IM - Saw Pipes LTD (Final)

8/4/2019 IM - Saw Pipes LTD (Final)

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PRIVATE & CONFIDENTIAL

MEANT FOR USE OF ADDRESSEE ONLY

INFORMATION MEMORANDUM

SAW PIPES LIMITED(Incorporated on 31st Oc tober, 1984 und er The Com panies Ac t, 1956)

Reg iste red Offic e: A-1, UPSIDC Industria l Area , Nand gaon Road, Kosi Ka lan ,

Distric t Mathura 281403 (UP)

Tel No.05662-252277, Fax No. 05662-232577, we bsite: sawp ipe sindia.c om

E.ma il add ress : sunilja in@sawp ipe sind ia.c om

INFORMATION MEMORANDUM FOR PRIVATE PLACEMENT OF SECURED REDEEMABLE NON-

CONVERTIBLE DEBENTURES OF RS. 10,00,000/ - EACH FOR CASH AT PAR AGGREGATING

RS. 100 CRORES.

Genera l Risk

Investment in debt instruments involves a degree of risk and investors should invest any

funds in the debt instrument unless they can afford to take the risk attached to suchinvestment s. Investo rs a re advised to read the risk fac to rs c arefully befo re taking an

investment decision in private placement. For taking investment decision, investors must

rely on their own examination of t he Issuer a nd the issue includ ing the risk involved . The

Sec urities have no t been rec om mended or ap proved b y Sec urities and Exc hange Boa rd

of Ind ia (SEBI) nor does SEBI gua rantee the ac c urac y or ad eq uac y of this doc ument . The

attention of investors is drawn to the statement of the Risk Factors on Page iii of the

Informa tion Memo rand um

Issuers Ab solute Responsib ility

The issuer, having ma de a ll rea sonab le inqu iries, ac c ep ts responsibility for and c onfirms

tha t this offer do c ument c onta ins a ll informat ion with rega rd to the issuer and the issue,

which is material in the context of the issue, that the information contained in the

Information Memorandum is true and correct in all material respects 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 make this

do cume nt a s a who le or any o f such informa tion or the expression o f any suc h op inions

or intentions mislead ing in any material respec t

Listing

The Debentures of the Co mp any a re p rop osed to b e listed on The Stoc k Excha nge ,

Mumbai (BSE)

Credit Rating :

CARE has assigned ra ting AA- (prono unc ed Doub le A minus) to these Debent ures. This

rating ind ica tes high qua lities by a ll sta nd ards. This instrume nt is a lso c lassified as high

investme nt g rade . They a re rat ed lower tha n CA RE AAA sec urities bec ause o f som ew hatlower ma rgins of p rote c tion. Cha nge s in assump tions ma y have a grea ter imp ac t or the

long-term risks may be somewhat larger. Overall, the difference with CARE AAA rated

sec urities is ma rgina l.

Note: This Information M em orand um for priva te placem ent is neither a p rospe c tus nor a

sta teme nt in lieu of p rospec tus. This is on ly an informa tion me mo rand um intend ed for

private use and should not be construed to be an invitation for subscription to

Debentures.


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DEBENTURE TRUSTEE :

UTI Bank Lim ited

111, Ma ker Tower F,

Cuffe Parad e, Colab a,

Mum ba i 400 005

Phone No. (022) 22162684, 22162815

Fax No. (022) 22162467EmailId: [email protected]

REGISTRAR TO THE ISSUE

RCMC Share Registry Private Limited

1515, 1st Floo r, Bhishm Pitama h Marg,

Kot la Mub arakpur (Nea r Sout h Extension),

New Delhi 110003

Pho ne No. 011- 24692346/ 24601017

Fax No.011- 24692345Ema il Id : rcmc @theoffice.net

Offer Op ening Date

Offe r Closing Da te

Deeme d Date o f Allotme nt

Issue Opening, Closing and Deemed date of Allotment of

the respective issue will be informed to the investors

sep a rat ely and as add end um fo rming a part of this Shelf

Informa tion Memo rand um.


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iii

INDEX

CONTENTS PAGE NO.

DEFINITIONS & ABBREVIATIONS i &ii

RISK FACTORS & PROPOSAL TO ADDRESS THE RISK Ii i

DISCLAIMER CLAUSE iv

PART I

I. GENERAL INFORMATION 1

II. CAPITAL STRUCTURE OF THE COMPANY 3

III. TERMS OF THE PRESENT ISSUE 5

IV. ISSUER PROFILE 13

V. INDUSTRY SCENARIO AND ACTIVITIES OF THE ISSUER 14

VI. STOCK MARKET DATA 19

VII. MANA GEMENT DISCUSSION & ANA LYSIS OF THE FINANCIAL STATEMENT FOR THELAST THREE FINANCIAL YEARS: 21

VIII. PROMOTERS & THEIR BACKGROUND 24

IX. BASIS FOR ISSUE PRICE 26

X. OUTSTANDING LITIGATIONS OR DEFAULTS 26

XI. RISK FACTORS AND PROPOSALS TO ADDRESS THE RISK 27

XII. DISCLOSURE ON INVESTOR GRIEVANCES AND REDREESAL SYSTEM : 28

PART II

XIII. GENERAL INFORMATION 29

XIV. AUDITORS REPORT & FINANCIAL INFORMATION 31XV. STATUTORY AND OTHER INFORMATION 43

XVI. RELATED PARTY DISCLOSURE 44

XVII. OTHER DETAILS 45

XVIII. MATERIAL CONTRACTS AND INSPECTION OF DOCUMENTS 47

XIX. DECLARATION 48


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DEFINITIONS/ ABBREVIATIONS USED

Ac t The Co mp anies Ac t, 1956

BSE The Stoc k Exchang e, Mumba i

CRISIL Cred it Ra ting Info rma tion Services of Ind ia Ltd .

CARE Cred it Ana lysis & Resea rch Limited

CMD Cha irma n and Mana ging Direc tor

CDSL Ce ntra l Dep osito ry Servic es Limited

CAGR Com po unded Annual Growth Rate

DIP Disc losure and Inve sto r Protec tion Gu ide lines of SEBI

DRR Deb ent ure Red em p tion Reserve

DSCR Deb t Service Co verage Ra tio

DP Dep ository Participant

EFT Elec tronic Fund Transfer

FI Financ ial Institu tion

FII Foreign Institu tiona l Investo rs

FY Financ ial Yea r

JELLC Jind a l Ent erprises LLC

NAV Net Asset Va lueNPAs Non Performing Assets

NRI(s) Non Reside nt Ind ividua ls

NSDL Na tiona l Sec urities Dep osito ry Limited

NSE Nationa l Stoc k Excha ng e.

NCD Non Co nvertible Deb entures

OTCEI Over The Co unte r Excha nge of Ind ia

OC B Oversea s Co rporat e Bod y

RBI Reserve Bank of Ind ia

SEBI Sec urities and Exchange Boa rd of Ind ia

SPL Saw Pipes Limite d


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iii

RISK FACTORS

Following are certain considerations, which the investors should peruse before making an

investment in the issue. The ma teria l imp lic a tion o f the risks env isaged by thema nage ment ha s been quantified a s far as po ssib le. Where suc h quantifica tion has not

be en ma de it may be c onstrued tha t the imp lic ation ca nnot be q uantified .

Risk Fac tors:

Internal Risk Factors:

Guarantees given to banks, FIs, Corporate Guarantees and Guarantees given by

banks on b eha lf of com pany amo unts to Rs.31237.49 Crores as per Ba lanc e Shee t on

30.09.2004

An amount of Rs.963.89 lacs (prev. year Rs.969.70 lacs.) is outstanding from Indian

subsidiary Com pany, which ha s ac c umulate d losses. Since these a re long te rm

investme nts the C om pa ny has not p rovide d any p rovisions

Exte rnal Risk Fac tor:

As the industry de velop s and mo re stringe nt q ua lity norms a re introd uc ed , comp any

has to rely more on imported steel plates and coils for the manufacturing of pipes,

which exposes the company to foreign exchange, lead time for transportation for

the raw material and the macro economic conditions for the countries of import.

Also the company is largely a project driven company and hence exposed to the

c yclica lities of d em and , whic h is typical in projec t d riven orga nizat ion.

The c om pa ny has ad dressed the a bo ve risks by p utting a rob ust financ ialmanagement system in place and which they are strengthening further by

prac tic ing the be st Corpo rate G overnance p roc ed ure.


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iv

DISCLAIMER CLAUSE

This Information Mem orand um for priva te plac em ent is neither a prospec tus nor a

sta tem ent in lieu of p rospe c tus. This is only a n informa tion m em orand um intende d for

private use and should not be construed to be an invitation for subscription to

Deb en tures. This docum ent is for the e xclusive use of the Person(s)/ Institut ion(s) to whomit is delivered and it shou ld not be c irc ulate d or d istributed to third pa rty(ies). No

Prospectus in relation to the Issuer or the NCDs relating to this Offer has been delivered

for neither registration nor such a document is required to be registered under the

app lic ab le law s. It is the responsibility of p oten tial investo rs to a lso ensure tha t they w ill sell

these NCDs in strict accordance with this Information Memorandum and other

applicable laws, so that the sale does not constitute an offer to the public, within the

me aning of the C om panies Ac t, 1956 . The p oten tial investo rs should consult their ow n

tax advisors on the tax implication relating to acquisition, ownership, sale or redemption

of NCDs and in respec t of inc om e a rising thereo n. Investo rs a re a lso required to m ake

the ir ow n a ssessme nt reg ard ing their elig ibility for ma king investment (s) in the NCDs of t he

Co mp any. The c om pany or any o f its d irec to rs, emp loyee s, advisors, Arrangers, a ffilia tes,

sub sidiaries or rep resent a tives do not ac c ep t a ny responsibility and or liab ility for any loss

or dam ag e how ever arising a nd o f whate ver nature and extent in co nnec tion with the

said information.

This Informa tion Memo rand um is not intende d to provide the sole b asis of a ny c red it

de c ision o r other evaluation a nd should not b e c onside red as a reco mme nda tion tha t

any rec ip ients of this Informa tion Me morand um should invest in the Debentures prop osed

to be issued by Issuer. Each potential investor should make its own independent

assessme nt o f the investment me rit o f the Deb entures and the Issuer.

The information relating to the c omp any c onta ined in the M emo rand um is be lieved by

the c omp any to b e a c c urate in all respe cts as of the da te hereof.

The d istribution of this Information M em orand um and the offering of the Debentures incertain jurisdictions may be restricted by law. Persons into whose possession this

Informa tion Mem orand um c om es a re req uired by the Issuer to inform the mselves abo ut,

and ob serve a ny suc h restric tions.


