Letter of Offer as one of the stock
exchanges on which this Issuer’s securities are proposed to be listed. The Exchange has scrutinized this Letter of
Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this
Issuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be
deemed or construed that the Letter of Offer has been cleared or approved by NSE; nor does it in any manner
warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer; nor
does it warrant that this Issuer’s securities will be listed or will continue to be listed on the exchange; nor does it
take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any
scheme or project of this Issuer.
Every person who desires to apply for or otherwise acquire any securities of this Issuer may do so pursuant to
independent inquiry, investigation and analysis and shall not have any claim against the Exchange 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 any other reason
whatsoever.”
Filing
The Draft Letter of Offer has been filed with the Corporation Finance Department of the SEBI, located at Unit
No: 002, Ground Floor, Sakar I, Near Gandhigram Railway Station, Opp. Nehru Bridge Ashram Road,
Ahmedabad - 380 009, India and also the Stock Exchange(s).
138
Selling Restrictions
The distribution of this Letter of Offer and the issue of Equity Shares on a rights basis to persons in certain
jurisdictions outside India may be restricted by the legal requirements prevailing in those jurisdictions. Persons
into whose possession this Letter of Offer may come are required to inform themselves about and observe such
restrictions. We are making this Issue of Equity Shares on a rights basis to our Eligible Equity Shareholders and
will dispatch the Letter of Offer/ Abridged Letter of Offer and CAFs to the Eligible Equity Shareholders who
have provided an Indian address.
No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for
that purpose, except that this Letter of Offer is filed with SEBI for observations. Accordingly, the rights or
Equity Shares may not be offered or sold, directly or indirectly, and this Letter of Offer may not be distributed
in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction.
Receipt of this Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to
make such an offer and, under those circumstances, this Letter of Offer must be treated as sent for information
only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Letter of Offer
should not, in connection with the issue of the rights or Equity Shares or rights, distribute or send the same in or
into the United States or any other jurisdiction where to do so would or might contravene local securities laws or
regulations. If this Letter of Offer is received by any person in any such territory, or by their agent or nominee,
they must not seek to subscribe to the Equity Shares or the rights referred to in this Letter of Offer.
Neither the delivery of this Letter of Offer nor any sale hereunder, shall under any circumstances create any
implication that there has been no change in the Company’s affairs from the date hereof or that the information
contained herein is correct as at any time subsequent to this date.
IMPORTANT INFORMATION FOR INVESTORS – ELIGIBILITY AND TRANSFER
RESTRICTIONS
As described more fully below, there are certain restrictions regarding the rights and Equity Shares that affect
potential investors. These restrictions are restrictions on the ownership of Equity Shares by such persons
following the offer.
The rights and the Equity Shares have not been and will not be registered under the Securities Act or any
other applicable law of the United States and, unless so registered, may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the
Securities Act) (“U.S. Persons”) except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable state securities laws.
The rights and the Equity Shares have not been and will not be registered, listed or otherwise qualified in
any jurisdiction outside India and may not be offered or sold, and bids may not be made by persons in
any such jurisdiction, except in compliance with the applicable laws of such jurisdiction.
Until the expiry of 40 days after the commencement of the Issue, an offer or sale of rights or Equity Shares
within the United States by a dealer (whether or not it is participating in the Issue) may violate the registration
requirements of the Securities Act.
Eligible Investors
The rights or Equity Shares are being offered and sold only to persons who are outside the United States and are
not U.S. Persons, nor persons acquiring for the account or benefit of U.S. Persons, in offshore transactions in
reliance on Regulation S under the Securities Act and the applicable laws of the jurisdiction where those offers
and sales occur. All persons who acquire the rights or Equity Shares are deemed to have made the
representations set forth immediately below.
Equity Shares and Rights Offered and Sold in this Issue
Each purchaser acquiring the rights or Equity Shares, by its acceptance of this Letter of Offer and of the rights
or Equity Shares, will be deemed to have acknowledged, represented to and agreed with us and the Lead
139
Manager that it has received a copy of this Letter of Offer and such other information as it deems necessary to
make an informed investment decision and that:
(1) the purchaser is authorized to consummate the purchase of the rights or Equity Shares in compliance with
all applicable laws and regulations;
(2) the purchaser acknowledges that the rights and Equity Shares have not been and will not be registered
under the Securities Act or with any securities regulatory authority of any state of the United States and,
accordingly, may not be offered or sold within the United States or to, or for the account or benefit of,
U.S. Persons except pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act;
(3) the purchaser is purchasing the rights or Equity Shares in an offshore transaction meeting the
requirements of Rule 903 of Regulation S under the Securities Act;
(4) the purchaser and the person, if any, for whose account or benefit the purchaser is acquiring the rights or
Equity Shares, is a non-U.S. Person and was located outside the United States at each time (i) the offer
was made to it and (ii) when the buy order for such rights or Equity Shares was originated, and continues
to be a non-U.S. Person and located outside the United States and has not purchased such rights or Equity
Shares for the account or benefit of any U.S. Person or any person in the United Sates or entered into any
arrangement for the transfer of such rights or Equity Shares or any economic interest therein to any U.S.
Person or any person in the United States;
(5) the purchaser is not an affiliate of the Company or a person acting on behalf of an affiliate;
(6) if, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such rights or Equity
Shares, or any economic interest therein, such rights or Equity Shares or any economic interest therein
may be offered, sold, pledged or otherwise transferred only (A) outside the United States in an offshore
transaction complying with Rule 903 or Rule 904 of Regulation S under the Securities Act and (B) in
accordance with all applicable laws, including the securities laws of the states of the United States. The
purchaser understands that the transfer restrictions will remain in effect until the Company determines, in
its sole discretion, to remove them, and confirms that the proposed transfer of the rights or Equity Shares
is not part of a plan or scheme to evade the registration requirements of the Securities Act;
(7) the purchaser agrees that neither the purchaser, nor any of its affiliates, nor any person acting on behalf of
the purchaser or any of its affiliates, will make any “directed selling efforts” as defined in Regulation S
under the Securities Act in the United States with respect to the rights or the Equity Shares;
(8) the purchaser understands that such rights or Equity Shares (to the extent they are in certificated form),
unless the Company determine otherwise in accordance with applicable law, will bear a legend
substantially to the following effect:
THE EQUITY SHARES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN AN OFFSHORE TRANSACTION COMPLYING WITH
RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES.
(9) the purchaser agrees, upon a proposed transfer of the rights or the Equity Shares, to notify any purchaser
of such rights or Equity Shares or the executing broker, as applicable, of any transfer restrictions that are
applicable to the rights or Equity Shares being sold;
(10) the Company will not recognize any offer, sale, pledge or other transfer of such rights or Equity Shares
made other than in compliance with the above-stated restrictions; and
(11) the purchaser acknowledges that the Company, the Lead Manager, their respective affiliates and others
will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements
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and agrees that, if any of such acknowledgements, representations and agreements deemed to have been
made by virtue of its purchase of such rights or Equity Shares are no longer accurate, it will promptly
notify the Company, and if it is acquiring any of such rights or Equity Shares as a fiduciary or agent for
one or more accounts, it represents that it has sole investment discretion with respect to each such account
and that it has full power to make the foregoing acknowledgements, representations and agreements on
behalf of such account.
Each person in a Member State of the EEA which has implemented the Prospectus Directive (each, a “Relevant
Member State) who receives any communication in respect of, or who acquires any rights or Equity Shares
under, the offers contemplated in this Letter of Offer will be deemed to have represented, warranted and agreed
to and with each Lead Manager and the Company that in the case of any rights or Equity Shares acquired by it
as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive:
(i) the rights or Equity Shares acquired by it in the placement have not been acquired on behalf of, nor have
they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than
qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the
prior consent of the Lead Manager has been given to the offer or resale; or
(ii) where rights or Equity Shares have been acquired by it on behalf of persons in any Relevant Member
State other than qualified investors, the offer of those rights or Equity Shares to it is not treated under the
Prospectus Directive as having been made to such persons.
For the purposes of this provision, the expression an “offer of Equity Shares to the public” in relation to any of
the rights or Equity Shares in any Relevant Member States means the communication in any form and by any
means of sufficient information on the terms of the offer and the rights or Equity Shares to be offered so as to
enable an investor to decide to purchase or subscribe for the rights or Equity Shares, as the same may be varied
in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member
State.
Listing
The existing Equity Shares are listed on the BSE and the NSE. We have received “in-principle” approvals from
BSE and NSE for listing the Rights Issue Equity Shares to be allotted in the Issue vide their letters dated January
17, 2013 and December 27, 2012, respectively. We will apply to the BSE and the NSE for listing and trading of
the Rights Issue Equity Shares.
If the permission to deal in and for an official quotation of the securities is not granted by any of the Stock
Exchanges mentioned above, we shall forthwith repay, without interest, all monies received from applicants in
pursuance of this Letter of Offer.
We will issue and dispatch Allotment advice/ share certificates/demat credit and/or letters of regret along with
refund order or credit the Allotted Equity Shares to the respective beneficiary accounts, if any, within a period
of 15 days from the Issue Closing Date.
If in either of the above cases money is not repaid within eight days from the day we become liable to repay it,
(i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is
earlier), we and every Director who is an officer in default shall, on and from expiry of eight days, be jointly and
severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act.
Consents
Consents in writing of the Directors, the Auditor, the Lead Manager, the Legal Counsel, the Registrar to the
Issue and the Bankers to the Company to act in their respective capacities have been obtained and such consents
have not been withdrawn up to the date of this Letter of Offer.
S.R. Batliboi & Associates, our Auditors, have given their written consent for the inclusion of their report
appearing in this Letter of Offer and such consent and report have not been withdrawn up to the date of this
Letter of Offer.
Expert
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Except as stated below, our Company has not obtained any expert opinions:
Our Company has received written consent from the Auditor namely, S.R. Batliboi & Associates, Chartered
Accountants to include its name as an expert under Section 58 of the Companies Act in this Letter of Offer in
relation to the report of the Auditor dated May 24, 2012 and December 10, 2012, statement of tax benefits dated
February 11, 2013 included in this Letter of Offer and such consent has not been withdrawn as of the date of this
Letter of Offer. However, the term “expert” shall not be construed to mean an “expert”" as defined under the
Securities Act.
Issue Related Expenses
The Issue related expenses include, inter alia, Lead Managers’ fee, printing and distribution expenses,
advertisement and marketing expenses and Registrar, legal and depository fees and other expenses and are
estimated at ` 105 Lakhs (approximately 1.76 % of the total Issue size) and will be met out of the proceeds of the
Issue.
Activity Expense
(in ` Lakhs) Expense
(% of total expenses)
Expense
(% of Issue Size)
Fees of Lead Manager, Bankers to the Issue, Legal
Advisor, Registrar and other Intermediaries including
Brokerage Commission and out of pocket expenses
57 54.29 0.96
Advertising, Printing, Distribution, Marketing and
Stationery expenses 18 17.14 0.30
Regulatory Fees, Filing Fees, Listing Fees, Depository
Fees, Statutory Fees, Auditors Fees and Miscellaneous
expenses
30 28.57 0.50
Total estimated Issue expenses 105 100.00 1.76
Previous Issues
The Company has not made a public issue or rights issue of equity shares in the last 5 years.
The Company has no listed group companies, subsidiaries and/or associates in India which have made any
capital issuance in the last 3 years.
Investor Grievances and Redressal System
We have adequate arrangements for the redressal of investor complaints in compliance with the corporate
governance requirements under the Listing Agreements. Additionally, we have been registered with the SEBI
Complaints Redress System (“SCORES”) as required by the SEBI Circular no. CIR/ OIAE/ 2/ 2011 dated June
3, 2011. The share transfer and dematerialization for us is being handled by Sharepro Services (India) Private
Limited, Registrar and Share Transfer Agent, which is also the Registrar to the Issue. Letters are filed category
wise after being attended to. All investor grievances received by us have been handled by the Registrar and
Share Transfer agent in consultation with the compliance officer.
Our Shareholders/ Investors’ Grievance Committee comprises Mr. L G Ramakrishnan and Mr. Motoo
Morimoto, Mr. Mukesh Patel and Mr. Anil Shah. Our Shareholders’/ Investors’ Grievance Committee oversees
the reports received from the Registrar and Share Transfer agent and facilitates the prompt and effective
resolution of complaints from our shareholders and investors
Investor Grievances arising out of the Issue
The investor grievances arising out of the Issue will be handled by Sharepro Services (India) Private Limited,
the Registrar to the Issue. The Registrar will have a separate team of personnel handling post-Issue
correspondences only.
The agreement between us and the Registrar provides for retention of records with the Registrar for a period of
at least one year from the last date of dispatch of Allotment Advice/ share certificate/ demat credit/ refund order
to enable the Registrar to redress grievances of Investors.
All grievances relating to the Issue may be addressed to the Registrar to the Issue or the SCSB in case of ASBA
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Applicants giving full details such as folio no. / demat account no., name and address, contact telephone/ cell
numbers, email id of the first applicant, number of Equity Shares applied for, CAF serial number, amount paid
on application and the name of the bank/ SCSB and the branch where the CAF was deposited, along with a
photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be
furnished.
The Company is registered with the SEBI Complaints Redress System (“SCORES”) as required by the SEBI
Circular no. CIR/ OIAE/ 2/ 2011 dated June 3, 2011. Consequently, investor grievances are tracked online by
us.
The average time taken by the Registrar for attending to routine grievances will be within 30 days from the date
of receipt of complaints. In case of non-routine grievances where verification at other agencies is involved, it
would be the endeavour of the Registrar to attend to them as expeditiously as possible. We undertake to resolve
the Investor grievances in a time bound manner.
