LETTER OF OFFER (Private & Confidential) For Equity Shareholders of the Company Only TULSYAN NEC LIMITED The Company was originally incorporated as ‘National Engineering Company Limited’ on April 11, 1947 under the Companies Act, 1913 and a certificate of commencement of business was received at Kapurthala (Punjab) on July 07, 1947. The registered office of the company was shifted from Kapurthala (Punjab) to West Bengal in year 1964 and a fresh certificate of incorporation was received at Calcutta on November 12, 1964. The registered office of the company was shifted from the State of Bengal to the State of Tamil Nadu and a new certificate of Registration issued by Registrar of Companies, West Bengal confirming the said transfer was received on January 21, 1978 and a certificate of Registration issued by Registrar of Companies, Tamil Nadu confirming the said transfer was received on January 31, 1978. The name of the Company was changed to ‘Tulsyan NEC Limited’ and a fresh certificate of incorporation consequent to change of name was obtained on August 21, 1996. Registered Office: 61, Sembudoss Street, Chennai – 600 001 Tel: +91—044-39181060 ; Fax: +91- 044-39181097; Email: [email protected]; Website: www.tulsyannec.co.in Contact person: Mr. K. Janakiraman, Company Secretary & Compliance Officer ISSUE OF 1,00,00,000 EQUITY SHARES OF ` 10/- EACH FOR CASH AT A PREMIUM OF ` 39.50 (I.E. PRICE OF ` 49.50 PER EQUITY SHARE) AGGREGATING TO ` 4950.00 LACS ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF TWO EQUITY SHARES FOR EVERY ONE EQUITY SHARE (I.E. 2:1) HELD ON RECORD DATE I.E. MARCH 12, 2011. THE ISSUE PRICE IS 4.95 TIMES THE FACE VALUE. PAYMENT TERMS # AMOUNT PAYABLE PER EQUITY SHARE (`) FACE VALUE (`) PREMIUM( `) TOTAL (`) ON APPLICATION 3.00 12.00 15.00 ON ALLOTMENT 3.00 12.00 15.00 FIRST AND FINAL CALL 4.00 15.50 19.50 TOTAL 10.00 39.50 49.50 # FOR DETAILS ON PAYMENT TERMS PLEASE REFER TO PAYMENT TERMS ON PAGE 161. GENERAL RISKS Investment 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 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 the adequacy of this document. The attention of investors is drawn to the statement of Risk Factors beginning on page no. v of this Letter of Offer. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in context of the Issue, that the information contained in this Letter of Offer 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 makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE, The Designated Stock Exchange), Madras Stock Exchange Limited (MSE), Calcutta Stock Exchange Limited (CSE) and are permitted to trade on the National Stock Exchange of India Limited (NSE) w.e.f November 2009. The Company has received in-principle approvals from BSE, MSE and CSE vide their letter nos. DCS/PREF/JA/IP-RT/514/10- 11, MSE/LD/PSK/738/365/10 and CSE/LD/946/2010 dated September 02, 2010, August 23, 2010 and September 13, 2010 respectively for listing of the equity shares being issued in terms of this Letter of Offer. LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE KEYNOTE CORPORATE SERVICES LIMITED 4 th Floor, Balmer Lawrie Building, 5, J. N. Heredia Marg, Ballard Estate, Fort, Mumbai – 400 001 Tel : +91-022-3026 6000-3 Fax: + 91-022-2269 4323 E-mail: [email protected]Website: www.keynoteindia.net SEBI Regn. No.: INM 000003606 AMBI Regn. No.: AMBI/040 MPA FINANCIAL SERVICES LIMITED Mount Chambers, 190, Anna Salai, Chennai- 600 002 Tel: + 91-044- 28523700 Fax:+91-044- 28523852 E-mail: [email protected]Website: www.mpa.in SEBI Regn. No.: INM000011401 CAMEO CORPORATE SERVICES LTD. Subramanian Building, No. 1, Club House Road, Chennai – 600 002 Tel: +91-044-28460390 (5 Lines); Fax: +91-044-28460129 E-mail: [email protected]Website: www.cameoindia.com SEBI Regn. No.: INR 000003753 ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS FOR SPLIT FORMS ISSUE CLOSES ON FRIDAY, MARCH 25, 2011 SATURDAY, APRIL 02, 2011 WEDNESDAY, APRIL 13, 2011
Transcript
LETTER OF OFFER (Private & Confidential)
For Equity Shareholders of the Company Only
TULSYAN NEC LIMITED
The Company was originally incorporated as ‘National Engineering Company Limited’ on April 11, 1947 under the Companies Act, 1913 and a certificate of commencement of business was received at Kapurthala (Punjab) on July 07, 1947. The registered office of the company was shifted from Kapurthala (Punjab) to West Bengal in year 1964 and a fresh certificate of incorporation was received at Calcutta on November 12, 1964. The registered office of the company was shifted from the State of Bengal to the State of Tamil Nadu and a new certificate of Registration issued by Registrar of Companies, West Bengal confirming the said transfer was received on January 21, 1978 and a certificate of Registration issued by Registrar of Companies, Tamil Nadu confirming the said transfer was received on January 31, 1978. The name of the Company was changed to ‘Tulsyan NEC Limited’ and a fresh certificate of incorporation consequent to change of name was obtained on August 21, 1996.
Contact person: Mr. K. Janakiraman, Company Secretary & Compliance Officer
ISSUE OF 1,00,00,000 EQUITY SHARES OF ` 10/- EACH FOR CASH AT A PREMIUM OF ` 39.50 (I.E. PRICE OF ` 49.50 PER EQUITY SHARE) AGGREGATING TO ` 4950.00 LACS ON RIGHTS BASIS TO THE EXISTING EQUITY SHAREHOLDERS OF THE COMPANY IN THE RATIO OF TWO EQUITY SHARES FOR EVERY ONE EQUITY SHARE (I.E. 2:1) HELD ON RECORD DATE I.E. MARCH 12, 2011. THE ISSUE PRICE IS 4.95 TIMES THE FACE VALUE.
PAYMENT TERMS# AMOUNT PAYABLE PER EQUITY SHARE (`)
FACE VALUE (`) PREMIUM( `) TOTAL (`) ON APPLICATION 3.00 12.00 15.00 ON ALLOTMENT 3.00 12.00 15.00 FIRST AND FINAL CALL 4.00 15.50 19.50 TOTAL 10.00 39.50 49.50 #FOR DETAILS ON PAYMENT TERMS PLEASE REFER TO PAYMENT TERMS ON PAGE 161.
GENERAL RISKS Investment 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 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 the adequacy of this document. The attention of investors is drawn to the statement of Risk Factors beginning on page no. v of this Letter of Offer.
ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for, and confirms that this Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in context of the Issue, that the information contained in this Letter of Offer 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 makes this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.
LISTING The existing Equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE, The Designated Stock Exchange), Madras Stock Exchange Limited (MSE), Calcutta Stock Exchange Limited (CSE) and are permitted to trade on the National Stock Exchange of India Limited (NSE) w.e.f November 2009. The Company has received in-principle approvals from BSE, MSE and CSE vide their letter nos. DCS/PREF/JA/IP-RT/514/10-11, MSE/LD/PSK/738/365/10 and CSE/LD/946/2010 dated September 02, 2010, August 23, 2010 and September 13, 2010 respectively for listing of the equity shares being issued in terms of this Letter of Offer.
MPA FINANCIAL SERVICES LIMITED Mount Chambers, 190, Anna Salai, Chennai- 600 002 Tel: + 91-044- 28523700 Fax:+91-044- 28523852 E-mail: [email protected] Website: www.mpa.in SEBI Regn. No.: INM000011401
CAMEO CORPORATE SERVICES LTD.
Subramanian Building, No. 1, Club House Road, Chennai – 600 002 Tel: +91-044-28460390 (5 Lines); Fax: +91-044-28460129 E-mail: [email protected] Website: www.cameoindia.com SEBI Regn. No.: INR 000003753
ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS FOR
SPLIT FORMS ISSUE CLOSES ON
FRIDAY, MARCH 25, 2011 SATURDAY, APRIL 02, 2011 WEDNESDAY, APRIL 13, 2011
TABLE OF CONTENTS DEFINITIONS/ABBREVIATIONS ................................................................................................................... i
CERTAIN CONVENTIONS; USE OF MARKET DATA ............................................................................. iii
FORWARD-LOOKING STATEMENTS ........................................................................................................ iv
PART – I SECTION I - RISK FACTORS ......................................................................................................................... v
SECTION II – INTRODUCTION
SUMMARY OF FINANCIAL DATA .............................................................................................................. 1
THE ISSUE ....................................................................................................................................................... 14
GENERAL INFORMATION ........................................................................................................................... 15
CAPITAL STRUCTURE OF THE COMPANY.............................................................................................. 22
OBJECTS OF THE ISSUE ................................................................................................................................ 27
STATEMENT OF TAX BENEFITS ................................................................................................................. 34
KEY INDUSTRY REGULATIONS AND POLICIES ................................................................................... 43
SECTION III - ABOUT COMPANY
HISTORY AND CORPORATE STRUCTURE OF THE COMPANY ......................................................... 49
DEFINITIONS/ABBREVIATIONS CONVENTIONAL / GENERAL TERMS
Term Description Act The Companies Act, 1956 and subsequent amendments thereto Depositories Act The Depositories Act, 1996 as amended from time to time Depository A Depository registered with SEBI under the SEBI (Depositories &
Participant) Regulations, 1996 as amended from time to time FY/ Financial year or Fiscal Year The twelve months ended March 31st of a particular year Security Certificate Equity Share Certificate Security(ies) Equity Share(s) SE/ Stock Exchange(s) Bombay Stock Exchange Limited, National Stock Exchange
Limited Madras Stock Exchange Limited and Calcutta Stock Exchange Limited
ISSUE RELATED TERMS
Term Description Articles Articles of Association of Tulsyan NEC Limited ASBA Application Supported by Blocked Amount Board Board of Directors, of Tulsyan NEC Limited BSE, Designated Stock Exchange Bombay Stock Exchange Limited CAF Composite Application Form Directors Directors on the Board of Tulsyan NEC Limited Equity Shareholders Equity Shareholders of the Company whose name appear as:
Beneficial Owners as per the list furnished by the depositories in respect of Equity Shares held in electronic form and
On the Register of Members of the Company in respect of the Equity Shares held in Physical form
Equity Shares Equity Shares of the Company of ` 10/- each Lead Managers/ LM Lead Managers to the Issue i.e. Keynote Corporate Services
Limited and MPA Financial Services Limited. Issue/ Rights Issue Issue of 1,00,00,000 equity shares of ` 10/- at a premium of ` 39.50
per equity share (issue price of ` 49.50) aggregating ` 4950 lacs on rights basis to the existing equity shareholders of the Company in the ratio of two equity shares for every one equity share (i.e. 2:1) held on March 12, 2011 (record date) as per this Letter of Offer.
Issue Price The price at which the equity shares will be issued by the Company under this Letter of Offer.
Issuer/ Company/Tulsyan Tulsyan NEC Limited Letter of Offer/ LOO/ Offer Document
This Letter of Offer dated March 14, 2011 circulated to the Equity Shareholders and filed with the Stock Exchanges containing inter alia the Issue price and the number of equity shares to be issued and other incidental information.
Promoters of the Company Mr. Lalit Kumar Tulsyan and Mr. Sanjay Tulsyan Statutory Auditors of the Company
C.A. Patel & Patel, Chartered Accountants having its office located at 442,“A Wing, 4th Floor, Flat No. 2, Parsn Manere, Anna Salai, Chennai – 600006.The Registration Number of the Firm is 005026 S.
SCSBs Self Certified Syndicate Banks
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COMPANY / INDUSTRY RELATED TERMS
Term Description AFBC Atmospheric Fluidised Bed Consumption EPC Engineering, procurement and construction IDBI Industrial Development Bank of India MOEF Ministry of Environment and Forests MT Metric Tonne TMT Thermo Mechanical Treated TNPCB Tamil Nadu Pollution Control Board
ABBREVIATIONS
Abbreviations Full Form AGM Annual General Meeting AY Assessment Year CDSL Central Depository Services (India) Limited CLB Company Law Board DCA Department of Company Affairs DIN Director Identification Number DP Depository Participant EGM Extraordinary General Meeting EPS Earnings Per Share FCNR Account Foreign Currency Non Resident Account FDI Foreign Direct Investment FEMA Foreign Exchange Management Act, 1999 read with rules and
regulations there under and amendments thereto FI Financial Institution FII (s) Foreign Institutional Investors registered with SEBI under applicable
laws. GOI Government of India SEBI (ICDR) Regulations, 2009/ICDR
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009
NA Not Applicable NAV Net Asset Value NR Non Resident NRE Account Non Resident External Account NRI(s) Non Resident Indians NRO Account Non Resident Ordinary Account NSDL National Securities Depository Limited NOF Net Owned Funds MOU Memorandum of Understanding PAN Permanent Account Number PAT Profit After Tax PBDT Profit Before Depreciation and Tax PBIDT Profit Before Interest Depreciation and Tax PBT Profit Before Tax P/E Ratio Price/Earnings Ratio ROC Registrar of Companies ROI Return on Investment RBI Reserve Bank of India SCRR Securities Contracts (Regulations) Rules, 1957 as amended from time
to time. SEBI Securities and Exchange Board of India
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CERTAIN CONVENTIONS; USE OF MARKET DATA
In this Letter of Offer, unless the context otherwise requires, all references to one gender also refers to another gender and the word "Lakh" or "Lac" means "one hundred thousand" and the word "million" means "ten lac" and the word "Crore" means "ten million" and the word “One hundred crore” means “Billion”. In this Letter of Offer, any discrepancies in any table between total and the sum of the amounts listed are due to rounding-off. Throughout this Letter of Offer, all figures have been expressed in Rupee(s), Lacs or crores as stated at appropriate places. All references to “India” contained in this Letter of Offer are to the Republic of India. For additional definitions used in this Letter of Offer, see the section “Definitions and Abbreviations” on page i of this Letter of Offer. Industry data used throughout this Letter of Offer has been obtained from industry publications and other authenticated published data. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable but that their accuracy and completeness are not guaranteed and their reliability cannot be assured. Although the Company believes that the industry data used in this Letter of Offer is reliable, it has not been independently verified. Similarly, internal Company reports, while believed by the Company to be reliable, have not been verified by any independent sources.
CURRENCY OF PRESENTATION In this Letter of Offer, all references to “Rupees” and “`” are to the legal currency of India.
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FORWARD-LOOKING STATEMENTS This Letter of Offer contains certain “forward-looking statements”. These forward looking statements can generally be identified by words or phrases such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue” or other words or phrases of similar import. Similarly, statements that describe the objectives, plans or goals also are forward-looking statements. All forward looking statements are subject to risks, uncertainties and assumptions about the Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from the expectations include, among others: General economic and business conditions in India and other countries. Regulatory changes relating to our industry / sector in India and our ability to respond to them; Fluctuation in operating costs; The ability to successfully implement the strategy, growth and expansion plans and technological
changes; Changes in laws and regulations that apply to the customers of the Company; Increasing competition among and the conditions of the customers of the Company; The monetary and fiscal policies of India, inflation, deflation, unanticipated turbulence in interest
rates, foreign exchange rates, changes in domestic and foreign laws, regulations and taxes. Occurrence of natural disaster or calamities; Changes in political conditions in India. For further discussion of factors that could cause actual results to differ, please see the section titled “Risk Factors” beginning on page no. v of this 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 the Company, the Directors, any member of the Lead Manager team nor any of their respective affiliates 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 requirements, the Company and the Lead Manager will ensure that investors in India are informed of material developments until such time as the grant of listing and trading permission by the Stock Exchanges.
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SECTION I - RISK FACTORS An investment in equity shares involves a high degree of risk. The investors should carefully consider all of the information in this Letter of Offer, in evaluating the Company and its business, including the risks and uncertainties described below, before making any investment decision. If any of the following risks actually occur, the business, financial condition and results of operations could suffer, the trading price of the Equity Shares could decline, and the investors might lose all or part of their investment. Unless specified or quantified in the relevant risk factors below, the financial or other implications of any of the risks described in this section cannot be quantified. Materiality The risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality:
Some events may not be material individually, but may be found material collectively. Some events may have material impact qualitatively instead of quantitatively. Some events may not be material at present but may have material impact in the future.
The risk factors are as envisaged by the management. Wherever possible, the financial impact of the risk factors has been quantified. A. INTERNAL RISK FACTORS
1. Contingent Liabilities not provided for The details of contingent liabilities as per the audited balance sheet for the period ended 30/09/2010 (on standalone basis) are as follows:
` in Lacs Sr. No. Particulars 30/09/2010 Contingent Liabilities not provided for
1 Guarantees Outstanding 122.63 2 FLC with Bank 5675.67 3 Entry Tax 1.79 4 Excise Duty 19.00 Total 5819.09
In the event such contingent liabilities materialize it may have an adverse effect on the financial condition and future financial performance of the Company.
2. The details of the tax liabilities disputed in appeal in relation to Income Tax as given in the auditor`s
report is as detailed below
Sr. No.
Asst. Year
Gross Demand
Disputed Amount
Undisputed Amount
Paid/ Adjusted
Remarks
In relation to Excise 1 2003-2004 2,01,989 201989 0 1,00,000 Paid disputed in
Appeal before Commissionorate CESTAT
2 2002-2003 39,87,205 39,87,205 0 14,22,316
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In relation to Income Tax 1 2001-2002 488,160 488,160 0 0 Refund due `
3,18,337/- Rectification sought u/s 154
2 2002-2003 (7590) - (7590) - Requested to adjust this refund against the liability of other years, appeal is made before the Asst. Commissioner of Income Tax
3. The implementation of the expansion project of the company is at a very preliminary stage. Any delay
in implementation of the project may increase the capital cost and also affect returns from the project. The company has acquired the land for setting up the proposed power plant at Gummidipoondi. The construction work at the proposed site is yet to commence. Further the company has appointed M/s. Enmas GB Power Systems Projects Limited to set up the entire plant for the proposed power project on a turnkey basis and their process of sourcing the plant and machinery is yet to commence. Any delay in any of the process related to the construction of the building or procuring of the plant and machinery would lead to a delay in the schedule of implementation of the project and may lead to any increase in the capital cost which would also affect the returns from the project.
4. Loss Making Subsidiaries/ Group Companies Some of the group companies of Tulsyan have incurred losses during the past financial years. The details of the same are as follows:
(Amount in ` Lacs) Name of the Company 2009-10 2008-09
Chitrakoot Steel & Power Pvt. Ltd.
(296.78) -
T G Logistics Pvt. Ltd.
- (8.76)
Management perception The loss in Chitrakoot Steel & Power Pvt. Ltd. (CSPPL) of ` 296.78 lacs was due to a temporary cessation in the activities of CSPPL from May 2009 to January 2010 because of adverse market conditions. It became a 100% subsidiary of the Company only from December 24, 2009, the activities of the company were recommenced from 02/02/2010 under the new management. During the period from 24/12/2009 to 31/03/2010 when the manufacturing activities were renewed under the new management, the Company has booked profit before tax of ` 62.17 lacs.
5. The Company has experienced negative cash flows from its financing activities.
Tulsyan has reported negative cash flows from financing activities for the financial year 2008-09 and 2009-2010 to the tune of ` 2271.66 lacs & ` 1052.04 lacs respectively on standalone basis and to the tune of ` 2288.55 lacs on consolidated basis for the financial year 2008-09.
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Management perception The negative cash flows from financial activities for the financial year ended 2008-09 and 2009-2010 are mainly due to interest payment to banks.
6. The Company is yet to receive approvals required for the proposed power project to be set up in the State of Tamil Nadu. The Company has applied to Tamil Nadu Pollution Control Board for obtaining consent to set up a power plant in the state of Tamil Nadu. The public hearing in this regard has been completed and final consent is awaited. The Company has also made applications to Inspectorate of Factories, Fire Department, Health Department, Department of Town and Country Planning (DTCP) for which approvals are still awaited. In case if the Company fails to obtain the said approval in a timely manner, it may have adverse effect on the business of the Company. For further details please refer to section “Government Approvals or Licensing Arrangements” on page 149 of this Letter of Offer.
7. The Company is dependent on the expertise of its senior management team and key technical and
managerial personnel, and the loss of such persons could adversely affect the business of the company.
The Company is dependent on its senior management team for setting the strategic direction and managing its business, both of which are crucial to its success. Given the substantial experience of the senior management team, in the event any or all of them leave or are unable to continue to work with the Company, it may be difficult to find suitable replacements in a timely manner or at all. The Company’s ability to retain experienced personnel as well as senior management will also in part depend on the Company maintaining appropriate staff remuneration and associated benefits. The Company cannot be sure that the remuneration and benefits that are in place will be sufficient to retain the services of the senior management and skilled people. The loss of any of the members of the senior management or other key personnel may adversely affect the business, financial condition and results of operations of the Company.
8. The company’s indebtness and the conditions and restrictions imposed by the financing agreements could restrict the ability to conduct its business operations.
There are certain restrictive covenants in the agreements with the Banks/ Institutions from whom the company has borrowed money for its business on an ongoing basis. The covenants in certain cases, among other things require the Company to obtain prior permission from them for change in Management, declaring dividend and undertaking of new project etc. which may limit Company’s discretion in these matters.
9. The premises of the registered office of the company is not owned by the company. The Company does not currently own the premises wherein its registered office is located. The premises has been taken on lease basis from Tulsyan Udyog which is a group company of Tulsyan. A monthly rent of ` 5000 is being paid by the company for the use of the premises. No lease agreement has been entered into by the company for the use of the premises. The lease may be renewed subject to mutual consent of the lessors and Tulsyan NEC Ltd. In the event that the lessor requires to vacate the premises, the Company will have to seek a new premises at short notice and for a price that may be higher than what the Company is currently paying, which may affect the ability to conduct the business or increase the operating costs of the Company.
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Management perception
The company is occupying the same premises for its registered office for the past two decades and does not forsee any difficulty in continuing with its lease in the same premises. In the event of any requirement of the company to vacate the said premises, the company is confident of relocating its registered office at a new premises within a reasonable time and at a price which may not increase its operating cost substantially.
10. There has been a reduction in sales and profits of the Company for financial year 2009-10 as compared to 2008-09. . If the Company continues to generate lower sales in the future, then the profitability of the Company may be adversely affected. The Company recorded sales of ` 63,420.40 lacs during the financial year 2009-10 as compared to ` 69,970.06 lacs during the financial year 2008-09. Even though there has been an increase in quantity of TMT bars sold there has been a reduction in sales on account of reduced selling price of TMT Bars. The reduction in sales has also led to reduction in net profits earned by the Company during the year. If the Company continues to generate lower sales in the future, then the profitability of the Company may be adversely affected.
11. Two of the subsidiaries of the issuer company have not commenced commercial activities till date. Two of the subsidiaries of the issuer company namely Tulsyan Power Ltd. and Balaji Engineering and Galvanizing Ltd. which were incorporated on 29/11/2002 and 04/11/2008 respectively have not commenced commercial activities till date.
12. The Company has filed compounding applications for compounding of offenses u/s 621A in the matter of non compliance of provisions of the Companies Act, 1956. Consequent to the inspection carried out by the Central Government U/s 209 (A) of the Companies Act by the Ministry of Corporate Affairs it had issued a warning notice dated 09/04/2010 and advised the company to be more careful in future Company Law Compliances and advised the Company and its Directors to compound the violation committed under sections 297, 209(1)(d) and 209(1) of the Companies Act, 1956 and accordingly compounding applications U/s 629A and 621A of the Companies Act, 1956 has been filed by the Directors and company under Sections 297, 209, 209(1) of the Act on June 09, 2010. If the Company fails to comply with the Companies Act 1956 in the future then it may affect the financial Company’s revenue.
13. The Equity Shares will be partly paid until they are made fully paid up from the date of allotment. Partly paid shares will be suspended from trading as per the rules and regulations of the Exchange prior to the Record Date fixed for the determination of the shareholders liable to pay the First and Final Call. The Rights Issue of equity shares is being made at a price of ` 49.50/- per share. All the shareholders will have to pay ` 15.00/- each on application and allotment and the balance ` 19.50/- on the first and final call. Till such time as the total amount of ` 49.50/- is paid, the equity shares shall be considered to be partly paid up. The partly paid up shares will be listed and traded under a separate ISIN granted by the Depositories. The Bank will fix a record date to determine the list of shareholders to whom the Call Money Notice would be sent for the allotment and then for the first & final Call. If the holder fails to pay the allotment and call money with any interest that may have accrued thereon after notice has been delivered by the Bank, then any shares in respect of which such notice has been given may, at any time thereafter before payment of the call money and interest and expenses due in respect thereof, be forfeited
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by resolution of the Board to that effect. Such forfeiture shall include all dividends declared in respect of the forfeited shares and actually paid before the forfeiture. B. EXTERNAL RISK FACTORS
1. Globally competitive business environment
The Company operates in a globally competitive business environment. Growing competition may force it to reduce the price of its products which may reduce its revenues and margins and/ or decrease its market share, either of which could have a materially adverse effect on its business, financial condition and results of operations.
2. Changes in the Government of India policies
A significant change in the Indian government’s or the state government’s economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and the business and financial condition and prospects in particular of the Company.
3. Risk relating to changes in laws and regulations
Any change in the laws and regulations governing the industry may adversely affect the business and financial condition of the Company.
4. Volatility of share price
After the Rights Issue, the price of the Equity Shares may be highly volatile and may fluctuate significantly due to many factors, including variations in the operations of the Company and changes in the regulatory environment. The prices of the Equity Shares may fluctuate as a result of several factors, including:
volatility in the Indian and global securities market. results of operations and performance in terms of market share; contracts, acquisitions, strategic partnerships, joint ventures, or capital commitments; changes in the estimates of Company performance or recommendations by financial analysts; significant developments in Indian economic liberalization and deregulation policies; significant developments in India’s fiscal and environmental regulations;
5 Factors beyond Management Control
Wars, natural disasters and terrorist attacks may adversely affect the markets, investors confidence, exchange rates and world economy in general and may result in loss of business and assets. PROMINENT NOTES
1. The networth of the Company is as under: (` in lacs)
Period Standalone Consolidated March 31, 2010 6216.24 5957.47
September 30, 2010 6689.89 6439.07
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2. The Book value per share is as follows: (`)
3. There is no interest of promoters/directors/ key management personnel other than reimbursement of
expenses incurred or normal remuneration or benefits. 4. The aggregate amount of related party transactions during the Financial Year 2009-10 is ` 2498.39 lacs.
For details of transactions by the issuer with the group or subsidiary companies during the past one year, please refer to the details on related party disclosures given on page no. 94 (on Standalone basis) of this Letter of Offer.
5. There has been no financing arrangement whereby the Promoter Group, the Directors of the Company
and their relatives have financed the purchase by any other person of securities of the Company other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing of the Draft Letter of Offer with SEBI.
6. All information shall be made available by the LM and the Company to the public and investors at large
and no selective or additional information would be available only to a section of the investors in any manner whatsoever.
7. Investors are free to contact the Lead Manager for any complaints/ information/ clarification pertaining
to this Issue. For contact details of the Lead Manager, please refer to the cover page 17 of this Offer Document.
8 The Company satisfies the following conditions as prescribed under Regulation 57(2) (b) of Part E of
Schedule VIII of the ICDR Regulations.
a. The 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 letter of offer with the designated stock exchange.
b. The reports, statements and information referred to in sub-clause (a) above are available on the
website of Bombay Stock Exchange Limited (BSE), one of the recognized stock exchange with nationwide trading terminals.
c. The Company has investor grievance – handling mechanism which includes meeting of the
Shareholder’s or Investor’s Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the Company as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.
9. The Lead Manager and the Company shall update this Letter of Offer and keep the shareholders/public informed of any material changes till the listing and trading commencement.
Period Standalone Consolidated March 31, 2010 213.84 249.81
September 30, 2010 210.36 246.09
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PART I
SECTION II INTRODUCTION
SUMMARY OF FINANCIAL DATA
Please read the following data in conjunction with the detailed Auditors’ Report commencing on page no. 72 under the heading ‘FINANCIAL INFORMATION’
Standalone Balance Sheet as at 31st March, 2010 and 31st March 2009 ` In Lacs
Particulars As at As at 31/03/2010 31/03/2009
I Sources of Funds 1 Shareholders' Fund: (a) Share Capital 500.00 500.00 (b) Reserves & Surplus 5733.07 4998.43 2 Loan Funds (a) Secured Loans 20307.68 16224.37 (b) Unsecured Loans 2070.20 1298.15 Deferred Tax Adjustment 1381.89 1231.71 29992.84 24252.66 II Application of Funds 1 Fixed Assets: Gross Block 15673.52 14032.58 Less: Depreciation 4979.43 4217.46 Net Block 10694.09 9815.12 Capital Work In Progress 14.76 483.32 2 Investments 773.64 112.16 3 Current Assets, Loans & Advances (a) Current Assets 25308.67 15707.70 (b) Loans & Advances 6322.31 7556.48 31630.98 23264.18 Less: Current Liabilities & Provisions (a) Current Liabilities 11195.05 7867.80 (b) Provisions 1925.58 1554.32 13120.63 9422.12 Net Current Assets 18510.35 13842.06 Miscellaneous Expenditure -------- -------- 29992.84 24252.66
Increase in current liabilities: The current liabilities of the Company were ` 7,867.80 lacs for the financial year ended 2008-09 which increased to ` 11,195.05 lacs for the financial year ended 2009-10. The increase of ` 3,327.25 lacs was on account of increase in activity level of steel division wherein the Company expanded the Rolling capacity by 150000 MTS during the year. Increase in secured loan: The Secured loan for the financial year ended 2008-09 was ` 16224.37 lacs which increased to ` 20307.68 for the financial year ended 2009-10. The increase of ` 4083.31 lacs during the year was due to term loan taken from IDBI for funding the expansion of the steel division.
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Increase in unsecured loan: Unsecured loans of the Company for the financial year ended 2008-09 were ` 1298.15 lacs which increased to ` 2070.20 lacs for the financial year ended 2009-2010. The increase of ` 772.05 lacs was on account of unsecured loans taken by the Company to fund the working capital requirements.
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Standalone Profit and Loss Account for the year ended 31st March, 2010 and 31st March 2009 ` In Lacs
Particulars Year ended Year ended 31/03/2010 31/03/2009 Sales and Other Receipts 63420.40 69970.06 Less : Excise Duty 4119.43 6886.04 59300.97 63084.02 Other Income 175.24 223.38 59476.21 63307.40 Deduct: Cost of Materials and other expenses 57217.70 60374.07 Depreciation 813.33 725.02
1985454.31 PROFIT BEFORE EXCEPTIONAL ITEMS 1445.18 2208.31 Exceptional Items Profit/Loss 85.73 722.10 Profit for the Year 1359.45 1486.21 Less: Provision for Current Tax 360.00 390.00 Fringe Benefit Tax 0.00 14.08 Deferred Tax 150.17 131.33 Profit after taxation 849.28 950.80 Add: Surplus brought forward 2698.83 1963.03 3548.11 2913.83 Appropriations: Transfer to General Reserve 102.00 115.00 Proposed Dividend * 100.00 100.00 Corporate Tax on Dividend 11.26 0.00 Balance Carried to Balance Sheet 3334.85 2698.83 Earning Per Share (basic) 16.99 19.02
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Standalone Cash Flow Statement for the Year Ended 31st March, 2010 and 31st March 2009 (` In lacs)
Particulars Year ended 31/03/2010
Year ended 31/03/2009
A CASH FLOW FROM OPERATING ACTIVITIES Profit Before Tax after adjustment of Loss on sale of assets 1359.45 1486.21 Adjustments for Depreciation 813.33 725.02 Depreciation on old Assets sold (54.72) (4.27) Pre-operative Expenses incurred during the year 0.00 0.61 Interest/Dividend 1965.11 2224.15 Operating Profit before WC Changes 4083.18 4431.72 Adjustments for Inventories (3311.79) 210.44 Sundry Debtors (5822.83) (893.47) Loans & Advances 1234.18 (615.97) Current Liabilities 3327.24 893.87 Working Capital Loans from Bank 3583.26 395.84 Short Term Loans 86.20 282.74 Cash generated from operations 3179.44 4705.17 Income Tax Payable/Paid 0.00 (17.00) Fringe Benefit Tax Paid 0.00 (5.69) Net Cash from Operating activities 3179.44 4682.48
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (1230.67) (2444.63) Sale of Fixed Assets 58.26 10.79 Purchase of Investments (661.48) 95.31 Interest Received 139.04 123.36 Dividend Received 33.78 100.02 Net Cash used in investing activities (1661.07) (2115.15)
C CASH FLOW FROM FINANCING ACTIVITIES Increase in Long Term Loans 413.85 435.85 Increase in Unsecured Loans 772.05 (159.98) Interest paid (2137.93) (2447.53) Dividend Payable/paid (100.00) (100.00) Net Cash from financing activities (1052.04) (2271.66)
D NET INCREASE IN CASH & CASH EQUIVALENTS A+B+C 466.33 295.67 Opening Cash & Cash Equivalents 1407.57 1111.90 Closing Cash & Cash Equivalents 1873.90 1407.57 0.00
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Consolidated Balance Sheet as at 31st March, 2010 and 31st March 2009
` In lacs Particulars As at As at
31/03/2010 31/03/2009 I Sources of Funds 1 Shareholders' Fund: (a) Share Capital 500.00 500.00 (b) Reserves & Surplus 5939.04 5171.15 Minority Interest 2.48 29.83 2 Loan Funds (a) Secured Loans 21558.14 16224.38 (b) Unsecured Loans 3271.97 1298.15 Deferred Tax Adjustment 1381.89 1231.71 32653.52 24455.22 II Application of Funds 1 Fixed Assets: Gross Block 17919.33 14176.64 Less: Depreciation 5451.49 4310.06 Net Block 12467.84 9866.58 Capital Work In Progress 39.45 483.33 Goodwill 2 Investments 2.31 7.22 3 Current Assets, Loans & Advances (a) Current Assets 26040.58 15951.72 (b) Loans & Advances 7054.14 7810.92 33094.72 23762.65 Less: Current Liabilities & Provisions (a) Current Liabilities 11528.16 7960.13 (b) Provisions 1991.74 1704.43 13519.90 9664.55 Net Current Assets 19574.82 14098.10 Deferred Tax Asset 101.88 Miscellaneous Expenditure 1.69 Profit & Loss Account 465.53 465.53 32653.52 24920.75
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Consolidated Profit and Loss Account for the year ended 31st March, 2010 and 31st March 2009 ` In lacs
Year ended Year ended Particulars 31/03/2010 31/03/2009
Sales and Other Receipts 64799.67 70707.08 Less : Excise Duty 4170.91 6886.04 60628.76 63821.04 Other Income 203.71 262.76 60832.47 64083.80 Deduct: Cost of Materials and other expenses 58395.55 60887.89 Depreciation 846.15 735.09 Profit for the Year before Exceptional Items 1590.77 2460.82 Exceptional Items Profit/Loss 85.73 722.10 Profit for the Year 1505.04 1738.72 Less: Provision for Current Tax 386.62 408.31 Fringe Benefit Tax 0.00 14.08 Deferred Tax 173.47 131.33 Profit after taxation 944.95 1185.00 Add: Surplus brought forward 2372.02 2063.70 Less :Preliminary Expenses written off 0.26 3316.97 3248.44 Appropriations: Transfer to General Reserve 110.34 140.22 Interim Dividend Paid ---- 22.53 Dividend Tax Payable (Interim) ---- 3.83 Proposed Dividend 133.80 190.12 Corporate Tax on Dividend 17.00 15.32 Balance Carried to Balance Sheet 3055.83 2876.42
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Consolidated Cash Flow Statement for the Year Ended 31st March, 2010 and for 31st March 2009 ` in Lacs
Particulars Year ended 31/03/2010
Year ended 31/03/2009
A CASH FLOW FROM OPERATING ACTIVITIES Profit Before Tax after adjustment of Loss on sale of assets 1505.04 1738.72 Adjustments for Depreciation 846.15 735.09 Depreciation on old Assets sold (60.91) (4.27) Pre-operative Expenses incurred during the year 0.93 0.61 Interest/Dividend 1998.23 2224.15 Operating Profit before WC Changes 4289.44 4694.30 Adjustments for Inventories (3699.18) 210.43 Sundry Debtors (5912.24) (862.71) Loans & Advances 767.86 (855.16) Current Liabilities 3568.03 881.70 Working Capital Loans from Bank 4321.14 395.83 Short Term Loans 86.20 282.74 Cash generated from operations 3421.25 4747.13 Income Tax Payable/Paid (19.14) (28.58) Fringe Benefit Tax Paid (3.03) (5.74) Net Cash from Operating activities 3399.08 4712.81
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (3023.04) (2445.64) Sale of Fixed Assets 73.53 10.79 Purchase of Investments (661.51) 95.31 Interest Received 140.46 123.36 Dividend Received 33.78 100.02 Net Cash used in investing activities (3436.78) (2116.16)
C CASH FLOW FROM FINANCING ACTIVITIES Increase in Long Term Loans 926.43 435.86 Increase in Unsecured Loans 1973.82 (159.98) Interest paid (2172.47) (2447.53) Dividend Payable/paid (212.65) (116.90) Net Cash from financing activities 515.13 (2288.55)
D NET INCREASE IN CASH & CASH EQUIVALENTS A+B+C 477.43 308.10 Opening Cash & Cash Equivalents 1429.02 1120.92 Closing Cash & Cash Equivalents 1906.45 1429.02
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Statement of Assets and Liabilities for the six period ended September 30, 2010 (Standalone) (limited review)
(` in lacs) Particulars As at 30/09/ 2010 As at 31/03/2010 A) Fixed Assets
G) Misc. Expend. to the Extent not written off or adjusted - - H) Surplus(+) or Deficit (-) in Profit & Loss Account 318.55 849.28 Networth (F-G-H) 6,689.89 6,216.24
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Statement of Profit and Loss A/c for the six period ended September 30, 2010 (Standalone) (limited review
(` in lacs) Particulars Six months
period ended 30/09/2010
Year Ended 31/03/2010
INCOME Sales - of Products manufactured by the company 26,474.15 54,196.25 of Products traded in by the Company 4,393.07 Other income 1.37 886.89 Increase/ Decrease (-) in Inventories 4,355.51 3,252.80 Total 30,831.03 62,729.01 EXPENDITURE Raw Material Consumed 22,825.52 47,920.45 Staff Costs 900.97 1,742.42 Other Manufacturing Expenses 4,519.19 6,167.02 Administration Expenses 1,409.54 Selling & Distribution and Other Expenses 1,093.14 Total 28,245.68 58,332.57 Earning Before Depreciation, Interest & Tax 2,585.35 4,396.44 Depreciation 431.07 813.33 Interest 1,680.63 2,137.93 Net Profit Before Tax and Extraordinary Items 473.65 1,445.18 Taxation Current Tax (Including Fringe Benefit Tax) 144.00 360.00 Deferred Tax 11.10 150.17 Net Profit before Extraordinary Items 318.55 935.01 Extraordinary items - (85.73) Net Profit after extraordinary items 318.55 849.28 Adjustments on account of prior period expenses - Adjusted profit
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Statement of Cash Flow for the six period ended September 30, 2010 (Standalone) (limited review)
(` in lacs) Sr. No. Particulars As at 30/09/2010 As at 31/03/ 2010
(Limited Review) 1 Cash flow from Operating activities 1725.04 3179.44 2 Cash flow from Investing activities (308.25) (1,661.07) 3 Cash flow from Financing activities (1138.72) (1,052.04)
4 Net Increase / (decrease) in cash and cash equivalents (1+2+3)
278.07 466.33
5 Cash and cash equivalent at the beginning of period 1873.89 1,407.57 6 Cash and cash equivalent at the end of period 2151.96 1,873.90
Notes on Cash Flow Statement:
1 State Subsidy received has been included in Reserve & Surplus
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Annexure-I - Statement of Assets and Liabilities (Consolidated) (limited review) Amount in ` lacs
Particulars As at 30/09/ 2010 As at 31/03/2010 A Fixed Assets Gross Block 18,256.94 17,958.78 Less: Depreciation 5,935.83 5,451.49 Net Block 12,321.11 12,507.29 Less: Revaluation Reserve 16.83 16.83 Net Block After Adjustment for revaluation reserve 12,304.28 12,490.46 B Investments 107.33 2.31 C Current Assets, Loans and Advances Inventories 13,079.63 10,141.73 Sundry Debtors 14,143.81 13,992.40 Cash and Bank Balances 2,182.69 1,906.45 Loans and Advances 7,129.55 7,054.14 Total 36,535.68 33,094.72 D Liabilities and Provisions Secured Loans 25,967.45 21,558.14 Unsecured Loans 2,406.18 3,271.97 Current Liabilities and Provisions 12,854.58 13,519.90 Liability for Deferred payment 1,280.01 1,280.01 Total 42,508.22 39,630.02 E: Grand Total (A+B+C-D) = E 6,439.07 5,957.47 F: Net Worth Represented by Share Capital 500.00 500.00 Equity Share Advances - - Reserves 5,937.12 4,994.09 Less: Revaluation Reserve 16.83 16.83 Reserves (Net of Revaluation reserves) 5,920.29 4,977.26 Minority Interest 2.58 2.48 Total 6,422.87 5,479.74 G Misc. Expend. to the Extent not written off or adjusted 465.59 467.22 H: Surplus(+) or Deficit (-) in Profit & Loss Account 481.79 944.95 Networth (F-G+H) 6,439.07 5,957.47
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Annexure-II - Statement of Profit and Loss Account (Consolidated) (limited review) Amount in ` lacs
Particulars For Six months period ended
30/09/2010
Year Ended 31/03/2010
INCOME Sales - of Products manufactured by the company 27,025.39 55,387.27 of Products traded in by the Company 716.83 4,393.07 Other income 371.60 1,052.13 Increase/ Decrease (-)in Inventories 3,201.54 3,463.30 Total 31,315.36 64,295.77 EXPENDITURE Raw Material Consumed 22,210.77 47,431.75 Staff Costs 1,179.57 1,950.52 Other Manufacturing Expenses 4,399.72 7,697.93 Administration Expenses 865.95 2,194.30 Selling & Distribution and Other Expenses 168.82 411.88 Total 28,824.83 59,686.38 Earning Before Depreciation, Interest & Tax Depreciation 463.86 846.15 Interest 1,418.23 2,172.47 Net Profit Before Tax and Extraordinary Items 608.44 1,590.77 Taxation Current Tax (Including Fringe Benefit Tax) 3.64 386.62 Deferred Tax - 173.47 Net Profit before Extraordinary Items 604.80 1,030.68 Extraordinary items 123.01 85.73 Net Profit after extraordinary items 481.79 944.95 Adjustments on account of prior period expenses - - Adjusted profit 481.79 944.95
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Annexure-III - Statement of Cash Flow (Consolidated) (limited review)
(` in Lacs) Sr. No. Particulars As at 30/09/2010
As at 31/03/2010
(Limited Review)
1 Cash flow from Operating activities 1,725.03 3364.35 2 Cash flow from Investing activities (308.25) (3436.78) 3 Cash flow from Financing activities (1,138.72) 549.86 4 Net Increase / (decrease) in cash and cash equivalents (1+2+3) 278.06 477.43 5 Cash and cash equivalent at the beginning of period 1,873.90 1429.02 6 Cash and cash equivalent at the end of period 2,151.96 1906.45
Notes on Cash Flow Statement:
1 State Subsidy received has been included in Reserve & Surplus
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THE ISSUE
Type of Issue Type of Instrument
No. of equity shares
Face Value (`)
Issue Price (`)
Consideration
Rights Issue Equity Shares 1,00,00,000 10/- 49.50 Cash
Entitlement Ratio The Equity Shares are being offered on rights basis to the existing Equity Shareholders of the Company in the ratio of Two Equity Shares for every One Equity Share held as on the Record Date i.e. 2:1
Market Lot
The market lot for the Equity Shares in dematerialized mode is one. In case of physical certificates, the Company would issue one certificate for the Equity Shares allotted to one folio (“Consolidated Certificate”).