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PRIVA TE AND CO NFIDENTIAL

PART I

I. GENERAL INFORMATION

SAW PIPES LIMITED(Inco rpo rate d on 31st Oc tober, 1984 und er The Com panies Ac t, 1956)

Reg istered Office: A-1, UPSIDC Ind ustria l Area , Nandgaon Roa d, Kosi Ka lan,

Distric t Mathura 281403 (UP)

Tel No.05662-252277, Fax No. 05662-232577, we bsite: sawp ipe sindia.c om

E.ma il add ress : sunilja in@sawp ipe sind ia.c om

Authority for Present Issue

The p resent issue o f Sec ured Non-Convertib le Red ee ma b le Debent ures is being m ade

pursuant to the resolution o f the Boa rd of Direc tors of the com pany in the m ee ting held

on 28th Oc tob er, 2004 and subjec t to the Mem orand um a nd A rticles of Assoc iation of the

Company.

The borrow ing is w ithin the gene ra l bo rrow ing limits set out in the resolution p assed und er

sec tion 293(1)(d) of the C om panies Ac t, 1956, and at t he Annua l General mee ting of the

Company held on 29th November, 2003 giving their consent to the borrowing by the

Direc to rs of the c om pany from t ime to time up to Rs. 1000 c rores. The b orrow ing under

this issua nc e will be within the p resc ribed limit.

Stoc k Exc hange Disc laim er Clause

It is to be distinctly unde rstoo d tha t the subm ission of the Information M em orand um to

the Stoc k Exc hange should no t in any wa y be d ee med o r c onstrued tha t the Information

Memo rand um ha s be en c lea red or app roved by Exc hang e. Stoc k Exc hang e d oes not

take any responsibility either for the financial or other soundness of this Issuer, or the

achievement of the object for which placement is proposed to be made or for the

correctness of the statement made or opinions expressed in the InformationMemorandum.

General Disc laimer

The issuer ac c ep ts no responsibility for sta tem ents ma de o the rwise tha n in the

Information Memorandum or in the advertisement or any other material issued by or at

the instance for the issuer and that anyone placing reliance on any other source of

informa tion would be d oing so a t his ow n risk.

Listing

The com pany wo uld list the deb entures prop osed to be issued unde r this Information

Mem orand um on The Stoc k Excha nge , Mumb a i Initial Ap plic a tion has been ma de to the

excha nge . The co mp any unde rta kes to co mp ly with a ll the listing req uirem entspresc ribed by SEBI/ BSE from time to time .

Impersonation

Any pe rson w ho-

a) ma kes in a fictitious nam e an ap p lica tion to a com pa ny of acquiring, or subsc ribing

for any Sec urities the rein, or

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b) otherwise induc es a c om pany to allot or reg iste r any transferor of Sec urities therein to

him, or any other person in a fictitious name shall be punishable under the extant

laws.

Minimum Subscription

Pursua nt to the no tifica tion no. SEBI/ MRD/ SE/ AT/ 46/2003 da ted 22nd December 2003

issued by SEBI minimum subsc ription c lause is not a pp lic ab le to the p riva te ly p lac ed deb tsec urities.

Issue Schedu le

Issue Ope ning Date Issue Closing Date Deem ed Date of Allotme nt

Issue O pening, Closing a nd Deem ed Date of Allotm ent of issue will be informed to t he

investo rs sep a ra te ly and sha ll be inc orpo ra ted in the Term Shee t o f issue.

The issuer reserves the right to c lose the issue ea rlier from the a foresa id d a te or cha nge

the issue time tab le inc luding the Deem ed Date of Allotm ent a t its sole d isc retion, without

giving a ny rea sons or prior notic e.

Nam es and Ad dresses of Audito rs, Reg istrars, Debe nture TrusteesStatutory Auditors

M/ s. N. C. Agga rwal & Co.

Chartered Ac co untant,

102, Harsha House

Karampura Comm ercial

Complex

New Delhi

Tel. No .: 011-25920555-056

Fax No.: 011-2592055

Reg istrars to the issue

RCMC Share Registry Pvt Ltd

1515, 1st Floor, Bhishm Pitamah

Marg,

Kot la Muba rakpur (Nea r Sout h Extn.)

New Delhi 110003

Phone No. 011-24692346/24601017

Fax No.24692345

Debe nture Trustees

UTI Bank Limited

111, Maker Tow er F,

Cuffe Parad e, Colab a,

Mum ba i 400 005

Phone No. (022) 22162684,

22162815

Fax No. (022) 22162467

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Credit Rating

CARE ha s assigned rating AA- (prono unc ed Doub le A minus) to the se Deb entures. This


investment grade.

Credit Rating obtained by the company for NCDs from Rating Agency for the previous

three yea rs.

Year Rating

2001-02 (*)

2002-03 (*)

2003-04 AA-

(*) No C redit rating wa s ta ken d uring the yea r 2001-02 and 2002-03

Please note that the rating is not a recommendation to buy, sell or hold securities and

investo rs shou ld ta ke the ir ow n dec isions. The rating m ay be sub jec t to revision or

withdraw al at any time b y the age ncy and ea c h rating should b e eva luate d

indep end ently of any othe r rat ing. The ratings ob ta ined a re subjec t to revision at any

po int in future. The rating ag enc ies have a right to suspe nd , withdraw the rating at a nytime on the ba sis of new informat ion etc .

Underwriting of the Issue

This is an Offe r Doc ume nt, Deta ils of underwriting if any, will be p rov ided in the

Addendum.

Comp lianc e Office r:

Mr. Sunil Jain

Designat ion : Com pa ny Sec reta ry

Address: Jindal Centre, 12 Bhikaiji Cama Place, New Delhi - 110 066.Tel No 26188360/ 51462220, Fax No .51659575

E.ma il Id : suniljain@sawp ipe sind ia.c om

The Investo r ma y co nta c t the c om plianc e o ffic er in case o f any p re-issue / post-issue

related problems such as non-receipt of letters of allotment / debenture certificates /

refund orde rs.

II. CAPITAL STRUCTURE OF THE COMPANY

Equity Shares Cap ital of the Com pa ny a s on da te of filing o f Informa tion Memo randum

Amount

(Rs. Crs.)A. Authorised Capital

5,00,00,000 Equity Sha res of Rs. 10 eac h 50.00

25,00,000 Red ee ma b le C umulative Pref. Sha res of

Rs. 100 ea ch

25.00

Tota l Authorised Ca p ital 75.00

B. Issued and Subsc ribed Ca p ital

3,89,80,108 Equity Sha res of Rs. 10 each 38.98

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C. Paid Up Ca pita l

3,89,79,108 Equity Sha res of Rs. 10 each 38.98

Add : Forfeited Ca pital

(800 Equity sha res pa id up Rs. 5 eac h a t the t ime

of forfeiture) -

D. Sha re Prem ium Ac c oun t (be fore and a fter issue) 5.59

This issue is an issuanc e o f de be ntures and wo uld no t ha ve a ny imp ac t on the p a id up

Share Ca pital of the Com pa ny.

Details rega rding Shareho lde rs

Top Ten Sha reho lders as on 30th September, 2004

Sr. No. Name of the Shareholder Shares Held

(Number)

% Stake

In Total

1 Jind a l Strips Ltd ., 10,710,000 27.48

2 Sigm atec h Inc . 6,024,000 15.45

3 Jinda l Equipm ent Lea sing & Co nsultanc yServic es Ltd

1,443,500 3.70

4 Co ptha ll Ma uritius Inve stm ents Ltd ., 1,356,130 3.48

5 Co lorad o Trad ing Co Ltd ., 1,050,000 2.69

6 J P Morgan Fleming Asset Ma na ge me nt 884,000 2.27

7 Ma nsa rove r Inve stm ents Ltd ., 871,496 2.24

8 Na lwa Inve stm ents Ltd ., 818,100 2.10

9 GMO Eme rging Ma rkets Fund 677,900 1.74

10 SUN Inve stm ents Ltd ., 628,078 1.61

Top Ten Sha reho lders as on 30th September, 2003

Sr.

No.

Nam e of the Shareho lder Shares Held

(Number)

% Stake

In Total

1 Jinda l Strips Ltd ., 10,714,000 27.49

2 Sigm a tec Inc 6,024,000 15.45

3 Jinda l Equipm ent Lea sing & Co nsultancy

Servic es Ltd

1,443,500 3.70


5 Ma nsarove r Inve stm ents Ltd 871,496 2.24



8 Sta inless Investm ents Ltd ., 554,484 1.42

9 TATA TD Wate rhouse Truste e Co 453,281 1.16

10 De lite Enterprises P Ltd ., 400,000 1.03

Top Ten Sha reho lders as on 20th Sep tem ber, 2004 (Ten d ays prior to 30th September, 2004)

Sr. No. Name of the Shareholder Shares Held

(Number)

% Stake

In Total

1 Jinda l Strips Ltd ., 10,710,000 27.48

2 Sigm atec h Inc . 6,024,000 15.45

3 Jind a l Equipm ent Lea sing & Co nsultanc y

Servic es Ltd

1,443,500 3.70

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4 Co ptha ll Ma uritius Inve stm ents Ltd ., 1,356,130 3.48


6 J P Morgan Fleming Asset Ma na gem ent 884,000 2.27

7 Ma nsa rove r Inve stm ents Ltd ., 871,496 2.24


9 GMO Eme rging Ma rkets Fund 677,900 1.74


Details of Deb ts Outstand ing as on 30.09.2004

S.No. Particula rs Am ount (Rs. Crs)

1. Sec ured Loan 441.58

2. Unsecured Loans 122.64

Total 564.22

Details regarding Shareholding of Promoters Group and Directors of the promoters as on

30.09.2004

Aggrega te shareholding o f the Prom ote rs Group is given b elow :

Promoter/ Promo ter Group Shares held

(Number)

% Stake

In Total

Ag greg a te Prom oter Group Holding 21466058 55.07%

Details of shares traded by the Promoter Group and its Director and maximum and

minimum p rice a t which purcha ses and sales were m ad e a long with the releva nt dates, if

any.

There ha s bee n no trad ing in the same by Prom oter Group a nd its Direc to rs.

III. TERMS OF THE PRESENT ISSUE

Priva te p lac em ent of Issue o f Sec ured Red eema ble Non-Conve rtible Deb entures of the

face value of Rs.10,00,000 each for cash, at par, aggregating to Rs. 100 crores in one or

mo re trenc hes by Saw Pipes Ltd . (hereinfafte r refe rred t o as SPL / The

Company/Issuer)

Equity Share Capital History of SPL

Date o f

allotment

No. Of

Shares

Issue price Nominal

Value Premium

Cumulative

Sha re Equity

Capital(Rs. in Crs.)