Registrar to the Issue
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex,
Sakinaka Telephone Exchange Lane,
Off Andheri-Kurla Road, Sakinaka,
Andheri (East), Mumbai – 400 072,
Maharashtra, India
Tel: +91 22 6191 5400
Fax: +91 22 6191 5444
Website: www.shareproservices.com
Email: [email protected]
Contact Person: Mr. Prakash A. Khare / Anand Moolya
SEBI Registration No: INR000001476
Investors may contact the Compliance Officer in case of any pre-Issue/ post -Issue related problems such
as non-receipt of Allotment advice/ share certificates/ demat credit/ refund orders etc. The contact details
of the Compliance Officer are as follows:
Mr. Parag Dave
Company Secretary and Compliance Officer
9th Floor, Abhijeet-I,
Mithakhali Six Roads,
Ahmedabad - 380 006
Tel: +91 79 30414800
Fax: +91 79 30414999
Email: [email protected], [email protected]
Website: http://www.hitachi-hli.com
Status of Complaints
a. Total number of complaints received during Fiscal 2010: 2 Complaints
b. Total number of complaints received during Fiscal 2011: 11 Complaints
c. Total number of complaints received during Fiscal 2012: 7 Complaints
d. Time normally taken for disposal of various types of investor complaints:
Share transfer process: Within 15 days
Share transmission process: Within 15 days
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Other Complaints: Within 10 to 15 days from the receipt of the Complaint
Status of outstanding investor complaints
As on January 31, 2013, there were no outstanding investor complaints.
Changes in Auditors during the last three years
There has been no change in Auditors during last three years.
Minimum Subscription
If we do not receive the minimum subscription of 90% of the Issue, we shall refund the entire subscription
amount received within 15 days from the Issue Closing Date. If there is delay in the refund of the subscription
amount by more than eight days after we become liable to pay the subscription amount (i.e.15 days after the
Issue Closing Date), we and every Director of the Company who is an officer in default shall be jointly and
severally liable to pay interest for the delayed period, as prescribed under sub-sections (2) and (2A) of Section
73 of the Companies Act.
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SECTION VIII – OFFERING INFORMATION
TERMS OF THE ISSUE
The Rights Issue Equity Shares proposed to be issued are subject to the terms and conditions contained in the
Draft Letter of Offer, the Letter of Offer, the Abridged Letter of Offer, including the CAF, the Memorandum of
Association and Articles of Association, the provisions of the Companies Act, the terms and conditions as may
be incorporated in the FEMA, applicable guidelines and regulations issued by SEBI and RBI, or other statutory
authorities and bodies from time to time, the Listing Agreements entered into by us, terms and conditions as
stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time
to time. All rights/ obligations of Equity Shareholders in relation to application and refunds pertaining to this
Issue shall apply to the Renouncee(s) as well.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all QIB applicants, Non-
Institutional Investors and other applicants whose application amount exceeds ` 2,00,000 complying with the
eligibilty conditions of SEBI circular dated December 30, 2009 can participate in the Issue only through the
ASBA process. The Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose
application amount is more than ` 2,00,000, can participate in the Issue either through the ASBA process or the
non ASBA process. ASBA Investors should note that the ASBA process involves application procedures that
may be different from the procedure applicable to non ASBA process. ASBA Investors should carefully read the
provisions applicable to such applications before making their application through the ASBA process. For
details, please refer to “Procedure for Application through the Applications Supported by Blocked Amount
(“ASBA”) Process” on page 153.
Further, in terms of the SEBI circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified that for making
applications by banks on own account using ASBA facility, SCSBs should have a separate account in own name
with any other SEBI registered SCSB(s). Such account shall be used solely for the purpose of making
application in public issues and clear demarcated funds should be available in such account for ASBA
applications.
Basis for the Issue
The Rights Issue Equity Shares are being offered for subscription for cash to those existing equity shareholders
whose names appear as beneficial owners as per the list to be furnished by the Depositories for the purpose of
this Rights Issue in respect of the Equity Shares held in the electronic form and on the Register of Members in
respect of the Equity Shares held in physical form at the close of business hours on the Record Date, fixed in
consultation with the Designated Stock Exchange.
Rights Entitlement
As your name appears as a beneficial owner in respect of the Equity Shares held in the electronic form or
appears in the register of members as an Equity Shareholder as on the Record Date, i.e., March 06, 2013, you
are entitled to the number of Rights Issue Equity Shares as set out in Part A of the CAFs.
The distribution of this Letter of Offer and the issue of the Equity Shares on a rights basis to persons in certain
jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into
whose possession the Letter of Offer or CAF may come are required to inform themselves about and observe
such restrictions. We are making the issue of the Equity Shares on a rights basis to the Equity Shareholders and
the Letter of Offer, the Abridged Letter of Offer and the CAFs will be dispatched only to those Equity
Shareholders who have a registered address in India or who have provided an Indian address. Any person who
acquires Rights Entitlements or the Rights Issue Equity Shares will be deemed to have declared, warranted and
agreed, by accepting the delivery of the Letter of Offer, the Abridged Letter of Offer and the CAFs, that it is not
and that at the time of subscribing for the Equity Shares or the Rights Entitlements, it will not be, in the United
States and in other restricted jurisdictions.
PRINCIPAL TERMS OF THE EQUITY SHARES ISSUED UNDER THIS ISSUE
Face Value
Each Equity Share will have the face value of ` 10.
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Issue Price
Each Rights Issue Equity Share shall be offered at an Issue Price of ` 130 for cash at a premium of ` 120 per
Rights Issue Equity Share. The Issue Price has been arrived at by us in consultation with the Lead Manager.
Rights Entitlement Ratio
The Rights Issue Equity Shares are being offered on a rights basis to the Equity Shareholders in the ratio of 1
(One) Rights Issue Equity Shares for every 5 (Five) Equity Shares held on the Record Date.
Terms of Payment
The full amount of ` 130 per Equity Share is payable on application.
Fractional Entitlements
The Equity Shares are being offered on a rights basis to the existing Equity Shareholders in the ratio of 1 (One)
Equity Shares for every 5 (Five) Equity Shares held as on the Record Date. For Equity Shares being offered on a
rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than 5 (Five) Equity
Shares or is not in a multiple of 5 (Five) Equity Shares, the fractional entitlement of such Equity Shareholders
shall be ignored for computation of the Rights Entitlement. However, Equity Shareholders whose fractional
entitlements are being ignored will be given preference in the allotment of one additional Equity Share each, if
such Equity Shareholders have applied for additional Equity Shares over and above their Rights Entitlement.
For example, if an Equity Shareholder holds 52 (Fifty Two) Equity Shares, he will be entitled to 10 (Ten) Equity
Shares on a rights basis. He will also be given a preferential consideration for the Allotment of one additional
Equity Share if he has applied for the same.
Also, those Equity Shareholders holding less than 5 (Five) Equity Shares and therefore entitled to ‘Zero’ Rights
Issue Equity Shares under this Issue shall be despatched a CAF with ‘Zero’ entitlement. Such Equity
Shareholders are entitled to apply for additional Rights Issue Equity Shares and would be given preference in
the allotment of one additional Rights Issue Equity Share if, such Equity Shareholders have applied for
additional Rights Issue Equity Shares. However, they cannot renounce the same to third parties.
Ranking
The Equity Shares being issued shall be subject to the provisions of our Memorandum of Association and
Articles of Association. The Equity Shares issued under this Issue shall rank pari passu, in all respects including
dividend, with our existing Equity Shares.
Mode of payment of dividend
In the event of declaration of dividend, we shall pay dividend to Equity Shareholders as per the provisions of the
Companies Act and the provisions of our Articles of Association.
Listing and trading of Rights Issue Equity Shares proposed to be issued
Our existing Equity Shares are currently listed and traded on BSE (Scrip Code: 523398 under the ISIN –
INE782A01015) and the NSE (Scrip Code: HITACHIHOM under the ISIN – INE782A01015).
The listing and trading of the Equity Shares shall be based on the current regulatory framework applicable
thereto. Accordingly, any change in the regulatory regime would affect the schedule. Upon Allotment the Equity
Shares shall be traded on Stock Exchanges in the demat segment only.
We have made an application for “in-principle” approval for listing of the Equity Shares to the BSE and the
NSE and have received such approval from the BSE and the NSE pursuant to the letter numbers
DCS/PREF/AK-RT/756/12-13 and NSE/LIST/190097-8, dated January 17, 2013 and December 27, 2012
respectively. We will apply to the BSE and the NSE for final approval for the listing and trading of the Equity
Shares. All steps for the completion of the necessary formalities for listing and commencement of trading of the
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Equity Shares to be allotted pursuant to the Issue shall be taken as soon as possible from the finalisation of the
basis of allotment but not later than 7 working days of finalization of basis of allotment. The fully paid up
Equity Shares proposed to be issued on a rights basis shall be listed and admitted for trading on the BSE and the
NSE under the existing ISIN for fully paid up Equity Shares.
Rights of the Equity Shareholder
Subject to applicable laws, the Equity Shareholders shall have the following rights:
Right to receive dividend, if declared;
Right to attend general meetings and exercise voting powers, unless prohibited by law;
Right to vote in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right to free transferability of Equity Shares; and
Such other rights as may be available to a shareholder of a listed public company under the Companies
Act and Memorandum of Association and Articles of Association.
General Terms of the Issue
Market Lot
The market lot for the Equity Shares in dematerialised mode is one Equity Share. In case an Equity Shareholder
holds Equity Shares in physical form, we would issue to the allottees one certificate for the Equity Shares
allotted to each folio (“Consolidated Certificate”). In respect of Consolidated Certificates, we will upon receipt
of a request from the respective Equity Shareholders, split such Consolidated Certificates into smaller
denominations within one week’s time from the receipt of the request in respect thereof. We shall not charge a
fee for splitting any of the Consolidated Certificates.
Joint Holders
Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed to hold the
same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles of
Association.
Nomination
In terms of Section 109A of the Companies Act, nomination facility is available in respect of the Equity Shares.
An Investor can nominate any person by filling the relevant details in the CAF in the space provided for this
purpose.
In case of Equity Shareholders who are individuals, a sole Equity Shareholder or the first named Equity
Shareholder, along with other joint Equity Shareholders, if any, may nominate any person(s) who, in the event
of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity
Shares. A person, being a nominee, becoming entitled to the Equity Shares by reason of the death of the original
Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he were the
registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make
a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the
event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon
the sale of the Equity Shares by the person nominating. A transferee will be entitled to make a fresh nomination
in the manner prescribed. Fresh nominations can be made only in the prescribed form available on request at our
Registered Office or such other person at such addresses as may be notified by us. The Investor can make the
nomination by filling in the relevant portion of the CAF. In terms of Section 109B of the Companies Act, any
person who becomes a nominee by virtue of the provisions of Section 109A of the Companies Act, shall upon
the production of such evidence as may be required by the Board, elect either:
to register himself or herself as the holder of the Equity Shares; or
to make such transfer of the Equity Shares, as the deceased holder could have made.
Further, the Board may at any time give notice requiring any nominee to choose either to be registered himself
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or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of ninety days,
the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable in respect of the
Equity Shares, until the requirements of the notice have been complied with.
Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already
registered the nomination with us, no further nomination needs to be made for Equity Shares that may be
allotted in this Issue under the same folio.
In case the allotment of Equity Shares is in dematerialised form, there is no need to make a separate nomination
for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depositary Participant
(“DP”) of the investor would prevail. Any investor desirous of changing the existing nomination is requested to
inform their respective DP.
Notices
All notices to the Equity Shareholder(s) required to be given by us shall be published in one English national
daily with wide circulation, one Hindi national daily with wide circulation and one regional language daily
newspaper with wide circulation in the state where our registered office is located and/ or will be sent by
ordinary post/ registered post / speed post to the registered address of the Equity Shareholders in India or the
Indian address provided by the Equity Shareholders, from time to time.
Subscription by the Promoter and Promoter Group
Our Promoter, Hitachi Appliances Inc., has confirmed vide its letter dated November 01, 2012 that it intends to
subscribe to the full extent of its Rights Entitlement in the Issue, in compliance with regulation 10 (4) of
Takeover Regulations. Further, it has confirmed that it intends to subscribe for (i) additional Right Issue Equity
Shares, and (ii) Rights Issue Equity Shares, if any, which remain unsubscribed. Such subscription to additional
Rights Issue Equity Shares and the unsubscribed portion, if any, to be made by the it, shall be in accordance
with regulation 10 (4) of Takeover Regulations. Further, such subscription shall not result in breach of minimum
public shareholding requirement as stipulated in the Listing Agreements. Further, our Promoter, Hitachi India
Private Limited has vide its letter dated February 11, 2013 inter alia confirmed that they do not intend to
subscribe either in full or part of its entitlement of Equity Shares in the Issue.
For details, please refer to the chapter “Terms of the Issue - Basis of Allotment” on page 161.
Procedure for Application
The CAF for Rights Issue Equity Shares offered as a part of the Issue would be printed for all Eligible Equity
Shareholders. In case the original CAFs are not received by the Eligible Equity Shareholders or is misplaced by
the Eligible Equity Shareholders, the Eligible Equity Shareholders may request the Registrar to the Issue, for
issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their
full name and address. In case the signature of the Eligible Equity Shareholder(s) does not match with the
specimen registered with us, the application is liable to be rejected.
Please note that neither the Company nor the Registrar shall be responsible for delay in the receipt of the CAF/
duplicate CAF attributable to postal delays or if the CAF/ duplicate CAF are misplaced in the transit.
Please note that QIB applicants, Non-Institutional Investors and other applicants whose application amount
exceeds ` 2,00,000 can participate in the Issue only through the ASBA process. Further, all QIB applicants and
Non-Institutional Investors are mandatorily required to use ASBA, even if application amount does not exceed ` 2,00,000. The applicants who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose
application amount is more than ` 2,00,000, can participate in the Issue either through the ASBA process or the
non ASBA process.
Please also note that by virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas
Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has
subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas
Corporate Bodies (OCBs) Regulations, 2003. Any Equity Shareholder being an OCB is required to obtain prior
approval from RBI for applying to this Issue.
