Letter of Offer Dated July 20, 2010 For equity shareholders of the Company only
TRENT LIMITED
Our Company was incorporated on December 5, 1952 as Lakme Limited under the provisions of the Indian Companies Act, 1913. The name of our Company was later changed to Trent Limited by way of a fresh certificate of incorporation dated June 15, 1999. Registered Office : Bombay House, 24 Homi Mody Street, Mumbai - 400 001, Maharashtra, India. Tel : + 91 22 6665 8282; Fax: + 91 22 2204 2081 Corporate Office : Trent House, G Block, Plot No. C-60, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India. Tel : +91 22 6700 9000; Fax : +91 22 6700 8100 Contact Person : Mr. M.M. Surti, Company Secretary and Compliance Officer. Email :[email protected]; Website : www.mywestside.com
FOR PRIVATE CIRCULATION ONLY TO THE EQUITY SHAREHOLDERS OF THE COMPANY LETTER OF OFFER ISSUE OF 89,14,164 CUMULATIVE COMPULSORILY CONVERTIBLE PREFERENCE SHARES (“CCPS”) COMPRISING OF 44,57,082 SERIES A CUMULATIVE COMPULSORILY CONVERTIBLE PREFERENCE SHARES OF THE COMPANY WITH A FACE VALUE OF RS. 10 EACH FOR CASH AT A PRICE OF RS. 550 EACH (INCLUDING A PREMIUM OF RS. 540 EACH) (“CCPS SERIES A”) AND 44,57,082 SERIES B CUMULATIVE COMPULSORILY CONVERTIBLE PREFERENCE SHARES OF THE COMPANY WITH A FACE VALUE OF RS. 10 EACH FOR CASH AT A PRICE OF RS. 550 EACH (INCLUDING A PREMIUM OF RS. 540 EACH) (“CCPS SERIES B”) AGGREGATING TO RS. 4,90,27,90,200 ON A RIGHTS BASIS IN THE RATIO OF 4 CCPS (COMPRISING 2 CCPS SERIES A AND 2 CCPS SERIES B) FOR EVERY 9 EQUITY SHARES HELD ON THE RECORD DATE, I.E. JULY 10, 2010, (THE “ISSUE”). ONE CCPS SERIES A IS CONVERTIBLE INTO ONE EQUITY SHARE OF THE COMPANY AND ONE CCPS SERIES B IS CONVERTIBLE INTO ONE EQUITY SHARE OF THE COMPANY. THE ISSUE PRICE FOR THE CCPS SERIES A IS 55 TIMES THE FACE VALUE OF THE CCPS SERIES A AND THE ISSUE PRICE FOR THE CCPS SERIES B IS 55 TIMES THE FACE VALUE OF THE CCPS SERIES B. AN EQUITY SHAREHOLDER SHOULD APPLY FOR SUCH EQUITY SHAREHOLDER’S ENTITLEMENT OF BOTH THE CCPS SERIES A AND SERIES B, TOGETHER. GENERAL RISKS Investments in equity and equity related securities involve a degree of risk and investors should not invest any funds in this Issue unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in 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 being offered in this Issue have not been recommended or approved by the Securities and Exchange Board of India (“ SEBI ”) nor does SEBI guarantee the accuracy or adequacy of this document. Investors are advised to refer to the section titled “Risk Factors” beginning on page 10 of this Letter of Offer before making an investment in this Issue. ISSUER’S ABSOLUTE RESPONSIBILITY The Issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this Letter of Offer contains all information with regard to the Issuer and the Issue, which is material in the context of this Issue, that the information contained in this Letter of Offer is true and correct in all aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Letter of Offer as a whole or any such information or the expression of any such opinions or intentions misleading in any material respect. LISTING The existing Equity Shares of the Company are listed on the Bombay Stock Exchange Limited (“ BSE ”) and the National Stock Exchange of India Limited (“ NSE ”). The CCPS offered through this Letter of Offer as well as the Equity Shares arising out of conversion thereof are proposed to be listed on the BSE and NSE. The Company has received “in-principle” approval from the BSE and NSE for listing the CCPS as well as the Equity Shares arising out of conversion thereof to be allotted pursuant to the Issue vide letters dated May 24, 2010. The BSE is the designated stock exchange for this Issue. LEAD MANAGERS TO THE ISSUE REGISTRAR TO THE ISSUE
JM Financial Consultants Private Limited Tata Capital Markets Limited* Link Intime India Private Limited 141 Maker Chambers III, Nariman Point, Mumbai One Forbes, Dr. V.B. Gandhi Marg, C-13, Pannalal Silk Mills Compound, - 400021 Fort, Mumbai - 400 001 L.B.S. Marg, Bhandup West, Tel: +91 22 3953 3030 Tel: +91 22 6745 9000 Mumbai - 400 078, Fax: +91 22 2204 7185 Fax: +91 22 2261 8215 Maharashtra, India Email: [email protected] Email: [email protected] Tel: +91 22 2596 0320 Investor Grievance Email: Investor Grievance ID: Fax: +91 22 2596 0329 [email protected] [email protected] Email: [email protected] Website: www.jmfinancial.in Contact Person: Mr. Abhishek Jain Website: www.linkintime.co.in Contact Person: Ms. Lakshmi Lakshmanan Website: www.tatacapital.com Contact Person: Mr. Pravin Kasare SEBI Registration No.: INM000010361 SEBI Registration No.: INM000011302 SEBI Registration No.: INR 000004058
ISSUE PROGRAMME ISSUE OPENS ON LAST DATE FOR REQUEST FOR SPLIT APPLICATION FORMS ISSUE CLOSES ON August 6, 2010 August 13, 2010 August 20, 2010
* Tata Capital Markets Limited is an indirect subsidiary of Tata Sons Limited, which is the promoter of the Issuer. Tata Capital Markets Limited has signed the due diligence certificate and accordingly has been disclosed as a Lead Manager. Further, in compliance with the proviso to regulation 21A(1) and explanation (iii) to regulation 21A(1) of SEBI (Merchant Bankers) Regulations, 1992, read with Regulation 110 and Schedule XX of the SEBI ICDR Regulations, Tata Capital Markets Limited would be involved only in the marketing of the Issue.
TABLE OF CONTENTS
OVERSEAS SHAREHOLDERS...... 1 NO OFFER IN THE UNITED STATES ...... 1 PRESENTATION OF FINANCIAL DATA...... 3 FORWARD-LOOKING STATEMENTS ...... 4 ABBREVIATIONS AND TECHNICAL TERMS ...... 5 RISK FACTORS...... 10 SUMMARY OF THE ISSUE...... 22 GENERAL INFORMATION ...... 23 CAPITAL STRUCTURE...... 29 OBJECTS OF THE ISSUE...... 34 STATEMENT OF TAX BENEFITS...... 39 HISTORY AND CORPORATE STRUCTURE...... 46 MANAGEMENT ...... 47 FINANCIAL INFORMATION ...... 52 ACCOUNTING RATIOS AND CAPITALIZATION STATEMENT...... 126 FINANCIAL INDEBTEDNESS ...... 128 OUTSTANDING LITIGATION ...... 129 GOVERNMENT APPROVALS...... 131 MATERIAL DEVELOPMENTS ...... 132 OTHER REGULATORY AND STATUTORY DISCLOSURES ...... 135 TERMS OF THE ISSUE...... 146 RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES...... 172 STATUTORY AND OTHER INFORMATION ...... 173 DECLARATION ...... 174
OVERSEAS SHAREHOLDERS
The distribution of this Letter of Offer and the issue of CCPS on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Letter of Offer may come are required to inform themselves about and observe such restrictions. The Company is making this Issue of CCPS on a rights basis to the Equity Shareholders of the Company and will dispatch the Abridged Letter of Offer and Composite Application Form (“ CAF ”) to the Equity Shareholders who have an Indian address. Equity Shareholders in foreign jurisdiction need to provide an Indian address, if not provided earlier, to receive this Letter of Offer. The securities of the Company are only listed in India.
No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with SEBI for observations. Accordingly, the CCPS may not be offered or sold, directly or indirectly, and this Letter of Offer may not be distributed, in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, in those circumstances, this Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Letter of Offer should not, in connection with the issue of the CCPS or with the Rights Entitlements, distribute or send this Letter of Offer in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the CCPS or the Rights Entitlements referred to in this Letter of Offer.
Neither the delivery of this Letter of Offer nor any sale hereunder shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as at any time subsequent to this date.
NO OFFER IN THE UNITED STATES
The rights and the securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the “ Securities Act ”), or any U.S. state securities laws and may not be offered, sold, resold or otherwise transferred within the United States of America or the territories or possessions thereof (the “ United States” or “ U.S .”) or to, or for the account or benefit of, “U.S. persons” (as defined in Regulation S under the Securities Act (“ Regulation S ”)), except in a transaction exempt from the registration requirements of the Securities Act. The rights referred to in this Letter of Offer are being offered in India, but not in the United States. The offering to which this Letter of Offer relates is not, and under no circumstances is to be construed as, an offering of any CCPS or rights for sale in the United States or as a solicitation therein of an offer to buy any of the said CCPS or rights. Accordingly, the Letter of Offer and the enclosed CAF should not be forwarded to or transmitted in or into the United States at any time.
Neither the Company nor any person acting on behalf of the Company, except from shareholders, will accept subscriptions or renunciation from any person, or the agent of any person, who appears to be, or who the Company or any person acting on behalf of the Company has reason to believe is, either a “U.S. person” (as defined in Regulation S) or otherwise in the United States when the buy order is made. Envelopes containing a CAF should not be postmarked in the United States or otherwise dispatched from the United States or any other jurisdiction where it would be illegal to make an offer under the Letter of Offer, and all persons subscribing for the CCPS and wishing to hold such CCPS in registered form must provide an address for registration of the CCPS in India. The Company is making this issue of CCPS on a rights basis to Equity Shareholders of the Company and the Letter of Offer and CAF will be dispatched to Equity Shareholders who have an Indian address. Any person who acquires rights and the CCPS will be deemed to have declared, represented, warranted and agreed, (i) that it is not and that at the time of subscribing for the CCPS or the Rights Entitlements, it will not be, in the United States, (ii) it is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States, and (iii) is authorised to acquire the rights and the CCPS in compliance with all applicable laws and regulations.
