+ All Categories
Home > Documents > Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A,...

Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A,...

Date post: 16-Jul-2020
Category:
Upload: others
View: 7 times
Download: 0 times
Share this document with a friend
178
LEAD MANAGERS TO THE ISSUE REGISTRAR 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 12 th 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: Tatasecurities. [email protected] Contact Person:Mr. Abhishek Jain SEBI Registration Number: INM000011302 Karvy Computershare Private Limited Plot Nos. 17-24, VittalRao Nagar, Madhapur, Hyderabad - 500 081 Telephone: + 91 40 44655000 Facsimile: + 91 40 23431551 E-mail: [email protected] Website: www.karvy.com Contact Person: Mr. M. Muralikrishna SEBI Registration No.: INR000000221 ISSUE SCHEDULE ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON [●] [●] [●] Coromandel Engineering Company Limited Our 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 OFFER October 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 RISKS Investments 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 RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Draft Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Draft Letter of Offer is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of 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.
Transcript
Page 1: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 2: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 3: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 4: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 5: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 6: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 7: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 8: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 9: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 10: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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”.

Page 11: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 12: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 13: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

11

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

Page 14: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

12

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

Page 15: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

13

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

Page 16: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

14

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.

Page 17: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

15

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

Page 18: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 19: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

17

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

Page 20: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 21: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 22: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 23: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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,

Page 24: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 25: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 26: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 27: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 28: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 29: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 30: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

-

-

Page 31: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 32: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 33: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

-

-

Page 34: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 35: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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]

Page 36: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 37: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 38: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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:

Page 39: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 40: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 41: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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 -

Page 42: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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 -

Page 43: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 44: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 45: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 46: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 47: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 48: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 49: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 50: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 51: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 52: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 53: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 54: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 55: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 56: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 57: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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:

Page 58: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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,

Page 59: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 60: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 61: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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);

Page 62: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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,

Page 63: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 64: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 65: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 66: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 67: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 68: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 69: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 70: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 71: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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;

Page 72: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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:

Page 73: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 74: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 75: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 76: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 77: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 78: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 79: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 80: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 81: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

79

Membership no.: F13291

Chennai

September 19th, 2013

Page 82: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 83: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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;

Page 84: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 85: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 86: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 87: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 88: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 89: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 90: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 91: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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)

Page 92: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 93: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 94: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 95: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 96: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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 - -

Page 97: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 98: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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)

Page 99: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 100: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 101: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 102: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 103: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 104: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 105: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 106: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 107: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 108: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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)

Page 109: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 110: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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)

Page 111: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 112: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 113: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 114: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 115: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 116: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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;

Page 117: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 118: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 119: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 120: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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),

Page 121: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 122: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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).

Page 123: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 124: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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:

Page 125: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 126: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 127: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 128: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 129: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 130: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

[•] [•] [•]

Page 131: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 132: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

130

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.

Page 133: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

131

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.

Page 134: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

132

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.

Page 135: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

133

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.

Page 136: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

134

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

Page 137: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

135

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

Page 138: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

136

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;

Page 139: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

137

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

Page 140: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

138

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

Page 141: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

139

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

Page 142: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

140

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:

Page 143: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

141

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’

Page 144: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

142

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

Page 145: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

143

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)

Page 146: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

144

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.

Page 147: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

145

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;

Page 148: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

146

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

Page 149: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 150: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

148

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

Page 151: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

149

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;

Page 152: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

150

(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

Page 153: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

151

(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

Page 154: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

152

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

Page 155: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 156: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

154

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.

Page 157: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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:

Page 158: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

156

(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.

Page 159: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 160: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

158

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

Page 161: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

159

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.

Page 162: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

160

(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;

Page 163: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

161

(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.

Page 164: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

162

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

Page 165: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

163

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

Page 166: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

164

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.

Page 167: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

165

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

Page 168: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

166

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

Page 169: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

167

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.

Page 170: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 171: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

169

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

Page 172: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

170

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

Page 173: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

171

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;

Page 174: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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

Page 175: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

173

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.

Page 176: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 177: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

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.

Page 178: Coromandel Engineering Company Limited...Tata Securities Limited 12th Floor, 1202, Tower A, Peninsula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai - 400 013 Telephone:

176

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


Recommended