LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE
Axis Capital Limited1st Floor, Axis House,C-2 Wadia International CentreP. B. Marg, Worli,Mumbai - 400025Telephone: (+91 22) 4325 3101Facsimile: (+91 22) 4325 3000Email: [email protected]: www.axiscapital.co.inInvestor Grievance Email: [email protected] Person: Mr. Sonal SinhaSEBI Registration Number: INM000012029
Tata Securities Limited12th Floor, 1202, Tower A, Peninsula Business Park,Ganpatrao Kadam Marg, Lower Parel,Mumbai - 400 013Telephone: (+91 22) 6606 9000Facsimile: (+91 22) 6656 2699Email: [email protected]: www.tatacapital.comInvestor Grievance Email: [email protected] Person:Mr. Abhishek JainSEBI Registration Number: INM000011302
Karvy Computershare Private LimitedPlot Nos. 17-24,VittalRao Nagar, Madhapur,Hyderabad - 500 081Telephone: + 91 40 44655000Facsimile: + 91 40 23431551E-mail: [email protected]: www.karvy.comContact Person: Mr. M. MuralikrishnaSEBI Registration No.: INR000000221
ISSUE SCHEDULEISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT
APPLICATION FORMSISSUE CLOSES ON
[●] [●] [●]
Coromandel Engineering Company LimitedOur Company was originally incorporated as ‘The Coromandel Engineering Company Limited’ on September 3, 1947, under the Indian Companies Act, 1913. The name of our Company was changed to ‘The Coromandel Engineering Company Private Limited’ on April 14, 1956. Our Company was again converted into a public company pursuant to which our name was changed to ‘The Coromandel Engineering Company Limited’ on November 5, 1975 and subsequently to ‘Coromandel Engineering Company Limited’ on February 24, 2006 and a fresh certificate of incorporation consequent to the change in name was obtained from the Registrar of Companies, Chennai.
Registered and Corporate Office: Parry House, 3rd Floor, 43, Moore Street, Chennai - 600 001 Tel No: +91 44 25301700, Fax No.: +91 44 25342822.
Contact Person: Mr. R Narayanan, Company Secretary and Compliance Officer E-mail: [email protected], Website: www.coromandelengg.com
DRAFT LETTER OF OFFEROctober 1, 2013
For Eligible Equity Shareholders of the Company only
CAPITAL
FOR PRIVATE CIRCULATION TO THE ELIGIBLE EQUITY SHAREHOLDERS OF OUR COMPANY ONLY
DRAFT LETTER OF OFFER
ISSUE OF [●] EQUITY SHARES OF FACE VALUE OF ` 10 EACH (“RIGHTS EQUITY SHARES”) OF COROMANDEL ENGINEERING COMPANY LIMITED (THE “COMPANY” OR THE “ISSUER”) FOR CASH AT A PRICE OF ` [●] (INCLUDING A PREMIUM OF ` [●]) PER RIGHTS EQUITY SHARE NOT EXCEEDING AN AMOUNT OF ` 5,000 LAKHS BY THE COMPANY TO THE ELIGIBLE EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF [●] RIGHTS EQUITY SHARES FOR EVERY [●] EQUITY SHARES HELD ON THE RECORD DATE, I.E. [●] (THE “ISSUE”). THE ISSUE PRICE OF EACH RIGHTS EQUITY SHARE IS [●] TIMES THE FACE VALUE OF THE RIGHTS EQUITY SHARE.
GENERAL RISKSInvestments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in 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 securities have not been recommended or approved by the Securities and Exchange Board of India, (“SEBI”), nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to the section titled “Risk Factors” from pages 10 to 25 before making an investment in this Issue.
ISSUER’S ABSOLUTE RESPONSIBILITYThe 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 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.
LISTINGThe existing Equity Shares of our Company are listed on the BSE Limited, (“BSE”) and the Madras Stock Exchange Limited (“MSE”). Our Company has received in-principle approvals from the BSE and the MSE for listing the Rights Equity Shares arising from this Issue pursuant to their letters dated [●] and [●], respectively. For the purposes of the Issue, the Designated Stock Exchange is the BSE.
TABLE OF CONTENTS
SECTION I – GENERAL .............................................................................................................................. 1
DEFINITIONS AND ABBREVIATIONS....................................................................................................... 1
NOTICE TO INVESTORS .............................................................................................................................. 7
PRESENTATION OF FINANCIAL INFORMATION AND USE OF MARKET DATA ............................. 8
FORWARD LOOKING STATEMENTS ........................................................................................................ 9
SECTION II – RISK FACTORS .................................................................................................................10
SECTION III – INTRODUCTION ..............................................................................................................26
THE ISSUE .....................................................................................................................................................26
SUMMARY OF FINANCIAL STATEMENTS .............................................................................................27
GENERAL INFORMATION..........................................................................................................................33
CAPITAL STRUCTURE ................................................................................................................................39
OBJECTS OF THE ISSUE .............................................................................................................................54
STATEMENT OF TAX BENEFITS...............................................................................................................63
SECTION IV – ABOUT THE COMPANY ................................................................................................69
OUR MANAGEMENT ...................................................................................................................................69
SECTION V – FINANCIAL INFORMATION ..........................................................................................75
FINANCIAL STATEMENTS .........................................................................................................................75
MATERIAL DEVELOPMENTS ..................................................................................................................104
WORKING RESULTS .................................................................................................................................105
ACCOUNTING AND OTHER RATIOS .....................................................................................................106
CAPITALISATION STATEMENT ..............................................................................................................107
MARKET PRICE INFORMATION .............................................................................................................108
PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY ........................................111
SECTION VI – LEGAL AND OTHER INFORMATION ......................................................................118
OUTSTANDING LITIGATIONS AND OTHER DEFAULTS ...................................................................118
GOVERNMENT AND OTHER APPROVALS ...........................................................................................121
OTHER REGULATORY AND STATUTORY DISCLOSURES ................................................................122
SECTION VII – OFFERING INFORMATION .......................................................................................133
TERMS OF THE ISSUE ...............................................................................................................................133
SECTION VIII –STATUTORY AND OTHER INFORMATION .........................................................174
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION ......................................................174
DECLARATION .........................................................................................................................................176
1
SECTION I – GENERAL
DEFINITIONS AND ABBREVIATIONS
The following list of defined terms is intended for the convenience of the reader only and is not exhaustive.
Company Related Terms
Term Description
“Coromandel Engineering
Company Limited” or “the
Company” or “our Company” or
“we” or “us” or “our”
Coromandel Engineering Company Limited, a public limited
company incorporated under the provisions of the Indian
Companies Act, 1913 having its registered office at Parry House,
3rd
Floor, 43, Moore Street, Chennai – 600 001
Articles/Articles of
Association/AoA
Articles of Association of our Company
Auditor Statutory Auditors of our Company, namely, M/s. Sundaram &
Srinivasan, Chartered Accountant
Board / Board of Directors The board of directors of our Company or a committee thereof
Compliance Officer and
Company Secretary
Mr. R Narayanan
Director(s) Any or all director(s) of our Company, as the context may require
Equity Share(s) The equity share(s) of our Company having a face value of ` 10
Group Companies Companies, firms, ventures, etc. promoted by the Promoters of our
Company, including such entities which are covered under Section
370 (1)(B) of the Companies Act, 1956
Memorandum/Memorandum of
Association
Memorandum of Association of our Company
Promoter and Promoter Group The promoters and promoter group of our Company as identified
in the filings made by our Company with the Stock Exchanges
Registered Office The registered office of our Company located at Parry House, 3rd
Floor, 43, Moore Street, Chennai – 600 001
Conventional and General Terms
Term Description
Companies Act The Companies Act, 1956 and the Notified Provisions of the
Companies Act, 2013
Companies Act, 1956 The Companies Act, 1956, as amended
Companies Act, 2013 The Companies Act, 2013
Depository A depository registered with SEBI under the SEBI (Depositories
and Participants) Regulations, 1996, as amended from time to time
Depositories Act The Depositories Act, 1996, as amended
Financial Year/Fiscal The period of 12 months beginning April 1 and ending March 31
of that particular year, unless otherwise stated
IT Act The Income Tax Act, 1961, as amended
Indian GAAP The generally accepted accounting principles in India
Industrial Policy The industrial policy and guidelines issued by the Ministry of
Industry, GoI
Listing Agreement The equity listing agreement signed between our Company and the
Stock Exchanges
Non Resident Persons resident outside India as defined in the FEMA
Notified Provisions of the
Companies Act, 2013
The 98 notified provisions of the Companies Act, 2013 published
in the Gazette of India on September 12, 2013
Regulation S Regulation S under the Securities Act.
Rupees / ` The lawful currency of India
2
Term Description
SEBI Act The Securities and Exchange Board of India Act, 1992, as
amended
SEBI (ICDR) Regulations The Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2009, as amended
Securities Act The United States Securities Act of 1933, as amended
Takeover Regulations The Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011
Issue Related Terms
Term Description
Abridged Letter of Offer The abridged letter of offer to be sent to Eligible Equity
Shareholders of our Company with respect to this Issue in
accordance with the provisions of the SEBI (ICDR) Regulations,
the Companies Act, 1956 and Notified Provisions of the
Companies Act, 2013.
Allottee(s) The successful applicant(s) eligible for Allotment of Rights
Equity Shares pursuant to the Issue
Allotment/Allotted Unless the context otherwise requires, the allotment of Rights
Equity Shares pursuant to the Issue to the Allottees
Applicant(s) Eligible Equity Shareholders and/or Renouncees who are entitled
to apply or have applied for Rights Equity Shares under the Issue,
as the case may be
Application Application made by the Applicant whether submitted by way of
CAF or in the form of a plain-paper Application, to subscribe to
the Rights Equity Shares issued pursuant to the Issue at the Issue
Price including applications by way of the ASBA Process
Application Amount The aggregate value of the Application indicated in the
Application Form or SAF, payable at the time of the Application
Application Form The form in terms of which an Applicant shall make an
Application to subscribe to the Rights Equity Shares pursuant to
the Issue, including plain-paper Applications
ASBA/Application Supported by
Blocked Amount
An application (whether physical or electronic) used
compulsorily by ASBA Applicants to make an application
authorizing the SCSB to block the amount payable on application
in their specified bank account
ASBA Account Account maintained with a SCSB and specified in the CAF or
plain paper application, as the case may be, for blocking the
amount mentioned in the CAF, or the plain paper application, as
the case may be.
ASBA Applicant(s) Applicants who;
hold the Equity Shares in dematerialized form as on the
Record Date and have applied towards his/her Rights
Entitlements or additional Rights Equity Shares in the Issue
in dematerialized form;
have not renounced his/her Rights Entitlements in full or in
part;
are not a Renouncee;
apply through a bank account maintained with one of the
SCSBs; and
have not split the CAF.
3
Term Description
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011
dated April 29, 2011, QIB Applicants, Non-Institutional Investors
(including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can
participate in the Issue only through the ASBA process, subject to
them complying with the requirements of SEBI circular dated
December 30, 2009. Further, all QIB Applicants and Non-
Institutional Investors are mandatorily required to use the ASBA
facility, even if application amount does not exceed ` 2,00,000.
Bankers to the Issue The bankers to the Issue being [•]
BSE The BSE Limited
Business Day Any day, other than Saturday and/or Sunday or public holidays,
on which commercial banks are open for business in Mumbai and
Chennai.
Composite Application
Form/CAF
Form used by an Eligible Equity Investor to make an Application
for Allotment of Equity Shares in the Issue, or renounce his
Rights Entitlement or request for SAFs, and used by sole
Renouncee to make an Application for Allotment of Equity
Shares in the Issue to the extent of renunciation of Rights
Entitlement in their favour
Consolidated Certificate In case of holding of Rights Equity Shares in physical form, our
Company would issue one certificate for the Rights Equity Shares
allotted to one folio
Controlling Branches of the
SCSBs
Such branches of the SCSBs which coordinate applications under
the Issue by the ASBA Investors with the Registrar to the Issue
and the Stock Exchanges and a list of which is available at http://
www.sebi.gov.in/pmd/scsb.html
Designated Branches Such branches of the SCSBs which shall collect CAF from
ASBA investor and a list of which is available on http://
www.sebi.gov.in/pmd/scsb.html
Designated Stock Exchange/DSE The BSE Limited
Draft Letter of Offer/DLOF This draft letter of offer of our Company dated October 1, 2013
filed with SEBI for its comments
Eligible Equity Shareholder(s) A holder(s) of Equity Shares as on the Record Date
Investor(s) The Eligible Equity Shareholders of our Company on the Record
Date i.e. [•], and Renouncees
Issue Issue of [•] Equity Shares of face value of ` 10 each (“Rights
Equity Shares”) of the Company for cash at a price of ` [•]
(including a premium of ` [•]) per Rights Equity Share not
exceeding an amount of ` 5,000 lakhs by the Company to the
Eligible Equity Shareholders of the Company in the ratio of [•]
Rights Equity Shares for every [•] Equity Shares held on the
Record Date, i.e. [•] (the “Issue”). The Issue Price of each Rights
Equity Share is [•] times the face value of the Rights Equity Share
Issue Closing Date [•]
Issue Opening Date [•]
Issue Price ` [•] per Rights Equity Share
Issue Proceeds The monies received by our Company pursuant to the Rights
Equity Shares which are allotted pursuant to the Issue
Lead Managers Axis Capital Limited and Tata Securities Limited
Letter of Offer/LOF The letter of offer dated [•] to be filed with the Stock Exchanges
after incorporating SEBI’s observations and comments on the
Draft Letter of Offer
Listing Agreement The listing agreements entered into between our Company and
4
Term Description
the Stock Exchanges
MSE Madras Stock Exchange Limited
Non Institutional Investor(s) All Investors including sub-accounts of FIIs registered with
SEBI, which are foreign corporates or foreign individuals, that
are not QIBs or Retail Individual Investors and who have applied
for Equity Shares for an cumulative amount more than ` 2 lakhs.
Non Retail Investor(s) Investors who are QIBs or Non Institutional Investors
NSE National Stock Exchange of India Limited
QIB(s) / Qualified Institutional
Buyer(s)
Qualified Institutional Buyer means: (i) a mutual fund, venture
capital fund and foreign venture capital investor registered with
the Board; (ii) a foreign institutional investor and sub-account
(other than a sub-account which is a foreign corporate or foreign
individual), registered with the Board; (iii) a public financial
institution as defined in Section 2 clause (72) of the Companies
Act, 2013; (iv) a scheduled commercial bank; (v) a multilateral
and bilateral development financial institution; (vi) a state
industrial development corporation; (vii) an insurance company
registered with the Insurance Regulatory and Development
Authority; (viii) a provident fund with minimum corpus of 2,500
lakh rupees; (ix) a pension fund with minimum corpus of twenty
five crore rupees; (x) National Investment Fund set up by
resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of
the Government of India published in the Gazette of India;(xi)
insurance funds set up and managed by army, navy or air force of
the Union of India; and (xii) insurance funds set up and managed
by the Department of Posts, India.
Qualified Foreign Investors/ QFI
QFI shall mean a person who fulfills the following criteria:
i. Resident in a country that is a member of Financial Action
Task Force (“FATF”) or a member of a group which is a
member of FATF; and ii. Resident in a country that is a
signatory International Organization of Securities
Commission’s Multilateral Memorandum of Understanding
or a signatory of a bilateral Memorandum of Understanding
with SEBI.
Provided that the person is not resident in a country listed in the
public statements issued by FATF from time to time on-(i)
jurisdictions having a strategic Anti-Money Laundering/
Combating the Financing of Terrorism (“AML/CFT”)
deficiencies to which counter measures apply, (ii) jurisdictions
that have not made sufficient progress in addressing the
deficiencies or have not committed to an action plan developed
with the FATF to address the deficiencies; Provided further such
person is not resident in India; Provided further that such person
is not registered with SEBI as Foreign Institutional Investor or
Sub-account or Foreign Venture Capital Investor.
Preference Shares Cumulative redeemable preference shares of our Company
having a face value of ` 100
Record Date [•]
Registrar to the Issue or Registrar Karvy Computershare Private Limited, situated at Plot Nos. 17-
24, Vittal Rao Nagar, Madhapur, Hyderabad – 500 081.
Renouncee(s) Any person(s) who have/has acquired Rights Entitlements from
Eligible Equity Shareholders
Retail Individual Investor(s) Individual Investors who have applied for Equity Shares for an
5
Term Description
amount not more than ` 2 lakhs (including HUFs applying
through their Karta)
Rights Entitlement The number of Rights Equity Shares that an Eligible Equity
Shareholder is entitled to in proportion to his/ her shareholding in
our Company as on the Record Date
Rights Equity Shares The Equity Shares offered and to be issued and allotted pursuant
to the Issue
SAF(s) Split Application Form(s)
Self Certified Syndicate Bank or
SCSB
The banks which are registered with SEBI under the SEBI
(Bankers to an Issue) Regulations, 1994 and offers services of
ASBA, including blocking of bank account and a list of which is
available on http:// www.sebi.gov.in/pmd/scsb.html
Stock Exchange(s) BSE Limited and Madras Stock Exchange where our Equity
Shares are currently listed
Abbreviations
Term Description
AIF
A fund in terms of Section 2(1)(b) of the Securities and Exchange
Board of India (Alternative Investment Funds) Regulations, 2012
AGM Annual General Meeting
AS Accounting Standards, as issued by the ICAI
BPLR Benchmark Prime Lending Rate
CDSL Central Depository Services (India) Limited
DIN Director Identification Number
DP Depository Participant
EBIDTA Earnings Before Interest, Depreciation, Taxes & Amortization
EGM Extraordinary General Meeting
EPS Earnings Per Share
FDI Foreign Direct Investment
FEMA Foreign Exchange Management Act, 1999, as amended and any
circulars, notifications, rules and regulations issued pursuant to
the provisions thereof
FI Financial Institution
FII(s) Foreign Institutional Investors registered with SEBI under
applicable laws
FVCI(s) Foreign venture capital investor registered with the SEBI under
applicable laws
GoI Government of India
HUF Hindu Undivided Family
ICAI Institute of Chartered Accountants of India
ISIN International Securities Identification Number
ITAT Income Tax Appellate Tribunal
MICR Magnetic Ink Character Recognition
MoU Memorandum of Understanding
N.A. Not Applicable
NAV Net Asset value
NECS National Electronic Clearing Service
NEFT National Electronic Fund Transfer
NR Non Resident
NRI(s) Non Resident Indians, as defined in the Foreign Exchange
Management (Deposit) Regulations, 2000, as amended
NSDL National Securities Depository Limited
6
Term Description
OCB(s) Overseas Corporate Body(ies)
PAN Permanent Account Number
RBI Reserve Bank of India
RoC Registrar of Companies Chennai, situated at Block no.6,B wing,
2nd floor, Shastri Bhawan 26, Haddows Road, Chennai –
600034, Tamil Nadu
RTGS Real Time Gross Settlement
SEBI Securities and Exchange Board of India
STT Securities Transaction Tax
VAT Value Added Tax
w.e.f. with effect from
The words and expressions used but not defined herein shall have the same meaning as is assigned to such
terms under the Companies Act, 1956 and the Notified Provisions of the Companies Act, 2013, the
Depositories Act and the rules and regulations made thereunder. Notwithstanding the foregoing, terms
under the sections titled “Financial Statements” and “Statement of Tax Benefits” on pages 75 and 63, of this
Draft Letter of Offer, respectively, shall have the meanings given to such terms in these respective
Sections.
7
NOTICE TO INVESTORS
The distribution of this Draft Letter of Offer and the issue of Equity Shares on a rights basis to persons in
certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions.
Persons into whose possession this Draft Letter of Offer, Letter of Offer, Abridged Letter of Offer or CAF
may come are required to inform themselves about and observe such restrictions. We are making this Issue
of Equity Shares on a rights basis to the Equity Shareholders and will dispatch the Draft Letter of Offer /
Letter of Offer / Abridged Letter of Offer and CAFs to such shareholders who have provided an Indian
address. Those overseas shareholders who do not update our records with their Indian address or the
address of their duly authorized representative in India, prior to the date on which we propose to dispatch
the Letter of Offer / Abridged Letter of Offer and CAFs, shall not be sent this Draft Letter of Offer /
Abridged Letter of Offer and CAFs. No action has been or will be taken to permit this Issue in any
jurisdiction where action would be required for that purpose, except that this Draft Letter of Offer has been
filed with SEBI for observations. Accordingly, the rights or Equity Shares may not be offered or sold,
directly or indirectly, and this 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, under
those circumstances, this Draft Letter of Offer must be treated as sent for information only and should not
be copied or redistributed.
Accordingly, persons receiving a copy of this Draft Letter of Offer should not, in connection with the Issue
of the rights or Equity Shares, distribute or send the same in or into the United States or any other
jurisdiction where to do so would or might contravene local securities laws or regulations. If this Draft
Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not
seek to subscribe to the rights or Equity Shares referred to in this Draft Letter of Offer. Envelopes
containing a CAF should not be dispatched from any jurisdiction where it would be illegal to make an
offer, and all persons subscribing for the Equity Shares in this Issue must provide an Indian address. Any
person who makes an application to acquire rights and the Equity Shares offered in this Issue will be
deemed to have declared, represented, warranted and agreed that he is authorised to acquire the rights and
the Equity Shares in compliance with all applicable laws and regulations prevailing in his jurisdiction. We,
the Registrar, the Lead Managers or any other person acting on behalf of us reserve the right to treat any
CAF as invalid where we believe that CAF is incomplete or acceptance of such CAF may infringe
applicable legal or regulatory requirements and we shall not be bound to allot or issue any Equity Shares or
Rights Entitlement in respect of any such CAF. Neither the delivery of this Draft Letter of Offer nor any
sale hereunder, shall under any circumstances create any implication that there has been no change in the
Company’s affairs from the date hereof or that the information contained herein is correct as at any time
subsequent to the date of this Draft Letter of Offer.
The contents of this Draft Letter of Offer should not be construed as legal, tax or investment advice.
Prospective investors may be subject to adverse foreign, state or local tax or legal consequences as a
result of the offer of Equity Shares. As a result, each investor should consult its own counsel, business
advisor and tax advisor as to the legal, business, tax and related matters concerning the offer of
Equity Shares. In addition, neither our Company nor the Lead Managers is making any
representation to any offeree or purchaser of the Equity Shares regarding the legality of an
investment in the Equity Shares by such offeree or purchaser under any applicable laws or
regulations.
8
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 our
Company’s audited financial statements for the Financial Year ended March 31, 2013 prepared in
accordance with Indian GAAP, applicable accounting standards and guidance notes issued by the ICAI, the
applicable provisions of the Companies Act, 1956 and other statutory and/or regulatory requirements.
Our Company‘s fiscal year commences on April 1 and ends on March 31 of the following calendar year, so
all references to a particular fiscal year are to the twelve-month period ended March 31 of that year. Our
Company is an Indian listed company and prepares its financial statements in accordance with Indian
GAAP, applicable accounting standards and guidance notes issued by the ICAI, the applicable provisions
of the Companies Act, 1956 and other statutory and/or regulatory requirements. Indian GAAP differs
significantly in certain respects from IFRS and US GAAP. 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 any accounting principles other than principles specified in the Indian
accounting practices.
In this Draft Letter of Offer, the audited financial statements for the Financial Year ended March 31, 2013
and the limited review statement of assets and liabilities, profit & loss and cash flow statements for three
month period ended June 30, 2013, certified by the Auditors, have been included. For details of such
financial statements, please see the section titled “Financial Statements” on page 75. We publish our
financial statements in Indian Rupees.
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. Numerical values have been rounded off to two decimal places.
Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in Rupees in
lakhs.
Currency of Presentation
All references to “India” contained in this Draft Letter of Offer are to the Republic of India, all references
to the “Rupees” or “`” or “Rs.” are to Indian Rupees, the official currency of the Republic of India.
Unless stated otherwise, throughout this Draft Letter of Offer, all figures have been expressed in lakhs. 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.
All references to “India” contained in this Draft Letter of Offer are to the Republic of India, all references
to the “US”, or the “U.S.” or the “USA” is to the United States of America and all references to “UK” are
to the United Kingdom. In this Draft Letter of Offer, references to the singular also refers to the plural and
one gender also refers to any other gender, wherever applicable, and the words ‘Lakh” or “Lac” mean “100
thousand”; “10 lakhs” means a “million”, and; “10,000 lakhs” means a “billion”.
9
FORWARD LOOKING STATEMENTS
Our Company has included statements in this Draft Letter of Offer which contain words or phrases such as
“may”, “will”, “aim”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “seek
to”, “future”, “objective”, “goal”, “project”, “should”, “potential” and similar expressions or variations of
such expressions, that are or may be deemed to be forward looking statements.
All forward looking statements 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, factors
affecting:
We are exposed to significant construction risks under our contracts that could cause us to incur
losses.
The demand for our property development business is dependant on the performance of the property
market in the areas in which we operate, and any slowdown in the demand for such development and
demand for business of our customers could adversely affect our business.
We have derived significant revenues from key customers and projects. The loss of one or more of
our key customers or projects could adversely affect us.
Our revenues depend upon the award of new contracts and the timing of those awards. Consequently,
our results of operations and cash flows may be adversely affected or fluctuate materially from period
to period.
A significant portion of our revenues are generated from one state in India. Our growth strategy to
expand into new geographic areas poses risks. We may not be able to successfully manage some or all
of such risks, which may have a material adverse effect on our revenues, profits and financial
condition.
Our industry is highly fragmented and competitive and increased competitive pressure may adversely
affect our results.
We are dependant on our senior management and our inability to retain them and attract new key
personnel may have an adverse impact on the functioning of our business.
The monetary and fiscal policies of India;
Unanticipated turbulence in interest rates; and
Equity prices or other rates or prices, the performance of the financial markets in India and globally.
For a further discussion of factors that could cause our Company‘s actual results to differ, please refer to
the section titled “Risk Factors” on page 10 of this Draft Letter of Offer. By their nature, certain market
risk disclosures are only estimates and could be materially different from what actually occurs in the future.
As a result, actual future gains or losses could materially differ from those that have been estimated.
Neither our Company nor the Lead Managers nor any of their respective affiliates or advisors have any
obligation to update or otherwise revise any statements reflecting circumstances arising after the date
hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to
fruition. In accordance with SEBI / Stock Exchanges requirements, our Company and Lead Managers will
ensure that Investors are informed of material developments until the time of the grant of listing and trading
permission for the Rights Equity Shares by the Stock Exchanges.
10
SECTION II – RISK FACTORS
An investment in equity and equity related securities involves a high degree of risk. 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. Our Company’s actual results could differ materially from those
anticipated in the section titled “Forward Looking Statements” on page 9 as a result of certain factors,
including the considerations described below. 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
and the Rights Equity Shares could decline and you may lose all or part of your investment. 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.
Unless specified or quantified in the relevant risk factors detailed below, we are not in a position to
quantify the financial or other implications of any of the risks described in this section.
Materiality:
Additionally, our business operations could also be affected by additional factors that are not presently
known to us or that we currently consider as immaterial to our operations. The following factors have been
considered for determining their materiality:
1. Some events may not be material individually but may be found material collectively.
2. Some events may have a material impact qualitatively instead of quantitatively.
3. Some events may not be material at present but may have material impacts in the future.
Internal risk factors
1. Our Company is involved in legal proceedings. An adverse outcome in such proceedings may
have a material adverse effect on our reputation, business, results of operations and financial
condition.
Our Company is currently involved in the following of legal proceedings. These legal proceedings
are pending at different levels of adjudication before various courts and tribunals. Decisions in
such proceedings adverse to our interests may have an adverse effect on our business, results of
operations and financial condition.
A summary of these proceedings are as follows:
Sl.
No.
Type of Proceeding Number of
Proceedings
Aggregate Amount
Involved (In `
Lakhs)
Pending Proceedings Initiated Against our Company
1. Tax Proceedings 2 147.59
2. Notices 2 323.72
For further details of these legal proceedings, please refer to the section titled “Legal and other
Information” on page 118 of this Draft Letter of Offer.
2. We have significant working capital requirements and our inability to meet our working capital
requirements may have an adverse effect on our results of operations.
Our business needs a significant amount of working capital. As of March 31, 2013, we had
obtained a sanction of ` 8,970.00 lakhs by way of short term and long term working capital
facilities for our business and our actual utilization was ` 6,455.81 lakhs. Owing to general
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economic and market condition, we may experience circumstances or events leading to or
resulting in mismatch in cash inflows and outflows and adverse imbalances in working capital
components.
Our sources of additional financing, if required, to meet our working capital requirement will be
through incurrence of debt, which will result in increase in our interest and debt repayment
obligations and could have a significant effect on our profitability and cash flows. We may be
subject to additional covenants, which could limit our ability to access additional funding.
Further, continued increases in our working capital requirements, insufficient operating or other
cash flows and our inability to borrow additional funds, if any, for working capital in time and on
favourable terms or at all may have an adverse effect on our business, financial condition and
results of operations.
3. We are exposed to significant construction risks under item rate contracts that could cause us
to incur losses.
Our Company derives revenue from contracts where the consideration is predominantly payable
on an item rate basis. Under the terms and conditions of such item rate contracts, we agree to
provide certain construction activities in a particular project at a rate specified in the relevant bill
of quantities (“BOQ”) for performing each such activity. The BOQ is an estimate of the quantity
of activities involved and these quantities may be varied by the parties during the course of the
project. The unit rate, however, is fixed, although it may be increased pursuant to the occurrence
of agreed escalation events. The actual expense to us for executing an item rate contract may vary
substantially from the assumptions underlying our bid for several reasons, including:
a. unanticipated increases in the cost of subcontracting, cost of equipment and materials;
b. delays associated with the delivery of equipment and materials to the project site;
c. unforeseen construction conditions, resulting in delays and increased costs;
d. delays caused by local weather conditions; and
e. suppliers’ or sub-contractors’ failure to perform.
Unanticipated costs or delays in performing part of the contract can have compounding effects by
increasing costs of performing other parts of the contract. These variations and the risks generally
inherent to the construction industry may result in our profits being different from those originally
estimated and may result in us experiencing reduced profitability or losses on projects. Depending
on the size of a project, these variations from estimated contract performance could have a
significant effect on our financial condition and results of operations.
4. The nature of our business exposes us to liability claims and contract disputes and our
insurance coverage and indemnities may not adequately protect us. Any liability in excess of
our insurance limits, reserves or indemnities could result in additional costs, which would
reduce our profits.
We typically enter into contracts which provide for liquidated damages for time overruns. In the
event there are delays in our current or future orders and we are unable to receive extensions from
our customers, we may be exposed to liquidated damages and termination apart from entailing
significant cost and time overruns. We are generally required to furnish performance guarantees
in the form of bank guarantees. In the event we fail to perform under the terms of a contract, a
bank guarantee may be called upon by our customer, which could adversely affect our financial
condition and results of operations. For instance, recently one of our customers sent notices to a
bank for invoking one bank guarantee and one performance guarantee aggregating to ` 306.08
lakhs given by our Company in their favour alleging non performance under the contract
undertaken by us, currently we are engaged in negotiations with the customer to prevent the
invocation of the said bank guarantee and the performance guarantee by the bank.
In addition, our operations are subject to hazards inherent in providing construction services, such
as risk of equipment failure, work accidents, fire or explosion, including hazards that may cause
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injury and loss of life, severe damage to and destruction of property and equipment, and
environmental damage. Our policy of covering these risks through insurance may not always be
effective or adequate. We may also be subject to claims resulting from defects arising from
construction services provided by us within the warranty periods extended by us, which may
range from 12 to 24 months from the date of commissioning, which is commonly referred to as
the defect liability period in our contracts. Also, under some of our project related contracts, the
customers are entitled to retain the payment of a portion of the project proceeds, until the
completion of the entire project and/or the taking over of the respective project work by the
customer.
Further, our subcontractors may not have adequate financial resources to meet their indemnity
obligations to us. Failure to effectively cover ourselves against construction industry risks for any
of these reasons could expose us to substantial costs and potentially lead to material losses. To
minimize our exposure, we selectively seek indemnities from our vendors and subcontractors and
generally maintain insurance policies for our projects in accordance with project requirements up
to the time of handing over of the project. Any liability in excess of our insurance limits or
indemnities could result in additional costs, which would reduce our profits. Faults in construction
might also require repair work, which may not be foreseen or covered by our insurance. In
addition, if there is a customer dispute regarding our performance or workmanship, the customer
may delay or withhold payment to us.
5. The demand for our property development business is dependant on the performance of the
property market in the areas in which we operate, and any slowdown in the demand for such
development and demand for business of our customers could adversely affect our business.
For the financial year ended March 31, 2013, we generated 15.44%, of our total revenue from our
property development business. The performance of this business is dependant on the
performance of the property market in the areas in which we operate. It is not possible to predict
whether demand for residential property in the areas in which we operate generally will continue
to grow in the future, as many social, political, economic and other factors may affect the
development of the property market. Accordingly, there can be no assurance that the level of
demand will consistently match the level of supply. In the event of any unfavorable developments
in the supply and demand or any decreases in property prices in the areas in which we operate, our
business, financial condition and results of operations may be adversely affected.
6. We recognize revenue based on the ‘percentage of completion method’ of accounting on the
basis of our management’s estimates of the project cost. Our revenues may fluctuate
significantly from period to period.
We follow the percentage completion method for revenue recognition, on the basis of physical
measurement of work actually completed as at the balance sheet date, taking into account the
contractual price and revision thereto by estimating the total revenue and total cost till completion
of the contract and the profit so determined is accounted for proportionate to the percentage of the
actual work done. We cannot assure you that these estimates will match with the actual cost
incurred in respect of these projects. The effect of changes to estimates is recognized in the
financial statements of the period in which such changes are determined. This may lead to
significant fluctuations in our revenues from period to period which in turn could adversely affect
our business, financial condition and results of operations.
7. Our profitability and results of operations may be adversely affected in the event of increases in
the prices of raw materials or other inputs.
The cost of raw materials and other input costs constitute a significant part of our operating
expenses. Our construction services require various construction raw materials including steel,
cement, bricks, building blocks and ready mixed concrete. For the financial year ended March 31,
2013, the cost of materials consumed constituted 37.55% of our expenses. Our ability to pass on
increases in the purchase price of materials may be limited in the case of fixed-price contracts or
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contracts with limited price escalation provisions. Any unforeseen rise in prices of construction
material, makes it expensive for us to acquire such raw materials and may materially and
adversely affect on financial condition and results of operations.
8. Contingent liabilities not provided which if materialize may have an adverse effect on our
financial condition and future financial performance.
Most of the contingent liabilities have been incurred during the normal course of business, in the
event of there being a crystallization of any of the above liabilities, we may be required to honour
the demands raised. This may materially and adversely impact our business. As of March 31,
2013, contingent liabilities disclosed in the notes to our audited financial statements aggregated ` 4,947.83 lakhs as set forth below:
Particulars Amount (` in lakhs)
Estimated amount of contracts remaining to be
executed on capital account not provided for 211.56
Guarantees issued by the Company’s bankers for
which the Company has given counter guarantees (net
of guarantees for which liability exists in the books of
accounts)
4,058.32
Letter of credits issued by the Company’s bankers for
which the Company has given counter guarantees
523.14
Estimated Liability on account of certain taxes and duties not provided for
Sales Tax
Andhra Pradesh VAT for the year 2006-2007 and
2007-2008 (against which ` 20.49 lakhs deposited
with the Commercial Tax Officer, Hyderabad)
43.32
Tamil Nadu – Entry Tax for the year 2012-2013
(entire amount of ` 2.99 lakhs deposited with the
Commercial Tax Officer, Ranipet)
2.99
Income Tax
Appeals pending on various matters before CIT
(Appeals):
Assessment Year 2005-2006: ` 1.90 lakhs
Assessment Year 2008-2009: `104.27 lakhs
Assessment Year 2009-2010: `2.33 lakhs
108.50
9. Our inability to complete projects on a timely basis or at all, may cause us to incur liquidated
damages for time overruns pursuant to our contracts, which may adversely affect our results of
operation.
Time is often of the essence in our projects. Our project-based contracts depend on the proper and
timely management of our projects. Although we focus on project management and have an
experienced project management team, ineffective or inefficient project management could
increase our costs and expenses, and thus materially and adversely affect our profitability. We
typically enter into contracts which provide for liquidated damages for time overruns. Further, in
our contracts our customers may be required to obtain statutory approvals which if not obtained in
timely manner increases the risk of idling of our resources and delays which in turn may increase
our liabilities. In case we are unable to meet the performance criteria as prescribed by the
customers and if liquidated damages are levied against us, our financial condition and results of
operations could be materially and adversely affected.
10. Competitive pricing to pre-qualify for and win contracts may adversely affect our business,
financial condition and results of operations.
Most of our construction services contracts are obtained through a competitive bidding process
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which involves certain pre-qualification criteria. In selecting contractors for major projects,
customers generally limit the tender to contractors they have pre-qualified based on these criteria,
and price competitiveness of the bid is among the most important selection criterion. Due to
competitive pricing, to qualify for the project we may bid at a lower price and consequently face
a risk of unforeseen cost escalations which may negatively affect our operating margins and our
financial condition and results of operations may be adversely affected.
11. We intend to utlize a portion of the Issue Proceeds for redemption of our existing Preference
Shares. The terms of such redemption are subject to the shareholder’s and share subscription
agreement entered into between our Company and Tata Capital Financial Services Limited
(“the Investors”).
Our Company has issued Preference Shares to Tata Capital Financial Services Limited
(“TCFSL”) in two tranches (i) 10,00,000 Preference Shares at a premium of ` 20 each per
Preference Share aggregating to ` 12,00,00,000 (“Tranche A Preference Shares”) and (ii)
15,00,000 Preference Shares at a premium of ` 20 each per Preference Share aggregating to `
18,00,00,000 (“Tranche B Preference Shares”). Our Company through the proceeds of the Issue
proposes to redeem the entire Tranche B Preference Shares. For details please refer to the section
titled “Objects of the Issue” on page 54 of the Draft Letter of Offer.
The manner in which the Preference Shares can be redeemed are subject to certain terms and
conditions as stated in the shareholder’s and share subscription agreement dated August 21, 2013
(the “Shareholder’s Agreement”). The Shareholder’s Agreement interalia contains provisions for
mandatory early redemption and voluntary early redemption. The mandatory early redemption lays
down that the Investors may at their option during the tenure of the Preference Shares require our
Company to redeem the entire Preference Shares or obligate the Muruguppa Group to arrange for
a third party buyer to purchase the outstanding Preference Shares at a mutually negotiated price if
any of the following events occur (i) the shareholding of the Murguppa Group falls below 51%;
(ii) The Murugappa Group loses control of our Company; (iii) a material breach of any of the
covenants; (iv) on happening of a liquidation event such as cross default, liquidation proceedings,
insolvency, change in constitution, sick company amongst others (as detailed in the Shareholder’s
Agreement); (v) upon the change in applicable laws, that is detrimental to the interest of the
Investor to continue to hold the Preference Shares. It is also the obligation of our Company to
ensure that the aggregate voting rights of the Investor and their group (which is the Tata
Companies) entitling any of the Tata Companies(jointly or severally) to exercise any voting rights
shall not exceed 19.75% of the voting rights in the Company at any time during the tenure of the
Preference Shares by operation of Act or otherwise and that any time after the expiry of 12
months from the date of allotment of Preference Shares, the aggregate shareholding of Tata
Companies in the Company shall not exceed 19.75% of the share capital of the Company at any
time during the tenure of the Preference Shares, by operation of Act or otherwise. Further any time
after the expiry of eighteen months from the date of allotment of the Preference Shares the
Investor at their option and after giving notice to our Company can redeem all the existing
outstanding Preference Shares. Further the Investors have a right to sell all or part of the
Preference Shares at all time during the tenor of the Preference Shares to any third party with prior
intimation to our Company.
In case due to the factors aforementioned the Investor call for an early redemption of the
Preference Shares before the expiry of their term or before the receipt of Issue Proceeds by our
Company, we shall have to redeem the Preference Shares and accordingly we will have to arrange
for resources to do the same which will entail additional strain on the financial position of the
Company.
Also, if the Investors exercise their option to transfer the Preference Shares to a third party buyer,
then in such an event, the third party buyer shall be entitled to receive the proceeds from the
redemption of the Preference Shares. For further details in connection with the utilization of Issue
Proceeds for redemption of our existing Preference Shares, please see section titled, “Objects of
the Issue - Redemption of existing Preference Shares” on page 59 of this Draft Letter of Offer.
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12. Our ongoing and forthcoming construction projects may be delayed, cancelled or not fully paid
for by our customers thereby affecting the financial performance of the company.
Our ongoing and forthcoming construction projects does not necessarily indicate future earnings
related to the performance of that work but represents business that is considered firm, but
cancellations or scope modifications or schedule adjustments may occur. We may also encounter
problems executing the project as ordered, or executing it on a timely basis. Moreover, factors
beyond our control or the control of our customers may postpone a project or cause its
cancellation, including delays or failures to obtain necessary permits, authorizations, permissions
and other types of difficulties or obstructions. Due to the possibility of cancellations or changes in
project scope and schedule, problems we encounter in project execution, or reasons outside our
control or the control of our customers, we cannot predict with certainty when, if or to what extent
a project will be performed. Delays in the completion of a project can lead to customers delaying
or refusing to make payment to us of some or all of the amounts we expect to be paid in respect of
the project. Even relatively short delays or surmountable difficulties in the execution of a project
could result in our failure to receive, on a timely basis or at all, any payments due to us on a
project.
13. We have recorded losses for the Financial Years ended March 31, 2012, March 31, 2013 and
for the period ended June 30, 2013 and may continue to experience losses in the future.
We recorded a loss of ` 2,145.22 lakhs and ` 544.05 lakhs for the Financial Years ended March
31, 2012 and March 31, 2013, resepectively and ` 494.38 lakhs for the period ended June 30,
2013. We cannot guarantee that we will become profitable in future. Further, in case we continue
to incur losses our net worth shall get affected. We may continue to incur losses in the future for a
number of reasons, including the other risks described in this Draft Letter of Offer, and we may
also encounter unforeseen expenses, difficulties, complications, delays and other unknown events.
If we incur losses in the future, our financial condition, our reputation and the market price of our
Equity Shares could suffer.
14. The completion of our projects can be delayed on account of our dependency on our contracted
labour force.
The construction industry is labour intensive and continuous access to qualified labour is critical
to our business. We rely on sub-contractors to meet our labour requirements. The timely
execution of our projects, depends on maintaining cordial relations with the sub-contractors. Any
strained relations, will severely affect our business requirements, as we may not be able to meet
any shortage of labour arising due to this. We also cannot assure that the subcontractors will
always meet our labour requirements. Additionally, our operations may also be affected by
circumstances beyond our control which may be due to work stoppages, labour disputes and or
shortage of qualified skilled labour and lack of availability of adequate infrastructure services or
even due to local festivities. Thus, the execution of work on all our projects and consequently,
payments for such projects will depend upon the adequate supply of qualified labour by our
contractors and the adequate performance by such labour. A deficiency of service on the part of a
contractor or inadequacy in the performance of any work may result in delayed payment.
15. We may require certain approvals or permits for some of our projects and may be unable to
obtain or renew required approvals and permits in a timely manner or at all and existing
approvals or permits may be suspended or revoked which could have an adverse effect on our
business, prospects, financial condition and results of operations.
In order to develop and complete a project, developers must obtain various approvals, permits and
licences from the relevant administrative authorities at various stages of project development, and
developments may have to qualify for inclusion in local “master plans”. There can be no
assurance that the relevant authorities will issue any of such permits or approvals in a timely
manner or at all, and/or on favorable terms and conditions. The availability of land for a particular
16
use or development is subject to regulations by various local authorities. For example, if a specific
parcel of land has been deemed as agricultural land, no residential development is permitted
without the prior approval of the local authorities. We can commence development on such land
only upon receiving approvals from the relevant state authority for the conversion of its usage to
residential purposes. The procedure for obtaining a certificate for change of land use varies from
state to state. If the approvals from the relevant state authority for the conversion of such land for
residential purposes are not granted in a timely manner, or at all, we may not be able to carry on
any developments on such land.
Failure by us to comply with the terms and conditions to which such permits or approvals are
subject, and/or to renew, maintain or obtain the required permits or approvals may result in the
interruption of our operations and may have a material adverse effect on our business, financial
condition and results of operations. For details, see “Government and Other Approvals” on page
121 of this Draft Letter of Offer.
16. Our revenues depend upon the award of new contracts and the timing of those awards.
Consequently, our results of operations and cash flows may be adversely affected or fluctuate
materially from period to period.
Our revenues are derived primarily from contracts awarded to us on a project-by-project basis.
Generally, it is very difficult to predict whether and when we will be awarded a new contract since
many potential contracts involve a lengthy and complex bidding and selection process that may be
affected by a number of factors, including changes in existing or assumed market conditions,
financing arrangements, governmental approvals and environmental matters. Because our
revenues are derived primarily from these contracts, our results of operations and cash flows may
be adversely affected or fluctuate materially from period to period depending on the timing of
contract awards.
The uncertainty associated with the timing of contract awards may increase our cost of doing
business. For example, we may decide to maintain and bear the cost of a workforce in excess of
our current contract needs in anticipation of future contract awards. If an expected contract award
is delayed or not received, we could incur costs in maintaining an idle workforce that may have a
material adverse effect on our results of operations. Reducing our workforce could also impact our
results of operations if we are unable to adequately staff projects that are awarded subsequent to a
workforce reduction.
17. Certain of our corporate record required to be submitted with the Registrar of Companies in
connection with our share capital and documents relating to the listing of our equity shares are
not traceable.
Our Company was incorporated on September 3, 1947. We are unable to trace copies of certain
submissions made by our Company with the RoC, including, among others, forms in respect of the
allotment of equity shares of face value of ` 100 each and ` 10 each, made from 1947 to 2008. We
have not been able to obtain copies of these documents despite having conducted a search in the
records of the RoC. Further, documents and records in connection with the initial listing of our
equity shares on MSE are not traceable.
18. We enter into arrangements with various third parties for construction and property
development rights, which entail certain risks.
We typically enter into joint development and construction agreements, which entails entering into
an agreement with the owner(s) of the land parcel(s) sought to be developed, with our Company
usually being the sole developer to entail development activities on that particular parcel of land.
Some of these third parties may acquire land from power of attorney holders, who may not be
authorised to transfer land on behalf of the owners of such land. Consequently, disputes may arise
during the execution of the projects which may adversely affect our business operations and
financial condition.
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Although we conduct due diligence procedures prior to entering into such joint development and
construction agreements, there can be no assurance that there are no pending litigation, disputes,
encumbrances or such other proceedings with respect to such land. In such a scenario, we cannot
assure you that the disputes arising from such matters will be decided in our favour. Until
ownership rights or clear title has been obtained, litigation is settled, conditions as imposed have
been complied with or a judgment has been obtained by a court of competent jurisdiction, we may
not be able to proceed with the project, which could cause delay in completion, suspension or
complete abandonment of a project and may adversely affect our business, financial condition and
results of operations.
Most of our development and construction agreements confer rights on us to construct, develop,
market and eventually sell a portion of the saleable area to third party buyers. Such agreements do
not convey any interest in the immovable property to us and only the development right is
transferred to us. Investments through development and construction agreements involve risks,
including the possibility that our development partners may fail to meet their obligations under the
development and construction agreement, causing the whole project to suffer. These and other
factors may cause our development partners to act in a way that is contrary to our interests, or
otherwise be unwilling to fulfill their obligations under our development arrangements may have
an adverse affect on our business, financial condition and results of operations.
19. The Company’s property development business is significantly in the state of Tamil Nadu and
the Company does not have an all India presence. In the event of slow down of growth in the
sectors, the operations of the Company may be adversely affected.
Our property development business is heavily dependent on the performance of the real estate
market in the state of Tamil Nadu. In the event of a regional slowdown in construction activity in
Tamil Nadu or any developments that make projects in Tamil Nadu less economically beneficial,
we may experience more pronounced effects on our financial condition, results of operations and
cash flows than if we had further diversified our portfolio across different sections in different
geographical locations. For example, our operations were affected during the financial year ended
March 31, 2013 with shortage and cost escalation of sand in the state of Tamil Nadu. Our
business, financial condition, results of operations and cash flows have been and will continue to
be largely dependent on the performance of, and the prevailing conditions affecting, the real estate
market in Tamil Nadu, till we have a diversified presence. The real estate markets in Tamil Nadu
may perform differently from, and be subject to, market and regulatory developments that are
different from the real estate markets in other states of India. We cannot assure you that the
demand for our projects in Tamil Nadu will grow, or will not decrease, in the future. The real
estate market is affected by changes in government policies, economic conditions, demographic
trends, employment and income levels and interest rates among other factors, which may
negatively affect the demand for and the valuation of our ongoing projects and our forthcoming
projects. If property prices fall in Tamil Nadu, our business, financial condition, results of
operations and cash flows may be adversely affected.