The Company, in consultation with the Lead Managers, reserves the right to treat as invalid any CAF
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which: (i) does not include the certification set out in the CAF to the effect that the subscriber is not a “U.S. person” (as defined in Regulation S), and does not have a registered address (and is not otherwise located) in the United States and is authorized to acquire the rights and the CCPS in compliance with all applicable laws and regulations; (ii) appears to the Company or its agents to have been executed in or dispatched from the United States; (iii) where a registered Indian address is not provided; (iv) where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements; and the Company shall not be bound to allot or issue any CCPS or Rights Entitlement in respect of any such CAF; or (v) where no regulatory permission is obtained to apply in the Issue, when required in applying in the Issue.
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PRESENTATION OF FINANCIAL DATA
Financial Data
Unless stated otherwise, the financial data in this Letter of Offer is derived from the Company’s consolidated and standalone financial statements which are set out in the section titled “Financial Information” on page 52 of this Letter of Offer. The Company’s fiscal year commences on April 1 and ends on March 31 of the following calendar year.
In this Letter of Offer, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding-off and, unless otherwise specified, all financial numbers in parentheses represent negative figures.
The Company is an Indian listed company and prepares its financial statements in accordance with Indian GAAP, which differs significantly in certain respects from IFRS and US GAAP. Neither the information set forth in our financial statements nor the format in which it is presented should be viewed as comparable to information prepared in accordance with US GAAP, IFRS or any accounting principles other than principles specified in the Indian Accounting Standards. Any reliance by persons not familiar with Indian accounting practices on the financial disclosures presented in this Letter of Offer should accordingly be limited. We have not attempted to explain those differences or quantify their impact on the financial data included herein, and we urge you to consult your own advisors regarding such differences and their impact on our financial data.
All references to “India” contained in this Letter of Offer are to the Republic of India, all references to the “US” or the “U.S.” or the “USA”, or the “United States” are to the United States of America, its territories and possessions, and all references to “UK” or the “U.K.” are to the United Kingdom of Great Britain and Northern Ireland, together with its territories and possessions.
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FORWARD-LOOKING STATEMENTS
We have included statements in this Letter of Offer which contain words or phrases such as “will”, “may”, “believe”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “seek to”, “future”, “objective”, “project”, “should” and similar expressions or variations of such expressions, that are “forward-looking statements”.
All forward-looking statements are subject to risks, uncertainties and assumptions about us 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 our expectations include but are not limited to:
• our ability to meet customer demand; • business conditions in the markets in which we operate; • prevailing local, regional and national economic conditions; • increasing competition in, or other factors affecting, the industry segments in which our Company operates; • changes in laws and regulations relating to the industries in which we operate; • our ability to successfully implement our expansion plans, and to successfully launch and implement various projects and business plans; • our ability to meet our capital expenditure requirements and/or increase in capital expenditure; • fluctuations in operating costs and impact on the financial results; • our ability to attract and retain qualified personnel; • changes in political and social conditions in India or in countries that we may enter, the monetary policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices; • the performance of the retail markets in India and globally; and • any adverse outcome in the legal proceedings in which we are involved.
For a further discussion of factors that could cause our actual results to differ, please refer to the section titled “Risk Factors” on page 10 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 nor the Lead Managers 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 and requirements of the Stock Exchanges, the Company and Lead Managers will ensure that investors in India are informed of material developments until the time of the grant of listing and trading permission by the Stock Exchanges.
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ABBREVIATIONS AND TECHNICAL TERMS
In this Letter of Offer, all references to “Rupees”, “Rs.” or “INR” refer to Indian rupees, the official currency of India; references to the singular also refer to the plural and reference to a gender also refers to any other gender, wherever applicable, and the words “lakh” or “lac” mean “100 thousand” and the word “million” means “10 lakh” and the word “crore” means “10 million” or “100 lakh” and the word “billion” means “1,000 million” or “100 crore”.
Conventional or general terms
Term Description
Accounting Accounting standards issued by ICAI. Standards
Act / Companies The Companies Act, 1956, as amended from time to time. Act
Depositories Act The Depositories Act, 1996, as amended from time to time.
Depositories The SEBI (Depository and Participant) Regulations, 1996, as amended from time to Regulations time.
Depository A depository registered with SEBI under the SEBI (Depository and Participant) Regulations, 1996, as amended from time to time.
FII “Foreign Institutional Investor” as defined under SEBI (Foreign Institutional Investors) Regulations, 1995 registered with SEBI and as defined under FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 and under other applicable laws in India.
FIPB Foreign Investment Promotion Board.
FY/ fiscal Financial year or year ended March 31.
ICAI The Institute of Chartered Accountants of India.
IFRS International Financial Reporting Standards.
Indian GAAP Generally Accepted Accounting Principles in India.
ISIN International Securities Identification Number allotted by the Depository.
IT Act Income Tax Act, 1961, as amended from time to time.
NAV Net asset value.
SEBI Securities and Exchange Board of India constituted under the SEBI Act, 1992.
SEBI Act, 1992 Securities and Exchange Board of India, 1992, as amended from time to time.
SEBI Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 issued by SEBI, as amended from time to time.
Takeover Code Securities and Exchange Board of India (Substantial Acquisition of Shares and
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Term Description Takeovers) Regulations, 1997, as amended from time to time.
US GAAP Generally Accepted Accounting Principles in the United States of America.
Issue related terms
Term Description
Abridged Letter of The abridged letter of offer to be sent to the Equity Shareholders with respect to this Offer Issue in accordance with SEBI Regulations.
Allotment Unless the context otherwise requires, the allotment of CCPS pursuant to the Issue.
Allottees Persons to whom CCPS of the Company are issued pursuant to the Issue.
Application The application (whether physical or electronic) used by an Investor to make a Bid Supported by authorizing the SCSB to block the Bid Amount maintained with the SCSB. Blocked Amount / ASBA
Bankers to the HDFC Bank Limited and Citibank N. A. Issue
Business Day Any day, other than a Saturday or a Sunday, on which commercial banks in Mumbai are open for business.
CCPS Cumulative compulsorily convertible preference shares of the Company comprised of CCPS Series A and CCPS Series B.
CCPS Series A Series A cumulative compulsorily convertible preference shares of the Company with a face value of Rs. 10 each.
CCPS Series B Series B cumulative compulsorily convertible preference shares of the Company with a face value of Rs. 10 each.
Composite The form used by an Investor to make an application for allotment of CCPS in the Application Form / Issue. CAF
Consolidated In case of holding of CCPS in physical form, the Company would issue one Certificate certificate for the CCPS allotted to one folio.
Designated Such branches of the SCSBs which shall collect application forms used by ASBA Branches Investors and a list of which is available on http://www.sebi.gov.in .
Designated Stock BSE. Exchange
Draft Letter of The draft letter of offer dated May 10, 2010 filed with SEBI for its comments. Offer
Equity Shareholder A holder of Equity Shares. / Shareholder
Equity Shares Equity shares of our Company having a face value of Rs. 10 each.
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Term Description
Investor(s) The Equity Shareholders on the Record Date and the Renouncees.
Issue Issue of 89,14,164 CCPS comprising of 44,57,082 series A cumulative compulsorily convertible preference shares of the Company with a face value of Rs. 10 each for cash at a price of Rs. 550 each (including a premium of Rs. 540 each) and 44,57082 series B cumulative compulsorily convertible preference shares of the Company with a face value of Rs. 10 each for cash at a price of Rs. 550 each (including a premium of Rs. 540 each) aggregating up to Rs. 4,90,27,90,200 on a rights basis in the ratio of 4 CCPS (comprising 2 CCPS Series A and 2 CCPS Series B) for every 9 Equity Shares held on the Record Date, i.e. July 10, 2010.
Issue Closing Date August 20, 2010.
Issue Opening August 6, 2010. Date
Issue Price Rs. 550 per CCPS Series A and Rs. 550 per CCPS Series B.
Issue Proceeds The proceeds of this Issue that is available to our Company.
Letter of Offer This letter of offer filed with the Stock Exchanges after incorporating SEBI comments on the Draft Letter of Offer dated May 10, 2010.
Lead Managers JM Financial and TCML.
JM Financial JM Financial Consultants Private Limited.
Record Date July 10, 2010.
Renouncee(s) Any person(s) who has / have acquired Rights Entitlements from an eligible Equity Shareholders.
Rights Entitlement The number of CCPS Series A and CCPS Series B that an eligible Equity Shareholder is entitled to in proportion to his / her shareholding in the Company as on the Record Date.
Registrar to the Link Intime India Private Limited. Issue / Registrar
Self Certified A banker to the Issue registered with SEBI, which offers the facility of ASBA and a Syndicate Bank(s) list of which is available on http://www.sebi.gov.in. / SCSB(s)
SRPL Satnam Realtors Private Limited.
Stock Exchange(s) The BSE and the NSE, which are where the Equity Shares are listed and where the CCPS are proposed to be listed.
TCML Tata Capital Markets Limited.
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Issuer and industry related terms
Term Description
AoA / Articles / Articles of association of our Company. Articles of Association
Auditors N. M. Raiji & Co., the statutory auditors of our Company.
Board / Board of The board of directors of the Company or a committee authorized to act on its behalf. Directors / Committee of Directors
Compliance Mr. M.M. Surti. Officer
Corporate Office Trent House, G Block, Plot No. C-60, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India.
Director(s) A director on the Board.
MOA / Memorandum of association of the Company. Memorandum / Memorandum of Association
Our Company / Trent Limited, a company incorporated under the Indian Companies Act, 1913 having the Company / its Registered Office at Bombay House, 24 Homi Mody Street, Mumbai - 400 001, Issuer / Trent Maharashtra, India.
Promoter Tata Sons Limited.
Promoter Group Tata Investments Corporation Limited, Aftaab Investment Company Limited, Questar Investments Limited (now Titan Industries Limited) and Fiora Services Limited.
Registered Office Bombay House, 24 Homi Mody Street, Mumbai 400 001, Maharashtra, India.
Subsidiaries Trent Hypermarket Limited, Landmark Limited, Trent Brands Limited, Fiora Services Limited, Fiora Link Road Properties Limited, Nahar Theatres Private Limited, Westland Limited, Landmark E-Tail Private Limited, Trent Global Holdings Limited, Regent Management Private Limited and Optim Estates Private Limited.
THL Trent Hypermarket Limited.
Abbreviations
Term Description
AGM Annual general meeting.
BSE The Bombay Stock Exchange Limited.
CDSL Central Depository Services (India) Limited.
EGM Extraordinary general meeting.