Equity shares outstanding prior to the Issue 50,00,000 Equity Shares Equity shares outstanding after the issue 1,50,00,000 Equity Shares
PAYMENT TERMS
The payment terms available to the Investors are as follows:
AMOUNT PAYABLE PER EQUITY SHARE (`) FACE VALUE (`) PREMIUM( `) TOTAL (`) ON APPLICATION 3.00 12.00 15.00 ON ALLOTMENT 3.00 12.00 15.00 FIRST AND FINAL CALL 4.00 15.50 19.50 TOTAL 10.00 39.50 49.50
USE OF PROCEEDS:
Please see section titled “Objects of the Issue” on page no. 27 of this Offer Document
RECORD DATE & OTHER DETAILS
PARTICULARS DATE(S) Record Date March 12, 2011 Purpose Rights entitlement (2:1) Ex-Right March 10, 2011
ISSUE SCHEDULE
ISSUE OPENS ON LAST DATE FOR RECEIVING REQUESTS FOR SPLIT FORMS
ISSUE CLOSES ON
FRIDAY MARCH 25, 2011 SATURDAY, APRIL 02, 2011 WEDNESDAY, APRIL 13, 2011
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GENERAL INFORMATION
Dear shareholder(s),
The Board of Directors at their meeting held on August 18, 2009 decided to make the rights issue of equity shares to the existing equity share holders of the company.
The resolution in respect of the rights issue was approved by the shareholders of the Company in the AGM of the Company held on September 16, 2009.
The Board of Directors in their meeting held on July 10, 2010 decided to make the rights issue of ` 4950.00 Lacs to the existing shareholders of the Company. Subsequently the ratio, price and no. of equity shares for the proposed rights issued were decided in the Board Meeting held on February 28, 2011 which is as follows:
Issue of 1,00,00,000 Equity Shares of ` 10/- each for cash at a price of ` 49.50 per equity share aggregating ` 4950.00 lacs on rights basis to the existing equity shareholders of the Company in the ratio of Two equity shares for every One equity share (i.e. 2:1) held on March 12, 2011 (record date). Accordingly the Draft Letter of Offer was approved by the Board in their meeting held on July 22, 2010.
The Letter of Offer has been approved by the Board of Directors in their meeting held on March 14, 2011.
The face value of the Equity Shares is ` 10/- per share and the Issue Price is 4.95 times the face value.
Name of the Company : Tulsyan NEC Limited Registered Office : 61, Sembudoss Street, Chennai – 600 001
Company Identification Number : L28920TN1947PLC007437 Registration Number : 007437 Contact person : K. Janakiraman Registrar of Companies : Shastri Bhavan, Block No. 6, B Wing, 2nd Floor, Haddows
Road, Chennai – 600 034, Tamil Nadu, India
Other Offices and Factories
Corporate Office
: Apex Plaza, I Floor, New No. 77, (Old No. 3), Nungambakkam High Road, Chennai – 600 034
Administrative Office
: 37, Kaveriappa Layout, Miller Tank Bund Road, Vasant Nagar, Bangalore- 560 052
Steel Division : 39, Dr. Harikrishna Naidu Street, Ambattur, Chennai- 600 053 Plot No. A 15/ N, (pt) SIPCOT Industrial Complex, Gummudipoondi, Tiruvallur District, Tamil Nadu. D-4, SIPCOT Industrial Complex, Gummudipoondi, Tiruvallur District, Tamil Nadu.
Depot : 55/2, Cuddalore, Main Road, Ariyankuppam, Pondicherry – 605 007 Windmill : Kudimangalam, Udumalapet, Tamil Nadu
Pazhavoor, Tiruneveli District, Tamil Nadu Kavalakurichi, Tiruneveli District, Tamil Nadu
Karnataka : Plot No. E-4, Madkaim Industrial Area, Madkaim Village, Ponda Taluk, Goa. : Survey No. 4/1- P-1, Adakamaranahully Village, Dasanapura Hobli Makali Post,
Tumkur Road, Bangalore. : Survey No. 237 to 245, Boincheruvupalli village, Peapully Mandal, Kurnool district,
Andhra Pradesh – 518 220
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IMPORTANT
1. This Issue is applicable to such Equity Shareholders whose names appear 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 on the Register of Members of the Company at the close of business hours on March 12, 2011 (Record Date)
2. Your attention is drawn to the section on risk factors starting from page no. v of this Letter of Offer.
3. Please ensure that you have received the CAF with this Letter of Offer.
4. Please read the Letter of Offer and the instructions contained herein and in the CAF carefully before filling in the CAFs. The instructions contained in the CAF are an integral part of this Letter of Offer and must be carefully followed. An application is liable to be rejected for any non compliance of the Letter of Offer or the CAF.
5. All enquiries in connection with this Letter of Offer or CAFs 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 CAFs.
6. The Lead Manager and the Company shall make all information available to the Equity Shareholders and no selective or additional information would be available for a section of the Equity Shareholders in any manner whatsoever including at presentations, in research or sales reports etc. after filing of the Letter of Offer with SEBI.
7. All the legal requirements as applicable till the filing of the Letter of Offer with the Designated Stock Exchange have been complied with.
BOARD OF DIRECTORS The Board of Directors of the Company comprises of:
Name of the Director Designation Status Mr. Lalit Kumar Tulsyan
Chairman Executive chairman
Mr. Sanjay Tulsyan
Managing Director Executive and Non Independent
Mr. Sanjay Agarwalla
Wholetime Director
Executive and Non Independent
Mr. A.P. Venkateshwaran
Wholetime Director
Executive and Non Independent
Mr. S. Ramakrishnan
Independent Director Non-executive Director
Mr. S. Soundararajan
Independent Director Non-executive Director
Mr. V. Kirubanandan
Independent Director Non-executive Director
Mr. C. Ramachandran
Independent Director Non-executive Director
Mr. P.T. Rangamani Independent Director Non-executive Director For further details of the Board of Directors of the Company, please refer to the chapter titled “Management” on page. 63 of this Letter of Offer.
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ISSUE MANAGEMENT TEAM
Company Secretary and Compliance Officer
Mr. K. Janakiraman Company Secretary & Compliance Officer 61, Sembudoss Street, Chennai – 600 001 Tel: +91- 044- 3918 1060 Fax: +91- 044- 3918 1097 Email: tulsyannec.co.in
Investors can contact the Compliance Officer or the Registrar to the issue in case of any pre-Issue or post-Issue related problems such as non-receipt of letters of allotment, credit of allotted Equity Shares in the respective beneficiary account or refund orders, etc.
Mount Chambers, 190, Anna Salai, Chennai 600 002 SEBI Regn No.: INM000011401 Tel: +91-044- 28523700 Fax: :+91-044- 28523852 E-mail: [email protected] Website: www.mpa.in Contact Person: Mr. Santosh Kumar Jain
Registrar to the Issue
CAMEO CORPORATE SERVICES LTD.
Subramanian Building, No. 1, Club House Road, Chennai – 600 002 Tel: +91-044-28460390 (5 Lines); Fax: +91-044-28460129 Website: www.cameoindia.com E-mail: [email protected], [email protected] SEBI Regn. No.: INR 000003753 Contact Person: Ms. Priya
Legal Advisors to the Issue Lakshmmi Subramanian & Associates 81, MNO Complex, Greams Road, Chennai – 600 006 Tel : 91 – 044 - 2892272 Fax : 91 – 044 - 2892273 Email : [email protected] Contact Person : Ms. Lakshmmi Subramanian
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Auditors of the Company C A PATEL & PATEL Chartered Accountants No. 442, ‘A’ Wing, 4th Floor, Flat No. 2, Parsn Manere, Anna Salai, Chennai 600 006 Tel: +91- 44 -52144887/52144188 Email: [email protected]
Bankers to the Company Canara Bank Prime Corporate Branch, Shankarnarayana Building, 25, M. G. Road, Bangalore- 560 001 Tel no: +91- 080- 2559 9254/ 59
Syndicate Bank Industrial Finance Branch, Manipal Center, II Floor, Dickenson Road, Bangalore- India Tel no: +91- 080- 2558 7294
Andhra Bank N. R. Road Branch, Bangalore – 560 002 Tel no:+91 – 080- 2295 9687/ 88 /89 /90
State Bank of India MID Corporate Group, Bangalore Region, #65, St. Mark’s Road, 2nd floor, Local Head Office Building, Bangalore – 560 001 Tel no: +91- 080- 2594 3080/ 82 /83
IDBI Bank Limited Bangalore Main Branch, IDBI House, 58, Mission Road, Post Bag No. 27015 Bangalore 560 027 Tel no: +91- 080 -2210 6138 – 44
Indian Overseas Bank Cathedral Branch, 762, Anna Salai, Chennai – 600 002 Tel no.: 044-28524833/28524813
Bankers to the Issue
Canara Bank Town Hall Branch P B No.6867,112, J.C. Road, Banglore- 560 002 Tel no.: +91-080 - 22238308 Contact Person: Mr. N.Parthasarathi Email id: [email protected] Website: www.canarabank.com SEBI Regn No: INBI00000019
ICICI Bank Capital Market Division 30, Mumbai Samachar Marg, Fort, Mumbai- 400 001 Tel no.: +91-022 -66310312/22/25 Fax no: +91-022- 6631 0350 / 2261 1138 Contact Person: Mr. Viral Bharani Email id: [email protected] Website: www.icicibank.com SEBI Regn No: INBI00000004
SELF CERTIFIED SYNDICATE BANKS
As on date following banks are registered with SEBI for collection of ASBA forms:
1. Corporation Bank Limited 17. State Bank of Hyderabad 2. ICICI Bank Limited 18. HSBC Bank 3. HDFC Bank Limited 19. Vijaya Bank 4. State Bank of India 20. State Bank of Travancore 5. Union Bank of India 21. Bank of Maharashtra
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6. IDBI Bank Limited 22. Andhra Bank 7. Axis Bank Limited 23. Allahabad Bank 8. Kotak Mahindra Bank 24. Deutsche Bank 9. State Bank of Bikaner & Jaipur 25. The Federal Bank
10. Bank of Baroda 26. Karur Vysya Bank Ltd. 11. Punjab National Bank 27. Central Bank of India 12. Indian Bank 28. IndusInd Bank 13. Yes Bank Limited 29. Oriental Bank of Commerce 14. Citi Bank 30. J P Morgan Chase Bank 15. Standard Chartered Bank 31. Nutan Nagarik Sahakari Bank Ltd. 16. Bank of India 32. UCO Bank 33. Canara Bank 34. United Bank of India 35. Syndicate Bank 36. South Indian Bank 37. Indian Overseas Bank 38. Tamilnad Mercantile Bank Ltd. 39. City Union Bank Ltd. 40. BNP Paribas 41. The Kalupur Commercial Co-
operative Bank Ltd.
For the details of list of controlling banks along with its branches for ASBA please visit the website of SEBI, BSE and NSE at www.sebi.gov.in, www.bseindia.com and www.nseindia.com respectively. INTER SE ALLOCATION OF RESPONSIBILITIES The following table sets forth the distribution of responsibilities and co-ordination for various activities among the Keynote Corporate Services Limited (Keynote) and MPA Financial Services Limited (MPA) (Lead Managers to the Issue/LMs).
Sr. No.
Activity Responsibility Co-ordinator
A. Capital Structuring with relative components and formalities such as composition of Structuring of the offer document.
Keynote & MPA Keynote
B. Drafting and design of the offer document and of the advertisement or publicity material including newspaper advertisement and brochure or memorandum containing salient features of the offer document.
Keynote & MPA Keynote
C. Selection of various agencies connected with issue, such as registrars to the issue, printers, advertising agencies, etc.
Keynote & MPA Keynote
D. Marketing of the issue, which shall cover, inter alia, formulating marketing strategies, preparation of publicity budget, arrangements for selection of (i) ad-media, (ii) centres for holding conferences of shareholders, investors, etc., (iii) bankers to the issue, (iv) collection centres as per schedule III of ICDR, distribution of publicity and issue material, Letter of Offer.
Keynote & MPA MPA
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Sr. No.
Activity Responsibility Co-ordinator
E. Post-issue activities, which shall involve essential follow-up steps including follow-up with bankers to the issue and Self Certified Syndicate Banks to get quick estimates of collection and advising the issuer about the closure of the issue, based on correct figures, finalisation of the basis of allotment or weeding out of multiple applications, listing of instruments, despatch of certificates or demat credit and refunds and coordination with various agencies connected with the post-issue activity such as Registrar to the issue, Bankers to the issue, Self Certified Syndicate Banks, etc.
Keynote & MPA MPA
CREDIT RATING/DEBENTURE TRUSTEE This being Rights Issue of equity shares, neither Credit Rating nor appointment of Debenture Trustee is required. MONITORING AGENCY Not Applicable APPRAISING ENTITY Not Applicable MINIMUM SUBSCRIPTION
i. If the Company does not receive minimum subscription of 90% of the issue, the entire subscription shall be refunded to the applicants within fifteen days from the date of closure of the issue.
ii. If there is delay in the refund of subscription by more than 8 days after the company becomes liable
to pay the subscription amount (i.e., fifteen days after closure of the issue), the company will pay interest for the delayed period, at prescribed rates in sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
IMPERSONATION Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: “Any person who- (a) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any
shares therein, or
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(b) 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.”
UNDERWRITING/ STANDBY SUPPORT This issue of equity shares is not being underwritten and/or no standby support is being sought for the said issue.
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CAPITAL STRUCTURE OF THE COMPANY
Details as on the date of Letter of Offer
Aggregate Value at Nominal Price (`)
Aggregate Value at Issue Price (`)
A. Authorized Capital 2,20,00,000 Equity Shares of ` 10/- each
22,00,00,000
22,00,00,000
B. Issued, Subscribed & Paid-up Capital 50,00,000 Equity Shares of ` 10/- each, fully paid –up
5,00,00,000
6,30,00,000
C. Present Rights Issue 1,00,00,000 Equity shares of ` 10/- each for cash at premium of ` 39.50 /- per Equity Share
10,00,00,000
49,50,00,000 D. Post Issue Capital
1,50,00,000 Equity shares of ` 10/- each
15,00,00,000
55,80,00,000
E. Share Premium Account Before the offer After the offer
1,30,00,000 40,80,00,000
Notes to Capital Structure:
1. The details of Locked-in, pledged and encumbered shares of Promoter and Promoter Group
As on the date of this Letter of Offer, none of the Equity Shares held by the Promoters and/or Promoter Group are pledged/locked-in/encumbered.
2. Promoters’ Contribution and Lock-in for the present issue
The present issue being a rights issue, provisions of promoters’ contribution and lock-in are not applicable.
3. Present Rights Issue:
Type of Instrument
Ratio Face Value (`)
No. of shares
Issue Price (`)
Consideration
Equity Shares
2:1 (i.e Two Equity shares for every One equity share held)
10/- 1,00,00,000 49.50
Cash
4. Pre & Post issue shareholding pattern of the Company assuming full subscription in the present
rights issue is given below:-
Category of Shareholder
No. of sharehold
ers (Pre issue)
Pre-issue (As on 31/12/2010)
Post-issue Shares pledged or otherwise encumbered#
Number of Shares
% Number of Shares
% Number of
Shares
%
(A) Shareholding of Promoter and Promoter Group
1 Indian (a) Individuals/ Hindu Undivided Family 16 32,79,700 65.59 98,39,100 65.59 0.00 0.00
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Category of Shareholder
No. of sharehold
ers (Pre issue)
Pre-issue (As on 31/12/2010)
Post-issue Shares pledged or otherwise encumbered#
Number of Shares
% Number of Shares
% Number of
Shares
%
(b) Central Government/ State Government(s)/Government company
- - - - - - -
(c) Financial Institutions/ banks - - - - - - - (d) Any Other (specify – Trust &
(C) Shares held by Custodians and against which Depository Receipts have been issued
- - - - - - -
GRAND TOTAL (A)+(B)+(C) 6156 50,00,000 100.00 1,50,00,000 100.00 0.00 0.00
# Presently none of the Equity Shares held by the Promoters and/or Promoter Group are pledged/locked-in/encumbered. The total number of shareholders of the Company is 6,156.
5. The pre- issue and post issue shareholding of Promoter and Promoter Group are as follows:
SUB – TOTAL 6,30,275 12.61 18,90,825 12.61 c) Company in which 10%
or more of the share capital is held by the promoter/his immediate relative, firm or HUF in which the promoter or his immediate relative is a member.
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Particulars
Present Post Rights No. of equity shares
of ` 10/- each % of present
capital No. of equity
shares of ` 10/- each
% of post issue capital
d) Company in which the Company mentioned in (c) above holds 10% or more of the share capital
e) HUF in which aggregate share of the promoter and his immediate relatives is equal or more than 10% of the total.
GRAND TOTAL 3279700 65.59 98,39,100 65.59 The entities belonging to the Promoter/Promoter Group have undertaken to subscribe to their rights entitlement in full and collectively to subscribe to the unsubscribed portion from public shareholders. It will be ensured that in the event of such subscription by the promoters, their post rights issue holding in the Company does not result in the public shareholding of the Company falling below the requisite levels as prescribed under clause 40A of the Listing Agreement.
Presuming no subscription is received from other shareholders and promoters(s)/promoter group as mentioned above subscribing to the unsubscribed portion as mentioned above, their shareholding may increase to 87.58 % of the post rights issue equity capital of the Company. As a result of this subscription and consequent allotment, the promoters/promoter group may acquire shares over and above their entitlement in the issue which may result in their shareholding in the Company being above their current holding. This subscription and acquisition of additional equity shares by the Promoters/Promoter Group, if any, will not result in change of control of the management of the Company and shall be exempt from the requirements of making a public offer in terms of provision to Regulation 3(1)(b)(ii) of the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997.
6. Details of shares acquired by promoters and promoter group in the last one year immediately preceding the date of filing the letter of offer with the designated stock exchange and SEBI is as mentioned below: There are no transactions in the promoter and promoter group in the last one year immediately preceding the date of filing the letter of offer with the designated stock exchange and SEBI.
7. The details of the shareholders holding more than one percent of the share capital of the Company as on December 31, 2010 are as follows:
Sr. No. Name of the Shareholder No. of Shares Shares as % of Total
8. The Company has not issued any warrant, option, convertible loan, debenture or any other securities
convertible at a later date into equity, which would entitle the holders to acquire further equity shares of the Company.
9. Equity shares of the Company are being traded in compulsory dematerialized mode. The market lot of
the equity shares is 1 (one). 10. The Company/Promoters/Directors/Lead Managers have not entered into buy back or similar
arrangements for purchase of securities issued by the Company. 11. As on the date of filing the letter of offer there are no partly paid up shares in the Company. 12. All the securities offered through the issue shall be made fully paid-up or may be forfeited for non-
payment of calls within twelve months from the date of allotment of securities. 13. The equity shares of the Company are of face value of `10/- and marketable lot is 1 (one). At any given
time there shall be only one denomination for the shares of the Company and the disclosures and accounting norms specified by SEBI from time to time will be complied with.
14. The Company shall not make any further issue of capital whether by way of issue of bonus shares,
preferential allotment, rights issue or public issue or in any other manner during the period commencing from the submission of the Letter of Offer to SEBI for the Rights Issue till the equity shares referred in the Letter of Offer have been listed or application money refunded, if any.
15. Further, presently the Company does not have any proposal, intention, negotiation or consideration to
alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of Equity Shares or any other securities within a period of six months from the date of opening of the present issue. However, if business needs of the Company so require, the Company may alter the capital structure by way of split/ consolidation of the denomination of the shares/ issue of shares on a preferential basis or issue of bonus or rights or public issue of shares or any other securities whether in India or abroad during the period of six months from the date of listing of the equity shares issued under this offer document or from the date the application moneys are refunded on account of failure of the issue, after seeking and obtaining all the approvals which may be required for such alternation.
16. As on date the Lead managers and their associates do not hold any equity shares in Tulsyan.
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OBJECTS OF THE ISSUE
The objects of the proposed Right Issues are to 1. Set up a captive power plant of 35 MW capacity in Gummidipoondi Taluk, Tamil Nadu 2. Meet expenses of the issue The main object clause of the Memorandum and Articles of Association of the Company enables the Company to undertake the existing activities and the activities for which the funds are being raised through the present issue. Brief Details of the Project Tulsyan NEC Limited is one of the leading manufacturers of Thermo Mechanical Treated (TMT) Bars in India. The total Rolling Mill capacity at Ambattur and Gummudipoondi units is 3,48,000 MTPA. The MS Billets and MS Ingots capacity at Gummudipoondi is 1,44,000 MTPA and 36,000 MTPA respectively. The TMT Bars manufactured by the company are in Grade Fe 415 and Fe 500 of sizes, ranging from 8 mm to 40 mm diameters. At present due to power shortage and restrictions in the State of Tamil Nadu, the company is not able to operate the induction furnace to its optimum level and hence the company is buying billets from the local market. The proposed captive power plant with an installed capacity of 35 MW will be used in the production of steel and will lead to an increase to 85%in the capacity of the induction furnace. The power production cost will also be cheaper in comparison to the wheeled board power and this will result in lower production of cost of steel. The proposed plant will have one no. of 150 tph, 96 kg/cm2 (a)/ 515 degree C Atomspeheric fluidised Bed Combuspion (AFBC) boiler and 35 MW bleed cum condensing turbine with air cooled condenser to generate high pressure and high temperature steam by burning of combination of solid fuel i.e. Coal and Dolochar in desired proportion to attain desired combustion. The company will be purchasing all the raw materials having calorific Values. The company has appointed M/s. Enmas GB Power Systems Projects Limited (Enmas) as their EPC contractor for the turnkey execution of the 35 MW power plant and the cost of the plant and machinery to be installed at the power plant is based on the quotations received from Enmas. The plant will be designed for base load and shall be capable of full range of operating conditions with a high availability and overall thermal efficiency in a cost effective manner. The details of the cost of the project are stated as under: Cost of project
Particulars Amount (` in Crs) Setting up a captive power plant of 35 MW capacity at Gummidipoondi Taluk, Tamil Nadu
-Land and Site Development -Building and Civil Construction -Plant and Machinery -Preliminary and Pre-operative expenses -Contingencies -Working capital requirement
10.40 11.00
140.00 19.03
7.50 0.02
Issue Expenses 0.55 Total 188.50
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Means of Finance (` in Crs)
Particulars Amount Proceeds of the Rights Issue 49.50 Term Loan 132.00 Internal Accruals 7.00 Total 188.50
The company has already been sanctioned term loans from banks to part fund the cost of the project of setting up 35 MW captive power plant. The details of the sanctions are as under:
Name of the bank Date of sanction Sanction amount (` In crores)
Canara Bank 03/04/2010 52.80 State Bank of India 19/05/2010 50.00 Indian Overseas Bank 02/01/2010 40.00 Syndicate Bank 29/03/2010 39.60 Andhra Bank 08/01/2010 30.00 Total 212.40
At the meeting of the consortium members of the Lenders held meeting on October 29, 2010, the terms of the loans were modified as under:
Name of the bank Sanction amount (` In crores)
Canara Bank 47.00 Indian Overseas Bank 36.00 Syndicate Bank 25.00 Andhra Bank 24.00 Total 132.00
The detailed terms and conditions of sanction are given on page no. 134 under the head “Principal terms of outstanding Loan”. Detailed Break-up of the cost of the project are as under: A. Land and Site Development The company has already acquired 77.03 Acres of land from various individuals at Chittor Natham Village for setting up the proposed power plant at a total cost of ` 9.36 crores. An amount of ` 1.04 crores is estimated to be spent on the site development. None of the promoters and/or directors are interested in the transaction relating to the purchase of the land. The land acquired is free from all encumbrances and has a clear title. B. Building and Civil Construction The company proposes to construct 1,23,456 sq.ft of building for the proposed project. The building would be inclusive of Turbine building, electrical & control rooms, DM plant building and Coal shed etc. The cost of building and civil construction is estimated at ` 11.00 crores as per the quotation given by
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M/s Aquatherm Engineering Consultants Pvt. Ltd., the technical consultant. The details of the area under construction at the proposed building is as under:
Sr. No. Description Area (Sq. Ft.) 1 Turbine Building 16,064 2 Electrical and control room 15,500 3 ESP MCC room 5,167 4 ACC MCC room 2,583 5 Switchyard control room 1,033 6 Fuel handling system MCC room 1,378 7 DM plant building and plant 13,778 8 Work shop and stores 3,100 9 Admin building 4,306
10 Coal shed 60,547 Total 1,23,456
None of the promoters and/or directors are interested in the transaction relating to the building and civil construction.
C. Plant & Machinery
The company has appointed M/s. Enmas GB Power Systems Projects Limited (Enmas) located at IV Floor, Gauna Building Main, 443 Anna Salai, Teynampet, Chennai – 600 018, India, as their EPC contractor for the turnkey execution of the 35 MW power plant with Air Cooled Condensing System excluding Civil works at a total cost of ` 140.00 crores. The cost of the plant and machinery to be installed at the power plant is based on the quotations received from Enmas. About Enmass Enmas GB Power Systems Projects Ltd is a part of the Resurgent group of companies which is operating in the field of power, paper and process industries, for more than two and a half decades. The synergy of these business entities covers the entire gamut of Design and Engineering, Project Management, Manufacturing, Construction and other associated services. Enmas combines the core strengths of GB, Enmas and offers the state of the art Power Plants, Power boilers capable of burning all types of fuels such as coal, oil, gas, waste gas, biomass & biogas. Enmas is presently involved in the execution of coal & bio-fuel fired boilers, multifuel fired boilers and has high temperature waste heat recovery boilers, to various industries for Power & Cogeneration. ENMAS has entered into a technical license agreement with Doosan Babcock Energy Limited, UK (erstwhile Mitsui Babcock) in the year 2002 for the design, engineering, manufacture and supply of industrial boilers viz., Atmospheric Fluidized Bed Combustion (AFBC), Stoker Fired Boilers, Pulverized Fuel Fired Boilers covering a range of fuels from coal, oil gas to biomass boilers. The major power projects for clients handled under EPC by Enmas include companies such as Kamachi Sponge & Power Corporation Ltd., JSW, Salem, Andhra Pradesh Paper Mills, Tamilnadu News Print, Indian Seamless Metal Tubes Ltd. etc. As per the terms of contract with Enmas, the completion period shall be 18 months from the date of the commencement. The plant and machinery which would be installed at the power plant would include Electrical Installations, Pollution Control equipments, Air Conditioning Systems, office equipment and motor cycle etc. The detailed break-up for the same is given herein under:
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Sr. No. Name of Machineries/Equipments 1. Steam Generator and Auxiliaries 2. Steam Turbine & Aux 3. Alternator 4. Gear Box 5. Fuel and Ash Handling System 6. Electrostatic Precipitator 7. Boiler Feed Pump 8. Air cooled condenser 9. DM Water treatment plant 10. EOT Crane 11. Instrument Air Compressors 12. Electrical BOP 13. DCS & I&C BOP 14. Air Conditioners 15. Auxiliary Cooling Towers 16. Centrifugal Pumps
None of the promoters and/or directors are interested in the transaction relating to the purchase of the plant and machinery. Enmas is an independent entity and not related to the Company in any manner.
D. Preliminary and Pre-operative Expenses
The preliminary and pre-operative expenses towards the project as estimated by the company is Rs 19.03 crores which includes upfront fees to be charged by the lenders, establishment expenses, consultancy fees, travelling expenses etc.
E. Contingency
The company has earmarked an amount of ` 7.50 crores towards contingency provision which is around 5 % of the Cost of Building and Civil Construction, Plant and Machinery and miscellaneous Fixed Assets.
F. Working Capital requirement for the power plant
Particulars 2011-12
Estimates (` in Lacs)
(A) Current Assets Inventory : Raw materials (incldg. Stores & other items used in the process of manufacture)
- Imported 9.13 - Indigenous 0.09 Total Current Assets (A) 9.22 (B) Current Liabilities & Provisions Sundry Creditors (Trade) 7.60 Total Current Liabilities (B) 7.60 Working Capital Gap (WCL) (A) – (B) 1.62 To be financed by: Bank finance 1.60 Rights Issue 0.02
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Basis of estimation of working capital requirement
Particulars No. of Months
Raw Material (Months’ Consumption) - Imported 3 - Indigenous 2 Sundry Creditors (months purchases) 3
The present working capital gap of the Company is ` 185.10 crores which is funded to the extent of ` 119.29 crores from banks and the balance through internal accruals. The company shall make an application to the banks for the working capital requirement for the power plant at the appropriate time.
G. Issue expenses
The break-up of issue expenses is as under: (` in lacs)
Activity Estimated Expense
Fees to intermediaries 33.50 Advertising and marketing expenses 7.00 Printing and Stationary & Distribution 8.00 Others 6.50 Total estimated Issue expenses 55.00
Schedule of implementation
Sr. no
Activity Commencement Completion
1 Land Already acquired 2 Site Development December 2010 January 2011 3 Civil Works January 2011 December 2011 Plant and Machinery & Other Misc. Fixed
Assets
4 Placement of orders September 2010 February 2011 5 Delivery at Site March 2011 December 2011 6 Erection and Installation November 2011 May 2012 7 Trial production June 2012 8 Commercial production July 2012
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Year wise break up of the proceeds to be used The year wise break up of funds to be incurred on the project under various heads is as follows:
(` in Crs) Particulars Amount
spent during
the year 2009-10
Amount to be spent
during the year 2010-11
Amount to be spent
during the year 2011-12
Amount to be spent
during the year 2012-13
Total
Land and Site Development 9.36 1.04 0.00 0.00 10.40 Building and Civil Construction 0.00 5.00 6.00 0.00 11.00 Plant and Machinery 0.00 74.00 66.00 0.00 140.00 Preliminary and Pre-operative expenses 0.00 7.00 7.07 4.96 19.03 Contingencies 0.00 3.60 2.88 1.02 7.50 Margin Money for Working Capital 0.00 0.00 0.00 0.02 0.02 Issue Expenses 0.08 0.27 0.20 - 0.55 Total 9.44 90.91 82.15 6.00 188.50
Sources & deployment of Funds As per the Certificate dated 08/02/2011 from C A Patel & Patel, Statutory Auditors & Chartered Accountants, an amount of ` 5237.53 lacs has been sourced by the Company out of Internal Accruals Term Loans from Banks and unsecured loans brought from the promoters and promoter group towards the proposed expansion project which has been deployed as under: Particulars Amount
(` In Lacs) DEPLOYMENT OF FUNDS Purchase of land & Site Development 958.10 Building & Civil Construction 34.59 Advance for Plant & Machinery 3358.69 Preliminary & Pre- Operative Expenses 209.85 Issue expenses 7.57 Cash in Bank 668.73 Total 5237.53 SOURCES OF FUNDS Unsecured loans from promoters/ promoter group 1208.68 Internal accrual 872.85 Term Loans from Banks 3156.00 Total 5237.53
An amount of ` 3156.00 lacs has been disbursed till February 07, 2011from term loans sanctioned by banks as detailed herein under towards proposed 35 MW captive power plant.
Some of the Promoters and promoter group entities have brought in unsecured loans in the company to the extent of ` 1208.68 lacs to finance the objects of the issue. The promoters(s)/ promoter group companies who have brought in unsecured loans will not convert the same into equity shares and will bring in fresh funds towards their rights entitlement and subscription towards unsubscribed portion if any in the rights issue. The details of the unsecured loan brought in during the period from May 2010 to July 2010 by promoters and promoter group is as follows:
Sr. No. Name of the promoter / promoter group entity
Total 1,208.68 BRIDGE LOAN The company has not raised any bridge loan which will be repaid from the issue proceeds. INTERIM USE OF FUNDS Pending utilization for the purposes described in “objects of the issue” above, the Company intends to temporarily invest the funds in high quality interest or dividend bearing liquid instruments including deposits with banks for the necessary duration. Such investments would be in accordance with any investment criteria approved by our Board of Directors from time to time. BASIC TERMS OF THE ISSUE The Equity shares being offered are subject to the provisions of the Companies Act, 1956, the Memorandum and Articles of Association of the Company, the terms of this Letter of Offer and other terms and conditions as may be incorporated in the Allotment advice and other documents /certificates that may be executed in respect of the issue. The Equity shares shall also be subjected to laws as applicable, guidelines, notifications and regulations relating to the issue of capital and listing and trading of securities issued from time to time by SEBI, GOI, RBI, ROC and /or other authorities as in force on the date of issue and to the extent applicable.
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STATEMENT OF TAX BENEFITS
STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO THE COMPANY AND ITS SHAREHOLDERS
To, The Board of Directors, M/s Tulsyan NEC Limited 61, Sembudoss Street, Chennai – 600 001 We M/S C.A.PATEL & PATEL, Chartered Accountants are the Statutory Auditors of M/s TULSYAN NEC LIMITED, having its registered office at 61, Sembudoss Street, Chennai-600 001. We hereby certify that under the current tax laws, the following tax benefits inter-alia will be available to the Company and the members of the Company. However, a member is advised to consider in his/her/its own case the tax implications of an investment in the Equity Shares, particularly in view of the fact that certain recently enacted legislation may not have direct legal precedent or may have a different interpretation on the benefits, which an investor can avail. As per the existing provisions of the Income Tax Act, 1961 and other laws as applicable for the time being in force, the following tax benefits and deductions are and will, inter-alia be available to M/s. TULSYAN NEC LIMITED and its SHAREHOLDERS. Special tax benefits available: We believe that there are no special tax benefits available to the COMPANY and its SHAREHOLDERS. General tax benefits available: These benefits are available to all companies or to the shareholders of any company after fulfilling certain conditions as required in the respective Acts.
A. Benefits to the company under Act
1. Dividends exempt under section 10(34) and 10(35) of the IT Act.
Dividend (whether interim or final) received by the company from its investment in shares of another domestic company would be exempted in the hands of the company as per the provisions of section 10(34) read with section 115-O of the IT Act. In terms of section 10(35) of the IT Act, any income received from units of a Mutual Fund specified under section 10(23D) of the IT Act is exempt from tax, subject to such income not arising from the transfer of units in such Mutual Fund.
2. Computation of capital gains
Capital assets are to be categorised into short-term capital assets and long-term capital assets based on the period of holding. All capital assets except shares held in a company or any other security listed in a recognised stock exchange in India or units of Unit Trust of India (‘UTI’) or Mutual Fund units specified under section 10(23D) of the IT Act or zero coupon bonds are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or UTI or Mutual Fund units specified under section
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10(23D) of the IT Act or zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months. As per the provisions of section 10(38) of the IT Act, long term capital gain arising to the company from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to Securities Transaction Tax (‘STT’). As per the provisions of section 112 of the IT Act, long-term capital gains other than those covered under section 10(38) of the IT Act are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains other than those covered under section 10(38) of the IT Act arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess). However, from Assessment Year 2007-2008, such long-term capital gains will be included while computing book profits for the purpose of payment of Minimum Alternate Tax (“MAT”) under the provisions of section 115JB of the IT Act. As per provisions of section 111A of the IT Ac t, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable at the rate of 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT.
3. Securities Transaction Tax
In terms of STT, transactions for purchase and sale of the securities in the recognized stock exchange by the shareholder will be chargeable to STT. As per the said provisions, any delivery based purchase and sale of equity share in a company through the recognized stock exchange is liable to securities transaction tax @ 0.125% of the value payable by both buyer and seller individually. The non-delivery based sale transactions are liable to tax @ 0.025% of the value payable by the seller.
4. Exemption of capital gains arising from income tax As per the provisions of section 54EC of the IT Act and subject to the conditions specified therein capital
gains arising to a company on transfer of a long-term capital asset other than those covered under section 10(38) of the IT Act shall not be chargeable to tax to the extent such capital gains are invested in National Highway Authority of India (NHAI) or Rural Electrification Corporation (REC) notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced. The IT Act has restricted the maximum investment in such bonds up to Rs 5 million per assessee during any financial year.
5. Where the long-term specified asset is transferred or converted into money at any time within a period of
three years from the date of its acquisition, the amount of capital gains exempted earlier would become chargeable to tax as long term capital gains in the year in which the long-term specified asset is transferred or converted into money.
6. In accordance with and subject to the provisions of section 32 of the Income tax Act, the Company will be
allowed to claim depreciation on specified tangible and intangible assets as per the rates specified.
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Besides normal depreciation, the Company, in terms of section 32(1)(iia), shall be entitled to claim Additional depreciation @ 20% of actual cost on new plant and machinery for the period of one year after acquired on or after 31st March, 2005.
7. In accordance with and subject to the provisions of section 35D of the Income tax Act, the Company will be entitled to amortise, over a period of five years, all expenditure in connection with the proposed public issue subject to the overall limit specified in the said section.
8. Under Section 115 JAA (1A) of the Act, tax credit shall be allowed of any tax paid (MAT) under Section
115 JB of the Act. Credit eligible for carry forward is the difference between MAT paid and the tax computed as per the normal provisions of the Act. Such MAT credit shall not be available for set-off beyond 10 years succeeding the year in which the MAT becomes allowable.
9. Unabsorbed depreciation if any, for an Assessment Year (AY) can be carried forward and set off against
any source of income in subsequent AYs, as per section 32 of the Act, subject to the (2) of section 72 and sub-section (3) of section 73 of the Act.
Carry forward and Set off of Business Loss
10. Business losses if any, for any AY can be carried forward and set off against business profits for eight
subsequent AYs. 11. Section 48 of the Act, which prescribes the mode of computation of capital gains, provides for deduction
of cost of acquisition/improvement and expenses incurred in connection with the transfer of a capital asset, from the sale consideration to arrive at the amount of capital gains. However, in respect of long term capital gains, it offers a benefit by permitting substitution of cost of acquisition / improvement with the indexed cost of acquisition/improvement, which adjusts the cost of acquisition / improvement by a cost inflation index as prescribed from time to time.
12. As per section 71 read with section 74, Short-term capital loss arising during a year is allowed to be set-off
against short-term as well as long-term capital gains of the said year. Balance loss, if any, should be carried forward and set-off against short-term as well as long-term capital gains for subsequent 8 years.
13. As per section 71 read with section 74, Long-term capital loss arising during a year is allowed to be set-off
only against long-term capital gains. Balance loss, if any, should be carried forward and set-off against subsequent year’s long-term capital gains for subsequent 8 years.
B. Benefits to the Resident shareholders of the company under the IT Act
1. Dividends exempt under section 10(34) of the IT Act Dividend (whether interim or final) received by a resident shareholder from its investment in shares of a
domestic company would be exempt in the hands of the resident shareholder as per the provisions of section 10(34) read with section 115-O of the IT Act.
2. Any income of minor children (Maximum two children) clubbed with the total income of the parent
under section 64(1A) of the Income Tax Act 1961, will be exempt from tax to the extent of ` 1500 per minor child under section 10(32) of the Income Tax Act 1961.
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3. Computation of capital gains Capital assets are to be categorised into short-term capital assets and long-term capital assets based on the
period of holding. All capital assets [except shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds] are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months.
As per the provisions of section 48 of the IT Act, the amount of capital gain shall be computed by
deducting from the sale consideration, the cost of acquisition and expenses incurred in connection with the transfer of a capital asset. However, in respect of long-term capital gains arising to a resident shareholder, a benefit is permitted to substitute the cost of acquisition/ improvement with the indexed cost of acquisition/ improvement. The indexed cost of acquisition/ improvement, adjusts the cost of acquisition/ improvement by a cost inflation index, as prescribed from time to time.
As per the provisions of section 10(38) of the IT Act, long term capital gain arising to a resident
shareholder from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT.
As per the provisions of section 112 of the IT Act, long-term capital gains [other than those covered under
section 10(38) of the IT Act] are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains [other than those covered under section 10(38) of the IT Act] arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess).
As per provisions of section 111A of the IT Act, short term capital gains arising from transfer of short
term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable @ 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT.
4. Exemption of capital gains arising from income tax
As per the provisions of section 54EC of the IT Act and subject to the conditions specified therein capital gains arising to a resident shareholder on transfer of a long-term capital asset other than those covered under section 10(38) of the IT Act shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced. However, if the resident shareholder transfers or converts the notified bonds into money (as stipulated therein) within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. The bonds specified for this section are bonds issued on or after April 1, 2006 by NHAI and REC. The IT Act has restricted the maximum investment in such bonds up to Rs 5 million per assessee during any financial year.
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Further, as per the provisions of section 54F of the IT Act and subject to conditions specified therein, long-term capital gains other than a capital gains arising on sale of resident house and those covered under section 10(38) of the IT Act arising to an individual or Hindu Undivided Family (‘HUF’) on transfer of shares of the company will be exempted from capital gains tax, if the net consideration from such shares are used for either purchase of residential house property within a period of one year before or two years after the date on which the transfer took place, or for construction of residential house property within a period of three years after the date of transfer. However, if the resident shareholder transfers the residential house property within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year.
C. Benefits to the Non-resident shareholders of the company other than Foreign Institutional Investors and Foreign Venture Capital Investors
1. Dividends exempt under section 10(34) of the IT Act
Dividend (whether interim or final) received by a non-resident shareholder from its investment in shares of a domestic company would be exempt in the hands of the non-resident shareholder as per the provisions of section 10(34) read with section 115-O of the IT Act.
2. Any income of minor children (Maximum two children) clubbed with the total income of the parent
under Section 64(1A) of the Income Tax Act 1961 will be exempt from tax to the extent of ` 1,500 per minor child per year in accordance with the provisions of section 10(32) of the Income Tax Act 1961.
3. Computation of capital gains
Capital assets are to be categorised into short-term capital assets and long-term capital assets based on the period of holding. All capital assets [except shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds] are considered to be long-term capital assets, if they are held for a period exceeding thirty-six months. Shares held in a company or any other security listed in a recognised stock exchange in India or units of UTI or Mutual Fund units specified under section 10(23D) of the IT Act and zero coupon bonds are considered as long-term capital assets, if these are held for a period exceeding twelve months. As per the provisions of section 48 of the IT Act, the amount of capital gain shall be computed by deducting from the sale the consideration, the cost of acquisition and expenses incurred in connection with the transfer of a capital asset. Under first proviso to section 48 of the IT Act, the taxable capital gains arising on the transfer of capital assets being shares or debentures of an Indian company need to 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 into the same foreign currency in which the shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be done at the prescribed rates prevailing on dates stipulated. Hence, in computing such gains, the benefit of indexation is not available to non-resident shareholders. As per the provisions of section 10(38) of the IT Act, long term capital gain arising to a non-resident shareholder from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT.
As per the provisions of section 112 of the IT Act, long-term capital gains (other than those covered under section 10(38) of the IT Act) are subject to tax at a rate of 20% (plus applicable surcharge and cess). However, proviso to section 112(1) specifies that if the long-term capital gains [other than those covered
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second proviso to section 48 and under section 10(38) of the IT Act] arising on transfer of listed securities or units or zero coupon bond, calculated at the rate of 20% with indexation benefit exceeds the capital gains computed at the rate of 10% without indexation benefit, then such capital gains are chargeable to tax at the rate of 10% without indexation benefit (plus applicable surcharge and education cess).