20. If we fail to anticipate and respond to customer requirements, our business prospects could be
adversely affected.
The growing disposable income of India’s middle and upper income classes, together with
changes in lifestyle, has resulted in a substantial change in the nature of consumer demands.
Increasingly, consumers are seeking better housing and better amenities such as schools, retail
areas, health clubs and parks in new residential developments. If we fail to anticipate and respond
to consumer requirements in respect of such amenities and facilities, we could lose potential
customers to competitors, which in turn may materially and adversely affect our business,
financial condition and results of operations.
21. Our business is subject to extensive government regulation. For example, the Government of
India proposes to enact the Real Estate (Regulation and Development) Bill, 2013 (the “Real
18
Estate Bill”) with respect to real estate projects. Pending the Real Estate Bill becoming a statute,
our Company is currently not in a position to analyze the requirements that our Company may
have to comply with in accordance with the Real Estate Bill and accordingly predict the impact
it may have on our business, prospects, financial condition and results of operations.
The Government of India proposes to enact the Real Estate Bill which is expected to include, inter
alia, requirements to register real estate projects and obtain a certificate of registration and other
approvals from the relevant authority constituted thereunder. Failure to comply with such
provisions may attract penalties from the relevant authorities and/ or cause delays in the
completion of a project. The Real Estate Bill is yet to be approved by the Parliament of India, as
well as by the President of India, and will require publication in the Official Gazette before
becoming a law. There is no certainty that the Real Estate Bill will be passed in its current form, or
at all, and our Company is accordingly not in a position to analyze the requirements that our
Company may have to comply with and the implications of the same on our business and results of
operations. At this stage, we cannot predict with certainty the impact of the Real Estate Bill on our
business and operations, if enacted.
22. Our industry is highly fragmented and competitive and increased competitive pressure may
adversely affect our results.
We operate in an intensely competitive and highly fragmented industry with low entry barriers.
We face significant competition in our business from a large number of Indian construction
companies who also operate in the same regional markets as us. The extent of the competition we
face in property development market depends on a number of factors, such as the size and type of
property development, contract value and potential margins, the complexity and location of the
property development, facilities and supporting infrastructure services, the reputation of our
competitors, and the risks relating to revenue generation.
Given the fragmented nature of the construction industry, we often do not have adequate
information about the projects our competitors are developing and constructing and accordingly,
we run the risk of underestimating supply in the market. Further, our competitors may commence
operations in the vicinity of our ongoing projects and forthcoming projects and may offer their
products at competitive prices, resulting in a decreasing of sales of our projects.
23. Our business is substantially dependent on certain key customers from whom we derive a
significant portion of our revenues. The loss of any significant customers may have a material
and adverse effect on our business and results of operations.
We derive a high proportion of our total revenue from a limited number of customers, although
our significant customers have varied on a year to year basis. The top ten customers contributed
64.17% of our total revenue for the financial year ended March 31, 2013. The loss of a significant
customer or a number of significant customers or contracts from such customers for any reason,
including as a result of a disqualification or dispute, may have a material and adverse effect on our
business and results of operations.
24. Our operations and the work force on sites are exposed to various hazards, which could
adversely affect our business, financial condition and results of operations.
We conduct various site studies to identify potential risks prior to the construction or property
development. However, there are certain unanticipated or unforeseen risks that may arise due to
adverse weather and geological conditions such as outbreaks of storms, hurricanes, lightning,
floods, landslides, rockslides and earthquakes and other reasons. Additionally, our operations are
subject to hazards inherent in providing such services, such as risk of equipment failure, impact
from falling objects, collision, work accidents, fire, or explosion, including hazards that may cause
injury and loss of life, severe damage to and destruction of property and equipment, and
environmental damage. Even though we have certain insurance policies in place to cover such
events, if any one of these hazards or other hazards were to occur, our business, financial condition
19
and results of operations may be adversely affected.
25. Our registered office is a leased office, non renewal of the lease could require us to vacate our
premises at short notice.
Our Company is currently operating out of leased premises. Our Company’s registered office is
situated at Parry House, 3rd Floor 43, Moore Street, Chennai - 600 001, which has been leased
from EID Parry Limited. In case of non renewal of the lease, or failure to renew the same on
favourable conditions, in a timely manner, or at all, could require us to vacate our premises at short
notice.
26. Our success depends largely on our senior management and our ability to attract and retain our
key personnel. Any significant changes in the key personnel, may affect the performance of the
Company.
The success of any company depends upon its senior management and key personnel and the
Company’s ability to attract and retain such persons. The resignation or loss of key personnel may
have an adverse impact on its business, future financial performance and the price of its Equity
Shares.
27. Our indebtedness and the restrictive covenants imposed upon us in certain debt facilities could
restrict our ability to conduct our business and grow our operations, which would adversely
affect our financial condition and results of operations.
As of March 31, 2013, the principal amount of our outstanding loans was ` 8,505.81 lakhs. There
are certain restrictive covenants in the arrangements we have entered into with the banks. Under
the terms of certain of our Company’s debt agreements, our Company is required to send an
intimation to its lenders for creating, assuming or incurring any additional long-term indebtedness.
Specifically, under some of our financing agreements, we require, and may be unable to obtain,
consents from the relevant lenders for, among others, the following matters: a) effect any major
changes in the shareholding pattern, management control, or make any investments in any fixed
assets, in associates/group companies except to the extent projected in the data submitted to the
Bank; b) effect change in the capital structure; c) formulate any scheme of amalgamation or
reconstruction; d) implement any major scheme of expansion; e) invest by way of share capital in
or lend advance funds to or place deposits with any other concern; f) enter into additional
borrowing arrangements (including securitization of receivables or provide escrow facilities),
either secured or unsecured, with any bank, financial institutions, company/firm or otherwise other
than the limits disclosed; g) undertake guarantee obligations on behalf of any other company/firm
etc; h) allow the promoters/directors to alienate, transfer, dispose or dilute their shareholding; i)
create any further charge, lien or encumbrance over the assets or properties of the Company
already charged to the Lender in favour of any other lenders, companies firm or person; and j)
declare or pay dividend for any year except out of profits for the year and after meeting the bank’s
obligations. Further, we intend to utilize a portion of the Net Proceeds for repayment/pre-payment
of certain of our outstanding loans. Any prepayment of our loans may require us to receive
consents from some of our lenders, which may be subject to payment of prepayment or other
charges, as applicable. For details, please see “Principal Terms of Loans and Assets charged as
Security” on page 111 of this Draft Letter of Offer.
There can be no assurance that our Company has, and will, at all times have, complied with all of
the terms of the said financing documents. Any failure to service our Company’s indebtedness
and/or to comply with all of the terms of the said financing documents, could have an adverse
effect on the operations and/or profitability of our Company.
28. We have experienced negative cash flows for the three month period ended June 30, 2013. Any
negative cash flows in the future would adversely affect our results of operations and financial
condition.
20
For the three month period ended June 30, 2013, we had a negative cash flow of ` 25.28 lakhs. If
we experience any negative cash flows in the future, this could adversely affect our results of
operations and financial condition. For further details, see the sections titled “Financial
Statements” on page 75 of this Draft Letter of Offer.
29. Our Company has availed various working capital demand loans and other loans which are
repayable upon demand and/or notice by the relevant lenders. If such lenders call upon our
Company to repay such borrowings on demand and/or upon serving a notice for the prescribed
period, we may have to raise funds to refinance these obligations, which may adversely affect
our business, operations, financial condition and cash flows.
Our Company has availed various working capital demand loans and other loans which are
repayable upon demand and/or notice by the relevant lenders under the respective agreements. If
such lenders call upon our Company to repay such borrowings on demand and/or upon serving a
notice for the prescribed period, we may have to raise funds to refinance these obligations. If we
are unable to raise such finance in a timely manner or at all or our failure to otherwise repay such
loans in a timely manner or at all, could adversely affect our business operations, financial
condition and cash flows.
30. The requirement of funds in relation to the Objects of the Issue has not been appraised and our
budgeted expenditure program may change.
We intend to use the Net Proceeds for the purposes as described under the section titled “Objects
of the Issue” on page 54 of this Draft Letter of Offer. The Objects of the Issue have not been
appraised by any bank or financial institution. In view of the highly competitive nature of the
industry in which we operate, we may have to revise our management estimates from time to time
and consequently our funding requirements may also change. In addition, a certain portion of the
total Net Proceeds have been allocated to general corporate purposes and will be used at the
discretion of our management.
31. Restrictions on FDI in the real estate sector may adversely affect our business and prospects.
Foreign investment in Indian securities is subject to regulation by Indian regulatory authorities.
Under the Consolidated Foreign Direct Investment Policy notified under Circular No. 1 of 2013
effective from April 5, 2013 (the “FDI Policy”) issued by the Department of Industrial Policy and
Promotion, Ministry of Commerce and Industry, Government of India, for the construction
development sector: townships, housing, built-up infrastructure and construction-development
projects, FDI is permitted up to 100%, subject to certain restrictions under the FDI Policy. Our
inability to raise additional capital as a result of these and other restrictions could adversely affect
our business and prospects.
Also, under the foreign exchange regulations currently in force in India, transfers of shares
between non-residents and residents are permitted subject to compliance with the pricing
guidelines and reporting requirements specified by the RBI. If the transfer of shares is not in
compliance with such pricing guidelines or reporting requirements or certain other conditions, then
the prior approval of the RBI will be required.
Due to the aforementioned factors FIIs, FVCIs, QFIs, multilateral and bilateral institutes intending
to apply for additional Rights Equty Shares or intending to apply for Rights Equity Shares
renounced in their favour shall be required to obtain prior approval from the appropriate regulatory
authority.
32. The trademark for “Coromandel Engineering” and our logo is neither registered in the name of
our Company, or our Promoter and Promoter Group. We may be subject to potential action for
alleged infringement by other parties, which in turn would affect our reputation and
profitability.
21
Neither our Company, nor our Promoters and Promoter Group have registered the trademark
name, “Coromandel Engineering” or the logo of the Company with the Registrar of Trade Marks
under the Trade Marks Act, 1956 (as modified by the Trade Marks Act, 1999). The unauthorised
use or infringement of our trademark by third parties may be detrimental to our business and may
also result in litigations relating to infringement. In the event any third party infringement claim is
brought against our Company our Company may be required to establish their right to the
exclusive use of the trademark “Coromandel Engineering”.
33. Certain provisions of the Companies Act, 2013, if notified in their current form may require us
to be disclosed as a subsidiary of Tata Capital Financial Services Limited in case they continue
to hold the Preference Shares post such notification.
Certain provisions of the Companies Act, 2013 have been notified by the Government of India on
September 12, 2013 (“Notification”). These substantive provisions along with others yet to be
notified provisions shall be accompanied with rules, to set out the procedure for compliance with
the substantive provisions of the Companies Act, 2013 (“Rules”). The said Rules are yet to be
notified. Sub-section (87) of Section 2 (“the Section”) of the Companies Act, 2013 inter-alia
defines a subsidiary company in relation to any other company (that is to say the holding
company), means a company in which the holding company exercises or controls more than one
half of the “total share capital” either at its own or together with one or more of its subsidiary
companies. This particular Section is one of the notified sections. Further, the Rules define the
term “total share capital” as “the aggregate of the paid-up equity share capital and paid-up
preference share capital”, as stated earlier this definition being part of the Rules are yet to be
notified.
As on date of this Draft Letter of Offer, TCFSL is only a preference share holder of our Company
and holds 25,00,000 Preference Shares, TCFSL is not entitled to any vote in any meeting of the
Company or by means of postal ballot and does not exercise any control on the affairs of our
Company. However, in the event the Rules are notified in their present form as aforementioned,
TCFSL shall hold 88.36% of pre-Issue total share capital. Consequently, if we fail to redeem the
Preference Shares issued to TCFSL prior to such notification of the Rules, we shall be deemed to
be a subsidiary of TCFSL as defined under the Act, 2013. However as per the shareholder’s and
share subscription agreement dated August 21, 2013 between TCFSL and our Company, in case of
such an event, TCFSL has a right to exercise mandatory early redemption and require the
Company to redeem the aforementioned Preference Shares.
Risks related to the Equity Shares/Issue
34. You will not be able to immediately sell any of the Equity Shares you purchase in this Issue on
the Stock Exchanges. You can start trading in the Equity Shares only after they have been
credited to your dematerialized account and listing and trading permissions are received from
the Stock Exchanges.
Under the SEBI (ICDR) Regulations, we are permitted to allot Equity Shares within 12 working
days of the Issue Closing Date. You can start trading such Equity Shares only after receipt of the
listing and trading approval in respect thereof. There can be no assurance that the Equity Shares
allocated to you will be credited to your demat account, or that trading in the Equity Shares will
commence within the specified time period, subjecting you to market risk for such period.
35. Our ability to pay dividends in the future will depend on our future earnings, financial
condition, cash flows, working capital requirements, capital expenditure and other factors.
Our Company has not made any dividend payments to its equity shareholders for financial years
2012 and 2013, the amount of future dividend payments by us, if any, will depend upon our future
earnings, financial condition, cash flows, working capital requirements, capital expenditures,
22
applicable Indian legal restrictions and other factors. We may decide to retain all of our earnings
to finance the development and expansion of our business and therefore, we may not declare
dividends on the Equity Shares. Additionally, we may in the future be restricted by the terms of
our loan agreements, to make any dividend payments unless otherwise agreed with the lenders.
36. There is no guarantee that the Equity Shares issued pursuant to the Issue will be listed on the
Stock Exchanges in a timely manner, or at all, and any trading closures at the BSE and the
MSE may adversely affect the trading price of the Equity Shares.
In accordance with Indian law and practice, permission for listing and trading of the Equity
Shares issued pursuant to the Issue will not be granted until after the Equity Shares have been
issued and allotted. Approval for listing and trading will require all relevant documents
authorizing the issuing of Equity Shares to be submitted. There could be a failure or delay in
listing the Equity Shares on either or both the Stock Exchanges. Any failure or delay in obtaining
the approval would restrict the shareholders ability to dispose of their Equity Shares.
37. The Issue Price of our Equity Shares may not be indicative of the market price of our Equity
Shares after the Issue.
The Issue Price of Equity Share may not be indicative of the market price for our Equity Shares
after the Issue. The market price of our Equity Shares could be subject to significant fluctuations
after the Issue, and may decline below the Issue Price. There can be no assurance that the investor
will be able to sell their shares at or above the Issue Price. Among the factors that could affect our
share price are:
quarterly variations in the rate of growth of our financial indicators, such as earnings per
share, net income and revenues;
changes in revenue or earnings estimates or publication of research reports by analysts;
speculation in the press or investment community;
general market conditions; and
domestic and international economic, legal and regulatory factors unrelated to our
performance.
38. Pursuant to the rules, regulations and bye-laws of the stock exchanges, our Equity Shares have
been classified as an ‘illiquid’ stock by the BSE and the NSE. Further, since April 1, 2013, our
Equity Shares are traded under the Periodic Call Auction Mechanism, (“PCAM”), on both, the
BSE and the NSE, in accordance with SEBI circular dated February 14, 2013, (“SEBI
Circular”). There can be no assurance that active trading of our Equity Shares on BSE and/or
NSE will develop after the Issue, which may impact the ability of the shareholders to sell their
Equity Shares.
As our Equity Shares are classified as an ‘illiquid’ in accordance with the rules, regulations and
bye-laws of the BSE and NSE and the provisions of the SEBI Circular, our Equity Shares are
traded on both, the BSE and the NSE, only under the PCAM, as prescribed by the SEBI Circular.
Under the PCAM, the equity shares are traded on an hourly basis throughout the entire trading
hours on the stock exchanges. Under the SEBI Circular, the equity shares of any company will be
moved from PCAM to the regular trading mechanism, only if, inter alia, there are a certain number
of trades and volume per quarter on a daily basis and thus has been declassified by the relevant
stock exchanges as ‘illiquid’. Further, in the event, if our Equity Shares fails to meet the
aforementioned criteria, our Equity Shares will not be traded under the regular trading mechanism
on the stock exchanges.
There can be no assurance that active trading in the Equity Shares will develop after the Issue or,
if such trading develops, that it will continue. Investors might not be able to sell the Equity Shares
at the quoted price if there is no active trading in the Equity Shares.
23
External risk factors
39. We cannot predict the effect of the proposed notification of the Companies Act, 2013 on our
business.
The Companies Act, 2013 (the “2013 Act”) has been notified by the Government of India on
September 12, 2013 (the “Notification”). Under the Notification, Section 1 of the 2013 Act has
come into effect and the remaining provisions of the 2013 Act shall come into force on such dates
as the Central Government may notify. Section 1 of the 2013 Act deals with the commencement
and application of the 2013 Act, and among others, sets out the types of companies to which the
2013 Act applies. Further the Ministry of Corporate Affairs, (“MCA”) has by their notification
dated September 12, 2013, notified 98 sections of the 2013 Act, which have come into force from
September 12, 2013 and thereafter, pursuant to its notification dated September 18, 2013, has
clarified that the relevant provisions of the Companies Act, 1956, corresponding to the
aforementioned notified 98 sections of the 2013 Act, shall cease to have effect from September
12, 2013.
The 2013 Act is expected to replace the existing Companies Act, 1956. The 2013 Act provides
for, among other things, changes to the regulatory framework governing the issue of capital by
companies, corporate governance, audit procedures, corporate social responsibility, the
requirements for independent directors, director’s liability, class action suits, and the inclusion of
women directors on the boards of companies. The 2013 Act is expected to be complemented by a
set of rules that shall set out the procedure for compliance with the substantive provisions of the
2013 Act. In the absence of such rules, it is difficult to predict with any degree of certainty the
impact, adverse or otherwise, of the 2013 Act on the Issue, and on the business, prospects and
results of operations of the Company. Further, as mentioned above, certain provisions of the 2013
Act have already come into force and the rest shall follow in due course. In event some or all of
the provisions of the 2013 Act and the rules thereto are notified prior to the consummation of the
Issue, we may have to undertake certain additional actions that we are not currently aware of (in
the absence of the rules), which may result in delay of this Issue.
40. Our future operating results are difficult to predict. Any unfavorable changes in the factors
affecting our operations, including the economic, political, legal or social environments of the
locations in which we operate may adversely affect our operating results and profitability.
Our business and results of operations may be adversely affected by, among other factors, the
following:
General economic and business environment in India;
Our ability to successfully implement our strategy and growth plans;
Our ability to compete effectively and access funds at competitive cost;
Changes in domestic or international interest rates and liquidity conditions;
Defaults by customers resulting in an increase in the level of non-performing assets in our
portfolio;
Interest rates and our ability to enforce security; and
Change in political conditions in India
All of the above factors may affect our revenues and therefore have an impact on our operating
results and profitability.
Our business, earnings, asset values and the value of our Equity Shares may be materially and
adversely affected by developments with respect to inflation, interest rates, currency fluctuations,
government policies, price and wage controls, exchange control regulations, retail laws and
regulations, taxation, expropriation, social instability and other political, legal or economic
developments in or affecting the States in which we primarily operate. We have no control over
such conditions and developments and can provide no assurance that such conditions and
developments will not have a material adverse effect on our operations or the price of or market
24
for our Equity Shares.
41. Our business is significantly dependent on the availability of financing in India and the failure
to obtain financing in the form of debt or equity and adverse changes in financing terms may
affect our growth and future profitability. Difficult conditions in the global financial markets
and the economy generally have affected and may continue to materially and adversely affect
our business and results of operations.
Although economic conditions differ in each country, investors' reactions to any significant
developments in one country can have adverse effects on the financial and market conditions in
other countries. These and other related events, such as the collapse of a number of financial
institutions, have had and continue to have a significant adverse impact on the availability of
credit, globally as well as in India. Indian financial markets have also experienced the contagion
effect of the global financial turmoil, evident from the sharp decline in the Sensex, BSE’s
benchmark index. We cannot assure you that global economic conditions will not deteriorate
further and, accordingly, that our financial condition and results of operations will not be further
adversely affected. On account of the prevailing conditions of the global and Indian credit
markets, buyers of our products may remain cautious, consumer sentiment and market spending
may turn more cautious in the near-term. If this trend continues, our results of operations and
business prospects may be materially and adversely affected.
42. Any downgrading of India’s debt rating by an independent agency may harm our ability to
raise debt financing.
Any adverse revisions to India’s credit ratings for domestic and international debt by international
rating agencies may adversely affect our ability to raise additional financing and the interest rates
and other commercial terms at which such additional financing is available. This could have a
material adverse effect on our capital expenditure plans, business and financial performance.
43. Public companies in India, including our Company, may be required to prepare financial
statements under the IFRS or a variation thereof, namely IND AS. The transition to IND AS is
still unclear and our results may be negatively affected by this transition.
On February 25, 2011, the Ministry of Corporate Affairs, Government of India (“MCA”), notified
that the IFRS converged Indian Accounting Standards (“IND AS”) will be implemented in a
phased manner and stated that the date of implementation of IND AS will be notified by the MCA
at a later date. As of date, there is no significant body of established practice on which to draw
from in forming judgments regarding the implementation and application of IND AS.
Additionally, IND AS has fundamental differences with IFRS and as a result, financial statements
prepared under IND AS may be substantially different from financial statements prepared under
IFRS. As we adopt IND AS reporting, we may encounter difficulties in the ongoing process of
implementing and enhancing our management information systems. The adoption of IND AS by
us and any failure to successfully adopt IND AS in accordance with the prescribed timelines could
have an adverse effect on our financial condition and results of operations.
44. Conditions in the Indian securities market may affect the price or liquidity of the Equity
Shares.
The Indian securities markets are smaller than securities markets in more developed economies.
Indian Stock Exchanges have in the past experienced substantial fluctuations in the prices of listed
securities. These exchanges have also experienced problems that have affected the market price
and liquidity of the securities of Indian companies, such as temporary exchange closures, broker
defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian
Stock Exchanges have from time to time restricted securities from trading, limited price
movements and restricted margin requirements. Further, disputes have occurred on occasion
between listed companies and the Indian Stock Exchanges and other regulatory bodies that, in
some cases, have had a negative effect on market sentiment. If similar problems occur in the
25
future, the market price and liquidity of the Equity Shares could be adversely affected.
PROMINENT NOTES
1. Issue of [•] Rights Equity Shares of our Company for cash at a price of ` [•] (including a premium of
` [•]) per Rights Equity Share, not exceeding an amount of ` 5,000 lakhs by the Company to the
Eligible Equity Shareholders of the Company in the ratio of [•] Rights Equity Shares for every [•]
Equity Shares held on the Record Date i.e. [•]. The Issue Price of each Rights Equity Share is [•]
times the face value of the Rights Equity Share.
2. Our Company’s Net-Worth as on March 31, 2013 was ` 1725.87 lakhs and on June 30, 2013 was
` 1,231.49 lakhs, as per our “Financial Information” on page 75 of this Draft Letter of Offer. As of
March 31, 2013, the Net Asset Value of each Equity Share was ` 52.38 and as on June 30, 2013 the
Net Asset Value of each Equity Share was ` 37.38, as per our “Financial Information” on page 75 of
this Draft Letter of Offer.
3. For details of the related party transactions of our Company as per AS 18, the nature of such
transaction and cumulative values, please refer to our “Financial Information” on page 75 of this
Draft Letter of Offer.
4. There are no financing arrangements whereby our Promoters and Promoter Group, our Directors or
their relatives have financed the purchase by any other person of securities of our Company other than
in the normal course of the business of the financing entity during the period of six months
immediately preceding the date of filing this Draft Letter of Offer.
5. Investors may contact the Lead Managers for any complaint, clarifications and information pertaining
to the Issue. Any clarification or information relating to this Issue shall be made available by the Lead
Managers to the public and investors at large and no selective or additional information would be
made available only to a section of the investors in any manner. All grievances relating to ASBA
process may be addressed to the Registrar to the Issue, with a copy to the relevant SCSBs, giving full
details such as name, address of the applicants, application number, number of Equity Shares applied
for, Bid Amounts blocked, ASBA Account number and the Designated Branch of the SCSBs where
the ASBA Bid-cum-Application Form has been submitted by the ASBA Bidder. For contact details
please refer to the section titled “General Information” beginning on page 33.
26
SECTION III – INTRODUCTION
THE ISSUE
The Board of Directors of our Company have, pursuant to a resolution passed at their meeting held on
September 5, 2013 authorized this offer of Rights Equity Shares.
The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified
in its entirety by, more detailed information in the section titled “Terms of the Issue” on page 133 of this
Draft Letter of Offer.
Rights Equity Shares being
offered by our Company
[•] Rights Equity Shares
Rights Entitlement for Rights
Equity Shares
[•] Rights Equity Shares for every [•] Equity Shares held on the
Record Date i.e. [•].
Record Date [•]
Face Value per Rights Equity
Shares
` 10
Issue Price per Rights Equity
Share
` [•] at a premium of ` [•] per Rights Equity Share
Equity Shares outstanding
prior to the Issue
32,94,780 Equity Shares
Issue size Not exceeding ` 5,000 lakhs
Equity Shares outstanding
after the Issue
[•] Equity Shares
Terms of the Issue Please refer to the section titled “Terms of the Issue” on page 133 of
this Draft Letter of Offer.
Use of Issue Proceeds For further information, see the section titled “Objects of the Issue”
on page 54
Payment terms
The payment terms available to the Investors are as follows:
Due Date Amount
On Application of Rights Equity
Shares ` [•] per Rights Equity Share which constitutes 100 % of the Issue
Price.
27
SUMMARY OF FINANCIAL STATEMENTS
The following tables set forth the summary financial information derived from our audited financial
statements for the Financial Year ended March 31, 2013 prepared in accordance with Indian GAAP and the
Companies Act, 1956 and the limited reviewed financial results for three months ended June 30, 2013
(consisting of statement of assets and liabilities, statement of profit and loss and cash flow as at June 30,
2013), prepared in accordance with Indian GAAP and the SEBI ICDR Regulations.
Our summary financial information presented below, is in ` in Lakhs and should be read in conjunction
with the financial statements and the notes thereto included in the section titled “Financial Statements”,
respectively, of this Draft Letter of Offer.
Balance Sheet as at 30th
June 2013
(Rs. In lakhs)
Particulars As at June 30, 2013 As at March 31, 2013
I
EQUITY AND LIABILITIES
(1)
Shareholders' Funds
(a) Share Capital 2,829.48
2,829.48
(b) Reserves and Surplus (1,597.99) 1,231.49 (1,103.61) 1,725.87
(2)
Non-Current Liabilities
(a) Long Term Borrowings 3,158.67
4,202.00
(b) Other Long Term Liabilities -
-
(c) Long Term Provisions 48.29 3,206.96 48.29 4,250.29
(3)
Current Liabilities
(a) Short Term Borrowings 4,433.34
2,955.81
(b) Trade Payables 3,428.65
3,105.45
(c) Other Current Liabilities 14,021.38
12,530.83
(d) Short Term Provisions 560.70 22,444.07 580.83 19,172.92
Total
26,882.52
25,149.08
II
ASSETS
(1)
Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 3,432.36
3,020.13
(ii) Intangible Assets 11.57
0.36
(iii) Capital work in progress 47.09 3,491.02 17.05 3,037.54
(b) Non Current Investments 5.44
5.44
(c) Deferred Tax Asset/(Liability) (Net) 1,113.81
1,113.81
(d) Long Term Loans and Advances 36.50
36.59
(e) Trade Receivables 933.56
1,004.00
(f) Other Non Current Assets 465.00
465.00
2,554.31
2,624.84
(2)
Current Assets
(a) Inventories 3,950.36
3,758.76
(b) Trade receivables 4,803.60
4,719.94
(c) Cash and Cash equivalents 557.23
582.51
(d) Short Term Loans and Advances 1,516.66
808.07
(e) Other Current Assets 10,009.34 20,837.19 9,617.42 19,486.70
Total
26,882.52
25,149.08
28
Profit and loss statement for the period ended 30th
June 2013
(Rs. In lakhs)
Particulars
For the period ended
June 30, 2013
For the year ended
March 31, 2013
I Revenue from Operations 4,303.52
21,639.22
II Other Income 16.25
90.30
III Total Revenue ( I + II )
4,319.77
21,729.52
IV Expenses
(a) Raw Materials Consumed 1,815.26
8,094.60
(b) Purchase of Traded Stock -
30.70
(c) Changes in Inventories (244.95)
(576.83)
(d) Sub-contracting Expenses 1,747.06
8,432.09
(e) Employee Benefit Expenses 464.38
1,894.74
(f) Finance Cost 304.88
1,127.59
(g) Depreciation 53.17
215.06
(h) Other Expenses 674.35
3,179.94
(i) Total Expenses
4,814.15
22,397.89
V
Profit/(loss) before exceptional and
extraordinary items and tax (III-IV)
(494.38)
(668.37)
VI Exceptional Items
-
-
VII
Profit/(loss) after exceptional items
before tax (V-VI)
(494.38)
(668.37)
VIII Extraordinary Items
-
-
IX. Profit/(loss) before tax (VII-VIII)
(494.38)
(668.37)
X Tax expense/(gain)
(1) Current tax
-
(2) Deferred tax
-
(124.32)
XI
Profit / (Loss) for the period from
continuing operations (IX-X)
(494.38)
(544.05)
XII Profit/(loss) from discontinuing operations
-
-
XIII Tax expense of discontinuing operations
-
-
XIV
Profit/(loss) from Discontinuing
operations (after tax) (XII-XIII)
-
-
XV Profit /(Loss) for the period (XI + XIV)
(494.38)
(544.05)
XVI Earnings per equity share:
(1) Basic
(15.00) (16.51)
(2) Diluted
-
-
29
Cash Flow Statement
(Rs. In lacs)
30th June 2013 31 st March 2013
Cash Flow from Operating Activities Net Profit/ (Loss) before tax as per P&L a/c
(494.38)
(668.37)
Adjustment for :
Depreciation 53.17
215.06
Finance Charges 304.88
1,127.59
Interest Income (16.25)
(35.40)
Dividend Income 0.00
(0.66)
(Profit) / Loss on sale of investment (Net) 0.00
(5.60)
Reversal of Provision on Dimunition of investment 0.00
(0.50)
(Profit) / Loss on sale of assets (Net) 0.00 341.80 1.48 1,301.97
Operating Profit before working capital changes
(152.58)
633.60
Adjustments for :
Trade and Other Receivables (1,019.24)
(3,550.80)
Inventories (191.60)
(836.25)
Trade Payables 1,793.62 582.78 4,502.61 115.56
Cash Generated from Operations
430.20
749.16
Direct Taxes Paid
(94.40)
(394.48)
Net Cash from Operating Activities
335.80
354.68
Cash Flow from Investing Activities
Purchase of Fixed Assets (506.65)
(837.03)
Sale of Fixed Assets -
6.24
Sale of investment -
5.84
Dividend Received -
0.66
Net Cash used in Investing Activities
(506.65)
(824.29)
Cash flow from Financing Activities
Loans (Net of Repayment) 434.20
1,587.41
Finance Charges (304.88)
(1,127.59)
Interest income 16.25
35.40
Net Cash used in Financing Activities
145.57
495.22
Net increase/ (decrease) in Cash and Cash Equivalents
(25.28)
25.61
Opening balance of Cash and Cash Equivalents
582.51
556.90
Closing balance of Cash and Cash Equivalents
557.23
582.51
30
Balance Sheet as at 31st March 2013 (Rs. In lakhs)
Particulars As at March 31, 2013 As at March 31, 2012
I
Equity and Liabilities
(1)
Shareholders' Funds
a Share Capital 2,829.48
2,829.48
b Reserves and Surplus (1,103.61) 1,725.87 (559.56) 2,269.92
(2)
Non Current Liabilities
a Long Term Borrowings 4,202.00
2,600.00
b Other Long Term Liabilities -
45.90
c Long Term Provisions 48.29 4,250.29 43.83 2,689.73
(3)
Current Liabilities
a Short Term Borrowings 2,955.81
2,970.40
b Trade Payables 3,105.45
1,580.38
c Other Current Liabilities 12,530.83
9,514.64
d Short Term Provisions 580.83 19,172.92 577.89 14,643.31
Total
25,149.08
19,602.96
II
Assets
(1)
Non-Current Assets
a Fixed Assets
(i)Tangible Assets 3,020.13
2,421.16
(ii)Intangible Assets 0.36
1.99
(iii) Capital work in progress 17.05 3,037.54 - 2,423.15
b Non Current Investments 5.44
5.20
c Deferred Tax Asset/(Liability) (Net) 1,113.81
989.49
d Long Term Loans and Advances 36.59
51.02
e Trade Receivables 1,004.00
934.91
f Other Non Current Assets 465.00
465.00
2,624.84
2,445.62
(2)
Current Assets
a Inventories 3,758.76
2,922.50
b Trade receivables 4,719.94
4,733.53
c Cash and Cash equivalents 582.51
556.90
d Short Term Loans and Advances 808.07
641.36
e Other Current Assets 9,617.42 19,486.70 5,879.90 14,734.19
Total
25,149.08
19,602.96
31
Profit and Loss Statement for the year ended 31st March 2013 (Rs. In lakhs)
Particulars
For the year ended March 31,
2013
For the year ended March 31,
2012
I Revenue from Operations 21,639.22
17,046.09
II Other Income 90.30
78.79
III Total Revenue ( I + II )
21,729.52
17,124.88
IV Expenses
(a) Raw Materials Consumed 8,094.60
8,150.00
(b) Purchase of Traded Stock 30.70
27.74
(c) Changes in Inventories (576.83)
(604.81)
(d) Sub-contracting Expenses 8,432.09
6,310.67
(e) Employee Benefit Expenses 1,894.74
1,879.11
(f) Finance Cost 1,127.59
1,149.23
(g) Depreciation 215.06
161.20
(h) Other Expenses 3,179.94
3,301.06
(i) Total Expenses
22,397.89
20,374.20
V Profit/(loss) before exceptional
and extraordinary items and
tax (III-IV)
(668.37)
(3,249.32)
VI Exceptional Items
-
-
VII Profit/(loss) after exceptional
items before tax (V - VI) (668.37)
(3,249.32)
VIII Extraordinary Items
-
-
IX. Profit/(loss) before tax (VII-
VIII) (668.37)
(3,249.32)
X Tax expense/(gain)
(1) Current tax
-
(2) Deferred tax
(124.32)
(1,104.10)
XI Profit / (Loss) for the period
from continuing operations (IX-
X)
(544.05)
(2,145.22)
XII Profit/(loss) from discontinuing
operations -
-
XIII Tax expense of discontinuing
operations -
-
XIV Profit/(loss) from Discontinuing
operations (after tax) (XII-XIII) -
-
XV Profit /(Loss) for the period (XI
+ XIV) (544.05)
(2,145.22)
XVI Earnings per equity share:
(1) Basic
(16.51)
(65.11)
(2) Diluted
-
-
32
Cash Flow Statement
Pursuant to Clause 32 of the Listing Agreement (as amended) (Rs. In lakhs)
31 st March 2013 31 st March 2012
Cash Flow from Operating Activities
Net Profit/ (Loss)before tax as per P&L a/c
(668.37)
(3,249.32)
Adjustment for :
Depreciation 215.06
161.20
Finance Charges 1,127.59
1,149.23
Interest Income (35.40)
(32.71)
Dividend Income (0.66)
(0.66)
(Profit) / Loss on sale of investment (Net) (5.60)
0.00
Reversal of Provision on dimunition of investment (0.50)
(Profit) / Loss on sale of assets (Net) 1.48 1,301.97 2.89 1,279.95
Operating Profit before working capital changes
633.60
(1,969.37)
Adjustments for :
Trade and Other Receivables (3,550.80)
(4,184.48)
Inventories (836.25)
(536.08)
Trade and Other Payables 4,502.61 115.56 7,749.30 3,028.74
Cash Generated from Operations
749.16
1,059.37
Direct Taxes Paid
(394.48)
(288.15)
Dividend paid
0.00
(95.73)
Net Cash from Operating Activities
354.68
675.49
Cash Flow from Investing Activities
Purchase of Fixed Assets (837.03)
(775.80)
Sale of Fixed Assets 6.24
11.11
Sale of investment 5.84
Dividend Received 0.66
0.66
Net Cash used in Investing Activities
(824.29)
(764.03)
Cash flow from Financing Activities
Issue of Preference Shares -
2,500.00
Loans Net of Repayment 1,587.41
(1,094.49)
Finance Charges (1,127.59)
(1,149.23)
Interest income 35.40
32.71
Net Cash used in Financing Activities
495.22
288.99
Net increase/ (decrease) in Cash and Cash Equivalents
25.61
200.45
Opening balance of Cash and Cash Equivalents
556.90
356.45
Closing balance of Cash and Cash Equivalents
582.51
556.90
33
GENERAL INFORMATION
Our Company was originally incorporated as ‘The Coromandel Engineering Company Limited’ on
September 3, 1947, under the Indian Companies Act, 1913 and forms part of the Murugappa Group of
Companies. The name of our Company was changed to ‘The Coromandel Engineering Company Private
Limited’ on April 14, 1956. Our Company was then converted into a public company pursuant to which our
name was again changed to ‘The Coromandel Engineering Company Limited’ on November 5, 1975 and
thereafter to ‘Coromandel Engineering Company Limited’ on February 24, 2006 and a fresh certificate of
incorporation consequent upon change in name was obtained from the Registrar of Companies, Chennai.
Our Company has been allotted a Corporate Identification Number, L74910TN1947PLC000343, under the
Companies Act, 1956.
Our Company operates primarily in construction, focusing on civil construction and property development.
We provide integrated construction services in the industrial, commercial and residential, cement and
auto/ancillary sectors which include (i) civil construction and related project management and (ii) allied
services such as mechanical and electrical, plumbing, fire-fighting, heating, ventilation and air
conditioning, interior fit-out services and glazing solutions. Our property development business focuses on
real estate development of residential properties with most of our significant operations in the State of
Tamil Nadu.
Pursuant to the resolution passed by the Board of Directors of our Company and the shareholders of our
Company at their meetings held on September 5, 2013 and October 1, 2013, respectively, it has been
decided to make the following offer to the Eligible Equity Shareholders of our Company, with a right to
renounce:
Issue of [•] Rights Equity Shares of our Company for cash at a price of ` [•] (including a premium of ` [•])
per Rights Equity Share not exceeding an amount of ` 5,000 lakhs by our Company to the Eligible Equity
Shareholders of our Company in the ratio of [•] Rights Equity Shares for every [•] Equity Shares held on
the Record Date, i.e. [•]. The Issue Price of each Rights Equity Share is [•] times the face value of the
Rights Equity Share.
For further details please refer to the section titled “Terms of the Issue” on page 133 of this Draft Letter of
Offer.
Registered Office of our Company
Coromandel Engineering Company Limited
Parry House, 3rd Floor
43, Moore Street,
Chennai - 600 001.
Telephone: + 91 44 2530 1700
Fax: + 91 44 2534 2822
Website: www.coromadelengg.com
Email: [email protected]
Registration No.: 000343
Corporate Identity No.: L74910TN1947PLC000343
Address of the RoC
Registrar of Companies, Chennai
Block no.6, B wing,
2nd floor, Shastri Bhawan,
26, Haddows Road,
Chennai – 600034,
Tamil Nadu
Telephone: +91 44 2827 0071
Fax: +91 44 2823 4298
Email: [email protected]
34
The Equity Shares of our Company are listed on the BSE Limited and the Madras Stock Exchange
Limited.
Company Secretary and Compliance Officer
Mr. R Narayanan
M/s Coromandel Engineering Company Limited,
3rd
Floor, Parry House,
43, Moore Street,
Chennai 600 001
Telephone: +91 44 2530 1777
Fax: +91 44 2534 2822
Website: www.coromandelengg.com
Email: [email protected]
Investors may contact the Compliance Officer for any pre-issue /post-issue related matters such as non-
receipt of letters of allotment/ share certificates/ refund orders, etc.
Lead Managers to the Issue:
Axis Capital Limited
1st Floor, Axis House,
C-2 Wadia International Centre
P.B. Marg, Worli, Mumbai- 400025
Telephone: (+91 22) 4325 3101
Facsimile: (+91 22) 4325 3000
Email: [email protected]
Website: www.axiscapital.co.in
Investor Grievance Email: [email protected]
Contact Person: Mr. Sonal Sinha
SEBI Registration Number: INM000012029
Tata Securities Limited
12th
Floor, 1202, Tower A, Peninsula Business Park,
Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013
Telephone: (+91 22) 6606 9000
Facsimile: (+91 22) 6656 2699
Email: [email protected]
Website: www.tatacapital.com
Investor Grievance Email: [email protected]
Contact Person: Mr. Abhishek Jain
SEBI Registration Number: INM000011302
Bankers to the Issue:
[•]
Refund Banker
[•]
Self Certified Syndicate Bankers:
The list of banks that have been notified by SEBI to act as SCSBs for the Applications Supported by
Blocked Amount Process is provided at www.sebi.gov.in/pmd/scsb.html. For details on designated
branches of SCSB collecting the CAF, please refer the above mentioned SEBI link.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
35
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue only
through the non-ASBA process.
Retail Individual Investors may optionally apply through the ASBA process, provided that they are eligible
ASBA Investors.
Please note that subject to SCSBs complying with the requirements of SEBI Circular No.
CIR/CFD/DIL/13/2012 dated September 25, 2012 within the periods stipulated therein, ASBA
Applications may be submitted at all branches of the SCSBs.
All grievances relating to the ASBA process may be addressed to the Registrar to the Issue, with a
copy to the SCSB, giving full details such as name, address of the applicant, number of Rights Equity
Shares applied for, amount blocked, ASBA account number and the Designated Branch of the SCSB
where the CAF was submitted by the ASBA Investors.
For more details on the ASBA process, please refer to the details given in CAF and also please refer to the
section titled “Terms of the Issue” on page 133 of this Draft Letter of Offer.
Domestic Legal Advisor to the Issue
J Sagar Associates
Vakils House,
18, Sprott Road
Ballard Estate
Mumbai- 400 001
Telephone: +91 22 4341 8600
Facsimile: +91 22 4341 8617
Email: [email protected]
Statutory Auditors of our Company
M/s Sundaram & Srinivasan, Chartered Accountants,
New No. 4, Old No 23,
C P Ramaswamy Road,
Alwarpet, Chennai – 600 018
Telephone: +91 44 2498 8762
Facsimile: +91 44 2498 8463
Email: [email protected] Firm Registration Number: 004207S
Contact Person: Mr. M. Padhmanabhan
Registrar to the Issue
Karvy Computershare Private Limited Plot Nos. 17-24, Vittal Rao Nagar, Madhapur,
Hyderabad - 500 081
Telephone: +91 40 4465 5000
Facsimile: +91 40 2343 1551
E-mail: [email protected]
Website: www.karvy.com
Contact Person: Mr. M. Muralikrishna
SEBI Registration No.: INR000000221
36
Note: Investors are advised to contact the Registrar to the Issue/Compliance Officer in case of any pre-
Issue/post-Issue related problems such as non-receipt of the Letter of Offer/abridged letter of
offer/CAF/allotment advice/share certificate(s)/refund orders.
Subscription by our Promoters and/or Promoter Group
Murugappa Holdings Limited, either by itself and/or through a combination of entities belonging to the
Promoter and Promoter Group holding Equity Shares in our Company have confirmed that they intend to
subscribe to an amount not exceeding ` 3,750 lakhs through (a) subscribing to Promoter and Promoter
Group’s Rights Entitlement including, by subscribing for Rights Shares pursuant to renunciation, if any,
obtained in their favour and (b) by retaining the right to apply for additional Equity shares in accordance
with and subject to Regulation 10(4)(b) of the Takeover Regulations.
Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may result in an
increase in their percentage shareholding. Any such acquisition of additional Equity Shares of the Company
shall not result in a change of control of the management of the Company in accordance with provisions of
the Takeover Code and shall be exempt in terms of Regulation 10 (4) (a) and (b) of the Takeover Code.
The subscription by Promoter and Promoter Group of the Rights Shares in the Issue and the consequent
allotment of the Rights Shares would be subject to aggregate shareholding of the Promoters and Promoter
Group not exceeding 75% of the post-Issue equity share capital of the Company on the date of Allotment,
in accordance with clause 40A of the Equity Listing Agreements.
For further details please refer to “Terms of the Issue – Basis of Allotment” on page 155 of this Draft Letter
of Offer.
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: [•]
Monitoring Agency
A monitoring agency is not required pursuant to Regulation 16(1) of the SEBI (ICDR) Regulations. Our
Board will monitor the use of proceeds of this Issue as per clause 49 of the Listing Agreement.
Impersonation
As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-
Section (1) of Section 38 of the Companies Act, 2013 which is reproduced below:
“Any person who makes or abets making of an application in a fictitious name to a company for acquiring,
or subscribing for, its securities; or makes or abets making of multiple applications to a company in
different names or in different combinations of his name or surname for acquiring or subscribing for its
securities; or otherwise induces directly or indirectly a company to allot, or register any transfer of,
securities to him, or to any other person in a fictitious name, shall be liable for action under Section 447.”
Expert
Except as stated below, our Company has not obtained any expert opinions:
37
Our Company has received written consent from the Auditor namely, M/s Sundaram & Srinivasan,
Chartered Accountants to include its name as an expert under Section 58 of the Companies Act, 1956 in
this Draft Letter of Offer in relation to the report of the Auditor dated April 30, 2013 and September 19,
2013 and statement of tax benefits dated September 17, 2013 included in this Draft Letter of Offer and such
consent has not been withdrawn as of the date of this Draft Letter of Offer.
Listing on the Stock Exchanges
The Equity Shares of our Company were initially listed on the MSE and subsequently on the BSE. With
effect from February 17, 2011, the Equity Shares of the Company are included on the NSE trading platform
pursuant to an agreement between the MSE and the NSE. We have received in-principle approvals for
listing of the Rights Equity Shares from the BSE and the MSE by letters dated [•] and [•], respectively. We
will make applications to the Stock Exchanges for final listing and trading approvals in respect of the
Rights Equity Shares being offered in terms of this Draft Letter of Offer.
Trustees
As this is an Issue of Rights Equity Shares, the appointment of trustee/s is not required.
Underwriting
Our Company has not currently entered into any underwriting arrangement. We may enter into such an
arrangement for the purpose of this Issue at an appropriate time and on such terms and conditions as we
may deem fit. In the event our Company enters into such an arrangement, which shall be done, prior to the
filing of the Letter of Offer with the Designated Stock Exchange, we shall disclose the details of the
underwriting arrangement in the Letter of Offer as required under the SEBI ICDR Regulations.
Statement of responsibility of the Lead Managers
The list of responsibilities for various activities in this Issue are as follows:
Sr.
No.
Activities Responsibility Co-ordination
1. Capital structuring with the relative components and
formalities such as type of instruments, etc.
Axis Capital
Limited and Tata
Securities Limited
Axis Capital
Limited
2. Undertaking due diligence documents and together with
legal counsels assist in drafting of the Offer Documents
and of advertisement/publicity material including
newspaper advertisements and brochure/ memorandum
containing salient features of the Offer Document.
Compliance with the SEBI Regulations and other
stipulated requirements and completion of prescribed
formalities with Stock Exchanges and SEBI.
Axis Capital
Limited and Tata
Securities Limited
Axis Capital
Limited
3. Selection of various agencies connected with the issue,
namely Registrar to the Issue, Bankers to the Issue,
printers and advertisement agencies.
Axis Capital
Limited and Tata
Securities Limited
Axis Capital
Limited
4. 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) distribution of publicity and
Issue material including composite application form,
Draft Letter of Offer, Letter of Offer, etc., and deciding
upon the quantum of Issue material.
Axis Capital
Limited and Tata
Securities Limited
Axis Capital
Limited
38
Sr.
No.
Activities Responsibility Co-ordination
5. The post Issue activities will involve essential follow up
steps, which must include finalization of basis of
allotment / weeding out of multiple applications, listing
of instruments and dispatch of certificates and refunds,
with the various agencies connected with the work such
as Registrar to the Issue, Bankers to the Issue and the
bank handling refund business. Lead Managers shall be
responsible for ensuring that these agencies fulfill their
functions and enable them to discharge this
responsibility through suitable agreements with the
Company.
Axis Capital
Limited and Tata
Securities Limited
Axis Capital
Limited
Credit Rating
As this is an Issue of Rights Equity Shares, we are not required to obtain a credit rating in connection with
the Issue and/or the Rights Equity Shares.