10.09.1986 3992000 10/ - NIL 3.99

10.09.1986 (1) 2008000 10/ - NIL 6.00

17.03.1990 (2) 1970936 10/ - NIL 7.97

05.10.1993 (3) 4643000 10/ - NIL 12.61

15.03.1994 6190318 10/ - NIL 18.80

29.06.1994 570000 10/ - 440/ - 19.37

16.02.1995 19146004 10/ - NIL 38.52

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16.11.1995 2500 10/ - NIL 38.52

26.02.1997 456500 10/ - NIL 38.98

21.07.1998 200 10/ - NIL 38.98

(1)Sha res issued for c onsidera tion other tha n c ash(2) Equity sha res a re a llot ted as fully p a id up to the sha reho lde rs of Swastik Foils ltd. a s per

Scheme of ama lga mation order da ted 3rd August/ 11th Sep tem be r 1989 of the Hon bleHigh Court o f Delhi.(3) Equity sha res a re a llot ted as fully pa id up to the Sha reho lders of Swa stik Udyog Ltd . As

pe r Sc hem e o f am a lgam a tion orde r da ted 17.08.1993 and 27.08.1993 of the Hon ble

High Co urts of Punjab and Haryana and Delhi.

Objec ts of the Borrowing

To repay existing d eb t.

To me et gene ra l c orporate p urposes

The ma in ob ject c lause of the Me morand um of Assoc ia tion of the comp any enab les it tounde rtake the ac tivities for which funds are being raised throug h the p resent issue and

also the a c tivities which the c om pany ha s be en c arrying out till da te.

Authority for Present Issue

The p resent issue o f Sec ured Non-Convertib le Red ee ma b le Debent ures is being m ade

pursuant to the resolution o f the Boa rd of Direc tors of the c om pany in the m ee ting held

on 28th Oc tob er, 2004 and subjec t to the Mem orand um a nd A rticles of Assoc iation of the

Company.

The borrow ing is w ithin the gene ra l bo rrow ing limits set out in the resolution p assed und er

sec tion 293(1)(d) of the C om panies Ac t, 1956, and at t he Annua l General mee ting of the

Company held on 29th November, 2003 giving their consent to the borrowing by the

Direc to rs of the c om pany from t ime to time up to Rs. 1000 c rores. The b orrow ing under

this issua nc e will be within the p resc ribed limit.

Credit Rating :

CARE has assigned ra ting AA- (prono unc ed Doub le A minus) to these Debent ures. This


investme nt g rade . They a re rat ed lower tha n CA RE AAA sec urities bec ause o f som ew hat

lower ma rgins of p rote c tion. Cha nge s in assump tions ma y have a grea ter imp ac t or the

long-term risks may be somewhat larger. Overall, the difference with CARE AAA rated

sec urities is ma rgina l.

Highlights of the Issue Structure

Issue Size Rs. 100 c rores Sec ured Red ee ma b le Non

Convertible Debentures in one or more

trenches

Sec urity To b e d ec ided in c onsultation with the

Trustees.

Fac e Va lue Rs.10,00,000

Interest The respec tive tranc hes (in c ase o f more

than one tranche) could be offered to

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investors either as fixed interest rate

instruments, floating interest rate

instruments or such other coupon rate as

may be dec ided

The d eta ils of the Debentures will be spe c ified in the a dde ndum .

Who ca n app lyOnly investors who have bee n ad dressed through a c omm unic ation d irec tly a re e ligible

to ap ply.

Com pa nies and Bod y Corporate s

Banks

Financial Institutions

Insurance Companies

Mutual funds

Reg iona l Rural Banks

Provident Fund s / Pension Fund s / Grat uity funds / Superannua tion Fund s

Any o the r investo r, autho rised to invest in these Debent ures

Minimum Numb er of Debentures

The a pp lic ation must b e m ad e for a minimum one de be nture a nd in multiple thereof.

There is no ma ximum limit on the ap plica tion.

Market Lot

The ma rket lot would b e 1 deb enture

Issue Of Debentures in Dematerialised Form

The Co mp any ha s ma de d ep ository arrangem ent s with NSDL and CDSL for the issue o f

Debentures in Dema t form. Investors shall hold the deb entures and dea l with the sam e a sper the p rov isions of Depositories Ac t, The investo rs will have the op tion to hold the

debentures in dematerialised form and deal with the same as per the provisions of

Dep osito ries Ac t, 1996 / rules as no tified by NSDL/ CDSL from t ime to t ime.

Investors should mention their Depository Participant's name, DP-ID and beneficiary

ac c ount numb er in the a pp rop riate plac e in the ap plic ation form. The c omp any shall

take nec essa ry step s to c red it the Dep ository Acc ount o f the a llotte e(s) with the num be r

of Deb entures allotted . In c ase inco rrec t deta ils p rovide d b y the investors and inability of

the company to credit the depository account, the allotment of debentures would be

held in ab eya nc e till the correc t dep ository ac c ount d eta ils a re furnished by the investors

to the comp any.

How to App ly

During the period of issue, investors can subscribe to the Debentures by completing the

application form for the Debentures in the prescribed form, as enclosed in the

Informa tion Mem orandum / Add end um. The a pp lic ation form should be filled in bloc k

letter in English. Ap p lic at ion forms must be ac c om panied by e ither a de ma nd d raft o r

cheq ue drawn or made pa yable in favour of "Saw Pipes Limited . and should b e c rossed

Ac c ount Payee only. The full am ount of the fac e va lue of the Deb entures ap plied for

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has to b e p aid a long with the d elivery of the fully co mp leted and executed Debe nture

App lic ation Form tog ether with other ap plic ab le d oc uments de sc ribe d be low .

Cheq ues / de ma nd d rafts ma y be drawn o n any b ank which is situated and is a mem be r

or sub-member of the Bankers Clearing House located at Mumbai, Calcutta, Chennai,

or New Delhi. Investors in c entres which do not ha ve a ny ba nk whic h is a m em be r or

sub-memb er of the Bankers Clea ring House loc ate d at the a bo ve m entioned ce ntreswill be required to m ake p ayme nts only through d ema nd d rafts pa yab le a t Mumb ai. The

issuer assumes no responsibility for any applications / cheques / demand drafts lost in

ma il or transit.

Fac ility for Elec tronic Fund Transfer (EFT)

The investo rs c an op t fo r Elec tronic Fund Transfer (EFT) by indic a ting the same in the

ap p lic at ion form. In case o f Debe nture ho lder opting fo r EFT, the interest and the

principa l amount wo uld be direc tly credited in the spe cified ac c ount of the Deb enture

holders on the d ue d ate .

Allotment Basis

Ac c ep tanc e of the offer to invest and the a llotme nt shall be d ec ide d b y the Com pa ny.

The c om pa ny reserves the right to rejec t in full or pa rt a ny or a ll of the offers rec eived by

them to invest in the d eb entures witho ut a ssigning a ny rea sons for suc h rejec tions.

Interest on Ap plica tion Money

Interest will be paid via interest warrants on the application money to the applicants at

its respec tive c oupon rate spec ified in the respec tive Term Sheet. Suc h inte rest will be

pa id for the period c omm enc ing from the da te of rea lisation of the che que (s) / d ema nd

drafts (s) up to b ut excluding the Dee me d Da te of Allotm ent.

Interest on Debentures

The Debent ures sha ll c a rry inte rest on the outsta nd ing p rincipa l a t the respec tive

Coupon rates, from the date of allotment till one day before the date of redemption

(sub ject to d ed uc tion of tax at source at the p reva iling rat es under the p rovisions of the

Inc om e Tax Act, 1961 or any ot her sta tutory mod ifica tion or re-ena c tme nt the reo f)

Interest pa yment w ill be ma de b y way of che que(s)/ interest wa rrant(s)/d em and d raft(s),

which w ill be de spat c hed to d eb etureholde rs by reg istered po st. The last interest shall be

pa id a long w ith the last p rinc ipa l rep ayme nt. For the investo rs op ting for the EFT fac ility,

the interest would be direc tly cred ited to the ir ba nk ac c ount on due d ate . The

freq uenc y of pa yment and the co upo n rate s will be m entioned in ad de ndum

Pay ment o f Interest

Interest payments will be made by way of interest warrants(s)/cheque(s) which will be

de livered to the Debe ntureholders one d ay p rior to the d ue d ate either by ha nd d elivery

or by reg iste red post.

The interest w ill be pa yab le to the reg istered Debentureholde rs and in c ase of joint

holders, to the one whose name stands first in the List of Beneficial owners given by the

Dep osito ry to the Co mp any as on RECO RD DATE.

All interest on the Deb entures will cease o n the dat e o f final redemp tion in all events.

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Effec t of Holida ys

If the d ue d ate(s) for pa yment of interest falls on a Sunday or any other holiday or a non

clearing day, the payment shall be made by the Company on the next working day without

any ad justment to the am ount.

The interest p aya ble o n one Deb entures shall be c a lculated on Ac tua l basis, by

multiplying the coupon rate by the principal amount, multiplying such product by the

ac tua l numbe r of d ays in the interest period c onc erned d ividing by 365 (or if the releva nt

interest period ends in a leap year, 366) and rounding the resulting figure to the nearest

rupee.

Payment on Redem ption

The Deb entures shall be ta ken as discha rge d o n pa yment o f the red em pt ion a mo unt by

the Company on maturity to the Debentureholders, as per the list of Beneficial Owners

prov ided b y NSDL / CDSL. Suc h payment w ill be a lega l d ischa rge o f the liab ility of the

Com pa ny towa rds the Debe ntureholders. On such p ayme nt being ma de , the Com pa ny

will inform NSDL / CDSL and ac c ording ly the a c c ount of the Deb entureholders w ith NSDL/ C DSL will be a d justed . The C om pany s liab ility to the De bent ureholders towards a ll the ir

rights including for payment or otherwise shall cease and stand extinguished from the

due da tes of red em pt ion in all eve nts.

Further, the Company will not be liable to pay any interest or compensation from the

da tes of such red em p tion. If the d ue d at e(s) for pa yment of p rinc ipa l fa lls on a Sunday o r

any other holida y or a no n clearing d ay, the p ayme nt shall be ma de by the Co mp any

on the ne xt wo rking d ay w ithout a ny ad justment to the a mount.

Rec ord Date

The Rec ord Date will be 30 c a lend a r da ys p rior to ea c h interest pa yment / princ ipalpayment date.

Tax Deduc tion a t Source

Tax as app lic ab le under the Inco me Tax Ac t, 1961, or any o ther sta tutory mod ifica tion or

re-enac tment thereof will be d ed ucte d at source . Tax exemp tion c ertific ate / do c ument,

unde r Sec tion 193 of the Inco me Tax Ac t, 1961, if any, must b e lod ge d at the o ffice o f

the Co mp any, at lea st 30 c alend a r days be fore the interest pa yment d at es.