As per provisions of section 111A of the IT Ac t, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable @ 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004 and the transaction is chargeable to STT.
4. Exemption of capital gain from income-tax
As per the provisions of section 54EC of the IT Act and subject to the conditions specified therein capital gains arising to a non-resident shareholder on transfer of a long-term capital asset (other than those covered under section 10(38) of the IT Act) shall not be chargeable to tax to the extent such capital gains are invested in certain notified bonds within six months from the date of transfer. If only part of such capital gain is invested, the exemption shall be proportionately reduced. However, if the non-resident shareholder transfers or converts the notified bonds into money (as stipulated therein) within a period of three years from the date of their acquisition, the amount of capital gains exempted earlier would become chargeable in such year. The bonds specified for this section are bonds issued on or after April 1, 2006 by NHAI and REC. The IT Act has restricted the maximum investment in such bonds up to Rs 5 million per assessee during any financial year. Further, as per the provisions of section 54F of the IT Act and subject to conditions specified therein, long-term capital gains (other than a capital gains arising on sale of resident house and those covered under section 10(38) of the IT Act) arising to an individual or HUF on transfer of shares of the company will be exempted from capital gains tax, if the net consideration from such shares are used for either purchase of residential house property (subject to prior approval from Reserve Bank of India) within a period of one year before or two years after the date on which the transfer took place, or for construction of residential house property within a period of three years after the date of transfer.
5. Non resident taxation
Under section 115-I of the IT Act, the non-resident Indian shareholder has an option to be governed by the provisions of Chapter XIIA of the IT Act viz. “Special Provisions Relating to Certain Incomes of Non-Residents” which are as follows: Under section 115E of the IT Act, where shares in the company are acquired or subscribed to in convertible foreign exchange by a non-resident Indian, capital gains arising to the non-resident on transfer of shares held for a period exceeding 12 months, will [in cases not covered under section 10(38) of the IT Act], be concessionally taxed at the flat rate of 10% (plus applicable surcharge and cess) (without indexation benefit but with protection against foreign exchange fluctuation) Under provisions of section 115F of the IT Act, long-term capital gains [in cases not covered under section 10(38) of the IT Act] arising to a non-resident Indian from the transfer of shares of the company subscribed to in convertible foreign exchange will be exempt from income tax, if the net consideration is reinvested in specified assets within six months of the date of transfer. If only part of the net consideration is so reinvested, the exemption will be proportionately reduced. However the amount so exempted will be chargeable to tax subsequently, if the specified assets are transferred or converted into money within three years from the date of their acquisition.
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6. In accordance with the provisions of Section 115G of the Income Tax Act 1961, Non Resident Indians are not obliged to file a return of income under Section 139(1) of the Income Tax Act 1961 if their only source of income is income from investments or long term capital gains earned on transfer of such investments or both, provided tax has been deducted at source from such income as per the provisions of Chapter XVII-B of the Income Tax Act 1961.
7. In accordance with the provisions of Section 115H of the Income Tax Act 1961, when a Non Resident
Indian become assessable as a resident in India, he may furnish a declaration in writing to the Assessing Officer along with his return of income for that year under Section 139 of the Income Tax Act 1961 to the effect that the provisions of Chapter XII-A shall continue to apply to him in relation to such investment income derived from the specified assets for that year and subsequent assessment years until such assets are converted into money.
8. As per the provisions of section 115 I of the I.T. Act, a Non-Resident Indian may elect not to be governed
by the provisions of Chapter XII-A for any assessment year by furnishing his return of income for that year under Section 139 of the Income Tax Act 1961, declaring therein that the provisions of Chapter XII-A shall not apply to him for that assessment year and accordingly his total income for that assessment year will be computed in accordance with the other provisions of the Income Tax Act 1961.
9. Tax Treaty Benefits
As per the provisions of Section 90(2) of the Income Tax Act 1961, the provisions of the Income Tax Act 1961 would prevail over the provisions of the tax treaty to the extent they are more beneficial to the Non-Resident.
D. Benefits to Foreign Institutional Investors (‘FII’)
1. Dividends exempt under section 10(34) of the Act
Dividend (whether interim or final) received by a FII from its investment in shares of a domestic company would be exempt in the hands of the FII as per the provisions of section 10(34) read with section 115-O of the Act.
2. Long term capital gains exempt under section 10(38) of the Act.
As per the provisions of section 10(38) of the Act, long term capital gain arising to the FII from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT.
3. Capital gains
As per the provisions of section 115AD of the Act, FIIs are taxed on the capital gains income at the following rates:
Rate of tax
Nature of Income (%)* Long-term capital gains 10 Short-term capital gains 30
* Plus applicable surcharge and cess
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The benefits of foreign currency fluctuation protection and indexation as provided by section 48 of the Act are not available to a FII.
As per the provisions of section 10(38) of the Act, long term capital gain arising to FII from transfer of a long term capital asset being an equity share in a company listed on a recognized stock exchange in India, shall be exempt from tax, if such sale is entered into on or after October 1, 2004, and the transaction is chargeable to STT. As per provisions of section 111A of the Act, short term capital gains arising from transfer of short term capital asset, being an equity share in a company or a unit of an equity oriented mutual fund shall be taxable at the rate of 15% (plus applicable surcharge and education cess), if such sale is entered into on or after October 1, 2004and is chargeable to STT.
4. Tax Treaty Benefits
As per section 90(2) of the Act, the provisions of the Act would prevail over the provisions of the tax treaty to the extent they are more beneficial to the FII. Thus, an FII can opt to be governed by provisions of the Act or the applicable tax treaty whichever is more beneficial.
E. Benefits to the Mutual Funds
1. Dividends exempt under section 10(34) of the Act
Dividend (whether interim or final) received by a Mutual Fund from its investment in shares of a domestic company would be exempt in the hands of the Mutual Fund as per the provisions of section 10(34) read with section 115-O of the Act.
2. As per the provisions of section 10(23D) of the Act
Any income of Mutual Funds registered under the Securities and Exchange Board of India Act, 1992 (‘SEBI’) or regulations made there under, Mutual Funds set up by public sector banks or public financial institutions or Mutual Funds authorised by the Reserve Bank of India, would be exempt from income tax, subject to the prescribed conditions.
F. Benefits to the Venture Capital Companies / Funds
1. Dividends exempt under section 10(34) of the Act
Dividend (whether interim or final) received by a Venture Capital Company (‘VCC’)/ Venture Capital Funds (‘VCF’) from its investment in shares of another domestic company would be exempt in the hands of the VCC/VCF as per the provisions of section 10(34) read with section 115-O of the Act.
2. In case of a shareholder being a Venture Capital Company/ Fund, as per the provisions of Section
10(23FB) of the Income Tax Act 1961, any income of Venture Capital Companies/ Funds registered with the SEBI, would be exempt from Income Tax, subject to the conditions specified in the said subsection.
G. Benefits under the Wealth Tax Act, 1957
Asset as defined under section 2(ea) of the Wealth-tax Act, 1957 does not include shares in companies and hence, shares are not liable to wealth tax.
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H. Benefits under the Gift Tax Act
As no Gift tax is leviable in respect of gifts made on or after October 1, 1998, but before April 1, 2006.As per amended section 56 (2) (vi) any gift received in money, the aggregate value of which exceeds ` 50,000/- is received without consideration, the whole of the aggregate value of such sum will be chargeable to tax. As per newly inserted section 56 (2) (vii) value of sum of money / immovable property/ movable property received without consideration or for inadequate consideration is in exceed of ` 50,000/- than the whole of the aggregate value of such sum will be chargeable to tax with effect from Dt: 01.10.2009. Notes
1. All the above benefits are as per the current tax laws as amended by the Finance Act, 2009 and
will be available only to the sole/ first named holder in case the shares are held by joint holders. 2. In respect of non-residents, the tax rates and the consequent taxation 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.
3. 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 scheme. 4. Tax implications of an investment in the Equity Shares, particularly in view of the fact that certain
recently enacted legislations may not have direct legal precedent or may have a different interpretation on the benefits which an investor can avail.
5. Our views expressed herein are based on the facts and assumptions indicated above. No assurance is
given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes.
For C. A. Patel & Patel Chartered Accountants Sd/- Bhavesh N Patel Partner Membership No. 26669 Place : Chennai Date : May 14, 2010
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KEY INDUSTRY REGULATIONS AND POLICIES
The following is a summary of certain relevant regulations and policies as prescribed by the Government of India that are applicable to the Company. Please note that the same are based on the legal provisions and the judicial interpretations as on date hereof, which are subject to change. The regulations and policies set out below are not exhaustive and are only intended to give general information to investors and are neither designed nor intended to be a substitute for professional advice. Legislation governing the Generation and Transmission of Electricity Electricity, being an entry in the Concurrent List (Entry 38, List III) of the Seventh Schedule to the Constitution of India, is governed by the laws of both the Government of India and the state governments. The central legislation governing the sector is the Electricity Act, 2003, as amended (the “Electricity Act”), a comprehensive legislation governing various aspects of the power sector including transmission, supply and use of electricity and central and state electricity regulatory commissions. Authorities under the Electricity Act The Central Electricity Authority (“CEA”) is constituted under the Electricity Act and comprises members appointed by the Government of India to perform the functions and duties prescribed by the Government of India. Among other functions, the CEA is to (a) specify technical standards for construction of electrical plants, electric lines and connectivity to the grid; (b) specify grid standards for operation and maintenance of transmission lines; (c) specify the conditions for installation of meters for transmission and supply of electricity; (d) advise the Government of India on matters relating to the National Electricity Policy; and (e) advise the appropriate government and commission on all technical matters relating to the generation, transmission and distribution of electricity. The Electricity Act also provides for a Central Electricity Regulatory Commission (“CERC”) and a State Electricity Regulatory Commission (“SERC”) for each state. Among other functions, the CERC is responsible for: (a) regulation of inter-state transmission of electricity; (b) determination of tariff for inter-state transmission of electricity; (c) issuing of licenses to function as a transmission licensee with respect to inter-state operations; and (d) specifying and enforcing standards with respect to quality, continuity and reliability of service by licensee. SERCs perform the similar functions at the state level. The Electricity Act also provides for the establishment of a Joint Commission by an agreement between two or more state governments or by the central government in respect of a union territory and one or more state governments. The Joint Commission shall determine tariff in respect of the participating states or union territories separately and independently. The Electricity Act also provides for the establishment of an Appellate Tribunal for Electricity that shall hear appeals against the order of the adjudicating officer or the appropriate commission under the Electricity Act. Electricity Rules, 2005 The Electricity Rules, 2005, as amended (the “Electricity Rules”) issued on June 8, 2005, under the provisions of the Electricity Act, state that no power plant shall qualify as a captive power plant unless: • not less than 26% of the ownership is held by captive users; and • not less than 50% of the aggregate electricity generated in such plant, determined on an annual basis,
is consumed for captive use.
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In case of a generating station owned by a company formed as a special purpose vehicle for such generating station: • the electricity required to be consumed by captive users shall be determined with reference to such
unit or units identified for captive use and not with reference to the generating station as a whole; and
• the equity shares to be held by the captive users shall not be less than 26% of the proportionate equity
interest of the company related to the generating unit or units identified as the captive generating plant.
Under the Electricity Rules, the National Load Dispatch Centre, the Regional Load Dispatch Centre or the State Load Dispatch Centre may give appropriate directions for maintaining the availability of the transmission system of a transmission licensee and such licensee shall comply with such directions. Tariff Policy The Tariff Policy (the “Tariff Policy”) was notified by the Central Government on January 6, 2006 pursuant to Section 3 of the Electricity Act. The central and state commissions are guided by the Tariff Policy while determining the tariff. The key features of the Tariff Policy are as follows: I. adoption of a two-part tariff structure for all long term contracts;
II. procurement of future power requirements is required to be through competitive bidding;
III. procurement of electricity separately for base load requirements and peak load requirements, in
order to facilitate setting up of generation capacities to meet peak load requirements;
IV. PPAs should ensure adequate and bankable payment security arrangements to the generating companies;
V. in case of coal based generating stations, the cost of the project will also include reasonable costs of
setting up coal washeries, coal beneficiation system and dry ash handling and disposal systems; and
VI. optimal development of the transmission network to promote efficient utilization of generation and transmission assets and to attract the required investments in the transmission sector and providing adequate returns.
National Electricity Policy The National Electricity Policy (the “NEP”) was notified by the Central Government on February 12, 2005, pursuant to Section 3 of the Electricity Act. The main objectives that the NEP seeks to achieve are as follows: • Access to electricity for all households in next five years; • Demand to be fully met by 2012. Energy and peaking shortages to be overcome and adequate spinning
reserve to be available; • Reliable supply of power of specified standards in an efficient manner and at reasonable rates; • Per capita availability of electricity to be increased to over 1,000 units by 2012; • Minimum lifeline consumption of 1 unit/household/day by 2012; • Financial turnaround and commercial viability of the electricity sector; and • Protection of consumers’ interests.
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In respect of hydro-electric generation projects, the NEP calls for greater commitment of the Government towards ensuring debt financing of longer tenure and review of procedures for land acquisition, and other approvals/clearances for speedy implementation of such projects. Further, in respect of thermal electricity generation, the NEP recommends establishing new generating stations near fuel sources, for example, pithead locations or load centers, and medium to long term fuel supply agreements, especially with respect to imported fuels, to ensure commercial viability and security of supply. Environmental Legislation We are required under applicable law to ensure that our operations are compliant with environmental legislation such as the Water (Prevention and Control of Pollution) Act 1974, as amended (the “Water Act”), the Air (Prevention and Control of Pollution) Act, 1981, as amended (the “Air Act”) and the Environment Protection Act, 1986, as amended (the “Environment Act”). The Water Act aims to prevent and control water pollution. It provides for the constitution of a Central Pollution Control Board (“CPCB”) and State Pollution Control Boards (“SPCBs”). The functions of the CPCB include coordination of activities of the SPCBs, collecting data relating to water pollution and the stipulation of measures for the prevention and control of water pollution and prescription of standards for streams or wells. The SPCBs are responsible for the planning for programs for, among other things, the prevention and control of pollution of streams and wells, collecting and disseminating information relating to water pollution and its prevention and control; inspection of sewage or trade effluents, works and plants for their treatment and to review the specifications and data relating to plants set up for treatment and purification of water; and laying down standards for treatment of trade effluents to be discharged. This legislation prohibits any person from establishing any industry, operation or process or any treatment and disposal system, which is likely to discharge trade effluents into a stream, well or sewer without the prior consent of the relevant SPCB. The CPCB and the SPCBs constituted under the Water Act are to perform functions under the Air Act for the prevention and control of air pollution. The Air Act aims to prevent and control air pollution. It is mandated under the Air Act that no person may, without the prior consent of the relevant SPCB, establish or operate any industrial plant in an air pollution control area. The Environment Act has been enacted for the protection and improvement of the environment. It empowers the Government to take measures to protect and improve the environment such as by laying down standards for emission or discharge of pollutants. The Government may make rules for regulating environmental pollution. Environment Impact Assessment Notifications The Environment Impact Assessment Notification S.O.60 (E), issued on January 27, 1994 (the “1994 Notification”) under the provisions of the Environment (Protection) Act, 1986, as amended (the “EPA”), prescribes that new construction projects that have an investment of more than ` 50 crore require prior environmental clearance of the MoEF. The environmental clearance must be obtained from the MoEF according to the procedure specified in the 1994 Notification. No construction work, preliminary or other, relating to the setting up of a project can be undertaken until such clearance is obtained. The application to the MoEF is required to be accompanied by a project report which should include, inter alia, an Environmental Impact Assessment Report and an Environment Management Plan. The Impact Assessment Authority evaluates the report and plan submitted. Such assessment is required to be completed within a period of 90 days from receipt of the requisite documents from the project developer/manager. Thereafter, a public hearing has to be completed and a decision conveyed within 30 days. The clearance granted is valid for a period of five years from the commencement of the construction or operation of the project. The project developer/manager concerned is required to submit a half yearly
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report to the Impact Assessment Authority to enable it to effectively monitor the implementation of the recommendations and conditions subject to which the environmental clearance has been given. If no comments from the Impact Assessment Authority are received within the time limits specified above, the project will be deemed to have been approved by the project developer/manager. On September 14, 2006, the Environmental Impact Assessment Notification S.O.1533 (the “2006 Notification”) superseded the 1994 Notification. Under the 2006 Notification, the environmental clearance process for new projects consists of four stages – screening, scoping, public consultation and appraisal. After completion of public consultation, the applicant is required to make appropriate changes in the draft Environment Impact Assessment Report and the Environment Management Plan. The final Environment Impact Assessment Report has to be submitted to the concerned regulatory authority for appraisal. The regulatory authority is required to give its decision within 105 days of the receipt of the final Environment Impact Assessment Report. Hazardous Waste (Management and Handling) Rules, 1989 The Hazardous Waste (Management and Handling) Rules, 1989, as amended, impose an obligation on each occupier and operator of any facility generating hazardous waste to dispose of such hazardous wastes properly and also imposes obligations in respect of the collection, treatment and storage of hazardous wastes. Each occupier and operator of any facility generating hazardous waste is required to obtain an approval from the relevant state pollution control board for collecting, storing and treating the hazardous waste. Public Liability Insurance Act, 1991 The Public Liability Insurance Act, 1991, as amended (the “Public Liability Act”) imposes liability on the owner or controller of hazardous substances for any damage arising out of an accident involving such hazardous substances. A list of ‘hazardous substances’ covered by the legislation has been enumerated by the Government by way of a notification. The owner or handler is also required to take out an insurance policy insuring against liability under the legislation. The rules made under the Public Liability Act mandate that the employer has to contribute towards the Environment Relief Fund, a sum equal to the premium paid on the insurance policies. This amount is payable to the insurer. Labor Legislation As part of our business, we are required to comply from time to time with certain laws in relation to the employment of labor. A brief description of certain labor legislations which are applicable to our operations is set forth below: Factories Act, 1948 The Factories Act, 1948, as amended (the “Factories Act”), defines a ‘factory’ to be any premises on which on any day in the previous 12 months, 10 or more workers are or were working and in which a manufacturing process is being carried on or is ordinarily carried on with the aid of power; or where at least 20 workers are or were working on any day in the preceding 12 months and on which a manufacturing process is being carried on or is ordinarily carried on without the aid of power. State governments prescribe rules with respect to the prior submission of plans, their approval for the establishment of factories and the registration and licensing of factories. The Factories Act provides that the ‘occupier’ of a factory (defined as the person who has ultimate control over the affairs of the factory and in the case of a company, any one of the directors) shall ensure the health, safety and welfare of all workers while they are at work in the factory, especially in respect of safety and proper maintenance of
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the factory such that it does not pose health risks, the safe use, handling, storage and transport of factory articles and substances, provision of adequate instruction, training and supervision to ensure workers’ health and safety, cleanliness and safe working conditions. If there is a contravention of any of the provisions of the Factories Act or the rules framed there under, the occupier and manager of the factory may be punished with imprisonment or with a fine. Minimum Wages Act, 1948 The Minimum Wages Act, 1948, as amended, provides a framework for State governments to stipulate the minimum wage applicable to a particular industry. The minimum wage may consist of a basic rate of wages and a special allowance; or a basic rate of wages and the cash value of the concessions in respect of supplies of essential commodities; or an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any. Workmen are to be paid for overtime at overtime rates stipulated by the appropriate government. Contravention of the provisions of this legislation may result in imprisonment for a term up to six months or a fine up to ` 500 or both. Payment of Bonus Act, 1965 Pursuant to the Payment of Bonus Act, 1965, as amended (the “Bonus Act”), an employee in a factory or in any establishment where 20 or more persons are employed on any day during an accounting year, who has worked for at least 30 working days in a year is eligible to be paid a bonus. Contravention of the provisions of the Bonus Act by a company is punishable with imprisonment or a fine, against persons in charge of, and responsible to the company for the conduct of the business of the company at the time of contravention. Employees State Insurance Act, 1948 The Employees State Insurance Act, 1948, as amended (the “ESI Act”), provides for certain benefits to employees in case of sickness, maternity and employment injury. All employees in establishments covered by the ESI Act are required to be insured, with an obligation imposed on the employer to make certain contributions in relation thereto. In addition, the employer is also required to register itself under the ESI Act and maintain prescribed records and registers. Contract Labor (Regulation and Abolition) Act, 1970 The Contract Labor (Regulation and Abolition) Act, 1970, as amended (the “CLRA”), requires establishments that employ, or have employed on any day in the previous 12 months, 20 or more workmen as contract labor to be registered and prescribes certain obligations with respect to the welfare and health of contract labor. The CLRA requires the principal employer of an establishment to which it applies to make an application to the registering officer in the prescribed manner for registration of the establishment. In the absence of registration, contract labor cannot be employed in the establishment. Likewise, every contractor to whom the CLRA applies is required to obtain a license and not to undertake or execute any work through contract labor except under and in accordance with the license issued. To ensure the welfare and health of contract labor, the CLRA imposes certain obligations on the contractor including the establishment of canteens, rest rooms, drinking water, washing facilities, first aid facilities, other facilities and payment of wages. However, in the event the contractor fails to provide these amenities, the principal employer is under an obligation to provide these facilities within a prescribed time period. Penalties, including both fines and imprisonment, may be imposed for contravention of the provisions of the CLRA.
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Employees Provident Fund and Miscellaneous Provisions Act, 1952 The Employees Provident Fund and Miscellaneous Provisions Act, 1952, as amended, provides for the institution of compulsory provident fund, pension fund and deposit linked insurance funds for the benefit of employees in factories and other establishments. Liability is placed both on the employer and the employee to make certain contributions to the funds mentioned above. Payment of Gratuity Act, 1972 Under the Payment of Gratuity Act, 1972, as amended, an employee who has been in continuous service for a period of five years will be eligible for gratuity upon his retirement, resignation, superannuation, death or disablement due to accident or disease. The entitlement to gratuity in the event of death or disablement is not contingent upon an employee having completed five years of continuous service. The maximum amount of gratuity payable may not exceed ` 0.035 crore. Fiscal Regulations Section 80-IA of the Income Tax Act, 1961 provides that, while computing the total income of an industrial undertaking or enterprise engaged in infrastructure development, including an undertaking set up for generation of power, 100% deduction of the profit and gains of such undertaking is allowed for undertakings that commence commercial operation up to March 31, 2010. This deduction is permitted during any 10 consecutive assessment years out of the first 15 years from the commencement of operation of the infrastructure facility. This benefit is not applicable when the concerned undertaking is formed by the splitting up or reconstruction of a business already in existence or by the transfer to a new business of machinery or plant previously used for any purpose.
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SECTION III - ABOUT COMPANY
HISTORY AND CORPORATE STRUCTURE OF THE COMPANY The Company was originally incorporated as National Engineering Company Limited on April 11, 1947 under the Companies Act, 1913 and a certificate of commencement of business was received at Kapurthala (Punjab) on July 7, 1947. The registered office of the company was shifted from Kapurthala (Punjab) to West Bengal in year 1964 and a fresh certificate of incorporation was received at Calcutta on November 12, 1964. The registered office of the company was shifted from the State of Bengal to the State of Tamil Nadu and a new certificate of Registration issued by Registrar of Companies, West Bengal confirming the said transfer was received on January 21, 1978 and a certificate of Registration issued by Registrar of Companies, Tamil Nadu confirming the said transfer was received on January 31, 1978. The name of the Company was changed to Tulsyan NEC Limited and a fresh certificate of incorporation consequent to change of name was obtained on August 21, 1996. The Company is the Flagship Company of the Tulsyan Group. The company is into manufacturing of Thermo Mechanically Treated Bars. It is the first Licensed Rolling Mill in South India to produce TMT Bars and obtain ISI 1786 and ISO certification. Tulsyan Steel is registered with the Bureau of Indian Standards and each TMT Bar is accompanied by a BIS Test Certificate. The total Rolling Mill capacity at Ambattur and Gummudipoondi unit is 3,48,000 MTPA. The MS Billets capacity at Gummudipoondi is 1,44,000 MTPA. The Ingot manufacturing unit with 36000 MTPA capacity at Gummudipoondi was closed in February 2009 due to power cuts at the plant. The ingots manufactured in this plant were consumed in Rolling Mill as raw material for production of TMT bars. The closure of the plant does not have any financial impact on the Company’s profitability as the plant was an old plant with a very small manufacturing capacity of ingots. During the financial year 2009-10, the company acquired M/s. Chitrakoot Steel and Power Pvt. Ltd. which manufactures sponge iron a basic raw material for Ingots/Billets. The installed capacity of this plant is 36000 MTPA. During the financial year 2009-10 the company floated a 100% subsidiary in the name Color Peppers Media Pvt. Ltd. (CPMPL with an investment of ` 5.00 lacs representing 50,000 equity shares of Rs. 10/- each(CPMPL). The main object of CPMPL is to deal in Intellectual Property Management and Marketing Solutions. The Company had entered the capital market with its maiden public issue during July 1994 and since then the equity shares of the company have been listed on the Bombay Stock Exchange Ltd. (BSE) The Company’s equity shares were initially also listed on Ahmedabad, Bangalore, Madras and Calcutta Stock Exchanges. The equity shares of the Company were voluntarily delisted from Ahmedabad and Bangalore Stock Exchanges. An application for delisting has also made by the company to Calcutta Stock Exchange in the year 2004 and the same is pending till date. Since November 2009 the Company’s shares have been permitted to trade on National Stock Exchange of India Ltd. (NSE). The Company had entered into an MOU with Budhrani Group of Companies on 20 August, 2008 for setting up a Joint Venture Company (JVC). This JVC was to be formed for setting up a steel making and rolling mill in Nigeria. However, there has been no development with respect to the said MOU till date. There would not be any conflict of interest as a result of this JVC as the market for the products produced by JVC will be different from that of the issuer Company. The Company also has a textile division which was earlier in the name of Tulsyan Synthetics Ltd. This division manufactures HPPE and PP woven sacks. In due course the product range was extended to include manufacture of Flexible Intermediate Bulk Containers (FIBC) with Wide Width Woven Fabric (WWWF). The division has 5 units located at Doddaballapur, Mallur, Bangalore, Kurnool and Goa. The present installed capacity of the plant is 20541 MTPA. Tulsyan Synthetics Ltd. vide court order dated
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June 24, 1996, got amalgamated with Tulsyan NEC Ltd. earlier known as National Engineering Company Ltd. The details of amalgamation are given herein under Details of Amalgamation of Tulsyan Synthetics Ltd. with Tulsyan NEC Ltd. earlier known as National Engineering Company Ltd. The Hon’ble High Court of Jurisdiction, Madras, vide its order dated June 24, 1996 approved the Scheme of Amalgamation whereby Tulsyan Synthetics Ltd. (“the Transferor Company”) got amalgamated with National Engineering Company Ltd. (“the Transferee Company”). The Board of Directors of Transferor Company approved the scheme as a form of reconstruction of the two companies with a view to have one Company for centralized control and administrative convenience besides rationalization of costs, overheads and other expenses. The main features of the scheme are as follows:
1. With effect from April 01, 1995 (“The Effective Date”) all the undertakings, business, properties, rights and powers, investments, inventories and all assets of whatsoever nature, including all properties movable and immovable and assets of whatsoever in nature, benefits of all contracts, deeds, instruments, licenses, leases, trademarks, agreements and all other interests, rights or powers of whatever kind, nature or description of Transferor Company shall without further act or deed, be and stand transferred to and vested in Transferee Company at Book Value.
2. With effect from the Effective Date all debts, liabilities, duties and obligations of the Transferor Company shall also be and stand transferred at the books values without further act or deed to the Transferee Company so as become as from that day the debts, liabilities, duties and obligations of the Transferee Company.
3. With effect from the Effective Date and subject to any corrections or adjustment, as may in the opinion of the Directors of the Transferee Company be required, the balance in the Investment Allowance Reserve, Other Reserves and Profit and Loss Account of the Transferor Company shall be and stand transferred to the Investment Allowance Reserve, Other Reserves and Profit and Loss Account of the Transferee Company.
4. All actions and legal proceedings pending by or against the Transferor Company on the completion of Procedures Date (The date on which the court’s orders vesting the assets, liabilities, rights, duties, obligations etc. of the Transferor Company in the Transferee Company are filed with RoC.) shall be continued and enforced by or against the Transferee Company as the case may be.
5. All the staff, workmen, and other employees in the service of the Transferor Company shall become the staff, workmen and employees of the Transferee Company on and with effect from the Effective date on the basis that: a) Their services shall have been continuous and shall not have been interrupted by reason of such
transfer:
b) The terms and conditions of service applicable to the said staff, workmen and other employees after such transfer shall not in any way be less favourable than those applicable to them immediately before the transfer.
c) In the event of retrenchment of any staff, workmen and other employees, the Transferee Company shall be liable to pay compensation in accordance with the law on the basis that the services of the staff, workmen and other employees have been continuous and shall have not been interrupted by reason of such transfer.
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6. Income and profits accruing to the Transferor Company or losses incurred by such undertaking on and from the Effective Date shall for all purposes be treated as the income, profits and/or losses, as the case may be, of the transferee Company.
7. Subject to the other provisions of this Scheme, all contracts, deeds, agreements and other instruments to which the Transferor Company is a party subsisting or operative immediately on or before the “Completion of Procedure Date” shall be in force and effect against or as the case may be in favour of the Transferee Company and may be enforced as fully and effectively as if instead of the Transferor Company, the Transferee had been a party thereto.
8. a) The Transferee Company shall, pursuant to this Scheme issue and allot to all the Members of the Transferor Company or their heirs of legal representatives Two Equity Shares of `10/- each credited as fully paid up, for every share of 10/- held by them in Transferor Company on the “Completion of Procedures Date”, upon their satisfying the Board of Directors of the transferee Company as to their title to their respective shares in the Transferor Company. b) The 3480 Equity shares of ` 10/- each held by the Transferee Company in the Transferor Company shall stand cancelled. c) The Equity Shares to be issued and allotted as aforesaid by the Transferee Company shall rank pari passu in all respects with the existing Equity Shares in the Transferee Company and shall be entitled to full dividend that maybe declared by the Transferee Company for the Financial Year 1995-96 even if such declaration is made subsequently.
9. With effect from the Effective date the Transferor Company shall stand dissolved without winding up, subject to the necessary report to be made by the Official Liquidator to the High Court of Madras in terms of the second proviso to Sub Section (1) of Section 394 of the Companies Act, 1956.
10. The Transferor Company and the Transferee Company shall obtain the requisite consent, approval or permission of the Central Government or any other authority as may be required or which by law may be necessary for the implementation of this Scheme. Major events of the company
Year Milestone achieved 1947 The Company was incorporated in the name of National Engineering Company Ltd. in
Kapurthala State (Punjab) to manufacture CTD bars, MS Rounds and other finished steel products
1965 Re- rolling facilities at Calcutta was relocated to Chennai 1986 The Company was taken over by Tulsyan Group
1994
Additional facility to manufacture MS Ingots was established for capacity of 36000 MTPA.
The equity shares of the Company got listed on the BSE Steel Division entered exports markets was awarded Regional Special Shield for outstanding performance
1996
Received an award from the Government of Karnataka for export performance during the year Amalgamation with M/s. Tulsyan Synthetics Ltd.
2004 Installed Furnace having Billet manufacturing capacity of 72000 MTPA at Gummudipoondi
2005 Set up Wind Mill at Devarkulam 2007 Installed Rolling Mill at Gummudipoondi having capacity of 150000 MTPA
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2008 Signed a Memorandum of Understanding with Power Trading Corporation and Suhaly Abdul Mohsin Al- Shouibi & Sons holding Co. Ltd.
2009 Increased Billet manufacturing capacity by 72000 MTPA at Gummudipoondi Increased Rolling Mill capacity by 150000 MTPA at Gummudipoondi Acquired Chitrakoot Steel & Power Pvt. Ltd. with sponge iron manufacturing capacity of
36000 MT per annum The Company`s shares have been permitted to trade on National Stock Exchange of India
Limited with effect from November 05, 2009 Changes in Registered Office of the Company There has been no change in the registered office of the company since 1978. MAIN OBJECTS OF THE COMPANY The main objects of the company are as follows: 1. To carry on the business of iron founders, mechanical engineers, and manufacturers of agricultural
implements and other machinery, tool-makers, brass-founders, metal workers, boiler-makers, mill-wrights, machinists, iron and steel converters, smiths, wood-workers, builders, printers, metallurgists electrical engineers, water supply engineers, gas-makers, farmers printers, carriers, and merchants, and to buy, sell manufacture, repair, convert, alter, let on hire and deal in machinery implements, rolling, stock, and hardware of all kinds, and to carry on any other business (manufacturing or otherwise) which may seem to the Company capable of being conveniently carried on in connection with the above or otherwise calculated, directly or indirectly, to enhance the value of any of the Company’s property and rights for the time being:
2. To carry on any business relating to the winning and working of minerals, the production,
manufacture, and preparation of any other materials, which may be usefully or conveniently combined with the engineering or manufacturing business of the Company, or any contracts undertaken by the company and either for the purpose only of such contracts or as an independent business.
3. To undertake and execute any contracts for works involving the supply or use of any machinery, and
to carry out ancillary or other works comprised in such contracts. 4. To carry on the trades or businesses of iron masters, steel makers, steel converters, colliery
proprietors, coke manufacturers, miners, smelters, engineers, tin-plate makers and iron founders, in all their respective branches.
5. To search for, get work, raise, make merchantable, sell and deal in iron, coal, ironstone, bricks-earth,
bricks and other metals, minerals, and substances, and to manufacture and sell patent fuel. 6. To carry on business as manufacturers of chemicals, and manures, distillers, dye makers, gas makers,
metallurgists, and mechanical engineers.
7. To carry on all or any of the business of undertakers, coach and carriage builders, saddlers sanitary engineers, electrical engineers and contractors in all their branches, builders, contractors, auctioneers, cabinet makers, upholsterers, warehousemen, carriers, store keepers, warehouse keepers, manufacturers of and dealers in hard ware.
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8. To carry on the trade or business of purchasing, hiring, or otherwise acquiring, and making building or manufacturing railway carriages, and wagons, and other carriages, wagons, carts, locomotives, engines, and conveyances of all kinds.
9. To carry on the business of mechanical engineers, machinists, fitters, millwright, founders, wire
drawers, tube-makers, metallurgists, saddlers, galvanizers, japaners annealers, enamellers electro platers, painters and packing case makers.
10. To buy, sell, let on hire, repair, alter and deal in machinery, component parts, accessories and fittings
of all kinds. 11. To carry on business as bankers, capitalists, financiers, concessionaires, and merchants, and to
undertake, and carry on and execute all kinds of financial, commercial trading and other operations and to carry on any other business which may seem to be capable of being conveniently carried on in connection with any of these objects.
12. To carry on all or any of the following businesses, that is to say general carriers, railway and forwarding agents, warehousemen, bonded carmen, and common carmen, and any other businesses which can conveniently be carried on in connection with the above.
13. To sink wells, tube wells and shafts, and to make build and construct, lay down and maintain tanks,
reservoirs, water works, cisterns, culverts, filter-beds, main and other pipes and appliances, and to execute and do all other works and things necessary or convenient for obtaining storing, selling, delivering, measuring and distributing water, or otherwise for the Company.
14. To carry on all or any of the business of importers, exporters, refrigerators, ship owners, shipbuilders,
caterers of ship or other vessels, warehousemen, merchants, ship and insurance brokers carriers, forwarding agents, warfingers, sheep farmers, stock owners and breeders, pasturers graziers, preservers and packers of provisions of all kinds, quarry owners, brickmakers, tanners carpenters and mechanical engineers.
15. To carry on all or any of the business of manufacturers, processors, laminates, exporters, importers,
distributors, agents, stockists, traders and dealers of packages of every kind of polyuretherene/poly propylene polythene bags, high density woven fabric sack, sacks, bags, paper boxes, cartons, ropes, tar paulins, packing materials of all kind and other materials of such manufacturing and all such raw materials, stores, equipments, product and by-products and machinery required in connection therewith.
16. To carry on all or any of the business of manufacturers, processors, pasters, folders, binders
exporters, importers, distributors, agents, stockists, traders and dealers of packages of every kind from papers, cardboard, stock board, packing materials of fibers, textiles, jute and jute products and containers.
17. To carry on all or any other business of manufacturers, processors, pasters, folders, assemblers
repairers, exporters, importers, distributors, agents, stockists, traders and dealers of drums, barrels, packages, cane boxes, tanks, containers and other industrial packings and fittings of every description from ferrous, non-ferrous and other materials and of such substances and may furnish materials for such manufacturing and all such raw-materials, stores, equipments, products byproducts and machinery required in connection therewith.
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18. To produce, manufacture, purchase, refine, prepare, process, import, export, sell and generally deal in cement port land cement, alumina cement, lime, limestone and by-products thereof, cement pipes, sheets and other building materials, refractories and bricks.
19. To manufacture, process, import, export, buy, sell and deal in vanaspathi, oils, de-hydrated
vegetables oils, oils made or processed from seeds, cotton seeds, coconuts, products of plantations horticulture, agriculture and forest produce and oil cakes, soaps and lubricants, made from such oils or by-products thereof.
20. To carry on all or any of the business of manufacturers, processors, assemblers, welders, repairers,
platers, exporters, importers, distributors, stockists, agents, traders and dealers of galvanised iron buckets made of plastic, ferrous, non ferrous and other material and such substances and may furnish materials for such manufacturing, and all such raw materials, stores, equipments, products and by-products and machinery required in connection therewith.
21. To manufacture, procure, buy, sell, prepare for market, manipulate, treat, care, submit to any process, trade in import, export and otherwise deal in and carry on the business of and for that purpose purchase, sell, re-sell and re-purchase, timber and wood of all kinds including ply-wood, bamboo, canes and allied products.
22. To manufacture and deal in all kinds of dissolved cellulose, including rayon, artificial silk,
nitrocellulose, cellophane films, plastics, cellulose derivatives or cellulose products and by-products.
23. To carry on the business of manufacturers of and dealers in chemicals of any nature and kind whatsoever and as chemists, druggists, analytical or pharmaceutical chemists, importers and exporters and manufacturers of and dealers in heavy chemicals, alkalis, acids, drugs, essences, pharmaceutical sizing and medical, chemical, industrial and other pre-operatives and articles of any nature and kind whatsoever, mineral and other water, petroleum products of all kinds, petrochemical products of all kinds, soaps, cements, oils, fats, paints, varnishes, compounds, drugs, dye stuffs, organic or mineral intermediates, paints and colour grinders, makers of and dealers in proprietary articles of all kinds and of electrical, chemical photographical, surgical and scientific apparatus and materials and manufacture, refine, manipulate, import and deal in salts and marine minerals and their derivatives, by-products and compound of any nature and kind whatsoever.
24. To carry on the business as dealers in and producers of dairy, poultry, garden and vegetable products of all kinds and grains of all kinds.
25. To manufacture, buy, sell exchange, alter, improve, manipulate, prepare for market, import or export and otherwise deal in all kinds of plant, machinery, apparatus, tools, utensils, substances, materials, and things necessary or convenient for carrying on any of the above business or usually dealt in by persons engaged in like business.
26. To erect, construct, enlarge alter acquire, work use, barter, exchange and otherwise deal with such mills factories, work shops, buildings, houses and erections as may be expedient and to purchase or put into working order such machinery and other accessories as may from time to time be expedient.
27. To carry on the business of electricians, electrical, mechanical and consulting engineers, suppliers of electricity for the purposes of light heat motive power or otherwise and manufacturers of and dealers in machinery, apparatus, instruments and things required for or capable of being used in connection with the generation, distribution, supply and accumulation, employment and use of electricity, galvanism, magnetism or otherwise.
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28. To undertake and execute any contracts for works involving the supply or use of any machinery and to carry out any auxillary or other works comprised in such works.
29. To generate, accumulate, distribute and supply electricity for the purpose of light, heat, motive power and for all other purposes for which electric energy can be employed.
30. To transact or carry on all kinds of agency, commission, and contract business in India or abroad, and in particular in relation to industrial, manufacturing and financial transactions and to act as agents of any person, firm, Company, Government or local authorities.
31. To carry on all kinds of contracts of Government, local bodies and other authorities.
32. To purchase or by any other means acquire and protect, prolong and renew, whether in India or elsewhere, any patent rights, brevet d’ invention, licenses protection, concessions, and the like, which may appear likely to be advantageous or useful to the Company, and used and turn to account and to manufacture under or grant licenses or privileges, in respect of the same and to spend money in experimenting upon and testing or in improving or seeking to improve any patents, inventions or rights which the Company may acquire or propose to acquire.
33. To set up and operate research laboratories for conducting scientific research for subjects and problems connected with technical and commercial objects and to devise, design and construct machinery, plant, moulds and tools for experimental and industrial use.
34. To employ experts to investigate and examine into the condition, prospects, value, character and circumstances of any business, concerns and undertakings, and generally of any assets, property or rights.
35. To purchase and otherwise acquire and deal in movable and immovable property of all kinds and in particular lands, mills, factories, collieries, tea and other produce, gardens, and plantations ships, boats, barges, railways, tramways, rope or other ways, motors, and other vehicles for use on land, sea or air, business, concerns and undertakings of every description, mortgages, shares stock, debentures, securities, policies, book debts, claims, and any interest in movable or immovable property and to establish and carry on any business in connection with all or any of the above or which may seem calculated to enhance the value of the property or rights of the Company or to facilitate the disposition thereof and to construct any mills, factories or other buildings or works and conveniences of all kinds.
36. To pay for any property or rights acquired by the Company, either in cash, or fully or partly paid shares or by the issue of securities or partly in one mode and partly in another and generally on such terms as may be determined.
37. To amalgamate with any other Company or Companies.
38. To carry on every kind of trade, venture, or activity as may be decided upon by the Directors at their absolute discretion.
39. To lease, let out on hire, mortgage, pledge, sell or otherwise dispose of the whole or any part of the undertaking of the Company, or any lands, business, property, rights or assets of any kind of the Company or any share or interest therein respectively, in such manner and for such consideration as the Company may think fit, and in particular for shares, debentures or securities of any other Corporation having objects altogether or in part similar to those of the Company.
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40. To pay any premiums or salamis and to pay for any property, rights or privileges acquired by the Company or for services rendered or to be rendered in connection with the promotion of the business of the Company or to acquisition of any property for the Company or otherwise, either wholly or partially in cash or in shares, bonds, debentures or other securities of the Company and to issue any such shares either as fully paid up or with such amount credited as paid up there on as may be agreed upon, and to charge any such bonds, debentures or other securities upon all or any part of the property of the Company.
41. To pay all or any costs, charges and expenses preliminary and incidental to the promotion, formation, establishment and registration of the Company.
42. To purchase or otherwise acquire and undertake all or any part of the business, property and liabilities of any person or corporation carrying on any business which the Company is authorised to carry on, or possessed of property suitable for the purpose of the Company.
43. To promote any other Company for the purpose of acquiring all or any of the property of this Company or advancing directly or indirectly the objects or interest thereof, and to take or otherwise acquire and hold shares in any such Company and to guarantee the payment of any debentures or other securities issued by any such Company.
44. To take or otherwise acquire and hold shares in any other Company having objects altogether or in part similar to those of this Company or carrying on any business capable of being conducted so as directly or indirectly to benefit this Company.
45. To enter into partnership or into any arrangement for sharing profits, union of interests, cooperation, joint adventure, reciprocal concession or otherwise with any person or Company carrying on or engaged in or about to carry on or engage in any business or transaction which this Company is authorized to carry on, or engage in any business or transaction capable of being conducted so as directly or indirectly to benefit this Company, and to take or otherwise acquire and hold shares of stock in any such Company.