For details in connection, please see the section titled “Principal Terms of Loans and Assets Charged as
Security” on pages 111 to 117 of this Draft Letter of Offer.
39
CAPITAL STRUCTURE
Our share capital as on the date of filing of this Draft Letter of Offer is set forth below:
(` in lakhs except share data)
Aggregate Value at
nominal value
Aggregate
Value at
Issue
Price
A) AUTHORISED SHARE CAPITAL 6,500.00
4,00,00,000 Equity Shares of ` 10each 4,000.00
25,00,000 Preference Shares of ` 100 each 2,500.00
B) ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL
BEFORE THE ISSUE
2,829.48
Equity Shares:
32,94,780 Equity Shares of ` 10 each 329.48
Preference Shares:
25,00,000 Preference Shares of ` 100 each 2,500.00
C) PRESENT ISSUE IN TERMS OF THIS DRAFT LETTER OF
OFFER
[•]Equity Shares of ` [•]each fully paid up [•] [•]
D) PAID UP EQUITY SHARE CAPITAL AFTER THE ISSUE
[•]Equity Shares of ` [•]each fully paid up [•]
E) SHARE PREMIUM ACCOUNT
Before the Issue 123.86
After the Issue [•]
Notes to the Capital Structure
1. Share Capital History of our Company
a) The following is the history of the equity share capital and securities premium account of our
Company as on the date of filing this Draft Letter of Offer.
Date of
allotment
of the
Equity
Shares
No. of
Equity
Shares
issued
Face
Value
(in `)
Issue
Price
per
Equity
Share
(in `)
Nature of
Consideration Mode of
Allotment Cumulative
No. of
Equity
Shares
Cumulative
Paid up
Equity
Share
Capital (`)
Cumulative
Share
Premium
Account (`)
Septemb
er 4,
1947
3,500 100 100 Cash Subscrib
ers to the
MoA
3,500 3,50,000 -
Novemb
er 15,
1951
1,750 100 100 Cash Further
issue of
shares
5,250 5,25,000 -
October
1, 1953
1,750 100 100 Cash Further
issue of
shares
7,000 7,00,000 -
40
Date of
allotment
of the
Equity
Shares
No. of
Equity
Shares
issued
Face
Value
(in `)
Issue
Price
per
Equity
Share
(in `)
Nature of
Consideration Mode of
Allotment Cumulative
No. of
Equity
Shares
Cumulative
Paid up
Equity
Share
Capital (`)
Cumulative
Share
Premium
Account (`)
Novemb
er 28,
1960
2,333 100 100 Cash Further
issue of
shares
9,333 9,33,300 -
March
19, 1966
667 100 100 Cash Further
issue of
shares
10,000 10,00,000 -
July 21,
1972
2,000 100 100 Cash Further
issue of
shares
12,000 12,00,000 -
The face value of the Equity Shares was reduced from ` 100 to ` 10 pursuant to a special resolution dated
April 16, 1975.
October
1, 1975
40,00
0
10 10 Cash Further
issue of
shares
1,60,000 16,00,000 -
March
16, 1979
80,00
0
10 10 Cash Further
issue of
shares
2,40,000 24,00,000
-
March
26, 1979
March
29,1979
Novemb
er 14,
1983
1,44,0
00
10 Nil Nil Bonus
issue
(Ratio
3:5)
3,84,000 38,40,000 -
March
31, 1989
1,295 10 10 Amalgamatio
n
Further
issue of
shares to
sharehol
ders of
Polutech
Limited
(Ratio
1:4) on
its
amalgam
ation
with the
Compan
y
3,85,295 38,52,950 -
August
31, 1989
3,85,2
95
10 10 Cash Rights
Issue
(Ratio
1:1)
7,70,590 77,05,900 -
August
31, 1989
1,800 10 10 Cash Allotted
to the
permane
nt
employe
es of the
Compan
y
7,72,390 77,23,900 -
August 8,75,0 10 10 Amalgamatio Further 16,47,390 1,64,73,90 -
41
Date of
allotment
of the
Equity
Shares
No. of
Equity
Shares
issued
Face
Value
(in `)
Issue
Price
per
Equity
Share
(in `)
Nature of
Consideration Mode of
Allotment Cumulative
No. of
Equity
Shares
Cumulative
Paid up
Equity
Share
Capital (`)
Cumulative
Share
Premium
Account (`)
24, 1992 00 n issue of
shares to
sharehol
ders of
Coroman
del
Prodorite
Private
Limited
(Ratio
5:2) on
its
amalgam
ation
with the
Compan
y
0
October
14, 2008
16,47,
390
10 20 Cash Rights
Issue
(ratio
1:1)
32,94,780 3,29,47,80
0
1,64,73,900
Note: Our Equity Shares were listed on the MSE on January 27, 1976 pursuant to an offer of Equity Shares to the
public through an offer for sale. Subsequently our Equity Shares were listed on the BSE on March 15, 2010 and
pursuant to an agreement between the MSE and the NSE our Equity Shares are being traded on the NSE since
February 17, 2011.
b) The following is the history of the preference share capital of our Company as on the date of filing
this Draft Letter of Offer.
Date of
allotment
of the
Equity
Shares
No. of
Prefer
ence
Shares
issued
Face
Value
(in `)
Issue
Price
per
Prefer
ence
Share
(in `)
Nature of
Consideration Mode of
Allotment Cumulative
No. of
Preference
Shares
Cumulative
Paid up
Preference
Share
Capital (`)
Cumulative
Share
Premium
Account (`)
March
28, 2012
25,00,
000
100 100 Cash Private
Placeme
nt basis
to M/s
Rachna
Credit
Capital
Private
Limited*
25,00,000 25,00,00,0
00
-
August
22, 2013
25,00,
000
100 120 Cash Private
Placeme
nt basis
to Tata
Capital
Financial
Services
Limited**
25,00,000 2,50,00,00
00
5,00,00,000
42
* These Preference Shares have been redeemed on August 22, 2013. ** ` 500 lakhs premium received on this allotment was utilized towards premium on redemption of
preference shares issued on March 28, 2012.
2. Outstanding Instruments:
Our Company has no outstanding instruments for conversion or instruments giving any options for
conversion.
3. Details of securities held by our Promoter and Promoter Group
The table below presents the details of the securities of our Company held by our Promoters and
Promoter Group as on June 30, 2013 including details of lock-in, pledge and/or encumbrance on
such securities:
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
Promoter and Promoter Group
1. M A M
Arunach
alam
2,11,610
6.42 0 0.00 0.00 0 0.00 0 0.00 6.42
2. M M
Venkatac
halam
2,01,610 6.12 0 0.00 0.00 0 0.00 0 0.00 6.12
3. Arun
Alagappa
n
2,01,610 6.12 0 0.00 0.00 0 0.00 0 0.00 6.12
4. A
Vellayan 2,01,610 6.12 0 0.00 0.00 0 0.00 0 0.00 6.12
5. M M 2,01,610 6.12 0 0.00 0.00 0 0.00 0 0.00 6.12
43
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
Murugap
pan
6. A
Venkatac
halam
2,01,610 6.12 0 0.00 0.00 0 0.00 0 0.00 6.12
7. S
Vellayan 2,01,610 6.12 0 0.00 0.00 0 0.00 0 0.00 6.12
8. M V
Murugap
pan
1,63,063 4.95 0 0.00 0.00 0 0.00 0 0.00 4.95
9. Ambadi
Investme
nts
Private
Limited
62,602 1.90 0 0.00 0.00 0 0.00 0 0.00 1.90
10. M M
Seethala
kshmi
61,916 1.88 0 0.00 0.00 0 0.00 0 0.00 1.88
11. A A
Alagam
mai
57,414 1.74 0 0.00 0.00 0 0.00 0 0.00 1.74
12. Murugap
pa
Educatio
nal &
Medical
Foundati
55,502 1.68 0 0.00 0.00 0 0.00 0 0.00 1.68
44
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
on
13. M V
Seetha
Subbiah
49,968 1.52 0 0.00 0.00 0 0.00 0 0.00 1.52
14. M M
Muthiah
Sons
Private
Limited
48,430 1.47 0 0.00 0.00 0 0.00 0 0.00 1.47
15. M V
Valli
Murugap
pan
47,714 1.45 0 0.00 0.00 0 0.00 0 0.00 1.45
16. E I D
Parry
India
Limited
42,938 1.30 0 0.00 0.00 0 0.00 0 0.00 1.30
17. Tube
Investme
nts of
India
Limited
42,919 1.30 0 0.00 0.00 0 0.00 0 0.00 1.30
18. Carborun
dum
Universa
l Limited
42,900 1.30 0 0.00 0.00 0 0.00 0 0.00 1.30
19. M A 41,210 1.25 0 0.00 0.00 0 0.00 0 0.00 1.25
45
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
Alagappa
n
20. M M
Muthiah
Research
Foundati
on
38,930 1.18 0 0.00 0.00 0 0.00 0 0.00 1.18
21. A M
Meyyam
mai
35,400 1.07 0 0.00 0.00 0 0.00 0 0.00 1.07
22. Kartik
Investme
nts Trust
Limited
26,876 0.82 0 0.00 0.00 0 0.00 0 0.00 0.82
23. M V
Subbiah 18,090 0.55 0 0.00 0.00 0 0.00 0 0.00 0.55
24. M A
Alagappa
n Grand
Children
s Trust
16,430 0.50 0 0.00 0.00 0 0.00 0 0.00 0.50
25. Arun
Alagappa
n
Children
Trust
16,430 0.50 0 0.00 0.00 0 0.00 0 0.00 0.50
26. Meenaks 16,164 0.49 0 0.00 0.00 0 0.00 0 0.00 0.49
46
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
hi AR
27. M A
Murugap
pan
Holdings
Private
Limited
14,600 0.44 0 0.00 0.00 0 0.00 0 0.00 0.44
28. A M M
Arunach
alam &
Sons
Private
Limited
14,600 0.44 0 0.00 0.00 0 0.00 0 0.00 0.44
29. AR
Lakshmi
Achi
Trust
13,556 0.41 0 0.00 0.00 0 0.00 0 0.00 0.41
30. M M
Murugap
pan
13,500 0.41 0 0.00 0.00 0 0.00 0 0.00 0.41
31. M V
Murugap
pan
13,344 0.41 0 0.00 0.00 0 0.00 0 0.00 0.41
32. A M M
Vellayan
Sons
Private
Limited
12,094 0.37 0 0.00 0.00 0 0.00 0 0.00 0.37
47
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
33. A M
Meyamm
ai
10,000 0.30 0 0.00 0.00 0 0.00 0 0.00 0.30
34. M A
Alagappa
n
10,000 0.30 0 0.00 0.00 0 0.00 0 0.00 0.30
35. Meenaks
hi
Murugap
pan
6,400 0.19 0 0.00 0.00 0 0.00 0 0.00 0.19
36. M V
Muthiah 6,000 0.18 0 0.00 0.00 0 0.00 0 0.00 0.18
37. Meyyam
mai
Venkatac
halam
5,232 0.16 0 0.00 0.00 0 0.00 0 0.00 0.16
38. M M
Murugap
pan
5,120 0.16 0 0.00 0.00 0 0.00 0 0.00 0.16
39. Lalitha
Vellayan 4,560 0.14 0 0.00 0.00 0 0.00 0 0.00 0.14
40. M V
Subbiah 4,160 0.13 0 0.00 0.00 0 0.00 0 0.00 0.13
41. Lakshmi
Venkatac
halam
4,000 0.12 0 0.00 0.00 0 0.00 0 0.00 0.12
42. V 3,456 0.10 0 0.00 0.00 0 0.00 0 0.00 0.10
48
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
Narayan
an
43. Murugap
pa
Manage
ment
Services
Limited
2,112 0.06 0 0.00 0.00 0 0.00 0 0.00 0.06
44. M V
Subbiah 1,840 0.06 0 0.00 0.00 0 0.00 0 0.00 0.06
45. M M
Veerapp
an
1,800 0.05 0 0.00 0.00 0 0.00 0 0.00 0.05
46. M M
Muthiah 1,800 0.05 0 0.00 0.00 0 0.00 0 0.00 0.05
47. M A
Alagapp
an
1,600 0.05 0 0.00 0.00 0 0.00 0 0.00 0.05
48. A
Vellayan 960 0.03 0 0.00 0.00 0 0.00 0 0.00 0.03
49. V
Arunach
alam
816 0.02 0 0.00 0.00 0 0.00 0 0.00 0.02
50. Chola
Insuranc
e
Services
364 0.01 0 0.00 0.00 0 0.00 0 0.00 0.01
49
Sl.
No
.
Name of
the
Sharehol
der
Details of Shares held Encumbered Shares Details of
Warrants
Details of
Convertible
Securities
Total
shares
(includin
g
underlyi
ng
shares
assumin
g full
conversi
on of
warrants
and
converti
ble
securitie
s) as a %
of
diluted
share
capital
No. of
shares
held
As a %
of total
no. of
equity
shares
outstand
ing as on
June 30,
2013
No. of
shares
held
As a
%
As a %
of total
no. of
equity
shares
outstandi
ng as on
June 30,
2013
No. of
warra
nts
held
As a %
total
number
of
warrant
s of the
same
class
No. of
converti
ble
securities
As a %
total
number
of
converti
ble
securiti
es of the
same
class
(I) (II) (III) (IV) (V) (VI)
=
(V) /
(III)
x
100
(VII)
(VIII) (IX)
(X) (XI)
(XII)
Private
Limited
Total 24,58,080 74.61 0 0.00 0.00 0 0.00 0 0.00 74.61
4. None of the Equity Shares of the Promoters/Promoter Group are pledged with any institutions,
locked-in or subject to any encumbrance as on June 30, 2013.
5. The Promoters and the Promoter Group have not acquired any Equity Shares in the last one year
immediately preceding the date of this Draft Letter of Offer, except as follows:
Sl.
No
.
Name of Promoter/Promoter
Group Entity
Total No.
of Equity
Shares
Consideration
(`/equity share)
Nature of
consideration
Date of
Transaction
1. Mr M V Subbiah received
from Ms Sivagami Natesan
4,160
- Gift November 7, 2012
2. M A Murugappan Holdings
Private Limited received from
A M M Arunachalam & Sons
Private Limited
14,600
- Pursuant to the
approval of a
scheme of
arrangement
for demerger
by the High
Court of
Chennai.
December 28, 2012
3. M A M Arunachalam, Trustee
of Arun Murugappan
Childrens Trust received from
Mr M A Alagappan jointly
with Valli Alagappan who are
16,430
- Bequeathal as
per the will of
AMM AR
Lakshmi.
March 25, 2013
50
Sl.
No
.
Name of Promoter/Promoter
Group Entity
Total No.
of Equity
Shares
Consideration
(`/equity share)
Nature of
consideration
Date of
Transaction
executors to Estate of AMM
AR Lakshmi
4. Mrs A A Alagammai –
Trustee, M A Alagappan
Grand Childrens Trust
received from Mr M A
Alagappan jointly with Valli
Alagappan who executors to
Estate of AMM AR Lakshmi
16,430
- Bequeathal as
per the will of
AMM AR
Lakshmi
March 25, 2013
5. Cholamandalam Distribution
Services Limited received
from Kartik Investments Trust
Limited
100 250 Transfer September 25, 2013
6. Murugappa Holdings Limited
received from Murugappa
Management Services Limited
100 250 Transfer September 26, 2013
7. Ambadi Enterprises Limited
received from Murugappa
Management Services Limited
100 250 Transfer September 26, 2013
8. Parry Agro Industries Limited
received from Murugappa
Management Services Limited
100 250 Transfer September 26, 2013
9. Parry Infrastructure Company
Private Limited received from
Murugappa Management
Services Limited
100 250 Transfer September26, 2013
10. Pressmet Private Limited 100 250 Market
purchase
September 26, 2013
11. Dare Investments Limited 100 258 Market
purchase
September 27, 2013
6. The ex-rights price arrived in accordance with the formula prescribed under Clause 4(b) of
Regulation 10 of the Takeover Regulations, in connection with the Issue is ` [•].
7. Shareholding Pattern:
The table below presents our Company’s shareholding as on June 30, 2013:
Category of
Shareholder
No. of
Sharehol
ders
Total No.
of Shares
Total No. of
Shares held
in
Demateriali
zed Form
Total Shareholding as a
% of total No. of
Shares
Shares pledged or
otherwise encumbered
As a %
of (A+B)
As a % of
(A+B+C)
Number of
shares
As a
% of
Total
No. of
Shares
(A)
Shareholdin
g of
Promoter
and
Promoter
51
Category of
Shareholder
No. of
Sharehol
ders
Total No.
of Shares
Total No. of
Shares held
in
Demateriali
zed Form
Total Shareholding as a
% of total No. of
Shares
Shares pledged or
otherwise encumbered
As a %
of (A+B)
As a % of
(A+B+C)
Number of
shares
As a
% of
Total
No. of
Shares
Group
(1) Indian
Individuals /
Hindu
Undivided
Family
38 20,92,143 20,92,143 63.50 63.50 0 0.00
Body
Corporates 12 3,65,937 3,65,937 11.11 11.11 0 0.00
Sub Total 50 24,58,080 24,58,080 74.61 74.61 0 0.00
(2) Foreign
Total
shareholding
of Promoter
and
Promoter
Group (A)
50 24,58,080 24,58,080 74.61 74.61 0 0.00
(B) Public
Shareholdin
g
(1)
Institutions
- - - - - - -
(2) Non-
Institutions
Bodies
Corporate 39 34,620 29,508 1.05 1.05 0 0.00
Individuals
Individual
shareholders
holding
nominal share
capital up to
` 1 lakh
962 2,27,325 1,59,902 6.90 6.90 0 0.00
Individual
shareholders
holding
nominal share
capital in
excess of ` 1
lakh
13 5,73,537 5,73,537 17.41 17.41 0 0.00
Any Others
(Specify) 6 1,218 1,218 0.04 0.04 0 0.00
Non Resident
Indians 6 1,218 1,218 0.04 0.04 0 0.00
52
Category of
Shareholder
No. of
Sharehol
ders
Total No.
of Shares
Total No. of
Shares held
in
Demateriali
zed Form
Total Shareholding as a
% of total No. of
Shares
Shares pledged or
otherwise encumbered
As a %
of (A+B)
As a % of
(A+B+C)
Number of
shares
As a
% of
Total
No. of
Shares
Sub Total 1,020 8,36,700 7,64,165 25.39 25.39 0 0.00
Total Public
shareholding
(B)
1,020 8,36,700 7,64,165 25.39 25.39 0 0.00
Total
(A)+(B) 1070 32,94,780 32,22,245 100.00 100.00 0 0.00
(C) Shares
held by
Custodians
and against
which
Depository
Receipts
have been
issued
0 0 0 0.00 0.00 0 0.00
(1) Promoter
and Promoter
Group 0 0 0 0.00 0.00 0 0.00
(2) Public 0 0 0 0.00 0.00 0 0.00
Sub Total 0 0 0 0.00 0.00 0 0.00
Total
(A)+(B)+(C) 1,070 32,94,780 32,22,245 0.00 100.00 0 0.00
8. Participation in the Issue by the Promoter and Promoter Group:
Murugappa Holdings Limited, either by itself and/or through a combination of entities belonging
to the Promoter and Promoter Group holding Equity Shares in our Company have confirmed that
they intend to subscribe to an amount not exceeding ` 3,750 lakhs through (a) subscribing to
Promoter and Promoter Group’s Rights Entitlement including, by subscribing for Rights Shares
pursuant to renunciation, if any, obtained in their favour and (b) by retaining the right to apply for
additional Equity shares in accordance with and subject to Regulation 10(4)(b) of the Takeover
Regulations.
Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may
result in an increase in their percentage shareholding. Any such acquisition of additional Equity
Shares of the Company shall not result in a change of control of the management of the Company
in accordance with provisions of the Takeover Code and shall be exempt in terms of Regulation
10 (4) (a) and (b) of the Takeover Code.
The subscription by Promoter and Promoter Group of the Rights Shares in the Issue and the
consequent allotment of the Rights Shares would be subject to aggregate shareholding of the
Promoters and Promoter Group not exceeding 75% of the post-Issue equity share capital of the
Company on the date of Allotment, in accordance with clause 40A of the Equity Listing
Agreements.
53
For further details please refer to “Terms of the Issue – Basis of Allotment” on page 155 of this
Draft Letter of Offer.
9. Persons and Entities owning more than 1% (one percent) of our Equity Shares:
Statement showing shareholding of persons belonging to the category “Public” and holding more
than 1% of the total number of Equity Shares as on June 30, 2013:
Sl.
No.
Name of the
Shareholder
Number of
shares held
Shares as
a % of
total
number
of
equity
shares
outstan
ding as
on June
30, 2013
Details of
Warrants
Details of
Convertible
Securities
Total
shares
(including
underlying
shares
assuming
full
conversion
of
warrants
and
convertible
securities)
as a % of
diluted
share
capital
No. of
warrants
held
As a %
total
numbe
r of
warra
nts of
the
same
class
No. of
convertibl
e
securities
% w.r.t
total
numbe
r of
convert
ible
securiti
es of
the
same
class
1. R Muthatha 1,45,477 4.42 0 0.00 0 0.00 4.42
2. Valli
Muthuraman 97,830 2.97 0 0.00 0 0.00 2.97
3. Vellachi
Ramanathan 90,677 2.75 0 0.00 0 0.00 2.75
4. Seetha
Subramanian 52,500 1.59 0 0.00 0 0.00 1.59
5. Umayal R 33,800 1.03 0 0.00 0 0.00 1.03
Total 4,20,284 12.76 0 0.00 0 0.00 12.76
10. The terms of issue to Eligible Equity Shareholders have been presented under the section titled
“Terms of the Issue” on page 133 of this Draft Letter of Offer.
11. At any given time, there shall be only one denomination of Equity Shares of our Company.
12. We have not revalued our assets during the last five Financial Years. 13. Issue to remain open for a minimum of 15 days and a maximum period which shall not exceed 30
days as may be determined by the Board.
14. All 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. Further, the Rights Equity Shares when issued
shall be fully-paid up.
54
OBJECTS OF THE ISSUE
The Objects of the Issue are:
1. Repayment/ pre-payment, in full or part, of certain loans availed by our Company;
2. Redemption of existing preference shares;
3. General corporate purposes.
The main objects clause of our Company’s Memorandum of Association enables us to undertake our
existing activities and the activities for which funds are being raised by our Company pursuant to the Issue.
We intend to utilize the proceeds of the Issue after deducting expenses relating to the Issue, (“Net
Proceeds”), which is estimated at ` 5,000 lakhs for the abovementioned objects.
The details of the proceeds of the Issue are as follows:
(` in lakhs)
S.
No.
Description Amount
1 Gross Proceeds of the Issue ` 5,000
2 Issue related Expenditure [•]
3 Net Proceeds of the Issue [•]
Means of Finance:
The stated objects of the Issue are proposed to be entirely financed by the Net Proceeds of the Issue and our
Company’s internal accruals, thus, we are not required to make any firm arrangements of finance through
verifiable means towards 75% of the stated means of finance excluding the amount to be raised through the
proposed Issue, as required under Regulation 4(2)(g) of the SEBI (ICDR) Regulations.
Utilisation of Net Proceeds
The utilization of the Net Proceeds of this Issue is as follows:
Serial
No.
Particulars Estimated amount to be utilized
(in ` in lakhs)
1 Repayment/ pre-payment, in full or part, of certain loans
availed by our Company
2,500
2 Redemption of existing preference share capital 1,970
3 General Corporate Purpose [•] 4 Issue Expenses [•]
Our fund requirements and deployment of the Net Proceeds of the Issue is based on internal management
appraisals and estimates and have not been appraised by any bank or financial institution. These are based
on current conditions and are subject to change in light of changes in external circumstances or costs, or in
other financial condition, business or strategy.
We operate in highly competitive and dynamic market conditions and may have to revise our estimates
from time to time on account of external circumstances or costs in our financial condition, business or
strategy. Consequently, our fund requirements may also change. Any such change in our plans may require
rescheduling of our expenditure programs and increasing or decreasing expenditure for a particular object
vis-à-vis the utilization of Net Proceeds.
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
55
the other purposes for which funds are being raised in this Issue. If surplus funds are unavailable, the
required financing will be through our internal accruals, cash flow from our operations and/or debt, as
required. In case of a shortfall in the Net Proceeds, we may explore a range of options including utilizing
our internal accruals, and / or seeking additional debt from existing and future lenders. In the event that
estimated utilization out of the Net Proceeds in a Fiscal is not completely met, the same shall be utilized in
the next Fiscal. For risks relating to our objects please see the risk factor: “The requirement of funds in
relation to the Objects of the Issue has not been appraised and our budgeted expenditure program may
change” in the section titled “Risk Factors” on page 10 of this Draft Letter of Offer.
Schedule of Deployment:
We confirm that no amounts have been deployed as on the date of this Draft Letter of Offer towards the
aforesaid objects of this Issue, accordingly the entire objects of the Issue are proposed to be financed from
the proceeds of the Issue in the following manner:
Sl.
No.
Expenditure Items Deployment
for the
Financial
Year ended
2014 (` in
lakhs)
Deployment
for the
Financial
Year ended
2015 (` in
lakhs)
Total
Deployment
(` in lakhs)
1. Repayment/ pre-payment, in full or
part, of certain loans availed by our
Company
1,500 1,000
2,500
2. Redemption of existing preference
share capital
1,970 - 1,970
3. General Corporate purposes [•] [•] [•]
TOTAL [•] [•] 5,000
Appraisal of the Objects
As the Net Proceeds are not proposed to be utilized for any project, the Company has not obtained any
appraisal of the use of proceeds of the Issue by any bank or financial institution.
Details of the Object of the Issue
1. Repayment/ pre-payment, in full or part, of certain loans availed by our Company.
Our Company has entered into financing arrangements with various banks/ financial institutions. These
arrangements include secured loans from banks/ financial institutions. For details of our debt financing
arrangements, see the section titled “Principal Terms of Loans and Assets Charged as Security” on page
111.
Our Company proposes to utilize an estimated amount of ` 2,500 lakhs from the Net Proceeds towards
repayment/ pre-payment, in full or part, of certain loans availed by our Company. We believe that such
repayment/ pre-payment will help reduce our outstanding indebtedness and our debt-equity ratio. We
believe that reducing our indebtedness will result in an enhanced equity base, assist us in maintaining a
favourable debt-equity ratio in the near future and enable utilization of our accruals for further investment
in business growth and expansion in new projects. In addition, we believe that the leverage capacity of our
Company will improve significantly to raise further resources in the future to fund our potential business
development opportunities and plans to grow and expand our business in the coming years.
The following table provides details of certain loans availed by the Company, out of which we may repay/
pre-pay, in full or in part, any or all of the loans from the Net Proceeds, without any obligation to any
particular bank/ financial institution:
56
Sr.n
o.
Name of
Lender and
nature,
date of the
loan
agreement
Purpose
of loan *
Amount
sanction
ed (in ` lakhs)
Amount
disburse
d upto –
Septem
ber 30,
2013 (in
` lakhs)
Total
Amount
outstan
ding as
on
Septem
ber 30,
2013 (in
` lakhs)
Rate of
interest
(per
annum
Repayment Prepaym
ent
penalty
1. Indusind
Bank
Limited –
Sanction
letter dated
June 29,
2013
To shore
up the
Compan
y’s net
working
capital
1,500
1,500 1,406.25 As
mutually
agreed
5 years As
mutually
agreed, if
prepaid
within 3
months
from the
date of
drawdow
n
2. New India
Co-op Bank
Limited –
Loan
agreement
dated March
27, 2013
To fund
acquisiti
on of
fixed
assets
450 450 449.81 12.25%
(Fixed)
13 months 2% on
the
sanctione
d limit (if
liability
is taken
over by
any other
bank/fina
ncial
institutio
ns)
3. New India
Co-op Bank
Limited –
Loan
agreement
dated March
30, 2013
To fund
acquisiti
on of
fixed
assets
1,000 1,000 999.59 12.25%
p.a.
(Fixed)
Within 25
months
2% on
the
sanctione
d limit (if
liability
is taken
over by
any other
bank/fina
ncial
institutio
ns)
4. New India
Co-op Bank
Limited –
Loan
agreement
dated
February 25,
2010
To fund
acquisiti
on of
fixed
assets
2,400 2,400 599.99 9.75%
p.a.
(fixed) to
be
charged
on
monthly
basis but
servicing
of
interest
permitted
on
quarterly
On
demand/annua
l review –
allowed to pay
in 4 annual
installments of
` 600 lakhs
each
(excluding
moratorium of
1 year).
2% on
the
sanctione
d limit (if
the
option is
exercised
after two
years,
from the
date of
first
disburse
ment,
57
Sr.n
o.
Name of
Lender and
nature,
date of the
loan
agreement
Purpose
of loan *
Amount
sanction
ed (in ` lakhs)
Amount
disburse
d upto –
Septem
ber 30,
2013 (in
` lakhs)
Total
Amount
outstan
ding as
on
Septem
ber 30,
2013 (in
` lakhs)
Rate of
interest
(per
annum
Repayment Prepaym
ent
penalty
basis prepayme
nt
penalty is
waived)
5. Tata
Capital
Financial
Services
Limited –
Term Loan
agreement
dated
January 25,
2012
To shore
up long
term
funds for
net
working
capital
requirem
ent for
property
develop
ment
2,000 2,000 1,732.11 LTR
less
4.75%
i.e.
13.25%
p.a.
floating
interest
rate.
LTR is
subject
to
change
from
time to
time.
5 years 1% on
the
principal
outstandi
ng if
prepaid
within 17
months
from 1st
disbursal
6. Tata
Capital
Financial
Services
Limited –
Term Loan
agreement
dated July
16, 2013
Towards
augment
ing long
term
funds for
net
working
capital
requirem
ent of
the
Compan
y for
property
develop
ment
1,000 1,000 1,000 LTR less
6.00%
i.e.
12.00%
p.a.
floating
interest
rate,
subject
to a
minimu
m of
11.50%.
LTR is
subject
to
change
from
time to
time.
5 years 1% on
the
principal
outstandi
ng (Nil
pre
payment
charges if
paid from
the
internal
accruals
of the
Company
)
7. Cholamanda
lam
Investment
and Finance
Company
Limited –
To meet
the
working
capital
of the
Compan
1,000 500 500 13.00%
p.a.
payable
monthly
1 year Nil
58
Sr.n
o.
Name of
Lender and
nature,
date of the
loan
agreement
Purpose
of loan *
Amount
sanction
ed (in ` lakhs)
Amount
disburse
d upto –
Septem
ber 30,
2013 (in
` lakhs)
Total
Amount
outstan
ding as
on
Septem
ber 30,
2013 (in
` lakhs)
Rate of
interest
(per
annum
Repayment Prepaym
ent
penalty
Sanction
letter dated
September
4, 2013
y
8. Axis Bank
Limited –
Loan
Agreement
dated
September
4, 2013
To meet
the
working
capital
of the
Compan
y
1,000 1,000 1,000 Base rate
+ 1.75%
p.a. i.e.
12.00%
p.a. at
present
as the
base rate
is
10.25%
1 year 0.5% if
pre paid
within 6
months
of date of
first
disbursal,
no pre
payment
penalty
thereafter
provided
the
Company
gives a
notice of
7 days to
the bank. *As per the certificate of M/s Sundaram & Srinivasan, Chartered Accountants, dated September 30, 2013, which further certifies that
such loans were utilized for the purposes for which they were availed.
Some of our loan agreements provide for the levy of prepayment penalties or premium. We will take such
provisions into consideration while deciding the loans to be repaid and/ or pre-paid from the Net Proceeds.
Payment of such pre-payment penalty or premium, if any, shall be made by our Company out of the Net
Proceeds of the Issue.
The selection of loans proposed to be repaid and/ or pre-paid from our loan facilities provided above shall
be based on various factors including, (i) any conditions attached to the loans restricting our ability to
prepay the loans and time taken to fulfill such requirements, (ii) receipt of consents for prepayment or
waiver from any conditions attached to such prepayment from our respective lenders, (iii) terms and
conditions of such consents and waivers, (iv) levy of any prepayment penalties and the quantum thereof,
(v) provisions of any law, rules, regulations governing such borrowings, and (vi) other commercial
considerations including, among others, the interest rate on the loan facility, the amount of the loan
outstanding and the remaining tenor of the loan. For details, please see the risk factor – “Our indebtedness
and the restrictive covenants imposed upon us in certain debt facilities could restrict our ability to conduct
our business and grow our operations, which would adversely affect our financial condition and results of operations”on page 19 of the Draft letter of Offer.
Given the nature of these borrowings and the terms of repayment/ pre-payment, the aggregate outstanding
loan amounts may vary from time to time. In addition to the above, we may, from time to time, enter into
further financing arrangements and draw down funds thereunder. In such cases or in case any of the above
loans are repaid/ pre-paid or further drawn-down prior to the completion of the Issue, we may utilize the
Net Proceeds towards repayment/ pre-payment of such additional indebtedness.
59
2. Redemption of existing Preference Shares.
Our Company has issued Preference Shares to Tata Capital Financial Services Limited (“TCFSL”) in two
tranches (i) 10,00,000 Preference Shares of `100 each issued at a premium of ` 20 each per Preference
Share aggregating to ` 1,200 lakhs (“Tranche A Preference Shares”) and (ii) 15,00,000 Preference
Shares of ` 100 issued at a premium of ` 20 each per Preference Share aggregating to ` 1,800 lakhs
(“Tranche B Preference Shares”). The proceeds of the Tranche A and Tranche B Preference Shares have
been utilized to redeem the then existing redeemable preference shares of the Company. Our Company
through the proceeds of the Issue proposes to redeem the entire Tranche B Preference Shares. The total cost
of redemption of the entire Tranche B Preference Shares at a yield of 11.35% as per the terms of the
Shareholders Agreement aggregates to ` 1,970 lakhs.
Our Company has entered into a shareholder’s and share subscription agreement dated August 21, 2013 the
“Shareholder’s Agreement”) with TCFSL which states certain terms and conditions in connection with
the Preference Shares. The significant terms and conditions of the Tranche B Preference Shares relating to
early redemption of the Preference Shares are as follows:
Particulars Terms
Subscription Amount: ` 1,800 lakhs
Tenure: 12 months from the date of allotment
Yield: Shall mean 11.35% yield to maturity to the investor
being TCFSL or any other entity holding the said
preference shares at the applicable time
Redemption: On the date falling on the expiry of the Tranche B
Tenure the Company shall forthwith redeem, all the
outstanding Tranche B Preference Shares, in
accordance with the provisions of the Companies
Act, 1956 by paying the redemption price along with
the interim dividend after giving a prior 15 (fifteen)
days notice to the TCFSL. There will also be certain
events on the occurrence of which mandatory early
redemption will trigger. With the consent of the
preference shareholder, our Company can also go in
for voluntary early redemption, without causing any
breach in terms of the agreement.
Mandatory Early Redemption: Upon happening of any of the following event,
TCFSL anytime during the tenure of the Preference
Shares, may require our Company to redeem the
entire outstanding Preference Shares by paying the
Early Redemption Price or may obligate the
Muruguppa Group to arrange for a third party buyer
to purchase the outstanding Preference Shares at a
mutually negotiated price:
(i) the shareholding of the Murguppa Group
falls below 51%;
(ii) The Murugappa Group loses control of our
Company;
(iii) a material breach of any of the covenants;
(iv) on happening of a liquidation event such as
cross default, liquidation proceedings,
insolvency, change in constitution, sick
company amongst others (as detailed in the
Shareholder’s Agreement);
60
Particulars Terms
(v) upon the change in applicable laws, that is
detrimental to the interest of the Investor to
continue to hold the Preference Shares
It is also the obligation of our Company to ensure
that the aggregate voting rights of the Investor and
their group (which is the Tata Companies) entitling
any of the Tata Companies (jointly or severally) to
exercise any voting rights shall not exceed 19.75%
of the voting rights in the Company at any time
during the tenure of the Preference Shares by
operation of Act or otherwise and that any time after
the expiry of 12 months from the date of allotment of
Preference Shares, the aggregate shareholding of
Tata Companies in the Company shall not exceed
19.75% of the share capital of the Company at any
time during the tenure of the Preference Shares, by
operation of Act or otherwise.
Voluntary Early Redemption: Any time after the expiry of eighteen months from
the date of allotment of the Preference Shares the
Investor at their option and after giving notice to our
Company can redeem all the existing outstanding
Preference Shares. Further the Investors have a right
to sell all or part of the Preference Shares at all time
during the tenor of the Preference Shares to any third
party with prior intimation to our Company.
Early Redemption Price: The price that provides TCFSL with return
equivalent to the Yield.
Purchase of Preference Shares by other entities: Redemption and Early redemption shall also include
purchase of the Preference shares by any entities
organized by the Muruguppa group at a mutually
agreed price.
Taxes: Any tax arising out of the payment towards
Redemption Price, Early Redemption Price, Payment
of Dividend or such other payments to be made to
the investor with respect to Preference Shares, shall
be met by our Company.
We have received a letter dated September 27, 2013 from TCFSL giving consent to the redemption of the
Tranche B Preference Shares in whole. For details on risks relating to this object, please see the risk factor-
“We intend to utlize a portion of the Issue Proceeds for redemption of our existing Preference Shares. The
terms of such redemption are subject to the shareholder’s and share subscription agreement entered into
between our Company and Tata Capital Financial Services Limited (“the Investors”)” on page 14 of this
Draft Letter of Offer.
Tata Securities Limited, one of the Lead Managers to the Issue, is an associate company of TCFSL.
3. General Corporate Purposes
We, in accordance with the policies of our Board, will have flexibility in applying the balance amount
towards general corporate purposes, subject to such utilization not exceeding 25% of the Net Proceeds,
61
including, strengthening marketing capabilities and brand building exercises, meeting our working capital
requirements, routine capital expenditure, funding our growth opportunities, including strategic initiatives,
meeting expenses incurred in the ordinary course of business including salaries and wages, rent,
administration expenses, insurance related expenses, repairs and maintenance, and the payment of taxes
and duties; and meeting of exigencies which our Company may face in course of business.
The quantum of utilization of funds towards each of the above purposes will be determined by the Board of
Directors based on the amount actually available under the head “General Corporate Purposes” and the
business requirements of the Company, from time to time.
4. Issue Expenses
The estimated Issue related expenditure is as follows:
S.
No.
Activity Expense Amount
(in ` lakhs)
Percentage of
Total Estimated
Issue
Expenditure
Percentage of Issue
Size
1. Lead management fees
(including underwriting
fee)
[•] [•] [•]
2. Fees to the legal advisor,
other professional services
and statutory fees
[•] [•] [•]
3. Fees of Registrar to the
Issue
[•] [•] [•]
4. Advertising and marketing
expenses
[•] [•] [•]
5. Printing and stationery,
distribution, postage etc.
[•] [•] [•]
6. Commission of SCSBs [•] [•] [•]
7. Other expenses [•] [•] [•]
Total Estimated Issue
Expenditure
Interim Use of Funds
Our management, in accordance with the policies established by our Board of Directors from time to time,
will have flexibility in deploying the Net Proceeds. Pending utilization for the purposes described above,
we intend to invest the funds in high quality interest bearing liquid instruments including investment in
money market mutual funds, deposits with banks and other interest bearing securities for the necessary
duration. Such investments will be approved by the Board or its committee from time to time, in
accordance with its investment policies.
Bridge Loan
We have not raised any bridge loans which are required to be repaid from the Net Proceeds. However,
depending upon business requirements, the Company may consider raising bridge financing facilities including
any other short-term instrument like NCDs, commercial papers etc, pending receipt of the Net Proceeds.
Monitoring Utilization of Funds from Issue
As this is an Issue for an amount not exceeding ` 50,000 lakhs, there is no requirement for the appointment
of a monitoring agency. Our Board will monitor the utilization of the proceeds of the Issue. The Company
will disclose the utilization of the proceeds of the Issue, including interim use, under a separate head along
with details, for all such proceeds of the Issue that have not been utilized. The Company will indicate
investments, if any, of unutilized proceeds of the Issue in the balance sheet of the Company for the relevant
Financial Years subsequent to the listing.
S
.
N
o
.
Project
Name
Plot Area
(acres)
Total cost of
Land
development
rights (` Mn)
Amount
Paid till
May 15,
2008* (`
Mn)
Amount
Paid as
percentage
of Total
Cost of Land
Developmen
t Rights (%)
Balance
payable
after
May 15,
2008
Nature of
Contract/
Documentation **
Status of
property
1
Godrej
Ahmadaba
d Township
330.00 3,250.00 500.00 15.38 2,750.0
0
Agreement for
grant of
development
rights dated April
15, 2008
Forthcomin
g project
2
Godrej
Greater
Noida -I
76.04 800.00 - - 800.00
Memorandum of
Understanding
dated May 2,
2008
Forthcomin
g project
Total 406.04 4,050.00 500.00 12.35 3,550.0
0
* As per certificate from Kalyaniwalla & Mistry, Chartered Accountants dated May 28, 2008
S
.
N
o
.
Project
Name
Plot Area
(acres)
Total cost of
Land
development
rights (` Mn)
Amount
Paid till
May 15,
2008* (`
Mn)
Amount
Paid as
percentage
of Total
Cost of Land
Developmen
t Rights (%)
Balance
payable
after
May 15,
2008
Nature of
Contract/
Documentation **
Status of
property
1
Godrej
Ahmedaba
d Township
330.00 3,250.00 500.00 15.38 2,750.0
0
Agreement for
grant of
development
rights dated April
15, 2008
Forthcomin
g project
2
Godrej
Greater
Noida -I
76.04 800.00 - - 800.00
Memorandum of
Understanding
dated May 2,
2008
Forthcomin
g project
Total 406.04 4,050.00 500.00 12.35 3,550.0
0
* As per certificate from Kalyaniwalla & Mistry, Chartered Accountants dated May 28, 2008
62
We will, on a quarterly basis, disclose to the Audit Committee the uses and applications of the Issue
Proceeds in accordance with the provisions of the Listing Agreement. We also will on an annual basis,
prepare a statement of funds which have been utilized for purposes other than those stated in this Letter of
Offer, if any, and place it before the Audit Committee. Such disclosure will be made only until such time
that all the Issue Proceeds have been utilized in full. The statement shall be certified by our Auditors.
Further, in accordance with clause 43A of the Listing Agreement we will furnish to the Stock Exchanges
on a quarterly basis, a statement including material deviations if any, in the utilization of the Issue Proceeds
from the objects of the Issue as stated above. This information will also be published in newspapers
simultaneously with the interim or annual financial results, after placing the same before the Audit
Committee.
The Company shall inform material deviations in the utilization of Issue proceeds to the Stock Exchanges
and shall also simultaneously make the material deviations/adverse comments, of the Audit committee, if
any, public through advertisement in newspapers.
Other Confirmations
Except, for the repayment of loan availed from the Cholamandalam Investment and Finance Company
Limited, our Promoter Group entity, no part of the proceeds from the Issue will be paid by the Company, in
any manner whatsoever, to its Promoter and Promoter Group, Directors, Group Companies or key
managerial employees.
63
STATEMENT OF TAX BENEFITS
M/s. Coromandel Engineering Co Ltd
“Parry House”, 3rd
Floor
43, Moore Street,
Chennai 600001
Dear Sirs
We hereby report that the enclosed annexure states “General Tax benefits” available to Coromandel
Engineering Company Limited (“the Company”) and its share holders under the current tax laws in force in
India.
The Company does not enjoy any “Special Tax Benefits”. All the above benefits are as per the current tax
laws and will be available only to the sole/ first named holder in case the shares are held by joint holders.
We do not express any opinion or provide any assurance as to whether:
The company or its shareholders will continue to obtain these benefits in future;
The conditions prescribed for availing the benefits have been/or would be met with.
For Sundaram & Srinivasan
Chartered Accountants
FRN: 004207S
M.Padhmanabhan
Partner
M. No. F.13291
Place: Chennai
Date: 17.09.2013
64
Annexure to Statement of “General Tax Benefits” available to Coromandel Engineering Company
Ltd and its shareholders:
1. INCOME TAX
A. To the Company:
1. The Company will be entitled to claim depreciation allowance at the prescribed rates on tangible
and intangible assets under section 32 of the Income Tax Act, 1961 (hereinafter referred as “Act”).
Subject to Company qualifying with the conditions as stated in section 32 (1) (iia) of Act as
amended in respect of Plant & Machinery (other than Ships or Aircraft) acquired or installed after
31st day of March 2005, additional depreciation @ 20% shall be allowed.
2. The company is eligible under section 35D of the Act to a deduction equal to one tenth of certain
specific and qualifying expenditure, for a period of ten successive years subject to the limits
provided and conditions specific therein.
3. Income by way of dividend (as referred to in Sec 115-O of the Act) received from other domestic
companies will be exempt from tax.
4. In accordance with the provisions of section 10(38) of the Act, long term capital gains arising on
the transfer of securities shall be exempt from tax if such transaction is entered into at recognized
stock exchange in India and such transaction is chargeable to Securities Transaction Tax. Under
Section 111A of the Act, Short term capital gains accruing to Company from transfer of short term
capital assets, being securities, in a transaction entered into on a recognized stock exchange in
India and such transaction being chargeable to Securities Transaction Tax shall be chargeable to
tax @ 15% plus applicable surcharge and education cess.
5. Subject to the provisions of section 112 of the Act, Long term capital gains, other than those
mentioned in 4 above, will be chargeable to tax @ 20% (plus applicable surcharge and education
cess) with indexation benefit and @ 10% (Plus applicable surcharge and education cess) if
computed without indexation benefit in case of shares.
6. The Company will be entitled to deduction of the whole of capital expenditure (other than on land)
incurred on scientific research related to the business carried on by the Company in the year in
which such expenditure is incurred, in accordance with the provisions of Section 35 of the Act.
7. Income in respect of Units from a Mutual Fund u/s 10(23D) of the Act will be exempt in the hands
of the Company u/s 10(35) of the Act.
8. The company is eligible to avail the benefit as applicable u/s 80IB(10) of the Income Tax Act
subject to certain conditions as per which 100% of the profit derived in the previous year relevant
to any assessment year from such housing project the Company is developing and building which
have been approved before the 31st day of March,2008 by a local authority.
B. Benefits to the Members of the Company:-
B. 1. Residents:
(a) By virtue of Section 10(34) of the Act, dividend declared by the Company referred to in section
115-O of the Act is exempt from tax.
(b) Under Section 10(38) of the Act, long term capital gain arising to the shareholder from transfer of
a long term capital asset being an equity share in the company (i.e. capital asset held for more than
65
twelve months) and a transaction entered into in at recognized stock exchange in India and which
is chargeable to Securities Transaction Tax, shall be exempt from tax. Under Section 111A of the
Act, capital gains arising from transfer of short term capital assets, being an equity share in the
company, which is subject to Securities Transaction Tax will be taxable under the Act @ 15%
(plus applicable Surcharge and Education cess).
(c) Subject to the Long term capital gains, other than those mentioned in (b) above, as per the
provisions of Section 112(1) (a) and (b) read with proviso to Section 112(1) of the Act, long-term
capital gains on transfer of the shares by an Individual, Hindu Undivided Family and Domestic
Companies, computed without indexation of cost of acquisition, would be taxed at the
concessional rate of 10% (plus applicable Surcharge and Education Cess) in accordance with the
provisions of section 112 of the Act and @ 20% in case the same is computed subject to
indexation benefit. In case of individuals and HUF’s, where the total taxable income as reduced by
long-term capital gain is below the basic exemption limit, the long-term capital gain will be
reduced to the extent of the shortfall and only the balance long-term capital gain will be subject to
tax in accordance with the provision to sub-Section (1) of Section 112 of the Act.
(d) Subject to the Long term capital gains, other than those mentioned in (b) above, in accordance
with and subject to the conditions and to the extent specified in Section 54EC of the Act, long-
term capital gains tax arising on transfer of the shares of the Company shall be exempt from
capital gains tax to the extent the gains are invested within six months from the date of transfer in
the purchase of long-term specified assets.
(e) Subject to the Long term capital gains, other than those mentioned in (b) above, in accordance
with, and subject to the conditions and to the extent specified in Section 54ED of the Act, long-
term capital gains tax arising on transfer of the shares of the Company shall be exempt from
capital gains tax to the extent the gains are invested within six months from the date of transfer in
acquiring equity shares forming part of an eligible issue of capital. In addition the shares should be
held for at least one year.
(f) Subject to the Long term capital gains, other than those mentioned in ( b ) above, in accordance
with, and subject to the conditions and to the extent specified in Section 54F of the Act,
long-term capital gains tax arising on transfer of the shares of the Company held by an individual
or Hindu Undivided Family shall be exempt from capital gains tax in proportion to the net sales
consideration utilised, within a period of one year before, or two years after the date of transfer, in
the purchase of a new residential house, or for construction of a residential house within three
years and the individual or HUF does not own any other residential house.
