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DRAFT LETTER OF OFFER
Dated January 28 2011
For Equity Shareholders of the Company only
JK PAPER LIMITED Our Company was incorporated as The Central Pulp Millslsquo Limited on July 4 1960 under the Companies Act 1956 as amended in the State of Maharashtra
For details of changes in the name and registered office of the Company see ―History and Certain Corporate Matters on page 87
Registered Office PO Central Pulp Mills - 394 660 Fort Songadh District Tapi Gujarat India
Corporate Office Nehru House 4 Bahadur Shah Zafar Marg New Delhi ndash 110 002 India
Tel No (91 11) 3017 9100 Fax No (91 11) 2373 9475
Contact Person Mr Suresh Chander Gupta Company Secretary and Compliance Officer
Emailjkpaperrightsjkmailcom Website wwwjkpapercom
THE PROMOTER OF OUR COMPANY IS BENGAL amp ASSAM COMPANY LIMITED
FOR PRIVATE CIRCULATION TO THE EQUITY SHAREHOLDERS OF THE COMPANY ONLY
DRAFT LETTER OF OFFER
ISSUE OF [] EQUITY SHARES OF FACE VALUE ` 10 EACH (ldquoEQUITY SHARESrdquo) OF JK PAPER LIMITED (THE ldquoCOMPANYrdquo OR THE
ldquoISSUERrdquo) FOR CASH AT A PRICE OF ` [] EACH (INCLUDING A PREMIUM OF ` [] EACH) AGGREGATING TO AN AMOUNT NOT
EXCEEDING ` 250 CRORES BY THE COMPANY TO THE EQUITY SHAREHOLDERS ON RIGHTS BASIS IN THE RATIO OF [] EQUITY
SHARES FOR EVERY [] EQUITY SHARES HELD ON THE RECORD DATE ie [] (THE ldquoISSUErdquo) THE ISSUE PRICE IS [] TIMES THE
FACE VALUE OF THE EQUITY SHARES
Our Company is considering issue of foreign currency convertible bonds for an amount aggregating upto ` 250 crores with certain investors prior to filing of
the Letter Of Offer with the Stock Exchanges The said issue of foreign currency convertible bonds is at the discretion of our Company In the event such or any
other foreign currency convertible bonds are outstanding on the Record Date the Company undertakes to make reservation of such number of Equity Shares to
which the holders of such outstanding foreign currency convertible bonds are entitled to as on the Record Date in favour of such holders Such Equity Shares
pursuant to the reservation will be issued on the same terms on which Equity Shares are issued under this Issue in accordance with Regulation 53 of the SEBI
ICDR Regulations See ldquoThe Issuerdquo and ldquoCapital Structurerdquo on pages 15 and 23 respectively
This Draft Letter of Offer may not be sent to any person or any jurisdiction in which it would not be permissible to deliver the Equity Shares and
rights to purchase the Equity Shares and the Equity Shares and rights to purchase the Equity Shares may not be offered sold resold transferred or
delivered directly or indirectly to any such person or in any such jurisdiction The Equity Shares and rights to purchase the Equity Shares have not
been and will not be registered under the US Securities Act of 1933 as amended (the ldquoSecurities Actrdquo) or under any securities law of any state or
other jurisdiction of the United States and may not be offered sold resold Allotted taken up exercised renounced pledged transferred or
delivered directly or indirectly within the United States or to or by US Persons (as defined in Regulation S under the Securities Act (ldquoRegulation
Srdquo)
The Company is making this Issue on a rights basis to the Equity Shareholders of the Company and will dispatch the Letter of OfferAbridged Letter
of Offer and Composite Application Form (ldquoCAFrdquo) to Equity Shareholders who have an Indian address GENERAL RISKS
Investments in equity securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing
their investment Investors are advised to read the risk factors carefully before taking an investment decision in relation to this Issue For taking an investment
decision investors must rely on their own examination of the Issuer and the Issue including the risks involved The Equity Shares being offered in the Issue
have not been recommended or approved by the Securities and Exchange Board of India (the ―SEBI) nor does SEBI guarantee the accuracy or adequacy of
this document Specific attention of investors is invited to the section on ―Risk Factors on page ix
ISSUER‟S ABSOLUTE RESPONSIBILITY
The Issuer having made all reasonable inquiries accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to
the Issuer and the Issue which is material in the context of this Issue that the information contained in this Draft Letter of Offer is true and correct in all
material aspects and is not misleading in any material respect that the opinions and intentions expressed herein are honestly held and that there are no other
material facts the omission of which makes this Draft 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 of the Company are listed on the Bombay Stock Exchange Limited (―BSE) and the National Stock Exchange of India Limited
(―NSE) The Company has received ―in-principle approvals from the BSE and the NSE for listing of the Equity Shares pursuant to letters dated [ ] and [ ]
respectively For the purpose of the Issue the Designated Stock Exchange shall be []
LEAD MANAGER TO THE ISSUE REGISTRAR TO THE ISSUE
ICICI SECURITIES LIMITED
ICICI Centre
HT Parekh Marg
Churchgate Mumbai 400 020 Maharashtra
Tel (91 22) 2288 2460
Fax (91 22) 2282 6580
E-mail jkpaperrights icicisecuritiescom
Investor grievance id
customercareicicisecuritiescom
Website wwwicicisecuritiescom
Contact Person Sumanth Rao
Registration No INM000011179
MCS Limited
F-65 Okhla Industrial Area
Phase I New Delhi 110 020
Tel (91 11) 4140 6149
Fax (91 11) 4170 9881
E-mail id adminmcsdelcom
Website wwwmcsdelcom
Contact Person SK Gupta
Registration No INR000000056
ISSUE PROGRAMME
ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT
APPLICATION FORMS ISSUE CLOSES ON
[] [] []
TABLE OF CONTENTS
SECTION I - GENERAL i DEFINITIONS AND ABBREVIATIONS i OVERSEAS SHAREHOLDERS iv PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA vi FORWARD LOOKING STATEMENTS viii SECTION II - RISK FACTORS ix SECTION III - INTRODUCTION 1 SUMMARY OF INDUSTRY OVERVIEW 1 SUMMARY OF OUR BUSINESS 4 SUMMARY FINANCIAL INFORMATION 9 THE ISSUE 15 GENERAL INFORMATION 16 CAPITAL STRUCTURE 23 OBJECTS OF THE ISSUE 34 BASIS FOR ISSUE PRICE 42 STATEMENT OF GENERAL AND SPECIAL TAX BENEFITS 45 SECTION IV ndash ABOUT THE COMPANY 51 INDUSTRY OVERVIEW 51 OUR BUSINESS 62 REGULATIONS AND POLICIES 83 HISTORY AND CERTAIN CORPORATE MATTERS 87 DIVIDEND POLICY 98 OUR MANAGEMENT 100 OUR PROMOTER AND GROUP COMPANIES 117 RELATED PARTY TRANSACTIONS 140 SECTION V ndash FINANCIAL INFORMATION 141 FINANCIAL STATEMENTS 141 MANAGEMENT‟S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 189 FINANCIAL INDEBTEDNESS 213 STOCK MARKET DATA FOR EQUITY SHARES OF THE COMPANY 222 SECTION VI ndash LEGAL AND OTHER INFORMATION 224 OUTSTANDING LITIGATION AND MATERIAL DEVELOPMENTS 224 GOVERNMENT AND OTHER APPROVALS 257 STATUTORY AND OTHER INFORMATION 266 SECTION VII - TERMS OF THE PRESENT ISSUE 276 SECTION VIII - MAIN PROVISIONS OF ARTICLES OF ASSOCIATION 301 SECTION IX ndash OTHER INFORMATION 331 MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION 331 DECLARATION 333
i
SECTION I - GENERAL
DEFINITIONS AND ABBREVIATIONS
All terms defined have the meaning set forth below unless otherwise specified in the context thereof
Company Related Terms
Reference to any statutes or regulations shall include any amendments made from time to time
Term Description
―JK Paper or ―the Company or
―our Company or ―we or ―us
or ―our
JK Paper Limited a public limited company incorporated under the provisions of
the Companies Act 1956 and our Subsidiaries unless the context otherwise
requires
ArticlesArticles of Association The Articles of Association of our Company
Auditors The statutory auditors of our Company Lodha amp Co Chartered Accountants
Corporate Office Nehru House 4 Bahadur Shah Zafar Marg New Delhi ndash 110 002 India
Group Companies Includes those companies firms and ventures disclosed in the section ―Our
Promoter and Group Companies on page 117 promoted by our Promoter
irrespective of whether such entities are covered under section 370(1)(B) of the
Companies Act
Listing Agreement The equity listing agreement signed between our Company and the Stock Exchanges
MemorandumMemorandum of
Association
The Memorandum of Association of our Company
Promoter Bengal amp Assam Company Limited
Promoter Group Includes such persons and entities constituting our promoter group pursuant to
Regulation 2(1)(zb) of the SEBI ICDR Regulations
Registered Office PO Central Pulp Mills - 394 660 Fort Songadh District Tapi Gujarat India
Scheme of Arrangement Scheme of arrangement between our Company Songadh Infrastructure amp Housing
Limited and Jaykaypur Infrastructure amp Housing Limited and their respective
shareholders
Subsidiaries
The subsidiaries of our Company namely Jaykaypur Infrastructure amp Housing
Limited and Songadh Infrastructure amp Housing Limited
Issue Related Terms
Term Description
Abridged Letter of Offer The abridged letter of offer to be sent to the eligible Equity Shareholders of our
Company with respect to this Issue in accordance with the SEBI ICDR Regulations
AllotAllottedAllotment Unless the context otherwise requires the allotment of Equity Shares pursuant to
the Issue
Allottees Persons to whom Equity Shares of the Company are issued pursuant to the Issue
Application Money The aggregate amount payable in respect of the Equity Shares applied for in this
Issue at the Issue Price
Application Supported by
Blocked AmountASBA
An application whether physical or electronic used by an ASBA Applicant to
apply for the Equity Shares in the Issue together with an authorization to an SCSB
to block the Application Money in the specified bank account maintained with such
SCSB
ASBA Applicants Eligible Equity Shareholders who intend to apply through ASBA and (a) are
holding Equity Shares in dematerialised form as on the Record Date and have
applied for (i) their Rights Entitlement or (ii) their Rights Entitlement and Equity
Shares in addition to their Rights Entitlement in dematerialised form (b) have not
renounced their Rights Entitlement in full or in part (c) are not renouncees and (d)
are applying through blocking of funds in bank accounts maintained with SCSBs
Bankers to the Issue []
Business Day Working Day All days other than a Sunday or a public holiday on which commercial banks in
New Delhi are open for business
Compliance Officer Mr Suresh Chander Gupta Company Secretary
Composite Application
FormCAF
The form used by an Investor to make an application for Allotment of Equity
Shares in this Issue
Consolidated Certificate In case of holding of Equity Shares in physical form the Company would issue one
certificate for the Equity Share Allotted to one folio
Controlling Branches The branches of the SCSBs which shall co-ordinate with the Lead Manager the
Registrar to the Issue and the Stock Exchanges and a list which is available at
ii
Term Description
httpwwwsebigovinpmdscsbpdf
Designated Branches Such branches of the SCSBs which shall collect application forms used by ASBA
Applicants and a list of which is available at httpwwwsebigovinpmdscsbpdf
Designated Stock Exchange []
Draft Letter of Offer This Draft Letter of Offer dated January 28 2011 filed with SEBI for its
observations
Equity Shareholder(s) A holder(s) of Equity Shares of our Company
Financial YearFiscal The period of 12 months ended March 31 of that particular year unless otherwise
stated
Investor(s) The Equity Shareholders on the Record Date and the Renouncees
Issue The issue of [] Equity Shares with a face value of ` 10 each for cash at a price of `
[] each (including a premium of ` [] each) aggregating to an amount not
exceeding ` 250 crores by the Company to the Equity Shareholders on rights basis
in the ratio of [] Equity Shares for every [] Equity Shares held on the Record
Date
Issue Closing Date [ ] 2011
Issue Opening Date [ ] 2011
Issue Price ` []
Lead Manager ICICI Securities Limited
Letter of Offer The letter of offer to be filed with the Stock Exchanges after incorporating
observations received from SEBI on this Draft Letter of Offer
Net Proceeds The Issue Proceeds less the Issue expenses For further details please see ―Objects
of the Issue on page 34
Record Date [ ]
Registrar to the Issue or Registrar MCS Limited
Renouncees Persons who have acquired Rights Entitlements from Equity Shareholders
Rights Entitlement The number of Equity Shares that an Equity Shareholder is entitled to in proportion
to hisher shareholding in the Company on the Record Date
SAF(s) Split Application Form(s)
SCSB(s) The Self Certified Syndicate Banks which are registered with the SEBI under the
SEBI (Bankers to the Issue) Regulations 1994 and are recognized as such by the
SEBI and offer services of ASBA including blocking of funds in bank accounts A
list of such banks are available at httpwwwsebigovinpmdscsbpdf
Stock Exchange(s) The BSE and the NSE where the Equity Shares of the Company are presently listed
Industry Related Terms
Term Description
AOX Adsorbable Organic Halides
BDMT Bone Dry Metric Tonne
BOD Biochemical Oxygen Demand
DCS Distributed Control System
ECF Elementary Chlorine Free
IPMA Indian Paper Manufacturers Association
T d sd Tonnes dry solid per day
TTT Time to Temperature
WGGC Wet Ground Calcium Carbonate
POP Point of purchase
Conventional and General Terms Abbreviations
Term Description
AGM Annual General Meeting
AS Accounting Standards as issued by the ICAI
BSE The Bombay Stock Exchange Limited
CAGR Compounded Annual Growth Rate
CDSL Central Depository Services (India) Limited
CEO Chief Executive Officer
Companies Act The Companies Act 1956
CRISIL Credit Rating Information Services of India Limited
iii
Term Description
CRPS Cumulative Redeemable Preference Shares
CSE The Calcutta Stock Exchange Association Limited
Depositories Act The Depositories Act 1996
DP Depository Participant
DSE Designated Stock Exchange
ECS Electronic Clearing Service
EGM Extraordinary General Meeting
EPS Earnings per share
FCCB Foreign Currency Convertible Bond
FEMA Foreign Exchange Management Act 1999
FDI Foreign Direct Investment
FI Financial Institutions
FII(s) Foreign Institutional Investors registered with SEBI under applicable laws
FIPB Foreign Investment Promotion Board
GDP Gross Domestic Product
GDR Global Depository Receipts
GoI Government of India
HUF Hindu Undivided Family
ICAI The Institute of Chartered Accountants of India
IFSC Indian Financial System Code
IT Act IT Act Income Tax Act 1961
Indian GAAP The generally accepted accounting principles in India
Indian GAAS The generally accepted accounting standards in India
ITAT Income Tax Appellate Tribunal
MICR Magnetic Ink Character Recognition
MoU Memorandum of Understanding
NAV Net asset value
NEFT National Electronic Fund Transfer
NI Act Negotiable Instruments Act 1881
NR Non Resident
NRI(s) Non Resident Indian(s)
NSDL National Securities Depository Limited
NSE The National Stock Exchange of India Limited
OCB Overseas Corporate Body
OCCRPS Optionally Convertible Cumulative Redeemable Preference Shares
PAN Permanent Account Number
RBI The Reserve Bank of India
RoC Registrar of Companies Gujarat
Rs or ` Indian Rupees
RTGS Real time gross settlement
SEBI Securities and Exchange Board of India
SEBI Act The Securities and Exchange Board of India Act 1992
SEBI ICDR Regulations The SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009
Securities Act The United States Securities Act of 1933
SME Small and Medium Enterprises
STT Securities Transaction Tax
Takeover Code The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997
US$ or USD United States Dollar
VSE Vadodara Stock Exchange Limited
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 in ―Main Provisions of Articles of Association ―Statement of General
and Special Tax Benefits ―Regulations and Policies and ―Financial Statements on pages 301 45 83 and
141 respectively shall have the meanings given to such terms in these respective sections
iv
OVERSEAS SHAREHOLDERS
The distribution of this Draft 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 this Draft Letter of Offer may come are required to inform themselves about and
observe such restrictions The Company is making this Issue on a rights basis to the Equity Shareholders of the
Company and will dispatch the Letter of OfferAbridged Letter of Offer and Composite Application Form
(―CAF) to Equity Shareholders who have 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 Draft Letter of Offer has been filed with SEBI for observations Accordingly the
Equity Shares may not be offered or sold directly or indirectly and this Draft Letter of Offer may not be
distributed in any jurisdiction except in accordance with legal requirements applicable in such jurisdiction
Receipt of this Draft Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal
to make such an offer and in those circumstances this Draft Letter of Offer must be treated as sent for
information only and should not be copied or redistributed Accordingly persons receiving a copy of this Draft
Letter of Offer should not in connection with the issue of the Equity Shares or the Rights Entitlements
distribute or send the same in or into the United States or any other jurisdiction where to do so would or might
contravene local securities laws or regulations If this Draft Letter of Offer is received by any person in any such
territory or by their agent or nominee they must not seek to subscribe to the Equity Shares or the Rights
Entitlements referred to in this Draft Letter of Offer
Neither the delivery of this Draft Letter of Offer nor any sale hereunder shall under any circumstances create
any implication that there has been no change in the Companylsquos affairs from the date hereof or that the
information contained herein is correct as at any time subsequent to this date
NO OFFER IN THE UNITED STATES
The rights and the Equity Shares of the Company have not been and will not be registered under the United
States Securities Act 1933 as amended (the ―Securities Act) or any US state securities laws and may not be
offered sold resold or otherwise transferred within the United States of America or the territories or
possessions thereof (the United Stateslsquolsquo or USlsquolsquo) or to or for the account or benefit of ―US persons (as
defined in Regulation S under the Securities Act (Regulation Slsquolsquo)) except in a transaction exempt from the
registration requirements of the Securities Act The rights referred to in this Draft Letter of Offer are being
offered in India but not in the United States The offering to which this Draft Letter of Offer relates is not and
under no circumstances is to be construed as an offering of any securities or rights for sale in the United States
or as a solicitation therein of an offer to buy any of the said securities or rights Accordingly the Draft Letter of
Offer Letter of Offer Abridged Letter of Offer and the enclosed CAF should not be forwarded to or transmitted
in or into the United States at any time
Neither the Company nor any person acting on behalf of the Company will accept subscriptions or renunciation
from any person or the agent of any person who appears to be or who the Company or any person acting on
behalf of the Company has reason to believe is either a ―US person (as defined in Regulation S) or otherwise
in the United States when the buy order is made Envelopes containing CAF should not be postmarked in the
United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal
to make an offer under the Letter of Offer and all persons subscribing for the Equity Shares and wishing to hold
such Equity Shares in registered form must provide an address for registration of the Equity Shares in India The
Company is making this issue of Equity Shares on a rights basis to the Equity Shareholders of the Company and
the Letter of OfferAbridged Letter of Offer and CAF will be dispatched to Equity Shareholders who have an
Indian address Any person who acquires rights and the Equity Shares will be deemed to have declared
represented warranted and agreed (i) 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 when the buy order is made (ii) it is not a ―US
person (as defined in Regulation S) and does not have a registered address (and is not otherwise located) in the
United States and (iii) is authorized to acquire the rights and the Equity Shares in compliance with all
applicable laws and regulations
The Company reserves the right to treat as invalid any CAF which (i) does not include the certification set out
in the CAF to the effect that the subscriber is not a ―US person (as defined in Regulation S) and does not
have a registered address (and is not otherwise located) in the United States and is authorized to acquire the
rights and the Equity Shares in compliance with all applicable laws and regulations (ii) appears to the Company
v
or its agents to have been executed in or dispatched from the United States (iii) where a registered Indian
address is not provided or (iv) where the Company believes that CAF is incomplete or acceptance of such CAF
may infringe applicable legal or regulatory requirements and the Company shall not be bound to Allot or issue
any Equity Shares or Rights Entitlement in respect of any such CAF The Company is informed that there is no
objection to a United States shareholder selling its rights in India Rights Entitlement may not be transferred or
sold to any US Person
European Economic Area Restrictions
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each a ―Relevant Member State) an offer of the Equity Shares to the public may not be made in
that Relevant Member State prior to the publication of a prospectus in relation to the Rights Entitlement or the
Equity Shares which has been approved by the competent authority in that Relevant Member State or where
appropriate approved in another Relevant Member State and notified to the competent authority in that
Relevant Member State all in accordance with the Prospectus Directive except that an offer of Equity Shares or
Rights Entitlement to the public in that Relevant Member State from and including the Relevant Implementation
Date may be made
(a) to legal entities which are authorized or regulated to operate in the financial markets or if not so authorized
or regulated whose corporate purpose is solely to invest in securities
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last
Financial Year (2) a total balance sheet of more than Euro 43000000 and (3) an annual net turnover of more
than Euro 50000000 as shown in its last annual or consolidated accounts or
(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive
provided that no such offer of Equity Shares shall result in the requirement for the publication by the Company
or the Lead Manager pursuant to Article 3 of the Prospectus Directive
For the purposes of this provision the expression an ―offer to the public in relation to any Equity Shares in any
Relevant Member State means the communication in any form and by any means of sufficient information on
the terms of the offer and the Equity Shares to be offered so as to enable an investor to decide to purchase or
subscribe the Equity Shares as the same may be varied in that Member State by any measure implementing the
Prospectus Directive in that Member State and the expression ―Prospectus Directive means Directive 20037
1EC and includes any relevant implementing measure in each Relevant Member State In the case of any Rights
Entitlement or Equity Shares being offered to a financial intermediary as that term is used in Article 3(2) of the
Prospectus Directive such financial intermediary will be deemed to have represented acknowledged and agreed
that the Rights Entitlement or Equity Shares acquired by them in the Issue have not been acquired on a non-
discretionary basis on behalf of nor have they been acquired with a view to their offer or resale to persons in
circumstances which may give rise to an offer of any Rights Entitlement or Equity Shares acquired by them in
the Issue to the public other than their offer or resale in a Relevant Member State to qualified investors as so
defined who are not financial intermediaries or in circumstances in which the prior consent of the Lead Manager
has been obtained to each such proposed offer or resale
United Kingdom Restrictions
This Draft Letter of Offer is only being distributed to and is only directed at (i) persons who are outside the
United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005 (the ―Order) or (iii) high net worth entities and other
persons to whom it may lawfully be communicated falling within Article 49(2)(a) to (d) of the Order (all such
persons together being referred to as ―relevant persons) The Equity Shares are only available to and any
invitation offer or agreement to subscribe purchase or otherwise acquire such Equity Shares will be engaged in
only with relevant persons Any person who is not a relevant person should not act or rely on this document or
any of its contents
vi
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA
Unless stated otherwise the financial information and data in this Draft Letter of Offer is derived from the
Companylsquos consolidated restated audited financial statements prepared in accordance with Indian GAAP and
SEBI ICDR Regulations which are included in this Draft Letter of Offer and set out in the section titled
―Financial Statements on page 141 The Fiscal Year of the Company commences on April 1 of every year and
ends on March 31 of the next year
The Company is an Indian listed company and prepares its financial statements in accordance with Indian
GAAP and the Companies Act There are changes in description and classification of certain amounts in the
presentation of the financial information included in this Draft Letter of Offer if compared to the presentation
and disclosures we have reported as a listed company in India Neither the information set forth in our financial
statements nor the format in which it is presented should be viewed as comparable to information prepared in
accordance with IFRS or US GAAP or any accounting principles other than Indian GAAP We prepare our
financial statements in accordance with Indian GAAP and Indian GAAS Indian GAAP differs significantly in
certain respects from IFRS and US GAAP
In this Draft Letter of Offer any discrepancies in any table between the total and the sums of the amounts listed
are due to rounding-off and unless otherwise specified all financial numbers in parenthesis represent negative
figures Any percentage amounts as set forth in the sections titled ―Risk Factors ―Our Business
―Management‟s Discussion and Analysis of Financial Condition and Results of Operations on pages ix 62
and 189 respectively and elsewhere in this Draft Letter of Offer unless otherwise indicated have been
prepared on the basis of the financial statements included in this Draft Letter of Offer
For definitions see ―Definitions and Abbreviations on page i All references to ―India contained in this Draft
Letter of Offer are to the Republic of India all references to the ―US or the ―US or the ―USA or the
―USA or the ―United States are to the United States of America and all references to ―UK or the ―UK are
to the United Kingdom
Currency and Units of Presentation
Except where specified in this Draft Letter of Offer all figures have been expressed in ―crores
All references to ―Rupees ―INR or ―Rs or ―`rdquo are to Indian Rupees the official currency of the Republic of
India all references to ―US$ or ―USD are to United States Dollars the official currency of the United States
of America all references to ―GBP or ―pound are to Great Britain Pounds the official currency of the United
Kingdom all references to ―EUR or ―euro are to the official currency of the European Union and all references
to ―SEK are to Swedish Krona the official currency of the Sweden
Industry and Market Data
Unless stated otherwise industry demographic and market data used in this Draft Letter of Offer has been
obtained from industry publications data on websites maintained by private and public entities data appearing
in reports by market research firms and other publicly available information These resources generally state that
the information contained therein has been obtained from sources believed to be reliable but that their accuracy
and completeness are not guaranteed and their reliability cannot be assured
Neither we nor the Lead Manager have independently verified this data and neither we nor the Lead Manager
make any representation regarding the accuracy of such data Accordingly applicants should not place undue
reliance on this information
Certain information in ―Industry Overview has been obtained from CRISIL Limited which has issued the
following disclaimer
CRISIL Limited has used due care and caution in preparing this report Information has been obtained by
CRISIL from sources which it considers reliable However CRISIL does not guarantee the accuracy adequacy
or completeness of any information and is not responsible for any errors or omissions or for the results obtained
from the use of such information No part of the report may be publishedreproduced in any form without
CRISILlsquos prior written approval CRISIL is not liable for investment decisions which may be based on the
vii
views expressed in the report CRISIL Research operates independently of and does not have access to
information obtained by CRISILlsquos Rating Division which may in its regular operations obtain information of a
confidential nature that is not available to CRISIL Research
Exchange Rates
The exchange rates of the respective foreign currencies as on September 30 2010 and March 31 2010 are
provided below
Currency Exchange rate into ` as on September 30
2010
Exchange rate into ` as on March
31 2010
USD 4492 4514
EUR 6100 6056
GBP 7114 6803
Yen 054 048
SEK 667 620 Sourcewwwrbiorgin wwwoandacom (for SEK data)
viii
FORWARD LOOKING STATEMENTS
Our Company has included statements in this Draft Letter of Offer which contain words or phrases such as
―aim ―is likely to result ―believe ―expect ―will continue ―anticipate ―estimate ―intend ―plan
―contemplate ―seek to ―future ―objective ―goal ―project ―potential ―will pursue and similar
expressions or variations of such expressions that are ―forward looking statements
All forward looking statements whether made by the Company or any third party are subject to risks
uncertainties and assumptions about our Company that could cause actual results to differ materially from those
contemplated by the relevant forward-looking statement Actual results may differ materially from those
suggested by the forward looking statements due to risks or uncertainties associated with our expectations with
respect to but not limited to the following
cost or availability of raw materials
our Companylsquos ability to successfully implement its strategy its growth and expansion plans and
technological changes
ability to obtain financing to expand our business
inability to generate sufficient cash flow or secure sufficient credit to simultaneously fund our
operations finance capital expenditures and satisfy other obligations
loss of or shutdown of operations at any of our manufacturing facilities
general political economic and business conditions in India and other countries
performance of the Indian debt and equity markets
our exposure to market risks
occurrence of natural calamities or natural disasters affecting the areas in which our Company has
operations
changes in laws and regulations that apply to companies in India and
changes in the foreign exchange control regulations in India
For a further discussion of factors that could cause the Companylsquos actual results to differ see ―Risk Factors
―Our Business and ―Management‟s Discussion and Analysis of Financial Condition and Results of
Operations on pages ix 62 and 189 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 our Company nor the Lead
Manager nor any of its 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 the SEBI Stock
Exchangeslsquo requirements our Company and the Lead Manager will ensure that applicants are informed of
material developments until the time of the grant of listing and trading permission by the Stock Exchanges
ix
SECTION II - RISK FACTORS
An investment in equity securities involves a high degree of risk and investors should not invest any funds in this
Issue unless they can afford to take the risk of losing all or a part of their investment You should carefully
consider all of the information in this Draft Letter of Offer including the risks and uncertainties described
below before making an investment To obtain a complete understanding you should read this section in
conjunction with ldquoOur Businessrdquo and ldquoManagement‟s Discussion and Analysis of Financial Condition and
Results of Operationrdquo on pages 62 and 189 respectively as well as the other financial and statistical
information contained in this Draft Letter of Offer In making an investment decision prospective investor must
rely on their own examination of the Company and terms of the Issue including the merits and risk involved If
any of the following risks actually occur our business financial condition results of operations and prospects
could suffer the trading price of our Equity Shares could decline and you may lose all or part of your
investment The risk and uncertainties described below are not the only risks that we currently face Additional
risk and uncertainties not presently known to us or that we currently believe to be immaterial may also have an
adverse effect on our business results of operations and financial condition You should also pay particular
attention to the fact that we are governed in India by a legal and regulatory environment which in some
material respects may be different from that which prevails in other countries
This Draft Letter of Offer also contains forward-looking statements that involve risks and uncertainties Our
Company‟s actual results could differ materially from those anticipated in these forward-looking statements as
a result of certain factors including the considerations described below and elsewhere in this Draft Letter of
Offer The financial and other implications of material impact of risks concerned wherever quantifiable have
been disclosed in the risk factors mentioned below However there are a few risk factors where the impact is not
quantifiable and hence the same has not been disclosed in such risk factors
Unless otherwise stated the financial information of the Company used in this section is derived from our
audited consolidated financial statements as restated
Internal Risk Factors
1 Changes in the cost or availability of raw materials and energy could affect our profitability
We rely significantly on certain raw materials (principally bamboo wood industrial chemicals and pulp)
and energy sources (principally water and electricity) for the manufacture of our products In Fiscal 2010
and six months period ended September 30 2010 raw materials comprised approximately 2606 and
2555 of our net sales
We procure a significant portion of our bamboo pulp wood from forest land allotted to us by the various
state governments through long term agreements wherein quantity and price are fixed on an annual basis
However such supply by the relevant state governments is subject to numerous conditions including
achieving certain production targets and lifting the bamboo pulp wood within the periods specified In the
event we are unable to comply with these conditions the relevant state governments may terminate the
allotment of such lands to us or may impose penalties Further as a result of flowering and illegal felling of
bamboo in forest land allocated to us by the state government of Gujarat we anticipate that only 15-20 of
our bamboo requirement would be met by such land allotted to us after Fiscal 2012 We have not entered
into any formal arrangements or commitments for the supply of our remaining bamboo pulp wood
requirements and procure such requirement from local farmers and the open market In addition due to
complicated land ownership structures we may not be able to procure land within adequate time or at all
to plantation of bamboo pulp wood for captive requirements Further as a result of increase in prices of
bamboo we use hardwood to cater our raw material requirements as an alternative to bamboo We may not
be able to procure adequate quantity of hardwood at a commercially acceptable price or at all Any
unavailability of hardwood at a competitive cost and timely manner would have a material adverse effect on
our business operations and financial condition
In addition availability of pulp in the international markets affects prices of pulp Events in past such as
earthquake in Chile a major supplier of pulp and increase in demand of pulp in China led to increase in
price of pulp internationally Raw material prices will change based on worldwide supply and demand and
there is no assurance that we will be able to procure our requirements from suppliers at reasonable costs and
in a timely manner For trends in relation to raw material prices see ―Industry Overview on page 51
x
Further factors such as inclement weather and heavy monsoons may delay or disrupt the harvest of
hardwood or bamboo for the particular crop period leading to unavailability of raw materials Also some
of our customers may have businesses which may be seasonal in nature and a downturn in demand for our
products by such customers could reduce our revenues during such periods
We procure our entire industrial chemicals required for our operations from the open market on a spot basis
and consequently are affected by variations in price of such industrial chemicals Any adverse variation in
price of industrial chemicals may adversely affect our raw material costs Further we may not be able to
pass increased cost for industrial chemicals to our customers
To meet our power requirements while we own and operate thermal captive power plants energy costs
may fluctuate significantly due to increase in coal prices or decreased production capacity Further we
purchased approximately 2843 and 6010 of our coal requirements for Unit JKPM and Unit CPM
respectively from the open market during Fiscal 2010 Coal prices have fluctuated dramatically in the past
and may continue to fluctuate in the future Any inability to source our coal requirements at a competitive
cost and in a timely manner would have a material adverse affect on our business operations and financial
condition
We may not be able to pass increased cost for raw materials or energy to our customers if the market or
existing agreements with our customers do not allow us to raise the prices of our finished products Even if
we are able to pass through increased cost of raw materials or energy the resulting increase in the selling
prices for our products could reduce the volume of products we sell and decrease our revenues While we
may try from time to time to hedge against increase in prices of raw materials we may not be successful in
doing so Any failure of our suppliers to deliver the raw materials or coal in the necessary quantities or to
adhere to delivery schedules or specified quality standards and technical specifications would adversely
affect our production processes and our ability to manufacture our products on time and at the desired level
of quality which could have a material adverse effect on our business financial condition and results of
operations
2 Outbreaks of diseases can significantly affect availability of raw materials for our products
Outbreak of diseases can significantly affect availability of raw materials for our products From time to
time there have been outbreaks of certain diseases in plants such as gall disease on eucalyptus trees in the
Fiscal 2007 which led to damage of saplings and adversely affected growth of eucalyptus plant As a result
of outbreak of gall disease farmers were reluctant to plant eucalyptus leading to significant reduction in
rate of increase of acreage of eucalyptus in the states of Andhra Pradesh and Odisha Damage to existing
eucalyptus plants and reluctance to plant new eucalyptus led to reduction in availability of raw materials
required to manufacture paper and paper products Outbreak of any such disease in future can adversely
affect availability of raw materials affect our plantation initiative and lead to waste of cost incurred in
plantation
3 The segments of the paper industry in which we operate are highly competitive and increased
competition could reduce our sales and profitability
We compete in different markets within the paper industry on the basis of the quality of our products
customer service product development activities price and distribution All of our markets are highly
competitive Factors affecting our competitive success include among other things price availability of
products brand recognition customer service ease of use and reliability Our competitors vary in size and
may have greater financial marketing personnel and other resources than us and certain of our competitors
have a longer history of established businesses and reputations in the Indian paper and packaging board
market as compared with us Competitive conditions in some of our segments have caused us to incur lower
net selling prices and reduced gross margins and net earnings These conditions may continue indefinitely
Changes in the identity ownership structure and strategic goals of our competitors and the emergence of
new competitors in our target markets may impact our financial performance New competitors may
include foreign-based companies and commodity-based domestic producers who could enter our specialty
markets
In addition to competition with different players in the paper industry industrial paper products compete
with products such as polymers wood and steel for packaging The writing and printing paper faces limited
xi
substitution threat from the increased tendency of storage of data in soft form which may affect demand of
our writing and printing paper products
4 Any inability to raise adequate financing to fund the expansion and upgrading of our facilities may have
a material adverse effect on our business prospects financial condition and results of operations
We will need significant additional capital to finance our business and in particular our plans for expansion
of Unit JKPM Our expansion of Unit JKPM requires capital expenditure of an aggregate amount of
approximately ` 165337 crores which we intend to finance through a combination of equity capital debt
internal accruals and equity linked securities Further we may intend to expand in our coated paper and
packaging board segments in future The expansion and upgradation of our facilities require significant
capital expenditure Our ability to finance our capital expenditure plans is subject to a number of risks
contingencies and other factors some of which are beyond our control including borrowing or lending
restrictions imposed by applicable government regulations and general economic and capital market
conditions We cannot assure you that we will be able to obtain sufficient funds to meet our capital
expenditure requirements and on terms acceptable to us or at all
While in the past we have been able to finance our projects on competitive terms due in part to our
Company achieving a favorable credit rating there can be no assurance that we will achieve such financing
in a timely manner and on favorable terms or at all or maintain a favorable credit rating Future debt
financing if available may result in increased finance charges increased financial leverage decreased
income available to fund further acquisition and expansions and the imposition of restrictive covenants on
our business and operations In addition future debt financing may limit our ability to withstand
competitive pressures and render us more vulnerable to economic downturns If we fail to generate or
obtain sufficient additional capital in the future we could be forced to reduce or delay the planned
expansion projects or other capital expenditures
In addition domestic funds may not be available or be available to us on unattractive terms which may
require us to seek funding internationally resulting in unattractive terms and conditions and exposure to
higher interest rates and foreign exchange risks If the funding requirements of a particular expansion
project increase we will need to look for additional sources of finance which may not be readily available
or may not be available on attractive terms which may have an adverse effect on the profitability of that
project We may face cost overruns during the expansion of our facilities which may require us to revise
our cost estimates Any significant change in the estimated funding requirements and development costs of
the facilities may have an adverse effect on our cash flows financial condition and results of operations
Our business financial condition results of operations and prospects may be adversely affected by any
delay or failure to successfully commission these projects
5 We have incurred significant indebtedness and intend to incur additional substantial borrowings in
connection with the expansion of our facilities The indebtedness incurred and the conditions and
restrictions imposed by our financing arrangements could adversely impact our ability to conduct our
business operations and we may not be able to meet our obligations under these debt financing
arrangements
As of September 30 2010 we had total outstanding indebtedness of ` 49780 crores Our debt-to-equity
ratio as at September 30 2010 was 0891 For further details regarding our indebtedness see ―Financial
Statements and ―Financial Indebtedness on pages 141 and 213 respectively We expect to incur
substantial additional indebtedness in order to finance the expansion of our manufacturing facilities The
indebtedness incurred and expected to be incurred and the restrictions imposed on us by our current or
future loan arrangements could adversely impact our ability to conduct our business operations and result in
other significant adverse consequences including but not limited to the following
we may be required to dedicate a significant portion of our cash flow towards repayment of our
existing debt which will reduce the availability of cash flow to fund working capital capital
expenditures acquisitions and other general corporate requirements
we may also be required to maintain certain specified financial ratios
our ability to obtain additional financing through debt or equity instruments in the future may be
impaired
xii
we may be required to obtain approval from our lenders regarding among other things expansion our
incurrence of additional indebtedness and the disposition of assets and we cannot assure you that we
will receive such approvals in a timely manner or at all
increase our vulnerability to general adverse economic industry and competitive conditions and
it could limit our flexibility in planning for or reacting to changes in our business and the industry
Additionally we have availed of unsecured loans amounting to ` 7366 crores as on September 30 2010
and such loans may be recalled by the lenders at any time For details see ―Financial Indebtedness on
page 213 Our ability to meet our debt service obligations and to repay our outstanding borrowings will
depend primarily upon the cash flow generated by our business over time as well as our ability to tap the
capital markets as a source of capital
Some of our financing documents require us to comply with certain information and financial covenants
Further we are required to obtain consent of certain lenders for undertaking certain actions such as change
in capital structure and issue of further securities We have applied to International Finance Corporation
(―IFC) to obtain its consent for issue of Equity Shares under the Issue but have not received its consent as
yet
We cannot assure you that we will generate sufficient cash to enable us to service our existing or future
borrowings comply with covenants or fund other liquidity needs If we fail to meet our debt service
obligations or financial covenants required under the financing documents the relevant lenders could
declare us to be in default under the terms of our borrowings accelerate the maturity of our obligations or
take over the financed project Further a default by us under the terms of any financing document may also
constitute a cross-default under other financing documents which may individually or in aggregate have a
material and adverse effect on our results of operations and financial position We cannot assure you that in
the event of any such acceleration we will have sufficient resources to repay these borrowings Failure to
meet our obligations under the debt financing arrangements could have a material adverse effect on our
cash flows business and results of operations
Future debt financing if available may result in increased finance charges increased financial leverage
decreased income available to fund further acquisitions and expansions decreased working capital and the
imposition of restrictive covenants on our business and operations Our planned and any proposed future
expansions may be materially and adversely affected if we are unable to obtain funding for such capital
expenditures on satisfactory terms or at all including as a result of any of our existing facilities becoming
repayable before its due date
6 Orders placed by customers may be delayed modified cancelled or not fully paid for by our customers
which may have an adverse effect on our business financial condition and results of operations
We may encounter problems in executing the orders in relation to our products or executing it on a timely
basis Moreover factors beyond our control or the control of our customers may postpone the delivery of
such products or cause its cancellation including delays or failure to obtain necessary permits
authorizations permissions and other types of difficulties or obstructions Due to the possibility of
cancellations or changes in scope and schedule of delivery of such products resulting from our customerslsquo
discretion or problems we encounter in the delivery of such products or reasons outside our control or the
control of our customers we cannot predict with certainty when if or to what extent we may be able to
deliver the orders placed Additionally delays in the delivery of such products can lead to customers
delaying or refusing to pay the amount in part or full that we expect to be paid in respect of such products
In addition even where a delivery proceeds as scheduled it is possible that the contracting parties may
default or otherwise fail to pay amounts owed While we have not yet experienced any material delay
reduction in scope cancellation execution difficulty payment postponement or payment default with
regard to the orders placed with us or disputes with customers in respect of any of the foregoing any such
adverse event in the future could materially harm our cash flow position and income
Further we operate in highly competitive markets in relation to our products where it is difficult to predict
whether and when we will receive such awards As a result our results of operations can fluctuate from
quarter to quarter and year to year depending on whether and when such orders are awarded to us and the
xiii
commencement and progress of work under the orders placed
7 We may be unable to generate sufficient cash flow or secure sufficient credit to simultaneously fund our
operations finance capital expenditures and satisfy other obligations
Our business is capital intensive and requires significant expenditures for equipment maintenance and new
or enhanced equipment for environmental compliance matters and to support our business strategies We
expect to meet all of our near-and longer-term cash needs from a combination of operating cash flows cash
and cash equivalents our existing credit facilities or other bank lines of credit and other long-term debt If
we are unable to generate sufficient cash flow from these sources or if we are unable to secure needed credit
due to our performance or tighter credit markets we could be unable to meet our near-and longer-term cash
needs
8 The Appraisal Report specifies certain risks in relation to our proposed expansion and development plan
for the Unit JKPM
The expansion and development plan of our Unit JKPM has been appraised by Poyry Management
Consulting Oy The Appraisal Report sets forth certain risks in relation to our proposed expansion and
development plan for the Unit JKPM including
Market risks such as increase in local and international competition that may impact sales volumes as
well as sales prices
As significant part of the machinery required for the proposed expansion would be imported and quoted
in foreign currency we may not be able to hedge against increase in our costs as a result of depreciation
of Rupee
Volatility in steel prices may affect our civil costs Further we may be required to incur additional
costs as a result of inaccurate estimates or increase in civil construction costs and other costs during the
expansion period
Contracts entered into for the proposed expansion are on fixed price basis and we may not be in a
position to negotiate the price or take benefit of a low cost alternative that may emerge in future
Delayed start up would create additional costs due to interest during construction
In the event a new capacity is built in the same region by our competitor(s) raw material costs may rise
and we may not be able to procure raw materials including wood and water at commercially
acceptable price or quantity or at all Further availability of water may be limited in case of
insufficient monsoon
In case any of the above risks materializes we may not be able to successfully implement our proposed
expansion and development plan for our Unit JKPM or may not be able to achieve expected benefits out of
it leading to unproductive expenditure of capital and resources which may have an adverse impact on our
business results of operations and financial condition
9 Capacity additions by other players could lead to temporary supply side and pricing pressures for a short
term
With the steady growth in domestic consumption many players in the industry have expanded their
capacities during past few years specifically in the copier paper segment While demand growth could meet
the extra capacity additions bunching of these capacities may result in temporary supply side and pricing
pressures in near term This may impact our selling prices of our products and consequently our
profitability as well See ―Industry Overview on page 51
10 An inability to manage our growth may disrupt our business and reduce our profitability
We have experienced year-on-year growth in our income from own manufacturing operations (gross sales)
of approximately 918 in Fiscal 2010 Our growth will place significant demands on us and require us to
continuously evolve and improve our operational financial and internal controls across our organisation In
particular continued expansion increases the challenges involved in
maintaining high levels of customer satisfaction
recruiting training and retaining sufficient skilled management technical and marketing personnel
adhering to health safety and environment and quality and process execution standards that meet
xiv
customer expectations
preserving a uniform culture values and work environment in operations and
developing and improving our internal administrative infrastructure particularly our financial
operational communications and other internal systems
Any inability to manage our growth may have an adverse effect on our business results of operations and
financial condition
11 Our business requires the services of third parties including technology licensors suppliers and sub-
contractors which entail certain risks
Our business generally requires the services of third parties including technology licensors contractors and
suppliers of labour materials and equipment For instance for our manufacturing units we enter into
annual maintenance contracts with third party service providers in relation to DCS system of pulp mill
DCS system recovery boiler and maintenance and repairing of electronic instruments The timing and
quality of completion of our products depends on the availability and skill of such third parties as well as
contingencies affecting them including labour and raw material shortages and industrial action such as
strikes and lock-outs We cannot assure you that skilled third parties will continue to be available at
reasonable rates and will be able to provide their support in the areas in which we conduct our business As
a result any delay in this respect could adversely affect our ability to continue to operate our manufacturing
facility optimally and have an adverse effect on our business financial condition and result of operations
There is also a risk that we may have disputes with our sub-contractors arising from among other things
the quality and timeliness of work performed by the sub-contractor customer concerns about the sub-
contractor or our failure to extend existing orders or issue new orders under a sub-contract In addition if
any of our sub-contractors fail to deliver on a timely basis the agreed-upon supplies andor perform the
agreed-upon services our ability to manufacture our products may be jeopardized Consequently we would
have to seek remedies from our suppliers sub-contractors or technology licensors as the case may be
should any product liability claim be made by our customers against us In case of any such claim against
us even if it is not proven our reputation may suffer and our business may be materially and adversely
affected We cannot assure you that claims of such nature will not be brought against us which could have
a material adverse effect on our reputation business and financial performance
12 Our business is dependent on our manufacturing facilities The loss of or shutdown of operations at any
of our manufacturing facilities may have a material adverse effect on our business financial condition
and results of operations
Our manufacturing facilities at Songadh Gujarat and Jaykaypur Odisha are subject to operating risks such
as the breakdown or failure of equipment power supply or processes performance below expected levels of
output or efficiency obsolescence labour disputes continued availability of services of our external
contractors earthquakes and other natural disasters industrial accidents and the need to comply with the
directives of relevant government authorities The occurrence of any of these risks could significantly affect
our operating results Although we take precautions to minimize the risk of any significant operational
problems at our facilities including insurance coverage our business financial condition and results of
operations may be adversely affected by any disruption of operations at our facilities including due to any
of the factors mentioned above
13 If we have any operational problems at any of our facilities it could have a material adverse effect on
our business and results of operations
Our manufacturing and distribution warehouses may suffer loss or damage due to fire flood terrorism
mechanical failure or other natural or man-made events If any of these facilities were to experience a loss
or damage it could disrupt our operations delay production delay or reduce shipments reduce revenue
and result in significant expenses to repair or replace the facility These expenses and losses may not be
adequately covered by property or business interruption insurance Even if covered by insurance our
inability to deliver our products to customers even on a short-term basis may cause us to lose market share
on a more permanent basis which could have a material adverse effect on our business and results of
operations
14 We require a number of approvals licenses registrations and permits for our business and the failure to
xv
obtain or renew them in a timely manner may adversely affect our operations
Our business is subject to extensive government regulation To conduct our business we must obtain
various approvals licenses registrations and permits Certain approvals that we have applied for in
connection with our business and operations are currently pending These include applications in relation to
registration of certain trademarks
Further ten applications are pending in relation to our manufacturing units These include amongst others
approvals regarding proposed expansion of our Unit JKPM
For more information see ―Government and Other Approvals on page 257 Further some of these
approvals are subject to certain conditions the non-fulfillment of which may result in revocation of such
approvals
Even after we have obtained the required licenses permits and approvals our operations are subject to
continued review and the governing regulations may change Further certain of our contractors and other
counter-parties are required to obtain approvals licenses registrations and permits with respect to the
services they provide to us We cannot assure you that such contractors or counterparties have obtained and
will maintain the validity of such approvals licenses registrations and permits We cannot assure you that
we or any other party will be able to obtain or comply with all necessary licenses permits and approvals
required for our business in a timely manner to allow for the uninterrupted construction or operation of our
facilities or at all
Furthermore our government approvals and licenses including environmental approvals are subject to
numerous conditions some of which are onerous and require us to incur substantial expenditure
specifically with respect to compliance with environmental laws We cannot assure you that the approvals
licenses registrations and permits issued to us would not be suspended or revoked in the event of non-
compliance or alleged non-compliance with any terms or conditions thereof or pursuant to any regulatory
action If we fail to comply with all applicable regulations or if the regulations governing our business or
their implementation change we may incur increased costs be subject to penalties or suffer a disruption in
our operations any of which could materially and adversely affect our business and results of operations
Any failure to renew the approvals that have expired or apply for and obtain the required approvals
licenses registrations or permits or any suspension or revocation of any of the approvals licenses
registrations and permits that have been or may be issued to us may adversely affect our operations
15 We have experienced negative cash flows in the past which could adversely affect our financial condition
and the trading price of our Equity Shares
We have recently experienced negative cash flows (on consolidated basis) as set forth in the table below
(In ` crores)
Particulars Six Month Period
Ended September
30 2010
Fiscal 2010 Fiscal 2009 Nine Month
Period Ended
March 31 2008
Net cash from
(used in)
operating
activities
15635 24380 20277 9385
Net cash from
(used in)
investing
activities
(4944) (6603) (2518) (9367)
Net cash from
(used in)
financing
activities
(10111) (20405) (14687) (151)
Increase
(decrease) in cash
and cash
equivalents
580 (2628) 3072 (133)
Cash and cash
equivalents at the
794 3422 350 483
xvi
Particulars Six Month Period
Ended September
30 2010
Fiscal 2010 Fiscal 2009 Nine Month
Period Ended
March 31 2008
beginning of the
year
Cash and cash
equivalents as at
the end of the
year
1374 794 3422 350
Our net cash used in investing activities for the six month period ended September 30 2010 was primarily
on account of the purchase of our investments in our Subsidiaries as well as investment of surplus cash in
certain mutual funds and the payment made towards the purchase of fixed assets in the normal course of
business of our Company Our net cash used in investing activities for the Fiscal 2010 was primarily on
account of purchase of our investments in certain mutual funds with surplus cash and payment made
towards the purchase of fixed assets in the normal course of business of our Company Our net cash used in
investing activities for the Fiscal 2009 was primarily on account payment made towards the purchase of
fixed assets in the normal course of business of our Company Our net cash used in investing activities for
the nine month period ended March 31 2008 was primarily on account of payment of made towards the
purchase of fixed assets which primarily consist of assets purchased for the purpose of our packaging board
plant in our Unit CPM which commenced operations in October 2007 as well as purchase of fixed assets
in the normal course of business of our Company and the payment made towards the purchase of our
investments in JK Enviro-tech Limited (our associate company)
Our net cash used in financing activities for the six month period ended September 30 2010 Fiscal 2010
and Fiscal 2009 was primarily on account of repayment of certain long-term borrowings payment as
interest and financial charges towards our short-term and long-term loans payments made as dividend
(including dividend tax) on our Equity Shares and preference shares issued repayment of certain short-term
borrowings availed for our working capital requirements and payment made towards redemption of certain
series of 10 CRPS issued to lenders of JK Lakshmi Cement Limited (―JKLC) on November 29 2001
pursuant to the order of the High Court of Gujarat dated August 30 2001 approving the Scheme of
Compromise Our net cash used in financing activities for the nine month period ended March 31 2008 was
primarily on account of repayment of certain long-term borrowings payment as interest and financial
charges towards our short-term and long-term loans and payments made as dividend (including dividend
tax) on our Equity Shares and preference shares issued
For details see ―Financial Statements and ―Management‟s Discussion and Analysis of Financial
Condition and Results of Operations on pages 141 and 189 respectively
Any negative cash flows in the future could adversely affect our financial condition and the trading price of
our Equity Shares During the course of our business we have entered into various capital commitments In
the event that the proposed Issue is not completed or is delayed and we may be unable to make other
alternative arrangements to raise funds to meet our cash flows requirements and it may have an adverse
effect on our business financial condition and results of operations
16 Our costs of compliance with environmental laws are expected to be significant and the failure to
comply with existing and new environmental laws could adversely affect our results of operations
Our operations are subject to national and state environmental laws and regulations which govern the
discharge emission storage handling and disposal of a variety of substances that may be used in or result
from our operations Environmental regulation of industrial activities in India may become more stringent
and the scope and extent of new environmental regulations including their effect on our operations cannot
be predicted with any certainty Governments may take steps towards the adoption of more stringent
environmental health and safety regulations and we cannot assure you that we will be at all times in full
compliance with these regulatory requirements For example these regulations can often require us to
purchase and install expensive pollution control equipment or make changes to our existing operations to
limit any adverse impact or potential adverse impact on the environment or the health and safety of our
employees and any violation of these regulations whether or not accidental may result in substantial fines
criminal sanctions revocations of operating permits or a shutdown of our facilities Due to the possibility of
unanticipated regulatory developments the amount and timing of future expenditures to comply with
regulatory requirements may vary substantially from those currently anticipated If there is any
xvii
unanticipated change in the environmental health and safety regulations we are subject to we may need to
incur substantial capital expenditures to comply with such new regulations Our costs of complying with
current and future environmental health and safety laws and our liabilities arising from failure to comply
with applicable regulatory requirements may adversely affect our business financial condition and results
of operations
We could be subject to substantial civil and criminal liability and other regulatory consequences in the
event that any environmental hazards are found at the site of any of our facilities or if the operation of any
of our facilities results in contamination of the environment We may be the subject of public interest
litigation in India relating to allegations of environmental pollution by our facilities as well as in cases
having potential criminal and civil liability filed by state pollution control authorities If such cases are
determined against us there could be an adverse effect on our business including the suspension of our
operations and results of operations
17 Our results of operations could be adversely affected by strikes work stoppages or increased wage
demands by our or our contractors‟ work force or any other kind of disputes involving our work force
India has stringent labor legislation that protects the interests of workers including legislation that sets forth
detailed procedures for discharge of employees and dispute resolution and imposes financial obligations on
employers upon employee layoffs As a result of such stringent labor regulations it is difficult for us to
maintain flexible human resource policies discharge employees or downsize which may adversely affect
our business financial condition and results of operations
We employ significant number of employees and contract labourers at our facilities Substantial number of
our permanent employees and contract labourers are represented by labour unions and staff associations In
1998-1999 we faced a 90 days lockout at our Unit JKPM leading to loss of production While we have
entered into settlement agreements with our labour unions and believe that we enjoy satisfactory
relationships with all of the labor organizations that represent our employees we cannot guarantee that
labor-related disputes will not arise Further we may not be able to satisfactorily renegotiate our wage
settlement agreements when they expire and may face tougher negotiations or higher wage demands In
addition existing labor agreements may not prevent a strike or work stoppage in the future Such incidents
or strikes and work stoppage by our employees could have an adverse effect on our business financial
operation and results of operations
Furthermore in the event our or our contractorslsquo work force (including contract labourers) unionize in the
future collective bargaining efforts by labour unions may divert managementlsquos attention and result in
increased costs We may be unable to negotiate acceptable collective bargaining agreements with those
employees who have chosen to be represented by unions which could lead to union-initiated work
stoppages including strikes thereby adversely affecting our business and results of operations Any
shortage of skilled personnel or work stoppages caused by disagreements with our work force could have an
adverse effect on our business and results of operations We have entered into contracts with independent
contractors to complete specified assignments and these contractors may be required to source the labour
necessary to complete such assignments Although we do not engage these labourers directly it is possible
under Indian laws that we may be held responsible for wage payments or benefits and amenities to
labourers engaged by our independent contractors should such contractors default on wage payments or in
providing benefits and amenities Any requirement to fund such payments may adversely affect our
business financial condition and results of operations Furthermore under Indian law we may be required
to absorb a portion of such contract labourers as our employees Any such order from a court or any other
regulatory authority may adversely affect our business and results of our operations
18 Activities at the facilities can be dangerous and can cause injury to people or property in certain
circumstances This could subject us to significant disruptions in our business legal and regulatory
actions any of which could adversely affect our business financial condition and results of operations
Our operations require our work force to work under potentially dangerous circumstances with highly
flammable and explosive materials Despite compliance with requisite safety requirements and standards
our operations are subject to hazards associated with handling of such dangerous materials If improperly
handled or subjected to unsuitable conditions these materials could hurt our employees or other persons
cause damage to our properties and properties of others or harm the environment Due to the nature of these
materials we may be liable for certain costs related to hazardous materials including cost for health related
xviii
claims or removal or treatment of such substances including claims and litigation from our current or
former employees for injuries arising from occupational exposure to materials or other hazards at our
facilities This could subject us to significant disruption in our business legal and regulatory actions which
could adversely affect our business financial condition and results of operations
19 Our insurance coverage may prove inadequate to satisfy future claims against us or against all material
hazards In the event that we suffer loss or damage that is not covered by or exceeds our insurance
coverage the loss would have to be borne by us and our results of operations and financial performance
could be adversely affected
Our operations carry inherent risks of personal injury and loss of life damage to or destruction of property
plant and equipment and damage to the environment and are subject to risks such as fire theft flood
earthquakes and terrorism We believe that we have insured our facilities plant and equipment in a way
which we believe is typical in our industry and in amounts which we believe to be commercially
appropriate See ―Our Business- Insurance on page 80 However we may become subject to liabilities
against which our property are not insured adequately or at all or cannot insure including when the loss
suffered is not easily quantifiable and in the event of severe damage to our reputation Even if a claim is
made under an existing insurance policy due to exclusions and limitations on coverage we may not be able
to successfully assert our claim for any liability or loss under such insurance policy
In addition in the future we may not be able to maintain insurance of the types or in the amounts which we
deem necessary or adequate or at premiums which we consider acceptable The occurrence of an event for
which we are not adequately or sufficiently insured or the successful assertion of one or more large claims
against us that exceed available insurance coverage or changes in our insurance policies (including
premium increases or the imposition of large deductible or co-insurance requirements) could have a
material and adverse effect on our business results of operations financial condition and cash flows
20 If we do not continue to invest in new technologies and equipment our technologies and equipment may
become obsolete and our cost of production may increase relative to our competitors which would have a
material adverse effect on our ability to compete results of operations financial condition and prospects
Our profitability and competitiveness are in large part dependent on our ability to maintain a low cost of
production and upgrade our facilities with the latest technology Changes in technology may require us to
make additional capital expenditures to upgrade our facilities to remain competitive We need to continue to
invest in new and more advanced technologies and equipment to enable us to respond to emerging
technology standards and practices in a cost-effective and timely manner that is competitive with our
existing and potential competitors If we are unable to adapt in a timely manner to changing market
conditions customer requirements or technological changes our business and financial performance could
be adversely affected
21 Our success will depend on our ability to attract and retain our key personnel If we are unable to do so
it would adversely affect our business and results of operations
Our future success substantially depends on the continued service and performance of the members of our
senior management team and other key personnel in our business for the management and running of our
daily operations and the planning and execution of our business strategy
There is intense competition for experienced senior management and other key personnel with technical and
industry expertise in the paper business and if we lose the services of any of these or other key individuals
and are unable to find suitable replacements in a timely manner our ability to realize our strategic
objectives could be impaired Loss of key members of our senior management or other key team members
particularly to competitors could have an adverse effect on our business and results of operations
22 There is outstanding litigation against us our Directors our Promoter and our Group Companies which
if determined adversely could affect our results of operations and reputation
We are defendants in legal proceedings incidental to our business and operations These legal proceedings
are pending at different levels of adjudication before various courts and tribunals The amounts claimed in
these proceedings have been disclosed to the extent ascertainable excluding contingent liabilities and
include amounts claimed jointly and severally from us and other parties Further our Promoter Directors
xix
and Group Companies are defendants in certain legal proceedings which may result in a material adverse
effect on the consolidated results of operations or financial condition of such entity if determined against
them Should any new developments arise such as a change in Indian law or rulings against us by appellate
courts or tribunals we may need to make provisions in our financial statements that could increase
expenses and current liabilities
Litigation against the Company
S No Nature of the litigation No of outstanding litigations Aggregate approximate amount involved (in `
crores)
1 Civil 3 756
2 Labour 21 056
3 Excise 47 4094
4 Income tax 7 1344
5 Sales and entry tax 9 439
6 Other tax 21 224
7 Notices 34 75
Litigation against the Directors
S No Name of the
Director
Nature of the
litigation
No of outstanding
litigations
Aggregate approximate amount
involved
(in ` crores)
1 MH Dalmia Violation of securities
law
1 -
2 Shailesh Vishnu
Haribhakti
Civil 1 -
Litigation against the Promoter
S No Nature of the litigation No of outstanding
litigations
Aggregate approximate amount involved
(in ` crores)
1 Income tax 7 037
Litigation against the Group Companies
S
No
Name of the
Group Company