Tax exemp tion certific at e in respe c t of non-ded uc tion of tax at source on interest or

ap plic ation mo ney, must b e subm itted along with the Ap plic ation Form.

Debentureholders should also consult their own tax advisors on the tax implication of theac quisition, owne rship a nd sa le of the Deb entures, and incom e a rising the reon.

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Sec urity

The Deb entures, inte rest thereo n, Trustees rem uneration and a ll other mo nies rela ting

thereto shall be sec ured by w ay o f a c harge on spe c ified mova ble / immo vab le a ssets

of the Comp any a s ag reed to b y the Trustee s. The C om pa ny sha ll have a right to

sub stitute the sec urity w ith p rior permission o f the Trustees.

The pa rticulars of the sec urity creat ed shall more spe c ifica lly be mentioned in the

ad de ndums to the Informa tion Mem orand um.

Mode o f Transfer

All req uests for transfer should b e sub mitted to the respec ive Dep ository Pa rticipants p rior

to the rec ord da te for pa yment o f interest / principa l.

Provide d further that nothing in this sec tion shall prejudice any po we r of the c om pa ny to

register as Debenture holder any person to whom the rights to any Debenture of the

co mp any has be en transmitted b y ope ration of law .

Debentures shall be transferred subject to and in accordance with the rules/procedures

as p resc ribed by the (NSDL)/ NSDL/ Dep ository Pa rticipant o f the transferor/t ransferee

and any o ther ap p lic ab le laws and rules notified in respe c t thereof.

Suc cession

In the eve nt o f dem ise of a Reg istered Deb enture ho lder of the Debentures, or the first

holder in the case of joint holders, the Issuer will recognize the executor or administrator

of the demised Debenture holder or the holder of succession certificate or other legal

rep resenta tive of the dem ised Deb enture ho lder as the Reg istered Deb entures holde r of

such Registered Holders Debentures if such a person obtains probate or letter of

administration or is the holder of succession certificate or other legal representation, as

the c ase m ay b e, from a Co urt of India ha ving jurisdic tion ove r the m at ter and de livers ac op y of the same to the Issuer. The Issuer ma y in its absolute d isc retion , where it thinks

fit, dispe nse with the p rod uc tion of the prob at e or lette r of administrat ion or suc cession

certificate or other legal representation, in order to recognize such holder as being

entitled to the Debentures standing in the name of the demised debentures holder on

production of sufficient documentary proof or indemnity. In case the debentures are

held by person other than individual, the rights in the debentures shall vest with the

suc c essor ac qu iring interest the rein, inc luding liquidat or or suc h a ny person app ointed as

pe r the ap plic ab le laws.

Rights of all Deb entureholders

The Debent ureholders will no t be entitled to a ny rights and p rivileg es of sha reholdersothe r than those availab le to them under sta tutory req uirem ents. The Deb entures sha ll

not confer upon the holders the right to receive notice, or to attend and vote at the

ge neral mee tings of sha reho lders of the Co mp any. The p rincipa l amo unt a nd interest, if

any, on the Debentures will be pa id to the holde r only, or in the case o f joint holders, to

the one whose na me sta nd s first. The Debent ures sha ll be sub jec ted to o the r usua l te rms

and conditions incorporated in the Debenture certificate(s) that will be issued to the

a llot tee(s) of suc h Deb entures by the C om pany and a lso in the Trustee Ag ree me nt / Trust

Deed.

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Rank ing o f Deb entures

The Debent ures offe red pursua nt to th is Informa tion Memo rand um sha ll sub jec t to the

Memorandum and Articles of Association of the Company rank pari passu inter se

without a ny preferenc e o r priority of one o ver the othe r or other of them.

Modification of Rights

The rights, privileg es, terms and c ond itions at tac hed to the Debentures ma y be varied ,

modified or abrogated with the consent, in writing, of those holders of the Debentures

who hold at least three fourth of the outstanding amount of the Debentures or with the

sanction accorded pursuant to a resolution passed at a meeting of the

Debentureholde rs, provided tha t no thing in such c onsent or resolution shall be op erative

ag ainst the Comp any whe re such c onsent or resolution mo d ifies or varies the terms and

co nditions of the Deb entures, if the sam e a re not ac c ep tab le to the Co mp any.

Governing Law and Jurisdiction

The Deb entures a re g ove rned by a nd a re subjec t to the provisions of the C om panies

Act, 1956, or any modification/ re-enactment thereof or any other applicable statute in

force in India and in the Debenture Certificate to be issued to the allottees, subject to

the exc lusive jurisd iction of the Co urts in Mumb a i.

Future Borrowings

The Comp any sha ll be entitled, from time to time, to ma ke further issue of Deb entures

and / or Bonds and other such instruments to the public / members of the Company /

Banks / Financial Institutions / Bodies Corporate and / or any other person(s) and /or to

raise further loa ns, advanc es and/ or ava il of further financ ial and / or gua rant ee fac ilities

from all or any of the above on security of said properties and having such ranking

includ ing ranking in p riority to the sec urity to b e c rea ted in favour of the Trustees as ma ybe de c ided by the Comp any from time to time, on suc h terms as to sec urity or otherwise

as ma y be ac c ep tab le to the c omp any a nd the Trustees without req uiring the co nsent

of the Debentureholde rs.

Applications under Power of Attorney

In case where application is made by Bodies Corporate / Limited Companies /

Reg istered Soc ieties / trusts etc . a c ertified true c op y of t he p ow er of a ttorney or the

releva nt aut hority as the c ase ma y be a long w ith the na mes and spec imen signa tures of

a ll the a utho rised signa to ries/ Memo randum a nd Artic les of Assoc iation / Rules and Bye-

Laws / Ce rtified True C op y of Resolution shou ld b e send a long w ith App lic a tion Form.

Deem ed d ate of Allotment

The Dee me d Da te o f Allotment will be m entioned in the a dd end ums to this Informa tion

Memorandum.

Letter of Allotment / Allotment Intima tion

The Comp any shall ma ke a llotm ent o f Deb entures to investors in due c ourse a fter

verific ation of the ap plic ation form, the ac c omp anying do cum ents and on realisation of

the application money.

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The Allotme nt Intima tion w ould be sent to the a llot tee (s). This Allotme nt Intima tion shou ld

neither be construed as a Letter(s) of Allotment nor as a credit advice, and hence it is

non-transferable/non-transmittable and not tradeable.

Refunds

For applicants whose applications would be rejected or allotted in part, refund orderswould have been despatched within 7 business days from the Deemed Date of

Allotment.

In case of over subscription in the issue, allotment would be made on a proportionate

basis. In case of under subscription the Company would have the option to allot such

under subscribed Debentures to which ever category of investors it deems fit or allow

suc h und er subsc ribed portion to lapse.

Interest in ca se of de lay in d espatc h of Allotment Letter/ Refund Orders`

The Co mp any sha ll as fa r as possible a llot the Deb entures within 30 da ys of t he Issue

c losing Da te . The Co mp any sha ll pay interest @ 15% per annum on the subsc ription

amount if allotment letter /refund orders are not despatched within 30 days from the

da te o f c losure of the Issue.

Despa tch of Allotment Letters / Refund Orders

The Comp any shall de spa tc h Lette r(s) of Allotm ent and / or Lette rs of Reg ret tog ethe r with

Refund Orders/Pay Orders, if any, within 15 days from the closure of the Issue to the

applicant at their sole risk. In case of delay in refund of such amount beyond the

stipulated period, the Company shall pay interest to the applicants at the prescribed

ra tes as per the p rov isions of Sec tion 73 of the Ac t. The Com pany sha ll ensure de spatc h

of Refund Orders by reg istered p ost/ c ourier only and tha t ad eq uat e fund fo r the p urpo se

wa s to be m ad e ava ilab le by the Comp any.

Undertaking by the Issuer Com pa ny:

a. The c om p laints rec eived in respec t of any issue of Deb entures pursua nt to this IM

sha ll be at tend ed to by the issuer com pa ny expe d itiously and sa tisfac torily

b. All step s for com pletion of the nec essary formalities for listing and com menc em ent

of trad ing at all stoc k exc hange whe re the sec urities a re to be listed a re ta ken within

7 working days of finaliza tion o f ba sis of a llotme nt.

c . No further issue o f sec urities sha ll be made till the sec urities offe red throug h this

Information Memorandum are listed or till the application moneys are refunded on

ac c ount o f non-listing.

d. Nec essary c o-op eration with the credit ra ting age nc y shall be extend ed in providing

true and adequate information till the debt obligations in respect of the instrument

are outstanding.e. The Co mp any sha ll forwa rd the d eta ils of utilisa tion of the funds raised t hrough the

debentures duly certified by the statutory auditors of the company, to the

de benture trustees a t the end o f eac h half-yea r.

f. The Com pa ny shall disc lose the c om p lete name and a dd ress of the debe nture

trustee in the a nnua l rep ort.

g. The Com pa ny shall provide a c omp lianc e c ertific ate to the d eb enture holders (on

yearly basis) in respect of compliance with the terms and conditions of issue of

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debentures as contained in the Information Memorandum duly certified by the

de benture trustee .

IV. ISSUER PROFILE

History Note / Present business of the Comp any and Ma in Objec t and Present business of

the Compa ny

History No te :

Saw Pipes Ltd . wa s inco rporat ed on 31st O c tober, 1984. SPL is esta b lished ma rket leader

in the c ountry for ma nufacturing a nd c oa ting o f large d iam eter subm erge d Arc Welded

line (SAW) pipes.' The c om pa ny has continually expa nde d a nd c onsolidat ed its

op erat ions. It ha s ama lga ma ted Swa stik Foils in 1988-89 with itself and as part of

bac kwa rd integra tion the Swa stik Udyog , a subsidiary of Jinda l Strips wh ich p rod uc es

thicker ga uge stee l stripes wa s merge d with the c om pa ny in 1991-92

Sinc e inc ep tion SPL has pioneered and pe rfec ted the art of p ipe ma king using U.O.E and

J.C.O. tec hno logy. SPL is g loba l playe r in the field o f ene rgy transporta tion w ith sta te o f

art fac ilities in four loca tions in India and throug h a ffilia ted it also m anag es the la rge pipe

mill in the US, suppo rted by an integrated pla te mill with a ma tc hing c apa c ity to c at er to

wo rld req uirem ent o f high g rade API Stee l line p ipes with glob al strat eg ic ad vantage s.