46. To draw, make accept, endorse, discount, execute and issue cheques, promissory notes, bills of exchange and other negotiable or transferable instruments.
47. To invest moneys of the Company not immediately required upon such securities as may from time to time be determined.
48. To lend money to such persons and on such terms as may seem expedient, and in particular, to customers of and to other persons having dealings with the Company, and to guarantee the performance of contracts by members of or persons having dealings with the Company.
49. To appoint agents and managers and constitute Agencies of the Company in India or in any other country what so ever.
50. To borrow or raise or secure the payment of money in such manner as the Company shall think fit, and in particular by the issue of debentures, charged upon all or any of the Company’s property (both present and future) including its uncalled capital and to purchase, redeem, or pay off any such securities.
51. To pay brokerage or commission to any person or persons in consideration of his of their subscribing or agreeing to subscribe, whether absolutely or conditionally, for any shares or debentures of the Company, or procuring or agreeing to procure subscriptions whether absolute or conditional for the
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same, which brokerage or commission may be paid either in cash or in debentures or shares of the Company credited as fully or partly paid up.
52. To grant pensions, allowances, gratitudes and bonuses to employees or ex-employees of the Company or the dependents of such persons, and to support or subscribe to any charitable or other institutions, clubs societies, funds, or objects.
53. To distribute any of the Company’s property among the members in spacie.
54. To do all or any of the above things in any part of the world, and either as principals, agents, contractors, trustees or otherwise and either alone or in conjunction with others, and by or through agents, sub-contractors, trustees or otherwise.
55. To do all such other things as are incidental or as the Company may thing conductive to the attainment of the above objects or any of them.
56. To give guarantee, and carry on and transact every kind of guarantee and counter guarantee business with or without any security and in particular to guarantee the payment of any principal moneys, interest or other moneys secured by or payable under any debentures, bonds, debenture stock, mortgages, charges, contracts, obligations and securities and the payment of dividends on and the repayment of capital of stocks and share of all kinds and descriptions to give guarantees and indemnities in respect of the debts and contracts of any person, firm or body corporate, against mortgages, charges, hypothecation’s or in any other security.
57. To promote, develop, establish, own, operate and maintain power plants of all types and capacities including hydro, thermal, gas, air, diesel oil, or renewal energy such as solar, photovoltaic, wind mill and/or any other means and to generate and supply power/electricity to the State Electricity Boards or other consumers in India and abroad and to establish the business of an electric power, light and supply company in all its branches and in particular to construct, lay down establish, operate, manage, maintain, fix and carry out all necessary power stations, boiler houses, steam turbines, switch yards, transmission lines, accumulators, workshops, fuel handling equipment machinery and facilities, cables, wires, lines, lamps and works and to generate, acquire by purchase in bulk, accumulate, distribute and supply electricity and to light cities, towns, streets, docks, markets, theatres, buildings and places, both public and private.
CHANGES IN MEMORANDUM Dates on which some of the main clauses of the Memorandum of Association of the Company has been altered citing the details of Amendment as under:
Date of Approval Amendment 28/09/1992 The Authorised Capital of the Company was increased from ` 5.00 lacs
divided into 50,000 equity shares of ` 10/- each to ` 500.00 lacs divided into 50,00,000 equity shares of ` 10.00 each
17/04/1996 The Authorised Capital of the Company was increased from ` 500.00 lacs divided into 50,00,000 equity shares of ` 10.00 each to ` 1,000 lacs divided into into 50,00,000 equity shares of ` 10/- each and 5,00,000 preference shares of ` 100/- each
16/08/1996 Name of the Company was changed to Tulsyan NEC Ltd. 16/10/2004 Alteration of Main object clauses of Memorandum of Association
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Date of Approval Amendment 16/09/2009 The Authorised Capital of the Company was increased from ` 1,000 lacs
divided into 50,00,000 equity shares of ` 10/- each and 5,00,000 preference shares of ` 100/- each to ` 2,200.00 lacs divided into 2,20,00,000 equity shares of ` 10/- each
Competition The Company constantly focuses on creating brand awareness in the market by putting hoardings in various states such as Tamilnadu, Kerala, Goa and Puducherry by publishing advertisements in newspapers and TV channels and Theaters in the state of Tamil Nadu. The Company also strives to improve the quality of the products and widen the distribution network in order to face the competition from major players in the industry. The details of associate companies having business interest in the issuer are as under:
Name of the Associate Companies Business Interest T G Logistics Pvt. Ltd. Provides Logistic facilities for movement of raw material and
finished goods Chitrakoot Steel & Power Pvt. Ltd. Provides sponge iron required in Billet making division Tulsyan Smelters P. Ltd. Acts as a Consignment Sales Agent of the company
SUBSIDIARIES OF THE COMPANY Tulsyan has following four subsidiaries: 1. Cosmic Global Ltd. 2. Tulsyan Power Ltd. 3. Balaji Engineering and Galvanizing Ltd. 4. Chitrakoot Steel & Power Pvt. Ltd. 5. Color Peppers Media Pvt. Ltd.
The details of above subsidiaries are given as follows: Cosmic Global Ltd. (CGL): CGL was originally incorporated as “Tulsyan Technologies Ltd.” on 05/02/1999 with Registrar of Companies, Tamil Nadu. The name of the Company was later changed to “Cosmic Global Ltd.” and fresh certificate of incorporation was received on 25/07/2005 consequent to change of name. The Registration Number of the company is 18- 41863 of 1999 and the CIN Number is U72200TN1999PLC041863. The registered office is situated at 61, Sembudoss Street, Chennai-600001, Tamil Nadu, India. The company is engaged in the business of providing services for clients through high speed telecommunications, computer networking, satellite communication or directly at the client’s site for any kind of data analysis, data processing, data conversion, software development, software debugging, software testing and analysis, handling telephonic inquiries, training people in any of the above or any other related areas. Mr. Lalit Kumar Tulsyan and Mr. Sanjay Tulsyan are the promoters of CGL.
Board of Directors Mr. Lalit Kumar Tulsyan, Mr. Sanjay Tulsyan and Mr. Sanjay Agarwalla
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The Shareholding pattern of CGL is as follows:
Sr. No
Name No. of shares held of ` 10/- each
% of total share capital
1 M/s Tulsyan NEC Ltd. 11,25,000 99.86 2 Mr. Lalit Kumar Tulsyan 100 0.0089 3 Mr. Sawarmal Tulsyan 100 0.0089 4 Mr. Sanjay Agarwalla 100 0.0089 5 Mr. Sanjay Tulsyan 100 0.0089 6 Ms. Priya Tulsyan 100 0.0089 7 Ms. M. Uma 900 0.0798 8 Mr. Balakrishna Iyer 100 0.0089 Total 11,26,500 100.00
Brief Financials (Amount in ` lacs)
Particulars 2009-2010 2008-2009 2007-2008 Equity Share Capital @ `10/- each 112.65 112.65 112.65 Reserves & Surplus 41.31 32.96 7.74 Networth 97.41 89.06 63.58 Total Income 586.37 776.40 586.63 Profit After Tax 56.80 233.93 102.15 Earnings Per Share (`) (Face Value ` 10/-) 5.04 20.76 9.07 Net Asset Value (NAV) 8.64 7.91 5.64
CGL has not made any capital issue during last three years. CGL is not a Sick Industrial Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995. Tulsyan Power Limited (TPL): TPL was incorporated as “Tulsyan Power Limited.” On 29/11/2002 with Registrar of Companies, Tamil Nadu. The Registration Number of the company is 049958 of 2002 and the CIN Number is U40101TN2002PLC049958. The registered office is situated at 61, Sembudoss Street, Chennai – 600001, Tamil Nadu, India. The company was incorporated with the view to engage itself in the business of development, establish, own, operate and maintain power plants of all types and capacities including thermal, hydro, gas, renewal energy (such as photovoltaic, wind mill, etc.) and/or any other means and to generate and supply power to the public and private companies and/or boards in India. The company has not commenced commercial activity till date. TPL is a 100% subsidiary of Tulsyan NEC Limited.
Board of Directors Mr. Lalit Kumar Tulsyan, Mr. Sanjay Tulsyan and Mr. Sanjay Agarwalla The Shareholding pattern of TPL is as follows:
Sr. No
Name No. of shares held of ` 10/- each
% of total share capital
1 M/s Tulsyan NEC Ltd. 5,00,000 100.00 Total 5,00,000 100.00
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Financials (Amount in ` lacs)
Particulars 2009-2010 2008-2009 2007-2008 Equity Share Capital @ `10/- each 5.00 5.00 5.00
Share application money 50.00 50.00 50.00
Networth (9.22) (9.15) (9.09)
Total Income 0 0 0 Profit After Tax 0 0 0 Earnings Per Share (`) (Face Value ` 10/-) 0 0 0 Net Asset Value (NAV) (18.44) (18.30) (18.18)
* Share Application Money is not considered while calculating the Net Worth of the company. TPL has not made any capital issue during last three years. TPL is not a Sick Industrial Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995. Balaji Engineering and Galvanizing Limited (BEGL): BEGL was incorporated as “Balaji Engineering and Galvanizing Limited.” on 04/11/2008 with Registrar of Companies, Tamil Nadu. The Registration Number of the company is 069747 of 2008 and the CIN Number is U51909TN2008PLC069747. The registered office is situated at 61, Sembudoss Street, Chennai – 600001, Tamil Nadu, India. The company was incorporated with the view to engage itself in the business of engineering, fabrication of electrical post and towers and galvanizing steel and to undertake the business as iron-masters, iron and steel makers, steel converters and steel fabricators; also as manufacturers of dealers in ferrous and non-ferrous castings and forgings of all types. The company has not commenced commercial activity till date. Mr. Lalit kumar Tulsyan and Mr. Sanjay Tulsyan are the promoters of BEGL.
Board of Directors Mr. Lalit Kumar Tulsyan, Mr. Sanjay Tulsyan and Mr. Sanjay Agarwalla The Shareholding pattern of BEGL is as follows:
Sr. No
Name No. of shares held of ` 10/- each
% of total share capital
1 M/s Tulsyan NEC Ltd. 49400 98.80 2 Mr. Lalit Kumar Tulsyan 100 0.20 3 Mr. Sanjay Tulsyan 100 0.20 4 Mr. Sanjay Agarwalla 100 0.20 5 Mr. Vivek Agarwalla 100 0.20 6 Mr. Sanjay Kumar Kasera 100 0.20 7 Mr. Vijay Kumar Bansal 100 0.20 Total 50,000 100.00
Financials (Amount in ` lacs)
Particulars 2009-10 As on 31/12/2009
Equity Share Capital @ `10/- each 5.00 5.00 Reserves & Surplus 0 0 Networth 4.54 4.57
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Particulars 2009-10 As on 31/12/2009
Total Income 0 0 Profit After Tax 0 0 Earnings Per Share (`) (Face Value ` 10/-) 0 0 Net Asset Value (NAV) 9.08 9.14
BEGL has not made any capital issue during last three years. BEGL is not a Sick Industrial Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995. Chitrakoot Steel & Power Private Limited (CSPPL):
CSPPL was incorporated as “Chitrakoot Steel & Power Private Limited” on 21/10/2003 with Registrar of Companies, Tamil Nadu. The Registration Number of the company is 051803 of 2003 and the CIN Number is U28999TN2003PTC051803. The registered office is situated at 61, Sembudoss Street, Chennai – 600001, Tamil Nadu, India. CSPPL was incorporated with the view to establish, own or acquire ferrous and non-ferrous metal melting furnaces, sponge iron units, etc and also to carry on business as traders & manufacturers of sponge iron. The company was taken over by Tulsyan NEC Ltd. during the financial year 2009 – 2010. CSPPL is a 100% subsidiary of Tulsyan NEC Limited.
Board of Directors Mr. Lalit Kumar Tulsyan, Mr. Sanjay Tulsyan and Mr. Sanjay Agarwalla
The Shareholding pattern of CSPPL is as follows:
Sr. No
Name No. of shares held of ` 10/- each
% of total share capital
1 M/s Tulsyan NEC Ltd. 64,89,200 100.00 Total 64,89,200 100.00
Financials (Amount in ` lacs)
Particulars 2009-10 Equity Share Capital @ `10/- each 648.92 Reserves & Surplus -- Net worth 183.39 Total Income 936.46 Profit After Tax (296.78) Earnings Per Share (`) (Face Value ` 10/-) (4.57) Net Asset Value (NAV) 2.83
CSPPL has not made any capital issue during last three years. CSPPL is not a Sick Industrial Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995.
Color Peppers Media Pvt. Ltd. (CPMPL) CPMPL was incorporated as “Color Peppers Media Private Limited” on December 09, 2010 with Registrar of Companies, Tamil Nadu. The CIN Number of the Company is U74300TN2010PTC078391. The registered office is situated at I floor, Apex Plaza, 3 Nungambakkam High Road, Chennai- 600 034 Tamil Nadu, India. CPMPL deals in Intellectual Property Management and Marketing Solutions. CPMPL is a 100% subsidiary of Tulsyan NEC Limited.
Board of Directors Mr. Sanjay Tulsyan and Mr. Sanjay Agarwalla
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The Shareholding pattern of CPMPL is as follows:
Sr. No
Name No. of shares held of ` 10/- each
% of total share capital
1 M/s Tulsyan NEC Ltd. 50,000 100.00 Total 50,000 100.00
Since the CPMPL was incorporated on December 09, 2010, the financials of the same are not available. CPMPL has not made any capital issue during last three years. CPMPL is not a Sick Industrial Company within the meaning of the Sick Industrial Companies (Special Provisions) Act, 1995. The Companies mentioned above fall under the category of Tulsyan Group Companies and under the same management u/s 370 (1B) of the Companies Act, 1956. SHAREHOLDERS’ AGREEMENTS
The company has not entered into --any shareholders agreements.
STRATEGIC AND FINANCIAL PARTNERS The company does not have any strategic and financial partners.
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MANAGEMENT
The details of the board of directors of the company are given below:
Mr. Lalit Kumar Tulsyan Age: 49 Years Chairman S/o: Late G.L.Tulsyan Address: 19 A-41 Cross, Jaya Mahal Extn, Bangalore – 560 046 Occupation: Business Qualification : B. Com DIN No. 00632823 (Executive and Non Independent)
22/09/ 2006
Tulsyan Smelters P. Limited Cosmic Global Limited Tulsyan Power Limited Tulsyan Alloys Ltd Balaji Engineering & Galvanizing Ltd. Chitrakoot Steel & Power Pvt. Ltd. T G Logistics (P) ltd Buildmet Fibers P Ltd
Mr. Sanjay Tulsyan Age: 45 Years Managing Director S/o: Late G.L.Tulsyan Address: A 602, Keshav Dugar, 1, East Avenue, Keshavaperumalpuram, Chennai – 600 028 Occupation: Business Qualification : B. Com (Hons) DIN No. 00632802 (Executive and Non- Independent)
22/09/2006
Tulsyan Smelters P. Limited Cosmic Global Limited Tulsyan Power Limited Savitri Steel Industries (Partner) Tulsyan Alloys Ltd Balaji Engineering & Galvanizing Ltd. Chitrakoot Steel & Power Pvt. Ltd. Buildmet Fibers Pvt. Ltd Color Peppers Media Pvt. Ltd.
Mr. S. Soundararajan Age: 83 Years Director S/o: Mr. R. Srinivasa Chari Address: Rajendra # 1, II Street, Prithvi Avenue, St. Mary’s Road, Chennai- 600 018 Occupation: Business Qualification : I.A. & A.S. DIN No. 01033820 ( Non Executive and Independent)
16/06/2010
Nil
Mr. P.T. Rangamani Age: 75 Years Director S/o: Mr. Venkataraghavachariyar Address: 5, 16th Street, Jai Nagar, Arumbakkam, Chennai – 600 106 Occupation: Business Qualification : B. Com, B.Law, F.C.S DIN No. 01387032 (Non Executive and Independent)
Mr. A.P. Venkateshwaran Age: 50 Years Whole Time Director S/o: Mr. A.V. Parameshwaran Address: 366,9th Block II Stage, Nagarabhavi, Banagalore – 560 072 Occupation: Business Qualification : B.Com, F.C.A DIN No. 01461988 (Executive and Non Independent)
01/10/2009
Nil
Mr. S. Ramakrishnan Age: 55 Years Director S/o: Mr. A.N. Selvaganapathy Address: 101,7th Cross,KHB Colony, Basaveswar Nagar, Bangalore – 560 079 Occupation: Business Qualification : B. Sc DIN No. 00510808 (Non-Executive and Independent)
Mr. Sanjay Agarwalla Age: 46 Years Whole Time Director S/o: Mr.N.L. Agarwalla Address: 8- D Coromandal Towers, 816 & 817, P.H. Road, Chennai – 600 010 Occupation: Business Qualification : B.Com (Hons) DIN No. 00632864 (Executive and non Independent)
22/09/2006
Tulsyan Power Limited Cosmic Global Limited Savitri Steel Industries Balaji Engineering & Galvanizing Ltd. Chitrakoot Steel & Power Pvt. Ltd. Color Peppers Media Pvt. Ltd.
Mr. V. Kirubanandan Age: 61 Years Director S/o: Mr. C. Venkatachalam Address: No. 20 Venkatrathanam Nagar, Extn. II Street, Adyar, Chennai – 600 020 Occupation: Business Qualification : B.E, M.Tech, MBA DIN No. 01068178 (Non Executive and Independent)
Mr. C. Ramachandran Age: 71 Years Director S/o: Mr. Raman Nair Address: F 108, Anna Nagar, Chennai – 600 012 Occupation: Business Qualification : I.A.S DIN No. 00050893 (Non Executive and Independent)
08/09/2008
Tamil Nadu Petro Products Ltd. Elnet Technologies Ltd. Elnet Software City Ltd. ETL Hospitability Services Limited The Great Indian Linen & Textile
Infrastructure Company Pvt. Limited ETL Corporate Services Private Limited ETL Power Services Ltd. ETL Infrastructure Services Ltd. Appu Hotels Ltd.
Number of equity shares held by the Board of Directors:
Name No. of Equity shares held
Mr. Lalit Kumar Tulsyan
13,44,693
Mr. Sanjay Tulsyan
13,04,732
Mr. A.P. Venkateshwaran
1,000
Mr. S. Soundararajan
400
Mr. Sanjay Agarwalla
100
RELATIONSHIP AMONG DIRECTORS There is no relationship among any of the directors in the Company with each other except that Mr. Lalit Kumar Tulsyan (Chairman) and Mr. Sanjay Tulsyan (Managing Director) are brothers. There is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any of the directors were selected as director or member of senior management. As on date of filing of the offer document there is no service agreement entered into by the directors with the Company providing benefits upon termination of employment except of Mr. Lalit Kumar Tulsyan (Executive Chairman ) , Mr. Sanjay Tulsyan,( Managing Director), Mr. A.P. Venkateshwaran (Whole Time Director ), and Mr. Sanjay Agarwalla ( Whole Time Director ) 1. Mr. Lalit Kumar Tulsyan (Executive Chairman) Mr. Lalit Kumar Tulsyan has been appointed as Executive Chairman of the company with effect from 22/09/2006 for a period of five years.
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The details are as under:
Salary Salary between ` 1,25,000/-pm. and ` 10,00,000/- p.m. Any revision in the same has to be fixed by the Board of Directors in their meeting
Medical Reimbursement
Reimbursement of expenses incurred for self and family subject to a ceiling of one month’s salary in a year or five months salary over a period of five years
Leave Travel Concession
Leave Travel Concession for self and family, once in a year incurred in accordance with the Rules of the Company
Membership Fee
Payment to Club Fees, other than life membership fee
Personal Accident Insurance
Personal Accident Insurance of an amount, the premium of which shall not exceed ` 1,00,000/-
Provident Fund a. Company’s Contribution towards Provident Fund as per Rules of the Company. b. Benefits under the Company’s Pension/Superannuation Fund in accordance
with the Company’s Practice and rules and regulations c. Contributions to Provident Fund and Superannuation Fund shall not be
included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income-Tax Act
Gratuity Gratuity Payable in accordance with the Company’s Rules but shall not exceed half –a- month’s salary for each computed year of service, subject to a ceiling of ` 3,50,000/-
Earned Leave On full pay and allowances as per Rules of the Company, but not exceeding one month’s leave for every eleven months of service.
Any other Benefits
Such other benefits and perquisites as are available to Senior Executives of the Company. Telephone at residence for Company’s Business
Reimbursement of Expenses,
including entertainment
expenses
The above remuneration is as per the Notification No. GSR 48 dated 01/02/1995, issued by Department of Company Affairs, Government of Indian permitting profit making companies to pay remuneration by way of salary and other allowances to Managerial Personnel not exceeding 5% of its net profit for one managerial person and/or 10% of the net profits for more than on managerial person.
2. Sanjay Tulsyan (Managing Director) Mr. Sanjay Tulsyan has been appointed as Managing Director of the company with effect from 22/09/2006 for a period of five years. The details are as under:
Salary Salary between ` 71,000/-pm. and ` 10,00,000/- p.m. Any revision in the same has to be fixed by the Board of Directors in their meeting
Medical Reimbursement
Reimbursement of expenses incurred for self and family subject to a ceiling of one month’s salary in a year or five months salary over a period of five years
Leave Travel Concession
Leave Travel Concession for self and family, once in a year incurred in accordance with the Rules of the Company
Membership Fee
Payment to Club Fees, other than life membership fee
Personal Accident Insurance
Personal Accident Insurance of an amount, the premium of which shall not exceed ` 1,00,000/-
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Provident Fund a. Company’s Contribution towards Provident Fund as per Rules of the Company. b. Benefits under the Company’s Pension/Superannuation Fund in accordance
with the Company’s Practice and rules and regulations c. Contributions to Provident Fund and Superannuation Fund shall not be
included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income-Tax Act
Gratuity Gratuity Payable in accordance with the Company’s Rules but shall not exceed half –a- month’s salary for each computed year of service, subject to a ceiling of ` 3,50,000/-
Earned Leave On full pay and allowances as per Rules of the Company, but not exceeding one month’s leave for every eleven months of service.
Any other Benefits
Such other benefits and perquisites as are available to Senior Executives of the Company. Telephone at residence for Company’s Business
Reimbursement of Expenses,
including entertainment
expenses
The above remuneration is as per the Notification No. GSR 48 dated 01/02/1995, issued by Department of Company Affairs, Government of Indian permitting profit making companies to pay remuneration by way of salary and other allowances to Managerial Personnel not exceeding 5% of its net profit for one managerial person and/or 10% of the net profits for more than on managerial person.
3. Mr. A.P. Venkateswaran (Whole-time Director) Mr. A.P. Venkateswaran has been appointed as Whole-time Director of the company with effect from 01/10/2009 for a period of five years The details are as under:
Salary Salary between ` 1,50,000/-pm. and ` 10,00,000/- p.m. Any revision in the same has to be fixed by the Board of Directors in their meeting
Medical Reimbursement
Reimbursement of expenses incurred for self and family subject to a ceiling of one month’s salary in a year or five months salary over a period of five years
Leave Travel Concession
Leave Travel Concession for self and family, once in a year incurred in accordance with the Rules of the Company
Membership Fee
Payment to Club Fees, other than life membership fee
Personal Accident Insurance
Personal Accident Insurance of an amount, the premium of which shall not exceed ` 1,00,000/-
Provident Fund a. Company’s Contribution towards Provident Fund as per Rules of the Company. b. Benefits under the Company’s Pension/Superannuation Fund in accordance
with the Company’s Practice and rules and regulations c. Contributions to Provident Fund and Superannuation Fund shall not be
included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income-Tax Act
Gratuity Gratuity Payable in accordance with the Company’s Rules but shall not exceed half –a- month’s salary for each computed year of service, subject to a ceiling of ` 3,50,000/-
Earned Leave On full pay and allowances as per Rules of the Company, but not exceeding one month’s leave for every eleven months of service.
Any other Benefits
Such other benefits and perquisites as are available to Senior Executives of the Company. Telephone at residence for Company’s Business
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Reimbursement of Expenses, including entertainment expenses
The above remuneration is as per the Notification No. GSR 48 dated 01/02/1995, issued by Department of Company Affairs, Government of Indian permitting profit making companies to pay remuneration by way of salary and other allowances to Managerial Personnel not exceeding 5% of its net profit for one managerial person and/or 10% of the net profits for more than on managerial person.
4. Mr. Sanjay Agarwalla (Whole-time Director) Mr. Sanjay Agarwalla has been appointed as Whole-time Director of the company with effect from 22/09/2006 for a period of five years The details are as under:
Salary Salary between ` 65,000/-pm. and ` 10,00,000/- p.m. Any revision in the same has to be fixed by the Board of Directors in their meeting
Medical Reimbursement
Reimbursement of expenses incurred for self and family subject to a ceiling of one month’s salary in a year or five months salary over a period of five years
Leave Travel Concession
Leave Travel Concession for self and family, once in a year incurred in accordance with the Rules of the Company
Membership Fee
Payment to Club Fees, other than life membership fee
Personal Accident Insurance
Personal Accident Insurance of an amount, the premium of which shall not exceed ` 1,00,000/-
Provident Fund a. Company’s Contribution towards Provident Fund as per Rules of the Company. b. Benefits under the Company’s Pension/Superannuation Fund in accordance
with the Company’s Practice and rules and regulations c. Contributions to Provident Fund and Superannuation Fund shall not be
included in the computation of the ceiling on perquisites to the extent these either singly or put together are not taxable under the Income-Tax Act
Gratuity Gratuity Payable in accordance with the Company’s Rules but shall not exceed half –a- month’s salary for each computed year of service, subject to a ceiling of ` 3,50,000/-
Earned Leave On full pay and allowances as per Rules of the Company, but not exceeding one month’s leave for every eleven months of service.
Any other Benefits
Such other benefits and perquisites as are available to Senior Executives of the Company. Telephone at residence for Company’s Business
Reimbursement of Expenses, including entertainment expenses
The above remuneration is as per the Notification No. GSR 48 dated 01/02/1995, issued by Department of Company Affairs, Government of Indian permitting profit making companies to pay remuneration by way of salary and other allowances to Managerial Personnel not exceeding 5% of its net profit for one managerial person and/or 10% of the net profits for more than on managerial person.
Minimum Remuneration In the event of absence or inadequacy of profits, in any financial year the aforesaid remuneration shall be considered as the minimum remuneration payable to them.
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DETAILS OF BORROWING POWER Subject to the provisions of Section 292 and 293 of the Act, the Board may, from time to time, at its discretion and by means of the resolution passed at its meeting, accept deposits from members either in advance of call or otherwise and generally, raise or borrow or secure the payment of, any sum or sums of ` 1000.00 Crores for the purpose of the Company. INTEREST OF PROMOTERS/ DIRECTORS All the Directors of the Company may be deemed to be interested to the extent of fees, if any, payable to them for attending meetings of the Board and its committees and reimbursement of expenses. All the directors may also be deemed to be interested to the extent of equity shares, if any, already held by them and /or by their friends /relatives in the Company that may be subscribed for or allotted to them in the present offer and also to the extent of any dividend payable to them and other distributions in respect of the said equity shares. All the directors may also be deemed to be interested to the extent of normal transactions, if any, with the Company. The Directors may also be regarded as interested in the equity shares, if any, held or that may be allotted to the companies, firms and trust in which they are interested as directors, members, partners and or trustees. Corporate Governance The Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the listing agreement and circular no. SEBI/CFD/DIL/CG/2004/12/10 dated October 29, 2004 issued by Securities and Exchange Board of India (SEBI.) as amended from time to time. Committees of the Board At present, there are Three committees constituted by the Board – the Audit Committee, the Shareholders/Investors' Grievance Committee and the Remuneration & Compensation Committee. The Board at the time of constitution of each committee fixes the terms of reference for each committee and also delegates powers from time to time. Various recommendations of the committees are submitted to the Board for approval. 1. Audit Committee The primary role of the audit committee is overseeing the financial reporting process and disclosure of financial information, reviewing the financial statements before submission to the Board, reviewing adequacy of internal control systems and reviewing findings of internal investigations besides recommending appointment/ removal of statutory auditors, internal auditors and fixing their remuneration. The committee holds discussions with the statutory auditors and internal auditors periodically.
The following directors of the Company constitute the Audit Committee.
Sr. No. Name of the Director Designation Status
1 Mr. S Soundararajan Chairman Independent & Non- executive 2 Mr. S Ramakrishnan Member Independent & Non- executive 3 Mr. A P Venkateshwaran Member Independent & Executive
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Terms of Reference The composition, powers, role and terms of reference of the Committee is in consonance with the requirements mandated under Section 292A of the Companies Act, 1956 and Clause 49 of the listing Agreement(s). In addition to this function, the responsibilities of the Board also include but are not limited to the following functions:
(a) Overseeing the Company’s financial reporting process and the disclosure of its financial information. (b) Recommending the appointment and removal of external auditors, fixation of audit fee and approval
of payment for any other services. (c) Reviewing with the management the financial statements before submission to the Board, focusing
primarily on: - Any changes in accounting policies and practices - Major accounting entries based on exercise of judgment by management - Qualifications in draft audit report - Significant adjustments arising out of audit - The going concern assumption - Compliance with accounting standards - Compliance with Stock Exchanges legal requirements concerning financing statements - Any related party transactions i.e. transactions of the Company of material nature with the top
management or their relatives, with shareholders with large holdings in the Company or their subsidiaries etc. that may have potential conflict with the interests of the Company at large;
(d) Reviewing with the management, external and internal auditors and the adequacy of internal control systems.
(e) Reviewing the adequacy of internal audit functions. (f) Discussion with internal auditors any significant findings and follow-up there on. (g) Reviewing the findings of any internal investigations by the internal auditors and where there is
suspected fraud or irregularity or failure of internal control systems of a material nature reporting the matter to the Board;
(h) Discussion with the external auditors, before the audit commences nature and scope of audit as well as has post-audit discussion to ascertain any area of concern.
(i) Reviewing the company’s financial and risk management policies. (j) To look into the reasons for substantial defaults in the payment to shareholders (in case of non-
payment of declared dividends) and creditors
2. Shareholders'/ Investors' Grievance/ Share Transfer Committee
The following directors of the Company constitute the shareholders’/Investor’s Grievance Committee
Sr. No. Name of the Director Designation Status 1. Mr. P T Rangamani Chairman Non- Executive & Independent
2. Mr. S Soundararajan Member Non- Executive & Independent
3. Mr. Kirubanandan Member Non- Executive & Independent
The Company has appointed Mr. Janakiraman as Compliance Officer. The role of the Committee is as follows: Approves and monitors transfers, transmission, splits and consolidation of shares of the Company
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Reviews redressal of complaints from shareholders relating to transfer of shares, non- receipt of balance sheet, dividends etc.
Reviews the compliances with various statutory and regulatory requirements. 3. Remuneration and Compensation Committee The Remuneration Committee has been constituted as under:
Sr. No. Name of the Director Designation Status
1. Mr. V Kirubanandan Chairman Non- Executive & Independent
2. Mr. P T Rangamani Member Non- Executive & Independent
3. Mr. S Ramakrishnan Member Non- Executive & Independent
Terms of reference The terms of reference of the Remuneration Committee are as follows:
The Remuneration Committee recommends to the board the compensation terms of the executive directors.
Framing and implementing on behalf of the Board and on behalf of the shareholders, a credible and transparent policy on remuneration of executive directors including ESOP, Pension Rights and any compensation payment.
Considering approving and recommending to the Board the changes in designation and increase in salary of the executive directors.
Ensuring the remuneration policy is good enough to attract, retain and motivate directors. Bringing about objectivity in deeming the remuneration package while striking a balance between the
interest of the Company and the shareholders.
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PART II
SECTION IV - FINANCIAL INFORMATION
REPORT OF THE AUDITORS TO THE MEMBERS OF M/s. TULSYAN NEC LIMITED. We have audited the attached Balance sheet of M/S. TULSYAN NEC LIMITED as at 31st March 2010 and 31st March 2009 and also the Profit & Loss Account and cash flow statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. 1. We conducted our audit in accordance with the auditing standards generally accepted in India. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
2. As required by the Companies (Auditor’s Report) Order, 2003 [as amended by the companies (Auditor’s Report) Amendment Order,2004], issued by the Central Government of India in term of Sub-Section (4A) of Section 227 of the Companies Act, 1956, we enclosed in the Annexure a statement on the matters specified in paragraphs 4 & 5 of the said Order.
Further to our comments in the Annexure referred to in paragraph 2 above, 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 purpose of our audit; b) In our opinion, proper books of Accounts, as required by law, have been kept by the Company, so far
as appears from our examination of those books. c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in
agreement with the books of Account. d) In our opinion the Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this
report comply with the mandatory Accounting standards referred to in sub-section (3C) of sec 211 of the Companies Act,1956.
e) On the basis of written representations received from the Directors as on 31st March 2010 and taken
on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March 2010, from being appointed as a Directors in terms of Clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
f) As stated in Note No 6 of the Schedule 14 to the Notes on Accounts, we report that the company has
paid ` 181.09 lacs as Managerial Remuneration, which exceeds the limits calculated under Schedule XIII of the Companies Act, 1956 by ` 29.52 lacs. as explained to us by the management that, the Company has submitted application to the Central Government seeking its approval for the said remuneration paid over the limit.
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g) Subject to our comments in Para (f) above, In our opinion and to the best of our information and according to the explanation given to us, the said accounts read together with Significant Accounting Policies and notes appearing thereon as contained in schedule 14 give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:
(i) In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010 and
31st March 2009 (ii) In the case of the Profit and Loss Account, of the Profit of the Company for the year ended on
that date. (iii) In the case of Cash Flow Statement, of the cash flows of the Company for the year ended on that
date For C.A. PATEL & PATEL Chartered Accountants
Sd/- BHAVESH N PATEL Partner
Place: Chennai M No. 26669 Date: 14/05/2010 FR No. 005026 S
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ANNEXURE TO AUDITORS’ REPORT Referred to in Paragraph 2 of our report of even date 1. In respect of its fixed assets:- (a) The Company is maintaining proper records showing full particulars, including quantitative details
and situation of fixed assets. (b) As explained to us, the fixed assets have been physically verified by the management and no material
discrepancies were noticed on such verification. (c) No substantial part of fixed assets has been disposed off during the year. 2. In respect of its inventories:
(a) As explained to us, physical verification have been conducted by the management at reasonable
intervals in respect of finished goods, stores and raw materials. (b) In our opinion & according to the information and explanation given to us, the procedure of physical
verification of stock followed by the management is reasonable and adequate in relation to the size of the company and nature of its business.
(c) As explained to us, there were no material discrepancies noticed on physical verification of inventory
as compared to the book records. 3. In respect of loans, secured or unsecured, granted or taken by the Company to/from companies,
firms or other parties covered in the register maintained under Section 301 of the Companies Act, 1956:
(a) The company has granted ` 770.82 lacs to subsidiary companies as loan during the year.
(Rs in lacs)
SL No Name of Party Relationship with Party Year end balance
1 Cosmic Global Limited 99.87% Subsidiary Company Cr.161.97 2 Tulsyan Power Limited* 100% Subsidiary Company Cr. 0.41 3 Chitrakoot Steel & Power P Ltd 100% Subsidiary Company Dr. 898.06 4 Balaji Engineering & Galvanizing
Ltd* 98.80% Subsidiary Company Dr. 35.14
* Commercial Operations not yet started for the above companies (b) In our opinion and according to the information and explanations given to us, the rate of interest,
wherever applicable and other terms and conditions are not prima facie prejudicial to the Interest of the Company.
(c) In respect of loans take by the Company, the interest payments are regular and the principal amount is
repayable on demand. In respect of interest free loans granted by the company are repayable on demand.
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(d) There is no overdue amount in respect of loans granted, as the same are repayable on demand so the question of overdue amounts does not arise.
(e) The company has taken unsecured loans from 29 parties aggregating to ` 1808.68 lacs during the year
(Excluding interest accrued & IFST),as stated in Note No 15. of schedule 14 to the Notes on Accounts. (f) In our opinion and according to the information and explanation given to us, the rate of interest,
wherever applicable and other terms and conditions are not prima facie prejudicial to the interest of the company.
4. 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 for the purchase of inventory and fixed assets and also sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control.
5. In respect of transactions covered under Section 301 of the Companies Act,1956: (a) In our opinion and according to the information and explanations given to us, Particulars of contracts
or arrangements that needed to be entered in the register maintained under section 301 of the Companies Act, 1956 have been so entered.
(b) In our opinion and according to the information and explanations given to us, the transactions made
in pursuance of contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregating during the year to ` 5,00,000/- (Rupees Five lacs Only) or more in respect of these parties are prima facie not prejudicial to the interest of the Company and are as per the prevailing market rates.
6. The Company has not accepted any deposit from the public, under section 58A and 58AA of the
companies Act, 1956 and the companies (Acceptance of Deposit) Rules 1975. However loans taken from Directors and their relatives and others the Companies regularly files statement in lieu of prospects after the AGM every year.
7. In our opinion, the internal audit functions carried out during the year by a firm of Chartered
Accountants appointed by the Management have been commensurate With the size of the Company and the nature of the business.
8. We have reviewed the books of accounts related to Materials, Labour and other items of cost
maintained by the company pursuant to the rules made by the Central Government for maintenance of cost records under section 209 (1) (d) of the Companies Act, 1956 and we are of the opinion that prima facie the prescribed accounts and records have been made and maintained.
9. In respect of statutory dues: (a) According to the records of the company, undisputed statutory dues including Provident Fund,
Employees State Insurance, Income–tax, Sales Tax, Wealth Tax, Custom Duty, Service Tax, Excise Duty, Cess and other statutory dues have been generally regularly deposited with the Appropriate Authorities. According to the information and explanations given to us, no undisputed amounts payable in respect of income Tax, Wealth Tax, Sales Tax , Service Tax, Customs Duty and any other statutory dues were outstanding as at 31st March 2010 for a period of more than six months from the date of becoming payable.
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(b) According to the information and explanation given to us, details of the disputed dues which have not been deposited as on March 31, 2010 are referred to in the Annexure ………… A.
10. The Company has no accumulated losses as at March 31st 2010, and it has not incurred any cash losses
in the financial year ended on the date or in the immediately preceding financial year. 11. Based on our audit procedures and on information and explanation given by the management we are
of the opinion that the Company has not defaulted in repayment of dues to any financial institution or bank as to the Balance sheet date.
12. The Company has not granted any loans and Advances on the basis of security by way of pledge of
shares, debentures and other securities, during the year under audit. 13. In our opinion, the company is not a Chit Fund or Nidhi / Mutual benefit fund / society. Therefore,
the provision of clause 4 (xiii) of the order are not applicable to the company. 14. In our opinion, the Company is not dealer or trader in shares, securities, debentures and other
investments. So, Clause 4 (xiv) of the order is not applicable to the company. 15. According to the information and explanation given to us, the Company has given corporate
guarantee for loans taken by M/s. Chitrakoot Steel & Power Pvt. Ltd from banks amounting to ` 20.00 crore as per point number 1.8 of the notes to Accounts.
16. According to the information and explanation given to us, on an overall basis, the term loan taken
from bank have been applied for the purposes for which they were obtained and the same have been mentioned in the Schedule 3 of the Balance Sheet.
17. According to the information and explanation given to us, on an overall examination of the Balance
Sheet of the Company, we report that no funds raised on short-term basis which have been used for long term investment.
18. The company has not made any preferential allotment of shares to parties and companies covered in
the register maintained under section 301 of the Companies Act, 1956. Accordingly clause 4 (xviii) of the order is not applicable to the Company.
19. During the period covered by our audit report the Company has not issued any debentures, therefore
the clause 4 (xix) of the order is not applicable to the Company. 20. The Company has not raised any money by way of public issues during the year, therefore clause 4
(xx) of the order is not applicable to the Company. 21. Based upon the audit procedures performed and information and explanation given by the
management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.