B. 2. Non Residents:
a. Dividend income received from Company qualifies for exemption under section 10 (34) of the IT
Act.
b. As per the provisions of section 10 (38) of the IT Act long term capital gains arising from the sale
of the shares of the Company will be exempt from tax if the transaction is entered into in a
recognized stock exchange in India and such transaction is chargeable to Securities Transaction
Tax.
c. As per the provision of Section 111 A, short term capital gains arising from the sale of Company’s
shares in a transaction entered into in a recognized stock exchange in India and such transaction
chargeable to Securities Transaction Tax, will be chargeable to tax @ 15% plus applicable
surcharge and education cess.
d. As per the provisions of section 112 of the IT Act, the long term capital gains from the transfer of
the shares of the Company, otherwise than as mentioned above, shall be charged to tax:
i. @ 20% plus applicable surcharge and education cess, if the gains are computed after considering
66
the benefit of indexation;
ii. @10% plus applicable surcharge and education cess, if the gains are computed without considering
the benefit of indexation.
e. Non Resident Indian members of the Company can elect to be governed by special provisions as
enunciated in section 115 C to 115 I of the Income tax act, according to which exemption from
capital gains tax is available subject to complying with conditions stated in those sections.
(i) Under Section 115E of the Act, any income from investment acquired out of convertible foreign
exchange will be taxable at 20% (plus applicable Surcharge and Education Cess) while income
from long-term capital gains on transfer of shares the Company acquired out of convertible foreign
exchange shall be taxed at the rate of 10% (plus applicable Surcharge and Education Cess).
(ii) Under Section 115F of the said Act, and subject to the conditions and to the extent specified
therein, long-term capital gain arising to a Non-Resident Indian from transfer of shares of the
Company acquired out of convertible foreign exchange shall be exempt from capital gains tax to
the extent the net consideration is invested within six months of the transfer of the asset in any
specified asset or in any saving certificates referred to in clause (4B) of Section 10 of the Act and
the new asset is held for a period of at least three years.
(iii) Under Section 115G of the Act, it is not necessary for a Non-Resident Indian to file a return of
income under Sector 139(1) of the Act, if his total income consists only of investment income
and/or long term capital gains earned on transfer of such investment acquired out of convertible
foreign exchange, and tax has been deducted at source from such income under the provisions of
Chapter XVII-B of the Act.
(iv) Under Section 115H of the Act, where a Non-Resident Indian becomes assessable as resident in
India in any subsequent year he may furnish to the Assessing Officer a declaration in writing
along with the return of income for the assessment year for which he is so assessable to the effect
that the provisions of Chapter XII-A of the Act shall continue to apply to him in relation to the
investment income (other than on shares in the Company) derived from any foreign exchange
asset as defined therein. On doing so, the provisions of Chapter XII- A of the Act shall continue to
apply to him in relation to such income for that assessment year and for every subsequent
assessment year until the transfer or conversion into money of such assets.
(v) Under Section 115I of the Act, where a Non-Resident Indian opts not to be governed by the
provisions of Chapter XII-A of the Act for any assessment year, his total income for that
assessment year (including taxable income arising from investment in the Company) will be
computed according to the other provisions of the Act, and he will therefore be eligible to get
concessions applicable to a resident individual and will be liable to tax accordingly.
f. In accordance with, and subject to provisions of Section 48 of the Act, capital gains arising out of
transfer of capital assets being shares in the Company shall be computed by converting the cost of
acquisition, expenditure in connection with such transfer and full value of the consideration
received or accruing as a result of the transfer of the capital assets into the same foreign currency
as was initially utilised in the purchase of shares and the capital gains computed in such foreign
currency shall be reconverted into Indian currency, so that the aforesaid manner of computation of
capital gains shall be applicable in respect of capital gains accruing/arising from every
reinvestment thereafter and sale of shares in a Company. Cost indexation benefits will not be
available in such a case.
g. In accordance with, and subject to the conditions and to the extent specified in Section 54EC of
the Act, long-term capital gains tax arising on transfer of the shares of the Company shall be
exempt from tax to the extent the gains are invested within six months from the date of transfer in
the purchase of long-term specified assets and are held for a period of 3 years
h. In accordance with, and subject to the conditions and to the extent specified in section 54ED of the
67
Act, long-term capital gains tax arising on transfer of the shares of the Company shall be exempt
from capital gains tax to the extent the gains are invested within six months from the date of
transfer in acquiring equity shares forming part of an eligible issue of capital. In addition the
shares should be held for at least one year.
i. In accordance with, and subject to the conditions and to the extent specified in Section 54F of the
Act, long-term capital gains tax arising on transfer of the shares of the Company held by an
individual shall be exempt from capital gains tax in proportion to the net sales consideration
utilised, within a period of one year before or two years after the date of transfer, in the purchase
of a new residential house, or for construction of a residential house within three years and the
Individual does not own any other residential house.
C. Foreign Institutional Investors:
(a) Income by way of dividend (referred to in Section 115-O of the Act) is exempt from tax Section
10(34) of the Act.
(b) Under Section 115AD capital gain arising on transfer of short term/long term capital assets, being
shares in a company, are taxed as follows:
i) Short term capital gain on transfer of shares entered in a recognized stock exchange which is
subject to Securities Transaction Tax shall be taxed @ 20% (plus applicable Surcharge and
Educational Cess): and
ii) Short term capital gains on transfer of shares other than those mentioned above would be taxable
@ 30% (plus applicable Surcharge and Education Cess).
(c) Under Section 54EC of the Act, Capital gain arising from transfer of long term capital assets
(other than those exempt u/s 10 (38) shall be exempt from tax, subject to the conditions and to the
extent specified therein, if the capital gain are invested within a period of six months from the date
of transfer in specified bonds and the bonds are held for a period at least three years.
(d) Under Section 54ED of the Act, capital gain arising from transfer of long term capital assets,
being listed securities or units (other than those exempt u/s. 10 (38), shall be exempt from tax,
subject to the conditions and to the extent specified therein, if the capital gain is invested in public
issued of equity shares issued by an Indian Public Company within a period of six months from
the date of such transfer. If only a part of the capital gain is so reinvested, the exemption shall be
proportionately reduced. However, the amount so exempted shall be chargeable to tax
subsequently, if the new equity shares are transferred or converted into money within one year
from the date of their acquisition. In addition the shares should be held for at least one year.
II. WEALTH TAX
(A) Assets as defined under Section 2(ea) of the Wealth-tax Act, 1957 do not include shares in
companies and hence, these are not liable to wealth-tax.
III. GIFT TAX: (A) Gift tax is not leviable in respect of any gifts made on or after 1
st October, 1998. Therefore, any
gift of shares will not attract gift-tax.
Notes:
In respect of non residents, taxability of capital gains mentioned above shall be further subject to any
benefits available under the Double Taxation Avoidance Agreements, if any, between India and the country
in which the non-resident has fiscal domicile.
68
In view of the individual nature of tax consequences, each investor is advised to consult his/her own tax
advisor, with respect to specific tax consequences of his/her participation in the issue.
The above statement of possible direct and indirect taxes benefits sets out the provisions of law in a
summary manner only and is not a complete analysis or listing of all potential tax consequences of the
purchase, ownership and disposal of equity shares.
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
consequence, each investor is advised to consult their own tax consultant with respect to the specific tax
implications arising out due to their participation in the issue.
We do not express any opinion or provide any assurance as to whether:
The company or its shareholders will continue to obtain these benefits in future;
The conditions prescribed for availing the benefits have been/or would be met with.
For Sundaram & Srinivasan
Chartered Accountants
FRN: 004207S
M.Padhmanabhan
Partner
M. No. F.13291
Place: Chennai 600018
Date: 17.09.2013
69
SECTION IV – ABOUT THE COMPANY
OUR MANAGEMENT
Board of Directors
As per the Articles of Association of our Company, we must have a minimum of three (3) and maximum of
twelve (12) directors. At present, our Company has 7 Directors, of which we have 1 Executive Director, 2
Non Executive Directors and 4 Non Executive and Independent Directors.
The Board of Directors of our Company comprises of the following members:
Sl.
No.
Name, Designation,
Father’s/Husband’s Name,
DIN, Address, Term and
Occupation
Age
(in years)
Date of
Appointment/
Re-
appointment
Other Directorships
1. Mr. M. M. Venkatachalam
Father’s Name : Muthiah
Murugappan Murugappan
Designation: Chairman and
Managing Director
Address: 20/1 Villiammai
Achi Road, Kotturpuram,
Channai – 600 085
Occupation: Industrialist
DIN No: 00152619
Term: 5 years with effect from
April 26, 2012
54 April 26, 2012 Indian Directorships:
1. M M Muthiah Sons Private
Limited;
2. Ambadi Investments
Private Limited;
3. New Ambadi Estates
Private Limited;
4. Alampara Hotells &
Resorts Private Limited;
5. Parry Agro Industries
Limited;
6. Ramco Systems Limited;
7. Polutech Limited;
8. Ambadi Enterprises
Limited;
9. USV Limited;
10. Coromandel International
Limited;
11. Sabero Organics Gujarat
Limited;
12. M M Muthiah Research
Foundation;
13. Cholamandalam Securities
Limited; and
14. Cholamandalam
Distribution Services
Limited.
Foreign Directorships:
15. Parry Murray & Co
Limited, UK.
2. Mr. M. A. M. Arunachalam
Father’s Name : Murugappan
Murugappa Arunachalam
Designation: Non executive
Director
47 July 28, 2012
Indian Directorships:
1. Ambadi Investments
Private Limited;
2. Placon (India) Private
Limited;
3. A M M Arunachalam &
Sons Private Limited;
70
Sl.
No.
Name, Designation,
Father’s/Husband’s Name,
DIN, Address, Term and
Occupation
Age
(in years)
Date of
Appointment/
Re-
appointment
Other Directorships
Address: New No 9 (Old No
4), Chitharanjan Road,
Teynampet, Chennai – 600
018
Occupation: Industrialist
DIN No: 00202958
Term: Liable to retire by
rotation.
4. Parry Enterprises India
Limited;
5. M A Murugappan Holdings
Private Limited;
6. New Ambadi Estates
Private Limited; and
7. AR Lakshmi Achi Trust
Foreign Directorships: Nil
3. Mr. Sridhar Ganesh
Father’s Name : Ganesh
Subbier
Designation: Non- Executive
Director
Address: New No 25, Old No
10/3, Archbishop Mathias
Avenue, Raja Annamalai
Puram, Chennai – 600 028
Occupation: Executive
DIN No: 01681018
Term: Liable to reitre by
roation
62 July 28, 2012
Indian Directorships:
1. Carborundum Universal
Limited;
2. Parry Enterprises India
Limited;
3. Ambadi Enterprises
Limited;
4. Parry Agro Industries
Limited;
5. Adrenalin eSystems
Limited;
6. Murugappa Holdings
Limited; and
7. Looking Glass Consultants
Private Limited
Foreign Directorships:
8. Parry Murray & Co
Limited, UK.
4. Mr. S. S. Rajsekar
Father’s Name : C
Subramaniam
Designation: Non- Executive
and Independent Director
Address: No 1, Riverview
Road, Kotturpuram, Chennai –
600 085
Occupation: Industrialist
DIN No: 00125641
Term: Liable to retire by
rotation
57 July 26, 2013
Indian Directorships:
1. Chennai Consultancy
Services Private Limited;
2. Chidbhava Constructions
and Properties Private
Limited; and
3. Andhra Chamber of
Commerce
Foreign Directorships: Nil
5. Mr. J Srinivasan
74 July 26, 2013
Indian Directorships:
71
Sl.
No.
Name, Designation,
Father’s/Husband’s Name,
DIN, Address, Term and
Occupation
Age
(in years)
Date of
Appointment/
Re-
appointment
Other Directorships
Father’s Name : Jagannathan
Srinivasan
Designation: Non- Executive
and Independent Director
Address: “Gayathri” No 16,
Sriram Nagar South Street,
Alwarpet, Chennai – 600 018
Occupation: Executive
DIN No: 00063660
Term: Liable to retire by
rotation
1. TTK Healthcare Limited;
2. TTK Protective Devices
Limited; and
3. Essae Digitronics Private
Limited
Foreign Directorships: Nil
6. Mr. V Venkiteswaran
Father’s Name : Ramaswamy
Veeraraghaban
Designation: Non- Executive
and Independent Director
Address: FF2 Block, 2
Shobanam, Parsns,
Nanjundapuram Road,
Coimbatore 641 036
Occupation: Retired Executive
DIN No: 00062246
Term: Liable to retire by
rotation
66 July 26, 2013
Indian Directorships:
M/s Shanthi Gears Limited
7. Mr. N V Ravi
Father’s Name : Nemmali
Varadarajan
Designation: Non- Executive
and Independent Director
Address: 34 MC Nichols
Road, Chetput, Chennai – 600
031
Occupation: Industrialist
DIN No: 00277255
Term: Liable to reitre by
roation
58 July 28, 2012 Indian Directorships:
1. Sakthi Auto Motors
Limited;
2. Sakthi Finance Financial
Services Limited; and
3. Sakthi Beverages Limited;
and
4. R R Constructions and
Housing Private Limited.
Foreign Directorships: Nil
72
Brief Biography of Directors
Mr. M. M. Venkatachalam
Mr. M.M.Venkatachalam, aged 54 years is the Chairman and Managing Director of our Board. He is a
graduate in agriculture and has completed his masters in business administration from George Washington
University, USA. He was appointed as a Director of our Company in July 2009 and is presently the
Chairman and Managing Director of the Company and has an experience of approximately 28 years in the
industry. He is also on the Board of various companies including Coromandel International Limited, Ramco
Systems Limited, Parry Agro Industries Limited, Ambadi Enterprises Limited, Polutech Limited, Parry
Murray & Co. Limited UK., etc
Mr. M. A. M. Arunachalam
Mr. M. A. M. Arunachalam, aged 47 years is a Non-Executive Director on our Board. He has completed
his bachelors in commerce from the University of Madras and masters in business administration from
University of Chicago. He is an industrialist and has an experience of 25 years in the field of varied
industrial activities. He is the managing director of Parry Enterprises India Limited and has been on the
Board of our Company, since September 1995.
Mr. S. S. Rajsekar
Mr. S.S. Rajsekar, aged 57 years is a Non-Executive Director on our Board. He is a chemical engineer (B.
Tech) from Anna University and has more than 33 years of experience in the field of real estate and
property related advisory services. He has been on the Board of our Company, since October 2005.
Mr. J. Srinivasan
Mr. J. Srinivasan, aged 74 years is a Non-Executive Director on our Board. He holds a bachelor’s degree in
economics, political science and commerce combination from the University of Delhi. He is also a member
of the Institute of Company Secretaries of India and has been in the industry for over 55 years in different
capacities. He has been on the Board of our Company since July 2008.
Mr. V. Venkiteswaran
Mr. V. Venkiteswaran, aged 66 years is a Non-Executive Director on our Board. He has business
experience of over 42 years in diverse areas of operations. He is a mechanical engineer from the University
of Madras and has worked for over 37 years with Tata Tea Limited, initially overseeing the technical
aspects of large tea plantations before attaining the position of general manager. He has held several key
management positions in diverse operations and has also been on the board of M/s Shanthi Gears Limited.
He has been on the Board of our Company since July 2008.
Mr. Sridhar Ganesh
Mr. Sridhar Ganesh, aged 62 years is a Non-Executive Director on our Board. He is a graduate in physics
and an alumnus of IIM Kolkata. He has worked as a human resource function in organisations like Cadbury
Schweppes and Berger Paints. He has been associated with the industry for 40 years and has been on the
Board of our Company since October 2009.
Mr. N. V. Ravi
Mr. N.V.Ravi, aged 58 years is a Non-Executive Director on our Board. He is an architect and has his own
private practice since 1985. He holds a masters degree in architecture from the University of Michigan Ann
Arbor. He has an experience of 28 years in the construction industry and has been on the Board of our
Company since February 2012.
Nature of relationship between Directors
73
None of our Directors on the Board are related to each other.
Directorships in companies suspended/delisted
Except as disclosed below, none of our Directors hold or held directorships in listed companies whose
shares have been/were delisted from the stock exchanges.
Name of the company Parry Agro Industries Limited
Name of the stock
exchange(s) listed on
The BSE Limited, Madras Stock Exchange Limited and Cochin Stock
Exchange
Date and name of the stock
exchanges delisted from
The BSE Limited – June 5, 2008
Cochin Stock Exchange – March 12, 2008
Madras Stock Exchange Limited – June 5, 2008
Compulsory or voluntary
delisting
Voluntary delisting
Reasons for delisting To help consolidate the holdings of the promoters and promoter group to
provide the company with additional operational flexibility required for
supporting all its future business plans.
Whether, relisted No
Term of the directorship
along with the relevant dates
of joining and resignation.
Mr M. M. Venkatachalam was appointed as an additional director of
Parry Agro Industries Limited with effect November 19, 2003. Mr. M.
M. Venkatachalam was subsequently appointed as the Chairman of the
aforementioned company with effect from January 27, 2004 and held
office until April 1, 2011.
None of our Directors hold directorships in listed companies whose shares have been/were suspended from
trading on the stock exchanges within a period of five years immediately preceding the date of this Draft Letter of Offer:
Arragements with major shareholders, customers, suppliers or others
There is no arrangement or understanding between our Company and major shareholders, customers,
suppliers or others, pursuant to which of any of the Directors of our Company was appointed as a Director
or member of senior management of our Company.
Service agreements entered into between our Company and our Directors:
There are no service contracts executed between our Company and any of our Directors providing for
benefits upon termination of employment.
Appointment and remuneration of Chairman and Managing Director
Mr. M M Venkatachalam, Chairman has been appointed as a Managing Director of the Company with
effect from April 26, 2012 for a period of 5 years pursuant to a resolution of the shareholders of our
Company passed at their AGM held on July 28, 2012. Our Managing Director in not entitled to any
remuneration, as authorised by a resolution passed by the shareholders of our Company at their AGM held
on July 28, 2012.
Remuneration payable to our Non-Executive and Independent Directors
All of our Directors may be deemed to be interested to the extent of fees payable to them for attending
meetings of our Board or a committee thereof as well as to the extent of other remuneration and
reimbursement of expenses payable to them under our Articles, and to the extent of remuneration paid to
them for services rendered as an officer or employee of our Company.
The Non Executive Directors are paid remuneration by way of commission besides sitting fees. The
commission is paid not exceeding 1% per annum of the net profits of the Company (computed in
74
accordance with Sections 349 and 350 of the Companies Act, 1956). However, all our Company’s Non-
Executive Directors and our Chairman and Managing Director, have renounced their rights to receive
sitting fees for our Board as well as committee meetings attended by them effective from January 25, 2012
till such time, our Board decides otherwise. Therefore no sitting fee was paid to any Director for the
Financial Year ended March 31, 2013.
For the Financial Year ended March 31, 2013, the Company has incurred losses and consequently, it was
decided by the Board not to pay any commission to the Non Executive Directors of the Company for the
said Financial Year.
Interest of Directors
Our Directors may be regarded as interested in the Equity Shares, if any, held by them or that may be
subscribed by or allotted to the companies, firms, trusts, in which they are interested as directors, members,
partners, trustees and promoter, pursuant to this Issue. All of our Directors may also be deemed to be
interested to the extent of any dividend payable to them and other distributions in respect of the said Equity
Shares.
Shareholding of our Directors in our Company as on August 31, 2013 is as follows:
Sl.
No
Name of the Director Number of Shares % of holding
1. Mr A M Arunachalam 2,11,610 6.42
2. Mr M M Venkatachalam 2,01,610 6.12
75
SECTION V – FINANCIAL INFORMATION
FINANCIAL STATEMENTS
INDEX
Sl.
No.
Particulars Page No.
1. Limited Review Statements for the three months ended June 30, 2013 76
2. Audited Financial Statements as at and for the year ended Financial Year ended 2013 81
76
—
The Board of Directors,
M/s. Coromandel Engineering Company Ltd
3rd Floor, Parry House,
43, Moore Street,
Chennai 600001
Re: Examination Report on the Unaudited Limited Reviewed Interim Financial Statements of Coromandel
Engineering Limited, (“Company”) in connection with the proposed rights issue of securities of the Company
(“Issue”).
1. We have reviewed the accompanying un-audited Balance Sheet of Corornandel Engineering Limited (the
“Company”) as at 30th June 2013 and the related Profit and Loss Statement and Cash Flow Statement for
three months ended on that date annexed thereto (all of which are hereinafter referred to as the
“Statement”), for the purpose of its inclusion in the offer document prepared by the Company in
connection with its proposed rights issue. The Statement is responsibility of the Company’s management
and has been approved by Board of Directors of the Company. Our responsibility is to issue a report
on the Statement based on our review of the Statement, which has been prepared by the
Company’s management pursuant to Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations 2009 issued by SEBI SEBI (ICDR) Regulations 2009”)], in
accordance with Accounting Standard 25 (“AS 25”) on Interim Financial Reporting, and other applicable
accounting standards, notified under the Companies (Accounting Standards) Rules, 2006.
2. We conducted our review in accordance with the Standard on Review Engagement (SRE) 2400
Engagements to Review Financial Statements issued by Institute ofChartered Accountants of India. This
Standard requires that we plan and perform the review to obtain moderate assurance as to whether the
financial statements are free of material misstatement. A limited review of interim financial statements
consists principally of applying analytical procedures to financial data and making enquiries with
Company personnel responsible for financial and accounting matters. It is substantially less in scope than
an audit conducted in accordance with the generally accepted auditing standards followed in India,
objective of which is the expression of an opinion regarding the financial statements as a whole.
Accordingly, we do not express such an opinion.
3. Based on our review conducted as above, nothing has come to our attention that causes us to believe that
the Statement, prepared fairly in all material respects in accordance with AS 25, has not disclosed the
information required to be disclosed in terms of AS 25 read with Paragraph A (3) in Clause X in Part E of
SEBI (ICDR) Regulations 2009, including the manner in which it is to be disclosed, or that it contains
any material misstatement.
4. The Company has changed the inventory valuation method from FIFO to Weighted Average with effect
from 01st April 2013, to better reflect the pattern of material usage at project sites. The impact of this
change resulted in inventory being higher by Rs. 5.24 Lakhs as at Quarter ending 30th June 2013 and
losses for the quarter lower by Rs. 5.24 Lakhs.
5. This report is intended solely for the use of the Company for filing with Securities and Exchange Board
of India and Registrar of Companies in connection with the proposed rights issue of Equity Shares of the
Company under SEBI (ICDR) Regulations 2009 and the same should not be used, referred to or
distributed for any other purpose, without our prior written consent..
Yours faithfully,
For Sundaram & Srinivasan
Chartered Accountants
FRN : 0042075
M. Padhmanabhan
Partner
Membership No: F13291.
Date: 19.09.2013
Chennal 600018
77
COROMANDEL ENGINEERING COMPANY LTD
Balance Sheet as at 30th
June 2013
(Rs. In lakhs)
Particulars As at June 30, 2013 As at March 31, 2013
I
EQUITY AND LIABILITIES
(1)
Shareholders' Funds
(a) Share Capital 2,829.48
2,829.48
(b) Reserves and Surplus (1,597.99) 1,231.49 (1,103.61) 1,725.87
(2)
Non-Current Liabilities
(a) Long Term Borrowings 3,158.67
4,202.00
(b) Other Long Term Liabilities -
-
(c) Long Term Provisions 48.29 3,206.96 48.29 4,250.29
(3)
Current Liabilities
(a) Short Term Borrowings 4,433.34
2,955.81
(b) Trade Payables 3,428.65
3,105.45
(c) Other Current Liabilities 14,021.38
12,530.83
(d) Short Term Provisions 560.70 22,444.07 580.83 19,172.92
Total
26,882.52
25,149.08
II
ASSETS
(1)
Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets 3,432.36
3,020.13
(ii) Intangible Assets 11.57
0.36
(iii) Capital work in progress 47.09 3,491.02 17.05 3,037.54
(b) Non Current Investments 5.44
5.44
(c) Deferred Tax Asset/(Liability) (Net) 1,113.81
1,113.81
(d) Long Term Loans and Advances 36.50
36.59
(e) Trade Receivables 933.56
1,004.00
(f) Other Non Current Assets 465.00
465.00
2,554.31
2,624.84
(2)
Current Assets
(a) Inventories 3,950.36
3,758.76
(b) Trade receivables 4,803.60
4,719.94
(c) Cash and Cash equivalents 557.23
582.51
(d) Short Term Loans and Advances 1,516.66
808.07
(e) Other Current Assets 10,009.34 20,837.19 9,617.42 19,486.70
Total
26,882.52
25,149.08
For Sundaram & Srinivasan
Chartered Accountants
Regn No: 004207S
M.PADHMANABHAN Partner
Membership no.: F13291
Chennai
September 19th, 2013
78
Profit and loss statement for the period ended 30th
June 2013
(Rs. In lakhs)
Particulars
For the period ended
June 30, 2013
For the year ended
March 31, 2013
I Revenue from Operations 4,303.52
21,639.22
II Other Income 16.25
90.30
III Total Revenue ( I + II )
4,319.77
21,729.52
IV Expenses
(a) Raw Materials Consumed 1,815.26
8,094.60
(b) Purchase of Traded Stock -
30.70
(c) Changes in Inventories (244.95)
(576.83)
(d) Sub-contracting Expenses 1,747.06
8,432.09
(e) Employee Benefit Expenses 464.38
1,894.74
(f) Finance Cost 304.88
1,127.59
(g) Depreciation 53.17
215.06
(h) Other Expenses 674.35
3,179.94
(i) Total Expenses
4,814.15
22,397.89
V
Profit/(loss) before exceptional and
extraordinary items and tax (III-IV)
(494.38)
(668.37)
VI Exceptional Items
-
-
VII
Profit/(loss) after exceptional items before tax
(V - VI)
(494.38)
(668.37)
VIII Extraordinary Items
-
-
IX. Profit/(loss) before tax (VII- VIII)
(494.38)
(668.37)
X Tax expense/(gain)
(1) Current tax
-
(2) Deferred tax
-
(124.32)
XI
Profit / (Loss) for the period from continuing
operations (IX-X)
(494.38)
(544.05)
XII Profit/(loss) from discontinuing operations
-
-
XIII Tax expense of discontinuing operations
-
-
XIV
Profit/(loss) from Discontinuing operations
(after tax) (XII-XIII)
-
-
XV Profit /(Loss) for the period (XI + XIV)
(494.38)
(544.05)
XVI Earnings per equity share:
(1) Basic
(15.00) (16.51)
(2) Diluted
-
-
For Sundaram & Srinivasan
Chartered Accountants
Regn No: 004207S
M.PADHMANABHAN
Partner
79
Membership no.: F13291
Chennai
September 19th, 2013
80
Cash Flow Statement
(Rs. In lacs)
30th June 2013 31 st March 2013
Cash Flow from Operating Activities Net Profit/ (Loss) before tax as per P&L a/c
(494.38)
(668.37)
Adjustment for :
Depreciation 53.17
215.06
Finance Charges 304.88
1,127.59
Interest Income (16.25)
(35.40)
Dividend Income 0.00
(0.66)
(Profit) / Loss on sale of investment (Net) 0.00
(5.60)
Reversal of Provision on Dimunition of investment 0.00
(0.50)
(Profit) / Loss on sale of assets (Net) 0.00 341.80 1.48 1,301.97
Operating Profit before working capital changes
(152.58)
633.60
Adjustments for :
Trade and Other Receivables (1,019.24)
(3,550.80)
Inventories (191.60)
(836.25)
Trade Payables 1,793.62 582.78 4,502.61 115.56
Cash Generated from Operations
430.20
749.16
Direct Taxes Paid
(94.40)
(394.48)
Net Cash from Operating Activities
335.80
354.68
Cash Flow from Investing Activities
Purchase of Fixed Assets (506.65)
(837.03)
Sale of Fixed Assets -
6.24
Sale of investment -
5.84
Dividend Received -
0.66
Net Cash used in Investing Activities
(506.65)
(824.29)
Cash flow from Financing Activities
Loans (Net of Repayment) 434.20
1,587.41
Finance Charges (304.88)
(1,127.59)
Interest income 16.25
35.40
Net Cash used in Financing Activities
145.57
495.22
Net increase/ (decrease) in Cash and Cash Equivalents
(25.28)
25.61
Opening balance of Cash and Cash Equivalents
582.51
556.90
Closing balance of Cash and Cash Equivalents
557.23
582.51
For Sundaram & Srinivasan
Chartered Accountants
Regn No: 004207S
M.PADHMANABHAN
Partner
Membership no.: F13291
Chennai
September 19th, 2013
81
AUDITORS’ REPORT TO THE MEMBERS OF COROMANDEL ENGINEERING COMPANY LIMITED
Report on the Financial Statements
We have audited the accompanying financial statements of Coromandel Engineering Company Limited which comprises
of the Balance Sheet as at 31st March 2013, the statement of Profit and Loss and Cash flow statement for the year then
ended and a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of the financial statements that give a true and fair view of the financial
position, financial performance and cash flow of the company in accordance with the Accounting Standards referred to in
sub section (3c) of section 211 of Companies Act, 1956. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and
fair view and are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with the standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risk of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the company’s preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of the accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the financial statements
give the information required by the Act in the manner so required and give a true and fair view in conformity with the
accounting policies generally accepted in India:
a) in the case of Balance sheet, of the state of affairs of the company, as at March 31, 2013;
b) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and
c) In the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order 2003 issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, We give in the Annexure, a statement on the matters specified in
paragraphs 4 and 5 of the order.
2. As required by section 227(3) of the Act, we report that :
a. We have obtained all the information and explanations, which to the best of our knowledge and belief were
necessary for the purposes of our audit;
b. in our opinion, proper books of account as required by law have been kept by the Company so far as it appears
from our examination of those books;
c. the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement dealt with by this Report are in
agreement with the books of account;
82
d. In our opinion, the Balance Sheet, Statement of Profit & Loss and Cash Flow Statement comply with the
Accounting Standards referred to in subsection (3C) of Section 211 of the Companies Act, 1956;
e. On the basis of written representations received from the directors, as on 31st March, 2013 and taken on record by
the Board of Directors, none of the directors is disqualified as on 31st March, 2013, from being appointed as a
director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956;
For SUNDARAM & SRINIVASAN
Chartered Accountants
Regn.No.004207S
M. PADHMANABHAN
Place: Chennai Partner
Date: April 30, 2013 Membership No.F13291
83
ANNEXURE REFERRED TO IN PARA 1 OF THE AUDITORS’ REPORT OF EVEN DATE TO THE
MEMBERS OF COROMANDEL ENGINEERING COMPANY LIMITED
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and
situation of its fixed assets.
(b) According to the information given to us, major portion of fixed assets have been physically verified by the
management during the year. In our opinion, the frequency of verification of fixed assets by the management is
reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were
noticed on such verification.
(c) There was no disposal of a substantial part of fixed assets during the year.
(ii) (a) The inventory has been physically verified by the management at reasonable intervals. In our opinion, the
frequency of verification is reasonable.
(b) In our opinion and according to the information and explanation given to us, the procedure for physical
verification of inventory followed by the management were reasonable and adequate in relation to the size of the
Company and the nature of its business.
(c) In our opinion, the Company has maintained proper records of inventory. The discrepancies between the
physical stocks and the book stocks were not material and have been properly dealt with in the books of account.
(iii) According to the information and explanations given to us, during the year, the Company has not granted or taken
any loans to or from companies, firms or other parties covered in the register maintained under Section 301 of the
Companies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, there are adequate internal control
procedures commensurate with the size of the Company and the nature of its business with regard to purchase of
inventory, fixed assets and for sale of goods. During the course of our audit, no major weakness in internal control
has been noticed.
(v) In our opinion and according to the information and explanation given to us, there were no transactions during
the year that were required to be entered in the register maintained under section 301 .
(vi) The Company has not accepted any deposits from the public.
(vii) The Company has a system of internal audit which, in our opinion, is commensurate with its size and nature of
business.
(viii) The Central Government vide notification dated 3rd
June 2011 prescribed maintenance of cost records by various
classes of companies. We have broadly reviewed books of accounts maintained by the company pursuant to the
rules made by the Central Government for the maintenance of the cost records under Section 209 (1) (d) of the
Companies Act, 1956 and are of the opinion, prima facie, the prescribed accounts and records have been made and
maintained.
(ix) (a) According to the records, information and explanations given to us, the Company is generally regular in
depositing with appropriate authorities undisputed statutory dues in respect of provident fund, employees’ state
insurance dues, Investor Education and Protection fund, income-tax, wealth-tax, sales-tax, service tax, excise
duty, cess and other statutory dues applicable to it and no undisputed amounts payable were outstanding as on 31st
March, 2013 for a period of more than six months from the date they become payable.
(b) According to the information and explanation given to us, the following are the details of disputed Income Tax
and Sales Tax dues that have not been deposited with the concerned authorities.
NAME OF THE
STATUTORY DUES
FORUM WHERE DISPUTE IS PENDING UNPAID
AMOUNT (Rs.in
84
lakhs)
Andhra Pradesh VAT The Appellate Deputy Commissioner (CT) 2006-07 &
2007-08
43.32
Income tax The Commissioner of Appeals 108.50
TNVAT – Entry Tax The Joint Commissioner of Sales Tax, Vellore 2.99
(x) The company incurred a loss of Rs.544.05 lakhs during the current financial year and the accumulated losses at
the end of the financial year is Rs.1324.44 lakhs. The company has incurred cash losses before tax of Rs.453.31
lakhs during the current financial year. The company has incurred a loss of Rs.2145.22 lakhs in the immediately
preceding financial year.
(xi) In our opinion and according to the information and explanations given by the management, the Company has not
defaulted in repayment of dues to Banks.
(xii) According to the information and explanations given to us, the Company has not granted loans and advances on
the basis of security by way of pledge of shares, debentures and other securities.
(xiii) The Company is not a chit/nidhi/mutual benefit fund/society and hence clause xiii of the Order is not applicable.
(xiv) The Company is not dealing or trading in shares, securities, debentures and other investments and hence clause
xiv of the order is not applicable.
(xv) According to the information and explanations given to us, the Company has not given any guarantee for loans
taken by others from bank or financial institutions.
(xvi) In our opinion and according the information and explanations given by the management, the term loans were
applied for the purpose for which they were obtained.
(xvii) According to the information and explanation given to us and on an overall examination of the Balance Sheet, in
our opinion, the Company has not used any funds raised on short-term basis towards long-term investment.
(xviii) During the year, the Company has not made any preferential allotment of shares to parties and companies covered
in the register maintained under Section 301 of the Act.
(xix) The Company has not issued any debentures.
(xx) The Company has not raised any money by public issues during the year.
(xxi) According to the information and explanations given to us by the management and based on audit procedures
performed, no fraud on or by the company has been noticed or reported during the course of our audit.
For SUNDARAM & SRINIVASAN Chartered Accountants Regn.No.004207S
M PADHMANABHAN
Place: Chennai Partner
Date: April 30, 2013 Membership No.F13291
85
Balance Sheet as at 31st March 2013 (Rs. In lakhs)
Particulars Note No. As at March 31, 2013 As at March 31, 2012
I
Equity and Liabilities
(1)
Shareholders' Funds
a Share Capital 1 2,829.48
2,829.48
b Reserves and Surplus 2 (1,103.61) 1,725.87 (559.56) 2,269.92
(2)
Non Current Liabilities
a Long Term Borrowings 3 4,202.00
2,600.00
b Other Long Term Liabilities 4 -
45.90
c Long Term Provisions 5 48.29 4,250.29 43.83 2,689.73
(3)
Current Liabilities
a Short Term Borrowings 6 2,955.81
2,970.40
b Trade Payables 7 3,105.45
1,580.38
c Other Current Liabilities 8 12,530.83
9,514.64
d Short Term Provisions 9 580.83 19,172.92 577.89 14,643.31
Total
25,149.08
19,602.96
II
Assets
(1)
Non-Current Assets
a Fixed Assets 10
(i)Tangible Assets
3,020.13
2,421.16
(ii)Intangible Assets
0.36
1.99
(iii) Capital work in progress
17.05 3,037.54 - 2,423.15
b Non Current Investments 11 5.44
5.20
c Deferred Tax Asset/(Liability) (Net) 12 1,113.81
989.49
d Long Term Loans and Advances 13 36.59
51.02
e Trade Receivables 14 1,004.00
934.91
f Other Non Current Assets 15 465.00
465.00
2,624.84
2,445.62
(2)
Current Assets
a Inventories 16 3,758.76
2,922.50
b Trade receivables 17 4,719.94
4,733.53
c Cash and Cash equivalents 18 582.51
556.90
d Short Term Loans and Advances 19 808.07
641.36
e Other Current Assets 20 9,617.42 19,486.70 5,879.90 14,734.19
Total
25,149.08
19,602.96
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For Sundaram & Srinivasan On Behalf of the Board
Chartered Accountants
Regn No: 004207S
M. PADHMANABHAN SRIDHAR GANESH M.M. VENKATACHALAM Partner Director Chairman and Managing Director
Membership no.: F13291
Chennai R. NARAYANAN
April 30, 2013 Head Finance and Company Secretary
86
Profit and Loss Statement for the year ended 31st March 2013 (Rs. In lakhs)
Particulars
Note
No
For the year ended March 31,
2013
For the year ended March 31,
2012
I Revenue from Operations 21 21,639.22
17,046.09
II Other Income 22 90.30
78.79
III Total Revenue ( I + II )
21,729.52
17,124.88
IV Expenses
(a) Raw Materials Consumed 23 8,094.60
8,150.00
(b) Purchase of Traded Stock
30.70
27.74
(c) Changes in Inventories
(576.83)
(604.81)
(d) Sub-contracting Expenses
8,432.09
6,310.67
(e) Employee Benefit Expenses 24 1,894.74
1,879.11
(f) Finance Cost 25 1,127.59
1,149.23
(g) Depreciation
215.06
161.20
(h) Other Expenses 26 3,179.94
3,301.06
(i) Total Expenses
22,397.89
20,374.20
V Profit/(loss) before exceptional and
extraordinary items and tax (III-IV) (668.37)
(3,249.32)
VI Exceptional Items
-
-
VII Profit/(loss) after exceptional items
before tax (V - VI) (668.37)
(3,249.32)
VII
I Extraordinary Items
-
-
IX. Profit/(loss) before tax (VII- VIII)
(668.37)
(3,249.32)
X Tax expense/(gain)
(1) Current tax
-
(2) Deferred tax
(124.32)
(1,104.10)
XI Profit / (Loss) for the period from
continuing operations (IX-X) (544.05)
(2,145.22)
XII Profit/(loss) from discontinuing
operations -
-
XII
I
Tax expense of discontinuing
operations -
-
XI
V Profit/(loss) from Discontinuing
operations (after tax) (XII-XIII) -
-
XV Profit /(Loss) for the period (XI +
XIV) (544.05)
(2,145.22)
XV
I Earnings per equity share:
(1) Basic
(16.51)
(65.11)
(2) Diluted
-
-
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For Sundaram & Srinivasan On Behalf of the Board
Chartered Accountants
Regn No: 004207S
M. PADHMANABHAN SRIDHAR GANESH M.M. VENKATACHALAM Partner Director Chairman and Managing Director
Membership no.: F13291
Chennai R. NARAYANAN
April 30, 2013 Head Finance and Company Secretary
87
Cash Flow Statement
Pursuant to Clause 32 of the Listing Agreement (as amended) (Rs. In lakhs)
31 st March 2013 31 st March 2012
Cash Flow from Operating Activities
Net Profit/ (Loss)before tax as per P&L a/c
(668.37)
(3,249.32)
Adjustment for :
Depreciation 215.06
161.20
Finance Charges 1,127.59
1,149.23
Interest Income (35.40)
(32.71)
Dividend Income (0.66)
(0.66)
(Profit) / Loss on sale of investment (Net) (5.60)
0.00
Reversal of Provision on dimunition of investment (0.50)
(Profit) / Loss on sale of assets (Net) 1.48 1,301.97 2.89 1,279.95
Operating Profit before working capital changes
633.60
(1,969.37)
Adjustments for :
Trade and Other Receivables (3,550.80)
(4,184.48)
Inventories (836.25)
(536.08)
Trade and Other Payables 4,502.61 115.56 7,749.30 3,028.74
Cash Generated from Operations
749.16
1,059.37
Direct Taxes Paid
(394.48)
(288.15)
Dividend paid
0.00
(95.73)
Net Cash from Operating Activities
354.68
675.49
Cash Flow from Investing Activities
Purchase of Fixed Assets (837.03)
(775.80)
Sale of Fixed Assets 6.24
11.11
Sale of investment 5.84
Dividend Received 0.66
0.66
Net Cash used in Investing Activities
(824.29)
(764.03)
Cash flow from Financing Activities
Issue of Preference Shares -
2,500.00
Loans Net of Repayment 1,587.41
(1,094.49)
Finance Charges (1,127.59)
(1,149.23)
Interest income 35.40
32.71
Net Cash used in Financing Activities
495.22
288.99
Net increase/ (decrease) in Cash and Cash Equivalents
25.61
200.45
Opening balance of Cash and Cash Equivalents
556.90
356.45
Closing balance of Cash and Cash Equivalents
582.51
556.90
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For Sundaram & Srinivasan On Behalf of the Board
Chartered Accountants
Regn No: 004207S
M. PADHMANABHAN SRIDHAR GANESH M.M. VENKATACHALAM Partner Director Chairman and Managing Director
Membership no.: F13291
Chennai R. NARAYANAN
88
April 30, 2013 Head Finance and Company Secretary
Notes Forming Part of Financial Statements
Note 1
Share Capital
As at March 31,
2013 Rs. Lakhs
As at March 31
2012 Rs. Lakhs
Authorised
Equity Shares
100,00,000 (31 March 2012: 100,00,000) equity shares of Rs.10 each 1,000.00 1,000.00
Preference shares
25,00,000(31 March 2012: 25,00,000)preference shares of Rs. 100 each 2,500.00 2,500.00
3,500.00 3,500.00
Notes:
Pursuant to Sec 94 & other provisions of the Companies Act, 1956, Authorised Share Capital of the Company has been
increased from Rs. 400 Lakhs to Rs. 3500 Lakhs consisting of 1 crore Equity shares of Rs. 10 each& 25 Lakhs preference
shares of Rs.100 eachas approved by the Shareholders through postal ballot in March 2012.
Issued, Subscribed and Paid Up
Equity Shares
22,74,485(31 March 2012 : 22,74,485) Equity shares of Rs. 10 each 227.45 227.45
1,44,000(31 March 2012 : 1,44,000) Equity shares of Rs. 10 each
issued as bonus sharesby capitalisation of general reserve 14.40 14.40
8,76,295(31 March 2012 : 8,76,295 ) Equity shares of Rs. 10 each
Issued in pursuance of scheme of amalgamation of Polutech Ltd. &
Coromandel Prodorite Pvt ltd with Coromandel Engg Co. Ltd. 87.63 87.63
Preference Shares
25,00,000(31 March 2012: 25,00,000)Preference Shares ofRs. 100 each issued
on Preferential basis 2,500.00 2,500.00
2,829.48 2,829.48
a. Reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period;
Equity Shares March 31, 2013 March 31 2012
At the beginning of the period 3,294,780 3,294,780
Issued during the period – Bonus issue - -
Issued during the period – ESOP - -
Outstanding at the end of the period 3,294,780 3,294,780
Preference shares March 31, 2013 March 31 2012
At the beginning of the period 2,500,000 -
Issued during the period - 2,500,000
Outstanding at the end of the period 2,500,000 2,500,000
b. Terms/rights attached to equity shares :
The company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares
is entitled to one vote per share. The dividend, if proposed by the board of directors, is subject to approval of the
89
shareholders in the ensuing annual general meeting. In the event of liquidation of the company, the holders of equity
shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts.
c. Terms/rights attached to preference shares :
During the year ended 31st March 2012,the company issued 25,00,000 preference shares of Rs. 100 each fully paid up.
The preference shares are cumulative in nature and carry a coupon of 0.01% p a. The preference shares are redeemable
at the option of the company with 4 weeks notice and within 18 months from the date of issue.Each holder of the
preference share is entitled to one vote per share only on resolution placed before the company which directly affects
the rights attached to the redeemable cumulative preference shares.