The c om pa ny a lso p rod uc es thick-wa lled p ipes and c old-rolled stee l coils. The c om pa ny

is a leader in energy transportation segment with four state-of-the-art facilities in India,

located at Kosi Kalan (UP), Mundra (Gujarat), Nasik (Maharashtra) and New Delhi

(Swa stik Foils). The Co mp anys Mund ra fac ility, ma nufac turing large d ia p ipes, is a lso

c lose t o A da ni po rt, red uc ing freight c osts in export. The c om pa ny has a very

comprehensive product portfolio, conforming to various global standards and approved

by inte rnationa l agenc ies. Insta lled c apac ity in Sep . 2003 was about 485,000 tons of

pipe s, along with fac ility to c oa t up to 7,000,000 sq. m . of p ipe surfac e a rea .

Through its a ffilia tes, the c om pany a lso ma nages one of the largest steel m ills in US,

supp orted by a plate mill with a ma tching c ap ac ity. The c omp any ha s an a ffiliate in the

US, SAW Pipes Inc ., in whic h it a cquired a sta ke in 1993-94 to c a te r to the No rth Ame ric an

ma rket s. In 1997, it set up US Denro to t ake ove r US Steels p late m anufa c turing m ill, in

orde r to e nsure ava ilab ility to chea per raw m aterial to Saw Pipes Inc . Both US Denro and

SAW p ipes Inc . are he ld through a 100% sub sidiary, Jinda l Enterprises LLC (JELLC). SPL

ho lds 19.47% in Saw Pipes Inc . while the remaining is he ld b y promot ers and relat ives. In

US Denro, JELLC hold s 49% (red uc ed from t he ea rlier 71%), while o the r Jinda l affilia tes

hold the rest.

Present Business :

The c om pa ny enjoys a ma rket lead ership in large d iame ter Submerge d Arc Welded line

pipe s used for ene rgy transpo rta tion. In ad d ition the com pa nys p rod uc ts also include s

Carbon, alloys and stainless steel seamless pipes manufactured by conical piercing

process.

Sp ira l p ipes and stee l bends for energy transporta tion sec to r.

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Duct ile Iron & Ca st Iron pipe s (DI CI) for wa ter and sew ag e transpo rta tion wo uld soon

be ma nufac tured.

Besides these, state of the art products, the company also offers value-added services

like anti corrosion coatings, concrete weight coatings for offshore applications, long

rad ius bend s and c onne c tor ca sting for d rilling o pe rat ions and c onnec ting the p ipelines.

The c om pa ny has envisage d setting up of an a dd itiona l integrated pipe unit c om prising

Ductile / Ca st iron p ipe c ap ac ity of 200,000 TPA, Pig iron m anufa c turing c ap ac ity of up to

250,000 TPA, a nd large d iam et er p ipe s of 350,000TPA.

The c om pa ny is setting up an integ rat ed pipe unit.

The c omp any is also setting up a c oke oven ba ttery plant w ith of c ap ac ity of

2,00,000 TPA.

Main Obje c t as pe r Mem orandum and Articles of Assoc iation

1. To ca rry on Ind ia or elsew here the business of ma nufa c turer of importers,

exporters and dea lers in all kinds of tub es, p ipes, and p ipe fittings ma de o f steel pla tes of

API sta nda rd and a ll other types of p lates, M. S. Strip , sc a lp, cop per, c ast iron, rubb er,

polythene, aluminum, stainless steel, and other material and machinery, equipment

req uired for manufa c ture o f suc h items.

2. To c a rry on the business or businesses of manufa c turers, imp orters, exp orte rs and

dealers in steel plates, steel strips, sheets, ferrous and non-ferrous metal including rollers

and re-rollers sheet metal, steel, alloy steels, special and stainless steel, aluminum, brass,

copper, shafting, bars, rods, wire rods, all kinds of steel wires, flais, plates, blooms, stabs,

squares from scrap, sponge iron, reproduced pillets, billets, ignots, expended metals,

hardware materials, hinges, hoops, rounds, circle buckets, fire buckets, bath tubs, mugs,

drums, tanks, containers, steel and tubelar furniture of all kinds, and other materials for

strong o r c onveying w a ter, oil and other ma terials solid or liquid.

V. INDUSTRY SCENARIO

The p ipes and tub es seg me nt in Ind ia c onsumed a round 1.9 million t onnes of HR c oils in

2000-01, ac c ounting fo r around 30% of the to ta l consump tion o f HR coils. The m a jor end-

use segments for pipes and tubes are water supply and distribution, housing, irrigation,

industrial applica tion and transpo rta tion of pe troleum p rod uc ts.

Pipes and tubes c an be c lassified on the ba sis of the ir ma nufac turing proc ess as we lded

pipes and seamless pipes. Welded steel pipes and tubes consist of a wide variety of

pipes and tubes, line precision pipes, tubular poles, Hamilton poles, API pipes, electricpoles, and lightweight galvanised pipes for sprinkler irrigation. In general, welded steel

p ipes a re manufac tured from HR and CR c oils by elec trica l resista nc e weld ing. The

submerge d a rc we lded (SAW) p ipes are a nothe r c at eg ory of p ipes tha t are wide ly used

in the oil and ga s sec tor for the transportation of c rude and nat ural g as. SAW pipes are

ma de from HR coils and plat es and a re used ma inly in the transpo rta tion of w a ter, b last

furnace gases and c oke ove n ga ses.

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Sea mless stee l pipes and tub es are used in the oil and the non -oil sec to rs. Sea mless steel

pipes and tubes are used in applications, such as line pipes, casing pipe production

tubing and drill pipes. American Petroleum Institute (API) grade material is used for the

ma nufac ter of line a nd c asing p ipes. The o il sec tor ac c ounts for around 60% of the tota l

c onsump tion of sea mless p ipes. The a utom ob ile sec tor and the b ea rings and bo ilers

segments account for the remaining consumption. In the non-oil sectors, seamless pipes

have various applications in industries, like boilers, ball bearings, automobiles, chemicalp lants, fertilizers, pe troc hem ica ls and industria l ma c hinery.

A p rimary c onsume r of SAW p ipes is the oil and gas industry for its p ipe line infrastruct ure.

Pipelines are the most cost-effective way of transporting petroleum products (crude,

pet rol a nd d iesel) a nd ga s. Ac c ording to industry sources, it c osts ba rely Rs. 1.30 pe r km

to mo ve eve ry ton of o il p rod uc ts by pipe lines while t ra ins c ost Rs 2.20 per ton a nd roa d

transport co sts Rs 3.02. The o il & g as p ipe line infrastruc ture in Ind ia ha s been m inima l a t

about 15,000 km. C om paratively, Franc e ha s 170,000 km o f p ipe lines, while US ha s

329,600 km. Only 25% of o il p rod uc ts a re moved by p ipe lines in Ind ia, co mp ared to 59% in

the US. How eve r, add ition of a bout 17,000 km o f p ipe line infrastructure in the ne xt six

yea rs is be ing p lanned , of which a signific ant pa rt m ay ma terialise.

Figure b elow ind ica tes the oil pipe line g rid in Ind ia w ith existing a nd prop osed pipe lines.

Sou rce: Business World , Oc t. 06, 2003

Sou rce: Business World , Oc t. 06, 2003

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As ag ainst a de ma nd of 117 million metric standard c ubic me tres per day (mmsc md ) the

supply of gas is only 70 mmscmd, and the demand is likely to grow to 166 mmscmd by

2007. Henc e, a t least 10,000 km of the 17,000 km of ne w pipe lines a re e xpec ted to c a ter

to g as transporta tion. The e xisting a nd p rop osed ga s p ipe line infrastruct ure is indica ted in

the figure.

The investment in oil p ipe line infrastructure is being influenc ed by the fo llow ing fac to rs:

The g ove rnme nt's dec ision to o pen up oil reta iling to the p rivate sec to r is likely to

introduce about 10,000 new retail outlets which would be set up by private oil

c om panies (Relianc e: 5,800, Essar: 1,700 and She ll: 2,000). Oil and Natura l ga sCorporation (ONGC) has also got government's approval for 1,000 outlets. Cost-

efficient transportation to cater to the demand of these outlets would be

imperative .

While IOC already has a 7,170 km network in place for both crude and petroleum

product transportation, BPCL is expanding its existing Mumbai-Manmad-Indore

product pipeline all the way to Delhi, to cater to the demand in the northern

region, which accounts for 40% of Indias product demand. IOC is also adding a

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25/55


Even if a p ortion of these p lans ma terialise, it would imp ly sub sta ntial dem and for SAW

pipe s ove r the c om ing 5-6 year period . On the expo rt front there is rising de ma nd from

S.E. Asia a nd Africa , which, tog ethe r with projec ts in Iraq , co uld increa se dem and .

Key M anageria l Personnel:

Name Designation Depa rtme nt Date of

Joining

Qualification Expe rienc e Ex-Emp loyer

Name

Mr. O P Sha rma Preside nt Ma rket ing 14/4/1986 Inte r 40 Navy

Mr H S Bed i Direc to r Tec hnica l 1/ 3/ 1989 B E (MET) 40 BST, Ganoor

Mr Vikram Puri Vice

President

Corp. HR 2.04.04 PGDPM&IR

(XLRI)

22 Mod i Xerox

Ltd.

Mr H S

Chaudhary

Vice

President

Administrati

on

11/1/ 1985 B.A 25 N.A

Mr Neeraj

Kumar

Director

Finance &CFO

Finance &

Accounts

15/5/ 2002 M.Sc , MBA

(Fin)

13 Lucent

Tec hnolog iesLtd

Mr Sunil Trehan President IPU 26/ 9/ 03 MBA 25 Honeywell

International

India Pvt Ltd

Cha nge in Key Ma nag eria l Personne l in the p rec ed ing o ne yea r: NIL

Boa rd of Direc to rs:

S.

No.

Nam e Of Direc tor and Address Other Direc torship

1. Shri. P R Jind a l6, Prithvi Raj Road,

New Delhi 110 011

1) Aseem Travels Ltd .2) Jind a l Vijaya nagar Steel Co. Ltd .

3) Jinda l Seamless Tub es Ltd .

4) Jind a l Transworld (P) Ltd .

5) Na lwa Fa rms (P) Ltd .

6) Saw Pipes Inc . U.S.A.

7) Iup Jind a l Hexa Meta ls Ltd .

2. Shri H.S. Cha ud ha ry

A-1, Upsidc Indl. Area,

Nandga on Road ,

Kosi Ka lan,

Distt. Mathura (U.P.)

Nil

3. Shri Pursho ttam La l

225, Araveli ApartmentAlaknanda,

New Delhi - 110 092

Nil

4. Shri A.J.A. Tauro

303, Symp hony Ap tt.

Sturrock Roa d ,

Ma nga lore 575001

1) Cha mb el Fertilisers & Chem ica ls

Ltd.

2) Supa rna Che mic a ls Ltd .

18


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5. Shri Kuld ip Bha rga va

Anand Bhawa n

Hisar - 125001 (Haryana)

1) Qua lity Foils (Ind ia) P. Ltd .