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The CAF consists of four parts:
Part A: Form for accepting the Equity Shares offered as a part of this Issue, in full or in part, and for
applying for additional Equity Shares;
Part B: Form for renunciation of Equity Shares;
Part C: Form for application for renunciation of Equity Shares by Renouncee(s);
Part D: Form for request for split Application forms.
Option available to the Equity Shareholders
The CAFs will clearly indicate the number of Rights Issue Equity Shares that the Shareholder is entitled to.
If the Eligible Equity Shareholder applies for an investment in the Rights Issue Equity Shares, then he can:
Apply for his Rights Entitlement of Rights Issue Equity Shares in full;
Apply for his Rights Entitlement of Rights Issue Equity Shares in part;
Apply for his Rights Entitlement of Rights Issue Equity Shares in part and renounce the other part of
the Equity Shares;
Apply for his Rights Entitlement in full and apply for additional Rights Issue Equity Shares;
Renounce his Rights Entitlement in full.
Acceptance of the Issue
You may accept the offer to participate and apply for the Rights Issue Equity Shares, either in full or in part
without renouncing the balance by filling Part A of the CAFs and submit the same along with the application
money payable to the collection branches of the Bankers to the Issue as mentioned on the reverse of the CAFs
before the close of the banking hours on or before the Issue Closing Date or such extended time as may be
specified by the Board of Directors in this regard. Investors at centres not covered by the branches of Bankers to
the Issue can send their CAFs together with the cheque drawn at par on a local bank at Mumbai/ demand draft
payable at Mumbai to the Registrar to the Issue by registered post / speed post. Such applications sent to anyone
other than the Registrar to the Issue are liable to be rejected. For further details on the mode of payment, please
refer to the headings “Mode of Payment for Resident Equity Shareholders/ Investors” and “Mode of Payment for
Non-Resident Equity Shareholders/ Investors” on page 171.
Additional Equity Shares
You are eligible to apply for additional Rights Issue Equity Shares over and above your Rights Entitlement,
provided that you are eligible to apply under applicable law and have applied for all the Rights Issue Equity
Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for
additional Rights Issue Equity Shares shall be considered and allotment shall be made at the sole discretion of
the Board, subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in
the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 161.
If you desire to apply for additional Rights Issue Equity Shares, please indicate your requirement in the place
provided for additional Equity Shares in Part A of the CAF. The Renouncees applying for all the Equity Shares
renounced in their favour may also apply for additional Equity Shares.
Where the number of additional Rights Issue Equity Shares applied for exceeds the number available for
Allotment, the Allotment would be made on a fair and equitable basis in consultation with the Designated Stock
Exchange.
Renunciation
This Issue includes a right exercisable by you to renounce the Rights Issue Equity Shares offered to you either in
full or in part in favour of any other person or persons. Your attention is drawn to the fact that we shall not Allot
and/ or register and Rights Issue Equity Shares in favour of more than three persons (including joint holders),
partnership firm(s) or their nominee(s), minors, HUF, any trust or society (unless the same is registered under
the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to
societies or trusts and is authorized under its constitution or bye-laws to hold equity shares, as the case may be).
Additionally, existing Equity Shareholders may not renounce in favour of persons or entities in the United
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States, or to, or for the account or benefit of a “U.S. Person” (as defined in Regulation S), or who would
otherwise be prohibited from being offered or subscribing for Equity Shares or Rights Entitlement under
applicable securities laws.
Pursuant to letter dated January 23, 2013, the RBI has allowed the renunciation of Rights Entitlements by a (i)
non resident Equity Shareholder to a resident investor, (ii) a non resident Equity Shareholder to a non resident
investor and (iii) a resident Equity Shareholder to a non resident investor, on the floor of the Stock Exchanges.
However, renunciation of Rights Entitlements by way of private arrangement by (i) non resident Equity
Shareholder to a resident investor, (ii) a non resident Equity Shareholder to a non resident investor and (iii) a
resident Equity Shareholder to a non resident investor, would require prior approval of the RBI. Renouncees
who have acquired the CAF or SAF by way of a private arrangement are required to submit approval from RBI,
along with the CAF or SAF. In case the RBI approvals are not submitted, we reserve the right to reject such
CAF or SAF.
Renunciations by OCBs
By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies
(“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the
Foreign Exchange Management (withdrawal of General Permission to Overseas Corporate Bodies (OCBs))
Regulations, 2003. Accordingly, the existing Equity Shareholders who do not wish to subscribe to the Equity
Shares being offered but wish to renounce the same in favour of Renouncee shall not renounce the same
(whether for consideration or otherwise) in favour of OCB(s).
The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003 that
OCBs which are incorporated and are not under the adverse notice of the RBI are permitted to undertake fresh
investments as incorporated non-resident entities in terms of Regulation 5(1) of RBI Notification No.20/ 2000-
RB dated May 3, 2000 under FDI Scheme with the prior approval of Government if the investment is through
Government Route and with the prior approval of RBI if the investment is through Automatic Route on case by
case basis. Shareholders renouncing their rights in favour of OCBs may do so provided such Renouncee obtains
a prior approval from the RBI. On submission of such approval to us at our Registered Office, the OCB shall
receive the Abridged Letter of Offer and the CAF.
Part ‘A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been
made. If used, this will render the application invalid. Submission of the CAF to the Banker to the Issue at its
collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly
filled in shall be conclusive evidence for us of the person(s) applying for Equity Shares in Part ‘C’ of the CAF to
receive Allotment of such Equity Shares. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will
render the application invalid. Renouncee(s) will have no further right to renounce any Equity Shares in favour
of any other person.
Procedure for renunciation
To renounce all the Equity Shares offered to an Equity Shareholder in favour of one Renouncee
If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of
joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been
made should complete and sign Part ‘C’ of the CAF. In case of joint Renouncees, all joint Renouncees must sign
Part ‘C’ of the CAF.
To renounce in part/ or renounce the whole to more than one person(s)
If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this
Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of SAFs. Please
indicate your requirement of SAFs in the space provided for this purpose in Part ‘D’ of the CAF and return the
entire CAF to the Registrar to the Issue so as to reach them latest by the close of business hours on the last date
of receiving requests for SAFs. On receipt of the required number of SAFs from the Registrar, the procedure as
mentioned in paragraph above shall have to be followed.
In case the signature of the Equity Shareholder(s), who has renounced the Equity Shares, does not match with
the specimen registered with us/ Depositories, the application is liable to be rejected.
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Renouncee(s)
The person(s) in whose favour the Equity Shares are renounced should fill in and sign Part ‘C’ of the CAF and
submit the entire CAF to the Bankers to the Issue or to any of the collection branches of the Bankers to the Issue
as mentioned in the reverse of the CAF on or before the Issue Closing Date along with the application money in
full. The Renouncee cannot further renounce.
Change and/ or introduction of additional holders
If you wish to apply for the Rights Issue Equity Shares jointly with any other person(s), not more than three
(including you), who is/ are not already a joint holder with you, it shall amount to renunciation and the
procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name
of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed.
However, this right of renunciation is subject to the express condition that the Board of Directors shall be
entitled in its absolute discretion to reject the request for Allotment from the Renouncee(s) without assigning
any reason thereof.
Instructions for Options
The summary of options available to the Eligible Equity Shareholder is presented below. You may exercise any
of the following options with regard to the Rights Issue Equity Shares offered, using the CAF:
Option Available Action Required
i. Accept whole or part of your Rights
Entitlement without renouncing the
balance.
Fill in and sign Part A (All joint holders must sign)
ii. Accept your Rights Entitlement in
full and apply for additional Rights
Issue Equity Shares
Fill in and sign Part A including Block III relating to the
acceptance of entitlement and Block IV relating to
additional Equity Shares (All joint holders must sign)
iii. Accept a part of your Rights
Entitlement and renounce the
balance to one or more
Renouncee(s)
OR
Renounce your Rights Entitlement
of all the Rights Issue Equity Shares
offered to you to more than one
Renouncee
Fill in and sign Part D (all joint holders must sign)
requesting for SAFs. Send the CAF to the Registrar to the
Issue so as to reach them on or before the last date for
receiving requests for SAFs. Splitting will be permitted
only once.
On receipt of the SAF take action as indicated below.
For the Equity Shares you wish to accept, if any, fill in and
sign Part A.
For the Rights Issue Equity Shares you wish to renounce,
fill in and sign Part B indicating the number of Equity
Shares renounced and hand it over to the Renouncee. Each
of the Renouncee should fill in and sign Part C for the
Equity Shares accepted by them.
iv. Renounce your Rights Entitlement
in full to one person (Joint
Renouncees are considered as one)
Fill in and sign Part B (all joint holders must sign)
indicating the number of Equity Shares renounced and
hand it over to the Renouncee. The Renouncee must fill in
and sign Part C (All joint Renouncees must sign)
v. Introduce a joint holder or change
the sequence of joint holders
This will be treated as a renunciation. Fill in and sign Part
B and the Renouncee must fill in and sign Part C.
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In case of Equity Shares held in physical form, applicants must provide information in the CAF as to
their respective bank account numbers, name of the bank, to enable the Registrar to print the said details
on the refund order. Failure to comply with this may lead to rejection of application. In case of Equity
Shares held in demat form, bank account details furnished by the Depositories will be printed on the
refund order.
Please note that:
Options iii – iv will not be available for Equity Shareholders applying through the ASBA process.
Part ‘A’ of the CAF must not be used by any person(s) other than the Eligible Equity Shareholder to
whom the Letter of Offer has been addressed. If used, this will render the application invalid.
Request for Split Application Forms/ SAF should be made for a minimum of one Equity Share or, in
either case, in multiples thereof, and one SAF for the balance Equity Shares, if any.
Request by the Equity Shareholder for the SAFs should reach the Registrar on or before March 21,
2013.
Only the Equity Shareholder to whom the Letter of Offer has been addressed shall be entitled to
renounce and to apply for SAFs. Forms once split cannot be split further.
SAFs will be sent to the Equity Shareholder(s) by post at the applicant’s sole risk.
Equity Shareholders may not renounce in favour of persons or entities in the restricted jurisdictions
including United States or to or for the account or benefit of a “U.S. Person” (as defined in Regulation
S), or who would otherwise be prohibited from being offered or subscribing for Equity Shares or
Rights Entitlement under applicable securities laws.
Submission of the CAF to the Banker to the Issue at its collecting branches specified on the reverse of
the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence
for us of the person(s) applying for Equity Shares in Part ‘C’ of the CAF to receive Allotment of such
Equity Shares.
While applying for or renouncing their Rights Entitlement, joint Equity Shareholders must sign the
CAF in the same order as per specimen signatures recorded with us or the Depositories.
Non-resident Equity Shareholders: Application(s) received from Non-Resident/ NRIs, or persons of
Indian origin residing abroad for allotment of Equity Shares alloted as a part of this Issue shall, inter
alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA in the
matter of refund of application money, allotment of equity shares, subsequent issue and allotment of
equity shares, interest, export of share certificates, etc. In case a Non-Resident or NRI Eligible Equity
Shareholder has specific approval from the RBI, in connection with his shareholding, he should enclose
a copy of such approval with the CAF.
Applicants must write their CAF number at the back of the cheque / demand draft.
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the Equity Shares, the Registrar to the Issue will
issue a duplicate CAF on the request of the Eligible Equity Shareholder who should furnish the registered folio
number/ DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note
that the request for duplicate CAF should reach the Registrar to the Issue at least 7 days prior to the Issue
Closing Date. Please note that those who are making the application in the duplicate form should not utilize the
original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the Eligible
Equity Shareholder violates such requirements, he/ she shall face the risk of rejection of both the applications.
Neither the Registrar nor the Lead Manager or our Company, shall be responsible for postal delays or loss of
duplicate CAFs in transit, if any.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate
CAF may make an application to subscribe to the Issue on plain paper, along with demand draft (after deducting
banking and postal charges) payable at Mumbai which should be drawn in favour of “Hitachi Home & Life
Solutions (India) Limited – Rights Issue - R” in case of resident shareholders and non-resident shareholders
applying on non-repatriable basis and in favour of “Hitachi Home & Life Solutions (India) Limited – Rights
Issue – NR” in case of non-resident shareholders applying on repatriable basis and send the same by registered
post / speed post directly to the Registrar to the Issue so as to reach Registrar to the Issue on or before the Issue
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Closing Date. The envelope should be superscribed “Hitachi Home & Life Solutions (India) Limited – Rights
Issue - R” in case of resident shareholders and Non-resident shareholders applying on non-repatriable basis, and
“Hitachi Home & Life Solutions (India) Limited – Rights Issue – NR” in case of non-resident shareholders
applying on repatriable basis.