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Term Description
EPS Earnings per share.
FCNR Foreign Currency (Non-Resident) Account Scheme.
FEMA Foreign Exchange Management Act, 1999, and the subsequent amendments thereto.
GoI Government of India.
NRE Non-Resident (External) Rupee Account Scheme.
NRO Non-Resident Ordinary Rupee Account Scheme.
NSE National Stock Exchange of India Limited
NSDL National Securities Depository Limited.
OCB(s) Overseas corporate body(ies).
PAN Permanent account number.
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RISK FACTORS
An investment in our Company’s securities involves a high degree of risk and you should not invest any funds in this Issue unless you can afford to take the risk of losing all or part of your investment. You should carefully consider all the information in this Letter of Offer, including but not limited to the risks and uncertainties described below, before making an investment in our Company’s securities. The occurrence of any or a combination of the following events could have a material adverse effect on our business, results of operations, financial condition and prospects and cause the market price of our Company’s Equity Shares to fall significantly, and you may lose all or part of your investment. Additionally, our business operations could also be affected by additional factors that are not presently known to us or that we currently consider as immaterial to our operations. Unless specified or quantified in the relevant risk factors below, our Company is not in a position to quantify the financial or other implications of any of the risks described in this section. This Letter of Offer also contains forward- looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including considerations described below and in the section entitled “Forward-Looking Statements” on page 4.
Risks related to our Company and business
1. Our inability to promptly identify and respond to changing customer preferences or evolving trends may decrease the demand for our merchandise among our customers, which may adversely affect our business.
We are in the business of retailing lifestyle products, apparels, books, music, groceries and other merchandise. We sell our own branded products as well as products of various other brands through our retail stores across India. We plan our product range based on forecasts of customer buying patterns and trends. Any mismatch between our planning and actual customer demand may lead to excess inventory, which may require us to mark down prices of the relevant products, thus lowering our margins in order to clear such inventory, and may adversely impact our business.
Our success depends partly upon our ability to anticipate and respond to changes in customer preferences in a timely manner. Further, the success of our own brand label depends on our ability to understand trends, introduce new products and explore new business opportunities on a regular basis. Our inability to identify and recognize international and domestic trends and customer preferences, obsolescence of our merchandise or our failure to meet necessary customer requirements could adversely affect our business.
2. Under our business model, we carry the inventory on our books prior to the actual sale of the merchandise to end customers. Inventory levels in excess of customer demand may result in inventory write-downs and have a material adverse effect on our results of operations and financial condition.
Under our business model, for our primary retailing formats we carry the inventory on our books till the sale of the merchandise to the end customer and do not pass the inventory risk to the manufacturer or supplier. This business model requires us to maintain high inventory levels and is working capital intensive. Inventory levels in excess of customer demand may result in inventory write-downs and have a material adverse effect on our results of operations and financial condition.
3. One of the objects of the Issue is to inject funds into our loss-making subsidiary, Trent Hypermarket Limited.
As a part of our growth strategy, we plan to expand the chain of Star Bazaar Hypermarket stores into other cities. The Star Bazaar Hypermarket stores are managed by our subsidiary Trent Hypermarket Limited. We would be investing the proceeds of this Issue in Trent Hypermarket Limited through debt and/or equity securities and/or loans and/or any other instrument allowed under applicable law. There can be no assurance that Trent Hypermarket Limited will generate profits in the future or that the investments made towards additional stores will be profitable.
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4. There have been delays and variation in the utilization of proceeds of our last rights issue According to the objects of the issue stated in the letter of offer dated April 30, 2007 in connection with our previous rights issue, the proceeds of such rights issue were to be utilized for setting up new stores, for the upgradation and expansion of existing stores and for meeting issue expenses. The Star Bazaar business, which was a division of the Company at the time of the previous rights issue, was transferred to Trent Hypermarket Limited (“THL”), a wholly-owned subsidiary of the Company, with effect from August 1, 2008. Consequent to the above change in structure, the Company invested part of the issue proceeds in THL. The Company also utilized part of the proceeds for investment in the joint venture of the Company for opening Zara stores.
Also, there have been certain delays in the setting up of stores listed in the objects in such previous letter of offer vis-à-vis the estimated implementation schedule. In some cases, the Company has identified and opened new stores in other properties where the delivery of properties (as mentioned in the letter of offer dated April 30, 2007) was delayed.
We cannot assure you that the objects of the proceeds of the present issue will be implemented in the manner stated in this Letter of Offer or that the implementation of these objects will not be delayed.
5. Our financials may not be comparable.
THL is a wholly-owned subsidiary of Trent Limited and was incorporated on July 1, 2008. THL is engaged in the retail business. The Company transferred its Star Bazaar business, as a going concern, to THL with effect from August 1, 2008. As a result of such transfer, the Company’s financials as of and for the periods ended March 31, 2010 and March 31, 2009 may not be comparable.
6. Our products include a range of lifestyle merchandise, apparel and leisure products, the demand for which may be seasonal due to the occurrence of festivals, including Durga Puja, Diwali, Christmas and Id, in the third quarter of our financial year. Any material decline in sales during this period could have a material adverse effect on our profitability and financial condition.
Our business has historically recorded higher sales during the third quarter of our financial year due to the occurrence of certain festivals, including Durga Puja, Diwali, Christmas and Id, during such period. Our operating costs, such as employee costs, lease rentals, store-operating costs, distribution and logistics costs, are mainly fixed. As a result of this, our operating profits are normally higher during this period. However, consumer spending during such period is conditional upon a variety of factors, including consumer preference and general economic conditions. Any material decline in sales during this period could have a material adverse effect on our profitability and financial condition.
7. The success of our business is dependent on supply chain management. Inefficient supply chain management by us or third parties may adversely affect our business and our results of operations.
The success of our business is dependent on supply chain management. Ensuring availability of shelf space for our products requires quick turnaround times and a high level of coordination with suppliers. Food and other grocery items, which are perishable or have a limited shelf life, require efficient supply chain management. We outsource to third parties the supply chain management of certain of our perishable goods. Inefficient supply chain management by us or third parties may lead to the unavailability or loss of merchandise and could adversely affect our business and our results of operations.
8. We are dependent on our loyalty programmes for retention of our customers. Any shift in spending patterns and shopping preferences of our customers may have an adverse impact on our Company’s performance.
We have initiated several programmes across our stores with the aim of maintaining customer loyalty, such as the “Clubwest Program” for our Westside chain of stores, the “Landmark” loyalty programme for our Landmark chain of stores and “Clubcard” for customers at our Star Bazaar stores. Under these programmes, points are credited for purchases made in our stores. Any shift in spending patterns and shopping preferences of our customers may have an adverse impact on our Company’s performance.
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9. The success of our business depends on our ability to identify and acquire rights to quality retail spaces. If we fail to lease or acquire targeted properties, this may adversely affect our business, operations and profitability.
The success of our business depends on our ability to identify and acquired rights (mostly on a leasehold basis) to quality retail spaces at appropriate terms and conditions. We compete with other large retailers to obtain real estate properties. If we fail to lease or acquire targeted properties, we may face delays in the execution of our expansion programme, which may result in cost overruns or otherwise adversely affect our business, operations and profitability.
10. Most of the premises occupied by us for our stores are on leasehold basis. If we are unable to execute or renew lease arrangements, this may have a material adverse effect on our business, financial performance and profitability.
Apart from five stores which are situated on properties owned by us or our subsidiaries, our stores are operated from premises which are acquired on a long-term leasehold or leave and license basis or on the basis of other contractual agreements with third parties. For some of the stores from which we operate, we have entered into agreements to lease the properties, but have not yet entered into lease deeds. If we are unable to execute or renew lease arrangements, this may lead to time and cost overruns and may have a material adverse effect on our business, financial performance and profitability.
11. Any adverse impact on the title or ownership rights or development rights of our landlords from whose premises we operate may adversely affect the operation of our stores, offices or distribution centres.
Most of the premises where we have our stores, offices and distribution centres are taken by us on long term lease or leave and licence or on the basis of other contractual agreements with third parties. We may continue to enter into such transactions with third parties. Any adverse impact on the title / ownership rights / development rights of our landlords from whose premises we operate our stores may impede our business, our operations and our profitability. Also, the sale by the incumbent landlord of their interest in the said properties could in certain cases adversely impact our contractual rights. Additionally, some of our lease agreements prescribe a lock-in period. These lock-in periods prevent us from moving our stores in the event that there are events or circumstances that impede our profitability. Any such event and such restrictive covenants in our lease agreements affect our ability to move the location of our stores and may adversely affect our business, financial condition and results of operations.
12. Strategic alliances may result in additional risks and uncertainties in our business.
We have entered into several strategic arrangements, including a joint venture with Industria De Diseño Textil, Sociedad Anónima (Inditex) to open Zara stores in India; a strategic alliance with Xander Investment Management (Xander) with respect to retail real estate development; a franchise arrangement with Benetton India Limited with regard to the operation of Sisley stores in India; a strategic association (involving a franchise and wholesale supply arrangement) with Tesco PLC for our Star Bazaar hypermarket business; and a shareholders’ arrangement with a private equity fund namely TVS Shriram Growth Fund I for our Landmark business. We may face numerous risks and uncertainties in relation to the above arrangements. In such arrangements (whether existing or proposed), we are subject to additional risks and uncertainties in that we may depend upon and be subject to liabilities, losses or damages, including to our reputation. In addition, conflicts or disagreements between us and our strategic alliance counterparties may adversely impact our businesses.
Present and future acquisitions and strategic alliances may entail certain risks, including ineffective integration of operations, the inability to maintain key pre-acquisition business relationships and to integrate new relationships, the inability to retain key employees, increased operating costs, exposure to unanticipated liabilities, risks of misconduct by employees not subject to our control, difficulties in realising projected efficiencies, synergies and cost savings, and exposure to new or unknown liabilities. If any of our alliance counterparties seek exit in full or in part or seek increased participation regarding the prevailing arrangements, we may have to review and substantially change our strategy with respect to the concerned business and any such change may adversely affect our business, financial condition and results of operations. Any future investments, acquisitions or joint ventures may require the allocation of
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significant resources and/or result in significant unanticipated losses, costs or liabilities. In addition, expansions, acquisitions, strategic alliances or joint ventures may require significant managerial attention, which may be diverted from our other operations.