2) Argentum Fashions (P) Ltd .

3) Tejasvi Investm ents (P) Ltd .

4) Qua lity Sta inless (P) Ltd .

6. Ms. Sminu Jinda l

Mana ging Direc tor6, Prithvi Raj Road,

New Delhi - 110 011

1) Jinda l Seamless Tub es Ltd .

2) Jinda l Transworld (P) Ltd .3) Iup Jind a l Hexa Meta ls Ltd .

7. Shri Moosa Raza

C/ o Ma nag eme nt Options For

Value Enhancem ent Pvt. Ltd .

5-A, Atm aram House, 5th Floor,

1, Tolsto y Ma rg,

New Delhi 110 001

1) Nirlon Ltd .

2) Il&Fs Trust Co . Ltd .

3) Vad od ara Halol Toll Roa d Co.

Ltd.

4) Jind a l Vijaya na gar Steel Ltd .

5) Jind a l Praxair Oxyge n Co . Ltd .

6) West Asia Ma ritime Ltd .

7) Ma nage ment Op tions For Value

Enhanc em ent Pvt. Ltd .

8. Shri M V Sa tya PrasadICICI Bank Ltd.

Nbcc Plac e,

Bhishma Pitam ah Ma rg ,

New Delhi 110003

1) Ma ysore Ce me nts Ltd .

9. Shri Devi Dya l

B-192 A

Sec to r 44

Noida 301201

1) Sun Air Hotels Ltd .

VI. STOCK MARKET DATA

High a nd low p rices quot ed on BSE & NSE during the last 3 yea rs

BSE

Yea r Date of

High

High(Rs) Volume

on date

of High

Date of

Low

Low (Rs.) Volum e on

da te of low

Average(Rs.)

2003-04 15-12-03 323.9 515647 01-04-03 64.2 36100 194.05

2002-03 23-12-02 95.8 652362 29-10-02 55.1 9126 75.45

2001-02 29-05-01 179.9 1622065 17-09-01 36 72701 107.95

NSE

Yea r Date of

High

High(Rs) Volume

on date

of High

Date of

Low

Low (Rs.) Volum e on

da te of low

Average(Rs.

)

2003-04 15-12-03 323.9 947304 01-04-03 63.4 67777 193.65

2002-03 12-07-02 97.05 176273 22-05-02 56.05 99666 76.55

2001-02 29-05-01 179.5 1121164 17-09-01 36.3 144478 107.9

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High a nd low pric es quo ted on BSE & NSE during the last 6 mo nths w ith volume with

respe c tive da te o f High/ Low

BSE BSE

Mo nth Date High Rs. Volume Dat e Low Rs. Volume

Oc t-04 11-Oc t-04 205 495598 29-Oc t-04 181 106713Sep-04 23-Sep -04 198.7 430626 20-Sep-04 181 138065

Aug-04 18-Aug -04 204.85 750726 02-Aug -04 167 422202

Jul-04 22-Jul-04 198.95 355839 09-Jul-04 125.5 98233

Jun-04 10-Jun-04 148.2 742954 17-Jun-04 119 122061

Ma y-04 03-May-04 211 67946 31-Ma y-04 124 59842

NSE NSE

Month Date High Rs. Volume Date Low Rs. Volume

Oc t-04 11-Oc t-04 204.8 1013992 29-Oc t-04 180 253650

Sep -04 23-Sep -04 198.55 959006 15-Sep -04 181.1 321041

Aug-04 18-Aug -04 204.95 2163558 13-Aug -04 157.9 822079Jul-04 22-Jul-04 199 1419224 09-Jul-04 120 301694

Jun-04 10-Jun-04 147.9 1902754 08-Jun-04 119 237931

Ma y-04 03-May-04 214.7 163248 31-May-04 122 154452

No. of Sha res trad ed during the last six months on ea c h stoc k excha nge

PERIOD BSE NSE

Nov-04 3426386 7716854

Oc t-04 3234898 6467742

Sep-04 5098527 11725885

Aug-04 7008559 19173442

Jul-04 7712076 20349392Jun-04 4678227 11715496

Ma y-04 1240567 3098948

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VII. MANA GEMENT DISCUSSION & ANANLYSIS OF THE FINANCIAL STATEMENT FOR THE

LAST THREE FINANCIAL YEARS:

STATEMENT OF PROFIT & LOSS ACCOUNT

(Rs. in Crs.)

200409 (12) 200309 (12) 200209 (15)

INCOME :

Sa les Turnover 1123.30 804.96 754.13

Exc ise Duty 41.25 111.96 7.36

Net Sa les 1082.05 693.00 746.77

Other Inc ome 6.01 2.03 3.18

Stoc k Ad justments 70.28 2.16 -15.83

Tota l Income 1158.34 697.19 734.12

EXPENDITURE :

Raw Materia ls 760.09 392.75 453.62Manufac turing Expenses 177.04 40.93 43.70

Emp loyee Cost 25.21 18.53 19.43

Selling and Ad ministration

Expenses

57.96 84.02 85.53

Tota l Exp end iture 1020.3 536.23 602.29

Op era ting Profit 138.04 160.96 131.84

Interest 38.67 38.14 66.07

Gross Profit 99.37 122.82 65.76

Dep rec ia tion 21.88 18.42 17.41Profit Before Tax 77.49 104.4 48.35

Tax 18.75 30.39 6.61

Deferred Tax 2.49 -1.19 -0.6

Reported Net Profit 56.25 76.07 42.34

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STATEMENT OF ASSETS & LIABILITIES

(Rs. in Crs.)

200409 200309 200209

SOURCES OF FUNDS :

Share Cap ita l 38.98 38.98 46.48

Re se rve s To ta l 360.88 319.24 258.77

Tota l Shareho lders Funds 399.86 358.22 305.25

Se cure d Lo ans 441.58 167.33 184.79

Unsec ured Loa ns 122.64 43.85 40.84

Tota l Deb t 564.22 211.18 225.63

To ta l Lia b ilit ie s 964.08 569.4 530.88

APPLICATION OF FUNDS :

G ro ss Blo c k 476.68 406.96 351.22

Less : Accum ula t ed Dep rec ia tion 152.23 127.65 105.47

Net Bloc k 324.45 279.31 245.75

Ca pita l Work in Pro gress 233.19 24.17 17.55

Investments 56.00 54.5 64.69

Current Assets, Loa ns & Ad va nc es

Inventories 451.82 96.46 78.65

Sund ry De bto rs 410.39 199.41 132.17

Cash and Bank 33.83 24.32 39.35

Loa ns a nd Ad va nc es 115.55 102.78 109.7

To ta l Current Asse ts 1011.59 422.97 359.87

Less : Current Liabilities and Provisions

Current Liab ilitie s 613.09 134.42 101.33

Provisions 18.21 33.06 10.51

Tota l Current Liab ilit ies 631.31 167.48 111.84

Ne t C urre nt Asse ts 380.29 255.49 248.03

Misce llaneous Expenses not writ ten o ff - 0.02 0.14

De fe rre d Ta x Asse ts - 2.7 0.62

Deferred Ta x Lia bility -46.58 46.79 45.9

Net Deferred Ta x -46.58 -44.09 -45.28

Tota l Assets 964.08 569.4 530.88

22


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The following discussion and ana lysis should b e read in conjunc tion with financ ial

statements.

Result of Op erations for the yea r end ed Sep tem ber 30, 2004 c om pa red to the yea r

end ed Sep tem be r 30, 2003

The c om pany ha s ac hieved turnove r of Rs.1123.30 crores which ma rks a 39.55% increa seover the last yea rs turnove r. The inc rease in turnover is large ly c on tributed b y the

revenue co ming from US Branc h op erations which ha s be en a dd ed to the co mp any

during this yea r. The p rofit a fter tax of the c om pany for FY end ing 04 wa s Rs.56.24 lac s,

26.07% dec rease ove r the last yea rs p rofit of Rs.76.07 c rores. The red uc tion in profit is

pred om inantly on acc ount of increase in the p rices of raw ma terial, whic h is ma inly stee l.

The p erformanc e for financ ial cha rge s has show n improvem ent. For the FY end ed 03

financ ial cha rges stood a t 4.74% of the tu rnover. For the ye ar the same sta nd s a t 3.44%.

During the FY 03-04 the operations at Nashik have stabilized and in the coming year the

com pa ny expec ts more b ene fit from the Sea mless op erations and revenue from DI/ CI

Pipe Plant to a c c rue.

Result of Op erations for the yea r end ed Sep tem ber 30, 2003 c om pa red to the yea r

end ed Sep tem be r 30, 2002

The c om pany ha s ac hieved turnove r of Rs.804.96 c rores wh ich ma rks a 33.42% increa se

ove r the last yea rs turnove r on a n annualized ba sis. The p rofit after tax of the c om pany

has bee n Rs.76.08 crores showing a 124.62% improvem ent over the last ye ars p rofit o n a n

annua lized basis. During the FY yea r ended 03 the re ha s bee n substa ntial saving in

Financial charges which have declined from Rs. 66.07 crores to Rs.38.13 crores showing

27.85% dec rease o n a n a nnua lized basis.

SAW PIPES LIMITED c onfirms that:

1. There have been no unusual or infreq uent events or transac tions, sinc e the da te o f

the Aud itors Rep ort ( 28th Oc tob er, 2004) conta ined herein.2. There are no signific ant ec onomic c hange s tha t ma terially affec ted or are likely to

ma terially a ffec t incom e from co ntinued op erations.

3. There are no known trends or uncertainties tha t have had or are likely to have a

ma teria l ad verse impa c t on the reve nue or inc om e from c ontinuing op erations.

4. There have b een no cha nge s in the ac tivity of the Issuer which may have had a

ma terial effec t on the sta tem ent of p rofit / loss for the last five yea rs.

Material Develop ment:

In the o p inion o f the SAW PIPES LIMITED, since t he da te of the last fina nc ial sta teme nt

disclosed in the Information Memorandum, there have been no circumstances that

materially and adversely affect or are likely to affect the trading or profitability of the

issuer, or the value of its assets, or its ability to pay its liabilities, within the next twelve

months.

Corporate Governanc e

The Co mp any c omp lies with Corpo rate Gove rnanc e a s ap plica ble to listed Com pa nies

and has constituted the committees such as Committee of Directors, Audit Committee,

Shareholde rs/ Investors Grieva nc e Comm ittee, Rem uneration C om mittee.

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VIII. PROMOTERS & THEIR BACKGROUND

Prom oters and their bac kg round

Shri P.R.Jinda l is the eld est son of Sh.O.P.Jinda l ha iling from a sma ll village in Haryana.