Nature of the litigation No of outstanding
litigations
Aggregate approximate
amount involved (in `
crores)
1 JK Tyres amp
Industries Limited
Civil cases 9 1129
Land acquisition compensation
and land encroachment cases
47 115
Labour disputes 65 513
Arbitration matters 2 1013
Consumer cases 22 015
Motor vehicle compensation
cases
1 002
Income tax cases 31 61471
Service tax cases 37 475
Excise cases 128 2151
Sales tax cases 11 1715
Customs cases 2 014
Anti-dumping cases 3 -
2 JK Lakshmi
Cement Limited
Civil cases 10 2811
Labour cases 3 016
Income tax cases 12 3259
Excise and service tax 5 1632
Sales and entry tax cases 26 5033
3 JK Agri Genetics
Limited
Criminal cases 5 -
Civil cases 4 006
Consumer cases 295 276
xx
S
No
Name of the
Group Company
Nature of the litigation No of outstanding
litigations
Aggregate approximate
amount involved (in `
crores)
4 Fenner (India)
Limited
Civil 1 327
Income tax cases 2 424
Excise cases 1 117
5 Udaipur Cement
Works Limited
Civil cases 1 804
6 JK Sugar Limited Criminal cases 5 -
Civil cases 6 089
Labour cases 18 002
Income tax cases 1 040
Trade tax cases 4 094
Excise duty 3 843
Entry tax cases 7 228
7 Umang Dairies
Limited
Civil cases 1 021
In addition JK Tyres and Industries Limited is involved in an arbitration proceedings in which aggregate amount involved
is USD 031 crore
For further details of outstanding litigation against us our Directors our Promoter and our Group
Companies see ―Outstanding Litigation and Material Developments on page 224
23 Our Promoter together with our Promoter Group will continue to retain control of our Company after
the Issue We cannot assure you that our Promoter andor our Promoter Group will always act in our
Company‟s or your best interest
Subsequent to the Issue our Promoter and Promoter Group will continue to exercise significant influence
over our business policies and affairs and all matters requiring shareholders approval including the
composition of our Board of Directors the adoption of amendments to our MoA and AoA the approval of
mergers strategic acquisitions or joint ventures or the sales of substantially all of our assets and the
policies for dividends lending investments and capital expenditures This concentration of control also
may delay defer or even prevent a change in control of our company and may make some transactions
more difficult or impossible without the support of these stockholders The interests of our Promoter and
Promoter Group as our Companylsquos controlling shareholders could conflict with our Companylsquos interests or
the interests of our other shareholders We cannot assure you that our Promoter and Promoter Group will
act to resolve any conflicts of interest in our Companylsquos or your favour
24 The development and construction costs of our projects in relation to the Net Proceeds of the Issue are
subject to change This could affect our profitability and cause the price of our Equity Shares to decline
Our allocation of the Net Proceeds to be received by us from this Issue is based on current plans and
business conditions In view of the highly competitive nature of the paper industry and owing to factors
such as exchange or interest rate fluctuations and other external factors which may not be within the control
of management of the Company the estimated cost of expansion of our facilities may need be revised from
time to time and consequently our funding requirements may also change Significant revisions to our
funding requirements or the deployment of the Net Proceeds of the Issue may result in the rescheduling of
our project expenditure programmes and an increase or decrease in our proposed expenditure for a
particular project or other delays with respect to our expansion which could have a material and adverse
effect on our business results of operation and financial condition
Further we intend to use part of the Net Proceeds for general corporate purposes that may not necessarily
improve our profitability or increase our market value and may cause the price of our Equity Shares to
decline Our management will have considerable discretion in the application of the Net Proceeds and you
may not have the opportunity as part of your investment decision to assess whether we are using the Net
Proceeds in a manner that you believe enhances our market value
xxi
25 We may become involved in claims concerning intellectual property rights and we could suffer
significant litigation or related expenses in defending our own intellectual property rights or defending
claims that we infringed the rights of others
We have six trademarks registered in our name including JK Copier Pluslsquo and JK Bondlsquo Further we
have filed 11 applications in relation to change in name from JK Corp Limitedlsquo to The Central Pulp
Mills Limitedlsquo and from The Central Pulp Mills Limitedlsquo to JK Paper Limitedlsquo for trademarks such as
JK Paper Limitedlsquo (logo) and JK Copierlsquo In addition eight applications are pending for registration of
our trademarks such as JK TuffPaclsquo before Registrar of Trade Marks We cannot assure you that we will
be able to obtain such registrations within reasonable time or at all We may lose market share and suffer a
decline in our revenue and net earnings if we cannot successfully defend one or more trademarks
We do not believe that any of our products infringe the valid intellectual property rights of third parties
However we may be unaware of intellectual property rights of others that may cover some of our products
or services In that event we may be subject to significant claims for damages
Any litigation regarding our intellectual property could be costly and time-consuming and could divert our
management and key personnel from our business operations Claims of intellectual property infringement
might also require us to enter into license agreements which would reduce our operating margins or in
some cases we may not be able to obtain license agreements on terms acceptable to us
26 We have entered into certain transactions with related parties for an aggregate amount of ` 4881 crores
in Fiscal 2010 These transactions or any future transactions with our related parties could potentially
involve conflicts of interest Further we benefit from and continue to rely on our Promoter Group
Companies and members of our Promoter Group for certain key development and support activities and
our business and growth prospects may decline if we cannot benefit from our relationships with them in
the future
We have entered into certain transactions with related parties and our Promoter Group Companies and
associates and may continue to do so in future In Fiscals 2010 2009 and nine months period ended March
31 2008 we entered into related party transactions for an aggregate of ` 4881 crores ` 8434 crores and `
804 crores respectively These transactions or any future transactions with our related parties could
potentially involve conflicts of interest For further information see ―Related Party Transactions on page
140 Further we have entered into and may continue to enter into a number of related party transactions
with our Promoter Group Companies and associates For details see ―Our Promoters and Group
Companies ―Management‟s Discussion and Analysis of Financial Condition and Results of
Operations and ―Financial Statements on pages 117 189 and 141 respectively
While we believe that all our related party transactions have been conducted in an ordinary course and on
an armlsquos length basis we cannot assure you that we could not have achieved more favourable terms had
such transactions been entered into with unrelated parties There can be no assurance that such transactions
individually or in the aggregate will not have an adverse effect on our business prospects results of
operations and financial condition including because of potential conflicts of interest or otherwise In
addition our business and growth prospects may decline if we cannot benefit from our relationships with
them in the future
27 Our ability to pay dividends in the future will depend upon future earnings financial condition cash
flows working capital requirements capital expenditures and restrictive covenants in our financing
arrangements
We may retain all future earnings if any for use in the operations and expansion of the business As a
result we may not declare dividends in the foreseeable future Any future determination as to the
declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on
factors that our Board of Directors deems relevant including among others our results of operations
financial condition cash requirements business prospects and any other financing arrangements
Accordingly realisation of a gain on shareholders investments will depend on the appreciation of the price
of the Equity Shares There is no guarantee that our Equity Shares will appreciate in value
28 Contingent liabilities which have not been provided for could adversely affect our financial conditions
xxii
As of September 30 2010 we had the following contingent liabilities that have not been provided for in our
consolidated restated financial statements
(In ` crores) S No Description As of September 30 2010
1 Excise duty liability in respect of matters in appeal 812
2 Sales tax liability in respect of matters in appeal 244
3 Forest matters 573
4 Income tax matters 179
5 Other matters 334
Total 2142
In addition to the above the following have also been classified as a contingent liability as of September 30
2010
1 In respect of certain disallowances and additions made by the Income Tax Authorities appeals are
pending before the Appellate Authorities and adjustment if any will be made after the same are finally
determined
2 The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Limited The Company has given an undertaking that on the happening of certain events it
will takeover Loan taken by JK Enviro-tech Limited from IDFC Limited of the value of ` 40 Crore
If any or all of these contingent liabilities materialize it could have an adverse effect on our business
financial condition and results of operation
29 Some of the properties from which we are operating are not registered in our name
Our Corporate Office has been leased to us by Childrenlsquos Book Trust for a period up to November 15
2016 Further our Unit JKPM is located on a total land measuring 686 acres of which 63697 acres has
been leased to us on 99 yearslsquo lease by State of Odisha The lease agreements executed in our favour by
third parties may not be renewed at commercially acceptable terms or at all which may have a material
adverse effect on our business and results of operations
30 We do not have access to records and data pertaining to certain historical legal and secretarial
information including with respect to issuance of shares and amendments in our MoA
We have been unable to locate certain of our corporate records with respect to issuance of certain Equity
Shares to various persons and with respect to certain amendments which have been made to our MoA Our
Company was incorporated on July 4 1960 and the management of our Company was transferred from the
erstwhile promoters of our Company to JK group and its associates in 1992 Disclosures in this Draft Letter
of Offer pertaining to equity share capital history of our Company between the years 1960 to 1992 and the
year 1994 are based on the minutes of the Boardshareholderslsquo meetings of our Company Additionally for
the years 1960 to 1992 relevant records and forms filed at that time evidencing the amendments to our
MoA are also not available Whilst we believe material information required for Investors to make their
investment decision in this Issue has been disclosed in this Draft Letter of Offer we are unable to make
certain disclosures required under the SEBI ICDR Regulations in this Draft Letter of Offer such as
disclosures pertaining to initial listing of Equity Shares by our Company and disclosures pertaining to issue
of Equity Shares by the Company for consideration other than cash or out of revaluation reserves For more
information see ―Capital Structure and ―History and Certain Corporate Matters on pages 23 and 87
respectively
31 Certain lease and other commercial agreements entered into by our Company may not be duly stamped
or registered Any inability to enforce our rights under the said agreements in the event of a breach by
the other party may have an adverse effect on our business and financial condition
Certain lease and other commercial agreements entered into by our Company may not be duly stamped or
registered Accordingly we may not be able to enforce any of our rights under the said agreements in any
court of law in India in the event of a breach of the said agreements Further in case any of the parties to
such agreements refuse to perform as per their obligations under such agreements it may have an adverse
effect on our business and financial condition
xxiii
32 Some of our Group Companies have incurred losses in the preceding Fiscals We cannot assure you that
these companies or any of our other Group Companies will not incur losses in the future or that there
will not be an adverse effect on our reputation or business as a result of such losses
Some of our Group Companies have incurred losses during the preceding Fiscal Year as set forth below
Group Companies which have incurred loss
(In ` crores unless otherwise stated)
Name of Group
Company
Fiscal 2010 Fiscal 2009 Fiscal 2008
JK Risk Managers amp
Insurance Brokers Limited
(134) (194) (220)
Udaipur Cement Works
Limited
(187) (747) (747)
JK Sugar Limited (270) (137) (198)
Modern Cotton Yarn
Spinners Limited (151) (236) (063)
For 15 months period from January 2009 to March 2010 For 12 months period from January to December
There is no assurance that these companies or any other ventures promoted by our Promoter will not incur
losses in any future periods or that there will not be an adverse effect on our reputation or business as a
result of such losses
33 Some of our Group Companies have not complied with provisions of the equity listing agreement We
cannot assure you that these companies or any of our other Group Companies will comply with equity
listing agreements in the future or that there will not be an adverse effect on our reputation or business
as a result of such non compliance
Pranav Investment (MP) Company Limited our Group Company is not in compliance with certain
requirements of equity listing agreement with Madhya Pradesh Stock Exchange and Uttar Pradesh Stock
Exchange Further trading in equity shares of Udaipur Cements Works Limited our Group Company was
suspended at BSE with effect from February 3 2003 due to non payment of listing fees by Udaipur
Cements Works Limited There is no assurance that any Group Company will be in compliance with
regulatory and statutory requirements in future or that there will not be an adverse effect on our reputation
or business as a result of such non-compliances
External Risk Factors
34 Volatility in the Rupee against foreign currencies may have an adverse effect on our results of
operations
We exported 260 of our writing and printing paper products and 362 of our packaging board products
in Fiscal 2010 Further we import hydrogen peroxide sodium sulphate and clay from various countries
such as China USA and Brazil for manufacture of our various brands of paper Pulp of different varieties is
imported from countries such as Indonesia Sweden Finland and USA for manufacturing high strength
virgin packaging board As on September 30 2010 our net unhedged foreign currency exposure is ` 742
crores Accordingly any depreciation of the Rupee against these currencies will significantly increase the
Rupee cost to us of servicing and repaying our foreign currency payables For example the US$ Rupee
exchange rate was US$ 1 = ` 3997 as of March 31 2008 and depreciated to US$ 1 = ` 5095 as of March
31 2009 and appreciated to US$ 1 = ` 4514 as of March 31 2010 If we are unable to recover the costs of
foreign exchange variations through our tariffs depreciation of the Rupee against foreign currencies may
adversely affect our results of operations and financial condition
35 Our business and financial performance may be adversely affected by downturns in the target markets
that we serve or reduced demand for the types of products we sell
Demand for our products is often affected by general economic conditions as well as product-use trends in
xxiv
our target markets These changes may result in decreased demand for our products For example our
specialty products business usually declines during periods of economic slowdowns There may be periods
during which demand for our products is insufficient to enable us to operate our production facilities in an
economical manner The occurrence of these conditions is beyond our ability to control and when they
occur they may have a significant impact on our sales and results of operations
36 Our raw material availability depends to a major extent on monsoon and weather conditions Any lack of
or an abnormal monsoon could negatively impact harvests and in turn have a material adverse effect on
our business growth and prospects financial condition and results of operations
Our raw materials are agricultural produce Further we substantially depend on activities such as farm
forestry for our raw materials Agricultural and farm forestry is largely dependent on monsoon and
favorable weather conditions Meteorologically our country has different weather conditions prevalent in
different geographical areas The geography of the country is also diversified into irrigable and non
irrigable areas The extent of monsoons and other seasonal conditions determine the quantity as well as
quality of our raw materials Scanty or abnormal level of monsoon may damage the crops and reduce the
availability of our raw materials This could have a material adverse effect on our business growth and
prospects financial condition and results of operations
37 Wage increases in India may reduce our profit margins and negatively impact our financial condition
and results of operations
We are highly dependent upon availability of skilled and semi-skilled labour Wages and other
compensation paid to our employees is one of our significant operating costs and an increase in the wages
or employee benefit costs will significantly increase our operating costs Because of rapid economic growth
in India and increased competition for skilled and semi-skilled employees in India wages for comparable
employees in India are increasing at a fast rate We may need to increase the levels of employee
compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and
number of skilled and semi-skilled employees that our business requires Further many of our employees
receive salaries that are linked to minimum wage laws in India and any increase in the minimum wage in
any state in which we operate could significantly increase our operating costs In addition a shortage in the
labour pool or other general inflationary pressures or changes will also increase our labour costs Wage
increases in the long-term may reduce our competitiveness and our profitability
38 Valuation methodology and accounting practice in paper related businesses may change
There is no standard valuation methodology or accounting practices in paper related industries
Additionally current valuations may also not be reflective of future valuations within the industry Current
valuations of other listed companies in our industry may not be comparable with our Company
39 Political instability or changes in the Government could adversely affect economic conditions in India
and consequently our business
Our performance and the market price and liquidity of the Equity Shares may be affected by changes in
exchange rates and controls interest rates government policies taxation social and ethnic instability and
other political and economic developments affecting India The GoI has traditionally exercised and
continues to exercise a significant influence over many aspects of the economy The business of our
Company and the market price and liquidity of the Equity Shares may be affected by changes in GoI
policy taxation social and civil unrest and other political economic or other developments in or affecting
India There has been a secular reduction in import duties on paper and packaging products over the years
Further pursuant to ASEAN free trade agreement import duties on pulp paper would be reduced to nillsquo by
January 2013 This may lead to preference of imported paper and packaging products over our products
Since 1991 successive Indian governments have pursued policies of economic liberalisation including
significantly relaxing restrictions on the private sector The governments have usually been multi-party
coalitions with differing agendas Any political instability could affect the rate of economic liberalisation
and the specific laws and policies affecting foreign investment the paper industry Other matters affecting
investment in the Equity Shares could change as well A significant change in Indialsquos economic
liberalisation and deregulation policies could adversely affect business and economic conditions in India
generally and our business in particular if new restrictions on the private sector are introduced or if
xxv
existing restrictions are increased
40 A slowdown in economic growth in India could cause our business to suffer
Our performance and the growth of our business are necessarily dependent on the health of the overall
Indian economy As a result a slowdown in the Indian economy could adversely affect our business
Indialsquos economy could be adversely affected by a general rise in interest rates inflation natural calamities
such as earthquakes tsunamis floods and droughts increases in commodity and energy prices and
protectionist efforts in other countries or various other factors In addition the Indian economy is in a state
of transition It is difficult to gauge the impact of these fundamental economic changes on our business
Any slowdown in the Indian economy or future volatility in global commodity prices could adversely affect
our business
41 Recent global economic conditions have been unprecedented and challenging and have had and
continue to have an adverse effect on the Indian financial markets and the Indian economy in general
which has had and may continue to have a material adverse effect on our business and our financial
performance and may have an impact on the price of our Equity Shares
Recent global market and economic conditions have been unprecedented and challenging with tighter credit
conditions and recession in most major economies continuing into the year 2009 Continued concerns about
the systemic impact of potential long-term and wide-spread recession energy costs geopolitical issues the
availability and cost of credit and the global housing and mortgage markets have contributed to increased
market volatility and diminished expectations for western and emerging economies In the second half of
2008 added concerns fuelled by the United States government conservatorship of the Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association the declared bankruptcy of Lehman
Brothers Holdings Inc the United States government financial assistance to American International Group
Inc Citigroup Inc Bank of America and other federal government interventions in the United States
financial system led to increased market uncertainty and instability in both United States and international
capital and credit markets These conditions combined with volatile oil prices declining business and
consumer confidence and increased unemployment have contributed to volatility of unprecedented levels
As a result of these market conditions the cost and availability of credit has been and may continue to be
adversely affected by illiquid credit markets and wider credit spreads Concern about the stability of the
markets generally and the strength of counterparties specifically has led many lenders and institutional
investors to reduce and in some cases cease to provide credit to businesses and consumers These factors
have led to a decrease in spending by businesses and consumers alike and corresponding decreases in global
infrastructure spending and commodity prices Continued turbulence in the United States and international
markets and economies and prolonged declines in business consumer spending may adversely affect our
liquidity and financial condition and the liquidity and financial condition of our customers including our
ability to refinance maturing liabilities and access the capital markets to meet liquidity needs These global
market and economic conditions have had and continue to have an adverse effect on the Indian financial
markets and the Indian economy in general which has had and may continue to have a material adverse
effect on our business our financial performance and may adversely affect the prices of our Equity Shares
42 Increases in interest rates may affect our results of operations
Increases in interest rates will adversely affect the cost of our borrowings as borrowings amounting to `
39098 crores out of our total outstanding borrowings of ` 49780 crores as on September 30 2010 have a
floating rate of interest While we have entered into interest rate hedging transactions in connection with
our loan agreements we cannot assure you that we will be able to enter into interest hedging contracts or
other financial arrangements on commercially reasonable terms or that any of such agreements will protect
us fully against our interest rate risk Any increase in interest expense may have an adverse effect on our
business prospects financial condition and results of operations
43 Any downgrading of India‟s debt rating by an international rating agency could have a negative impact
on our business
Any adverse revisions to Indialsquos credit ratings for domestic and international debt by international rating
agencies may adversely impact our ability to raise additional financing and the interest rates and other
commercial terms at which such additional financing may be available This could have an adverse effect
xxvi
on our business and future financial performance our ability to obtain financing for capital expenditures
and the price of our Equity Shares
44 Instability in the Indian financial markets could materially and adversely affect our results of operations
and financial condition
The Indian financial market and the Indian economy are influenced by economic and market conditions in
other countries particularly in Asian emerging market countries Financial turmoil in Asia Europe and
elsewhere in the world in recent years and more recently in the United States has affected the Indian
economy Although economic conditions are different in each country investorslsquo reactions to developments
in one country can have adverse effects on the securities of companies in other countries including India A
loss in investor confidence in the financial systems of other emerging markets may cause increased
volatility in Indian financial markets and indirectly in the Indian economy in general Any worldwide
financial instability could also have a negative impact on the Indian economy Financial disruptions may
occur again and could harm our results of operations and financial condition
45 Terrorist attacks civil unrest and other acts of violence or war involving India and other countries could
adversely affect financial markets and our business
Terrorist attacks and other acts of violence or war may negatively affect the Indian markets on which our
Equity Shares trade and also adversely affect the worldwide financial markets These acts may also result in
a loss of business confidence making travel and other services more difficult and ultimately adversely
affecting our business
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 a negative impact on our business
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 our Equity Shares
Other acts of violence or war outside India including those involving the United States the United
Kingdom or other countries may adversely affect worldwide financial markets and could adversely affect
the world economic environment which could adversely affect our business results of operations financial
condition and cash flows and more generally any of these events could lower confidence in India South
Asia has from time to time experienced instances of civil unrest and hostilities among other neighbouring
countries
46 The extent and reliability of Indian infrastructure could adversely affect our results of operations and
financial condition
Indialsquos physical infrastructure is less developed than that of many developed nations Any congestion or
disruption in its port rail and road networks electricity grid communication systems or any other public
facility could disrupt our normal business activity Any deterioration of Indialsquos physical infrastructure
would harm the national economy disrupt the transportation of goods and supplies and add costs to doing
business in India These problems could interrupt our business operations which could have an adverse
effect on our results of operations and financial condition
47 The proposed adoption of IFRS which we expect to have to adopt effective April 1 2011 could have a
material adverse effect on the price of the Equity Shares
Public companies in India including our Company 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 through the press note dated January 22 2010 (the
―MCA Press Release) and the clarification thereto dated May 4 2010 (together with the MCA Press
Release the ―IFRS Convergence Note) Pursuant to the IFRS Convergence Note all companies in India
whose shares or other securities are listed on stock exchanges outside India will be required to prepare their
annual and interim financial statements under converged accounting standards in a phased manner
beginning with the Fiscal commencing April 1 2011 Our financial condition results of operations cash
flows or changes in shareholderslsquo equity may appear materially different under IFRS than under Indian
GAAP This may have a material adverse effect on the amount of income recognised during that period and
in the corresponding (restated) period in the comparative Fiscal Yearperiod
xxvii
In addition in our transition to IFRS reporting we may encounter difficulties in the ongoing process of
implementing and enhancing our management information systems Moreover our transition may be
hampered by increasing competition and increased costs for the relatively small number of IFRS-
experienced accounting personnel available as more Indian companies begin to prepare IFRS financial
statements
48 Our business and activities will be regulated by the Competition Act 2002
The Competition Act 2002 (the ―Competition Act) several provisions of which have recently been
brought into effect is designed to prevent business practices that have an appreciable adverse effect on
competition in India Under the Competition Act any arrangement understanding or action in concert
between enterprises whether formal or informal which causes or is likely to cause an appreciable adverse
effect on competition in India is void and attracts substantial monetary penalties Any agreement which
directly or indirectly determines purchase or sale prices limits or controls production shares the market by
way of geographical area or market or number of customers in the market is presumed to have an adverse
effect on competition Further if it is proved that the contravention committed by a company took place
with the consent or connivance or is attributable to any neglect on the part of any director manager
secretary or other officer of such company that person shall be guilty of the contravention and liable to be
punished
The effect of the Competition Act on the business environment in India is as yet unclear If we are affected
directly or indirectly by any provision of the Competition Act or its application or interpretation including
any enforcement proceedings initiated by the Competition Commission and any adverse publicity that may
be generated due to scrutiny or prosecution by the Competition Commission it may have a material adverse
effect on our business financial condition and results of operations
49 There is no guarantee that the Equity Shares offered under this Issue will be listed on the Stock
Exchanges in a timely manner or at all and any trading closures at the Stock Exchanges may adversely
affect the trading price of our 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 authorizing the issuing of Equity Shares to be submitted There could be a failure or delay in
listing the Equity Shares on the Stock Exchanges Any failure or delay in obtaining the approval would
restrict your ability to dispose of your Equity Shares
50 An active market for our Equity Shares may not be sustained which may cause the price of our Equity
Shares to fall
While our Equity Shares are traded on the Stock Exchanges there can be no assurance regarding the
continuity of the existing active or liquid market for our Equity Shares the ability of investors to sell their
Equity Shares or the prices at which investors may be able to sell their Equity Shares The price of our
Equity Shares on the Stock Exchanges may fluctuate after this Issue as a result of several factors including
volatility in the Indian and global securities market our operations and performance performance of our
competitors the perception of the market with respect to investments in the materials handling industry
adverse media reports about us or the paper manufacturing industry changes in the estimates of our
performance or recommendations by financial analysts significant developments in Indialsquos economic
liberalisation and deregulation policies and significant developments in Indialsquos fiscal regulations There
can be no assurance that an active trading market for our Equity Shares will develop or be sustained after
this Issue or that the prices at which our Equity Shares are initially traded will correspond to the prices at
which our Equity Shares will trade in the market subsequent to this Issue
51 Any future issuance of Equity Shares may dilute your shareholding and sales of our Equity Shares by
our Promoter or other major shareholders may adversely affect the trading price of our Equity Shares
Any future equity issuances by us including a primary offering may lead to the dilution of investorslsquo
shareholdings in our Company Further as on the date of this Draft Letter of Offer the Company had 50
FCCBs outstanding convertible into 2352105 Equity Shares Further the Company is contemplating is
subject to market conditions and applicable statutory and regulatory requirements contemplating to offer
xxviii
issue and allot additional FCCBs Any future equity issuances by the Company either in the form of
qualified institutions placement or conversion of FCCBs or pursuant to a preferential allotment shall lead to
the dilution of your shareholding in the Company Any future equity issuances by us or sales of our Equity
Shares by our Promoter or other major shareholders may adversely affect the trading price of our Equity
Shares In addition any perception by potential investors that such issuances or sales might occur could also
affect the trading price of our Equity Shares
52 There are restrictions on daily movements in the price of our Equity Shares which may adversely affect
a shareholder‟s ability to sell or the price at which it can sell Equity Shares at a particular point in time
We are subject to a daily circuit breakerlsquo imposed by the Stock Exchanges which may not allow
transactions beyond specified increases or decreases in the price of our 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 will 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 will limit the upward and downward
movements in the price of our 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
Prominent Notes
1 Our Companylsquos net worth on a restated and standalone basis as at September 30 2010 was ` 55719
crores and the Companylsquos net worth on a restated and consolidated basis as at September 30 2010 was
` 55700 crores The Issue is for an aggregate amount not exceeding ` 25000 crores
2 The net asset value per Equity Share as at September 30 2010 was ` 7129 as per our restated
standalone financial statements and the net asset value per Equity Share as at September 30 2010 was
` 7126 as per our restated consolidated financial statements
3 The Promoter of our Company acquired 14344407 shares in our Company for consideration other
than cash in terms of BACL Scheme of Amalgamation For details see the section titled ―Capital
Structure and ―History and Certain Corporate Matters on pages 23 and 87
4 Except as disclosed otherwise in ―Our Promoter and Group Companies on page 117 and in ―Related
Party Transactions on page 140 and to the extent of any Equity Shares held by them and to the
extent of the benefits arising out of such shareholding none of the Group Companies have any business
or other interests in the Company
5 There have been no financing arrangements whereby the Promoter Group the directors of the Promoter
of our Company the Directors of our Company and their relatives have financed the purchase by any
other person of Equity Shares of our Company other than in the normal course of business of the
financing entity during the period of six months immediately preceding the date of filing of the Draft
Letter of Offer with SEBI
6 In addition to disclosures under ―Related Party Transactions on page 140 the details of transactions
between the Company and the Group Companies or Subsidiaries during the last Fiscal year are set
forth below
(` in crores)
S No Name of the company Nature of transaction Cumulative value
1 JK Lakshmi Cement Limited Sale of cement to Company 066
Purchase of paper products from
Company
007
Reimbursement of expenses received
from Company
206
Reimbursement of expenses paid to
Company
087
2 JK Tyre and Industries Limited Reimbursement of expenses received 031
xxix
S No Name of the company Nature of transaction Cumulative value
from the Company
Reimbursement of expenses paid to
the Company
018
Purchase of paper products from the
Company
0004
3 Fenner (India) Limited Purchase of V-belts and other items 002
4 Pranav Investment (MP)
Company Limited
Dividend paid on 3108 10 CRPS 0004
Premium paid on 3108 10 CRPS 081
Redemption of 3108 10 CRPS 0031
5 Umang Dairies Limited Interest received on inter-corporate
loan
006
7 The investors may contact the Lead Manager for any complaint pertaining to the Issue
8 Except as disclosed in ―Financial Statements-[bull] there are no related party transactions entered into
by our Company
1
SECTION III - INTRODUCTION
SUMMARY OF INDUSTRY OVERVIEW
I) Global Paper Industry Overview
The total consumption of paper globally in 2009 was estimated as 3640 million tonnes Asia contributed the
maximum to this consumption pattern with a total consumption of 1557 million tonnes followed by Europe and
North America at 935 and 781 million tonnes respectively
II) Domestic Paper Industry Overview
India consumed only about 3 of global paper production Indialsquos per capita consumption of paper averaged
around 84 kgs in 2009 as compared to a global average of 543 kgs (Source CRISIL Research Paper Annual
Review November 2010) Indian consumption has also lagged the global averages in past years However the
per capital consumption in India has shown a persistent rising trend over the past years
Domestic Demand-Supply Situation
The stable economic growth in India has led to a gradual but persistent rise in the consumption of paper and
board The demand for paper has grown at a CAGR of 67 from 2004-05 to 2009-10 The total demand in
2009-10 was approximately 814 mn tonnes in 2009-10 which has risen from approximately 589 mn tonnes in
2004-05( Source CRISIL Research Paper Annual Review November 2010) Domestic capacity increases have
not kept pace with the growth in demand showing a CAGR of just 56 This has meant that there has been a
steady increase in imports
Structure of Indian Paper Industry
The domestic Indian paper industry can be divided into four broad segments namely Writing and Printing Paper
(WPP) Industrial Paper (IP) Newsprint (NP) and Speciality Paper (SP) The IP segment contributed the largest
proportion of demand in 2009-10 at 49 of total demand in volume terms The total paper industry market size
in 2009-10 has been estimated at Rs 317 bn and the WPP segment is the highest value segment and accounts for
435 of the total market size
Our company operates in the WPP and IP segments details of which are provided below
Writing and Printing Paper
The WPP segment accounts for almost 32 of the total demand of paper in the country This segment consists
of varieties of paper normally under 120 GSM used primarily for writing (stationery) and printing (textbooks
and notebooks) The various varieties of WPP starting from the lower end of the value chain are creamwove
maplitho copier and coated paper
2
In terms of market size for 2009-10 creamwove accounted for Rs 569 bn maplitho for Rs 354 bn coated
paper for Rs 230 bn and branded copier for Rs 226 bn
The branded copier paper and coated paper segments have grown at a cumulative annual average rate of 175
and 181 respectively from Fiscal 2006 to Fiscal 2010 (Source IPMA Report March 2010)
Industrial Paper
This segment caters to the packaging of manufactured goods It may be classified into tertiary packaging (which
includes kraft paper) and consumer packaging (which includes greyback paperboard whiteback paperboard
folding box board (FBB) and solid bleached board (SBB))
Tertiary packaging mainly refers to the packaging for the containment and safeguard of goods during storage
handling and transportation Such paperboards are made mainly from kraft paper Kraft paper is usually the
brown paper used for manufacturing brown bags and cartons Corrugated boxes account for about 90 of the
total demand for kraft paper
Consumer packaging refer to secondary packaging of goods It is done not only for protection of goods but also
as a brand building and marketing measure The primary varieties in this segment include Greyback Whiteback
Folding box board and Solid bleached board
Kraft paper accounts for nearly 55 of demand followed by Greyback and Whiteback at 37 and
FBBSBBOthers at 8 Demand for paperboard has increased at a CAGR of 67 to an estimated 47 mn
tonnes in 2009-10 from 34 mn tonnes in 2004-05
III) Costs and Prices
Costs
The primary inputs for the manufacture of paper are the fiber (derived from wood waste paper agri residues
etc) and the power and fuel expenses While actual costs may vary based upon individual company product
profiles and locations these two together typically account for almost 70 of the total costs
Fiber Costs
The three main sources of fiber are
a) Wood or bamboo
b) Waste paper
c) Agri- residue such as Bagasse
Wood accounts for 37 of production while wastepaper and agri residue account for 32 and 31
respectively
Described below are the key raw materials in use by Our Company
Wood Bamboo
Softwood is not used in India given its unavailability High end products require the use of imported pulp
Hardwood prices depend upon the location from where a company sources its requirements Prices of hardwood
and bamboo have been increasing in recent years to over 3500 Rstonne (2009-10) from approximately 2500
Rstonne (2004-05) for hardwood and from approximately 1700 Rstonne (2004-05) to approximately 3250
Rstonne (2009-10) for bamboo
Pulp
Pulp prices for imported pulp have also seen an increase in recent years Since April 2005 pulp prices for US
and Indonesian hardwood pulp have increased from around 550 USD per tonne to close to 750 USD per tonne in
July 2010 Along similar lines the prices of US softwood pulp have increased from 550 USD per tonne to close
to 800 USD per tonne
3
Paper Prices
The prices of most varieties in the WPP and IP segments have been growing in the recent years Prices reduced
on a y-o-y basis in 2009-10 owing to the general economic conditions that prevailed in 2009-10 however
excluding this prices have seen a secular uptrend since 2004-05 as shown below
IV) Characteristics and concerns for the industry
Characteristics of the industry
a) The industry is fragmented in nature with between 500 to 1000 mills in India Further paper mills are
largely of small size in India with nearly 45 of paper mills in India being small units (less than 7500 tpa)
with only about 15 with capacities in excess of 33000 tpa (large mills)
b) Raw material availability decides location of plants with most paper mills in India are located close to the
source of the raw materials (forests and coal pit heads) and skilled labour
c) High entry barriers preventing entry of new players since setting up a paper mill calls for a substantial
capital outlay
Concerns
a) Raw material availability is a key concern with wood and wood based pulp being limited by availability of
forest resources and the use of wood for alternate purposes leading to competition
b) Substitution of paper products by other products while not threatening is on the rise with products in the IP
segment competing with products such as polymers wood and steel for packaging
c) Reducing import duty levels over the years is also a concern given the increase in imports
d) Capacity Additions by other players in the industry owing to the growth in demand could lead to temporary
pricing pressures
V) Growth Expectations
The information provided below should be read in conjunction with ―Risk Factors on page ix
Estimates indicate that the Indian paper industry will grow at a CAGR of 107 from its current levels of Rs
317 bn in 2009-10 to Rs 526 bn in 2014-15 the demand being driven by strong industrial and economic
growth WPP is likely to be the largest segment with a market share of around 42 followed by paperboard at
39 The shares of speciality paper and newsprint are expected to be around 7 and 13 respectively
Among the segments demand for paperboard is expected to increase as 78 CAGR to reach 67 mn tonnes in
2014-15 driven by a healthy growth in industrial production and a sustained demand for consumer goods The
WPP segment is expected to increase in demand at a 76 CAGR till 2014-15 as compared to a 65 CAGR in
the preceding 5 years
4
SUMMARY OF OUR BUSINESS
Overview
We are the largest producer of branded paper in terms of production and a leading player in the fine paperslsquo and
virgin packaging boardlsquo segments in terms of market share in India We are a market leader in the branded
copier paper segment in India where we had a market share of approximately 288 (Source CRISIL Research
Paper Annual Review November 2010) We manufacture and sell a diverse and multi-application range of
papers specialty papers allied stationery and virgin packaging board products and are focused in the production
and marketing of high-end paper and virgin packaging board products As on September 30 2010 our
distribution network of paper and virgin packaging board products comprises of four regional offices six
warehouses 134 wholesalers and various dealers enabling us to have a pan-India presence Additionally we
export our paper and virgin packaging board to over 40 countries including in Brazil UK Turkey Middle East
Sri Lanka Bangladesh Singapore Malaysia and several African nations We are a part of the JK Group one of
the leading business brands in India with a significant presence in automotive tyres and tubes cement power
transmission including V-belts oil seals hybrid agricultural seeds system engineering sugar dairy products
textiles health care clinical research and the paper and pulp brand segments among others with presence in
India as well as several other countries
We operate two integrated manufacturing facilities the JK Paper Mills Unit at Rayagada Odisha (―Unit
JKPM) and the Central Pulp Mills Unit at Songadh Gujarat (―Unit CPM) for the production of paper and
virgin packaging boards with a combined manufacturing capacity of 240000 TPA Our Unit JKPM presently
has an installed capacity of 125000 TPA for manufacturing paper and saleable pulp In addition our blade
coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper enabling us
to move up the value chain and capitalize on the growing market of coating paper The capacity of the coating
plant at the Unit JKPM is 46000 TPA We are the second largest producer of coated paper in India (Source
IPMA Report March 2010) Further we commissioned a pulp drying plant at our Unit JKPM in 2001 to
increase the output and realization of market pulp Our Unit CPM presently has an installed capacity of 55000
TPA for manufacturing paper and saleable pulp Additionally we have set up a packaging board plant at our
Unit CPM which was commissioned in October 2007 with an installed capacity of 60000 TPA which is
equipped with contemporary technology sourced from global leaders in the paper board machinery sector
We were incorporated as The Central Pulp Mills Limitedlsquo in 1960 as a pulp manufacturing facility at
Songadh in Gujarat and started paper production in 1975 We were subsequently referred to the BIFR in 1988
due to accumulated losses We were declared a sick industrial company in terms of the Sick Industrial
Companies (Special Provisions) Act 1985 in 1989 The JK Group as part of its strategy to strengthen its
position in the paper manufacturing market acquired our Company in 1992 pursuant to a rehabilitation scheme
sanctioned by the BIFR In 2000 as part of a restructuring exercise undertaken by JK Lakshmi Cement Limited
the Unit JKPM which was operating as a division of JK Lakshmi Cement Limited for its paper manufacturing
business was consolidated with our Company which was subsequently renamed as JK Paper Limitedlsquo
Our Company and our manufacturing units have received numerous awards and recognitions such as the Good
Corporate Citizen Award-2006lsquo by PHD Chambers of Commerce amp Industry Certificate of Appreciation for
Excellence in Energy Management ndash 2008lsquo by Bureau of Energy GoI for our Unit JKPM the Paper Mill of
the Yearlsquo award from Indian Paper Manufacturers Association for our Unit CPM in 2004 and the Greentech
Environment Excellence Award 2010 - Winner of Gold Award in Paper Sectorlsquo to our Unit CPM among others
Further we were awarded the TPM Excellence First Category Awardlsquo for the year 2006 by the Japan Institute
of Plant Maintenance for both our manufacturing units
We have been conscious in addressing environmental and safety concerns and have regularly introduced cleaner
and environment-friendly technologies in our manufacturing units Both our manufacturing units are ISO 9001 ndash
2008 compliant operating at over 100 capacity utilization and are equipped with all of the requisite facilities
for end-to-end environmentally compliant operations ranging from production of pulp to finishing and
packaging of our paper virgin packaging board and stationery products Our Unit JKPM has been adjudged as
the First Greenest Paper Milllsquo in 1999 and Second Greenest Paper Milllsquo in 2004 by Centre for Science amp
Environment (CSE) Additionally both our manufacturing units are ISO 14001 certified for their eco-friendly
operations and OHSAS 180012007 certified for occupational health and safety management system standards
Our Equity Shares re-admitted for trading on the BSE in 1992 Our Equity Shares were listed on the VSE and
the NSE in 1995 and 2005 respectively However our Equity Shares were delisted from the VSE in 2007
5
For the six month period ending September 30 2010 and Fiscal 2010 based on our restated consolidated
financial statements our net sales were ` 61316 crores and ` 112234 crores respectively and our adjusted
profit after tax was ` 5775 crores and ` 9198 crores respectively and for the Fiscal 2009 based on our
restated standalone financial statements our net sales were ` 109285 crores and our adjusted profit after tax
was ` 3746 crores
Our Strengths
Our business is characterized by the following key strengths
Established bdquoJK‟ brand recognition in the paper industry
We believe the ―JK Paperlsquo brand has an established reputation in the Indian market This is reflected in our
market share of approximately 288 in the branded copier paper segment in India In virgin packaging board
segment out of the total production of 387000 tonnes during Fiscal 2010 in India our Company produced
66135 tonnes We are the largest producer of branded papers in India in terms of production second largest
producer of virgin board and a leading player in the fine paperslsquo segment in terms of market share (Source
CRISIL Research Paper Annual Review November 2010) We believe that our brand commands respect and
credibility and offers us competitive advantages enabling us to maintain our leadership position in the branded
market along with strengthening the brand equity of our leading products such as JK Copierlsquo JK Excel Bondlsquo
and JK Easy Copierlsquo
Both our manufacturing units are ISO 9001 ndash 2008 compliant In Fiscal 2010 our Unit JKPM operated at
11014 capacity utilization and Unit CPM operated at 11833 capacity utilization The paper manufacturing
unit at Unit CPM operated at 11860 capacity utilization and the virgin packaging board manufacturing unit at
Unit CPM operated at 11809 capacity utilization Both our manufacturing units are equipped with the
requisite facilities for end-to-end environmentally compliant operations ranging from production of pulp to
finishing and packaging of our paper stationery and virgin packaging board products Additionally both our
manufacturing units are ISO 14001 certified for their eco-friendly operations and OHSAS 180012007 certified
for occupational health and safety management system standard
Diverse product range and ability to identify customer requirements
We manufacture and sell a diverse and multi-application range of papers specialty papers allied stationery and
virgin packaging board products to serve and satisfy the growing requirements of customers We produce paper
under several brands which are used for varied purposes including in diaries notepads letterheads calendars
balance sheets book printing labels photocopying project reports resumes inkjet laserjet and colour printers
office stationary envelopes mark sheets share certificates and financial instruments among others Our
speciality papers are used for MICR cheques and other premium printing applications such as POP materials
catalogues brochures books and calendars Additionally our virgin packaging board products serve a diverse
range of customer requirements including in packaging of FMCG products such as cosmetics food
pharmaceuticals and garments personal care products greeting cards life style products book covers beverage
cups and playing cards among others We strive to identify specific customer needs and to increase our products
range from economy to premium segment varying in terms of brightness smoothness opacity stiffness while
at the same time ensuring quality of printability and runnability in printing machines
Our Company introduced high quality bond paper Finesselsquo in A4 size consumer friendly retails packs of 100
sheets in 1998 and also laser paper in 1999 In recent times our Company has introduced Cedarlsquo in 2009 a
high quality paper for use in colour printers and for making corporate presentations developed the high value
MICR cheque paper and branded JK Savannahlsquo in A4 packs which have been well received in the market We
believe our dedicated effort towards increasing our products range and the ability to identify varying customer
requirements contribute significantly to our position as one of the leading players of the pulp and paper industry
in India
Locational advantages of our manufacturing units
Our manufacturing units are strategically located to meet our requirements with respect to raw materials as well
as to ensure timely delivery of our products to our customers Both our units are connected to rail and road
networks Our Company has a competitive advantage of location with respect to sourcing of raw materials as we
6
source bamboo and hardwood within an average distance of 325 kms from Unit JKPM and 500 kms from Unit
CPM
Our Unit JKPM at Rayagada Odisha procures privately grown bamboo from North Odisha as and when
required in addition to sourcing bamboo from the forests under the control of the state government of Odisha
where the Company has long term extraction concessions Our Unit JKPM meets its water requirement from the
Nagavali river a perennial river flowing within one km distance from the unit Hardwood is procured mainly
from Odisha and the neighbouring states of Andhra Pradesh and West Bengal
Our Unit CPM at Songadh Gujarat procures bamboo for its paper production primarily from the forests leased
from the Government of Gujarat Further our Unit CPM equipped with manufacturing facilities for our virgin
packaging board products is located on the western coast of India near the main consumption markets in the
states of Maharashtra and Gujarat This gives us significant cost as well as time advantage in reaching supplies
to the customers The location also facilitates faster imports logistics since the ports are nearer to our Unit CPM
compared to the facilities of our competitors
Additionally our manufacturing units are favorably located to effectively cover geographically dispersed
demand centers like Mumbai Ahmedabad Chennai Bangalore Hyderabad Cochin Kolkata New Delhi
Varanasi Patna Guwahati Bhubaneshwar Nagpur Madurai Sivakasi Vijaywada Raipur and Cuttack through
our distribution network
Strong relationships with key customers
We have long-standing relationships with leading publishers wholesalers commercial printers and retailers We
believe our sales strategy which includes both direct sales to our larger customers and sales to wholesalers and
retailers who then resell our products has enabled us to reduce our sales costs and enhance customer service In
relation to our paper products our relationships with our five largest customers which contributed
approximately 2030 and 2120 of our net sales for the six month period ended September 30 2010 and
Fiscal 2010 respectively is more than 10 years old In relation to our virgin packaging board products our
relationships with our five largest customers which contributed approximately 962 and 931 of our net
sales for the six month period ended September 30 2010 and Fiscal 2010 respectively is since the beginning of
commercial production of our virgin packaging board products ie October 2007 We seek to continue to
enhance our relationships with our key customers by providing them with a high level of value-added customer
service
Our plantation initiatives ensure strong backward linkages for sourcing raw materials
Our plantation initiative was started in 1990 at our Unit JKPM and later extended to our Unit CPM Our
Company has been aggressively promoting social and farm forestry and high yielding clones developed by our
in-house research and development institutions in the areas close to our manufacturing units ie in Odisha and
Andhra Pradesh for our Unit JKPM and in Gujarat and Maharashtra for our CPM Plant to provide for
sustainable supply of raw materials and increasing benefit to the villagers Under this programme carried out on
the land owned by people residing in villages near to our manufacturing units villagers are educated to adopt
scientific methods of growing trees besides being supplied with high quality seeds seedlings and high yielding
clones During Fiscal 2010 an additional area of 4200 hectares of land was covered under this programme by
utilising over 2 crore seedlingsplants Procurement of wood from farm forestry sources now accounts for over
70-75 of our Companylsquos raw materials consumption Our Company has developed seed orchards of high
yielding strains of various species including Eucalyptus and Casuarina We are presently operating such social
and farm forestry programs in Koraput Rayagada Ganjam Gajpati and Kalahandi districts of Odisha Dhule
Nandurbar Jalgaon and Nashik districts of Maharashtra Tapi Surat Bharuch Baroda Kheda and Valsad
districts of Gujarat and Vizianagram Srikakulam and Vishakhapatnam districts of Andhra Pradesh
Additionally the location and proximity of our manufacturing units to the areas in which are plantation
initiatives are carried out in comparison to our competitors benefits our Company by assisting in the
continuous procurement of raw materials in the long term
Modern and advanced manufacturing technology and infrastructure
Our manufacturing units are equipped with modern and advanced manufacturing technology and infrastructure
enabling us to maintain our position amongst leaders in quality paper segment in India Our modern and
advanced manufacturing technology includes amongst others efficient chip washing system implementation of
7
DCS control and oxygen delignification plant that helps in reduction of chlorine consumption Further we are
the exclusive licensee of colorlok technologylsquo and colorlok trademarklsquo in India for manufacture of high
quality copier paper We believe that our dedicated effort towards use and continuous upgradation of
manufacturing technology and infrastructure contributes significantly to our position as one of the leading
players of the pulp and paper industry in India
Our Business Strategies
Our aim is to further strengthen our position as one of Indialsquos leading paper manufacturing and selling
companies to enhance our manufacturing capacity and increase our products range and to increase our
geographical reach in India and abroad to complement our brand In order to achieve our aim we intend to
follow the key business strategies described below
Increase our market share in the paper and virgin packaging board segments
We seek to take advantage of our competitive strengths to further increase our market share in the paper and
virgin packaging board business segments The branded copier paper and coated paper segments are market
segments that in addition to being more stable than other market segments have grown at a cumulative annual
average rate of 175 and 181 respectively from Fiscal 2006 to Fiscal 2010 (Source IPMA Report March
2010) We intend to continue our focus and our marketing efforts on the sale of our copier paper products
coated paper products (especially in higher gsm range) and virgin packaging board products We seek to further
increase our market share by enhancing our manufacturing capacity at our Unit JKPM For details see ―Objects
of the Issue on page 34
Maintain our focus on increasing our products range and moving up the value chain
Our Company has consistently focused on increasing its product range particularly in the high value added
segment like branded copier paper for instance JK Copier Pluslsquo premium watermark bond for instance JK
Excel Bondlsquo premium digital coated paper Cedarlsquo and virgin packaging board for instance JK TuffCotelsquo
and JK Ultimalsquo We seek to identify specific customer needs and to increase our products range from economy
to premium segment by employing a combination of innovative and creative marketing initiatives such as
advertising in the print media trade and consumer campaigns at the national level road shows and select
customer meets We believe that this will contribute towards enhancing our reputation as one the leading players
in the Indian pulp and paper manufacturing industry
Expanding operations and our distribution network in new markets
We are actively involved in market expansion beyond the Indian market to ultimately have a global footprint for
our paper and virgin packaging board products Our Company is presently exporting paper and virgin packaging
board to over 40 countries including in Brazil UK Turkey Middle East Sri Lanka Bangladesh Singapore
Malaysia and several African nations We intend to capitalize on our established global network and further
expand the reach of our paper and virgin packaging board products in international markets
Further our wholesalers and retailers form an important part of our distribution network and help us reach the
end-use customers of our paper allied stationery and virgin packaging board products We believe that our wide
distribution network consisting of four regional offices six warehouses 134 wholesalers and various dealers as
of September 30 2010 enables us to have a pan-India presence We intend to further expand our distribution
network across our geographies by identifying pockets of opportunities and ensure a direct or indirect presence
in these areas
Ensuring continuous raw material supply
Our Company is focused on ensuring long-term continuous supply of pulp wood primary raw material used in
manufacturing of our products by promoting farm forestry activities We provide high quality seedlingsclones
to private farmers located within the vicinity of our manufacturing units and source wood back from such
farmers During Fiscal 2010 an additional area of 4200 hectares of land was covered under this programme by
utilising over 2 crore seedlingsplants At present procurement of wood from farm forestry sources accounts for
over 70-75 of our raw material consumption We seek to further increase our dependency on farm forestry
sources and consequently decrease our dependency on government and other sources We believe that this
would reduce uncertainty in availability of raw materials and also assist us in arresting significant increase in
8
costs of raw materials
9
SUMMARY FINANCIAL INFORMATION
The following tables set forth our selected historical financial information derived from our consolidated
financial statements for the six months period ended September 30 2010 Fiscal 2010 Fiscal 2009 nine-months
period ended March 31 2008 Fiscal 2007 and Fiscal 2006 all prepared in accordance with Indian GAAP the
Companies Act and the SEBI ICDR Regulations as described in the Report of the Auditor included in
―Financial Statements on page 141 and this table should be read in conjunction with the financial statements
mentioned therein and the notes thereto
SUMMARY FINANCIAL INFORMATION FROM OUR RESTATED STANDALONE FINANCIAL
STATEMENTS
10
11
12
SUMMARY FINANCIAL INFORMATION FROM OUR RESTATED CONSOLIDATED FINANCIAL
STATEMENTS
13
14
15
THE ISSUE
Rights Entitlement [] Equity Shares for every [] fully paid-up Equity Shares held on
the Record Date
Record Date [] 2011
Issue Price per Equity Share ` []
Face value per Equity Share ` 10
Equity Shares outstanding prior to the Issue 78149939 Equity Shares
Equity Shares outstanding after the Issue
(assuming full subscription for and Allotment of
the Rights Entitlement)
[] Equity Shares
Terms of the Issue For more information see ―Terms of the Present Issue on page
276
Use of Issue Proceeds For more information see ―Objects of the Issue on page 34
In April 2006 our Company issued 50 FCCBs for an aggregate value of USD 5000000 due for redemption on March 30 2011 (ldquo2006
FCCBsrdquo) The 2006 FCCBs are convertible into such number of Equity Shares as determined in accordance with the terms of the
Offering Circular dated March 30 2006 at any time on or prior to March 17 2011 In the event the Record Date is on or before March
17 2011 our Company shall make reservation of such number of Equity Shares to which the holders of the outstanding 2006 FCCBs
are entitled to as on the Record Date in favour of such holders
In terms of a resolution passed by the Board on October 29 2010 and a special resolution passed by the Shareholders on
December 1 2010 the Company has been authorized to issue securities including foreign currency convertible bonds
for an amount aggregating up to ` 250 crores Our Company is subject to market conditions and applicable statutory and
regulatory requirements contemplating to issue and allot foreign currency convertible bonds (ldquo2011 FCCBsrdquo) In the
event the Company proceeds with the allotment of 2011 FCCBs before the Record Date our Company shall make
reservation of such number of Equity Shares to which the holders of the 2011 FCCB are entitled in favour of such
holders
The Equity Shares reserved for the holders of the outstanding 2006 FCCBs and 2011 FCCBs if any shall be issued at the time of
conversion of such foreign currency convertible bonds or Allotment under this Issue whichever is later on the same terms on which
Equity Shares are issued under this Issue in accordance with Regulation 53 of SEBI ICDR Regulations
16
GENERAL INFORMATION
Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on January 28
2011 it has been decided to make the following offer to the Equity Shareholders of the Company with a right to
renounce
The issue of [] Equity Shares with a face value of ` 10 each for cash at a price of ` [] each (including a
premium of ` [] each) aggregating to an amount not exceeding ` 250 crores by the Company to the
Equity Shareholders on rights basis in the ratio of [] Equity Shares for every [] Equity Shares held on
the record date ie [] The issue price for the Equity Shares is [] times the face value of the Equity
Shares
Registered Office of the Company
PO Central Pulp Mills - 394 660
Fort Songadh
District Tapi
Gujarat
Corporate Office
Nehru House
4 Bahadur Shah Zafar Marg
New Delhi - 110 002
Registration No 04-18099
Corporate Identification No L21010GJ1960PLC018099
Address of the RoC
Office of the Registrar of Companies Gujarat
Dadra and Nagar
RoC Bhawan
Opposite Rupal Park Society
Naranpura
Ahmedabad 380 013 Gujarat India
The Equity Shares of the Company are listed on the Stock Exchanges
Board of Directors
Name Fathers Name Designation Occupation Age DIN and Term Address
Mr Hari Shankar Singhania
So Late Mr Lakshmipat Singhania
Designation Chairman
Occupation Industrialist
Age 78 years
DIN 00051324
Term Five years with effect from January 1 2007
Address 19 Prithviraj Road New Delhi 110 011 India
Mr Harsh Pati Singhania
So Mr Bharat Hari Singhania
Designation Managing Director (Executive
Non-Independent)
Occupation Industrialist
Age 50 years
DIN 00086742
Term Five years with effect from January 1 2007
Address 19 Prithviraj Road New Delhi 110 011 India
Mr Om Prakash Goyal
Occupation Company Executive
17
Name Fathers Name Designation Occupation Age DIN and Term Address
So Late Mr BDGoyal
Designation Whole-time Director (Executive Non-
Independent)
Age 68 years
DIN 00030115
Term Three years with effect from September 7 2009
Address B-50 Sector-XIV Noida Uttar Pradesh 201 301 India
Mr Dhirendra Kumar
So Late Mr Bhagwat Prasad
Designation Non-Executive Non- Independent
Director
Occupation Business
Age 67 years
DIN 00153773
Term Liable to retire by rotation
Address 11 Mandevilla Gardens Kolkata 700 019 West
Bengal India
Mrs Vinita Singhania
Wo Late Mr Shripati Singhania
Designation Non Executive Non-Independent
Director
Occupation Industrialist
Age 58 years
DIN 00042983
Term Liable to retire by rotation
Address 101 Friends Colony (East) New Delhi 110 065 India
Mr Arun Bharat Ram
So Late Dr Bharat Ram
Designation Non-Executive Independent Director
Occupation Industrialist
Age 70 years
DIN 00694766
Term Liable to retire by rotation
Address 1 Silver Oak Avenue Westend Green Farms Rajokari
New Delhi 110 038 India
Mr MH Dalmia
So Late Mr Jaidayal Dalmia
Designation Non-
Executive Independent Director
Occupation Industrialist
Age 69 years
DIN 00009529
Term Liable to retire by rotation
Address Dalmia House 20 F Prithviraj Road New Delhi 110
011 India
Mr RV Kanoria
So Mr Shyam Sundar Kanoria
Designation Non-
Executive Independent Director
Occupation Industrialist
Age 56 years
DIN 00003792
Term Liable to retire by rotation
Address A-45 Vasant Marg Vasant Vihar New Delhi 110 057
India
Mr Shailesh Vishnu Haribhakti
So Mr Vishnu Bhagwandas Haribhakti
Designation Non-
Executive Independent Director
Occupation Chartered Accountant
Age 54 years
DIN 00007347
Term Liable to retire by rotation
Address 228 Kalpataru Habitat B Wing 22nd amp 23rd Floor Dr
18
Name Fathers Name Designation Occupation Age DIN and Term Address
SSRoad Parel Mumbai 400 012 Maharashtra India
Mr SK Pathak
So Late Mr JP Pathak
Designation Non-
Executive Independent Director
Occupation Industrialist
Age 76 years
DIN 00928630
Term Liable to retire by rotation
Address Villa no 19 Umm Al Sheif Street Jumeirah-3 Dubai
United Arab Emirates
Mr Udayan Bose
So Late Mr Prabhas Chandra Bose
Designation Non- Executive Independent Director
Occupation Banker
Age 61 years
DIN 00004533
Term Liable to retire by rotation
Address 34 A Sterling Apartments Pedder Road Mumbai 400
026 Maharashtra India
For further details of our Directors see ―Our Management on page 100
Company Secretary and Compliance Officer
Mr Suresh Chander Gupta
Nehru House
4 Bahadur Shah Zafar Marg
New Delhi- 110 002 India
Tel (91 11) 41509716
Fax (91 11) 2373 9475
Email jkpaperrightsjkmailcom
Bankers to the Company
State Bank of India
Corporate Account Group Branch
Reliance House 2nd
Floor
34 Jawahar Lal Nehru Road
Kolkata 700 071 India
Contact Person Mr Uttam Chowdhury
Tel (91 33) 2288 8117
Fax (91 33) 2288 7037
Emailcagkolsbicoin
Website wwwstatebankofindiacom
Axis Bank Limited
Statesman House 2nd
Floor
148 Barakhamba Road
New Delhi 110 001 India
Tel (91 11) 4368 2400
Fax (91 11) 4368 2447
Emailshaleenvermaaxisbankcom
Website wwwaxisbankcom
IDBI Bank Limited
IRCS Building 1
Red Cross Road
New Delhi 110 001
Tel (91 11) 6628 1900
Fax (91 11) 2375 2730
Email scbhattidbicoin
Website wwwidbicom
Canara Bank
74 Janpath
New Delhi 110 001
Tel (91 11) 2332 3594
Fax (91 11) 2332 3991
Emaillbadel0307canbankcoin
Website wwwcanarabankcom
ICICI Bank Limited
NBCC Place Bhishm Pitamah Marg
Pragati Vihar Lodhi Road
New Delhi- 110 003 India
Contact Person Mr Raman Aggarwal
19
Tel (91 11) 2439 0000
Fax (91 11) 2439 0070
Emailramanaggarwalicicibankcom
Website wwwicicibankcom
Bankers to the Issue
[] Tel []
Fax []
E-mail []
Contact Person []
Website []
Self Certified Syndicate Banks
The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process are provided on
wwwsebigovinpmdscsbhtml
Issue Management Team
Lead Manager to the Issue
ICICI Securities Limited
ICICI Centre
HT Parekh Marg
Churchgate Mumbai 400 020 India
Tel (91 22) 2288 2460
Fax (91 22) 2282 6580
E-mail jkpaperrightsicicisecuritiescom
Website wwwicicisecuritiescom
Contact Person Sumanth Rao
Registration No INM000011179
Legal Advisor to the Issue
Amarchand amp Mangaldas amp Suresh A Shroff amp Co
Amarchand Towers
216 Okhla Industrial Estate Phase III
New Delhi 110 020 India
Tel (91 11) 2692 0500
Fax (91 11) 2692 4900
Auditors of the Company
Lodha amp Co
12 Bhagat Singh Marg
New Delhi 110 001 India
Tel (91 11) 2371 0176
Fax (91 11) 4372 4461
Email delhilodhacocom
Firm Registration Number 301051E
Registrar to the Issue
MCS Limited
F-65 Okhla Industrial Area
Phase I New Delhi 110 020
Tel (91 11) 4140 6149
Fax (91 11) 4170 9881
20
E-mail id adminmcsdelcom
Website wwwmcsdelcom
Contact Person SK Gupta
Registration No INR000000056
Note Investors are advised to contact the Registrar to the IssueCompliance Officer in case of any pre-
Issuepost Issue related problems such as non-receipt of Letter of OfferAbridged Letter of
OfferCAFAllotment adviceshare certificate(s) refund orders
Monitoring Agency
As this is an Issue for less than ` 500 crore there is no requirement for the appointment of a monitoring agency
The Audit Committee will monitor the utilization of the proceeds of the Issue
Project Appraisal
In terms of the letter dated January 14 2011 Poyry Management Consulting Oy appraising entity for the
expansion and development of Unit JKPM has given its consent to disclose its details as Appraisal Entitylsquo and
to disclose the contents of the feasibility report dated December 19 2010 prepared by it in the Draft Letter of
Offer and the Letter of Offer The details of the Appraisal Entitylsquo are given below
Poyry Management Consulting Oy
PO Box 4 (Jaakonkatu 3)
FI-01621 Vantaa
Finland
Domicile Vantaa Finland
Business ID F123022763
Tel (358 10) 33 22655
Fax (358 10) 33 21031
Email pekkanikupoyrycom
Website httpwwwpoyrycom
Statement of responsibilities of the Lead Manager
ICICI Securities Limited is the sole Lead Manager to the Issue and all the responsibilities relating to
coordination and other activities in relation to the Issue shall be performed by it The various activities have
been set forth below
S No Activities
1 Capital structuring with the relative components and formalities such as composition of debt and equity type of
instruments etc in conformity with SEBI ICDR Regulations Undertaking liaison with the Stock Exchanges as
may be required under the prevailing framework of guidelines issued by SEBI and the Stock Exchanges
2 Undertaking due diligence activities and together with the legal counsels assist in drafting and design of the
Draft Letter of Offer and of the advertisement or publicity material including newspaper advertisement and
brochure or memorandum containing salient features of the Draft Letter of Offer
3 Selection of various agencies connected with the Issue such as registrars to the Issue printers advertising
agencies etc
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 authority
whatsoever
5 Marketing of the Issue which shall cover inter alia formulating marketing strategies preparation of publicity
budget arrangements for selection of (i) ad-media (ii) centers for holding conferences of stock brokers
investors etc (iii) bankers to the Issue (iv) collection centers as per Schedule III of the SEBI ICDR
Regulations (v) brokers to the Issue and (vi) distribution of publicity and Issue material including application
form Draft Letter of Offer and brochure and deciding upon the quantum of Issue material
6 Post-Issue activities which shall involve essential follow-up steps including follow-up with bankers to the Issue
and SCSBs to get quick estimates of collection and advising the Issuer about the closure of the Issue based on
correct figures finalisation of the basis of allotment or weeding out of multiple applications listing of
instruments dispatch of certificates or de-mat credit and refunds and coordination with various agencies
connected with the post-Issue activity such as registrars to the issue bankers to the issue SCSBs etc
21
Credit rating
As this is a rights issue of Equity Shares and no convertible or debt instruments are being issued a credit rating
is not required
Listing of Equity Shares
The existing Equity Shares are listed on the Stock Exchanges We have applied for 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 []
and [] respectively We will make applications to the Stock Exchanges for permission to deal in and for an
official quotation in respect of the Equity Shares being offered in terms of the Letter of Offer If the permission
to deal in and for an official quotation is not granted for the Equity Shares by the Stock Exchanges our
Company shall forthwith repay without interest all monies received from the applicants pursuant to the Letter
of Offer within a period of 15 days from the Issue Closing Date
Issue Schedule
The subscription will open upon the commencement of the banking hours and will close upon the close of
banking hours on the dates mentioned below
Issue Opening Date []
Last date for receiving requests for SAFs []
Issue Closing Date []