13. We may in the future face potential liabilities from lawsuits or claims by customers.
We face the risk of legal proceedings and claims being brought against us by our customers for any defective product sold or any deficiency in our services to them. The total amount involved in the customer claims outstanding as on June 30, 2010 against us was Rs.14.50 lakhs. Also, since we have a large number of customers visiting our stores daily, we could face liabilities should our customers face any loss or damage due to any unforeseen incident such as fire or an accident in these stores. This may result in liabilities for our Company and/or financial claims made against our Company as well as loss of business and reputation. We have taken public and product liability insurance policies, which may not adequately cover all losses, damages or claims.
We are also required to comply with the provisions of the Standards of Weight and Measures Act, 1976 and the rules made thereunder, such as the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Similarly, the Company is required to comply with the provisions of the Prevention of Food Adulteration Act, 1954 and the rules made thereunder. These regulations prescribe certain standards with regard to food products and packaging. We are required to meet these standards both for products that we manufacture as well as for the products made by other manufacturers and sold by us. Failure by us or by these manufacturers to meet prescribed standards may subject us to regulatory action and may adversely affect our business and reputation.
14. If our competitors misappropriate our trademarks or other intellectual property rights, it could have a material adverse effect on our business. Registration applications for some of our trademarks are pending with the relevant trademark authorities. If we are unable to register such trademarks, this may adversely affect our ability to protect such marks and the value of the marks for our in-house brands.
Our success depends on our ability to protect and preserve our intellectual property, including our trademarks and copyrights. We market our in-house products under our brands. We hold over 30 trademarks, which are registered in our name. We have also applied to register several other trademarks with the relevant authorities, which applications are currently pending. Any delay or failure to register these trademarks may adversely affect our ability to protect our in-house brands and may lead to a dilution of such brands and lower their value. Further, if a competitor copies or otherwise gains access to our database, we may not be able to compete effectively. The loss of, or our inability to enforce, our intellectual property rights and other proprietary know-how may adversely affect our business. We may need to bring legal claims to enforce or protect intellectual property rights. Any litigation, whether successful or unsuccessful, could result in substantial costs and diversion of resources.
15. We rely on third parties for the supply and transportation of our merchandise from our warehouses to our stores, which are subject to various uncertainties and risks. Any disruptions in the supply or transportation of merchandise could materially and adversely affect our business, financial condition and results of operations.
We rely completely on third parties to transport our merchandise from our warehouses to our stores. We predominantly rely on road transportation for the delivery of our merchandise. Current transportation facilities may not be adequate to support our existing and future operations. Further, disruptions of transportation services due to weather-related problems, strikes, lock-outs, inadequacies in the road infrastructure or other events could impair our ability to supply our merchandise to our stores. Any disruptions in the supply or transportation of merchandise could materially and adversely affect our business, financial condition and results of operations.
16. We rely on our information technology systems and any failure in our systems could adversely impact our business.
We rely extensively on our information technology systems to provide connectivity across our business functions through our software, hardware and connectivity systems. Any delay in the implementation of
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such systems or any disruption in the functioning of existing systems could disrupt our ability to track, record and analyze the merchandise that we sell and cause disruptions in operations, including, among others, an inability to process the shipments of goods, process financial information or credit card transactions, deliver products or engage in similar normal business activities. Any such delay or disruption may have a material adverse effect on our business.
17. We face competition from existing retailers, online retailers and potential entrants, both domestic and foreign, to the retail industry that may adversely affect our competitive position and our profitability.
Loss of market share and increase in competition may adversely affect our profitability. We face competition from other retailers. Further, we face competition from online retailers who market similar products as us. With the opening of new malls, many new players are expected to enter organized retailing and competition could increase. The entry strategy of the new entrants and growth strategy of existing competitors may not be focussed on profitability in the short term. This could adversely affect the profitability dynamics of the retail business. Some of our competitors may be able to compete more effectively because of their access to significantly greater resources, which may lead to increased competition. Such increase in competition may cause us to increase our marketing expenditure, reduce prices of our products, thereby reducing margins. With increased competition, the demand for good store locations may increase, impacting our cost of operation.
Additionally, we may face competition from international players if foreign participation in the retail sector is further liberalized. Moreover, as the industry is highly fragmented, we also face competition from local stores who may, for a variety of reasons, such as easier access to, as well as established personal relationships with, the customers, be able to cater to local demands better than us. Our inability to compete successfully in our industry would materially affect our business prospects and financial condition.
18. We are dependent upon other entities for our manufacturing and distribution process.
The manufacturing process for our private labels is outsourced to our vendors. We are exposed to the risk of our service providers and vendors failing to adhere to the standards set for them by us in respect of quality and quantum of production and distribution which in turn could adversely affect our net sales and revenues. In addition, certain of our service providers and vendors are retained on a non-exclusive basis and may engage in other businesses that may even compete with ours. If our competitors provide better incentives to our service providers and vendors, it may result in our service providers and vendors promoting the products of our competitors instead of ours. Also, delays in delivery of merchandise by our vendors and their financial instability could adversely impact the availability of merchandise in our stores and have a material adverse effect on our business and financial condition.
19. Certain of our subsidiaries have incurred losses in the last three fiscal years. As set forth below, some of our subsidiaries have incurred losses during the last three fiscal years (as per their respective standalone financial statements). They may continue to incur losses in future periods, which could have an adverse effect on our results of operations.
The details of the subsidiaries which have incurred losses in last three fiscal years are provided in the following table: (Rs. in lakh) Sr. no. Name of Subsidiary Profit/(loss) after tax For the year ended March 31, 2008 2009 2010
1. Trent Brands Limited 250.82 (81.03) (146.47)
2. Fiora Link Road Properties Limited (0.19) (0.11) (0.23)
3. Trent Hypermarket Limited N.A. (1768.82) (2913.72)
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4. Trent Global Holdings Limited N.A. (334.20 (6.67)
5. Landmark Limited 220.67 (193.00) (167.59)
6. Westland Limited 20.08 (193.27) (84.12)
7. Regent Management Private Limited (0.10) (0.11) (0.18)
8. Landmark E-Tail Private Limited (0.85) (0.52) 0.87
9. Nahar Theaters Private Limited 5.36 19.71 (10.89)
20. Contingent liabilities, if crystallized, could adversely affect the financial condition of our Company since the provision made in the books of accounts of our Company may not be adequate. Our contingent liabilities based on standalone financial statements as on March 31, 2010 were as follows: (Rs. in lakh) Sr. no. Nature of liability Amount 1. Claims made against the Company not acknowledged as debt 784.29 2. Sales tax, excise and custom demands against which the Company has 61.81 filed appeals 3. Income tax demands against which the Company has filed appeals 362.23 4. Corporate guarantee given on behalf of Subsidiary 1,500.00 5. General provision for contingencies* 205.00 *As a matter abundant caution, a general provision for contingencies of up to Rs. 205.00 lakh has been made till March 31, 2010 against items 1, 2 and 3 above, which are disputed by the Company.
If any of these contingent liabilities materialise, fully or partly, the financial condition of our Company could be materially and adversely affected. For more information regarding our contingent liabilities, please refer to the section titled “Financial Information” on page 52 of this Letter of Offer.
21. Our operations are subject to various business risks and there may be inadequate insurance coverage to cover our economic losses as well as certain other risks including those pertaining to claims by third parties and litigation. Our operations are subject to various risks and hazards which may adversely affect our profitability, including natural calamities, failure or substandard performance of network equipment, third party liability claims, labour disturbances, employee frauds, infrastructure failure and terrorist activities.
Though we have, in our opinion, taken adequate safeguards to protect our assets from various perceived risks, it is possible that our insurance may not provide adequate coverage in certain circumstances. These may include claims by third parties and litigation. Also, insurance policies are usually subject to certain deductibles, exclusions and limits on coverage.
If our arrangements for insurance or indemnification are not adequate to cover claims, including those exceeding policy aggregate limitations or exceeding the resources of the indemnifying party, we may be required to make payments that may adversely affect our financial condition and results of operations.
22. We are dependent on our management team and key personnel and loss of any key team member may adversely affect our business performance.
Our business is managed by a core management team that supervises the day-to-day operations, strategy and growth of our business. If one or more members of our key management team are unable or unwilling to continue in their present positions, such persons may be difficult to replace and our business,
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prospects, financial condition and results of operations could be adversely affected.
23. Our business and results of operations could be adversely affected if we are unable to meet our employees’ needs.
Our success in expanding our business will also depend, in part, on our ability to attract, retain and motivate appropriately qualified people at various levels. If we fail to successfully manage our employees’ needs, it could adversely affect our business prospects, financial condition and results of operations.
24. If we are not able to obtain, renew or maintain the permits and approvals required to operate our business, this may have a material adverse effect on our business.
Our Company requires certain permits and approvals to operate its businesses and/or facilities, including such permits required by the environmental regulatory authorities. Failure by our Company to renew, maintain or obtain the required permits and approvals, and technology licenses in a timely manner or at all may interrupt our Company’s operations and may have a material adverse effect on our Company’s results of operations, financial condition and prospects.
25. We are involved in certain legal proceedings that, if decided against us, could have an adverse effect on our reputation, business prospects and results of operations.
There are several litigations outstanding against our Company. The total amount involved in the legal proceedings outstanding against us as on June 30, 2010 is Rs. 837.28 lakhs plus interest. In the event of an adverse outcome in any of the material litigation against our Company, our business, reputation and results of operations could be adversely affected. For details of outstanding material litigation pending against our Company, please refer to the section titled “Outstanding Litigation” on page 129 of this Letter of Offer.
26. We have not entered into any definitive agreements to use the proceeds of the Issue and may use a part of the Net Proceeds towards general corporate purposes. Further, the use of proceeds to be raised through this Issue is not subject to monitoring by any independent agency.
We intend to use the proceeds of the Issue for setting up new stores through our subsidiary Trent Hypermarket Limited, for the redemption of debentures and for general corporate purposes. For further details, see the section titled “Objects of the Issue” on page 34 of this Letter of Offer. We have not entered into any definitive agreements to utilise the Net Proceeds. The purposes for which the Net Proceeds are to be utilised have not been appraised by a bank or financial institution and are based on our estimates. No independent body will be monitoring the use of proceeds. In addition, our capital expenditure plans are subject to a number of variables, including possible cost overruns and changes in management’s views of the desirability of current plans, among others. There can be no assurance that we will be able to conclude definitive agreements on commercially acceptable terms. Furthermore, we have not currently placed any orders in relation to our investment in Trent Hypermarket Limited sought to be funded by the net proceeds of the Issue. As a result, our planned use of the proceeds of the Issue, or the estimated costs relating to such expansion plans, may change. The store opening plans are dependent upon various real estate developers, handing over possession of stores on time or obtaining statutory approvals. This may lead to delay in the store opening plans and cause time and cost overruns. Any failure to effectively implement our growth strategy could have significant adverse impact on our business. We have experienced delays in obtaining possession of store sites on time in the past. Further, we have not identified the general corporate purposes for which we intend to utilise a portion of the net proceeds of the Issue.