The application on plain paper, duly signed by the applicant(s) including joint holders, in the same order as per
specimen recorded with us or the Depositories, must reach the office of the Registrar to the Issue before the
Issue Closing Date and should contain the following particulars:
Name of Issuer, being Hitachi Home & Life Solutions (India) Limited;
Name and address of the Equity Shareholder including joint holders;
Registered Folio Number/ DP and Client ID no.;
Number of Equity Shares held as on Record Date;
Number of Equity Shares entitled to;
Number of Equity Shares applied for;
Number of additional Equity Shares applied for, if any;
Total number of Equity Shares applied for;
Total amount paid at the rate of ` 130 per Equity Share;
Particulars of cheque/ demand draft;
Savings/ Current Account Number and name and address of the bank where the Equity Shareholder
will be depositing the refund order. In case of Equity Shares allotted in demat form, the bank account
details will be obtained from the information available with the Depositories;
Except for applications on behalf of the Central or State Government, the residents of Sikkim and the
officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint
names, irrespective of the total value of the Equity Shares applied for pursuant to the Issue;
Share certificate numbers and distinctive numbers of Equity Shares, if held in physical form;
Allotment option preferred - physical or demat form, if held in physical form;
If the payment is made by a draft purchased from NRE/ FCNR/ NRO account, as the case may be, an
account debit certificate from the bank issuing the draft confirming that the draft has been issued by
debiting the NRE/ FCNR/ NRO account;
Signature of the Equity Shareholders to appear in the same sequence and order as they appear in the our
records; and
Additionally, all such applicants are deemed to have accepted the following:
“I/ We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be, registered
under the United States Securities Act of 1933 (the “US Securities Act”) or any United States state securities
laws, and may not be offered, sold, resold or otherwise transferred within the United States or to the territories
or possessions thereof (the “United States”) or to, or for the account or benefit of a “U.S. Person” as defined in
Regulation S of the US Securities Act (“Regulation S”). I/ we understand the Equity Shares referred to in this
application are being offered in India but not in the United States. I/ we understand the offering to which this
application relates is not, and under no circumstances is to be construed as, an offering of any Equity Shares or
Rights Entitlement for sale in the United States, or as a solicitation therein of an offer to buy any of the said
Equity Shares or Rights Entitlement in the United States. Accordingly, I/ we understand this application should
not be forwarded to or transmitted in or to the United States at any time. I/ we understand that neither us, nor the
Registrar, the Lead Manager or any other person acting on behalf of us will accept subscriptions from any
person, or the agent of any person, who appears to be, or who we, the Registrar, the Lead Manager or any other
person acting on behalf of us have reason to believe is, a resident of the United States or a “U.S. Person” (as
defined in Regulation S) or is ineligible to participate in the Issue under the securities laws of their jurisdiction.
I/ We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any
jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to whom it
is unlawful to make such offer, sale or invitation except under circumstances that will result in compliance with
any applicable laws or regulations. We satisfy, and each account for which we are acting satisfies, all suitability
standards for investors in investments of the type subscribed for herein imposed by the jurisdiction of our
residence.
I/ We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold, pledged
or otherwise transferred except in an offshore transaction in compliance with Regulation S, or otherwise
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US
Securities Act.
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I/ We (i) am/ are, and the person, if any, for whose account I/ we am/ are acquiring such Rights Entitlement and/
or the Equity Shares is/ are, outside the United States, (ii) am/ are not a “U.S. Person” as defined in Regulation
S, and (iii) is/ are acquiring the Rights Entitlement and/ or the Equity Shares in an offshore transaction meeting
the requirements of Regulation S.
I/ We acknowledge that we, the Lead Manager, their affiliates and others will rely upon the truth and accuracy
of the foregoing representations and agreements.”
Please note that those who are making the application otherwise than on original CAF shall not be entitled to
renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is
received subsequently. If the Investor violates such requirements, he/ she shall face the risk of rejection of both
the applications. We shall refund such application amount to the Investor without any interest thereon.
Investors are requested to strictly adhere to these instructions. Failure to do so could result in an application
being rejected, with our Company, the Lead Manager and the Registrar not having any liability to the Investor.
Last date for Application
The last date for submission of the duly filled in CAF is March 28, 2013.The Board of Directors may extend the
said date for such period as it may determine from time to time, subject to the Issue Period not exceeding 30
days.
If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the Issue on
or before the close of banking hours on the aforesaid last date or such date as may be extended by the Board or
any authorised committee thereof, the invitation to offer contained in the Letter of Offer shall be deemed to have
been declined and the Board or any authorised committee thereof shall be at liberty to dispose of the Equity
Shares hereby offered, as provided under the chapter “Terms of the Issue – Basis of Allotment” on page 161.
PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED
AMOUNT (“ASBA”) PROCESS
This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA
Process. The Lead Manager and we are not liable for any amendments or modifications or changes in applicable
laws or regulations, which may occur after the date of the Letter of Offer. Investors who are eligible to apply
under the ASBA Process are advised to make their independent investigations and to ensure that the CAF is
correctly filled up.
The Lead Manager, we, our directors, affiliates, associates and their respective directors and officers and the
Registrar to the Issue shall not take any responsibility for acts, mistakes, errors, omissions and commissions etc.
in relation to applications accepted by SCSBs, applications uploaded by SCSBs, applications accepted but not
uploaded by SCSBs or applications accepted and uploaded without blocking funds in the ASBA Accounts. It
shall be presumed that for applications uploaded by SCSBs, the amount payable on application has been blocked
in the relevant ASBA Account.
Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number
CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are (i) QIBs, (ii) Non-Institutional Investors or
(iii) other applicants whose application amount exceeds ` 2,00,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI Circular dated December 30, 2009.
Further, all QIB applicants and Non-Institutional Investors are mandatorily required to use ASBA, even if
application amount does not exceed ` 2,00,000. The Investors who are not (i) QIBs, (ii) Non-Institutional
Investors or (iii) investors whose application amount is more than ` 2,00,000, can participate in the Issue either
through the ASBA process or the non ASBA process.
Further, in terms of the SEBI circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified that for making
applications by banks on own account using ASBA facility, SCSBs should have a separate account in own name
with any other SEBI registered SCSB(s). Such account shall be used solely for the purpose of making
application in public issues and clear demarcated funds should be available in such account for ASBA
applications.
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The list of banks which have been notified by SEBI to act as SCSBs for the ASBA Process is provided on
http://www.sebi.gov.in/sebiweb/home/list/5/33/0/0/Recognised-Intermediaries and/or such other website(s) as
may be prescribed by the SEBI / Stock Exchange(s) from time to time. For details on Designated Branches of
SCSBs collecting the CAF, please refer the above mentioned SEBI link.
Equity Shareholders who are eligible to apply under the ASBA Process
The option of applying for Rights Issue Equity Shares through the ASBA Process is available only to the Equity
Shareholders on the Record Date.
To qualify as ASBA Applicants, Eligible Equity Shareholders:
are required to hold Equity Shares in dematerialized form as on the Record Date and apply for (i) their
Rights Entitlement or (ii) their Rights Entitlement and Equity Shares in addition to their Rights
Entitlement in dematerialized form;
should not have renounced their Right Entitlement in full or in part;
should not have split the CAF and further renounced it;
should not be Renouncees;
should apply through blocking of funds in bank accounts maintained with SCSBs; and
are eligible under applicable securities laws to subscribe for the Rights Entitlement and the Rights Issue
Equity Shares in the Issue.
CAF
The Registrar will dispatch the CAF to all Eligible Equity Shareholders as per their Rights Entitlement on the
Record Date for the Issue. Those Eligible Equity Shareholders who must apply or who wish to apply through the
ASBA will have to select for this ASBA mechanism in Part A of the CAF and provide necessary details.
Eligible Equity Shareholders desiring to use the ASBA Process are required to submit their applications by
selecting the ASBA Option in Part A of the CAF. Application in electronic mode will only be available with
such SCSBs who provide such facility. The Eligible Equity Shareholder shall submit the CAF to the Designated
Branch of the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the
application in the ASBA Account.
More than one ASBA Investor may apply using the same ASBA Account, provided that SCSBs will not accept
a total of more than five CAFs with respect to any single ASBA Account as provided for under SEBI Circular
dated December 30, 2009.
Acceptance of the Issue
You may accept the Issue and apply for the Rights Issue Equity Shares either in full or in part, by filling Part A
of the respective CAFs sent by the Registrar, selecting the ASBA Mechanism in Part A of the CAF and submit
the same to the Designated Branch of the SCSB before the close of the banking hours on or before the Issue
Closing Date or such extended time as may be specified by the Board of Directors or any committee thereof in
this regard.
Mode of payment
The Eligible Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on
application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the
amount payable on application, in an ASBA Account.
After verifying that sufficient funds are available in the in an ASBA Account details of which are provided in
the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the
CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs
shall transfer such amount as per the Registrar’s instruction from the ASBA Account. This amount will be
transferred in terms of the SEBI ICDR Regulations, into the separate bank account maintained by us as per the
provisions of section 73(3) of the Companies Act. The balance amount remaining after the finalisation of the
Basis of Allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the
Registrar to the Issue and the Lead Manager to the respective SCSB.
155
The Equity Shareholders applying under the ASBA Process would be required to give instructions to the
respective SCSBs to block the entire amount payable on their application at the time of the submission of the
CAF.
The SCSB may reject the application at the time of acceptance of CAF if the ASBA Account with the SCSB
details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds
equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the
application by the SCSB, we would have a right to reject the application only on technical grounds.
Options available to the Eligible Equity Shareholders applying under the ASBA Process
The summary of options available to the Equity Shareholders is presented below. You may exercise any of the
following options with regard to the Equity Shares, using the respective CAFs received from Registrar:
Option Available Action Required
1. Accept whole or part of your Rights Entitlement
without renouncing the balance.
Fill in and sign Part A of the CAF (All joint holders
must sign)
2. Accept your Rights Entitlement in full and apply
for additional Equity Shares
Fill in and sign Part A of the CAF including Block III
relating to the acceptance of entitlement and Block IV
relating to additional Equity Shares (All joint holders
must sign)
The Eligible Equity Shareholders applying under the ASBA Process will need to select the ASBA process
option in the CAF and provide required necessary details. However, in cases where this option is not selected,
but the CAF is tendered to the designated branch of the SCSBs with the relevant details required under the
ASBA process option and the SCSBs block the requisite amount, then that CAF would be treated as if the
Equity Shareholder has selected to apply through the ASBA process option.
Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number
CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or other
applicants whose application amount exceeds ` 2,00,000 can participate in the Issue only through the ASBA
process. Further, all QIB applicants and Non-Institutional Investors are mandatorily required to use ASBA, even
if application amount does not exceed ` 2,00,000. The Investors who are not (i) QIBs, (ii) Non-Institutional
Investors or (iii) investors whose application amount is more than ` 2,00,000, can participate in the Issue either
through the ASBA process or the non ASBA process, subject to them complying with the requirements of SEBI
Circular dated December 30, 2009.
Further, in terms of the SEBI circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified that for making
applications by banks on own account using ASBA facility, SCSBs should have a separate account in own name
with any other SEBI registered SCSB(s). Such account shall be used solely for the purpose of making
application in public issues and clear demarcated funds should be available in such account for ASBA
applications.
Additional Rights Issue Equity Shares
You are eligible to apply for additional Rights Issue Equity Shares over and above the number of Rights Issue
Equity Shares that you are entitled to, provided that you are eligible to apply for the Rights Issue Equity Shares
under applicable law and you have applied for all the Rights Issue Equity Shares (as the case may be) offered
without renouncing them in whole or in part in favour of any other person(s). Where the number of additional
Equity Shares applied for exceeds the number available for Allotment, the Allotment would be made on a fair
and equitable basis in consultation with the Designated Stock Exchange. Applications for additional Rights
Issue Equity Shares shall be considered and Allotment shall be made at the sole discretion of the Board, in
consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue -
Basis of Allotment” on page 161.
If you desire to apply for additional Equity Shares please indicate your requirement in the place provided for
additional Equity Shares in Part A of the CAF. The Renouncee applying for all the Equity Shares renounced in
their favour may also apply for additional Equity Shares.
156
Renunciation under the ASBA Process
Renouncees are not eligible to participate in this Issue through the ASBA Process.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate
CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on plain
paper. The Equity Shareholder shall submit the plain paper application to the SCSB for authorising such SCSB
to block an amount equivalent to the amount payable on the application in the said bank account maintained
with the same SCSB.
The envelope should be superscribed “Hitachi Home & Life Solutions (India) Limited – Rights Issue- R” or
“Hitachi Home & Life Solutions (India) Limited – Rights Issue- NR”, as the case may be. The application on
plain paper, duly signed by the Investors including joint holders, in the same order as per the specimen recorded
with us or the Depositories, must reach the Designated Branch of the SCSBs before the Issue Closing Date and
should contain the following particulars:
Name of Issuer, being Hitachi Home & Life Solutions (India) Limited;
Name and address of the Equity Shareholder including joint holders;
Registered Folio Number/ DP and Client ID no.;
Number of Equity Shares held as on Record Date;
Number of Equity Shares entitled to;
Number of Equity Shares applied for;
Number of additional Equity Shares applied for, if any;
Total number of Equity Shares applied for;
Total amount to be blocked at the rate of ` 130 per Equity Share;
Details of the ASBA Account such as the account number, name, address and branch of the relevant
SCSB;
In case of non-resident investors, details of the NRE/ FCNR/ NRO account such as the account
number, name, address and branch of the SCSB with which the account is maintained;
Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts(subject to submitting sufficient documentary evidence in support of
their claim for exemption, provided that such transactions are undertaken on behalf of the Central and
State Government and not in their personal capacity), PAN number of the Investor and for each
Investor in case of joint names, irrespective of the total value of the Equity Shares applied for pursuant
to the Issue; and
Signature of the Shareholders to appear in the same sequence and order as they appear in our records or
depositories records.
In case of Non Resident Shareholders, NRE/ FCNR/ NRO A/c No. name and address of the bank and
branch; and
Additionally, all such applicants are deemed to have accepted the following:
“I/ We understand that neither the Rights Entitlement nor the Equity Shares have been, and will be,
registered under the United States Securities Act of 1933 (the “US Securities Act”) or any United States
state securities laws, and may not be offered, sold, resold or otherwise transferred within the United States
or to the territories or possessions thereof (the “United States” or to or for the account or benefit of a “U.S.
Person” as defined in Regulation S of the US Securities Act (“Regulation S”). I/ we understand the Equity
Shares referred to in this application are being offered in India but not in the United States. I/ we understand
the offering to which this application relates is not, and under no circumstances is to be construed as, an
offering of any Equity Shares or Rights Entitlement for sale in the United States, or as a solicitation therein
of an offer to buy any of the said Equity Shares or Rights Entitlement in the United States. Accordingly, I/
we understand this application should not be forwarded to or transmitted in or to the United States at any
time. I/ we understand that none of we, the Registrar, the Lead Manager or any other person acting on
behalf of us will accept subscriptions from any person, or the agent of any person, who appears to be, or
who, we, the Registrar, the Lead Manager or any other person acting on behalf of we have reason to believe
is, a resident of the United States or a “U.S. Person” as defined in Regulation S, or is ineligible to
participate in the Issue under the securities laws of their jurisdiction.