For C A PATEL & PATEL Chartered Accountants Sd/- BHAVESH N PATEL Partner Place: Chennai M No. 26669 Date: 14/05/2010 FR No. 005026 S
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Standalone Balance Sheet as at 31st March, 2010 and 31st March 2009 (` In Lacs)
PARTICULARS Schedule
As at As at 31/03/2010 31/03/2009
I Sources of Funds 1 Shareholders' Fund: (a) Share Capital 1 500.00 500.00 (b) Reserves & Surplus 2 5733.07 4998.43 2 Loan Funds (a) Secured Loans 3 20307.68 16224.37 (b) Unsecured Loans 4 2070.20 1298.15 Deferred Tax Adjustment 1381.89 1231.71 29992.84 24252.66 II Application of Funds 1 Fixed Assets: Gross Block 15673.52 14032.58 Less: Depreciation 4979.43 4217.46 Net Block 5 10694.09 9815.12 Capital Work In Progress 14.76 483.32 2 Investments 6 773.64 112.16 3 Current Assets, Loans & Advances 7 (a) Current Assets 25308.67 15707.70 (b) Loans & Advances 6322.31 7556.48 31630.98 23264.18 Less: Current Liabilities & Provisions 8 (a) Current Liabilities 11195.05 7867.80 (b) Provisions 1925.58 1554.32 13120.63 9422.12 Net Current Assets 18510.35 13842.06 Miscellaneous Expenditure 9 -------- -------- 29992.84 24252.66 Significant Account Policies & Notes on Accounts 14 0.00
Schedules 1 to 9 and 14 form integral part of this Balance Sheet and are to be read in conjunction therewith as per our report of even date
For C. A. Patel & Patel Chartered Accountants Bhavesh N Patel Partner M. No.26669 FR No. 005026 S
Place: Chennai Date: 14th May, 2010
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Standalone Profit and Loss Account for the year ended 31st March, 2010 and 31st March 2009
(` In Lacs) PARTICULARS Year ended Year ended
Schedule 31/03/2010 31/03/2009 Sales and Other Receipts 10 63420.40 69970.06 Less : Excise Duty 4119.43 6886.04 59300.97 63084.02 Other Income 11 175.24 223.38 59476.21 63307.40 Deduct: Cost of Materials and other expenses 12 57217.70 60374.07 Depreciation 813.33 725.02
1985454.31 PROFIT BEFORE EXCEPTIONAL ITEMS 1445.18 2208.31 Exceptional Items Profit/Loss 13 85.73 722.10 Profit for the Year 1359.45 1486.21 Less: Provision for Current Tax 116,334,892.00 360.00 390.00 Fringe Benefit Tax 8731.15 0.00 14.08 Deferred Tax 150.17 131.33 Profit after taxation 849.28 950.80 Add: Surplus brought forward 2698.83 1963.03 3548.11 2913.83 Appropriations: Transfer to General Reserve 102.00 115.00 Proposed Dividend * 100.00 100.00 Corporate Tax on Dividend 11.26 0.00 Balance Carried to Balance Sheet 3334.85 2698.83 * Subject to approval of the AGM Earning Per Share (basic) 16.99 19.02
Significant Account Policies & Notes on Accounts
14
Schedules 10 to 14 form integral part of this Profit & Loss Account and are to be read in conjunction therewith As per our report of even date For C. A. Patel & Patel Chartered Accountants Bhavesh N Patel Partner M. No.26669 FR No. 005026 S Place : Chennai Date: 14th May, 2010
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Standalone Cash Flow Statement for the Year Ended 31st March, 2010 and 31st March 2009 (` In lacs)
PARTICULARS Year ended Year ended 31/03/2010 31/03/2009
A CASH FLOW FROM OPERATING ACTIVITIES Profit Before Tax after adjustment of Loss on sale of assets 1359.45 1486.21 Adjustments for Depreciation 813.33 725.02 Depreciation on old Assets sold (54.72) (4.27) Pre-operative Expenses incurred during the year 0.00 0.61 Interest/Dividend 1965.11 2224.15 Operating Profit before WC Changes 4083.18 4431.72 Adjustments for Inventories (3311.79) 210.44 Sundry Debtors (5822.83) (893.47) Loans & Advances 1234.18 (615.97) Current Liabilities 3327.24 893.87 Working Capital Loans from Bank 3583.26 395.84 Short Term Loans 86.20 282.74 Cash generated from operations 3179.44 4705.17 Income Tax Payable/Paid 0.00 (17.00) Fringe Benefit Tax Paid 0.00 (5.69) Net Cash from Operating activities 3179.44 4682.48
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (1230.67) (2444.63) Sale of Fixed Assets 58.26 10.79 Purchase of Investments (661.48) 95.31 Interest Received 139.04 123.36 Dividend Received 33.78 100.02 Net Cash used in investing activities (1661.07) (2115.15)
C CASH FLOW FROM FINANCING ACTIVITIES Increase in Long Term Loans 413.85 435.85 Increase in Unsecured Loans 772.05 (159.98) Interest paid (2137.93) (2447.53) Dividend Payable/paid (100.00) (100.00) Net Cash from financing activities (1052.04) (2271.66)
D NET INCREASE IN CASH & CASH EQUIVALENTS A+B+C 466.33 295.67 Opening Cash & Cash Equivalents 1407.57 1111.90 Closing Cash & Cash Equivalents 1873.90 1407.57
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Schedules to Balance Sheet (` in Lacs)
As at As at Particulars 31/03/2010 31/03/2009
Schedule 1 Share Capital Authorised: 2,20,00,000 Equity Shares of `10/- each 2200.00 1000.00 (1,00,00,000 Equity Shares of ` 10/- each) 2200.00 1000.00 Issued, Subscribed & Paid-up: 50,00,000 Equity Shares of `10/- each fully paid-up 500.00 500.00
Of the above, 5,06,660 Equity Shares of ` 10/- each were issued as fully paid bonus shares by way of capitalisation of reserves Schedule 2 Reserves & Surplus Share Premium 130.00 130.00 State Subsidy 10.00 10.00 Revaluation Reserve 16.83 20.19 Investment Allowance Reserve 59.39 59.39 General Reserve 2182.00 2080.00 Profit & Loss Account 3334.85 2698.85 5733.07 4998.43 Schedule 3 Secured Loans Working Capital Loans from Banks - Refer Note 1 Canara Bank 4911.51 3492.55 Syndicate Bank 3220.77 2896.28 State Bank of India 2486.21 1703.45 Andhra Bank 1310.75 253.69 Interest accrued and due - Refer Note 1 Term Loan form Banks Term Loan - Andhra Bank - Refer Note 2 225.80 289.50 Term Loan - Canara Bank - Refer Note 2 246.28 394.59 Term Loan - Syndicate Bank - Refer Note 2 1936.83 2272.27 Term Loan - State Bank of India - Refer Note 2 224.64 261.94 Term Loan - State Bank of India (Wind Mill) - Refer Note 3 199.14 275.71 From Financial Institutions Industrial Development Bank of India - Refer Note 4 3899.66 2824.50 From Others 1646.09 1559.89 20307.68 16224.37
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Notes :
1. Against hypothecation of book debts, inventories & second charge on Fixed Assets of the Company
2. Secured by first charge on fixed assets on above loan
3. First Charge on Wind Mill. In addition, the above loans are also guaranteed by the directors
4. Secured by first charge on balance of fixed assets of the company. In addition, the above loans are also guaranteed by directors
(` in lacs) Schedule 4 As at As at Unsecured Loans 31/03/2010 31/03/2009 From Bodies Corporate 1658.60 730.45 From Directors 41.96 104.86 From Others 108.12 88.50 Interest Accrued and Due 86.91 81.35 IFST Loan 174.61 292.98 2070.20 1298.15
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Schedule 5 - Fixed Assets (` in lacs)
Description
GROSS BLOCK DEPRECIATION NET BLOCK
Cost as at Additions Sold Cost as at As on For the
31/03/2010 31/03/2009 Schedule 6 Investments - Long Term Unquoted at Cost In Govt. Securities 0.09 0.09 -10 Equity Shares of ` 90/- each in 0.01 0.01 Karnataka Woven Sacks Construction P Ltd. - 11,25,000 Equity Shares of ` 10/-each in Cosmic Global Limited * 112.50 100.00 - 50,000 Equity Shares of ` 10/- each in Tulsyan Power Limited ** 5.00 4.94 -7,500 Equity Shares of ` 10/- each Tulsyan Alloys Limited 0.75 0.75 -49,400 Equity Shares of ` 10/- each Balaji Engineering & Galvanizing Limited * 4.94 4.94 -64,89,200 Equity Shares of `10/- each Chitrakoot Steel & Power P Limited ** 648.92 - In Bonds of ` 100/- each in Krishana Bhagya 1.00 1.00 Jaala Nigam Ltd. (17% Secured Redeemable NCB) Quoted -864 Equity shares of ` 10 each in Syndicate 0.43 0.43 (Market Value ` 40841) 773.64 112.16 * Subsidiary Company ** Wholly Owned Subsidiary Company
(` in lacs)
Schedule 7 As at As at 31/03/2010 31/03/2009
Current Assets, Loans & Advances A Current Assets [a] Inventories (i) Rawmaterials 1588.15 2044.40 (ii) Finished Goods 7871.26 4162.22 (iii) Stores, Spares & Others 288.05 229.04 9747.46 6435.66 [b] Sundry Debtors - unsecured considered good Outstanding for more than six months 1711.53 1985.23 Other Debts# 11975.78 5879.24 13687.31 7864.47 [c] Cash and Bank Balances (i) Cash on hand 13.57 19.94 (ii) Balances with scheduled banks in Current Accounts 25.90 13.34 in Deposit Accounts 1834.43 1374.29 1873.90 1407.57 25308.67 15707.70
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Note: The figures of debtors for the financial year 2009-10 includes `3442.16 lacs due from debtors for sales made on consignment by Tulsyan Smelters Pvt. Ltd. on behalf of Tulsyan NEC Ltd. B Loans and Advances Unsecured and considered good, recoverable in cash or in kind or for value to be received or pending adjustment -77.99 Loans 1781.11 1848.13 Advance Tax 1935.05 1691.30 Deposits 872.92 849.75 Advances to Suppliers 43.50 1781.47 Advance for Fixed Assets 194.09 255.11 Other Advances 1495.64 1130.71 6322.31 7556.48 31630.98 23264.18
(` In Lacs)
Schedule 8 As at As at 31/03/2010 31/03/2009 Current Liabilities & Provisions Liabilities Sundry Creditors Micro and Small Enterprises 0.16 Other than Micro and Small Enterprises 4650.79 4135.49 Other Creditors 6544.10 3732.31 Interest Accrued but not due 11195.05 7867.80 Provisions Provision for Taxation 1795.91 1435.91 Proposed Dividend 100.00 100.00 Corporate Dividend Tax 11.26 Fringe Benefit Tax Payable 18.41 18.41 1925.58 1554.32 13120.63 9422.12
(` in lacs)
Schedule 9 As at
31/03/2010 As at
31/03/2009 Miscellaneous Expenditure (To the extent not written off) Pre-operative Expenses 0.61 Less: Written off during the year 0.61 Total -
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Schedules to Profit & Loss Account ` In Lacs
For the For the Year ended Year ended
Particulars 31/03/2010 31/03/2009 Schedule 10 Sales and Other Receipts Sales - Domestic 56442.71 60386.17 - Exports 1872.97 3987.75 '- Export Trading 32.59 54.52 - Raw Material Sales Trading 4360.48 4992.41 Processing Charges & Other Receipts 441.49 458.65 Sale of Import Licence 126.80 15.80 Drawback 143.36 74.76 63420.40 69970.06
` In Lacs
Schedule 11 For the For the Year ended Year ended 31/03/2010 31/03/2009 Other Income Interest Receipts 139.04 123.36 Dividend - Refer Note below 33.78 100.02 Discount Profit on sale of Assets 2.42 Profit on Purchase of Import Licence 175.24 223.38 Note :- ` 33,75,000/- (`1,00,00,000/-) received from Subsidiary Company, Cosmic Global Ltd
` in Lacs
Schedule 12 For the For the Year ended Year ended 31/03/2010 31/03/2009
Cost of Materials and other expenses Stocks of Raw Materials and Finished Goods as at 1st April 6206.62 6443.73 Purchases 46672.77 46751.40 Material Inward Expenses 1247.68 1342.55 Salaries, Wages, Labour Charges, Bonus & Gratuity 1623.91 1386.07 Gratuity Contribution to Provident & Other Funds 82.79 65.34 Excise Duty 6.03 7.95 Workmen and staff welfare expenses 35.72 39.17 Power and Fuel 4262.13 3691.48 Stores and spares consumed 1524.67 1652.33 Repairs to Machinery 70.32 265.00 Repairs to Buildings 9.73 2.71 Other Manufacturing Overheads 30.89 24.50
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Schedule 12 For the For the Year ended Year ended 31/03/2010 31/03/2009
Processing Charges 239.48 283.64 Insurance 23.77 14.42 Rent 96.00 120.12 Loss on Sale of Assets 1.74 3.59 Rates & Taxes 77.93 28.55 Remuneration to Directors 156.93 151.92 Legal Professional & Consultancy Charges 98.81 28.13 Payment to Auditors 6.05 5.00 Transportation Charges 291.86 389.81 Brokerage and Commission 120.02 104.64 Other Administration & Selling Expenses 681.26 728.03 Interest on Fixed Loans 783.09 827.21 Interest on Other Loans 1354.84 1620.32 Head Office Interest Other Finance Charges 972.08 603.10 Less: Stock of Raw Materials, Finished Goods as at 31st March 9459.42 6206.62 57217.70 60374.07
` In Lacs
Schedule 13 For the For the Year ended Year ended 31/03/2010 31/03/2009 EXCEPTIONAL ITEMS Foreign Curr Fluctn-Forward Contract Profit/Loss 85.73 722.10 85.73 722.10
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SCHEDULE 14 NOTES ON ACCOUNTS (Standalone) (All amounts in Rupees in lacs unless otherwise stated) Nature of Operation: Tulsyan NEC Limited is engaged in the Manufacturing TMT bars and Synthetics Woven Fabrics and Sacks. It has manufacturing plant at Chennai ( Ambattur & Gummudipoondi) and Bangalore (Dodabalapur). 1. Significant Accounting Policies: 1.1 Basis of preparation of Financial Statements
a. The financial statements are prepared under the historical cost convention on accrual basis of
accounting to comply in all material respects with mandatory accounting standard as notified by the Companies ( Accounting Standards) Rules,2006 as amended (‘the Rules’) and the relevant provisions of the Companies Act, 1956 ( ‘the Act’).
b. Accounting policies have been consistently applied the company and the accounting policies not
referred to otherwise, are in conformity with Generally Accepted Accounting Principles ( GAAP).
1.2 Fixed Assets and Depreciation a. Fixed Assets: Fixed assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost
includes all expenditure necessary to bring the asset to its working condition for its intended use. Own manufactured assets are capitalized inclusive of all direct costs and attributable overhead.
Capital work-in-progress comprises of advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for their intended use as at the balance sheet date. Assets held for disposal are stated at the lower of net book value and the estimated net realizable value.
b. Financial costs incurred up to the date of commissioning of assets are capitalised. c. Depreciation has been provided as follows:
i) Under WDV method on assets acquired up to 31.12.1985 at the then prevailing rates.
ii) Under SLM method on assets acquired after 31.12.1985 and up to 15.12.1993 at the rates as originally prescribed in Schedule XIV to the Companies Act,1956, and on assets acquired thereafter at the revised rates as per Notification GSR 756(E) dated 16.12.1993.
iii) Depreciation on revaluation is adjusted against Revaluation Reserve.
iv) Cost of Leasehold land is amortised over the lease period.
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v) Plant and Machinery and Furniture and Fittings which cost are less than Rs 5000/- each are depreciable at the rate of 100% in the year of purchase.
Depreciation
Type of asset Rate of Dep. Land NIL Factory buildings 3.34 Office premises 3.34 Pant and machinery: Double shift 7.42 Triple Shift 10.34 Computer 16.21 Lab equipments 4.75 Office and other equipments
6.33
vehicles 9.50
Amortisation
Type of assets Basis Land Leasehold Period of lease ERP software Straight line basis over a period of five years
1.3 Retirement and other employee benefits: Defined contribution to provident fund and employee state
insurance are charged to the profit and loss account of the year when the contributions to the respective funds are due. There are no other obligations other than contribution payable to the respective statutory authorities. Retirement benefits in the form of gratuity are considered as defined benefit obligation, and are provided in the year of separation.
1.4 Inventories Raw materials, Components, Stores and Spares and Work-in-Progress are valued at cost. Finished
goods are valued at cost or realizable value whichever is less. The basis of determining cost for various categories of inventories are as follows:
Raw Material, components, stores and spares : At cost ( Weighted Average)
Work-in-Progress : At Material cost plus Conversion cost on the basis of
absorption costing
Finished Goods : At material cost plus conversion cost on the basis of absorption costing ( including of excise Duty payable)
1.5 Sales
Sales comprises of sale of goods produced & purchased by the Company as also sales effected as agents and sale of raw materials, and are gross of duties. Consignment sales is accounted on receipt of consignment sale note from the consignee.
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1.6 Revenue Recognition
All income and expenditure are recognised on accrual basis except rates & taxes, bonus on cash basis. Export benefits representing duty free imports of earlier years are accounted in proportion to materials consumed. The value of Advance Licence on hand at the end of the year as certified by the management is incorporated in the books of accounts.
1.7 Investments:
Long Term Investments are carried at cost less provision for diminution in value other than temporary, if any. Current investments are valued at lower of cost and fair value.
1.8 Contingent Liabilities
All liabilities have been provided for in the accounts except liabilities of a contingent nature, which have been disclosed at their estimated value in the Notes to the Accounts wherever practicable.
The Company has executed Corporate Guarantee in favour of the Shamrao Vithal Co-operative Bank Limited, Mumbai for the loan taken by M/s. Chitrakoot Steel and Power Pvt. Ltd., wholly owned subsidiary of the Company, for ` 20.00 crores.
1.9 Cash and Cash Equivalents:
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
1.10 Foreign Exchange Transactions:
All foreign currency transactions are recorded at the average exchange rate prevailing during the transaction occur. Outstanding balance of foreign currency monetary items are reported using the period end rates. Pursuant to the notification of the companies ( Accounting Standard) amendment Rules 2009 issued by the Ministry of Corporate Affairs on March 31st ,2009 amending Accounting Standard-11(AS-11), the effect of changes in Foreign Exchange Rates(Revised 2003), exchange difference relating to long term monetary items are dealt with in the following manner
Exchange difference relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of depreciable capital asset are added to/deducted from the cost of the assets and depreciated over the balance life of the asset. In other cases, such difference are accumulated in the “ Foreign Currency Translation Difference Account” and amortised to the profit and loss account over the balance life of the long term Monetary item but not beyond 31st March, 2011.
All other exchange difference are recognized as income or expenses in the profit and loss account (discloses separately under the head Exceptional items in the Sch-VI, Part-II of the Companies Act, 1956). Foreign exchange transactions are as follows:
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` in lacs Transactions 31/03/2010 31/03/2009 CIF Value of imports (Raw materials) 6492.08 7085.71 Earnings in foreign Exchange (FOB) 1857.19 3770.17 Exchange in Foreign currency for other matters 9.09 28.97 Interest paid on $ Loan 208.02 100.65 Loan Paid 1189.47 233.41 During the year foreign exchange transaction towards Royalty, know-how, professional fees & consultant fees were NIL. Hence not disclosed in the notes on accounts. 2 Quantitative information in respect of class of goods manufactured including conversion Class of Goods Licensed Installed Production Capacity Capacity 2009-2010 Finished Steel Products Delicensed 48000 MT 48195 MT (Chennai) (48000 MT) (42073 MT) Finished Steel Products Delicensed 300000* MT 107348 MT (Chennai-Gummudipoondi) (150000 MT) (78085 MT) *150000 MT added during September, 2009 Finished Steel Products Delicensed ------------ ---------- (Coimbatore) (36000 MT) (4047* MT) *Three months only April to June 2008 MS Ingots Delicensed 36000 MT -------- MT (36000 MT) (19818 MT) MS Billet Delicensed 144000 MT 56894 MT 144000 MT (41096) MT HDPE/PP Woven Sack Delicensed 20541 MT 11464 MT & Fabrics (20541 MT) (11188MT) Note: i) Installed Capacity being a technical matter is as certified by the Management and relied upon by the Auditors. ii) Scrap generated 6640 MT (During the year 2008-09 - 5141 MT) 3. Consumption of materials (` In Lacs) 2009-10 2008-09 Ingot, billets and rerollables Indigenous Qty 163884 MT 132247 MT Value 37161.91 39385.38 Percent 98.74 100.00 Imported Qty 2090 MT ------ Value 449.27 ------ Percent 1.26 ------
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Steel Scrap Qty 23354 MT 24442 MT Indigenous Value 2829.52 3044.63 Percent 34.50 34.13 Imported Qty 44343 MT 47171 MT Value 6441.48 10022.72 Percent 65.50 65.87 PP/HDPE Granules Imported Qty 744 MT 504 MT Value 415.96 312.92 Percent 7.28 4.06 Indigenous Qty 9465 MT 9286 MT Value 6333.92 7370.22 Percent 92.72 95.94 Stores & Spares Indigenous 1520.35 1652.33 Imported 4.32 ------- 4. Opening & Closing stocks and Sales (` In Lacs) Finished Steel Products Opening Stock Qty 9992 MT 3486 MT Value 3172.08 1141.51 Closing Stock Qty 20757 MT 9992 MT Value 6606.43 3172.08 Sales Qty 143362 MT 120315 MT Value 40109.88 43528.30 Trading (Highsea Sales) Qty 20556 MT 14510 MT Value 2997.70 2748.38 MS Ingots Opening Stock Qty 9 MT 55 MT Value 2.42 14.09 Closing Stock Qty 0 MT 9 MT Value 0 2.42 Sales Qty 9 MT 414MT Value 2.04 98.61 M S Billet Opening Stock Qty 370 MT 694 MT Value 105.79 151.75 Closing Stock Qty 710 MT 38 MT Value 154.06 9.59 Sales Qty 94 MT 30 MT Value 20.05 6.41
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Fabrics Opening Stock Qty 751 MT 558 MT Value 570.77 429.40 Closing Stock Qty 725 MT 751 MT Value 551.05 570.77 Sales Qty 946 MT 2464 MT Value 701.87 1621.10 Sacks Opening Stock Qty 426 MT 494 MT Value 340.76 400.08 Closing Stock Qty 288 MT 426 MT Value 220.02 340.76 Sales Qty 10155 MT 8630 MT Value 9544.47 9261.34 5. Other Information (` in lacs) a) CIF Value of Imports (Raw Materials) 6492.08 7085.71 b) Earnings in Foreign Exchange (FOB) 1857.19 3770.17 c) Expenditure in Foreign Currency for other matters 9.09 28.97 d) Interest paid on $ Loan 208.02 100.65 e) Loan paid 1189.47 233.41 6. Directors Remuneration to the directors: (` In Lacs) a) Salary 169.69 163.82 b) Contribution to Provident & Other Funds 2.40 2.31 c) Monetary Value of perquisites 9.00 9.00 d) Sitting fees 0.76 0.66 Managerial Remuneration paid during the year 2009-10 ` 181.09 to the Managing Directors and Whole-time Directors exceeded the limits calculated under Schedule XIII to the Companies Act, 1956, by ` 29.52 lacs. The Company has filed the application to the Central Government seeking its approval for the remuneration paid over the limit 7. Remuneration to Auditors (` In Lacs) For Audit 5.00 3.50 For Tax Audit 0.75 0.75
For Certification and other works 2.00 2.00 For Internal Audit 8.55 7.80 8. During the year, Company has purchased a 100% shares of M/s Chitrakoot Steel & Power Pvt Ltd, a sponge iron manufacturing plant and invested ` 648.92 lacs
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9. Segment Reporting A. Primary Segment Reporting - by Geographical Segment on Location of Assets Segments have been identified in line with the Accounting Standard on Segment Reporting (AS 17), taking into account the organisational structure as well as differential risk and returns of the segments The Company has two products viz. Steel and Synthetic. Steel is in Chennai and Synthetic is in Bangalore
(` In Lacs)
1. Sales/ Other income Chennai/Steel Bangalore/Synthetic Total (i) Sales- External 47261.23 16159.16 63420.39 (ii) Sales- Inter-segment 53.20 0.00 53.20 (iii)Other Income-External 0.00 0.00 0.00 (iv)Other Income-Inter-segment NIL NIL NIL -------------- -------------- ------------ Total 47208.04 16159.16 63367.19 -------------- -------------- -------------- Segment Results Profit/(Loss) before interest & Tax 2834.65 662.71 3497.35 Less: Interest (unallocable charge) 2137.93 Profit/(Loss) after Interest 1359.42 Less: Other unallocable expenses 0.00 Profit/(Loss) before tax 1359.42 B. Other information Segment Assets 20833.32 9159.52 29992.84 Adj: Eliminations 12945.17 (12945.17) 0.00 33778.49 (3785.66) 29992.84 Segment Liabilities 20833.32 9159.52 29992.84 Chennai/Steel Bangalore/Synthetic Total Capital Employed 20060.76 9158.43 29219.19 Capital Expenditure (Fixed Assets) 1570.63 128.57 1699.20 Depreciation 550.86 262.47 813.33 C. Secondary Segments Reporting Sales to Customers within India 61547.42 Sales to Customers outside India 1872.97
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10. Related parties Disclosure Disclosure as required by Accounting Standards 18 " Related Party Disclosures" are given below a) List of Related Parties 1. Cosmic Global Limited Subsidiary 2. Chitrakoot Steel & Power P Ltd Subsidiary 3. Tulsyan Power Limited Subsidiary 4. Balaji Engineering & Galvanizing Ltd Subsidiary 5. Tulsyan Smeters P Ltd Associate 6. T G Logistics P Ltd Associate 7. Shri Lalitkumar Tulsyan Executive Chairman/Key Management Person 8. Shri Sanjay Tulsyan Managing Director/Key Management Person 9. Shri A P Venkateswaran Director-Finance/Key Management Person 10.Shri Sanjay Agarwalla Whole-time Director/Key Management Person b) Transaction with related parties Purchase of Goods – Associates 316.12 (Chitrakoot Steel & Power P Ltd) Sale of Goods – Associates 10.49 (Chitrakoot Steel & Power P Ltd) Purchase of Fixed Assets – Associates NIL Sale of Fixed Assets – Associates NIL Rendering Services – Associates NIL Receiving Services – Associates 200.07 (T G Logistics P Ltd & Tulsyan Smelters Pvt. Ltd) Agency Arrangements NIL Leasing or Hire Purchase Arrangement – Associates NIL Transfer of Research & Development NIL Licence Agreements NIL Interest Paid NIL Outstanding balances as on 31.03.2010 (` In Lacs) Amount Receivable (Associates and Subsidiaries) 933.20 Amount Payable (Associates and Key Management Persons) 204.34 Equity Contribution in Subsidiary in Cash 664.48 Guarantees and collaterals NIL Payment towards Management (Employment) contracts 169.69 Key Management Personnel The figures of loans and advances include following associate companies
(Amount in ` Lacs) Related Party Amount Receivable Amount Payable
Cosmic Global Ltd. - 161.97 Tulayan Power Ltd. - 0.41 Balaji Engineering & Galvanizing Ltd. 35.14 - Chitrakoot Steel & Power Ltd. 898.06 - Total 933.20 162.38
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11. Earnings per Share
` in Lacs Particulars Year ended Year ended 31/03/2010 31/03/2009 Net Profit attributable to Shareholders 849.25 950.81 Weighted average number of equity shares 50.00 50.00 Basic earnings per share of ` 10/- each 16.99 19.02 12. Taxes on Income: Tax expenses for a year comprises of current tax and deferred tax. Current tax has measured at the amount expected to be paid to the tax authority, after taking into consideration, the applicable deductions and exemptions admissible under the provisions of the Income Tax Act, 1961. Deferred tax reflects the impact of current year timing difference between taxable income and accounting income for the year and reversal of timing difference of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance sheet date. Deferred tax assets are recognized only to the extent that is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If there is unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets are recognized only to the extent that is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred tax resulting from timing differences which originate during the tax holiday period but are expected to reversed after such tax holiday period is recognized in the year in which the timing difference originate using the tax rates and laws enacted or subsequently enacted at the balance sheet date. At each Balance Sheet date, the company reassesses unrecognized deferred tax assets. It recognizes unrealized deferred tax assets to the extent it has become reasonably certain or virtually certain, as the case may be, that sufficient taxable income will be available against which the deferred tax can be realized. As per Accounting Standard-22 (Accounting for tax on income), issued by the Institute of Chartered Accountants of India is as under:
` in lacs Particulars 31/03/2010 31/03/2009 Deferred Tax (Liability) 1381.89 1231.71 Minimum Alternative Tax (MAT) : 231.03 ------ 13. Lease Payments and Receipts Lease payments have been made towards land at Chennai and amortised o n a straight line basis during the period of lease. Lease payments have been made towards Hire Purchase of Vehicles. Lease charges have been debited to the Profit and Loss Account based on the certificate issued by the Lessor. The Principal amount of lease due has been disclosed in the Balance Sheet under Secured Loans
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14. Details of Secured Loans a. Loans from Banks secured by exclusive charge on land, buildings and plant and machinery other than those specifically charged and hypothecation of inventories and book debts and are guaranteed by the Managing Director and two Directors of the Company b. Term Loan from Financial Institution is secured by assets purchased under the loan and are guaranteed by the Managing Director and two Directors of the Company c. Others Loans are secured by Hire Purchase/Hypothecation Agreements of vehicles and specific machinery and are guaranteed by the Managing Director.
15. Unsecured loans include ` 41.96 lakhs due to Directors (As at 31.03.2009 ` 104.86 lacs) ` in Lacs
Principal Interest Loan from the Directors: 37.01 4.95 16. Other contingent liabilities: Guarantees given by bankers 133.88 90.36 17. Liability under acceptances against Letter 5617.93 3040.22 of Credit established by Bankers
18. The Company has confirmed balances with most of Sundry Debtors, Creditors & Loans and Advances.
19. An amount of ` 102.00 Lacs has been appropriated from Profit & Loss Appropriation A/c. to General Reserve A/c from profits. 20 Income tax deducted at source:
` in lacs From interest received 21.93 24.82 From Job works received 9.75 10.53 From Others 0.35 Nil 21. Balances with bank in deposit accounts includes ` 1834.42 Lacs being margin money for Letters of Credit/Guarantees issued by Bank (As at 31.03.2009 ` 1374.29 lacs). 22. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no over dues to parties on account of principal amount and/or interest and accordingly no additional disclosures have been made 23. As per the management representation there is no impairment loss on fixed assets during the year. So AS-28 is not applicable.
24. Previous year figures are regrouped and reclassified whenever necessary to conform to the current year classification.
25 Borrowing Cost:
In respect of new units/major expansions, the interest paid/payable on borrowing funds, attributable to construction of building and acquisition/erection of Plant and machinery is capitalized upto the date of
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construction/acquisition/erection of aforesaid assets all other borrowing costs are charged to profit and loss account. During the year under audit the below mention amount has been capitalized as per AS-16 issued by the Institute of chartered Accountants of India. (Amount in `)
Qualifying Asset Borrowing Cost Plant & Machinery 4263375
Building 1137583 Land 151510
26. Derivative Instruments: NIL 27. Advance Licence under DFRC (Duty Free Replenishment Certificate)/DEPB/DFIA/TARGET PLUS to the extent of Rs 381.95 lacs (balance as on 31/03/2010) for which exports have already been made and proceeds received, has been credited to Raw Material Purchase Account and debited to Loans & Advances. As per our report of even date For C.A PATEL & PATEL Chartered Accountants Sd/- Bhavesh N Patel Partner M. No.26669 FR No. 005026 S Place: Chennai Date: 14th May, 2010
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Report of the Auditors to the Board of Directors of Tulsyan NEC Limited on the Consolidated Financial Statements of Tulsyan NEC Limited and its Subsidiaries
We have examined the attached consolidated Balance Sheet of Tulsyan NEC Limited and its subsidiaries Cosmic Global Limited, Chitrakoot Steel & Power P Limited, Tulsyan Power Limited and Balaji Engineering & Galvanizing Limited as at 31st March, 2010 and the Consolidated Profit & Loss Account for the year ending as on that date. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are prepared, in all material respects, in accordance with an identical reporting framework and are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The financial statements of Tulsyan NEC Limited incorporate the accounts of Cosmic Global Limited, Chitrakoot Steel & Power P Limited, Tulsyan Power Limited and Balaji Engineering & Galvanizing Limited as at 31st March, 2010 and as at 31st March 2009 which has been audited by their auditors and whose report has been considered by us. We did not audit the financial statements of their subsidiaries Cosmic Global Limited, Chitrakoot Steel & Power P Limited, Tulsyan Power Limited and Balaji Engineering & Galvanizing Limited as at 31st March, 2010 whose financial statements reflect total assets of ` 2695.43 lakhs and gross revenue of ` 145.58 lakhs for the year then ended. These financial statements have been audited by another auditor whose reports have been furnished to us, and our opinion, in so far as it relates to the amount included in respect of subsidiary, is based solely on report of the other auditor. We report that the consolidated financial statements have been prepared in accordance with the requirements of AS-21- Consolidated Financial Statements issued by the Institute of Chartered Accountants of India and on the basis of the separate audited financial statements of Tulsyan NEC Limited and its subsidiaries Cosmic Global Limited, Chitrakoot Steel & Power P Limited, Tulsyan Power Limited and Balaji Engineering & Galvanizing Limited as at 31st March, 2010 included in the consolidated financial statements. On the basis of the information and explanations given to us and on consideration of the separate audit reports on individual audited financial statements of Tulsyan NEC Limited and its aforesaid subsidiaries, the consolidated financial statements gives a true and fair view in conformity with the accounting principles generally accepted in India : a. in the case of the consolidated Balance Sheet of the consolidated state of affairs of Tulsyan NEC
Limited and its subsidiaries as at 31st March, 2010 and 31st March 2009 b. in the case of the consolidated Profit & Loss Account of the consolidated results of operation of
Tulsyan NEC Limited and its subsidiaries for the year ended on that date, and
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c. in the case of consolidated Cash Flow Statement, of the consolidated cash flow of Tulsyan NEC Limited and its subsidiaries for the year ended on that date
For C. A. Patel & Patel Chartered Accountants Sd/- Bhavesh N Patel Partner MSN 26669 FRN 005026S Place : Chennai Date : 14th May, 2010
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Consolidated Balance Sheet as at 31st March, 2010 and 31st March, 2009 ` In lacs
Particulars As at As at Schedule 31/03/2010 31/03/2009
I Sources of Funds 1 Shareholders' Fund: (a) Share Capital 1 500.00 500.00 (b) Reserves & Surplus 2 5939.04 5171.15 Minority Interest 2.48 29.83 2 Loan Funds (a) Secured Loans 3 21558.14 16224.38 (b) Unsecured Loans 4 3271.97 1298.15 Deferred Tax Adjustment 1381.89 1231.71 Branch/Head Office 32653.52 24455.22 II Application of Funds 1 Fixed Assets: Gross Block 17919.33 14176.64 Less: Depreciation 5451.49 4310.06 Net Block 5 12467.84 9866.58 Capital Work In Progress 39.45 483.33 Goodwill 2 Investments 6 2.31 7.22 3 Current Assets, Loans & Advances 7 (a) Current Assets 26040.58 15951.72 (b) Loans & Advances 7054.14 7810.92 33094.72 23762.65 Less: Current Liabilities & Provisions 8 (a) Current Liabilities 11528.16 7960.13 (b) Provisions 1991.74 1704.43 13519.90 9664.55 Net Current Assets 19574.82 14098.10 Deferred Tax Asset 101.88 Miscellaneous Expenditure 9 1.69 Profit & Loss Account 465.53 465.53 32653.52 24920.75
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Notes on Accounts Schedule Schedules 1 to 9 and 14 form integral part of this Balance Sheet and are to be read in conjunction therewith
14
As per our report of even date For C. A. Patel & Patel Chartered Accountants Sd/- Bhavesh N Patel Partner M. No. 26669 FR No. 005026 S Place : Chennai Date: 14th May, 2010
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Consolidated Profit and Loss Account for the year ended 31st March, 2010 and 31st March, 2009
` In lacs Year ended Year ended
Particulars Schedule 31/03/2010 31/03/2009 Sales and Other Receipts 10 64799.67 70707.08 Less : Excise Duty 4170.91 6886.04 60628.76 63821.04 Other Income 11 203.71 262.76 60832.47 64083.80 Deduct: Cost of Materials and other expenses 12 58395.55 60887.89 Depreciation 846.15 735.09 Profit for the Year before Exceptional Items 1590.77 2460.82 Exceptional Items Profit/Loss 13 85.73 722.10 Profit for the Year 1505.04 1738.72 Less: Provision for Current Tax 386.62 408.31 Fringe Benefit Tax 0.00 14.08 Deferred Tax 173.47 131.33 Profit after taxation 944.95 1185.00 Add: Surplus brought forward 2372.02 2063.70 Less :Preliminary Expenses written off 0.26 3316.97 3248.44 Appropriations: Transfer to General Reserve 110.34 140.22 Interim Dividend Paid ---- 22.53 Dividend Tax Payable (Interim) ---- 3.83 Proposed Dividend * 133.80 190.12 Corporate Tax on Dividend 17.00 15.32 Balance Carried to Balance Sheet 3055.83 2876.42 * Subject to approval of the AGM Notes on Accounts 14 Schedules 10 to 14 form integral part of this Balance Sheet and are to be read in conjunction therewith.
As per our report of even date For C. A. Patel & Patel Chartered Accountants Bhavesh N Patel Partner M. No. 26669 FR No. 005026 S Sd/- Place : Chennai Date: 14th May, 2010
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Consolidated Cash Flow Statement for the Year Ended 31st March, 2010 and 31st March, 2009
` In Lacs
Particulars Year ended Year ended 31/03/2010 31/03/2009
A CASH FLOW FROM OPERATING ACTIVITIES Profit Before Tax after adjustment of Loss on sale of assets 1505.04 1738.72 Adjustments for Depreciation 846.15 735.09 Depreciation on old Assets sold (60.91) (4.27) Pre-operative Expenses incurred during the year 0.93 0.61 Interest/Dividend 1998.23 2224.15 Operating Profit before WC Changes 4289.44 4694.30 Adjustments for Inventories (3699.18) 210.43 Sundry Debtors (5912.24) (862.71) Loans & Advances 767.86 (855.16) Current Liabilities 3568.03 881.70 Working Capital Loans from Bank 4321.14 395.83 Short Term Loans 86.20 282.74 Cash generated from operations 3421.25 4747.13 Income Tax Payable/Paid (19.14) (28.58) Fringe Benefit Tax Paid (3.03) (5.74) Net Cash from Operating activities 3399.08 4712.81
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets (3023.04) (2445.64) Sale of Fixed Assets 73.53 10.79 Purchase of Investments (661.51) 95.31 Interest Received 140.46 123.36 Dividend Received 33.78 100.02 Net Cash used in investing activities (3436.78) (2116.16)
C CASH FLOW FROM FINANCING ACTIVITIES Increase in Long Term Loans 926.43 435.86 Increase in Unsecured Loans 1973.82 (159.98) Interest paid (2172.47) (2447.53) Dividend Payable/paid (212.65) (116.90) Net Cash from financing activities 515.13 (2288.55)
D NET INCREASE IN CASH & CASH EQUIVALENTS A+B+C 477.43 308.10 Opening Cash & Cash Equivalents 1429.02 1120.92 Closing Cash & Cash Equivalents 1906.45 1429.02
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Schedules to Balance Sheet ` In lacs
Particulars As at As at 31/03/2010 31/03/2009
Schedule 1 Share Capital Authorised: 2,20,00,000 Equity Shares of `10/- each 2200.00 1000.00 (1,00,00,000 Equity Shares of ` 10/- each) Issued, Subscribed & Paid-up: 50,00,000 Equity Shares of `10/- each fully 500.00 500.00 paid-up Of the above, 5,06,660 Equity Shares of ` 10/- each were issued as fully paid bonus shares by way of Capitalisation of reserves Schedule 2 Reserves & Surplus Share Premium 130.00 130.00 State Subsidy 10.00 10.00 Revaluation Reserve 16.83 20.19 Investment Allowance Reserve 59.38 59.39 General Reserve 2182.00 2080.00 Profit & Loss Account 3334.84 2698.86 Share Application Money 50.00 50.00 Capital Reserve 155.99 122.71 5939.04 5171.15 Schedule 3 Secured Loans From Banks Working Capital Loans from Banks – Refer Note 1 Canara Bank 4911.51 3492.55 Syndicate Bank 3220.77 2896.28 State Bank of India 2486.21 1703.45 Andhra Bank 1310.75 253.69 Indian Overseas Bank* 732.82 Interest accrued and due 5.06 Term Loan form Banks* Term Loan – Andhra Bank – Refer Note 2 225.81 289.50 Term Loan – Canara Bank – Refer Note 2 246.28 394.59 Term Loan – Syndicate Bank – Refer Note 2 1936.83 2272.27 Term Loan – State Bank of India – Refer Note 2 224.64 261.94 Term Loan – State Bank of India (Wind Mill) – Refer Note 3 199.14 275.71 Term Loan – Andhra Bank (Windmill) From Financial Institutions Industrial Development Bank of India – Refer Note 4 3899.66 2824.50 Term Loan –Indian Overseas Bank, C & IC Branch* 512.57 From others 1646.09 1559.89 21558.14 16224.37
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Notes : 1. Against hypothecation of book debts, inventories & second charge on Fixed Assets of the Company 2. Secured by first charge on fixed assets on above loan 3. First Charge on Wind Mill. In addition, the above loans are also guaranteed by the directors 4. Secured by first charge on balance of fixed assets of the company. In addition, the above loans are also guaranteed by directors
` in lacs Particulars As at As at
31/03/2010 31/03/2009 Schedule 4 Unsecured Loans From Bodies Corporate 2860.37 730.45 From Directors 41.96 104.86 From Others 108.12 88.50 Interest Accrued and Due 86.92 81.36 IFST Loan 174.60 292.98 Holding Company 3271.97 1298.15
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Schedule 5 Fixed Assets
` in Lacs GROSS BLOCK DEPRECIATION NET BLOCK
Description Cost as at Additions Sold Cost as at As on For the year
31/03/2010 31/03/2009 Schedule 6 Investments – Long Term Unquoted at Cost In Govt. Securities 0.09 0.09 -10 Equity Shares of ` 90/- each in Karnataka Woven Sacks Construction P Ltd 0.01 0.01 - 11,25,000 Equity Shares of ` 10/-each in Cosmic Global Limited * - 50,000 Equity Shares of ` 10/- each in Tulsyan Power Limited ** -7,500 Equity Shares of ` 10/- each Tulsyan Alloys Limited 0.75 0.75 -49,400 Equity Shares of ` 10/- each Balaji Engineering & Galvanizing Limited * 4.94 -64,89,200 Equity Shares of ` 10/- each Chitrakoot Steel & Power P Limited ** - In Bonds of ` 100/- each in Krishana Bhagya Jaala Nigam Ltd (17% Secured Redeemable NCB) 1.00 1.00 Quoted –Fully Paid - 2961 Equity Shares of ` 10/- each in United Brew (Market Value ` 957735.45) -864 Equity shares of ` 10 each in Syndicate Bank (Market Value ` 74434) 0.43 0.43 25 Equity Shares of ` 100 each in The Shamrao Vithal Co-operative Bank Ltd 0.03 2.31 7.22 * Subsidiary Company ** Wholly Owned Subsidiary Company
` in Lacs
Particulars As at As at 31/03/2010 31/03/2009 Schedule 7 Current Assets, Loans & Advances A Current Assets [a] Inventories (i) Raw materials 1904.69 2044.41 (ii) Finished Goods 7935.77 4169.10 (iii) Stores, Spares & Others 301.27 229.04 (iv) Stock In Transit 10141.73 6442.55 [b] Sundry Debtors – Outstanding for more than six months Unsecured Considered Good 1811.24 1985.23 Unsecured Considered Doubtful 15.34 Other Debts 12165.82 6094.93 13992.40 8080.16 [c] Cash and Bank Balances (i) Cash on hand 25.40 20.12 (ii) Balances with scheduled banks
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in Current Accounts 45.09 24.44 in Deposit Accounts 1835.96 1384.46 1906.45 1429.02 26040.58 15951.73 B Loans and Advances Unsecured and considered good, Considered doubtful recoverable in cash or in kind or for value to be received or pending adjustment Loans 2243.82 1848.13 Advance Income-tax 1935.05 1691.30 Deposits 908.82 849.78 Advances to Suppliers 43.50 1815.15 Advance for Fixed Assets 194.09 255.11 Other Advances 1728.86 1351.45 7054.14 7810.92
Total (A+B) 33094.72 23762.65 ` in Lacs
Particulars As at As at 31/03/2010 31/03/2009
Schedule 8 Current Liabilities & Provisions Liabilities Sundry Creditors Micro and Small Enterprises 0.16 Other than Micro and Small Enterprises 4948.27 4227.72 Other Creditors 6579.73 3732.41 Interest Accrued but not due 11528.16 7960.13 Provisions Provision for Taxation 1822.53 1454.22 Proposed Dividend 133.80 212.65 Corporate Dividend Tax 17.00 19.14 Fringe Benefit Tax Payable 18.41 18.41 1991.74 1704.43 13519.90 9664.55
` in lacs Schedule 9 As at As at Miscellaneous Expenditure (To the extent not written off) 31/03/2010 31/03/2009 A. Public Issue Expenditure Pre-operative Expenses 2.62 0.61 Less: Amortised during the year Less: Amortised during the year 0.93 0.61 Revenue Expenditure Total 1.69 0.00 MINORITY INTEREST 2.48 29.83
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Schedules to Profit & Loss Account ` in Lacs
Year ended Year ended Particulars 31/03/2010 31/03/2009
Schedule 10 Sales and Other Receipts Sales – Domestic 801.01 60386.17 - Exports 9181.47 3987.75 - Export Trading 1872.97 - Raw Material Trading 32.59 4992.41 - Processing Charges & Other Receipts 4360.48 458.65 - Sale of Import Licence 441.49 15.80 - Drawback 126.80 - Services 578.26 737.03 Processing Charges & Other Receipts Stock Transfer Outward – CBE, Mysore 17395.07 70707.08
` in Lacs
Year ended Year ended Particulars 31/03/2010 31/03/2009
Schedule 11 Other Income Interest Receipts 1.42 123.36 Dividend - Refer Note below 74.58 100.02 Miscellaneous Income 27.05 39.38 Profit on sale of shares Profit on sale of fixed assets 103.05 262.76 Note :- ` 33,75,000/- (` 1,00,00,000/-) received from Subsidiary Company, Cosmic Global Ltd
` in Lacs
Year ended Year ended Particulars 31/03/2010 31/03/2009
Schedule 12 Cost of Materials and other expenses Stocks of Raw Materials and Finished Goods as at 1st April 6383.51 6443.73 Purchases 47431.75 46751.40 Material Inward Expenses 1342.55 Salaries, Wages, Labour Charges, Bonus & Gratuity 416.56 1534.68 Gratuity Contribution to Provident & Other Funds 6.93 71.62 Excise Duty 47.71 7.95
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Year ended Year ended Particulars 31/03/2010 31/03/2009
Workmen and staff welfare expenses 8.78 41.40 Power and Fuel 59.83 3699.11 Stores and spares consumed 516.63 1652.33 Repairs to Machinery 461.60 265.00 Repairs to Buildings 5.64 2.71 Other Manufacturing Overheads 48.93 24.50 Processing Charges 26.34 283.63 Translation Charges Paid 218.19 300.25 Insurance 239.59 15.18 Rent 31.33 131.83 Loss on Sale of Assets 72.01 3.59 Rates & Taxes 4.10 28.66 Remuneration to Managing Director 21.82 151.92 Legal Professional & Consultancy Charges 95.06 28.36 Payment to Auditors 71.14 5.75 Transportation Charges 1.75 389.81 Brokerage and Commission 287.74 104.64 Other Administration & Selling Expenses 33.09 754.32 Interest on Fixed Loans 149.70 827.21 Interest on Other Loans 750.27 1620.32 Other Finance Charges -1625.02 612.07 Less: Stock of Raw Materials, Finished Goods as 9846.81 6206.62 at 31st March 45918.17 60887.89
` in Lacs
Year ended Year ended Particulars 31/03/2010 31/03/2009
NOTES ON ACCOUNTS Tulsyan NEC Limited (hereinafter known as the Parent Company) holds 99.87% of the Shares of Cosmic Global Limited, 100% of the Shares of Tulsyan Power Limited, 100% of the Shares of Chitrakoot Steel & Power P Limited and 98.80% of the Shares of Balaji Engineering & Galvanizing Limited (hereinafter known as the Subsidiaries) with a common reference to the companies being made as “Group” or “Group Companies”. Principles of Consolidation The Consolidated Financial Statements have been prepared on the following basis: The Financial Statements of the Parent Company and its Subsidiary companies has been combined on
a line to line basis by adding together the book values of like items of Assets, liabilities, Income and Expenditure after fully eliminating intra group balances.