27. Our business plans may need substantial capital and additional financing in the form of debt and/or equity to meet our requirements.
Our proposed business plans are being funded through this Issue and by our internal cash accruals. However, the actual amount and timing of future capital requirements may differ from estimates, including but not limited to unforeseen delays or cost overruns, delays in handing over of properties, unanticipated expenses, market developments or new opportunities in the industry. Our ability to raise capital is also restricted due to foreign investment restrictions applicable to the retail industry. We may
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also not be able to generate internal cash in our Company as estimated and may have to resort to alternate sources of funds. Sources of additional financing may include commercial borrowings, vendor financing, or issue of equity or debt instruments. If we decide to raise additional funds through the debt route, the interest obligations would increase and we may be subject to additional covenants, which could limit our ability to access cash flows from the operations. If we decide to raise additional funds through equity route, your shareholding in our Company could get diluted.
28. Renunciation by any shareholder in favour of a non-resident will require prior approval of the RBI and/or FIPB, subject to certain terms and conditions.
Renunciation of any Rights Entitlement by any Equity Shareholder in favour of a non-resident (other than renunciation by a resident or FII in favour of an FII) will require prior approval of the RBI and/or FIPB, subject to certain terms and conditions. There can be no certainty as to the conditions subject to which the approval may be granted or whether the approval will be granted at all. For more details on the restrictions applicable to non-residents please refer to the section titled “Terms of the Issue” beginning on page 146 of this Letter of Offer.
External risks 29. Public places, such as malls in which our stores are located, could be targets for unforeseen acts of violence (including terrorist acts and riots), which may adversely impact our business.
Any acts of violence (including terrorist acts and riots) in public places, such as malls in which our retail stores are located, could cause damage to life and property, and also impact consumer sentiment and their willingness to visit public places, which may adversely impact our business. The financial impact of the aforesaid risk cannot be reasonably quantified.
30. We rely on various external partners on whom absolute control is not possible. We rely upon a large number of suppliers to provide us with products and services. If products are not obtained in a timely manner from suppliers or if the supply of such products is discontinued, our business, financial condition and results of operations may be adversely affected.
31. Multiplicity of local taxes and levies, including octroi and sales tax, impact the growth of organized retail and changes in these local taxes and levies may have a material adverse effect on our business, financial condition and results of operations. Each state in India has different local taxes and levies, including octroi and sales tax, which enhances the complexity for organized retailers to operate in these states as well as adds to such retailers’ costs. The incidence of levies on various products may lead to organized retailers functioning at a sub-optimal level, adversely impacting their competitiveness against unorganized players. Changes in these local taxes and levies may have a material adverse effect on our business, financial condition and results of operations. New taxes imposed by State/Central Government and the implementation of Goods and Services Tax (GST) and the uncertainty thereof may also materially increase the complexity of our operations and adversely impact the profitability of our business.
32. Levy of service tax on rentals may have a material adverse effect on our business, financial condition and results of operations. The Central Government, in 2007, imposed a service tax on rentals received by landlords. This was contested by certain retail companies as being unconstitutional. In April 2008, the Delhi High Court delivered a judgement in favour of such retail companies. Thereafter, the Government of India challenged such judgement and such appeal is currently pending with the Supreme Court of India. Also, the GoI has made certain changes in the related income tax provisions in the recent budget for 2010-11. The incidence of such service tax on rentals could materially impact the costs incurred by the Company in taking on properties and may have a material adverse effect on our business, financial condition and results of operations.
33. Our financial performance may be affected by economic conditions. Our financial performance depends in part upon the spending patterns of consumers, which, in turn, depends upon overall economic conditions especially in areas such as lifestyle products. Any adverse
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impact on the Indian economy may have a material impact on the consumer spend and thus on our financial condition and results of operations. Retail companies lease properties from investors who, in turn, borrow and invest in real estate. The yield available on the lease of properties is therefore dependent on the interest rates in the economy. Any change in the banking policy regarding financing of real estate or rates of interest could impact the availability of properties for retailing and thus have a material adverse effect on our business.
34. If we are unable to attract and retain qualified personnel, our results of operations may be adversely affected. Companies in the retail sector compete with companies in other emerging service sectors, such as telecommunications and information technology, to hire and retain quality personnel in addition to competing against companies within the sector. Hence, availability of trained manpower poses a key risk for the retail sector generally and to our business in particular. There will be further pressure on existing retail companies as new entrants look for trained manpower at various levels. If we are unable to attract and retain qualified personnel, our results of operations may be adversely affected.
35. Multiplicity of legislations impact the growth of organized retail. Companies in the retail sector are subject to multiple laws and regulations. Multiple licenses and clearances are required before a store can be opened. Thereafter, stringent laws pertaining to labour conditions, hours of work, etc. limit flexibility in operations, add to the overall cost of doing business and can impact operations.
36. We are subject to regulatory risks and changes in law which may adversely affect our business. Our operations are subject to regulations framed by various regulatory authorities in India and other jurisdictions, including regulations relating to foreign investment in India. Compliance with many of the regulations applicable to us across jurisdictions, including any restrictions on investments and other activities currently being carried out by our Company, involves a number of risks, particularly in areas where applicable regulations may be subject to interpretation. If the interpretation of the regulators and/or other competent authorities varies from our interpretation, we may be subject to penalties and our business could be adversely affected.
We are also subject to changes in Indian laws, regulations and accounting principles. There can be no assurance that these laws will not change in the future or that such changes or the interpretation or enforcement of existing and future laws and rules by governmental and regulatory authorities will not adversely affect our business and future financial performance.
Foreign investment in multi-brand retail in India is currently prohibited. Any change in the relevant regulations may require us to take cognizance of the expected change in the competitive landscape, revisit strategic alliance arrangements as appropriate under the applicable disposition and appropriately change our strategy with respect to various retail formats.
37. Terrorist attacks or war or conflicts involving countries in which we operate or where our customers are located could adversely affect the financial markets and adversely affect our business.
Terrorist attacks and other acts of violence, war or conflicts, particularly those involving India, as well as the U.S. and the EU, may adversely affect Indian and worldwide financial markets. Such acts may negatively impact business sentiment, which could adversely affect our business and profitability. India has from time to time experienced and continues to experience, social and civil unrest, terrorist attacks and hostilities with neighbouring countries. Also, some of India’s neighbouring countries have experienced, or are currently experiencing internal unrest. Such events could also create a perception that investments in companies such as ours involve a higher degree of risk than investments in companies in other countries. This, in turn, could have a material adverse effect on the market for securities in India, including our Equity Shares. The consequences of any armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business.
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38. We are subject to risks arising from interest rate fluctuations, which could adversely affect our business, financial condition and results of operations. Changes in interest rates could significantly affect our business, financial condition and results of operations. If the interest rates for our existing or future borrowings increase significantly, our cost of funds will increase. This may adversely impact our results of operations, planned capital expenditures and cash flows. Although we may in the future enter into hedging arrangements against interest rate risks, there can be no assurance that these arrangements will successfully protect us from losses due to fluctuations in interest rates.
39. Natural calamities could have a negative impact on the Indian economy and on our business. India, Bangladesh, Indonesia and other Asian countries have experienced natural calamities such as earthquakes, floods, droughts and a tsunami in recent years. Some of these countries have also experienced pandemics. Prolonged spells of abnormal rainfall and other natural calamities could have an adverse impact on the economies in which we have operations, which could adversely affect our business and the price of our CCPS and Equity Shares.
40. The market value of an investment in our CCPS may fluctuate due to the volatility of the Indian securities markets. The Stock Exchanges have, in the past, experienced substantial fluctuations in the prices of listed securities. Such fluctuations and volatility could affect the market price and liquidity of the securities of Indian companies, including our CCPS and Equity Shares. Moreover, there have been occasions when secondary market operations have been interrupted and/or affected due to temporary exchange closures, broker defaults, settlement delays and strikes by brokerage firm employees. In addition, the governing bodies of the Stock Exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time, disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.
SEBI received statutory powers in 1992 to assist it in carrying out its responsibility for improving disclosure and other regulatory standards for the Indian securities markets. Subsequently, SEBI has prescribed certain regulations and guidelines in relation to disclosure requirements, insider dealing and other matters relevant to the Indian securities markets.
41. Changes in the economic policies of the Government of India or political instability may adversely affect our business and financial condition.
The role of the Indian central and state governments in the Indian economy has remained significant over the years. Since 1991, the Government has pursued policies of economic liberalisation, including significantly relaxing restrictions on the private sector. There can be no assurance that these liberalisation policies will continue in the future. The rate of economic liberalisation could change and specific laws and policies affecting foreign investment, currency exchange rates and other matters affecting investments in Indian companies could change as well. A significant change in India’s economic liberalisation and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular.
The current Government is a coalition of several parties. The withdrawal of one or more of these parties could result in political instability. Any political instability could delay the reform of the Indian economy, which could materially adversely impact our business.
42. Currency exchange rate fluctuations may affect the value of the CCPS. Fluctuations in the exchange rate between the Rupee and the U.S. dollar will affect the dollar equivalent of the Rupee price of the Equity Shares on the Stock Exchanges, as well as the U.S. dollar value of the proceeds a holder would receive upon the sale in India of any Equity Shares. Equity Shareholders may not be able to convert Rupee proceeds into U.S. dollars or any other currency, and there is no guarantee of the rate at which any such conversion will occur, if at all.
43. Our transition to IFRS reporting could have a material adverse effect on our reported results of operations or financial condition.