Note 1 d. Shares in the company held by each shareholder holding more than 5 percent shares, specifying the number
of shares held
March 31 2013 March 31 2012
Sl.N Name of the Shareholder No. of Shares held % of Holding No. of Shares held % of Holding
1 R Narayanan 246912 7.49 246912 7.49
2 M M Murugappan 220230 6.68 220230 6.68
3 M A M Arunachalam 211610 6.42 201610 6.12
4 A Vellayan 201610 6.12 201610 6.12
5 Arun Alagappan 201610 6.12 201610 6.12
6 M M Venkatachalam 201610 6.12 201610 6.12
7 S Vellayan 201610 6.12 201610 6.12
8 A Venkatachalam 201610 6.12 201610 6.12
9 M V Murugappan 176407 5.35 176407 5.35
Note 2
Reserves and Surplus
As at March 31, 2013
Rs. Lakhs
As at March 31, 2012
Rs. Lakhs
(a) Capital Reserve 7.24 7.24
(b) General Reserve
As Per last Balance Sheet 551.72 551.72
Add : Transfer from Profit and Loss Account - -
551.72 551.72
(c) Investment Allowance Reserve 77.71 77.71
(d) Share Premium Account 135.88 135.88
(e) Surplus in Profit and Loss Account
Balance as per last financial statement (1,332.11) 813.11
Add : Net profit/(Loss) after tax for the year (544.05) (2,145.22)
Appropriations :
Less : Transfer to General Reserve - -
Less : Proposed Final Dividend - -
Less : Dividend Tax - -
Balance available for Appropriation (1,876.16) (1,332.11)
(1,103.61) (559.56)
90
Note 3
Long Term Borrowings
As at March 31,
2013
Rs. Lakhs
As at March 31,
2012
Rs. Lakhs
Secured
a) Term loan from Co-operative Bank 1,450.00 600.00
(Repayable in installments upto April 2015, secured against charge on
present and future fixed assets of the company, interest rate @ 12.25%
p.a)
b) Term loan from Non Banking Financial Company 1,533.00 2,000.00
(Repayable in 6 yearly installments with moratorium of 1 year, secured
against charge on the present and future current assets of the Property
development division, Interest rate @ 13.25% p a)
c) Term Loan from Banking Company 1,219.00
(Repayable in 16 equal quarterly installments with moratorium of 1 year,
secured against subservient charge on the current assets and moveable
fixed assets of the company , interest rate @ 12.25 % p a)
4,202.00 2,600.00
Note 4
Other Long Term Liabilities
As at March 31,
2013Rs. Lakhs
As at March 31,
2012
Rs. Lakhs
Trade Payables - 45.90
- 45.90
Note 5
Long Term Provisions
As at March 31,
2013
Rs. Lakhs
As at March 31,
2012
Rs. Lakhs
a) Provision for Employee benefits - Gratuity 11.81 20.58
b) Accrued leave encashment benefit liability 36.48 23.25
48.29 43.83
Note 6
Short Term Borrowings
As at March 31,
2013
Rs. Lakhs
As at March 31,
2012
Rs. Lakhs
Secured
a) Cash Credit from Banks 1,155.81 1,220.40
b) Working Capital Demand Loan 1,300.00 1,000.00
(Secured by hypothecation of present and future stocks, Work in
91
progress and receivables of the Company . They carry interest
between 11.5% and 12.00% p.a. They are repayable on demand)
c) Short term loan from Bank 500.00 -
(The above is secured by a subservient charge on current assets and
carry interest @ 12.00% p.a)
Unsecured
a) From Banks - 750.00
2,955.81 2,970.40
Note 7
Trade Payables
As at March 31,
2013
Rs. Lakhs
As at March 31,
2012
Rs. Lakhs
Sundry Creditors
(a) Purchases 1,966.30 860.42
(b) Expenses 1,139.15 719.96
3,105.45 1,580.38
Note 8
Other Current Liabilities
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
a) Advance from customers 6,339.53 3,757.75
b) Mobilisation advance 2,426.25 2,538.06
c) Outstanding Liabilities 2,154.53 1,697.31
d) Current maturities of long term borrowings 1,348.00 1,200.00
e) Unclaimed Dividend 4.86 4.86
Statutory Liabilities
f) ESI employees recoveries - 1.01
g) PF recoveries and remittance 0.01 12.47
h) Professional tax recovery and remittance 0.00 4.25
i) Service tax payable 80.72 231.97
j) TDS payable 31.41 27.15
k) WCTDS payable 8.52 7.24
l) Other payables 137.00 32.57
12,530.83 9,514.64
Note 9
Short Term Provisions
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
a) Bonus Payable 2.71 14.65
b) Others (towards incentives etc) 38.68 20.00
c) Leave Travel Assistance payable 3.84 7.64
d) Provision for taxation 535.60 535.60
580.83 577.89
92
Note 10 (` in lakhs)
Fixed Assets
Fixed Assets Gross Block Accumulated Depreciation Net Block
Balance as
at 1 April
2012
Additions Deletions Balance as
at 31st
March
2013
Balance as
at 1 April
2012
Depreciati
on charge
for the
year
On
deletions
Balance as
at 31st
March
2013
Balance as
at 31st
March
2013
Balance as
at 31
March
2012
a Tangible Assets
Land
Buildings
Office Building - 23.11 23.11 23.11 23.11 -
Plant and Equipment 2,772.81 765.26 3,538.07 440.09 158.74 598.83 2,939.24 2,332.72
Furniture and Fixtures 25.97 2.43 28.40 22.56 2.31 24.87 3.53 3.41
Vehicles 32.67 12.10 7.72 37.05 11.25 3.34 0.14 14.45 22.60 21.42
Office equipment 45.01 3.05 48.06 21.80 3.43 25.23 22.83 23.21
Computer 106.34 9.22 115.56 65.94 17.69 83.63 31.93 40.40
Total 2,982.80 815.17 7.72 3,790.25 561.64 208.62 0.14 770.12 3,020.13 2,421.16
b Intangible Assets
Software & Licensing 40.12 4.81 44.93 38.13 6.44 44.57 0.36 1.99
Total 40.12 4.81 - 44.93 38.13 6.44 - 44.57 0.36 1.99
c Capital Work In Progress 17.05 17.05 17.05
Total (a + b + c) 3,022.92 837.03 7.72 3,852.23 599.77 215.06 0.14 814.69 3,037.54 2,423.15
Previous Year 2,262.59 775.80 15.47 3,022.92 440.05 161.20 1.48 599.77 2,423.15 1,822.54
93
Note 11
Non-Current Investments
Face As at As at As at As at
Value
March 31,
2013
March 31
2012
March 31,
2013
March 31
2012
Shares in companies Non Trade Rs. Quantity Quantity Rs. Lakhs Rs. Lakhs
Quoted fully paid up
(a)
Cholamandalam Investments &
Finance Co Ltd 10 262 262 0.20 0.20
Sri Vajra Granites Ltd 10 100 100 0.01 0.01
Unquoted fully paid up (b) New India Co-operative Bank Ltd 10 50000 50000 5.00 5.00
MPC Confectionary Ltd (Formerly
Charmvel Electronics Ltd) 100 240 500 0.24 0.50
Consolidated Foundations India Ltd 10 120 120 0.04 0.04
Rock Copco Ltd 10 100 100 0.02 0.02
VM Jog Constructions Pvt Ltd 10 400 400 0.05 0.05
Less : Provision for Diminution in
value of Investments
0.12 0.62
5.44 5.20
Market value - Quoted Investment
0.67 0.48
Note 12
Deferred Tax Asset/(Liability)
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
Timing Difference
(a) - Depreciation (233.35) (123.45)
(b) - Expenses allowed on payment basis 10.26 8.84
(c) - Unabsorbed Business losses 1,336.90 1,104.10
1,113.81 989.49
Note 13
Long Term Loans and Advances
Unsecured and considered good
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
Advance for hire of materials 36.59 51.02
36.59 51.02
94
Note 14
Trade Receivables
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
Unsecured, considered good 1,004.00 934.91
Doubtful - -
Less: Provision for doubtful receivables - -
1,004.00 934.91
Note 15
Other Non-Current Assets
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
Advance for properties 465.00 465.00
465.00 465.00
Note 16
Inventories
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
(a) Raw Materials at cost 1,158.10 857.23
(b) Work-in-Progress at cost 2,600.66 2,023.83
(c) Land Cost - 41.44
3,758.76 2,922.50
Note 17
Trade Receivables
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
Unsecured - Considered good
Outstanding for a period exceeding six months from the due date
of payment
(a) Unsecured, considered good 1,494.58 496.95
Doubtful - -
Less: Provision for doubtful debts
1,494.58 496.95
Other Receivables
(b) Unsecured, considered good 3,225.36 4,236.58
Doubtful
Less: Provision for doubtful debts - -
95
Total 3,225.36 4,236.58
Total (a + b) 4,719.94 4,733.53
Note 18
Cash and Cash Equivalents
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
(a) Balances with Banks
Current Accounts 46.46 93.43
Margin Account - For Bank Guarantees 534.04 459.73
(b) Cash on hand 2.01 3.74
582.51 556.90
Note 19
Short Term Loans and Advances
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
Unsecured and considered good
(a) Loans and Advances to suppliers and subcontractors 378.86 369.50
(b) Service Tax 315.92 202.51
(c) Others 113.29 69.35
808.07 641.37
Note 20
Other Current Assets
As at
March 31, 2013
Rs. Lakhs
As at
March 31 2012
Rs. Lakhs
(a) Interest accrued on deposits 56.80 33.79
(b) Advance for properties for development 1,003.48 841.88
(c) Deposits 158.45 178.66
(d) Advance Tax & TDS receivable 1,537.10 1,142.62
(e) Unbilled Contract in progress 6,681.80 3,588.03
(f) others 179.79 94.92
9,617.42 5,879.90
Note 21
Revenue From Operations
As at
March 31, 2013
Rs. Lakhs
Year Ended
March 31 2012
Rs. Lakhs
(a) Sale of Services
96
Proceeds on contract 17,213.99 14,519.32
Unbilled contract Revenue 4,358.81 2,426.46
Sale of Products 32.03 28.67
(b) Other Operating revenues
Scrap and Sundry Sales 34.39 71.64
21,639.22 17,046.09
Note 22
Other Income
As at
March 31, 2013
Rs. Lakhs
Year Ended
March 31 2012
Rs. Lakhs
(a) Interest Income 35.40 32.71
(b) Dividend Income 0.66 0.66
(c) Commission Income 42.50 45.42
(d) Profit on sale of investments 5.60 -
(e)
Reversal of Provision for diminution of investment no longer
required 0.50
(f) Miscellaneous receipt 5.11 -
(g) Insurance Claim 0.53
90.30 78.79
Note 23
Cost of Materials Consumed
As at
March 31, 2013
Rs. Lakhs
Year Ended
March 31 2012
Rs. Lakhs
(a) Raw Materials Consumed
Opening stock 898.67 967.40
Add: Purchases 8,354.03 8,081.27
9,252.70 9,048.67
Less: Closing stock 1,158.10 898.67
Total 8,094.60 8,150.00
(b) Purchase of Traded stock 30.70 27.74
(c) Changes in Inventories
Opening stock of
Finished goods - -
Work-in-progress 2,023.83 1,419.02
Closing stock of
Finished goods - -
Work-in-progress 2,600.66 2,023.83
(Increase)/ Decrease (576.83) (604.81)
97
Note 24
Employee Benefit Expenses
As at
March 31, 2013
Rs. Lakhs
Year Ended
March 31 2012
Rs. Lakhs
(a) Salaries, wages and bonus 1,626.52 1,648.10
(b) Contribution to provident and other funds 122.74 99.82
(c) Staff welfare expenses 145.48 131.19
1,894.74 1,879.11
Note 25
Finance Cost
As at
March 31, 2013
Rs. Lakhs
Year Ended
March 31 2012
Rs. Lakhs
(a) Interest expense 991.31 1,030.35
(b) Interest paid on Share application money
15.34
(c) Bank charges, guarantee commission and processing fees 136.28 103.54
1,127.59 1,149.23
Note 26
Other Expenses
As at
March 31, 2013
Rs. Lakhs
Year Ended
March 31 2012
Rs. Lakhs
(a) Transport & freight 238.31 246.80
(b) Power and fuel 552.10 224.04
(c) Rent, Rates and taxes 649.07 1,030.91
(d) Repairs and maintenance - -
- Buildings 9.77 7.80
- Plant and Machinery 91.30 110.72
- Others 15.16 2.73
(e) Insurance 131.93 108.21
(f) Printing & stationary 24.04 30.39
(g) Advertisement, Exhibition and Sales Promotion expenses 47.58 25.67
(h) Staff training expenses 1.98 4.45
(i) Payment to Auditors (see Note 27(8)) 3.91 7.06
(j) Directors' commission & sitting Fees - 1.54
(k) Travelling expenses 219.13 228.75
(l) Telephone, Courier and Communication expenses 90.44 46.41
(m) Loss on sale of Fixed Assets (Net) 1.48 2.89
(n) Professional and consultancy charges 118.73 235.59
(o) Plant hire charges 984.04 969.06
(p) Miscellaneous expenses 0.97 18.04
GRAND TOTAL 3,179.94 3,301.06
98
NOTE 27
1. CORPORATE INFORMATION Coromandel Engineering Company Limited(CEC) was incorporated as a Public Limited Company in the year
1947 and the shares of the Company are listed in Madras and Bombay Stock Exchanges. CEC is in the business
of Construction and Property Development.
2. SIGNIFICANT ACCOUNTING POLICIES
2.1. Basis of preparation of Financial Statements
The financial statements are prepared under the historical cost convention, on accrual basis and in accordance
with the Generally Accepted Accounting Principles in India(Indian GAAP) and comply with the Accounting
Standards prescribed in the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the
Companies Act, 1956.
2.2. Use of estimates
The preparation of the financial statements in conformity with the generally accepted accounting principles
requires the management to make estimates and assumptions that affect the reported amount of assets and
liabilities as of the date of the financial statements and the reported amount of revenues and expenses for the year
and disclosure of contingent liabilities as of the date of Balance Sheet. The estimates and assumptions used in the
accompanying financial statements are based upon the management’s evaluation of relevant facts and
circumstances as of the date of the financial statements. Actual amounts could differ from these estimates.
2.3. Fixed Assets
Fixed Assets are carried at cost less accumulated depreciation. Cost includes related taxes, duties, freight,
insurance etc. attributable to acquisition and installation of assets and borrowing costs incurred up to the date of
commencing operations. Impairment loss is recognised, where applicable, when the carrying value of fixed assets
exceeds its market value or the value in use whichever is higher.
2.4. Depreciation
Depreciation on Fixed Assets is provided on Straight Line Method as per Schedule XIV of the Companies Act,
1956. Depreciation on impaired assets is provided by adjusting the depreciation charge in the remaining periods
so as to allocate the asset’s revised carrying amount over its remaining useful life. Intangible Assets are amortised
over a period of three years.
2.5. Investments
All investments are valued at cost. Diminution in the value of investments other than temporary in nature is
provided for.
2.6. Inventories
Materials at site are valued at cost on FIFO method. Work-in-Progress in respect of contracts till attaining a
reasonable progress level and in property development till significant risks and rewards of ownership are
transferred is valued at cost.
2.7. Revenue Recognition
i) Revenue in respect of construction contracts including Property Development activity is recognised on
percentage of completion method. Percentage of completion is arrived at as the proportion of contract
costs incurred (including directly attributable borrowing costs) up to the Balance Sheet date to the
estimated total contract costs.
ii) Dividend from investments is accounted when received.
99
2.8. Contract Revenue /Sales
i) Revenue in respect of billed and unbilled contracts/property development in progress includes recognised
profits based on percentage of completion and retention on bills. Provision for expected losses is made
irrespective of percentage of completion.
ii) Revenue from Property Development activity is recognised when significant risks and rewards of
ownership in the land and/or building are transferred to the customer.
iii) Bill raised for value of work done in respect of completed and ongoing contracts including retention on
bill is disclosed as proceeds on contracts.
iv) Sale of goods and services are recognized when the goods are delivered or services rendered.
v) Sales are recorded net of trade discounts/rebates exclusive of sales tax.
2.9. Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of assets that necessarily takes substantial
period of time to get ready for intended use are treated as part of the cost of such assets. All other borrowing costs
are charged to revenue.
2.10. Employee Benefits
a. Short Term
Short term employee benefits, including accumulated compensated absences, are recognized as an expense as per
the Company‘s scheme, based on expected obligations on undiscounted basis.
b. Long term
i. Long term employee benefits comprise of leave encashment which is provided for based on the actuarial
valuation using the projected unit credit method.
ii. Provident Fund
Contributions are made to the Company’s Employees Provident Fund Trust in accordance with the fund rules.
The interest rate payable by the trust to the beneficiaries every year is being notified by the Government. The
company has an obligation to make good the shortfall, if any, between the return from the investments of the
trust and the notified interest rate.
iii. Superannuation
This is defined contribution plan. Fixed contributions to the Superannuation Fund administered by trustees
and managed by Life Insurance Corporation of India are charged to the Profit and Loss Account. The
Company has no further obligations for future superannuation benefits other than its annual contributions and
recognizes such contributions as an expense in the year incurred.
iv. Gratuity
The Company makes annual contribution to a Gratuity Fund administered by trustees and managed by Life
Insurance Corporation of India (LIC). Liability for future gratuity benefits is accounted based on actuarial
valuation, as at the Balance Sheet date, determined every year by LIC using projected unit credit method.
Actuarial gains and losses, comprising of experience adjustments and the effects of changes in actuarial
assumptions, are recognised immediately in the profit and loss account.
2.11. Taxation
Provision for current tax is made based on the liability computed in accordance with the relevant tax rates and tax
laws. Provision for deferred tax is made for timing differences arising between the taxable income and accounting
income calculated at the tax rates enacted or substantially enacted by the Balance Sheet date. Deferred tax assets
are recognized only if there is a virtual certainty that they will be realised and are reviewed for appropriateness of
their respective carrying values at each Balance Sheet date.
2.12. Provisions & Contingent Liabilities:
Provisions are recognized for known liabilities that can be measured where the Company has a present obligation
as a result of past event. Contingent Liabilities are disclosed by way of note.
100
NOTE 27
Rs. In Lakhs
As at
31st March 2013
As at
31st March
2012
Contingent Liability
3.1 Estimated amount of Contracts remaining to be
executed on Capital Account not provided for 211.56 NIL
3.2) a) Guarantees issued by the Company's bankers
for which the Company has given counter guarantees.
(Net of guarantees for which Liability exists in the
books of account) 4,058.32 4,646.47
3.2 ) b ) Letter of Credits issued by the Company’s bankers for
which the Company has given counter guarantees 523.14 34.48
3.3 Estimated liability on account of certain taxes
and duties not provided for
i) Sales Tax
Andhra Pradesh VAT for the year 2006-07 &
2007-08 (against which Rs 20.49 Lakhs deposited 43.32 43.32
with the Commercial Tax Officer, Hyderabad)
Tamil Nadu-Entry Tax for the year 2012-13 2.99 -
(entire amount of Rs 2.99 Lakhs deposited
with the Commercial Tax Officer, Ranipet)
ii) Income Tax
Appeals pending on various matters before
CIT (Appeals) 108.50 316.58
AY - 2005-06 Rs. 1.90 Lakhs; AY-2008-09 Rs. 104.27 Lakhs; AY 2009-10
Rs.2.33 Lakhs ;
iii) Excise Duty
Department appeal pending. Refund granted for Rs. 3.77 lakhs against Rs. 9.54
lakhs amount paid NIL 32.38
Tender & Security Deposit in Note 20 includes : (*)
i) Fixed Deposit with a scheduled Bank 1.25 1.25
ii) Kissan Vikas Patra 0.39 0.19
iii) 6 Year NSC VIII issue 3.69 3.69
(*) Held by Commercial Tax & Other
Authorities as Security Deposit
101
5. EMPLOYEE BENEFITS AS PER AS-15 (REVISED)
5.1 Details of Actuarial Valuation of Gratuity
Rs. Lakhs
2012-13 2011-12
i) Changes in Present Value of Benefit Obligation- Gratuity
1 Present Value of Benefit Obligation at the beginning of the Period 66.77 45.03
2 Current Service Cost 12.01 7.40
3 Interest Cost 5.34 3.60
4 Benefits Paid (4.35) (2.21)
5 Actuarial (Gain)/Loss (0.38) 12.95
6 Present value of Benefits Obligation at the end of the period 79.39 66.77
ii Changes in Fair Value of Plan Assets
1 Fair Value of Plan Assets at the beginning of the Period 46.19 29.68
2 Expected return on Plan Assets 5.21 3.37
3 Contributions 20.53 15.35
4 Benefits Paid (4.35) (2.21)
5 Actuarial Gain/(Loss) on Plan assets - -
6 Fair Value of Plan Assets at the end of the period 67.58 46.19
iii Amount recognised in the Balance Sheet
1 Projected Benefit Obligation at the end of the period 79.39 66.77
2 Fair Value of Plan Assets at the end of the period 67.58 46.19
3 Liability recognised in the Balance sheet 11.81 20.58
iv Amount recognised in the Statement of Profit & Loss
1 Current Service Cost 12.01 7.40
2 Interest Cost 5.34 3.60
3 Expected return on Plan Assets (5.21) (3.37)
4 Net Actuarial (Gain)/Loss recognised in the period (0.38) 12.95
6 Net Cost 11.76 20.58
v Principal Actuarial Assumptions
1 Discount Rate 8% 8%
2 Estimated Rate of Return on Plan Assets 9.25% 9.25%
3 Expected rate of Salary increases 6% 6%
4 Attrition Rate 3% 3%
5.2 Details of Actuarial Assumptions for Leave encashment
1 Discount Rate 8% 8%
2 Salary Escalation 6% 6%
3 Attrition Rate 3% 3%
5.3 Note on Provident Fund : With respect to the Provident Fund administered by the Company, the Company shall
make good deficiency, if any, in the interest rate declared by Trust over statutory limit. Having regard to the assets
of the fund and return on investments, the Company does not expect any deficiency in the forseeable future.
102
As at
31st March 2013
As at
31st March 2012
6 (i) Salary and allowances include:
-Retirement benefits paid on account of
Leave encashment 5.18 5.73
(ii) Sundry Creditors include:
-Dues to Micro, Small and Medium enterprises in
respect of suppliers from whom intimation was
received regarding their status under Micro, NIL NIL
Small and Medium Enterprises Devl Act, 2006.
7 Income Tax Deducted at source on:
Interest Receipts 3.54 3.60
8 Auditor's Remuneration (included in Note 26)
Statutory Audit Fees 2.30 2.00
Tax Audit fees 0.50 0.50
Management services - 3.00
Other services 1.11 0.60
Out of pocket expenses
0.19
Service Tax
0.77
9 Turnover
Contract Revenue 21,572.79 16,945.77
Scrap & Sundry Sales 34.39 71.65
Merchant Sales 32.04 28.67
10 AS-7 disclosure for Contracts in Progress
Contract revenue recognised 21,213.40 12,366.59
Contract Costs incurred 19,106.18 13,265.29
Advance Received 2,426.25 2,538.00
Retention 1,498.24 951.17
Due from Customers 4,198.43 3,699.19
11 Directors' Remuneration
Directors' Sitting Fees - 1.54
Commission - -
- 1.54
12 Basic/Diluted Earnings Per Share
- Profit/(loss) attributable to the Equity
shareholders (544.05) (2,145.22)
- No. of Equity Shares Outstanding
during the year 3294780 3294780
- Nominal value of Equity Share (Rs.) 10 10
- Basic Earnings Per Share (Rs.) (16.51) (65.11)
- Diluted Earnings Per share (Rs.) NA NA
13 Deferred tax asset on account of Unabsorbed Capital
Loss on Sale of investments/provision for diminution
103
in value of investments not recognised in the accounts
on the basis of prudence in accordance with Accounting
17.99
Standard 22 - Accounting for taxes on income
14 The Company is engaged in Construction activity and
as there is no other activity, separate segmental
reporting as per Accounting Standard 17 is not applicable
15 Expenditure in Foreign currency NIL NIL
16 Related Party Transactions
Key Management Personnel
Mr. M.M. Venkatachalam, Chairman and Managing Director
Mr.G.Viswanath Kumar, Sr.Vice President
Remuneration to key Management Personnel
Mr.G.Viswanath Kumar 40.83 43.50
17 Previous Year's figures have been regrouped
to conform to the Current Year grouping.
As per our report of even date On behalf of the Board
For Sundaram & Srinivasan
Chartered Accountants
Regn No: 004207S
M.PADHMANABHAN SRIDHAR GANESH M.M.VENKATACHALAM
Partner Director Chairman and Managing Director
Membership no.: F13291
Chennai R. NARAYANAN
Date : April 30, 2013 Head Finance and company secretary
104
MATERIAL DEVELOPMENTS
Save as disclosed hereinafter, there have been no developments since March 31, 2013 which effect the operations,
performance, prospects or financial condition of our Company:
1. Our Company redeemed 25,00,000 Preference Shares at an aggregate consideration of ` 3,004.43 lakhs.
2. Our Company has issued Preference Shares to Tata Capital Financial Services Limited on August 22, 2013 in two
tranches (i) Tranche A- consisting of 10,00,000 Preference Shares of ` 100 each issued at a premium of ` 20 each
per Preference Share aggregating to ` 1,200 lakhs) and (ii) Tranche B -consisting of 15,00,000 Preference Shares of
`100 issued at a premium of ` 20 each per Preference Share aggregating to ` 1,800 lakhs. For details relating to
redemption of existing Preference Shares, please see the section titled “Objects of the Issue - Redemption of existing
Preference Shares” on page 59 of this Draft Letter of Offer.
105
WORKING RESULTS
In accordance with circular no.F.2/5/SE/76 dated February 5, 1977 issued by the Ministry of Finance, Government of
India, as amended by Ministry of Finance, Government of India through its circular dated March 8, 1977, the information
relating to the working results for the period between the last date of the financial statements and up to the end of the last
but one month preceding the date of the Letter of Offer will be updated in the Letter of Offer to be filed with the Stock
Exchanges.
106
ACCOUNTING AND OTHER RATIOS
(` in lakhs except EPS and no. of shares)
Particulars Stub period ended
June 2013
Year Ended
March 2013
Year Ended
March 2012
Net Profit after Tax (A) (494.38) (544.05) (2,145.22)
Less: Preference Dividend & Dividend tax - - -
Profit Available for Equity Share Holders (B) (494.38) (544.05) (2,145.22)
Net Worth (C) 1,231.49 1,725.87 2269.92
Return on Net Worth (%) (A/C) (D) - - -
No. of Shares at the end of Year /Period (E) 32,94,780 32,94,780 32,94,780
Weighted No. of Equity Shares 32,94,780 32,94,780 32,94,780
Basic Earnings Per Share (`) (A/E) (15.00) (16.51) (65.11)
Net Asset Value/Book Value per Equity Share of ` 10 each
(C/E) 37.38 52.38 68.89
Notes: Definition of Ratios:
Basic Earnings Per Share (Net Profit after tax)/(Total number of equity shares outstanding during the
year/period)
Return on Net Worth (%) (Net Profit after tax)/(Networth at the end of the year/period)
Net Asset Value Per Share (Net Worth at the end of the year/period)/ (Total number of equity shares
outstanding during the year/period)
Net Worth Equity share capital + Preference Capital + Reserves (execluding Revlauation
Reserves)
107
CAPITALISATION STATEMENT
The capitalisation statement of the Company as at March 31, 2013 as adjusted post the Issue is as follows:
Amount (` in lakhs)
Particulars Pre Issue
As at March 31, 2013
As Adjusted Post Issue*
Debt:
Short Term Debt 2,955.81 [•]
Long Term Debt 5,550.00 [•]
Total Debt: 8,505.81 [•]
Shareholders Fund:
Share Capital 2,829.48 [•]
Reserve & Surplus (excluding Revaluation Reserve)
--Capital Reserve 7.24 [•]
--Securities Premium 135.88 [•]
--Investment Allowance Reserve 77.71 [•]
--General Reserve 551.72 [•]
--Surplus (1,876.16) [•]
Total Shareholders Fund: 1,725.87 [•]
Long Term Debt/Shareholders Fund 3.22
Total Debt/Shareholders Fund 4.93 [•]
*The corresponding post Issue figures will be determined upon finalisation of the Issue Price.
108
MARKET PRICE INFORMATION
Our Company has received an approval from the MSE for the listing of our Equity Shares on January 27, 1976.
Subsequently, our Equity Shares were listed on BSE from March 15, 2010. With effect from February 17, 2011, the Equity
Shares of the Company are included on the NSE trading platform pursuant to an agreement between the MSE and NSE.
We have received in-principle approval for listing of the Rights Equity Shares to be issued pursuant to this Issue from the
BSE and the MSE vide their letters dated [•] and [•] respectively. We will make applications to the BSE and the MSE for
permission to deal in and for an official quotation in respect of the Rights Equity Shares being offered in terms of this Draft
Letter of Offer.
The high and low closing market prices of the Equity Shares of our Company during the preceding three years were
recorded, as stated below:
BSE
Fiscal Year High
(`) Date of High
Volume on date
of high
(No. of equity
shares)
Low (`) Date of Low
Volume on date
of low
(No. of equity
shares)
April-2010-
March-2011
479.90 September 21,
2010
39615 194.90 April 1, 2010 9023
April-2011-
March-2012
328.40 July 29, 2011 287 183.40 March 27, 2012 35
April-2012-
March-2013
268.50 January 3, 2013 225 139.00 October 15, 2012 4
(Source: BSE)
NSE
Fiscal Year High
(`) Date of High
Volume on date
of high
(No. of equity
shares)
Low (`) Date of Low
Volume on date
of low
(No. of equity
shares)
April-2010-
March-2011
307.50 February 18,
2011
1 220.00 March 30, 2011 65
April-2011-
March-2012
331.80 August 5, 2011 140 181.00 December 22,
2011
1
April-2012-
March-2013
264.00 January 31, 2013 312 142.50 October 19, 2012 4005
(Source: NSE)
Monthly high and low closing prices on the BSE for the six months preceding the date of filing of this Draft Letter of Offer
is as stated below:
BSE
Month High
(`) Date of High
Volume on date
of high
(No. of equity
shares)
Low (`) Date of Low
Volume on date
of low
(No. of equity
shares)
April 2013 269.00 April 25, 2013 267 213.00 April 2, 2013 62
May 2013 242.85 May 6, 2013 10 208.30 May 29, 2013 10
June 2013 - - - - - -
July 2013 197.90 July 3, 2013 5 183.00 July 9, 2013 20
August 2013 177.25 August 1, 2013 31 161.90 August 13, 2013 10
September
2013
258.00 September 27,
2013
100 167.25 September 3,
2013
611
(Source: BSE)
109
In the event the high or low or closing price of the Equity Shares are the same on more than one day, the day on which there has
been higher volume of trading has been considered for the purposes of this chapter.
Monthly high and low closing prices on the NSE for the six months preceding the date of filing of this Draft Letter of Offer
is as stated below:
NSE
Month High
(`) Date of High
Volume on date
of high
(No. of equity
shares)
Low (`) Date of Low
Volume on date
of low
(No. of equity
shares)
April 2013 230.00 April 3, 2013 84 225.15 April 2, 2013 70
May 2013 220.05 May 3, 2013 20 195.15 May 27, 2013 10
June 2013 - - - - - -
July 2013 204.90 July 19, 2013 35 204.90 July 19, 2013 35
August 2013 218.00 August 12, 2013 2 199.50 August 26,-2013 44
September
2013
237.00 September 19,
2013
15 189.55 September 3,
2013
74
(Source: NSE)
(*With data starting from February 17, 2011, the date of Company’s listing on the NSE)
The closing price of our Equity Shares as on September 6, 2013 (the trading day immediately following the day on which
the Board resolution was passed approving the Issue) was ` 175.60 on the BSE and ` 194.70 on the NSE.
Week end prices of Equity Shares of our Company for the last four weeks on the BSE along with the highest and lowest
closing prices for the weeks are as below:
BSE
For the week
ended on
High
(`) Date of High
Volume on
date of high
(No. of equity
shares)
Low (`) Date of Low
Volume on
date of low
(No. of equity
shares)
September 27,
2013 250
September 25,
2013 100 - - -
September 20,
2013
240 September 18,
2013
22 224 September 16,
2013
103
September 13,
2013 213.35
September 13,
2013 75 184.35
September 10,
2013 25
September 06,
2013 175.6
September 5,
2013 25 167.25 September 3, 2013 611
(Source: BSE)
Week end prices of Equity Shares of our Company for the last four weeks on the NSE along with the highest and lowest
closing prices for the weeks are as below:
NSE
For the week
ended on
High
(`) Date of High
Volume on
date of high
(No. of equity
shares)
Low (`) Date of Low
Volume on
date of low
(No. of equity
shares)
September 27,
2013
- - - - - -
September 20,
2013
237 September 19,
2013 15 219.45 September 16,
2013 5
September 13,
2013 214.6 September 11,
2013
56 204.4 September 10,
2013
96
110
NSE
For the week
ended on
High
(`) Date of High
Volume on
date of high
(No. of equity
shares)
Low (`) Date of Low
Volume on
date of low
(No. of equity
shares)
September 06,
2013
198 September 4,
2013
2 189.55 September 3,
2013
74
(Source: NSE)
The market capitalization of our Equity Shares as on September 27, 2013 was ` 8,500 lakhs on the BSE and ` 8,752.59
lakhs on the NSE based on a closing market price of ` 250.00 and ` 265.65, respectively.
The Issue price of ` [•] has been arrived at in consultation between our Company and the Lead Managers.
111
PRINCIPAL TERMS OF LOANS AND ASSETS CHARGED AS SECURITY
Sr.
No.
Nature of
Facility
Amou
nt
Sancti
oned
(in ` lakhs)
Amount
Outstan
ding as
on
August
31, 2013
(in ` lakhs)
Security Rate of
Interest (per
annum)
Repayment/Tenor
Working Capital Facilities
1. Development Credit Bank Limited – Total limit amounting to ` 1,759.00 lakhs
a)
a)
Cash Credit
Sub Limit:
Working
Capital
Demand Loan
to the extent of
` 200.00 lakhs
200.00
4.32
200.00
First charge on
pari passu basis
on the current
assets of the
Company,
present and
future with other
banks in multiple
banking
arrangement
other than assets
pertaining to
property
development.
Base rate plus
2% p.a.
currently
12.50% p.a.
(present base
rate 10.50%
p.a.)
On demand/Annual
Review
b) Bank
Guarantee -
Interchangeabl
e to cash credit
to the extent of
` 100.00 lakhs
700.00
253.00 Counter
guarantee of the
Company and
extension of first
pari passu charge
on current assets.
1.00% p.a. On Expiry/On
Demand/Annual
Review
c) Letter of
Credit (One
time)
94.00 - Goods procured
under the letter
of credit.
1% p.a. +
Service Tax
Tenor of the Letter of
Credit: 90 days
d) Bank
Guarantee
(One time)
dated June 18,
2013
265.00 265.00 Nil 1.00% p.a. Tenor 12 months
(excluding claim
period of 3 months)
e) Short Term
Loan
500.00 500.00 Subservient
charge on
Current Assets of
the Company
Base Rate -
1.50%
Minimum
12.00 % p a
(present base
rate 10.50% p
a)
Tenor 5 months by
way of bullet
repayment
2. City Union Bank Limited – Total limit amounting to ` 1,500.00 lakhs
112
Sr.
No.
Nature of
Facility
Amou
nt
Sancti
oned
(in ` lakhs)
Amount
Outstan
ding as
on
August
31, 2013
(in ` lakhs)
Security Rate of
Interest (per
annum)
Repayment/Tenor
a) Open loan
cash credit
1,000.0
0
990.03 Primary: Stock
(construction
material), book
debts
(Receivables)
and pari passu
charge with
Indian Bank
Limited.
12.00%
BR+1.25%
Base Rate
10.75%
One year
-
b) Bank
Guarantee
500.00 458.06 Primary: Stock
(construction
material), book
debts
(Receivables)
and pari passu
charge with
Indian Bank
Limited.
2% margin
deposit 10%
3. Indian Bank – Total limit amounting to ` 3,500.00 lakhs (` 1,500.00 lakhs fund based limit and
` 2,000.00 lakhs non-fund based limit )
a) Overdraft
Facility
1,500.0
0
(Fund
based)
1,443.78 Current assets
including
inventory, WIP,
unbilled works,
receivables upto
180 days other
than Property
Development
Division.
Base rate +
tenor premium
+ 0.75%
presently
11.75%
floating
(subject to the
lenders rate of
interest not
being less than
the rate
charged by
other banks)
One year
b) Bank
Guarantee
combined with
letter of credit
(documents
against
acceptance
120 days)*
2,000.0
0
(Non-
fund
based)
1,654.76 Counter
guarantee by the
Company
Letter of Credit:
stock procured
under the said
letter of credit.
Card rate
4. HDFC Bank Limited – Limit amounting to ` 1,000.00 lakhs
a) Cash
Credit/Workin
g Capital
Demand Loan
800.00
(Fund
based)
563.67 First pari pasu
charge on all
current assets of
the Company
excluding current
assets of the
property
As per market
or as
prescribed by
RBI from time
to time
On demand/up to 180
days
113
Sr.
No.
Nature of
Facility
Amou
nt
Sancti
oned
(in ` lakhs)
Amount
Outstan
ding as
on
August
31, 2013
(in ` lakhs)
Security Rate of
Interest (per
annum)
Repayment/Tenor
development
business.
b) Letter of
Credit/Bank
Guarantee
200.00
(Non-
fund
based)
196.58 Nil As per market
or as
prescribed by
RBI from time
to time.
180 days from
usance/Maximum of
24 months (including
claim period)
5. IDBI Bank Limited – Limit amounting to ` 1,800.00 lakhs
a) Cash Credit –
full way
interchangeabi
lity as bank
guarantee
900.00 32.81 First pari passu
charge on all
current assets of
the Company.
At bank base
rate + 2.50%
(presently the
bank base rate
is 10.50% p.a.)
payable
monthly.
Wherever the
rate of interest
is linked to
bank prime
lending rate or
bank base rate
the applicable
rate of interest
will change
automatically
from the date
of change,
whenever
there is a
change in the
bank prime
lending rate or
bank base rate.
On demand
b) Working
capital demand
loan (inner
limit to cash
credit) to the
extent of `
500.00 lakhs
- - To be decided
at the time of
draw down
(exclusive of
interest tax,
other
levies/duties)
On due dates
c) Bank
Guarantee
900.00 1,397.19 -
d) Letter of
Credit (inner
limit to Bank
Guarantee) to
the extent of ` 500.00 lakhs
- 1% p.a. plus
service tax
payable
upfront
114
Sr.
No.
Nature of
Facility
Amou
nt
Sancti
oned
(in ` lakhs)
Amount
Outstan
ding as
on
August
31, 2013
(in ` lakhs)
Security Rate of
Interest (per
annum)
Repayment/Tenor
6. Indusind Bank – amounting to ` 1,500.00 lakhs for Long term working capital and ` 1,770.00
lakhs (fund and non-fund based limit)
a) Long term
working
capital loan
1,500.0
0
1,500.00 Subservient
charge on current
and moveable
fixed assets of
the Company.
As mutually
agreed
Maximum 60 months,
including a
moratorium of 12
months from the date
of first disbursement
To be repaid in 16
equal quarterly
installments , the first
instalment being
payable at the end of
three months from the
moratorium
b) Cash
credit/Working
capital demand
loan**
870.00
0.45 First pari pasu
charge on entire
current assets of
the Company
with the bank
under the
multiple bank
agreement other
than assets
pertaining to
property
development
division
Repayable on
demand/ renewable
annually
c) Letter of credit
/Bank
guarantee
900.00 1,131.73 -
Term loans
7. Tata Capital Financial Services Limited – amounting to ` 2,000.00 lakhs
a) Term Loan 2,000.0
0
1,865.44 Primary:
First pari
passu charge
on all the
present and
future current
assets of the
property
development
division of the
Company
having
minimum
security cover
of 1.25x
during the
tenor of the
Long Term
Rate less
4.75% i.e.
13.25% p.a.
floating
interest rate.
LTR is subject
to change from
time to time.
60 months -
12 month moratorium
starting from date of
first tranche
disbursement ,
thereafter payable as
below:
13th
month: ` 133.33
lakhs;
18th
month: ` 133.33
lakhs;
24th
month: ` 200.00
lakhs;
115
Sr.
No.
Nature of
Facility
Amou
nt
Sancti
oned
(in ` lakhs)
Amount
Outstan
ding as
on
August
31, 2013
(in ` lakhs)
Security Rate of
Interest (per
annum)
Repayment/Tenor
loan
Escrow of
future
receivables
from real
estate division
(Security
perfection and
escrow
mechanism to be
perfected within
90 days from the
date of the first
disbursement).
36th
month: ` 333.33
lakhs;
48th
month: ` 533.33
lakhs; and
60th
month: ` 666.67
lakhs
8. Tata Capital Financial Services Limited – amounting to ` 1,000.00 lakhs
a) Term Loan 1,000.0
0
1,000 Primary:
First pari
passu charge
on all the
present and
future current
assets of the
property
development
division of the
Company
having
minimum
security cover
of 1.25x
during the
tenor of the
loan
Escrow of
future
receivables
from real
estate division.
LTR less
6.00% i.e.
12.00% p.a.
floating
interest rate,
subject to a
minimum of
11.50%.
LTR is subject
to change from
time to time.
60 months -
6 month moratorium
starting from date of
first tranche
disbursement
(repayment starting
from 7th
month),
thereafter payable in
equal quarterly
installments till
maturity.
9. New India Co-op Bank Limited amounting to ` 3,850.00 lakhs
a) Term Loan 450.00 449.81 Extension of
charge on present
and future fixed
assets of the
Company.
12.25%
(Fixed)
Repayable on demand
or in 13 months by
bullet payment at the
end of the tenure of
the loan.
b) Additional
Term Loan
1,000.0
0
999.59 Prime -
Hypothecation/m
ortgage on
extension of
charge on present
12.25% p.a.
(Fixed)
On demand/permitted
to repay within a
period of 25 months
by permitting bullet
repayment on part
116
Sr.
No.
Nature of
Facility
Amou
nt
Sancti
oned
(in ` lakhs)
Amount
Outstan
ding as
on
August
31, 2013
(in ` lakhs)
Security Rate of
Interest (per
annum)
Repayment/Tenor
and future fixed
assets.
Collateral –
Hypothecation
on present and
future current
assets of the
Company.
principal amount of `
500 lakhs at the end
of the 13th
month and
balance principal debt
of ` 500 lakhs at the
end of the 25th
month
from the date of the
first drawal of the
loan and interest to be
serviced on monthly
basis
c) Term Loan 2,400.0
0
599.99 Charge on fixed
assets of the
Company in the
form of
construction
equipments and
facilities used for
execution of
project involving
industrial
construction and
hypothecation of
machinery with
an aggregate
value of not
below ` 3,000
lakhs.
9.75% p.a.
(fixed) to be
charged on
monthly basis
but servicing
of interest
Permitted on
quarterly basis
On demand/annual
review – allowed to
pay in 4 annual
installments of ` 600
lakhs each (excluding
moratorium of 1 year)
* Bank Guarantees are unsecured loans.
**The cash credit/working capital demand loaned fully interchangeable with the letter of credit/bank
guarantee.
Details of borrowings of the Company post August 31, 2013 till the date of this Draft Letter of Offer:
Sr.
No.
Nature of
Facility
Amount
Sanctioned
(in ` lakhs)
Security Rate of
Interest
(per
annum)
Repayment/Tenor
Secured Borrowings – Working Capital Facilities
1. Cholamandalam Investment and Finance Company Limited
a)
Short Term Loan 1,000.00 Subservient charge
on the fixed assets of
the Company.
13.00% p.a.
payable
monthly
Principal – Bullet
payment at the end of
the tenure (with an
option of pre-payment
after 6 months)
Interest – To be paid
on monthly basis in
arrears
117
Sr.
No.
Nature of
Facility
Amount
Sanctioned
(in ` lakhs)
Security Rate of
Interest
(per
annum)
Repayment/Tenor
Secured Borrowings – Working Capital Facilities
2. Axis Bank Limited
a) Demand/Short
term credit
facility
1,000.00 Hypothecation on
subservient charge
basis all movable
plant and machinery,
furnitures, fixtures
etc., both present and
future.
Base rate +
1.75% p.a.
i.e. 12.00%
p.a. at
present as
the base rate
is 10.25%
Repayment to be made
at the end of 12
months from the date
of first disbursement
by way of bullet
repayment.
No prepayment
penalty after 6 months
3. Develeopment Credit Bank Limited
a) Short Term Loan
(STL) - Sanction
Letter dated
September 5,
2013
500.00 Subservient charge
on receivables of the
Company.
Base Rate +
1.50%
minimum
12.35% p.a.
(Present
base rate
10.85% p.a.)
Repayable in two
monthly installments
of ` 150 lakhs each
on 8th
and 9th
month
and ` 200 lakhs on
the 10th
month
Corporate Actions:
Many of our financing arrangements entail various restrictive conditions and covenants restricting certain
corporate actions, and we are required to take the prior approval of the lender before carrying out such
activities.
For instance, we are required to intimate the lenders if we, inter alia, (i) effect any major changes in the
shareholding pattern, management control, or make any investments in any fixed assets, in associates/group
companies except to the extent projected in the data submitted to the Bank; (ii) effect change in the capital
structure; (iii) formulate any scheme of amalgamation or reconstruction; (iv) implement any major scheme
of expansion; (v) invest by way of share capital in or lend advance funds to or place deposits with any other
concern enter into additional borrowing arrangements (including securitization of receivables or provide
escrow facilities), either secured or unsecured, with any bank, financial institutions, company/firm or
otherwise other than the limits disclosed; (vi) undertake guarantee obligations on behalf of any other
company/firm etc.; (vii) allow the promoters/directors to alienate, transfer, dispose or dilute their
shareholding; (viii) create any further charge, lien or encumbrance over the assets or properties of the
Company already charged to the lender in favour of any other lenders, companies firm or person; (ix)
declare or pay dividend for any year except out of profits for the year and after meeting the bank’s
obligations; (x) reduction in Promoter and Promoter Group holding in the Company below 51% without
intimation to the lender; (xi) changes in the memorandum and articles of association of the Company; (xii)
infusion of further capital in the Company by Fiscal 2014.
118
SECTION VI – LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND OTHER DEFAULTS
Except as described below, there are no outstanding litigations, suits, civil or criminal prosecutions,
proceedings before any judicial, quasi-judicial, arbitral or administrative tribunals, including pending
proceedings for violation of statutory regulations or, alleging criminal or economic offences or tax
liabilities or any other offences (including past cases where penalties may or may not have been awarded
and irrespective of whether they are specified under paragraph (i) of Part 1 of Schedule XIII of the
Companies Act, 1956) against our Company that would have a material adverse effect on our business.
Further there are no defaults, nonpayment or overdue of statutory dues, institutional/bank dues and dues
payable to holders of debentures, bonds and arrears of cumulative preference shares that would have a
material adverse effect on our business.
Further, except as disclosed below, the Company is not subject to any material litigation.
In terms of the SEBI ICDR Regulations, the following litigation will be considered material:
a) Any litigation, which if resulting in adverse outcome, would materially and adversely affect the
operations or financial position of the Company.
b) Any litigation involving issues of moral turpitude or criminal liability on the part of the Company
material violations of statutory regulations by the Company, or economic offences where
proceedings have been initiated against the Company in the preceding ten years.
c) Any litigation which may not have any impact on the future revenues, where:
1. The aggregate amount involved in such individual litigation exceeds 1% of the net worth of the
Company as the case may be, for Fiscal 2013; or
2. The decision in one case is likely to affect the decision in similar cases, even though the amount
involved in a single case individually may not exceed 1% of the net worth of the Company as the
case may be, for Fiscal 2013.
d) Any litigation which may have an impact on the future revenues, where:
1. The aggregate amount involved in such individual litigation is likely to exceed 1% of the total
revenue of the Company as the case may be, for Fiscal 2013; or
2. The decision in one case is likely to affect the decision in similar cases, even though the amount
involved in a single case individually may not exceed 1% of the total revenue of the Company, as
the case may be, for Fiscal 2013.
All outstanding civil, arbitral and tax related litigations and disputes which individually or collectively are
of value more than ` 17 lakhs are material to our Company. As on the date of this Draft Letter of Offer, we
had the following legal proceedings pending before various courts and authorities, which, in terms of the
Schedule VIII Part E (XII) of the SEBI (ICDR) Regulations, have been disclosed hereunder:
Litigation against our Company
A summary of litigation and disputes involving potential financial liability of ` 17 lakhs or more and
certain other litigation which we consider material is as follows:
Value Added Tax Proceedings
1. The Commercial Tax Officer, Hyderabad issued an assessment order dated March 06, 2009 rejecting
the exemption claimed by the Company with respect to the work assigned to the sub-contractor on the
grounds that the sub-contractor was found to be an unregistered dealer under the provisions of the
Andhra Pradesh Value Added Tax Act, 2005 (“Act”) and directed the Company to pay ` 17.41 lakhs
and a total penalty of ` 25.91 lakhs. In response to the above-mentioned assessment order the
Company filed an appeal dated April 9, 2009 before the Appellate Deputy Commissioner (CT),
119
Secunderabad (“ADC”) pursuant to which the ADC passed an order dated May 13, 2010, setting
aside the impugned assessment and remanded the matter to the assessing authority to redo the
assessment. However, the Joint Commissioner (CT) Legal, Office of the Commissioner of
Commercial Taxes , Hyderabad (“JC”) set aside the order of the ADC and restored the original
assessment order dated March 6, 2009 vide his order dated September 18, 2010. Thereafter, the
Company filed a second appeal dated November 26, 2010 before the Sales Appellate Tribunal,
Andhra Pradesh contesting the order of the JC. The Company also filed a second appeal dated August
16, 2011 before the ADC against the above-mentioned penalty order dated March 6, 2009. The ADC
vide his order dated June 12, 2013 set aside the said impugned penalty order and directed the
assessing officer to verify the particulars of the sub-contractor and take appropriate action under law.
Income Tax Proceedings
1. The Assistant Commissioner of Income Tax, Company Circle III, Chennai issued an assessment order
dated December 30, 2010, under Section 143(3) of the Income Tax Act, 1961, (“Act”) along with a
notice of demand dated December 30, 2010, to our Company, for the assessment year 2008-2009,
demanding ` 95.40 lakhs along with penal interest amounting to a total sum ` 104.27 lakhs of on the
grounds of non compliance with conditions stipulated under Section 801B of the Act. The Company
has filed an appeal dated January 20, 2011 before the Commissioner of Income Tax Appeal – III,
Chennai to allow exemption claimed under Section 801B(10) of the Act to the extent of ` 204.65
lakhs claimed and reverse the disallowance and direct the Assessing Officer to give credit for TDS
amounting to `121.81 lakhs against ` 53.58 lakhs as provided in the assessment and reduce the
amount. The matter is pending final disposal.
Notices received by our Company
1. The Office of the Assistant Commissioner (CT) issued a notice dated August 12, 2013 to the
Company under the Tamil Nadu Value Added Tax Act, 2006 for reversal and payment of input tax
credit for the year 2012-2013 amounting to ` 98.17 lakhs along with interest on the said amount for
the period commencing from the date of the claim of input tax credit to the date of its payment as the
Company is not eligible to claim input tax credit on Special Economic Zone contracts. The Company
vide its letter dated September 12, 2013 responded to the said notice clarifying its position and
requisition for a personal hearing. The matter is pending hearing and final disposal.
2. The Employee State Insurance Corporation, Regional Office, Tamil Nadu issued a notice dated
March 25, 2013 for violation of Section 40 read with Section 39 of the Employees’ State Insurance
Act, 1948. It has been alleged in the notice that the Company has not made the requisite employers
and employees contribution amounting to ` 225.55 lakhs and has also not submitted returns of
contribution for the year 2008-2009. The said notice has directed the Company to show cause against
the abovementioned determination and recovery on April 19, 2013. In response to the said notice, the
Company vide its letter dated April 19, 2013 submitted the requisite documents in relation to the
contributions made by them in order to clarify their position and have requested additional time to
collate past record of documents as well.