The Board or a duly authorised committee thereof 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
Impersonation
As a matter of abundant caution attention of the applicants is specifically drawn to the provisions of sub-section
(1) of Section 68A of the Companies Act which is reproduced below
ldquoAny 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 yearsrdquo
Allotment Letters Refund Orders
The Company will issue and dispatch Allotment advice share certificatesdemat credit andor 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 the
Company becomes liable to repay it the Company and every Director of the Company who is an officer in
default shall on and from expiry of eight days be jointly and severally liable to repay the money with interest as
prescribed under Section 73 of the Companies Act
In case of those applicants who have opted to receive their Rights Entitlement in physical form the Company
will issue the corresponding share certificates under section 113 of the Companies Act or other applicable
provisions if any Investors are requested to preserve such letters of Allotment which would be exchanged later
for the share certificates For more information see ―Terms of the Present Issue on page 276
Declaration by Board on creation of separate account
The Board declare that funds received against this Issue will be transferred to a separate bank account subject of
compliance with Regulation 56 of the SEBI ICDR Regulations
Minimum Subscription
If the Company does not receive the minimum subscription of 90 of the Issue on the Issue Closing Date the
Company shall forthwith refund the entire subscription amount received within 15 days from the Issue Closing
22
Date If such money is not repaid within eight days from the day the Company becomes liable to repay it the
Company and every Director of the Company who is an officer in default shall on and from expiry of eight
days be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the
Companies Act
Principal Terms of Loans and Assets charged as security
For details of the principal terms of loans and assets charged as security see ―Financial Indebtedness on page
213
Underwriting
The Company has not entered into any underwriting agreement with the Lead Manager in connection with the
Issue
23
CAPITAL STRUCTURE
Our share capital as on the date of filing of this Draft Letter of Offer is set forth below
(In ` )
Aggregate Value at
Face Value
Aggregate Value at
Issue Price
A Authorized Share Capital
200000000 Equity Shares of face value of ` 10 each 2000000000 -
30000000 Redeemable Preference Shares of ` 100 each 3000000000 -
B Issued Subscribed and Paid-up Capital before the Issue
78149939 Equity Shares of ` 10 each fully paid-up 781499390
9000 Preference Shares of ` 100 each fully paid-up 900000
C Present Issue to the existing Equity Shareholders in terms of this Draft Letter of Offer
[] Equity Shares at an Issue Price of ` [] per Equity Share [] []
D Issued subscribed and paid-up Equity Capital after the Issue (assuming full subscription for and Allotment
of the Rights Entitlement)
[] Equity Shares of ` 10 each fully paid-up []
F Securities Premium Account
Before the Issue 1816834747
After the Issue [] For details of changes in the authorized share capital of the Company please see ldquoHistory and Certain Corporate Mattersrdquo on page 87 The present Issue has been authorized through a resolution of the Board of Directors in their meeting on January 28 2011
As on the date of the Draft Letter of Offer 50 FCCBs are outstanding due for conversion into 2352105 Equity Shares of the Company
Notes to the Capital Structure
1 Share Capital History of our Company
The following is the history of the Equity Share capital of our Company
Date of
Allotment
Number of
Equity
Shares
Issue Price
per Equity
Share
Conversion
Price (In `)
Face value
per Equity
Share (In
`)
Consideration Nature of
Allotment
Cumulative
Equity Share
Capital (In `)
August 22
1960
2200 100 100 Cash Preferential
allotment
220000
August 26
1960
100 100 100 Cash Preferential
allotment
230000
September 6
1960
50 100 100 Cash Preferential
allotment
235000
May 31
1962 2350 100 100 Cash Preferential
allotment
470000
September 29
1962
300 100 100 Cash Preferential
allotment
500000
August 21
1964
2950 100 100 Cash Preferential
allotment
795000
September 30
1964
2050 100 100 Cash Preferential
allotment
1000000
March 6
1965
97280 100 100 Cash Initial Public
Offer
10728000
April 9 1965 1660 100 100 Cash Preferential
allotment
10894000
August 3
1965
72310 100 100 Cash Follow on Public
Offer
18125000
March 29
1969
3808 100 100 Cash Preferential
allotment
18505800
24
Date of
Allotment
Number of
Equity
Shares
Issue Price
per Equity
Share
Conversion
Price (In `)
Face value
per Equity
Share (In
`)
Consideration Nature of
Allotment
Cumulative
Equity Share
Capital (In `)
April 28
1969
10226 100 100 Cash Preferential
allotment
19528400
September 22
1970
1054 100 100 Cash Preferential
allotment
19633800
September 6
1972
500 100 100 Cash Preferential
allotment
19683800
March 29
1974
2537 100 100 Cash Preferential
allotment
19937500
February 15
1977
41188 100 100 Cash Rights issue 24056300
April 27
1978
58500 100 100 Cash Rights issue 29906300
July 9 1992 81250 100 100 Cash Conversion of
81250
preference shares
of ` 100 each
into equity shares
of ` 100 each
pursuant to the
BIFR order dated
May 13 1992
38031300
July 9 1992 500000 100 100 Cash Allotment
pursuant to the
BIFR order dated
May 13 1992
88031300
December 3
1992
500000 100 100 Cash Allotment
pursuant to the
BIFR order dated
May 13 1992
138031300
May 29 1993 1000000 100 100 Cash Allotment
pursuant to the
BIFR order dated
May 13 1992
238031300
May 10
1994
5000000 100 100 Cash Allotment
pursuant to the
BIFR order dated
May 13 1992
738031300
January 23
1995
143000 100 100 Cash Allotment
pursuant to the
BIFR order dated
May 13 1992
752331300
June 26 1996 Reduction of the issued subscribed paid-up capital of the Company by 70 ie from ` 752331300 to
` 225699390 and sub- division of the face value of each equity share from ` 100 each to 10 Equity
Shares of ` 10 each pursuant to the order of the BIFR dated June 24 1996
June 26 1997 5000000 10 10 Cash Conversion of
warrants
275699390
April 28
2004
27500000 40 10 Cash Conversion of
11000000
CPRS of ` 100
each
550699390
March 14
2006
15380000 65 10 Cash Preferential
allotment
704499390
March 30
2006
7700000 69 10 Cash Issue of
underlying
Equity Shares for
issue of GDRs
781499390
For details see ldquoRisk Factors- Internal Risk Factors no 30 - We do not have access to records and data pertaining to certain historical
legal and secretarial information including with respect to issuance of shares and amendments in our MoArdquo on page xxii
For details see ldquoScheme of Rehabilitationrdquo under the section titled ldquoHistory and certain Corporate Mattersrdquo on page 87
25
The following is the preference share capital history of the Company
Date Number of
Preference
Shares
Issue
Conversion
Redemption
Price per
Preference
Share (In `)
Face value
per
Preference
Share (In
`)
Consideration Nature
(Allotment
Conversion
Redemption)
Cumulative
Preference
Share Capital
(In `)
January 6 1965 81250 10000 10000 Cash Allotment of
81250 930
Redeemable
Cumulative
Preference Shares
8125000
July 9 1992 (81250) 10000 10000 Cash Conversion of
81250 930
Redeemable
Cumulative
Preference Shares
into 81250 Equity
Shares of ` 100
each pursuant to
pursuant to the
BIFR order dated
May 13 1992
Nil
November 29
2001
16200000 10000 10000 Other than
cash
Allotment of
16200000 8
Optionally
Convertible
Cumulative
Redeemable
Preference Shares
(―OCCRPS)
2620000000
10000000 10000 10000 Other than
cash
Allotment of
10000000 10
Cumulative
Redeemable
Preference Shares
(―CRPS)
April 28 2004 (11000000) 4000 10000 Cash Conversion of
11000000 8
OCCRPS into
27500000 Equity
Shares of ` 10 each
and variation in
terms of remaining
5200000
OCCRPS to carry a
fixed cumulative
preferential
dividend of 375
to be redeemed in
three installments
of ` 30 ` 30 and `
40 respectively on
November 29
2017 November
29 2018 and
November 29
2019
1520000000
July 1 2004 (9700000) NA 10000 NA Pursuant to order
of Gujarat High
Court 9700000
10 CRPS were
converted into term
loans
550000000
June 30 2006 (143000) 48112 10000 Cash Redemption of 535700000
26
Date Number of
Preference
Shares
Issue
Conversion
Redemption
Price per
Preference
Share (In `)
Face value
per
Preference
Share (In
`)
Consideration Nature
(Allotment
Conversion
Redemption)
Cumulative
Preference
Share Capital
(In `)
143000 10
CRPS Series A
July 1 2006 (5200000) NA 10000 NA Pursuant to order
of Gujarat High
Court confirming
reduction of share
capital the
remaining
5200000 375
CRPS were
converted into
unsecured loans
15700000
June 30 2007 (76000) 81711 10000 Cash Redemption of
76000 10 CRPS
Series B
8100000
June 30 2008 (40000) 146251 10000 Cash Redemption of
40000 10 CRPS
Series C
4100000
June 30 2009 (21000) 269525 10000 Cash Redemption of
21000 10 CRPS
Series D
2000000
June 30 2010 (11000) 506362 10000 Cash Redemption of
11000 10 CRPS
Series E
900000
For details see ldquoScheme of Rehabilitationrdquo under the section titled ldquoHistory and certain Corporate Mattersrdquo on page 87
The High Court of Gujarat by its order dated August 30 2001 in Company Petition No 313 of 2000 under Section
391(2) of the Companies Act approved the Scheme of Compromise between JK Lakshmi Cement Limited (ldquoJKLCrdquo) the
lenders bankers and shareholders of JKLC our Company and the shareholders of our Company for restructuring of debts
of JKLC due to its lenders and bankers and for reconstruction of JKLC and our Company by transfer of the Unit JKPM to
our Company Pursuant to this scheme our Company allotted 16200000 8 OCCRPS and 10000000 10 CRPS to
lenders of JKLC on November 29 2001 For further details on the Scheme of Compromise see ldquoHistory and Certain
Corporate Mattersrdquo on page 87
The 275000000 Equity Shares were listed on the BSE and the VSE and admitted for trading with effect from May 31
2004 Our Equity Shares were subsequently delisted from VSE on March 30 2007
6000 10 CRPS as part of Series F are required to be redeemed on June 30 2011 and the remaining 3000 10
CRPS as part of Series G are required to be redeemed on June 30 2012 as per the terms of issuance of the 10
CRPS
Details of issue of preference shares for consideration other than cash is set forth below
Date Number of
Preference
Shares
Issue
Conversion
Redemption
Price per
Preference
Share (In `)
Face value
per
Preference
Share (In
`)
Consideration Nature
(Allotment
Conversion
Redemption)
Cumulative
Preference
Share Capital
(In `)
November 29
2001
16200000 10000 10000 Other than
cash
Allotment of
16200000 8
Optionally
Convertible
Cumulative
Redeemable
Preference Shares
(―OCCRPS)
2620000000
10000000 10000 10000 Other than
cash
Allotment of
10000000 10
Cumulative
27
Date Number of
Preference
Shares
Issue
Conversion
Redemption
Price per
Preference
Share (In `)
Face value
per
Preference
Share (In
`)
Consideration Nature
(Allotment
Conversion
Redemption)
Cumulative
Preference
Share Capital
(In `)
Redeemable
Preference Shares
(―CRPS)
Further our Company by way of an Offering Circular dated March 30 2006 issued 50 125 unsecured foreign
currency convertible bonds for an aggregate value of USD 5000000 due for redemption on March 30 2011 at
130441 of their principal amount of US$ 100000 (the ―2006 FCCBs) and 7700000 global depositary
receipts (the ―GDRs) The FCCBs are listed on the Luxembourg Stock Exchange As of the date of this Draft
Letter of Offer none of the FCCBs have been redeemed cancelled or converted Further the Company issued
7700000 GDRs at an issue price of USD 1544 (ie ` 69 at the conversion rate of ` 4469 based on the
conversion rates prevailing on March 29 2006) which were held by the Bank of New York 101 Barclay Street
22nd
floor New York NY 10286 (the ―Depositary) On January 16 2008 the holder(s) of the GDRs acquired
the underlying Equity Shares representing the GDRs from the Depositary
The 2006 FCCBs are convertible into such number of Equity Shares as determined in accordance with
the terms of the Offering Circular at any time on or prior to March 17 2011 In the event the Record
Date is on or before March 17 2011 our Company shall make reservation of such number of Equity
Shares to which the holders of the outstanding 2006 FCCBs are entitled to as on the Record Date in
favour of such holders
In terms of a resolution passed by the Board on October 29 2010 and a special resolution passed by the
Shareholders on December 1 2010 the Company has been authorized to issue securities including
foreign currency convertible bonds for an amount aggregating up to ` 250 crores Our Company is
subject to market conditions and applicable statutory and regulatory requirements contemplating to
offer issue and allot foreign currency convertible bonds (ldquo2011 FCCBsrdquo) In the event the Company
proceeds with the allotment of 2011 FCCBs our Company shall make reservation of such number of
Equity Shares to which the holders of the 2011 FCCB are entitled to as on the Record Date in favour of
such holders
The Equity Shares reserved for the holders of the outstanding 2006 FCCBs and 2011 FCCBs if any shall
be issued at the time of conversion of such foreign currency convertible bonds or Allotment under the
Issue whichever is later on the same terms on which Equity Shares are issued under the Issue
2 Shareholding Pattern of our Company
Shareholding pattern of our Company as on December 31 2010 is as follows
Category
Code
Category of
Shareholders
Number of
Shareholders
Total no
of Shares
No of Shares
held in
Demateralised
form
Total shareholding as a
percentage of total
shares
Shares pledged or
otherwise
encumbered
As a
percentage
of (A+B)
As a
percentage
of
(A+B+C)
Number
of
Shares
As a
percentage
A Shareholding of Promoter and
Promoter Group
1 Indian
A IndividualsHindu Undivided Family
11 600000 600000 077 077
B Central
GovernmentState Government(s)
C Bodies Corporate 4 30299539 30299539 3877 3877
D Financial
InstitutionsBanks
- - - - -
e i
Any other (Specify) Trust
- - - - -
ii Society - - - - -
28
Category
Code
Category of
Shareholders
Number of
Shareholders
Total no
of Shares
No of Shares
held in
Demateralised
form
Total shareholding as a
percentage of total
shares
Shares pledged or
otherwise
encumbered
As a
percentage
of (A+B)
As a
percentage
of
(A+B+C)
Number
of
Shares
As a
percentage
iii Educational
Institutions
- - - - -
Sub Total (A) (1) 15 30899539 30899539 3954 3954
2 Foreign
A Individuals (Non
Resident Indians
Foreign Individuals)
- - - - -
B Bodies Corporate - - - - -
C Institutions - - - - -
D Any Other (Specify) - - - - -
Sub Total (A) (2) - - - - -
Total Shareholding
of Promoter and
Promoter Group
(A) = (A)(1) + (A)
(2)
15 30899539 30899539 3954 3954
B Public Shareholding NA NA
1 Institutions NA NA
A Mutual FundsUTI 2 341286 341286 044 044
B Financial InstitutionsBanks
2 57000 57000 007 007
C Central
GovernmentState Government(s)
- - - - -
D Venture Capital
Funds
0 - - - -
E Insurance Companies
4 3513855 3513855 450 450
F Foreign Institutional
Investors
2 536104 536104 069 069
G Foreign Venture
Capital Investors
- - - - -
H Any Other
(International
Finance Corporation)
1 7690000 7690000 984 984
Sub Total (B)(1) 11 12138245 12138245 1553 1553
2 Non-Institutions NA NA
A Bodies Corporate 656 3478793 3478643 446 446
b i
Individuals Individual
Shareholder Holding
Nominal Share
Capital Upto ` 1
Lakh
15814
7380582
7348129
944
944
ii Individual
Shareholders Holding Nominal
Share Capital in
excess of ` 1 Lakh
201 7515021 7515021 962 962
c i
Any Other (Specify) Trust amp Foundations
4
11123909
11123909
1423
1423
ii Cooperative
Societies
- - - - -
iii Educational Institutions
- - - - -
iv Non Resident
Individual
165 3113850 3113850 398 398
v Foreign Companies - - - - -
vi OCB 1 2500000 2500000 320 320
Sub Total (B)(2) 16841 35112155 35079552 4493 4493
Total Public
Shareholding (B) =
(B)(1) + (B)(2)
16852 47250400 47217797 6046 6046
Total (A) + (B) 16867 78149939 78117336 10000 10000
C Shares held by NA NA
29
Category
Code
Category of
Shareholders
Number of
Shareholders
Total no
of Shares
No of Shares
held in
Demateralised
form
Total shareholding as a
percentage of total
shares
Shares pledged or
otherwise
encumbered
As a
percentage
of (A+B)
As a
percentage
of
(A+B+C)
Number
of
Shares
As a
percentage
Custodians and
against which Depository Receipts
have been issued
1 Promoter and
Promoter Group
- - - - -
2 Public - - - - -
GRAND TOTAL
(A) + (B) + (C)
16867 78149939 78117336 10000 10000
3 Except as provided otherwise in this Draft Letter of Offer since our incorporation and subject to Risk
Factor no 30 ―We do not have access to records and data pertaining to certain historical legal and
secretarial information including with respect to issuance of shares and amendments in our MoArdquo on
page xxii we have not allotted equity or preference shares for consideration other than cash or out of
revaluation of assets
4 In terms of the letter dated January 28 2011 our Promoter has confirmed that it intends to subscribe to
the full extent of its Rights Entitlement in the Issue Subject to compliance with the Securities and
Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 as
amended (the ―Takeover Code) and other applicable rules and regulations our Promoter reserves its
right to subscribe for Equity Shares in this Issue by subscribing for renunciations if any made by the
Promoter Group or any other shareholder in its favour
Our Promoter has further confirmed that it along with the Promoter Group entities shall subscribe to
additional Equity Shares in the Issue to the extent of such unsubscribed portion of the Issue subject to
applicable laws As a result of this subscription and consequent Allotment our Promoter and the
Promoter Group entities may acquire Equity Shares over and above their Rights Entitlement in the
Issue which may result in an increase of their shareholding being above their current shareholding
This subscription and acquisition of additional Equity Shares by our Promoter and the Promoter Group
entities if any shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code
Our Promoter undertakes that subscription by it and the Promoter Group entities for the Equity Shares
in the Issue and the Allotment of the Equity Shares in the Issue will be in continuous compliance with
the minimum public shareholding requirement specified under Clause 40A of the Equity Listing
Agreement with the Stock Exchanges and other applicable laws
6 The details of the shareholding of the Promoter and our Promoter Group as on December 31 2010
Name of companies Pre Issue Post Issue
Number of Equity
Shares
Percentage Number of
Equity
Shares
Percentage
Promoter
Bengal amp Assam Company
Limited
14344407 1836 [] []
Total (A) 14344407 1836 [] []
Promoter Group
Fenner (India) Limited 7690000 984 [] []
JK Agri Genetics Limited 6675248 854 [] []
BMF Investments Limited 1589884 203 [] []
Mrs Sharda Singhania 100000 013 [] []
Mr Hari Shankar Singhania 100000 013 [] []
Mr Harsh Pati Singhania 75000 010 [] []
Mr Raghupati Singhania 75000 010 [] []
Mr Vikram Pati Singhania 75000 010 [] []
Mrs Vinita Singhania 50000 006 [] []
Mr Anshuman Singhania 25000 003 [] []
30
Name of companies Pre Issue Post Issue
Number of Equity
Shares
Percentage Number of
Equity
Shares
Percentage
Mrs Sunanda Singhania 25000 003 [] []
Mrs Mamta Singhania 25000 003 [] []
Mr Shrivats Singhania 25000 003 [] []
Mrs Swati Singhania 25000 003 [] []
Total (B) 16555132 2118 [] []
Total Shareholding of the
Promoter Group (A + B)
30899539 3954 [] []
Directors
Mr Hari Shankar Singhania 100000 013 [] []
Mr Harsh Pati Singhania 75000 010 [] []
Mr Om Prakash Goyal 15 000 [] []
Mrs Vinita Singhania 50000 006 [] [] In terms of the SEBI ICDR Regulations (other than Promoter)
To be included at the time of filing the Letter of Offer
Preference shareholding of BACL in our Company is set forth below
Particulars Number
10 CRPS ndash Series F 888
10 CRPS ndash Series G 444
Total 1332
7 Shareholders holding more than 1 of the equity share capital of the Company as of December 31 2010
are as follows
Name of shareholders Number of Equity Shares
held
of Equity Shares
Bengal amp Assam Company Limited 14344407 1835
Bharat Hari Singhania ndash JK Paper Employees Welfare
Trust
10414493 1333
International Finance Corporation 7690000 984
Fenner (India) Limited 7690000 984
JK Agri Genetics Limited 6675248 854
Edgefield Securities Limited 2500000 320
Life Insurance Corporation of India 1875889 240
BMF Investments Limited 1589884 203
Keswani Haresh 1527698 195
General Insurance Corporation of India 1196959 153
Ricky Ishwardas Kriplani 1181567 151
Total 56686145 7254
a History of Equity Share Capital held by the Promoter
Date of
Allotment
Transfer
No of Equity
Shares
acquiredallotted
Transferred
Cumulative
No of
Equity
Shares
Face
Value
(In `)
Issue
Acquisition
Transfer
Price per
Equity Share
(In `)
Nature of
Consideration
Nature of Transaction
January 16
2006
35000 35000 10 40 Other than cash Acquisition pursuant to
scheme of arrangement
between BACL and
Sthenic Investment
Limited
January 24
2008
17000 52000 10 4128 Other than cash Acquisition pursuant to
scheme of arrangement
and demerger between
BACL and JK Udyog
Limited
January 24 25000 77000 10 5527 Other than cash Acquisition pursuant to
31
Date of
Allotment
Transfer
No of Equity
Shares
acquiredallotted
Transferred
Cumulative
No of
Equity
Shares
Face
Value
(In `)
Issue
Acquisition
Transfer
Price per
Equity Share
(In `)
Nature of
Consideration
Nature of Transaction
2008 scheme of arrangement
and demerger between
BACL and Nav Bharat
Vanijya Limited
January 24
2008
25000 102000 10 4000 Other than cash Acquisition pursuant to
scheme of arrangement
and demerger between
BACL and Pranav
Investment (MP)
Company Limited
April 18
2009
7457159 7559159 10 2921 Other than cash Acquisition from
Ashim Investment
Company Limited
pursuant to the Bengal
and Assam Scheme of
Amalgamation
April 18
2009
110000 7669159 10 4001 Other than cash Acquisition from
Radial Finance
Limited pursuant to
the Bengal and Assam
Scheme of
Amalgamation
April 18
2009
6675248 14344407 10 2854 Other than cash Acquisition from
Netflier Finco Limited
pursuant to the Bengal
and Assam Scheme of
Amalgamation
Total 14344407
For details of schemes of arrangement scheme of arrangement and demerger and Bengal and Assam Scheme of Amalgamation see ldquoOur
Promoter and Group Companies ndash Our Promoterrdquo on page 117
8 None of our Promoter directors of our Promoter our Directors (or their immediate relatives as defined
in sub clause (ii) of clause (zc) of sub regulation (1) of regulation (2) of the SEBI ICDR Regulations)
or our Promoter Group have purchased or sold our Equity Shares or financed the purchase of our
Equity Shares by any other person (other than in the normal course of business of the financing entity)
in the last six months preceding filing of this Draft Letter of Offer except as stated below
S
n
o
Particulars Number
of Shares
Details of transaction with
maximum price
Details of transaction with minimum
price
1 Sale of Equity Shares by
Mr Shailesh Vishnu
Haribhakti (as karta of SV
Haribhakti HUF)
10000 10000 Equity Shares sold on September 29 2010 at the rate of ` 6633
per Equity Share
2 Purchase of Equity Shares
by Mrs Sangeeta Goyal
7000 820 Equity Shares purchased
on November 23 2010 at the
rate of ` 6018 per Equity
Share
1000 Equity Shares purchased on
January 11 2011 at the rate of ` 5316
per Equity Share
3 Sale of Equity Shares by
Mrs Sangeeta Goyal
9000 1000 Equity Shares sold on
October 11 2010 at the rate
of ` 7278 per Equity Share
300 Equity Shares sold on November
30 2010 at the rate of ` 5808 per
Equity Share
4 Sale of Equity Shares by
Mr Sunil Goyal
17351 1000 Equity Shares sold on
October 27 2010 at the rate
of ` 7278 per Equity Share
1000 Equity Shares and 3000 Equity
Shares sold on August 19 2010 and
August 3 2010 respectively at the rate
of ` 5982 per Equity Share
5 Purchase of Equity Shares
by Mr Sunil Goyal
2000 1000 Equity Shares
purchased on September 29
2010 at the rate of ` 6469
per Equity Share
1000 Equity Shares purchased on
August 26 2010 at the rate of ` 6053
per Equity Share
Immediate relative of Mr OP Goyal
32
9 None of the Equity Shares or Preference Shares of our Company held by our Promoter and our
Promoter Group are currently pledged
10 The list of our top 10 shareholders and the number of Equity Shares held by them is set forth below
a The top 10 equity shareholders of our Company as on the date of filing this Draft Letter of
Offer January 31 2011 and 10 days prior to the date of filing this Draft Letter of Offer with
SEBI January 21 2011 are as follows
Name of Shareholder Number of Equity Shares Percentage
Bengal amp Assam Company Limited 14344407 1835
Bharat Hari Singhania ndash JK Paper Employees Welfare
Trust
10414493 1333
International Finance Corporation 7690000 984
Fenner (India) Limited 7690000 984
JK Agri Genetics Limited 6675248 854
Edgefield Securities Limited 2500000 320
Life Insurance Corporation of India 1875889 240
BMF Investments Limited 1589884 203
Keswani Haresh 1537926 198
Ricky Ishwardas Kirpalani 1208956 155
Total 55526803 7106
b The top 10 equity shareholders of our Company two years before the date of filing of this Draft
Letter of Offer with SEBI January 31 2009 are as follows
Name of Shareholder Number of Equity Shares Percentage
Bharat Hari Singhania ndash JK Paper Employees Welfare
Trust
10414493 1333
International Finance Corporation 7690000 984
Fenner (India) Limited 7690000 984
Ashim Investment Company Limited 7457159 954
JK Agri Genetics Limited 6675248 854
Netflier Finco Limited 6675248 854
Edgefield Securities Limited 2500000 320
Life Insurance Corporation of India 1875889 240
BMF Investments Limited 1589884 203
Ricky Ishwardas Kirpalani 1335737 171
Total 53903658 6897
11 The present Issue being a rights issue as per Regulation 34(c) of the SEBI ICDR Regulations the
requirement of promoterslsquo contribution and lock-in are not applicable
12 The total number of equity shareholders of our Company as on December 31 2010 was 16867 The
total number of preference shareholders of our Company as on December 31 2010 was 24
13 Other than ICICI Bank Limited associate of the Lead Manager which holds 8300 Equity Shares as on
January 7 2011 the Lead Manager and its associates do not hold any Equity Shares on their own
account as on January 7 2011
14 The Equity Shares of our Company are fully paid up and there are no partly paid up Equity Shares as
on the date of this Draft Letter of Offer
15 All preferential allotments made by our Company after being a listed company have been made in
compliance with the relevant provisions of applicable law
16 Our Company has not issued any Equity Shares or granted any options under any employee stock
option scheme or employee stock purchase scheme
17 Our Company has not availed of ―bridge loans to be repaid from the proceeds of the Issue for
33
incurring expenditure on the projects detailed in the ―Objects of the Issue on page 34
18 Our Company Promoter or Promoter Group our Directors or the Lead Manager have not entered into
any buy-back standby or similar arrangements for any of the Equity Shares being issued through this
Draft Letter of Offer
19 Our Company our Directors our Promoter our Promoter Group shall not make incentive whether
direct or indirect in any manner whether in cash or kind or services or otherwise under this Issue
20 Other than as disclosed in ―Financial Statements on page 141 none of our sundry debtors are related
to our Directors or Promoter or us
21 Further other than as disclosed in this Draft Letter of Offer or by conversion of issued and outstanding
2006 FCCBs or issuance of 2011 FCCBs and the conversion of such 2011 FCCBs into Equity Shares
presently our Company does not have any proposal or intention to alter the equity capital structure by
way of split consolidation of the denomination of the shares or the issue of securities on a preferential
basis or issue of bonus or rights or further public issue of securities or qualified institutions placement
within a period of six months from the date of opening of the Issue However if business needs of our
Company so require our Company may alter the capital structure by way of split consolidation of the
denomination of the Equity Shares issue of Equity Shares on a preferential basis or issue of bonus or
rights or public or preferential issue of Equity Shares or any other securities during the period of six
months from the date of opening of the Issue or from the date the application moneys are refunded on
account of failure of the Issue after seeking and obtaining all the approvals which may be required
34
OBJECTS OF THE ISSUE
We intend to use proceeds from the Issue to (1) part finance the expansion and development of the Unit JKPM
and (2) fund expenditure for general corporate purposes
The main objects clause of our Memorandum of Association enables us to undertake our existing activities and
the activities for which funds are being raised by us through this Issue
The details of proceeds of the Issue are summarized in the following table
(In ` crores)
Description Amount
Gross proceeds of the Issue 25000
Issue related expenses []
Net proceeds of the Issue []
To be provided at the time of filing of the Letter of Offer
Requirement of Funds Use of Net Proceeds and Means of Finance
We intend to utilise the Net Proceeds of the Issue of ` [] crores (―Net Proceeds) for financing the objects as
set forth below
(In ` crores)
Expenditure Items Total Estimated
Cost
Amount Deployed as
of December 31 2010
Amount Proposed to
be Financed from Net
Proceeds
Balance Amount
Required
1 2 3 4 = 1- 3
Part finance the
expansion and
development of the
Unit JKPM
165337 437 23500 141837
Fund expenditure
for general
corporate purposes
[] - [] -
Total [] 437 [] 141837
As certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011
Includes the amount of ` 437 crores deployed as of December 31 2010 towards the expansion and development of the
Unit JKPM to be recouped from the Net Proceeds As certified by Lodha amp Co Chartered Accountants by their certificate
dated January 28 2011 the Company has deployed ` 437 crores as of December 31 2010 from its internal accruals
To be provided at the time of filing of the Letter of Offer This amount is proposed to be financed through a combination of internal accruals debt and issue of additional securities
such as the proposed 2011 FCCBs In terms of letter dated January 28 2011 Lodha amp Co Chartered Accountants have
certified that the amount of existing identifiable internal accruals as on December 31 2010 is ` 11608 crores
Any expenditure incurred towards the aforementioned objects until the raising of funds from this Issue would be
recouped from the Net Proceeds of the Issue
Other than the feasibility report dated December 19 2010 provided by Poyry Management Consulting Oy (the
―Appraisal Report) in relation to the expansion and development of Unit JKPM on which we have relied the
fund requirement and deployment are based on internal management estimates and have not been appraised by
any bank financial institution or any other external agency These are based on current circumstances of our
business 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-agrave-vis the utilization of Net Proceeds
In view of the dynamic nature of the paper manufacturing industry and on account of the inherent risks in any
expansion project we may have to revise the expenditure estimates as a result of variations in the cost structure
35
changes in estimates delay in receipt of approvals exchange rate fluctuations and other external factors which
may not be within the control of our management This may entail rescheduling or revising the planned
expenditure and increasing or decreasing the expenditure for a particular purpose from its planned expenditure
at the discretion of our management
Whilst we intend to utilise the Net Proceeds in the manner provided above in the event of a surplus we will use
such surplus towards general corporate purposes including meeting future growth requirements 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 In the event of any shortfall in the Net Proceeds our
Company will fund requirements from internal accruals or debt
Details of the Objects
1 Part finance the expansion and development of the Unit JKPM
We propose to expand the manufacturing capacity of our Unit JKPM and carrying out related developments
which include (a) installation of a new or augmented fibre line with a capacity to produce approximately
215000 tonnes of pulp per annum and phasing out the existing fibreline with a capacity of 110000 BDMT
(b) installation of new paper machine with a capacity to produce of 165000 tonnes of woodfree copy paper per
annum for manufacturing copier paper and other multi-functional office paper grades and phasing out the
existing paper machines with combined capacity of 41000 TPA (c) installation of a new chemical recovery
system with a new high pressure recovery boiler with a capacity of 1400 t dsdvirgin liquor and phasing out
the existing recovery boiler with a capacity of 660 t dsdvirgin liquor and (d) installation of captive power
generation facility of 55 MW replacing the existing captive power generation facility with an installed capacity
of 199 MW
We intend to utilise ` 23500 crores from the Net Proceeds towards part financing the expansion and
development of the Unit JKPM which includes an amount of ` 437 crores deployed from our internal accrual
as of December 31 2010 towards the expansion and development of the Unit JKPM to be recouped from the
Net Proceeds
Estimated Cost
The breakdown of expansion and development of the Unit JKPM as detailed in the Appraisal Report is provided
below (In ` crores)
S
No
Particulars Amount (Estimated)
1 Installation of new or augmented fibre line 17313
2 Installation of new paper machine and A4 cutters 53112
3 Installation of new chemical recovery section 28929
4 Installation of captive power generation facility 17700
5 Others 12818
6 Total tax and duties 6719
A Sub total (Equipment supply and erection) (1 ndash 6) 136591
7 Indirect costs (Preliminary pre-operative and other miscellaneous expenses) 2850
8 Interest during construction 12136
9 Contingencies 9761
10 Margin money 4000
B Sub total (7-10) 28747
C Total (A+B) 165337
As provided in the Appraisal Report based on an exchange rate of 1 EUR = ` 65
The Company has issued a letter of intent for supply of a new fibre line including DD washers process pumps heat
exchanges O2 reactors and design and erection
The Company has issued a letter of intent for supply and erection of a paper production line of 165000 TPA of woodfree
uncoated and pigmented paper
The Company has issued a letter of intent for supply and erection of recovery island comprising evaporators recovery
boiler carbon steel lower furnace re-caustisiser and lime kiln
Installation of a new or augmented fibre line with a capacity of 215000 TPA
36
The total cost of installation of a new or augmented fibre line with a capacity to produce approximately 215000
tonnes of pulp per annum is estimated at ` 17313 crores This includes cost of installation of a new wood
handling unit comprising a chipping line and a log washing unit The total cost primarily includes cost of
machinery estimated at ` 11589 crores and the costs of equipment buildings erection and commissioning
civil and electrical costs
Installation of a new paper machine with a capacity of 165000 TPA and A4 cutters
The total cost of installation of new paper machine with a capacity to produce of 165000 tonnes of woodfree
copy paper per annum is estimated at ` 53112 crores This includes cost of installation of an A4 line primarily
comprising a cutter machine The total cost primarily includes cost of machinery estimated at ` 42953 crores
and the costs of equipment buildings erection and commissioning and electrical costs
Installation of a new chemical recovery system
The total cost of installation of a new chemical recovery system with a new high pressure recovery boiler with a
capacity of 1400 t dsdvirgin liquor is estimated at ` 28929 crores This primarily includes machinery cost
estimated at ` 21377 crores and other costs such as cost of buildings tanks automation erection and
commissioning and electrical costs
Installation of captive power generation facility
The total cost of installation of captive power generation facility of 55 MW is estimated at ` 17700 crores This
primarily includes cost of machinery estimated at ` 13100 crores and other costs such as costs of buildings
equipments automation erection and commissioning and electrical costs
Others
Other costs include costs of chemical preparation unit used for bleaching and pulping common mill systems
used in water and effluent treatment roll grinding machine used in grinding of paper rollers and service
departments and mill site used for storage purposes The total cost is estimated at ` 12818 crores This
primarily includes machinery and equipment costs costs of buildings erection and commissioning automation
and electrical costs
Taxes and duties
Total taxes and duties (excluding entries on which MODVAT is applicable) including octroi basic customs
duty central sales tax and education cess applicable to the proposed expansion of Unit JKPM have been
estimated at ` 6719 crores
Indirect costs (Preliminary pre-operative and other miscellaneous expenses)
Preliminary expenses are estimated at ` 2850 crores and include expenses incurred for trial run compensation
to technical personnel overheads relating to the project fees to be paid towards technical studies conducted by
engineers and lenders independent engineer appraisal fees employees recruitment training and salaries
Interest during construction period
The interest during construction period has been estimated at the interest rate of 105 pa during the expansion
(assuming an implementation period including trial run of 26 months for the entire project from the date of
finalization of order for the main plant and machinery) which aggregates to approximately ` 12136 crores
Contingencies
We have provided for contingency expenses of ` 9761 crores towards escalation of input prices orders yet to
be finalized and currency fluctuations
Margin money
37
Provision for margin money for working capital requirements building of inventory has been made at ` 4000
crores The margin money has been estimated at 25 of projected net working capital requirement of our
Company For the purpose of estimates current assets comprising of receivables for 45 days raw material
(bamboo and hardwood) stock of 60 days chemicals and dyes stock of 30 days stores and spares stock of 120
days fuel stock of 15 days finished and semi-finished stock of 20 days and sundry creditors for 30 days has
been assumed
Out of the total estimated cost of ` 165337 crores our Company has already deployed ` 437 crores as of
December 31 2010 towards pre-operative and other expenditures from internal accruals of the Company as
certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011
Environment
The major areas of environmental impact due to the proposed expansion plant at our Unit JKPM are as
following
Effluent treatment
In terms of the Appraisal Report as a result of the proposed expansion of the Unit JKPM the level of
dissolved COD in the effluent treatment plant is expected to rise the specific flow rate per pulp and
paper production is expected to drop and AOX load is expected to drop as a result of change to ECF
bleaching Our Company intends to upgrade the effluent treatment targets and improve the removal
efficiency of the organic matter
Solid waste handling
In terms of the Appraisal Report as a result of the proposed expansion of the Unit JKPM the total
amount of fibrous waste sludge is expected to decrease but the amount of waste biological sludge is
expected to increase Our Company intends to create a new hazardous waste landfill near the
wastewater treatment plant at our Unit JKPM
An Environmental Impact Assessment and Environment Management Plan (EIA) dated November
2010 has been prepared by MIN MEC Consultancy Private Limited
For details see ―Our Business ndash Proposed Expansion on page 75
Expansion and development schedule
The expansion and development of the Unit JKPM is expected to be completed including trial run and
commissioning by February 2013 The expected schedule of key expansion and development activities for the
Unit JKPM as per the Appraisal Report is given below
Particulars Expected Completion
Basic engineering June 2011
Receipt of vendor data July 2011
Detailed engineering activities December 2011
Equipment delivery August 2012
Civil construction September 2012 Erection of plant and machinery October 2012 Pre-commissioning trials and commissioning November 2012 Commencement of saleable production February 2013
Details of means of finance
The total funds required for the expansion and development of our Unit JKPM are approximately ` 165337 crores 75 of the stated means of finance excluding Net Proceeds and existing identifiable internal accruals
have been arranged as follows
(In ` crores)
Particulars Amount
38
Particulars Amount
I (a) Cost of expansion and development of the Unit JKPM 165337
(b) Expenditure already incurred as on December 31 2010(1) 437
(c) Amount proposed to be financed from the Net Proceeds 23500
(d) Existing identifiable internal accruals as on December 31 2010(2) 11608
(e) Funding required(3) (including towards recoupment of the
expenditure already incurred until December 31 2010)
excluding Net Proceeds and existing identifiable internal
accruals ie I(a) - I(c) - I(d) 130229
II Arrangements regarding 75 of the funds required (ie 75 of I(e)) 97672
Sanctioned debt proposed to be utilised for the expansion and
development of the Unit JKPM
100100
(1) As certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011 (2) As certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011 (3) The amount is proposed to be financed through a combination of internal accruals debt and issue of additional securities
such as the proposed 2011 FCCBs
Details of debt financing arrangements
With regards to the amount to be funded through debt in relation to the expansion and development of our Unit
JKPM we have received the following firm sanction letters
(In ` crores)
Lender Date of Sanction Amount Sanctioned Axis Bank September 21 2010 15000
Exim Bank January 10 2011 10000
Indian Bank October 20 2010 15000
State Bank of India September 28 2010 25000
DZ Bank December 21 2010 35100
Total 100100
As certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011 as of December 31 2010
the Company has not drawn down the aforementioned facilities
Calculated on exchange rate of ` 6500 = 1 EURO as provided in Appraisal Report
In accordance with Regulation 4(2)(g) of the SEBI ICDR Regulations and the SEBI Circular
NoSEBICFDMBIS320082908 we confirm that we have made firm arrangements of finance through
verifiable means towards at least 75 of the stated means of finance in the form of debt excluding the amount
to be raised through the Net Proceeds or through existing identifiable internal accruals
The project team chart in relation to our proposed expansion at Unit JKPM is provided below
39
Schedule of Deployment of funds for the proposed expansion at Unit JKPM
Our Company proposes to deploy the funds for the proposed expansion of Unit JKPM in the manner set out
below
(In ` crores)
Amount deployed
as on December
31 2010(1)
Estimated
deployment in
remaining Fiscal
2011
Estimated
deployment in
Fiscal 2012
Estimated
deployment in
Fiscal 2013
Estimated
deployment in
Fiscal 2014
Total
437 9939 110762(2) 37238 6961 165337 (1) As certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011 (2) This includes deployment of ` 23500 crores from the Net Proceeds
2 Fund expenditure for general corporate purposes
We intend to use a part of the Net Proceeds approximately ` [] crores towards general corporate purposes
including funding cost overruns of our expansion and development plans at our Unit JKPM (if any) strategic
initiatives acquisitions joint ventures meeting exigencies which we may face in the ordinary course and
strengthening of our marketing capabilities Our management will have the flexibility in utilizing the sum
earmarked for general corporate purposes and any surplus amounts from the Net Proceeds
Schedule of Deployment of Net Proceeds
Our Company proposes to deploy the entire Net Proceeds in the aforesaid objects in Fiscal 2012 Detailed below
is the estimated schedule of deployment of Net Proceeds for the objects
(In ` crores)
S No Expenditure Items Estimated Net Proceeds Utilization in Fiscal 2012
1 Part finance the expansion and development of the Unit
JKPM
23500
2 Fund expenditure for general corporate purposes []
Total []
To be finalised upon determination of Issue Price
Issue Related Expenses
WTD
VP (Purchase) Chief Executive-
New Project Advisor (Technical) CFO
JKPM Site Head
(Project Head)
Head Process Technology
CGM (Process)
Head Pulp amp
Recovery
GM
Head Paper Machine
DGM
Head Mechanical
GM
Head Automation
GM
Head Power Block
DGM
Head Civil Engg
DGM
Head Electrical
Head
Stores amp Yard
(Vacant)
Head
Safety
Manager (Project
Cost Management)
Manager (Project
Cost Management)
DGM
(Purchase)
Manager
Project HO
Asst Manager
(Project HO)
Asst Manager
(Project HO)
Sr Manager
(Purchase)
Sr GM
(Finance)
40
The expenses of this Issue include among others management fees printing and distribution expenses legal
fees advertisement expenses and listing fees The estimated Issue expenses are as follows
(` in crores unless stated otherwise)
Activity Estimated expenses
As a of the
total estimated
Issue expenses
As a of the
total Issue size
Fees payable to the Lead Manager [] [] [] Advertising and marketing expenses [] [] [] Fees payable to the Registrar [] [] [] Fees payable to the Bankers to the Issue and SCSBs [] [] [] Others (legal fees listing fees etc) [] [] [] Total estimated Issue expenses [] [] []
Will be incorporated at the time of filing of the Letter of Offer
Working Capital Requirement
The Net Proceeds will not be used to meet our working capital requirements as we expect to have internal
accruals avail debt andor draw down from our existing or new lines of credit to meet our existing working
capital requirements
Interim use of funds
The management of our Company will have flexibility in deploying the Net Proceeds Pending utilization for the
purposes described above we intend to invest the funds in high quality interestdividend bearing liquid
instruments including investments in mutual funds deposits with banks and other investment grade interest
bearing securities We confirm that pending utilization of the Net Proceeds we shall not use the funds for any
investments in the equity markets
Appraisal
The expansion and development plan of our Unit JKPM has been appraised by Poyry Management Consulting
Oy as set out in the Appraisal Report prepared on the basis of information and documents provided by the
Company
For details of risks and weaknesses disclosed in the Appraisal Report see ―Risk Factors on page ix
The main assumptions on which the Appraisal Report was based were as follows
Profitability calculations have been done applying general principles which are typical for a feasibility study
and are accepted by major financial institutions
The focus has been on the cash generating ability of the paper mill and thus the profitability is based on
discounted estimated future unlevered free cash flows
The following profitability indicators have been applied
o Internal Rate of return (IRR)
o Net present value (NPV)
o Payback period
The IRR NPV and the payback period is calculated from marginal free cash flows ie on incremental basis
Marginal cash flow statement = cash flow from the investment alternative minus cash flow from
continuation of the production ―As Is
The project IRR represents the average return on total investment during the projectlsquos expected lifetime
In order for the project to be financially feasible IRR should exceed the risk adjusted cost of capital for the
project (weighted average cost of debt and equity)
The pretax discount rate applied for the NPV calculation and the payback period is 12 and the after tax
discount rate 10
The unlevered free cash flows are calculated on year by year basis
The future annual free cash flow projections refer to annual earnings as net revenues less all cash expenses
including annual reinvestments after taxes but prior to debt service payments
The annual cash flow is calculated as following
Net sales income
41
less Cash operating expenses
less Capex including normal reinvestments to sustain operations
less Taxes
= Cash flow
The projected cash flows are calculated on nominal basis in local currency INR
The cost level used as the basis for the projections corresponds to 200910 actual figures The general
exchange rates and inflation assumptions for the following years are in line with the past industry trends
Long-term trend prices of paper and purchased chemical pulp are used for the whole calculation period The
transfer price of wood and bamboo delivered to the mill is assumed to include all costs related to forestry
operations
The calculation period for IRR is 20 years (including 16 years production of the new paper machine) In the
projected cash flows the start-up date is set for calculation purposes to the beginning of February 2013 (ie
the first 2 monthslsquo saleable production at the end of Fiscal year 4 as defined in the Appraisal Report)
The IRR calculation method used by Poyry and accepted by major financial institutions takes into consideration the
whole period of the project including construction time In this method the interest during construction time is not
included in the investment costs In the financial plans this interest must be observed
Bridge Financing Facilities
The Company has not raised any bridge loans from any bank or financial institution as on the date of this Draft
Letter of Offer which are proposed to be repaid from the Issue Proceeds
Monitoring Utilization of Funds
In accordance with Regulation 16 of the SEBI ICDR Regulations as the Issue size does not exceed ` 50000
crores there is no requirement of appointing a monitoring agency for this Issue to monitor the utilization of the
Net Proceeds
Our Board will monitor the utilization of the Net Proceeds The Company will disclose the utilization of the Net
Proceeds including interim use under a separate head in its balance sheet until such time the Net Proceeds have
been utilized clearly specifying the purpose for which such proceeds have been utilized The Company will
also in its balance sheet for the applicable Fiscal periods provide details if any in relation to all such Net
Proceeds that have not been utilized thereby also indicating investments if any of such currently unutilized Net
Proceeds
Pursuant to Clause 49 of the Listing Agreement the Company shall on a quarterly basis disclose to the Audit
Committee the uses and applications of the Net Proceeds On an annual basis the Company shall prepare a
statement of funds utilized for purposes other than those stated in this Draft Letter of Offer and place it before
the Audit Committee Such disclosure shall be made only until such time that all the Net Proceeds have been
utilized in full The statement shall be certified by the statutory auditors of the Company In terms of Clause
43A of the Listing Agreement the Company 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 Draft 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 shall 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
Other confirmations
No part of the Net Proceeds will be paid by the Company as consideration to our Promoter our Directors Group
Companies associates or our key managerial personnel except in normal course of business
42
BASIS FOR ISSUE PRICE
The Issue Price would be determined by the Board of Directors in consultation with the Lead Manager
Investors are advised to read the sections ldquoRisk Factorsrdquo and ldquoFinancial Statementsrdquo on pages ix and 141
respectively to have a more informed view before making the investment decision
The face value of our Equity Shares is ` 10 and the Issue Price of ` [] is [] times the face value of our Equity
Shares
Qualitative Factors
The established JKlsquo brand recognition in the paper industry
Our diverse product range and ability to identify customer requirements
The locational advantages of our manufacturing units
Strong relationships with key customers
Our plantation initiatives ensure strong backward linkages for sourcing raw materials
Modern and advanced manufacturing technology and infrastructure
For further details which form the basis for computing the Issue Price see ―Our Business and ―Risk factors
on pages 62 and ix respectively
Quantitative factors
The information presented in this section is derived from our restated consolidated financial statements for the
six month period ended September 30 2010 and Fiscal 2010 as well as our restated standalone financial
statements for the Fiscal 2009 and the nine month period ended March 31 2008 prepared in accordance with
Indian GAAP For more information see ―Financial Statements on page 141
Basic and Diluted Earning per Share (ldquoEPSrdquo)
As per our restated consolidated financial statements for the six month period ended September 30 2010 and
Fiscal 2010 as well as our restated standalone financial statements for the Fiscal 2009 and the nine month period
ended March 31 2008
Period Basic EPS (in `) Diluted EPS (in `) Weight
Nine month period from July 01 2007
to March 31 2008
407 396 1
Fiscal 2009 479 467 2
Fiscal 2010 1177 1145 3
Weighted Average 816 794
These numbers are standalone as no consolidation was necessary prior to Fiscal 2010
The basic and diluted EPS for the 6 month period ended September 30 2010 was ` 739 and ` 739 respectively
(not annualized)
EPS calculations have been done in accordance with Accounting Standards 20 ndash ―Earnings per share issued by
the Institute of Chartered Accountants of India
Average Return on Net Worth (ldquoRoNWrdquo)
RoNW as per our restated consolidated financial statements for the six month period ended September 30 2010
and Fiscal 2010 as well as our restated standalone financial statements for the Fiscal 2009 and the nine month
period ended March 31 2008
Period RoNW Weight
Nine month period from July 01 2007
to March 31 2008
824 1
Fiscal 2009 932 2
Fiscal 2010 1956 3
43
Period RoNW Weight
Weighted Average 1426
These numbers are standalone as no consolidation was necessary prior to Fiscal 2010
The RoNW for the six month period ended September 30 2010 was 1037 (not annualized)
Minimum Return on Total Net Worth after Issue needed to maintain Pre-Issue EPS for the year
ended March 31 2010
The minimum return on total net worth after Issue needed to maintain pre-Issue EPS for the year ended March
31 2010 at the Issue Price is [bull]
Net Asset Value (ldquoNAVrdquo) per Equity Share
NAV per Equity Share as per our restated consolidated financial statements for the six month period ended
September 30 2010 and Fiscal 2010 as well as our restated standalone financial statements for the Fiscal 2009
and the nine month period ended March 31 2008
Period NAV Equity Share (in `)
9 month period from July 01 2007 to March 31 2008 4932
Fiscal 2009 5140
Fiscal 2010 6016
These numbers are standalone as no consolidation was necessary prior to Fiscal 2010
The NAV per Equity Share for the 6 month period ended September 30 2010 was ` 7126 (not annualized)
The NAV per Equity Share after the Issue is ` [bull] and the Issue Price of ` [bull] is at a ` [bull] premium to the NAV
per Equity Share
Formulas used
1 EPS
Basic Earning attributable to Equity Shareholders divide by weighted average number of Equity Shares
outstanding during the year period before dilution
Diluted Earning attributable to Equity Shareholders after dilution divide by weighted average number of
Equity Shares outstanding during the year period after dilution
2 RoNW Net profit after tax as restated divided by net worth as restated at the end of the year period
3 NAVEquity Share Net worth attributable to Equity Shareholders as restated at the end of the year
period divide by number of Equity Shares outstanding at the end of year period
Comparison of Accounting Ratios
Comparison with other Industry Peers
Table A
Particula
rs
Financi
al Year
Ending
Face
Value
(`)
Book
Value for
Equity
Sharehol
der per
share (`)
Dilute
d EPS
(`)
Net profit
After Tax
(In `
crores)
Net
Worth (In
` crores)
Share
Price
(`Share
)
PE
RONW
()
Net
Sales
(In `
crores)
The
Andhra
Pradesh Paper
Mills Limited
March
31 2010
1000 15356 2103 5419 50295 14210
676
1077 64908
44
Particula
rs
Financi
al Year
Ending
Face
Value
(`)
Book
Value for
Equity
Sharehol
der per
share (`)
Dilute
d EPS
(`)
Net profit
After Tax
(In `
crores)
Net
Worth (In
` crores)
Share
Price
(`Share
)
PE
RONW
()
Net
Sales
(In `
crores)
Ballarpur Industries
Limited
June 30 2010
200 3419 311 24042 224239 3455
1111
1072 379460
JK Paper Limited
March 31 2010
1000 6016 1145 9198 47033 5290 462 1956 112234
Rainbow
Papers
Limited
March
31 2010
1000 12716 2600 2359 22181 5735 221
1064 25762
Seshasaye
e Paper
and Boards
Limited
March
31 2010
1000 19963 3549 3993 22459 23455 661
1778 50926
Tamil
Nadu
Newsprint
and Papers
Limited
March
31 2010
1000 11624 1821 12606 80450 13990 768 1567 102568
West
Coast Paper
March
31 2010
200 8547 880 5470 53633 8035
913
1020 62391
The
Sirpur Paper
Mills
Limited
March
31 2010
1000 12265 (789) (1185) 18403 5330 NA -644 33549
(1) Revenues refer to the consolidated net sales provided in ` Crores(10 Million)
(2) PE ratio calculated as closing market price of equity shares on the BSE as on 25th
January 2011 divided
by the EPS
(3) RoNW is computed as net profit after tax divided by net worth
(4) Book value is computed as net worth reduced by preference share capital divided by number of equity
shares outstanding
(5) Diluted EPS has been taken after considering extraordinary item
(6) Net worth has been calculated after excluding revaluation reserve and miscellaneous expenses to the extent
not written off
Source Annual Reports of the Company and industry peers for the latest year ending except for the JK Paper
Limited based upon consolidated restated financial statements for the period ended on March 31 2010
Price Earnings (PE) ratio of the industry peers
Table B
Highest 1111
Lowest 221
Average 724
Industry Peers as provided in Table A
On the basis of the above quantitative and qualitative parameters the Company and the Lead Manager are of the
opinion that the Issue Price of ` [bull] per Equity Share is justified Investors should also see ―Risk Factors and
―Financial Statements on pages ix and 141 respectively including important profitability and return ratios to
have a more informed view The trading price of the Equity Shares of our Company could decline due to the
factors mentioned in ―Risk Factors on page ix and you may lose all or part of your investments
45
STATEMENT OF GENERAL AND SPECIAL TAX BENEFITS
Statement of Possible Direct Tax Benefits available to JK Paper Limited and its Shareholders
The Board of Directors
JK Paper Limited
Nehru House
4 Bahadur Shah Zafar Marg
New Delhi-110 002
India
Dear Sirs
We hereby report that the enclosed statement states the possible direct tax benefits available to JK Paper Ltd
(the ldquoCompanyrdquo) and its shareholders under the current direct tax laws presently in force in India Several of
these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the
relevant direct tax laws Hence the ability of the Company or its shareholders to derive the tax benefits is
dependent upon fulfilling such conditions which based on business imperatives the Company faces in the
future the Company may or may not choose to fulfill Investors should also note that the Draft of the Direct
Tax Code has recently been issued for public comments if the same is passed in present form by both houses of
Indian Parliament and approved by the President of India and then notified in the Gazette of India there could
be an impact on the tax provisions mentioned below
The benefits discussed in the enclosed statement are not exhaustive This statement is only intended to provide
general information to the investors and is neither designed nor intended to be a substitute for professional tax
advice In view of the individual nature of the tax consequences and the changing tax laws each investor is
advised to consult their own tax consultant with respect to the specific tax implications arising out of their
participation in the issue Neither we are suggesting nor advising the investor to invest money based on this
We do not express any opinion or provide any assurance as to whether
i the Company or its shareholders will continue to obtain these benefits in future or
ii the conditions prescribed for availing the benefits have beenwould be met with
The contents of the enclosed annexure are based on information explanations and representations obtained from
the Company and on the basis of our understanding of the business activities and operations of the Company
For Lodha amp Co
Chartered Accountants
NK Lodha
Partner
Firm Registration No 301051E
Membership No 85155
Place New Delhi
Date January 28 2011
46
The following key tax benefits are available to the Company and the its shareholder under the current direct tax
laws in India
A Special Tax Benefits
No special tax benefits are available to the Company
No special tax benefits are available to the Shareholders of the Company
B General Tax Benefits
Benefits available under the Income-Tax Act 1961 (hereinafter referred to as ldquothe Actrdquo) to the Company
and Shareholders of the Company
1 As per Section 10(34) of the Act income earned by way of dividend from domestic company referred to
in Section 115(O) of the Act is exempt from tax However as per the section 94(7) the losses arising
from sale transfer where such shares are purchased within three months prior to record date and sold
within three months from record date will be disallowed to the extent of such loss does not exceed the
amount of dividend claimed exempt
2 As per Section 10(38) of the Act long-term capital gain on sale of equity shares or units of an equity
oriented fund will be exempt provided that the transaction of such sale is chargeable to Securities
Transaction Tax
3 The long-term capital gains accruing otherwise than as mentioned in 2 above shall be chargeable to tax at
the rate of 20 (plus applicable surcharge and education cess) in accordance with and subject to the
provisions of Section 112 of the Act However if the tax on long term capital gain resulting on sale of
listed securities or unit or zero coupon bond calculated at the rate of 20 with indexation benefit
exceeds the tax calculated at the rate of 10 without indexation benefit then such gains are chargeable
to tax at a concessional rate of 10 (plus applicable surcharge and education cess)
4 As per Section 111A of the Act short-term capital gain on sale of equity shares or units of an equity
oriented fund where the transaction of such sale is chargeable to Securities Transaction Tax shall be
chargeable to tax at the rate of 15 (plus applicable surcharge and education cess)In case of non
chargeability of Securities Transaction Tax such short term gain will chargeable to tax at the rate of 30
(plus applicable surcharge and education cess)
5 In accordance with and subject to the condition specified in Section 54EC of the Act long term capital
gain [other than those exempt US 10(38) and 10 (36) ] shall not be chargeable to tax to the extent such
capital gain is invested in certain notified bonds within six months from the date of transfer If only part
of the capital gain is so reinvested the exemption shall be allowed proportionately However if the said
bonds are transferred or converted into money within a period of three years from the date of their
acquisitions the amount of capital gain exempted earlier would become chargeable to tax as long term
capital gain in the year in which the bonds are transferred or converted into money Investment made on
or after April 1 2007 in the long term specified asset by an assessee during any financial year should not
exceed Rs 50 Lacs
In addition to the General Tax Benefit mentioned above other benefits available to the Company are as
follows
1 The Company is entitled to claim depreciation at the prescribed rates on specified tangible and intangible
assets under section 32 of the Act
As per section 32(2) of the Act Unabsorbed depreciation if any for an Assessment Year (AY) can be
carried forward amp set off against any source of income in subsequent AYs subject to the provisions of
sub-section (2) of section 72 and sub-section (3) of section 73
2 In accordance with and subject to the conditions specified in Section 80-IA of the Act the Company
would be entitled for a deduction of an amount equal to hundred per cent of profits or gains derived from
industrial undertaking engaged in generation andor distribution or transmission of power for any ten
consecutive assessment years out of fifteen years beginning from the year in which the undertaking has
47
started its operation which should be on or before 31st day of March 2011
3 As per Section 35 of the Act the Company is eligible for a deduction of the entire amount of the revenue
or capital expenditure incurred (other than expenditure on the acquisition of any land) on scientific
research related to the business of the Company in the year in which such expenditure is incurred
Where the assessee does not himself carry on scientific research but makes contributions to other
institutions for this purpose a weighted deduction is allowed of
- one and one-fourth times of payment if
the payment is made to an approved company registered in India and having its main object of
scientific research and development or
the payment is made to an approved university college or institution for the use of research for
social science or statistical research related or unrelated to the business of the assessee
- one and three-fourth times of payment wef 1042011 if
the payment is made to an approved research association which has as its object undertaking of
scientific research related or unrelated to the business of the assessee or
the payment is made to an approved university college or institution for the use of scientific
research related or unrelated to the business of the assessee or
As per Section 35 (2AB) of the Act Company is eligible for a weighted deduction of a sum equal to
two times of the expenditure incurred on in-house research and development if it satisfies the
following conditions
the tax payer is a Company
it is engaged in the business of manufacture or production of an article or thing except those
specified in the Eleventh Schedule of the Act
it incurs any expenditure on scientific research and such expenditure is of capital nature (other
than land or building) or revenue nature
the above deduction is allowed up to March 31 2012 on in-house research and development
facility
the research and development facility is approved by the prescribed authority (prescribed
authority is Secretary Department of Scientific and Industrial Research)
the Company has entered into an agreement with the prescribed authority for cooperation in
such research and development facility and for audit of the accounts maintained for that
facility
4 As per Section 35D the Company is eligible for deduction in respect of specified preliminary
expenditure incurred by the Company in connection with extension of its industrial undertaking or in
connection with setting up a new industrial unit for an amount equal to one-fifth of such expenditure for
each of the five successive previous years subject to conditions and limits specified in that section
5 As per Section 35DDA the Company is eligible for deduction in respect of payments made to its
employees in connection with their voluntary retirement for an amount equal to one-fifth of the amount
so paid for that previous year and the balance shall be deducted in equal installments for each of the four
immediately succeeding previous years subject to conditions specified in that section
6 As per Section 115JAA of the Act credit is allowed in respect of any tax paid (MAT) under Section
115JB of the Act for any assessment year commencing on or after April 1 2006 Credit eligible for carry
forward is the difference between MAT paid and the tax computed as per the normal provisions of the
Act Such MAT credit shall be carried forward and set off in the year in which tax computed as per
normal provision of the Act exceeds tax payable under section 115JB to the extent of such excess Such
carried forward shall be allowed upto ten assessment years immediately succeeding the assessment year
in which tax credit becomes allowable
7 The domestic company is required to pay Dividend Distribution Tax (―DDT) at the rate of 15 (plus
applicable surcharge and education cess)on distributed profits As per section 115-O (1A) of the Act
while computing the DDT payable by a domestic company on Dividend the amount of dividend paid by
48
it would be reduced by the amount of dividend received by it from its subsidiary company during the
financial year if
The subsidiary company has paid DDT on such dividend
The domestic company itself is not a subsidiary of any other company
In addition to the General Tax Benefit mentioned above other benefits available to the Shareholders of
the Company are as follows
1 Resident Shareholders (a) According to the provision of Section 54F of the Act and subject to the conditions specified
therein in the case of an individual or a Hindu Undivided Family (HUF) capital gain arising on
transfer of long term assets [other than a residential house and those exempt US 10(38)] are not
chargeable to tax if the entire net consideration is invested within the prescribed period in a
residential house If only a part of such net consideration is invested the exemption shall be
allowed proportionately For this purpose net consideration means full value of the consideration
received or accruing as a result of the transfer of capital asset as reduced by any expenditure
incurred wholly and exclusively in connection with such transfer
Such benefit will not be available if the individual or Hindu Undivided Family ndash
owns more than one residential house other than the new asset on the date of transfer of the
original asset or
purchase any residential house other than the new asset within a period of one year before or
two year after the date of transfer of the original asset or
constructs any residential house other than the new asset with in a period of three years after
the date of transfer of the original asset and
the income from such residential house other than the one residential house owned on the date
of transfer of the original asset is chargeable under the head ―Income from house property
If the new residential house is transferred within a period of three years from the date of purchase
or construction the amount of capital gains on which tax was not charged earlier will be deemed
to be income chargeable under the head ―Capital Gains of the year in which the residential house
is transferred
(b) As per the provision of section 71(3) if there is loss under the head ―Capital Gain it cannot be
setoff with the income under any other head Section 74 provides that the Short term capital loss
can be setoff against both short term capital gain and long term capital gain whereas long term
capital loss can only be set off against long term capital gain The unabsorbed capital loss can be
carried forward for eight assessment years
2 Non-Resident Shareholders
i As per the first proviso to Section 48 of the Act in case of a non resident in computing the capital
gains arising from transfer of shares Debentures of the Indian company acquired in convertible
foreign exchange (as per exchange control regulations) protection is provided from fluctuations in
the value of rupee in terms of foreign currency in which the original investment was made Cost
indexation benefits will not be available in such a case
ii As per the provision of Section 90(2) if the provision of Double taxation Avoidance Agreement
(DTAA) between India and the country of Residence of Non Resident are more beneficial then the
provision of DTAA shall be applicable
iii As per provisions of Section 115G of the Act it shall not be necessary for a non-resident Indian to
furnish his return of income if his only source of income is investment income or long term capital
gains or both arising out of assets acquired purchased or subscribed in convertible foreign
exchange and tax has been deducted at source from such income
iv Under Section 115-I of the Act a non resident Indian may elect not to be governed by the
provisions of Chapter XII-A of the Act for any assessment year by furnishing his return of income
under Section 139 of the Act declaring therein that the provisions of the this Chapter shall not
apply to him for that assessment year and if he does so the provisions of this Chapter shall not
apply to him In such a case his total income shall be charged as per normal provisions of the Act
49
3 Mutual Funds
In terms of Section 10(23D) of the Act mutual funds registered under the Securities and Exchange
Board of India Act 1992 and such other mutual funds set up by public sector banks or public financial
institutions authorized by the Reserve Bank of India and subject to the conditions specified therein
are eligible for exemption from income tax on their entire income including income from investment
in the shares of the company
4 Foreign Institutional Investors (FIIs)
i As per Section 115AD capital gain arising on transfer of short term capital assets being shares and
debentures in a company are taxed as follows
a Short term capital gain on transfer of equity sharesunits of equity oriented fund entered in a
recognized stock exchange which are subject to securities transaction tax shall be taxed 15
(plus applicable surcharge and education cess) and
b Short term capital gains on transfer of sharesdebentures other than those mentioned above would be
taxable 30 (plus applicable surcharge and education cess)
ii As per Section 115AD capital gain arising on transfer of long term capital assets [other than those
exempt US 10 (38)] being shares and debentures in a company are taxed 10 (plus applicable
surcharge and education cess)
Such capital gains would be computed without giving effect to the first and second proviso to Section 48
5 Venture Capital Companies Funds
As per the provisions of Section 10(23FB) of the Act income from investment is exempt from income tax
of
i Venture Capital Company which has been granted a certificate of registration under the Securities
and Exchange Board of India Act 1992 (SEBI) and notified as such in the Official Gazette and
ii Venture Capital Fund operating under a registered trust deed or a venture capital scheme made by
Unit Trust of India which has been granted a certificate of registration under the Securities and
Exchange Board of India Act 1992 and notified as such in the Official Gazette from investment in a
Venture Capital Undertaking
Benefits available under the Wealth Tax Act 1957
Shares in a company held by a shareholder will not be treated as an asset within the meaning of Section 2(ea) of
Wealth tax Act 1957 hence wealth tax is not leviable on shares held in the company
Benefits available under the Gift Tax Act 1957
Gift of shares of the company made on or after October 1 1998 are not liable to Gift Tax
However any transfer of shares made on or after October 1 2009 without adequate consideration to an
Individual or HUF will be taxable in the hands of receiver under clause (vii) of section 56(2) of the Income Tax
Act 1961 subject to the prescribed condition and valuation rules
NOTES
A All the above benefits are as per the current direct tax law and will be available only to the sole first
named holder in case the shares are held by joint holders
B In respect of non-residents taxability of capital gains mentioned above shall be further subject to any
benefits available under the Double Taxation Avoidance Agreement if any between India and the
country in which the non-resident has fiscal domicile
C In view of the individual nature of tax consequence each investor is advised to consult his her own tax
advisor with respect to specific tax consequences of his her participation in the scheme
D The above statement of possible direct tax benefits sets out the provisions of law in a summary manner
only and is not a complete analysis or listing of all potential tax consequences of the purchase
50
ownership and disposal of equity shares
E Tax Benefits available to the Company and its shareholders will be variedchange up on applicability of
Direct Taxes Code Bill 2009 which is proposed to be made applicable wef 1st April 2011
51
SECTION IV ndash ABOUT THE COMPANY
INDUSTRY OVERVIEW
The information in this section has been obtained or derived from publicly available documents prepared by
various sources including the ldquoCRISIL Research paper Annual Reviewrdquo dated November 2010 This
information has not been prepared or independently verified by us or any of our advisors including the LM and
should not be relied on as if it had been so prepared or verified Such data involves risks uncertainties and
numerous assumptions and is subject to change based on various factors including those discussed in the
section titled ldquoRisk Factorsrdquo in this Draft Letter of Offer
I) Global Paper Industry Overview
The total consumption of paper globally in 2009 was estimated as 3640 million tonnes Asia contributed the
maximum to this consumption pattern with a total consumption of 1557 mn tonnes followed by Europe and
North America at 935 and 781 mn tonnes respectively Table 1 below describes the patterns for world
consumption of paper since 2004
Table 1 Paper ndash World Consumption
Source CRISIL Research Paper Annual Review November 2010
II) Domestic Paper Industry Overview
India consumed only about 3 of global paper production As can be seen from Table 2 below Indialsquos per
capita consumption of paper averaged around 84 kgs in 2009 as compared to a global average of 543 kgs
(Source CRISIL Research Paper Annual Review November 2010) Indian consumption has also lagged the
global averages in past years However the per capita consumption in India has shown a persistent rising trend
over the past years as seen in Table 2
Table 2 Paper- World per Capita consumption
Source CRISIL Research Paper Annual Review November 2010
Domestic Demand-Supply Situation
52
The stable economic growth in India has led to a gradual but persistent rise in the consumption of paper and
board The demand for paper has grown at a CAGR of 67 from 2004-05 to 2009-10 The total demand in
2009-10 was approximately 814 mn tonnes in 2009-10
While the demand has grown at a CAGR of 67 over the same period the domestic capacity increase has seen
a CAGR of just 56 With capacity additions not matching demand increases imports have seen a rise in the
period mentioned Table 3 provides a summary of the demand supply situation in India for paper
Table 3 Paper ndash Demand -Supply
Source CRISIL Research Paper Annual Review November 2010