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The Ministry of Corporate Affairs, Government of India, through a press note dated January 22, 2010 (the “ IFRS Convergence Note ”), announced that public companies in India may be required to prepare annual and interim financial statements under IFRS in accordance with the roadmap for the adoption of, and convergence with, the IFRS. Pursuant to the IFRS Convergence Note, all companies which (i) are a part of the Nifty 50 index of the NSE, (ii) of the Sensex 30 index of the BSE, or (iii) which have a net worth in excess of Rs. 1,000 crore will be required to convert their opening balance sheets as at April 1, 2011 in compliance with the notified accounting standards which are convergent with IFRS. Further, according to the IFRS Convergence Note, companies which have a net worth of over Rs. 500 crore but less than Rs. 1,000 crore will be required to convert their opening balance sheets as at April 1, 2013 in compliance with the notified accounting standards which are convergent with IFRS.
Our financial condition, results of operations, cash flows or changes in shareholders’ equity may appear materially different under IFRS than under Indian GAAP or our adoption of IFRS may adversely affect our reported results of operations or financial condition. This may have a material adverse effect on the amount of income recognised during that period and in the corresponding (restated) period in the comparative fiscal year/period.
In addition, in our transition to IFRS reporting, we may encounter difficulties in the ongoing process of implementing and enhancing our management information systems. Moreover, our transition may be hampered by increasing competition for the relatively small number of IFRS-experienced accounting personnel available as more Indian companies begin to prepare IFRS financial statements.
Risks related to the CCPS and the Equity Shares 44. There is no existing market for our CCPS. While our Equity Shares are listed on the Stock Exchanges, there is no existing market for our CCPS. We cannot assure you that a trading market for the CCPS issued pursuant to the Issue will develop or, if a market does develop, that there will be liquidity in the market for the CCPS. In the event there is insufficient demand for the CCPS, your ability to sell the CCPS on the Stock Exchanges may be impeded.
45. Our shareholders bear the risk of fluctuation in the price of our shares. It is impossible to predict whether the price of our CCPS and the Equity Shares arising upon conversion of the CCPS will rise or fall. Trading prices of our CCPS will be influenced by, among other things, the financial position of and the results of operations of our Company, as well as political, economic, financial and other factors.
46. There is no assurance that the CCPS will be listed on the BSE and the NSE in a timely manner or at all and any trading closures at the BSE and the NSE may adversely affect the trading price of the CCPS. In accordance with Indian law and practice, permission for listing of the CCPS will not be granted until after the CCPS have been issued and allotted. Such permission will require that all other relevant documents authorising the issue of the CCPS be submitted failing which there could be a delay or failure to list the CCPS. Any failure or delay in obtaining the approval would restrict the Investor’s ability to dispose of their CCPS.
Prominent notes :
1. The net worth of the Company as on March 31, 2010 was Rs. 64,050.51 lakh.
2. Issue of 89,14,164 cumulative compulsorily convertible preference shares (“ CCPS ”) comprising of 44,57,082 Series A cumulative compulsorily convertible preference shares of the Company with a face value of Rs. 10 each for cash at a price of Rs. 550 each (including a premium of Rs. 540 each) (“ CCPS Series A ”) and 44,57,082 Series B cumulative compulsorily convertible preference shares of the Company with a face value of Rs. 10 each for cash at a price of Rs. 550 each (including a premium of Rs. 540 each) (“ CCPS Series B ”) aggregating up to Rs. 4,90,27,90,200 to the equity shareholders of the Company on a rights basis in the ratio of 4 CCPS (comprising 2 CCPS Series A and 2 CCPS Series B) for every 9 Equity Shares held on the Record Date, i.e. July
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10, 2010, (the “ Issue ”). One CCPS Series A is convertible into one Equity Share of the Company and one CCPS Series B is convertible into one Equity Share of the Company. The issue price for the CCPS Series A is 55 times the face value of the CCPS Series A and the issue price for the CCPS Series B is 55 times the face value of the CCPS Series B.
3. The aggregate amount of the related party transactions for the financial year 2009-10 is Rs. 28,432.41 lakhs. For details of transactions with our Group Companies and Subsidiaries, please refer to the section titled “Financial Information-Related Party Transactions” on page 52 of this Letter of Offer.
4. There is no financing arrangement whereby the promoter group, the directors of the Promoters, the Directors and their relatives have financed the purchase by any other person of securities of the Issuer other than in the normal course of business of the financing entity during the period of six months immediately preceding the date of filing the Letter of Offer with SEBI.
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SUMMARY OF THE ISSUE
The following is a summary of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, more detailed information in the section tiled “Terms of the Issue” on page 146.
This issue of CCPS is being made by the Company as set forth below
CCPS offered by the One (1) CCPS Series A and one (1) CCPS Series B are each Company convertible into 1 Equity Share.
Rights Entitlement 4 CCPS (comprising 2 CCPS Series A and 2 CCPS Series B) for every 9 Equity Shares held on the Record Date
Record Date July 10, 2010.
Issue price Rs. 550 per CCPS Series A and Rs. 550 per CCPS Series B.
Conversion date(s) The CCPS Series A will be compulsorily and automatically converted on September 1, 2011 and CCPS Series B will be compulsorily and automatically converted on September 1, 2012.
Preference shares of the 70,000 redeemable preference shares of Rs. 1,000 each. Company outstanding prior to the Issue
Preference shares of the 70,000 redeemable preference shares of Rs. 1,000 each. Company outstanding after 44,57,082 CCPS Series A with a face value of Rs. 10 each. the Issue 44,57,082 CCPS Series B with a face value of Rs. 10 each.
Equity Shares outstanding 2,00,56,877 Equity Shares. prior to the Issue
Equity Shares outstanding 2,00,56,877 Equity Shares. after the Issue
Equity Shares outstanding 2,45,13,959 Equity Shares after the conversion of CCPS Series A. after the conversion of 2,89,71,041 Equity Shares after the conversion of CCPS Series B. CCPS
Terms of the Issue See “Terms of the Issue” on page 146 of this Letter of Offer.
Use of Issue Proceeds See “Objects of the Issue” on page 34 of this Letter of Offer.
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GENERAL INFORMATION
Dear Equity Shareholder(s),
Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on April 26, 2010, the Company has been authorized to make the following offer to the existing Equity Shareholders:
ISSUE OF 89,14,164 CUMULATIVE COMPULSORILY CONVERTIBLE PREFERENCE SHARES (“CCPS”) COMPRISING OF 44,57,082 SERIES A CUMULATIVE COMPULSORILY CONVERTIBLE PREFERENCE SHARES OF THE COMPANY WITH A FACE VALUE OF RS. 10 EACH FOR CASH AT A PRICE OF RS. 550 EACH (INCLUDING A PREMIUM OF RS. 540 EACH) (“CCPS SERIES A”) AND 44,57,082 SERIES B CUMULATIVE COMPULSORILY CONVERTIBLE PREFERENCE SHARES OF THE COMPANY WITH A FACE VALUE OF RS. 10 EACH FOR CASH AT A PRICE OF RS. 550 EACH (INCLUDING A PREMIUM OF RS. 540 EACH) (“CCPS SERIES B”) AGGREGATING UP TO RS. 4,90,27,90,200 ON A RIGHTS BASIS IN THE RATIO OF 4 CCPS (COMPRISING 2 CCPS SERIES A AND 2 CCPS SERIES B) FOR EVERY 9 EQUITY SHARES HELD ON THE RECORD DATE, I.E. JULY 10, 2010, (THE “ISSUE”). ONE CCPS SERIES A IS CONVERTIBLE INTO ONE EQUITY SHARE OF THE COMPANY AND ONE CCPS SERIES B IS CONVERTIBLE INTO ONE EQUITY SHARE OF THE COMPANY.
For further details please refer to the section titled “Terms of the Issue” on page 146 of this Letter of Offer.
Registered Office of our Company
Bombay House, 24 Homi Mody Street, Mumbai 400 001, Maharashtra, India.
Tel: +91 22 6665 8282 Fax: +91 22 2204 2081
Corporate Office
Trent House, G Block, Plot No. C-60, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India.
Tel: +91 22 6700 9000 Fax: +91 22 6700 8100
Registration No .: 11-8951 of 1952-1953
Corporate Identification Number : L24240MH1952PLC008951
Registrar of Companies, State of Maharashtra
Everest House, 100 Marine Drive, Mumbai - 400 002 Maharashtra, India.
The Equity Shares of our Company are listed on the BSE and the NSE.
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Company Secretary and Compliance Officer Mr. M. M. Surti Company Secretary Trent House, G Block, Plot No. C-60, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India.
Tel: +91 22 6700 9000 Fax: +91 22 6700 8100 Email: [email protected] Website: www.mywestside.com
Investors may contact the Compliance Officer / Registrar to the Issue for any pre-Issue / post-Issue related matters including inter alia non-receipt of Letter of Offer / Abridged Letter of Offer, CAF, allotment advice, share certificate(s), refund order(s) etc.
Lead Managers to the Issue
JM Financial Consultants Private Limited Tata Capital Markets Limited 141 Maker Chambers III, One Forbes, Dr. V.B. Gandhi Marg Nariman Point, Mumbai - 400021 Fort, Mumbai 400 001 Tel: +91 22 3953 3030 Tel: +91 22 6745 9000 Fax: +91 22 2204 7185 Fax: +91 22 2261 8215 Email: [email protected] Email: [email protected] Investor Grievance Email: Investor Grievance ID: [email protected] [email protected] Website: www.jmfinancial.in Contact Person: Mr. Abhishek Jain Contact Person: Ms. Lakshmi Lakshmanan Website: www.tatacapital.com SEBI Registration No.: INM000010361 SEBI Registration No: INM000011302
Legal advisor to the Issue
AZB & Partners Express Towers, 23 rd Floor Nariman Point Mumbai - 400 021 Tel : +91 22 6639 6880 Fax : +91 22 6639 6888 Email : [email protected]
Registrar and transfer agent for the Company
TSR Darashaw Limited 6/10, Haji Moosa Patrawala Industrial Estate 20, Dr. E. Moses Road Mahalaxmi, Mumbai - 400 011, India
Registrar to the Issue
Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S Marg, Bhandup West, Mumbai - 400 078, Maharashtra, India
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Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Email: [email protected] Website: www.linkintime.co.in Contact Person: Mr. Pravin Kasare SEBI Registration No.: INR 000004058
Investor may contact the registrar to the issue/compliance officer in case of any pre-Issue/Post Issue related problems.