Litigations by our Company
Civil Proceedings
1. Our Company filed a company petition (COPET No. 32 of 2012) dated July 23, 2012 against M/s
Jayashree Chemicals Limited, (“JCL”), Shri S K Bhangur, Chairman, M/s Jayashree Chemicals
Limited, (“SKB”), and Sri P K Gupta, Head, Finance M/s Jayashree Chemicals Limited, (“PKG”)
(“Opposite Parties”), before the High Court of Orissa, Cuttack. The said company petition has been
filed by our company for winding up of the JCL for its admitted inability to repay its debts to the
Company in terms of Section 433 (e) of the Companies Act, 1956. JCL, vide a letter of intent dated
September 23, 2009, entered into by the Company and JCL for and structural works for the
conversion of an existing Mercury Cell Caustic Soda Plant to a [Uhde Membrance] Cell Plant in
Ganjam, Orissa for a total price of `1,437 lakhs. Thereafter, JCL defaulted in several payments due to
the Company and on completion of the contracted work by the Company outstanding dues to the
120
Company amounted to ` 533 lakhs out of which the Company made a settlement for a sum of ` 450
lakhs. In response to the notice issued by the Company to JCL dated May 21, 2012, JCL admitted its
liability towards the Company and also informed the Company that substantial dues were pending
against them pursuant to BIFR proceedings. Therefore the Company filed the present Company
petition for winding up of JCL.
2. Our Company filed a company petition (CP No 228 of 2012) dated September 13, 2012 against M/s
Castwel Auto Parts Private Limited, (“Respondent”), before the High Court of Judicature, Madras.
The said company petition has been filed by our company for winding up of the Respondent for its
inability to repay its debts to the Company in terms of Section 433 (e) and (f) and 434(1)(a) of the
Companies Act, 1956. The Respondent defaulted in several payments due to the Company under an
agreement dated March 16, 2009, entered into by the Company and the Respondent, for the
construction of a manufacturing facility in Chennai. On completion of the contracted construction, the
Company sent repeated reminders to the Company to pay the outstanding amount of ` 104.98 lakhs.
The Respondent admitted that an amount of ` 95.56 lakhs was due to the Company by them.
Subsequently, the Company also discovered that the Respondent has suffered huge losses as per its
balance sheet filed with the Registrar of Company for the financial year ending March 31, 2011.
Therefore the Company filed the present Company petition for winding up along with dues playable
amounting to ` 129.43 lakhs (principal amount along with the interest component).
121
GOVERNMENT AND OTHER APPROVALS
A. Pending approvals in connection with our business:
Sr.
No.
Type of Application Application
Number/Reference
Number
Granting
Authority
Date of
application
Date
of
Expiry
1. Building & Other
Construction Workers
(Regulation of Employment
and Conditions of Service)
Act, 1996 – Rakindo Site
Nil Inspector of
Factories,
Coimbatore
August 29,
2013 NA
2. Tamil Nadu Pollution Control
Board, Coimbatore – Coral
Ennar Site
Nil The District
Environmental
Engineer,
Coimbatore
July 29,
2013 NA
3. Tamil Nadu Electricity Board,
Medavakkam , Chennai –
Coral Cascade – NOC from
Corporation
Nil The
Commissioner
Corporation of
Chennai,
Ripon
Building
September
14, 2013
NA
122
OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
This Issue is being made pursuant to a resolution passed by the Board of Directors of our Company and the
shareholders of our Company at their meetings held on September 5, 2013 and October 1, 2013,
respectively. Pursuant to resolution passed by our Board on [•], the Board has determined a Rights
Entitlement of [•] Rights Equity Shares for every [•] fully paid-up Equity Shares held on the Record Date
and a price of ` [•] per Rights Equity Share as the Issue Price.
Eligibility for the Issue
Our Company is an existing listed company registered under the Companies Act, 1913, whose Equity
Shares are listed on the BSE and the MSE. Our Company is eligible to offer the Rights Equity Shares
pursuant to the Issue in terms of Chapter IV of the SEBI ICDR Regulations.
Our Company has complied with the requirements of Part E of Schedule VIII of the SEBI ICDR
Regulations, to the applicable extent, in terms of the disclosures made in this Draft Letter of Offer.
Further, our Company confirms that it is in compliance with the following:
(a) our Company has been filing periodic reports, statements and information in compliance with the
listing agreement for the last three years immediately preceding the date of filing this Draft Letter
of Offer with SEBI;
(b) the reports, statements and information referred to in sub-clause (a) above are available on the
website of any recognized stock exchange with nationwide trading terminals or on a common e-
filing platform specified by SEBI; and
(c) our Company has investor grievance-handling mechanism which includes meeting of the
Shareholders’ or Investors’ Grievance Committee at frequent intervals, appropriate delegation of
power by the Board of Directors as regards share transfer and clearly laid down systems and
procedures for timely and satisfactory redressal of investor grievances.
Further, our Company has complied with the requirements of Part E of Schedule VIII of the SEBI
Regulations, to the applicable extent, in terms of the disclosures made in this Draft Letter of Offer.
Prohibition by SEBI or RBI
1. Our Company, our Promoters and Promoter Group, our Group Entities, Directors or person(s) in
control of our Promoter have not been prohibited or debarred from accessing or operating in the
capital markets or restrained from buying, selling or dealing in securities under any order or
direction passed by SEBI;
2. None of our Promoters and Promoter Group, Directors or persons in control of our Company was
or also is a promoter, director or person in control of any other company which has been
restrained, prohibited or debarred from accessing or operating in the capital markets or restrained
from buying, selling or dealing in securities under any order or direction passed by SEBI;
3. Our Company, our Directors, our Promoters and Promoter Group, our Group Entities and the
relatives (as per the Companies Act, 2013) of our Directors, our Promoters, have not been declared
as willful defaulters by RBI or any other governmental authority;
4. Except for Mr. M. M. Venkatachalam, who is a director in Cholamandalam Securities Limited,
none of the Directors of the Company are associated with the securities markets in any manner.
Our Chairman and Managing Director, Mr. M.M Venkatachalam is on the board of directors of
Cholamandalam Securities Limited (“CSL”) which is also our Promoter Group Company. CSL in
past has been involved in the following proceedings involving securities laws:
123
(a) SEBI vide an order dated January 27, 2005 directed that the certificate of registration of
Cholamandalam Securities Limited, (“CSL”) as a stock broker registered with NSE, be suspended
for a period of two months for acceptance of payment through cheques from third parties for
purchases made by their customers. However, CSL filed an appeal against the said order before
the Securities Appellate Tribunal and the above-mentioned order was revised to a warning.
(b) Cholamandalam Securities Limited, (“CSL”), failed to obtain prior approval from SEBI for
change in control as per the relevant regulations due to which SEBI initiated adjudication
proceedings against CSL. In the course of the said proceedings CSL filed a consent application
vide its letter dated December 17, 2008 and remitted a settlement fee amounting to ` 25,000 and `
3.50 lakhs towards consent in the said proceedings. In consideration of the above, SEBI passed an
order dated May 2009 disposing the adjudication proceedings.
Disclaimer Clause
AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO
SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT
LETTER OF OFFER TO SEBI SHOULD NOT, IN ANY WAY BE DEEMED OR CONSTRUED
THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE
ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR
THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE, OR FOR THE
CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT
LETTER OF OFFER. THE LEAD MANAGERS, AXIS CAPITAL LIMITED AND TATA
SECURITIES LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT
LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH
SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN
FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO
TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS
PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF
ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD
MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE
COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND
TOWARDS THIS PURPOSE THE LEAD MANAGERS, AXIS CAPITAL LIMITED AND TATA
SECURITIES LIMITED HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE,
WHICH READS AS FOLLOWS:
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATION LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES
WITH COLLABORATORS, ETC. AND OTHER MATERIAL IN CONNECTION WITH
THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE
SAID ISSUE;
2. ON THE BASIS OF SUCH EXAMINATION AND THE DISCUSSIONS WITH THE
COMPANY, ITS DIRECTORS AND OTHER OFFICERS, OTHER AGENCIES, AND
INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE
OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE
DOCUMENTS AND OTHER PAPERS FURNISHED BY THE COMPANY, WE
CONFIRM THAT:
(a) THE DRAFT LETTER OF OFFER FILED WITH THE BOARD IS IN
CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS
RELEVANT TO THE ISSUE;
(b) ALL THE LEGAL REQUIREMENTS RELATING TO THE ISSUE AS ALSO
124
THE REGULATIONS GUIDELINES, INSTRUCTIONS, ETC. FRAMED/ISSUED
BY THE BOARD, THE CENTRAL GOVERNMENT AND ANY OTHER
COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY
COMPLIED WITH; AND
(c) THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE,
FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL
INFORMED DECISION AS TO THE INVESTMENT IN THE PROPOSED ISSUE
AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE
REQUIREMENTS OF THE COMPANIES ACT, 1956, THE SECURITIES AND
EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 AND OTHER APPLICABLE LEGAL
REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED
IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH THE BOARD AND
THAT TILL DATE SUCH REGISTRATION IS VALID.
4. WE HAVE SATISFIED OURSELVES ABOUT THE CAPABILITY OF THE
UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS – NOTED
FOR COMPLIANCE.
5. WE CERTIFY THAT WRITTEN CONSENT FROM PROMOTERS HAS BEEN
OBTAINED FOR INCLUSION OF THEIR SPECIFIED SECURITIES AS PART OF
PROMOTERS’ CONTRIBUTION SUBJECT TO LOCK-IN AND THE SPECIFIED
SECURITIES PROPOSED TO FORM PART OF PROMOTERS’ CONTRIBUTION
SUBJECT TO LOCK-IN SHALL NOT BE DISPOSED / SOLD / TRANSFERRED BY THE
PROMOTERS DURING THE PERIOD STARTING FROM THE DATE OF FILING THE
DRAFT RED HERRING PROSPECTUS WITH THE BOARD TILL THE DATE OF
COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT RED
HERRING PROSPECTUS – NOT APPLICABLE.
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009, WHICH RELATES TO SPECIFIED SECURITIES INELIGIBLE
FOR COMPUTATION OF PROMOTERS CONTRIBUTION, HAS BEEN DULY
COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH
THE SAID REGULATION HAVE BEEN MADE IN THE DRAFT RED HERRING
PROSPECTUS – NOT APPLICABLE.
7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE
(C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES
AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE
CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT
PROMOTERS’ CONTRIBUTION SHALL BE RECEIVED AT LEAST ONE DAY
BEFORE THE OPENING OF THE ISSUE. WE UNDERTAKE THAT AUDITORS’
CERTIFICATE TO THIS EFFECT SHALL BE DULY SUBMITTED TO THE BOARD.
WE FURTHER CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE
THAT PROMOTERS’ CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT
WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE
COMPANY ALONG WITH THE PROCEEDS Of THE PUBLIC ISSUE – NOT
APPLICABLE.
8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE COMPANY FOR WHICH
THE FUNDS ARE BEING RAISED IN THE PRESENT ISSUE FALL WITHIN THE
‘MAIN OBJECTS’ LISTED IN THE OBJECT CLAUSE OF THE MEMORANDUM OF
ASSOCIATION OR OTHER CHARTER OF THE COMPANY AND THAT THE
ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN
TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.
125
9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO
ENSURE THAT THE MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN
A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB-SECTION (3) OF
SECTION 73 OF THE COMPANIES ACT, 1956 WE FURTHER CONFIRM THAT THE
AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE
COMPANY SPECIFICALLY CONTAINS THIS CONDITION. – NOTED FOR
COMPLIANCE
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF
OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE.
11. WE CERTIFY THAT ALL THE APPLICABLE DISCLOSURES MANDATED IN THE
SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND
DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN
ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE
TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION.
12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE
DRAFT LETTER OF OFFER:
(a) AN UNDERTAKING FROM THE COMPANY THAT AT ANY GIVEN TIME,
THERE SHALL BE ONLY ONE DENOMINATION FOR THE EQUITY SHARES
OF THE COMPANY; AND
(b) AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY
WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY THE
BOARD FROM TIME TO TIME.
13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO
ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS,
2009 WHILE MAKING THE ISSUE.
14. WE ENCLOSE A NOTE EXPLAINING HOW THE PROCESS OF DUE DILIGENCE
HAS BEEN EXERCISED BY US IN VIEW OF THE NATURE OF CURRENT BUSINESS
BACKGROUND OF THE COMPANY, SITUATION AT WHICH THE PROPOSED
BUSINESS STANDS, THE RISK FACTORS, PROMOTERS EXPERIENCE, ETC.
15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE
WITH THE APPLICABLE PROVISIONS OF THE SECURITIES AND EXCHANGE
BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION
NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE
DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED
WITH AND OUR COMMENTS, IF ANY.
16. WE ENCLOSE STATEMENT ON ‘PRICE INFORMATION OF PAST ISSUES
HANDLED BY MERCHANT BANKERS (WHO ARE RESPONSIBLE FOR PRICING
THIS ISSUE)’, AS PER FORMAT SPECIFIED BY THE BOARD THROUGH
CIRCULAR– NOT APPLICABLE BEING A RIGHTS ISSUE.
17. WE CERTIFY THAT PROFITS FROM RELATED PARTY TRANSACTIONS HAVE
ARISEN FROM LEGITIMATE BUSINESS TRANSACTIONS
The filing of this Draft Letter of Offer does not, however, absolve our Company from any liabilities under
Section 34 or Section 38 of the Companies Act, 2013 or from the requirement of obtaining such statutory or
other clearance as may be required for the purpose of the proposed Issue. SEBI further reserves the right to
take up, at any point of time, with the Lead Managers any irregularities or lapses in this Draft Letter of
Offer.
126
Caution
Disclaimer Statement from our Company and the Lead Managers:
OUR COMPANY AND THE LEAD MANAGERS, NAMELY AXIS CAPITAL LIMITED AND
TATA SECURITIES LIMITED ACCEPT NO RESPONSIBILITY FOR STATEMENTS MADE
OTHERWISE THAN IN THE DRAFT LETTER OF OFFER OR IN THE ADVERTISEMENT OR
ANY OTHER MATERIAL ISSUED BY OR AT THE INSTANCE OF OUR COMPANY AND
THAT ANYONE PLACING RELIANCE ON ANY OTHER SOURCE OF INFORMATION
WOULD BE DOING SO AT HIS OWN RISK.
INVESTORS WHO INVEST IN THE ISSUE WILL BE DEEMED TO HAVE BEEN
REPRESENTED BY OUR COMPANY AND THE LEAD MANAGERS AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, AGENTS, AFFILIATES AND REPRESENTATIVES
THAT THEY ARE ELIGIBLE UNDER ALL APPLICABLE LAWS, RULES, REGULATIONS,
GUIDELINES AND APPROVALS TO ACQUIRE EQUITY SHARES OF OUR COMPANY, AND
ARE RELYING ON INDEPENDENT ADVICE / EVALUATION AS TO THEIR ABILITY AND
QUANTUM OF INVESTMENT IN THIS ISSUE.
WE AND THE LEAD MANAGERS SHALL MAKE ALL INFORMATION AVAILABLE TO THE
ELIGIBLE EQUITY SHAREHOLDERS AND NO SELECTIVE OR ADDITIONAL
INFORMATION WOULD BE AVAILABLE FOR A SECTION OF THE ELIGIBLE EQUITY
SHAREHOLDERS IN ANY MANNER WHATSOEVER INCLUDING AT PRESENTATIONS, IN
RESEARCH OR SALES REPORTS ETC. AFTER FILING OF THIS DRAFT LETTER OF
OFFER WITH SEBI.
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS LETTER OF
OFFER. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION OR
REPRESENTATIONS. THIS DRAFT LETTER OF OFFER IS AN OFFER TO SELL ONLY THE
EQUITY SHARES AND RIGHTS TO PURCHASE THE EQUITY SHARES OFFERED HEREBY,
BUT ONLY UNDER CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO
DO SO. THE INFORMATION CONTAINED IN THIS DRAFT LETTER OF OFFER IS
CURRENT ONLY AS OF ITS DATE.
Applicants will be required to confirm and will be deemed to have represented to our Company and
the Lead Managers and their respective directors, officers, agents, affiliates and representatives that
they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the
Rights Equity Shares and that they shall not issue, sell, pledge or transfer their Rights Entitlement or
Rights Equity Shares to any person who is not eligible under applicable laws, rules, regulations,
guidelines and approvals to acquire the Rights Equity Shares. Our Company, the Lead Managers
and their respective directors, officers, agents, affiliates and representatives accept no responsibility
or liability for advising any Applicant on whether such Applicant is eligible to acquire any Rights
Equity Shares.
The Lead Managers and its affiliates may engage in transactions with, and perform services for, our
Company and our Group Entities or affiliates in the ordinary course of business and have engaged, or may
in the future engage, in transactions with our Company and our Group Entities or affiliates, for which they
have received, and may in the future receive, compensation.
Disclaimer with respect to jurisdiction
This Draft Letter of Offer has been prepared under the provisions of Indian Laws and the applicable rules
and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the
appropriate court(s) in Chennai, India only.
Selling Restrictions
127
The distribution of this Draft Letter of Offer and the issue of our Rights 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. Our Company is making this Issue of Rights Equity Shares
to its Eligible Equity Shareholders and will dispatch the Letter of Offer and Composite Application Form
(“CAF”) to the 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 Rights 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 Rights Equity Shares or the Rights Entitlements, distribute or send the same in or into the US or any
other jurisdiction where to do so would or might contravene local securities laws or regulations. If this
Draft Letter of Offer is received by any person in any such territory, or by their agent or nominee, they
must not seek to subscribe to the Rights 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 our Company‘s affairs from the date hereof or that
the information contained herein is correct as at any time subsequent to this date.
Designated Stock Exchange
The Designated Stock Exchange for the purposes of this Issue will be the BSE.
Disclaimer Clause of the BSE
“The BSE Limited, (“Exchange”), has given, vide its letter dated [•], permission to this Company to use
the Exchange’s name in this Draft Letter of Offer as one of the stock exchanges on which this Company’s
securities are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer for its limited
internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The
Exchange does not in any manner:
i. warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter
of Offer; or
ii. warrant that this company’s securities will be listed or will continue to be listed on the Exchange; or
iii. take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this company;
and it should not for any reason be deemed or construed that this Draft Letter of Offer has been cleared or
approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of
this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any
claim against the Exchange whatsoever by reason of any loss which may be suffered by such person
consequent to or in connection with such subscription/acquisition whether by reason of anything stated or
omitted to be stated herein or for any other reason whatsoever.”
Disclaimer Clause of the MSE
“The Madras Stock Exchange Limited, (“Exchange”), has given vide its letter dated [•], permission to this
Company to use the Exchange’s name in this Draft Letter of Offer as one of the stock exchanges on which
this Company’s securities are proposed to be listed. The Exchange has scrutinized this Draft Letter of Offer
128
for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this
Company. The Exchange does not in any manner:
i. warrant, certify or endorse the correctness or completeness of any of the contents of this Draft Letter
of Offer; or
ii. warrant that this company’s securities will be listed or will continue to be listed on the Exchange; or
iii. take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this company;
and it should not for any reason be deemed or construed that this Draft Letter of Offer has been cleared or
approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of
this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any
claim against the Exchange whatsoever by reason of any loss which may be suffered by such person
consequent to or in connection with such subscription/acquisition whether by reason of anything stated or
omitted to be stated herein or for any other reason whatsoever.”
Filing with SEBI
This Draft Letter of Offer has been filed with SEBI, Overseas Towers, 7th
Floor, 756-L, Anna Salai,
Chennai 600 002 and also with the Stock Exchange(s).
Impersonation
As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-
Section (1) of Section 38 of the Companies Act, 2013 which is reproduced below:
“Any person who makes in a fictitious name an application to a company for acquiring, or subscribing for,
any shares therein, or otherwise induces a company to allot, or register any transfer of shares therein to
him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may
extend to five years”
Expert
Except as stated below, our Company has not obtained any expert opinions:
Our Company has received written consent from the Auditor namely, M/s Sundaram & Srinivasan,
Chartered Accountants to include its name as an expert under Section 58 of the Companies, 1956 Act in
this Draft Letter of Offer in relation to the report of the Auditor dated April 30, 2013 and September 19,
2013 and statement of tax benefits dated September 17, 2013 included in this Draft Letter of Offer and such
consent has not been withdrawn as of the date of this Draft Letter of Offer.
Expenses of the Issue
The expenses of the Issue including fees and reimbursement to the Lead Managers, Auditors, Legal
Advisor to the Issue, Registrar to the Issue, printing and distribution expenses, publicity, listing fees, stamp
duty and other expenses are estimated at ` [•] lakhs (around [•]% of the total Issue size).
S.
No.
Activity Expense Amount
(in ` lakhs)
Percentage of
Total Estimated
Issue Expenditure
Percentage of Issue
Size
1. Lead management fees
(including underwriting fee)
[•] [•] [•]
2. Fees to the legal advisor, other
professional services and
statutory fees
[•] [•] [•]
129
3. Fees of Registrar to the Issue [•] [•] [•]
4. Advertising and marketing
expenses
[•] [•] [•]
5. Printing and stationery,
distribution, postage etc.
[•] [•] [•]
6. Commission of SCSBs [•] [•] [•]
7. Other Expenses [•] [•] [•]
Total Estimated Issue
Expenditure
[•] [•] [•]
Listing on the Stock Exchanges
The Equity Shares of our Company were initially listed on the MSE and subsequently on the BSE. With
effect from February 17, 2011, the Equity Shares of the Company are included on the NSE trading platform
pursuant to an agreement between the MSE and the NSE. We have received in-principle approvals for
listing of the Rights Equity Shares from the BSE and the MSE by letters dated [•] and [•], respectively. We
will make applications to the Stock Exchanges for final listing and trading approvals in respect of the
Rights Equity Shares being offered in terms of this Draft Letter of Offer.
Important
This Issue is made to only Eligible Equity Shareholders as per the list to be furnished by the
Depositories in respect of the Equity Shares held in the electronic form and as appearing in the
register of members of our Company in respect of equity shares held in the physical form, at the
close of business hours on the Record Date i.e. [•], after giving effect to the valid share transfers
lodged with our Company up to the Record Date.
Your attention is drawn to the section titled “Risk Factors” on page 10 of this Draft Letter of
Offer.
Please ensure that you have received the CAF with the Abridged Letter of Offer.
Please read the Draft Letter of Offer, Letter of Offer, the Abridged Letter of Offer, the CAF, and
the instructions contained therein carefully before filling in the CAF. The instructions contained in
the CAF are each an integral part of the Letter of Offer and must be carefully followed. An
application is liable to be rejected for any non-compliance of the provisions contained in the Draft
Letter of Offer, Letter of Offer, Abridged Letter of Offer or the CAF.
All enquiries in connection with the Draft Letter of Offer, Letter of Offer, Abridged Letter of
Offer or CAF should be addressed to the Registrar to the Issue, quoting the registered folio
number/ DP and Client ID number and the CAF numbers as mentioned in the CAF.
All information shall be made available to the Investors by the Lead Managers and the Issuer, and
no selective or additional information would be available by them for any section of the Investors
in any manner whatsoever including at road shows, presentations, in research or sales reports.
The Lead Managers and our Company shall update the Draft Letter of Offer and keep the public
informed of any material changes until the listing and trading commences.
Issue Schedule
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Issue Opening Date: [•]
Last date for receiving requests for SAFs: [•] Issue Closing Date: [•]
The Board may however decide to extend the Issue period as it may determine from time to time but not
exceeding 30 days from the Issue Opening Date.
Allotment Advices / Refund Orders
Our Company will issue and dispatch allotment advice / share certificates/ demat credit and/or letters of
regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any,
within a period of 15 days from the date of closure of the Issue.
Investors residing at the centres where clearing houses are managed by the RBI, will get refunds through
NECS only except where applicant is otherwise eligible to get refunds through direct credit and RTGS. In
case of any failure in processing of refunds through NECS, the Refund Bank shall make refunds by the
issue of refund warrants/demand drafts in connection with the relevant amount liable to be refunded.
In case of those Applicants who have opted to receive their Rights Entitlement in dematerialized form
using electronic credit under the depository system, an advice regarding their credit of the Rights Equity
Shares shall be given separately. Applicants to whom refunds are made through electronic transfer of funds
will be sent a letter intimating them about the mode of credit of refund within 15 days of closure of the
Issue.
In case of those Applicants who have opted to receive their Rights Entitlement in physical form, our
Company will issue the corresponding share certificates under Section 113 of the Companies Act, 1956 or
other applicable provisions.
Refund orders would be payable at par at all places where the applications were originally accepted. The
same would be marked ‘Account Payee only’ and would be drawn in favour of the sole / first Investor.
Adequate funds would be made available to the Registrar to the Issue for this purpose.
Investor Grievances and Redressal System
Our Company has adequate arrangements for redressal of Investor complaints. Well-arranged
correspondence system has been developed for letters of routine nature. Our share transfer agent handles
the share transfer and dematerialization for our Company. Letters are filed category wise after having
attended to. Redressal norm for response time for all correspondence including shareholders complaints is
within 15 days. Additionally, we have been registered with the SEBI Complaints Redress System,
(“SCORES”), as required by the SEBI Circular no. CIR/ OIAE/ 2/ 2011 dated June 3, 2011.
The Company has constituted a Shareholders and Investor grievances Committee which looks into the the
redressal of the Investor complaints and complaints received from the stock exchanges. The said committee
deals with redressal of matters relating to transfer/transmission of shares, non receipt of bakance sheet, non
receipt of dividend declared etc.
Status of Complaints
Number of complaints outstanding as on August 31, 2013: Nil
Time normally taken by our Company for disposal of various types of Investor grievances: 15
days
Investor Grievances arising out of this Issue
Our Company’s Investor grievances arising out of the Issue will be handled by Mr R Narayanan,
Compliance Officer and Company Secretary and Karvy Computershare Private Limited, who are the
Registrars to the Issue. The Registrar will have a separate team of personnel handling only post-Issue
correspondence.
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All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as
folio no., name and address, contact telephone / cell numbers, e-mail id of the first Investor, number and
type of shares applied for, CAF serial number, amount paid on application and the name of the bank and
the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In
case of renunciation, the same details of the Renouncee should be furnished.
All Investor complaints pertaining to the Issue would be redressed in accordance with SEBI Circular No.
CIR/OIAE/2/2011 dated June 3, 2011, through the SEBI Complaints Redress System (SCORES)
mechanism.
The average time taken by the Registrar for attending to routine grievances will be 15 days from the date of
receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the
endeavour of the Registrar to attend to them as expeditiously as possible. Our Company undertakes to
resolve the Investor grievances in a time bound manner.
Investors may contact the Compliance Officer & Company Secretary and/or the Registrar to the
Issue, in case of any pre-Issue/ post -Issue related problems such as non-receipt of allotment
advice/share certificates/ demat credit/refund orders, the following address:
Mr R Narayanan
Parry House, 3rd Floor
43, Moore Street,
Chennai - 600 001.
Telephone: +91 44 2530 1777
Fax: +91 44 2534 2822
Website: www.coromandelengg.com
Email: [email protected]
The contact details of the Registrar to the Issue are as follows:
Karvy Computershare Private Limited Plot Nos. 17-24, Vittal Rao Nagar, Madhapur,
Hyderabad - 500 081
Telephone: +91 40 4465 5000
Facsimile: +91 40 2343 1551 E-mail: [email protected]
Website: www.karvy.com
Contact Person: Mr. M. Muralikrishna
SEBI Registration No.: INR000000221
Changes in Auditors during the last three years
Pursuant to a resolution passed by the shareholders of our Company at their AGM held on July 25, 2013,
M/s Sundaram & Srinivasan were re-appointed as the statutory auditors of our Company. There have been
no changes in our statutory auditors in the last three years preceding the date of this Draft Letter of Offer.
Capitalisation of Reserves or Profits
Our Company has not capitalized any of its reserves or profits for the last five years.
Revaluation of Fixed Assets
There has been no revaluation of our Company‘s fixed assets for the last five years.
Minimum Subscription
If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level falls
below 90%, after the Issue Closing Date on account of cheques being returned unpaid or withdrawal of
applications, our Company shall refund the entire subscription amount.
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Further, as per the Companies Act, 2013, if the aforementioned “stated minimum amount” has not be
subscribed and the sum payable on application is not received within a period of 30 days from the date of
the Letter of Offer, the application money has to be returned within such period as may be prescribed. In
the event of any failure to refund the application money within the specified period, a penalty of ` 1,000 for
each day during which the default continues or ` 100,000, which ever is less.
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SECTION VII – OFFERING INFORMATION
TERMS OF THE ISSUE
This Section applies to all Applicants. ASBA Applicants should note that the ASBA process involves
procedures that may be different from that applicable to other Applicants and should carefully read the
provisions applicable to such Applications, in the Letter of Offer, Abridged Letter of Offer and CAF, before
submitting an Application Form. The Company and the Lead Managers are not liable for any amendments,
modifications or changes in applicable law which may occur after the date of the Letter of Offer.
OVERVIEW
The Rights Equity Shares proposed to be issued on rights basis, are subject to the terms and conditions
contained in the Draft Letter of Offer, this Letter of Offer, the Abridged Letter of Offer, the CAF, the
provisions of the Memorandum and Articles of Association of our Company, the provisions of the
Companies Act, 1956 and the Notified Provisions of the Companies Act, 2013, FEMA, SEBI Regulations,
guidelines, notifications and regulations for issue of capital and for listing of securities issued by the
Government of India and/or any other statutory and/or regulatory authorities from time to time, the terms of
listing agreements entered into by the Company with the Stock Exchanges, and, the terms and conditions as
stipulated in the allotment advice or the security certificate.
The Rights Entitlement on the Equity Shares, the ownership of which is currently under dispute under and
including any court proceedings and / or currently under transmission or are held in a demat suspense
account pursuant to the clause 5A of the Listing Agreement and for which our Company has withheld the
dividend, shall be held in abeyance and the CAFs in relation to these Rights Entitlement shall not be
dispatched pending resolution of the dispute / completion of the transmission or pending the release of
Equity Shares from demat suspense account. On submission of such documents / records confirming the
legal and beneficial ownership of the Equity Shares with regard to these cases, to the satisfaction of the
Issuer, the Issuer shall make available the Rights Entitlement on such Equity Shares to the identified
Eligible Equity Shareholder. The identified Eligible Equity Shareholder shall be entitled to subscribe to the
Rights Equity Shares with respect to these Rights Entitlement at the Issue Price of ` [•] per Equity Share as
adjusted for any bonus shares, consolidation or spilt of shares (as may be applicable) in accordance with the
provisions of the Companies Act, 1956 and all other applicable laws.
Renouncees
All rights and obligations of the Eligible Equity Shareholders in relation to Applications and refunds
pertaining to the Issue shall apply to Renouncee(s) as well.
The ASBA Facility
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000. Accordingly, an eligible
ASBA Investor is an Applicant who:
holds the Equity Shares in dematerialised form as on the Record Date and has applied towards
his/her Rights Entitlements or additional Rights Equity Shares in the Issue in dematerialised form;
has not renounced his/her Rights Entitlements in full or in part;
is not a Renouncee; and
applies through a bank account maintained with one of the SCSBs.
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Notwithstanding anything contained hereinabove, all Renouncees (including Renouncees who are
Individuals) shall apply in the Issue only through the non-ASBA process.
Retail Individual Investors may optionally apply through the ASBA process, provided that they are eligible
ASBA Investors.
Please note that subject to SCSBs complying with the requirements of SEBI Circular No.
CIR/CFD/DIL/13/2012 dated September 25, 2012 within the periods stipulated therein, ASBA
Applications may be submitted at all branches of the SCSBs.
ASBA Investors should note that the ASBA process involves application procedures that may be different
from the procedure applicable to non ASBA Investors. ASBA Investors should carefully read the
provisions applicable to such applications before making their application through the ASBA process. For
details, please see “Procedure for Application through the Applications Supported by Blocked Amount
(“ASBA”) Process” on page 162 of this Draft Letter of Offer.
Authority for the Issue
This Issue is being made pursuant to a resolution passed by the Board of Directors of our Company and the
shareholders of our Company at their meetings held on September 5, 2013 and October 1, 2013,
respectively. Pursuant to resolution passed by our Board on [•], the Board has determined a Rights
Entitlement of [•] Rights Equity Shares for every [•] fully paid-up Equity Shares held on the Record Date
and a price of ` [•] per Rights Equity Share as the Issue Price.
Basis for the Issue
The Rights Equity Shares are being offered for subscription for cash to those existing Eligible Equity
Shareholders, whose names appear, (i) as beneficial owners as per the list to be furnished by the
Depositories in respect of the Equity Shares held in the electronic form, and, (ii) on the register of members
of our Company in respect of the Equity Shares held in physical form, at the close of business hours on the
Record Date, i.e. [•]. The basis of allotment for the Rights Equity Shares shall be fixed in consultation with
the Designated Stock Exchange.
Rights Entitlement Ratio
The Eligible Equity Shareholders shall be entitled to apply for [•] Rights Equity Share(s) for every [•]
Equity Share(s) held on the Record Date.
The distribution of this Draft Letter of Offer and the issue of Rights Equity Shares on a rights basis
to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in
those jurisdictions. Our Company is making the issue of the Rights Equity Shares on a rights basis to
the Eligible Equity Shareholders and this Draft Letter of Offer, the Letter of Offer, the Abridged
Letter of Offer and the CAFs will be dispatched only to those Eligible Equity Shareholders who have
a registered address in India. Any person who acquires Rights Entitlements or Rights Equity Shares
will be deemed to have declared, warranted and agreed, by accepting the delivery of this Draft Letter
of Offer, that it is not and that at the time of subscribing for the Rights Equity Shares or the Rights
Entitlements, it will not be, in the US and/or in other restricted jurisdictions which have any
restrictions in connection with offering, issuing and allotting any shares within its jurisdiction, and/or
to its citizens.
Persons who may acquire Rights Entitlements or come into possession of the Letter of Offer or CAF
are advised to consult their own legal advisors as to restrictions applicable to them and to observe
such restrictions. The Letter of Offer may not be used for the purpose of an offer or invitation in any
circumstances in which such offer or invitation is not authorized. No action has been or will be taken
that would permit the offering of the Equity Shares or Rights Entitlements pursuant to the Issue to
occur in any jurisdiction other than India, or the possession, circulation or distribution of the Letter
of Offer or CAF in any jurisdiction where action for such purpose is required. Accordingly, the
Equity Shares may not be offered or sold, directly or indirectly, and the Letter of Offer, Abridged
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Letter of Offer or CAF may not be distributed or published in or from any jurisdiction except under
circumstances that will result in compliance with applicable law and procedures of and in any such
jurisdiction. Recipients of the Letter of Offer, Abridged Letter of Offer or CAF, including Eligible
Equity Shareholders and Renouncees, are advised to consult their legal counsel prior to applying for
the Rights Entitlement and additional Equity Shares or accepting any provisional allotment of
Equity Shares, or making any offer, sale, resale, pledge or other transfer of the Equity Shares or
Rights Entitlement.
For Eligible Equity Shareholders wishing to apply through the ASBA process for the Issue, kindly refer
section titled “Procedure for Application through the Applications Supported by Blocked Amount
(“ASBA”) Process” on page 162 of this Draft Letter of Offer.
PRINCIPAL TERMS AND CONDITIONS OF THE RIGHTS SHARES
Face Value
Each Rights Equity Share will have the face value of ` 10 each.
Issue Price
Each Rights Equity Share shall be offered at an Issue Price of ` [•] for cash, at a premium of ` [•] per
Equity Share. The Issue Price has been arrived at after consultation between our Company and the Lead
Managers.
Terms of Payment
Applicants shall have to make full payment of ` [•] per Rights Share at the time of making an application.
The payment towards the Rights Equity Shares offered will be applied as under:
` [•] per Rights Equity Share towards Equity Share capital of our Company; and
` [•] per Rights Equity Share towards securities premium account of our Company.
A separate cheque/demand draft/pay order must accompany each application form.
All payments should be made by cheque/bank demand draft/pay order drawn on any bank, (including a co-
operative bank), which is situated at and is a member or a sub-member of the bankers clearing house
located at the center where the CAF is accepted. Outstation cheques /money orders/postal orders will not be
accepted and CAFs accompanied by such cheque/money orders/postal orders are liable to be rejected. The
Registrar to the Issue will not accept any payments against applications, if such payments are made in cash.
Pursuant to the RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the
Stockinvest scheme has been withdrawn and accordingly, payment through Stockinvest will not be
accepted in the Issue.
Where an applicant has applied for additional Rights Equity Shares and is allotted lesser number of Rights
Equity Shares than applied for, the excess application money shall be refunded. The excess application
monies would be refunded within 15 days from the closure of the Issue. If there is a delay beyond 8 days
from the stipulated period (15 days from the closure of the Issue) our Company shall be punishable with a
fine which shall not be less than five lakh rupees but which may extend to fifty lakh rupees and every officer of
our Company in default shall be punishable with imprisonment for a term of one year or with fine which shall
not be less than fifty thousand rupees but may extend to three lakh rupees or with both in accordance with
Section 40 (5) of the Companies Act, 2013.
Rights Entitlement Ratio
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The Rights Equity Shares are being offered to the existing Eligible Equity Shareholders in the ratio of [•]
Rights Equity Share(s) for [•] Equity Share(s) held on the Record Date i.e. [•].
Fractional Entitlements
For Rights Equity Shares being offered under this Issue, if the shareholding of any of the Eligible Equity
Shareholders is less than [•] Equity Shares, the fractional entitlement of such Eligible Equity Shareholders
shall be ignored and shall be entitled to zero Rights Equity Shares. Eligible Equity Shareholders whose
fractional Rights Entitlements are being ignored would be given preference in allotment of one additional
Rights Equity Share each if they apply for additional Rights Equity Shares. For example, if an Eligible
Equity Shareholder holds between [•] and [•] Equity Shares, he will be entitled to one Rights Equity Share.
He will also be given a preference for allotment of one additional Rights Equity Share if he has applied for
the same. Similarly, if any Eligible Equity Shareholder holds between [•] and [•] Equity Shares, he will be
entitled to [•] Rights Equity Shares. He will also be given a preference for allotment of one additional
Rights Equity Share if he has applied for the same. Those Eligible Equity Shareholders who have a holding
of less than [•] Equity Shares and therefore entitled to zero Rights Equity Share under this Issue shall be
dispatched a CAF with Nil entitlement. Such Eligible Equity Shareholders are entitled to apply for
additional Rights Equity Shares. However, they cannot renounce the same in favor of third parties. CAF
with Nil entitlement will be non-negotiable/non-renounceable.
It is clarified that the additional Rights Equity Shares, required in connection with the aforementioned
allotments would be adjusted from the unsubscribed portion of the Issue, if any.
Ranking
The Rights Equity Shares being issued shall be subject to the provisions of the Memorandum of
Association and Articles of Association. The Rights Equity Shares shall rank pari passu, in all respects
including dividend, with our existing Equity Shares.
Mode of Payment of Dividend
We shall pay dividend to our Equity Shareholders as per applicable statutory and regulatory requirements,
including inter alia the provisions of the Companies Act, 1956 and the Notified Provisions of the
Companies Act, 2013, and our Company’s Articles of Association.
Listing and trading of Rights Equity Shares proposed to be issued
Our Company’s existing Equity Shares are currently traded on the Stock Exchanges under the ISIN Code
INE312J01012. The fully paid up Rights Equity Shares proposed to be issued on a rights basis shall be
listed and admitted for trading on the Stock Exchanges under the existing ISIN for fully paid Equity Shares
of our Company. All steps for completion of necessary formalities for listing and commencement of trading
in the Equity Shares will be taken within 7 Working Days from finalization of the basis of allotment. The
Company has made applications to the Stock Exchanges seeking “in-principle” approval for the listing of
the Rights Equity Shares pursuant to the Issue in accordance of the Listing Agreement and has received
such approval from the BSE pursuant to letter no. [•] dated [•] and from MSE pursuant to letter no. [•]
dated [•]. Our Company will apply to the Stock Exchanges for final approval for the listing and trading of
the Rights Equity Shares. No assurance can be given regarding the active or sustained trading in the Rights
Equity Shares or the price at which the Rights Equity Shares offered under the Issue will trade after the
listing thereof.
Rights of the Eligible Equity Shareholder
The Rights Equity Shares allotted in this Issue shall rank pari passu with the existing Equity Shares in all
respects including dividend. Subject to applicable laws, the Eligible Equity Shareholders of our Company
shall have the following rights:
Right to receive dividend, if declared;
Right to attend general meetings and exercise voting powers, unless prohibited by law;
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Right to vote/ poll in person or by proxy;
Right to receive offers for rights shares and be allotted bonus shares, if announced;
Right to receive surplus on liquidation;
Right to free transferability of Rights Equity Shares; and
Such other rights as may be available to a shareholder of a listed public company under the
Companies Act, 1956 and Notified Provisions of the Companies Act, 2013, the Listing Agreement
and Memorandum and Articles of Association.
GENERAL TERMS OF THE ISSUE
Market lot
The Equity Shares of our Company are tradable only in dematerialized form. The market lot for Equity
Shares in dematerialised mode is one. In case an Eligible Equity Shareholder holds Equity Shares in
physical form, our Company would issue to the Allottees one certificate for the Rights Equity Shares
allotted to each folio, (“Consolidated Certificate”). However, our Company would issue split certificates
on receipt of written requests alongwith such Consolidated Certificate from Eligible Equity Shareholders.
Our Company shall not charge a fee for splitting any of the share certificates.
Nomination
In terms of Section 109A of the Companies Act, 1956 nomination facility is available for Rights Equity
Shares. An Eligible Equity Shareholder can nominate any person by filling the relevant details in the CAF
in the space provided for this purpose. In case of Eligible Equity Shareholders who are individuals, a sole
Eligible Equity Shareholder or the first named Eligible Equity Shareholder, along with other joint Eligible
Equity Shareholders, if any, may nominate any person(s) who, in the event of the death of the sole holder
or all the joint-holders, as the case may be, shall become entitled to the Rights Equity Shares. A person,
being a nominee, becoming entitled to the Rights Equity Shares by reason of the death of the original
Eligible Equity Shareholder(s), shall be entitled to the same advantages to which he would be entitled if he
were the registered holder of the Rights Equity Shares. Where the nominee is a minor, the Eligible Equity
Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become
entitled to the Rights Equity Shares, in the event of death of the said holder(s), during the minority of the
nominee. A nomination shall stand rescinded upon the sale of the Rights Equity Shares by the person
nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the
Rights Equity Shares are held by two or more persons, the nominee shall become entitled to receive the
Rights Equity Shares only on the demise of all the holders. Fresh nominations can be made only in the
prescribed form available on request at the Registered Office of our Company or such other person at such
addresses as may be notified by our Company. An Eligible Equity Shareholder can make the nomination by
filling in the relevant portion of the CAF.
In terms of Section 109B of the Companies Act, 1956 any person who becomes a nominee by virtue of the
provisions of Section 109A of the Companies Act, 1956 shall upon the production of such evidence as may
be required by the Board, elect either:
to register himself or herself as the holder of the Equity Shares; or
to make such transfer of the Equity Shares, as the deceased holder could have made.
Further, the Board may at any time give notice requiring any nominee to choose either to be registered
himself or herself or to transfer the Equity Shares, and if the notice is not complied with within a period of
ninety days, the Board may thereafter withhold payment of all dividends, bonuses or other moneys payable
in respect of the Equity Shares, until the requirements of the notice have been complied with.
Only one nomination would be applicable for one folio. Hence, in case the Eligible Equity Shareholder(s)
has already registered the nomination with our Company, no further nomination needs to be made for
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Rights Equity Shares that may be allotted in this Issue under the same folio.
In case the allotment of Rights Equity Shares is in dematerialised form, there is no need to make a
separate nomination for the Rights Equity Shares to be allotted in this Issue. Nominations registered
with respective Depository Participant (“DP”) of the Applicant would prevail. Any Applicant
desirous of changing the existing nomination is requested to inform its respective DP.
Joint Holders
Where two or more persons are registered as the holders of any Equity Shares they shall be deemed to hold
the same as joint holders with the benefit of survivorship subject to the provisions contained in the Articles
of Association of our Company. In case of joint holders, the CAF would be required to be signed by all the
joint holders to be considered as valid for allotment of Rights Equity Shares.
In case such Eligible Equity Shareholders who are joint holders wish to renounce their Rights Entitlement,
all such Eligible Equity Shareholders who are joint holders would be required to sign Part B of the CAF. In
absence of signatures of all joint holders, the CAF would be liable for rejection.
Subscription by our Promoters and/or Promoter Group
Murugappa Holdings Limited, either by itself and/or through a combination of entities belonging to the
Promoter and Promoter Group holding Equity Shares in our Company have confirmed that they intend to
subscribe to an amount not exceeding ` 3,750 lakhs through (a) subscribing to Promoter and Promoter
Group’s Rights Entitlement including, by subscribing for Rights Shares pursuant to renunciation, if any,
obtained in their favour and (b) by retaining the right to apply for additional Equity shares in accordance
with and subject to Regulation 10(4)(b) of the Takeover Regulations.
Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may result in an
increase in their percentage shareholding. Any such acquisition of additional Equity Shares of the Company
shall not result in a change of control of the management of the Company in accordance with provisions of
the Takeover Code and shall be exempt in terms of Regulation 10 (4) (a) and (b) of the Takeover Code.
The subscription by Promoter and Promoter Group of the Rights Shares in the Issue and the consequent
allotment of the Rights Shares would be subject to aggregate shareholding of the Promoters and Promoter
Group not exceeding 75% of the post-Issue equity share capital of the Company on the date of Allotment,
in accordance with clause 40A of the Equity Listing Agreements.
Minimum Subscription
If our Company does not receive the minimum subscription of 90% of the Issue, or the subscription level
falls below 90%, after the Issue Closing Date on account of withdrawal of applications, our Company shall
refund the entire subscription amount received within 15 days from the Issue Closing Date. If such money
is not repaid within a period of 30 days from the date of the Letter of Offer, the application money has to be
returned within such period as may be prescribed. In the event of any failure to refund the application
money within the specified period, a penalty of ` 1,000 for each day during which the default continues or
` 100,000, which ever is less as per Section 39(3) of the Companies Act, 2013.
Notices
All notices to the Eligible Equity Shareholder(s) required to be given by our Company shall be published in
one English language national daily newspaper, one Hindi national daily newspaper and one Tamil
language daily newspaper with wide circulation in Chennai and/or, will be sent by post to the registered
address of the Equity Shareholders in India or the Indian address provided by the Eligible Equity
Shareholders from time to time.
Offer to Non-Resident Equity Shareholders/Applicants / Foreign Institutional investors
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As per Regulation 6 of Notification No. FEMA 20/200-RB dated May 3, 2000, the RBI has given general
permission to Indian companies to issue Rights Equity Shares to non-resident shareholders including
additional securities. Applications received from NRIs and non-residents for allotment of Rights Equity
Shares shall be inter alia, subject to the conditions imposed from time to time by the RBI under the FEMA
in the matter of refund of application moneys, allotment of Rights Equity Shares and issue of letter of
allotment. The Abridged Letter of Offer and CAF shall be dispatched to non-resident Eligible Equity
Shareholders at their Indian address only. If an NR or NRI Applicants has specific approval from RBI,
in connection with his shareholding, he should enclose a copy of such approval with the Application Form.
The Board may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI
while approving the allotment of Rights Equity Shares. The Rights Equity Shares purchased by non-
residents shall be subject to the same conditions including restrictions in regard to the repatriation as are
applicable to the original shares against which Rights Equity Shares are issued on rights basis.
CAFs will be made available for eligible NRIs at our Registered Office and with the Registrar to the Issue.
In case of change of status of holders i.e. from Resident to Non-Resident, a new demat account must be
opened.
DETAILS OF SEPARATE COLLECTING CENTRES FOR NON-RESIDENT APPLICATIONS SHALL
BE PRINTED ON THE CAF.
No Offer in the United States
The Rights Entitlements and the Rights Equity Shares of our Company have not been and will not be
registered under the United States Securities Act of 1933, as amended, (“Securities Act”), or any U.S. state
securities laws and may not be offered, sold, resold or otherwise transferred within the United States of
America or the territories or possessions thereof, (“United States” or “U.S.”), or to, or for the account or
benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act, (“Regulation S”), 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
Rights Equity Shares or rights for sale in the United States or as a solicitation therein of an offer to buy any
of the said Rights Equity Shares or rights. Accordingly, this Draft Letter of Offer and the enclosed CAF
should not be forwarded to or transmitted in or into the United States at any time. Neither our Company nor
any person acting on behalf of our Company will accept subscriptions or renunciation from any person, or
the agent of any person, who appears to be, or who our Company or any person acting on behalf of our
Company has reason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the
United States when the buy order is made. Envelopes containing a 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 this Draft Letter of Offer, and all persons subscribing for the Rights Equity
Shares and wishing to hold such Rights Equity Shares in registered form must provide an address for
registration of the Rights Equity Shares in India. Our Company is making this issue of Rights Equity
Shares on a rights basis to its Eligible Equity Shareholders and the Abridged Letter of Offer and CAF will
be dispatched to Eligible Equity Shareholders who have an Indian address.