Structure of Indian Paper Industry
The domestic Indian paper industry can be divided into four broad segments namely Writing and Printing Paper
(WPP) Industrial Paper (IP) Newsprint (NP) and Speciality Paper (SP) Chart 4 shows the structure of the
Indian Paper Industry
Chart 4 Structure of the Indian Paper Industry
Source CRISIL Research Paper Annual Review November 2010
Of the total paper demand in 2009-10
a) IP accounted for about 49
b) WPP accounted for 32
c) NP accounted for 15 and
d) SP accounted for 4
(Source CRISIL Research Paper Annual Review November 2010)
The paper industrylsquos market size in 2009-10 has been estimated at Rs 317 bn Of the various segments
a) WPP is the highest value segment and accounts for 435 of the total market size
b) IP accounts for about 389
c) NP accounts for 112 and
53
d) SP accounts for 65
Chart 5 Variety wise demand from 2004-05 to 2009-10
Source CRISIL Research Paper Annual Review November 2010
Segment- Wise Description
This section describes the specific segments in which our Company operates
Writing and Printing Paper
The WPP segment accounts for almost 32 of the total demand of paper in the country This segment consists
of varieties of paper normally under 120 GSM used primarily for writing (stationery) and printing (textbooks
and notebooks) The various varieties of WPP starting from the lower end of the value chain are creamwove
maplitho copier and coated paper
Creamwove is a wood free paper manufactured from chemical pulp It is of medium brightness mainly used for
computer stationery textbooks and notebooks Maplitho is a surface sized WPP largely used for printing and
manufacturing premium notebooks Creamwove can replace maplitho in certain applications in order to reduce
costs Coated paper is a superior quality printing paper that is coated with an adhesive solution and kaolin
The variety ndashwise demand situation for the WPP segment is provided in chart 6 below As can be seen
creamwove accounts for more than 45 of the WPP demand maplitho for 24 and the rest for about 29
There has been a gradual shift in demand from the traditional creamwove and maplitho to higher end varieties
such as copier and coated paper Despite a gradual decline in share to 47 in 2009-10 from 52 in 2004-05
creamwove continues to be the largest contributor to the total WPP demand
54
Chart 6 WPP variety Wise Demand (2009-10)
Source CRISIL Research Paper Annual Review November 2010
In terms of market size for 2009-10 the various varieties accounted for
a) creamwove Rs 569 bn
b) maplitho Rs 354 bn
c) coated paper Rs 230 bn
d) branded copier Rs 226 bn
(Source CRISIL Research Paper Annual Review November 2010)
Demand drivers
Overall growth for the segment is driven by the increasing emphasis on education in the country GDP
growth and the increasing presence of modern retail formats and convenience stores
Increasing use of e-ticketing by airlines railways etc
Increasing use by small-office home office segments
The implementation of Right to Education is likely to enroll 10 million children additionally each year
On an average a school-going child consumes 7 kgs per annum
Growth in post paid mobile connections electricity bills bank accounts and credit card population
Notebooks and textbooks are the main demand drivers for creamwove Government spending on
printing of these affects demand With the government providing a greater thrust to education demand
for creamwove has remained steady The demand for creamwove is usually seasonal with higher
demand during February ndash June when notebooks are generally manufactured and sold
Demand drivers for maplitho are printing of annual report corporate literature premium books diaries
calendars etc Corporate spending therefore affects maplitho demand Demand for maplitho is
generally not seasonal owing to the requirement throughout the year for various end uses
Printing of brochures pamphlets labels playing cards calendars magazines greeting cards
envelopes officer stationery etc are demand drivers for coated paper
Copier and Coated segments
The copier paper segment has grown by a cumulative annual average rate of 175 from Fiscal 2006 to Fiscal
2010 Similarly over the same period the coated paper segment has grown at a cumulative annual average rate
of 181 Table 7 below provides the year wise production of copier paper by Indian Paper Manufacturers
Association member mills (Source IPMA Report March 2010) Table 8 below provides year wise production
data of coated paper by IPMA member mills
Chart 7 Year wise production of copier paper by IPMA member mills
55
Table 8 Year wise production of Coated paper by IPMA mills
MILL 2005-06 2006-07 2007-08 2008-09 2009-10
BILT 123939 133641 133782 143486 229953
JK 20145 34998 40393 50580 51914
WCPM 0 0 0 4421 0
SPB 1445 1846 2250 2810 810
Grand Total 145529 170485 176425 201297 282677
Source IPMA Report March 2010
Industrial Paper
This segment caters to the packaging of manufactured goods It may be classified into tertiary packaging (which
includes kraft paper) and consumer packaging (which includes greyback paperboard whiteback paperboard
folding box board (FBB) and solid bleached board (SBB))
Tertiary packaging mainly refers to the packaging for the containment and safeguard of goods during storage
handling and transportation Such paperboards are made mainly from kraft paper Kraft paper is usually the
brown paper used for manufacturing brown bags and cartons Corrugated boxes account for about 90 of the
total demand for kraft paper
Consumer packaging refer to secondary packaging of goods It is done not only for protection of goods but also
as a brand building and marketing measure Of the varieties used for such a purpose the following form a
majority
a) Greyback Made primarily from recycled paper and is a multi layered paperboard with an outer surface
that is unbleached and grey It has a high degree of stiffness and has a smooth surface that allows for
operations such as stamping and lamination
b) Whiteback This is of a better quality than greyback and is bleached Its properties are similar to that of
greyback except for the white surface that is better suited to printing
c) Folding box board This is made entirely of virgin pulp and has some layers which are unbleached It is
a superior variety of paperboard as compared to greyback and whiteback FBB is a clean strong board
with even brightness and good printing properties
d) Solid bleached board it is also made of virgin pulp with all layers made of bleached pulp Its printing
and embossing characteristics are superior to all other varieties of paperboard and is therefore ideal for
packaging of production where preservation of aroma and flavor are essential
Chart 9 provides the variety wise demand for paper board in 2009-10 As can be seen kraft paper accounts for
nearly 55 of demand Demand for paperboard has increased at a CAGR of 67 to an estimated 47 mn tonnes
in 2009-10 from 34 mn tonnes in 2004-05
56
Chart 9 Paper Board Variety Wise Demand (2009-10)
Source CRISIL Research Paper Annual Review November 2010
The total market size of paperboard was about Rs 123 bn in 2009-10 of which
a) Kraft accounted for Rs 545 bn
b) Others for Rs 685 bn
Demand drivers
Overall demand is closely linked to the level of industrial activity in the country and the manufacture of
consumer and white goods
Demand for kraft paper depends on the growth on the FMCG textile consumer durables and
horticulture industries
Growth in the consumer packaging is dependant upon industries such as pharmaceuticals cigarettes
matchboxes and hosiery
Growth in organized retail which uses more of virgin grade packaging board
III) Costs and Prices
Costs
The primary inputs for the manufacture of paper are the fiber (derived from wood waste paper agri residues
etc) and the power and fuel expenses While actual costs may vary based upon individual company product
profiles and locations these two together typically account for almost 70 of the total costs
Fiber Costs
The three main sources of fiber are
a) Wood or bamboo
b) Waste paper
c) Agri- residue such as Bagasse
Wood accounts for 37 of production while wastepaper and agri residue account for 32 and 31
respectively
Described below are the key raw materials in use by Our Company
Wood Bamboo
Softwood is not used in India given its unavailability High end products require the use of imported pulp
Hardwood prices depend upon the location from where a company sources its requirements Prices of hardwood
have been increasing in recent years as shown in Chart 10 Despite availability of bamboo its supply is
restricted owing to government regulations and the lack of bamboo farming Bamboo prices have also shown
steep increases as shown in Chart 11 Imported wood pulp is also used by manufacturers for purposes of high
end products Chart 12 shows the movement of imported softwood pulp
Chart 10 Hardwood Prices
57
Source CRISIL Research Paper Annual Review November 2010
Chart 11 Bamboo Prices
Source CRISIL Research Paper Annual Review November 2010
Chart 12 Pulp Prices
Source CRISIL Research Paper Annual Review November 2010
58
Paper Prices
The prices of most varieties in the WPP and IP segments have been growing in the recent years Table 13 shows
the domestic paper price movements since 2004-05 Prices reduced on a y-o-y basis in 2009-10 owing to the
general economic conditions that prevailed in 2009-10
Table 13 Domestic Paper Prices
Source CRISIL Research Paper Annual Review November 2010
IV) Characteristics and concerns for the industry
Characteristics of the industry
a) Fragmented nature of the Industry and the small size of paper mills
The domestic paper industry is highly fragmented The estimated number of mills in India varies between
500 to over 1000 The top 5 paper producers account for approximately 20-23 of the total paper capacity
(Source CRISIL Research Paper Annual Review November 2010) Adding to the fragmentation is the
small size of paper mills In an Indian context mills with an annual capacity of over 33000 tpa may be
categorized as large while those with capacity up to 7500 tpa may be termed small Nearly 45 of paper
mills in India are small units with only about 15 have capacities in excess of 33000 tpa (Source CRISIL
Research Paper Annual Review November 2010) A result of this fragmentation has increased competition
among varieties of products most of the smaller players in the industry are largely present in lower end of
the paper product segments especially unbleached kraft paper duplex board creamwove paper and
newsprint which largely use waste paper and agri-residues as their raw materials which require lower
upfront capital investments As a result the competition within these product segments is relatively higher
than other paper segments which are largely dominated by bigger mills and hence acts as a protective
factor for the players present in value added paper segments such as copier paper maplitho paper coated
paper and other specialised paper categories
b) Raw material availability decides location of plants
Location of plants has an important role to play in ensuring cost competitiveness Most paper mills in India
are located close to the source of the raw materials (forests and coal pit heads) and skilled labour
Companies that rely on imports are located close to the ports In general along with the availability of raw
materials proximity to a water source also influences a plantlsquos location Agri-based mills are largely
located in the northern and western states where the presence of several sugar mills guarantees easy
availability of bagasse Wood based units tend to be located in eastern and southern states
c) High entry barriers preventing entry of new players
Setting up a paper mill calls for a substantial capital outlay A new integrated plant with captive power with
in-house pulping facility and a co-generation plant will require an investment of Rs 80000 -100000 per
tonne of paper output Cost economics therefore do not favour the setting up of a Greenfield plant This
adds a significant entry barrier to new players who wish to enter the industry Added to the high initial cost
of investment is the 2-3 year gestation period for the setting up of a paper mill (Source CRISIL Research
Paper Annual Review November 2010)
59
Concerns
d) Raw material availability
Availability of raw material remains a key concern in the domestic market Wood and wood based pulp are
limited by the limited forest resources and limitations on enlarging man made forests Additionally wood is
used for many alternate purposes which lead to competition for available wood The domestic paper
industry used around 5 to 56 mn tonnes of wood pulp in 2009-10 Of this close to 05 mn tonnes was
imported owing to a lack of domestic supply (Source CRISIL Research Paper Annual Review November
2010) Waste paper collection mechanisms in India are not very well developed thus requiring an import of
waste paper to the tune of almost 15 of domestic production Agri products such as bagasse are seasonal
in nature and also have alternate uses such as for power generation
e) Substitution by other products
While the level of substitution in the industry has not reached threatening levels in the IP segment paper
competes with products such as polymers wood and steel for packaging Polymers pose a threat owing to
their lower prices durability and appearance The WPP segment faces limited substitution threat Their
main threat is from online storage of data etc which can only marginally affect demand (Source CRISIL
Research Paper Annual Review November 2010)
f) Reducing import duty levels
There has been a secular reduction in import duties on paper and packaging products over the years Table
14 shows the import duties of such products in recent years Since the level of distribution efforts required
in channelizing imports of WPP in domestic market is much higher than IP and newsprint segments due to
diversity in customer profile of PWP the import threats are relatively lower in PWP segment
Table 14 paper ndash Import Duties
Source CRISIL Research Paper Annual Review November 2010
g) Capacity Additions
With the steady growth in domestic consumption almost all the leading players in the industry have
expanded their capacities during past few years Chart 15 provides an estimate of the amount of capacity
additions that have happened and are expected to occur Given the demand growth the incremental
capacities could be absorbed however bunching of these capacities may result in temporary supply side and
pricing pressures in near term
60
Chart 15 Trends in Capacity Additions
Source CRISIL Research Paper Annual Review November 2010
V) Growth Expectations
The information provided below should be read in conjunction with ―Risk Factors beginning on page ix
Estimates indicate that the Indian paper industry will grow at a CAGR of 107 from its current levels of Rs
317 bn in 2009-10 to Rs 526 bn in 2014-15 the demand being driven by strong industrial and economic
growth WPP is likely to be the largest segment with a market share of around 42 followed by paperboard at
39 The shares of speciality paper and newsprint are expected to be around 7 and 13 respectively
Chart 16 Paper Industry Market Size
Source CRISIL Research Paper Annual Review November 2010
Among the segments demand for paperboard is expected to increase as 78 CAGR to reach 67 mn tonnes in
2014-15 driven by a healthy growth in industrial production and a sustained demand for consumer goods Table
17 provides a breakup of the expected demand in this segment (Source CRISIL Research Paper Annual
Review November 2010)
61
Table 17 Variety-wise Demand for Paperboard
Source CRISIL Research Paper Annual Review November 2010
The WPP segment is expected to increase in demand at a 76 CAGR till 2014-15 as compared to a 65
CAGR in the preceding 5 years Demand is expected to reach 45 mn tonnes in 2014-15 Within this segment
the demand for copier paper is likely to record the strongest growth at around 16 which will be driven by the
revival in economic conditions leading to a greater demand for good quality paper from the office printing
segment The expected CAGR for various varieties of WPP is shown in Chart 18
Chart 18 WPP demand ndash Variety Wise Projected Growth Rates
Source CRISIL Research Paper Annual Review November 2010
62
OUR BUSINESS
The following information is qualified in its entirety by and should be read together with the more detailed
financial and other information included in this Draft Letter of Offer including the information contained in
ldquoRisk Factorsrdquo on page ix
Overview
We are the largest producer of branded papers in terms of production and a leading player in the fine paperslsquo
and virgin packaging boardlsquo segments in terms of market share in India We are a market leader in the
branded copier paper segment in India where we had a market share of approximately 288 (Source CRISIL
Research Paper Annual Review November 2010) We manufacture and sell a diverse and multi-application
range of papers specialty papers allied stationery and virgin packaging board products and are focused in the
production and marketing of high-end paper and virgin packaging board products As on September 30 2010
our distribution network of paper and virgin packaging board products comprises of four regional offices six
warehouses 134 wholesalers and various dealers enabling us to have a pan-India presence Additionally we
export our paper and virgin packaging board to over 40 countries including in Brazil UK Turkey Middle East
Sri Lanka Bangladesh Singapore Malaysia and several African nations We are a part of the JK Group one of
the leading business brands in India with a significant presence in automotive tyres and tubes cement power
transmission including V-belts oil seals hybrid agricultural seeds system engineering sugar dairy products
textiles health care clinical research and the paper and pulp brand segments among others with presence in
India as well as several other countries
We operate two integrated manufacturing facilities the JK Paper Mills Unit at Rayagada Odisha (―Unit
JKPM) and the Central Pulp Mills Unit at Songadh Gujarat (―Unit CPM) for the production of paper and
virgin packaging boards with a combined manufacturing capacity of 240000 TPA Our Unit JKPM presently
has an installed capacity of 125000 TPA for manufacturing paper and saleable pulp In addition our blade
coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper enabling us
to move up the value chain and capitalize on the growing market of coating paper The capacity of the coating
plant at the Unit JKPM is 46000 TPA We are the second largest producer of coated paper in India (Source
IPMA Report March 2010) Further we commissioned a pulp drying plant at our Unit JKPM in 2001 to
increase the output and realization of market pulp Our Unit CPM presently has an installed capacity of 55000
TPA for manufacturing paper and saleable pulp Additionally we have set up a packaging board plant at our
Unit CPM which was commissioned in October 2007 with an installed capacity of 60000 TPA which is
equipped with contemporary technology sourced from global leaders in the paper board machinery sector
We were incorporated as The Central Pulp Mills Limitedlsquo in 1960 as a pulp manufacturing facility at
Songadh in Gujarat and started paper production in 1975 We were subsequently referred to the BIFR in 1988
due to accumulated losses We were declared a sick industrial company in terms of the Sick Industrial
Companies (Special Provisions) Act 1985 in 1989 The JK Group as part of its strategy to strengthen its
position in the paper manufacturing market acquired our Company in 1992 pursuant to a rehabilitation scheme
sanctioned by the BIFR In 2000 as part of a restructuring exercise undertaken by JK Lakshmi Cement Limited
the Unit JKPM which was operating as a division of JK Lakshmi Cement Limited for its paper manufacturing
business was consolidated with our Company which was subsequently renamed as JK Paper Limitedlsquo
Our Company and our manufacturing units have received numerous awards and recognitions such as the Good
Corporate Citizen Award-2006lsquo by PHD Chambers of Commerce amp Industry Certificate of Appreciation for
Excellence in Energy Management ndash 2008lsquo by Bureau of Energy GoI for our Unit JKPM the Paper Mill of
the Yearlsquo award from Indian Paper Manufacturers Association for our Unit CPM in 2004 and the Greentech
Environment Excellence Award 2010 - Winner of Gold Award in Paper Sectorlsquo to our Unit CPM among others
Further we were awarded the TPM Excellence First Category Awardlsquo for the year 2006 by the Japan Institute
of Plant Maintenance for both our manufacturing units
We have been conscious in addressing environmental and safety concerns and have regularly introduced cleaner
and environment-friendly technologies in our manufacturing units Both our manufacturing units are ISO 9001 ndash
2008 compliant operating at over 100 capacity utilization and are equipped with all of the requisite facilities
for end-to-end environmentally compliant operations ranging from production of pulp to finishing and
packaging of our paper virgin packaging board and stationery products Our Unit JKPM has been adjudged as
the First Greenest Paper Milllsquo in 1999 and Second Greenest Paper Milllsquo in 2004 by Centre for Science amp
63
Environment (CSE) Additionally both our manufacturing units are ISO 14001 certified for their eco-friendly
operations and OHSAS 180012007 certified for occupational health and safety management system standards
Our Equity Shares re-admitted for trading on the BSE in 1992 Our Equity Shares were listed on the VSE and
the NSE in 1995 and 2005 respectively However our Equity Shares were delisted from the VSE in 2007
For the six month period ending September 30 2010 and Fiscal 2010 based on our restated consolidated
financial statements our net sales were ` 61316 crores and ` 112234 crores respectively and our adjusted
profit after tax was ` 5775 crores and ` 9198 crores respectively and for the Fiscal 2009 based on our
restated standalone financial statements our net sales were ` 109285 crores and our adjusted profit after tax
was ` 3746 crores
Our Strengths
Our business is characterized by the following key strengths
Established bdquoJK‟ brand recognition in the paper industry
We believe the ―JK Paperlsquo brand has an established reputation in the Indian market This is reflected in our
market share of approximately 288 in the branded copier paper segment in India In virgin packaging board
segment out of the total production of 387000 tonnes during Fiscal 2010 in India our Company produced
66135 tonnes We are the largest producer of branded papers in India in terms of production second largest
producer of virgin board and a leading player in the fine paperslsquo segment in terms of market share (Source
CRISIL Research Paper Annual Review November 2010) We believe that our brand commands respect and
credibility and offers us competitive advantages enabling us to maintain our leadership position in the branded
market along with strengthening the brand equity of our leading products such as JK Copierlsquo JK Excel Bondlsquo
and JK Easy Copierlsquo
Both our manufacturing units are ISO 9001 ndash 2008 compliant In Fiscal 2010 our Unit JKPM operated at
11014 capacity utilization and Unit CPM operated at 11833 capacity utilization The paper manufacturing
unit at Unit CPM operated at 11860 capacity utilization and the virgin packaging board manufacturing unit at
Unit CPM operated at 11809 capacity utilization Both our manufacturing units are equipped with the
requisite facilities for end-to-end environmentally compliant operations ranging from production of pulp to
finishing and packaging of our paper stationery and virgin packaging board products Additionally both our
manufacturing units are ISO 14001 certified for their eco-friendly operations and OHSAS 180012007 certified
for occupational health and safety management system standard
Diverse product range and ability to identify customer requirements
We manufacture and sell a diverse and multi-application range of papers specialty papers allied stationery and
virgin packaging board products to serve and satisfy the growing requirements of customers We produce paper
under several brands which are used for varied purposes including in diaries notepads letterheads calendars
balance sheets book printing labels photocopying project reports resumes inkjet laserjet and colour printers
office stationary envelopes mark sheets share certificates and financial instruments among others Our
speciality papers are used for MICR cheques and other premium printing applications such as POP materials
catalogues brochures books and calendars Additionally our virgin packaging board products serve a diverse
range of customer requirements including in packaging of FMCG products such as cosmetics food
pharmaceuticals and garments personal care products greeting cards life style products book covers beverage
cups and playing cards among others We strive to identify specific customer needs and to increase our products
range from economy to premium segment varying in terms of brightness smoothness opacity stiffness while
at the same time ensuring quality of printability and runnability in printing machines
Our Company introduced high quality bond paper Finesselsquo in A4 size consumer friendly retails packs of 100
sheets in 1998 and also laser paper in 1999 In recent times our Company has introduced Cedarlsquo in 2009 a
high quality paper for use in colour printers and for making corporate presentations developed the high value
MICR cheque paper and branded JK Savannahlsquo in A4 packs which have been well received in the market We
believe our dedicated effort towards increasing our products range and the ability to identify varying customer
requirements contribute significantly to our position as one of the leading players of the pulp and paper industry
in India
64
Locational advantages of our manufacturing units
Our manufacturing units are strategically located to meet our requirements with respect to raw materials as well
as to ensure timely delivery of our products to our customers Both our units are connected to rail and road
networks Our Company has a competitive advantage of location with respect to sourcing of raw materials as we
source bamboo and hardwood within an average distance of 325 kms from Unit JKPM and 500 kms from Unit
CPM
Our Unit JKPM at Rayagada Odisha procures privately grown bamboo from North Odisha as and when
required in addition to sourcing bamboo from the forests under the control of the state government of Odisha
where the Company has long term extraction concessions Our Unit JKPM meets its water requirement from the
Nagavali river a perennial river flowing within one km distance from the unit Hardwood is procured mainly
from Odisha and the neighbouring states of Andhra Pradesh and West Bengal
Our Unit CPM at Songadh Gujarat procures bamboo for its paper production primarily from the forests leased
from the Government of Gujarat Further our Unit CPM equipped with manufacturing facilities for our virgin
packaging board products is located on the western coast of India near the main consumption markets in the
states of Maharashtra and Gujarat This gives us significant cost as well as time advantage in reaching supplies
to the customers The location also facilitates faster imports logistics since the ports are nearer to our Unit CPM
compared to the facilities of our competitors
Additionally our manufacturing units are favorably located to effectively cover geographically dispersed
demand centers like Mumbai Ahmedabad Chennai Bangalore Hyderabad Cochin Kolkata New Delhi
Varanasi Patna Guwahati Bhubaneshwar Nagpur Madurai Sivakasi Vijaywada Raipur and Cuttack through
our distribution network
Strong relationships with key customers
We have long-standing relationships with leading publishers wholesalers commercial printers and retailers We
believe our sales strategy which includes both direct sales to our larger customers and sales to wholesalers and
retailers who then resell our products has enabled us to reduce our sales costs and enhance customer service In
relation to our paper products our relationships with our five largest customers which contributed
approximately 2030 and 2120 of our net sales for the six month period ended September 30 2010 and
Fiscal 2010 respectively is more than 10 years old In relation to our virgin packaging board products our
relationships with our five largest customers which contributed approximately 962 and 931 of our net
sales for the six month period ended September 30 2010 and Fiscal 2010 respectively is since the beginning of
commercial production of our virgin packaging board products ie October 2007 We seek to continue to
enhance our relationships with our key customers by providing them with a high level of value-added customer
service
Our plantation initiatives ensure strong backward linkages for sourcing raw materials
Our plantation initiative was started in 1990 at our Unit JKPM and later extended to our Unit CPM Our
Company has been aggressively promoting social and farm forestry and high yielding clones developed by our
in-house research and development institutions in the areas close to our manufacturing units ie in Odisha and
Andhra Pradesh for our Unit JKPM and in Gujarat and Maharashtra for our CPM Plant to provide for
sustainable supply of raw materials and increasing benefit to the villagers Under this programme carried out on
the land owned by people residing in villages near to our manufacturing units villagers are educated to adopt
scientific methods of growing trees besides being supplied with high quality seeds seedlings and high yielding
clones During Fiscal 2010 an additional area of 4200 hectares of land was covered under this programme by
utilising over 2 crore seedlingsplants Procurement of wood from farm forestry sources now accounts for over
70-75 of our Companylsquos raw materials consumption Our Company has developed seed orchards of high
yielding strains of various species including Eucalyptus and Casuarina We are presently operating such social
and farm forestry programs in Koraput Rayagada Ganjam Gajpati and Kalahandi districts of Odisha Dhule
Nandurbar Jalgaon and Nashik districts of Maharashtra Tapi Surat Bharuch Baroda Kheda and Valsad
districts of Gujarat and Vizianagram Srikakulam and Vishakhapatnam districts of Andhra Pradesh
Additionally the location and proximity of our manufacturing units to the areas in which are plantation
initiatives are carried out in comparison to our competitors benefits our Company by assisting in the
continuous procurement of raw materials in the long term
65
Modern and advanced manufacturing technology and infrastructure
Our manufacturing units are equipped with modern and advanced manufacturing technology and infrastructure
enabling us to maintain our position amongst leaders in quality paper segment in India Our modern and
advanced manufacturing technology includes amongst others efficient chip washing system implementation of
DCS control and oxygen delignification plant that helps in reduction of chlorine consumption Further we are
the exclusive licensee of colorlok technologylsquo and colorlok trademarklsquo in India for manufacture of high
quality copier paper We believe that our dedicated effort towards use and continuous upgradation of
manufacturing technology and infrastructure contributes significantly to our position as one of the leading
players of the pulp and paper industry in India
Our Business Strategies
Our aim is to further strengthen our position as one of Indialsquos leading paper manufacturing and selling
companies to enhance our manufacturing capacity and increase our products range and to increase our
geographical reach in India and abroad to complement our brand In order to achieve our aim we intend to
follow the key business strategies described below
Increase our market share in the paper and virgin packaging board segments
We seek to take advantage of our competitive strengths to further increase our market share in the paper and
virgin packaging board business segments The branded copier paper and coated paper segments are market
segments that in addition to being more stable than other market segments have grown at a cumulative annual
average rate of 175 and 181 respectively from Fiscal 2006 to Fiscal 2010 (Source IPMA Report March
2010) We intend to continue our focus and our marketing efforts on the sale of our copier paper products
coated paper products (especially in higher gsm range) and virgin packaging board products We seek to further
increase our market share by enhancing our manufacturing capacity at our Unit JKPM For details see ―Objects
of the Issue on page 34
Maintain our focus on increasing our products range and moving up the value chain
Our Company has consistently focused on increasing its product range particularly in the high value added
segment like branded copier paper for instance JK Copier Pluslsquo premium watermark bond for instance JK
Excel Bondlsquo premium digital coated paper Cedarlsquo and virgin packaging board for instance JK TuffCotelsquo
and JK Ultimalsquo We seek to identify specific customer needs and to increase our products range from economy
to premium segment by employing a combination of innovative and creative marketing initiatives such as
advertising in the print media trade and consumer campaigns at the national level road shows and select
customer meets We believe that this will contribute towards enhancing our reputation as one the leading players
in the Indian pulp and paper manufacturing industry
Expanding operations and our distribution network in new markets
We are actively involved in market expansion beyond the Indian market to ultimately have a global footprint for
our paper and virgin packaging board products Our Company is presently exporting paper and virgin packaging
board to over 40 countries including in Brazil UK Turkey Middle East Sri Lanka Bangladesh Singapore
Malaysia and several African nations We intend to capitalize on our established global network and further
expand the reach of our paper and virgin packaging board products in international markets
Further our wholesalers and retailers form an important part of our distribution network and help us reach the
end-use customers of our paper allied stationery and virgin packaging board products We believe that our wide
distribution network consisting of four regional offices six warehouses 134 wholesalers and various dealers as
of September 30 2010 enables us to have a pan-India presence We intend to further expand our distribution
network across our geographies by identifying pockets of opportunities and ensure a direct or indirect presence
in these areas
Ensuring continuous raw material supply
Our Company is focused on ensuring long-term continuous supply of pulp wood primary raw material used in
manufacturing of our products by promoting farm forestry activities We provide high quality seedlingsclones
to private farmers located within the vicinity of our manufacturing units and source wood back from such
66
farmers During Fiscal 2010 an additional area of 4200 hectares of land was covered under this programme by
utilising over 2 crore seedlingsplants At present procurement of wood from farm forestry sources accounts for
over 70-75 of our raw material consumption We seek to further increase our dependency on farm forestry
sources and consequently decrease our dependency on government and other sources We believe that this
would reduce uncertainty in availability of raw materials and also assist us in arresting significant increase in
costs of raw materials
Our Business Activities
Our Company manufactures and sells a diverse and multi-application range of papers and allied stationery
products as well as virgin packaging board products Detailed below is the description of our business segments
Writing and printing paper
Our paper products portfolio include several brands which are used for varied purposes including in
photocopying project reports resumes inkjet laserjet and colour printers office stationary diaries notepads
letterheads calendars annual reports book printing and financial instruments among others Our speciality
papers are used for MICR cheques and other premium printing applications such as POP materials catalogues
brochures books and calendars The different categories of paper used in our paper brands include creamwove
watermarked bond photocopier art paper poster paper and coated paper
We operate two integrated manufacturing facilities the Unit JKPM at Rayagada Odisha and the Unit CPM at
Songadh Gujarat for the production of our pulp paper and virgin packaging boards with a combined
manufacturing capacity of 240000 TPA and have a pan-India presence through our four regional offices six
warehouses 134 wholesalers and various dealers as on September 30 2010
Our Companylsquos leading brands in the paper segment include JK Copierlsquo JK Easy Copierlsquo JK Excel Bondlsquo
JK Bondlsquo and JK Cotelsquo Additionally in order to further strengthen our position in the market our Company
has launched higher price product variants such as JK Copier Pluslsquo Cedarlsquo across India
Product range
A detailed description of the product range of our paper segment and their use is given below
S No Product Uses
Writing and Printing Paper
1 JK Copier Plus
Substance range 80 gsm
Ideal for quality photocopying project reports
resumes inkjet and laserjet printers presentation
copies or any aesthetic job
2 JK Copier
Consumer packed paper for high speed photocopying
desk top printing and general stationery paper
JK Paper Limited
Writing and Printing
Paper
Branded
Copier Paper
Industrial paper Specialty paper
Coated Paper Consumer
Packaging
Folding Box Board Solid Bleached Sulphate Board
(Virgin grade Packaging Board)
67
S No Product Uses
Substance range 75 gsm
3 JK Easy Copier
Substance range 56-150 gsm
Value for money consumer packed paper for
photocopyinggeneral office stationery
4 Sparkle
Substance range 75 gsm
Mid price range multipurpose copy paper
5 Cedar
Substance range 100 gsm
Ideal for color printing digital photocopying and
desktop printing
6 JK Cote (Coated wood free)
Substance range 130 ndash 220 gsm
Premium international quality coated papers for
premium printing applications such as POP
materials catalogues brochures books calendars
among others
Speciality Paper
7 MICR Cheque Paper
Substance range 95 gsm
MICR cheques
8 JK Excel Bond
Substance range 70-90 gsm
A premium watermarked paper for letterheads
project reports resumes presentations and premium
stationery paper
9 JK Bond
Substance range 58-70 gsm
An economy brand watermarked paper for
letterheads computer stationery envelopes among
others
10 JK Ledger
Substance range 70-90 gsm
Account books ledgers and legal documentation
11 Parchment Paper
Substance range 70-110 gsm
Lifelong documents ndash mark sheets share certificates
financial instruments and high value stationery
The Company also has a limited presence in the stationery segment through its brands JK PhotoVista (used for
high quality digital printing) JK Excel (premium notebooks and pads) NotePal (Student notebooks) and
PrintBlanc (Plotter rolls for use by printers)
Raw materials and other purchases
The primary raw materials for our paper manufacturing are hardwood bamboo and imported pulp
Privately grown bamboo from North Odisha is procured as and when required in addition to bamboo sourced
from forests managed by the state governments of Odisha and West Bengal Hardwood required for our Unit
JKPM is procured primarily from the states of Andhra Pradesh West Bengal and Odisha wherein the Unit
JKPM uses the services of various local suppliers to procure bulk of the requisite quantities and a small portion
is procured by us directly through its depots to develop a better understanding of the hardwood market We also
participate in auctions conducted by various State Forest Corporations to source our raw material requirements
Over the years due to reduced availability of bamboo and its higher costs the Unit JKPM has limited its
bamboo usage to approximately 10-15 of its raw material requirement The Unit JKPM now uses hardwood
for the balance requirement being approximately 85-90 of its raw material requirement
The Unit CPMlsquos annual requirement of bamboo and hardwood is approximately 130000 BDMT The Unit
CPM in Gujarat primarily uses hardwood as the main cellulosic raw material and it accounts for nearly 65 of
its requirements Hardwood required for our Unit CPM is being procured from farmers suppliers primarily
from the state of Andhra Pradesh in addition to some quantity which is procured from the states of Gujarat and
Maharashtra in the surrounding areas of our manufacturing unit in order to minimize the transportation cost The
wood plantations in Gujarat are primarily owned by the state government and government institutions and these
are periodically cut and sold in the local markets Our Unit CPM procures wood from the states of Gujarat and
Maharashtra
Bamboo is procured from the forests leased from the government of Gujarat Our Unit CPM works on the
forests and is required to arrange for cutting stacking bundling and transporting the bamboo to meet its raw
material requirements Our Company pays the state government of Gujarat a royalty based on the weight of
bamboo extracted In addition bamboo is procured from the state of Madhya Pradesh through a tender process
68
and a small quantity is procured from private growers in the states of Gujarat and Maharashtra Further need
based quantities of bamboo are also procured from the states of Assam and Uttar Pradesh on a spot deliveryndash
basis depending upon price and availability The state government of Gujarat owned forests had been a major
source of pulpwood for the Unit CPM since its inception However due to flowering and illegal felling the
present availability of bamboo from some of the designated forest divisions has reduced drastically Separately
our Company has been planting bamboo shoots in barren areas of the forests under the control of the state
government of Gujarat to increase future availability of bamboo
Additionally over the years we have undertaken plantation initiatives and promoted social and farm forestry
along with high yielding clones developed by our research and development team to provide for sustainable
supply of raw materials We have provided Eucalyptuslsquo seedlings to villagers at subsidized rates and have
started the promotion of Subabullsquo plantations by distributing quality seedlings and technical guidance to
interested villagers with whom we enter into buy-back agreements
Both our manufacturing units are strategically located to ensure ready availability of industrial chemicals and
sufficient supply of water required for our paper manufacturing process At our Unit JKPM the total power
requirement is 225 MW with the peak load requirement at 235 MW of which approximately 82 of the
power requirement is met through our own captive power plant and the balance through purchase of power from
GRIDCO (the state power distribution company in Odisha) under contract demand of 10 MVA at 132 KV At
our Unit CPM the total power requirement is 16 MW and the peak load requirement is 17 MW Our captive
power unit meets the entire power requirement Grid power is used only when captive power generation
equipment is under maintenance For details see ―History and Certain Corporate Matters on page 87
Additionally the industrial chemicals required as raw materials for our manufacturing process such as alum
(ferric and non ferric) and wet ground calcium carbonate (95 and 45) are also procured from the local markets
near our manufacturing units on a spot deliveryndashbasis depending upon price and availability
For the six months period ended September 30 2010 and for the Fiscal 2010 respectively 4206 and 3959
of raw materials consumed by us were imported Further for the six months period ended September 30 2010
and the Fiscal 2010 respectively 563 and 703 of total stores spares and chemicals consumed by us were
imported Pulp of different varieties is imported from countries such as Indonesia Sweden Finland and USA
for manufacturing high strength virgin packaging board Hydrogen peroxide is imported from Thailand Turkey
and China for bleaching pulp to manufacture bright paper We also import Hydragloss-90 Kaolin clay from
USA and Brazil for providing high gloss in coated paper Industrial chemicals such as LB-50 PA-40 Carboxy
Methyl Cellulose and Sodium Chlorate are also imported from countries such as Taiwan and Italy
Manufacturing process
The basic operations in paper manufacturing consist of manufacture of pulp from bamboohardwood
conversion of pulp into paper on a paper machine and cutting finishing and packing Recovery of chemicals is
an integral part of the pulp and paper manufacturing process Both our Units follow substantially similar
process The process at Unit JKPM is based on a new fibreline consisting of Rapid Displacement Heating
(RDH) Alkaline Kraft Pulping process with extended oxygen delignification system The process at our Unit
CPM is based on Alkaline Kraft Pulping technology The manufacturing process of paper is detailed below
Chip preparation The raw materials bamboo and hardwood are washed with water to remove the adhering
impurities on the log The raw materials are then chipped with the help of chippers to an optimum dimensional
size (20 ndash 25 mm) and sent to the digesters after screening oversized chips dusts and fines
Pulp preparation The cellulosic raw materials are chemically digested to free the cellulose from lignin which
binds the fibers by RDH cooking in our Unit JKPM In Unit CPM the chemical digestion is done through
sulphate cooking The resulting pulp is sent to the screening and cleaning plant to remove the wood knots The
screened pulp is washed and thickened to a high pulp consistency in a press
Thereafter the process of oxygen delignification and bleaching is carried out pursuant to which pulp is washed
with clean warm water or steam condensate and diluted Thereafter coloured residues of lignin are removed by
usage of chlorine dioxide and chlorine and oxygen-reinforced extraction is carried out with hydrogen peroxide
dosing at our Unit JKPM Calcium hypochlorite is used for extra stage bleaching at Unit CPM Thereafter pulp
is bleached using chlorine dioxide Black liquor recovered in the process goes to chemical recovery to
regenerate the chemicals which are re-cycled in RDH sulphate cooking
69
The surplus pulp produced at our Unit JKPM is passed through a pulp drying machine to make pulp dried
sheets Surplus bleached pulp in the form of slurry is fed to endless wire in a pulp drying machine The water is
drained out gradually and a wet mat of pulp is formed The pulp mat is then dewatered by pressing action in
press section and dried further with airborne dryers The dried pulp web is then converted into proper size
(75X100cm) pulp sheets The pulp sheets are then tied with a string to form bundles of around 50 kgs which are
sold for commercial purpose The surplus pulp produced at Unit CPM is directly pumped to our packaging
board plant at cost basis
Stock preparation and paper machines The bleached pulp obtained from the bleaching process needs
mechanical and chemical treatment for papermaking Refining and systematic addition of fillers sizing
chemicals whitening agents and dyes are used to provide the required characteristics to the paper Stock in the
slurry form is fed to endless wire in a paper machine The water is drained out gradually with the help of dandy
roll and a wet mat of paper is formed The water mark is imparted on the paper mat with the dandy roll if so
desired by the customer The paper web is then dewatered by pressing action and dried further with a series of
dryers The paper web is then passed through calendars with or without starch at the sizing press to reduce the
surface roughness and to impart a smooth texture The paper web is then wound at the pope reel to form big size
paper rolls
Conversion and finishing After paper making the big size paper rolls are passed through rewinders and
cutters for conversion to reels or sheets as per market requirement After sorting out the defective sheets the cut
sheets are finished into paper reams and packed as per the requirement of the customers
Coating The base paper produced at Unit JKPM is passed through an off-line blade coater to coat it with
different finishes The coated paper is dried and passed through super calendar to improve the gloss and through
rewinder and cutter before finishing
Chemical recovery The spent cooking liquor (called black liquor) obtained from the pulping operation is sent
to the recovery process It is concentrated in evaporators and burnt in recovery boilers to obtain smelt (which is
mostly sodium carbonate) The smelt is dissolved to make a solution and is reacted with slaked lime (calcium
hydroxide) in the causticizing section Calcium carbonate precipitates out of the solution and the sodium
hydroxide is reused for cooking bamboo wood chips in the pulp mill The Calcium carbonate thus generated is
burnt in a lime kiln to regenerate the lime (calcium oxide)
An energy efficient falling film type evaporation plant has been installed for black liquor solids processing This
incorporates a large economizer for recovery of heat and a high efficiency electrostatic precipitator for
increasing the chemical recovery efficiency
The process chart for our paper manufacturing process is presented below
70
Virgin Packaging board
We entered the virgin packaging board business in Fiscal 2008 and have steadily increased our market share to
become one of the leading players in this segment Our virgin packaging board products portfolio serve a
diverse range of customer requirements including in packaging of high-end FMCG products such as cosmetics
food pharmaceuticals and garments personal care products greeting cards life style products book covers
beverage cups and playing cards among others Our Company has set up a virgin packaging board plant at our
Unit CPM which was commissioned in October 2007 having an installed capacity of 60000 TPA and is
equipped with contemporary technology sourced from global leaders in the packaging board machinery sector
Further our Unit CPM equipped with manufacturing facilities for our virgin packaging board products is
located on the western coast of India near the main consumption markets in the states of Maharashtra and
Gujarat
Our Companylsquos primary and high-end brands in the virgin packaging board segment include JK Ultimalsquo JK
Chip Preparation
Digester
Washing
Screening amp Cleaning
Bleaching
Stock Preparation
Paper Machine
Finishing
Godown
Despatch
Evaporators
Recovery Boiler
Causticising
Oxygen Delignification
Coal Fired Boiler TG Set
Chips
Pulp
Unbleached Pulp
Unbleached Screened Pulp
Bleached Pulp
Pulp Stock
Paper
Paper
Paper
Paper to Market
WoodBamboo Dust
Black Liquor
Strong Black Liquor
Steam
Steam to Process
Captive Power Generated
Lime
Lime Sludge Disposal
Furnace Oil
Furnace oil used during
startup only
Oxygen Bld Pulp
Pulp Drying
Pulp Sheets to Market
71
TuffCotelsquo JK TuffPaclsquo JK PristineCotelsquo JK PureFil Baselsquo and JK Club Cardlsquo
Products range
A detailed description of the product range of our virgin packaging board segment and their use is given below
S No Product Uses
1 JK Ultima
Substance range 200 ndash 450 gsm
Packaging of personal care products pharma book covers
greeting cards
2 JK TuffCote
Substance range 190 - 450 gsm
Packaging of high-end FMCG products such as cosmetics
food pharma lifestyle products among others
3 JK TuffPac
Substance range 190 ndash 230 gsm
Cigarette packaging
4 JK PristineCote
Substance range 200 ndash 400 gsm
Book covers danglers brochures
5 JK PureFil Base
Substance range 170 ndash 330 gsm
Disposable beverage cups and tubs
6 JK Club Card
Substance range 250 ndash 270 gsm
Playing cards book covers danglers brochures annual
report covers
Raw materials and other purchases
The fibrous raw materials required for manufacturing of virgin grade packaging board consist of hard wood
chemical pulp soft wood chemical pulp and bleached chemi thermo mechanical pulp We internally produce
hard wood chemical pulp which meets approximately one-third of our total pulp requirements The balance
requirement consisting of bleached chemi thermo mechanical pulp soft wood chemical pulp and a part of hard
wood chemical pulp is imported from Indonesia Brazil Chile Estonia Canada Sweden Finland and USA
Coal required in the manufacturing process of virgin packaging board is sourced from WCL and from open
market depending on our requirement and availability
In addition chemicals such as resin PAC talcum and packing materials such as core pipe LDPE shrink film
are also used for manufacture of virgin packaging board These chemicals are sourced from local markets near
our manufacturing units on a spot deliveryndashbasis depending upon price and availability
Manufacturing process
The manufacturing process of virgin packaging board is detailed below
Treatment of raw materials Raw materials for the virgin packaging board currently manufactured by our
Company are different types of virgin pulp
Pulp manufacturing Market pulp is re-pulped in hydro pulpers Sand and grits are removed in high density
cleaner and the pulp is screened by fine screening system and through centricleaning system to remove the
unwanted non fibrous materials
Stock preparation In the secondary fibre treatment plant for stock preparation mechanical and chemical
treatment is done to the pulp and chemicals like PAC rosin soap stone powder ORA and dyes are added to
pulp slurry
Paperboard manufacturing Pulp slurry is sent through forming fabricslsquo to form layers and subsequently all
layers of pulp are attached in the wire section Thereafter the pulp is sent to the press section and drier section
wherein the wet web is passed through rotary steam heated dryers to remove water from sheet The board sheet
then passes through size press followed by dryers and coating section where coating solution is applied on the
surface of board sheet for achieving smooth printable surface Thereafter the board sheet is calendared in soft
nip calendar and reeled on pope reel
72
Finishing and Converting Lastly the board is sent to finishing and converting section where virgin packaging
board is made in the form of reels or sheets in accordance with the requirements
73
Process chart of manufacturing process of virgin packaging board
Top Layer and back layer for Market PulpMill pulp
Filler ndash Middle Layer (BCTMP)
Conveyor Pulper HD
Cleaner
Coarse
Screening
Storage
Chest
Stock
Prepration
Approach
Flow
Conveyor Pulper HD
Cleaner
Storage
Chest
Stock
Prepration
Approach
Flow
Board
machine wet
end section
(WIRE PART)
Board machine
wet end
section (PRESS PART)
Board machine
dry end section (DRYER PART)
Board machine
dry end section (COATING PART)
Board machine
dry end section (SOFT NIP amp
POPE REEL)
Board Machine Rewinding
section
Board Machine Finishing
House Sheeting Section
Board Machine Godown
Section
Dispatch to Coustomer
74
Manufacturing Facilities
Unit JKPM
Our Unit JKPM was established in 1962 at Rayagada Odisha and is located on a total land measuring 686 acres
(63697 acres leasehold and 4903 acres freehold)
Our Unit JKPM presently has an installed capacity of 125000 TPA for manufacturing paper and saleable pulp
In addition our blade coating facility was commissioned at the Unit JKPM in July 2005 to produce quality
coated paper enabling us to move up the value chain and capitalize on the growing market of coating paper The
capacity of the coating plant at the Unit JKPM is 46000 TPA
The total power requirement at our Unit JKPM is 225 MW with the peak load requirement at 235 MW of
which approximately 82 of the power requirement is met through own captive power plant and the balance
through purchase of power from GRIDCO (the power distribution company in Odisha) under contract demand
of 10 MVA at 132 KV For details see ―History and Certain Corporate Matters and ―Government and Other
Approvals on pages 87 and 257 respectively
The Unit JKPM meets water requirement of approximately 33000 m3d from river Nagavali a perennial river
flowing within one km distance from the unit For details see ―History and Certain Corporate Matters and
―Government and Other Approvals on pages 87 and 257 respectively
We have well-developed township Jaykaypur which is self-sufficient in various facilities including school
college medical centre bank post office shopping centre guest house employeeslsquo club officerslsquo mess and
religious places of worship Pursuant to the Scheme of Arrangment our Company has transferred 1806
residential units for its officers workers and contractors to JIHL with effect from April 1 2009
Our Unit JKPM has an effluent treatment plant that releases about 24500 m3d of treated effluent to the
Nagavali river The plant treats the effluent by way of an activated sludge process The clear effluent discharged
from the Unit JKPM conforms to the standards set by the Orrisa State Pollution Control Board
Unit CPM
Our Unit CPM was established in 1960 at Songadh Gujarat and is located on a total land measuring 39622
acres of freehold land
Our Unit CPM presently has an installed capacity of 55000 TPA for manufacturing paper and saleable pulp
Additionally we have set up a virgin packaging board plant at our Unit CPM which was commissioned in
October 2007 having an installed capacity of 60000 TPA and is equipped with contemporary technology
sourced from global leaders in the paper board machinery sector
At our Unit CPM the total power requirement is 16 MW and the peak load requirement is 17 MW The captive
power unit meets the entire power requirement Grid power is used only when captive power generation
equipment is under maintenance For details see ―History and Certain Corporate Matters and ―Government
and Other Approvals on pages 87 and 257 respectively
The Unit CPM meets water requirement of approximately 22000 m3d from river Ukai left bank canal sourced
from river Tapi reservoir flowing within a distance of 5 kms from the Unit CPM For details see ―History and
Certain Corporate Matters and ―Government and Other Approvals on pages 87 and 257 respectively
We have residential colony having various facilities including school bank post office guest house
employeeslsquo club officerslsquo mess places of religious worship and centre for medical facilities Pursuant to the
Scheme of Arrangment our Company has transferred 575 residential units for its officers and workers to SIHL
with effect from April 1 2009
Our Unit CPM has an effluent treatment plant having capacity of 30000 m3d This plant treats effluents from
different units like pulp mill chemical recovery cooling tower blow down and sewage from colony by way of
activated sludge process The clear effluent discharged from the Unit CPM confirms to the standards set by the
Gujarat State Pollution Control Board
75
Capacity utilization of our manufacturing units
Capacity utilization of each of our manufacturing unit for Fisca1 2010 Fiscal 2009 and for nine month period
ended March 31 2008 is set forth below
Particulars Fiscal 2010 () Fiscal 2009 () Nine month period ended
March 31 2008 ()
Unit JKPM ndash Paper and
saleable pulp
11014 10757 10392
Unit CPM ndash Paper and
saleable pulp
11860 11435 10619
Unit CPM ndash Packaging
board
11809 9578 4508
Total 11406 10617 9479
Proposed expansion
Manufacturing units
We seek to expand and develop our Unit JKPM in order to maintain our leadership position in the Indian paper
market We initiated the expansion and development plan of Unit JKPM in December 2010 and expect to
complete the proposed expansion by February 2013 Under the proposed expansion and development
programme we seek to expand the manufacturing capacity of our Unit JKPM and carrying out related
developments which include (a) installation of a new or augmented fibre line with a capacity to produce
approximately 215000 tonnes of pulp per annum and phasing out the existing fibreline with a capacity of
110000 BDMT (b) installation of new paper machine with a capacity to produce of 165000 tonnes of
woodfree copy paper per annum for manufacturing copier paper and other multi-functional office paper grades
and phasing out the existing paper machines with combined capacity of 41000 TPA (c) installation of a new
chemical recovery system with a new high pressure recovery boiler with a capacity of 1400 t dsdvirgin liquor
and phasing out the existing recovery boiler with a capacity of 660 t dsdvirgin liquor and (d) installation of
captive power generation facility of 55 MW replacing the existing captive power generation facility having
installed capacity of 199 MW
As a result of the expansion and development programme our installed capacity of paper at Unit JKPM is
expected to be 243000 TPA In addition the unit is expected to produce 32000 BDMT of saleable pulp which
would be available for external sales or transfer to virgin packaging board operations at Unit CPM Post
expansion the combined installed capacity of our Company for paper and saleable pulp manufacturing is
expected to be 330000 TPA
The table below sets forth our present and planned total installed capacity after implementation of our expansion
and development plan
Unit Present installed capacity (TPA) Proposed installed capacity (post
expansion) (TPA)
CPM
Paper and saleable pulp 55000 55000
Virgin Packaging board 60000 60000
JKPM
Paper and saleable pulp 125000 275000
Total
Paper saleable pulp and virgin
packaging board
240000 390000
Technology upgradation
Pursuant to the proposed expansion we intend to install a new paper machine equipped with new generation
technology named Process Line Packagelsquo based on Voithlsquos OnePlatform Conceptlsquo supplied by Voith Paper
Germany for manufacturing cut-size multi-purpose office paper
In addition the proposed expansion includes installation of a wood handling unit which includes a new chipping
line with log washing The new chipping line would consist of one new chipper chip storage and two new chip
76
screens Further the Company intends to install of a new chemical recovery system with a new high pressure
recovery boiler with a capacity of 1400 t dsdvirgin liquor and phasing out the existing recovery boiler with a
capacity of 660 tdsdvirgin liquor and installation of captive power generation facility of 55 MW replacing
the existing captive power generation facility having an installed capacity of 199 MW
Approvals
In order to undertake the proposed expansion at Unit JKPM we have applied to obtain approval of the state
government of Odisha on May 21 2010 under Orissa Industries (Facilitation) Act 2004 The terms of reference
of the proposed expansion at Unit JKPM was issued by MoEF on August 16 2010 pursuant to which an
environmental impact assessment and environment management plan dated November 2010 (EIA) has been
prepared by MIN MEC Consultancy Private Limited The EIA was prepared in order to amongst other things
establish the present environment scenario of the area anticipate the impacts of the proposed project on the
environment during its construction and operation phase and suggest preventive and mitigative measures to
minimize adverse impacts and to maximize beneficial impacts A public hearing in accordance with the rules
prescribed in the EIA Notification was held on December 22 2010 For further details see ―Government and
Other Approvals on page 257
Implementation schedule
On the basis of quotations received from various suppliers of fibre line pulp machine and recovery boiler the
Company has issued letter of intents in the month of December 2010 and January 2011
The expected schedule of key expansion and development activities for the Unit JKPM is given below
Particulars Expected Completion
Basic engineering June 2011
Receipt of vendor data July 2011
Detailed engineering activities December 2011
Equipment delivery August 2012
Civil construction September 2012 Erection of plant and machinery October 2012 Pre-commissioning trials and commissioning November 2012 Commencement of saleable production February 2013
Raw materials and other purchases
We will continue to procure privately grown bamboo from North Odisha and from the forests managed by the
state governments of Odisha and West Bengal Hardwood is expected to be procured from various local
suppliers and depots in the states of Andhra Pradesh West Bengal and Odisha
The raw water intake after implementation of our expansion and development plan is expected to continue to be
met from Nagavali River The total water requirement after the completion of expansion and development plan
is expected to increase from 33000 m3d to 35000 m
3d
The total power requirement at our Unit JKPM is expected to increase from 225 MW to 467 MW With the
installation of new of captive power generation facility of 55 MW our complete power requirement for the Unit
JKPM shall be met However our Company intends to continue the arrangement with GRIDCO with respect to
the purchase of power as a back-up
Additionally the industrial chemicals required will be procured from the local markets on a spot deliveryndashbasis
depending upon price and availability
Environmental impact
As a result of the proposed expansion of the Unit JKPM the level of dissolved COD in the effluent treatment
plant is expected to rise the specific flow rate per pulp and paper production is expected to drop and AOX load
is expected to drop as a result of change to ECF bleaching Our Company intends to upgrade the effluent
treatment targets and improve the removal efficiency of the organic matter Further the total amount of fibrous
waste sludge is expected to decrease but the amount of waste biological sludge is expected to increase Our
Company intends to create a new hazardous waste landfill near the wastewater treatment plant at our Unit
77
JKPM
Financing Plan
The total costs estimated to part finance the expansion and development of the Unit JKPM is ` 165337 crores
The table below sets out the means for financing the proposed expansion and development
(In ` crores)
Expenditure Items Total Estimated
Cost
Amount Deployed as
of December 31 2010
Amount Proposed to
be Financed from Net
Proceeds
Balance Amount
Required
1 2 3 4 = 1- 3
Part finance the
expansion and
development of the
Unit JKPM
165337 437 23500 141837
As certified by Lodha amp Co Chartered Accountants by their certificate dated January 28 2011
Includes the amount of ` 437 crores deployed as of December 31 2010 towards the expansion and development of the
Unit JKPM to be recouped from the Net Proceeds This amount is proposed to be financed through a combination of internal accruals debt and issue of additional securities
such as the proposed 2011 FCCBs In terms of letter dated January 28 2011 Lodha amp Co Chartered Accountants have
certified that the amount of existing identifiable internal accruals as on December 31 2010 is ` 11608 crores
To meet a portion of balance amount required for expansion of Unit JKPM we have entered into firm-tie up
arrangements with various lenders such as DZ Bank State Bank of India Axis Bank Indian Bank and Exim
Bank
For details see ―Objects of the Issue on page 34
Plantation initiatives
Our plantation initiative was started in 1990 at our Unit JKPM and later extended to our Unit CPM Our
Company has been aggressively promoting social and farm forestry and high yielding clones developed by our
in-house research and development institutions carried out on the lands owned by people residing at villages
near our manufacturing units (ie in Odisha and Andhra Pradesh for our Unit JKPM and in Gujarat and
Maharashtra for our CPM Plant) to provide for sustainable supply of raw materials and increasing benefit to the
villagers Our Company has been promoting plantation of high yielding short duration pulpwood species with
the help of villagers in areas in a radius of about 250-300 kms from our manufacturing units Currently a well-
equipped network comprising around 60 de-centralized nurseries and two centralized nurseries contain 18 mist
chambers and several clone testing and demonstration fields that are used for development and production of
clonal plants Fast growing clones have been identified that are able to produce 100-120 MTha of hardwood in
a period of five to six years as compared to 50-60 MTha from seed route seedlings in six to seven years Clonal
seedlings and seed route seedlings are distributed among villagers with a buyback understanding Regular
technical assistance is made available to the villager for the proper upkeep and growth of plants
Procurement of wood from farm forestry sources now accounts for over 70-75 of our Companylsquos raw
materials consumption Our Company has developed seeds orchards of high yielding strains of various species
including Eucalyptus and Casuarina We are presently operating such social and farm forestry programs in
Koraput Rayagada Ganjam Gajpati and Kalahandi districts of Odisha Dhule Nandurbar Jalgaon and Nashik
districts of Maharashtra Tapi Surat Bharuch Baroda Kheda and Valsad districts of Gujarat and Vizianagram
Srikakulam and Vishakhapatnam districts of Andhra Pradesh This benefits our Company in the long term
ensuring continuous procurement of hardwood and bamboo
We have been able to generate over 75000 hectares of plantations through our social forestry and farm forestry
programs The ecological benefits from plantations include
control of surface run-off nutrient and soil erosion
improvement of microclimates such as lowering of soil temperature and reduction in evaporation of
moisture through mulching and shading
improvement in soil structure through constant addition of organic matter from decomposed litter
78
use and restoration of degraded marginal lands
greening of wastelands and increase in the area under tree cover and
reduction of pressure on natural forests
The plantation program undertaken by the Company has the following key objectives
maximization of farm forestry within 200 kms radius of the manufacturing units
research and development for disease resistant varieties and improvement of farm productivity
diversity of species to be maintained to avoid monoculture
focus on less productive lands and providing assistance to farmers for sustainable management of land
development of agro-forestry and
implementation of gate-purchase scheme for direct purchase of raw materials from farmers
Distribution Sales and Marketing
Our sales and marketing office is headquartered in New Delhi It is responsible for the entire sales and
marketing activities including planning strategy product development product promotion brand management
and advertising Our Company has four Regional Marketing Offices located at New Delhi Mumbai Kolkata
and Chennai These offices comprise sales and product managers who operate as brand managers to meet the
local market and customer requirements The overall sales and marketing team comprises of 63 people
The marketing of our brands is undertaken domestically by a dedicated and experienced team and an extensive
distribution network Additionally we export our paper and virgin packaging board to over 40 countries
including in Brazil UK Turkey Middle East Sri Lanka Bangladesh Singapore Malaysia and several African
nations Sales in countries outside India are undertaken directly
Presently our distribution network comprises numerous distributors across India four carrying and forwarding
agents and 134 wholesellers Based on their long term experience in the paper and stationery they facilitate in
creating awareness about our products and their features amongst the customers and thereby also help in product
marketing
Traditionally our distribution has been driven through a chain of wholesalers who supply directly to large
customers and are also responsible for distributing the products in their respective areas through a network of
dealers and sub-dealers This channel is utilised to deal with all bulk consumers needing direct servicing
including customers in the printing and publishing industry
Our Company distributes its products through the following modes
(i) direct sales to wholesalers from the manufacturing units
(ii) exports to international markets directly from the manufacturing units and
(iii) through our depots managed by clearing and forwarding (CampF) agents and through consignment
agents
Research and Development
In addition to a well equipped laboratory responsible for various development works in order to promote basic
and applied research in the paper industry for product development process studies and technology
development our Company has promoted an autonomous research institution Pulp and Paper Research Institute
(―PAPRI) at our Unit JKPM in Jaykaypur in 1971 Since its inception PAPRI has carried out studies in the
field of pulp and paper making and raw material development (including clonal propagation and tissue culture)
The institute has a fully equipped laboratory that carries out diversified tests and trials PAPRI has run various
trials from time to time to infuse latest environment friendly technologies in areas like pulping of raw materials
paper manufacturing processes and formulations
Human Resource
79
We believe that our ability to maintain our growth depends to a large extent on our strength to attract train
motivate and retain employees As of December 31 2010 we had approximately 2823 full-time employees on
the rolls of our Company
Category No of Employees
Workmen 1597
Officers 657
Supervisors 214
Staff 132
Sub staff 50
Casual employees 173
Total 2823
Our Company has several human resource initiatives in place conforming to contemporary standards to nurture
and develop its human resources Efforts are made to enhance the individual skills and abilities of our
employees through various training programmes and to make the overall work experience meaningful The
developmental needs for each employee is identified at the time of annual appraisal and employees are put
through an appropriate mix of internal and external training programmes and other facilitating mechanisms Our
Company emphasizes on improved business performance year after year and accordingly the individual goals
and targets of the management team are finalized in a workshop prior to the beginning of the relevant financial
year As a part of the customer-in culture a few distinguished dealers wholesalers are invited to share their
experiences and expectations from our Company during the Goal Setting Workshoplsquo thereby helping our
senior management to orient their goals for the coming Fiscal Year Besides several visits to customer locations
by the executives not working in our sales and marketing department are also arranged from our manufacturing
units as well as our head office in New Delhi Further our Company has instituted The Executive Coachinglsquo
along with Ms Hewitt Associates a renowned HR Consultancy firm a program for our senior executives to
train them in delivering quality performance
At the top management level strategic skills and organization building skills are emphasized at the middle
management level it is largely focused on preparing future leadership whereas at junior management levels
appropriate functional skills training is imparted Our Company has organized summits for our senior
management such as a 3-day summit on Strategies for Quantum Growthlsquo conducted at the ISB Hyderabad in
November 2008 Additionally some of our promising employees have also undergone one to two weeks
Leadership Programmeslsquo at IIM Bangalore and IIM Lucknow
Awards and Recognitions
Our Company and our manufacturing units have received numerous awards and recognitions some of which are
listed below
bull Sword of Honour from British Safety Council United Kingdom for our Unit JKPM
bull Paper Mill of the Yearlsquo award from Indian Paper Makers Association for our Unit JKPM in 1995
bull Our Unit JKPM has been adjudged as the First Greenest Paper Milllsquo in 1999 and Second Greenest Paper
Milllsquo in 2004 by Centre for Science amp Environment (CSE)
bull Paper Mill of the Yearlsquo award from Indian Paper Manufacturers Association for our Unit CPM in 2004
bull National Safety Award-2004lsquo by Ministry of Labour amp Employment GoI to our Unit CPM
bull CII Sohrabji Godrejlsquos National Award for Excellence in Energy Management 2005lsquo to our Unit CPM
bull CII National Awardlsquo to our Unit CPM for excellence in energy management in 2005
bull The IPMA Energy Conservation Awardlsquo to our Unit CPM in 2007
bull Greentech Environment Excellence Award 2010 - Winner of Gold Award in Paper Sectorlsquo to our Unit
CPM
80
bull Greentech Environment Excellence Award 2010 - Winner of Silver Award in Paper Sectorlsquo to our Unit
JKPM
bull National Energy Conservation Award 2009 - Merit Certificate in the Pulp amp Paper Sectorlsquo to our Unit
CPM
bull Good Corporate Citizen Award-2006lsquo by PHD Chambers of Commerce amp Industry
bull TPM Excellence First Category Awardlsquo in 2006 by Japan Institute of Plant Maintenance for both our
manufacturing units
bull Award for Excellence in Consistent TPM Commitment ndash 2009lsquo by Japan Institute of Plant Maintenance for
our Unit JKPM
Intellectual Properties
We have six trademarks registered in our name including JK Copier Pluslsquo and JK Bondlsquo Further we have
filed 11 applications in relation to change in name from JK Corp Limitedlsquo to The Central Pulp Mills
Limitedlsquo and from The Central Pulp Mills Limitedlsquo to JK Paper Limitedlsquo for trademarks such as JK Paper
Limitedlsquo (logo) and JK Copierlsquo In addition eight applications are pending for registration of our trademarks
such as JK TuffPaclsquo before Registrar of Trade Marks For further details see ldquoGovernment and other
Approvalsrdquo on page 257
Properties
In terms of the lease agreement dated May 7 2008 our Corporate Office has been leased to us by Childrenlsquos
Book Trust until November 15 2016 Our Unit CPM is located at 39622 acres of freehold land Further our
Unit JKPM located on a total land measuring 686 acres of which 4903 acres is freehold and 63697 acres has
been leased to us on 99 yearslsquo lease from State of Odisha Pursuant to the Scheme of Arrangement between our
Company Songadh Infrastructure amp Housing Limited and Jaykaypur Infrastructure amp Housing Limited with
effect from April 1 2009 4851 acres of land of our Unit CPM stands transferred to Songadh Infrastructre amp
Housing Limited and 12278 acres of land of our Unit JKPM which includes 264 acres of freehold land and
12014 acres of leasehold land stands transferred to Jaykaypur Infrastructure amp Housing Limited See ―Our
Promoter and Group Companies on page 117
Insurance
We maintain insurance against property damage caused by fire burglary terrorism earthquake and other perils
that may result in physical damage to or destruction of our offices manufacturing units equipment raw
materials inventory and business interruption We also have a marine cargo open policy for transport of
machines All policies are subject to standard deductibles and coverage limitations In addition we maintain
group personnel accident policy and group mediclaim policy with respect to certain of our employees We also