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I/ We will not offer, sell or otherwise transfer any of the Equity Shares which may be acquired by us in any
jurisdiction or under any circumstances in which such offer or sale is not authorized or to any person to
whom it is unlawful to make such offer, sale or invitation except under circumstances that will result in
compliance with any applicable laws or regulations. We satisfy, and each account for which we are acting
satisfies, all suitability standards for investors in investments of the type subscribed for herein imposed by
the jurisdiction of our residence.
I/ We understand and agree that the Rights Entitlement and Equity Shares may not be reoffered, resold,
pledged or otherwise transferred except in an offshore transaction in compliance with Regulation S, or
otherwise pursuant to an exemption from, or in a transaction not subject to, the registration requirements of
the US Securities Act.
I/ We (i) am/ are, and the person, if any, for whose account I/ we am/ are acquiring such Rights Entitlement
and/ or the Equity Shares is/ are, outside the United States, (ii) am/ are not a “U.S. Person” as defined in
(“Regulation S”), and (iii) is/ are acquiring the Rights Entitlement and/ or the Equity Shares in an offshore
transaction meeting the requirements of Regulation S.
I/ We acknowledge that we, the Lead Manager, their affiliates and others will rely upon the truth and
accuracy of the foregoing representations and agreements.”
Option to receive Equity Shares in Dematerialized Form
EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE
EQUITY SHARES UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN
DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE
EQUITY SHARES ARE HELD BY SUCH ASBA APPLICANT ON THE RECORD DATE.
Issuance of Intimation Letters
Upon approval of the Basis of Allotment by the Designated Stock Exchange, the Registrar to the Issue shall
send to the Controlling Branches, a list of the ASBA Investors who have been allocated Equity Shares in the
Issue, along with:
The amount to be transferred from the ASBA Account to the separate bank account opened by the
Company for the Issue, for each successful ASBA;
The date by which the funds referred to above, shall be transferred to the aforesaid bank account; and
The details of rejected ASBA applications, if any, to enable the SCSBs to unblock the respective
ASBA Accounts.
General instructions for Equity Shareholders applying under the ASBA Process
Please read the instructions printed on the CAF carefully.
Application should be made on the printed CAF only and should be completed in all respects. The CAF
found incomplete with regard to any of the particulars required to be given therein, and/ or which are
not completed in conformity with the terms of the Letter of Offer, Abridged Letter of Offer are liable to
be rejected. The CAF must be filled in English.
ASBA Applicants are required to select this mechanism in Part A of the CAF and provide necessary
details, including details of the ASBA Account, authorizing the SCSB to block an amount equal to the
Application Money in the ASBA Account mentioned in the CAF, and including the signature of the
ASBA Account holder if the ASBA Account holder is different from the Applicant.
The CAF in the ASBA Process should be submitted at a Designated Branch of the SCSB and whose
ASBA Account/ bank account details are provided in the CAF and not to the Bankers to the Issue/
Collecting Banks (assuming that such Collecting Bank is not a SCSB), to us or Registrar or Lead
Manager to the Issue.
All applicants, and in the case of application in joint names, each of the joint applicants, should
mention his/ her PAN number allotted under the IT Act, irrespective of the amount of the application.
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Except for applications on behalf of the Central or State Government, the residents of Sikkim and the
officials appointed by the courts, CAFs without PAN will be considered incomplete and are liable to be
rejected. With effect from August 16, 2010, the demat accounts for Investors for which PAN details
have not been verified shall be “suspended for credit” and no allotment and credit of Equity Shares
shall be made into the accounts of such Investors.
All payments will be made by blocking the amount in the ASBA Account. Cash payment or payment
by cheque/ demand draft/ pay order is not acceptable. In case payment is affected in contravention of
this, the application may be deemed invalid and the application money will be refunded and no interest
will be paid thereon.
Signatures should be either in English or Hindi or in any other language specified in the Eighth
Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression
must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The
Equity Shareholders must sign the CAF as per the specimen signature recorded with us and/ or
Depositories.
In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as
per the specimen signature(s) recorded with the depository/ us. In case of joint applicants, reference, if
any, will be made in the first applicant’s name and all communication will be addressed to the first
applicant.
All communication in connection with application for the Equity Shares, including any change in
address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of
Allotment in this Issue quoting the name of the first/ sole applicant Equity Shareholder, folio numbers
and CAF number.
Only the person or persons to whom the Equity Shares have been offered shall be eligible to participate
under the ASBA Process.
Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights Entitlement
and Equity Shares under applicable securities laws are eligible to participate.
Only the Equity Shareholders holding shares in demat are eligible to participate through ASBA
process.
Equity shareholders who have renounced their entitlement in part/ full are not entitled to apply using
ASBA process.
Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing
number CIR/CFD/DIL/1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional
Investors and other applicants whose application amount exceeds ` 2,00,000 can participate in the
Issue only through the ASBA process. Further, all QIB applicants and Non-Institutional Investors are
mandatorily required to use ASBA, even if application amount does not exceed ` 2,00,000. The
Investors who are not (i) QIBs, (ii) Non-Institutional Investors or (iii) investors whose application
amount is more than ` 2,00,000, can participate in the Issue either through the ASBA process or the
non ASBA process.
Further, in terms of the SEBI circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified that
for making applications by banks on own account using ASBA facility, SCSBs should have a separate
account in own name with any other SEBI registered SCSB(s). Such account shall be used solely for
the purpose of making application in public issues and clear demarcated funds should be available in
such account for ASBA applications.
In case of non – receipt of CAF, application can be made on plain paper mentioning all necessary
details as mentioned under the heading “Application on Plain Paper” on page 151.
Do’s:
Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are filled
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in.
Ensure that the details about your Depository Participant and beneficiary account are correct and the
beneficiary account is activated as Equity Shares will be allotted in the dematerialized form only.
Ensure that the CAFs are submitted with the Designated Branch of the SCSBs and details of the correct
bank account have been provided in the CAF.
Ensure that there are sufficient funds (equal to {number of Equity Shares as the case may be applied
for} X {Issue Price of Equity Shares, as the case may be}) available in the ASBA Account mentioned
in the CAF before submitting the CAF to the respective Designated Branch of the SCSB.
Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on
application mentioned in the CAF, in the ASBA Account, of which details are provided in the CAF and
have signed the same.
Ensure that you receive an acknowledgement from the Designated Branch of the SCSB for your
submission of the CAF in physical form.
Except for CAFs submitted on behalf of the Central or State Government, the residents of Sikkim and
the officials appointed by the courts, each applicant should mention their PAN allotted under the I T
Act.
Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary
account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure
that the beneficiary account is also held in same joint names and such names are in the same sequence
in which they appear in the CAF.
Ensure that the Demographic Details are updated, true and correct, in all respects.
Ensure that the account holder in whose bank account the funds are to be blocked has signed
authorising such funds to be blocked.
Apply under ASBA process only of you fall under the definition of an ASBA Investor.
Don’ts:
Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to
your jurisdiction.
Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the SCSB.
Do not pay the amount payable on application in cash, by money order, by pay order or by postal order.
Do not send your physical CAFs to the Lead Manager to Issue/ Registrar/ Collecting Banks (assuming
that such Collecting Bank is not a SCSB)/ to a branch of the SCSB which is not a Designated Branch
of the SCSB/ Company; instead submit the same to a Designated Branch of the SCSB only.
Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this
ground.
Do not apply if the ASBA account has already been used for five applicants.
Do not apply through the ASBA Process if you are not an ASBA Investor.
Do not instruct the SCSBs to release the funds blocked under the ASBA Process.
Grounds for Technical Rejection under the ASBA Process
In addition to the grounds listed under “Grounds for Technical Rejection for non-ASBA Investors” on page 168,
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applications under the ABSA Process are liable to be rejected on the following grounds:
Application on a SAF by a person who has renounced or by a renounce.
Application for allotment of Rights Entitlements or additional shares which are in physical form.
DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available
with the Registrar.
Sending CAF to a Lead Manager/ Registrar/ Collecting Bank (assuming that such Collecting Bank is
not a SCSB)/ to a branch of a SCSB which is not a Designated Branch of the SCSB/ Company.
Insufficient funds are available with the SCSB for blocking the amount.
Funds in the bank account with the SCSB whose details have been mentioned in the CAF / Plain Paper
Application having been frozen pursuant to regulatory order.
ASBA Account holder not signing the CAF or declaration mentioned therein.
CAFs that do not include the certification set out in the CAF to the effect that the subscriber is not a
“U.S. Person” (as defined under Regulation S) and does not have a registered address (and is not
otherwise located) in the United States or restricted jurisdictions and is authorized to acquire the rights
and the securities in compliance with all applicable laws and regulations.
CAFs which have evidence of being executed in/ dispatched from a restricted jurisdiction or executed
by or for the account or benefit of a U.S. Person (as defined in Regulation S).
Renouncees applying under the ASBA Process.
Submission of more than five CAFs per ASBA Account.
QIBs, Non-Institutional Investors and other Equity Shareholders applying for Equity Shares in this
Issue for value of more than ` 2,00,000 holding Equity Shares in dematerialised form and not
renouncing or accepting equity shares from an Eligible Equity Shareholder, not applying through the
ASBA process.
QIB applicants and Non-Institutional Investors making an application of below ` 2,00,000 and not
applying through the ASBA process.
The application by an Equity Shareholder whose cumulative value of Equity Shares applied for is more
than ` 2,00,000 but has applied separately through split CAFs of less than ` 2,00,000 and has not done
so through the ASBA process.
Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper application.
Submitting the GIR instead of the PAN.
An investor, who is not complying with any or all of the conditions for being an ASBA Investor,
applies under the ASBA process.
Applications by persons not competent to contract under the Contract Act, 1872, as amended, except
applications by minors having valid demat accounts as per the demographic details provided by the
Depositories.
Depository account and bank details for Equity Shareholders applying under the ASBA Process
IT IS MANDATORY FOR ALL THE ELIGIBLE EQUITY SHAREHOLDERS APPLYING UNDER
THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM AND
TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE HELD BY THE
EQUITY SHAREHOLDER ON THE RECORD DATE. ALL EQUITY SHAREHOLDERS APPLYING
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UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S
NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY
ACCOUNT NUMBER IN THE CAF. EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA
PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS
THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS
SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT
IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH
THEY APPEAR IN THE CAF.
Equity Shareholders applying under the ASBA Process should note that on the basis of name of these Equity
Shareholders, Depository Participant’s name and identification number and beneficiary account number
provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of
these Equity Shareholders such as address, bank account details for printing on refund orders and occupation
(“Demographic Details”). Hence, Equity Shareholders applying under the ASBA Process should carefully fill in
their Depository Account details in the CAF.
These Demographic Details would be used for all correspondence with such Equity Shareholders including
mailing of the letters intimating unblocking of their respective ASBA Accounts. The Demographic Details given
by the Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence,
Equity Shareholders are advised to update their Demographic Details as provided to their Depository
Participants.
By signing the CAFs, the Equity Shareholders applying under the ASBA Process would be deemed to have
authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic
Details as available on its records.
Letters intimating Allotment and unblocking the funds would be mailed at the address of the Equity Shareholder
applying under the ASBA Process as per the Demographic Details received from the Depositories. The
Registrar to the Issue will give instructions to the SCSBs for unblocking funds in the ASBA Account to the
extent equity shares are not allotted to such Equity Shareholders. Equity Shareholders applying under the ASBA
Process may note that delivery of letters intimating unblocking of the funds may get delayed if the same once
sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and
other details given by the Equity Shareholder in the CAF would be used only to ensure dispatch of letters
intimating unblocking of the ASBA Accounts.
Note that any such delay shall be at the sole risk of the Equity Shareholders applying under the ASBA Process
and none of us, the SCSBs or the Lead Manager shall be liable to compensate the Equity Shareholder applying
under the ASBA Process for any losses caused due to any such delay or liable to pay any interest for such delay.
In case no corresponding record is available with the Depositories that matches three parameters, (a) names of
the Equity Shareholders (including the order of names of joint holders), (b) the DP ID and (c) the beneficiary
account number, then such applications are liable to be rejected.
Issue Schedule
Issue Opening Date: March 14, 2013
Last date for receiving requests for SAFs: March 21, 2013
Issue Closing Date: March 28, 2013
The Board may however decide to extend the Issue period as it may determine from time to time but not
exceeding 30 days from the Issue Opening Date.
Basis of Allotment
Subject to the provisions contained in the Letter of Offer, the Articles of Association and the approval of the
Designated Stock Exchange, the Board will proceed to Allot the Equity Shares in the following order of priority:
a. Full Allotment to those Equity Shareholders who have applied for their Rights Entitlement either in full
or in part and also to the Renouncee(s) who has/ have applied for Equity Shares renounced in their
favour, in full or in part.
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b. Allotment pertaining to fractional entitlements in case of any shareholding other than in multiples of 5
(Five). Investors whose fractional entitlements are being ignored would be given preference in
allotment of one additional Equity Share each if they apply for additional Equity Share. Allotment
under this head shall be considered if there are any unsubscribed Equity Shares after allotment under
(a) above. If number of Equity Shares required for allotment under for this head are more than number
of Equity Shares available after allotment under (a) above, the Allotment would be made on a fair and
equitable basis in consultation with the Designated Stock Exchange, as a part of Issue and will not be a
preferential allotment.
c. Allotment to the Equity Shareholders who having applied for all the Equity Shares offered to them as
part of the Issue and have also applied for additional Equity Shares. The Allotment of such additional
Equity Shares will be made as far as possible on an equitable basis having due regard to the number of
Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after
making full Allotment in (a) and (b) above. The Allotment of such Equity Shares will be at the sole
discretion of the Board/ Committee of Directors in consultation with the Designated Stock Exchange,
as a part of the Issue and will not be a preferential Allotment.
d. Allotment to Renouncees who having applied for all the Equity Shares renounced in their favour, have
applied for additional Equity Shares provided there is surplus available after making full Allotment
under (a), (b) and (c) above. The Allotment of such Equity Shares will be at the sole discretion of the
Board/ Committee of Directors in consultation with the Designated Stock Exchange, as a part of the
Issue and not preferential Allotment.
e. Allotment to any other person that the Board of Directors in their absolute discretion decide.