Jinda ls a t the outset w ere traders dea ling in anything they c ould lay the ir hand s on from

steel and ghee to steel pipes. In 1954 they put up their manufacturing facility to makebends and sockets used for joining pipes and tested their first success. Encouraged,

Shri.O.P.Jinda l father of Sh.P.R.Jinda l set up a p ipe ma king fac ility in 1961 at Ghaziab ad in

U.P. and then at Hissar. Realising soon that there was a shortage of steel strips used for

ma king p ipes, it was dec ided to sta rt a fa c ility to ma ke the strips itself. Jinda ls ac quired a

sma ll stee l plant o wned by Pirama ls and Sh.P.R.Jinda l wa s sent to Mum ba i in 1983 to run

tha t p lant a nd then set up a sta inless steel rolling unit. In 1984 he w ent t o USA where he

spo tted an inop erative p lant for manufac ture o f Subm erge d arc w elded pipes. He m ad e

a h isto ric d ec ision to p urcha se tha t p lant a nd set it up a t Kosi Ka lan. La te r p lants we re set

up at Mund ra and Nashik for manufa c ture o f La rge d iame ter pipes and sea mless pipe s,

respec tively. The C om pany also ha s a fa c ility for ma nufac ture of ultra t in foils a t

Naja fga rh Roa d, Delhi . Mr.P.R.Jinda l ha s a lso incorpo ra ted a Co mp any in USA formed

as a spe c ial purpo se ve hicle for ac quiring a pla te m ill.

SUBSIDIARY COMPANIES

Presently, the C om pany has 3 subsidiary co mp anies w ithin the m ea ning o f Sec tion 4 of

the Co mp anies Ac t, 1956. The b rief financ ial informa tion o f the subsidiaries is as follows: -

Hexa Sec urities & Financ e Co. Ltd., :

Date of Incorporation: 23rd November, 1994

Nature of ac tivities:

UFinancial Highlights

Rs. Crs.

Yea r Sep tem ber

2004

Sep temb er

2003

Sep temb er

2002

Equity Sha re Cap ita l 25.50 25.50 25.50

Reserves (excluding

revaluation reserve)

-24.89 -28.60 -30.23

Sha re Prem ium - - -

Profit a fte r Tax 3.92 1.77 0.66

EPS (Fac e va lue Rs. 10

ea c h) (Rs.)

1.45 0.64 0.20

NAV (Rs.) per sha re Rs 10/ -each

0.24 -1.22 -1.85

24


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Jindal Enterprises LLC

Date of Incorporation:

Nature of ac tivities: Sta inless Steel Proc essing fa c ility

Financ ial HighlightsRs. in c rs.(*)

Year June

2004

June

2003

June

2002

Sta ted Cap ita l 4.60 4.64 4.88

Ret a ined Defic it 32.37 29.90 31.89

Net income (2.74) 0.42 8.50(*) Converted into INR

IUP Jinda l Hexa Metals Ltd., :

Date of Incorporation: 9th Aug ust, 2004

Financ ial Highlights

Rs. in c rsYea r Sep tem ber

2004

Equity Sha re Ca p ita l 1.80

Nature of ac tivities:

The Comp any has ente red into a Joint Venture Ag reement w ith Imp hy Ugine Prec ision,

IUP, France, one of the divisions of Arcelor Group, for manufacturing of high precision

me ta l to be used in elec tronics industry and othe r ap p lic at ions. The Joint VentureComp any has be en inco rpo rat ed in the na me o f IUP Jindal Hexa Me ta ls Ltd . The

ma nufac turing eq uipm ent s of Swa stik Foils Division of your Co mp any wo uld b e

transferred to the Joint Venture. IUP is a lso transferring manufac turing eq uipm ent s from

one o f their plants to the Joint Venture. The Comp any wo uld also ma ke ca sh

contribution to b uild the infrastructure for the fac ility. The Joint Vent ure wou ld be 73%

owned by your Company and the Jindal Group would also have the management

control. The Joint Venture would b ene fit from m anufa c turing ca pab ilities of bo th the

partners, the technology transfer from IUP and the management capabilities and

ma rketing efforts of bo th the pa rties in India a nd a broa d. The Co mp any would be nefit

from the sha reho lders va lue that w ould b e c rea ted onc e the Joint Venture atta ins its full

potential.

For the p rop osed transfer of ma nufa c turing e quipm ent s of the Swastik Foils and the c ash

c ontribut ion, the sha reho lders c onsent ha s be en o bt ained by w ay of Posta l Ballot.

Details of Com pa nies under sam e Ma nag em ent u/ s 370 (1B).

There are no Comp anies unde r the sam e ma nage me nt within the mea ning of Sec tion

370(1B) of t he Co mp anies Ac t, 1956.

25


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IX. BASIS FOR ISSUE PRICE

Issue is at par and interest rate will be benchmarked based on the credit rating of the

company.

X. OUTSTANDING LITIGATIONS OR DEFAULTS

Outstanding litigations pertaining toSAW PIPES LIMITED

S.NO

.

NAME OF

THE CASE

BRIEF POINTS OF

DISPUTE

AMOUNT

INVOLVED

(Approx.)

STATUS

1. SPL Vs.

GAIL

This c ase relates to the

application of Price

Reduction formula by

GAIL alleging the

delayed supply of

pipes under theContract

Rs. 48 c rores Pend ing

2. SPL Vs.

BPCL

This a lso re late s to the

application of price

reduction formula by

BPCL alleging the

delayed supply of

pipes by SPL

Rs. 1.83

crores

Pending

3. SPL Vs.

ONGC

(SHG)

This c ase relates to the

dispute relating to

applicability of Foreign

Excha nge Rat es on the

payments made by

ONGC to SPL

Rs. 1.12

crores

Pending

4. SPL Vs.

ONGC

(Casing

Pipe)

This c ase a lso relate s to

the applicability of

Price Reduction

Formula by ONGC

alleging the delayed

supply of Pipes by SPL

USD

60224.58

Pending

5. SPL Vs.

SDJV,

Banglades

h

SDJV, Bangladesh

attempted to invoke

the Performance Bank

Guarantee No. 53405

for USD 705698 issued

by Ca nara Bank

USD 705698 Pend ing

6. United

India

Insuranc e

Vs. CCI &

SPL

SPL supplied pipes to

HPCL which were

transported by CCI

under separate

agreement with HPCL.

During the course of

transportation some

dam age w as done to

Rs. 30 lakhs Pend ing

26


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p ipe s. HPCL filed its

insurance claim and

go t the mo ney. United

India Insurance has

filed the case at

Visakhapatnam for

recovery of claimamount from CCI

alleging their

negligence in

transporting the pipes.

It has made SPL as

proforma party as

supp lier of t hese p ipes.

7. Ca se in Co nsumer

Forum Co urts

There a re tw o a c tive

ca ses pe nding b efore the

Consumer Forum against

the Company alleging

that Company wasdefic ient in transferring the

shares lodged by the

transferee for transfer. The

Companys stand is that

the Company has

observed all the rules and

regulations while

transferring these cases

and the Consumer Forum

has no jurisdiction to try

these c ases. The

outcome is like to be in

the Co mp any s favour.

Outstand ing litiga tion pe rtaining to Promoter/ Promters Group

There a re no o utstand ing litiga tion aga inst the Prom ote r / Prom ote r Group .

Defaults

The Co mp any ha s not d efaulted in the p ayme nt of interest and rep ayme nt of principa l

to o ther Banks, financ ial institutions, dep osit holde rs etc . The Com pany has no t defa ulted

in meeting statutory dues, institutional dues and dues towards instrument holders like

Deb ent ures, fixed dep osits, and other a rrea rs.

XI. RISK FACTORS AND PROPOSALS TO ADDRESS THE RISK

Following are certain considerations, which the investors should peruse before making an

investment in the issue. The ma terial imp lic a tion o f the risks env isaged by the

ma nage ment ha s been quantified a s far as po ssib le. Where suc h quantifica tion has not

be en ma de it may be c onstrued tha t the imp lic ation ca nnot be q uantified .

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Risk Fac tors:

Internal Risk Factors:

Guarantees given to banks, FIs, Corporate Guarantees and Guarantees given by

banks on b eha lf of com pany amo unts to Rs.31237.49 Crores as per Ba lanc e Shee t on30.09.2004

An a mo unt of Rs.963.89 lac s (prev. yea r Rs.969.70 lac s.) is outsta nd ing from Ind ian

subsidiary Com pany, which ha s ac c umulate d losses. Since these a re long te rm

investme nts the C om pa ny has not p rovide d any p rovisions

Exte rnal Risk Fac tor:

As the industry de velop s and more stringe nt q ua lity norms a re introd uc ed , comp any

has to rely more on imported steel plates and coils for the manufacturing of pipes,

which exposes the company to foreign exchange, lead time for transportation for

the raw material and the macro economic conditions for the countries of import.

Also the company is largely a project driven company and hence exposed to the

c yclica lities of d em and , which is typica l in p rojec t d riven orga niza tion.

The c om pa ny has ad dressed the a bo ve risks by p utting a rob ust financ ial

management system in place and which they are strengthening further by

prac tic ing the be st Corpo rate G overnance p roc ed ure.

XII. DISCLOSURE ON INVESTOR GRIEVANCES AND REDREESAL SYSTEM :

To e nsure tha t Investo rs g rieva nc es a re a tte nded to exped itiously the issuer has

appointed M/ s. RCM C Sha re Reg istry Priva te Limited as its Reg istrar and Sha re Transfer

Agent:

M/ s. : RCMC Share Registry Private Limited

1515, 1st Floor, Bhishm Pitama h Ma rg,

Lot la Mub arakpur (Nea r Sout h Extension),

New Delhi 110003

Phone No. 24692346/24601017

Fax No. 24692345

Ema il Id : rcm c @theoffice.ne t

Further, investors may note that a compliance officer has also been appointed by the

Issuer and he m ay b e c onta c ted in c ase o f any g rievanc es at t he follow ing ad dress :

Mr. Sunil Jain


Address: Jindal Centre, 12 Bhikaiji Cama Place, New Delhi - 110 066.

Tel No 26188360/ 51462220, Fax No .51659575

E.ma il Id : suniljain@sawp ipe sind ia.c om

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PART II

XIII. GENERAL INFORMATION

Consent

M/ s.N C Ag ga rwa l & Co., the Sta tuto ry Aud itors of the Issuer have their written c onsent t otheir rep ort be ing included in the fo rm a nd c onte nt in which it ap pe a rs in this Informa tion

Memorandum

UTI Bank Ltd ha s g iven its writte n c onsent to ac t a s Trustees to the issue and for inc lud ing

their nam e in the Information Mem orand um.

M/ s RCM C Sha re Reg istry Pvt Ltd has given its c onsent written c onsent to ac t a s Reg istrar

to the issue a nd fo r includ ing its name in the Informa tion Memo randum Reg istrar.