maintain a range of general commercial liability insurance including directors and officers and company
reimbursement policy Our insurance policies are provided by domestic insurance companies
Environment
Our Company has been focused in terms of adopting and improving the practices contributing to continual
environment improvement and sustainable development Both our manufacturing units are ISO 14001lsquo certified
for their eco-friendly operations and OHSAS 18001 2007lsquo certified for occupational health and safety
management system standard Our Unit CPM has won the National Safety Award from Ministry of Labour GoI
for the year 2004 and the National Award for Excellence in Energy Management in 2005 by CII-Sohrabji
Godrej Green Business Centre Hyderabad which declared our Unit CPM as an ―Energy Efficient Unit We
deploy eco-friendly technology to provide a safe and clean environment in its neighbourhood In recognition of
our efforts in these areas the Unit CPM was conferred the Greentech Environment Excellence Gold Award
2010lsquo and the Unit JKPM was conferred the prestigious National Ground Water Augmentation Award ndash 2008lsquo
by Ministry of Water Resources GoI and the Certificate of Appreciation for Excellence in Energy Management
ndash 2008lsquo by Bureau of Energy GoI
Some of the recent initiatives taken by our Company to further improve the environment include the following
81
We have implemented an oxygen delignification system and chlorine dioxide system at the Unit CPM
to reduce elemental chlorine consumption in the process
We have installed high efficiency DCS controlled modern recovery boiler at the Unit CPM to improve
upon the chemical recovery efficiency and also help in conserving coal for steam generation
We are using treated effluent for internal use of effluent treatment plant and chips washing to save
water
We are increasing fly ash utilization by 25 and
We have installed lime kilns at both our manufacturing units to recover lime from the lime sludge This
has brought down the quantity of lime sludge disposed by about 85 besides reducing the requirement
of lime
In Fiscal 2008 we signed an Emission Reduction Purchase Agreement (ERPA) with the Bio Carbon Fund of
World Bank for sale of carbon emission reductions under the Clean Development Mechanism (CDM)
Health safety and risk management
We have implemented work safety measures and standards to ensure healthy and safe working conditions
equipment and systems of work for all the employees contractors workers visitors and customers at our
manufacturing units We intend to reduce waste and other harmful pollutants by careful use of materials energy
and other resources while maximizing recycling opportunities Each of our manufacturing unit has its own work
safety management department which ensures compliance with safety measures and standards In addition we
have established a separate in-house safety department to address all safety related issues with respect to our
manufacturing units We have established a committee for work safety which sets safety measures and standards
in accordance with the relevant safety laws and regulations in India We oversee the implementation and
compliance of these safety measures and standards
Starting at the design and engineering of our manufacturing units we adopt safety technology for all our
equipment electrical machines and electronic control systems as per international standards of industrial safety
Both our manufacturing units have integral safety systems and emergency shutdown systems for stoppage of the
manufacturing units in abnormal conditions
Corporate and social responsibility
As a part of our corporate and social responsibility initiatives our Unit JKPM established the Lakshmipat
Singhania School at Jaykaypur in 1964 Our Unit JKPM also commenced an adult literacy program in 2005 and
is currently operating 18 adult literacy centres Our Unit JKPM also organizes approximately 20 healthcare
camps every year for the benefit of people residing near the unit As a community development initiative our
Unit JKPM has formed women self-help groupslsquo which take up income generation projects such as production
and marketing of hill brooms powders and cultivation of mushroom and hybrid maize Our Unit JKPM has also
started tailoring and embroidery training centre in the year 2009 as a part of its skill development programme
for tribal girls
Additionally our Unit CPM established the Singhania Public School at Songadh in the year 2007 Our Unit
CPM has also commenced an adult literacy program in 2004 and is currently operating 13 adult literacy centres
Our Unit CPM also runs a mobile medical unit for weekly visits in villages and organized 14 medical camps in
Fiscal 2010 for the benefit of villagers Our Unit CPM has also started skill development program for women
wherein it provides training for skills such as cutting sewing and painting It also conducts program to provide
technical training to students of various industrial training institutes Further our Unit CPM has also provided
infrastructural support for construction and repair of roads and supply for piped water in Songadh
Competition
We compete with companies operating in the paper and virgin packaging board business in India and other
countries we operate in Some of our competitors may have more experience than us in the manufacturing and
sale of paper and virgin packaging board products In addition a number of our competitors may have more
82
resources than us In coated paper segment our primary competitor is Ballarpur Industries Limited In writing
and printing paper segment our primary competitors are Ballarpur Industries Limited TNPL AP Paper Mills
and West Coast Paper Mills among others In virgin packaging board segment ITC Limited is our major
competitor Further we face competition from countries such as China Korea Indonesia from where lower
price coated paper is imported into India Additionally the competition in paper industry ranges from large
well-established players to small units in the unorganized segment Small unorganized players mainly compete
in the low value added segments like creamwove and kraft paper whereas the high value added segments like
copier paper coated paper and virgin packaging board are mainly controlled by the larger players See
―Industry Overview on page 51
83
REGULATIONS AND POLICIES
The following description is a summary of various sector-specific laws and regulations in India prescribed by
the GoI and various state Governments which are applicable to our Company The information contained in
this chapter has been obtained from publications in the public domain The regulations set out below may not be
exhaustive and are only intended to provide general information to the investors and are neither designed nor
intended to substitute for professional legal advice
Set forth below are certain significant legislations and regulations that generally govern our business operations
The Factories Act 1948 (the ldquoFactories Actrdquo)
State governments prescribe rules with respect to the prior submission of plans their approval for the
establishment of factories and the registration and licensing of factories
The Factories Act provides that the occupierlsquo of a factory (defined as the person who has ultimate control over
the affairs of the factory and in the case of a company any one of the directors) shall ensure the health safety
and welfare of all workers while they are at work in the factory especially in respect of safety and proper
maintenance of the factory such that it does not pose health risks the safe use handling storage and transport of
factory articles and substances provision of adequate instruction training and supervision to ensure workerslsquo
health and safety cleanliness and safe working conditions
If there is a contravention of any of the provisions of the Factories Act or the rules framed thereunder the
occupier and manager of the factory may be punished with imprisonment for a term up to two years or with a
fine up to ` 100000 or with both and in case of contravention continuing after conviction with a fine of up to
` 1000 per day of contravention In case of a contravention which results in an accident causing death or
serious bodily injury the fine shall not be less than ` 25000 and ` 5000 respectively
Environmental Laws
Our operations require various environmental and other permits covering among other things water use and
discharges stream diversions solid waste disposal and air and other emissions The applicability of these laws
and regulations varies from operation to operation and is also dependent on the jurisdiction in which we operate
Compliance with relevant environmental laws is the responsibility of the occupier or operator of the facilities
Major environmental laws applicable to our operations include
Indian Forest Act 1927 (the ldquoForests Actrdquo)
The Forests Act consolidates the law relating to forests the transit of forest produce and the duty leviable on
timber and other forest produce Under Section 4 of the Forests Act the state government is empowered to
declare proprietary rights over forests or forest produce by issuing a notification in the Official Gazette Further
as per Section 84 of the Forests Act land so acquired by issuing such a notification in the Official Gazette is
deemed to be acquired for a public purpose under the Land Acquisition Act 1894 as amended
As per Section 39 of the Forests Act the GoI is also authorised to declare by notification the duty leviable on
timber or other forest produce which is (1) produced in territories over which the GoI has any right and (2)
which is brought into territories to which the Forests Act applies There is no monetary limit under the Forests
Act on the amount chargeable as purchase money or royalty on any timberforest produce Additionally
Chapter IX of the Forests Act prescribes penalties for offences in relation to forest produce
The Environment (Protection) Act 1986 (the ldquoEPArdquo)
The EPA is an umbrella legislation in respect of the various environmental protection laws in India The EPA
vests the GoI with the power to take any measure it deems necessary or expedient for protecting and improving
the quality of the environment and preventing and controlling environmental pollution This includes rules for
inter alia laying down the quality of environment standards for emission of discharge of environment
pollutants from various sources inspection of any premises plant equipment machinery examination of
manufacturing processes and materials likely to cause pollution Penalties for violation of the EPA include fines
84
up to ` 100000 or imprisonment of up to five years or both
There are provisions with respect to certain compliances by persons handling hazardous substances furnishing
of information to the authorities in certain cases establishment of environment laboratories and appointment of
government analysts
The Environment Impact Assessment Notification SO 1533(E) 2006 (the ldquoEIA Notificationrdquo)
The EIA Notification issued under the EPA and the Environment (Protection) Rules 1986 as amended
provides that the prior approval of the MoEF GoI or State Environment Impact Assessment Authority as the
case may be is required for the establishment of any new project and for the expansion or modernisation of
existing projects specified in the EIA Notification The EIA Notification states that obtaining of prior
environmental clearance includes a maximum of four stages ie screening scoping public consultation and
appraisal
An application for environmental clearance is made after the identification of prospective site(s) for the project
andor activities to which the application relates but before commencing any construction activity or
preparation of land at the site by the applicant Certain projects which require approval from the State
Environment Impact Assessment Authority may not require an Environment Impact Assessment Report For
projects that require preparation of an Environment Impact Assessment Report public consultation involving
both public hearing and written response is conducted by the State Pollution Control Board The appropriate
authority makes an appraisal of the project only after a Final EIA Report is submitted addressing the questions
raised in the public consultation process
The prior environmental clearance granted for a project or activity is valid for a period of five years in the case
of all projects and activities in the paper manufacturing sector This period of validity may be extended by the
regulatory authority concerned by a maximum period of five years
Coal or lignite based thermal power plants with a capacity of 500 MW or more requires clearance from the
MoEF GoI Coal or lignite based thermal power plants with a capacity of more than 50 MW but less than 500
MW requires clearance from State Environment Impact Assessment Authority
The Hazardous Wastes (Management Handling and Transboundary Movement) Rules 2008 (the
ldquoHazardous Wastes Rulesrdquo)
The Hazardous Wastes Rules aim to regulate the proper collection reception treatment storage and disposal of
hazardous waste by imposing an obligation on every occupier and operator of a facility generating hazardous
waste to dispose such waste without adverse effect on the environment including through the proper collection
treatment storage and disposal of such waste Every occupier and operator of a facility generating hazardous
waste must obtain an approval from the relevant state Pollution Control Board The occupier the transporter
and the operator are liable for damages caused to the environment resulting from the improper handling and
disposal of hazardous waste The operator and the occupier of a facility are liable for any fine that may be levied
by the relevant State Pollution Control Boards Penalty for the contravention of the provisions of the Hazardous
Waste Rules includes imprisonment up to five years and imposition of fines as may be specified in the EPA or
both
The Water (Prevention and Control of Pollution) Act 1974 (the ldquoWater Actrdquo)
The Water Act aims to prevent and control water pollution as well as restore water quality by establishing and
empowering the Central Pollution Control Board and the State Pollution Control Boards Under the Water Act
any person establishing any industry operation or process any treatment or disposal system use of any new or
altered outlet for the discharge of sewage or new discharge of sewage must obtain the consent of the relevant
State Pollution Control Board which is empowered to establish standards and conditions that are required to be
complied with In certain cases the State Pollution Control Board may cause the local Magistrates to restrain the
activities of such person who is likely to cause pollution Penalty for the contravention of the provisions of the
Water Act include imposition of fines or imprisonment or both
The Central Pollution Control Board has powers inter alia to specify and modify standards for streams and
wells while the State Pollution Control Boards have powers inter alia to inspect any sewage or trade effluents
and to review plans specifications or other data relating to plants set up for treatment of water to evolve
85
efficient methods of disposal of sewage and trade effluents on land to advise the state government with respect
to the suitability of any premises or location for carrying on any industry likely to pollute a stream or a well to
specify standards for treatment of sewage and trade effluents to specify effluent standards to be complied with
by persons while causing discharge of sewage to obtain information from any industry and to take emergency
measures in case of pollution of any stream or well
A central water laboratory and a state water laboratory has been established under the Water Act
The Water (Prevention and Control of Pollution) Cess Act 1977 (the ldquoWater Cess Actrdquo)
The Water Cess Act provides for levy and collection of a cess on water consumed by industries with a view to
augment the resources of the Central and State Pollution Control Boards constituted under the Water Act Under
this statute every person carrying on any industry is required to pay a cess calculated on the basis of the amount
of water consumed for any of the purposes specified under the Water Cess Act at such rate not exceeding the
rate specified under the Water Cess Act A rebate of up to 25 on the cess payable is available to those persons
who install any plant for the treatment of sewage or trade effluent provided that they consume water within the
quantity prescribed for that category of industries and also comply with the provision relating to restrictions on
new outlets and discharges under the Water Act or any standards laid down under the EPA For the purpose of
recording the water consumption every industry is required to affix meters as prescribed Penalties for non-
compliance with the obligation to furnish a return and evasion of cess include imprisonment of any person for a
period up to six months or a fine of `1000 or both and penalty for non payment of cess within a specified time
includes an amount not exceeding the amount of cess which is in arrears
The Air (Prevention and Control of Pollution) Act 1981 (the ldquoAir Actrdquo)
Pursuant to the provisions of the Air Act any person establishing or operating any industrial plant within an air
pollution control area must obtain the consent of the relevant State Pollution Control Board prior to establishing
or operating such industrial plant The State Pollution Control Board is required to grant consent within a period
of four months of receipt of an application but may impose conditions relating to pollution control equipment to
be installed at the facilities No person operating any industrial plant in any air pollution control area is
permitted to discharge the emission of any air pollutant in excess of the standards laid down by the State
Pollution Control Board The penalties for the failure to comply with the provisions of the Air Act include
imprisonment of up to six years and the payment of a fine as may be deemed appropriate
Under the Air Act the Central Pollution Control Board has powers inter alia to specify standards for quality of
air while the State Pollution Control Boards have powers inter alia to inspect any control equipment
industrial plant or manufacturing process to advise the state government with respect to the suitability of any
premises or location for carrying on any industry and to obtain information from any industry
Kyoto Protocol and Carbon Credits
The Kyoto Protocol is a protocol to the International Framework Convention on Climate Change with the
objective of reducing greenhouse gases (GHG) that cause climate change The Kyoto Protocol was agreed on
December 11 1997 at the third conference of the parties to the treaty when they met in Kyoto and entered into
force on February 16 2005 India ratified the Kyoto Protocol on August 22 2006
The Kyoto Protocol defines legally binding targets and timetables for reducing the GHG emissions of
industrialized countries that ratified the Kyoto Protocol
Governments have been separated into developed nations (who have accepted GHG emission reduction
obligations) and developing nations (who have no GHG emission reduction obligations) The protocol includes
flexible mechanismslsquo which allow developed nations to meet their GHG emission limitation by purchasing
GHG emission reductions from elsewhere These can be bought either from financial exchanges from projects
which reduce emissions in developing nations under the Clean Development Mechanism (―CDM) the Joint
Implementation scheme or from developed nations with excess allowances
Typical emission certificates are
Certified Emission Reduction (CER)
Emission Reduction Unit (ERU) and
86
Voluntary or Verified Emission Reductions (VER)
CERs and ERUs are certificates generated from emission reduction projects under the CDM for projects
implemented in developing countries and under Joint Implementation (―JI) for projects implemented in
developed countries respectively These mechanisms are introduced within the Kyoto Protocol For projects
which cannot be implemented as CDM or JI but still fulfill the required standards VERs can be generated
VERs however cannot be used for compliance under the Kyoto Protocol
Other Applicable Regulations
In addition to the aforementioned material legislations applicable to our Company following are laws that apply
to our operations
The Contract Labour (Regulation and Abolition) Act 1970
The Employeeslsquo Provident Funds and Miscellaneous Provisions Act 1952
The Employeeslsquo State Insurance Act 1948
The Industrial Disputes Act 1947
The Payment of Wages Act 1936
The Workmenlsquos Compensation Act 1923
The Minimum Wages Act 1948
The Payment of Bonus Act 1965 and
The Payment of Gratuity Act 1972
In relation to sale of power we are required to comply with rules bye laws and circulars issued by the Power
Exchange India Limited
87
HISTORY AND CERTAIN CORPORATE MATTERS
Incorporation
We were incorporated as The Central Pulp Mills Limitedlsquo on July 4 1960 under the Companies Act in the State
of Maharashtra We received our certificate of commencement of business on August 27 1960 Subsequently
the name of our Company was changed from The Central Pulp Mills Limitedlsquo to JK Paper Limitedlsquo and a
fresh certificate of incorporation to this effect was issued by the Registrar of Companies Gujarat Dadra and
Nagar Haveli on November 5 2001 after consolidation of the Unit JKPM which was operating as a division of
JK Lakshmi Cement Limited for its paper manufacturing business with our Company as part of a restructuring
exercise undertaken by JK Lakshmi Cement Limited
Changes in our registered office
Pursuant to the order of the Board of Industrial and Financial Reconstruction (the ―BIFR) dated May 13 1992
the registered office of the Company was transferred from the State of Maharashtra to the State of Gujarat on
August 4 1992
Scheme of Rehabilitation
The BIFR by its orders dated May 13 1992 and May 7 1994 (Case No 16788 In re Central Pulp Mills
Limited) sanctioned a scheme for the rehabilitation of our Company as it was declared a sick industrial company
in terms of the Sick Industrial Companies (Special Provisions) Act 1985 (―Scheme of Rehabilitation) in
1989 Pursuant to the Scheme of Rehabilitation the management of the Company was transferred from the
erstwhile promoters of our Company namely Paper amp Pulp Conversions Limited Mr MS Parkhe and their
associates to JK Industries Limited (subsequently renamed as JK Tyre amp Industries Limited) and its associates
by transfer of entire shareholding of the erstwhile promoters amounting to 4089 of the issued subscribed paid
up capital of the Company to JK Industries Limited and its associates at a discount (at the rate of ` 52 per
equity share of face value ` 100 each) and a one time settlement was arrived for settlement of certain dues of
financial institutions and banks
The cost of rehabilitation as per the Scheme of Rehabilitation was ` 13350 crores This amount was financed by
issue of fresh capital for an amount of ` 7000 crores including issue of warrants to JK Tyre amp Industries
Limited and Straw Products Limited (subsequently renamed as JK Lakshmi Cement Limited) aggregating to `
50 crores an unsecured loan of ` 1900 crores supplierslsquo deferred credit of ` 2100 crores and internal accruals
of ` 1530 crores along with certain reliefs and concessions granted in accordance with the Scheme of
Rehabilitation Subsequently pursuant to BIFR order dated June 24 1996 the issued subscribed and paid up
share capital of our Company was reduced by 70 ie from ` 7523 crores to ` 2257 crores along with a sub-
division of the face value of the equity shares of the Company from ` 100 to ` 10 The BIFR by its order dated
February 17 1997 upon consideration of the annual report of our Company for the financial year ended June
30 1996 held that our Company had ceased to be a sick industrial company within the meaning of Section
3(1)(o) of the Sick Industrial Companies (Special Provisions) Act 1985
Scheme of Compromise
The High Court of Gujarat by its order dated August 30 2001 in Company Petition No 313 of 2000 under
Section 391(2) of the Companies Act approved the scheme of compromisearrangement between JK Lakshmi
Cement Limited (―JKLC) the lenders bankers and shareholders of JKLC our Company and the shareholders
of our Company for restructuring of debts of JKLC due to its lenders and bankers and for reconstruction of
JKLC and our Company (―Scheme of Compromise) This was achieved by the transfer of the assets and
liabilities of the Unit JKPM (which was part of JKLC) by way of slump sale for a lumpsum consideration of `
500 crore to our Company with effect from April 1 2000 In addition our Company allotted 16200000 8
OCCRPS and 10000000 10 CRPS to lenders of JKLC on November 29 2001 For details see ―Capital
Structure on page 23
Scheme of Arrangement
The High Court of Orissa and the High Court of Gujarat in terms of their orders dated October 1 2010 and
December 24 2010 respectively sanctioned a scheme of arrangement between the Company SIHL JIHL and
88
their shareholders pursuant to which (i) housing business which is carried on by the Company and including all
assets rights liabilities and obligations (whether movable or immovable tangible or intangible) located in the
state of Gujarat of whatsoever nature of the staff housing undertaking as on April 1 2009 (―CPM Staff
Housing Undertaking) were to be transferred to Songadh Infrastructure amp Housing Limited and (ii) housing
business which is carried on by the Company and including all assets rights liabilities and obligations (whether
movable or immovable tangible or intangible) located in the state of Odisha of whatsoever nature of the staff
housing undertaking as on April 1 2009 (―JKPM Staff Housing Undertaking) were to be transferred to
Jaykaypur Infrastructure amp Housing Limited (―Scheme of Arrangement) Songadh Infrastructure amp Housing
Limited and Jaykaypur Infrastructure amp Housing Limited are wholly owned subsidiaries of our Company
The Scheme of Arrangement became effective on January 20 2011 and is operative from April 1 2009
Accordingly upon the Scheme of Arrangement becoming effective the CPM Staff Housing Undertaking stood
transferred to Songadh Infrastructure amp Housing Limited and the JKPM Staff Housing Undertaking stood
transferred to Jaykaypur Infrastructure amp Housing Limited both with effect from April 1 2009
As a consideration Songadh Infrastructure amp Housing Limited shall issue 4900000 equity shares and
8673142 0 redeemable debentures of ` 10 each aggregating to ` 1357 crore to our Company and
Jaykaypur Infrastructure amp Housing Limited shall issue 4900000 equity shares and 33497896 0
redeemable debentures of ` 10 each aggregating to ` 3840 crores to our Company For further details on the
impact of this scheme on our results operation and financial condition see ―Managementbdquos Discussion and
Analysis of Financial Condition and Results of Operationsrdquo on page 189
Major Events
Year Event
1992 Scheme of rehabilitation sanctioned by the BIFR pursuant to which the JK Group acquired control
over our Company
1992 Re-admission of dealing of our Equity Shares on the Bombay Stock Exchange Limited with effect
from November 5 1992
1997 Pursuant to the order of the BIFR dated February 17 1997 our Company was no longer a sick
industrial companylsquo in terms of the Sick Industrial Companies (Special Provisions) Act 1985
2001 The Scheme of Compromise was approved by the order of the High Court of Gujarat dated August 30
2001 pursuant to which Unit JKPM was transferred to our Company
2004 The Unit CPM of the Company received the ―Paper Mill of the Year Award from the Indian Paper
Manufacturerslsquo Association
2004 3 Leaves Awardlsquo by the Centre for Science and Environment for leadership in efficient process
management reduction in water use and promotion of farm forestry
2005 Listing of Equity Shares on National Stock Exchange of India Limited
2006 Issue of 125 unsecured foreign currency convertible bonds for an aggregate value of USD 5000000
due for redemption on March 30 2011 at 130441 of their principal amount and 7700000 global
depositary receipts (the ―GDRs) by way of an Offering Circular dated March 30 2006
2007 Forayed into the packaging board business with the installation of a packaging board plant with an
installed capacity of 60000 TPA in our Unit CPM
2009 Jaykaypur Infrastructure amp Housing Limited and Songadh Infrastructure amp Housing Limited became
our wholly owned Subsidiaries with effect from April 30 2009
2010 The Scheme of Arrangement between the Company and its Subsidiaries was approved by the High
Court of Orissa and the High Court of Gujarat in terms of their orders dated October 1 2010 and
December 24 2010
Our Company has not changed its activities or discontinued any lines of business during the last five years
which may have a material effect on our financial condition and results of operation Further our Company is
not operating under any injunction or restraining order
For details of our business our operations activities markets technology capacity build-up and competition
see ―Our Business on page 62 For details relating to the management of our Company see ―Our
Management on page 100
The total number of equity shareholders of our Company as on December 31 2010 was 16867 The total
number of preference shareholders of our Company as on December 31 2010 was 24
Our Main Objects
89
Our main objects as contained in our Memorandum of Association are
Clause Particulars
I To carry on the business of manufacturers of and dealers in all kinds and classes of Pulp and Pulp products
and conversions including Sulphate and Sulphite Pulp Soda Pulp Mechanical Pulp Chemical Pulp Paper
Pulp Rayon Pulp and all other varieties types and qualities of Pulp in all its forms by converting treating
or turning to account by any process or method of manufacture spin dye manner and mode bamboo
timber and wood dropping fly cotton or cotton waste cotton seeds grasses straw rice straw wheat straw
jute jute sticks seisal fibre flax hemp remie hessian gunny sugarcane bagasse leather asbestos rags
waste paper water hyacinth all types and forms of seed hairs bast fibres grass fibre leaf fibre wood fibre
or any other vegetable or other material synthetic or otherwise suitable for any of the above treatment and
to manufacture and deal in all kinds of articles in which any form of pulp is used and also to manufacture
andor deal in any other articles or things of a character similar or analogous to the foregoing or any of them
or connected therewith
II To carry on the business of manufacturers of and dealers in all kinds and classes of Paper Board and Paper
and Board products and conversions including writing paper printing paper absorbent paper blotting
paper filter paper antique paper ivory-finish paper coated paper art paper bank or bond paper badami
brown or buff paper bible paper cartridge paper clothlined paper azure-laid and move paper cream-laid
and wove paper greaseproof paper glassine paper gummed paper hand-made paper parchment paper
drawing paper wrapping paper kraft paper manilla paper envelope paper tracing paper vellum paper
corrugated paper water-proof paper carbon paper sensitised paper chemically treated paper litmus paper
photographic paper glass paper emery paper paper board paste board card cardboard strawboard grey
board pulpboard leather board mill board corrugated board duplex and triplex boards laminated board
hard-board plywood board post cards visiting cards chromo and coated paper and boards machine coated
boards etc and all kinds or articles in the manufacture of which in any form paper or board is used and also
to manufacture or deal in any other articles or things of a character similar or analogous to the foregoing or
any of them or connected therewith
III To manufacture and deal in all materials and substances used in the manufacture production or treatment of
Pulp Paper and Board and other substances articles and things the manufacture of which the Company is
authorised to undertake and to turn to account render marketable and deal in any of the by-products or the
manufacturing process which the Company may undertake
IV To buy sell import export process cut cost chemically or otherwise treat and to work out for special
purposes all kinds of pulps paper and boards and also deal in the manufacture of any other articles
connected with the foregoing
V To plant cultivate produce raise manufacture purchase sell import export or otherwise handle or deal in
grass timber wood bamboo straw and other forest products cotton jute flax hemp sugarcane leather
asbestos rags waste paper gunnies water hyacinth jute sticks or other fibres fibrous substances or other
things as many furnish materials for pulp and for paper or board manufacture in any of its branches or as
may be proper or necessary in connection with the above objects or any of the them and to carry on
business as owners lessees managers or planters of forest plantations and farms and hewers and cutters of
bamboo wood timber grasses and all other forest products
VI To own work erect install maintain equip repair alter add to or otherwise handle or deal in pulp and
paper plants filatures or any other factories for pressing ginning carding combing scouring mixing
processing bleaching printing dyeing or finishing pulp or paper or board for conversion of pulp paper or
board or any allied products of any description and kind
Changes in Memorandum of Association
Since our incorporation the following changes have been made to our Memorandum of Association
Date of shareholders‟
resolution
Amendment
February 1 1964 Amendment to Clause V of the MoA of the Company by substitution of ―930 instead of
―900 with respect to the applicable fixed cumulative preferential dividend on the
Redeemable Cumulative Preference Shares
September 26 1972 Substitution of Clause V of the MoA with the following
ldquoThe capital of the Company is ` 5 crores divided into 350000 equity shares of ` 100 each
and 150000 preference shares of ` 100 each with power to increase or reduce the capital
or convert shares into different classes as may be determined from time to time in
accordance with the provisions of the Act and any modifications thereof
July 9 1992 Amendment to Clause V of the MoA to reflect increase in authorized capital of the Company
from ` 5 crores divided into 5 lakhs equity shares of ` 100 each to ` 25 crores divided into
25 lakhs equity shares of ` 100 each
July 9 1992 The situation of the registered office of the Company was changed from 1183 Shivaji Nagar
Fergusson College Road Pune 411 005 to its present Registered Office
90
Date of shareholders‟
resolution
Amendment
September 25 1993 Amendment to Clause V of the MoA to reflect increase in authorized capital of the Company
from ` 25 crores divided into 25 lakhs equity shares of ` 100 each to ` 35 crores divided into
35 lakhs equity shares of ` 100 each
March 30 1994 Amendment to Clause V of the MoA to reflect increase in authorized capital of the Company
from ` 35 crores divided into 35 lakhs equity shares of ` 100 each to ` 135 crores divided
into 135 lakhs equity shares of ` 100 each
June 10 1996 Amendment to Clause V of the MoA to reflect submdashdivision of our equity shares by
substituting 13500000 equity shares of ` 100 each to 135000000 equity shares of ` 10
each
December 29 1997 Amendment to Clause V of the MoA to reflect reclassification of our authorized capital by
substituting the existing Clause V with the following
ldquoThe authorized share capital of the Company is ` 135 crore divided into 75000000 equity
shares of ` 10 each 3000000 redeemable preference shares of ` 100 each and unclassified
share capital of ` 300000000rdquo
November 2 2001 The name of the Company was changed from ―The Central Pulp Mills Limited to ―JK
Paper Limited
November 2 2001 Amendment to Clause V of the MoA by substituting the existing authorized capital of the
Company from ` 400 crores divided into 125000000 equity shares of ` 10 each and
27500000 preference shares of ` 100 each to ` 500 crores divided into 200000000 equity
shares of ` 10 each and 30000000 preference shares of ` 100 each
For details see ldquoRisk Factors- Internal Risk Factor no 30 - We do not have access to records and data pertaining to certain historical
legal and secretarial information including with respect to issuance of shares and amendments in our MoArdquo on page xxii Dates of meetings of the Board at which orders of the BIFR were given effect to
Our Subsidiaries
1 Jaykaypur Infrastructure amp Housing Limited (ldquoJIHLrdquo)
JIHL was incorporated on December 30 2008 and received its certificate of commencement of business on
August 25 2009 JIHL is engaged in the business of construction of residential houses staff colonies and
commercial buildings The authorised share capital of JIHL is ` 500 crore divided into 05 crore equity shares
of ` 10 each and the issued subscribed and paid up capital of JIHL is approximately ` 005 crore divided into
50600 equity shares of ` 10 each
The shareholding pattern of JIHL as on December 31 2010 is as follows
SNo Name of shareholder Number of equity shares of `
10 each
Percentage of
shareholding
1 Company 50000 9881
2 Nominees of the Company and the Company 600 119
Total 50600 10000
2 Songadh Infrastructure amp Housing Limited (ldquoSIHLrdquo)
SIHL was incorporated on January 2 2009 and received its certificate of commencement of business on July
30 2009 SIHL is engaged in the business of construction of residential houses staff colonies and commercial
buildings The authorised share capital of SIHL is ` 500 crore divided into 05 crore equity shares of ` 10 each
and the issued subscribed and paid up capital of SIHL is approximately ` 005 crore divided into 50600 equity
shares of ` 10 each
The shareholding pattern of SIHL as on December 31 2010 is as follows
SNo Name of shareholder Number of equity shares of `
10 each
Percentage of
shareholding
1 Company 50000 9881
2 Nominees of the Company and the Company 600 119
Total 50600 10000
There are no accumulated profits or losses of the Subsidiaries which have not been accounted for by our
Company
91
Our Joint Ventures
We currently do not have any joint ventures
Strategic and Financial Partners
We currently do not have any strategic or financial partners
Shareholders Agreements
Shareholders‟ agreement dated March 8 2006 among our Company JK Agri Genetics Limited JK Lakshmi
Cement Limited JK Industries Limited BMF Beltings Limited Fenner (India) Limited and International
Finance Corporation and share-subscription agreement dated March 8 2006 among our Company and
International Finance Corporation
JK Agri Genetics Limited JK Lakshmi Cement Limited JK Tyre and Industries Limited (formerly JK
Industries Limited) BMF Beltings Limited Fenner (India) Limited (collectively known as the ―Sponsors)
International Finance Corporation (―IFC) and our Company entered into a shareholders agreement whereby
each of the IFC and Fenner (India) Limited subscribed to 7690000 Equity Shares
Board rights So long as IFC remains a shareholder of the Company holding more than 6 of the issued
subscribed and paid up share capital of the Company it shall have the right but not the obligation to nominate a
director on the Board At present IFC holds 984 of the issued subscribed and paid up share capital of the
Company but it has not exercised its right to nominate a director on the Board
Transfer rights In the event IFC proposes to sell 50 or more of its shareholding in the Company in a single
transaction it shall provide prior written notice to the Sponsors stating the number of Equity Shares it proposes
to sell and the price at which it proposes to sell such Equity Shares The Sponsors shall have the right to buy all
but not less than all of the Equity Shares stated in the notice If the Sponsors communicate their non-acceptance
or if they do not respond to the notice within a stipulated time IFC shall have the right to sell such Equity
Shares to any person
Pre-emptive and tag along rights So long as IFC holds 1 of the issued subscribed paid up capital of the
Company it shall have the right (a) to be entitled to subscribe on a pro-rata basis to any increase of the
subscribed share capital of the Company including by way of a public issue rights issue or a preferential
allotment and (b) to participate on a pro-rata basis under the same terms and conditions in any transfer being
effected by any of the Sponsors of the Equity Shares of the Company by way of sale of any Equity Shares in any
transaction off market or a block deallsquo outside the Stock Exchanges provided that the Sponsors shall not
complete the sale to any third party acquirer unless and until such third party acquirer has acquired such number
of Equity Shares as determined from IFC and (c) to participate on a pro-rata basis under the same terms and
conditions in any sale by the Sponsors jointly and severally of more than 4 of the issued subscribed and paid
up equity share capital of the Company in one or a series of transactions on the floor of a recognized stock
exchange in one calendar year IFC does not have any tag along rights in any inter-se transfer of shares between
the constituent members of the JK group (as defined under Section 2(ef) of the Monopolies and Restrictive
Trade Practices Act 1969) that does not result in the collective direct shareholding of the Sponsors becoming
less than 26 of the issued subscribed and paid up capital of the Company In the event that the collective
shareholding of the Sponsors falls below 26 of the issued subscribed and paid-up capital of the Company IFC
shall have the right to tag along its entire shareholding in the Company As per the terms of the shareholderslsquo
agreement the Company cannot form any subsidiary other than having the main objective of carrying out
plantation operations make any amendment to the MoA and the AoA which is prejudicial to the interests of
IFC enter into any related party transactions that is not on an arms length basis and enter into any transaction
other than on the basis of arms length arrangement IFC has granted waiver to the Company for incorporating
SIHL and JIHL as its subsidiaries
Term The shareholders agreement is effective so long as IFC remains a shareholder of the Company However
if the shareholding of IFC falls below 1 of the issued subscribed and paid up capital of the Company certain
clauses of the shareholders agreement including clauses pertaining to certain tag along rights and affirmative
covenants would cease to have any effect
Other Material Agreements
92
Set forth below is a brief summary of our other material agreements with a brief description of significant terms
of such agreements
Agreement for extraction of bamboo from forest areas between Orissa Forest Development Corporation
Limited and the Company dated January 5 2011
Pursuant to this agreement our Company has been granted the rights to extract and lift harvested and left over
bamboo stocks from certain allotted forest divisions in Odisha subject to the approval of the competent
authority The forest divisions allotted to our Company are Baliguda Behrampur Ghumsur (North) Ghumsur
(South) Kalahandi (North) Kalahandi (South) Koraput Parakhemundi Phulbani and Rayagada
Production targets We are required to achieve specified targets of production as per the terms of the agreement
The agreement also fixes a minimum target for the production of industrial bamboo along with a minimum
royalty payable to the state government The state government may provide certain incentives if the production
of bamboo is above a certain qualifying quantity of the production slab
Selling Price The selling price of bamboo and the royalty payable to the state government for the year 2010-
2011 is fixed as per the terms of the agreement
Lifting We are required to take delivery of the bamboo stock within seven days of issue of allotment order by
the relevant authority We are bound to lift and remove the delivered stock within 90 days from the date of such
delivery Further if the bamboo delivered to us are not removed by us within the prescribed time limit we will
be liable to pay land rent from the date of expiry of 90 days up to a maximum of 180 days or December 31
2010 whichever is earlier after which the average weight of bamboo obtained shall be accounted for the
remaining delivered but unlifted bamboo bundles In the event of any additional delay we will be liable to pay
penal rates and thereafter such bamboo shall become the property of the government
Term and termination The agreement is in force from date of execution and is in force for the year 2009-2010
bamboo crop year ie until June 30 2011 The terms and conditions of the contract are subject to review and
modification as may be mutually agreed between the parties at the end of every year during the period of
contract provided that in case of any urgency suitable modifications as deemed necessary may be effected by
mutual agreement The Orissa Forest Development Corporation Limited is at a liberty to terminate this
agreement if after affording reasonable opportunity of being heard if it is of the opinion that our performance
was unsatisfactory as per the terms of the agreement
Forest working contract dated November 25 1960 among the Company the Governor of Gujarat and the
Paper and Pulp Conversions Limited (as the confirming party and hereinafter referred to as ldquoPapcordquo)
Our Company entered into the forest working contract on November 25 1960 with the Governor of Gujarat and
Papco (as a confirming party by virtue of the State of Bombay having granted concession to Papco to extract
bamboos by an agreement dated April 10 1960 in the areas forming part of this contract) which provides our
Company a concession for a period of 40 years from the date of this contract for the extraction of bamboos in
the forest areas of the districts of Dang and Surat as well as the Rajpipla forest division in the District of Broach
Gujarat for manufacturing pulp paper and allied products Some of the salient features of the forest working
contract are as follows
we are required to set up a bamboo pulp plant at Fort Songadh Gujarat and the government has agreed
to provide assistance for acquiring a site for the plant and connected installations Further the
government has agreed to lease 300 acres of waste or forest land to us for the purposes of the factory
and the housing colonies of the employees
we are required to work in the designated territory strictly in accordance with the prescriptions of the
working plans andor special schemes approved by the government and cannot extract more bamboos
than the quantity laid down by the Chief Conservator of Forests as the sustained annual yield of the
territory We have undertaken to extract a minimum of 35000 tonnes of bamboos per year which
quantity may be raised to 001 crore tonnes subject to availability of material whenever and wherever
possible
we are required to pay to the government a royalty at the rate of ` 5 per ton by weight of air-dry
93
bamboos during the first three years at the rate of ` 7 per ton during the next five years and at such
revised rates as may be prescribed by the government during the remaining period of the concession
provided the revision shall not exceed 20 of the rate in force at or immediately before such revision
The amount of royalty shall be payable quarterly in advance
the state government shall supply raw material for infrastructural facilities to be established by our
Company such as timber quarry stones and electricity The state government has also agreed to grant
license to our Company to draw water from the river Tapi for the purposes of its factory and housing
colonies for our employees
we have undertaken to allot a maximum of 10 of our total production to supply the needs of cottage
industries in the state of Gujarat Such allocation shall be at concessional rates to be fixed by the state
government which shall in no case be less than our cost of production
we have agreed that in respect of the pulp that we will manufacture after supplying our own needs for
manufacture of paper and allied products and the like requirements of Promoter we shall give
preference to the requirements of the paper mills situated in the state of Gujarat
We are required to insure the bamboo stacks the dumping depots and the factory premises against loss
by fire along with the factory buildings for a value to be assessed at the market rates
The state government has the right to terminate the agreement for any breach or non-observance of the
terms of this agreement or the applicable law
On November 19 2001 pursuant to a notification of the state government of Gujarat the forest working
contract was extended for a further period up to November 18 2010 Further pursuant to a letter dated
November 19 2010 issued by the Forest and Enviornment Department state government of Gujarat the
Company would continue to extract bamboos on the terms and conditions mentioned in the forest working
contract till the time an agreement extending the term of the forest working contract for a period up to October
31 2020 is executed between the parties
Material Agreements in relation to the Unit CPM
Coal supply agreements (ldquoCoal Supply Agreementsrdquo) entered between the Company and Western Coalfields
Limited (ldquoWCLrdquo)
Our Company entered into three separate coal supply agreements with WCL two of them dated June 28 2008
and as amended on February 1 2010 and a third agreement dated July 21 2009 read with a memorandum of
understanding entered between the parties dated July 21 2009 for satisfying the coal requirements of the
process plant and the captive power generation plant of 12 MW at the Unit CPM Details of the Coal Supply
Agreements are provided below
(a) Coal supply agreement between WCL and the Company dated June 28 2008 for 12321 TPA of coal
for the process plant at the Unit CPM as amended on February 1 2010 (ldquoProcess Plant CSArdquo)
Our Company entered into the Process Plant CSA with WCL dated June 28 2008 for satisfying the
coal requirements of the process plant at the Unit CPM The agreement is effective from July 1 2008
and provides for 12321 TPA of coal of grade Dlsquo to be supplied by WCL from its mines at Wareham
Umber Kamp tee Pinch Kansan Pathakhera coalfields or international coalfields in case coal
cannot be sourced from such domestic coalfields to our Company through rail or road network in
equal monthly installments
If for any year the level of delivery by WCL or the level of lifting by our Company is less than 60 of
12321 TPA the defaulting party is required to pay compensation at the rate of 10 of the value of the
failed quantity of coal below 60 of 12321 TPA calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement The agreement provides that if WCL
delivers more than 90 of 12321 TPA of coal to our Company in a particular year our Company is
required to pay a performance incentive to WCL calculated in terms of the agreement The method of
calculation of level of delivery and level of lifting of coal under the agreement has been amended by
way of an agreement between the parties dated February 1 2010
94
(b) Coal supply agreement between WCL and the Company dated June 28 2008 for 53556 TPA of coal
for the 12 MW captive power plant at the Unit CPM as amended on February 1 2010 (ldquoCPP CSArdquo)
Our Company entered into the CPP CSA with WCL dated June 28 2008 for satisfying the coal
requirements of the 12 MW captive power plant at the Unit CPM The agreement is effective from July
1 2008 and provides for 53556 TPA of coal of grade Dlsquo to be supplied by WCL from its mines at
Wardha Umrer Kamptee Pench Kanhan Pathakhera coalfields or international coalfields in case
coal cannot be sourced from such domestic coalfields to our Company through rail or road network in
equal monthly installments
If for any year the level of delivery by WCL or the level of lifting by our Company is less than 60 of
53556 TPA the defaulting party is required to pay compensation at the rate of 10 of the value of the
failed quantity of coal below 60 of 53556 TPA calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement The agreement provides that if WCL
delivers more than 90 of 53556 TPA of coal to our Company in a particular year our Company is
required to pay a performance incentive to WCL calculated in terms of the agreement The method of
calculation of level of delivery and level of lifting of coal under the agreement has been amended by
way of an agreement between the parties dated February 1 2010
(c) Coal supply agreement entered between the Company and WCL dated July 21 2009 (ldquoCPP CSA IIrdquo)
and the memorandum of understanding entered between the Company and WCL dated July 21 2009
(ldquoMoUrdquo)
Our Company entered into CPP CSA II with WCL dated July 21 2009 for satisfying the coal
requirements of the 12 MW captive power plant at the Unit CPM The agreement provides for certain
conditions by both parties to be satisfied for the agreement to be effective As on the date of the
agreement our Company has satisfied the requisite conditions and the conditions required to be
satisfied by WCL are deemed to be satisfied pursuant to a waiver given by our Company Accordingly
the agreement is effective from July 29 2009 and provides for 60000 TPA of coal of grade Elsquo to be
supplied by WCL from its mines at Wardha Umrer Kamptee Pench Nagpur Kanhan Pathakhera
coalfields or international coalfields in case coal cannot be sourced from such domestic coalfields to
our Company through rail or road network in equal monthly installments
If for any year the level of delivery by WCL or the level of lifting by our Company is less than 25 of
60000 TPA the defaulting party is required to pay compensation at the rate of 10 of the value of the
failed quantity of coal below 25 of 60000 TPA calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement The agreement provides that if WCL
delivers more than 90 of 60000 TPA of coal to our Company in a particular year our Company is
required to pay a performance incentive to WCL calculated in terms of the agreement
The Coal Supply Agreements are each valid for a period of five years unless terminated earlier in accordance
with the terms specified in the agreements After completion of three years from the effective date of the
agreements either party is entitled by prior written notice to the other party of not less than 30 days to seek a
review of the agreements If the review requested by a party does not result in a mutually agreed position within
nine months from the date of notice for review such party shall have the right to terminate the agreements
subject to a further notice of three months given in writing to the other party On completion of five years from
the effective date of the agreements the agreements shall expire unless both parties mutually agree in writing to
extend the agreements on the same or such terms as may be agreed upon by the parties
As per the terms of the Coal Supply Agreements the title and risk of coal shall pass from WCL to our Company
at the colliery sidings or colliery loading points as the case may be as coal is loaded in to wagons containers
of our Company and WCL shall have no liability with regard to any loss thereafter
The price of coal delivered under the Coal Supply Agreements shall be the sum of the base price (meaning in
case of supply from domestic mines the pithead price notified from time to time by Coal India Limited or WCL
as the case may be and in relation to imported coal wherever applicable the landed price intimated by Coal
India Limited or WCL as the case may be) sizing charges transportation charges up to the delivery points
rapid loading charges statutory charges levies and other charges as applicable The components of the price
shall be determined on the basis of the ratescriteria duly notified by Coal India Limited WCL relevant
95
statutory authority from time to time The price of imported coal shall be as decided and declared by Coal India
Limited from time to time Any statutory levy or tax including royalty payable to the state government central
government for supply of coal under the agreements shall be borne by our Company with effect from the date
such charges are made applicable Further freight charges irrespective of the mode of transportation of the coal
supplied shall be borne by our Company
Either of the parties is entitled to terminate the Coal Supply Agreements due to any force majeure event as
specified under the agreements Additionally in the event that the level of delivery falls below 30 or the level
of lifting falls below 30 our Company or WCL as the case may be shall have the right to terminate the
agreements within 60 days of the end of the relevant year after providing the other party with prior written
notice of not less than 30 days In the event that either party suffers insolvency appointment of liquidator
appointment of receiver of any of the material assets levy of any order of attachment of material assets or any
order or injunction restraining the party from dealing with or disposing of its assets and such order having been
passed is not vacated within 60 days the other party shall be entitled to terminate the agreements Further in the
event that any party commits a breach of terms or conditions of the Coal Supply Agreements the other party
shall have the right to terminate the agreements after providing the defaulting party with 30 days prior notice
and breach has not been cured or rectified to the satisfaction of the non-defaulting party within the said period of
30 days
Further WCL is entitled to terminate the Coal Supply Agreements in the event of
(i) any material change in the coal distribution system of WCL due to any government
directivenotification at any time after the execution of the agreements without any obligation
liability after providing WCL with prior written notice to WCL of not less than 30 days andor
(ii) our Company reselling or diverting the coal purchased pursuant the agreements andor
(iii) encashment of security deposit or financial coverage or suspension of coal supplies as per the
agreements subject to providing a prior written notice of 30 days provided WCL has not replenished
the security deposit financial coverage within the aforesaid notice period of 30 days
Further our Company is entitled to terminate the Coal Supply Agreements in the event that our Company is
prevented disabled under law from using coal for reasons beyond our control owing to changes in applicable
environmental andor statutory norms subject to a prior written notice to WCL of not less than 30 days
Material Agreements in relation to the Unit JKPM
Fuel supply agreement entered between the Company and Mahanadi Coalfields Limited (ldquoMCLrdquo) dated
November 7 2008 (ldquoFuel Supply Agreementrdquo)
Our Company entered into the Fuel Supply Agreement with MCL dated November 7 2008 for satisfying the
coal requirements of the captive power plant and the paper manufacturing plant at the Unit JKPM The
agreement is effective from November 7 2008 and provides for 116932 tonnes per year of coal and 61026
tonnes per year of coal of grade EFlsquo to be supplied by MCL from its mines or international sources to our
Company through rail in equal monthly installments
If for any year the level of delivery by MCL or the level of lifting by our Company is less than 60 of 177958
tonnes per year the defaulting party is required to pay compensation at the rate of 10 of the value of the failed
quantity of coal below 60 of 177958 tonnes per year calculated in terms of the base price of the highest
grade of the coal to be supplied as per the terms of the agreement The agreement provides that if MCL delivers
more than 90 of 177958 tonnes per year of coal to our Company in a particular year our Company is
required to pay a performance incentive to MCL calculated in terms of the agreement
The Fuel Supply Agreement is valid until April 30 2013 unless terminated earlier in accordance with the terms
specified in the agreements After completion of three years from the effective date of the agreement either
party is entitled by prior written notice to the other party of not less than 30 days to seek a review of the
agreement If the review requested by a party does not result in a mutually agreed position within nine months
from the date of notice for review such party shall have the right to terminate the agreement subject to a further
notice of three months given in writing to the other party On completion of five years from the effective date of
the agreement the agreement shall expire unless both parties mutually agree in writing to extend the agreement
96
on the same or such terms as may be agreed upon by the parties
As per the terms of the Fuel Supply Agreement the title and risk of coal shall pass from MCL to our Company
at the colliery sidings or colliery loading points as the case may be in the designated coal mine of MCL or the
locations ports identified by MCL at which MCL delivers imported coal and MCL shall have no liability with
regard to any loss thereafter
The price of coal delivered under the Fuel Supply Agreement shall be the sum of the base price (meaning in
case of supply from domestic mines the pithead price notified from time to time by Coal India Limited or MCL
as the case may be and in relation to imported coal wherever applicable the landed price intimated by Coal
India Limited or MCL as the case may be) sizing charges transportation charges up to the delivery points
rapid loading charges statutory charges levies and other charges as applicable The components of the price
shall be determined on the basis of the ratescriteria duly notified by Coal India Limited MCL relevant
statutory authority from time to time The price of imported coal shall be as decided and declared by Coal India
Limited from time to time Any statutory levy or tax including royalty payable to the state government GoI for
supply of coal under the agreements shall be borne by our Company with effect from the date such charges are
made applicable Further freight charges irrespective of the mode of transportation of the coal supplied shall
be borne by our Company
Either of the parties is entitled to terminate the Fuel Supply Agreement due to any force majeure event as
specified under the agreement Additionally in the event that the level of delivery falls below 30 or the level
of lifting falls below 30 our Company or MCL as the case may be shall have the right to terminate the
agreement within 60 days of the end of the relevant year after providing the other party with prior written notice
of not less than 30 days In the event that either party suffers insolvency appointment of liquidator appointment
of receiver of any of the material assets levy of any order of attachment of material assets or any order or
injunction restraining the party from dealing with or disposing of its assets and such order having been passed is
not vacated within 60 days the other party shall be entitled to terminate the agreement Further in the event that
any party commits a breach of terms or conditions of the Fuel Supply Agreement the other party shall have the
right to terminate the agreement after providing the defaulting party with 30 days prior notice and breach has not
been cured or rectified to the satisfaction of the non-defaulting party within the said period of 30 days
Further MCL is entitled to terminate the Fuel Supply Agreement in the event of
(i) any material change in the coal distribution system of MCL due to any government
directivenotification at any time after the execution of the agreement without any obligation liability
after providing MCL with prior written notice to MCL of not less than 30 days andor
(ii) our Company reselling or diverting the coal purchased pursuant the agreement andor
(iii) encashment of security deposit or financial coverage or suspension of coal supplies as per the
agreement subject to providing a prior written notice of 30 days provided MCL has not replenished
the security deposit financial coverage within the aforesaid notice period of 30 days
Further our Company is entitled to terminate the Fuel Supply Agreement in the event that our Company is
prevented disabled under law from using coal for reasons beyond our control owing to changes in applicable
environmental andor statutory norms subject to a prior written notice to MCL of not less than 30 days
Agreement for supply of power between JKLC (then bdquoJK Corp Limited‟) and GRID Corporation of Orissa
Limited (ldquoGridcordquo) dated March 23 1998 (ldquoJKPM Power Supply Agreementrdquo)
JKLC has entered into the JKPM Power Supply Agreement with Gridco dated March 23 1998 for the supply
up to but not exceeding 10000 KVA of power per month for the Unit JKPM including 1000 KVA of power
per month for the residential colony at the Unit JKPM the supply of which started from September 1 1997 The
agreement is valid for a period of five years from September 1 1997 and thereafter continue until the agreement
is determined by either party giving to the other three calendar months notice in writing of its intention to
terminate the agreement However if the power supply remains disconnected for a period of three years for non-
payment of tariff or non-compliance of directions issued under the Orissa State Electricity Board (General
Condition of Supply) Regulations 1995 and no effective steps are taken by JKLC for removing the cause of
disconnection and restoration of power supply the agreement shall be deemed to have been terminated on the
expiry of three months from the date of disconnection without any further notice The agreement provides that
97
JKLC shall comply with the applicable provisions of the Orissa State Electricity Board (General Condition of
Supply) Regulations 1995 as amended from time to time including the provisions relating to the payment of
demand charges or energy charges or electricity duty or any other applicable charges or levies as may be
notified thereunder
98
DIVIDEND POLICY
Under the Companies Act an Indian company pays dividends upon recommendation by its board of directors
and approval by a majority of the shareholders who have the right to decrease but not to increase the amount of
dividend recommended by the board of directors Under the Companies Act dividends may be paid out of
profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves
of the previous Fiscal Years or out of both
We do not have a formal dividend policy Any future dividends declared would be at the discretion of the Board
of Directors and would depend on the financial condition results of operations capital requirements contractual
obligations the terms of our credit facilities and other financing arrangements at the time a dividend is
considered and other relevant factors
Pursuant to the terms of some of our loan agreements with certain banks and financial institutions we cannot
declare or pay any dividend to our shareholders during any Fiscal if any amount remaining outstanding under
such loan agreements to the relevant lenders or if we are in default of the terms and conditions of such loan
agreement For details see ―Financial Indebtedness on page 213
Set forth below is the dividend paid by our Company for the last five Fiscals
(a) Equity Shares
Particulars Fiscal
2010
Fiscal 2009 Fiscal 2008 (nine
month period)
Year ended
June 30 2007
Year ended
June 30
2006
Year ended
June 30
2005
Number of
Equity
Shares
78149939 78149939 78149939 78149939 78149939 55069939
Dividend
paid (` in
crores)
1563 1368 1172 1758 1240 1101
Rate of
dividend
()
(a) Interim 000 000 000 000 14 (1) 000
(b) Final 2000 1750 1500 2250 600 2000
Dividend tax
(in ` crores)
260 232 199 299 174 155
(1)Interim dividend at 14 on 55069939 Equity Shares
In terms of resolution passed by our Board on January 28 2011 our Company approved payment of interim
dividend for the Fiscal 2011 at the rate of ` 225 per Equity Share on equity share capital of our Company
(b) Preference Shares
(i) 10 cumulative redeemable
Particulars Fiscal 2010 Fiscal 2009 Fiscal 2008 (nine
month period)
Year ended
June 30 2007
Year ended
June 30 2006
Year ended
June 30 2005
Number of
preference
shares of
face value `
100 each
20000 41000 81000 81000 157000 300000
Dividend
paid (` in
crore)
003 005 006 016 030 030
Rate of
dividend ()
1000 1000 1000 1000 1000 1000
Dividend tax
(in ` crore)
0004 001 001 003 004 004
99
In terms of resolution passed by our Board on January 28 2011 our Company has declared interim dividend at
the rate of 10 on preference share capital of our Company
(ii) 375 cumulative redeemable
Particulars Fiscal 2010 Fiscal 2009 Fiscal 2008 (nine
month period)
Year ended
June 30 2007
Year ended
June 30
2006
Year
ended
June 30
2005
Number of
preference
shares of
face value `
100 each
- - - - 5200000 5200000
Dividend
paid (` in
crores)
- - - - 195 195
Rate of
dividend ()
- - - - 375 375
Dividend tax
(in ` crore)
- - - - 027 028
The amounts paid as dividends in the past are not necessarily indicative of the dividend policy of the Company
or dividend amounts if any in the future
100
OUR MANAGEMENT
Our Articles of Association provide that the minimum number of Directors shall be three and the maximum
number of Directors shall be not more than 18 (excluding nominee Directors) As on the date of this Draft Letter
of Offer we have 11 Directors
The following table sets forth details regarding our Board as on date of filing of this Draft Letter of Offer
Name Fathers Name
Designation Occupation Age
DIN and Term
Address Other directorships
Mr Hari Shankar Singhania
So Late Mr Lakshmipat
Singhania
Designation Chairman
Occupation Industrialist
Age 78 years
DIN 00051324
Term Five years with effect from
January 1 2007
19 Prithviraj Road New
Delhi 110 011 India JK Lakshmi Cement Limited
JK Tyre amp Industries Limited
Bengal amp Assam Company Limited
Tanvi Commercial Private Limited
Niyojit Properties Private Limited
HSS Stock Holding Private Limited and
Henry F Cockill amp Sons Limited
Mr Harsh Pati Singhania
So Mr Bharat Hari Singhania
Designation Managing Director
(Executive
Non-Independent)
Occupation Industrialist
Age 50 years
DIN 00086742
Term Five years with effect from
January 1 2007
19 Prithviraj Road New
Delhi 110 011 India Fenner (India) Limited
Bhopal Udyog Limited
Anant Design Private Limited
Rockwood Properties Private Limited and
Oakwood Properties amp Farms Private
Limited
Mr Om Prakash Goyal
So Late Mr BDGoyal
Designation Whole-time
Director (Executive Non-
Independent)
Occupation Company Executive
Age 68 years
DIN 00030115
Term Three years with effect
from September 7 2009
B-50 Sector-XIV Noida
Uttar Pradesh 201 301 India Shiva Cement Limited
JK Enviro-Tech Limited and
LVP Foods Private Limited
Mr Dhirendra Kumar
So Late Mr Bhagwat Prasad
Designation Non-Executive
11 Mandevilla Gardens
Kolkata 700 019 West
Bengal India
SIVPL Products Private Limited
Contemporary Polysacks Limited
RD Tea Limited
Rukong Tea Estate Private Limited
101
Name Fathers Name
Designation Occupation Age
DIN and Term
Address Other directorships
Non- Independent Director
Occupation Business
Age 67 years
DIN 00153773
Term Liable to retire by rotation
Rosebud Commercial Company Private
Limited
The Scottish Assam (India) Limited
SPBP Tea Plantation Limited
Shwetambra Investment amp Trading Private
Limited
Bengal Tea amp Fabrics Limited and
Park Tower Services Private Limited
Mrs Vinita Singhania
Wo Late Mr Shripati Singhania
Designation Non Executive Non-
Independent Director
Occupation Industrialist
Age 58 years
DIN 00042983
Term Liable to retire by rotation
101 Friends Colony (East)
New Delhi 110 065 India JK Lakshmi Cement Limited
Bengal amp Assam Company Limited
JKLC Employees Welfare Association
Limited
Niyojit Properties Private Limited and
Vinita Stockholdings Private Limited
Mr Arun Bharat Ram
So Late Dr Bharat Ram
Designation Non-Executive
Independent Director
Occupation Industrialist
Age 70 years
DIN 00694766
Term Liable to retire by rotation
1 Silver Oak Avenue
Westend Green Farms
Rajokari New Delhi 110 038
India
SRF Limited
DCM Shriram Consolidated Limited
Essilor India Private Limited
Moser Baer India Limited
Samtel Color Limited
Samtel Glass Limited
SRF Holiday Home Limited
SRF Fluoro Chemicals Limited
SRF Energy Limited
Shri Educare Limited
SRF Overseas Limited
SRF Industex Belting (Proprietary) Limited
SRF Tech Textile (Thailand) Limited and
Bharat Ram Associates Private Limited
Mr MH Dalmia
So Late Mr Jaidayal Dalmia
Designation Non-
Executive Independent Director
Occupation Industrialist
Age 69 years
DIN 00009529
Term Liable to retire by rotation
Dalmia House 20 F
Prithviraj Road New Delhi
110 011 India
Dalmia Bharat Sugar and Industries Limited
(formerly Dalmia Cement (Bharat) Limited
First Capital India Limited
Dalton International UK
Marathon Trading International FZE UAE
and
Dalmia International FZE UAE
Mr RV Kanoria
So Mr Shyam Sundar Kanoria
Designation Non-
Executive Independent Director
Occupation Industrialist
A-45 Vasant Marg Vasant
Vihar New Delhi 110 057
India
Kanoria Chemicals amp Industries Limited
Ludlow Jute amp Specialities Limited
Kirtivardhan Finvest Services Limited
KPL International Limited
Cholamandlam Investment and Finance
Company Limited
RVInvestment amp Dealers Limited and
102
Name Fathers Name
Designation Occupation Age
DIN and Term
Address Other directorships
Age 56 years
DIN 00003792
Term Liable to retire by rotation
KCI Alco Chem Limited
Mr Shailesh Vishnu Haribhakti
So Mr Vishnu Bhagwandas
Haribhakti
Designation Non-
Executive Independent Director
Occupation Chartered
Accountant
Age 54 years
DIN 00007347
Term Liable to retire by rotation
228 Kalpataru Habitat B
Wing 22nd amp 23rd Floor Dr
SS Road Parel Mumbai 400
012 Maharashtra India
BDO Consulting Private Limited
Advantage Moti India Private Limited
Quadrum Solutions Private Limited
J M Financial Asset Reconstruction
Company Private Limited
Milestone Ecofirst Advisory Services
(India) Private Limited
Planet People and Profit Consulting Private
Limited
Pantaloon Retail (India) Limited
Future Capital Holdings Limited
Hexaware Technologies Limited
Ackruti City Limited
ACC Limited
Ambuja Cements Limited
Mahindra Lifespace Developers Limited
Blue Star Limited
The Dhanlaxmi Bank Limited
Everest Kanto Cylinder Limited
LampT Finance Holdings Limited
Future Value Retail Limited
Haribhakti SME Transformation and
Support Solutions Private Limited
Torrent Pharmaceuticals Limited
Raymond Limited and
Fortune Financial Services (India) Limited
(Alternate director)
Hercules Hoists Limited (Alternate
Director)
Mr SK Pathak
So Late Mr JP Pathak
Designation Non-
Executive Independent Director
Occupation Industrialist
Age 76 years
DIN 00928630
Term Liable to retire by rotation
Villa no 19 Umm Al Sheif
Street Jumeirah-3 Dubai
United Arab Emirates
Al Basti amp Mukhta LLC
Bilt Middle East LLC
ABM Inks Industries LLC
Ductfab LLC
Tushar Investments LLC
Tushar International Limited
Romeco Trading Company Limited
Mr Udayan Bose
So Late Mr Prabhas Chandra
Bose
Designation Non- Executive
Independent Director
Occupation Banker
34 A Sterling Apartments
Pedder Road Mumbai 400
026 Maharashtra India
Pritish Nandy Communication Limited
Creditcapital Finance Limited
Tamara Capital Advisors Private Limited
Bikrampur Investment amp Trading Private
Limited
Invest India Private Limited
Earl Investments Private Limited
KC Corporate Finance Advisors Private
Limited and
Zodiac Clothing Company (UAE) LLC
103
Name Fathers Name
Designation Occupation Age
DIN and Term
Address Other directorships
Age 61 years
DIN 00004533
Term Liable to retire by rotation
Dubai
All our Directors except Mr SK Pathak and Mr MH Dalmia are Indian residents Further Mr Harsh Pati
Singhania is the nephew of Mr Hari Shankar Singhania as well as Mrs Vinita Singhania and Mrs Vinita
Singhania is the wife of late Mr Shripati Singhania one of the brothers of Mr Hari Shankar Singhania Further
Mr Dhirendra Kumar is the brother-in-law of Mr Hari Shankar Singhania
Mr Hari Shankar Singhania and Mr Harsh Pati Singhania have been nominated pursuant to Article 101 of our
AoA by Fenner (India) Limited and BACL respectively as Directors on the Board of our Company For details
see ―Main Provisions of our Articles of Association on page 301 Except as disclosed above there are no
arrangements or understanding with major shareholders customers suppliers or others pursuant to which any
of the Directors were selected as a Director except as per the Articles of Association of our Company
Details of our Directors
Mr Hari Shankar Singhania is the Chairman of our Company He has obtained a bachelorlsquos degree in
science from Calcutta University Mr Hari Shankar Singhania has nearly 58 years of experience in managing
various industries including paper cement automotive tyres synthetics jute and hybrid seed industries Besides
our Company he is currently the chairman of JK Tyre and Industries Limited BACL and JK Lakshmi Cement
Limited He is also president Managing Committee of Pushpawati Singhania Research Institute for Liver Renal
and Digestive Diseases New Delhi and member Managing Committee ASSOCHAM He has also served as
president of the International Chamber of Commerce (1993 and 1994) and president of the Federation of Indian
Chambers of Commerce and Industry He was vice president of the Confederation of Asia-Pacific Chambers of
Commerce and Industry and member of the Board of Commonwealth Development Corporation United
Kingdom He has held positions as director on various board appointed by GoI Mr Hari Shankar Singhania is a
recipient of the Padma Bhushanlsquo from the GoI for his contribution in the field of trade and economic activities
He has also been conferred several other awards and decorations including The Royal Order of Polar Starlsquo by
His Majesty the King of Sweden and has been named as the Commander First Classlsquo in recognition of his
distinguished services to Sweden He has been a member of our Board since July 9 1992
Mr Harsh Pati Singhania is the Managing Director of our Company He is responsible for overseeing our
paper business and directly controls the strategy and finance functions of our Company He has obtained a
degree in Bachelors in Commerce from Calcutta University and holds a degree in Masters in Business
Administration from the University of Massachusetts USA He has also completed the Owner President
Management program from Harvard Business School USA Mr Harsh Pati Singhania has more than 21 years of
experience in the paper industry He currently holds several key positions such as member of the Executive
Committee and Steering Committee of FICCI Managing Committee of PHD Chamber of Commerce and
Industry Executive Committee of International Chamber of Commerce (India) committee of the Indian Paper
Manufacturers Association and Board of Governors International Management Institute India He is also
member of the Council of Association Central Pulp and Paper Research Institute and Managing Committee of
Pushpawati Singhania Research Institute for Liver Renal and Digestive Diseases New Delhi He has been a
member of our Board since July 9 1992