Our Promoter, Hitachi Appliances Inc., has confirmed vide its letter dated November 01, 2012 that it intends to
subscribe to the full extent of its Rights Entitlement in the Issue, in compliance with regulation 10 (4) of
Takeover Regulations. Further it has confirmed that it intends to subscribe for (i) additional Right Issue Equity
Shares, and (ii) Rights Issue Equity Shares, if any, which remain unsubscribed. Such subscription to additional
Rights Issue Equity Shares and the unsubscribed portion, if any, to be made by the it, shall be in accordance
with regulation 10 (4) of Takeover Regulations. Further, such subscription shall not result in breach of minimum
public shareholding requirement as stipulated in the Listing Agreements. Further, our Promoter, Hitachi India
Private Limited has vide its letter dated February 11, 2013 inter alia confirmed that they do not intend to
subscribe either in full or part of its entitlement of Equity Shares in the Issue.
Underwriting
The Issue shall not be underwritten.
Allotment Advices/ Refund Orders
We will issue and dispatch Allotment advice/ share certificates/ demat credit and/ or letters of regret along with
refund order or credit the allotted Equity Shares to the respective beneficiary accounts, if any, within a period of
15 days from the Issue Closing Date. If such money is not repaid within eight days from the day we become
liable to repay it, we and every Director who is an officer in default shall, on and from expiry of eight days, be
jointly and severally liable to pay the money with interest as prescribed under Section 73 of the Companies Act.
Investors residing at centers where clearing houses are managed by the Reserve Bank of India ("RBI"), payment
of refund would be done through NECS and for applicants having an account at any of the centres where such
facility has been made available to get refunds through direct credit and real time gross settlement ("RTGS").
In case of those Investors who have opted to receive their Rights Entitlement in dematerialized form using
electronic credit under the depository system, advice regarding their credit of the Equity Shares shall be given
separately. Investors to whom refunds are made through electronic transfer of funds will be sent a letter through
ordinary post intimating them about the mode of credit of refund within 15 days of the Issue Closing Date.
In case of those Investors who have opted to receive their Rights Entitlement in physical form and we issue
letter of allotment, the corresponding share certificates will be kept ready within three months from the date of
Allotment thereof or such extended time as may be approved by the Company Law Board under Section 113 of
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the Companies Act or other applicable provisions, if any. Investors are requested to preserve such letters of
allotment, which would be exchanged later for the share certificates. For more information, please refer to the
chapter “Terms of the Issue” on page 144.
The letter of allotment/ refund order would be sent by registered post / speed post to the sole/ first Investor’s
registered address in India or the Indian address provided by the Equity Shareholders from time to time. Such
refund orders would be payable at par at all places where the applications were originally accepted. The same
would be marked ‘Account Payee only’ and would be drawn in favour of the sole/ first Investor. Adequate funds
would be made available to the Registrar to the Issue for this purpose.
Our Company shall ensure at par facility is provided for encashment of refund orders or pay orders at the places
where applications are accepted.
As regards allotment/refund to Non-residents, the following further conditions shall apply:
In the case of Non-resident Shareholders or Investors who remit their Application Money from funds held in
NRE/FCNR Accounts, refunds and/or payment of interest or dividend and other disbursements, if any, shall be
credited to such accounts, the details of which should be furnished in the CAF. Subject to the approval of the
RBI, in case of Non-resident Shareholders or Investors who remit their application money through Indian Rupee
demand drafts purchased from abroad, refund and/or payment of dividend or interest and any other
disbursement, shall be credited to such accounts and will be made after deducting bank charges or commission
in US Dollars, at the rate of exchange prevailing at such time. Our Bank will not be responsible for any loss on
account of exchange rate fluctuations for conversion of the Indian Rupee amount into US Dollars. The Share
Certificate(s) will be sent by registered post / speed post to the address in India of the Non Resident
Shareholders or Investors.
The Letter of Offer/ Abridged Letter of Offer and the CAF shall be dispatched to only such Non-resident
Shareholders who have a registered office address in India.
Payment of Refund
Mode of making refunds
The payment of refund, if any, would be done through any of the following modes:
i. NECS – Payment of refund would be done through NECS for Investors having an account at any of
centres where such facility has been made available. This mode of payment of refunds would be
subject to availability of complete bank account details including the MICR code as appearing on a
cheque leaf, from the Depositories/ the records of the Registrar. The payment of refunds is mandatory
for Investors having a bank account at any centre where NECS facility has been made available
(subject to availability of all information for crediting the refund through NECS).
ii. NEFT – Payment of refund shall be undertaken through NEFT wherever the Investors’ bank has been
assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, allotted to that
particular bank branch. IFSC Code will be obtained from the website of RBI as on a date immediately
prior to the date of payment of refund, duly mapped with MICR numbers. Wherever the Investors have
registered their nine digit MICR number and their bank account number with the Registrar or with the
depository participant while opening and operating the demat account, the same will be duly mapped
with the IFSC Code of that particular bank branch and the payment of refund will be made to the
Investors through this method.
iii. RTGS – If the refund amount exceeds ` 2,00,000, the Investors have the option to receive refund
through RTGS. Such eligible Investors who indicate their preference to receive refund through RTGS
are required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall be
made through NECS or any other eligible mode. Charges, if any, levied by the refund bank(s) for the
same would be borne by the Company. Charges, if any, levied by the Investor’s bank receiving the
credit would be borne by the Investor.
iv. Direct Credit – Investors having bank accounts with the Bankers to the Issue shall be eligible to
receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would
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be borne by us.
v. For all other Investors the refund orders will be despatched through registered post / speed post. Such
refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/ first
Investor and payable at par.
vi. Credit of refunds to Investors in any other electronic manner permissible under the banking laws,
which are in force and are permitted by the SEBI from time to time.
Refund payment to Non- resident
Where applications are accompanied by Indian rupee drafts purchased abroad and payable at Mumbai, refunds
will be made in the Indian rupees based on the U.S. dollars equivalent which ought to be refunded. Indian
rupees will be converted into U.S. dollars at the rate of exchange, which is prevailing on the date of refund. The
exchange rate risk on such refunds shall be borne by the concerned applicant and our Bank shall not bear any
part of the risk.
Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be credited to
NRE/FCNR/NRO accounts respectively, on which such cheques were drawn and details of which were provided
in the CAF.
Printing of Bank Particulars on Refund Orders
As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement,
the particulars of the Investor’s bank account are mandatorily required to be given for printing on the refund
orders. Bank account particulars, where available, will be printed on the refund orders/ refund warrants which
can then be deposited only in the account specified. We will in no way be responsible if any loss occurs through
these instruments falling into improper hands either through forgery or fraud.
Allotment advice/ Share Certificates/ Demat Credit
Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered address
of the first named Investor or respective beneficiary accounts will be credited within 15 days, from the Issue
Closing Date. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share
certificates. In case our Company issues allotment advice, the relative share certificates will be dispatched
within one month from the date of Allotment.
Option to receive Equity Shares in Dematerialized Form
Investors shall be allotted the Equity Shares in dematerialized (electronic) form at the option of the Investor. We
have signed a tripartite agreement with NSDL and the Registrar to the Issue on April 14, 2010 which enables the
Investors to hold and trade in Equity Shares in a dematerialized form, instead of holding the Equity Shares in the
form of physical certificates. We have also signed a tripartite agreement with CDSL and the Registrar to the
Issue on April 06, 2010 which enables the Investors to hold and trade in Equity Shares in a dematerialized form,
instead of holding the Equity Shares in the form of physical certificates.
In this Issue, the allottees who have opted for Equity Shares in dematerialized form will receive their Equity
Shares in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with
a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate
place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar
to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such
Equity Shares to the Investor’s depository account. CAFs, which do not accurately contain this information, will
be given the Equity Shares in physical form. No separate CAFs for Equity Shares in physical and/ or
dematerialized form should be made.
INVESTORS MAY PLEASE NOTE THAT THE EQUITY SHARES CAN BE TRADED ON THE STOCK
EXCHANGE ONLY IN DEMATERIALIZED FORM.
The procedure for availing the facility for Allotment of Equity Shares in this Issue in the electronic form is as
under:
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Open a beneficiary account with any depository participant (care should be taken that the beneficiary
account should carry the name of the holder in the same manner as is registered in our records. In the
case of joint holding, the beneficiary account should be opened carrying the names of the holders in the
same order as registered in our records). In case of Investors having various folios with different joint
holders, the Investors will have to open separate accounts for such holdings. Those Equity
Shareholders who have already opened such beneficiary account(s) need not adhere to this step.
For Equity Shareholders already holding Equity Shares in dematerialized form as on the Record Date,
the beneficial account number shall be printed on the CAF. For those who open accounts later or those
who change their accounts and wish to receive their Equity Shares by way of credit to such account, the
necessary details of their beneficiary account should be filled in the space provided in the CAF. It may
be noted that the Allotment of Equity Shares arising out of this Issue may be made in dematerialized
form even if the original Equity Shares are not dematerialized. Nonetheless, it should be ensured that
the depository account is in the name(s) of the Equity Shareholders and the names are in the same order
as in our records.
The responsibility for correctness of information (including Investor’s age and other details) filled in
the CAF vis-à-vis such information with the Investor’s depository participant, would rest with the
Investor. Investors should ensure that the names of the Investors and the order in which they appear in
CAF should be the same as registered with the Investor’s depository participant.
If incomplete/ incorrect beneficiary account details are given in the CAF, then such shares will be
credited to a demat suspense a/c which shall be opened by the Company as specified in the SEBI
circular no. SEBI/CFD/DIL/LA/1/2009/24/04 dated April 24, 2009.
The Equity Shares allotted to applicants opting for issue in dematerialized form, would be directly
credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund
order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s
depository participant will provide to the applicant the confirmation of the credit of such Equity Shares
to the applicant’s depository account. It may be noted that Equity Shares in electronic form can be
traded only on the Stock Exchanges having electronic connectivity with NSDL or CDSL.
Renouncees will also have to provide the necessary details about their beneficiary account for
Allotment of Equity Shares in this Issue. In case these details are incomplete or incorrect, the
application is liable to be rejected.
Non-transferable allotment advice/refund orders will be directly sent to the Investors by the Registrar.
Dividend or other benefits with respect to the Equity Shares held in dematerialized form would be paid
to those Equity Shareholders whose names appear in the list of beneficial owners given by the
Depository Participant to our Company as on the date of the book closure.
General instructions for non-ASBA Investors
i. Please read the instructions printed on the CAF carefully.
ii. Applicants that are not QIBs and whose Application Money does not exceed ` 2,00,000 may
participate in the Issue either through ASBA or the non-ASBA process. Eligible Equity Shareholders
who have renounced their entitlement (in full or in part), Renouncees and Applicants holding Equity
Shares in physical form and/or subscribing in the Issue for Allotment in physical form may participate
in the Issue only through the non ASBA process.
iii. Application should be made on the printed CAF, provided by us except as mentioned under the head
“Application on Plain Paper” on page 151 and should be completed in all respects. The CAF found
incomplete with regard to any of the particulars required to be given therein, and/ or which are not
completed in conformity with the terms of the Letter of Offer or Abridged Letter of Offer are liable to
be rejected and the money paid, if any, in respect thereof will be refunded without interest and after
deduction of bank commission and other charges, if any. The CAF must be filled in English and the
names of all the Investors, details of occupation, address, father’s/ husband’s name must be filled in
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block letters.
iv. Eligible Equity Shareholders participating in the Issue other than through ASBA are required to fill
Part A of the CAF and submit the CAF along with Application Money before close of banking hours
on or before the Issue Closing Date or such extended time as may be specified by the Board in this
regard. The CAF together with the cheque/ demand draft should be sent to the Bankers to the Issue/
Collecting Bank or to the Registrar to the Issue and not to us or Lead Manager to the Issue. Investors
residing at places other than cities where the branches of the Bankers to the Issue have been authorised
by us for collecting applications, will have to make payment by demand draft payable at Mumbai of an
amount net of bank and postal charges and send their CAFs to the Registrar to the Issue by registered
post / speed post. If any portion of the CAF is/ are detached or separated, such application is liable to
be rejected. CAF’s received after banking hours on closure day will be liable for rejection.
v. Applications where separate cheques/ demand drafts are not attached for amounts to be paid for Equity
Shares are liable to be rejected.
vi. Except for applications on behalf of the Central and State Government, the residents of Sikkim and the
officials appointed by the courts, all Investors, and in the case of application in joint names, each of the
joint Investors, should mention his/ her PAN number allotted under the I.T. Act, irrespective of the
amount of the application. CAFs without PAN will be considered incomplete and are liable to be
rejected.
vii. Investors, holding Equity Shares in physical form, are advised that it is mandatory to provide
information as to their savings/ current account number and the name of the bank with whom such
account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund
orders, if any, after the names of the payees. Application not containing such details is liable to be
rejected.
viii. All payment should be made by cheque/ demand draft only. Application through the ASBA process as
mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in
contravention of this, the application may be deemed invalid and the application money will be
refunded and no interest will be paid thereon.
ix. Signatures should be either in English or Hindi or in any other language specified in the Eighth
Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression
must be attested by a Notary Public or a Special Executive Magistrate under his/ her official seal. The
Equity Shareholders must sign the CAF as per the specimen signature recorded with us/ Depositories.
x. In case of an application under power of attorney or by a body corporate or by a society, a certified true
copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the
relevant investment under this Issue and to sign the application and certified true a copy of the
Memorandum and Articles of Association and/ or bye laws of such body corporate or society must be
lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the
above referred documents are already registered with us, the same need not be a furnished again. In
case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue
Closing Date, then the application is liable to be rejected. In no case should these papers be attached to
the application submitted to the Bankers to the Issue.
xi. In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order and as
per the specimen signature(s) recorded with us or the Depositories. Further, in case of joint Investors
who are Renouncees, the number of Investors should not exceed three. In case of joint Investors,
reference, if any, will be made in the first Investor’s name and all communication will be addressed to
the first Investor.
xii. Application(s) received from NRs/ NRIs, or persons of Indian origin residing abroad for Allotment of
Equity Shares shall, inter alia, be subject to conditions, as may be imposed from time to time by the
RBI under FEMA, including regulations relating to QFI’s, in the matter of refund of application
money, Allotment of Equity Shares, subsequent issue and Allotment of Equity Shares, interest, export
of share certificates, etc. In case a NR or NRI Equity Shareholder has specific approval from the RBI,
in connection with his shareholding, he should enclose a copy of such approval with the CAF.