Any person who acquires rights and the Rights 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 Rights 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 “U.S.
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 authorised to acquire the rights and the Rights Equity Shares in compliance
with all applicable laws and regulations.
Our Company reserves the right to treat as invalid any CAF which: (i) does not include the certification set
out in the CAF to the effect that the subscriber is not a “U.S. person’ (as defined in Regulation S), and does
not have a registered address (and is not otherwise located) in the US and is authorized to acquire the rights
and the Rights Equity Shares in compliance with all applicable laws and regulations; (ii) appears to our
Company or its agents to have been executed in or dispatched from the US; (iii) where a registered Indian
address is not provided; or (iv) where our Company believes that CAF is incomplete or acceptance of such
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CAF may infringe applicable legal or regulatory requirements; and our Company shall not be bound to allot
or issue any Rights Equity Shares or Rights Entitlement in respect of any such CAF. Our Company is
informed that there is no objection to a US shareholder selling its rights in India. Rights Entitlement may
not be transferred or sold to any U.S. person.
Arrangements for disposal of odd lots
The market lot for our Company’s Equity Shares is one.
PROCEDURE FOR APPLICATION
How to Apply
The CAF will be printed in black ink for all Eligible Equity Shareholders. The CAF along with the Abridged
Letter of Offer shall be dispatched through registered post or speed post at least three days before the Issue
Opening Date. In case the original CAFs are not received by the Applicant or is misplaced by the Applicant,
the Applicant may request the Registrars to the Issue, for issue of a duplicate CAF, by furnishing the
registered folio number, DP ID Number, Client ID Number and their full name and address. In case the
signature of the Equity Shareholder(s) does not match with the specimen registered with our Company, the
application is liable to be rejected.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000. Accordingly, an eligible
ASBA Investor is an Applicant who:
holds the Equity Shares in dematerialised form as on the Record Date and has applied towards
his/her Rights Entitlements or additional Rights Equity Shares in the Issue in dematerialised form;
has not renounced his/her Rights Entitlements in full or in part;
is not a Renouncee; and
applies through a bank account maintained with one of the SCSBs.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue only
through the non-ASBA process.
Retail Individual Investors may optionally apply through the ASBA process, provided that they are eligible
ASBA Investors.
The CAF consists of four parts:
Part A: Form for accepting the Rights Equity Shares offered as a part of this Issue, in full or in part, and for
applying for additional Rights Equity Shares;
Part B: Form for renunciation of Rights Equity Shares;
Part C: Form for application of Rights Equity Shares by Renouncees; and
Part D: Form for request for Split Application Forms.
Please note that neither the Company nor the Registrar to the Issue, shall be responsible for any delay in the
receipt of the CAF/duplicate CAF which is attributable to postal delays or if the CAF/duplicate CAF are
misplaced in transit.
Options available to the Eligible Equity Shareholders
The CAFs will clearly indicate the number of Rights Equity Shares that the Eligible Equity Shareholder is
entitled to. If the Eligible Equity Shareholder applies for an investment in the Issue, then he can:
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A. Apply for his Rights Entitlement in full;
B. Apply for his Rights Entitlement in part (without renouncing the other part);
C. Apply for his Rights Entitlement in full and apply for additional Rights Equity Shares;
D. Renounce his entire Rights Entitlement; or
E. Apply for his Rights Entitlement in part and renounce the other part.
Options A and B: Acceptance of the Rights Entitlement
The Eligible Equity Shareholders may accept their Rights Entitlement and apply for the Rights Equity
Shares offered, either (i) in full or (ii) in part, without renouncing the other part, by completing Part A of
the CAF. For details in relation to submission of the CAF and mode of payment please refer to the section
titled “Terms of the Issue - Submission of Application and Modes of Payment for the Issue” on page 150 of
this Draft Letter of Offer.
Option C: Acceptance of the Rights Entitlement and Application for Additional Rights Equity Shares
You are eligible to apply for additional Rights Equity Shares over and above your Rights Entitlement,
provided that you have applied for all the Rights Equity Shares offered to you without renouncing them in
whole or in part in favor of any other person(s). Applications for additional Rights Equity Shares shall be
considered, and the allotment shall be made at the sole discretion of the Board/ Committee of the Board,
subject to sectoral caps and in consultation if necessary with the Designated Stock Exchange and in the
manner prescribed under the section titled “Terms of the Issue – Basis of Allotment” on page 155 of this
Draft Letter of Offer.
If you desire to apply for additional Rights Equity Shares, please indicate your requirement in the place
provided for additional Rights Equity Shares in Part A of the CAF. Any Renouncee applying for all the
Rights Equity Shares renounced in their favor may also apply for additional Rights Equity Shares.
Where the number of additional Rights Equity Shares applied for exceeds the number available for
allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated
Stock Exchange.
Options D and E: Renunciation of the Rights Entitlement
This Issue includes a right exercisable by you to renounce the Rights Equity Shares offered to you either in
full or in part in favour of any other person or persons. Your attention is drawn to the fact that our
Company shall not allot and/or register Rights Equity Shares in favour of persons and/or entities which are
incompetent to contract in their own capacity:
More than three persons, including joint holders;
Partnership firms or their nominees, (partners of the partnership firm are eligible for allotment of
Rights Equity Shares if they have applied for the same in their individual capacity as partners of
such firm);
Minors other than who have a valid beneficiary account, as per demographic details provided by
Depositaries;
Hindu Undivided Families (HUFs) (kartas of a HUF are eligible for allotment of Rights Equity
Shares if they have applied for the same on behalf of or for the benefit of the HUF); or
Any trusts or societies (unless registered under the Societies Registration Act, 1860 or the Indian
Trusts Act, 1882 or any other law applicable to trusts and societies and subject further to the trusts
or society being authorised under its constitution or bye-laws to hold equity shares of a company,
as the case may be).
‘Part A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been
made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the
Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (‘Part B’
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of the CAF) duly filled in shall be conclusive evidence for our Company of the Renouncees applying for
Rights Equity Shares in ‘Part C‘of the CAF to receive allotment of such Rights Equity Shares. The
Renouncees applying for all the Rights Equity Shares renounced in their favour may also apply for
additional Rights Equity Shares. ‘Part A’ of the CAF must not be used by the Renouncee(s) as this will
render the application invalid. Renouncee(s) will have no further right to renounce any Rights Equity
Shares in favour of any other person.
Additional Rights Equity Shares
You are eligible to apply for additional Rights Equity Shares over and above your Rights Entitlement,
provided that you are eligible to apply under applicable law and have applied for all the Rights Equity
Shares offered without renouncing them in whole or in part in favour of any other person(s). Renouncee(s),
applying for Equity Shares renounced in their favor, can also apply for additional Rights Equity Shares in
the Issue. Applications for additional Rights Equity Shares shall be considered and allotment shall be made
at the sole discretion of the Board, subject to applicable sectoral caps, and in consultation if necessary with
the Designated Stock Exchange and in the manner prescribed under the section titled “Terms of the Issue –
Basis of Allotment” on page 155 of this Draft Letter of Offer. If you desire to apply for additional Rights
Equity Shares, please indicate your requirement in the place provided for additional Rights Equity Shares
in Part A of the CAF. Where the number of additional Rights Equity Shares applied for exceeds the number
available for Allotment, the Allotment would be made on a fair and equitable basis in consultation with the
Designated Stock Exchange.
Eligible Equity Shareholders whose fractional Rights Entitlements are being ignored would be given
preference in allotment of one additional Rights Equity Share each if they apply for additional Rights
Equity Shares. Those Eligible Equity Shareholders who have a holding of less than [•] Equity Shares and
therefore entitled to zero Rights Equity Shares will be given a preference for allotment of one additional
Rights Share if he has applied for the same. For further details please refer to the section titled “Terms of
the Issue – Basis of Allotment” on page 155 of this Draft Letter of Offer.
Applications by Overseas Corporate Bodies
By virtue of the Circular No. 14 dated September 16, 2003, issued by the RBI, Overseas Corporate Bodies
(“OCBs”), have been derecognized as an eligible class of investors and the RBI has subsequently issued
the Foreign Exchange Management (Withdrawal of General Permission to OCBs) Regulations, 2003.
Accordingly, the existing Eligible Equity Shareholders of our Company who do not wish to subscribe to the
Rights Equity Shares being offered but wish to renounce the same in favour of Renouncee shall not be able
to renounce the same (whether for consideration or otherwise), in favour of OCB(s).
The RBI has however clarified in its circular, A.P. (DIR Series) Circular No. 44, dated December 8, 2003,
that OCBs which are incorporated and are not and were not at any time subject to any adverse notice from
the RBI, are permitted to undertake fresh investments as incorporated non-resident entities in terms of
Regulation 5(1) of RBI Notification No.20/2000-RB dated May 3, 2000, under the foreign direct
investment scheme with the prior approval of Government of India if the investment is through the
government approval route and with the prior approval of RBI if the investment is through automatic route
on case by case basis. Eligible Equity Shareholders renouncing their rights in favour of OCBs may do so
provided such Renouncee obtains a prior approval from the RBI. On submission of such RBI approval to
our Company at our Registered Office, the OCB shall receive the Abridged Letter of Offer and the CAF.
Renunciation by and/or in favor of Non Residents
Any renunciation (i) from a resident Indian Equity Shareholder to a Non Resident, or (ii) from a Non
Resident Equity Shareholder to a resident Indian, or (iii) from a Non Resident Equity Shareholder to a Non
Resident, in light of the RBI Master circular on Foreign Investment in India dated July 02, 2012, the RBI
Notification No. FEMA 20/2000-RB dated May 03, 2000, as amended from time to time, would not require
approval from RBI, if such renunciation is made on the floor of the exchange, provided that in case of any
renunciation from a resident Indian Equity Shareholder to a Non Resident, the offer price for the Rights
Equity Shares should not be less than the price at which an offer is made to the resident Eligible Equity
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Shareholder. Any renunciation through a private arrangement would be subject to applicable pricing
requirements prescribed by the RBI and/or seeking appropriate approvals from the RBI in this regard.
However, the right of renunciation is subject to the express condition that the Board shall be entitled,
in its absolute discretion, to reject the request from the renouncees for the allotment of Equity Shares
without assigning any reason thereof.
Procedure for renunciation
To renounce all the Rights Equity Shares offered to an Eligible Equity shareholder in favour of one
Renouncee
If you wish to renounce the offer indicated in ‘Part A’, in whole, please complete ‘Part B’ of the CAF. In
case of joint holding, all joint holders must sign ‘Part B’ of the CAF. The person in whose favour
renunciation has been made should complete and sign ‘Part C’ of the CAF. In case of joint Renouncees, all
joint Renouncees must sign part C of the CAF.
To renounce in part/or renounce the whole to more than one person(s)
If you wish to either accept this offer in part and renounce the balance or renounce the entire offer
under this Issue in favour of two or more Renouncees, the CAF must be first split into requisite number of forms. Please indicate your requirement of Split Application Forms, (“SAFs”), in the space
provided for this purpose in ‘Part D’ of the CAF and return the entire CAF to the Registrar to the Issue so
as to reach them latest by the close of business hours on the last date of receiving requests for SAFs, i.e. [•]
of this Draft Letter of Offer. On receipt of the required number of SAFs from the Registrar, the procedure
as mentioned in paragraph above shall have to be followed. In case the signature of the Eligible Equity
Shareholder(s), who has renounced the Rights Equity Shares, does not match with the specimen registered
with our Company, the application is liable to be rejected.
Renouncee(s)
The person(s) in whose favour the Rights Equity Shares are renounced should fill in and sign ‘Part C’ of
the CAF and submit the entire CAF to the Bankers to the Issue on or before the Issue Closing Date along
with the application money in full. A Renouncee cannot further renounce.
Change and/or introduction of additional holders
If you wish to apply for Rights Equity Shares jointly with any other person(s), not more than three, who
is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above
for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall
amount to renunciation and the procedure, as stated above, shall have to be followed. However, this right of
renunciation is subject to the express condition that the Board shall be entitled in its absolute discretion to
reject the request for allotment from the Renouncee(s) without assigning any reason thereof. All such
applications will be treated as applications from Renouncees and shall have to be made through the non-
ASBA process only to be considered valid for allotment. Please also see section titled “Terms of the Issue –
Basis of Allotment” on page 155 of this Draft Letter of Offer.
Instructions for Filling the CAF
The summary of options available to the Eligible Equity Shareholder is presented below. You may exercise
any of the following options with regard to the Rights Equity Shares offered, by using the CAF as detailed
herein:
Option Available Action Required
1. Accept whole or part of your Rights Entitlement
without renouncing the balance.
Fill in and sign Part A (All joint holders must sign)
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Option Available Action Required
2. Accept your Rights Entitlement in full and apply
for additional Rights Equity Shares
Fill in and sign Part A including Block III relating
to the acceptance of entitlement and Block IV
relating to additional Rights Equity Shares (All
joint holders must sign)
3. Renounce your Rights Entitlement in full to one
person (Joint Renouncees are considered as one).
Fill in and sign Part B (all joint holders must sign)
indicating the number of Rights Equity Shares
renounced and hand it over to the Renouncee. The
Renouncee must fill in and sign Part C (All joint
Renouncees must sign)
4. Accept a part of your Rights Entitlement and
renounce the balance to one or more
Renouncee(s)
OR
Renounce your Rights Entitlement of all Rights
Equity Shares offered to you to more than one
Renouncee
Fill in and sign Part D (all joint holders must sign)
requesting for SAFs. Send the CAF to the
Registrar to the Issue so as to reach them on or
before the last date for receiving requests for
SAFs. Splitting will be permitted only once.
On receipt of the SAF take action as indicated
below.
For the Rights Equity Shares you wish to accept, if
any, fill in and sign Part A. For the Rights Equity
Shares you wish to renounce, fill in and sign Part B
indicating the number of Rights Equity Shares
renounced and hand it over to the Renouncee. Each
of the Renouncee should fill in and sign Part C for
the Rights Equity Shares accepted by them.
5. Introduce a joint holder or change the sequence
of joint holders
This will be treated as a renunciation. Fill in and
sign Part B and the Renouncee must fill in and sign
Part C.
Applicants must provide information in the CAF as to their savings bank/current account number and the
name of the bank with whom such account is held, to enable the Registrar to print the said details in the
refund orders after the names of the payee(s) in case of Equity Shares held in the physical form. Failure to
comply with this may lead to rejection of the application. Bank account details furnished by the
Depositories will be printed on the refund warrant in case of Equity Shares held in electronic form.
Please note that:
Options 3 – 5 will not be available for Equity Shareholders applying through the ASBA process
‘Part A’ of the CAF must not be used by any person(s) other than the Eligible Equity Shareholders
to whom this Draft Letter of Offer has been addressed. If used, this will render the application
invalid.
Request for Split Application Forms / SAF should be made for a minimum of one Rights Share or,
in either case, in multiples thereof and one SAF for the balance Rights Equity Shares, if any.
A request by the Applicant for the SAF should reach our Company on or before [•] of this Draft
Letter of Offer.
Only the Eligible Equity Shareholders to whom this Draft Letter of Offer has been addressed shall
be entitled to renounce and to apply for SAFs. Forms once split cannot be split further.
SAFs will be sent to the applicant(s) by post at the Applicant’s risk.
While applying for or renouncing their Rights Entitlement, joint holders must sign in the same
order and as per the specimen signatures registered with our Company or the Depositories.
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In the case of a renunciation, the submission of the CAF to the Bankers to the Issue at the
collecting branches specified on the reverse of the CAF together with Part B of the CAF duly
completed shall be conclusive evidence of the right of the person applying for the Rights Equity
Shares to receive allotment of such Rights Equity Shares.
Eligible Equity Shareholders may not renounce in favour of persons or entities in the United
States, who would otherwise be prohibited from being offered or subscribing for Rights Equity
Shares or Rights Entitlement under applicable securities laws.
Non-resident Equity Shareholders: Application(s) received from Non-Resident/ NRIs, or persons
of Indian origin residing abroad for allotment of Equity Shares alloted as a part of this Issue shall,
inter alia, be subject to conditions, as may be imposed from time to time by the RBI under FEMA
in the matter of refund of application money, allotment of equity shares, subsequent issue and
allotment of equity shares, interest, export of share certificates, etc. In case a Non-Resident or NRI
Eligible Equity Shareholder has specific approval from the RBI, in connection with his
shareholding, he should enclose a copy of such approval with the CAF.
Applicants must write their CAF Number at the back of the cheque/demand draft
Availability of duplicate CAF
In case the original CAF is not received, or is misplaced by the Applicant, the Registrar to the Issue will
issue a duplicate CAF on the request of the Applicant who should furnish the registered folio number/ DP
and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the
request for duplicate CAF should reach the Registrar to the Issue within 8 days from the Issue Opening
Date. Please note that those who are making the application in the duplicate CAF should not utilize the
original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the
applicant violates any of these requirements, he / she shall face the risk of rejection of both the CAFs.
Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of duplicate
CAF in transit, if any.
Application on Plain Paper
An Eligible Equity Shareholder who has neither received the original CAF nor is in a position to obtain the
duplicate CAF may make an application to subscribe to the Issue on plain paper, along with demand draft /
cheque / pay order payable at Hyderabad which should be drawn in favor of the “Coromandel Engineering
Company Limited- Rights Issue - R” incase of resident shareholders/applicants and shareholders/applicants
applying on non repatriable basis or “Coromandel Engineering Company Limited - Rights Issue - NR”
incase of non resident shareholders applying on repatriable basis and the Eligible Equity Shareholders
should send the same by registered post / speed post directly to the Registrar to the Issue. The envelope
should be superscribed “Coromandel Engineering Company Limited – Rights Issue - R” incase of resident
shareholders/applicants or shareholders/applicants applying on non repatriable basis or “Coromandel
Engineering Company Limited - Rights Issue -NR” in case of non resident shareholders/applicants
applying on repatriable basis and should be postmarked in India.
The application on plain paper, duly signed by the Applicants including joint holders, in the same order as
per specimen recorded with our Company, must reach the office of the Registrar to the Issue before the
Issue Closing Date and should contain the following particulars:
Name of the Company, being Coromandel Engineering Company Limited;
Name and address of the Eligible Equity Shareholder including joint holders;
Registered Folio Number/DP and Client ID no.;
Number of Equity Shares held as on Record Date;
Number of Rights Equity Shares entitled to;
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Number of Rights Equity Shares applied for;
Certificate numbers and distinctive numbers, if the Equity Shares on the Record Date are held in
physical form;
Number of additional Rights Equity Shares applied for, if any;
Allotment option preferred for the Rights Equity Shares - Physical or Demat (Rights Equity
Shares will be allotted in physical form only if the Equity Shares held on the Record Date i.e. [•]
are in the physical form)
Total number of Rights Equity Shares applied for;
The total amount paid at the rate of ` [•] per Rights Equity Share;
Particulars of demand draft/cheque/pay order;
In case of Equity Shares allotted in physical form, Savings/Current Account Number and name
and address of the bank where the Eligible Equity Shareholder will be depositing the refund order
(In case of equity shares allotted in demat mode, the bank account details will be obtained from
the information available with the depositories);
Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts, PAN of the Applicant and for each Applicant in case of joint
names, irrespective of the total value of the Rights Equity Shares applied for pursuant to the Issue;
subject to submitting sufficient documentary evidence in support of their claim for exemption,
provided that such transactions are undertaken on behalf of the Central and State Government and
not in their personal capacity;
Signature of Eligible Equity Shareholders to appear in the same sequence and order as they appear
in the records of our Company or the Depositories;
In case of Non Resident Shareholders, NRE/ FCNR/ NRO A/c No. Name and Address of the Bank
and Branch;
If payment is made by a draft purchased from NRE/ FCNR/ NRO A/c No., as the case may be, an
Account debit certificate from the bank issuing the draft, confirming that the draft has been issued
by debiting NRE/ FCNR/ NRO Account;
A representation that the Eligible Equity Shareholder is not a “U.S. Person” (as defined in
Regulation S under the Securities Act);
Additionally, Non Resident applicants shall include the representation in writing that:
1. “I/We understand that the Rights Entitlement have not been, and will not be, registered
under the United States Securities Act of 1933, as amended, (“US Securities Act”), or
any United States state securities laws, and may not be offered, sold, resold or otherwise
transferred within the United States or to the territories or possessions thereof or to, or for
the account or benefit of, “U.S. Persons” (as defined in Regulation S under the US
Securities Act), except in a transaction exempt from, or in a transaction not subject to, the
registration requirements of the US Securities Act. The Equity Shares referred to in this
application are being offered in India but not in the United States of America. None of
our Company, the Registrar, the Lead Managers or any other person acting on behalf of
our Company will accept subscriptions from any person, or the agent of any person, who
appears to be, or who our Company, the Registrar, the Lead Managers or any other
person acting on behalf of our Company has reason to believe is, a resident of the United
States and to whom an offer, if made, would result in requiring registration of this
application with the United States Securities and Exchange Commission.
2. I/We will not offer, sell or otherwise transfer any of the Rights Equity Shares which may
be acquired by us in any jurisdiction or under any circumstances in which such offer or
sale is not authorised or to any person to whom it is unlawful to make such offer, sale or
147
invitation except under circumstances that will result in compliance with any applicable
laws or regulations. We satisfy, and each account for which we are acting satisfies, all
suitability standards for investors in investments of the type subscribed for herein
imposed by the jurisdiction of our residence.
3. I/We understand and agree that the Rights Equity Shares may not be reoffered, resold,
pledged or otherwise transferred except in an offshore transaction in compliance with
Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the US Securities Act.”
Please note that Eligible Equity Shareholders who are making an application otherwise than on a
CAF, (i.e., on plain paper as stated above on pages 145 and 165 of this Draft Letter of Offer), shall
not be entitled to renounce their rights and should not utilize the CAF for any purpose, including
renunciation, even if it is received subsequently. If the Eligible Equity Shareholder does not
comply with any of these requirements, he/she shall face the risk of rejection of both the
applications and the application money received shall be refunded. However, our Company and/or
any Director of our Company will, notwithstanding anything to the contrary contained herein, not
be liable to pay any interest whatsoever on the Application Money so refunded.
The Eligible Equity Shareholders are requested to strictly adhere to these instructions. Failure to
do so could result in the application being rejected, with our Company, the Lead Managers and the
Registrar not having any liability to such Eligible Equity Shareholders.
General instructions for Applicants
(a) Please read the instructions printed on the CAF carefully.
(b) Application should be made on the printed CAF, provided by our Company except as mentioned
under the head application on plain paper and should be completed in all respects. For further
details see section titled “Terms of the Issue - Application on Plain Paper” on pages 145 and 165
of this Draft Letter of Offer. The CAF found incomplete with regard to any of the particulars
required to be given therein, and/ or which are not completed in conformity with the terms of this
Draft Letter of Offer, the Letter of Offer and/or the Abridged Letter of Offer are liable to be
rejected and the money paid, if any, in respect thereof will be refunded without interest and after
deduction of bank commission and other charges, if any. The CAF must be filled in English and
the names of all the Applicants, details of occupation, address, father‘s / husband’s name must be
filled in block letters.
(c) The CAF together with cheque/demand draft should be submitted to the Bankers to the Issue/
collecting branch of the Escrow Collection Bank(s) or dispatched to the Registrar to the Issue and
not to our Company or Lead Managers to the Issue. Applicants residing at places other than cities
where the branches of the Bankers to the Issue have been authorised by our Company for
collecting applications, will have to make payment by Demand Draft payable at Hyderabad and
send their CAFs to the Registrar to the Issue by REGISTERED POST. If any portion of the CAF
is/are detached or separated, such application is liable to be rejected. All CAFS along with the
Demand Drafts will need to reach the Registrar on or before the Issue Closing Date to be
considered valid for allotment.
(d) Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts, PAN of the Applicant and for each Applicant in case of joint
names, irrespective of the total value of the Rights Equity Shares applied for pursuant to the Issue,
must be submitted along with the CAF. CAF without a PAN will be considered incomplete and is
liable to be rejected, subject to submitting sufficient documentary evidence in support of their
claim for exemption, provided that such transactions are undertaken on behalf of the Central and
State Government and not in their personal capacity. However, in case of an Applicant who is
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exempt from holding a PAN and has made an application(s) for Rights Share(s) in physical form,
it is the liability of the Applicant(s) to submit sufficient supporting documents, on or before the
Issue Closing Date with the Registrar for evidencing such exemption. In the absence of such
supporting documents, the application is liable to be rejected.
(e) Applicants are advised that it is mandatory to provide information as to their savings/current
account number and the name of the bank with whom such account is held in the CAF to enable
the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the
payees for Equity Shares held in the physical form. Application not containing such details is
liable to be rejected. For Eligible Equity Shareholders holding Equity Shares in dematerialized
form, such bank details will be drawn from the demographic details of the Eligible Equity
Shareholder in the records of the Depository.
(f) All payments should be made by cheque/demand draft only. Application through the ASBA
process as mentioned above is acceptable. Cash payment is not acceptable. In case payment is
effected in contravention of this, the application may be deemed invalid and the application money
will be refunded and no interest will be paid thereon. Signatures should be either in English or
Hindi or in any other language specified in the Eighth Schedule to the Constitution of India.
Signatures other than in English or Hindi and thumb impression must be attested by a Notary
Public or a Special Executive Magistrate under his/ her official seal. The Equity Shareholders
must sign the CAF as per the specimen signature recorded with our Company.
(g) In case of an application under power of attorney and / or by a body corporate or by a society, a
certified true copy of the relevant power of attorney and / or relevant resolution or authority to the
signatory to make the relevant investment under this Issue and to sign the application and a copy
of the Memorandum and Articles of Association and/or bye laws of such body corporate or
society must be lodged with the Registrar to the Issue giving reference of the serial number
of the CAF. In case the above referred documents are already registered with our Company, the
same need not be furnished again. In case these papers are sent to any other entity besides the
Registrar to the Issue or are received by the Registrar to the Issue after the Issue Closing Date,
then the application is liable to be rejected. In no case should these papers be attached to the
application submitted to the Bankers to the Issue.
(h) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order
and as per the specimen signature(s) recorded with our Company. Further, in case of joint
Applicants who are Renouncees, the number of Applicants should not exceed three. In case of
joint Applicants, reference, if any, will be made in the first Applicant’s name and all
communication will be addressed to the first Applicant.
Application(s) received from Non-Resident / NRIs, or persons of Indian origin residing abroad for
allotment of Rights Equity Shares shall, inter alia, be subject to conditions, as may be imposed
from time to time by the RBI under FEMA in the matter of refund of application money, allotment
of equity shares, subsequent issue and allotment of equity shares, interest and export of share
certificates. In case a Non-Resident or NRI Eligible Equity Shareholder has specific approval from
the RBI, in connection with his shareholding, he should enclose a copy of such approval with the
CAF. Additionally, Applications will not be accepted from NRs/NRIs in the United States or its
territories and possessions, or any other jurisdiction where the offer or sale of the Rights
Entitlements and Rights Equity Shares may be restricted by applicable securities laws. The
Abridged Letter of Offer and CAF shall be dispatched to non-resident Eligible Equity
Shareholders at their Indian address only.
(i) All communication in connection with application for the Rights Equity Shares, including any
change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the
Issue prior to the date of allotment in this Issue quoting the name of the first/sole Applicant, folio
numbers and CAF number. Please note that any intimation for change of address of Eligible
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Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer
Agents of our Company, in the case of Equity Shares held in physical form and to the respective
depository participant, in case of Equity Shares held in dematerialized form.
(j) Payment by cash: The Registrar will not accept any payments against any applications, if made in
cash. In case payment is effected in contravention of this, the application may be deemed invalid
and the application money will be refunded and no interest will be paid thereon.
(k) SAFs cannot be re-split.
(l) Only the person or persons to whom Rights Equity Shares have been offered and not
Renouncee(s) shall be entitled to obtain SAFs.
(m) Applicants must write their CAF number at the back of the cheque /demand draft.
(n) Only one mode of payment per application should be used. The payment must be by cheque /
demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is
a member or a sub member of the Bankers Clearing House located at the centre indicated on the
reverse of the CAF where the application is to be submitted.
(o) A separate cheque / draft must accompany each CAF. Outstation cheques / demand drafts or post-
dated cheques and postal / money orders will not be accepted and applications accompanied by
such cheques / demand drafts / money orders or postal orders will be rejected. The Registrar will
not accept payment against application if made in cash.
(p) No receipt will be issued for application money received. The Bankers to the Issue / collecting
branch of the Escrow Collection Bank(s) / Registrar will acknowledge receipt of the same by
stamping and returning the acknowledgment slip at the bottom of the CAF.
(q) An applicant which is a mutual fund can make a separate application in respect of each scheme of
the mutual fund registered with SEBI and such applications in respect of more than one scheme of
the mutual fund shall not be treated as multiple applications provided that the application clearly
indicate the scheme concerned for which the application has been made. The application made by
the asset management company or custodian of a mutual fund shall clearly indicate the name of
the concerned scheme for which the application is made.
(r) The distribution of this Draft Letter of Offer and issue of Rights Equity Shares and Rights
Entitlements to persons in certain jurisdictions outside India may be restricted by legal
requirements in those jurisdictions. Persons in the United States and such other jurisdictions are
instructed to disregard this Draft Letter of Offer and not to attempt to subscribe for Rights Equity
Shares.
Do’s for non-ASBA Investors:
(a) Check if you are eligible to apply i.e. you are an Equity Shareholder on the Record Date;
(b) Read all the instructions carefully and ensure that the cheque/ draft option is selected in part A of
the CAF and necessary details are filled in;
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(c) In the event you hold Equity Shares in dematerialised form, ensure that the details about your
Depository Participant and beneficiary account are correct and the beneficiary account is activated
as the Equity Shares will be allotted in the dematerialized form only;
(d) Ensure that your Indian address is available to our Company and the Registrar, in case you hold
Equity Shares in physical form or the depository participant, in case you hold Equity Shares in
dematerialized form;
(e) Ensure that the value of the cheque / draft submitted by you is equal to the (number of Equity
Shares applied for) X (Issue Price of Equity Shares, as the case may be) before submission of the
CAF;
(f) Ensure that you receive an acknowledgement from the collection centers of the collection bank for
your submission of the CAF in physical form;
(g) Ensure that you mention your PAN allotted under the I.T. Act with the CAF, except for
Applications on behalf of the Central and State Governments, residents of the state of Sikkim and
officials appointed by the courts. Please ensure that the PAN for all joint holders have been
mentioned on the CAF, in the absence of which the application is liable to be rejected;
(h) Ensure that the name(s) given in the CAF is exactly the same as the name(s) in which the
beneficiary account is held with the Depository Participant. In case the CAF is submitted in joint
names, ensure that the beneficiary account is also held in same joint names and such names are in
the same sequence in which they appear in the CAF;
(i) Ensure that the demographic details with your Depository Participant(s) are updated, true and
correct, in all respects.
Don’ts for non-ASBA Investors:
(a) Do not apply if you are in the United States of America or are not eligible to participate in the
Issue in accordance with the securities laws applicable to your jurisdiction;
(b) Do not apply on duplicate CAF after you have submitted a CAF to a collection center of the
collection bank;
(c) Do not pay the amount payable on application in cash, by money order or by postal order;
(d) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this
ground;
(e) Do not submit Applications accompanied with Stock invest.
SUBMISSION OF APPLICATION AND MODES OF PAYMENT FOR THE ISSUE (OTHER
THAN ASBA APPLICANTS)
Applicants who are Resident Equity Shareholders
1. Applicants who are applying through CAF and residing at places where the bank collection centres
have been opened for collecting applications, are requested to submit their applications at the
corresponding collection centre together with cheque/bank demand draft drawn on any bank
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(including a co-operative bank), for the full application amount favouring “Coromandel
Engineering Company Limited -Rights Issue - R” and marked ‘A/c Payee only’.
2. Applicants who are applying through CAF and residing at places other than places where the bank
collection centres have been opened for collecting applications, are requested to send their
applications together with a demand draft of full amount favouring “Coromandel Engineering
Company Limited -Rights Issue - R” and marked ‘A/c Payee only’ payable at Hyderabad directly
to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing
Date. Our Company or the Registrar to the Issue will not be responsible for postal delays or loss
of applications in transit, if any.
3. Applicants who are applying on plain paper, are requested to send their applications on plain paper
together with a demand draft of full amount for the Rights Equity Shares favouring “Coromandel
Engineering Company Limited - Rights Issue - R” and marked ‘A/c Payee only’ payable at
Hyderabad directly to the Registrar to the Issue by registered post so as to reach them on or before
the Issue Closing Date. Our Company or the Registrar to the Issue will not be responsible for
postal delays or loss of applications in transit, if any.
Applicants who are Non-Resident Equity Shareholders
Application with repatriation benefits
Applicants who are Non-Resident Equity Shareholders and are applying on a repatriation basis, are
required to submit the completed CAF or application on plain paper, as the case may be, along with the
payment made through any of the following ways:
1. By Indian Rupee drafts purchased from abroad and payable at Hyderabad or funds remitted from
abroad (submitted along with Foreign Inward Remittance Certificate).
2. By Local cheque / bank drafts remitted through normal banking channels or out of funds held in
Non-Resident External Account (NRE) or FCNR Account maintained with banks authorized to
deal in foreign currency in India, along with documentary evidence in support of remittance.
3. FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
4. For Eligible Equity Shareholders / Applicants, applying through CAF, the CAF is to be sent at the
bank collection centre specified in the CAF along with cheques/drafts in favour of “Coromandel
Engineering Company Limited - Rights Issue - NR” and crossed ‘A/c Payee only’ for the amount
payable.
5. For Eligible Equity Shareholders / Applicants, applying on a plain paper, the applications are to be
directly sent to the Registrar to the Issue by registered post along with drafts in favour of
“Coromandel Engineering Company Limited-Rights Issue - NR” payable at Hyderabad and
crossed ‘A/c Payee only’ for the amount payable so as to reach them on or before the Issue
Closing Date.
6. For Eligible Equity Shareholders/ Applicants applying through CAF but not residing at places
where the collection centre is located, shall send the CAF to the Registrar to the Issue by
registered post along with drafts of the full amount in favour of “Coromandel Engineering
Company Limited -Rights Issue - NR” payable at Hyderabad and crossed ‘A/c Payee only’ for the
amount payable so as to reach them on or before the Issue Closing Date.
A separate cheque or bank draft must accompany each application form. Applicants may note that where
payment is made by drafts purchased from NRE/FCNR accounts as the case may be, an Account Debit
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Certificate from the bank issuing the draft confirming that the draft has been issued by debiting the
NRE/FCNR account should be enclosed with the CAF. In the absence of the above the application shall be
considered incomplete and is liable to be rejected.
In the case of NRIs who remit their application money from funds held in FCNR/NRE Accounts, refunds
and other disbursements, if any shall be credited to such account details of which should be furnished in the
appropriate columns in the CAF. In the case of NRIs who remit their application money through Indian
Rupee Drafts from abroad, refunds and other disbursements, if any will be made in U.S Dollars at the rate
of exchange prevailing at such time subject to the permission of RBI. Our Company will not be liable for
any loss on account of exchange rate fluctuation for converting the Rupee amount into U.S. Dollar or for
collection charges charged by the applicant’s Bankers.
Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of application in
transit, if any.
Payments through Non Resident Ordinary Account (NRO account) will not be permitted.
Application without repatriation benefits
For non-residents Eligible Equity Shareholders/Applicants applying on a non-repatriation basis, in addition
to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident
(Ordinary) Account maintained and can be deposited at the designated collection centres opened by our
Company or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at
Hyderabad. In such cases, the allotment of Rights Equity Shares will be on non-repatriation basis.
For Non Resident Equity Shareholders/Applicants, applying through CAF, the CAF is to be sent at the
bank collection centre specified in the CAF along with cheques/demand drafts drawn for the full amount
after deducting bank and postal charges in favor of “Coromandel Engineering Company Limited -Rights
Issue - R” and crossed ‘A/c Payee only’ for the amount payable.
For Non Resident Eligible Equity Shareholders/Applicants, applying on a plain paper, the applications are
to be directly sent to the Registrar to the Issue by registered post along with demand drafts drawn in favor
of “Coromandel Engineering Company Limited -Rights Issue - R” payable at Hyderabad to be confirmed
for so as to reach them on or before the Issue Closing Date.
For Non Resident Eligible Equity Shareholders/ Applicants applying through CAF but not residing at
places where the collection centre is located, shall send the CAF to the Registrar to the Issue by registered
post along with drafts of an amount in favour of “Coromandel Engineering Company Limited-Rights Issue
- R” payable at Hyderabad for the amount payable so as to reach them on or before the Issue Closing Date.
If the payment is made by a draft purchased from an NRO account, an Account Debit Certificate from the
bank issuing the draft, confirming that the draft has been issued by debiting the NRO account, should be
enclosed with the CAF. In the absence of the above, the application shall be considered incomplete and is
liable to be rejected.
New dematerialised accounts must be opened for Eligible Equity Shareholders who have had that change in
status from resident Indian to NRI.
Our Company or the Registrar to the Issue will not be responsible for postal delays or loss of application in
transit, if any, on this account and applications received through mail after closure of the Issue are liable to
be rejected. Applications through mails should not be sent in any other manner except as mentioned above.
The CAF along with the application money must not be sent to our Company or the Lead Managers or the
Registrar. Applicants are requested to strictly adhere to these instructions.
Renouncees who are NRIs/FIIs/Non-Resident should submit their respective applications either by hand
delivery or by registered post / speed post with acknowledgement due to the Registrar to the Issue only
153
along with the cheque/demand draft payable at Hyderabad so that the same are received on or before the
closure of the Issue.
Procedure for Application by Mutual Funds
In case of a Mutual Fund, a separate application can be made in respect of each scheme of the Mutual Fund
registered with SEBI and such Applications in respect of more than one scheme of the Mutual Fund will
not be treated as multiple applications provided that the application clearly indicate the scheme concerned
for which the application has been made.
Applications made by asset management companies or custodians of a mutual fund shall clearly indicate
the name of the concerned scheme for which application is being made.
As per the current norms prescribed by SEBI, the following restrictions are applicable for investments by
mutual funds:
No mutual fund scheme shall invest more than 10% of its net asset value in the Rights Equity Shares of any
company provided that the limit of 10% shall not be applicable for investments in index funds or sector or
industry specific funds. No mutual fund under all its schemes should own more than 10% of any
company’s paid-up share capital carrying voting rights.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue through the
non-ASBA process only.
Procedure for Application by FIIs
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:
The issue of Rights Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue
paid up capital of our Company. In respect of an FII investing in the Rights Equity Shares on behalf of its
sub-accounts the investment on behalf of such FII (including each sub-account) shall not exceed 10% of the
total paid up capital of our Company or 5% of the total paid-up Equity Share capital of our Company in
case such sub-account is a foreign corporate or a foreign individual. In accordance with foreign investment
limits applicable to our Company, the total FII investment cannot exceed 24% of the total paid-up capital of
our Company. With the approval of our Board and our shareholders, (by way of a special resolution), the
aggregate FII holding can go up to the permitted sectoral cap applicable to our Company. Applications will
not be accepted from FIIs located in jurisdictions which have any restrictions in connection with
offering, issuing and allotting any securities within its jurisdiction, and/or to its citizens.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue through the
non-ASBA process only.
FII Applicants cannot apply for additional Rights Equity Shares or apply for Rights Equity Shares
obtained through renounciation in their favour unless accompanied by applicable regulatory
approvals from FIPB and/or RBI.
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Procedure for Application by NRIs
Investments by NRIs are governed by the Portfolio Investment Scheme under Regulation 5(3) (i) of the
Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India)
Regulations, 2000. NRI Applicants should note that applications by ineligible Non-residents (including on
account of restriction or prohibition under applicable local laws) and where a registered address in India
has not been provided, are liable to be rejected.
NRs who are permitted to subscribe for Equity Shares under applicable law may obtain Application Forms
from the Registrar to the Issue. NR Applicants are requested to send their Application Forms either to the
collection centres of the Bankers to the Issue mentioned on the CAF or, if applying from places other than
places where collection centres have been opened by the Bankers to the Issue, directly to the Registrar to
the Issue by speed/registered post, so as to reach on or before the Issue Closing Date. The Company, the
Lead Managers, the Registrar to the Issue and the Bankers to the Issue will not be responsible for any
postal delays or loss of Applications in transit.
NRs Applying on repatriation basis may make payments by inward remittance in foreign exchange through
normal banking channels or by debits to the NRE or FCNR accounts maintained with an authorised dealer
registered with RBI under the Foreign Exchange Management (Foreign Currency Accounts) Regulations,
2000 (“Authorised Dealer”). NRIs Bidding on repatriation basis are required to submit a bank certificate
confirming that the payment has been made by debiting to the NRE or FCNR account, as the case may be,
along with the Application Form. NRIs Applying on non-repatriation basis may make payments by inward
remittance in foreign exchange through normal banking channels or by debits to NRE/FCNR accounts as
well as the NRO/Non-Resident (Special) Rupee Account (“NRSR”)/Non-Resident Non-Repatriable Term
Deposit Account (“NRNR”) accounts. NRIs Bidding on non-repatriation basis are required to submit a
bank certificate confirming that the payment has been made by debiting to the
NRE/FCNR/NRO/NRSR/NRNR account, as the case may be, along with the Application Form. For more
information, see “Terms of the Issue - Submission of Application and Modes of Payment for the Issue” on
page 150 of this Draft Letter of Offer.
If Equity Shares are Allotted on non-repatriation basis, dividend and sale proceeds of the Equity Shares
cannot be remitted outside India. If Equity Shares are Allotted on repatriation basis, interest, dividend, sales
proceeds derived from the investment in Equity Shares can be remitted outside India, subject to tax, as
applicable according to the IT Act.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue through the
non-ASBA process only.
Investment by QFIs
In terms of circulars dated January 13, 2012, SEBI has permitted investment by QFIs in Indian equity
issues, including in rights issues. A QFI can invest in the Issue through its DP with whom it has opened a
demat account. No single QFI can hold more than 5% of paid up equity capital of the company at any point
of time. Further, aggregate shareholding of all QFIs shall not exceed 10% of the paid up equity capital of
the Company at any point of time.
Applications will not be accepted from QFIs in restricted jurisdictions.
QFI applicants which are QIBs or whose Application Money exceeds ` 2,00,000 can participate in the
Issue only through the ASBA process.
155
QFI Applicants cannot apply for additional Rights Equity Shares or apply for Rights Equity Shares
obtained through renounciation in their favour unless accompanied by applicable regulatory
approvals from FIPB and/or RBI.
Acceptance of the terms of the Issue
By applying for the Rights Equity Shares offered, you will be deemed to have accepted the terms of the Issue.
Applicants may apply for the Rights Equity Shares offered, either in full or in part by filling Block III of Part
A of the enclosed CAF and submit the same along with the application money payable to the Bankers to the
Issue or any of the branches as mentioned on the reverse of the CAF before the close of the banking hours on
or before the Issue Closing Date or such extended time as may be specified by the Board thereof in this
regard. Applicants at centers not covered by the branches of Bankers to the Issue can send their CAF
together with demand draft payable at Hyderabad to the Registrar to the Issue by registered post. Such
applications sent to anyone other than the Registrar to the Issue are liable to be rejected.
Note:
1. In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the
investment in Rights Equity Shares can be remitted outside India, subject to tax, as applicable
according to Income Tax Act, 1961.
2. In case Rights Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds
of the Rights Equity Shares cannot be remitted outside India.
3. The CAFs duly completed together with the amount payable on application must be deposited
with the collecting bank indicated on the reverse of the CAFs before the close of business hours on
or before the Issue Closing Date. Separate cheque or bank draft must accompany each CAF.
4. In case of a CAF received from non-residents, allotment, refunds and other distribution, if any,
will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time
of making such allotment, remittance and subject to necessary approvals.
Last date of Application
The last date for submission of the duly filled in CAF is [•]. The Issue will be kept open for a minimum of
15 days and our Board or any committee thereof will have the right to extend the said date for such period
as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.
If the CAF together with the amount payable is not received by the Banker to the Issue/ Registrar to the
Issue on or before the close of banking hours on the aforesaid last date or such date as may be extended by
the Board/Committee of Directors, the offer contained in this Draft Letter of Offer shall be deemed to have
been declined and the Board/Committee of Directors shall be at liberty to dispose off the Rights Equity
Shares hereby offered, as provided under the section titled “Terms of the Issue – Basis of Allotment” on
page 155 of this Draft Letter of Offer.
APLLICANTS MAY PLEASE NOTE THAT THE RIGHTS EQUITY SHARES CAN BE TRADED
ON THE STOCK EXCHANGE ONLY IN DEMATERIALISED FORM.
Basis of Allotment
Subject to the provisions contained in this Draft Letter of Offer, the Articles of Association of our
Company and the approval of the Designated Stock Exchange, the Board will proceed to allot the Rights
Equity Shares in the following order of priority:
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(a) Full allotment to those Eligible Equity Shareholders who have applied for their Rights Entitlement
either in full or in part and also to the Renouncee(s) who has/ have applied for Rights Equity
Shares renounced in their favour, in full or in part.
(b) For Rights Equity Shares being offered under this Issue, if the shareholding of any of the Eligible
Equity Shareholders is less than [•] Equity Shares, the fractional entitlement of such Eligible
Equity Shareholders shall be ignored and shall be entitled to zero Rights Equity Shares. Eligible
Equity Shareholders whose fractional Rights Entitlements are being ignored would be given
preference in allotment of one additional Rights Equity Share each if they apply for additional
Rights Equity Shares. Allotment under this head shall be considered if there are any unsubscribed
Rights Equity Shares after allotment under (a) above. If the number of Rights Equity Shares
required for allotment under this head are more than the number of Rights Equity Shares available
after allotment under (a) above, the allotment would be made on a fair and equitable basis in
consultation with the Designated Stock Exchange.
(c) Allotment to the Eligible Equity Shareholders who having applied for all the Rights Equity Shares
offered to them as part of the Issue and have also applied for additional Rights Equity Shares. The
allotment of such additional Rights Equity Shares will be made as far as possible on an equitable
basis having due regard to the number of Equity Shares held by them on the Record Date,
provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The
allotment of such Rights Equity Shares will be at the sole discretion of the Board/Committee of
Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not
preferential allotment.
(d) Allotment to Renouncees who having applied for all the Rights Equity Shares renounced in their
favour, have applied for additional Rights Equity Shares provided there is surplus available after
making full allotment under (a), (b) and (c) above. The allotment of such Rights Equity Shares
will be at the sole discretion of the Board/Committee of Directors in consultation with the
Designated Stock Exchange, as a part of the Issue and not preferential allotment.
After taking into account allotment to be made under (a), (b), (c) and (d) above, if there is any
undersubscribed portion, the same shall be deemed to be ‘unsubscribed’ and allotment of the unsubscribed
Rights Equity Shares will be made to any other person including (our Promoters and Promoter Group) as
the Board may in its absolute discretion deem fit.
Murugappa Holdings Limited, either by itself and/or through a combination of entities belonging to the
Promoter and Promoter Group holding Equity Shares in our Company have confirmed that they intend to
subscribe to an amount not exceeding ` 3,750 lakhs through (a) subscribing to Promoter and Promoter
Group’s Rights Entitlement including, by subscribing for Rights Shares pursuant to renunciation, if any,
obtained in their favour and (b) by retaining the right to apply for additional Equity shares in accordance
with and subject to Regulation 10(4)(b) of the Takeover Regulations.
Such subscription for Equity Shares over and above their Rights Entitlement, if allotted, may result in an
increase in their percentage shareholding. Any such acquisition of additional Equity Shares of the Company
shall not result in a change of control of the management of the Company in accordance with provisions of
the Takeover Code and shall be exempt in terms of Regulation 10 (4) (a) and (b) of the Takeover Code.
The subscription by Promoter and Promoter Group of the Rights Shares in the Issue and the consequent
allotment of the Rights Shares would be subject to aggregate shareholding of the Promoters and Promoter
Group not exceeding 75% of the post-Issue equity share capital of the Company on the date of Allotment,
in accordance with clause 40A of the Equity Listing Agreements.
In case the permission to deal in and for an official quotation of the Rights Equity Shares is not granted by
the Stock Exchanges, our Company shall forthwith repay without interest, all monies received from the
applicants in pursuance of this Draft Letter of Offer.
157
Underwriting
Our Company has not currently entered into any underwriting arrangement. We may enter into such an
arrangement for the purpose of this Issue at an appropriate time and on such terms and conditions as we
may deem fit. In the event our Company enters into such an arrangement, which shall be done, prior to the
filing of the Letter of Offer with the Designated Stock Exchange, we shall disclose the details of the
underwriting arrangement in the letter of offer as required under the SEBI ICDR Regulations.