Mr Om Prakash Goyal is a whole-time Director of our Company He is responsible for the day to day
operations of our Company Mr Goyal is a qualified chartered accountant from ICAI and has obtained a
bachelorlsquos degree in commerce from Rajasthan University Jaipur Mr Goyal has over 45 years of experience in
paper and cement industry having served in various capacities in numerous companies such as JK Lakshmi
Cement Limited Kesoram Textiles and Industries Limied and Century Textiles and Industries Limited He has
been a member of our Board since December 24 1996
Mr Dhirendra Kumar is a non-executive Director of our Company Mr Kumar obtained his bachelorlsquos
degree in Engineering from New York University Mr Kumar has over 45 years of experience primarily in the
tea industry He has been the President of Tea Association of India Bharat Chamber of Commerce and Calcutta
104
Tea Traders Association He has been a member of our Board since October 30 2001
Mrs Vinita Singhania is a non-executive Director of our Company Mrs Singhania has a degree in bachelorslsquo
of arts from Chowdhary Charan Singh University Meerut She is presently the managing director of JK
Lakshmi Cement Limited She is president of Cement Manufacturers Association and Chairperson of National
Council for Cement and Building Materials She is also actively involved in organizing religious discourses
providing health-care to people below the poverty line and helping destitute girl children for higher education
and various other philanthropic activities She has been awarded Best Woman Entrepreneur of the Year 2009lsquo
by PHD Chamber of Commerce and the Golden Peacock Women Business Leadership Awardlsquo from the
Institute of Directors She has been a member of our Board since May 14 2009
Mr Arun Bharat Ram is a non-executive independent Director of our Company Mr Arun Bharat Ram has a
bachelorslsquo degree in industrial engineering from University of Michigan USA Mr Arun Bharat Ram has over
43 years of experience He has been instrumental in building SRF Limited Mr Arun Bharat Ram was President
of CII (2000-01) and is currently chairman CII Educational Council He was also appointed by the GoI to be
co-chairman of Indo-German Consultative Group Mr Arun Bharat Ram has been awarded Jamshedji Tata
Award by the Indian Society for Quality for the year 2006 and the Officerlsquos Cross of the Order of Merit by the
Federal Government of Germany in 2008 He has been a member of our Board since April 25 2006
Mr MH Dalmia is a non-executive independent Director of our Company Mr Dalmia obtained a bachelorslsquo
degree in chemical engineering from Jadavpur University Kolkata Mr Dalmia has over 30 years of experience
in the fields of cement industrial ceramics real estate information technology investments engineering and
trading in India United Kingdom and USA He is a member of the managing committee of the Associated
Chambers of Commerce and Industry and has been the President of Indian Refractories Manufacturers
Association and of Cement Manufacturers Association He was also the President of National Council for
Cement and Building Materials during 1986-89 and a member of the Managing Committee of the FICCI during
1987-89 He has been a member of our Board since May 14 2009
Mr RV Kanoria is a non-executive independent Director of our Company Mr Kanoria completed his degree
in Masters of Business Administration (Honours) from International Institute for Management Development
Switzerland and completed an Advanced Management Programme of the Wharton School of Business USA
Mr Kanoria has substantial experience in the chemicals petrochemicals textiles and jute industries He has
been Vice President of FICCI and served in its executive committee for 17 years during which period he has
headed several joint business councils for India He was a part of the official GoI delegation for the WTO Inter
Ministerial Meetings in Seattle and Hong Kong He has also served as chairman of the Indian Jute Mills
Federation and the Confederation of Indian Textile Industries He is a chairman of the Commission on Trade
and Investment Policy of the International Chamber of Commerce Paris He is also a Member of the managing
committee of PHD Chamber of Commerce and Industry He has been a member of our Board since July 24
2007
Mr Shailesh Vishnu Haribhakti is a non-executive independent Director of our Company Mr Haribhakti is
a chartered accountant Mr Haribhakti has over 30 years of experience in the fields of governance issues and
risk management Mr Haribhakti is a director on the board of various companies In addition he is a committee
member of Futures amp Options segment of the NSE and a member of SEBI committee on Disclosures and
Accounting Standards He serves as a member of managing committees of ASSOCHAM and IMC Corporate
Governance Committee of ASSOCHAM and CII and is the Chairman of the Global Warming Committee He
was a member of the ICAIs Group on Implementation of Convergence with IFRS and a Member on the
Standards Advisory Council of the International Accounting Standards Board He has been awarded The Best
Non Executive Independent Director Award ndash 2007lsquo by the Asian Centre for Corporate Governance He has
been a member of our Board since July 21 2008
Mr SK Pathak is a non-executive independent Director of our Company Mr Pathak obtained his degree in
master of arts in economics from University of Allahabad Mr Pathak has over 51 years of experience in
engineering (civil mechanical and electrical) contracting and manufacturing business He is also the founder
and chairman of the Al Basti amp Mukhta group based in UAE engaged in the business of amongst others civil
construction and manufacture of printing inks coating and varnishes He has been a member of our Board since
April 24 2004
Mr Udayan Bose is a non-executive independent Director of our Company Mr Bose obtained his degree in
chemistry with honours and majored in mathematics from the Presidency College Kolkata Mr Bose has over
105
40 years of experience in banking business Mr Bose is a Fellow of the Chartered Institute of Bankers United
Kingdom and has completed his course in Advanced Management at Harvard Business School USA Mr Bose
has previously worked with Grindlays Bank in India and the United Kingdom and Deutsche Bank Asia where
he became Regional Director of South Asia In 1985 he set up Creditcapital which eventually was bought out
by Lazard LLC Mr Bose has served as Chairman of Creditcapital Lazard India from 1985 to 2005 and became
a managing director and General Partner of Lazard LLC in the period from 2001 to 2005 He was Advisor to the
Union Bank of Switzerland and has also served on the Advisory Board of The Economic Intelligence Unit of the
Economist Recently Mr Bose joined Dubai Holding LLC as a member of its board of directors He has been a
member of our Board since April 25 2006
None of our Directors is or was a director on any listed companies during the last five years preceding the date
of filing of the Draft Letter of Offer and until date whose shares have been or were suspended from being
traded on BSE or NSE during the term of their directorship in such companies
Except as listed below none of our Directors is or was a director on any listed companies which have been or
were delisted from the any stock exchange during the term of their directorship in such companies
Name of the
Director(s) and
term of
directorship
Name of the
stock exchange(s)
on which the
company was
listed
Date of
delisting on
stock
exchanges
Whether
compulsory
or voluntary
delisting
Reasons for
delisting
Whether
relisted
Date of
relisting and
stock
exchange on
which
relisted
Bengal amp Assam Company Limited
Hari Shankar
Singhania
Term Non-
executive
chairman wef
February 2 2009
ndash present
Calcutta Stock
Exchange Limited
November
3 2010
Voluntary
Delisting
Insignificant
trading volume of
equity shares
No NA
Vinita Singhania
Term Director
liable to retire by
rotation wef
February 2 2009
ndash present
JK Lakshmi Cement Limited
Hari Shankar
Singhania
Term Non-
executive
chairman wef
January 1 2002 -
present
Jaipur Stock
Exchange
June 7 2003 Voluntary
Delisting
Insignificant
trading volume of
equity shares
No NA
Vinita Singhania
Term Managing
Director for a
period of five
years wef
January 1 2006 -
present
Ahmedabad Stock
Exchange
September
26 2003
Voluntary
Delisting
Insignificant
trading volume of
equity shares
No NA
Delhi Stock
Exchange
Association
Limited
December
29 2003
Voluntary
Delisting
Insignificant
trading volume of
equity shares
No NA
Calcutta Stock
Exchange Limited
March 3
2004
Voluntary
Delisting
Insignificant
trading volume of
equity shares
No NA
Madhya Pradesh
Stock Exchange
March 21
2005
Voluntary
Delisting
Insignificant
trading volume of
equity shares
No NA
Bhubaneshwar
Stock Exchange
September
28 2006
Voluntary
Delisting
Insignificant
trading volume of
No NA
106
Name of the
Director(s) and
term of
directorship
Name of the
stock exchange(s)
on which the
company was
listed
Date of
delisting on
stock
exchanges
Whether
compulsory
or voluntary
delisting
Reasons for
delisting
Whether
relisted
Date of
relisting and
stock
exchange on
which
relisted
equity shares
JK Tyre and Industries Limited
Hari Shankar
Singhania
Term chairman
wef March 25
1974 - present
Calcutta Stock
Exchange Limited
August 18
2010
Voluntary
delisting
Infrequent and
insignificant
trading of equity
shares
No NA
Delhi Stock
Exchange
Association
Limited
January 29
2004
Voluntary
delisting
Infrequent and
insignificant
trading of equity
shares
No NA
Jaipur Stock
Exchange Limited
June 7 2003 Voluntary
delisting
Infrequent and
insignificant
trading of equity
shares
No NA
Kanoria Chemicals and Industries Limited
RV Kanoria
Term director
wef November
9 1982 ndash present
The Uttar Pradesh
Stock Exchange
Association
Limited
October 28
2004
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
The Calcutta
Stock Exchange
Association
Limited
March 30
2005
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Ludlow Jute amp Specialities Limited (previously Aekta Limited)
RV Kanoria
Term director
wef November
8 2006 ndash present
The Calcutta
Stock Exchange
Association
Limited
June 28
2008
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
KPL International Limited
RV Kanoria
Term director
wef June 4 2001
ndash present
The Bombay
Stock Exchange
Limited
January 31
2005
Voluntary
delisting
Public
shareholding
falling below
minimum public
shareholding
requirements
No NA
The Delhi Stock
Exchange
Association
Limited
March 31
2005
Voluntary
delisting
Public
shareholding
falling below
minimum public
shareholding
requirements
No NA
The Calcutta
Stock Exchange
Association
Limited
June 21
2005
Voluntary
delisting
Public
shareholding
falling below
minimum public
shareholding
requirements
No NA
R V Investment amp Dealers Limited
RV Kanoria
Term director
wef April 19
2007 ndash present
The Calcutta
Stock Exchange
Association
Limited
March 19
2010
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
SRF Limited
Arun Bharat Ram
Term director
wef August 1
1975 ndash present
The Ahmedabad
Stock Exchange
December 8
2003
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Delhi Stock
Exchange
December
10 2003
Voluntary
delisting
Insignificant
trading volume of
No NA
107
Name of the
Director(s) and
term of
directorship
Name of the
stock exchange(s)
on which the
company was
listed
Date of
delisting on
stock
exchanges
Whether
compulsory
or voluntary
delisting
Reasons for
delisting
Whether
relisted
Date of
relisting and
stock
exchange on
which
relisted
equity shares
Madras Stock
Exchange
January 7
2004
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
DCM Shriram Consolidated Limited
Arun Bharat Ram
Term director
wef May 25
1990 ndash present
Delhi Stock
Exchange
February 11
2004
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Calcutta Stock
Exchange
June 27
2005
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Samtel Color Limited
Arun Bharat Ram
Term director
wef February 15
1998 ndash present
Calcutta Stock
Exchange
Year 2006 Voluntary
delisting
Infrequent and
insignificant
trading of equity
shares
No NA
Moser Baer India Limited
Arun Bharat Ram
Term director
wef April 30
2002 ndash present
Ahmedabad Stock
Exchange
January 22
2004
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Delhi Stock
Exchange
January 23
2004
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Kanpur Stock
Exchange Limited
November
28 2003
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Calcutta Stock
Exchange
August 10
2007
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
KAMA Holdings Limited (formerly SRF Polymers Limited)
Arun Bharat Ram
Term director
from January 11
2002 ndash July 10
2008
Ahmedabad Stock
Exchange
December 8
2003
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Delhi Stock
Exchange
December
10 2003
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Madras Stock
Exchange
January 7
2004
Voluntary
delisting
Insignificant
trading volume of
equity shares
No NA
Compensation of our Directors
Executive Directors
Except as per employment agreements pursuant to which we pay remuneration (including commissions) to Mr
Hari Shankar Singhania Mr Harsh Pati Singhania and Mr OP Goyal and the sitting fees paid to our
Directors our Company does not pay any remuneration to our Directors
Our Company has entered into an employment agreement with Mr Hari Shankar Singhania dated March 26
2007 and supplemental agreement dated October 30 2008 appointing him as the Chairman of our Company for
a term of five years with effect from January 1 2007 As per the terms of the agreement Mr Hari Shankar
Singhania is currently being paid a basic salary of ` 1500000 per month with effect from January 1 2011 in
the salary range of ` 007 crore to ` 015 crore per month with such increments as may be decided by the Board
from time to time Mr Hari Shankar Singhania is also entitled to a commission of two per cent of the net profits
of our Company computed under Section 349 to 350 of the Companies Act and a performance linked incentive
as may be decided by the Board from time to time
108
Our Company has entered into an employment agreement with Mr Harsh Pati Singhania dated March 26 2007
and supplemental agreement dated October 30 2008 appointing him as the Managing Director of our Company
for a term of five years with effect from January 1 2007 As per the terms of the agreement Mr Harsh Pati
Singhania is being currently paid a basic salary of ` 1400000 per month with effect January 1 2011 in the
salary range of ` 007 crore to ` 015 crore per month with such increments as may be decided by the Board
from time to time Mr Harsh Pati Singhania is also entitled to a commission of two per cent of the net profits of
our Company computed under Section 349 to 350 of the Companies Act and a performance linked incentive as
may be decided by the Board from time to time
Our Company has entered into an employment agreement with Mr Om Prakash Goyal dated September 3
2009 appointing him as a Whole-time Director of our Company for a term of three years with effect from
September 7 2009 As per the terms of the agreement Mr Goyal is being currently paid a basic salary of `
350000 per month in the salary range of approximately ` 002 crore to ` 006 crore per month with such
increments as may be decided by the Chairman or Managing Director from time to time Mr Goyal is also
entitled to a commission of one per cent of the net profits of our Company subject to a ceiling of 100 of his
annual salary computed under Section 349 to 350 of the Companies Act and a performance linked incentive as
may be decided by the Board from time to time
Mr Hari Shankar Singhania Mr Harsh Pati Singhania and Mr Goyal as per the terms of their respective
employment agreements are also entitled to allowances and perquisites including (i) free furnished residential
accommodation with gas electricity water and other amenities (ii) car(s) with drivers (iii) reimbursement of
medical expenses incurred in India and abroad (iv) reimbursement of expenses on domestic help (v) telephone
at residence (vi) leave travel including foreign travel (vii) personal accident insurance and (viii) fees of clubs
Additionally Mr Hari Shankar Singhania Mr Harsh Pati Singhania and Mr Goyal are also entitled to
contribution to provident and superannuation fund or annuity fund to the extent these are not taxable under the
Income Tax Act 1961 payment of gratuity and encashment of unavailed leave
Non-Executive Directors
Each of the non-executive Directors are entitled to sitting fees of ` 15000 for each Board meeting ` 10000 for
each meeting of the Audit Committee and ` 5000 for each meeting of all other committees of the Board such
as the Investor Grievance Committee Remuneration Committee and Committee of Directors
In the case of Executive Directors notice period is six months Severance fee for the Chairman and the
Managing Director is remuneration for the unexpired residue of term or for three years whichever is shorter
and for the Whole-time Director six months salary in lieu of notice period
In Fiscal 2010 our Company paid compensation to our Directors as follows
Name of Director Term Compensation Remuneration in Fiscal
2010 (` in crore)
Mr Hari Shankar Singhania Five years wef January 1
2007
See ―- Terms and conditions
of employment of our
executive Directors
495
Mr Harsh Pati Singhania Five years wef January 1
2007
See ―- Terms and conditions
of employment of our
executive Directors
521
Mr Om Prakash Goyal Three years wef September
7 2009
See ―- Terms and conditions
of employment of our
executive Directors
167
Mr Arun Bharat Ram Liable to retire by rotation Sitting fees and commission 007
Mr Dhirendra Kumar Liable to retire by rotation Sitting fees and commission 007
Mr MH Dalmia Liable to retire by rotation Sitting fees and commission 006
Mr RV Kanoria Liable to retire by rotation Sitting fees and commission 007
Mr Shailendra Swarup Up to January 28 2011 Sitting fees and commission 007
Mr Shailesh Vishnu
Haribhakti
Liable to retire by rotation Sitting fees and commission 006
Mr SK Pathak Liable to retire by rotation Sitting fees and commission 006
Mr Udayan Bose Liable to retire by rotation Sitting fees and commission 007
Mrs Vinita Singhania Liable to retire by rotation Sitting fees and commission 006
Borrowing Powers of the Board in our Company
109
Pursuant to a resolution passed by our shareholders on December 1 2010 in accordance with provisions of the
Companies Act and our Articles of Association our Board has been authorised to borrow sums of money for the
purpose of the Company upon such terms and conditions as the Board may think fit provided that the money or
monies to be borrowed together with the monies already borrowed by the Company shall not exceed at any
time a sum of ` 2500 crores
Corporate Governance
As a listed company we are in compliance with the applicable provisions of the Listing Agreements pertaining
to corporate governance including appointment of independent Directors and constitution of committees
Corporate governance is administered through our Board and the committees of the Board In compliance with
Clause 49 of the Listing Agreement with the Stock Exchanges our Board has constituted Audit Committee and
ShareholdersInvestorlsquos Grievance Committee Further our Board has also constituted Remuneration
Committee and Committee of Directors
A brief description of the key committees their scope composition and meetings for the current year is as
follows
(i) Audit Committee
We had through a resolution of Board dated July 24 2007 re-constituted an Audit Committee as required under
Section 292A of the Companies Act and Clause 49 of the Equity Listing Agreement with the Stock Exchanges
The Audit Committee currently comprises
(a) Mr Udayan Bose Chairman
(b) Mr Dhirendra Kumar and
(c) Mr RV Kanoria
Terms of Reference
The terms of reference of the Audit Committee includes the following
Overseeing the financial reporting process and disclosure of its financial information
Recommending to the Board the appointment re-appointment or replacement of statutory auditors and
the setting of audit fees
The management shall disclose to the Audit Committee the usesapplications of funds by major
category (capital expenditure sales and marketing working capital etc) raised through an issue
(public issues rights issues preferential issues etc) on a quarterly basis as part of the Companylsquos
quarterly declaration of financial results
Approving the statement of funds utilized for purposes other than those stated in any offer
documentprospectusnotice issued by our Company
Two-thirds of the members of the Audit Committee are independent The Audit Committee met four times
during Fiscal 2010
(ii) Shareholders‟Investors‟ Grievance Committee
We have through a resolution of Board dated January 28 2011 re-constituted our ShareholderslsquoInvestorslsquo
Grievance Committee which currently comprises
(a) Mr RV Kanoria Chairman
(b) Mr Arun Bharat Ram
(c) Mr Harsh Pati Singhania and
(c) Mr OP Goyal
Terms of Reference
The terms of reference of the ShareholderslsquoInvestors Grievance Committeelsquo includes the following
110
To redress all investor complaints like non-receipt of balance sheet dividends transfertransmission of
shares etc
To oversee the performance of the registrar and the share transfer agent
The ShareholderslsquoInvestorslsquo Grievance Committee met four times during Fiscal 2010
(iii) Remuneration Committee
We had through a resolution of Board dated January 28 2011 re-constituted our Remuneration Committee The
Remuneration Committee currently comprises
(a) Mr Arun Bharat Ram Chairman
(b) Mr Udayan Bose and
(c) Mr RV Kanoria
Terms of Reference
The terms of reference of the Remuneration Committee inter alia includes the following
To determine consider and recommend remuneration (including minimum remuneration) to the
executive Directors of our Company
The quorum of this committee is three independent Directors The Remuneration Committee met two times
during Fiscal 2010
(iv) Committee of Directors
We had through a resolution of Board dated January 28 2011 re-constituted our Committee of Directors The
Committee of Directors currently comprises
(a) Mr Hari Shankar Singhania Chairman
(b) Mr Harsh Pati Singhania and
(c) Mr OP Goyal
(d) Mr RV Kanoria
Terms of Reference
The terms of reference of the Committee of Directors inter alia include the following
To approve from time to time transfer transmission and transposition of shares debentures or other
securities of the Company issue of certificates on consolidation subdivision or renewal of certificates
of shares debentures and other securities of the Company and issue of duplicate certificates or fresh
certificates on rematerialization of respective securities
To close registers of shares debentures or other securities of the Company or fix record date for
determining entitlement to payment of dividend interest or redemption amount andor for purposes of
annual closing in terms of the listing agreement
To borrow sums make loans and additional investments and approve purchase lease or acquisition of
lands buildings or other immovable properties and to sell lease or otherwise dispose of the properties
or other assets of the Company
To do all such acts deeds and things as may be required in connection with the Issue including but not
limited to (i) finalisation of and approval of Letter of Offer Composite Application Form abridged
Letter of Offer (ii) approval of notices advertisement(s) (iii) decide the Record Date date of opening
and closing of the Issue ratio price and premium of the Equity Shares to be offered (iv) reserve
Equity Shares in favour of holders of outstanding convertible debt instruments and issue and Allot
Equity Shares
The Committee of Directors met 12 times during Fiscal 2010
Our Articles do not require our Directors to hold any qualification shares
111
Shareholding of our Director(s) in our Company
The following table details the shareholding of our Director(s) in their personal capacity and either as sole or
first holder as on the date of filing of this Draft Letter of Offer
Name of Director Number of Equity Shares (Pre-Issue)
Mr Hari Shankar Singhania 100000
Mr Harsh Pati Singhania 75000
Mr Om Prakash Goyal 15
Mrs Vinita Singhania 50000
Interest of our Directors
Our Directors may be deemed to be interested to the extent benefits they are entitled to in terms of their
appointment including any compensation and fees payable to them for attending meetings of the Board or a
committee thereof to the extent of reimbursement of expenses payable to them as detailed in ldquo- Compensation
of our Directors on page 107
One of our Directors Mr Hari Shankar Singhania is also the natural person in control of our Promoter For
details see ―Our Promoter and our Group Companies on page 117
All our Directors may be interested in the Equity Shares already held by them or that may be Allotted to them
pursuant to the Issue and or that may be Allotted to their relatives or companies firms and trusts in which they
are directors members partners or trustees as the case may be pursuant to this Issue The Director(s) may have
further interest to the extent of any dividend payable to them and other distributions in respect of the Equity
Shares For details see ―Related Party Transactions on page 140
Additionally Mr Harsh Pati Singhania is the nephew of Mr Hari Shankar Singhania and Mrs Vinita Singhania
is the wife of late Mr Shripati Singhania one of the brothers of Mr Hari Shankar Singhania
Except as stated below and in the ―Related Party Transactions on page 140 the Company has not entered into
any contracts or agreements during the two years prior to this Draft Letter of Offer in which Directors are
directly or indirectly interested and no payments have been made to them in this respect of any such contracts
agreements or arrangements or as are proposed to be made to them
Name of Director Name of the Company Nature of transaction
Hari Shankar Singhania JK Lakshmi Cement Limited Purchase of Cement bags by our
Company
Habras International Limited Commission on purchase order paid
by our Company
JK Tyre and Industries Limited Sale of paper note pad by our
Company
Lakshmipat Singhania Education Foundation Payment of donation by our
Company
Harsh Pati Singhania Fenner (India) Limited Purchase of V-belts and other
materials by our Company
Pulp and Paper Research Institute Payment of charges by our Company
Bhopal Udyog Limited Arrangement of residential
accommodation by Bhopal Udyog
Limited
Lakshmipat Singhania Education Foundation Payment of donation by our
Company
Habras International Limited Commission on purchase order
Vinita Singhania JK Lakshmi Cement Limited Purchase of cement bags by our
Company
Sale of paper by our Company
Lakshmipat Singhania Education Foundation Payment of donation by our
Company
Habras International Limited Commission on purchase order paid
by our Company
OP Goyal JK Enviro-tech Limited Purchase of lime and other re-
imbursements by our Company
112
Name of Director Name of the Company Nature of transaction
RV Kanoria Kanoria Chemicals amp Industries Limited Purchase of polyalumium chloride by
our Company
All the transactions mentioned above are entered in ordinary course of business and on an arm-length basis
None of our Directors have any interest in any property acquired or proposed to be acquired by our Company in
the last two years Our Directors do not have any interest in any Objects of the Issue for which the Issue
proceeds are proposed to be utilised
Changes in our Board of Directors during the last three years
Name Date of Appointment Date of Cessation Reason
Mr Gajanan Khaitan October 30 2001 January 23 2009 Death
Mr Shailesh Vishnu Haribhakti July 21 2008 - Appointment
Mr MH Dalmia May 14 2009 - Appointment
Mrs Vinita Singhania May 14 2009 - Appointment
Mr Shailendra Swarup July 9 1992 January 28 2011 Resignation
113
Organisational Structure
Chairman
Hari Shankar
Singhania
MD
Harsh Pati Singhania
WTD
OP Goyal
COO
P Ramnath
EVP
(Works) ndash CPM
NK Agarwal CGM
(Internal
Audit)
Pramod
Kapoor
CE (New
Project)
Ashish De
CGM
(Sale ndash PB)
Santosh
Wakhloo
EVP
(Works) ndash JKPM
MC Goel
VP
(Sales - Paper)
AK Ghosh
Advisor
SC Majumdar
GM (TS)
S C Rath
DGM (security)
Virender Singh
GM (Sales)
Saikat Basu
VP (HRD)
VP
(Materials)
Amit Datta
CFO
V Kumaraswamy
Sr GM (ACs)
B Dhimaan
Senior GM
(Finance)
Ashok Gupta
VP
(Tech amp Dev)
Chief of
Taxation
Vinit
Marwaha
Company
Secretary
SC Gupta
GM (RM Procurement)
DK Daukia
114
Key Managerial Personnel
Mr P Ramnath aged 51 years is the Chief Operating Officer of our Company Mr Ramnath holds a BTech
degree in Chemical Engineering from Osmania University College of Technology and is a Post Graduate in
Management from Indian Institute of Management Bangalore He has over 28 years of experience in the fields
of management consulting sales and marketing business development and business unit management across
diverse industries such as petrochemicals building products speciality polymers industrial and speciality gases
and pharmaagro intermediates Mr Ramnath has previously worked with Business Consulting Group (BCG)
Reliance Industries Limited Bakelite Hylam Limited SNG Ion Exchange and Praxair India Limited Prior to
joining our Company in March 2010 he was Senior Vice President amp Head (Advanced Intermediates Business)
Jubilant Organosys Limited The remuneration paid to Mr Ramnath for period ended March 31 2010 was `
386 lakhs
Mr Ashish De aged 60 years is the Chief Executive (New Projects) of our Company Mr De obtained his
Bachelors of Science from Calcutta University and is a post graduate diploma in pulp and paper technology
from Institute of Paper Technology (presently Indian Institute of Technology Roorkie Chapter Saharanpur) as
well as trained in recycled paper board treatment and coating technology at North Carolina State University
North Carolina USA He has over 39 years of experience in the pulp and paper industry Mr De previously
worked with Orient Paper Mills Rohit Pulp amp Paper Mills Balkrishna Industries (a subsidiary of Siyaram Silk
Mills) and BILT Industries in various capacities Prior to joining our Company in February 2005 he was with
ITClsquos paper board and specialty paper division in various capacities such as Vice President (Business
Development) Vice President (Technical) and Vice President ndash Bhadrachalam Operations Mr De has been in-
charge of the packaging paperboard business of the Indian joint venture unit of MM Carton Austria The
remuneration paid to Mr De for Fiscal 2010 was ` 5229 lakhs
Mr V Kumaraswamy aged 49 years is the Chief Financial Officer of our Company Mr Kumaraswamy
obtained his Bachelors of Commerce from Madras University and completed his Masters in Business
Administration from Indian Institute of Management Ahmedabad as well as his CWA from ICWAI He has
over 27 years of experience in the field of finance Mr Kumaraswamy has previously worked with Voltas ITC
Group and Ciba-Geigy Prior to joining our Company in September 2005 as Vice President (Finance) he was
with Atul Limited as General Manager (Finance) The remuneration paid to Mr Kumaraswamy for Fiscal 2010
was ` 5309 lakhs
Mr MC Goel aged 59 years is the Executive Vice President (Works) of the Unit JKPM of our Company and
is responsible for overall efficient cost effective amp smooth mill management including raw material
procurement and plantation (including bamboo forest working) personnel and administration manufacturing
maintenance power plant operation material management accounts and costing sales and dispatch and project
and development including strategic business planning liaisoning public relation corporate social
responsibility activities and implementation of management system at our Unit JKPM Mr Goel is an
engineering graduate from IIT Roorkee (formerly University of Roorkee Roorkee) and Post Graduate from IIT
New Delhi and holds Post Graduate Diploma in Project Management from Punjabi University Patiala He has
over 36 years of experience in general management operations and maintenance project planning and
execution of various projects in integrated pulp and paper mills and synthetic fiber industries Mr Goel has
previously worked with Phoenix Pulp amp Paper Thailand Century Polyester Limited Nigeria JCT Limited Star
Paper Mills Limited and the Ministry of Energy GoI The remuneration paid to Mr Goel for Fiscal 2010 was `
2987 lakhs
Mr NK Agarwal aged 54 years is the Executive Vice President (Works) of the Unit CPM of our Company
and is responsible for overall functioning modernization and expansion plans of the Unit CPM in the areas of
pulp and paper manufacturing packaging board operations quality control project management cost
compression operational excellence human resource management commercial and administration functions
TPM and business process re-engineering at our Unit CPM Mr Agarwal has obtained his BTech in Chemical
Engineering from Harcourt Butler Technological Institute Kanpur He has over 31 years of experience in the
paper industry Mr Agarwal has previously worked with West Coast Paper Mills and Century Pulp and Paper
Prior to joining our Company in July 1992 Mr Agarwal has worked with Star Paper Mills Limited as Manager
(Project and Development) The remuneration paid to Mr Agarwal for Fiscal 2010 was ` 3159 lakhs
Mr AK Ghosh aged 46 years is the Vice President (Sales - Paper) of our Company and is responsible for
sales and marketing Mr Ghosh has obtained his Bachelors in Arts form University of Calcutta Diploma in
export and import from Bombay University and Post Graduate Diploma in Sales and marketing from Xavier
115
Institute of Management affiliated to Bharat Chamber of Commerce He has over 14 years of experience in the
paper industry Mr Ghosh has previously worked with TLT Worldwide and Cannon India Prior to joining our
Company in March 1997 Mr Ghosh has worked with Vijay Fine Protection Systems Limited as Regional Sales
Manager The remuneration paid to Mr Ghosh for Fiscal 2010 was ` 3156 lakhs
Mr Suresh Chander Gupta aged 53 years is the Company Secretary of our Company Mr Gupta became a
qualified company secretary from ICSI in 1982 Mr Gupta obtained his degree in commerce from Sri Ram
College of Commerce University of Delhi and completed his Masters in Business Administration from
Management Development Institute Gurgaon He has over 27 years of experience in various aspects related to
corporate laws Mr Gupta has previously worked with Khosla Foundry Limited and Jindal Drilling and
Industries Limited Prior to joining our Company in January 2001 Mr Gupta has worked with Jindal Pipes
Limited as Deputy General Manager (Finance and Company Secretary) The remuneration paid to Mr Gupta for
Fiscal 2010 was ` 1957 lakhs
All of the above key managerial personnel are permanent employees of the Company
None of the key managerial personnel are related to each other or to any Director of our Company Further
there are no arrangements or understanding with major shareholders customers suppliers or others pursuant to
which any of the key managerial persons were appointed
Shareholding of Key Managerial Personnel
The following key managerial personnel hold Equity Shares as on the date of filing of the Draft Letter of Offer
Name Number of Equity Shares (Pre-Issue)
Mr Ashish De 500
Except the above none of our key managerial personnel hold any Equity Shares or options to acquire Equity
Shares
Bonus or Profit Sharing Plan for our Key Managerial Personnel
The Company has an annual Business Performance Link Incentive Pay Plan (―BPLIP) for the employees
having designation General Manager and above The incentives under the BPLIP are determined on the basis of
achievement of certain financial and non-financial parameters as detailed in the BPLIP The financial
parameters include amongst others achieving target earning levels return on capital employed (ROCE) and
non-financial parameters include among others risk mitigation and other operating parameters on which the
long term health of our Company depends
Except as mentioned above our Company does not have any bonus or profit sharing plans for our key
managerial personnel and the employees of our Company
Interest of Key Managerial Personnel
The key managerial personnel have an interest in our Company to the extent of the remuneration or benefits to
which they are entitled to as per the terms of appointment incentive payable under the BPLIP and
reimbursement of expenses incurred by them in the ordinary course of business Additionally the key
managerial persons have interest in our Company to the extent of their shareholding in our Company and to the
extent of Equity Shares that may be Allotted to them and or that may be Allotted to their relatives or
companies firms and trusts in which they are directors members partners or trustees as the case may be
pursuant to this Issue The key managerial persons may have further interest to the extent of any dividend
payable to them and other distributions in respect of the Equity Shares
We have not entered into any contract agreement or arrangement during the preceding two years from the date
of this Draft Letter of Offer in which our key managerial personnel are interested directly or indirectly and no
payments have been made to them in respect of these contracts agreements or arrangements or are proposed to
be made to them
116
Changes in our Key Managerial Personnel of the Company during the last three years
Name Designation Date of appointment as
key managerial
personnel
Date of
Cessation
Reason
Mr
SKMishra
Chief Executive (Works) January 31 1990 December 13
2008
Resignation
Mr Rajiv
Sheopuri
Chief Executive (Marketing and
Business Development)
September 13 2000 December 31
2008
Resignation
Mr Surajit
Ray
Vice President (Technology and
Development)
June 1 2005 November 8
2010
Resignation
Dr TK
Mandal
Vice President (Human Resource
Development)
December 1 2006 November 18
2010
Resignation
Mr MC Goel Executive Vice President (Works)
(Unit JKPM)
November 3 2008 - Promotion
Mr NK
Agarwal
Executive Vice President (Works)
(Unit CPM)
May 26 2008 - Promotion
Mr AK
Ghosh
Vice President (Sales - Paper)
January 19 2009 - Promotion
Mr P
Ramnath
Chief Operating Officer March 11 2010 - Appointment
Employees Share Purchase SchemeEmployee Stock Option Scheme
Our Company does not have any employee share purchase scheme or an employee stock option scheme
Payment of benefit to officers of our Company
Except as disclosed in this Draft Letter of Offer and except the statutory benefits provided upon termination of
their employment in our Company or superannuation no officer of our Company is entitled to any benefits
117
OUR PROMOTER AND GROUP COMPANIES
Our Promoter
The Promoter of our Company is Bengal amp Assam Company Limited
Our Promoter currently holds 14344407 Equity Shares of our Company which constitutes 1835 of our pre-
Issue paid-up share capital and will continue to hold the majority of our post-Issue paid-up share capital
Promoter
Bengal amp Assam Company Limited (―BACL)
BACL was incorporated as Bengal amp Assam Investors Limitedlsquo under the erstwhile Companies Act 1913 on
January 30 1947 as a public limited company The name of the company was subsequently changed to Bengal
amp Assam Company Limitedlsquo on June 2 1982 The registered office of BACL is situated at Link House 3
Bahadur Shah Zafar Marg New Delhi 110 002 India Its corporate identification number is
L67120DL1947PLC116830
BACL is engaged in the business of holding investments and other financial assets of certain companies under
the JK group BACL is duly registered as a non-banking financial company (NBFC) with the RBI
Pursuant to a scheme of scheme of arrangement between BACL and Sthenic Investment Limited as approved
by the High Court of Delhi BACL acquired 35000 Equity Shares of our Company on January 16 2006 In
terms of the scheme of arrangement and demerger between Juggilal Kamlapat Udyog Limited Nav Bharat
Vanijya Limited J K Credit amp Finance Limited Param Shubham Vanijya Limited Pranav Investment (MP)
Company Limited (―Transferor Companies) and BACL and their respective shareholders and creditors
certain specified investments were demerged from the Transferor Companies and merged with BACL The said
scheme was sanctioned by the High Court of Delhi in terms of its order dated July 19 2007 Pursuant to the said
scheme BACL acquired 67000 Equity Shares of our Company on January 24 2008
Further pursuant to a scheme of amalgamation as approved by the order of the Delhi High Court dated August
22 2008 and made effective on November 11 2008 Ashim Investment Company Limited (―AICL) and its
four wholly owned subsidiaries namely Mayfair Finance Limited Sidhi Vinayak Investment Limited
Terrestrial Finance Limited and Yashodhan Investment Limited along with Netflier Finco limited (―NFL) and
its four wholly owned subsidiaries namely Hansdeep Investment Limited Panchanan Investment Limited
Hidrive Finance Limited and Radial Finance Limited have amalgamated into and with BACL (the ―Bengal and
Assam Scheme of Amalgamation) As per the scheme BACL has issued and allotted 23 equity shares of ` 10
each for every 59 equity shares of ` 10 each held by the shareholders in AICL and 17 equity shares of ` 10 each
fully paid up for every 73 equity shares of ` 10 each held in NFL as on the relevant record date ie November
28 2008 and the equity share capital of BACL was increased to approximately ` 868 crore
Pursuant to the Bengal and Assam Scheme of Amalgamation the equity shares of BACL were listed on BSE
and CSE on August 17 2009 and December 8 2009 respectively The equity shares of BACL have been
delisted from the CSE with effect from November 3 2010 The equity shares of BACL are presently listed on
BSE
Shareholding Pattern
The shareholding pattern of BACL as on December 31 2010 is as follows
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family 5176993 5962
(b) Central GovernmentState Government(s) - -
(c) Bodies Corporate 880047 1013
(d) Financial InstitutionsBanks - -
(e) Any Other (Specify) - -
118
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
Sub-Total (A)(1) 6057040 6975
(2) Foreign
(a) Individuals (Non-Resident IndividualsForeign
Individuals) - -
(b) Bodies Corporate - -
(c) Institutions - -
(d) Any Other (specify) - -
Sub-Total (A)(2) - -
Total Shareholding of Promoter and Promoter Group
(A) = (A)(1)+(A)(2)
6057040 6975
(B) Public shareholding
(1) Institutions
(a) Mutual FundsUTI 1129 001
(b) Financial InstitutionsBanks 1150 001
(c) Central GovernmentState Government(s) 37285 043
(d) Venture Capital Funds - -
(e) Insurance Companies 375805 433
(f) Foreign Institutional Investors 14985 017
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 430354 496
(2) Non-Institutions
(a) Bodies Corporate 513177 591
(b) Individuals-
(i) Individual shareholders holding nominal share capital
up to Rs 1 lakh
602571
694
(ii) Individual shareholders holding nominal share capital
in excess of Rs 1 lakh
641497 739
(c) Others
Trusts 209797 242
NRIlsquosOCBs 227854 262
Custodian of Enemy Property 1263 001
Sub-Total (B)(2) 2196159 2529
Total Public Shareholding (B) = (B)(1)+(B)(2) 2626513 3025
Total (A)+(B) 8683553 10000
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(C) - -
Grand total (A)+(B)+(C) 8683553 10000
Board of Directors
The Board of Directors of BACL as on December 31 2010 comprises Mr Hari Shankar Singhania Chairman
Mr Bharat Hari Singhania Dr Raghupati Singhania Mrs Vinita Singhania Mr OP Khaitan Mr Shailendra
Swarup Mr LR Puri and Mr JRC Bhandari
Financial Performance
The audited standalone financials of BACL for Fiscal 2010 Fiscal 2009 and Fiscal 2008 are set forth below
(Amount in ` crores except per share data)
Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 868 868 868() Reserves and surplus() 22492 20306 19148
SalesTurnover 2651 1615 1613
Profit(Loss) after tax 2404 1288 1359
Earnings per share (in `) (Basic) 2768 1483 1564
119
Fiscal 2010 Fiscal 2009 Fiscal 2008
Diluted earnings per share (in `) 2768 1483 1564
Net asset value per share (in `) 26902 24384 23051 ()
Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any
() Including share capital suspense account of ` 353 crores
Details of listing and highest and lowest market price during the preceding six months
Monthly high and low price of the equity shares of BACL during the preceding six months at the BSE are as
follows
Month BSE
High Low
July 2010 21470 18905
August 2010 32000 19910
September 2010 45400 28645
October 2010 42900 36300
November 2010 39100 29600
December 2010 38480 26870
(Source wwwbseindiacom)
There has been no trading of equity shares of BACL on the CSE since listing of equity shares of BACL on the
CSE
The closing share price of BACL as of December 31 2010 on the BSE was ` 34925
The market capitalization of BACL as of December 31 2010 as per the closing price on the BSE was ` 30327
crores
Capital issues in the last three years
There have been no public or rights issues by BACL in the last three years
Rate of dividend
Rates of dividend for Fiscal 2010 Fiscal 2009 and Fiscal 2008 are 25 15 and 50 respectively
Change in capital structure since the date of last issue
Except in accordance with the BACL Scheme of Amalgamation there has been no change in capital structure of
Bengal amp Assam since the date of its last issue
Promise vs performance
Not applicable
Mechanism for redressal of investor grievance
The board of directors of BACL have constituted an investor grievance committee comprising Mr Om Prakash
Khaitan (Chairman) Mr Jatan Roop Chand Bhandari and Mr Lajpat Rai Puri in accordance with Clause 49 of
the Listing Agreement to look into the redressal of complaints of investors such as transfers or credit of shares to
demat accounts and non-receipt of dividendinterestannual reports Mr Dillip Swain the company secretary of
BACL is the compliance officer
BACL normally takes three-four days to dispose of various types of investor complaints BACL received eight
investor complaints in Fiscal 2010 and all were disposed of in that period As of December 31 2010 there were
no investor complaints pending against BACL
Promoter of BACL
The promoter of BACL is Mr Hari Shankar Singhania
120
Our Company confirms that the PAN bank account numbers company registration numbers and the addresses
of the registrar of the companies where our Promoter is registered will be submitted to the Stock Exchanges at
the time of filing the Draft Letter of Offer with them
Natural person in control of our Promoter
Mr Hari Shankar Singhania 78 years has been instrumental in the foundation of the
JK group of companies and the expansion of their business He is on the board of
directors of our Promoter Bengal amp Assam Company Limited
Mr Hari Shankar Singhania is a resident Indian national currently residing at 19
Prithviraj Road New Delhi 110 011 India His driving license number is
P02042000112985 His voter identification number is DL01002222279 For further
details see ―Our Management on page 100
Interests of our Promoter
Our Promoter is interested in our Company to the extent of its shareholding and the premium and dividends
received on such shareholding of Equity and preference shares as may be applicable in our Company
Additionally our Promoter is entitled to appoint Director(s) on the Board of our Company until such time it
holds the requisite percentage of shareholding in the Company as provided under Article 101 of the Articles of
the Company The Promoter will also have interest to the extent of subscription pursuant to renouncements in its
favour and towards subscription of additional Equity Shares applied for towards the unsubscribed portion
The Promoter confirms that it has no interest in any property acquired by our Company during the last two years
from the date of filing of this Draft Letter of Offer
Disassociation by the Promoter in the last three years
Our Promoter has not disassociated itself from any company or firm during the three years immediately
preceding the date of filing of this Draft Letter of Offer with SEBI
Group Companies
The following companiesfirmsventures are promoted by our Promoter (including companies under the same
management pursuant to Section 370 (1B) of the Companies Act) and thus are our Group Companies
S
No
Name of Company Brief Description of business Promoters‟ shareholding
in (direct)
1 JK Lakshmi Cement Limited Manufacturing and sale of cement 2225
2 JK Tyre amp Industries Limited Manufacturing and sale of
automotive tyres tubes and flaps
2054
3 Fenner (India) Limited Manufacture and sale of fan belts
including raw edge cogged power
transmission belts oil seals moulded
rubber products and in designing
supplying and installing of
mechanical power transmission
drives
8790
4 JK Agri Genetics Limited Reasearch and development
production and marketing of hybrid
seeds and holding and dealing in
investments
3855
5 BMF Investments Limited Investment into shares and other
securities
-
6 Florence Alumina Limited Manufacturing of alumina and
conversion of alumina to aluminum
-
7 JK Sugar Limited Manufacturing trading exporting
and importing of sugar and sugar
4486
121
S
No
Name of Company Brief Description of business Promoters‟ shareholding
in (direct)
products and generation and
distribution of electricity
8 Pranav Investment (MP) Company
Limited
Investment in securities and
registered with the RBI as a non-
banking financial company
3000
9 Southern Spinners and Processors Limited Manufacture sale and distribution of
cotton yarn and fabric
-
10 Udaipur Cement Works Limited Manufacture and sale of cement 4937
11 Modern Cotton Yarn Spinners Limited Manufacture sale and distribution of
cotton yarn and fabric
-
12 Hansdeep Industries and Trading
Company Limited
Manufacture purchase sale and
dealing in cement and cement
products
-
13 Dwarkesh Energy Limited Production and distribution of
power
4994
14 JK Enviro-tech Limited Manufacturing of lime 4545
15 JK Risk Managers and Insurance Brokers
Limited
Insurance broking 4950
16 Panchmahal Properties Limited Purchase and sale of land and
buildings any real estate and
investments
9998
17 Acorn Engineering Limited Manufacturing of engineering
materials
-
18 Umang Dairies Limited Manufacture of diary products such
as instant diary powder ghee and
skimmed milk powder
4531
19 LVP Foods Private Limited Processing and packing of liquid
milk in poly pouches
9999
Promoters‟ shareholdings shown as bdquo-‟ in the table above are held indirectly
Pursuant to a scheme of arrangement and demerger between JK Agri Genetics Limited and Florence Alumina Limited and their
respective shareholders and creditors filed before the High Court of Calcutta the Seed Undertaking of JK Agri Genetics Limited as defined in the scheme of arrangement is proposed to be transferred to Florence Alumina Limited Upon approval of the proposed scheme
Florence Alumina Limited will engage in the business of research and development production and marketing of hybrid seed and JK Agri
Genetics Limited will engage in the business of holding and dealing in investments
Unless otherwise specifically stated no equity shares of any of our Group Companies are listed on any Indian
stock exchange and they have not made any public or rights issue of securities in India in the preceding three
years
The following information with respect to our Group Companies is being provided pursuant to sub-clause (2)
of clause (C) of (IX) of Part A of Schedule VIII of the SEBI ICDR Regulations
A Listed Group Companies
1 JK Tyre amp Industries Limited (ldquoJK Tyrerdquo)
JK Tyre was incorporated as JK Industries Private Limitedlsquo as a private company under the erstwhile Indian
Companies Act 1913 on February 14 1951 Upon conversion to a public company the name of JK Tyre was
changed to JK Industries Limitedlsquo with effect from May 24 1974 and subsequently to its present name with
effect from April 2 2007 Its corporate identification number is L67120WB1951PLC019430 Its registered
office is situated at 7 Council House Street Kolkata ndash 700 001
JK Tyre is engaged in the business of manufacture and sale of automotive tyres tubes and flaps
The equity shares of JK Tyre were listed on the BSE Calcutta Stock Exchange Limited and Delhi Stock
Exchange Association Limited in 1975 The equity shares were subsequently listed on Jaipur Stock Exchange
Limited in 1990 and on the NSE in 2004 Subsequently the equity shares of JK Tyre were voluntary delisted
from the Calcutta Stock Exchange Limited the Delhi Stock Exchange Association Limited and from Jaipur
Stock Exchange Limited The equity shares of JK Tyre are presently listed on the Stock Exchanges
Shareholding Pattern
122
The shareholding pattern of JK Tyre as of December 31 2010 is as follows
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family 715161 174
(b) Central GovernmentState Government(s) - -
(c) Bodies Corporate 18569320 4523
(d) Financial InstitutionsBanks - -
(e) Any Other (Trust) - -
Sub-Total (A)(1) 19284481 4697
(2) Foreign
(a) Individuals (Non-Resident IndividualsForeign
Individuals)
- -
(b) Bodies Corporate - -
(c) Institutions - -
(d) Any Other (specify) - -
Sub-Total (A)(2) - -
Total Shareholding of Promoter and Promoter Group
(A) = (A)(1)+(A)(2)
19284481 4697
(B) Public shareholding
(1) Institutions
(a) Mutual FundsUTI 802747 196
(b) Financial InstitutionsBanks 8613 002
(c) Central GovernmentState Government(s) 285520 070
(d) Venture Capital Funds - -
(e) Insurance Companies 1903294 464
(f) Foreign Institutional Investors 5094003 1241
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 8094177 1971
(2) Non-Institutions
(a) Bodies Corporate 7205518 1755
(b) Individuals-
(i) Individual shareholders holding nominal share
capital up to Rs 1 lakh
4181442
1018
(ii) Individual shareholders holding nominal share
capital in excess of Rs 1 lakh
2217346
540
(c) Others (Trust) 200 000
(d) Clearing Members 76182 019
Sub-Total (B)(2) 13680688 3332
Total Public Shareholding (B) = (B)(1)+(B)(2) 21774865 5303
Total (A)+(B) 41059346 10000
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(bdquoc) - -
Grand total (A)+(B)+(C) 41059346 10000
Board of Directors
The Board of Directors of JK Tyre as on December 31 2010 comprises Mr Hari Shankar Singhania Chairman
Dr Raghupati Singhania Vice Chairman amp Managing Director Mr Arvind Singh Mewar Mr Bakul Jain Mr
GB Pande (Representative of LIC of India) Mr OP Khaitan Mr Kalpataru Tripathy Mr Ashok U Katra
(IDBI Nominee) Mr Bharat Hari Singhania Managing Director Mr Vikrampati Singhania Deputy Managing
Director Mr SC Sethi Whole-time Director and Mr Arun K Bajoria President amp Director Mr GB Pande
ceased to be director with effect from January 6 2011
123
Financial Performance
The audited financials of JK Tyre for the Fiscal 2010 Fiscal 2009 and Fiscal 2008 are set forth below
(In ` crores except per share data)
Fiscal 2010 Fiscal 2009 (October
2007 ndash March Fiscal 2008 (
Equity capital 4106 4106 3079
Reserves and surplus 54502 39875 32896
Gross Sales Turnover 395629 549032 319571
Profit(Loss) after tax 16347 1905 6673
Earnings per share (`) (Basic) 3974 552 2153
Earnings per share (`) (Diluted) 3974 552 2153
Net asset value per share (`) 14274 10712 11682 Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any
Details of listing and highest and lowest market price during the preceding six months
Monthly high and low price of the equity shares of JK Tyre at the BSE and the NSE are as follows
Month
BSE NSE
High (Rs) Low (Rs) High (Rs) Low (Rs)
July 2010 17335 15750 17350 15710
August 2010 18840 15775 18900 15515
September2010 20260 16905 20400 16900
October 2010 19630 16215 19640 16240
November 2010 17050 13000 17065 13490
December 2010 15390 13215 15300 13230
(Source BSE and NSE websites)
The closing equity share price of JK Tyre as of December 31 2010 on NSE and BSE were ` 13445 and ` 13485 respectively and the market capitalization of JK Tyre as of December 31 2010 on NSE and BSE was `
55204 crore and ` 55369 crores respectively
Public or Rights Issue in the last three years
JK Tyre made a rights issue of 10264836 equity shares of ` 10 each for a price of ` 85 per equity share
aggregating to ` 872511 lakhs in September 2008 There has been no change in capital structure of JK Tyre
subsequent to the date of allotment of equity shares pursuant to the rights issue
Promise vs Performance
The objects of the rights issue in the year 2008 were to part finance expansion projects which were (i) expansion
program for enhancing the capacity of truckbus radial plant (ii) implementation of the project for
manufacturing speciality tyres special application tyres and (iii) implementation of certain energy saving
projects The proceeds of rights issue have been fully utilized for the aforesaid purposes
Mechanism for redressal of investor grievance
The board of directors of JK Tyre have constituted a shareholdersinvestors grievance committee comprising
four directors namely Mr GB Pande (Chairman) Mr OP Khaitan Mr Vikrampati Singhania and Mr SC
Sethi in accordance with clause 49 of the Equity Listing Agreement with the Stock Exchanges to specifically
look into the redressal of complaints of investors such as the transfers or credit of shares to demat accounts and
non receipt of dividend annual reports Mr PK Rustagi Vice President (Legal) and Company Secretary is the
compliance officer JK Tyre normally takes up to 15 days for disposal of various types of investor grievances
Total number of investor complaints received during the last three Fiscal years is 19 out of which three investor
complaints were received during Fiscal 2010 As of December 31 2010 there were no pending investor
complaints pending against JK Tyre
124
Business interest in the Company
JK Tyre has had following business interest in the Company in the last three Fiscal years (` in crore)
S No Particulars Fiscal 2010 Fiscal 2009 Nine month
period ended
March 31 2008
1 Reimbursement of expenses received from the
Company
031 039 064
2 Reimbursement of expenses provided to the
Company
018 031 042
3 Purchase of paper from our Company Negligible Negligible Negligible
4 Sale of car to the Company - - 008
2 JK Lakshmi Cement Limited (ldquoJKLCrdquo)
JKLC was incorporated as Straw Products Limitedlsquo a public limited company under the erstwhile Indian
Companies Act 1913 on August 6 1938 and received its certificate for commencement of business on May 30
1939 Its corporate identification number is L74999RJ1938PLC019511 Its registered office is situated at
Jaykaypuram-307019 Basantgarh Dist Sirohi Rajasthan
JKLC is engaged in the business of manufacture and sale of cement
JKLC was listed on the BSE and the NSE in the year 1959 and 2006 respectively The equity shares of JKLC
are presently listed on the Stock Exchanges
Shareholding Pattern
The shareholding pattern of JKLC as of December 31 2010 is as follows
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage ()
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family 1003260 082
(b) Central GovernmentState Government(s) Nil Nil
(c) Bodies Corporate 53069093 4337
(d) Financial InstitutionsBanks Nil Nil
(e) Any Other (Trust) Nil Nil
Sub-Total (A)(1) 54072353 4419
(2) Foreign
(a) Individuals (Non-Resident IndividualsForeign
Individuals)
Nil Nil
(b) Bodies Corporate Nil Nil
(c) Institutions Nil Nil
(d) Any Other (specify) Nil Nil
Sub-Total (A)(2) Nil Nil
Total Shareholding of Promoter and Promoter Group
(A) = (A)(1)+(A)(2)
54072353 4419
(B) Public shareholding
(1) Institutions
(a) Mutual FundsUTI 4800641 392
(b) Financial InstitutionsBanks 9560324 781
(c) Central GovernmentState Government(s) (IPICOL) 306230 025
(d) Venture Capital Funds Nil Nil
(e) Insurance Companies 3763420 308
(f) Foreign Institutional Investors 5318684 435
(g) Foreign Venture Capital Investors Nil Nil
(h) Any Other (specify) ndash Foreign Banks 8524 001
Sub-total (B)(1) 23757823 1942
(2) Non-Institutions
(a) Bodies Corporate 10307460 842
125
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage ()
(b) Individuals-
(i) Individual shareholders holding nominal share capital
up to Rs 1 lakh
23851099
1949
(ii) Individual shareholders holding nominal share capital
in excess of Rs 1 lakh
6078764 497
(c) Others
Trusts amp Foundations 8300 001
Cooperative Societies Nil Nil
Educational Institutions Nil Nil
Foreign Companies Nil Nil
Overseas Corporate Bodies Nil Nil
Non-resident Indians 3543371 290
Sub-Total (B)(2) 43788994 3579
Total Public Shareholding (B) = (B)(1)+(B)(2) 67546817 5521
Total (A)+(B) 121619170 9940
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group Nil Nil
(b) Public 739754 060
Sub-Total (C) 739754 060
Grand total (A)+(B)+(C) 122358924 10000
Board of Directors
The board of directors of JKLC as on December 31 2010 comprises of Mr Hari Shankar Singhania Mr Bharat
Hari Singhania Mrs Vinita Singhania Dr Ajay Dua Mr BV Bhargava Mr Kashi Nath Memani Mr NG
Khaitan Mr Pradeep Dinodia Dr RP Singhania Mr S Chouksey Mr Raj Kumar Bansal and Mr SK Wali
Financial Performance
The audited financials of JKLC for the Fiscal 2010 Fiscal 2009 and Fiscal 2008 are set forth below
(In ` crores except per share data)
Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital ( face value ` 5 per
share)
6119 6119 6119
Reserves and surplus 92879 72344 57348
Gross SalesTurnover 164405 140405 128636
Profit(Loss) after tax 24113 17859 22367
Earnings per share (`) (Basic) 1971 1460 1936
Earnings per share (`) (Diluted) 1971 1460 1886
Net asset value per share (`) 8091 6412 5187
Reserves and surplus are excluding Revaluation reserve if any and reduced by miscellaneous expenditure if any
Net asset value per share is on the basis of face value of ` 5 per share
Details of listing and highest and lowest market price during the preceding six months
Monthly high and low price of the equity shares of JKLC at the BSE and the NSE are as follows
Month
BSE NSE
High (`) Low (`) High (`) Low (`)
July 2010 7195 6110 7320 6130 August 2010 6430 5115 6415 5825
September 2010 6775 5805 6790 5800
October 2010 6700 6110 6700 6120
November 2010 6830 4850 6800 4800
December 2010 5950 5020 5940 5055
(Source BSE and NSE websites)
126
The share price of JKLC as of December 31 2010 on the NSE and the BSE were ` 5535 and ` 5520
respectively
The market capitalization of JKLC as of December 31 2010 on the NSE and the BSE was ` 67726 crores and `
67542 crores respectively
Public or Rights Issue in the last three years
JKLC has not undertaken any public or rights issue in the last three years
Changes in the capital structure of JKLC during last three years
Date of Allotment Number of equity
shares allotted
Face
Value
(`)
Issue Price
(`)
Consideration Reasons of allotment
January 30 2008 4102500 10 9750 Cash Allotment pursuant to
conversion of warrants
December 21 2009 122358924 5 NA - Allotment pursuant to sub-
division of each equity share
with face value of ` 10 each
into two equity shares with
face value of ` 5 each
Promise vs Performance
Not applicable
Mechanism for redressal of investor grievance
The board of directors of JKLC have constituted a shareholdersinvestors grievance committee comprising four
directors namely Dr RP Singhania chairman Mr NG Khaitan Mr Bharat Hari Singhania and Dr Ajay
Dua in accordance with clause 49 of the Equity Listing Agreement with the Stock Exchanges to look into the
redressal of complaints of investors such as transfers or credit of shares to demat accounts and non receipt of
dividendinterestannual reports Mr Brijesh Kumar Daga Vice President and Company Secretary is the
compliance officer JKLC normally takes up to two days for disposal of various types of investor grievances
Total number of investor complaints received during the last three Fiscal years is 21 out of which five investor
complaints were received during Fiscal 2010 As of December 31 2010 there were no pending investor
complaints pending against JKLC
Business Interest in our Company
JKLC has had following business interest in the Company in the last three Fiscal years
(` in crore)
S No Particulars Fiscal 2010 Fiscal 2009 Nine month
period ended
March 31 2008
1 Sale of cement to Company 066 098 181
2 Purchase of paper from Company 007 007 006
3 Reimbursement of expenses received from
Company
206 156 151
4 Reimbursement of expenses paid to Company 087 092 091
3 JK Agri Genetics Limited
JK Agri Genetics Limited (―JK Agri) was incorporated as a public limited company under the Companies Act
on May 25 1993 as JK Agro Products Limited JK Agri received its certificate for commencement of business
on September 1 1993 Its corporate identity number is L24211WB1993PLC092885 The registered office of JK
Agri is situated at 7 Council House Street Kolkata 700 001
JK Agri is engaged in the business of research and development production and marketing of hybrid seeds and
127
holding and dealing in investments Pursuant to a scheme of arrangement and demerger between JK Agri and
Florence Alumina Limited and their respective shareholders and creditors filed before the High Court of
Calcutta the Seed Undertaking of JK Agri Genetics Limited as defined in the scheme of arrangement is
proposed to be transferred to Florence Alumina Limited Upon approval of the proposed scheme JK Agri will
primarily engage in the business of holding and dealing in investments
The equity shares of JK Agri were listed on the BSE with effect from March 8 2004 and on CSE with effect
from March 29 2004
Shareholding pattern
The shareholding pattern of JK Agri as of December 31 2010 is as follows
Category
Code
Category of Shareholder Number
of Equity
Shares
holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family 95251 272
(b) Central GovernmentState Governments(s) -- --
(c) Bodies Corporate 1351820 3855
(d) Financial InstitutionsBanks -- --
(e) Any Other (specify) -- --
Sub-Total (A)(1) 1447071 4127
(2) Foreign
(a) Individuals (Non-Resident Individuals)Foreign Individuals -- --
(b) Bodies Corporate -- --
(c) Institutions -- --
(d) Any Other (specify) -- --
Sub-Total (A)(2) -- --
Total Shareholding of Promoter and Promoter Group
(A)=(A)(1)+(A)(2)
1447071 4127
(B) Public Shareholding
(1) Institutions
(a) Mutual FundsUTI 1296 004
(b) Financial InstitutionsBanks 451 001
(c) Central GovernmentState Government(s) -- --
(d) Venture Capital Funds -- --
(e) Insurance Companies 50 000
(f) Foreign Institutional Investors -- --
(g) Foreign Venture Capital Investors -- --
(h) Any Other (specify) -- --
Sub-Total (B)(1) 1797 005
(2) Non-Institutions
(a) Bodies Corporate 1274424 3634
(b) Individuals ndash
(i) Individual Shareholders holding nominal share capital upto Rs 1
lakh
513223
1464
(ii) Individual Shareholders holding nominal share capital in excess
of Rs 1 lakh
267933
764
(c) Others -- --
(d) Clearing Members 2062 006
Sub-Total (B)(2) 2057642 5868
Total Public Shareholding (B)=(B)(1)+(B)(2) 2059439 5873
Total (A)+(B) 3506510 10000
(C)
Shares held by custodians against which depository receipts have
been issued
(a) Promoter and Promoter Group -- --
(b) Public -- --
Sub-Total(C) -- --
Grand Total (A)+(B)+(C) 3506510 10000
128
Board of Directors
The board of directors of JK Agri as on December 31 2010 comprise of Mr Bharat Hari Singhania Chairman
Dr Raghupati Singhania Mr Vikrampati Singhania Mr Swaroop Chand Sethi Mr JRC Bhandari Mr
Sanjay Kumar Khaitan and Mr Sanjeev Kumar Jhunjhunwala
Financial Performance
The audited financial statements of JK Agri for the last three years ended on September 30 2010 September 30
2009 (18 months) and March 31 2008 are as follows
(` in crores except per share data)
Particulars September 302010 September 30 2009 (18
months)
March 31 2008
Equity Capital 351 351 351
Reserves and Surplus 5260 4196 4319
SalesTurnover 11383 14008 8974
Profit(Loss) after tax 1064 (123) 645
Earnings per share (`) (Basic) 3034 (351) 1839
Earnings per share (`) (Diluted) 3034 (351) 1839
Net Asset value per share (`) 16001 12965 13317 Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any
Details of listing and highest and lowest market price during the preceding six months
The equity shares of JK Agri are listed on the BSE and the CSE The details of the highest and lowest price on
the BSE during the preceding six months are as follows
Month Monthly High (`) Monthly Low (`)
July 2010 19900 17000
August 2010 34390 18150
September 2010 44400 29035
October 2010 63400 39000
November 2010 72600 50000
December 2010 74400 51000
Source wwwbseindiacom
The equity shares of JK Agri are not being traded actively on CSE
The closing equity share price of JK Agri as of December 31 2010 on BSE was ` 61515 and market
capitalization of the Company on the said date on BSE was ` 21570 crores
Public or Rights Issue in the last three years
JK Agri has not made any public or rights issue in the last three years
Changes in the capital structure of JKLC during last three years
Not Applicable
Promise vs Performance
Not Applicable
Mechanism for redressal of investor grievance
The Board of Directors of JK Agri has constituted a shareholdersinvestors grievance committee comprising of
Mr Swaroop Chand Sethi Chairman Mr Sanjay Kumar Khaitan and Mr Vikrampati Singhania in accordance
with clause 49 of the equity listing agreement with the stock exchanges to specifically look into the redressal of
complaints of investors such as transfers or credit of shares to demat accounts and non receipt of dividend
interest annual reports JK Agri normally takes up to 15 days for disposal of various types of investor
129
grievances
Total number of investor complaints received during the last three Fiscal years is one which was received
during Fiscal 2008 As at December 31 2010 there are no investor grievances pending against the company
4 JK Sugar Limited
JK Sugar Limited was incorporated as Sahai Woodplast Limitedlsquo a public limited company under the
Companies Act on April 19 1996 and received its certificate for commencement of business on July 4 1996 Its
corporate identification number is L25206WB1996PLC079417 Its registered office is situated at 7 Council
House Street Kolkata 700 001
JK Sugar Limited is engaged in the business of manufacturing trading exporting and importing of sugar and
sugar products and generation and distribution of electricity
The equity shares of JK Sugar Limited were listed on the BSE and the CSE in March 2004
Shareholding Pattern
The shareholding pattern of JK Sugar Limited as of December 31 2010 is as follows
Category
code Category of shareholder
Number of Equity
Shares Percentage
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family 1176877 1136
(b) Central GovernmentState Government(s) - -
(c) Bodies Corporate 5462534 5273
(d) Financial InstitutionsBanks - -
(e) Any Other (Trust) - -
Sub-Total (A)(1) 6639411 6409
(2) Foreign
(a) Individuals (Non-Resident IndividualsForeign
Individuals)
- -
(b) Bodies Corporate - -
(c) Institutions - -
(d) Any Other (specify) - -
Sub-Total (A)(2) - -
Total Shareholding of Promoter and Promoter Group
(A) = (A)(1)+(A)(2)
6639411 6409
(B) Public shareholding
(1) Institutions
(a) Mutual FundsUTI 1941 002
(b) Financial InstitutionsBanks 121155 117
(c) Central GovernmentState Government(s) - -
(d) Venture Capital Funds - -
(e) Insurance Companies 286795 277
(f) Foreign Institutional Investors - -
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 409891 396
(2) Non-Institutions
(a) Bodies Corporate 1816299 1753
(b) Individuals-
(i) Individual shareholders holding nominal share capital
up to Rs 1 lakh
1111314 1073
(ii) Individual shareholders holding nominal share capital
in excess of Rs 1 lakh
381413 368
(c) Others - -
(d) Clearing Members 1257 001
Sub-Total (B)(2) 3310283 3195
Total Public Shareholding (B) = (B)(1)+(B)(2) 3720174 3591
130
Category
code Category of shareholder
Number of Equity
Shares Percentage
Total (A)+(B) 10359585 10000
(C) Shares held by custodians against which depository
receipts have been issued
- -
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(C) - -
Grand total (A)+(B)+(C) 10359585 10000
Board of directors
The board of directors of JK Sugar Limited as on December 31 2010 comprises of Mr Bharat Hari Singhania
chairman Mr Vikrampati Singhania Mr Jatan Roop Chand Bhandari Mr Gautam Khaitan Mr Pramod
Kumar Jain Mr Ashok Kumar Kinra and Mr Arun Kumar Jain
Financial Performance
The audited financials of JK Sugar Limited for the Fiscal 2010 Fiscal 2009 and Fiscal 2008 are set forth below
(In ` crores except per share data)
Particulars Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 1036 1036 1036
Reserves and surplus 622 996 1244
Gross SalesTurnover 10233 12823 11319
Profit(Loss) after tax (270) (137) (198)
Earnings per share (`) (Basic) (261) (132) (191)
Earnings per share (`) (Diluted) (261) (132) (191)
Net asset value per share (`) 1600 1965 2200
Reserves and surplus are excluding revaluation reserves if any and reduced by miscellaneous expenditure if any
Details of listing and highest and lowest market price during the preceding six months
The equity shares of JK Sugar Limited are listed on BSE and CSE The details of monthly high and low price of
the equity shares of JK Sugar Limited at the BSE are as follows
Month
BSE
High (`) Low (`)
July 2010 2920 2260
August 2010 2685 2205
September 2010 2795 2315
October 2010 2850 2410
November 2010 3380 2180
December 2010 2675 2200
(Source wwwbseindiacom)
The equity shares of the JK Sugar are not being traded actively on CSE
The closing equity share price of JK Sugar Limited as of December 31 2010 on the BSE was ` 2555
The market capitalization of JK Sugar Limited as of December 31 2010 on the BSE was ` 2647 crores
Public or Rights Issue in the last three years
JK Sugar Limited has not undertaken any public or rights issue in the last three years
Changes in the capital structure of JK Sugar Limited during last three years
Not Applicable
Promise vs Performance
131
Not Applicable
Mechanism for redressal of investor grievance
The board of directors of JK Sugar Limited have constituted a shareholdersinvestors grievance committee
comprising three directors namely Mr Vikrampati Singhania (chairman) Mr Gautam Khaitan and Mr AK
Kinra in accordance with clause 49 of the Equity Listing Agreement with the stock exchanges to look into the
redressal of complaints of investors such as transfers or credit of shares to demat accounts and non receipt of
dividendinterestannual reports JK Sugar normally takes up to 15 days for disposal of various types of investor
grievances
No investor complaints were received during the last three Fiscal years As of December 31 2010 there were no
investor complaints pending against JK Sugar Limited
B Unlisted Group Companies
1 Fenner (India) Limited
Fenner (India) Limited was incorporated as a private limited company April 9 1992 under the name Sonex
Pharma Private Limited The company became public company on April 22 1997 The name of the company
was changed to its present name with effect from October 18 2007
The corporate identification number of Fenner (India) Limited is U24231TN1992PLC062306 and its registered
office is situated at 3 Madurai-Melakkal Road Madurai 625 016 Tamil Nadu
Fenner (India) Limited is engaged in the manufacture and sale of V amp fan belts including raw edge cogged
power transmission belts oil seals moulded rubber products and in designing supplying and installing of
mechanical power transmission drives
Board of directors
The board of directors of Fenner (India) Limited as on December 31 2010 comprise Dr Raghupati Singhania
chairman Mr HV Lodha Mr Harsh Pati Singhania Mr LR Puri Mr Surendra Malhotra Mr Vikrampati
Singhania and Mr ANRavichandran
Financial Performance
The audited financials of Fenner (India) Limited for the Fiscals 2010 2009 and 2008 are set forth below
(Rs in crores except per share data)
Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 248 248 248
Reserves and surplus 23798 20773 19576
SalesTurnover 34798 30523 28645
Profit(Loss) after tax 3911 1650 2015
Earnings per share (Rs) (Basic) 15749 6644 8114
Earnings per share (Rs) (Diluted) 15749 6644 8114
Net asset value per share (Rs) 96844 84659 79837 Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any
Business Interest in our Company
Fenner (India) Limited has had following business interest in the Company in the last three Fiscal years
(` in crore)
S No Particulars Fiscal 2010 Fiscal 2009 Nine month
period ended
March 31 2008
1 Sale of V-belts and other items to our
Company
002 003 003
132
C Group Companies having negative net worth andor sick Group Companies
1 J K Risk Managers amp Insurance Brokers Limited
J K Risk Managers amp Insurance Brokers Limited (ldquoJK Risk Managersrdquo) was incorporated as JK Insurance
amp Risk Managers Limitedlsquo as a public limited company under the Companies Act on April 3 2002 It received a
certificate of commencement of business on June 12 2002 Subsequently its name was changed to JK Risk
Managers amp Insurance Brokers Limitedlsquo on September 11 2007 Its corporate identification number (CIN) is
U74999DL2002PLC114816 Its registered office is situated at Link House 3 Bahadur Shah Zafar Marg New
Delhi
It is authorised to carry on the business of insurance broking
Financial Performance
The audited financials of JK Risk Managers for Fiscal 2010 2009 and 2008 are set forth below (In ` crores except per share data)
Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 250 250 250
Reserves and surplus (486) (352) (158)
Gross SalesTurnover 225 231 171
Profit(Loss) after tax (134) (194) (220)
Earnings per share (Rs) (Basic) (536) (775) (4265)
Earnings per share (Rs)
(Diluted)
(536) (775) (4265)
Net asset value per share (Rs) (943) (407) 368 Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any
2 Umang Dairies Limited (ldquoUmang Dairiesrdquo)
Umang Dairies was incorporated as a public limited company under the Companies Act on December 2 1992
as JK Dairy and Foods Limited and received its certificate of commencement of business on December 24
1992 Its registered office is located at Gajraula Hasanpur Road Gajraula District Jyotiba Phule Nagar Uttar
Pradesh ndash 244 235 Its corporate identification number is L15111UP1992PLC014942
Umang Dairies Limited is engaged in manufacturing of dairy products such as instant dairy powder ghee and
skimmed milk powder
The net worth of Umang Dairies was fully eroded as on March 31 2002 and a reference was made to BIFR
under section 15(1) of the Sick Industrial Companies (Special Provisions) Act 1985 as amended Pursuant to an
order dated July 14 2005 the BIFR declared Umang Dairies as a sick industrial undertaking and appointed
Canara Bank as operating agency The rehabilitation scheme for Umang Dairies was sanctioned by the BIFR on
August 3 2009
The equity shares of Umang Dairies Limited were listed on the BSE in October 1994 The equity shares of
Umang Dairies Limited are presently listed on the BSE
Shareholding Pattern
The shareholding pattern of Umang Dairies Limited as on December 31 2010 is as follows
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family 1500 001
(b) Central GovernmentState Government(s) Nil Nil
(c) Bodies Corporate 16489930 7494
(d) Financial InstitutionsBanks Nil Nil
133
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
(e) Any Other (Trust) Nil Nil
Sub-Total (A)(1) 16491430 7495
(2) Foreign
(a) Individuals (Non-Resident IndividualsForeign
Individuals)
Nil Nil
(b) Bodies Corporate Nil Nil
(c) Institutions Nil Nil
(d) Any Other (specify) Nil Nil
Sub-Total (A)(2) Nil Nil
Total Shareholding of Promoter and Promoter Group
(A) = (A)(1)+(A)(2)
16491430 7495
(B) Public shareholding
(1) Institutions