Cha nge in Direc tors of Saw Pipes Limited d uring the Last Three Years

The follow ing Persons have b een app ointed and induc ted into the Boa rd a s Direc tors

during the last 3 yea rs

Sr.

No.

Name of Director Date of App ointment

1 Shri M. K. Tand on

(Nominee of ICICI Ltd .)

30.01.2002

2 Shri Devi Daya l 30.07.2004

3 Shri M.V. Sa tya Prasad 30.07.2004

The follow ing Persons have b ec om e/ c ea sed to be Direc tors during the last 3 yea rs

S.No. Nam e of Direc to r Date of

Appointment

Date of C essat ion

1. Shri M. K. Tand on(Nominee of ICICI Ltd .)

15.07.2004

2. Shri Sub ha sh Cha nd ra - 30.04.2004

3. Shri T.M. Sen - 22.07.2003

6. Shri Ra ta n Jind a l - 22.11.2001

7. Shri Sa jjan Jind a l - 22.11.2001

Cha nge in Aud itors of Saw Pipes Limited During The Last Three Years

There was no c hang e in Sta tutory Aud itors of the c om pany during last three yea rs.

Proced ure a nd time schedule for allotment of Debentures

Boa rd o f Direc tors of the c om pany w ould a llot d eb entures and Lette r of Allotm ent w ould

be c red ited in Dema t ac co unt within 2 da ys from the d ate o f allotme nt. Letter of

allotment will be converted into NCD within the time limit prescribed under the

Comp anies Ac t, 1956

29


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Name a nd ad dress

Com pa ny Sec retary

Mr. Sun il Jain


Ad d ress: Jinda l Centre, 12 Bhika iji Cama Plac e,

New Delhi - 110 066.

Tel No 26188360/ 51462220, Fax No .51659575E.ma il Id : suniljain@sawp ipe sind ia.c om

Statutory Auditors

M/ s. N. C. Agg arwal & Co.

Chartered Acc ountant,

102, Harsha House,

Karamp ura C omm erc ial Comp lex

New Delhi

Tel. No.: 011-25920555-556

Fax No.: .:011-25920555

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XIV. AUDITORS REPORT & FINANCIAL INFORMATION

AUDITORS REPORT AND FINANCIAL INFORMATION

We were engaged to report on financial information of Saw PipesLimited ('the Company') annexed to this report, which is required to

be prepared in accordance with the Securities and Exchange Board of

India (Disclosure and Investor Protection) Guidelines, 2000

('the Guidelines'), issued by Securities and Exchange Board of India

('SEBI') on 19 January 2000 in pursuance of section 11 of the

Securities and Exchange Board of India Act, 1992.

The said financial information is proposed to be included in the

Offer Document of the company in connection with the issue of

secured debt aggregating to Rs.100 Crores in the nature of Non-

Convertible Secured Debentures (NCSDs) on a private placement basis.

We were engaged to report on the annexed restated statements of assets

and liabilities of the company as at 30th September,2004, 30

September 2003, 30 September 2002, 30 June,2001and 30th June,2000 and

the annexed restated statements of Profit and loss for each of the

years ended on those dates and ('the summary statements') (Annexure I

(i) & (ii))

The summary statements and significant accounting policies (Annexure

III)have been extracted from the financial statements drawn up in

accordance with the provisions of Section 211 of the Companies Act,

1956, audited by us for the aforesaid years.

Further we were engaged to report on the annexed restated ConsolidatedStatement of assets and liabilities and the annexed restated

Consolidated Statement of Profit and Loss of Saw Pipes Limited and its

subsidiaries as at 30th September,2004,30th September,2003 and as at 30th

September,2002 (Annexure II (i)and (ii)along with the basis of

preparation of the consolidated financial statements of the Company and

its Subsidiaries.(Annexure II (iii)

Further attention is invited to:

i) Diminution in value of unquoted investments (amount unascertained)

has not been made since in the opinion of management, considering the

long term strategic investments and future prospectus, such diminution

is temporary in nature.

The Company's management is responsible for the preparation of the

summary statements. Our responsibility is to report based on the work

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done.We have performed such tests and procedures, which, in our

opinion, were necessary for our reporting to you. These procedures

include comparison of the annexed financial information with the

Company's audited financial statements and do not constitute either an

audit or review.

Based on such procedures carried out by us and review examination of

the records produced to us and the information and explanations given

to us by the company's management, we confirm that nothing has come to

our attention to show non- compliance of clause 6.18.1 of said SEBI

Guidelines.

This report is intended solely for the purpose of inclusion in

Shelf Information Memorandum for issue of NCSDs and for the Company

to comply with the provision of the said SEBI Guidelines and will not

be suitable for any other purpose.

For N.C.Aggarwal & Co.

Chartered Accountants

Sd/-(G.K.Aggarwal)

Partner

Dated: 20th December,2004

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ANNEXURE 1 (i)

SAW PIPES LTD.

STATEMENT OF ASSETS AND

LIABILITIES - - - -

As At As At As At As At As At

DESCRIPTION June 30,2000 June 30,2001 Sep t. 30,2002 Sep t. 30,2003 Sep t. 30,2004

(15 Mon ths)

(Rs. in lac s) (Rs. in lacs) (Rs. in lac s) (Rs. in lac s) (Rs. in lac s)

SOURCES OF FUNDS

SHAREHOLDERS FUNDS

Equ ity Sha re Ca pita l

3,897.97 3,897.97 3,897.97 3,897.97 3,897.97

Preferenc e Share Ca pital

1,500.00 1,500.00 750.00 - -

Reserves and Surplus

25,188.90 27,280.09 25,877.55 31,923.69 36,088.25

Less: Revaluation Reserve

(3,773.05) (3,562.60) (3,309.10) (2,889.89) (2,532.12)

26,813.82 29,115.46 27,216.42 32,931.77 37,454.10

Deferred Tax Liab ility (Net)

- - 4,528.41 4,409.02 4,657.77

LOAN FUNDS

Sec ured

22,915.87 21,913.86 18,479.08 16,679.70 44,158.25

Unsec ured

1,395.88 1,972.25 4,083.54 4,438.38 12,263.83

24,311.75 23,886.11 22,562.62 21,118.08 56,422.08

51,125.57 53,001.57 54,307.45

58,458.87 98,533.95

APPLICATION OF FUNDS

FIXED ASSETS :

Gross Bloc k

30,698.68 34,132.92 35,122.49 40,696.69 47,668.46

Less :Depreciation

7,069.74 8,575.67 10,546.55 12,764.91 15,223.04

Net Bloc k

23,628.94 25,557.25 24,575.94 27,931.78 32,445.42

Less: Revaluation Reserve

(3,773.05) (3,562.60) (3,309.10) (2,889.89) (2,532.12)Ca pita l Work in Prog ress

2,624.68 794.01 1,641.58 2,389.53 23,318.60

Pre-ope rative Expenses

735.24 9.54 112.96 26.78 1,672.48

23,215.81 22,798.20 23,021.38 27,458.20 54,904.38

INVESTMENTS

6,742.68 6,752.68 6,469.18 5,450.24 5,600.94

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CURRENT ASSETS, LOA NS AND

ADVANCES

Inventories

4,700.28 12,165.23 7,864.85 9,646.36 45,182.44

Sund ry Debt ors

7,865.67 7,391.51 13,216.52 19,940.90 41,038.89

Ca sh and Bank Balanc es

5,666.66 6,468.78 3,934.81 2,432.18 3,383.09

Loans and Adva nces

11,052.00 11,589.50 10,970.30 10,277.38 11,555.03

29,284.61 37,615.02 35,986.48 42,296.82 101,159.45

LESS: CURRENT LIABILITIES AND

PROVISIONS

Current liab ilities

7,838.08 12,649.36 10,132.35 13,441.39 61,309.01

Provisions

617.53 1,686.04 1,051.38 3,306.62 1,821.81

8,455.61 14,335.40 11,183.73 16,748.01 63,130.82

NET CURRENT ASSETS

20,829.00 23,279.62 24,802.75 25,548.81 38,028.63

MISCELLANEOUS EXPENDITURE

(To t he e xtent not written o ff or

ad justed) 338.08 171.07 14.14 1.62 -

51,125.57 53,001.57 54,307.45 58,458.87 98,533.95

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SAW PIPES LIMITED ANNEXURE 1 (ii)

STATEMENT OF PROFIT AND LOSSES

FOR THE YEAR

12 Months

Ended

13 Months

Ended

15 Months

Ended

12 Months

Ended

12 Months

Ended

DESCRIPTION June 30,2000 June 30,2001 Sep t. 30,2002 Sep t. 30,2003 Sep t. 30,2004(Rs. in lac s) (Rs. in lac s) (Rs. in lac s) (Rs. in lac s) (Rs. in lac s)

INCOME

Sales and Op erational Incom e

-of products manufac tured

29,127.62 39,966.51 75,410.30 80,495.90 112,330.12

-of products traded

1,065.20 55.84 2.90 - -

Tota l

30,192.82 40,022.35 75,413.20 80,495.90 112,330.12

Less: Exc ise Duty

2,007.17 3,580.60 736.45 11,196.41 4,124.95

Net Sales and Op erational

Inc om e 28,185.65 36,441.75 74,676.75 69,299.49 108,205.17

Other Incom e1,145.28 351.41 317.98 203.18 601.32

Increa se/ (Dec rease) in Stoc k

(456.16) 3,310.65 (1,583.07) 216.37 7,028.68

28,874.77 40,103.81 73,411.66 69,719.04 115,835.17

EXPENDITURE

Raw Ma terial C onsumed

16,814.79 24,393.73 45,359.96 39,274.98 76,009.40

Purchase fo r Re-Sa le

1,004.02 77.05 2.40 - -

Ma nufac turing Expenses

1,845.71 2,173.53 4,369.83 4,093.25 17,704.47

Paym ents to and Provisions for

Emp loyee s 882.14 1,089.54 1,942.39 1,853.05 2,521.60

Selling Expenses

1,028.66 1,152.81 6,927.23 2,141.62 3,947.86

Finance Expenses

3,444.03 4,886.47 6,607.36 3,813.58 3,866.91

Ad ministrative & O ther Expenses

1,482.71 971.55 1,626.00 6,261.51 1,847.62

Depreciation (net of revaluation

reserve ) 1,189.12 1,292.72 1,741.00 1,842.47 2,188.33

27,691.18 36,037.40 68,576.17 59,280.46 108,086.19

Profit be fore Taxa tion

1,183.59 4,066.41 4,835.49 10,438.58 7,748.98

Provision fo r Incom e Tax

-Current Tax- 1,130.00 661.00 3,039.00 1,875.00

-Deferred Tax/ Withd rawn from

Defe rred Tax Lia

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