Bankers to the Issue
HDFC Bank Limited FIG - OPS Department, Lodha - I Think Techno Campus, O-3 Level, Next to Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400 042. Tel: +91 22 3075 2928 / +91 93242 72185 Fax No. : +91 22 2579 9801 Email: [email protected]
Citibank, N.A. Citigroup Centre 6th Floor, Bandra Kurla Complex, Bandra (East) Mumbai - 400 051 Tel: +91 22 4001 5757 Fax: +91 22 2653 5824 Email: [email protected] , [email protected]
Self Certified Syndicate Banks
The list of banks that have been notified by SEBI to act as SCSBs for the ASBA process are provided on http://www.sebi.gov.in. For details on designated branches of SCSBs collecting the CAF, please refer the above mentioned SEBI link.
Auditors of our Company
N.M. Raiji & Co Chartered Accountants, Universal Insurance Building, Pherozeshah Mehta Road, Mumbai 400 001, India Tel: +91 22 2287 0068 Fax: +91 22 2282 8646 Email: [email protected]
Auditors of the Subsidiaries and Joint Ventures
Trent Hypermarket Limited, Trent Brands Limited, Fiora Services Limited, Fiora Link Road Properties Limited, Nahar Theatres Private Limited
M/s. N. M. Raiji & Co. Chartered Accountants, Universal Insurance Building, Pherozeshah Mehta Road, Mumbai 400 001, India
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Tel: +91 22 2287 0068 Fax: +91 22 2282 8646 Email: [email protected]
Landmark Limited, Westland Limited
Deloitte Haskins & Sells Chartered Accountants ASV N Ramanas Tower 7th , 8th & 9 th Floor Old No. 37 & 38, New No. 52 Venkatnarayana Road T. Nagar, Chennai – 600 017 India. Tel: +91 44 6688 5000 Fax: +91 44 6688 5050 Fax +91 44 6688 5100 Email: [email protected]
Trexa ADMC Private Limited
Deloitte Haskins & Sells Chartered Accountants 12, Dr. Annie Besant Road, Opp. Shiv Sagar Estate, Worli Mumbai – 400 018 India. Tel: +91 22 6667 9000 Fax: +91 22 6667 9100 Email: [email protected]
Landmark E-tail Private Limited, Regent Management Private Limited
M/s. V.V.S. Kumar & Co. Chartered Accountants Flat C-3, Soundarya Apartments, 49, Mambalam High Road, T. Nagar, Chennai – 600 017. Tel: +91 44 2814 3194 Fax: +91 44 2814 3194 Email: [email protected]
Inditex Trent Retail India Private Limited
M/s. B S R and Co (KPMG) Chartered Accountants, 8th Floor, Tower B, DLF Building # 10, DLF Cyber City, Phase II, Gurgaon, Haryana 122 002, India. Tel: +91 124 254 9191 Fax: +91 124 254 9101 Email: [email protected]
Trent Global Holdings Limited
Kemp Chatteris Deloitte 3rd Floor, Cerné House, La Chaussée, Port Louis, Mauritius, P.O. Box 322 Tel.: +230 203 8000
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Fax: +230 208 8002 Email: [email protected]
Inter-se responsibilities of the Lead Managers
The responsibilities and coordination roles for various activities in this Issue have been allocated between the Lead Managers as follows:
No. Activities Responsibility* Coordinator
1. Capital structuring with the relative components and JM Financial JM Financial formalities such as the composition of debt and equity, type of instruments, etc. 2. Liaison with Stock Exchanges and SEBI, including JM Financial JM Financial obtaining in-principle listing approval and completion of prescribed formalities with the Stock Exchanges and SEBI 3. Due diligence of our Company’s operations / JM Financial, JM Financial management /legal/ business plans etc. Drafting & TCML* design of the offer document and of statutory advertisement/publicity material including newspaper advertisements and memorandum/ brochure containing salient features of the offer document. The designated Lead Manager shall ensure compliance with stipulated requirements and completion of prescribed formalities (including finalization of Letter of Offer) with Stock Exchanges, the Registrar of Companies and SEBI. 4. Drafting and approval of all publicity material other JM Financial JM Financial than statutory advertisement (mentioned in (3) above) including corporate advertisement, brochure, corporate film, etc. 5. Marketing of the Issue, which will cover, inter alia, JM Financial, TCML formulating marketing strategies, preparation of TCML* publicity budget, arrangements for selection of (i) ad- media, (ii) centres of holding conferences (iii) collection centres, (iv) distribution of publicity and issue material including application form, Letter of Offer, Abridged Letter of Offer and brochure and deciding on quantum of issue material. 6. Selection of various agencies connected with the issue, JM Financial JM Financial namely Registrar to the Issue, Bankers to the Issue, printers and advertisement agencies. 7. Follow-up with Bankers to the Issue to get estimates of JM Financial JM Financial Collection and advising the Issuer about closure of the Issue, based on correct figures. 8. The post Issue activities will involve essential follow JM Financial JM Financial up steps, which must include finalization of basis of allotment / weeding out of multiple applications, listing of instruments and dispatch of certificates and refunds, with the various agencies connected with the work such as Registrar to the Issue, Bankers to the Issue and the bank handling refund business. Lead Managers shall be responsible for ensuring that these agencies fulfill their functions and enable them to discharge this responsibility through suitable agreements with the Issuer Company.
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* TCML is an indirect subsidiary of Tata Sons Limited, which is our Promoter. TCML has signed the due diligence certificate and accordingly has been disclosed as a Lead Manager. Further, in compliance with the proviso to regulation 21A(1) and explanation (iii) to regulation 21A(1) of SEBI (Merchant Bankers) Regulations, 1992, read with Regulation 110 and Schedule XX of the SEBI ICDR Regulations, TCML would be involved only in the marketing of the Issue.
Monitoring Agency
Since the Issue size does not exceed Rs. 500 crore, the appointment of a monitoring agency as per Regulation 16 of the SEBI Regulations is not required. The Board of Directors of our Company will monitor the use of the proceeds of this Issue.
Underwriting The present Issue is not underwritten.
Impersonation
As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of subsection (1) of Section 68A of the Act which is reproduced below:
“Any person (a) who makes in a fictitious name an application to a company for acquiring, or subscribing for, any shares therein, or otherwise induces a company to allot, or register any transfer of shares therein to him, or (b) any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”
Appraisal Reports
None of the purposes for which the net proceeds are proposed to be utilised have been financially appraised by any bank or financial institution.
Principal Terms of Loans and Assets Charged as Security
For details of the principal terms of loans and assets charged as security, please see the section titled “Financial Indebtedness” on page 128.
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CAPITAL STRUCTURE
Aggregate nominal Aggregate value at Issue value price (in Rs.) (in Rs.)
Authorized share capital
3,20,00,000 Equity Shares of Rs. 10/- each 32,00,00,000/-
50,00,000 unclassified shares of Rs. 10/- each 5,00,00,000/-
70,000 redeemable preference shares of Rs. 1,000/- 7,00,00,000/- each
1,20,00,000 cumulative convertible preference shares 12,00,00,000/- of Rs. 10/- each
Total 56,00,00,000/-
Issued share capital
2,00,56,877 Equity Shares of Rs. 10/- each 20,05,68,770/-
70,000 redeemable preference shares of Rs. 1,000/- 7,00,00,000/- each
Total 27,05,68,770/-
Subscribed and paid-up share capital
2,00,56,877 Equity Shares of Rs. 10/- each fully 20,05,68,770/- paid-up
70,000 redeemable preference shares of Rs. 1,000/- 7,00,00,000/- each
Present Issue being offered to the eligible Equity Shareholders through the Letter of Offer
44,57,082 CCPS Series A of Rs. 550 /- each 4,45,70,820/- 2,45,13,95,100/-
44,57,082 CCPS Series B of Rs. 550/- each 4,45,70,820/- 2,45,13,95,100/-
Paid-up capital after the Issue (pre-conversion of the CCPS)
2,00,56,877 Equity Shares of Rs. 10/- each 20,05,68,770/-
44,57,082 CCPS Series A of Rs. 10/- each 4,45,70,820/-
44,57,082 CCPS Series B of Rs. 10/- each 4,45,70,820/-
70,000 redeemable preference shares of Rs. 1,000/- 7,00,00,000/- each
2,89,71,041 Equity Shares of Rs. 10/- each fully paid- 28,97,10,410/-
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Aggregate nominal Aggregate value at Issue value price (in Rs.) (in Rs.) up^
Paid-up capital after the Issue (post-conversion of the CCPS)
2,00,56,877 Equity Shares of Rs. 10/- each 20,05,68,770/-
2,89,71,041 Equity Shares of Rs. 10/- each fully paid- 28,97,10,410/- up^
70,000 redeemable preference shares of Rs. 1,000/- 7,00,00,000/- each
Share premium account
Existing securities premium account 2,96,20,07,155.50
Securities premium account after the Issue 7,77,56,55,715.50 ^ Equity Shares outstanding post conversion of the CCPS issued by the Company under this Issue assuming subscription of and conversion of all the CCPS being offered under the Issue.
Notes to the capital structure:
1. Tata Sons Limited (“ TSL ”) has confirmed that it intends to subscribe to the full extent of its Rights Entitlement in the Issue. TSL reserves the right to apply for any or all of the Rights Entitlement renounced by any of the Promoter Group companies. TSL (either through itself and/or through its subsidiaries) also intends to subscribe to any unsubscribed portion of the Issue such that 100% of the Issue is subscribed. As a result of this subscription and consequent allotment, TSL and its subsidiaries may acquire CCPS over and above their Rights Entitlement, which may result in an increase of TSL’s shareholding above its current shareholding and including their Rights Entitlement of CCPS under the Issue and allotment of Equity Shares upon conversion of the CCPS. This subscription and acquisition of additional CCPS by TSL through this Issue, if any, and allotment of Equity Shares upon conversion of the CCPS will not result in a change of control of the management of the Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, there is no intention other than meeting the requirements indicated in the section on “Objects of the Issue” on page 34 of this Letter of Offer, there is no other intention/purpose for this Issue, including no intention to de-list the Company, even if, as a result of allotments to the Promoter in this Issue (including conversion of the CCPS), TSL’s shareholding in the Company exceeds its current shareholding. The Promoter shall subscribe to the above mentioned unsubscribed portion as per the relevant provisions of law. Pursuant to this allotment to the Promoter of any unsubscribed portion, over and above its Rights Entitlement, the Company and the Promoter undertake to comply with the Listing Agreement and other applicable laws.
2. The Company is in compliance with Clause 40A of the Listing Agreement and is required to maintain public shareholding of at least 25% of the total number of its listed Equity Shares.