(a) Mutual FundsUTI 14200 006
(b) Financial InstitutionsBanks 4100 002
(c) Central GovernmentState Government(s) Nil Nil
(d) Venture Capital Funds Nil Nil
(e) Insurance Companies Nil Nil
(f) Foreign Institutional Investors Nil Nil
(g) Foreign Venture Capital Investors Nil Nil
(h) Any Other (specify) Nil Nil
Sub-total (B)(1) 18300 008
(2) Non-Institutions
(a) Bodies Corporate 717542 326
(b) Individuals-
(i) Individual shareholders holding nominal share capital
up to Rs 1 lakh
4385285 1993
(ii) Individual shareholders holding nominal share capital
in excess of Rs 1 lakh
348222 158
(c) Others Nil Nil
Non-resident Indians 42421 019
(d) Clearing Members Nil Nil
Sub-Total (B)(2) 5493470 2497
Total Public Shareholding (B) = (B)(1)+(B)(2) 5511770 2505
Total (A)+(B) 22003200 100
(C) Shares held by custodians against which depository
receipts have been issued
Nil Nil
(a) Promoter and Promoter Group Nil Nil
(b) Public Nil Nil
Sub-Total(bdquoC) Nil Nil
Grand total (A)+(B)+(C) 22003200 100
Board of directors
The board of directors of Umang Dairies Limited as on December 31 2010 comprise Mr D B Doda Mr RC
Jain Mr RC Periwal and Mr RL Saha
Financial Performance
The audited financials of Umang Dairies Limited for the Fiscals March 2010 March 2009 and March 2008 are
set forth below
(` in crore except per share data)
Fiscal 2010 Fiscal 2009 Fiscal 2008
Equity capital 1100 1200 1200
Reserves and surplus (2057) (3199) (2942)
SalesTurnover 4625 3213 3462
Profit(Loss) after Tax and extra
ordinary items
542 (257) (119)
Earnings per share (Rs) (Basic) 246 (151) (099)
134
Fiscal 2010 Fiscal 2009 Fiscal 2008
after extra ordinary items
Earnings per share (Rs)
(Diluted) after extra ordinary
items
246 (151) (099)
Net asset value per share
(Rs)after extra ordinary
items
(435) (908) (1452)
Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any Pursuant to the scheme of rehabilitation sanctioned by the BIFR on August 3 2009 one time settlement was done between Umang
Dairies and its lenders Due to remission back of liabilities and written off the premium on redemption of preference shares a sum of ` 744
crores have been shown as extra-ordinary items For Fiscal 2010 profit after tax before extra-ordinary items was ` (202) crores and basic
and diluted earnings per share was ` (091) each
Calculation based on face value of ` 5 per equity share except for Fiscal year 2008 in which face value was Rs 10 per equity share
Details of listing and highest and lowest market price during the preceding six months
Monthly high and low price of the equity shares of Umang Dairies Limited at the BSE are as follows
Month
BSE
High (`) Low (`)
July 2010 2490 1630
August 2010 2485 1900
September 2010 2385 1870
October 2010 2235 1795
November 2010 2020 1400
December 2010 1800 1370 (Source wwwbseindiacom)
The equity share price of Umang Dairies Limited as of December 31 2010 on the BSE was ` 1725
The market capitalization of Umang Dairies Limited as of December 31 2010 on the BSE was ` 3796 crores
Public or Rights Issue in the last three years
Umang Dairies Limited has not undertaken any public or rights issue in the last three years
Changes in the capital structure of Umang Dairies Limited
Date of
Allotment
change
Number of equity
shares allotted
Face
Value
(Rs)
Issue price
(Rs)
Consideration Reasons of allotment
October 20
2009
- - - - Pursuant to order of BIFR
dated August 3 2009 the
face value of equity shares
of Umang Dairies was
reduced from ` 10 per
equity share to ` 5 per
equity share Consequently
the paid-up equity share
capital was reduced from
approximately ` 12 crores to
approximately ` 6 crores
January 28
2010
10000000 5 - Other than cash Fresh issue of equity shares
to promoter group entities of
Umang Dairies Limited ie
BACL Juggilal Kamlapat
Udyog Limited Accurate
Finman Services Limited
pursuant to the order of
BIFR dated August 3 2009
with effect from October 1
2008
Promise vs Performance
135
Not applicable
Mechanism for redressal of investor grievance
The board of directors of Umang Dairies Limited have constituted a shareholdersinvestors grievance committee
comprising of three directors Mr R C Periwal Chairman Mr RC Jain and Mr RL Saha in accordance with
clause 49 of the Equity Listing Agreement with the stock exchanges to look into the redressal of complaints of
investors such as transfers or credit of shares to demat accounts and non receipt of dividendinterestannual
reports Mrs Shuchi Sharma the company secretary is the compliance officer Umang Dairies normally takes 7-
15 days for disposal of various types of investor grievances
Total number of investor complaints received during the last three Fiscal years is 23 out of which four investor
complaints were received during Fiscal 2010 As of December 31 2010 no investor complaints were pending
against Umang Daries Limited
Business interest in the Company
Umang Dairies Limited has taken an inter-corporate deposit from the Company amounting to ` 050 crore and
has paid aggregate interest of ` 016 crore to the Company during the last three Fiscal years
3 Udaipur Cement Works Limited (ldquoUCWLrdquo)
UCWL was incorporated as a public limited company under the Companies Act on March 15 1993 as JK
Udaipur Udyog Limitedlsquo and received its certificate for commencement of business on March 24 1993 Its
corporate identification number is L26943RJPLC007267 Its registered office is located at E-2 Transport
Nagar Jaipur Rajasthan
The BIFR by its order dated November 13 2003 declared it to be a sick industrial company within the meaning
of the Sick Industries (Special Provisions) Act 1985 as amended The BIFR has appointed ICICI Bank as the
operating agency to formulate a rehabilitation scheme based on the proposal of UCWL for revival UCWL has
also filed a scheme of rehabilitation with the BIFR which was approved by the BIFR by its order dated
November 24 2010 Steps are being initiated for implementation of the said scheme
Trading in equity shares of UCWL was suspended at the BSE with effect from February 3 2003 due to non
payment of listing fees by UCWL
UCWL is engaged in the business of manufacture and sale of cement
Shareholding pattern
The shareholding pattern of UCWL as of December 31 2010 is as follows
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
(A) Shareholding of Promoter and Promoter Group
(1) Indian
(a) IndividualsHindu Undivided Family Nil Nil (b) Central GovernmentState Government(s) Nil Nil (c) Bodies Corporate 40486242 6416
(d) Financial InstitutionsBanks Nil Nil (e) Any Other (Trust) - - Sub-Total (A)(1) 40486242 6416
(2) Foreign
(a) Individuals (Non-Resident IndividualsForeign
Individuals)
Nil Nil
(b) Bodies Corporate Nil Nil (c) Institutions Nil Nil (d) Any Other (specify) - - Sub-Total (A)(2) - -
136
Category
code
Category of shareholder Pre- Issue
Number of Equity
Shares
Percentage
Total Shareholding of Promoter and Promoter Group
(A) = (A)(1)+(A)(2)
40486242 6416
(B) Public shareholding
(1) Institutions
(a) Mutual FundsUTI 31500 005
(b) Financial InstitutionsBanks 3790900 600
(c) Central GovernmentState Government(s) - -
(d) Venture Capital Funds - -
(e) Insurance Companies 10800 002
(f) Foreign Institutional Investors - -
(g) Foreign Venture Capital Investors - -
(h) Any Other (specify) - -
Sub-total (B)(1) 3833200 607
(2) Non-Institutions
(a) Bodies Corporate 11006251 1744
(b) Individuals-
(i) Individual shareholders holding nominal share capital
up to Rs 1 lakh
7777550 1233
(ii) Individual shareholders holding nominal share capital
in excess of Rs 1 lakh
- -
(c) Others - -
Sub-Total (B)(2) 18783801 2977
Total Public Shareholding (B) = (B)(1)+(B)(2) 22617001 3584
Total (A)+(B) 63103243 10000
(C) Shares held by custodians against which depository
receipts have been issued
(a) Promoter and Promoter Group - -
(b) Public - -
Sub-Total(bdquoC) - -
Grand total (A)+(B)+(C) 63103243 10000
Board of directors
The board of directors of UCWL as on December 31 2010 comprises Mr ON Rai Mr Vinit Marwaha and
Mr RK Gupta
Financial performance
The audited financials of UCWL for the Fiscal year ended March 31 2010 (15 months period) Fiscal year
ended December 31 2008 (12 month period) and Fiscal year ended December 31 2007 (12 months period) are
set forth below
(In ` crores except per share data)
15 month period
beginning January 1
2008 ending March 31
2009
12 month period
beginning January 1
2007 ending December
31 2007
12 month period
beginning January 1
2006 ending December
31 2006
Equity capital 6337 6337 6337
Reserves and surplus () 22957 22770 22023
Salesturnover and other income - 002 005
Profit(Loss) after tax (187) (747) (747)
Earnings per share (`) (Basic) (030) (118) (118)
Earnings per share (`) (Diluted) (030) (118) (118)
Net asset value per share (`) (2634) (2604) (2485)
Reserves and surplus are excluding revaluation reserve if any and reduced by miscellaneous expenditure if any
The qualifications of the auditors as provided in the audit report dated July 5 2010 in relation to audited
accounts of UCWL with respect for the 15 months period ended March 31 2010 are reproduced below
137
―In our opinion and to the best of our information the Profit amp Loss Account Balance Sheet and the Cash Flow
Statement dealt with by this report comply with the accounting standards referred to section 211(3C) of the
Companies Act 1956 to the extent applicable except to the extent of non-provision of interest liability etc and
preparation of accounts on going concern basis (AS-1) non provision of leave encashment (AS-15) Non-
determination of current net Realizable value of Inventory and Non-determination non-provision of obsolete
and unusable assets and inventory non provision of depreciation and for impairment of assets (AS-2AS-6AS-
10 and AS-28)
On the basis of written representations received from the directors as on 31st March 2010 and taken on record
by the Board of Directors we report that non of the directors is disqualified as on 31st March 2010 from being
reappointed as a director of the company in terms of the clause (g) of sub-(1) of section 274 of the Companies
Act 1956 However all the directors of the company are disqualified to be appointedreappointed as directors in
any other public company
Attention is invited to
i Note no 1amp11 of Schedule 13 regarding preparation of accounts on ―going concern basis for the
reasons stated in the said notes and our inability to comment thereon
ii Note no 2 of Schedule 13 regarding non provision of salary wages allowances and other benefit etc as
stated in the said note(amount uncertained)
iii Note no 3 of Schedule 13 regarding valuation of respective inventories as valued considered same as
in the previous year and have been taken on the same value as in the previous year and non provision of
adjustment of lower of net realizable value over cost of inventories and non provision for obsolete
shortages damaged and non moving inventories and fixed assets and for impairment of assets (amount
unascertained) and non provision of depreciation as stated in the said note
iv Note no 4(a) of Schedule 13 regarding non provision of interest on secured loans bank borrowings
trade deposits royalty dues payable to Ajmer Vidyut Vitaran Nigam Ltd (AVVNL) excise duty
demand and penal interest liquidated damages etc thereon as stated in the said note (amount
unascertained) and regarding non-accounting of interest earned on certain deposits
v Note No 4 (c) of Schedule 13 regarding non-accounting of interest earned on certain deposits as stated
in the said note (amount unascertained)
vi Note No 14 Schedule 13 regarding non-provision against overdue debtors amounting to Rs 367
79578 and loans and advances amounting to Rs 47028145
vii Note No 21 14 6 amp 11 of Schedule 13 regarding pending reconciliation confirmation of balances of
secured loans unsecured loans deferred interest creditors other current liabilities banks deposits
debtors loans and advances and contingent liabilities considered to the extent identified by the
management and our inability to comment thereon
viii Note No 13 Schedule 13 regarding non-provision of interest on overdue liability of Sundry Creditors
under Current Liabilities amp Provision as defined under the ―Micro Small and Medium Enterprises
Development Act2006 (amount unascertained) and identification of such parties and their dues by the
management and our inability to comment on the same
We further report that the loss for the year balance in profit amp loss account assets and liabilities as stated are
without considering the impact of items Loss for the year would have been Rs 192400 Lac(as against reported
figure of Rs 18683 Lac) debit balance in profit and loss account would have been Rs 3078372 Lac(as against
reported figure of Rs 2904656 Lac) debtors would have been Rs Nil(as against reported figure of Rs 36780
Lac) and loans amp advances would have been Rs 1000 Lac(as against reported figure of Rs 147028 Lac)
Public or Rights Issue in the last three years
UCWL has not undertaken any public or rights issue in the last three years
Changes in the capital structure of UCWL during last three years
Not Applicable
Promise vs Performance
Not Applicable
138
Mechanism for redressal of investor grievance
The board of directors of UCWL have constituted a shareholdersinvestors grievance committee comprising Mr
ON Rai Mr Vinit Marwaha and Mr RK Gupta in accordance with clause 49 of the Equity Listing
Agreement with the stock exchange to look into the redressal of complaints of investors such as transfers or
credit of shares to demat accounts and non receipt of dividendinterestannual reports Mr RK Gupta the
company secretary is the compliance officer UCWL normally takes up to two days for disposal of various
types of investor grievances
Total number of investor complaints received during the last three Fiscal years is 112 out of which 13 investor
complaints were received during 15 month period ended March 31 2010 As of December 31 2010 there were
no pending investor complaints pending against UCWL
Interests of our Group Companies
We have an existing lease agreement dated August 31 2005 as extended by a letter dated March 11 2010 for a
period up to March 31 2014 with JK Lakshmi Cement Limited one of our Group Companies in respect of a
space admeasuring 8060 square feet at Gulab Bhawan New Delhi See ―Risk Factors and ―Related Party
Transactions on pages ix and 140 respectively
Our Group Companies is interested in our Company to the extent of their shareholding in our Company and the
dividends received on such shareholding Except for Fenner (India) Limited JK Agri Genetics Limited BMF
Investments Limited none of our Group Companies have any shareholding in our Company
Except as disclosed above or in ―Related Party Transactionsrdquo on page 140 our Group Companies have no
interest in any property acquired by our Company during the last two years from the date of filing of the Draft
Letter of Offer or proposed to be acquired by our Company
Except as mentioned otherwise in this Draft Letter of Offer none of our Group Companies have any business or
other interest in the Company Further transactions conducted between our Company and the Group Companies
are in ordinary course of business and on an arms length basis Further except as stated in ―Related Party
Transactions on page 140 our Company does not have any salespurchase arising out of any transaction with
any Group Company or Subsidiary exceeding aggregate 10 of total sales or purchase of our Company
Other Confirmations
Our Promoter directors of our Promoter directors of our Group Companies and Group Companies have
confirmed that they have not been declared as willful defaulters by the RBI or any other governmental authority
and except as disclosed in ―Outstanding Litigation and Material Developments on page 224 there are no
violations of securities laws committed by them in the past and no proceedings pertaining to such penalties are
pending against them
Except as disclosed in this Draft Letter of Offer neither our Promoter nor any of our Group Companies have
become sick companies under the Sick Industrial Companies (Special Provisions) Act 1985 and no winding up
proceedings are pending against them Further no application has been made in respect of any of them to the
Registrar of Companies for striking off their names Additionally neither our Promoter nor any of the Group
Companies have become defunct in the five years preceding the filing of the Draft Letter of Offer with SEBI
Payment or Benefit to Promoter and Group Companies
Except as stated above in ―-Interests of our Promoter ―-Interests of our Group Companiesrdquo and ―Related
Party Transactions on pages 120 138 and 140 respectively there has been no payment of benefits to the
Promoter and Group Companies during Fiscal 2010 Fiscal 2009 and Fiscal 2008
Litigation
For details relating to the legal proceeding involving the Promoter and Group Companies see ―Outstanding
Litigation and Material Developments on page 224
Common Pursuits
139
Our Promoter and Group Companies do not have any interest in any venture that is involved in any activities
similar to those conducted by us We shall adopt the necessary procedures and practices as permitted by law to
address any conflict situations as and when they may arise For further details on the related party transactions
to the extent of which our Company is involved see ―Related Party Transactions on page 140
140
RELATED PARTY TRANSACTIONS
We have related party transactions with our Subsidiaries associates Group Companies Promoter key
management personnel and entities under significant influence For details see ―Financial
Statements―Restated Consolidated Financial Statements ―Annexure E on page 179
141
SECTION V ndash FINANCIAL INFORMATION
FINANCIAL STATEMENTS
A u d i t o r ‟ s R e po r t o n F i n a n c ia l I n fo r ma t i o n i n r e l a t io n to D ra f t L e t t e r o f O f f er
(Financial information of JK Paper Ltd)
To
The Board of Directors
JK Paper Limited
Nehru House
4 Bahadur Shah Zafar Marg
New Delhi-110 002
India
Dear Sirs
We have examined (a) the restated standalone financial information of JK Paper Limited (―the Company) (b)
the restated consolidated financial information of the Company its subsidiaries and its interest in associate
(collectively described as ―the Group) annexed to this report The said restated financial information have been
prepared by the management and approved by the Board of Directors in accordance with the requirements of
a paragraph B (1) of Part II of Schedule II of the Companies Act 1956 (―the Act)
b the Securities and Exchange Board of India (Issue of Capital and Disclosures requirements)
Regulations 2009 (the ―SEBI Regulations) to the extent applicable and the related clarifications
thereto issued by the Securities and Exchange Board of India (―SEBI) pursuant to section 11 of
the Securities and Exchange Board of India Act 1992 as amended to date and
c the terms of our engagement agreed upon with you in accordance with our appointment letter dated
August 25 2010 in connection with the Draft Letter of Offer and Letter of Offer (collectively
hereinafter refer as Offer Documentslsquo) being issued by the Company for its proposed right issue
of Equity shares
1 Restated financial information
a The restated standalone financial information of the Company has been extracted from the audited
standalone financial statements as at and for the yearsperiods ended March 31 2010 2009 2008
June 30 2007 2006 and 2005 which have been approved by the board of directors and also
adopted by the Members of the Company and from the audited standalone financial statements as
at and for the periods ended September 30 2010 which has been approved by the board of
directors and thereafter restated
b The restated consolidated financial information of the Group has been extracted from the audited
consolidated financial statements as at and for the periods year ended September 30 2010 March
31 2010 which have been approved by the board of directors of the Company and restated
thereafter
2 Financial Information
We have examined the attached
a Restated standalone Summary Statement of Assets and Liabilities of the Company as on
September 30 2010 March 31 2010 2009 2008 June 30 2007 2006 and 2005 (Annexure 1)
Restated Summary Statement of Profit or Loss of the Company for the yearsperiods ended
September 30 2010 March 31 2010 2009 2008 June 30 2007 2006 and 2005 (Annexure 2)
and Restated Summary Statement of Cash Flows of the Company for the yearsperiods ended
September 30 2010 March 31 2010 2009 2008 June 30 2007 2006 and 2005 (Annexure 3)
together with Significant Accounting Policies as at September 30 2010 and selected Notes thereto
set out in Annexure 5 amp 6
142
b Restated Consolidated Summary Statement of Assets and Liabilities as at September 30 2010
March 31 2010 (Annexure A) Restated Consolidated Summary Statement of Profit or Loss for
the year periods ended September 30 2010 March 31 2010 (Annexure B) and Restated
Consolidated Summary Statement of Cash Flows the year periods ended September 30 2010
March 31 2010 (Annexure C) together with Principles of Consolidation and the selected Notes
thereto set out in Annexure E
3 We did not audit the financial statements of the subsidiaries The financial statements of the
subsidiary namely Songadh Infrastructure amp Housing Limited reflects total assets of Rs 1376 crores
as at September 30 2010 and of Jaykaypur Infrastructure amp Housing Limited reflects total assets of
Rs 3847 crores as at September 30 2010 total revenues of Rs Nil for the six months period ended
on September 30 2010 Further we did not audit the financial statements of an associate namely JK
Enviro-tech Limited whose financial statements reflects total assets of Rs 7517 crores as at
September 30 2010 and total revenues of Rs 1665 crores for the period then ended The financial
statements of subsidiaries and associate have been audited by other auditors whose reports have been
furnished to us and our opinion in so far as it relates to the amounts included in respect of the said
companies is based solely on the reports of other auditors
4 Without qualifying our opinion we draw your attention to
i) note no 2 Annexure-6 and note no 2 of Annexure-E regarding certain adjustments made for the
limited purpose for inclusion in restated financial information in the Offer Documents
ii) Note no12 (a) (iii) and (iv) of Annexure 6 regarding the year wise measurement and disclosure in
respect of certain employee benefits for the limited purpose for inclusion in restated financial
information in the Offer Documents
iii) note no 16 of Annexure-6 and note no 10 of Annexure E regarding pursuant to the Scheme of
Arrangement sanctioned by CPM Staff Housing Undertaking and JKPM Staff Housing
Undertaking of the company have been transferred and vested to Songadh Infrastructure amp
Housing limited and Jaykapur Infrastructure amp Housing Limited respectively on going concern
basis wef 1st April 2009 The impact of the scheme has been considered in six months restated
standalone and consolidated financial information for the period ended 30th
September 2010
5 Based on our examination of the standalone and consolidated financial information and the related
Audit reports and on the basis of the information and explanations given to us we report that
a Having regards to para 4 above the accounting policies applied for preparation of standalone
financial information as on for the yearsperiods ended September 30 2010 March 31 2010
2009 2008 June 30 2007 2006 and 2005 are in accordance with the applicable Accounting
Standards and consistent accounting practices followed by the Company Accordingly no
adjustments on account of changes in accounting policies and accounting practices that have been
made to the Companylsquos standalone audited financial statements for years presented except
adjustments stated vide note No 4a of Annexure 6
b Having regards to para 4 above the accounting policies applied for preparation of consolidated
financial information as at and for the period ended September 30 2010 March 31 2010 are in
accordance with the applicable Accounting Standards and consistent accounting practices followed
by the Company Accordingly no adjustments on account of changes in accounting policies and
accounting practices have been made to the Grouplsquos consolidated audited financial statements for
years presented except adjustments duly made vide note no 2 of Annexure E
c There are no material adjustments relating to previous years which need to be adjusted in the
financial information in the period to which they relate except adjustments stated vide note no 4a
of Annexure 6
d There are no exceptional items which need to be disclosed separately in the financial information
except note no 4a of Annexure 6
e There are no qualifications in the auditorlsquos report which require any adjustment in the financial
information annexed
143
6 Other Financial Information
(a) We have also examined the other standalone financial information relating to the Company for the
yearsperiods ended September 30 2010 March 31 2010 2009 2008 June 30 2007 2006 and
2005 listed below which is proposed to be included in the Offer Documents as approved by the
Board of Directors
i Statement of Other Income included in Annexure 7
ii Statement of Accounting Ratios included in Annexure 8
iii Statement of Dividend paidproposed included in Annexure 9
iv Statement of Capitalisation as at September 30 2010 included in Annexure10
v Statement of Outstanding Secured and Unsecured Loans as at September30 2010 included in
Annexure 11 and
vi Statement of Tax Shelter included in Annexure 12
(b) We have also examined the other standalone financial information as set out in Annexure 4(1) to
Annexure 4 (10) relating to the Company
(c) We have also examined the other consolidated financial information relating to the Group as at
and for the yearsperiods ended September 30 2010 March 31 2010 listed below which is
proposed to be included in the Offer Documents as approved by the Board of directors
i Statement of Other Income included in Annexure-F
ii Statements of Accounting ratios included in Annexure-G
iii Statement of Dividend paidproposed included in Annexure H
iv Statement of Capitalisation as at September 30 2010 included in Annexure-I
v Statement of Outstanding Secured and Unsecured Loans as at September30 2010 included in
Annexure J and
vi Statement of Tax Shelter included in Annexure K
(d) We have also examined the other consolidated financial information as set out in Annexure D(1) to
Annexure D-(9)relating to the Group
7 In our opinion the financial information and other financial information read with the notes of the
Company as attached to this report as mentioned in paragraphs 2 and 6 above prepared by the
Company after making adjustments and regrouping as considered appropriate have been prepared in
accordance with paragraph B (1) of Part II of Schedule II of the Act and the SEBI Regulations as
amended from time to time Our work has been carried out in accordance with auditing standards
generally accepted in India and as per the Guidance Note on Reports in Company Prospectuses issued
by the Institute of Chartered Accountants of India
8 This report should not in any way be construed as a re-issuance or re-dating of any of the previous
audit reports issued by us for the respective years nor should this report be construed as a new opinion
on any of the audited financial statements referred to herein We have no responsibility to update our
reports for events and circumstances occurring after the date of the report
9 Our report is intended solely for the use of the management and for inclusion in the Offer Documents
in connection with the proposed right issue of equity shares of the Company and should not be used
for any other purposes except with our prior consent in writing
For Lodha amp Co
Chartered Accountants
Firm Registration Number 301051E
NK Lodha
Partner
144
Membership Number301051E
Place New Delhi
Date January 28 2011
145
FINANCIAL INFORMATION FROM RESTATED STANDALONE FINANCIAL STATEMENTS
146
147
148
149
150
151
152
153
Annexure - 5
Significant Accounting Policies
1 Accounts are maintained on accrual basis ClaimsRefunds not ascertainable with reasonable certainty
are accounted for on settlement basis
2 Fixed Assets are stated at cost adjusted by revaluation of certain assets
3 Expenditure during constructionerection period is included under Capital Work-in-Progress and
allocated to the respective fixed assets on completion of construction erection
4 a) Foreign currency transactions are recorded at exchange rates prevailing on the date of transaction
Monetary assets and liabilities in foreign currencies as at the Balance Sheet date are translated at
exchange rate prevailing at the year end Premium or discount in respect of forward contracts covered
under AS 11 (revised 2003) is recognized over the life of contract Exchange differences arising on
actual payments realizations and year end translations including on forward contracts are dealt with in
Profit and Loss Account except foreign exchange lossgain on reporting of long-term foreign currency
monetary items used for depreciable assets which are capitalized Non Monetary Foreign Currency
items are stated at cost
b) In accordance with Announcement issued by the Institute of Chartered Accountants of India all
outstanding derivatives except covered under AS 11 (revised 2003) are mark to market on Balance
Sheet date and loss if any is recognized in Profit amp Loss Account and gain being ignored
5 Long term investments are stated at cost Provision for diminution in the value of long term
investments is made only if such a decline is other than temporary in the opinion of the management
The current investments are stated at lower of cost and quoted fair value computed category-wise
When investment is made in partly convertible debentures with a view to retain only the convertible
portion of the debentures the excess of the face value of the non-convertible portion over the
realisation on sale of such portion is treated as a part of the cost of acquisition of the convertible
portion of the debenture Income in respect of securities with long-term maturities is accounted for as
per contractual obligation
6 Inventories are valued at the lower of cost and net realisable value (except scrap waste which are
valued at net realisable value) The cost is computed on weighted average basis Finished Goods and
Process Stock include cost of conversion and other costs incurred in bringing the inventories to their
present location and condition
7 Export incentives Duty drawbacks and other benefits are recognized in the Profit and Loss Account
Project subsidy is credited to Capital Reserve
8 Revenue expenditure on Research and Development is charged to Profit and Loss Account in the year
in which it is incurred and capital expenditure is added to Fixed Assets
9 Borrowing cost is charged to Profit and Loss Account except cost of borrowing for acquisition of
qualifying assets which is capitalised till the date of commercial use of the asset
10(a) Depreciation on Buildings Plant amp Machinery Railway Siding and Other Assets of all Units is
provided as per straight line method considering the rates in force at the time of respective additions of
the assets made before 02041987 and on additions thereafter at the rates and in the manner specified
in Schedule XIV of the Companies Act 1956 Continuous Process Plants as defined in Schedule XIV
have been considered on technical evaluation Depreciation on additions due to exchange rate
fluctuation is provided on the basis of residual life of the assets Depreciation on assets costing up to
Rs5000- and on Temporary Sheds is provided in full during the year of additions
(b) Depreciation on the increased amount of assets due to revaluation is computed on the basis of the
residual life of the assets as estimated by the valuers on straight-line method
(c) Leasehold Land is being amortised over the lease period
154
11 An asset is treated as impaired when the carrying cost of assets exceeds its recoverable amount An
impairment loss is charged to the profit and loss account when an asset is identified as impaired
Reversal of impairment loss recognised in prior periods is recorded when there is an indication that the
impairment losses recognised for the assets no longer exist or have decreased Post impairment
depreciation is provided on the revised carrying value of the asset over its remaining useful life
12 Employee Benefits
(a) Defined Contribution Plan
Employee benefit in the form of Superannuation Fund is considered as defined contribution plan
and charged to the Profit and Loss Account in the year when the contribution to the respective
fund is due
(b) Defined Benefit Plan
Retirement benefits in the form of Gratuity is considered as defined benefit obligation and
provided for on the basis of an actuarial valuation using the projected unit credit method as at the
date of Balance Sheet
The Provident Fund Contribution is made to trust administered by the trustees The interest rate to
the members of the trust shall not be lower than the statutory rate declared by the Central
Government under Employeeslsquo Provident Fund and Miscellaneous Provision Act 1952 Any
shortfall if any shall be made good by the Company
(c) Other long-term benefits
Long term compensated absences are provided for on the basis of an actuarial valuation using the
projected unit credit method as at the date of Balance Sheet
Actuarial gainlosses if any are immediately recognized in the Profit and Loss Account
13 Lease rentals in respect of assets taken on finance lease are accounted for in reference to lease terms
14 Miscellaneous expenditure are amortised as under
Expenditure incurred against which benefit is expected to flow into future periods are treated as
Deferred Revenue Expenditure and charged to Revenue Account over the expected duration of benefit
15 Intangible Assets are being recognised if the future economic benefits attributable to the asset are
expected to flow to the company and the cost of the asset can be measured reliably The same are being
amortised over the expected duration of benefits
16 Current tax is the amount of tax payable on the estimated taxable income for the current year as per the
provisions of Income Tax Act 1961 Deferred tax assets and liabilities are recognised in respect of
current year and prospective years Deferred Tax Assets are recognised on the basis of reasonable
certainty virtual certainty as the case may be that sufficient future taxable income will be available
against which the same can be realised
17 Provisions involving substantial degree of estimation in measurement are recognised when there is a
present obligation as a result of past events and it is probable that there will be an outflow of resources
Contingent liabilities are not recognised but are disclosed in the notes
18 Premium on redemption of preference shares is accounted for in the year of redemption
155
Annexure ndash 6
Notes to the Summary Statement of Assets and Liabilities - Restated and Summary Statement of Profit amp
Loss - Restated for the six month ended September 30 2010 for each of the year ended March 31 2010
2009 for the nine months ended March 31 2008 and for each of the year ended 30th June 2007 2006 amp
2005
1 Company with a view to have a uniform financial year under the Companies Act 1956 amp the Income
Tax Act 1961 had changed its accounting year from July-June to April-March in the period ended 31st
March 2008 Accordingly the Accounts for 2007-08 are for a period of 9 months from July 01 2007 to
March 31 2008
2 Following Adjustments referred in note no 2 (i) to (iv) have been made in the financial information
for the Yearsperiods ended September 30 2010 March 31 2010 2009 2008 June 30 2007 2006 and
2005 for the limited purpose of inclusion of financial information in the Offer Document
i Changes in Accounting Policies (a) Foreign Currency Exchange Fluctuation (Accounting Standard-11)
1) During the year ended March 31 2008 exchange difference in respects of loans other than
regarded as borrowing cost which were hitherto adjusted in carrying cost of related assets have
been reorganized as incomeexpense in the profit amp loss account
2) During the year ended March 31 2009 Company has opted to capitalize the exchange
difference on reporting of foreign currency monetary items used for depreciable assets
retrospectively wef July 1 2007
3) Financial information for the period ended March 31 2008 has been restated accordingly for
the reasons stated in para (1) amp (2) above
(b) The Company has adopted Accounting Standard-15 (Revised) Employees Benefitslsquo wef July 1
2007 For the purpose of restatement Financial information for the years ended on June 30 2007
2006 and 2005 has not been restated since in the opinion of management it does not have material
impact
ii Material amounts relating to adjustments for previous years have been identified and adjusted in
arriving at the profits of the years to which they relate irrespective of the year in which the event
triggering the profit or loss occurred
iii Adjustment of Auditor‟s Qualifications
Auditor had qualified their report for the financial yearperiod ended on March 31 2008 June 30
2007 2006 and 2005 on the matter of (a) non-provision of deferred tax liability for the transitional
period up to June 30 2001 (b) non-provision for diminution in the value of long term investment
and (c) charging off one time additional interest (exceptional) to the Profit amp Loss account and
transferring an equivalent amount from the General Reserve to the Profit amp Loss Account
Aforesaid Auditorlsquos qualifications have been appropriately adjusted in the restated financial
information
iv Appropriate adjustments have been made in the Restated financial information wherever required
by a reclassification of the corresponding items of assets liabilities income expenses and cash
flows in order to bring them in line with the groupings as per the financials of the Company for
the 6 months period ended September 30 2010
3 In the opinion of management there is no extraordinary item as defined in ―Accounting Standard-5
Net Profit or Loss for the period Prior Period Items and Changes in Accounting Policies included in
Summary Statement of Profit amp Losses for the Yearperiod ended September 30 2010 March 31
2010 2009 2008 June 30 2007 2006 and 2005
4 a) Restatements in Summary Statement of Profit amp Loss arising out of change in accounting
policies and adjustments relating to previous years (also refer Note 2 above)
156
Rs in Crores (10 Million)
Particulars
6 Months
ended
September
30 2010
Year
ended
March 31
2010
Year
ended
March 31
2009
9 Months
ended
March 31
2008
Year
ended
June 30
2007
Year
ended
June 30
2006
Year
ended
June 30
2005
A Profit after tax as per Audited Financial
Statements (A) 5819 9103 3801 3471 4591 3552 3853
B Adjustment on account of
i) Change in accounting policies
- Capitalisation of Foreign Exchange Fluctuation - - - 105 - - -
ii) Previous-period items
Previous period adjustments (net) - 104 (148) (165) 094 221 100
Total Adjustments before tax (i + ii) - 104 (148) (060) 094 221 100
Tax Impact on Adjustments - (035) 093 013 (032) (074) (016)
Total Adjustments net of tax impact (B) - 069 (055) (047) 062 147 084
C Adjusted Profit after tax before exceptional
items (A + B) 5819 9172 3746 3424 4653 3699 3937
D Exceptional Items
One time additional interest charges on
prepayment of high cost loans - - - (240) - (159) (2066)
E Adjusted Profit after tax After exceptional
items (C + D) 5819 9172 3746 3184 4653 3540 1871
Adjusted against general reserve in audited accounts b) Restatements in Reserves amp Surplus arising out of change in accounting policies and adjustments relating to
previous years
Rs in Crores (10 Million)
Particulars
As at
September
30 2010
As at
March 31
2010
As at
March 31
2009
As at
March 31
2008
As at
June 30
2007
As at
June 30
2006
As at
June 30
2005
A Reserves amp Surplus as per Audited Financial
Statements (A) 48305 39739 33030 31362 30025 28365 14431
B Adjustment on account of
i) Change in accounting policies
- Capitalisation of Foreign Exchange Loss - - - 105 - - -
ii) Previous-period items
Previous period adjustment (net) - 001 (103) 045 210 116 (105)
iii) Provision for diminution in value of Investments
(being provided in the period ended 310308) - - - - (453) (453) (453)
Total Adjustments before tax (i + ii + iii) - 001 (103) 150 (243) (337) (558)
Tax Impact on Adjustments - - 035 (058) (071) (022) 052
Deferred Tax on Transional Period upto 30062001
(being provided in the year ended 300607) - (275) (275)
Total Tax Impact - - 035 (058) (071) (297) (223)
Total Adjustments net of tax impact (B) - 001 (068) 092 (314) (634) (781)
C Adjusted Reserves amp Surplus as per Summary
Statement of Assets amp Liabilities - Restated (A + B) 48305 39740 32962 31454 29711 27731 13650
5 Estimated amount of contracts remaining to be executed on capital account (Net of Advances) are as
under
Rs in Crore (10 Million) As at
September
As at March 31 As at June 30
157
30
2010 2010 2009 2008 2007 2006 2005
Outstanding
contractsCapital
commitments
2366
1140
214
1975
4372
15903
10186
6 a) Contingent Liabilities in respect of claims not acknowledged as debts are as follows
Rs in Crore (10 Million) As at
September
30
As at March 31 As at June 30
2010 2010 2009 2008 2007 2006 2005
Excise duty liability in
respect of matters in appeal
812 272 301 300 300 576 578
Sales tax liability in respect
of matters in appeals
244 182 250 323 432 453 674
Foreign Exchange
Fluctuation Liability
(Pertaining to Pre-take
over period)
-
-
-
-
380
455
423
Forest Matters 573 588 588 588 577 392 307
Income Tax Matters 179 179 649 525 503 - -
Other Matters 334 432 317 671 662 588 574
TOTAL 2142 1653 2105 2407 2854 2464 2556
b) In respect of certain disallowances and additions made by the Income Tax Authorities appeals are
pending before the Appellate Authorities and adjustment if any will be made after the same are finally
determined
c) In respect of levy of Octroi pertaining to Central Pulp Mills Unit by Songadh Group Gram Panchayat
the Company has paid Rs125 Crore till 31st March 1997 under protest and also created a liability for
the similar amount As the matter is still pending in the court of law the necessary adjustment if any
would be made after its disposal
7 The Company has only one business segment ie Paper and Boards and geographical reportable
segment ie Operations within India hence Segment Reporting as defined in Accounting Standard (AS
ndash 17) is not required
8 Land Roads Buildings and Pulp Mill Plant amp Machinery of Unit - Central Pulp Mills were revalued as
on 30091976 The revaluation in respect of these assets (other than Land and Roads) were updated
and Plant amp Machinery of Paper Machine I amp II and Railway Sidings were revalued as on 3131994
based on current replacement cost by the approved valuers appointed for the purpose As a result the
book value of such assets has been increased by Rs 4227 Crore which has been transferred to
Revaluation Reserve during the year ended 3131994
9 In accordance with AS 28 ―Impairment of Assets which became mandatory for the company wef
01072004 the company had carried the impairment test on that date Considering the market
conditions amp future plans of the company certain plant amp machinery and building on the basis of cash
generating units had been identified for impairment as value in use (discount rate 7)net selling price
was lower than its carrying value The impairment loss aggregating to the Rs 649 Crore (net of
deferred taxes of Rs 363 Crore) had been provided amp adjusted against the opening balance in the
General Reserve account as per the transitional provision
10 The Balances of certain Advances Security Deposits Creditors and Other liabilities are in the process
of confirmationreconciliation
11 a) Details of Deferred Tax Liability(Asset) pursuant to the Accounting Standard for Taxes on
Incomelsquo (AS 22)
Rs in Crore (10 Million) As at
September
As at March 31 As at June 30
158
30
2010 2010 2009 2008 2007 2006 2005
(i) Tax on difference
between book value of
depreciable assets as per
books of account and
written down value as per
Income Tax
13660
14379
14789
12935
11843
10557
10126
(ii) Tax on Carried
forward unabsorbed
depreciation
--
--
(3029)
(2778)
(1580)
(2812)
(4156)
(iii) Tax on Others (1063) (923) (801) (671) (672) (613) (706)
TOTAL 12597 13456 10959 9486 9591 7132 5264
after the effect of deferred tax liability of Rs 453 Crore pursuant to the Scheme (refer note 16)
b) Based on the past performance and current plans the Company expects to continue to generate
taxable income which will enable it to utilise MAT credit entitlement
12 a) Defined Benefit Plans ndash As per Actuarial Valuation on Balance Sheet date
159
Rs in Crore (10 Million)
Nature of Transactions
Sr No Gratuity
(Funded)
Long Term
Compensated
Absences
(Non Funded)
Gratuity
(Funded)
Long Term
Compensated
Absences
(Non Funded)
Gratuity
(Funded)
Long Term
Compensated
Absences
(Non Funded)
Gratuity
(Funded)
Long Term
Compensated
Absences
(Non Funded)
I
1 Current Service Cost 078 049 142 086 133 079 081 037
2 Interest Cost 117 020 188 037 184 043 135 024
3 Expected return on plan assets (117) - (201) - (156) - (078) -
4 Actuarial (gains)losses 084 (034) 352 009 150 (119) 055 047
5 Past Service Cost 014 - 017 - - - - -
6 Total expense 176 035 498 132 311 003 193 108
II
1 Present Value of Defined Benefit
Obligation 3117 484 2981 481 2409 422 2306 508
2 Fair Value of plan assets 2955 - 2710 - 1771 - 1488 -
3 Funded status [Surplus(Deficit)] (162) (484) (271) (481) (638) (422) (818) (508)
4 Net Assets(Liability) recognized (162) (484) (271) (481) (638) (422) (818) (508)
III
1 Present Value of Defined Benefit
Obligation at the beginning of the
period 2981 481 2409 422 2306 508 2243 400
2 Current Service Cost 078 049 142 086 133 079 081 037
3 Interest Cost 117 020 188 037 184 043 135 024
4 Actuarial (gains)losses 081 (034) 479 009 081 (119) 061 047
5 Past Service Cost 014 -- 017 -- -- -- -- --
6 Benefits Paid (154) (032) (254) (073) (295) (089) (214) --
7 Present Value of Defined Benefit
Obligation at the end of the
period 3117 484 2981 481 2409 422 2306 508
IV
1 Fair Value of plan assets at the
beginning of the period 2711 - 1771 - 1488 - 1217 -
2 Expected return on plan assets 117 - 201 - 156 - 078 -
3 Contribution by employer 285 - 865 - 491 - 401 -
4 Actual benefits paid (154) - (254) - (295) - (214) -
5 Actuarial gains(losses) (003) - 127 - (069) - 006 -
6 Fair value of plan assets at the
end of the period 2956 - 2710 - 1771 - 1488 -
7 Actual return on plan assets 114 - 328 - 086 - 083 -
V
Mutual Funds 79 - 94 - 100 - 100 -
VI
1 Discount Rate 791 791 785 785 775 775 800 800
2 Expected rate of return on plan
assets 800 - 800 - 800 - 850 -
3 Mortality
4 Turnover rate
5 Salary Escalation 625
Actuarial Assumptions
April 2010 to September
2010 (6 Months)
LIC (1994-96) duly
Age upto 30-3 upto 44-2
above 44-1
Net Assets(Liability) recognized in the Balance Sheet
Change in obligation during the period
Change in Assets during the period
The major categories of plan assets as of total plan
2009-10 (12 Months) 2008-09 (12 Months) 2007-08 (9 Months)
Expenses recognized in the Statement of Profit amp Loss Account
LIC (1994-96) duly modified
Age upto 30-3 upto 44-2
above 44-1 550
LIC (1994-96) duly
Age upto 30-3 upto 44-2
above 44-1 550
LIC (1994-96) duly modified
Age upto 30-3 upto 44-2
above 44-1 550
Amount recognized as an expense and included in Staff Cost
6 Months
ended
September 30
Year ended March 31 9 Months
ended
March 31
Year ended June 30
2010 2010 2009 2008 2007 2006 2005
Gratuity 176 498 311 193 219 418 417
Long Term
Compensated
Absences
035 132 003 108 172 031 080
Notes
i The expected return on plan assets is determined considering several applicable factors mainly
the composition of the plan assets held assessed risk of assets management historical results on
plan assets and the policy for plan assets management
ii The estimates of future salary increase considered in actuarial valuation take account of
160
inflation seniority promotion and other relevant factors such as supply and demand in the
employment market
iii The disclosure in respect of status of defined benefits obligation have been given for the 6
months ended September 30 2010 and the previous 3 yearsperiods since the Company has
adopted Accounting Standard ndash 15 ―Employee Benefits (Revised 2005) with effect from July
1 2007
iv In the Financial Year 2008 Company had made provision for the employee benefits in
accordance with the Accounting Standard-15 (revised 2005) ―Employee Benefits which
became applicable to the Company wef 1st July 2007 and accordingly Rs 028 Crore (net of
tax expense of Rs 014 Crore) had been adjusted against opening balance of General Reserve
b) Defined Contribution Plans
Amount recognized as an expense in Profit amp Loss Account
6 Months
ended
September
30
Year ended March 31 9 Months
ended
March 31
Year ended June 30
2010 2010 2009 2008 2007 2006 2005
Contribution to
Provident amp Other
Funds
331
651 584 417 518 475 453
Pending the issuance of Guidance Note from the Institute of Actuaries of India the Companylsquos
actuary has expressed his inability to reliably measure the provident fund liability
13 Disclosure as required under Related Party Disclosureslsquo (AS 18) issued by The Institute of Chartered
Accountants of India are as below
a) List of Related Parties
i Subsidiaries
- Songadh Infrastructure amp Housing Ltd (Wholly Owned Subsidiaries wef 30th
April 2009)
- Jaykaypur Infrastructure amp Housing Ltd (Wholly Owned Subsidiaries wef 30th
April 2009)
ii Associate
- JK Enviro-tech Limited (wef 19th
December 2007)
- JK Tyre amp Industries Limited (ceased to be Associate wef 18th
April 2007)
- JK Lakshmi Cement Limited (ceased to be Associate wef 18th
April 2007)
iii Key Management Personnel (KMP)
- Shri Hari Shankar Singhania - Chairman
- Shri Harsh Pati Singhania - Managing Director
- Shri Om Prakash Goyal - Whole-time Director
iv Enterprise over which KMPlsquos have significant influence
- Habras International Limited
b) The following transactions were carried out with related parties in the ordinary course of business
161
Rs in Crores (10 Million)6 Months
ended
September
30 2010
Year ended
March 31
2010
Year ended
March 31
2009
9 Months
ended March
31 2008
Year ended
June 30
2007
Year ended
June 30
2006
Year ended
June 30
2005
(i) Purchase of Goods
JK Enviro-tech Ltd 1459 2026 040 - - - -
JK Lakshmi Cement Limited - - - - 243 096 022
(ii) Sale of Goods
JK Enviro-tech Ltd 070 042 - - - - -
JK Lakshmi Cement Limited - - - - 009 017 002
Habras International Limited 075 - - - - - -
(iii) Reimbursement of Expenses ndash Received
JK Enviro-tech Ltd 141 042 197 - - - -
JK Tyre amp Industries Limited - - - - 035 051 031
JK Lakshmi Cement Limited - - - - 115 122 124
(iv) Reimbursement of Expenses ndash Paid
JK Enviro-tech Ltd 282 404 - - - - -
JK Tyre amp Industries Limited - - - - 100 045 035
JK Lakshmi Cement Limited - - - - 096 065 067
Songadh Infrastructure amp Housing Ltd 147
Jaykaypur Infrastructure amp Housing Ltd 262
(v) Interest received
JK Enviro-tech Ltd 130 218 249 - - - -
Key Management Personnel - - - - - $
( Rs 2000- $ Rs 6000-)
(vi) Commission Paid
Habras International Limited 002 016 - - - - -
(vii) Sale of Fixed Assets
JK Enviro-tech Ltd - 198 5261 - - - -
JK Lakshmi Cement Limited - - - - 008 -
( Rs 26000-)
(viii) Equity Contribution
Songadh Infrastructure amp Housing Ltd - 005 - - - - -
Jaykaypur Infrastructure amp Housing Ltd - 005 - - - - -
JK Enviro-tech Ltd - - - 170 - - -
(ix) Loans given
JK Enviro-tech Ltd 129 743 2104 - - - -
(x) Loans installment received
JK Enviro-tech Ltd 092 - - - - - -
(xi) Advance received for Capital Equipments
JK Enviro-tech Ltd - - - 300 - - -
(xii) Managerial Remuneration
Key Management Personnel (KMP) 709 1192 583 334 656 496 406
(xiii) Outstanding at end of the yearperiod
Receivable (Payable)
JK Enviro-tech Ltd 3150 3051 2146 (300) - - -
JK Tyre amp Industries Limited - - - - - 009 005
JK Lakshmi Cement Limited - - - - 023 010 -
Habras International Limited 014 (016) - - - - -
Songadh Infrastructure amp Housing Ltd 018
Jaykaypur Infrastructure amp Housing Ltd 052
Key Management Personnel (KMP) - - - - - - 001
Particulars
Pursuant to the Scheme of Arrangement sanctioned by the Honlsquoble High Courts of Gujarat amp
Orissa under section 391 to 394 of the Companies Act 1956 which has become effective on 20th
January 2011 CPM Staff Housing Undertaking and JKPM Staff Housing Undertaking of the
Company have been transferred and vested to Songadh Infrastructure amp Housing Limited (SIHL)
and Jaykaypur Infrastructure amp Housing Limited (JIHL) respectively on a going concern basis
wef 1st April 2009
14 Based on information so far available with the company in respect of MSME (as defined in The Micro
Small amp Medium Enterprises Developments Act 2006lsquo) there is no delay in payment of dues to such
enterprises and there is no such dues payable at the end of the yearperiod
162
15 The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Ltd The Company has given an undertaking that on the happening of certain events it will
takeover Loan taken by JK Enviro-tech Ltd from IDFC Ltd of the value of Rs 40 Crore
16 Pursuant to the Scheme of Arrangement sanctioned by the Honlsquoble High Courts of Gujarat amp Orissa
under section 391 to 394 of the Companies Act 1956 which has become effective on 20th Jan 2011
CPM Staff Housing Undertaking and JKPM Staff Housing Undertaking of the Company have been
transferred and vested to Songadh Infrastructure amp Housing Limited (SIHL) and Jaykaypur
Infrastructure amp Housing Limited (JIHL) respectively on a going concern basis wef 1st April 2009
as a result
(i) The effect of the above has been considered in 6 months restated financial information as shown
below
Rs in Cr (10 million)
Sr No Particulars
A Assets as reduced by transfer and vesting of above two undertaking 2205
B Settled as follows
SIHL
- 4900000 Fully paid up Equity Share of Rs 10- each
- 8673142 Nos Fully paid up 0 Redeemable Debenture of Rs10- each
JIHL
- 4900000 Fully paid up Equity Share of Rs 10- each
- 33497896 Nos Fully paid up 0 Redeemable Debenture of Rs10- each
490
867
490
3350
C Capital Reserve 2992
(ii) The Deferred Tax Liability of Rs 453 Crore has been adjusted against the general reserve
(iii) The Company carried on the business of above two Housing Undertaking wef 1st April 2009 for
and on behalf of SIHL and JIHL
(iv) The necessary steps and formalities in respect of issue of redeemable debentures issue and
allotment of shares as stated above and transfer of assets are under implementation
(v) Based upon the agreement the Company has reimbursed all the expenses incurred during 1st
April 2009 to 30th Sep 2010 by the SIHL and JIHL and the same has been included in
respective heads of accounts
17 During the year ended 30th
June 2006 Company raised Rs 9997 Crore by issue of Equity Shares on
preferential basis Rs 5313 Crore by issue of Equity Shares in the form of GDRs and Rs 2235 Crore
by issue of FCCBs aggregating to Rs 17545 Crore
18 The company had issued FCCBs in the financial year 2005-06 with an option to convert into equity
shares at an initial conversion price of Rs 95 per equity share between April 4 2006 to March 17 2011
or redemption at 130441 percent of the principal amount on March 30 2011 The company has a
policy to account for the premium on redemption if any in the year of redemption Since as on 30th
September 2010 it is likely that the FCCBs will be fully redeemed the proportionate 50 percent of
premium payable on redemption amounting to Rs 382 crore has been provided in Interest and finance
charges in the 6 months ended September 30 2010
19 In the Year ended 31st March 2008 Other Current Assets includes Lime Kiln assets of Rs 4170 Crore
held for sale to JK Enviro-tech Ltd
163
164
165
166
167
168
169
170
FINANCIAL INFORMATION FROM RESTATED CONSOLIDATED FINANCIAL STATEMENTS
171
172
173
174
175
176
177
Annexure - E
Notes to the Summary Statement of Assets and Liabilities - Restated and Summary Statement of Profit amp
Loss -Restated for the six month ended September 30 2010 and the year ended March 31 2010
1 Principles of Consolidation
a) The Consolidated Financial Statements comprise of the financial statements of JK Paper Limited
(Parent Company) and the followings as on 30th
September 2010 and 31st March 2010
Name
Country of
Incorporat
ion
Proportion of Ownership
interest held as at
Financial Statements as on Status
30th
September
2010
31st March
2010
For the 6
months
ended
September
30 2010
For the Year
ended
March 31
2010
a)
Subsidiaries
Jaykaypur
Infrastructure
amp Housing
Limited
India 100 100 30th
Sep
2010
29th
March
2010
Audited
Songadh
Infrastructure
amp Housing
Limited
India 100 100 30th
Sep
2010
31st March
2010
Audited
b) Associates
JK Enviro-
tech Limited
India 3434 3434 30th
Sep
2010
31st March
2010
Audited
b) The Financial Statements of the Parent Company and its Subsidiaries have been consolidated on a
line by line basis by adding together the book value of like items of assets liabilities income and
expenses after eliminating intra-group balances and intra-group transactions
c) In case of Associate where Company holds directly or indirectly 20 or more equity or and
exercises significant influence Investments are accounted for by using Equity Method in
accordance with Accounting Standard (AS-23) ndash ―Accounting for Investments in Associate in
Consolidated Financial Statements
d) The Accounting Policies of the Parent Company its Subsidiaries and Associate are largely similar
hence not be re-produced
2 Material amounts relating to adjustments for previous years have been identified and adjusted in
arriving at the profits of the years to which they relate irrespective of the year in which the event
triggering the profit or loss occurred
3 Estimated amount of contracts remaining to be executed on capital account (Net of Advances) - Rs
2366 Crore as on 30th
September 2010 and Rs 1140 Crore as on 31st March 2010
4 a) Contingent liabilities in respect of claims not acknowledged as debts are as follows
Rs in Crores (10 Million)
30th Sep2010 31stMarch2010
a) Excise duty liability in respect of matters in appeal 812 272
b) Sales tax liability in respect of matters in appeals 244 182
c) Forest Matters 573 588
d) Income Tax Matters 179 179
e) Other Matters 334 432
Total 2142 1653
178
b) In respect of certain disallowances and additions made by the Income Tax Authorities appeals are
pending before the Appellate Authorities and adjustment if any will be made after the same are
finally determined
c) The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Ltd The Company has given an undertaking that on the happening of certain events it
will takeover Loan taken by JK Enviro-tech Ltd from IDFC Ltd of the value of Rs 40 Crore
5 The Company has identified business segment as the primary segment after considering all the relevant
factors The Companys manufactured products are sold primarily within India and as such there is no
reportable geographical segment During the last year ended 31st March 2010 the Company has one
Business segment namely Paper amp boards
The Companys operation predominantly relates to manufacture of Paper amp Boards Other Business
Segment comprise activities providing housing facilities to the employees engaged in Paper amp Boards
Manufacturing Business of JK Paper Ltd whose operations are insignificant in the context of total
turnover hence same has been shown as others which comprise the information from 1st April 2009
to 30th Sep 2010 (Also refer note 10 of Annexure E)
Rs in Crores (10 Million)
Primary Segments - Business
Paper amp Boards Others Total
A REVENUE
Net Sales 61316 - 61316
Other Income 231 - 231
Total Revenue 61547 - 61547
B RESULTS
Segment Results (PBIT) 10302 (054) 10248
Interest amp Financial Charges 2267 - 2267
Income Tax 2216 - 2216
Net Profit 5819 (054) 5765
C OTHER INFORMATION
Segment Assets 129544 5223 134767
Segment Liabilities 68377 073 68450
Capital Expenditure 2199 - 2199
Depreciation 3563 045 3608
Non-cash expense other than depreciation 258 - 258
6 Months ended September 30 2010
6 Land Roads Buildings and Pulp Mill Plant amp Machinery of Unit - Central Pulp Mills were revalued as
on 30091976 The revaluation in respect of these assets (other than Land and Roads) were updated
and Plant amp Machinery of Paper Machine I amp II and Railway Sidings were revalued as on 3131994
based on current replacement cost by the approved valuers appointed for the purpose As a result the
book value of such assets has been increased by Rs 4227 Crore which has been transferred to
Revaluation Reserve during the year ended 3131994
7 In accordance with AS 28 ―Impairment of Assets which became mandatory for the company wef
01072004 the company had carried the impairment test on that date Considering the market
conditions amp future plans of the company certain plant amp machinery and building on the basis of cash
generating units had been identified for impairment as value in use (discount rate 7)net selling price
was lower than its carrying value The impairment loss aggregating to the Rs 649 Crore (net of
deferred taxes of Rs 363 Crore) had been provided amp adjusted against the opening balance in the
General Reserve account as per the transitional provision
8 a) Details of Deferred Tax Liability(Asset) pursuant to the Accounting Standard for Taxes on Incomelsquo
(AS 22) Rs in Crore (10 million)
30th Sep 2010 31stMarch 2010
179
30th Sep 2010 31stMarch 2010
i)
Tax on difference between book value of depreciable assets as per books
of account and written down value as per Income Tax
13660 14379
ii) Tax on Others (1063) (923)
Total 12597 13456
after the effect of deferred tax liability of Rs 453 Crore pursuant to the Scheme (refer note 10)
b) Based on the past performance and current plans the Parent Company expects to continue to generate
taxable income which will enable it to utilise MAT credit entitlement
9 Disclosure as required under Related Party Disclosureslsquo (AS 18) issued by The Institute of Chartered
Accountants of India are as below
c) List of Related Parties
iii Associate
- JK Enviro-tech Limited
ii Key Management Personnel (KMP)
- Shri Hari Shankar Singhania - Chairman
- Shri Harsh Pati Singhania - Managing Director
- Shri Om Prakash Goyal - Whole-time Director
iii Enterprise over which KMPlsquos have significant influence
Habras International Limited
180
Annexure ndash E Cont
d) The following transactions were carried out with related parties in the ordinary course of business
Rs in Crores (10 Million)
6 Months
ended
Sptember 30
2010
Year ended
March 31
2010
(i) Purchase of Goods
JK Enviro-tech Ltd 1459 2026
(ii) Sale of Goods
JK Enviro-tech Ltd 070 042
Habras International Limited 075 -
(iii) Sharing of Expenses ndash Received
JK Enviro-tech Ltd 141 042
(iv) Reimbursement of Expenses ndash Paid
JK Enviro-tech Ltd 282 404
(v) Interest received
JK Enviro-tech Ltd 130 218
(vi) Commission Paid
Habras International Limited 002 016
(vii) Sale of Fixed Assets
JK Enviro-tech Ltd - 198
(viii) Loans given
JK Enviro-tech Ltd 129 743
(ix) Loans installment received
JK Enviro-tech Ltd 092 -
(x) Managerial Remuneration
Key Management Personnel (KMP) 709 1192
(xi) Outstanding at end of the yearperiod
Receivable (Payable)
JK Enviro-tech Ltd 3150 3051
Habras International Limited 014 (016)
Particulars
10 Pursuant to the Scheme of Arrangement sanctioned by the Honlsquoble High Courts of Gujarat amp Orissa
under section 391 to 394 of the Companies Act 1956 which has become effective on 20th Jan 2011
CPM Staff Housing Undertaking and JKPM Staff Housing Undertaking of the Company have been
transferred and vested to Songadh Infrastructure amp Housing Limited (SIHL) and Jaykaypur
Infrastructure amp Housing Limited (JIHL) respectively on a going concern basis wef 1st April 2009
as a result
(i) The effect of the above has been considered in 6 months restated consolidated financial
information as shown below
Rs in Cr (10 million)
Sr No Particulars
A Assets as increased by transfer and vesting of above two undertakings from JK 2992
181
Paper Ltd to SIHL and JIHL
B Capital Reserve 2992
(ii) The Deferred Tax Liability of Rs 453 Crore has been adjusted against the general reserve
(iii) The Company carried on the business of above two Housing Undertakings wef 1st April 2009
for and on behalf of SIHL and JIHL
(iv) The necessary steps and formalities in respect of issue of redeemable debentures issue and
allotment of shares as stated above and transfer of assets are under implementation
11 The company had issued FCCBs in the financial year 2005-06 with an option to convert into equity
shares at an initial conversion price of Rs 95 per equity share between April 4 2006 to March 17 2011
or redemption at 130441 percent of the principal amount on March 30 2011 The company has a
policy to account for the premium on redemption if any in the year of redemption Since as on 30th
September 2010 it is likely that the FCCBs will be fully redeemed the proportionate 50 percent of
premium payable on redemption amounting to Rs 382 crore has been provided in Interest and finance
charges in the 6 months ended September 30 2010
182
183
184
185
186
187
188
189
MANAGEMENT‟S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You should read the following discussion of our Company‟s financial condition and results of operations
together with the restated consolidated and standalone financial statements which appear in this Draft Letter of
Offer Unless otherwise stated the financial information used in this section is derived from our audited
restated consolidated financial statements for Fiscal 2010 Fiscal 2009 Fiscal 2008 Fiscal 2007 Fiscal 2006
and the six month period ended September 30 2010 Our audited restated standalone and consolidated
financial statements have been derived from our audited standalone and consolidated financial statements
respectively Our fiscal year ends on March 31 of each year Accordingly unless otherwise stated all
references to a particular fiscal year are to the twelve-month period ended March 31 of that year However
until June 30 2007 our Company had a fiscal year ending June 30 Effective July 1 2007 our Company‟s
fiscal year ends on March 31 of that year Therefore the Company‟s standalone financial statements for Fiscal
2008 and the discussion of this period in this section refers to the nine month period ended March 31 2008 and
is not directly comparable to our results of operations for Fiscal 2009 Fiscal 2010 or prior fiscal years
Prior to April 30 2009 our Company did not have any Subsidiaries Therefore the Company has only
standalone financial statements as of and for the fiscal year ended March 31 2009 and as of and for the nine
month period ended March 31 2008
Our financial statements have been prepared in accordance with Indian GAAP and standards issued by the
Institute of Chartered Accountants of India and restated in accordance with the SEBI ICDR Regulations
Some of the statements in the following discussion are forward-looking statements See ldquoForward-Looking
Statementsrdquo on page viii Our actual results could differ materially from those anticipated in these forward-
looking statements as a result of certain factors and contingencies that could impact our financial condition
results of operations and cash flows including those set forth under ldquoRisk Factorsrdquo on page ix and elsewhere
in this Draft Letter of Offer and those set forth below
Overview
We are the largest producer of branded paper in terms of production and a leading player in the fine paperslsquo and
virgin packaging boardlsquo segments in terms of market share in India We are a market leader in the branded
copier paper segment in India where we had a market share of approximately 288 (Source CRISIL Research
Paper Annual Review November 2010) We manufacture and sell a diverse and multi-application range of
papers specialty papers allied stationery and virgin packaging board products and are focused in the production
and marketing of high-end paper and virgin packaging board products As on September 30 2010 our
distribution network of paper and virgin packaging board products comprises of four regional offices six
warehouses 134 wholesalers and various dealers enabling us to have a pan-India presence Additionally we
export our paper and virgin packaging board to over 40 countries including in Brazil UK Turkey Middle East
Sri Lanka Bangladesh Singapore Malaysia and several African nations We are a part of the JK Group one of
the leading business brands in India with a significant presence in automotive tyres and tubes cement power
transmission including V-belts oil seals hybrid agricultural seeds system engineering sugar dairy products
textiles health care clinical research and the paper and pulp brand segments among others with presence in
India as well as several other countries
We operate two integrated manufacturing facilities the JK Paper Mills Unit at Rayagada Odisha (―Unit
JKPM) and the Central Pulp Mills Unit at Songadh Gujarat (―Unit CPM) for the production of paper and
virgin packaging boards with a combined manufacturing capacity of 240000 TPA Our Unit JKPM presently
has an installed capacity of 125000 TPA for manufacturing paper and saleable pulp In addition our blade
coating facility was commissioned at the Unit JKPM in July 2005 to produce quality coated paper enabling us
to move up the value chain and capitalize on the growing market of coating paper The capacity of the coating
plant at the Unit JKPM is 46000 TPA We are the second largest producer of coated paper in India (Source
IPMA Report March 2010) Further we commissioned a pulp drying plant at our Unit JKPM in 2001 to
increase the output and realization of market pulp Our Unit CPM presently has an installed capacity of 55000
TPA for manufacturing paper and saleable pulp Additionally we have set up a packaging board plant at our
Unit CPM which was commissioned in October 2007 with an installed capacity of 60000 TPA which is
equipped with contemporary technology sourced from global leaders in the paper board machinery sector
We were incorporated as The Central Pulp Mills Limitedlsquo in 1960 as a pulp manufacturing facility at
190
Songadh in Gujarat and started paper production in 1975 We were subsequently referred to the BIFR in 1988
due to accumulated losses We were declared a sick industrial company in terms of the Sick Industrial
Companies (Special Provisions) Act 1985 in 1989 The JK Group as part of its strategy to strengthen its
position in the paper manufacturing market acquired our Company in 1992 pursuant to a rehabilitation scheme
sanctioned by the BIFR In 2000 as part of a restructuring exercise undertaken by JK Lakshmi Cement Limited
the Unit JKPM which was operating as a division of JK Lakshmi Cement Limited for its paper manufacturing
business was consolidated with our Company which was subsequently renamed as JK Paper Limitedlsquo
Our Company and our manufacturing units have received numerous awards and recognitions such as the Good
Corporate Citizen Award-2006lsquo by PHD Chambers of Commerce amp Industry Certificate of Appreciation for
Excellence in Energy Management ndash 2008lsquo by Bureau of Energy GoI for our Unit JKPM the Paper Mill of
the Yearlsquo award from Indian Paper Manufacturers Association for our Unit CPM in 2004 and the Greentech
Environment Excellence Award 2010 - Winner of Gold Award in Paper Sectorlsquo to our Unit CPM among others
Further we were awarded the TPM Excellence First Category Awardlsquo for the year 2006 by the Japan Institute
of Plant Maintenance for both our manufacturing units
We have been conscious in addressing environmental and safety concerns and have regularly introduced cleaner
and environment-friendly technologies in our manufacturing units Both our manufacturing units are ISO 9001 ndash
2008 compliant operating at over 100 capacity utilization and are equipped with all of the requisite facilities
for end-to-end environmentally compliant operations ranging from production of pulp to finishing and
packaging of our paper virgin packaging board and stationery products Our Unit JKPM has been adjudged as
the First Greenest Paper Milllsquo in 1999 and Second Greenest Paper Milllsquo in 2004 by Centre for Science amp
Environment (CSE) Additionally both our manufacturing units are ISO 14001 certified for their eco-friendly
operations and OHSAS 180012007 certified for occupational health and safety management system standards
Our Equity Shares re-admitted for trading on the BSE in 1992 Our Equity Shares were listed on the VSE and
the NSE in 1995 and 2005 respectively However our Equity Shares were delisted from the VSE in 2007
For the six month period ending September 30 2010 and Fiscal 2010 based on our restated consolidated
financial statements our net sales were ` 61316 crores and ` 112234 crores respectively and our adjusted
profit after tax was ` 5775 crores and ` 9198 crores respectively and for the Fiscal 2009 based on our
restated standalone financial statements our net sales were ` 109285 crores and our adjusted profit after tax
was ` 3746 crores
Note regarding presentation
Our consolidated financial statements comprise the financial statements of our Subsidiaries and our associate
JK Enviro-tech Limited in which we hold 3434 equity interest The financial statements for both our
Subsidiaries were made for 15 months ending March 31 2010 Prior to April 30 2009 our Company did not
have any Subsidiaries Therefore the Company only has standalone financial statements for the nine month
period ended March 31 2008 and Fiscal 2009 The financial statements of our Company and our Subsidiaries
have been consolidated on a line by line basis for Fiscal 2010 and the six month period ended September 30
2010 However in case of our associate as we hold more than 20 of the equity capital of JK Enviro-tech
Limited investments are accounted for by using the equity method in accordance with Accounting Standard 23
ndash ―Accounting for Investments in Associate in Consolidated Financial Statements
The High Court of Orissa and the High Court of Gujarat in terms of their orders dated October 1 2010 and
December 24 2010 respectively sanctioned a scheme of arrangement between the Company SIHL JIHL and
their shareholders pursuant to which (i) housing business which is carried on by the Company and including all
assets rights liabilities and obligations (whether movable or immovable tangible or intangible) located in the
state of Gujarat of whatsoever nature of the staff housing undertaking as on April 1 2009 (―CPM Staff
Housing Undertaking) were to be transferred to Songadh Infrastructure amp Housing Limited and (ii) housing
business which is carried on by the Company and including all assets rights liabilities and obligations (whether
movable or immovable tangible or intangible) located in the state of Odisha of whatsoever nature of the staff
housing undertaking as on April 1 2009 (―JKPM Staff Housing Undertaking) were to be transferred to
Jaykaypur Infrastructure amp Housing Limited (―Scheme of Arrangement) Songadh Infrastructure amp Housing
Limited and Jaykaypur Infrastructure amp Housing Limited are wholly owned subsidiaries of our Company
The Scheme of Arrangement became effective on January 20 2011 and is operative from April 1 2009
Accordingly upon the Scheme of Arrangement becoming effective the CPM Staff Housing Undertaking stood
191
transferred to Songadh Infrastructure amp Housing Limited and the JKPM Staff Housing Undertaking stood
transferred to Jaykaypur Infrastructure amp Housing Limited both with effect from April 1 2009
As a consideration Songadh Infrastructure amp Housing Limited shall issue 4900000 equity shares and
8673142 0 redeemable debentures of ` 10 each aggregating to ` 1357 crore to our Company and
Jaykaypur Infrastructure amp Housing Limited shall issue 4900000 equity shares and 33497896 0
redeemable debentures of ` 10 each aggregating to ` 3840 crores to our Company
The financial statements included in this Draft Letter of Offer give effect to the Scheme of Arrangement The
effect of the Scheme of Arrangement has been considered in the restated consolidated financial information for
the six month period ended September 30 2010 as shown below
(In ` crores)
S No Particulars
1 Assets as increased by transfer and vesting of the two undertakings from the Company to its
respective Subsidiaries
2992
2 Capital Reserve 2992
(i) The deferred tax liability of ` 453 crores has been adjusted against the general reserve
(ii) The Company carried on the business of the two housing undertakings with effect from April 1 2009
for and on behalf of its respective Subsidiaries
(iii) The necessary steps and formalities in respect of issue of redeemable debentures issue and allotment of
shares as stated above and transfer of assets are under implementation
For details of the Scheme of Arrangement see ―History and Certain Corporate Matters on page 87
Factors Affecting our Results of Operations
We are a company engaged in the paper and packaging board manufacturing business produced at our two
manufacturing units ie the Unit CPM and the Unit JKPM Our results of operations have been and will
continue to be affected by a number of events and actions some of which are beyond our control including the
performance of the Indian economy and the paper and packaging board industries and the price of raw materials
However there are some specific items that we believe have impacted our results of operations and in some
cases may continue to impact our results of operations on a consolidated level and at our individual projects in
future In this section we discus some of the significant factors that we believe have or could have an impact on
our revenue and expenditure Please also see the section titled ―Risk Factors on page ix
Cost and availability of raw materials
The availability cost and quality of certain raw materials such as hardwood bamboo and imported pulp are key
to our results of operations Our cost of raw material consumed comprised 2633 of our total income in the six
month period ended September 30 2010 2573 of our total income in Fiscal 2010 2547 of our total income
in Fiscal 2009 and 2393 in the nine month period ended March 31 2008 We procure approximately 20-25
of our bamboo pulp wood from forest land allotted to us by the relevant state government through long term
agreements spanning a year on a fixed price basis However such supply by the relevant state government is
subject to numerous conditions including achieving certain production targets and lifting the bamboowood
within the periods specified We have no formal commitments for the supply of our remaining bamboopulp
requirements and procure such requirement from local farmers and the open market Hardwood required for our
Unit JKPM is procured primarily from the states of Andhra Pradesh West Bengal and Odisha wherein the Unit
JKPM uses the services of various local suppliers to procure bulk of the requisite quantities and a small portion
is procured by us directly through its depots to develop a better understanding of the hardwood market
Hardwood required for our Unit CPM is being procured from farmers suppliers primarily from the state of