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Additionally, applications will not be accepted from NRs/ NRIs in the United States or its territories
and possessions, or any other jurisdiction where the offer or sale of the Rights Entitlements and Equity
Shares may be restricted by applicable securities laws.
xiii. All communication in connection with application for the Equity Shares, including any change in
address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of
Allotment in this Issue quoting the name of the first/ sole Investor, folio numbers and CAF number.
Please note that any intimation for change of address of Equity Shareholders, after the date of
Allotment, should be sent to our Registrar and Transfer Agent, in the case of Equity Shares held in
physical form and to the respective depository participant, in case of Equity Shares held in
dematerialized form.
xiv. SAFs cannot be re-split.
xv. Only the Equity Shareholder(s) and not Renouncee(s) shall be entitled to obtain SAFs.
xvi. Investors must write their CAF number at the back of the cheque/ demand draft.
xvii. Only one mode of payment per application should be used. The payment must be by cheque/ demand
draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or
a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF
where the application is to be submitted.
xviii. A separate cheque/ draft must accompany each CAF. Outstation cheques/ demand drafts or post-dated
cheques and postal/ money orders will not be accepted and applications accompanied by such
outstation cheques/ outstation demand drafts/ money orders or postal orders will be rejected.
xix. No receipt will be issued for application money received. The Bankers to the Issue/ Collecting Bank/
Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at
the bottom of the CAF.
xx. The distribution of the Letter of Offer and issue of Equity Shares and Rights Entitlements to persons in
certain jurisdictions outside India may be restricted by legal requirements in those jurisdictions.
Persons in such jurisdictions are instructed to disregard the Letter of Offer and not to attempt to
subscribe for Equity Shares.
xxi. Investors are requested to ensure that the number of Equity Shares applied for by them do not exceed
the prescribed limits under applicable law.
Do’s for non-ASBA Investors:
Check if you are eligible to apply i.e. you are an Equity Shareholder on the Record Date;
Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of the CAF
and necessary details are filled in;
In the event you hold Equity Shares in dematerialised form, ensure that the details about your Depository
Participant and beneficiary account are correct and the beneficiary account is activated as the Equity Shares
will be allotted in the dematerialized form only;
Ensure that your Indian address is available to us and the Registrar, in case you hold Equity Shares in
physical form or the depository participant, in case you hold Equity Shares in dematerialised form;
Ensure that the value of the cheque/ draft submitted by you is equal to the (number of Equity Shares applied
for) X (Issue Price of Equity Shares, as the case may be) before submission of the CAF. Investors residing
at places other than cities where the branches of the Bankers to the Issue have been authorised by us for
collecting applications, will have to make payment by demand draft payable at Mumbai of an amount net of
bank and postal charges;
Ensure that you receive an acknowledgement from the collection branch of the Banker to the Issue for your
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submission of the CAF in physical form;
Ensure that you mention your PAN allotted under the I.T. Act with the CAF, except for Applications on
behalf of the Central and State Governments, residents of the state of Sikkim and officials appointed by the
courts;
Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the beneficiary
account is held with the Depository Participant. In case the CAF is submitted in joint names, ensure that the
beneficiary account is also held in same joint names and such names are in the same sequence in which they
appear in the CAF;
Ensure that the demographic details are updated, true and correct, in all respects.
Don’ts for non-ASBA Investors:
Do not apply if you are not eligible to participate in the Issue under the securities laws applicable to your
jurisdiction;
Do not apply on duplicate CAF after you have submitted a CAF to a collection branch of the Banker to the
Issue;
Do not pay the amount payable on application in cash, by money order or by postal order;
Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground;
Do not submit Application accompanied with Stock invest;
Grounds for Technical Rejections for non-ASBA Investors.
Investors are advised to note that applications are liable to be rejected on technical grounds, including the
following:
Amount paid does not tally with the amount payable;
Bank account details (for refund) are not given and the same are not available with the DP (in the case of
dematerialized holdings) or the Registrar (in the case of physical holdings);
Submission of CAFs to the SCSBs.
Submission of plain paper Applications to any person other than the Registrar to the Issue.
Age of Investor(s) not given (in case of Renouncees);
Except for CAFs on behalf of the Central or State Government, the residents of Sikkim and the officials
appointed by the courts, PAN number not given for application of any value;
In case of CAF under power of attorney or by limited companies, corporate, trust, relevant documents are
not submitted;
If the signature of the Equity Shareholder does not match with the one given on the CAF and for
Renouncee(s) if the signature does not match with the records available with their Depositories;
CAFs are not submitted by the Investors within the time prescribed as per the CAF and the Letter of Offer;
CAFs not duly signed by the sole/ joint Investors;
CAFs/ SAFs by OCBs not accompanied by a copy of an RBI approval to apply in this Issue;
CAFs accompanied by Stockinvest/ outstation cheques/ post-dated cheques/ money order/ postal order/
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outstation demand draft;
In case no corresponding record is available with the Depositories that matches three parameters, namely,
names of the Investors (including the order of names of joint holders), the Depositary Participant’s identity
(DP ID) and the beneficiary’s identity;
CAFs that do not include the certifications set out in the CAF to the effect that the subscriber is not a “U.S.
Person” (as defined in Regulation S) and does not have a registered address (and is not otherwise located) in
the United States or other restricted jurisdictions and is authorized to acquire the Rights Entitlements and
Equity Shares in compliance with all applicable laws and regulations;
CAFs which have evidence of being executed in/ dispatched from restricted jurisdictions;
CAFs by ineligible non-residents (including on account of restriction or prohibition under applicable local
laws) and where the registered addressed in India has not been provided;
CAFs where we believe that CAF is incomplete or acceptance of such CAF may infringe applicable legal or
regulatory requirements;
In case the GIR number is submitted instead of the PAN;
CAFs submitted by Renouncees where Part B of the CAF is incomplete or is unsigned. In case of joint
holding, all joint holders must sign Part ‘B’ of the CAF;
Applications by persons not competent to contract under the Contract Act, 1872, as amended, except bids
by minors having valid demat accounts as per the demographic details provided by the Depositaries.
Applications by Renouncees who are persons not competent to contract under the Indian Contract Act,
1872, including minors;
Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper application; and
Applications from QIBs, Non-Institutional Investors (including applications for less than ` 2,00,000) or
Investors applying in this Issue for Equity Shares for an amount exceeding ` 2,00,000, not through ASBA
process.
Please read the Letter of Offer or Abridged Letter of Offer and the instructions contained therein and in the CAF
carefully before filling in the CAF. The instructions contained in the CAF are an integral part of the Letter of
Offer and must be carefully followed. The CAF is liable to be rejected for any non-compliance of the provisions
contained in the Letter of Offer or the CAF.
Investment by FIIs
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:
No single FII can hold more that 10% of our post-Issue paid-up share capital. In respect of an FII investing in
the Equity Shares on behalf of its sub-accounts, the investment on behalf of each sub-account shall not exceed
5% of our total paid-up share capital.
Applications will not be accepted from FIIs in restricted jurisdictions.
Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number
CIR/ CFD/ DIL/ 1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are
other Eligible Equity Shareholders applying in this Issue for Equity Shares for an amount exceeding ` 2,00,000
shall mandatorily make use of ASBA facility. Further, all QIB applicants and Non-Institutional Investors are
mandatorily required to use ASBA, even if application amount does not exceed ` 2,00,000.
Investment by NRIs
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Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3)(i) of the Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.
Applications will not be accepted from NRIs in restricted jurisdictions.
Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number
CIR/ CFD/ DIL/ 1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are
applying in this Issue for Equity Shares for an amount exceeding ` 2,00,000 shall mandatorily make use of
ASBA facility. Further, all QIB applicants and Non-Institutional Investors are mandatorily required to use
ASBA, even if application amount does not exceed ` 2,00,000.
Procedure for Applications by Mutual Funds
A separate application can be made in respect of each scheme of an Indian mutual fund registered with the SEBI
and such applications shall not be treated as multiple applications. The applications made by asset management
companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which
the application is being made.
Please note that pursuant to the applicability of the directions issued by SEBI vide its circular bearing number
CIR/ CFD/ DIL/ 1/ 2011 dated April 29, 2011, all applicants who are QIBs, Non-Institutional Investors or are
applying in this Issue for Equity Shares for an amount exceeding ` 2,00,000 shall mandatorily make use of
ASBA facility. Further, all QIB applicants and Non-Institutional Investors are mandatorily required to use
ASBA, even if application amount does not exceed ` 2,00,000.
Investment by QFIs
In terms of circulars dated January 13, 2012, SEBI and RBI have permitted investment by QFIs in Indian equity
issues, including in rights issues. A QFI can invest in the Issue through its depository participant with whom it
has opened a demat account. No single QFI can hold more than five percent of paid up equity capital of the
company at any point of time (includes investment made as a QFI and FDI). Further, aggregate shareholding of
all QFIs shall not exceed ten percent of the paid up equity capital of the Company at any point of time.
Procedure for Applications by AIFs, FVCIs and VCFs
The SEBI (Venture Capital Funds) Regulations, 1996, as amended (“SEBI VCF Regulations”) and the SEBI
(Foreign Venture Capital Investor) Regulations, 2000, as amended (“SEBI FVCI Regulations”) prescribe,
amongst other things, the investment restrictions on VCFs and FVCIs registered with SEBI. Further, the SEBI
(Alternative Investments Funds) Regulations, 2012 (“SEBI AIF Regulations”) prescribe, amongst other things,
the investment restrictions on AIFs.
As per the SEBI VCF Regulations and SEBI FVCI Regulations, VCFs and FVCIs are not permitted to invest in
listed companies pursuant to rights issues. Accordingly, applications by VCFs or FVCIs will not be accepted in
this Issue.
Venture capital funds registered as category I AIFs, as defined in the SEBI AIF Regulations, are not permitted
to invest in listed companies pursuant to rights issues. Accordingly, applications by venture capital funds
registered as category I AIFs, as defined in the SEBI AIF Regulations, will not be accepted in this Issue. Other
categories of AIFs are permitted to apply in this Issue subject to compliance with the SEBI AIF Regulations.
Such AIFs having bank accounts with SCSBs that are providing ASBA in cities / centers where such AIFs
are located, are mandatorily required to make use of the ASBA facility. Otherwise, applications of such
AIFs are liable for rejection.
Applications will not be accepted from QFIs in restricted jurisdictions
QFI applicants which are QIBs, Non-Institutional Investors or whose application amount exceeds ` 2,00,000 can
participate in the Issue only through the ASBA process. Further, QFI applicants which are QIB applicants and
Non-Institutional Investors are mandatorily required to use ASBA, even if application amount does not exceed ` 2,00,000.
Mode of payment for Resident Equity Shareholders/ Investors
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All cheques/ drafts accompanying the CAF should be drawn in favour of the Company (specified on
the reverse of the CAF), crossed ‘A/c Payee only’ and marked “Hitachi Home & Life Solutions (India)
Limited – Rights Issue - R”;
Investors residing at places other than places where the bank collection centres have been opened by us
for collecting applications, are requested to send their CAFs together with Demand Draft for the full
application amount, net of bank and postal charges favouring the Company, crossed ‘A/c Payee only’
and marked “Hitachi Home & Life Solutions (India) Limited – Rights Issue - R” payable at Mumbai
directly to the Registrar to the Issue by registered post / speed post so as to reach them on or before the
Issue Closing Date. We or the Registrar to the Issue will not be responsible for postal delays or loss of
applications in transit, if any.
Applications through mails should not be sent in any other manner except as mentioned above. The CAF along
with the application money must not be sent to our Company or the Lead Manager. Applicants are requested to
strictly adhere to these instructions.
Mode of payment for Non-Resident Equity Shareholders/ Investors
As regards the application by non-resident Equity Shareholders/ Investors, the following conditions
shall apply:
Individual non-resident Indian applicants who are permitted to subscribe for Equity Shares by
applicable local securities laws can also obtain application forms from the following address:
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex,
Sakinaka Telephone Exchange Lane,
Off Andheri-Kurla Road, Sakinaka,
Andheri (East), Mumbai – 400 072,
Maharashtra, India
Tel: +91 22 6191 5400
Fax: +91 22 6191 5444
Website: www.shareproservices.com
Email: [email protected]
Contact Person: Mr. Prakash A. Khare / Anand Moolya
SEBI Registration No: INR000001476
Note: the Letter of Offer/ Abridged Letter of Offer and CAFs to NRIs shall be sent only to their Indian
address, if provided
Applications will not be accepted from non-resident from any jurisdiction where the offer or sale of the
Rights Entitlements and Equity Shares may be restricted by applicable securities laws.