The Consolidated financial statements are prepared by adopting uniform accounting policies for like transactions and other events in similar circumstances and are presented to the extent possible, in the same manner as the Parent Company’s separate Financial Statement.
The Excess of Cost to the Parent Company of its investment in the Subsidiary is recognized in the financial statements as Goodwill, which is amortised on a straight line basis over a period of five years. At the end of every year, a review of the balancing amount of goodwill would be made and if it is considered that the goodwill is impaired then only it would be written down.
1. Significant Accounting Policies: 1.1 Basis of preparation of Financial Statements
a. The financial statements are prepared under the historical cost convention on accrual basis of accounting to comply in all material respects with mandatory accounting standard as notified by the Companies ( Accounting Standards) Rules,2006 as amended (‘the Rules’) and the relevant provisions of the Companies Act, 1956 ( ‘the Act’).
b. Accounting policies have been consistently applied the company and the accounting policies not referred to otherwise, are in conformity with Generally Accepted Accounting Principles ( GAAP).
1.2 Fixed Assets and Depreciation
a. Fixed Assets:
Fixed assets are stated at cost, less accumulated depreciation and impairment losses, if any. Cost includes all expenditure necessary to bring the asset to its working condition for its intended use. Own manufactured assets are capitalized inclusive of all direct costs and attributable overhead.
Capital work-in-progress comprises of advances paid to acquire fixed assets and the cost of fixed
assets that are not yet ready for their intended use as at the balance sheet date. Assets held for disposal are stated at the lower of net book value and the estimated net realizable
value.
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b. Financial costs incurred up to the date of commissioning of assets are recognized. c. Depreciation has been provided as follows:
i) Under WDV method on assets acquired up to 31.12.1985 at the then prevailing rates. ii) Under SLM method on assets acquired after 31.12.1985 and up to 15.12.1993 at the rates as
originally prescribed in Schedule XIV to the Companies Act,1956, and on assets acquired thereafter at the revised rates as per Notification GSR 756(E) dated 16.12.1993.
iii) Depreciation on revaluation is adjusted against Revaluation Reserve. iv) Cost of Leasehold land is amortised over the lease period. v) Plant and Machinery and Furniture and Fittings which cost are less than Rs 5000/- each are
depreciable at the rate of 100% in the year of purchase.
Depreciation
Type of asset Rate of Depreciation Land NIL Factory buildings 3.34 Office premises 3.34 Plant and machinery: Double shift 7.42 Triple Shift 10.34 Computer 16.21 Lab equipments 4.75 Office and other equipments 6.33 vehicles 9.50
Amortisation
Type of assets Basis
Land Leasehold Period of lease ERP software Straight line basis over a period of five years
Retirement and other employee benefits: Defined contribution to provident fund and employee state insurance are charged to the profit and loss account of the year when the contributions to the respective funds are due. There are no other obligations other than contribution payable to the respective statutory authorities. Retirement benefits in the form of gratuity are considered as defined benefit obligation, and are provided in the year of separation.
Inventories
Raw materials, Components, Stores and Spares and Work-in-Progress are valued at cost. Finished goods are valued at cost or recognized value whichever is less. The basis of determining cost for various categories of inventories is as follows:
Raw Material, components, stores and spares : At cost ( Weighted Average) Work-in-Progress : At Material cost plus Conversion cost on the basis of absorption costing Finished Goods : At material cost plus conversion cost on the basis of
absorption costing ( including of excise Duty payable)
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Sales
Sales comprises of sale of goods produced & purchased by the Company as also sales effected as agents and sale of raw materials, and are gross of duties. Consignment sales is accounted on receipt of consignment sale note from the consignee. Export/Consultancy Services are billed at mutually discussed rates wherever the terms have not been reduced to writing.
Revenue Recognition
All income and expenditure are recognized on accrual basis except rates & taxes, bonus on cash basis. Export benefits representing duty free imports of earlier years are accounted in proportion to materials consumed. The value of Advance License on hand at the end of the year as certified by the management is incorporated in the books of accounts.
Investments:
Long Term Investments are carried at cost less provision for diminution in value other than temporary, if any. Current investments are valued at lower of cost and fair value.
Contingent Liabilities
All liabilities have been provided for in the accounts except liabilities of a contingent nature, which have been disclosed at their estimated value in the Notes to the Accounts wherever practicable.
(` In lacs) On 31/03/2010 On 31/03/2009 Guarantees Outstanding 133.88 90.36 FLC with Bank ----- 202.91 Entry Tax 80.44 80.44 Excise Duty 9.96 9.96
Cash and Cash Equivalents:
Cash and cash equivalents in the cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.
Foreign Exchange Transactions:
All foreign currency transactions are recorded at the average exchange rate prevailing during the transaction occur. Outstanding balance of foreign currency monetary items is reported using the period end rates. Pursuant to the notification of the companies ( Accounting Standard) amendment Rules 2009 issued by the Ministry of Corporate Affairs on March 31st ,2009 amending Accounting Standard-11 (AS-11), the effect of changes in Foreign Exchange Rates(Revised 2003), exchange difference relating to long term monetary items are dealt with in the following manner
Exchange difference relating to long term monetary items, arising during the year, in so far as they relate to the acquisition of depreciable capital asset are added to/deducted from the cost of the assets and depreciated over the balance life of the asset. In other cases, such difference are accumulated in the “Foreign Currency Translation Difference Account” and amortised to the profit and loss account over the balance life of the long term monetary item but not beyond 31st March, 2011.
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All other exchange difference are recognized as income or expenses in the profit and loss account (discloses separately under the head Exceptional items in the Sch-VI, Part-II of the Companies Act, 1956). Foreign exchange transactions are as follows:
Transactions ` in Lacs
31/03/2010 31/03/2009 a) CIF Value of imports ( Raw materials) 6492.08 7085.71 b) Earnings in foreign Exchange ( FOB) 2350.21 4397.53 c ) Exchange in Foreign currency for other matters 164.85 292.89 c) Interest paid on $ Loan 208.02 100.65 d) Loan Paid 1189.47 233.41
During the year foreign exchange transaction towards Royalty, know-how, professional fees & consultant fees were NIL. Hence not disclosed in the notes on accounts. 2 Quantitative information in respect of class of goods manufactured including conversion Class of Goods Licensed Installed Production Capacity Capacity 2009-2010 Finished Steel Products Delicensed 48000 MT 48195 MT (Chennai) (48000 MT) (42073 MT) Finished Steel Products Delicensed 300000* MT 107348 MT (Chennai-Gummudipoondi) (150000 MT) (78085 MT) *150000 MT added during September, 2009 Finished Steel Products Delicensed ------------- ---------- (Coimbatore) (36000 MT) (4047* MT) *Three months only April to June 2008 MS Ingots Delicensed 36000 MT -------- MT (36000 MT) (19818 MT) MS Billet Delicensed 144000 MT 56894 MT 144000 MT (41096) MT HDPE/PP Woven Sack Delicensed 20541 MT 11464 MT & Fabrics (20541 MT) (11188MT) Note: i) Installed Capacity being a technical matter is as certified by the Management and relied upon by the
Auditors. ii) Scrap generated 6640 MT (During the year 2008-09 – 5141 MT)
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3 Consumption of materials ` in Lacs 2009-10 2008-09 Ingot, billets and rerollables Indigenous Qty 163884 MT 132247 MT Value 37161.91 39385.38 Percent 98.74 100.00 Imported Qty 2090 MT ------ Value 449.27 ------ Percent 1.26 ------ Steel Scrap Qty 23354 MT 24442 MT Indigenous Value 2829.52 3044.63 Percent 34.50 34.13 Imported Qty 44343 MT 47171 MT Value 6441.48 10022.72 Percent 65.50 65.87 PP/HDPE Granules Imported Qty 744 MT 504 MT Value 415.96 312.92 Percent 7.28 4.06 Indigenous Qty 9465 MT 9286 MT Value 6333.92 7370.22 Percent 92.72 95.94 Stores & Spares Indigenous 1520.35 1652.33 Imported 4.32 ------- 4 Opening & Closing stocks and Sales ` in Lacs Finished Steel Products Opening Stock Qty 9992 MT 3486 MT Value 3172.08 1141.51 Closing Stock Qty 20757 MT 9992 MT Value 6606.43 3172.08 Sales Qty 143362 MT 120315 MT Value 40109.88 43528.30 Trading (High sea Sales) Qty 20556 MT 14510 MT Value 2997.70 2748.38 MS Ingots Opening Stock Qty 9 MT 55 MT Value 2.42 14.09 Closing Stock Qty 0 MT 9 MT Value 0 2.42 Sales Qty 9 MT 414MT Value 2.04 98.61
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M S Billet Opening Stock Qty 370 MT 694 MT Value 105.79 151.75 Closing Stock Qty 710 MT 38 MT Value 154.06 9.59 Sales Qty 94 MT 30 MT Value 20.05 6.41 Fabrics Opening Stock Qty 751 MT 558 MT Value 570.77 429.40 Closing Stock Qty 725 MT 751 MT Value 551.05 570.77 Sales Qty 946 MT 2464 MT Value 701.87 1621.10 Sacks Opening Stock Qty 426 MT 494 MT Value 340.76 400.08 Closing Stock Qty 288 MT 426 MT Value 220.02 340.76 Sales Qty 10155 MT 8630 MT Value 9544.47 9261.34 The above information is provided from the books of Tulsyan NEC Limited. Since, the nature of business of Cosmic Global Limited is technical and not quantifiable in terms of any particular unit of conversion, it is not possible to give the quantitative details (as prescribed under paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956) of transcription charges received, export and consultancy services. 5 Other Information ` in Lacs a) CIF Value of Imports (Raw Materials) 6492.08 7085.71 b) Earnings in Foreign Exchange (FOB) 2350.21 4397.53 c) Expenditure in Foreign Currency for other matters 164.85 292.89 d) Interest paid on $ Loan 208.02 100.65 e) Loan paid 1189.47 233.41 6. Directors Remuneration to the directors:
` in Lacs a) Salary 169.69 163.82 b) Contribution to Provident & Other Funds 2.40 2.31 c) Monetary Value of perquisites 9.00 9.00
Managerial Remuneration paid during the year 2009-10 ` 181.09 to the Managing Directors and Whole-time Directors exceeded the limits calculated under Schedule XIII to the Companies Act, 1956, by ` 29.52 lacs. The Company has filed the application to the Central Government seeking its approval for the remuneration paid over the limit
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7. Remuneration to Auditors ` in Lacs
For Audit 7.13 4.25 For Tax Audit 0.75 0.75 For Certification and other works 2.00 2.00 For Internal Audit 8.55 7.80
8. During the year, Company has purchased a 100% shares of M/s Chitrakoot Steel & Power Pvt Ltd, a
sponge iron manufacturing plant and invested ` 648.92 lacs ` in Lacs
9. Sitting Fees paid to Directors 0.76 0.96 10. Details of Secured Loans
a. Loans from Banks secured by exclusive charge on land, buildings and plant and machinery other than those specifically charged and hypothecation of inventories and book debts and are guaranteed by the Managing Director and two Directors of the Company
b. Term Loan from Financial Institution is secured by assets purchased under the loan and are
guaranteed by the Managing Director and two Directors of the Company
c. Others Loans are secured by Hire Purchase/Hypothecation Agreements of vehicles and specific machinery and are guaranteed by the Managing Director/secured by a charge on the specific equipment.
11. Unsecured loans include ` 41.96 lakhs due to Directors (As at 31.03.2009 ` 104.86 lacs) ` in Lacs
Principal Interest Loan from the Directors: 37.01 4.95
12. Other contingent liabilities: ` in Lacs
Guarantees given by bankers 133.88 90.36
` in Lacs 13. Liability under acceptances against Letter 5617.93 3040.22 of Credit established by Bankers
14. The Company has confirmed balances with most of Sundry Debtors, Creditors & Loans and Advances.
15. An amount of ` 102.00 Lacs has been appropriated from Profit & Loss Appropriation A/c. to General
Reserve A/c from profits.
16 Income tax deducted at source: ` in Lacs
From interest received 21.93 24.82 From Job works received 9.75 10.53 From Others 0.35 Nil
17. Balances with bank in deposit accounts include ` 1834.42 Lacs being margin money for Letters of Credit/Guarantees issued by Bank (As at 31.03.2009 ` 1374.29 lacs).
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18. The information required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no over dues to parties on account of principal amount and/or interest and accordingly no additional disclosures have been made
19. As per the management representation there is no impairment loss on fixed assets during the year. So AS-28 is not applicable.
20. Previous year figures are regrouped and reclassified whenever necessary to conform to the current year classification.
21. Borrowing Cost: In respect of new units/major expansions, the interest paid/payable on borrowing funds, attributable to construction of building and acquisition/erection of Plant and machinery is capitalized upto the date of construction/acquisition/erection of aforesaid assets all other borrowing costs are charged to profit and loss account. During the year under audit the below mention amount has been capitalized as per AS-16 issued by the Institute of chartered Accountants of India.
Qualifying Asset Borrowing Cost Plant & Machinery 4263375 Building 1137583 Land 151510
22. Derivative Instruments: NIL
23. Advance Licence under DFRC (Duty Free Replenishment Certificate)/DEPB/DFIA/TARGET PLUS to the extent of ` 381.95 lacs (balance as on 31/03/2010) for which exports have already been made and proceeds received, has been credited to Raw Material Purchase Account and debited to Loans & Advances.
24. The Company has confirmed balances with most of Sundry Debtors, Creditors & Loans and Advances
24. Accounting Policies and Notes on Accounts of the Financial Statements of the Parent Company and
the Subsidiaries are set out in their respective Financial Statements.
As per our report of even date
For C.A PATEL & PATEL Chartered Accountants Sd/- BHAVESH N PATEL Partner M. No.26669 & FR No. 005026 S Place: CHENNAI Date: 14th May, 2010
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ACCOUNTING RATIOS A. Standalone
Particulars
Year ended
March 31,2009 Year ended
March 31,2010 Earning Per share (`) 19.02 16.98 Net Asset Value Per Share (`) 109.56 213.84 Return on Net Worth (%) 17.36% 13.66% Weighted average number of equity shares in the period (in Nos.) 50,00,000
50,00,000
B. Consolidated
Particulars
Year ended March 31,2009
Year ended March 31,2010
Earning Per share (`) 23.70 18.90 Net Asset Value Per Share (`) 113.62 249.81 Return on Net Worth (%) 20.88% 15.86% Weighted average number of equity shares in the period (in Nos.) 50,00,000
50,00,000
Notes: Definition of Ratios Earning Per Share (`)
(Net Profit attributable to Equity Shareholders) / (Weighted average number of Equity Shares outstanding during the Period)
Net Asset Value Per Share (`)
(Net Worth excluding revaluation reserve at the end of the Period) /(Weighted average number of Equity Shares outstanding during the Period)
Return on Net Worth (%) (Net Profit attributable to Equity Shareholders) / (Net Worth excluding Revaluation Reserve at the end of the Period )
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Limited Review Report for the Period from April 1, 2010 to September 30, 2010 on the Interim Standalone Financial Statements
To, The Board of Directors, Tulsyan NEC Limited, 61, Sembudoss Street, Chennai – 600 001 Dear Sirs, We have reviewed the accompanying Standalone Statement of Un-audited financial results of Tulsyan NEC Limited for the period ended 30th September, 2010. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors/Committee of Board of Directors. Our responsibility is to issue a report on these Standalone Financial Statements based on our review. We conducted our review in accordance with the Standard of Review Engagement (SRE) 2400, engagements to Review Financial Statements issued by the Institute of Chartered Accountants in India. The 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 review is limited primarily to inquiries of Company Personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Standalone Statement of un-audited financial results prepared in accordance with accounting standards and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement. 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. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Yours Faithfully,
For C.A. Patel & Patel
Chartered Accountants
Registration no. of the Firm: 005026 S
Bhavesh N Patel
Partner
Membership No: 26669 Place: Chennai Date: 20/01/2011
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Annexure-I - Statement of Assets and Liabilities (Standalone)
(` in lacs) Particulars As at 30/09/2010 As at 31/03/2010 A) Fixed Assets
G) Misc. Expend. to the Extent not written off or adjusted - - H) Surplus(+) or Deficit (-) in Profit & Loss Account 318.55 849.28 Networth (F-G-H) 6,689.89 6,216.24
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Annexure-II - Statement of Profit and Loss Account (Standalone)
(Rs in lacs) Particulars Six months
period ended 30/09/2010
Year Ended 31/03/2010
INCOME Sales - of Products manufactured by the company 26,474.15 54,196.25 of Products traded in by the Company 4,393.07 Other income 1.37 886.89 Increase/ Decrease (-) in Inventories 4,355.51 3,252.80 Total 30,831.03 62,729.01 EXPENDITURE Raw Material Consumed 22,825.52 47,920.45 Staff Costs 900.97 1,742.42 Other Manufacturing Expenses 4,519.19 6,167.02 Administration Expenses 1,409.54 Selling & Distribution and Other Expenses 1,093.14 Total 28,245.68 58,332.57 Earning Before Depreciation, Interest & Tax 2,585.35 4,396.44 Depreciation 431.07 813.33 Interest 1,680.63 2,137.93 Net Profit Before Tax and Extraordinary Items 473.65 1,445.18 Taxation Current Tax (Including Fringe Benefit Tax) 144.00 360.00 Deferred Tax 11.10 150.17 Net Profit before Extraordinary Items 318.55 935.01 Extraordinary items - (85.73) Net Profit after extraordinary items 318.55 849.28 Adjustments on account of prior period expenses - Adjusted profit
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Annexure-III - Statement of Cash Flow (Standalone)
(` in Lacs)
Sr. No. Particulars As at 30/09/2010
As at 31/03/2010
(Limited Review)
1 Cash flow from Operating activities 1725.04 3179.44
2 Cash flow from Investing activities (308.25)
(1,661.07)
3 Cash flow from Financing activities (1138.72)
(1,052.04)
4 Net Increase / (decrease) in cash and cash equivalents (1+2+3)
278.07
466.33
5 Cash and cash equivalent at the beginning of period 1873.89
1,407.57
6 Cash and cash equivalent at the end of period 2151.96
1,873.90 Notes on Cash Flow Statement:
1 State Subsidy received has been included in Reserve & Surplus ANNEXURE IV - NOTES ON ACCOUNTS: (Standalone) 1. SIGNIFICANT ACCOUNTING POLICIES:
a. Accounting policies are consiststent with generally accepted Accounting Principles, except wherever
stated otherwise. b. Financial Statements are based on Historical Cost. c. Mercantile System of Accounting is followed and Income & Expenditure are accounted for on accrual
concept on going concern basis consistently. 2. FIXED ASSESTS:
Expenditure which are of Capital nature are Capitalized at cost which directly incurred in acquiring assets. 3. CAPITAL WORK IN PROGRESS:
Capital work in progress is carried at cost comprising direct cost and incidental expenditure during construction period to be allocated to the fixed assets on the completion of construction. 4. DEPRECIATION:
Depreciation is Provided from the date the Assets have been acquired and put to use, So Straight Line Method (SLM) at the rates and the manner specified in Schedule- XIV of the Companies Act, 1956.
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5. INVENTORIES:
Raw Materials and Stores and Spares are valued at weighted average cost and Finished Goods at cost or market price whichever is less. The cost inclusive of excise duties. 6. SALES:
Sales comprises of sale of goods produced & purchased by the Company as also sales effected as against including internal stock transfers and sale of raw materials and are gross of duties. Consignment sales is accounted on receipt of consignment sale note from the consignee and Inter Unit Transfer included in Sale and Purchases. 7. REVENUE RECONGNITION:
All Income and expenditure are recognized on accrual basis except rates & taxes, bonus on payment basis. Export benefits representing duty free imports of earlier years are accounted in proportion to materials consumed. The value of Advance Licence on hand at the end of the year as certified by the management is incorporated in the books of accounts. 8. INVESTMENTS:
Long term Investments are valued at cost. Provision for diminution in the value of investments is made to recognize a decline other than temporary. 9. CONTIGENTY LIABILITIES:
All Liabilities have been provided for in the accounts except liabilities of a contigent nature, which have been disclosed at their estimated value in the Notes to the Accounts wherever practicable.
(` In Lacs) On 30/09/2010 on 31/03/2010
a. Guarantees Outstanding Rs.122.63 Rs 133.88 b. FLC with Bank Rs. 5675.67 ----- c. Entry Tax Rs. 1.79 Rs 80.44 d. Excise Duty Rs. 19.00 Rs 9.96
10. FOREIGN CURRENCY TRANSATIONS:
Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction or at contracted forward rates. 11. BORROWING COST:
The Borrowing cost has been treated in accordance with Accounting Standard on Borrowing Costs ( AS-16) issued by the Institute of Chartered Accountants of India. 12. DEFERRED TAX:
Deferred Tax has been accounted in accordance with the requirement of Accounting Standard on “ Tax on Income” ( AS-22), Issued by the Institute of chartered Accountants of India. As on 30th Sep-10 balance stands in the Balance Sheet Rs 1381.89 lacs.
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13. DETAILS OF SECURED LOANS:
a. Loan from Banks secured by exclusive charge on land, buildings and plant and machinery other than those specifically charged and hypothecation of inventories and book debts and are guaranteed by the Managing Director and Director of the company.
b. Term loan from financial Institution is secured by assets purchased under the loan and are guaranteed by the Managing Director of the Company.
c. Other Loans are secured by Hire Purchase/Hypothecation Agreements of vehicles and specific machinery and are guaranteed by the Managing Director.
Annexure - V - Accounting and Other Ratios (Standalone) Particulars As at 30/09/2010 As at 31/03/2010 01. Earnings Per Share (`) 6.37 16.99 02. Net Assets value per share(`) 210.36 213.84 03. Return on net worth(%) 4.76 13.66 04. Weighted Average Number of Equity Shares 50 lacs 50 lacs
Annexure - VI - Statement of Capitalisation (Standalone)
(` in Lacs) Particulars As at 30/09/2010 As adjusted for the
Issue 01. Borrowings :
Short-term Debt 16,210.27 16,210.27
Long Term debt 9,537.06 9,537.06
Total Debt 25,747.33 25,747.33
02. Shareholders Funds
Share Capital 500.00 1500.00
Reserves 6,189.89 10139.89
Total Shareholders' Funds 6,689.89 11639.89
03. Ratio
Long term debt/ Equity Ratio 1.43 0.82 Total Debt/ Equity Ratio 3.85 2.21
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Limited Review Report for the Period from April 1, 2010 to September30, 2010 on the Interim
Consolidated Financial Statements
To, The Board of Directors, Tulsyan NEC Limited, 61, Sembudoss Street Chennai – 600 001 Dear Sirs, We have reviewed the accompanying Consolidated Statement of Un-audited financial results of Tulsyan NEC Limited for the period ended 30th September, 2010. This statement is the responsibility of the Company’s Management and has been approved by the Board of Directors/Committee of Board of Directors. Our responsibility is to issue a report on these Consolidated Financial Statements based on our review. We conducted our review in accordance with the Standard of Review Engagement (SRE) 2400, engagements to Review Financial Statements issued by the Institute of Chartered Accountants in India. The 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 review is limited primarily to inquiries of Company Personnel and analytical procedures applied to financial data and thus provide less assurance than an audit. We have not performed an audit and accordingly, we do not express an audit opinion. Based on our review conducted as above, nothing has come to our attention that causes us to believe that the accompanying Consolidated Statement of un-audited financial results prepared in accordance with accounting standards and other recognised accounting practices and policies has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreement including the manner in which it is to be disclosed, or that it contains any material misstatement. 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. We do not accept or assume any liability or duty of care for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Yours Faithfully, For C. A. Patel & Patel
Chartered Accountants
Registration no. of the Firm: 005026 S
Bhavesh N Patel
Partner
Membership No: 26669
Place: Chennai Date: 20/01/2011
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Annexure-I - Statement of Assets and Liabilities (Consolidated) Amount in ` lacs
Particulars As at 30/09/ 2010 As at 31/03/2010 A Fixed Assets Gross Block 18,256.94 17,958.78 Less: Depreciation 5,935.83 5,451.49 Net Block 12,321.11 12,507.29 Less: Revaluation Reserve 16.83 16.83 Net Block After Adjustment for revaluation reserve 12,304.28 12,490.46 B Investments 107.33 2.31 C Current Assets, Loans and Advances Inventories 13,079.63 10,141.73 Sundry Debtors 14,143.81 13,992.40 Cash and Bank Balances 2,182.69 1,906.45 Loans and Advances 7,129.55 7,054.14 Total 36,535.68 33,094.72 D Liabilities and Provisions Secured Loans 25,967.45 21,558.14 Unsecured Loans 2,406.18 3,271.97 Current Liabilities and Provisions 12,854.58 13,519.90 Liability for Deferred payment 1,280.01 1,280.01 Total 42,508.22 39,630.02 E: Grand Total (A+B+C-D) = E 6,439.07 5,957.47 F: Net Worth Represented by Share Capital 500.00 500.00 Equity Share Advances - - Reserves 5,937.12 4,994.09 Less: Revaluation Reserve 16.83 16.83 Reserves (Net of Revaluation reserves) 5,920.29 4,977.26 Minority Interest 2.58 2.48 Total 6,422.87 5,479.74 G Misc. Expend. to the Extent not written off or adjusted 465.59 467.22 H: Surplus(+) or Deficit (-) in Profit & Loss Account 481.79 944.95 Networth (F-G+H) 6,439.07 5,957.47
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Annexure-II - Statement of Profit and Loss Account (Consolidated) Amount in ` lacs
Particulars As at 30/09/2010 Year Ended 31/03/2010
INCOME Sales - of Products manufactured by the company 27,025.39 55,387.27 of Products traded in by the Company 716.83 4,393.07 Other income 371.60 1,052.13 Increase/ Decrease (-)in Inventories 3,201.54 3,463.30 Total 31,315.36 64,295.77 EXPENDITURE Raw Material Consumed 22,210.77 47,431.75 Staff Costs 1,179.57 1,950.52 Other Manufacturing Expenses 4,399.72 7,697.93 Administration Expenses 865.95 2,194.30 Selling & Distribution and Other Expenses 168.82 411.88 Total 28,824.83 59,686.38 Earning Before Depreciation, Interest & Tax Depreciation 463.86 846.15 Interest 1,418.23 2,172.47 Net Profit Before Tax and Extraordinary Items 608.44 1,590.77 Taxation Current Tax (Including Fringe Benefit Tax) 3.64 386.62 Deferred Tax - 173.47 Net Profit before Extraordinary Items 604.80 1,030.68 Extraordinary items 123.01 85.73 Net Profit after extraordinary items 481.79 944.95 Adjustments on account of prior period expenses - - Adjusted profit 481.79 944.95
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Annexure-III - Statement of Cash Flow (Consolidated)
(` in Lacs) Sr. No. Particulars As at 30/09/2010
As at 31/03/2010
(Limited Review)
1 Cash flow from Operating activities 1,725.03 3364.35 2 Cash flow from Investing activities (308.25) (3436.78) 3 Cash flow from Financing activities (1,138.72) 549.86 4 Net Increase / (decrease) in cash and cash equivalents (1+2+3) 278.06 477.43 5 Cash and cash equivalent at the beginning of period 1,873.90 1429.02 6 Cash and cash equivalent at the end of period 2,151.96 1906.45
Notes on Cash Flow Statement:
1 State Subsidy received has been included in Reserve & Surplus
ANNEXURE IV- NOTES ON ACCOUNTS: (Consolidated) 1. SIGNIFICANT ACCOUNTING POLICIES:
a. Accounting policies are consiststent with generally accepted Accounting Principles, except wherever
stated otherwise. b. Financial Statements are based on Historical Cost. c. Mercantile Syatem of Accounting is followed and Income & Expenditure are accounted for on accrual
concept on going concern basis consistently.
2. FIXED ASSESTS: Expenditure which are of Capital nature are Capitalized at cost which directly incurred in acquiring assets.
3. CAPITAL WORK IN PROGRESS:
Capital work in progress is carried at cost comprising direct cost and incidental expenditure during construction period to be allocated to the fixed assets on the completion of construction.
4. DEPRECIATION:
Depreciation is Provided from the date the Assets have been acquired and put to use, So Straight Line Method (SLM) at the rates and the manner specified in Schedule- XIV of the Companies Act, 1956.
5. INVENTORIES:
Raw Materials and Stores and Spares are valued at weighted average cost and Finished Goods at cost or market price whichever is less. The cost inclusive of excise duties.
6. SALES:
Sales comprises of sale of goods produced & purchased by the Company as also sales effected as against including internal stock transfers and sale of raw materials and are gross of duties. Consignment sales is accounted on receipt of consignment sale note from the consignee and Inter Unit Transfer included in Sale and Purchases.
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7. REVENUE RECONGNITION: All Income and expenditure are recognized on accrual basis except rates & taxes, bonus on payment basis. Export benefits representing duty free imports of earlier years are accounted in proportion to materials consumed. The value of Advance Licence on hand at the end of the year as certified by the management is incorporated in the books of accounts.
8. INVESTMENTS:
Long term Investments are valued at cost. Provision for diminution in the value of investments is made to recognize a decline other than temporary.
9. CONTIGENTY LIABILITIES:
All Liabilities have been provided for in the accounts except liabilities of a contigent nature, which have been disclosed at their estimated value in the Notes to the Accounts wherever practicable.
(` In Lacs) On 30/09/2010 on 31/03/2010 e. Guarantees Outstanding Rs.122.63 Rs 133.88 f. FLC with Bank Rs. 5675.67 -------- g. Entry Tax Rs. 1.79 Rs 80.44
Excise Duty Rs. 19.00 Rs 9.96
10. FOREIGN CURRENCY TRANSATIONS: Transactions denominated in foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction or at contracted forward rates.
11. BORROWING COST:
The Borrowing cost has been treated in accordance with Accounting Standard on Borrowing Costs ( AS-16) issued by the Institute of Chartered Accountants of India.
12. DEFERRED TAX:
Deferred Tax has been accounted in accordance with the requirement of Accounting Standard on “ Tax on Income” ( AS-22), Issued by the Institute of chartered Accountants of India. As on 30th Sep-10 balance stands in the Balance Sheet Rs 1280.01 lacs.
13. DETAILS OF SECURED LOANS:
a. Loan from Banks secured by exclusive charge on land, buildings and plant and machinery other
than those specifically charged and hypothecation of inventories and book debts and are guaranteed by the Managing Director and Director of the company.
b. Term loan from financial Institution is secured by assets purchased under the loan and are guaranteed by the Managing Director of the Company.
c. Other Loans are secured by Hire Purchase/Hypothecation Agreements of vehicles and specific machinery and are guaranteed by the Managing Director.
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Annexure - IV - Accounting and Other Ratios (Consolidated) (Referred to in our report of even date)
Particulars Six months period ended 30/09/2010
Year Ended31/03/2010
01. Earnings Per Share (RS.) 9.64 18.90 02. Net Assets value per share(RS.) 246.09 249.81 03. Return on net worth(%) 7.48 15.86 04. Weighted Average Number of Equity Shares 50 lacs 50 lacs
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Reasons for increase or decrease in the assets and liabilities in 2009-10 over 2008-09 Increase in current liabilities: The current liabilities of the Company were ` 7,867.80 lacs for the financial year ended 2008-09 which increased to ` 11,195.05 lacs for the financial year ended 2009-10. The increase of ` 3,327.25 lacs was on account of increase in activity level of steel division wherein the Company expanded the Rolling capacity by 150000 MTS during the year. Increase in secured loan: The Secured loan for the financial year ended 2008-09 was ` 16224.37 lacs which increased to ` 20307.68 for the financial year ended 2009-10. The increase of ` 4083.31 lacs during the year was due to term loan taken from IDBI for funding the expansion of the steel division. Increase in unsecured loan: Unsecured loans of the Company for the financial year ended 2008-09 were ` 1298.15 lacs which increased to ` 2070.20 lacs for the financial year ended 2009-2010. The increase of ` 772.05 lacs was on account of unsecured loans taken by the Company to fund the working capital requirements. Increase in other debts : The other debts consists of sundry debots outsanting for less than 6 months. Other debts amounted to Rs. 5879.24 lacs for the financial year 2008-09 which increased to Rs. 11975.78 lacs in the financial year 2009-10. The increase of Rs. 6096.54 lacs was on account of increase in number of debtors such as SEZ & Government supplies and increase in credit period given to them.
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WORKING RESULTS Information relating to the Company sales, gross profit etc., as required by the Ministry of Finance Circular No.F2/5/SE/ 76 dated February 5, 1977 read with the amendments of even no. dated March 8, 1977 is as under: The Unaudited working results of the Company for the period from October 01, 2010 to December 31, 2010 are as given hereunder: (` In lacs)
Particulars For the period October 01, 2010 to December 31, 2010
Gross Sales 26793.22 Less: Exercise Duty 2051.91 Net Sales 24741.31 Other Income 19.14 Total Income 24760.45 Estimated Gross Profit (Before Depreciation and Taxes) 615.77 Provision for Depreciation 297.42 Provision for Taxes 119.40 Estimated Net Profit 198.95
Material Changes and Commitments There are no material changes and commitments affecting the financial position of the Company
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PRINCIPAL TERMS OF OUTSTANDING LOANS AS ON 30/09/2010 Sr. No.
Name of the Bank
Date of Sanction
Amount sanctioned (` In Lacs)
Amount o/s as on
30/09/2010 (` In Lacs)
Rate of interest
(%)
Repayment Terms
Security
Term Loan 1 Canara
Bank 28/02/2008 TL – II
262.50 199.50 BPLR –
0.75%
25 quarterly installments commencing
from 31/12/2008
Primary Security Unregistered Equitable Mortgage (UREM) of property / project assets situated at Gummidioondi, Chennai and Doddaballapur, Bangalore, and Hypothecation of plant & machinery and equipment, all worth ` 40.49 crores
Collateral Pari passu first charge on UREM of property valued at ` 32.80 crores situated under Sy. No. 62, and 63/2A and Plot No. 7A situated in Doddaballapur Industrial area already along with IDBI for the term loan
24/06/2010 1500.00 1500.00 BPLR To be repaid within 3 months
Prime Security: Nil Personal Guarantee: Mr. Lalit Kumar Tulsyan Mr. Sanjay Kumar Tulsyan
Sub- Total 1699.50
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2 Andhra Bank
21/01/2008 263.00 195.26 BPLR +0.25(-0.75%)
25 quarterly installments commencin
g from 31/12/2008
Primary Security Exclusive charge on pari passu 1st charge basis, among the term lenders of the project, on the property/ project assets situated at Gummindipoondi, Chennai, Doddaballpur, and Banglore and hypothecation of plant and machinery and equipment.
Sub- Total 195.26 3 State
Bank of India
NA
130.00 2.12 NA Repaid in full
Primary Security Pari passu 1st charge at plot no. 7 A KIADB industry area, Doddaballapur (Sy. 61/1 & 32, P&M on the assets created out of Term Loan Doddaballapur Plant & Land & building at SIPCOT complex, Gummindipoondi, Tamil Nadu & Plant and Machinery created out of Term Loan)
TL-II 23.03.2006
400.00 184.14 SBAR+/-1.25%
29 quarterly installments commencin
g from 31/12/2006
Security Hypothecation of windmill at Kavalkurchi village, Tamil Nadu and EM of 2 acres of land at KavalKurchi village Tamil Nadu
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TL – III 31/01/2008
260.00
187.32 SBAR-0.75%
25 quarterly installments commencin
g from 31/12/2008
Primary Security EM of property situated at Gummindipoondi, Chennai, Doddaballapur, Banglore and Hypothecation of P&M equipment, pari passu 1st charge on with other consortium banks Collateral Security Pari- Passu 1st charge on the property at Sy 62 and 63/2A and plot no. 7A situated at Doddaballapur industrial area alongwith IDBI for term loan
Sub- Total 373.58 4 Syndicate
Bank 27/01/2004
TL – I 305.00
19.15 PLR + 1%
24 quarterly installments commencing
from 31/03/2005
Security: Existing land and building and plant & machinery to be purchased/ already purchased for the proposed expansion of the unit valued at 1959.00 lacs Collateral Security: Pari passu second charge on the fixed assets of the Company pertaining to the Synthetic division and steel division along with other banks. First charge with IDBI for existing term loan.
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20/02/2007 TL – II 2367.50
1702.72 PLR – 0.75%
25 quarterly installments commencing
from 31/12/2008
Primary
Unregistered Equitable Mortgage (UREM) of property / project assets situated at Gummidioondi, Chennai and Doddaballapur, Bangalore, and Hypothecation of plant & machinery and equipment, all worth ` 40.49 crores
Collateral Pari passu first charge on UREM of property valued at ` 32.80 crores situated under Sy. No. 62, and 63/2A and Plot No. 7A situated in Doddaballapur Industrial area already along with IDBI for the term loan
Sub- Total 1721.87 5. IDBI 20/02/2010 1850.00
1500.00 BPLR-100bps
16 quarterly installments from the 1st
date of disbursement
Primary Security
First charge on the fixed assets of the company situated at D4 SIPCOT Industrial complex Gummudipoondi
Demand Promissory Note
Personal Guarantee of Lalit Kumar Tulsyan and Mr. Sanjay Kumar Tulsyan
Collateral
Extension of 1st charge on the fixed assets of the Company on pari passu except those exclusively charged by other banks/FIs
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10/01/2010 1500.00
1050.00 BPLR- 1.75%
20 quarterly installments commencing
from 01/04/2009
Security Demand Promissory Notes Extension of pari- passu first charge on all fixed assets of the Company except those assets exclusively charged to other FIs/Banks Personal Guarantee of Mr. Lalit Kumar Tulsyan and Mr. Sanjay Tulsyan
02/03/2005 1000.00 218.71 LIBOR+3.5%
To be repaid in 5 equal
installments at the end of 24th, 36th, 48th , 60th and 66th month from
the first disbursement
Security Demand Promissory Notes
Extension of pari passu first charge on all fixed assets of the Company
Unconditional and irrevocable personal guarantees of Mr. Lalit Tulsyan and Mr. Sanjay Tulsyan
Pledge of promoters shareholding
02/20/2010 1000.00 500.00 To be decided at the time of disbursem
ent
On respective due dates
Primary Security Subsequent charge on current assets of the Company both future and present
Collateral
Extension of existing charge on the fixed assets, charged to corporate term loan
Personal Guarantee of Mr. Lalit Kumar Tulsyan and Mr. Sanjay Tulsyan
Sub Total 3268.71
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Working Capital Sr. No.
Name of the Bank
Date of Sanction
Amount sanctioned (` In Lacs)
Amount o/s as on
30/09/2010 (` In Lacs)
Rate of interest
(%)
Security
1 Canara Bank
05.03.2010 CC 6080.00
LC- 6640.00
5681.90 BPLR Security
1st charge on entire current assets, Hypothecation of stock and book debts on pari passu basis with other consortium members
Collateral
Sy no. 61/1 & 62 at vardanahalli village, Bangalore Sy no. 2 & 63/2A at Doddaballapur Bangalore Plot no. E4 sy no. 511 Makikaim Indl area Ponda to Goa
Plot no 39, sy nos 181-186,196/1,196/3 and 196/4 Harikrishna Nadu street Ambattur village Chennai
Plot no. A 15/N SIPCOT industrial Indtl Complex Gummidipoonsi
Plot no. 7A sy nos. 73,106, 107,107 at Doddaballapur Bangalore
Plot no. d-4 and D 4A sy no. 262/2, part 264/1 and 2 part, 265/3,74 parts of pappanakuppam village Sipcot indtl complex Gummidipoondi Plant and machinery at Doddaballapur, Gummidipoondi and Ambattur
2 Syndicate Bank
29/03/2010 CC- 4560.00
LC- 4980.00
4481.09 BPLR-1% Security
1st charge on entire current assets, Hypothecation of stock and book debts on pari passu basis with other consortium members
Pari passu 2nd charge on the fixed assets of the Company pertaining to Synthetics division and steel division along with other banks
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Sr. No.
Name of the Bank
Date of Sanction
Amount sanctioned (` In Lacs)
Amount o/s as on
30/09/2010 (` In Lacs)
Rate of interest
(%)
Security
3 State
Bank of India
25/11/2008 CC- 3040.00
LC-
3320.00
3023.47 SBAR+0.25%
Primary security Hypothecation of entire stocks of raw material, finished goods, receivables, book debts and other current assets charge ranking pari- passu with other banks
Collateral security
Pari passu 2nd charge on the land & building situated at 39, Dr. Harikrishna Naidu St.. Ambattur Chennai, A15/ N and D 4 SIPCOT Industrial area Gummidipoondi, 7-A Doddaballapur, Karnataka,
Entire plant & machinery
4 Andhra
Bank 08/01/2010 CC-
1520.00
LC-1660.00
1523.81 As Agreed Primary Security Hypothecation of Company’s entire stock of raw material, finished goods, stock in process, consumable stores, spares, book debts and other current assets on pari passu 1sr charge basis with other financing banks Collateral Security 2nd pari passu charge on the fixed assets of the Company
Other Loans Sr. No. Particulars Amount (` in
lacs) 1 Hire Purchase loans against vehicle from various Banks 65.04 2 Foreign Letter of Credit
Canara Bank 548.22 Syndicate Bank 1072.98 Andhra Bank 289.49 Total 1975.73
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PRINCIPAL TERMS OF LOANS AVAILED FOR THE PROPOSED POWER PROJECT Sr. No.