Andhra Pradesh in addition to some quantity which is procured from the states of Gujarat and Maharashtra in
the surrounding areas of our manufacturing unit in order to minimize the transportation cost Pulps of different
varieties are imported from countries such as Indonesia Sweden Finland and USA for manufacturing high
strength packaging board The cost and supply of these raw materials depend on factors which are not under our
control including availability of such raw materials competition productivity transportation costs foreign
exchange fluctuations and import duties
192
Competition
We compete in different markets and competitors within the paper and packaging board industry on the basis of
the quality of our products customer service product development activities price and distribution In
particular in the coated paper segment our primary competitor is Ballarpur Industries Limited In writing and
printing paper segment our primary competitors are Ballarpur Industries Limited TNPL AP Paper Mills and
West Coast Paper Mills among others In packaging board segment ITC Limited is our major competitor
Further we face competition from countries such as China Korea Indonesia from where lower price coated
paper is imported into India Additionally the competition in paper industry ranges from large well-established
players to small units in the unorganized segment Small unorganized players mainly compete in the low value
added segments like creamwove and kraft paper whereas the high value added segments like copier paper
coated paper and high bright maplitho and packaging board are mainly controlled by the larger players
The sustained demand for our products our ability to remain competitive in the markets we operate in and our
ability to expand and meet the market demand may have a material impact on our business operations and
financial condition
Other manufacturing expenses
Other manufacturing expenses comprise consumption of industrial chemicals packing material machine
clothing stores and spares (net of scrap sales) Industrial chemicals comprise lime caustic soda chlorine
dioxide hydrogen peroxide sodium sulphite powder starch and other chemicals used in the manufacture of
coated paper and packaging board required as raw materials for our manufacturing process Stores and spares
comprise spare parts replacements which are required for the continued operation and maintenance of the
machinery at our manufacturing units In Fiscal 2010 and the six months ended September 30 2010 as a
percentage of our total income our consumption of stores spares and chemicals constituted 2077 and 2145
respectively The availability quality and price of these constituents are key to our results of operations
Availability quality and price of fuel supply
We own and operate thermal captive power plants at each of our Unit JKPM and the Unit CPM for the
generation of power to meet the demands of each of our manufacturing units In view of the electricity tariffs
our ability to source quality coal at reasonable prices is critical to our business operations We source our coal
primarily through our long term coal supply agreements with Mahanadi Coalfields Limited and Western
Coalfields Limited for our Unit JKPM and Unit CPM respectively For a summary of the key terms of these
agreements see ―History and Certain Corporate Matters on page 87 Further in Fiscal 2010 we purchased
approximately 2843 and 6010 of our coal requirements for our Unit JKPM and Unit CPM respectively
from the open market
Coal prices have fluctuated dramatically in the past and may continue to fluctuate in the future Any inability to
source our coal requirements at a competitive cost and timely manner would have a significant impact on our
business operations and financial condition There can be no assurance that we will be able to obtain coal
supplies both in sufficient quantities acceptable quality and on commercially acceptable terms for our power
plants
Compliance with environmental laws and regulations
We are subject to central and state environmental laws and regulations which govern the discharge emission
storage handling and disposal of a variety of substances that may be used in or result from its operations In
case of any change in environmental or pollution laws and regulations we may be required to incur significant
amounts on among other things environmental monitoring pollution control equipments and emissions
management In addition failure to comply with environmental laws may result in the assessment of penalties
and fines against us by regulatory authorities
Macroeconomic conditions
Our results of operations may be materially affected by conditions in the global capital markets and the
economy generally in India and elsewhere around the world As widely reported financial markets in the United
States Europe and Asia including India experienced extreme disruption recently including among other
193
things extreme volatility in security prices severely diminished liquidity and credit availability rating
downgrades of certain investments and declining valuation of others Performance of global paper and
packaging board industry is dependent among other things on economic growth and in particular on industrial
growth
Critical Accounting Policies
Our financial statements have been prepared on accrual basis in compliance with the accounting standards
issued by the ICAI in accordance with the Indian GAAP and the provisions of the Companies Act The
preparation of financial statements in conformity with the Indian GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities
on the date of financial statements and reported amounts of revenue and expenses during the reporting period
Actual results could differ from those estimates Any revision to accounting estimates is recognised
prospectively in current and future periods
The critical accounting policies that are relevant and specific to our business and operations are described
below
1 Accounts are maintained on accrual basis Claimsrefunds not ascertainable with reasonable certainty
are accounted for on settlement basis
2 Fixed Assets are stated at cost adjusted by revaluation of certain assets
3 Expenditure during constructionerection period is included under capital work-in-progress and
allocated to the respective fixed assets on completion of construction erection
4 (a) Foreign currency transactions are recorded at exchange rates prevailing on the date of
transaction Monetary assets and liabilities in foreign currencies as at the balance sheet date
are translated at exchange rate prevailing at the year end Premium or discount in respect of
forward contracts covered under AS 11 (revised 2003) is recognized over the life of contract
Exchange differences arising on actual payments realizations and year end translations
including on forward contracts are dealt with in profit and loss account except foreign
exchange lossgain on reporting of long-term foreign currency monetary items used for
depreciable assets which are capitalized Non monetary foreign currency items are stated at
cost (b) In accordance with Announcement issued by the Institute of Chartered Accountants of India
all outstanding derivatives except covered under AS 11 (revised 2003) are mark to market on
balance sheet date and loss if any is recognized in profit amp loss account and gain being
ignored
5 Long term investments are stated at cost Provision for diminution in the value of long term
investments is made only if such a decline is other than temporary in the opinion of the management
The current investments are stated at lower of cost and quoted fair value computed category-wise
When investment is made in partly convertible debentures with a view to retain only the convertible
portion of the debentures the excess of the face value of the non-convertible portion over the
realisation on sale of such portion is treated as a part of the cost of acquisition of the convertible
portion of the debenture Income in respect of securities with long-term maturities is accounted for as
per contractual obligation
6 Inventories are valued at the lower of cost and net realisable value (except scrap waste which are
valued at net realisable value) The cost is computed on weighted average basis Finished goods and
process stock include cost of conversion and other costs incurred in bringing the inventories to their
present location and condition
7 Export incentives duty drawbacks and other benefits are recognized in the profit and loss account
Project subsidy is credited to capital reserve
8 Revenue expenditure on research and development is charged to profit and loss account in the year in
which it is incurred and capital expenditure is added to fixed assets
194
9 Borrowing cost is charged to profit and loss account except cost of borrowing for acquisition of
qualifying assets which is capitalised till the date of commercial use of the asset
10 (a) Depreciation on buildings plant amp machinery railway siding and other assets of all Units is
provided as per straight line method considering the rates in force at the time of respective
additions of the assets made before April 2 1987 and on additions thereafter at the rates and
in the manner specified in Schedule XIV of the Companies Act Continuous Process Plants as
defined in Schedule XIV have been considered on technical evaluation Depreciation on
additions due to exchange rate fluctuation is provided on the basis of residual life of the assets
Depreciation on assets costing up to ` 5000 and on temporary sheds is provided in full during
the year of additions
(b) Depreciation on the increased amount of assets due to revaluation is computed on the basis of
the residual life of the assets as estimated by the valuers on straight-line method
(c) Leasehold land is being amortised over the lease period
11 An asset is treated as impaired when the carrying cost of assets exceeds its recoverable amount An
impairment loss is charged to the profit and loss account when an asset is identified as impaired
Reversal of impairment loss recognised in prior periods is recorded when there is an indication that the
impairment losses recognised for the assets no longer exist or have decreased Post impairment
depreciation is provided on the revised carrying value of the asset over its remaining useful life
12 Employee benefits
(a) Defined Contribution Plan
Employee benefit in the form of Superannuation Fund is considered as defined contribution
plan and charged to the profit and loss account in the year when the contribution to the
respective fund is due
(b) Defined Benefit Plan
Retirement benefits in the form of gratuity is considered as defined benefit obligation and
provided for on the basis of an actuarial valuation using the projected unit credit method as at
the date of balance sheet
The provident fund contribution is made to trust administered by the trustees The interest rate
to the members of the trust shall not be lower than the statutory rate declared by the Central
Government under Employeeslsquo Provident Fund and Miscellaneous Provision Act 1952 Any
shortfall if any shall be made good by the Company
(c) Other long-term benefits
Long term compensated absences are provided for on the basis of an actuarial valuation using
the projected unit credit method as at the date of balance sheet
Actuarial gainlosses if any are immediately recognized in the profit and loss account
13 Lease rentals in respect of assets taken on finance lease are accounted for in reference to lease terms
14 Miscellaneous expenditure are amortised as under
Expenditure incurred against which benefit is expected to flow into future periods are treated as
deferred revenue expenditure and charged to revenue account over the expected duration of benefit
15 Intangible assets are being recognised if the future economic benefits attributable to the asset are
expected to flow to the company and the cost of the asset can be measured reliably The same are being
amortised over the expected duration of benefits
195
16 Current tax is the amount of tax payable on the estimated taxable income for the current year as per the
provisions of Income Tax Act 1961 Deferred tax assets and liabilities are recognised in respect of
current year and prospective years Deferred tax assets are recognised on the basis of reasonable
certainty virtual certainty as the case may be that sufficient future taxable income will be available
against which the same can be realised
17 Provisions involving substantial degree of estimation in measurement are recognised when there is a
present obligation as a result of past events and it is probable that there will be an outflow of resources
Contingent liabilities are not recognised but are disclosed in the notes
18 Premium on redemption of preference shares is accounted for in the year of redemption
Principles of consolidation
The financial statements of the Company and its Subsidiaries have been consolidated on a line by line basis by
adding together the book value of like items of assets liabilities income and expenses after eliminating intra-
group balances and intra-group transactions
In case of associate company JK Enviro-tech Limited where Company holds directly or indirectly 20 or
more equity or and exercises significant influence investments are accounted for by using equity method in
accordance with Accounting Standard (AS-23) ndash ―Accounting for Investments in Associate in Consolidated
Financial Statements
For details of our critical accounting policies adopted in the preparation of the restated consolidated financial
information see ―Financial Statements on page 141
Results of Operations
Income
Our total income comprises our net sales and other income The following table shows our income from net
sales and other income for the periods indicated in Rupees in crores and as a percentage of our total income
Amounts have been rounded to ensure percentages total to 100 as appropriate
(In ` crores) S
No
Particulars Six Month
Period Ended
September 30
2010
Fiscal 2010 Fiscal 2009 Nine Month
Period Ended
March 31 2008
1 Net sales 61316 112234 109285 61721
of total income 10105 10068 9804 9810
2 Other income 231 135 492 787
of total income 038 012 044 125
3 Increase(Decrease) in stocks (869) (895) 697 409
of total income (143) (080) 063 065
Total Income 60678 111474 110474 62917
Net Sales
Our net sales comprise our gross sales of products manufactured by our Company and products traded by our
Company less discounts and excise duties paid The products manufactured by our Company comprises
products in the (i) paper (both coated and uncoated) segment and (ii) the packaging board segment We
currently have two manufacturing units ie the Unit CPM and the Unit JKPM We derive our income primarily
from the sale of paper and allied products and packaging board manufactured in these two units
The products traded by our Company comprise paper and allied stationery products Due to capacity constraints
our Company purchases such products from third parties in order to offer a wider range of products to customers
and distributors Sale of such products are classified under this category
Our income from net sales accounted for 10105 10068 9804 and 9810 of our total income for the six
196
month period ended September 30 2010 Fiscal 2010 Fiscal 2009 and the nine month period ended March 31
2008 respectively
Other Income
Our other income primarily comprises income from current investments dividend income profit on sale of
fixed assets excess provisions of earlier years no longer required and miscellaneous income Additionally we
also derive income from selling the surplus power generated from our Unit CPM pursuant to commencement of
power trading from our Unit CPM in May 2010 Our other income accounted for 038 012 044 and
125 of our total income for the six month period ended September 30 2010 Fiscal 2010 Fiscal 2009 and the
nine month period ended March 31 2008 respectively
Expenditure
Our expenditure comprises cost of raw materials consumed staff cost other manufacturing expenses cost
towards purchase of finished goods selling and distribution expenses administration and other expenses
interest and financial charges and depreciation expenses The following table shows our expenditure for the
periods indicated in Rupees in crores and as a percentage of our total income Amounts have been rounded to
ensure percentages total to 100 as appropriate
(In ` crores) S
No
Particulars Six Month Period
Ended September
30 2010
Fiscal 2010 Fiscal 2009 Nine Month
Period Ended
March 31
2008
1 Raw materials consumed 15979 28679 28143 15054
of total income 2633 2573 2547 2393
2 Staff cost 6593 11970 9979 7100
of total income 1087 1074 903 1128
3 Other manufacturing expenses 20259 35915 36788 20337
of total income 3339 3222 3300 3232
4 Purchase of finished goods 831 4398 11487 5668
of total income 137 395 1030 901
5 Selling amp distribution expenses 1690 2425 2622 1463
of total income 279 218 235 233
6 Administration amp other expenses 1470 3544 3231 1671
of total income 242 318 290 266
7 Interest amp financial charges 2267 4849 5847 3546
of total income 374 435 525 564
8 Depreciation 3608 7004 6969 4586
of total income 595 628 625 729
Total expenditure 52697 98784 105066 59425
Raw materials consumed
Our expenses towards raw materials consumed primarily comprised cost of procurement of raw materials for
our paper and packaging board products such as hardwood bamboo and imported pulp for both our
manufacturing facilities ie the Unit CPM and the Unit JKPM Cost of raw materials accounted for 2633
2573 2547 and 2393 of our total income for the six month period ended September 30 2010 Fiscal
2010 Fiscal 2009 and the nine month period ended March 31 2008 respectively
Staff cost
Our staff cost primarily comprises employee salaries and wages and bonuses contribution towards employeeslsquo
provident fund and other funds staff welfare expenses and employee benefits Staff costs accounted for 1087
1074 903 and 1128 of our total income for the six month period ended September 30 2010 Fiscal
2010 Fiscal 2009 and the nine month period ended March 31 2008 respectively
Other manufacturing expenses
Our other manufacturing expenses primarily include costs incurred towards consumption of stores spares and
197
chemicals power fuel and water repairs to buildings and machinery for both our manufacturing facilities ie
the Unit CPM and the Unit JKPM Our other manufacturing expenses accounted for 3339 3222 3300
and 3232 of our total income for the six month period ended September 30 2010 Fiscal 2010 Fiscal 2009
and the nine month period ended March 31 2008 respectively
Purchase of finished goods
Our expenses towards purchase of finished goods primarily comprises costs incurred towards purchase of paper
products from third parties in our traded products segment Our expenses towards purchase of finished goods
accounted for 137 395 1030 and 901 of our total income for the six month period ended September
30 2010 Fiscal 2010 Fiscal 2009 and the nine month period ended March 31 2008 respectively
Selling amp distribution expenses
Our selling and distribution expenses primarily comprise expenses incurred towards sales promotion transport
clearing and forwarding charges rent commission on sales advertisement expenses and cash discounts offered
on our products Our selling and distribution expenses accounted for 279 218 235 and 233 of our
total income for the six month period ended September 30 2010 Fiscal 2010 Fiscal 2009 and the nine month
period ended March 31 2008 respectively
Administration amp other expenses
Our administration and other expenses primarily comprise expenses incurred towards applicable rates and taxes
insurance coverage directorslsquo fees directorslsquo commission assets written off loss on sale of fixed assets
deferred revenue expenditure written off bad debts provisions made for doubtful debts and bank charges
traveling and other miscellaneous expenses Our administration and other expenses accounted for 242
318 290 and 266 of our total income for the six month period ended September 30 2010 Fiscal 2010
Fiscal 2009 and the nine month period ended March 31 2008 respectively
Interest amp financial charges
Interest and financial charges include interest paid on term loans working capital facilities and cash credit and
processing fees Interest and financial charges accounted for 374 435 525 and 564 of our total
income for the six month period ended September 30 2010 Fiscal 2010 Fiscal 2009 and the nine month period
ended March 31 2008 respectively
Depreciation
Depreciation is provided on a pro-rata basis under the straight line method at rates of depreciation as prescribed
in Schedule XIV to the Companies Act except in respect of furniture and fixtures and office equipment on
which depreciation is provided at rates higher than those prescribed in Schedule XIV to the Companies Act
Depreciation accounted for 595 628 625 and 729 of our total income for the six month period ended
September 30 2010 Fiscal 2010 Fiscal 2009 and the nine month period ended March 31 2008 respectively
Six month period ended September 30 2010
The effect of the Scheme of Arrangement has been considered in the restated consolidated financial information
for the six month period ended September 30 2010 as shown below
(In ` crores)
S No Particulars
1 Assets as increased by transfer and vesting of the two undertakings from the Company to its
respective Subsidiaries
2992
2 Capital Reserve 2992
(i) The deferred tax liability of ` 453 crores has been adjusted against the general reserve
(ii) The Company carried on the business of the two housing undertakings with effect from April 1 2009
for and on behalf of its respective Subsidiaries
198
(iii) The necessary steps and formalities in respect of issue of redeemable debentures issue and allotment of
shares as stated above and transfer of assets are under implementation
For details of the Scheme of Arrangement see ―History and Certain Corporate Matters on page 87
Income
Our total income was ` 60678 crores for the six month period ended September 30 2010
Net sales
For the six month period ended September 30 2010 our net sales was ` 61316 crores which constituted
10105 of our total income primarily driven by the sale of 93966 MT of paper and allied products and 38432
MT of packaging board products
Other income
For the six month period ended September 30 2010 our other income was ` 231 crores which constituted
038 of our total income
Expenditure
Our total expenditure was ` 52697 crores for the six month period ended September 30 2010
Raw materials consumed
For the six month period ended September 30 2010 expenditure incurred by us on the raw materials consumed
was ` 15979 crores which constituted 2633 of our total income primarily driven by cost of procurement of
raw materials for our paper and packaging board products which was impacted by an increase in the prices of
imported pulp for our Unit CPM as well as an increase in the prices of hardwood and bamboo for both our
manufacturing facilities ie the Unit CPM and the Unit JKPM
Staff cost
For the six month period ended September 30 2010 our staff cost amounted to ` 6593 crores which
constituted 1087 of our total income primarily driven by the expenses incurred towards employee salaries
and wages and bonuses contribution towards employeeslsquo provident fund and other funds staff welfare expenses
and employee benefits
Other manufacturing expenses
For the six month period ended September 30 2010 our other manufacturing expenses amounted to ` 20259
crores which constituted 3339 of our total income primarily driven by expenses amounting to ` 13014
crores incurred towards consumption of stores spares and chemicals which was impacted by an increase in the
prices of industrial chemicals expenses amounting to ` 6744 crores incurred towards power fuel and water
which was impacted by lower sourcing of coal through coal linkage and consequently our purchasing coal at
higher negotiated rates from the open market expenses amounting to ` 265 crores incurred towards repairs to
buildings and expenses amounting to ` 231 crores incurred towards repairs to our machinery for both our
manufacturing facilities ie the Unit CPM and the Unit JKPM
Purchase of finished goods
For the six month period ended September 30 2010 the expenditure incurred on purchase of finished goods
amounted to ` 831 crores which constituted 137 of our total income primarily driven by the costs incurred
towards purchase of paper products from third parties in our traded products segment The purchase of finished
goods by our Company was affected due to floods in the factory premises of one of our suppliers in Fiscal 2010
which severely impacted the operations of our supplier in this period Therefore this resulted in a steep fall in
the quantity of paper products sourced and traded
Selling amp distribution expenses
199
For the six month period ended September 30 2010 the selling and distribution expenses amounted to ` 1690
crores which constituted 279 of our total income primarily driven by expenses amounting to ` 976 crores
incurred towards cash discounts offered on our products expenses amounting to ` 278 crores incurred towards
transport clearing and forwarding charges expenses amounting to ` 266 crores incurred towards sales
promotion expenses amounting to ` 074 crore incurred towards payment of rent expenses amounting to ` 061
crore incurred towards payment of commission on sales and expenses amounting to ` 035 crore incurred
towards advertisement expenses
Administration amp other expenses
For the six month period ended September 30 2010 administration and other expenses amounted to ` 1470
crores which constituted 242 of our total income primarily driven by expenses amounting to ` 1086 crores
incurred towards bank charges traveling and other miscellaneous expenditures expenses amounting to ` 154
crores incurred towards provisions made for bad debts expenses amounting to ` 098 crore incurred towards
payment of applicable rates and taxes expenses amounting to ` 056 crore incurred towards bad debts expenses
amounting to ` 044 crore incurred towards assets written off expenses amounting to ` 027 crore incurred
towards payment of directorslsquo commission expenses amounting to ` 004 crore incurred towards deferred
revenue expenditure written off and expenses amounting to ` 003 crore incurred towards payment of directorslsquo
fees
Interest and financial charges
For the six month period ended September 30 2010 interest and financial charges amounted to ` 2267 crores
which constituted 374 of our total income primarily driven by interest paid on term loans working capital
facilities and cash credit and processing fees This includes provision made for ` 382 crores towards 50 of the
one-time redemption premium payable on maturity of 2006 FCCBs which are due for redemption on March 30
2011
Depreciation
For the six month period ended September 30 2010 expenses incurred on account of depreciation amounted to
` 3608 crores which constituted 595 of our total income primarily driven by depreciation of our fixed assets
in the normal course of business
Profit before tax
For the reasons mentioned above our profit before tax was ` 7981 crores for the six month period ended
September 30 2010
Provision for tax
We made a provision for tax of ` 2216 crores comprising a provision for current tax of ` 2621 crores and credit
of deferred tax amounting to ` 405 crores for the six month period ended September 30 2010
Adjusted profit after tax
Our adjusted profit after tax was ` 5775 crores for the six month period ended September 30 2010
Fiscal 2010 compared with Fiscal 2009
Income
Our total income increased marginally by ` 10 crores or 091 from ` 110474 crores in Fiscal 2009 to `
111474 crores in Fiscal 2010 The increase was due to a ` 2949 crores increase in our net sales which was
marginally offset by a ` 357 crores decrease in our other income and a ` 1592 crores decrease in our stocks
pursuant to higher demand for our products
Net sales
200
Our net sales increased marginally by ` 2949 crores or 270 from ` 109285 crores in Fiscal 2009 to `
112234 crores in Fiscal 2010 The increase was primarily due to an increase in our quantity of sale of
packaging board products from 56613 MT in Fiscal 2009 to 71505 MT in Fiscal 2010 This was partially offset
by a decrease in our quantity of sale of paper and allied products from 200305 MT in Fiscal 2009 to 193540
MT in Fiscal 2010
Other income
Our other income decreased by ` 357 crores or 7256 from ` 492 crores in Fiscal 2009 to ` 135 crores in
Fiscal 2010 This decrease was primarily due to ` 424 crores excess provisions written back in Fiscal 2009 as
against ` 048 crore excess provisions written back in Fiscal 2010
Expenditure
Our expenditure decreased by ` 6282 crores or 598 from ` 105066 crores in Fiscal 2009 to ` 98784 crores
in Fiscal 2010 The decrease was primarily due to a ` 7089 crores decrease in our expenses incurred towards
purchase of finished goods a ` 873 crores decrease in our other manufacturing expenses a ` 197 crores
decrease in our selling and distribution expenses and a ` 998 crores decrease in our expenses incurred towards
interest and financial charges which were partially offset by a ` 536 crores increase in our expenses incurred
towards raw materials consumed a ` 1991 crores increase in our expenses incurred towards staff cost a ` 313
crores increase in our administration and other expenses and a ` 035 crore increase in our expenses incurred
towards depreciation
Raw materials consumed
Our cost of raw materials consumed increased marginally by ` 536 crores or 190 from ` 28143 crores in
Fiscal 2009 to ` 28679 crores in Fiscal 2010 This increase was primarily due to an increase in our consumption
of imported pulp as a raw material for production in our packaging board segment However the cost incurred
due to the requirement for other raw materials for our paper manufacturing operations did not witness any
significant changes Also as a result of this raw material consumption as a percentage of our total income
increased marginally to 2573 in Fiscal 2010 compared to 2547 in Fiscal 2009
Staff cost
Our staff cost increased by ` 1991 crores or 1995 from ` 9979 crores in Fiscal 2009 to ` 11970 crores in
Fiscal 2010 This increase was primarily due to increment in salaries and wages of our employees in the normal
course of the business of our Company Also as a result of this staff cost as a percentage of our total income
increased marginally to being 1074 in Fiscal 2010 compared to being 903 in Fiscal 2009
Other manufacturing expenses
Our other manufacturing expenses decreased by ` 873 crores or 237 from ` 36788 crores in Fiscal 2009 to
` 35915 crores in Fiscal 2010 This decrease was primarily due to a ` 445 crores reduction in our expenses
incurred towards power fuel and water which was caused by higher sourcing of coal through coal linkage
compared to purchase from the open market a ` 197 crores reduction in our expenses incurred towards
consumption of stores spares and chemicals a ` 159 crores reduction in our expenses incurred towards repairs
to machinery and a ` 020 crore reduction in our expenses incurred towards repairs to building on account of
operating efficiencies achieved in our manufacturing units Also as a result of this our other manufacturing
expenses as a percentage of our total income decreased marginally to being 3222 in Fiscal 2010 compared to
being 3330 in Fiscal 2009
Purchase of finished goods
Our expenses incurred on purchase of finished goods decreased by ` 7089 crores or 6171 from ` 11487
crores in Fiscal 2009 to ` 4398 crores in Fiscal 2010 Our Company sources certain paper products from other
non-integrated paper mills from within India In Fiscal 2010 due to domestic shortage in pulp the quantity of
paper products sourced from and produced by other mills and purchased by our Company was lower compared
to Fiscal 2009 Further floods in the factory premises of one of our suppliers forced them to close their
201
operations This resulted in a steep fall in the quantity of paper products sourced and traded However this
shortfall was partially offset by our sourcing copier paper from a leading international paper manufacturer Also
as a result of this expenses incurred on purchase of finished goods as a percentage of our total income
decreased to being 395 in Fiscal 2010 compared to being 1040 in Fiscal 2009
Selling amp distribution expenses
Our selling and distribution expenses decreased by ` 197 crores or 751 from ` 2622 crores in Fiscal 2009
to ` 2425 crores in Fiscal 2010 This decrease was primarily due to a ` 161 crores reduction in our expenses
incurred towards transport clearing and forwarding charges owing to lower export volumes of paper and
packaging board products in comparison to Fiscal 2009 as well as a ` 090 crore reduction in our expenses
incurred towards payment of commission on sales and a ` 087 crore reduction in our expenses incurred towards
sales promotion which was partially offset by a ` 114 crores increase in our expenses incurred cash discount
offered on our products a ` 023 crore increase in our expenses incurred towards payment of rent and a ` 004
crore increase in our expenses incurred towards advertisement expenses Also as a result of this our selling and
distribution expenses as a percentage of our total income decreased marginally to being 218 in Fiscal 2010
compared to being 237 in Fiscal 2009
Administration amp other expenses
Our administration and other expenses increased by ` 313 crores or 969 from ` 3231 crores in Fiscal 2009
to ` 3544 crores in Fiscal 2010 This increase was primarily due to a ` 300 crores increase in our expenses
incurred towards payment of applicable rates and taxes as well as donations made to educational and charitable
institutions a ` 216 crores increase in our expenses incurred towards our provision for doubtful debts a ` 173
crores increase in our expenses incurred towards bank charges travelling and miscellaneous expenses a ` 036
crore increase in our expenses incurred towards assets written off and a ` 030 crore increase in our expenses
incurred towards payment of our Directorslsquo commissions which was marginally offset by a ` 400 crores
decrease in our expenses incurred towards bad debts a ` 018 crore decrease in our expenses incurred towards
deferred revenue expenditure written off and a ` 001 crore decrease in our expenses incurred towards payment
of our Directorslsquo fee Also as a result of this our administration and other expenses as a percentage of our total
income increased marginally to being 318 in Fiscal 2010 compared to being 292 in Fiscal 2009
Interest and financial charges
Interest and financial charges decreased by ` 998 crores or 1707 from ` 5847 crores in Fiscal 2009 to `
4849 crores in Fiscal 2010 This decrease was primarily due to repayment of term loans aggregating to ` 12309
crores as well as tighter credit and stocking policies adopted by our Company leading to a reduction in working
capital funds Additionally in Fiscal 2010 our inventory levels decreased as compared to in Fiscal 2009
leading to lower requirement of funds from lenders towards working capital Also as a result of this our interest
and financial charges as a percentage of our total income decreased to being 435 in Fiscal 2010 compared to
being 529 in Fiscal 2009
Depreciation
Our expenses incurred on account of depreciation increased by ` 035 crore 050 from ` 6969 crores in
Fiscal 2009 to ` 7004 crores in Fiscal 2010 This increase was primarily due to an increase in our asset base on
account of capital expenditure incurred in the normal course of business of our Company Also as a result of
this depreciation as a percentage of our total income increased marginally to 628 in Fiscal 2010 from 631
in Fiscal 2009
Profit before tax
As a result of the above profit before tax increased by ` 7282 crores or 13465 from ` 5408 crores in Fiscal
2009 to ` 12690 crores in Fiscal 2010
Provision for tax
Primarily due to the reasons described above our provisions for tax liabilities increased by ` 1983 crores or
12340 from ` 1607 crores in Fiscal 2009 to ` 3590 crores in Fiscal 2010 This increase was primarily due
to an increase in provision for current tax and provision for deferred tax which were partially offset by an
202
increase in MAT credit entitlement and abolition of fringe benefit tax under the Income Tax Act Additionally
the increase in our tax liabilities was also caused by a higher profit before tax which was partially offset by
deductions allowed in relation to our profits on power assets under Section 80IA of the Income Tax Act with
respect to our Unit CPM
Adjusted profit after tax
Our adjusted profit after tax was ` 9198 crores in Fiscal 2010 and our adjusted profit after tax (after exceptional
items) was ` 3746 crores in Fiscal 2009 an increase of ` 5452 crores or 14554
Nine Month Period Ended March 31 2008
Significant events
In this period our Company commenced the commercial production of packaging board products in our Unit
CPM in October 2007 which had an impact on our income and expenditures in this period
Income
Our total income was ` 62917 crores for the nine month period ended March 31 2008
Net sales
For the nine month period ended March 31 2008 our net sales were ` 61721 crores which constituted 9810
of our total income primarily driven by the sale of 147605 MT of our paper and allied products and 12008
MT of our packaging board products
Other income
For the nine month period ended March 31 2008 our other income was ` 787 crores which constituted 125
of our total income
Expenditure
Our total expenditure was ` 59425 crores for the nine month period ended March 31 2008
Raw materials consumed
For the nine month period ended March 31 2008 the expenditure incurred by us on raw material consumed was
` 15054 crores which constituted 2393 of our total income primarily driven by cost of procurement of raw
materials for our paper and packaging board products and which was particularly impacted by the procurement
of imported pulp as raw material due to the commencement of our packaging board business in October 2007 at
our Unit CPM
Staff cost
For the nine month period ended March 31 2008 our staff cost was ` 7100 crores which constituted 1128
of our total income primarily driven by the expenses incurred towards employee salaries and wages and
bonuses contribution towards employeeslsquo provident fund and other funds staff welfare expenses and employee
benefits
Other manufacturing expenses
For the nine month period ended March 31 2008 our other manufacturing expenses were ` 20337 crores
which constituted 3232 of our total income primarily driven by expenses amounting to ` 13559 crores
incurred towards consumption of stores spares and chemicals which was impacted by a reduction in the rates of
industrial chemicals expenses amounting to ` 6319 crores incurred towards power fuel and water which was
impacted by an increase in the cost of sourcing of coal at both our manufacturing units expenses amounting to `
311 crores incurred towards repairs to buildings and expenses amounting to ` 239 crores incurred towards
repairs to our machinery for both our manufacturing facilities ie the Unit CPM and the Unit JKPM
203
Purchase of finished goods
For the nine month period ended March 31 2008 the expenditure incurred on purchase of finished goods was `
5668 crores which constituted 901 of our total income primarily driven by the costs incurred towards
purchase of paper products from third parties in our traded products segment which was marginally affected by
an increased focus of our Company in the domestic markets where the demand for paper products was higher
Selling amp distribution expenses
For the nine month period ended March 31 2008 our selling and distribution expenses were ` 1463 crores
which constituted 233 of our total income primarily driven by expenses amounting to ` 963 crores incurred
towards cash discounts offered on our products expenses amounting to ` 318 crores incurred towards sales
promotion expenses amounting to ` 114 crores incurred towards payment of commission on sales expenses
amounting to ` 104 crores incurred towards payment of rent and expenses amounting to ` 042 crore incurred
towards advertisement expenses
Administration amp other expenses
For the nine month period ended March 31 2008 our administration and other expenses were ` 1671 crores
which constituted 266 of our total income primarily driven by expenses amounting to ` 1455 crores incurred
towards bank charges traveling and other miscellaneous expenditures expenses amounting to ` 128 crores
incurred towards deferred revenue expenditure written off expenses amounting to ` 039 crore incurred towards
payment of applicable rates and taxes expenses amounting to ` 032 crore incurred towards payment for
insurance coverage expenses amounting to ` 016 crore incurred towards payment of directorslsquo commission and
expenses amounting to ` 001 crore incurred towards payment of directorslsquo fees
Interest and financial charges
For the nine month period ended March 31 2008 our interest and financial charges were ` 3546 crores which
constituted 564 of our total income primarily driven by interest paid on term loans working capital facilities
and cash credit and processing fees
Depreciation
For the nine month period ended March 31 2008 our expenses incurred on account of depreciation were `
4586 crores which constituted 729 of our total income primarily driven by depreciation of our fixed assets
in the normal course of business
Profit before tax
For the reasons mentioned above our profit before tax was ` 3492 crores for the nine month period ended
March 31 2008
Provision for tax
We made a provision for tax of ` 012 crores comprising a provision for current tax of ` 613 crores MAT
credit entitlement of ` 613 crores credit of deferred tax amounting to ` 078 crore and provision for fringe
benefit tax amounting to ` 099 crore for the nine month period ended March 31 2008
Adjusted profit after tax
Our adjusted profit after tax (after exceptional items) was ` 3184 crores for the nine month period ended March
31 2008
Liquidity and Capital Resources
As of September 30 2010 we had cash and bank balances of ` 1374 crores Cash and bank balances comprise
cash on hand cheques on hand and deposit accounts Our primary liquidity requirements have been to finance
our working capital requirements We have met these requirements from cash flows from operations and short-
204
term and long-term borrowings Our business requires a significant amount of working capital We expect to
meet our working capital requirements for the next 12 months primarily from the cash flows from our business
operations project specific borrowings from banks and financial institutions as may be expedient and to a
certain extent from the proceeds of this Issue
Cash flows
Set forth below is a table of selected information from our Companylsquos consolidated statements of cash flows for
the period indicated
(In ` crores)
Particulars Six Month Period
Ended September
30 2010
Fiscal 2010 Fiscal 2009 Nine Month
Period Ended
March 31 2008
Net cash from (used
in) operating activities
15635 24380 20277 9385
Net cash from (used
in) investing activities
(4944) (6603) (2518) (9367)
Net cash from (used
in) financing activities
(10111) (20405) (14687) (151)
Increase (decrease) in
cash and cash
equivalents
580 (2628) 3072 (133)
Cash and cash
equivalents at the
beginning of the year
794 3422 350 483
Cash and cash
equivalents as at the end
of the year
1374 794 3422 350
Net cash from operating activities
Net cash from operating activities in the six month period ended September 30 2010 was ` 15635 crores and
our operating profit before working capital changes for that period was ` 14013 crores The difference was
attributable to a ` 1646 crores increase in trade and other payables due to increased scale of operations and
longer credit period provided to us by our suppliers a ` 776 crores decrease in our inventories primarily due to
a reduction in our finished goods a ` 481 crores decrease in our trade and other receivables primarily due to a
shorter credit period availed by our customers and as adjusted by the payment of ` 1281 crores as taxes paid
Net cash from operating activities in Fiscal 2010 was ` 24380 crores and our operating profit before working
capital changes for that period was ` 25568 crores The difference was attributable to a ` 2701 crores increase
in trade and other payables due to increased scale of operations and longer credit period provided to us by our
suppliers a ` 978 crores increase in our inventories due to increased scale of our operations a ` 1023 crores
increase in our trade and other receivables due to an increase in our sales and as adjusted by the payment of `
1888 crores as taxes paid
Net cash from operating activities in Fiscal 2009 was ` 20277 crores and our operating profit before working
capital changes for that period was ` 19041 crores The difference was attributable to a ` 4180 crores decrease
in trade and other receivables due to sale of our lime kiln assets of ` 4170 crores which was held for sale to JK
Enviro-tech Limited (our associate company) a ` 323 crores decrease in our inventories due to lower stock
holding of raw materials by our Company a ` 2306 crores decrease in our trade and other payables due to early
payment made by us to our suppliers and as adjusted by the payment of ` 943 crores as taxes paid and ` 018
crores as miscellaneous expenditure incurred
Net cash from operating activities in the nine month period ended March 31 2008 was ` 9385 crores and our
operating profit before working capital changes for that period was ` 11548 crores The difference was
attributable to a ` 1419 crores increase in trade and other payables a ` 2393 crores increase in our inventories
a ` 466 crores increase in our trade and other receivables all primarily due to commencement of our packaging
board business in October 2007 from our Unit CPM and as adjusted by the payment of ` 567 crores as taxes
paid and ` 156 crores as miscellaneous expenditure incurred
205
Net cash used in investing activities
Net cash used in investing activities in the six month period ended September 30 2010 was ` 4944 crores This
primarily reflected the payment of ` 3291 crores towards the purchase of our investments in our Subsidiaries as
well as investment of surplus cash in certain mutual funds and the payment of ` 2199 crores towards the
purchase of fixed assets in the normal course of business of our Company This was partially offset by ` 439
crores interest received primarily on fixed deposits maintained with banks as well as deposits maintained with
the JK Paper Employeeslsquo Welfare Trust and JK Enviro-tech Limited
Net cash used in investing activities in Fiscal 2010 was ` 6603 crores This primarily reflected the payment of `
3906 crores towards the purchase of our investments in certain mutual funds with surplus cash and the payment
of ` 3593 crores towards the purchase of fixed assets in the normal course of business of our Company This
was partially offset by ` 783 crores interest received primarily on fixed deposits maintained with banks as well
as deposits maintained with the JK Paper Employeeslsquo Welfare Trust and JK Enviro-tech Limited
Net cash used in investing activities in Fiscal 2009 was ` 2518 crores This primarily reflected the payment of `
3399 crores towards the purchase of fixed assets in the normal course of business of our Company This was
partially offset by ` 668 crores interest received primarily on fixed deposits maintained with banks as well as
deposits maintained with the JK Paper Employeeslsquo Welfare Trust and JK Enviro-tech Limited
Net cash used in investing activities in the nine month period ended March 31 2008 was ` 9367 crores This
primarily reflected the payment of ` 10239 crores towards the purchase of fixed assets which primarily consist
of assets purchased for the purpose of our packaging board plant in our Unit CPM which commenced operations
in October 2007 as well as purchase of fixed assets in the normal course of business of our Company and the
payment of ` 170 crores towards the purchase of our investments in JK Enviro-tech Limited (our associate
company) This was partially offset by ` 928 crores interest received primarily on fixed deposits maintained
with banks as well as deposits maintained with the JK Paper Employeeslsquo Welfare Trust
Net cash used in financing activities
Net cash used in financing activities in the six month period ended September 30 2010 was ` 10111 crores
This reflected the repayment of ` 5099 crores towards certain long-term borrowings payment of ` 2174 crores
as interest and financial charges towards our short-term and long-term loans payment of ` 1819 crores as
dividend (including dividend tax) on our Equity Shares and preference shares issued repayment of ` 1796
crores towards certain short-term borrowings availed for our working capital requirements and payment of `
557 crores towards redemption of 11000 10 CRPS (Series E) issued to lenders of JKLC on November 29
2001 pursuant to the order of the High Court of Gujarat dated August 30 2001 approving the Scheme of
Compromise This was partially offset by the receipt of ` 1334 crores as proceeds from certain long-term
borrowings
Net cash used in financing activities in Fiscal 2010 was ` 20405 crores This reflected the repayment of `
12309 crores towards certain long-term borrowings payment of ` 5328 crores as interest and financial charges
towards our short-term and long-term loans payment of ` 1601 crores as dividend (including dividend tax) on
our Equity Shares and preference shares issued repayment of ` 601 crores towards certain short-term
borrowings availed for our working capital requirements and payment of ` 566 crores towards redemption of
21000 10 CRPS (Series D) issued to lenders of JKLC on November 29 2001 pursuant to the order of the
High Court of Gujarat dated August 30 2001 approving the Scheme of Compromise
Net cash used in financing activities in Fiscal 2009 was ` 14687 crores This reflected the repayment of ` 8708
crores towards certain long-term borrowings payment of ` 6183 crores as interest and financial charges
towards our short-term and long-term loans repayment of ` 5019 crores towards certain short-term borrowings
availed for our working capital requirements payment of ` 1375 crores as dividend (including dividend tax) on
our Equity Shares and preference shares issued and payment of ` 585 crores towards redemption of 40000
10 CRPS (Series C) issued to lenders of JKLC on November 29 2001 pursuant to the order of the High Court
of Gujarat dated August 30 2001 approving the Scheme of Compromise This was partially offset by the
receipt of ` 7183 crores as proceeds from certain long-term borrowings
Net cash used in financing activities in the nine month period ended March 31 2008 was ` 151 crores This
reflected the repayment of ` 14223 crores towards certain long-term borrowings payment of ` 3952 crores as
interest and financial charges towards our short-term and long-term loans payment of ` 2067 crores as
206
dividend (including dividend tax) on our Equity Shares and preference shares issued and payment of ` 240
crores as one time additional interest pursuant to prepayment of a high-cost loan availed from UTI Asset
Management Company Limited This was offset by the receipt of ` 12927 crores as proceeds from certain long-
term borrowings and the receipt of ` 7404 crores as proceeds from certain short-term borrowings availed for
our working capital requirements
Financial indebtedness
The following table sets forth our Companylsquos consolidated secured and unsecured debt position as at September
30 2010
(In ` crores)
Particulars Amount Outstanding as at September 30 2010
Unsecured Loans
Fixed Deposits 3058
125 Foreign Currency Convertible Bonds 2246
Buyers Credit Facilities from Various Banks 1689
Foreign Currency Term Loan 373
Total (A) 7366
Secured Loans
Financial Institutions 8565
Banks 24570
Working Capital Loans 9279
Total (B) 42414
Total (A + B) 49780
Contingent liabilities
As of September 30 2010 we had the following contingent liabilities that have not been provided for in our
consolidated restated financial statements
(In ` crores) S No Description As of September 30 2010
1 Excise duty liability in respect of matters in appeal 812
2 Sales tax liability in respect of matters in appeal 244
3 Forest matters 573
4 Income tax matters 179
5 Other matters 334
Total 2142
In addition to the above the following have also been classified as a contingent liability as of September 30
2010
1 In respect of certain disallowances and additions made by the Income Tax Authorities appeals are
pending before the Appellate Authorities and adjustment if any will be made after the same are finally
determined
2 The Company has entered into a Take or Pay agreement for the purpose of sourcing lime from JK
Enviro-tech Limited The Company has given an undertaking that on the happening of certain events it
will takeover Loan taken by JK Enviro-tech Limited from IDFC Limited of the value of ` 40 Crore
Off-Balance Sheet Arrangements
Except for certain forward contracts and future contracts entered into by our Company for the purpose of
hedging of interest rate and exchange rate risks we do not have any off-balance sheet arrangements derivative
instruments swap transactions or other relationships with unconsolidated entities or financial partnerships that
would have been established for the purpose of facilitating off-balance sheet transactions
Quantitative and Qualitative disclosure about market risk
Interest rate risk
207
We are exposed to market rate risk due to changes in interest rates on our credit facilities that we entered into
As of September 30 2010 we had ` 39098 crores of our outstanding indebtedness (comprising ` 37036 crores
from our secured loan facilities and ` 2062 crores from our unsecured loan facilities) was subject to floating
rates of interest linked to six month LIBOR or the State Bank of India prime lending rate and are thereby
exposed to changes in interest rates In addition the interest rates for our indebtedness are subject to periodic
resets We undertake debt obligations to support our working capital needs and capital expenditure Upward
fluctuations in interest rates increase the cost of new debt and interest cost of outstanding variable rate
borrowings Although we currently hedge some of our interest rate risk through interest rate swaps we may not
be able to sufficiently offset the increase in interest rates An increase in interest rates may adversely affect our
ability to service long-term debt and to finance development of new projects all of which may in turn adversely
affect our results of operations
Commodity price risk
We compete in different markets within the paper and packaging board industry on the basis of the quality of
our products customer service product development activities price and distribution All of our markets are
highly competitive Competitive conditions in some of our segments have caused us to incur lower net selling
prices and reduced gross margins and net earnings Therefore we are exposed to the market fluctuations in the
selling price of our products
We are dependent upon various suppliers for our fuel requirements We have entered into coal supply
agreements with Western Coalfields Limited and Mahanadi Coalfields Limited for our captive power plants
located at the Unit CPM and the Unit JKPM respectively For a summary of key terms of these agreements see
―History and Certain Corporate Matters on page 87 However prices for fuel under these coal supply
agreements fluctuate according to notifications issued by Coal India Limited or other statutory authorities from
time to time In addition to this we also procure coal through open market sources
We are also exposed to fluctuations in the price availability and quality of the primary raw materials required
for manufacturing of paper and allied products and packaging boards For information see ―-Factors Affecting
our Results of Operations We may not be able to pass increased cost for raw materials or energy to our
customers if the market or existing agreements with our customers do not allow us to raise the prices of our
finished products Even if we are able to pass through increased cost of raw materials or energy the resulting
increase in the selling prices for our products could reduce the volume of products we sell and decrease our
revenues While we may try from time to time to hedge against price increases we may not be successful in
doing so
Foreign currency exchange rate risk
We are exposed to significant foreign exchange rate risk We export approximately 3 of our paper and allied
products and packaging boards and import approximately 20 of the total pulp requirement from Europe South
America and South East Asian countries for manufacture of our packaging boards Further we also have `
18057 crores of secured and unsecured loans denominated in foreign currency as of September 30 2010 As on
September 30 2010 our unhedged foreign currency exposure was as follows
(In Crores)
S No Foreign Currency Amount in Foreign Currency Amount as converted in
Rupees
1 USD 0162 728
2 Euro (00003) (002)
3 Sterling Pound (00003) (002)
4 Swedish Krona 0026 017
Although our Company hedges approximately 70 of its forex liabilities there may still be an impact of foreign
currency exchange rate fluctuations on our business financial condition and results of operations For details
see ―Risk Factors on page ix Accordingly any depreciation of the Rupee against these currencies may
significantly increase the Rupee cost to us of servicing and repaying our foreign currency payables
Unusual or infrequent events or transactions
Except as described in this Draft Letter of Offer there have been no events or transactions which may be
208
described as ―unusual or ―infrequent
Significant regulatory changes
Except as described in ―Regulations and Policies on page 83 there have been no significant regulatory
changes that materially affect or are likely to affect the income from continuing operations
Known trends or uncertainties
Our business has been impacted and we expect will continue to be impacted by the trends identified above in ―-
Factors Affecting Our Results of Operations and the uncertainties described in ―Risk Factors on page ix To
our knowledge except as we have described in this Draft Letter of Offer there are no known trends or
uncertainties that have had or are expected to have a material adverse impact on our revenues or income from
continuing operations
Future relationship between income and expenditure
Except as described in ―Risk Factors and ―Our Business on pages ix and 62 respectively to the best of our
knowledge there is no future relationship between income and expenditure which will have a material adverse
impact on the operation and finances of our Company
New product or business segment
We do not have any new products or business segments
Seasonality of business
Our revenues and results may be affected by seasonal factors For example inclement weather such as heavy
monsoons may delay or disrupt the harvest of hardwood or bamboo for the particular crop period Further
some of our customers may have businesses which may be seasonal in nature and a downturn in demand for our
products by such customers could reduce our revenues during such periods For details see ―Risk Factors ndash
External Risk Factors no 36 - Our raw material availability depends to a major extent on monsoon and
weather conditions Any lack of or an abnormal monsoon could negatively impact harvests and in turn have
a material adverse effect on our business growth and prospects financial condition and results of operations
on page xxiv
Significant dependence on a single or few suppliers or customers
As described in ―Risk Factors and ―Our Business on pages ix and 62 respectively we have long term
contracts for the supply of paper products with a limited number of customers and a bulk of our hardwood
bamboo and coal requirements are supplied by a limited number of suppliers For details see ―History and
Certain Corporate Matters on page 87
Competitive conditions
For details on competition see the sections titled ―Risk Factors ―Our Business and ―Industry Overview on
pages ix 62 and 51 respectively
Transactions with associate companies and related parties
We have certain transactions with our associate companies and related parties For details see ―Related Party
Transactions on page 140
Recent accounting pronouncements
There are no recent accounting pronouncements that were not yet effective as on September 30 2010 which
will result in a change in our Companylsquos significant accounting policies
Significant developments after September 30 2010
209
As stated above the Scheme of Arrangement for transfer and vesting of all assets rights liabilities and
obligations of the CPM Staff Housing Undertaking to Songadh Infrastructure amp Housing Limited and the
JKPM Staff Housing Undertaking to Jaykaypur Infrastructure amp Housing Limited both of which are our wholly
owned Subsidiaries was filed with the High Court of Gujarat on March 19 2010 and with the High Court of
Orissa on March 25 2010 for their approval pursuant to Sections 391 to 394 of the Companies Act The High
Court of Gujarat and the High Court of Orissa sanctioned this Scheme of Arrangement by their orders dated
December 24 2010 and October 1 2010 respectively The certified copies of the orders of the High Court of
Gujarat approving the Scheme of Arrangement with effect from April 1 2009 the appointed date as per the
Scheme of Arrangement have been filed with the RoC on January 20 2011 For details of the Scheme of
Arrangement see ―History and Certain Corporate Matters and ―-Note regarding Presentation on pages 87
and 190 respectively
In addition in terms of a resolution passed by our Board on October 29 2010 and a special resolution passed by
the shareholders of our Company on December 1 2010 our Company has been authorized to issue securities
including foreign currency convertible bonds for an amount aggregating upto ` 250 crores Our Company is
subject to market conditions and applicable statutory and regulatory requirements contemplating to offer issue
and allot the 2011 FCCBs In the event our Company proceeds with the allotment of 2011 FCCBs our
Company shall make reservation of such number of Equity Shares to which the holders of the 2011 FCCB are
entitled to as on the Record Date in favour of such holders
Further our Company has also availed of certain borrowing after September 30 2010 as mentioned below
Lender Particulars Amount sanctioned (` in
crore)
Yes Bank Limited Term loan pursuant to a sanction letter dated September
27 2010 and loan agreement dated October 20 2010
5000
ICICI Bank Limited Tern loan pursuant to a sanction letter dated July 5
2010 modified by letter dated September 9 2010 and
loan agreement dated November 2 2010
12500
Exim Bank Term loan pursuant to a sanction letter dated January 10
2011
10000
Indian Bank Term loan pursuant to a sanction letter dated October
20 2010
15000
State Bank of India Term loan pursuant to a sanction letter dated September
28 2010
25000
DZ Bank Term loan pursuant to a sanction letter dated December
21 2010
35100
Calculated on exchange rate of ` 6500 = 1 EURO as provided in Appraisal Report
For details see ―Financial Indebtedness on page 213
Further information as required pursuant to the SEBI ICDR Regulations and Government of India Ministry of
Finance Circular No F25SE76 dated February 5 1997 as amended pursuant to Circular of even number dated
March 8 1997 is set forth below
Standalone (limited review) Financial Results for the quarter ended December 31 2010
(` in crores)
Third Quarter Ended Nine Months Ended
Year
Ended S Particulars
No
31122010 31122009 31122010 31122009 31032010
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Audited)
1 Gross Sales
36746
31139
106965
95157
129957
(a) Net Sales ( Net of
Discounts amp Excise Duty)
31377
26533
91717
81132
110553
(b) Other Operating Income
-
013
108
046
096
210
Third Quarter Ended Nine Months Ended
Year
Ended S Particulars
No
31122010 31122009 31122010 31122009 31032010
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Audited)
Total (1=a + b)
31377
26546
91825
81178
110649
2 Expenditure
(a)
(Increase) Decrease in
stock-in-trade and Work in
Progress
(023)
(1674)
846
(1338)
895
(b)
Consumption of Raw
Materials
8980
7387
24959
21378
28679
(c) Purchase of Traded Goods
1110
1807
1941
3704
4398
(d) Power Fuel and Water
3567
3087
10311
9064
11849
(e)
Consumption of Stores
Spares and Chemicals
7059
5816
20073
17474
23147
(f) Employees Cost
3079
3017
9672
8900
11970
(g) Depreciation
1819
1794
5381
5305
7004
(h) Other Expenditure
1066
1041
3743
3513
5204
Total (2)
26657
22275
76926
68000
93146
3
Profit from Operation before
Other Income Interest amp
Exceptional Items (1-2)
4720
4271
14899
13178
17503
4 Other Income
054
010
177
031
039
5
Profit before Interest amp
Exceptional Items ( 3+ 4)
4774
4281
15076
13209
17542
6 Interest amp Financial Charges
-
(a) Interest Charges
882
1104
2586
3416
4466
(b)
Redemption Premium on
FCCBs ( refer Note No 5
below )
192
-
574
-
-
(c) Forex
- Forward
PremiumRealised Foreign
Exchange Loss (Gain)
123
084
307
091
199
- Unrealised Foreign
Exchange Loss (Gain)
(025)
016
(028)
023
184
7
Profit after Interest but before
Exceptional Items (5-6)
3602
3077
11637
9679
12693
8 Exceptional items
-
-
-
-
-
9
Profit from Ordinary Activities
before Tax (7+8)
3602
3077
11637
9679
12693
10 Tax Expense
- Provision for Current Tax
1117
518
3738
1757
2357
- MAT Credit Entitlement
-
(518)
-
(1751)
(1229)
- Provision for Deferred Tax
(026)
1042
(431)
3280
2462
211
Third Quarter Ended Nine Months Ended
Year
Ended S Particulars
No
31122010 31122009 31122010 31122009 31032010
(Unaudited) (Unaudited) (Unaudited)
(Unaudited) (Audited)
11
Net Profit from Ordinary
Activities after Tax (9-10)
2511
2035
8330
6393
9103
12
Extraordinary Items (net of tax
expenses)
-
-
-
-
-
13 Net Profit (11-12)
2511
2035
8330
6393
9103
14
Paid-up Equity Share Capital (Face
value Rs10-)
7815
7815
7815
7815
7815
15
Reserves excluding Revaluation
Reserve
39199
16
Earnings Per Share (`)
(beforeafter extraordinary items
not annualised)
- Basic
321
260
1066
818
1164
- Diluted
321
253
1066
796
1133
- Cash
551
557
1699
1692
2218
17 Public Shareholding
- Noof Shares
47250400
47250400
47250400
47250400
47250400
- Percentage of Shareholding
6046
6046
6046
6046
6046
18
Promoters and Promoter Group
Shareholding
a)Pledged Encumbered
-Number of Shares NIL NIL NIL NIL NIL
-Percentage of Shares NIL NIL NIL NIL NIL
b)Non-encumbered
- Noof Shares
30899539
30899539
30899539
30899539
30899539
- Percentage of Shares ( as a of
total shareholding of promoter and
promoter group)
10000
10000
10000
10000
10000
- Percentage of Shares ( as a of
total share capital of the Company)
3954
3954
3954
3954
3954
Notes
1 The Board has declared an Interim Dividend of ` 225 per share (225) on Equity amounting to ` 1758 crores
for the year 2010-11
2 The Board has approved issue of further equity capital by way of Rights upto ` 250 crores for part funding of
Companys expansion project
3 Pursuant to a Scheme of Arrangement under Sections 391-394 of the Companies Act 1956 sanctioned by the
Honble High Courts of Gujarat and Orissa becoming effective on 20th January 2011 and operative from 1st
April 2009 (Appointed Date under the Scheme) the Staff Housing Undertakings of the Company stood
transferred and vested in the wholly owned subsidiaries namely Songadh Infrastructure amp Housing Ltd ( SIHL)
and Jaykaypur Infrastructure amp Housing Ltd ( JIHL) from the appointed date as going concerns Impact of
scheme has been given in these results and all profits and or losses and assets amp liabilities relating to the Staff
Housing Undertakings have accordingly been transferred to SIHL and JIHL The excess of consideration over the
book value of assets net of liabilities amounting to ` 2992 crores has been credited to Capital Reserve Account
of the Company Necessary steps for issue of securities as consideration by SIHL and JIHL are under
implementation
212
4 The Company has redeemed 11000 (Nos) 10 Cumulative Redeemable Preference Shares (Series E) of ` 100
each alongwith accrued dividend of ` 001 crore and premium payable on redemption on 30th June 2010
5 As on 31st December 2010 provision has been made for 75 of the one time redemption premium payable on
maturity of FCCBs which are due for redemption on 30th March 2011
6 Information on the investors complaints for the quarter ended 31122010 (Nos) Opening Balance - NIL New -
2 Disposal ndash 2 Pending - NIL
7 The Company has only one business segment namely Paper and Board
8 The figures for the previous period have been regrouped rearranged wherever necessary
9 These results have been reviewed by the Audit Committee and approved by the Board of Directors at their
respective meetings held on 28th January 2011 Limited Review of these results has been carried out by the
Auditors
213
FINANCIAL INDEBTEDNESS
Set forth below is a brief summary of our Companylsquos significant secured borrowings of ` 42414 crore and
unsecured borrowings of ` 7366 crore together with the amount outstanding as on September 30 2010 and a
brief description of certain significant terms of such financing arrangements
A Secured loans of our Company
A1 Domestic Borrowings
A11 Term Loans
S No Lender Facility and purpose of facility Repayment terms Amount
outstanding as
on September
30 2010 (` in
crore)
Rate of
interest as
on
September
30 2010
1 State Bank of
India Loan of ` 40 crore pursuant to
sanction letters dated October
12 2004 and October 25 2004
and loan agreement dated
October 29 2004 for the
purposes of import and
installation of an offline coating
plant a sheet cutter and a paper
machine head box
Repayment of the
principal amount after
a moratorium of 2
years from the date of
first disbursement in
23 quarterly
installments
commencing on
December 31 2006 in
terms of the repayment
schedule contained in
the loan agreement
dated October 29
2004
1328 State Bank
of India
Applicable
Rate minus
255 ie
970
2 Axis Bank
Limited Rupee term loan of ` 40 crore
pursuant to sanction letter dated
June 15 2007 and term loan
agreement dated September 13
2007 for the purpose of part
financing capital expenditure of
our Company in the ordinary
course of business
Repayment of the
principal amount
within a period of five
years in 20 equal
quarterly installments
commencing on
January 2009 of ` 2
crore each after a
moratorium of 12
months from the date
of first disbursement
2600 Prime
lending rate
minus 350
pa
presently
1175
3 State Bank of
India Loan of ` 3711 crore pursuant
to sanction letter dated March
14 2005 and loan agreement
dated March 23 2005 and the
revised letter dated January 16
2007 for pre-repayment of
cumulative redeemable
preference shares converted
term loans from other banks
Repayment of the
principal amount in 24
quarterly instalments
commencing on
September 30 2006 in
the manner provided in
the loan agreement
dated March 23 2005
1691 For the first
three years at
850
thereafter it
would be
reset at the
end of every
three years at
SBAR minus
175
presently
1050
4 State Bank of
India Rupee term loan of ` 50 crore
pursuant to sanction letter dated
April 10 2007 and loan
agreement dated May 28 2007
and modification letter dated
January 24 2008 for the purpose
of inter alia part-financing of
capital expenditure for
replacement of machinery parts
commissioning of a chlorine di-
oxide plant installation of a
Repayment of the
principal amount of
the loan in 20 quarterly
instalments
commencing on March
31 2008 in the
manner provided in the
loan agreement dated
May 28 2007
3450 SBAR minus
125
presently
1100
214
S No Lender Facility and purpose of facility Repayment terms Amount
outstanding as
on September
30 2010 (` in
crore)
Rate of
interest as
on
September
30 2010
power project boiler in ordinary
course of business
5 IDBI Bank
Limited1 Rupee loan of ` 70 crore
pursuant to sanction letter dated
August 1 2008 and loanfacility
agreement dated October 16
2008 and reset letter dated
October 21 2009 for the
purpose of part financing the
normal capital expenditure of
our Company and working
capital margin
Repayment in 50 equal
monthly instalments
beginning from April
2010 and ending May
2014
3960 BPLR minus
175 with
yearly reset
presently
1150
6 IDBI Bank
Limited
Rupee term loan of ` 50 crore
pursuant to sanction letter dated
January 29 2008 and loan
agreement dated March 20
2008 for the purpose of inter
alia meeting the capital
expenditure of our Company in
the ordinary course of business
foreclosure of zero coupon loans
and investment in an SPV for
setting up lime kilns
Repayment of
principal amount
beginning from
October 2009 in 12
equal quarterly
instalments till July
2012
2917 11 pa
7 IDBI Bank
Limited Rupee term loan of ` 519 crore
pursuant to loan agreement
dated July 1 2006 for the
purpose of refinancing a high
cost loan availed by our
Company
Repayment in eight
equal annual
instalments starting
from June 30 2007
and ending on June 30
2014
260 At 870
pa for the
first three
years from
the date of
first
disbursement
and
thereafter
every three
years the
sum of the
benchmark
rate plus 257
basis points
presently
941
8 IDBI Bank
Limited
Rupee term loan of ` 4570
crore pursuant to loan agreement
dated July 1 2006 for the
purpose of conversion of a part
of 10 non-convertible
redeemable preference shares
Repayment in eight
equal quarterly
instalments starting
from June 30 2007
and ending on June 30
2014
2285 At 870
pa for the
first three
years from
the date of
disbursement
and
thereafter
every three
years the
sum of the
benchmark
rate plus 257
basis points
presently
944
9 Housing
Development
Finance
Corporation
Limited
Rupee term loan of ` 2875
crore (divided in two tranches of
` 25 crore and 375 crore
respectively) pursuant to a
sanction letter dated March 15
Repayment of the two
tranches of ` 25 crore
and ` 375 crore in 84
consecutive equated
monthly instalments
434 CPLR minus
050
presently
1425 with
quarterly
215
S No Lender Facility and purpose of facility Repayment terms Amount
outstanding as
on September
30 2010 (` in
crore)
Rate of
interest as
on
September
30 2010
2007 and a loan agreement
dated March 27 2007 for the
purpose of financing of existing
immovable and movable
properties located at the Unit
JKPM and the Unit CPM and
residential colony of the Unit
CPM
commencing from
May 2009 and ending
April 2016
reset
10 IFCI Limited Pursuant to the Scheme of
Compromise and the approval of
our shareholders in general
meeting on December 2 2004
and letter dated March 23 2005
for conversion of 10 CRPS of
approximately ` 899 crore (out
of ` 927 crore) into term loan
Eight equal annual
instalments
commencing from
June 30 2007 and
ending on June 2014
450 850 pa
11 Yes Bank
Limited Term loan of ` 50 crore for
meeting capital expenditure
long term working capital and
revolving short term loan as a
sub limit of the term loan for ` 50 crore pursuant to a sanction
letter dated September 27 2010
and loan agreement dated
October 20 2010
(a) Repayment of the
term loan in eight
equal half yearly
instalments
commencing from the
date of the loan
agreement
(b) Repayment of the
sub limit of the term
loan ie the revolving
short term loan will be
bullet repayment at the
end of each tenor
Nil2 For the term
loan and the
sub-limit - at
the bankslsquo
base rate
plus 175
pa payable
monthly
presently
925
12 ICICI Bank
Limited
Rupee term loan A of ` 9500
crore and rupee term loan B of ` 3000 crore for the purposes of
part refinancing of the existing
debt obligations of our
Company and normal capital
expenditure respectively
pursuant to a sanction letter
dated July 5 2010 modified by
letter dated September 9 2010
and loan agreement dated
November 2 2010
Rupee term loan A is
repayable in 20
quarterly installments
with first installment
being due 27 months
from the first
drawdown date with a
total period of seven
years from the date of
first drawdown
Rupee term loan B is
repayable in 20
quarterly installments
with first installment
being due 15 months
from the first
drawdown date with a
total period of six
years from the date of
the first drawdown
Nil3 300 plus
ICICI bank-
base rate at
the time of
disbursement
of each
tranche and
shall be reset
at the end of
every 12
months from
the date of
first
disbursement
of firsteach
tranche
presently
1050
1 Our Company has taken disbursement of ` 45 crores only and the balance undrawn portion of ` 25 crores has been cancelled by IDBI
Bank pursuant to its letter dated October 16 2010 2 Our Company has not yet taken disbursement
3 Our Company has taken a disbursement of ` 30 crore on December 21 2010
Further ICICI Bank and HDFC Bank have granted vehicle loans to our Company aggregating to ` 094 crore
at varying rate of interest The security for the loans is hypothecation of the vehicle The total amount
outstanding as on September 30 2010 is ` 012 crore
216
A12 Working Capital Loans (Fund Based Limits)
S No
Lender Facility and purpose of
facility
Repayment terms Amount
outstanding
as on
September
30 2010 (` in
crore)
Rate of interest as on
September 30 2010
13 Axis Bank Limited Working capital loan of `
35 crore (along with a
sub-limit for export
packing credit of ` 9
crore foreign bills
purchaseddiscounted of
` 6 crore) pursuant to
sanction letter dated
October 26 2009 and
loan agreement dated
July 8 2010 for the
purpose of meeting
working capital
requirements valid for a
period of 1 year
Repayable on
demand
1110 (a) For cash credit ndash
BPLR minus 375
pa presently 1150
(b) For export
packing credit- BPLR
minus 425 pa
presently 1100 pa
(c) For foreign bills
purchaseddiscounted-
(i) for demand bills
for transit period-
BPLR minus 425
pa presently 1100
pa
(ii) for usuance bills-
BPLR minus 400
pa presently 1125
14 IDBI Bank Limited Working capital loan of `
1750 crore pursuant to
sanction letter dated
October 3 2009 and
loan agreement dated
July 8 2010 valid for a
period of one year for the
purposes of meeting
working capital
requirements of our
Company
Repayment on due
date
959 BPLR minus 100
pa presently 1225
pa
15 State Bank of India Working capital loan of ` 105 crore (along with a
sub-limit of ` 14 crore as
export packing credit and
` 11 crore as foreign bills
purchaseddiscounted)
pursuant to sanction
letter dated January 4
2010 and loan agreement
dated July 8 2010 valid
for a period of one year
for the purposes of
meeting working capital
requirements of our
Company
Repayment on
demand
a) 4193
b) 2000 ndash
working
capital
demand loan
(a) For cash credit at
BPLR presently
1225
(b) for export packing
credit and foreign
bills
purchaseddiscounted
as per RBI directives
and
(c) for working
capital demand loan
775 pa
16 Canara Bank Working capital loan of `
1750 crore pursuant to
sanction letter March 5
2010 and loan agreement
dated July 8 2010 for
the purposes of meeting
working capital
requirements of our
Company
Repayable on demand 1017 BPLR ndash 100
presently 1150
A13 Working Capital Loans (Non-Fund Based Limit)
S No Lender Facility and purpose of facility
1 Axis Bank
Limited Letter of credit of ` 30 crore (along with a sub-limit of ` 6 crore as loan equivalent risk and of `
5 crore as cash management service facility) pursuant to sanction letter dated October 26 2009