All non-resident investors should draw the cheques/ demand drafts in favour of “Hitachi Home & Life
Solutions (India) Limited – Rights Issue – NR”, crossed “A/c Payee only” for the full application
amount, net of bank and postal charges and which should be submitted along with the CAF to the
Bankers to the Issue/ collection centres or to the Registrar to the Issue.
Non-resident investors applying from places other than places where the bank collection centres have
been opened by the Company for collecting applications, are requested to send their CAFs together
with Demand Draft for the full application amount, net of bank and postal charges drawn in favour of
the Company, crossed “A/c Payee only” and marked “Hitachi Home & Life Solutions (India) Limited –
Rights Issue – NR” payable at Mumbai directly to the Registrar to the Issue by registered post / speed
post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue
will not be responsible for postal delays or loss of applications in transit, if any.
Payment by non-residents must be made by demand draft payable at Mumbai / cheque payable drawn
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on a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways:
Application with repatriation benefits
i. By Indian Rupee drafts purchased from abroad and payable at Mumbai or funds remitted from abroad
(submitted along with Foreign Inward Remittance Certificate);
ii. B By local cheque / bank drafts remitted through normal banking channels or out of funds held in Non-
Resident External Account (NRE) or FCNR Account maintained with banks authorized to deal in
foreign currency in India, along with documentary evidence in support of remittance;
iii. By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable
in Mumbai;
iv. FIIs registered with SEBI must remit funds from special non-resident rupee deposit account; or
v. Non-resident investors applying with repatriation benefits should draw cheques/ drafts in favour of
‘Hitachi Home & Life Solutions (India) Limited – Rights Issue - NR’ and must be crossed ‘account
payee only’ for the full application amount.
vi. Investors may note that where payment is made by drafts purchased from NRE/ FCNR accounts as the
case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has
been issued by debiting the NRE/ FCNR account should be enclosed with the CAF. Otherwise the
application shall be considered incomplete and is liable to be rejected.
vii. In the case of NRI Investors who remit their application money from funds held in FCNR/NRE
Accounts, refunds and other disbursements, if any, shall be credited to such account details of which
should be furnished in the appropriate columns in the CAF. In the case of NRI Investors who remit
their application money through Indian Rupee drafts from abroad, refunds and other disbursements, if
any, will be made in U.S Dollars at the rate of exchange prevailing at such time subject to the
permission of RBI. Our Bank will not be liable for any loss on account of exchange rate fluctuation for
converting the Rupee amount into U.S. Dollar or for collection charges charged by the Investor’s
bankers.
viii. Payments through NRO accounts will not be permitted.
ix. Investors may note that where payment is made by drafts purchased from NRE/ FCNR accounts as the
case may be, an Account Debit Certificate from the bank issuing the draft confirming that the draft has
been issued by debiting the NRE/ FCNR account should be enclosed with the CAF. Otherwise the
application shall be considered incomplete and is liable to be rejected.
Application without repatriation benefits
i. As far as non-residents holding Equity Shares on non-repatriation basis are concerned, in addition to
the modes specified above, payment may also be made by way of cheque drawn on Non-Resident
(Ordinary) Account maintained in India or Rupee Draft purchased out of NRO Account maintained
elsewhere in India but payable at Mumbai. In such cases, the Allotment of Equity Shares will be on
non-repatriation basis.
ii. All cheques/ drafts submitted by non-residents applying on a non-repatriation basis should be drawn in
favour of ‘Hitachi Home & Life Solutions (India) Limited – Rights Issue – R’ and must be crossed
‘account payee only’ for the full application amount. The CAFs duly completed together with the
amount payable on application must be deposited with the Collecting Bank indicated on the reverse of
the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or
bank draft must accompany each CAF.
iii. Investors may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO accounts
as the case may be, an Account Debit Certificate from the bank issuing the draft confirming that the
draft has been issued by debiting the NRE/ FCNR/ NRO account should be enclosed with the CAF.
Otherwise the application shall be considered incomplete and is liable to be rejected.
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iv. New demat account shall be opened for holders who have had a change in status from resident Indian
to NRI. Any application from a demat account which does not reflect the accurate status of the
Applicant are liable to be rejected.
Notes:
In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the
investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to the
I.T. Act.
In case Equity Shares are allotted on a non-repatriation basis, the dividend and sale proceeds of the
Equity Shares cannot be remitted outside India.
The CAF duly completed together with the amount payable on application must be deposited with the
Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before
the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
In case of an application received from non-residents, Allotment, refunds and other distribution, if any,
will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of
making such Allotment, remittance and subject to necessary approvals.
Impersonation
As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section
(1) of section 68A of the Companies Act which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any
shares therein, or otherwise induces a Company to Allot, or register any transfer of shares therein to him, or any
other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five
years”.
Payment by Stockinvest
In terms of RBI Circular DBOD No. FSC BC 42/ 24.47.00/ 2003-04 dated November 5, 2003, the Stockinvest
Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue.
Disposal of application and application money
No acknowledgment will be issued for the application moneys received by us. However, the Bankers to the
Issue/ Registrar to the Issue/ Designated Branch of the SCSBs receiving the CAF will acknowledge its receipt
by stamping and returning the acknowledgment slip at the bottom of each CAF.
The Board reserves its full, unqualified and absolute right to accept or reject any application, in whole or in part,
and in either case without assigning any reason thereto.
In case an application is rejected in full, the whole of the application money received will be refunded.
Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money
due on Equity Shares allotted, will be refunded to the Investor within a period of 15 days from the Issue Closing
Date. If such money is not repaid within eight days from the day we become liable to repay it, we and every
Director who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to
repay the money with interest as prescribed under Section 73 of the Companies Act. The dispatch of allotment
advice / share certificates / refund orders and demat credit will be completed and the allotment and listing
documents will be submitted to the stock exchanges within 15 days from the Issue Closing Date.
For further instructions, please read the CAF carefully.
Utilisation of Issue Proceeds
The Board of Directors declares that:
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i. All monies received out of this Issue shall be transferred to a separate bank account referred to sub-
section (3) of Section 73 of the Companies Act;
ii. Details of all monies utilized out of the Issue shall be disclosed under an appropriate separate head in
our balance sheet indicating the purpose for which such monies have been utilized till the time any of
the Issue Proceeds remained unutilised;
iii. Details of all unutilized monies out of the Issue, if any, shall be disclosed under an appropriate separate
head in our balance sheet indicating the form in which such unutilized monies have been invested; and
iv. We may utilize the funds collected in the Issue only after finalisation of the Basis of Allotment.
Undertakings by us
We undertake the following:
i. The complaints received in respect of the Issue shall be attended to by us expeditiously and
satisfactorily.
ii. All steps for completion of the necessary formalities for listing and commencement of trading at all
Stock Exchange where the Equity Shares are to be listed will be taken within 15 days of the Issue
Closing Date / 7 days from the finalization of the Basis of Allotment.
iii. The funds required for making refunds to unsuccessful applicants as per the modes disclosed shall be
made available to the Registrar to the Issue by us.
iv. We undertake that where refunds are made through electronic transfer of funds, a suitable
communication shall be sent to the Investor within seven working days of finalisation of Basis of
Allotment, giving details of the banks where refunds shall be credited along with amount and expected
date of electronic credit of refund.
v. Adequate arrangements shall be made to collect all ASBA applications and to consider them similar to
non-ASBA applications while finalising the basis of Allotment.
vi. The certificates of the securities/ refund orders to the non-resident Indians shall be dispatched within
the specified time.
vii. No further issue of securities affecting our equity capital shall be made till the securities issued/ offered
through the Letter of Offer Issue are listed or till the application money are refunded on account of non-
listing, under-subscription etc.
viii. At any given time there shall be only one denomination of our Equity Shares.
ix. We accept full responsibility for the accuracy of information given in the Letter of Offer and confirm
that to the best of our knowledge and belief, there are no other facts the omission of which makes any
statement made in the Letter of Offer misleading and further confirms that we have made all reasonable
enquiries to ascertain such facts.
x. All information shall be made available by the Lead Manager and the Issuer to the Investors at large
and no selective or additional information would be available for a section of the Investors in any
manner whatsoever including at road shows, presentations, in research or sales reports etc.
xi. We shall comply with such disclosure and accounting norms specified by SEBI from time to time.
Minimum Subscription
If we do not receive the minimum subscription of 90% of the Issue, the Company shall refund the entire
subscription amount received within 15 days from the Issue Closing Date. If there is delay in the refund of
subscription by more than 8 days after we become liable to pay the subscription amount (i.e., 15 days after the
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Issue Closing Date or the date of refusal by the Stock Exchanges to grant listing permission to us for the listing
of the Equity Shares Allotted in this Issue, whichever is earlier), the Company and every Director of the
Company who is an officer in default will be liable to pay interest for the delayed period, at prescribed rates in
sub-sections (2) and (2A) of Section 73 of the Companies Act.
Important
Please read the Letter of Offer carefully before taking any action. The instructions contained in the
accompanying CAF are an integral part of the conditions and must be carefully followed; otherwise the
application is liable to be rejected.
All enquiries in connection with the Letter of Offer or accompanying CAF and requests for SAFs must
be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and
the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘Hitachi Home &
Life Solutions (India) Limited - Rights Issue’ on the envelope and postmarked in India) to the Registrar
to the Issue at the following address:
Sharepro Services (India) Private Limited
13 AB, Samhita Warehousing Complex,
Sakinaka Telephone Exchange Lane,
Off Andheri-Kurla Road, Sakinaka,
Andheri (East), Mumbai – 400 072,
Maharashtra, India
Tel: +91 22 6191 5400
Fax: +91 22 6191 5444
Website: www.shareproservices.com
Email: [email protected]
Contact Person: Mr. Prakash A. Khare / Anand Moolya
SEBI Registration No: INR000001476
It is to be specifically noted that this Issue of Equity Shares is subject to the risk factors mentioned in the chapter
titled “Risk Factors” on page XI.
The Issue will remain open for a minimum 15 days. However, the Board will have the right to extend the Issue
period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.
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SECTION IX – STATUTORY AND OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by us or
entered into more than two years before the date of this Letter of Offer) which are or may be deemed material
have been entered or are to be entered into by us. These contracts and also the documents for inspection referred
to hereunder, may be inspected at our registered office situated at 9th
Floor, Abhijeet-I, Mithakhali Six Roads,
Ahmedabad - 380 006, Gujarat, India, from 11.00 a.m. to 5.00 p.m. on working days from the date of filing of
this Letter of Offer with SEBI until the Issue Closing Date.
(A) MATERIAL CONTRACTS
1. Agreement dated December 12, 2012 entered into between us and the Lead Manager to the Issue.
2. Agreement dated December 01, 2012 entered into between us and the Registrar to the Issue.
3. Tripartite Agreement dated April 14, 2010 between us, Sharepro Services (India) Private Limited and the
NSDL to establish direct connectivity with the Depository
4. Tripartite Agreement dated April 06, 2010 between us, Sharepro Services (India) Private Limited and the
CDSL to establish direct connectivity with the Depository.
5. Banker to the Issue Agreement dated February 11, 2013 between us, the Lead Manager, ICICI Bank
Limited and Sharepro Services (India) Private Limited.
(B) DOCUMENTS
1. Our Memorandum and Articles of Association.
2. Our certificates of incorporation dated December 7, 1984 and fresh certificates of incorporation dated April
18, 1990, September 14, 1990, January 25, 1999 and March 12, 2003.
3. Consents of the Directors, Company Secretary and Compliance Officer, Auditors, Lead Manager to the
Issue, Bankers to the Issue, Legal Counsel and the Registrar to the Issue to include their names in this Letter
of Offer to act in their respective capacities.
4. Copy of the resolution of the Board of Directors dated October 18, 2012 authorising the Issue and related
matters.
5. The Report of the Auditors being, S. R. Batliboi & Associates, as set out herein dated December 10, 2012 in
relation to financial results subjected to limited review for the six months ended September 30, 2012.
6. A report by the Auditors being, S. R. Batliboi & Associates on Statement of tax benefit available to us and
prospective shareholders dated February 11, 2013.
7. Copy of the letter of offer for our last rights issue dated November 18, 2003.
8. Our Annual Reports for the last five financial years.
9. In-principle listing approvals dated January 17, 2013 and December 27, 2012 from BSE and NSE
respectively.
10. Due Diligence Certificate dated December 13, 2012 from ICICI Securities Limited.
11. RBI approval dated January 23, 2013 received from RBI in relation to renunciation of rights entitlement by
and to persons resident outside India
12. Letter no. WRO/SM/RI/HHLS/0213/2013 dated February 05, 2013 issued by the SEBI for the Issue.
Any of the contracts or documents mentioned in this Letter of Offer may be amended or modified at any time if
so required in the interest of the Company or if required by the other parties, without reference to the Equity
Shareholders, subject to compliance with applicable law.
177
DECLARATION
We hereby certify that no statement made in this Letter of Offer contravenes any of the provisions of the
Companies Act, 1956 and the rules made thereunder. We further certify that all the legal requirements
connected with the Issue as also the guidelines, instructions, etc., issued by SEBI, the Government of India and
any other competent authority in this behalf, have been duly complied with. We further certify that all
disclosures made in this Letter of Offer are true and correct.
Shinichi Iizuka
Chairman
Motoo Morimoto
Managing Director
Amit Doshi
Executive Director
Anil Shah
Executive Director (Finance)
Vinay Chauhan Executive Director
L G Ramakrishnan
Non - Executive Director
Devender Nath
Non - Executive &Independent Director
Ashok Balwani
Non - Executive &Independent Director
Mukesh Patel
Non - Executive &Independent Director
RS Mani
Non - Executive &Independent Director
Ravindra Jain
Non - Executive &Independent Director
Vinesh Sadekar
Non - Executive &Independent Director
Date: February 27, 2013
Place: Ahmedabad