Name of the Bank
Date of Sanction
Amount sanctioned (` In Lacs)
Rate of interest
(%)
Repayment Terms
Security
1 Indian Overseas
Bank
02/01/2010 4000.00 BPLR -1%
28 quarterly installments of ` 143.00 lacs each starting
from 31/12/2012
Security Pari passu first charge by way of equitable mortgage on the Company’s factory land at proposed project (existing 75 acres) and proposed building at Gummidipoondi. Hypothecation of plant & machinery and other fixed assets existing/ proposed of the Company to be shared with other term lenders
2 Canara Bank
03/04/2010 5280.00 BPLR 27 quarterly installments of ` 177.00 lacs each
Security EMT of land admeasuring 75 acres, situated at Gummidipoondi and proposed building thereon valued at ` 21.40 crores and Hypothecation of P&M, Misc. fixed Assets of ` 152.08 crores (as per the project cost) to be shared on parri passu basis with other lenders II pari passu charge on the entire current assets of the Company both existing and future
3 Andhra
Bank 08/01/2010 3000.00 As agreed 28 quarterly
installments Collateral Security: extension of secured charge on all the current assets of the Company
4 State Bank of
India
19/05/2010 5,000.00 SBAR+0.25%
28 quarterly installments of ` 179.00
lacs each and ` 173.00 lacs
for 2 quarters
Primary:
First charge, by way of equitable mortgage of factory land measuring 71.95 acres of land at Gummidipoondi and building/ plant
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Sr. No.
Name of the Bank
Date of Sanction
Amount sanctioned (` In Lacs)
Rate of interest
(%)
Repayment Terms
Security
proposed to be constructed thereon. First Hypothecation charge on all plant & machinery and other fixed assets of the project Assignment of all project contracts, documents, insurance policies rights, titles, permits/ approvals, clearances and interests etc. of the Company. Assignment of all the Company’s rights and interests under Letter of Credit, guarantee of performance bond provided by any party for any project contract in favour of the Company First Charge on all bank accounts of the Project – Disbursal & Revenue A/c
Collateral
Second charge on the current assets of the proposed project on a reciprocal basis with the working capital lenders Personal Guarantee of promoter Directors All the above securities will be on a pari- passu basis with other term lenders
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Sr. No.
Name of the Bank
Date of Sanction
Amount sanctioned (` In Lacs)
Rate of interest
(%)
Repayment Terms
Security
5 Syndicate Bank
29/03/2010 3960.00 PLR 27 quarterly installments of ` 141.00
lacs each and ` 153.00 lacs
for last quarter
Pari Passu 1st charge on fixed assets being created under the proposed Power project at a total cost.
Collateral Pari passu 2nd charge on the fixed assets of the Company pertaining to Synthetic Division & Steel division along with other banks Pari Passu 2nd charge on current assets
TULSYAN NEC LIMITED ____________________________________________________________________________________________________________
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STOCK MARKET DATA FOR SHARES OF THE COMPANY
The equity shares of the Company are listed on Bombay Stock Exchange Limited (BSE, The Designated Stock Exchange), Madras Stock Exchange Limited (MSE) & Calcutta Stock Exchange Limited (CSE) and permitted to trade on National Stock Exchange of India Limited (NSE). There has been no trading in the equity shares of the Company on the stock exchange at MSE and CSE.
The stock market data for the equity shares on the BSE are as follows
Week end price of equity Shares of Tulsyan NEC Limited on the BSE.
Week ended High Price (Rs.)
Low Price (Rs.)
Closing Price (Rs)
11/03/2011 47.65 44.85 45.55
04/03/2011 56.00 52.65 52.85
25/02/2011 60.00 57.00 58.80
18/02/2011 64.00 58.55 59.45
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The stock market data for the equity shares on the NSE are as follows Preceding 3 Years The equity shares of Tulsyan NEC have been permitted to trade on NSE with effect from November 05, 2009 hence data for the year 2008 is not available.
The market price of the Company on 22/07/2010, the date on which the Board of Directors approved the Draft Letter of Offer was ` 86.35 on BSE & ` 86.85 on NSE. The market price of the Company on March 14, 2011, the date on which the Board of Directors approved the Letter of Offer was ` 47.80 on BSE & ` 48.35 on NSE.
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The market price of the equity shares of the Company as on 18/08/2009 the date of meeting of Board of Directors where decision of proposed rights issue was taken was ` 60.00 on BSE. The market price of the equity shares of the Company as on 28/02/2011 the date of meeting of Board of Directors where decision of ratio and the price in respect of the proposed rights issue was taken was ` 55.85 on BSE and 55.15 on NSE. The cum-rights closing price of the shares of the Company as on March 09, 2011 was ` 49.30 on BSE
and ` 49.20 on NSE. The ex-rights closing price of the shares of the Company as on March 10, 2011 was ` 47.05 on BSE `
47.00 on NSE. The issue price of ` 49.50 has been arrived at in consultation between the Company and the Merchant Bankers.
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SECTION V- LEGAL AND OTHER INFORMATION
OUTSTANDING LITIGATIONS AND DEFAULTS There are no outstanding litigations against the Company, its Directors, Promoters or any disputes, tax liabilities, non -payment of statutory dues, over dues to banks/ financial institutions, defaults against banks/ financial institutions, defaults in creation of full security as per terms of issue/ other liabilities, proceedings initiated for economic/ civil/ 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) against the Company, its Directors and the Promoters except as follow: The details of the tax liabilities disputed in appeal in relation to Income Tax as given in the auditor`s report is as detailed below
Sr. No.
Asst. Year
Gross Demand
Disputed Amount
Undisputed Amount
Paid/ Adjusted
Remarks
In relation to Excise 1 2003-2004 2,01,989 201989 0 1,00,000 Paid disputed in
Appeal before Commissionorate CESTAT
2 2002-2003 39,87,205 39,87,205 0 14,22,316
In relation to Income Tax 1 2001-2002 488,160 488,160 0 0 Refund due `
3,18,337/- Rectification sought u/s 154
2 2002-2003 (7590) - (7590) - Requested to adjust this refund against the liability of other years, appeal is made before the Asst. Commissioner of Income Tax
Violations under the Companies Act 1956 Consequent to the inspection carried out by the Central Government U/s 209 (A) of the Companies
Act by the Ministry of Corporate Affairs it had issued a warning notice and advised the company to be more careful in future Company Law Compliances and advised the Company and its Directors to compound the violation committed under sections 297, 209(1)(d) and 209(1) of the Companies Act, 1956 and accordingly compounding applications U/s 629A and 621A of the Companies Act, 1956 has been filed by the Directors and company under Sections 297, 209, 209(1) of the Act on June 09, 2010.
The company has also filed condonation applications under section 141 of Companies Act, 1956 for
delay in filing Form 8 U/s. Section 125 of the Act on April 22, 2010.
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A. Cases against the Company 1. Cases of Civil nature: NIL 2. Cases of criminal nature: NIL 3. Litigations involving securities related offences: NIL
4. Litigations involving statutory and other offences: NIL
5. Labour related disputes: NIL
6. Non - payment of statutory dues: NIL
7. Overdue interest/ principal as on current date: NIL 8. Proceedings against Income Tax Act and Sales Tax Act: NIL 9. Legal Proceedings against directors of the Company: NIL 10. Legal Proceedings against the promoters: NIL
11. Legal Proceedings against the Subsidiaries and group companies: NIL B. Cases filed by the Company, Subsidiaries and group companies: NIL
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GOVERNMENT APPROVALS OR LICENSING ARRANGEMENTS
The Company has received the necessary consents, licenses, permissions and approvals from the Governments and various Governmental agencies required for our present business and except as mentioned below, no further materials approvals are required for our present business. On the basis of the indicative list of approvals below, the Company is permitted to carry on business activities and no further approvals from any Government authorities are required by us to undertake the business of the Company. It must be distinctly understood that, in granting these licenses, the Government of India does not take any responsibility for Company’s financial soundness or for the correctness of any of the statements made or opinions expressed in this behalf. Approvals relating to the Business (a) Taxation Related Approvals
Description Reg. No. / Ref. No & Date Authority
Permanent Account Number AABCT3720E dated 21.08.1996
Commissioner of Income Tax, Computer Operations,121, Mahatma Gandhi Road, Nungambakkam, Madras - 600 034
Tax Deduction Account Number under the Income Tax Act, 1961 CHET02271D Income Tax Authority
Service Tax Registration under Section 69 of the Finance Act, 1994 (32 of 1994)
AABCT3720EST004 dated 12.01.2007 Commissioner of Service Tax
Value Added Tax Act, 2006 FORM D [Rule 5(1) (a)]
33370040046 with effect from 01.01.2007
Commercial Tax Department
(b) Ministry of Corporate Affairs Related Approval
Description Reg. No. / Ref. No & Date Authority Validity
Change of name of the company from National Engineering Limited to Tulsyan NEC Limited
Letter number 7437/TA.I/S.21/96 dated 21.08.1996
Registrar of Companies Lifetime
*Alteration of Main Object clause of Memorandum of Association
Co.No.7437 Company Petition no. 962/17/SRB/96
Ministry of Corporate Affairs Lifetime
Alteration of Main Object clause of Memorandum of Association
Serial No. 404 approval Date 03.12.2004
Ministry of Corporate Affairs Lifetime
Commencement of Business - Ministry of Corporate Affairs Lifetime
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Registered Trademark
Date Description Trade Mark Number
28.03.2007 TMT-HSD bars, Iron Slabs, Iron strip, Iron slabs, Iron ware, iron Unwrought or sem wrought, Iron bands (Stretches For-) tension links and wrought or unwrought of all kinds of metals.
1333084
(c) Other Approvals
Date Description Registration Number
31.05.1993 Import Export Code (for all branches)
IEC Number: 0493005455
05.04.2002 Manufacture of M. S. Ingots FALLING UNDER chapter Sub heading No. 7206.90 and Runners and Raisers falling under Chapter sub - heading No. 7204.90 of the Central Excise Tariff Act 1985 at Plot No. A-15/N, Sipcot Industrial Complex, Gummidipoondi 601 201
AABCT3720E XM 002
14.02.2002 Manufacturing at No. 39, Dr. Harikrishna Naidu Street, Ambattur, Chennai – 600 053
AABCT3720E XM 001
04.12.2003 Manufacture of excisable goods at Plot No. D-4, Sipcot Industrial Complex, Gummidipoondi, Thiruvallur, Tamil Nadu 601 201
AABCT3720E XM 004
The list of major approvals required for the proposed power project to be set up by the company and the present status of the same is as given below:
Approval/Consent Agency Status No Objection Certificate for usage of land for industrial purpose
Local Authority The company has already applied to Tahsildar for the use of land and the approval is awaited.
Consent to establish from Pollution Control Board
State Government/ TNPCB
The public hearing in this regard has been completed and cleared by MoEF. The final consent from TNPCB is awaited
NOC from Air-port authority for Chimney
Airports Authority
Obtained
Water Clearance Central Ground Water Authority
Obtained
Certification of Boiler Inspector of Boilers
To be obtained after installation of the boiler.
Wheeling Agreement TNEB Will be entered into before commencement of the commercial production.
Approval from Factories, Fire Department, Health Department, DTPC
Inspectorate of Factories, Fire Department, Health Department, DTPC
Applications submitted to respective authorities approval awaited
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MATERIAL DEVELOPMENTS AFTER THE DATE OF THE LAST BALANCE SHEET There are no material developments after the date of the latest balance sheet that is likely to materially affect the performance and the prospects of the Company. The Company has not discontinued any of its existing business nor commenced any new business during past year. The company has floated a new 100% subsidiary Color Peppers Media Pvt. Ltd in December 09, 2011. The details of the same are given on page 61 of the Letter of Offer. ADVERSE EVENTS There are no adverse events affecting the operations of the Company occurring within one year prior to the date of filing of the Letter of Offer with the Stock Exchange.
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SECTION VI - REGULATORY AND STATUTORY DISCLOSURES
AUTHORITY FOR THE PRESENT ISSUE
The Board of Directors at their meeting held on August 18, 2009 decided to make the rights issue of equity shares to the existing equity share holders of the company. The resolution in respect of the rights issue was approved by the shareholders of the Company in the AGM of the Company held on September 16, 2009. The Board of Directors in their meeting held on July 10, 2010 decided to make the rights issue of ` 4950.00 Lacs to the existing shareholders of the Company. Subsequently the ratio, price and no. of equity shares for the proposed rights issued were decided in the Board Meeting held on February 28, 2011 which is as follows: Issue of 1,00,00,000 Equity Shares of ` 10/- each at a premium of ` 39.50 per equity share (Issue Price of ` 49.50) aggregating to ` 4950.00 lacs on rights basis to the existing Equity Shareholders of the Company in the ratio of Two Equity Shares for every One Equity Share held on March 12, 2011 (Record Date). Accordingly the Draft Letter of Offer was approved by the Board in their meeting held on July 22, 2010. The Letter of Offer has been approved by the Board of Directors in their meeting held on March 14, 2011. PROHIBITION BY SEBI The Company, its Promoters, Directors or any of the Company’s associates or group companies with which the Directors of the Company are associated as Directors or Promoters have not been prohibited from accessing the capital market under any order or direction passed by SEBI. ELIGIBILITY FOR THE ISSUE Tulsyan NEC Limited is an existing listed Company. It is eligible to offer this Rights Issue in terms of Chapter IV of ICDR Regulations 2009. The promoters, their relatives, the Company, Group companies are not detained as willful defaulters by RBI/Government authorities and there are no violations of securities laws committed by them in the past or pending against them. The Company is in compliance as prescribed under Regulation 57(2) (b) of Part E of Schedule VIII of the ICDR Regulations. It satisfies the following conditions a. The 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 letter of offer with the designated stock exchange.
b. The reports, statements and information referred to sub-clause (a) above are available on the website
of Bombay Stock Exchange Limited (BSE) one of the recognized stock exchange with nationwide trading terminals.
c. The Company has investor grievance – handling mechanism which includes meeting of the Shareholder’s or Investor’s Grievance Committee at frequent intervals, appropriate delegation of
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power by the board of directors of the Company as regards share transfer and have clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances. The Company has also complied with the following provisions:
a. Provisions of the Listing Agreement with respect to reporting and compliance under Clauses 35, 40A, 41 and 49,
b. Provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, with
respect to reporting in terms of Regulation 8 (3) pertaining to disclosure of pledged shares c. Provisions of SEBI (Prohibition of Insider Trading) Regulations, 1992, with respect to reporting in
terms of Regulation 13.
DISCLAIMER CLAUSE AS REQUIRED, A COPY OF THE LETTER OF OFFER HAS BEEN SUBMITTED TO THE SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI). “IT IS TO BE DISTINCTLY UNDERSTOOD THAT SUBMISSION OF 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 OFFER DOCUMENT. LEAD MANAGER, KEYNOTE CORPORATE SERVICES LIMITED AND MPA FINANCIAL SERVICES LIMITED HAVE CERTIFIED THAT THE DISCLOSURES MADE IN THE LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ISSUER COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE LETTER OF OFFER, LEAD MANAGER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE, THE LEAD MANAGER KEYNOTE CORPORATE SERVICES LIMITED AND MPA FINANCIAL SERVICES LIMITED HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED JULY 31, 2010 WHICH READS AS FOLLOWS :
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO
LITIGATIONS LIKE COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS ETC. AND OTHER MATERIAL IN CONNECTION WITH THE FINALISATION OF THE 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, INDEPENDENT VERIFICATION OF THE STATEMENTS CONCERNING THE OBJECTS OF THE ISSUE, PRICE JUSTIFICATION AND THE CONTENTS OF THE DOCUMENTS OTHER PAPERS FURNISHED BY THE COMPANY, WE CONFIRM THAT:
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a) THE 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 TO THE SAID ISSUE AS ALSO THE 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 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 SEBI (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
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 – NOT APPLICABLE AS THE ISSUE IS NOT UNDERWRITTEN.
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 LETTER OF OFFER WITH THE BOARD TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE LETTER OF OFFER. – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF
INDIA (ISSUES 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 LETTER OF OFFER – NOT APPLICABLE AS THE PRESENT ISSUE IS A RIGHTS ISSUE.
7. WE UNDERTAKE THAT SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C ) AND
(D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SEBI (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 ISSUER ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE. - NOT APPLICABLE AS THE PRESENT ISSUE IS RIGHTS ISSUE.
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8. WE CERTIFY THAT THE PROPOSED ACTIVITIES OF THE ISSUER 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 ISSUER AND THAT THE ACTIVITIES WHICH HAVE BEEN CARRIED OUT UNTIL NOW ARE VALID IN TERMS OF THE OBJECT CLAUSE OF ITS MEMORANDUM OF ASSOCIATION.
9. WE CONFIRM THAT NECESSARY ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT
THE MONIES RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SUB SECTION (3) OF SECTION 73 OF THE COMPANIES ACT, 1956 AND THAT SUCH MONIES SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FORM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURHTER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION.
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE 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 APPLICABLE DISCLOSURES MANDATED IN SECURITIES AND
EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN THE 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 LETTER
OF OFFER:
a) AN UNDERTAKING FROM THE ISSUER THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY AND
b) AN UNDERTAKING FROM THE ISSUER 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 THE
ADVERTISMENT IN TERMS OF 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 ISSUER, SITUATION AT WHICH THE PROPOSED BUISNESS STANDS, THE RISK FACTORS, PROMOTERS’ EXPERIENCE, ETC.
15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATIONWISE COMPLIANCE WITH THE
APPLICABLE PROVISIONS OF 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 LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.
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THE FILING OF THE OFFER DOCUMENT DOES NOT, HOWEVER, ABSOLVE THE ISSUER FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE COMPANIES ACT, 1956 OR FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY OR OTHER CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE PROPOSED ISSUE. SEBI FURTHER RESERVES THE RIGHT TO TAKE UP, AT ANY POINT OF TIME, WITH THE LEAD MANAGER ANY IRRREGULARITIES OR LAPSES IN OFFER DOCUMENT”. CAUTION STATEMENT / DISCLAIMER CLAUSE OF THE ISSUER AND THE LEAD MANAGER The Issuer Company and the Lead Manager accept no responsibility for statements made otherwise than in this Offer Document or in the advertisement or in any other material issued by or at the instance of the Company and the Lead Manager and any one placing reliance on any other source of information would be doing so at his/her/their own risks. DISCLAIMER IN RESPECT OF JURISDICTION This offer is being made in India to persons resident in India (including Indian nationals resident in India who are majors, Hindu Undivided Families, companies, corporate bodies and societies registered under the applicable laws in India and authorized to invest in shares, Indian mutual funds registered with SEBI, Indian financial institutions, commercial banks, regional rural banks, co-operative banks (subject to RBI permission), Trusts registered under the Societies Registration Act, 1860, or any other Trust law and who are authorized under their constitution to hold and invest in shares), Foreign Collaborators and to NRIs, OCBs and FIIs as defined under the Indian laws. This Offer Document does not, however, constitute an offer to sell or an invitation to subscribe to securities issued hereby in any jurisdiction other than India. Any person into whose possession this Offer Document comes is required to inform himself about and to observe any such restrictions. Any dispute arising out of this Offer will be subject to the jurisdiction of appropriate court(s) in Chennai, State of Tamil Nadu, India only. No action has been or will be taken to permit a public offering in any jurisdiction where action would be required for that purpose, except that this Offer Document has been submitted to the SEBI. Accordingly, the equity shares represented thereby may not be offered or sold, directly or indirectly, and this Offer Document may not be distributed, in any jurisdiction, except in accordance with the legal requirements applicable in such jurisdiction. Neither the delivery of Offer Document nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Tulsyan NEC Limited since the date hereof or that the information contained herein is correct as of any time subsequent to this date. DISCLAIMER CLAUSE OF STOCK EXCHANGES Disclaimer Clause of Bombay Stock Exchange Limited (BSE): “Bombay Stock Exchange Limited (“the Exchange”) has given vide its letter no. DCS/PREF/JA/IP-RT/514/10-11 dated September 02, 2010 permission to the Company to use the Exchange’s name in this Letter of Offer as one of the stock exchanges on which this Company’s securities are proposed to be listed. The Exchange has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Company. The Exchange does not in any manner: i. Warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of
Offer; or ii. Warrant that this Company’s securities will be listed or will continue to be listed on the Exchange; or iii. Take any responsibility for the financial or other soundness of this Company, its promoters, its
management or any scheme or project of this Company;
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and it should not for any reason be deemed or construed that this Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of this Company may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the Exchange whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/acquisition whether by reason of anything stated or omitted to be stated herein or for any other reason whatsoever”. Disclaimer Clause of the Madras Stock Exchange Limited (MSE): “Madras Stock Exchange Limited (MSE), has, vide their letter dated August 23, 2010 given permission to the Issuer to use the name of the Exchange in this Letter of Offer as one of the Stock Exchanges on which this Issuer’s securities are proposed to be listed. MSE has scrutinized this Letter of Offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the Issuer. MSE does not in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer; or warrant that this Issuer’s securities will be listed or will continue to be listed on the Exchange; or take any responsibility for the financial or other soundness of this Issuer, its Promoters, its Management or any scheme or project of this Issuer; and it should not for any reason be deemed or construed that this Letter of Offer has been cleared or approved by MSE. Every person who desires to apply for or otherwise acquires any securities of this Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against MSE, 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 in the Letter of Offer or any other reason whatsoever.” Disclaimer Clause of the Calcutta Stock Exchange of India Ltd. (CSE): “The Calcutta Stock Exchange Ltd. (“the Exchange”), has vide its letter dated September 13, 2010 given its permission to the company to use the name of the Exchange in the Letter of Offer as a Non –Designated Stock Exchanges on which the company’s securities are proposed to be listed. The Exchange has scrutinized this offer document for its limited internal purpose of deciding on the matter of granting the aforesaid permission to the company. This Exchange does not in any manner: 1) warrant, certify or endorse the correctness or completeness of any of the contents of this Letter of Offer, or 2) warrant that the company’s securities will be listed or will continue to be listed on this Exchange, or 3) take any responsibility for the financial or other soundness of this Company, its promoters, its management or any scheme or project of this Company; and It should not for any reason be deemed or construed that this Letter of Offer has been cleared or approved by the Exchange. Every person who desires to apply for or otherwise acquires any securities of the 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 in the Letter of Offer or for any other reason whatsoever.” FILING A copy of this Letter of Offer has been filed with SEBI at Primary Market and Issue Management Division, D' Monte Building, 3rd Floor, 32 D' Monte Colony,TTK Road, Alwarpet, Chennai : 600018., Bombay Stock Exchange Limited (BSE, the Designated Stock Exchange) at Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai., with Madras Stock Exchange Limited (MSE) at Exchange Building, 30, Second Line Beach, Chennai-600 001 and with Calcutta Stock Exchange Limited (CSE) 7, Lyons Range, Calcutta-700 001.
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EXPENSES OF THE ISSUE
The total expenses of the issue are estimated to be ` 55.00 lacs. All expenses with respect to the issue would be met out of the proceeds of the issue. The split of issue expenses is as under: -
(` in Lacs)
Activity Estimated Expense
Fees to intermediaries 33.50 Advertising and marketing expenses 7.00 Printing and Stationary & Distribution 8.00 Others 6.50 Total estimated Issue expenses 55.00
INVESTOR GRIEVANCE REDRESSAL SYSTEM The investor grievances against the Company are handled by the Registrars and Transfer Agent in consultation with the secretarial department of the Company. To handle the grievances received, the Company has appointed Mr. K. Janakiraman, as the Compliance Officer. He will supervise redressal of complaints received from the investors at the office of the Company as well as the Registrars to the Rights Issue and ensure timely settlement.
All grievances related to the offer may be addressed to the Registrar to the Rights Issue quoting the application No. (Including prefix), Number of equity shares applied for, amount paid on application, date, Bank and branch/ Collection center where application was submitted.
The normal time taken by the Company for redressal of investor grievance is given below:-
Sr. No Type of Request Normal Time Taken (No of Days)
1 Issue of Duplicate Share Certificate 7 Days 2 Transfer of shares 7 Days 3 Transmission of shares 7 Days 4 Demat/remat of shares 7 Days 5 Non receipt of dividend 7 Days 6 Non receipt of Annual Report 7 Days 7 Change of residential address/ Bank mandate 7 Days 8 Consolidation/split of share certificates/ Remat 7 Days
As on date there are no pending investor complaints against the Company.
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SECTION VII - OFFERING INFORMATION
A.TERMS OF THE ISSUE
The Equity Shares now being offered are subject to the provisions of the Act and the terms and conditions of this Letter of Offer, the CAF, the Memorandum and Articles of Association of the Company, the approvals from the Government of India, FIPB and RBI, if applicable, the provisions of the Act, guidelines issued by SEBI Regulations, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India and/or other statutory authorities and bodies from time to time, Listing Agreements entered into by the Company with Stock Exchanges, terms and conditions as stipulated in the allotment advice or letter of allotment or Security Certificate and rules as may be applicable and introduced from time to time, the FEMA and the Letters of Allotment/Equity Shares to be issued. Over and above such terms and conditions, the Equity Shares shall also be subject to applicable laws, guidelines, notifications and regulations relating to issue of capital and listing of securities issued from time to time by SEBI, the Government of India, RBI and or other authorities. Ranking of equity shares The new Equity Shares proposed to be issued shall rank in all respects pari-passu with existing fully paid up Equity Shares. Mode of payment of dividend The dividend is paid to all the eligible shareholders as per the provisions of Companies Act. Face value & issue price The Face Value of Equity Shares of the Company is ` 10/-. The Equity Shares of ` 10/- each are being issued at a premium of ` 39.50 /- each i.e.; at a price of ` 49.50/- in the present rights issue. Rights of equity shareholders The Shareholders are entitled to receive dividend, as and when declared and bonus and rights shares, as and when issued. Further, the rights of the above and other holders of shares are subject to the provisions of the Companies Act, 1956, the Memorandum and the Articles of Association of the Company, the terms of this Letter of Offer and other laws as applicable from time to time. Market lot The market lot for the Equity Shares held in the demat mode is one share. In case of physical certificate, the Company would issue one certificate for the Equity Shares allotted to one person (“Consolidated Certificate”). In respect of consolidated certificate, the Company will, only upon request from the equity shareholder, split & return such consolidated certificate into smaller denomination within 7 days time in conformity with the clause 3 of the Listing Agreement. No fee would be charged by the Company for splitting the consolidated certificate. Nomination In terms of Section 109A of the Act, nomination facility is available in case of Equity Shares. The applicant can nominate any person by filling the relevant details in the CAF in the space provided for this purpose.
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The sole Equity Shareholder or first Equity Shareholder, along with other joint Equity Shareholders (being individual(s) may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the Equity Shares. Person(s), being a nominee, becoming entitled to the Equity Shares by reason of the death of the original Equity Shareholder(s), shall be entitled to the same rights to which he would be entitled if he/she were the registered holder of the Equity Shares. Where the nominee is a minor, the Equity Shareholder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the Equity Share(s), in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale/disposal of the Equity Share by the person nominating. A buyer will be entitled to make a fresh nomination in the manner prescribed. When two or more persons hold the Equity Share(s), the nominee shall become entitled to receive the shares only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request at the office of the Company located at Chennai or such other place at such addresses as may be notified by the Company. The applicant can make the nomination by filling in the relevant portion in the CAF. Only one nomination would be applicable for one folio. Hence, in case the shareholder(s) has (have) already registered the nomination with the Company, no further nomination need to be made for Equity Shares to be allotted in this Issue under the same folio. In case the allotment of Equity Shares is in dematerialized form, there is no need to make a separate nomination for the Equity Shares to be allotted in this Issue. Nominations registered with respective Depository Participant of the applicant would prevail. If the applicant requires to change the nomination, they are requested to inform their respective Depository Participant. Minimum subscription i) If the Company does not receive the minimum subscription of 90% of the issue, the entire
subscription shall be refunded to the applicants within fifteen days from the date of closure of the Issue.
ii) If there is a delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fifteen days after closure of the issue), the Company shall pay interest for the delayed period at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
Disposal of odd lots The Company has not made any arrangements for the disposal of odd lot Equity Shares arising out of this Issue. The Company will issue certificates of denomination equal to the number of Equity Shares being allotted to the Equity Shareholder.
Restrictions on transfer and transmission of shares and on their consolidation/ splitting
There are no restrictions on transfer and transmission and on their consolidation/splitting of shares issued pursuant to this issue.
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B. ISSUE PROCEDURE
BASIS OF THE OFFER
The Equity Shares are being offered for subscription for cash to those existing Equity Shareholders whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in the electronic form and on the Register of Members of the Company in respect of Equity Shares held in the physical form at the close of business hours on the Record Date. The Company has in consultation with the Designated Stock Exchange fixed the Record Date for determining the shareholders who are entitled to receive this offer for Equity Shares on a rights basis. The Equity Shares are being offered for subscription in the ratio of Two Equity Shares for every One Equity Share held by the Equity Shareholders. The shareholders whose names appear as beneficial owners as per the list furnished by the depositories in respect of the Equity Shares held in electronic form and on the register of members of the Company in respect of the shares held in physical form on March 12, 2011 (Record Date) at the close of business hours shall be entitled to the Equity Shares on the Rights basis in the ratio of Two equity share for every One Share (i.e. 2:1) held by them. OPTION TO SUBSCRIBE Allotment of securities to applicants of the Equity Shares of the Company issued through this Rights Issue shall be made in dematerialized (electronic) form at the option of the applicant. The Company has signed a tripartite agreement with National Securities Depository Limited (NSDL) and Cameo Corporate Services Limited and with Central Depository Services (India) Limited (CDSL) and Cameo Corporate Services Limited which enables the Investors to hold and trade in securities in a dematerialized form, instead of holding the securities in the form of physical certificates. The ISIN number assigned to the Company is NE463D01016. RIGHTS ENTITLEMENT As your name appears as beneficial owner in respect of the shares held in the electronic form or appears in the register of members as an equity shareholder of the Company on the Record Date, you are entitled to this Rights Offer. The number of Equity Shares to which you are entitled is shown in Block I of Part A of the enclosed CAF and as shown in part A of the enclosed CAF. PAYMENT TERMS The payment terms available to the investors are as follows:
Payment Terms* Amount payable per equity share (`)
Face value (`) Premium( `) Total (`) On Application 3.00 12.00 15.00 On Allotment 3.00 12.00 15.00 First and Final Call 4.00 15.50 19.50 Total 10.00 39.50 49.50
* The Investors shall be required to make the second payment towards the Allotment and the balance payment towards the First and Final Call by the due date which shall be separately notified by the Company.
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NOTE: 1. All categories of investors are eligible for this payment method. 2. While making an application, the investor shall make a payment of `15/- per rights equity share. 3. Out of the amount of ` 15/- paid on application, ` 3/- would be adjusted towards the face value of
the rights equity shares and `12/- shall be adjusted towards the share premium of the rights equity shares.
4. The company reserves the right to adjust the amount received over and above the application money towards the allotment money and the balance, if any, will be refunded to the applicant.
5. Allotment and first and final call notice shall be sent by the Company for making the payment towards the balance amount due.
6. Rights equity shares in respect of which the balance amount payable remains unpaid may be forfeited, at any time after the due date for payment of the balance amount due.
Procedure for allotment money & first call and final call
The listing and trading of the partly paid-up rights equity shares shall be based on the current regulatory framework applicable thereto. Accordingly, any change in the regulatory regime would accordingly affect the schedule.
Allotment Money The Company would convene a meeting of the Board to pass the required resolution for making the Allotment Money and suitable intimation would be given by the Company to the Stock Exchanges. Further, advertisements for the same will be published in one (1) English national daily with wide circulation, one (1) Hindi national daily with wide circulation and one (1) Tamil daily newspaper. The Allotment Money shall be deemed to have been made at the time when the resolution authorizing such Allotment Money was passed at the meeting of the Board. The Allotment Money may be revoked or postponed at the discretion of the Board. The Board may, from time to time at its discretion, extend the time fixed for the payment of the Allotment Money. First and Final Call The Company would convene a meeting of the Board to pass the required resolution for making the First and Final Call and suitable intimation would be given by the Company to the Stock Exchanges. Further, advertisements for the same will be published in one (1) English national daily with wide circulation, one (1) Hindi national daily with wide circulation and one (1) Tamil daily newspaper. The First and Final Call shall be deemed to have been made at the time when the resolution authorizing such First and Final Call was passed at the meeting of the Board. The First and Final Call may be revoked or postponed at the discretion of the Board. The Board may, from time to time at its discretion, extend the time fixed for the payment of the First and Final Call. Record Date for Allotment Money and First& Final Call and suspension of trading The Company would fix a record date giving at least fifteen (15) days prior notice to the Stock exchanges for the purpose of determining the list of Allottees to whom the notice for allotment and call money would be sent. Once the record date has been fixed, trading in the partly paid Rights Equity Shares for which Allotment and First& Final calls have been made would be suspended for the period as may be applicable under the rules and regulations prior to such record date that has been fixed for the Allotment Money and First & Final Call.
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Separate ISIN on Application, Allotment and First & Final Call In addition to the present ISIN for the existing fully paid up Equity Shares, the Company would obtain separate ISIN Nos. for its partly paid-up Rights Equity Shares. The partly paid-up Equity Shares offered under the Issue will be traded under a separate ISIN from the date of listing of these Equity Shares. The ISIN representing partly paid up Equity Shares will be terminated on payment of the Allotment Money and first & final call. Such shares on which first and final call has been duly paid would be converted into fully paid up Equity Shares and merged with the existing ISIN for fully paid up Equity Shares. Listing of partly paid-up Rights Equity Shares The partly paid-up Rights Equity Shares would be listed on the BSE (the Designated Stock Exchange), MSE and CSE. For an applicable period, under the rules and regulations, prior to the record date for the Allotment Money as well as First & Final Call, the trading of the then existing partly paid-up Rights Equity Shares would be terminated upon payment of Allotment Money, the partly paid shares would be upgraded to the investors demat account to the next category of partly paid shares. The process of corporate action for credit of fully paid shares to the demat account of the shareholder may take some time from the date of last date of payment of the amount payable on Call. Payment period for manner of Calls As per Regulation 13 (2) of Table A, Schedule I of the Companies Act, 1956, AOA, shareholders would be given not less than fourteen (14) days time for the payment of the allotment and call money. The Company has stipulated a period of 15 days time to the shareholders for making payment towards the allotment and call money. If any members fails to pay allotment money or call due from him/her on the day appointed for payment thereof, or any such extension thereof as aforesaid, he/she shall be liable to pay interest on the same from the day appointed for payment thereof to the day of actual payment at such rate as shall from time to time be fixed by the Board, but nothing in this Article shall render it obligatory for the Board to demand or recover any interest from any such member. Any sums, which by the terms of issue of a share becomes payable on allotment or any fixed date, whether on account of nominal value of the share or by way of premium shall for the purpose of these Article be deemed to be a call duly made and payable on the date on which by the terms of issue the same becomes payable and in case of non-payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise, shall apply mutatis mutandis as if such sum had become payable by virtue of Allotment Money or call duly made and notified. Procedure for allotment money & first call and final call
The company would convene a meeting of the Board of Directors to pass the required resolutions for making the allotment money and first & final call and suitable intimation would be given by the company to the stock exchanges. Further, advertisements for the same will be published in one English national daily and one Hindi national daily, both with wide circulation. The allotment /first call and final call shall be deemed to have been made at the time when the resolution authorizing the call is passed at the meeting of the board. The allotment /first and final call may be revoked or postponed at the discretion of the board. The board may, from time to time at its discretion, extend the time fixed for the payment of the call. Equity shares in respect of which the balance amount payable remains unpaid may be forfeited by the company, at any time after the due date for payment of the balance amount due after giving a prior notice of at least fifteen days. If the investors fail to pay the allotment/ call money within the period fixed for the payment for respective call, the application and/or call money already paid may be forfeited.
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FRACTIONAL ENTITLEMENT Fractional entitlement if any will be rounded off to the next higher integer and the share required for the same to be adjusted from one of the promoter’s entitlement. JOINT-HOLDERS Where two or more persons are registered as the holders of any Equity Shares, they shall be deemed (so far as the Company is concerned) to hold the same as joint-holders with benefits of survivorship subject to provisions contained in the Articles. OFFER TO NON-RESIDENT EQUITY SHAREHOLDERS/ APPLICANTS Applications received from NRIs and other NR shareholders for allotment of 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 Equity Shares, issue of Letter of Allotment / share certificates, payment of interest, dividends, etc. General permission has been granted to any person resident outside India to apply shares offered on rights basis by an Indian Company in terms of FEMA and the rules and regulations there under. Vide notification dated June 18, 2003, bearing number FEMA 94/2003, RBI has granted general permission to Indian companies to issue rights/bonus shares to existing non-resident shareholders. The existing non-resident shareholders may apply for issue of additional shares and the Company may allot the same subject to the condition that the overall issue of shares to non-residents in the total paid up capital does not exceed the sectoral cap. In other words, non-residents may subscribe for additional shares over and above shares offered on rights basis by the Company and renounce the shares offered in full or part thereof in favour of a person named by them. Residents may subscribe for additional shares over and above the shares offered on rights basis by the Company and also renounce the shares offered either in full or part thereof in favour of a person named by them. The Equity Shares issued under the Rights Issue and purchased by NR shall be subject to the same conditions including restrictions in regard to the repatriability as are applicable to the previously held Equity Shares against which Equity Shares under the Rights Issue are issued. However, as per the provisions of AP DIR circular No. 14 dated September 16, 2003 (issued by the RBI), such shareholders who have been allotted the Equity Shares as OCBs would not be permitted to participate in the Rights Issue. Accordingly, shareholders/ applicants who are OCBs and wishing to participate in the Rights Issue would be required to submit approvals in relation thereto from the FIPB and the RBI. The Board of Directors may at its absolute discretion, agree to such terms and conditions as may be stipulated by RBI while approving the allotment of Equity Shares, payment of dividend etc. to the Equity Shareholders who are NR. NOTICES All notices to the Equity Shareholder(s) required to be given by the Company shall be published in one English national daily with wide circulation, one Hindi national daily with wide circulation and in one Tamil daily newspaper and/or, will be sent by ordinary post to the registered holders of the Equity Share(s) from time to time.
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Listing and trading of the Rights Equity Shares proposed to be issued The Company's existing Equity Shares are currently listed on the BSE (the Designated Stock Exchange), MSE & CSE and permitted to trade on NSE under the ISIN NE463D01016. The fully paid up Rights Equity Shares proposed to be issued shall be listed on the BSE, MSE & CSE and admitted for trading on the BSE, MSE, CSE and NSE under the existing ISIN for fully paid up Equity Shares of the Company. In addition to the present ISIN for the existing fully paid up Equity Shares, the Company would obtain separate ISIN Nos. for its partly paid up equity shares. The partly paid up equity shares offered under the Issue will be traded under a separate ISIN from the date of listing of these equity shares and for the period as may be applicable under the rules and regulations prior to the record date for the Allotement Money and First & Final Call. The ISIN representing partly paid up Equity Shares will be terminated after the Record Date for the First and Final call. Such shares on which final call has been duly paid would be converted into fully paid-up equity shares and merged with the existing ISIN for fully paid up equity shares. The rights equity shares in respect of which the balance amount payable remains unpaid may be forfeited, at any time after the due date for payment of the balance amount due. The rights equity shares allotted pursuant to this Issue will be listed as soon as practicable but in no case later than 7 working days from the date of finalization of basis of allotment. The Company has made an application for "in-principle" approval for listing of the rights equity shares in accordance with clause 24(a) of the Listing Agreement to the BSE, MSE and CSE and has received the same vide their letters no. DCS/PREF/JA/IP-RT/514/10-11, MSE/LD/PSK/738/365/10 and CSE/LD/946/2010 respectively dated September 02, 2010, August 23, 2010 and September 13, 2010 respectively. The distribution of the 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. The Company is making this Issue of rights equity shares on a rights basis to the eligible equity shareholders of the Company and will dispatch the Letter of Offer and the CAF through the Registered post / Speed post to all the existing equity shareholders who have provided an Indian address atleast three days before the date of opening of the issue. ISSUE OF DUPLICATE EQUITY SHARE CERTIFICATE If any Equity Share Certificate(s) is/are mutilated or defaced or the pages for recording transfers of Equity Shares are fully utilized, the Company against the surrender of such Certificate(s) may replace the same, provided that the same will be replaced as aforesaid only if the Certificate numbers and the Distinctive numbers are legible. If any Equity Share Certificate(s) is/are destroyed, stolen, lost or misplaced, then upon production of proof thereof to the satisfaction of the Company and upon furnishing such indemnity/ surety and/or such other documents as the Company may deem adequate, duplicate Equity Share Certificate(s) shall be issued. OPTIONS AVAILABLE TO THE EQUITY SHAREHOLDERS The Equity Shareholders will be having the following five options: Apply for his entitlement in part Apply for his entitlement in part and renounce the other part
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Renounce his entire entitlement Apply for his entitlement in full Apply for his entitlement in full and apply for additional Equity Shares
IMPERSONATION Attention of the applicants is specifically drawn to the provisions of Sub-Section (1) of Section 68A of the Companies Act, 1956 which is reproduced below: "Any person who-
(c) makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or
(d) 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."
HOW TO APPLY For Resident Indian Shareholders Application should be made only on the enclosed CAF provided by the Company. The enclosed CAF should be completed in all respects, as explained in the instructions indicated in the CAF. Applications will not be accepted by the Lead Managers or by the Registrar to the Issue or by the Company at any offices except in the case of postal applications as per instructions given in the Letter of Offer. Payment should be made in cash (not more than ` 20,000/-) or by cheque/bank draft/ 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 centre where the CAF is submitted and which is participating in the clearing at the time of submission of the application. Outstation cheques/money orders/postal orders will not be accepted and CAFs accompanied by such cheques/money orders/postal orders are liable to be rejected. For Non-Resident Shareholders Applications received from the Non-Resident Equity Shareholders for the allotment of Equity Shares shall, inter alia, be subject to the conditions as may be imposed from time to time by the RBI, in the matter of refund of application moneys, allotment of Equity Shares, issue of letters of allotment/certificates/ payment of dividends etc. Letter of Offer and CAF shall be dispatched to non-resident Equity Shareholders in India only. For Mutual Fund Shareholders A separate application can be made in respect of rights entitlement if any for each scheme of an Indian mutual fund registered with the SEBI and such applications shall not be treated as multiple applications. The applications made by asset management companies or custodians of a mutual fund should clearly indicate the name of the concerned scheme for which the application is being made. Investment by FIIs In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:-
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The Issue of Equity Shares under this Issue to a single FII should not exceed 10% of the post-issue paid up capital of the Company. In respect of an FII investing in the Equity Shares on behalf of its sub-accounts the investment on behalf of each sub-account shall not exceed 5% of the total paid up capital of the Company. Investment 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 Investors 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. For applicants residing at places other than designated Bank collecting branches. Applicants residing at places other than the cities where the Bank collection centers have been opened should send their completed CAF by registered post/speed post to the Registrars to the Issue Cameo Corporate Services Limited along with demand drafts, net of demand draft and postal charges, payable at Chennai in favour of “Tulsyan NEC Ltd. - Rights Issue” crossed “A/c Payee only” so that the same are received on or before closure of the Issue i.e. April 13, 2011. The Company will not be liable for any postal delays and applications received through mail after the closure of the Issue are liable to be rejected and returned to the applicants. Applications by mail should not be sent in any other manner except as mentioned below. All application forms duly completed together with cash/cheque/demand draft for the application money must be submitted before the close of the subscription list to the Bankers to the Issue named herein or to any of its branches mentioned on the reverse of the CAF. The CAF along with application money must not be sent to the Company or the Lead Manager to the Issue or the Registrar to the Issue except as mentioned above. The applications are required to strictly adhere to these instructions. Failure to do so could result in the application being liable to be rejected by the Company, the Lead Manager and the Registrar not having any liabilities to such applicants. The CAF consists of four parts: Part A: Form for accepting the Equity Shares offered and for applying for additional Equity Shares Part B: Form for renunciation Part C: Form for application for renouncees Part D: Form for request for split application forms You may exercise any one of the following options with regard to the Equity Shares offered to you, using the enclosed CAF: Sr. No Options available Action Required
1. Accept whole or part of the Equity Shares offered to you 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 Equity Shares.