Allotments and Refunds
Our Company will issue and dispatch allotment advice/ share certificates/ demat credit and/ or letters of
regret along with refund order or credit the allotted securities to the respective beneficiary accounts, if any,
within 15 days from the Issue Closing Date. If there is a delay beyond 8 days from the stipulated period (i.e
15 days from the closure of the Issue) our Company shall be punishable with a fine which shall not be less than
five lakh rupees but which may extend to fifty lakh rupees and every officer of our Company in default shall be
punishable with imprisonment for a term of one year or with fine which shall not be less than fifty thousand
rupees but may extend to three lakh rupees or with both in accordance with Section 40 (5) of the Companies Act,
2013.
Applicants residing at the centers where clearing houses are managed by the RBI will get refund through
NECS only if the Applicants are otherwise applicable/eligible to get refunds through NEFT, direct credit
and RTGS, provided however that the relevant MICR details are recorded with the Depositories or our
Company.
In case of those Applicants who have opted to receive their Right Entitlement in dematerialized form by
using electronic credit under the depository system, an advice regarding the credit of the Rights Equity
Shares shall be given separately. Applicants to whom refunds are made through electronic transfer of funds
will be sent a letter intimating them about the mode of credit of refund within 15 days of the Issue Closing
Date. In case of those Applicants who have opted to receive their Rights Entitlement in physical form, our
Company will issue the corresponding share certificates under Section 113 of the Companies Act, 1956 or
other applicable provisions if any. All refund orders will be dispatched by registered post/ speed post to the
sole/ first Applicant‘s registered address. Such cheques or pay orders will be payable at par at all places
where the applications were originally accepted and will be marked “Account Payee only” and would be
drawn in the name of the sole/ first Applicant. Adequate funds would be made available to the Registrar to
the Issue for this purpose.
Payment of Refund
Mode of making refunds
The payment of refund, if any, would be done through any of the following modes:
1. NECS – Payment of refund would be done through NECS for applicants having an account at one
of the centres specified by the RBI, where such facility has been made available.
This would be subject to availability of complete Bank Account Details including MICR code
wherever applicable from the depository. The payment of refund through NECS is mandatory for
applicants having a bank account at any of the centres where NECS facility has been made
available by the RBI (subject to availability of all information for crediting the refund through
NECS including the MICR code as appearing on a cheque leaf, from the depositories), except
where applicant is otherwise disclosed as eligible to get refunds through NEFT or Direct Credit or
RTGS.
2. NEFT – Payment of refund shall be undertaken through NEFT wherever the Applicant’s bank has
been assigned the Indian Financial System Code (IFSC), which can be linked to a MICR, if any,
available to that particular bank branch. IFSC Code will be obtained from the website of RBI as
on a date immediately prior to the date of payment of refund, duly mapped with MICR numbers.
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Wherever the Applicants have registered their nine digit MICR number and their bank
account number while opening and operating the demat account, the same will be duly
mapped with the IFSC Code of that particular bank branch and the payment of refund will
be made to the Applicants through this method.
3. Direct Credit – Applicants having bank accounts with the refund bankers shall be eligible to
receive refunds through direct credit. Charges, if any, levied by the refund banker(s) for the same
would be borne by our Company.
4. RTGS – Applicants having a bank account at any of the abovementioned centres specified by RBI
and whose refund amount exceeds ` 2,00,000, have the option to receive refund through RTGS.
Such eligible Applicants who indicate their preference to receive refund through RTGS are
required to provide the IFSC code in the CAF. In the event the same is not provided, refund shall
be made through NECS. Charges, if any, levied by the refund bank(s) for the same would be borne
by our Company. Charges, if any, levied by the Applicant’s bank receiving the credit would be
borne by the Applicant.
5. For all other Applicants, including those who have not updated their bank particulars with the
MICR code, the refund orders will be dispatched by Speed Post/ Registered Post. Such refunds
will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first Applicant
and payable at par.
6. Credit of refunds to Applicants in any other electronic manner permissible under applicable
banking laws which are in force and as permitted by SEBI from time to time.
For shareholders opting for allotment in physical mode, bank account details as mentioned in the
CAF shall be considered for electronic credit or printing of refund orders, as the case may be.
Refund orders will be made by cheques, pay orders or demand drafts drawn on the Refund Bank(s)
and payable at par at places where the applications were received and will be marked account payee
and will be drawn in the name of Sole/First Applicant. The bank charges, if any, for encashing such
cheques, pay orders or demand drafts at other centres will be payable by the Applicants.
Printing of Bank Particulars on Refund Orders
As a matter of precaution against possible fraudulent encashment of refund orders due to loss or
misplacement, the particulars of the Applicant’s bank account are mandatorily required to be given for
printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants
which can then be deposited only in the account specified. Our Company will in no way be responsible if
any loss occurs through these instruments falling into improper hands either through forgery or fraud.
Refund payment to Non-Resident
Where applications are accompanied by Indian rupee drafts purchased abroad and payable at Hyderabad,
refunds will be made in the Indian rupees based on the U.S. dollars equivalent which ought to be refunded.
Indian rupees will be converted into U.S. dollars at the rate of exchange, which is prevailing on the date of
refund. The exchange rate risk on such refunds shall be borne by the concerned applicant and our Company
shall not bear any part of the risk.
Where the applications made are accompanied by NRE/FCNR/NRO cheques, refunds will be credited to
NRE/FCNR/NRO accounts respectively, on which such cheques were drawn and details of which were
provided in the CAF. Export of letters of allotment (if any)/ share certificates/ demat credit to non-resident
Allottees will be subject to RBI approval.
Allotment advice / Share Certificates/ Demat Credit
Allotment advice/ share certificates/ demat credit or letters of regret will be dispatched to the registered
address of the first named Applicant or respective beneficiary accounts will be credited within 15 days
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from the Issue Closing Date. In case our Company issues allotment advice, the share certificates will be
dispatched within one month from the date of allotment. Allottees are requested to preserve such allotment
advice (if any) to be exchanged later for share certificates.
Option to receive Rights Equity Shares in Dematerialized Form
Applicants to the Rights Equity Shares of our Company, and holding Equity Shares in the physical form as
on the Record Date, shall be allotted the Rights Equity Shares in dematerialized (electronic) form at the
option of the Applicant. Our Company signed a tripartite agreement dated May 5, 2008, with NSDL and the
Registrar to the Issue, which enables the Applicants to hold and trade in securities in a dematerialized form,
instead of holding the securities in the form of physical certificates. Our Company has also signed a
tripartite agreement dated April 23, 2008, with CDSL and the Registrar to the Issue, which enables the
Applicants to hold and trade in securities in a dematerialized form, instead of holding the securities in the
form of physical certificates.
In this Issue, the Allottees, currently holding the Equity Shares in physical form and who have opted for
Rights Equity Shares in dematerialized form will receive their Rights Equity Shares in the form of an
electronic credit to their beneficiary account as given in the CAF with a depository participant. Applicant
will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment
advice, refund order, (if any), would be sent directly to the applicant by the Registrar to the Issue but the
applicant‘s depository participant will provide to him the confirmation of the credit of such Rights Equity
Shares to the applicant‘s depository account. Applications, which do not accurately contain this
information, will be given the Rights Equity Shares in physical form. No separate applications for Rights
Equity Shares in physical and/or dematerialized form should be made. If such applications are made, the
application for physical Rights Equity Shares will be treated as multiple applications and is liable to be
rejected.
APPLICANTS MAY PLEASE NOTE THAT THE RIGHTS EQUITY SHARES OF OUR
COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALIZED
FORM.
Procedure for availing the facility for allotment of Rights Equity Shares in this Issue in the electronic form
is as under:
(i) Open a beneficiary account with any depository participant (care should be taken that the
beneficiary account should carry the name of the holder in the same manner as is exhibited in the
records of our Company. In the case of joint holding, the beneficiary account should be opened
carrying the names of the holders in the same order as with our Company). In case of Applicants
having various folios in our Company with different joint holders, the Applicants will have to
open separate accounts for such holdings. Those Eligible Equity Shareholders who have already
opened such beneficiary account (s) need not adhere to this step.
(ii) For Eligible Equity Shareholders already holding Equity Shares of our Company in dematerialized
form as on the Record Date, the beneficial account number shall be printed on the CAF. For those
who open accounts later or those who change their accounts and wish to receive their Rights
Equity Shares pursuant to this Issue by way of credit to such account, the necessary details of their
beneficiary account should be filled in the space provided in the CAF. Nonetheless, it should be
ensured that the depository account is in the name(s) of the Eligible Equity Shareholders and the
names are in the same order as in the records of our Company.
(iii) Responsibility for correctness of information (including Applicant’s age and other details) filled in
the CAF vis-à-vis such information with the Applicant’s depository participant, would rest with
the Applicant. Applicants should ensure that the names of the applicants and the order in which
they appear in CAF should be the same as registered with the applicant’s depository participant.
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(iv) For applicants holding Equity Shares in physical form as on the Record Date and who have opted
to receive Rights Equity Shares in dematerialized form, if incomplete / incorrect beneficiary
account details are given in the CAF the Applicant will get Rights Equity Shares in physical form.
(v) Renouncees will also have to provide the necessary details about their beneficiary account for
allotment of Rights Equity Shares in this Issue. In case these details are incomplete or incorrect,
the application is liable to be rejected.
(vi) Rights Equity Share allotted to an Applicant in the electronic account form will be credited
directly to the Applicant’s respective beneficiary account(s) with depository participant.
(vii) Applicants should ensure that the names of the Applicants and the order in which they appear in
the CAF should be the same as registered with the Applicant’s depository participant.
(viii) Non-transferable allotment advice/refund orders will be directly sent to the Applicant by the
Registrar to this Issue.
(ix) The Rights Equity Shares pursuant to this Issue allotted to Applicants opting for dematerialized
form, would be directly credited to the beneficiary account as given in the CAF after verification.
Allotment advice, refund order (if any) would be sent directly to the Applicant by the Registrar to
the Issue but the Applicant’s depository participant will provide to him the confirmation of the
credit of such Rights Equity Shares to the Applicant’s depository account. No intimation of
allotment of Rights Equity Shares will be provided by the Registrar and / or the Company to the
individual Allottees.
(x) It may be noted that Rights Equity Shares in electronic form can be traded only on the Stock
Exchanges having electronic connectivity with NSDL or CDSL.
(xi) Dividend or other benefits with respect to the Rights Equity Shares held in dematerialized form
would be paid to those Eligible Equity Shareholders whose names appear in the list of beneficial
owners to be given by the Depository Participant to our Company as on the date of book closure /
record date.
GROUNDS FOR TECHNICAL REJECTIONS
Applicants are advised to note that applications are liable to be rejected on technical grounds, including the
following:
(a) Amount paid does not tally with the amount payable for;
(b) Bank account details (for refund) are not given and the same are not available with the DP (in the
case of dematerialized holdings) or the Registrar (in the case of physical holdings);
(c) Submission of CAFs to the SCSBs.
(d) Submission of plain paper Applications to any person other than the Registrar to the Issue
(e) Age of first Applicant not given while completing Part C of the CAFs;
(f) Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts, PAN not given for application of any value;
(g) GIR number provided instead of the PAN;
(h) In case of application under power of attorney relevant documents are not submitted;
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(i) In case of application by limited companies, corporate, trust, relevant documents are not
submitted;
(j) If the signature of the existing Eligible Equity Shareholder does not match with the one given on
the CAF and for renouncee(s) if the signature does not match with the records available with their
depositories;
(k) If the Applicant holding Equity Shares in physical form as on Record Date desires to have Rights
Equity Shares in electronic form, but the CAF does not have the Applicant’s depository account
details;
(l) Application forms are not submitted by the Applicants within the time prescribed as per the CAF
and this Draft Letter of Offer;
(m) Applications not duly signed by the sole/joint Applicants. All Applications need to be signed by
all joint Applicants. Absence of signatures of any of the joint Applicants or mismatch in signatures
of any of the joint Applicants may result in the CAF being rejected;
(n) Applications by OCBs unless accompanied by specific approval from RBI permitting the OCBs to
participate in the Issue;
(o) Applications accompanied by Stockinvest;
(p) In case no corresponding record is available with the Depositories that matches three parameters,
namely, names of the Applicants (including the order of names of joint holders), the Depositary
Participant‘s identity (DP ID) and the beneficiary‘s identity;
(q) For applications by Applicants that are located outside of the United States and that are not U.S.
persons, such applications that do not include the certification set out in the CAF to the effect that
the subscriber is not a “U.S. person” (as defined 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 securities in compliance with all applicable laws and regulations;
(r) Applications by ineligible Non-residents (including on account of restriction or prohibition under
applicable local laws) and applications on Plain Paper where a registered address in India has not
been provided;
(s) Applications by Eligible Equity Shareholders who are joint holders, where Part A of the CAF is
not signed by all such joint holders;
(t) Applications by Renouncees of Eligible Equity Shareholders who are joint holders, where Part B
of the CAF is not signed by all such joint holders;
(u) Applications where our Company believes that CAF is incomplete or acceptance of such CAF
may infringe applicable legal or regulatory requirements;
(v) Multiple Applications including cases where an Investor submits CAFs along with an application
on plain paper;
(w) Applications which are not made through the ASBA process by Non Retail Individual Investors
who are eligible ASBA Investors (i.e. complying with the eligibility conditions of SEBI circular
dated December 30, 2009);
(x) Applications by investors who are not eligible ASBA Investors made through the ASBA process;
(y) Applications by renounces who are persons not competent to contract under the Indian Contract
Act, 1872, including minors (other than minors who have a valid beneficiary account, as per
demographic details provided by Depositaries); and
(z) Please read this Draft Letter of Offer and the instructions contained therein and in the CAF
carefully before filling in the CAF. The instructions contained in the CAF are each an integral part
of this Draft Letter of Offer and must be carefully followed. An application is liable to be rejected
for any non-compliance of the provisions contained in this Draft Letter of Offer or the CAF.
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PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY
BLOCKED AMOUNT (“ASBA”) PROCESS
This section is for the information of the ASBA Investors proposing to subscribe to the Issue through
the ASBA Process. Our Company and the Lead Managers are not liable for any amendments or
modifications or changes in applicable laws or regulations, which may occur after the date of this
Draft Letter of Offer. Eligible Equity Shareholders who are eligible to apply under the ASBA Process
are advised to make their independent investigations and to ensure that the CAF is correctly filled up
and also ensure that the number of Rights Equity Shares applied for by such Eligible Equity
Shareholders do not exceed the applicable limits under laws or regulations.
The Lead Managers, our Company, its directors, affiliates, associates and their respective directors
and officers and the Registrar to the Issue shall not take any responsibility for acts, mistakes, errors,
omissions and commissions in relation to applications accepted by SCSBs, Applications uploaded by
SCSBs, applications accepted but not uploaded by SCSBs or applications accepted and uploaded
without blocking funds in the ASBA Accounts. It shall be presumed that for applications uploaded
by SCSBs, the amount payable on application has been blocked in the relevant ASBA Account.
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue through the
non-ASBA process only.
The list of banks that have been notified by SEBI to act as SCSB for the ASBA Process is provided on
http://www.sebi.gov.in/cms/sebi_data/attachdocs/1355898148848.html. For details on designated branches
of SCSB collecting the CAF, please refer the above mentioned SEBI link.
Please note that subject to SCSBs complying with the requirements of SEBI Circular No.
CIR/CFD/DIL/13/2012 dated September 25, 2012 within the periods stipulated therein, ASBA
Applications may be submitted at all branches of the SCSBs.
Further, in terms of the SEBI circular CIR/CFD/DIL/1/2013 dated January 2, 2013, it is clarified that for
making applications by banks on own account using ASBA facility, SCSBs should have a separate account
in own name with any other SEBI registered SCSB(s). Such account shall be used solely for the purpose of
making application in public issues and clear demarcated funds should be available in such account for
ASBA applications
Eligible Equity Shareholders who are eligible to apply under the ASBA Process
The option of applying for Rights Equity Shares in the Issue through the ASBA Process is only available to
Eligible Equity Shareholders of our Company on the Record Date and who:
hold the Equity Shares in dematerialised form as on the Record Date and have applied towards
his/her/their Rights Entitlements or additional Rights Equity Shares in the Issue, in a dematerialised
form;
have not renounced his/her/their Rights Entitlements in full or in part;
are not Renouncee/s; and
apply through a bank account maintained with one of the SCSBs
Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through the
ASBA process, subject to them complying with the requirements of SEBI circular dated December
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30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily required to
use the ASBA facility, even if application amount does not exceed ` 2,00,000.
Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue through the
non-ASBA process only.
Retail Individual Investors may optionally apply through the ASBA process, provided that they are eligible
ASBA Investors.
CAF
The Registrar will dispatch the CAF to all Eligible Equity Shareholders as per their Rights Entitlement on
the Record Date for the Issue. Those Eligible Equity Shareholders who wish to apply through the ASBA
payment mechanism will have to select for this mechanism in Part A of the CAF, provide necessary details,
and submit the same to the SCSB with whom such applicant’s bank account is maintained. The SCSB in turn
would block the application amount in the Applicant’s account as per the authority contained in the CAF and
undertake other tasks as per the specified procedures signifying blocking of the relevant application monies
on the CAF.
Submission of the CAF / Plain Paper Application
Eligible Equity Shareholders desiring to use the ASBA Process are required to submit their applications by
selecting the ASBA Option in Part A of the CAF only or in plain paper application and indicate that they
wish to apply through the ASBA payment mechanism. On submission of the CAF after selecting the ASBA
Option in Part A or plain paper applications indicating application through the ASBA payment mechanism,
the Eligible Equity Shareholders are deemed to have authorized (i) the SCSB to do all acts as are necessary
to make the CAF in the Issue, including blocking or unblocking of funds in the bank account maintained
with the SCSB specified in the CAF or the plain paper, transfer of funds to the separate bank account
maintained by our Company as per the provisions of Section 40(3) of the Companies Act, 2013 on receipt
of instruction from the Registrar to the Issue after finalization of the basis of Allotment; and (ii) the Registrar
to the Issue to issue instructions to the SCSB to remove the block on the funds in the bank account specified
in the CAF or plain paper, upon finalization of the basis of Allotment and to transfer the requisite funds to
the separate bank account maintained by our Company as per the provisions of Section 40(3) of the
Companies Act, 2013.
Application in electronic mode will only be available with such SCSB who provides such facility. The
Equity Shareholder shall submit the CAF/ plain paper application to the SCSB for authorizing such SCSB to
block an amount equivalent to the amount payable on the application in the said bank account maintained
with the same SCSB. However, no more than five (5) applications (including CAF and plain paper
application) can be submitted per bank account in the Issue. In case of withdrawal / failure of the Issue, the
Lead Managers, through the Registrar to the Issue, shall notify the SCSBs to unblock the blocked amount of
the Equity Shareholder applying through ASBA within one (1) day from the day of receipt of such
notification.
The relevant Designated Branch of each SCSB would upon receipt and verification of ASBA Applications
and blocking of the relevant application monies upload details of each Application Form received by it on
the online-application platform provided by the Stock Exchanges, and issue an acknowledgement to the
ASBA Applicant in connection with submission of the ASBA Application.
Mode of payment
The Equity Shareholder applying under the ASBA Process agrees to block the entire amount payable on
application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the
amount payable on application, in a bank account maintained with the SCSB.
After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall
block an amount equivalent to the amount payable on application mentioned in the CAF until it receives
instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such
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amount as per Registrar’s instruction allocable to the Eligible Equity Shareholders applying under the ASBA
Process from bank account with the SCSB mentioned by the Equity Shareholder in the CAF. This amount
will be transferred in terms of the SEBI Regulations, into the separate bank account maintained by our
Company as per the provisions of Section 40(3) of the Companies Act, 2013. The balance amount remaining
after the finalization of the basis of allotment shall be either unblocked by the SCSBs or refunded to the
investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue
and the Lead Managers to the respective SCSB.
The Eligible Equity Shareholders applying under the ASBA Process would be required to block the entire
amount payable on their application at the time of the submission of the CAF.
The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB
details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds
equivalent to the amount payable on application mentioned in the CAF or (ii) more than five (5) applications
are submitted per account held with the SCSB in the Issue. Subsequent to the acceptance of the application
by the SCSB, our Company would have a right to reject the application only on technical grounds.
Options available to the Eligible Equity Shareholders applying under the ASBA Process
The summary of options available to the Eligible Equity Shareholders is presented below. You may exercise
any of the following options with regard to the Equity Shares, using the respective CAFs received from
Registrar:
Option Available Action Required
1. Accept whole or part of your Rights
Entitlement without renouncing the
balance.
Fill in and sign Part A (All joint holders must sign)
2. Accept your Rights Entitlement in full and
apply for additional Rights Equity Shares
Fill in and sign Part A including Block III relating
to the acceptance of entitlement and Block IV
relating to additional Rights Equity Shares (All
joint holders must sign)
The Equity Shareholder applying under the ASBA Process will need to select the ASBA option
process in the CAF and provide required necessary details. However, in cases where this option is not
selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA
process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Equity
Shareholder has selected to apply through the ASBA process option.
Additional Rights Equity Shares
You are eligible to apply for additional Rights Equity Shares over and above the number of Rights Equity
Shares that you are entitled to, provided that (i) you have applied for all the Rights Equity Shares (as the
case may be) offered without renouncing them in whole or in part in favour of any other person(s).
Applications for additional Rights Equity Shares shall be considered and allotment shall be made at the sole
discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed
under the section titled “Terms of the Issue – Basis of Allotment” on page 155 of this Draft Letter of Offer.
If you desire to apply for additional Rights Equity Shares please indicate your requirement in the place
provided for additional Rights Equity Shares in Part A of the CAF.
Where the number of additional Rights Equity Shares applied for exceeds the number available for
Allotment, the Allotment would be made on a fair and equitable basis in consultation with the Designated
Stock Exchange.
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Renunciation under the ASBA Process
Renouncees cannot participate in the Issue through the ASBA Process.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate
CAF and who is applying under the ASBA Process may make an application to subscribe to the Issue on
plain paper. Eligible Equity Shareholders applying on the basis of a plain paper application are required to
indicate their choice of applying under the ASBA Process.
The envelope should be super scribed “Coromandel Engineering Company Limited– Rights Issue - R”
incase of resident shareholders/applicants or shareholders/applicants applying on non repatriable basis or
“Coromandel Engineering Company Limited- Rights Issue -NR” incase of non resident
shareholders/applicants applying on repatriable basis and should be postmarked in India. The application on
plain paper, duly signed by the Applicants including joint holders, in the same order as per specimen
recorded with our Company, must reach the Designated Branch of the SCSBs before the Issue Closing Date
and should contain the following particulars:
Name of Company, being Coromandel Engineering Company Limited;
Name and address of the Eligible Equity Shareholder including joint holders;
Registered Folio Number/DP and Client ID no.;
Number of Equity Equity Shares held as on Record Date;
Number of Rights Equity Shares entitled to;
Number of Rights Equity Shares applied for;
Number of additional Rights Equity Shares applied for, if any;
Total number of Rights Equity Shares applied for;
Total amount blocked at the rate of ` [•] per Equity Share;
Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts, PAN of the Applicant and for each Applicant in case of joint
names, irrespective of the total value of the Rights Equity Shares applied for pursuant to the Issue;
Signature of Eligible Equity Shareholders to appear in the same sequence and order as they appear
in the records of our Company or the Depositories;
Authorizing such SCSB to block an amount equivalent to the amount payable on the application in
such bank account maintained with the same SCSB;
In case of non-resident investors, details of the NRE/ FCNR/ NRO account such as the account
number, name, address and branch of the SCSB with which the account is maintained;
A representation that the Equity Shareholder is not a “U.S. Person” (as defined in Regulation S
under the Securities Act); and
Additionally, Non Resident applicants shall include the representation in writing that:
1. “I/We understand that the Rights Entitlement have not been, and will not be, registered
under the United States Securities Act of 1933, as amended, (“US Securities Act”), or
any United States state securities laws, and may not be offered, sold, resold or otherwise
transferred within the United States or to the territories or possessions thereof or to, or for
the account or benefit of, “U.S. Persons” (as defined in Regulation S under the US
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Securities Act), except in a transaction exempt from, or in a transaction not subject to, the
registration requirements of the US Securities Act. The Equity Shares referred to in this
application are being offered in India but not in the United States of America. None of
our Company, the Registrar, the Lead Managers or any other person acting on behalf of
our Company will accept subscriptions from any person, or the agent of any person, who
appears to be, or who our Company, the Registrar, the Lead Managers or any other
person acting on behalf of our Company has reason to believe is, a resident of the United
States and to whom an offer, if made, would result in requiring registration of this
application with the United States Securities and Exchange Commission.
2. I/We will not offer, sell or otherwise transfer any of the Rights Equity Shares which may
be acquired by us in any jurisdiction or under any circumstances in which such offer or
sale is not authorised or to any person to whom it is unlawful to make such offer, sale or
invitation except under circumstances that will result in compliance with any applicable
laws or regulations. We satisfy, and each account for which we are acting satisfies, all
suitability standards for investors in investments of the type subscribed for herein
imposed by the jurisdiction of our residence.
3. I/We understand and agree that the Rights Equity Shares may not be reoffered, resold,
pledged or otherwise transferred except in an offshore transaction in compliance with
Regulation S, or otherwise pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of the US Securities Act.”
Option to receive Rights Equity Shares in Dematerialized Form
ELIGIBLE EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE
THAT THE RIGHTS EQUITY SHARES OF OUR COMPANY UNDER THE ASBA PROCESS
CAN BE ALLOTTED ONLY IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY
ACCOUNT IN WHICH THE RIGHTS SHARES ARE BEING HELD ON RECORD DATE.
Issuance of Intimation Letters:
Upon approval of the Basis of Allotment by the Designated Stock Exchange, the Registrar to the Issue shall
send the Controlling Branches, a list of the ASBA Investors who have been allocated Rights Equity Shares
in the Issue, along with:
The number of Rights Equity Shares to be allotted against each successful ASBA;
The amount to be transferred from the ASBA Account to the separate account opened by our
Company for the Issue, for each successful ASBA;
The date by which the funds referred to in above paragraph, shall be transferred to separate
account opened by our Company for the Issue; and
The details of rejected ASBAs, if any, along with reasons for rejection to enable SCSBs to
unblock the respective ASBA Accounts.
General instructions for Eligible Equity Shareholders applying under the ASBA Process
a. Please read the instructions printed on the respective CAF carefully.
b. Application should be made on the printed CAF only and should be completed in all respects. The
CAF found incomplete with regard to any of the particulars required to be given therein, and/or
which are not completed in conformity with the terms of this Draft Letter of Offer are liable to be
rejected. The CAF / plain paper application must be filled in English.
c. The CAF / plain paper application in the ASBA Process should be only at a Designated Branch of
the SCSB and whose bank account details are provided in the CAF and not to the Bankers to the
Issue/ collecting branch of the Escrow Collection Bank(s) (assuming that such Collecting Bank
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is not a SCSB), to our Company or Registrar or Lead Managers to the Issue. The onus of due
completion and submission of such ASBA applications shall solely be that of the applicant.
d. All applicants, and in the case of application in joint names, each of the joint applicants, should
mention his/her PAN allotted under the Income-Tax Act, 1961, irrespective of the amount of the
application. Except for applications on behalf of the Central or State Government, residents of
Sikkim and the officials appointed by the courts, CAFs / plain paper applications without PAN
will be considered incomplete and are liable to be rejected. With effect from August 16, 2010,
the demat accounts for Investors for which PAN details have not been verified shall be
“suspended for credit” and no allotment and credit of Rights Equity Shares shall be made
into the accounts of such Investors.
e. All payments will be made by blocking the amount in the bank account maintained with the SCSB.
Cash payment is not acceptable. In case payment is affected in contravention of this, the application
may be deemed invalid and the application money will be refunded and no interest will be paid
thereon.
f. Signatures should be either in English or Hindi or in any other language specified in the Eighth
Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb
impression must be attested by a Notary Public or a Special Executive Magistrate under his/her
official seal. The Eligible Equity Shareholders must sign the CAF / plain paper application as per
the specimen signature recorded with our Company /or Depositories.
g. In case of joint holders, all joint holders must sign the relevant part of the CAF / plain paper
application in the same order and as per the specimen signature(s) recorded with our Company. In
case of joint applicants, reference, if any, will be made in the first Applicant’s name and all
communication will be addressed to the first Applicant.
h. All communication in connection with application for the Rights Equity Shares, including any
change in address of the Eligible Equity Shareholders should be addressed to the Registrar to the
Issue prior to the date of allotment in this Issue quoting the name of the first/sole Applicant, folio
numbers and CAF number.
i. Only the person or persons to whom the Rights Equity Shares have been offered and not
renouncee(s) shall be eligible to participate under the ASBA process.
j. Only persons outside restricted jurisdictions and who are eligible to subscribe for Rights
Entitlement and Rights Equity Shares under applicable securities laws are eligible to participate.
k. Only the Eligible Equity Shareholders holding shares in demat are eligible to participate through
ASBA process.
l. Eligible Equity Shareholders who have renounced their entitlement in part/ full are not entitled to
apply using ASBA process.
m. Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and
other Applicants whose application amount exceeds ` 200,000 can participate in the Issue
only through the ASBA process, subject to them complying with the requirements of SEBI
circular dated December 30, 2009. Further, all QIB Applicants and Non-Institutional
Investors are mandatorily required to use the ASBA facility, even if application amount does
not exceed ` 2,00,000.
n. Notwithstanding anything contained hereinabove, all Renouncees shall apply in the Issue
through the non-ASBA process only.
Do’s:
(a) Ensure that the ASBA Process option is selected in part A of the CAF and necessary details are
filled in. In case of non-receipt of the CAF, the application can be made on plain paper indicating
application through the ASBA payment mechanism with all necessary details as indicated under the
section titled “Terms of the Issue – Application on Plain Paper” on pages 145 and 165 of this Draft
Letter of Offer.
(b) Electronic mode is only available with certain SCSBs and not all SCSBs and you should ensure that
your SCSB offers such facility to you.
(c) Ensure that the details about your Depository Participant and beneficiary account are correct and
the beneficiary account is activated as Rights Equity Shares will be allotted in the dematerialized
form only.
168
(d) Ensure that the CAFs / plain paper applications are submitted at the registered branch of the SCSBs
for blocking of application monies in the relevant account maintained with such SCSB and details
of the correct bank account have been provided in the CAF.
(e) Ensure that there are sufficient funds (equal to {number of Rights Equity Shares applied for} X
{Issue Price of Rights Equity Shares}) available in the bank account maintained with the SCSB
mentioned in the CAF before submitting the CAF to the respective Designated Branch of the
SCSB.
(f) Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount
payable on application mentioned in the CAF / plain paper application, in the bank account
maintained with the respective SCSB, of which details are provided in the CAF / plain paper
application and have signed the same.
(g) Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF /plain
paper application in physical form or electronic mode.
(h) Except for applications on behalf of the Central or State Government, residents of Sikkim and the
officials appointed by the courts, each applicant should mention their PAN allotted under the IT
Act.
(i) Ensure that the name(s) given in the CAF / plain paper application is exactly the same as the
name(s) in which the beneficiary account is held with the Depository Participant. In case the CAF /
plain paper application is submitted in joint names, ensure that the beneficiary account is also held
in same joint names and such names are in the same sequence in which they appear in the CAF /
plain paper application.
(j) Ensure that the Demographic Details with your Depository Participant(s) are updated, true and
correct, in all respects.
(k) Ensure that the account holder in whose bank account the funds are to be blocked has signed
authorizing such funds to be blocked.
(l) Apply under the ASBA process only if you comply with the definition of an ASBA Investor,
namely such Retail Individual Investors who:
hold the Equity Shares in dematerialised form as on the Record Date and have applied
towards his/her Rights Entitlements or additional Rights Equity Shares in the Issue in
dematerialised form;
have not renounced his/her Rights Entitlements in full or in part;
are not a Renouncee; and
apply through a bank account maintained with one of the SCSBs.
Note: Please note that subject to SCSBs complying with the requirements of SEBI Circular No.
CIR/CFD/DIL/13/2012 dated September 25, 2012 within the periods stipulated therein, ASBA
Applications may be submitted at all branches of the SCSBs.
Don’ts:
(a) Do not apply on duplicate CAF after you have submitted a CAF to a Designated Branch of the
SCSB.
(b) Do not pay the amount payable on application in cash, by money order or by postal order.
(c) Do not send your physical CAFs / plain paper applications to the Lead Managers to Issue /
Registrar / Collecting Banks (assuming that such Collecting Bank is not a SCSB) / to a branch of
the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a
Designated Branch of the SCSB only.
(d) Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this
ground.
(e) Do not instruct your respective banks to release the funds blocked under the ASBA Process.
(f) Do not apply if the ASBA Account has been used for five Applicants.
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Grounds for Technical Rejection under the ASBA Process
In addition to the grounds listed under “Terms of the Issue - Grounds for Technical Rejection” beginning on
page 160 of this Draft Letter of Offer, applications under the ABSA Process are liable to be rejected on the
following grounds:
(a) Application for Rights Entitlements or additional shares in physical form.
(b) DP ID and Client ID mentioned in CAF / plain paper application not matching with the DP ID and
Client ID records available with the Registrar.
(c) Sending CAF / plain paper application to the Lead Managers / Registrar / Collecting Bank
(assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a
Designated Branch of the SCSB / Company.
(d) Renouncee applying under the ASBA Process.
(e) Insufficient funds are available with the SCSB for blocking the amount.
(f) Funds in the bank account with the SCSB whose details are mentioned in the CAF / plain paper
application having been frozen pursuant to regulatory orders.
(g) Account holder not signing the CAF / plain paper application or declaration mentioned therein.
(h) Submitting the GIR number instead of the PAN.
(i) Submission of more than five CAFs per ASBA Account
(j) Applications by investors who are not eligible ASBA Investors made through the ASBA process.
(k) Application on SAF.
(l) CAFs that do not include the certification set out in the CAF to the effect that the subscriber does
not have a registered address (and is not otherwise located) in restricted jurisdictions and is
authorized to acquire the rights and the securities in compliance with all applicable laws and
regulations.
(m) CAFs which have evidence of being executed in/dispatched from restricted jurisdiction.
(n) QIBs and Non Institutional Investors who are eligible ASBA Investors (as per the conditions of the
SEBI circular dated December 30, 2009) not applying through the ASBA process. Non Retail
Individual Investors having bank account with SCSBs that are providing ASBA in cities/ centers
where Non Retail Individual Investors are located, are mandatorily required to make use of ASBA
facility. Otherwise, applications of such non-retail individual investors are liable for rejection.
(o) The application by an Eligible Equity Shareholder whose cumulative value of Rights Equity Shares
applied for is more than ` 200,000 but has applied separately through split CAFs of less than `
200,000 and has not done so through the ASBA process.
(p) Please note that, in terms of SEBI circular CIR/CFD/DIL/1/2011 dated April 29, 2011, QIB
Applicants, Non-Institutional Investors (including all companies and bodies corporate) and other
Applicants whose application amount exceeds ` 200,000 can participate in the Issue only through
the ASBA process, subject to them complying with the requirements of SEBI circular dated
December 30, 2009. Further, all QIB Applicants and Non-Institutional Investors are mandatorily
required to use the ASBA facility, even if application amount does not exceed ` 2,00,000. Non
Retail Individual Investors having bank account with SCSBs that are providing ASBA in cities/
centers where Non Retail Individual Investors are located, are mandatorily required to make use of
ASBA facility. Otherwise, applications of such Non Retail Individual Investors are liable for
rejection. All Non Retail Individual Investors are encouraged to make use of ASBA facility
wherever such facility is available.
(q) Multiple CAFs, including cases where an Investor submits CAFs along with a plain paper
application
(r) Applications by persons not competent to contract under the Contract Act, 1872, as amended,
including by minors other than minors who have a valid beneficiary account, as per demographic
details provided by Depositaries.
Depository account and bank details for Eligible Equity Shareholders applying under the ASBA
Process
IT IS MANDATORY FOR ALL THE ELIGIBLE EQUITY SHAREHOLDERS APPLYING UNDER
THE ASBA PROCESS TO RECEIVE THEIR RIGHTS SHARES IN DEMATERIALISED FORM.
ALL ELIGIBLE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS
SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY
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PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN
THE CAF / PLAIN PAPER APPLICATION. ELIGIBLE EQUITY SHAREHOLDERS APPLYING
UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF / PLAIN
PAPER APPLICATION IS EXACTLY THE SAME AS THE NAME IN WHICH THE
DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF / PLAIN PAPER APPLICATION IS
SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY
ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME
SEQUENCE IN WHICH THEY APPEAR IN THE CAF / PLAIN PAPER APPLICATION.
Eligible Equity Shareholders applying under the ASBA Process should note that on the basis of name of
these Eligible Equity Shareholders, Depository Participant’s name and identification number and beneficiary
account number provided by them in the CAF / plain paper application, the Registrar to the Issue will obtain
from the Depository demographic details of these Eligible Equity Shareholders such as address, bank
account details for printing on refund orders and occupation, (“Demographic Details”). Hence, Eligible
Equity Shareholders applying under the ASBA Process should carefully fill in their Depository Account
details in the CAF / plain paper application.
These Demographic Details would be used for all correspondence with such Eligible Equity Shareholders
including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The
Demographic Details given by Eligible Equity Shareholders in the CAF / plain paper application would not
be used for any other purposes by the Registrar. Hence, Eligible Equity Shareholders are advised to update
their Demographic Details as provided to their Depository Participants.
By signing the CAFs / plain paper applications, the Eligible Equity Shareholders applying under the ASBA
Process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to
the Issue, the required Demographic Details as available on its records.
Letters intimating allotment and unblocking or refund (if any) would be mailed at the address of the
Equity Shareholder applying under the ASBA Process as per the Demographic Details received from
the Depositories. Refunds, if any, will be made directly to the bank account in the SCSB and which
details are provided in the CAF / plain paper application and not the bank account linked to the DP
ID. Eligible Equity Shareholders applying under the ASBA Process may note that delivery of letters
intimating unblocking of bank account may get delayed if the same once sent to the address obtained
from the Depositories are returned undelivered. In such an event, the address and other details given
by the Equity Shareholder in the CAF / plain paper application would be used only to ensure dispatch
of letters intimating unblocking of bank account.
Note that any such delay shall be at the sole risk of the Eligible Equity Shareholders applying under
the ASBA Process and none of our Company, the SCSBs or the Lead Managers shall be liable to
compensate the Equity Shareholder applying under the ASBA Process for any losses caused due to
any such delay or liable to pay any interest for such delay.
In case no corresponding record is available with the Depositories that matches three parameters, namely,
names of the Eligible Equity Shareholders (including the order of names of joint holders), the DP ID and the
beneficiary account number, then such applications are liable to be rejected.
Transfer of Funds
The Registrar to the Issue shall instruct the relevant SCSB to unblock the funds in the relevant ASBA bank
accounts for (i) transfer of requisite funds to the separate bank account maintained by our Company as per
the provisions of Section 40(3) of the Companies Act, 2013 (ii) rejected / unsuccessful ASBAs.
In case of failure or withdrawal of the Issue, on receipt of appropriate instructions from the Lead Managers
through the Registrar to the Issue, the SCSBs shall unblock the bank accounts latest by the next day of
receipt of such information.
MISCELLANEOUS
Payment by Stockinvest
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In terms of the RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the
Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in
this Issue.
Disposal of application and application money
No acknowledgment will be issued for the application monies received by our Company. However, the
Bankers to the Issue / Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping
and returning the acknowledgment slip at the bottom of each CAF. The Board reserves its full, unqualified
and absolute right to accept or reject any application, in whole or in part, and in either case without
assigning any reason thereto. In case an application is rejected in full, the whole of the application money
received will be refunded. Wherever an application is rejected in part, the balance of application money, if
any, after adjusting any money due on Equity Shares allotted, will be refunded to the Applicant within a
period of 15 days from the Issue Closing Date. If there is a delay beyond 8 days from the stipulated period
(i.e 15 days from the closure of the Issue) our Company shall be punishable with a fine which shall not be less
than five lakh rupees but which may extend to fifty lakh rupees and every officer of our Company in default shall
be punishable with imprisonment for a term of one year or with fine which shall not be less than fifty thousand
rupees but may extend to three lakh rupees or with both in accordance with Section 40 (5) of the Companies Act,
2013.
Utilisation of Issue Proceeds
Our Board confirms that:
(a) All monies received out of this Issue shall be transferred to a separate bank account other than the
bank account referred to Section 40(3) of the Companies Act, 2013;
(b) Details of all monies utilized out of the Issue referred to in clause (i) above shall be disclosed
under an appropriate separate head in the balance sheet of our Company indicating the purpose for
which such monies have been utilized; and
(c) Details of all unutilized monies out of the Issue, if any, referred to in clause (i) above shall be
disclosed under an appropriate separate head in the balance sheet of our Company indicating the
form in which such unutilized monies have been invested.
(d) The Company may utilize the funds collected in the Issue only after the basis of Allotment is
finalized.
Undertakings by our Company
Our Company undertakes:
1. The complaints received in respect of the Issue shall be attended to by the company expeditiously
and satisfactorily;
2. That all steps for completion of the necessary formalities for listing and commencement of trading
at all Stock Exchanges where the securities are to be listed are taken within 7 working days of
finalization of basis of allotment;
3. The funds required for making refunds to unsuccessful applicants under the Issue as per the
mode(s) disclosed in this Draft Letter of Offer shall be made available to the Registrar to the
Issue;
172
4. That where refund are made through electronic transfer of funds, a suitable communication shall
be sent to the applicant/s under the Issue within 15 days of the Issue Closing Date giving details of
the bank where refunds shall be credited along with the amount and expected date of electronic
credit of refund.
5. Adequate arrangements shall be made to collect all ASBA applications and to consider them
similar to non-ASBA applications while finalizing the basis of allotment under the Issue.
6. At any given time, there shall be only one denomination for the Equity Shares.
7. The Company shall comply with such disclosure and accounting norms specified by the SEBI
from time to time.
8. The certificates of the securities or refund orders to non-resident shareholders will be dispatched
within specified time
9. No further issue of securities shall be made till the securities offered through the Draft Letter of
Offer are listed or till the application moneys are refunded on account of non-listing, under-
subscription, etc.
Our Company accepts full responsibility for the accuracy of information given in this Draft Letter of Offer
and confirms to the best of his knowledge and belief, there are no other facts or the omission of which
makes any statement made in this Draft Letter of Offer misleading and further confirms that it has made all
reasonable inquiries to ascertain such facts.
Important
Please read this Draft Letter of Offer carefully before taking any action. The instructions contained in the
accompanying CAF are an integral part of the conditions of this Draft Letter of Offer and must be carefully
followed; otherwise the application is liable to be rejected.
As a matter of abundant caution, attention of the Applicants is specifically drawn to the provisions of sub-
Section (1) of Section 38 of the Companies Act, 2013 which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing
for, any shares therein, or otherwise induces a Company to allot, or register any transfer of shares
therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a
term which may extend to five years”
All enquiries in connection with this Draft Letter of Offer or accompanying CAF and requests for SAFs
must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and
the name of the first Applicant as mentioned on the CAF and superscribed “Coromandel Engineering
Company Limited – Rights Issue - R” incase of resident shareholders/applicants or shareholders/applicants
applying on non repatriable basis or “Coromandel Engineering Company Limited - Rights Issue -NR”
incase of non resident shareholders/applicants applying on repatriable basis on the envelope and
postmarked in India) to the Registrar to the Issue at the following address:
Karvy Computershare Private Limited Plot Nos. 17-24, Vittal Rao Nagar, Madhapur,
Hyderabad - 500 081
Telephone: +91 40 4465 5000
Facsimile: +91 40 2343 1551 E-mail: [email protected]
Website: www.karvy.com
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Contact Person: Mr. M. Muralikrishna
SEBI Registration No.: INR000000221
It is to be specifically noted that this Issue of Equity Shares is subject to the risks as detailed in the section
titled “Risk Factors” beginning on page 10 of this Draft Letter of Offer.
Issue to remain open for a minimum of 15 days and maximum of 30 days as may be determined by the
Board.
174
SECTION VIII –STATUTORY AND OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION
The following contracts (not being contracts entered into in the ordinary course of business carried on by
our Company or entered into more than two years before the date of this Draft Letter of Offer) which are or
may be deemed material have been entered or are to be entered into by our Company. These contracts and
also the documents for inspection referred to hereunder, may be inspected at the Registered and Corporate
Office of our Company from 10:00 A.M. to 5:00 P.M. from the date of this Draft Letter of Offer until the
Issue Closing Date, on working days.
(A) Material Contracts
1. Issue Agreement dated October 1, 2013 between our Company and the Lead Managers to the
Issue.
2. Agreement dated October 1, 2013 between our Company and the Registrar to the Issue.
3. Escrow Agreement dated [•] between our Company, the Lead Managers, the Registrar to the Issue,
and Bankers to the Issue.
(B) Documents
1. Certificate of incorporation dated September 3, 1947 and a fresh certificate of incorporation dated
April 14, 1956 for change in name. Consequent to conversion to a public company, another fresh
certificate of incorporation dated November 5, 1975 was issued to the Company and thereafter the
name of the Company was again changed on February 24, 2006 vide a fresh certificate of
incorporation.
2. Memorandum and Articles of Association of our Company.
3. Board resolution dated September 5, 2013, authorizing this Issue.
4. Shareholders resolution dated October 1, 2013, authorizing this Issue.
5. Board resolutions dated April 26, 2012 appointing Mr M M Venkatachalam as the Managing
Director.
6. Consents of the Directors, Company Secretary and Compliance Officer, Auditor, Lead Managers
to the Issue, Registrar to the Issue and the Legal Advisor to the Issue to include their names in this
Draft Letter of Offer to act in their respective capacities.
7. Statement of Tax Benefits dated September 17, 2013 from the Auditor of our Company as
disclosed in this Draft Letter of Offer.
8. The Reports of the Auditors dated April 30, 2013 in relation to the audited financial statements of
our Company as at and for the financial year ended March 31, 2013.
9. The Report of the Auditors dated September 19, 2013 in relation to the limited reviewed financial
statements of our Company as at and for the three months ended June 30, 2013.
10. Annual Reports of our Company for 2009, 2010, 2011, 2012 and 2013.
11. In-principle listing approval dated [•] and [•] from the BSE and the MSE respectively.
12. Due Diligence Certificate dated October 1, 2013 from the Lead Managers.
13. Tripartite agreement with May 5, 2008 dated with CDSL and Karvy Computershare Private
Limited.
175
14. Tripartite agreement with April 23, 2008 dated with NSDL and Karvy Computershare Private
Limited.
15. Shareholder’s and share subscription agreement dated August 21, 2013 between Tata Capital
Financial Services Limited and our Company.
16. Sanction Letter dated September 4, 2013, for a loan facility amounting to ` 1,000 lakhs,
sacntioned by Cholamandalam Investment and Finance Company Limited to our Company.
17. Copy of the Letter of Offer dated August 11, 2008 for the last rights issue of 16,47,390 equity
shares of face value ` 10 each of our Company.
18. Letter No. [•] dated [•], issued by SEBI in connection with the Issue
Any of the contracts or documents mentioned in this Draft Letter of Offer as may be amended or
modified at any time, if so required in the interest of our Company or if required by the other
parties, without reference to the shareholders, subject to compliance of the provisions contained in
the Companies Act, 1956 and Notified Provisions of the Companies Act, 2013 and other relevant
statutes.
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DECLARATION
We certify that no statement made in this Draft Letter of Offer contravenes any of the provisions of the
Companies Act and the rules made thereunder. We further certify that, all the legal requirements connected
with the said Issue as also the regulations, guidelines, instructions, etc. issued by SEBI, Government and
any other competent authority in this behalf have been duly complied with.
We hereby certify that all disclosures made in this Draft Letter of Offer are true and correct.
Signed by all the Directors of our Company
____________________________
Mr M M Venkatachalam
Chairman & Managing Director
_________________________
Mr M A M Arunachalam
Non-Executive Director
____________________________
Mr. Sridhar Ganesh
Non-Executive Director
______________________________
Mr S S Rajsekar
Non-Executive Director
_____________________________ Mr J Srinivasan
Non-Executive Director
____________________________
Mr V Venkiteswaran
Non-Executive Director
___________________________
Mr N V Ravi
Non-Executive Director
_____________________________
Mr R Narayanan
Company Secretary and Compliance
Officer/Chief Financial Officer
Date: October 1, 2013
Place: Chennai