Fill in and sign Part A including Block III relating to the acceptance of Rights Entitlement and Block IV relating to additional Equity Shares (All joint holders must sign).
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Sr. No Options available Action Required 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 Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All joint Renouncees must sign).
OR On receipt of Split Forms : 4. Accept a part of your Rights Entitlement
and renounce the balance to one or more Renouncee(s). OR Renounce your Rights Entitlement to all the Equity Shares offered to you to more than one Renouncee.
Fill in and sign Part D (all joint holders must sign) requesting for Split Application Forms. Send the CAF to the Registrar to the Issue so as to reach them on or before the last date for receiving requests for Split Application Forms. Splitting will be permitted only once. On receipt of the Split Application Form take action as indicated below. For the Equity Shares you wish to accept, if any, fill in and sign Part A. For the Equity Shares you wish to renounce, fill in and sign Part B indicating the number of Equity Shares renounced and hand it over to the Renouncee. Each of the Renouncees should fill in and sign Part C for the 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.
Note: If application is made jointly with any other person(s) who is/are not already joint holders or change in the sequence of names of joint holders, it will amount to renunciation and the procedure mentioned in (2) above will have to be followed. Acceptance of Offer You may accept the Offer and apply for the 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 collecting banks can send their CAF together with the demand draft, net of demand draft and postal charges, payable at Chennai 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. You may apply for the Equity Shares offered wholly or in part by filling in the enclosed CAF and submitting the same along with the application money to the Bankers to the Issue or its designated branches on or before the closure of the subscription list. The CAF should be complete in all respects, as explained in the INSTRUCTIONS indicated in the CAF. The CAF should not be detached under any circumstances, otherwise the application(s) will be rejected forthwith.
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Application for additional Equity Shares You are also eligible to apply for additional Equity Shares over and above the number of Equity Shares offered to you provided you have applied for all the shares offered to you without renouncing them in full or in part. However, the additional Equity Shares cannot be renounced in full or in part, in favour of any other person(s). If you desire to apply for additional Equity Shares, you may fill in the number of additional Equity Shares in Part A of the CAF. The allotment of additional Equity Shares will be at the sole discretion of the Board on an equitable basis with reference to the number of Equity Shares held by you on the Record Date in consultation with The Designated Stock Exchange. In the case of requests for additional Equity Shares by Non Residents, the allotment will be subject to the approval of Reserve Bank of India. The Board may reject any application for additional Equity Shares without assigning any reasons thereof. The renounces can also make an application for additional shares. Renunciation You may renounce all or any of the Equity Shares; you are entitled to in favour of any individual, limited companies, or statutory corporations / institutions. However renunciation in favour of more than three persons as joint holders, trust or society (unless the same is registered under the Societies Registration Act, 1860 or any other applicable trust laws and is authorized under its constitution to hold shares in a company), OCBs, minors (unless acting through natural or legal guardians), Partnership Firms, or their nominees, or any of them will not be accepted. Any renunciation from Resident(s) to Non- Resident(s) is subject to the renouncer(s)/ renouncee(s) obtaining requisite approval(s) of the Reserve Bank of India (RBI) and the said permission must be attached to the CAF. Procedure for renunciation (i) To Renounce in WHOLE If you wish to renounce this offer in whole, please complete PART 'B' of the CAF enclosed with the Letter of Offer for the number of Equity Shares renounced and deliver the CAF duly signed to the person(s) in whose favour the Equity Shares are so renounced. All joint holders must sign as per specimen signatures recorded with the Company at the place provided for the purpose and in the same order. The person(s), in whose favour the offer has been renounced (renouncees) should complete and sign PART C of the CAF. In case of joint renouncees, all joint renouncees must sign. (ii) To Renounce in PART If you wish to either accept this offer in part or renounce the balance of this offer the CAF must first be split into the requisite number of forms, by applying to the Registrar to the Issue. Please indicate your requirement of split forms 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 or before the last date for receiving requests for split forms i.e. April 02, 2011. If you wish to apply for Equity Shares jointly with any person(s) who is/are not already joint holder(s) with you, then it would amount to renunciation and the procedure of renunciation as mentioned above 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.
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Further, this right of renunciation is subject to the express condition that the Board shall be entitled in its absolute and unqualified discretion to reject any such request for allotment of Equity Shares from renouncee(s) without assigning any reason thereof save where the Equity Shares have been renounced in favour of a person who is already a member of the Company. Please note that:
a) 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.
b) Only the person to whom this Letter of Offer has been addressed and NOT the renouncees shall
be entitled to split forms. Forms once split cannot be resplit. Request for split forms: Request for Split Forms should be addressed to the Registrar to the Issue so as to reach them on or
before the last date for receiving of request for split forms by filling in PART D of the CAF. Requests for Split Forms will be entertained only once. 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. Please note that those who are making the application in the duplicate form should not utilize the original CAF for any purpose including renunciation, even if it is received/ found subsequently. If the applicant violates any of these requirements, he / she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF may make an application to subscribe to the Rights Issue on plain paper, along with a Demand Draft payable at Chennai which should be drawn in favour of “Tulsyan NEC Ltd. - Rights Issue” crossed A/c Payee Only and send the same by registered post directly to the Registrar to the Issue. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date (i.e. April 13, 2011) and should contain the following particulars: Name of Issuer, being Tulsyan NEC Limited. Name and address of the Equity Shareholder including joint holders Registered Folio Number/ DP and Client ID no. Number of shares held as on March 12, 2011 (Record Date). Certificate numbers and distinctive numbers, if held in physical form Number of Rights Equity Shares entitled Number of Rights Equity Shares applied for out of entitlement Number of additional Equity Shares applied for, if any Total number of Equity Shares applied for Total amount paid at the rate of ` 15.00 per Equity Share on application
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Particulars of cheque/draft Savings/Current Account Number and name and address of the Bank where the Equity Shareholder
will be depositing the refund order Each of the applicants should mention his/her Permanent Account Number (PAN) allotted under the
IT Act. In case of Non-Resident shareholders, NRE/FCNR/NRO Account No., name and address of the
bank and branch. Signature of Equity Shareholders to appear in the same sequence and order as they appear in the
records of the Company Payment in such cases, should be through a demand draft, net of demand draft and postal charges,
payable at Chennai be drawn in favour of “Tulsyan NEC Ltd.- Rights Issue” crossed “A/c Payee only”.
Please note that those who are making the application on plain paper shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications as well as forfeiture of amounts remitted along with the applications. The Company shall refund such application amount to the applicant without any interest thereon. Quoting of PAN/GIR no. in the application forms Pursuant to the circular MRD/DoP/Circ-05/2007 dated April 27, 2007, SEBI has mandated Permanent Account Number (PAN) to be the sole identification number for all participants transacting in the securities market, irrespective of the amount of the transaction with effect from July 2, 2007. Each of the applicants should mention his/her PAN allotted under the IT Act. Applications without this information will be considered incomplete and are liable to be rejected. It is to be specifically noted that applicants should not submit the GIR number instead of the PAN, as the Bid is liable to be rejected on this ground. Last date for submission of CAF The last date for receipt of CAF by the Bankers to the Issue together with the amount payable on application is April 13, 2011. If the relevant CAF together with amount payable there under is not received by the Bankers/Registrar to the Issue on or before the close of banking hours on the aforesaid last date the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose of the Equity Shares hereby offered as provided under "Basis of Allotment". Incomplete application CAFs which are not complete or are not accompanied with the application money amount payable are liable to be rejected. TERMS OF PAYMENT On application ` 15.00/- per share On allotment ` 15.00/- per share On First & Final Call ` 19.50/- per share
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MODE OF PAYMENT For Resident Shareholders/Applicants Payment(s) must be made by cheque/demand draft and 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 centre where the CAF is submitted. A separate cheque/draft must accompany each CAF. Only one mode of payment should be used. Money orders, postal orders and outstation cheques will not be accepted and applications accompanied by any such instruments will be rejected. Shareholders/Applicants residing at places other than those mentioned in the CAF and applicants who wish to send their applications but not having collection centers should send their application by Registered Post, ONLY to the Registrar to the Issue enclosing a demand draft drawn on a clearing Bank and payable at Chennai ONLY net of bank charges and postal charges, before the closure of the issue. Such cheque/drafts should be payable to "Tulsyan NEC Ltd. - RIGHTS ISSUE". All cheques/ drafts must be crossed 'A/c Payee only’. No receipt will be issued for the application money received. However, the Collection Centre receiving the application will acknowledge receipt of the application by stamping and returning the acknowledgement slip at the bottom of each CAF. The Company is not responsible for any postal delay/ loss in transit on this account. For Non-Resident Shareholders/Applicants As regards the application by non-resident equity shareholders, the following further conditions shall apply: Application with repatriation benefits Payment by NRIs/ FIIs/ foreign investors must be made by demand draft/cheque payable at Chennai or funds remitted from abroad in any of the following ways: By Indian Rupee drafts purchased from abroad and payable at Chennai or funds remitted from
abroad (submitted along with Foreign Inward Remittance Certificate); or By cheque / draft on a Non-Resident External Account (NRE) or FCNR Account maintained in
Chennai; or By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and
payable in Chennai; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account. All cheques/drafts submitted by non-residents applying on repatriable basis should be drawn in favour of "Tulsyan NEC Ltd. - RIGHTS ISSUE - NR" payable at Chennai and crossed ‘A/c Payee only’ for the amount payable. 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 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
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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 US Dollars at the rate of exchange prevailing at such time subject to the permission of RBI. The Company will not be liable for any loss on account of exchange rate fluctuation for converting the Rupee amount into US Dollars or for collection charges charged by the applicant’s Bankers. Application without repatriation benefits As far as non-residents holding shares on non-repatriation basis is concerned, in addition to the modes specified above, payment may also be made by way of cheque drawn on Non-Resident (Ordinary) Account maintained in Chennai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Chennai. In such cases, the allotment of Equity Shares will be on non-repatriation basis. All cheques/drafts submitted by non-residents applying on non-repatriation basis should be drawn in favour of "Tulsyan NEC Ltd. - RIGHTS ISSUE” payable at Chennai and must be crossed ‘A/c Payee only’ for the amount payable. The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF. 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 demat account shall be opened for holders who have had a change in status from resident Indian to NRI. “Non-resident Indian Applicants may please note that only such application as are accompanied by payment in free foreign exchange shall be considered for allotment. The non-resident Indians who intend to make payment through Non- Resident Ordinary (NRO) accounts shall mention the details of the Bank Account from their payment is being made.” Note: In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the
investment in Equity Shares can be remitted outside India, subject to tax, as applicable according to Income Tax Act, 1961.
In case Equity Shares are allotted on non-repatriation basis, the dividend and sale proceeds of the Equity Shares cannot be remitted outside India.
The CAF duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAF before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
In case of an application received from non-residents, allotment, refunds and other distribution, if any, will be made in accordance with the guidelines/ rules prescribed by RBI as applicable at the time of making such allotment, remittance and subject to necessary approvals.
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PROCEDURE FOR APPLICATION THROUGH THE APPLICATIONS SUPPORTED BY BLOCKED AMOUNT (“ASBA”) PROCESS This section is for the information of Equity Shareholders proposing to subscribe to the Issue through the ASBA Process. The Company and the Lead Manager are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Letter of Offer. Shareholders who are eligible to apply under the ASBA Process are advised to make their independent investigations and ensure that the number of Equity Shares applied for by such Shareholders do not exceed the applicable limits under laws or regulations. Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on application as stated in the CAF will be blocked by the SCSB. The list of banks who have been notified by SEBI to act as SCSB for the ASBA Process are provided on www.sebi.gov.in. For details on designated branches of SCSB collecting the CAF, please refer the above mentioned SEBI website. ASBA Process Equity Shareholders who are eligible to apply under the ASBA Process The option of applying for Rights Issue of equity shares in the Issue through the ASBA Process is available to all equity shareholders of the Company on the Record Date. Composite Application Form The Registrar will dispatch the CAF to all Equity Shareholders as per their entitlement on the Record Date for the Issue. Equity Shareholders desiring to use the ASBA Process are required to submit their applications by selecting the ASBA Option in the CAF. 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. The Equity Shareholder shall submit the CAF 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. Equity Shareholders applying under the ASBA Process are also advised to ensure that the CAF is correctly filled up, stating therein the bank account number maintained with the SCSB in which an amount equivalent to the amount payable on application as stated in the CAF will be blocked by the. Acceptance of the Issue You may accept the Issue and apply for the Equity Shares offered, either in full or in part, by filling the respective CAFs sent by the Registrar, selecting the ASBA process option in the CAF and submit the same to the SCSB before the close of the banking hours on or before the Issue Closing Date or such extended time as may be specified by the Board of Directors of the Company in this regard. Mode of payment The Shareholder applying under the ASBA Process agrees to block the entire amount payable on application (including for additional Equity Shares, if any) 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.
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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 Registrars. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Shareholders applying under the ASBA Process from bank account with the SCSB mentioned by the Shareholder in the CAF. This amount will be transferred in terms of the SEBI Guidelines, into the separate bank account maintained by the Company as per the provisions of section 73(3) of the Companies Act, 1956. The balance amount remaining after the finalization of the basis of allotment shall be unblocked by the SCSBs on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB. The 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 Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. Subsequent to the acceptance of the application by the SCSB, the Company would have a right to reject the application only on technical grounds. Options available to the Shareholder applying under the ASBA Process The summary of options available to the Shareholders is presented below. You may exercise any of the following options with regard to the Equity Shares offered, using the respective CAFs received from Registrar:
Option Available
Action Required
1. Accept whole or part of your entitlement without renouncing the balance.
Fill in and sign Part A of the CAF (All joint holders must sign)
2. Accept your entitlement in full and apply for additional Equity Shares
Fill in and sign Part A of the CAF including Block III relating to the acceptance of entitlement and Block IV relating to additional Equity Shares (All joint holders must sign)
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 Equity Shares renounced and hand it over to the Renouncee. The Renouncee must fill in and sign Part C (All joint Renouncees must sign).
The 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 Shareholder has selected to apply through the ASBA process option. Additional Equity Shares You are eligible to apply for additional Equity Shares over and above the number of Equity Shares that you are entitled too, provided that (i) you have applied for all the Equity Shares offered without renouncing them in whole or in part in favour of any other person(s). Applications for additional Equity Shares shall be considered and allotment shall be made at the sole discretion of the Board, in consultation
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with the Designated Stock Exchange and in the manner prescribed under the section entitled ‘Basis of Allotment’ on page no. 183 of this Letter of Offer. If you desire to apply for additional Equity Shares, please indicate your requirement in the place provided for additional Equity Shares in Part A of the CAF. Application on Plain Paper An Equity Shareholder who has neither received the original CAF nor is in a position to obtain a duplicate CAF and wanting to apply under ASBA process may make an application to subscribe for the Issue on plain paper. 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 be submitted at a designated branch of a SCSB on or before the Issue Closing Date and should contain the following particulars:
Name of the Issuer, being Tulsyan NEC 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 Equity Shares entitled; Number of Equity Shares applied for; Number of additional Equity Shares applied for, if any; Total number of Equity Shares applied for; Total amount paid at the rate of ` 15.00/- per Equity Share on application; Separate cheques / DDs are to be attached for amounts to be paid for Equity Shares; Particulars of cheque / demand draft / Savings / Current Account Number and name and
address of the bank where the Eligible Equity Shareholder will be depositing the refund order; PAN of the Investor, and for each Investor in case of joint names, irrespective of the total value of
the Equity Shares applied for pursuant to the Issue; Signature of the Equity Shareholders to appear in the same sequence and order as they appear in
the records of our Company. Please note that those who are making an application otherwise than on an original CAF shall not be entitled to renounce their rights and should not utilize the original CAF for any purpose including renunciation even if it is received subsequently. If the Investor violates any of these requirements, he / she shall face the risk of rejection of both the applications. Separate cheque / DDs are to be attached for amounts to be paid for Equity Shares. The Company shall refund such application amount to the Investor without any interest thereon. Last date of Application The last date for submission of the duly filled in CAF is April 13, 2011. The Issue will be kept open for a minimum of 20 (twenty) days and the 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 (thirty) 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 or if the CAF is not received by the SCSB 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 Letter of Offer shall be deemed to have been declined and the Board/Committee of Directors shall be at liberty to dispose off the Equity Shares hereby offered, as provided under “Basis of Allotment”.
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Option to receive Securities in Dematerialized Form SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE EQUITY SHARES OF THE COMPANY UNDER THE ASBA PROCESS CAN ONLY BE ALLOTTED IN DEMATERIALIZED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE. General instructions for Shareholders applying under the ASBA Process (a) Please read the instructions printed on the respective CAF carefully. (b) Application 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 Letter of Offer are liable to be rejected. The CAF must be filled in English.
(c) The CAF/plain paper application in the ASBA Process should be submitted 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 Banks (assuming that such Collecting Bank is not a SCSB), to the Company or Registrar or Lead Manager to the Issue.
(d) All applicants, and in the case of application in joint names, each of the joint applicants, should
mention his/her PAN number allotted under the Income-Tax Act, 1961, irrespective of the amount of the application. CAFs without PAN will be considered incomplete and are liable to be rejected with effect from August 16, 2010, the demat accounts for investors for which PAN details have not been mentioned shall be suspended credit and no allotment and credit of Rights Issue of 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 Equity Shareholders must sign the CAF/ application on plain paper as per the specimen signature recorded with the Company/or Depositories.
(g) In case of joint holders, all joint holders must sign the relevant part of the CAF in the same order
and as per the specimen signature(s) recorded with the 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 Equity Shares, including any change in address of the Equity Shareholders should be addressed to the Registrar to the Issue prior to the date of allotment in this Issue quoting the name of the first/sole applicant Equity Shareholder, folio numbers and CAF number.
(i) Only the person or persons to whom Securities have been offered and renouncee(s) shall be
eligible to participate under the ASBA process.
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Do’s: a. Ensure that the ASBA Process option is selected in the CAF and necessary details are filled in. b. Ensure that you submit your application in physical mode only. 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 Equity Shares will be allotted in the dematerialized form only.
d. Ensure that the CAFs are submitted at the SCSBs whose details of bank account have been provided in the CAF.
e. Ensure that you have mentioned the correct bank account number in the CAF. f. Ensure that there are sufficient funds (equal to {number of Equity Shares applied for} X {Issue
Price}] 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.
g. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of which details are provided in the CAF and have signed the same.
h. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form.
i. Each applicant should mention their Permanent Account Number (“PAN”) allotted under the I. T. Act.
j. 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.
k. Ensure that the Demographic Details are updated, true and correct, in all respects. 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 to the Lead Manager to Issue / Registrar / Collecting Banks
(assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only.
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 their respective banks to release the funds blocked under the ASBA Process. Grounds for Technical Rejection for ASBA Process: CAF in addition to the “Grounds of Technical Rejection” mentioned under page 180 can be rejected on following additional grounds: a) Application for entitlements or additional shares in physical form. b) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available
with the Registrar. c) Sending CAF to a Lead Manager / Registrar / Collecting Bank (assuming that such Collecting Bank
is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company.
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d) Insufficient funds are available with the SCSB for blocking the amount. e) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen
pursuant to regulatory orders. f) Account holder not signing the CAF or declaration mentioned therein. Depository account and bank details for Shareholders applying under the ASBA Process IT IS MANDATORY FOR ALL THE SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR EQUITY SHARES IN DEMATERIALISED FORM. ALL SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS MUST ENSURE THAT THE NAME GIVEN IN THE CAF IS EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD. IN CASE THE CAF IS SUBMITTED IN JOINT NAMES, IT SHOULD BE ENSURED THAT THE DEPOSITORY ACCOUNT IS ALSO HELD IN THE SAME JOINT NAMES AND ARE IN THE SAME SEQUENCE IN WHICH THEY APPEAR IN THE CAF. Shareholders applying under the ASBA Process should note that on the basis of Depository Participant’s name and identification number and beneficiary account number provided by them in the CAF, the Registrar to the Issue will obtain from the Depository demographic details of these Shareholders such as address, bank account details and occupation (“Demographic Details”). Hence, Shareholders applying under the ASBA Process should carefully fill in their Depository Account details in the CAF. These Demographic Details would be used for all correspondence with such Shareholders including mailing of the letters intimating unblock of bank account of the respective Shareholder. The Demographic Details given by Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Shareholders are advised to update their Demographic Details as provided to their Depository Participants. By signing the CAFs, the 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 would be mailed at the address of the Shareholder applying under the ASBA Process as per the Demographic Details received from the Depositories. 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 Shareholder in the CAF 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 Shareholders applying under the ASBA Process and none of the Company, the SCSBs or the Lead Manager shall be liable to compensate the Shareholder applying under the ASBA Process for any losses caused to such Shareholder 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 match three parameters, namely, name(s) of the Shareholder(s) (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected.
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Application will not be accepted by the Lead Manager or by the Company. Note on cash payment (section 269 SS)
Having regard to the provisions of Section 269 SS of the Income Tax Act, 1961, subscriptions against applications for securities should not be effected in cash and must be effected only by ‘Account Payee’ cheques or ‘Account Payee’ bank drafts, if the amount payable is ` 20,000/- or more. In case payment is effected in contravention of this provision, the application is liable to be rejected. FORFEITURE The allotment shall be made only on receipt of application money as mentioned in “Terms of Payment”. If the investors fail to pay the call money within the period fixed for the payment for respective call, the application and/or call money already paid may be forfeited. APPLICATION UNDER POWER OF ATTORNEY In case of applications under Power of Attorney or by Limited Companies or Bodies Corporate or Societies registered under the applicable laws, a certified copy of the Power of Attorney or the relevant authority, as the case may be, along with the certified copy of the Memorandum and Articles of Association or Bye-laws, as the case may be, must be lodged separately by registered post at the office of the Registrar to the Issue simultaneously with the submission of the CAF, indicating the serial number of the CAF and the name of the bank and the branch office where the application is submitted within 10 days of closure of the offer, failing which the application is liable to be rejected. In case the Power of Attorney is already registered with the Company, then the same need not be furnished again. However, the serial number of the Registration under which the Power of Attorney has been registered with the Company must be mentioned below the signature of the Applicant. BANK DETAILS OF THE APPLICANT The applicant must fill in the relevant column in the CAF giving particulars of Savings Bank/Current Account Number and the name of the Bank with whom such accounts is held, to enable the Registrar to the Issue to print the said details in the Refund Orders, if any, after the name of the payees. Please note that provision of Bank Account details has now been made mandatory and applications not containing such details are liable to be rejected. APPLICATION NUMBER ON THE CHEQUE/DEMAND DRAFT To avoid any misuse of instruments, the applicants are advised to write the application number and name of the first applicant on the reverse of the cheque / demand draft. GROUNDS FOR TECHNICAL REJECTIONS Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following: Amount paid does not tally with the amount payable for; In case of physical shareholders, bank account details (for refund) are not given; Age of first applicant not given in case of renouncee(s); PAN not stated. See the section titled “Issue Procedure – Permanent Account Number or PAN/
GIR; Cash applications for an amount exceeding ` 20,000/-;
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In case of Application under power of attorney or by limited companies, corporate, trust, etc., relevant documents are not submitted;
If the signature of the existing shareholder does not match with the one given on the Application Form and for renouncees if the signature does not match with the records available with their depositories;
If the Applicant desires to have shares in electronic form, but the CAF does not have the Applicant’s depository account details;
CAFs are not submitted by the Applicants within the time prescribed as per the CAF and the Letter of Offer;
Applications not duly signed by the sole/joint Applicants; Applications by OCBs unless accompanied by specific approval from the RBI permitting the
OCBs to invest in the Issue; 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;
Applications by ineligible Non-residents (including on account of restriction or prohibition under applicable local laws) and where last available address in India has not been provided;
Multiple applications. GENERAL
(a) Application should be made on the printed CAF, provided by the Company except as mentioned under the head “Application on Plain Paper” on page 170 of this Letter of Offer and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/ or which are not completed in conformity with the terms of the Letter of Offer are liable to be rejected and the money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the Investors, details of occupation, address, father’s / husband’s name must be filled in block letters. The CAF together with the cheque/demand draft should be sent to the Bankers to the Issue/Collecting Bank or to the Registrar to the Issue and not to the Company or Lead Managers to the Issue. Investors residing at places other than cities where the branches of the Bankers to the Issue have been authorised by the Company for collecting applications, will have to make payment by Demand Draft payable at Chennai of an amount net of bank and postal charges 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. Applications where separate cheques/demand drafts are not attached for amounts to be paid for Rights Issue Equity Shares are liable to be rejected.
(b) Please read the instructions in the enclosed CAF carefully. (c) ALL COMMUNICATIONS IN CONNECTION WITH YOUR APPLICATION FOR THE EQUITY
SHARES INCLUDING ANY CHANGE IN YOUR REGISTERED ADDRESS SHOULD BE ADDRESSED TO THE REGISTRAR TO THE ISSUE.
(d) Application Forms must be filled in ENGLISH in BLOCK LETTERS. (e) Signatures should be either in English or Hindi or the languages specified in the Eighth Schedule
to the Constitution of India. Signatures other than in the aforementioned languages or thumb impressions must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal.
(f) In case of Joint Holders, all joint holders must sign the relevant parts of the Application Form in the same order and as per the specimen signatures recorded with the Company.
(g) In case of joint applicants, refunds and all payments will be made to the person whose name appears first on the application form and all communications will be addressed to him/her. To
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prevent any fraudulent encashment of refund orders by third parties, the Sole/First Applicant must indicate Saving / Current Account number and the name of the bank and its branch with whom such account is held in the space provided in the CAF for the purpose so that Refund Orders are printed with these details after the name. Applications without this information are liable to be rejected.
(h) The Application Form should be presented to the Bank in its entirety. If any of the Part(s) A,B,C and D of the Application Form(s) is /are detached or separated, such application will forthwith be rejected.
(i) All shareholders must submit the CAF along with remittance only to the Bankers to the Issue mentioned elsewhere in this Letter of Offer and not to the Company, the Registrar or the Lead Manager.
(j) Any dispute or suit action or proceedings arising out of or in relation to this Letter of Offer or in respect of any matter or thing herein contained and claimed by either party against the other shall be instituted or adjudicated upon or decided solely by the appropriate Court where Registered Office of the Company is situated.
(k) The last date for receipt of CAF along with the amount payable is April 13, 2011. However, the Board will have the right to extend the same for such period as it may determine from time to time, but not exceeding 30 days from the date of opening of the subscription list. If the CAF together with the amount payable there under is not received by the bankers to the issue on or before the closure of the banking hours on the aforesaid date, or such date as may be extended by the Board, the offer contained in this Letter of Offer shall be deemed to have been declined and the Board shall be at liberty to dispose the Rights hereby offered.
For further instructions please read CAF carefully. DEMATERIALISATION As per the provisions of the Depositories Act, 1996, the shares of a body corporate may be held in dematerialized form i.e. not in the form of physical certificates but be fungible and be represented by the statement issued through electronic mode. The equity shares of Tulsyan NEC are traded in the demat segment The Company has entered into a tripartite agreement dated December 29, 2001 with the National Securities Depository Ltd. (NSDL) for dematerialization of the equity shares of the Company. The Company has also entered into a tripartite agreement dated April 30, 2001 with the Central Depository Services Limited (CDSL) for dematerialization of the equity shares of the Company. The ISIN No. granted to the equity shares of the Company is INE463D01016. An applicant has the option to seek allotment in physical or demat mode. An applicant who seeks allotment in demat mode must have atleast one Beneficiary Account with any of the Depository Participants (DP) of NSDL or CDSL registered with SEBI, prior to the application. Such applicants must necessarily fill in the details (including the Beneficiary Account Number and Depository Participant’s ID Number) appearing under the head “Request for shares in electronic form” in the CAF. Applicant must indicate in the CAF, the number of shares they wish to receive in electronic form out of the total number of equity shares applied for. In case of partial allotment, shares will first be allotted in electronic form and the balance, if any, will be allotted in physical form. Names in the CAF should be identical to those appearing in the account details in the Depository. In case of joint holders, the name should necessarily be in the same sequence as they appear in the account details in the Depository.
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No separate application for demat and physical shares is to be made. If such applications are made the application for physical shares will be treated as multiple applications and rejected accordingly. It may be noted that electronic shares can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. Non-transferable allotment letters/ refund orders will be directly sent to the applicant by the Registrar to the Issue The applicant is responsible for the correctness of the applicant’s demographic details given in the share application form vis-à-vis those with his/her DP. Equity shares allotted in demat mode will be credited directly to the respective Beneficiary Account. DISPOSAL OF APPLICATION AND APPLICATION MONEY The Board reserves the right to reject applications in case the application concerned is not made in terms of this Letter of Offer. In case an application is rejected in full the whole of the application money received will be refunded to the first named applicant and where an application is rejected in part, the excess application money will be refunded to the first named applicant within 15 days from the date of closure of the subscription list in accordance with Section 73 of the Act. If there is delay of refund of application money by more than 8 days after the Company becomes liable to pay (i.e. forty-two days after the closure of Issue), the Company will pay interest for the delayed period at the rate prescribed under sub-Section (2) and (2A) of Section 73 of the Act. The subscription monies received in respect of this Issue will be kept in a separate bank account and the Company will not have access to nor appropriate the funds until it has satisfied the Stock Exchange with suitable documentary evidence that minimum subscription of 90% of the application money for the Issue has been received. No acknowledgment will be issued for the application monies received by the Company. However, the Bankers to the Issue at its collection branches to the Issue receiving the CAF as applicable as per the terms of this Letter of Offer, will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF. Except for the reasons stated under “Grounds for Technical Rejections” on page 180 of this Letter of Offer and subject to valid application, acknowledgement of receipt of application money given by the collection agent shall be valid and binding on issuer and other persons connected with the Issue. BASIS OF ALLOTMENT In the event of the issue being oversubscribed, the basis of allotment will be made only within the overall size of the Rights Issue, as stated in the Letter of Offer and the Board will proceed to allot the Equity Shares in consultation with the designated stock exchange (i.e.; BSE) in the following order of priority: 1. Full allotment to the Shareholders who have applied for their Rights entitlement, either in full or in
part and also the renouncee(s) who have applied for Equity Shares renounced in their favour either in full or in part (subject to the other provisions contained under the paragraph titled “Renunciation”).
2. Allotment to the shareholders who have applied for additional Equity Shares provided that they
have applied for all the Equity Shares offered to them, provided there is a surplus after making full allotment under (1) above. The allotment of such additional Equity Shares will be made as far as possible on the basis of the Equity Shares held as on the Record Date.
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3. Allotment to the renouncees who have applied for all the Equity Shares renounced in their favour and have applied for additional Equity Shares, as the Board may in its absolute discretion deem fit, provided there is a surplus after making full allotment (1) and (2) above.
4. Allotment to any other person as the Board may in their absolute discretion deem fit, provided there
is a surplus after making full allotment under (1), (2), (3) above. The issue will become undersubscribed after considering the number of shares applied as per the entitlement plus additional shares. The undersubscribed portion can be applied for only after the close of the Issue. LETTERS OF ALLOTMENT OR REFUND ORDERS Company shall ensure dispatch of refund orders, if any, by under the Certificate of Posting or registered post or speed post or through modes as mentioned in section, Terms of the Issue clause “Mode of Payment” as stated below, as applicable, only at the sole or First Applicant’s sole risk within 15 days of closure of the Rights Issue, and adequate funds for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be made available to the Registrar to the Issue by the issuer. In case of those shareholders who have opted to receive their Right Entitlement Shares in dematerialized form by electronic credit under the depository system, an advice regarding the credit of the Equity Shares shall be given separately. For Non-Resident Applicants, refunds, if any, will be made as under: Where applications are accompanied by Indian Rupee Drafts purchased abroad and payable at
Chennai, India, refunds will be made in convertible foreign exchange equivalent to Indian Rupees to be refunded. Indian Rupees will be converted into foreign exchange 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 the 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 are drawn and details of which are provided in the CAF.
MODE OF PAYMENT OF REFUND Applicants should note that on the basis of name of the applicant, Depository Participant’s name, Depository Participant-Identification number and Beneficiary Account Number provided by them in the Composite Application Form, the Registrar to the Issue will obtain from the depositories the applicant’s bank account details including nine digit MICR code. Hence, applicants are advised to immediately update their bank account details as appearing on the records of the depository participant. Please note that failure to do so could result in delays in credit of refunds to applicant at the applicant’s sole risk and neither the Lead Manager nor the Company shall have any responsibility and undertake any liability for the same. The payment of refund, if any, shall be undertaken in any of the following manners: 1. NEFT: Payment of refund shall be undertaken through National Electronic Fund Transfer (NEFT)
wherever the applicants’ bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a Magnetic Ink Character Recognition (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
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date of payment of refund, duly mapped with MICR numbers. 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.
2. ECS - Payment of refund shall be undertaken through ECS for applicants having an account at any of the following 68 centers: Ahmedabad, Bangalore, Bhubaneshwar, Kolkata, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Kanpur, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram (managed by RBI); Baroda, Dehradun, Nashik, Panaji, Surat, Trichy, Trichur, Jodhpur, Gwalior, Jabalpur, Raipur, Calicut, Siliguri (Non-MICR), Pondicherry, Hubli, Shimla (Non-MICR), Tirupur, Burdwan (Non-MICR), Durgapur (Non-MICR), Sholapur, Ranchi, Tirupati (Non-MICR), Dhanbad (Non-MICR), Nellore (Non-MICR) and Kakinada (Non-MICR) (managed by State Bank of India); Agra, Allahabad, Jalandhar, Lucknow, Ludhiana, Varanasi, Kolhapur, Aurangabad, Mysore, Erode, Udaipur, Gorakpur and Jammu (managed by Punjab National Bank); Indore (managed by State Bank of Indore); Pune, Salem and Jamshedpur (managed by Union Bank of India); Visakhapatnam (managed by Andhra Bank); Mangalore (managed by Corporation Bank); Coimbatore and Rajkot (managed by Bank of Baroda); Kochi/Ernakulum (managed by State Bank of Travancore); Bhopal (managed by Central Bank of India); Madurai (managed by Canara Bank); Amritsar (managed by Oriental Bank of Commerce); Haldia (Non-MICR) (managed by United Bank of India); Vijaywada (managed by State Bank of Hyderabad); and Bhilwara (managed by State Bank of Bikaner and Jaipur). This mode of payment of refunds would be subject to availability of complete bank account details including the MICR code as appearing on a cheque leaf, from the Depositories. One of the methods for payment of refund is through ECS for applicants having a bank account at any of the abovementioned 68 centers.
3. Direct Credit: Applicants having bank accounts with the Banker(s) to the Issue / Refund Banker(s), as appointed by the Company, shall be eligible to receive refunds through direct credit. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by the Issuer.
4. RTGS: Applicants having a bank account at any of the abovementioned fifteen centers and whose refund amount exceeds ` 5 million, 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 ECS. Charges, if any, levied by the Banker(s) to the Issue / Refund Banker(s) for the same would be borne by such applicant opting for RTGS as a mode of refund. 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 shall be dispatched under Certificate of Posting for value up to ` 1,500 and through Speed Post/ Registered Post for refund orders of ` 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn on the refund banker as appointed by the Company, and payable at par.
6. Credit of refunds to Investors in any other electronic manner permissible under the banking laws, which are in force, and is permitted by the SEBI from time to time.
INTEREST IN CASE OF DELAY IN ALLOTMENT / DESPATCH If there is delay in the refund of subscription by more than 8 days after the Company becomes liable to pay the subscription amount (i.e. fifteen days) after closure of the issue, the Company will pay interest for the delayed period, at rates prescribed under sub-sections (2) and (2A) of Section 73 of the Companies Act, 1956.
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The Company undertakes that: A) The complaints received in respect of the Issue shall be attended to by the issuer company
expeditiously and satisfactorily. B) 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 seven working days of finalization of basis of allotment.
C) Funds required for making refunds to unsuccessful applicants as per the mode(s) disclosed shall be
made available to the Registrar to the issue by the issuer.
D) Where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the applicant after closure of the issue, giving details of the bank where refunds shall be credited along with amount and expected date of electronic credit of refund;
E) Adequate arrangements shall be made to collect all Applications Supported by Blocked Amount
(ASBA) and to consider them similar to non-ASBA applications while finalizing the basis of allotment.
F) At any given time there shall be only one denomination for the shares of the Company G) It shall comply with such disclosure and accounting norms specified by SEBI from time to time. The Issuer and Lead Manager shall update the Letter of Offer and keep the investors informed of any material changes till the listing and trading commences. UTILISATION OF ISSUE PROCEEDS The Board of Directors declares that: (i) all monies received out of issue of shares or specified securities to public shall be transferred to
separate bank account; (ii) details of all monies utilized out of the issue referred to in sub-item(i) shall be disclosed under an
appropriate separate head in the balance sheet of the issuer company indicating the purpose for which such monies had been utilized; and
(iii) details of all unutilized monies out of the issue of specified securities referred to in clause (i) shall be
disclosed under an appropriate separate head in the balance sheet of the issuer indicating the form, if any, referred to in sub-item (i) shall be disclosed under an appropriate separate head in the balance sheet of the issuer company indicating the form in which such monies have been invested.
Utilization of funds raised in rights issue The Company shall utilize the funds collected in rights issues after the finalization of the basis of allotment.
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Important Please read this Letter of Offer carefully before taking any action. The instructions contained in the
accompanying CAF are an integral part of the conditions of this Letter of Offer and must be carefully followed; otherwise the application is liable to be rejected.
All enquiries in connection with this Letter of Offer or accompanying CAF and requests for SAFs
must be addressed (quoting the Registered Folio Number/ DP and Client ID number, the CAF number and the name of the first Equity Shareholder as mentioned on the CAF and super scribed ‘Tulsyan NEC Ltd.-Rights Issue’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:
CAMEO CORPORATE SERVICES LTD.
Subramanian Building, No. 1, Club House Road, Chennai – 600 002 Tel: +91-044-28460390 (5 Lines); Fax: +91-044-28460129 Website: www.cameoindia.com E-mail: [email protected], [email protected] SEBI Regn. No.: INR 000003753 Contact Person: Ms. Priya
It is to be specifically noted that this Issue of Rights Issue Equity Shares is subject to the risk factors
mentioned in the chapter “Risk Factors” on page v of this Letter of Offer. The Issue will remain open for a minimum 20 days. However, the Board will have the right to extend the Issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.
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SECTION VIII - OTHER INFORMATION
MATERIAL CONTRACTS AND DOCUMENTS
The Contracts referred to in para (A) below (not being contracts entered into in the ordinary course of the business carried on by the Company which are or may be deemed material, have been entered into by the Company. The contracts together with the documents referred to in paragraph (B) below, copies of all of which have been attached to the copy of this Letter of Offer may be inspected at the Registered Office of the Company between 11.00 a.m. - 4.00 p.m. on any working day from the date of this Letter of Offer until the closing of the subscription list. A. MATERIAL CONTRACTS 1. Copy of Memorandum of Understanding dated June 18, 2010 between Tulsyan NEC Limited and
Keynote Corporate Services Limited, Lead Manager to the Issue.
2. Copy of Memorandum of Understanding dated June 18, 2010 between Tulsyan NEC Limited and MPA Financial Services Limited, Lead Manager to the Issue.
3. Copy of Memorandum of Understanding dated November 27, 2009 between Tulsyan NEC Limited
and Cameo Corporate Services Ltd., Registrar to the Issue. 4. Copy of tripartite agreement dated December 29, 2001 between Tulsyan NEC Limited, National
Securities Depository Limited (NSDL) and Cameo Corporate Services Ltd. 5. Copy of tripartite agreement dated April 30, 2001 between Tulsyan NEC Limited, Central Depository
Services (India) Limited (CDSL) and Cameo Corporate Services Ltd. B. DOCUMENTS FOR INSPECTION
1. Memorandum and Articles of Association of Tulsyan NEC Limited as amended from time to time.
2. Copy of inter- se allocation of responsibilities between Keynote and MPA. 3. Board Resolution dated July 10, 2010 passed by the Board of Directors of the Company in respect of
the Rights Issue. 4. Copies of Annual Reports of the Company for the last 5 accounting periods i.e. 2005-06, 2006-07,
2007-08, 2008-09 and 2009-10. 5. Auditor’s Report dated May 14, 2010 issued by C A Patel & Patel, Statutory Auditors & Chartered
Accountants for the financial year ended March 31 2010 and Limited Review Report dated January 20, 2011 for the six months period ended September 30, 2010
6. Copy of certificate dated February 08, 2011 received from C A Patel & Patel, Statutory Auditors & Chartered Accountants regarding sources and deployment of funds.
7. Copy of Prospectus dated June 13, 1994 in respect of the Initial Public Offer made by the Company
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8. Legal Due Diligence report dated April 07, 2010 and Addendum to Due Diligence Report dated
February 21, 2011 by Lakshmmi Subramanian & Associates along with certificate in respect of Letter of Offer.
9. Due Diligence Certificate dated July 31, 2010 to SEBI from Keynote Corporate Services Limited and
MPA Financial Services Limited, Lead Manager to the Issue. 10. Consent letters from Directors, Lead Manager to the Issue, Statutory Auditors of the Company,
Bakers to the Issue, Legal Advisors to the Issue, Registrar to the Issue, Company Secretary and Compliance Officer to act in their respective capacities and for inclusion of their names in the Letter of Offer.
11. Copies of Service Agreements entered into by the company with its Chairman/Managing Director / Whole Time Director viz. Mr. Lalit Kumar Tulsyan, Mr. Sanjay Tulsyan, Mr. A.P. Venkateshwaran, and Mr. Sanjay Agarwalla
12. Copies of documents of title for the land purchased at Chittor Natham Village for setting up of the
proposed power plant.
13. Copies of sanction letters from Indian Overseas Bank, State Bank of India, Canara Bank, Andhra Bank & Syndicate Bank for ` 212.40 crores of Term Loans
14. Copies of in-principle approval received from BSE, MSE and CSE vide letters no. DCS/PREF/JA/IP-
RT/514/10-11, MSE/LD/PSK/738/365/10 and CSE/LD/946/2010 respectively dated September 02, 2010, August 23, 2010 and September 13, 2010 respectively.
15. Copy of SEBI Observation letter no. SRO/04/07/5/10 dated December 31, 2010 and compliance thereof.
Tulsyan NEC Limited
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PART III
DECLARATION
No Statement made in this Letter of Offer contravenes any of the provisions of the Companies Act, 1956 and the rules made there under. All the legal requirements connected with the issue as also the guidelines, instructions, etc issued by SEBI, Government and any other competent authority in this behalf, have been duly complied with. The Board of Directors further certify that all the disclosures in this Letter of Offer are true and correct. By the Board of Directors Tulsyan NEC Limited