3. No shares of the Company have been acquired by the Promoter or the promoter group in the year immediately preceding the date of filing the Letter of Offer with the SEBI.
4. The shareholding pattern of the Company as on June 30, 2010 was as follows:
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Category of shareholder No. of Total Total no. of Total Shares share- no. of shares held shareholding as a pledged or holders shares in demate- % of total no. of otherwise rialized shares encumbered form
As a % of As a % No. of As a (A+B) of shares % of (A+B+C) total no. of shares
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Bodies corporate 8 6,281,192 6,280,892 31.32 31.32 - -
Sub total 8 6,281,192 6,280,892 31.32 31.32 - -
(2) Foreign
Total shareholding of Promoter 8 6,281,192 6,280,892 31.32 31.32 - - and Promoter Group (A)
(B) Public shareholding
(1) Institutions
Mutual funds / UTI 42 4,182,685 4,178,386 20.85 20.85 - -
Financial institutions / 24 4,854 3,243 0.02 0.02 - - banks
Insurance companies 3 89,719 89,619 0.45 0.45 - -
Foreign institutional 35 1,925,270 1,922,290 9.60 9.60 - - investors
Sub total 104 6,202,528 6,194,168 30.92 30.92 - -
(2) Non-institutions
Bodies corporate 612 1,641,522 1,633,629 8.18 8.18 - -
Individuals - -
Individual shareholders holding 33,295 4,943,121 3,896,718 24.64 24.64 - - nominal share capital up to Rs. 1 lakh
Individual shareholders holding 11 925,839 925,839 4.62 4.62 - - nominal share capital in excess of Rs. 1 lakh
Any others (specify) 11 62,675 62,649 0.32 0.32 - -
Trusts 8 875 849 0.01 0.01 - -
Directors and their relatives 3 61,800 61,800 0.31 0.31 - - and friends
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Category of shareholder No. of Total Total no. of Total Shares share- no. of shares held shareholding as a pledged or holders shares in demate- % of total no. of otherwise rialized shares encumbered form
Sub total 33,929 7,573,157 6,518,835 37.76 37.76 - -
(B) Total public shareholding 34,033 13,775,685 12,713,003 68.68 68.68 - -
Total (A)+(B) 34,041 20,056,877 18,993,895 100.00 100.00 - -
(C) Shares held by ------Custodians and against which Depository Receipts have been issued
Total (A)+(B)+(C) 34,041 20,056,877 18,993,895 100.00 100.00 - -
5. The details of shareholding by the Promoter and the Promoter Group as of June 30, 2010 are as follows:
Sr. Name of the Total shares held Shares pledged or otherwise encumbered no. shareholder Number As a % of Number % of total shares As a % of grand total held grand total (A)+(B)+(C) (A)+(B)+(C)
1. Tata Sons Ltd 5,060,969 25.23 - - -
2. Tata 732,714 3.65 - - - Investment Corporation Ltd
3. Aftaab 327,266 1.63 - - - Investment
Ltd
4. Fiora 159,943 0.80 - - - Services Ltd
5. Titan 300 0.00 - - - Industries Ltd
Total 6,281,192 31.32 - - -
6. The details of shareholders holding more than one per cent of the share capital of the Issuer as of June 30, 2010 are as follows:
Sr. Name of the shareholder No. of shares Shares as % of total no. of shares no.
1. Reliance Capital Trustee Co. Ltd A/c 12,10,922 6.04 Reliance Equity Opportunities Fund
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Sr. Name of the shareholder No. of shares Shares as % of total no. of shares no.
2. Sundaram BNP Paribas Mutual Fund 786,507 3.92 A/c Sundaram BNP Paribas Select Midcap
3. Siddhartha Yog 724,960 3.61
4. Government Pension Fund Global 643,094 3.21
5. Xander Investment Management Ltd 506,348 2.52
6. HDFC Trustee Company Ltd A/c 335,000 1.67 HDFC Prudence Fund
7. Reliance Capital Trustee Co Ltd A/c 313,561 1.56 Reliance Tax Saver (ELSS) Fund
8. Derive Trading Pvt Ltd 269,000 1.34
9. DSP Blackrock Equity Fund 255,365 1.27
10. Jaguar Services Pvt Ltd 235,117 1.17
11. DSP Blackrock Small And Mid Cap 225,362 1.12 Fund
12. HDFC Trustee Company Ltd A/c 220,096 1.10 HDFC Long Term Equity Fund
13. Periar Trading Company Pvt Ltd 208,487 1.04
Total 5,933,819 29.58
7. No securities held by the Promoter and promoter group are locked in or have been pledged or encumbered.
8. The Issue being a rights issue as per regulation 34(c) of SEBI Regulation, provisions of promoters’ contribution and lock-in are not applicable.
9. The Issuer had granted 21,825 options under the employees’ stock option scheme to the employees of the Company on June 17, 2009. The aggregate nominal value of the options was Rs. 2,18,250 (21,825 options @ Rs. 10/- per option). The eligible employees have exercised their options and the Issuer has since allotted 21,825 equity shares of the face value of Rs. 10 each on June 22, 2010.
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OBJECTS OF THE ISSUE
The objects of the Issue are: • To invest (through equity and/or debt instruments and/or loans) in Trent Hypermarket Limited (a 100% subsidiary of the Company) for setting up additional Star Bazaar stores; • Redemption of debentures; and • General corporate purposes. The main objects clause and objects incidental or ancillary to the main objects clause of the Memorandum of Association of our Company enable us to undertake our existing activities and the activities for which the funds are being raised by us through this Issue. Further, we confirm that the activities carried out by us to the date have been in accordance with the objects clause of our Memorandum of Association.
The details of the proceeds of the Issue are summarised in the table below: (Rs. in lakh) Particular Amount
Gross proceeds of the Issue 49,028.00
Issue related expenses 270.00
Net Proceeds 48,758.00
Use of Proceeds
The following table summarises the intended use and deployment of the Net Proceeds: (Rs. in lakh) Activities Amount for the period
Total estimated FY 2011 FY 2012 FY 2013 amount
Investment (equity and/or debt 27,500.00 11,660.00 7,815.00 8,025.00 instruments and/or loans) into Trent Hypermarket Limited
Redemption of debentures 12,283.00 6,315.00 5,968.00 -
General corporate purposes 8,975.00
Total 48,758.00 17,975.00 13,783.00 8,025.00
The fund requirements set out in the table above are based on our current business plan. In view of the dynamic and competitive environment of the industry in which we operate, we may revise our business plan from time to time and consequently our capital requirements may also change. We may have to revise our estimated costs, funding allocation and fund requirements owing to factors such as economic and business conditions, increased competition, and other external factors which may not be within the control of our management and may entail rescheduling and revising the planned expenditure and funding requirement and increasing or decreasing the expenditure for a particular purpose from the planned expenditure at the discretion of our management.
It is confirmed that the entire objects of the issue could be met through the issue proceeds alone. In case of any increase in the actual utilisation of funds earmarked for the above objects, such additional funds for a particular activity will be met by way of such means available to the Company, including from
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internal accruals, additional equity and/or incremental debt. If the actual utilisation towards any of the aforesaid objects is lower than what is stated above, such balance will be used for future growth opportunities, including funding existing objects, if required, general corporate purposes and/or any other project, activity or initiative the Company may undertake.
Details of the Objects
(A) Investment in Trent Hypermarket Limited The Company proposes to invest (through equity and/or debt instruments and/or loans and/or any other instrument allowed under applicable law) in Trent Hypermarket Limited (THL) to expand the chain of the Star Bazaar Hypermarket stores. The Company aims to consolidate THL’s position in existing markets and to make in-roads into new markets. The form of investment in THL has yet to be decided and thus the terms of such investment have not yet been determined. Requirement of funds in THL for new stores We intend to utilise Rs. 27,500 lakh for the opening of 23 new Star Bazaar Hypermarket stores. This amount has been estimated based on recent costs incurred by the Company in setting up stores which were similar in type and size to the proposed new stores. The total funds required for the new stores have not been appraised by any appraising agency. The Company has not obtained any quotation for the proposed capital expenditure for the stores.
THL’s requirement of funds for setting up 23 new stores and the deployment schedule for such funds, are as detailed below: (Rs. in lakh) Activity Amount for the period
Total estimated cost FY 2011 FY 2012 FY 2013
Expenditure to establish new retail stores 27,500 11,660 7,815 8,025
Cost break-up for setting up retail stores The estimated cost of setting up new stores primarily comprises of advance rent and deposit for lease/license arrangements, expenditure on installation of air-conditioning equipment, escalators/elevators, generator sets, electrical lighting, interiors, furniture, fixtures, security system, in- store IT systems, display equipments, civil work and establishment related expenses. We typically enter into contracts with vendors for the supply of the same a few months prior to the date on which we expect the property to be handed over to us to operate the stores. Since these are standard equipment available from various vendors in India and overseas, we foresee no difficulty in sourcing such equipment even upon short notice.
The estimated cost breaks-up of setting up 23 stores is as follows: (Rs. in lakh ) Sr. no. Particular Total amount
1. Property related cost 7,157.65
2. Building improvement 2,644.51
3. Furniture, fixtures and interiors 4,882.16
4. Electrical equipment 2,644.51
5. Plant and machinery 8,543.79
6. Computers 1,627.38
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Sr. no. Particular Total amount
Total 27,500.00
The identified properties for setting up new stores are as follows:
Sr. No. Location Schedule of Implementation Total 1 Aurangabad 2010-11 1 2 Bangalore 2010-11 1 2011-12 2 2012-13 3 3 Chandigarh 2012-13 1 4 Chennai 2011-12 2 5 Hyderabad 2012-13 3 6 Kolhapur 2011-12 1 7 Mumbai 2010-11 1 2011-12 1 8 Pune 2010-11 3 2011-12 1 9 Surat 2010-11 1 2011-12 1 10 Thane 2012-13 1 Grand Total 23
Neither the Promoter, the Directors, nor the promoter group entities have any interest in the leave and license / lease agreements with property owners or in the proposed direct investment in leasehold / freehold properties. We might procure equipments from group companies for setting up new stores in the normal course of business for which payment might be made from issue proceeds.
The details of Trent Hypermarket Limited (“ THL ”) are as provided below:
Business of THL
THL is a wholly-owned subsidiary of Trent Limited and was incorporated on July 1, 2008. THL is engaged in the retail business. The Star Bazaar Hypermarket business was transferred by the Company as a going concern to THL with effect from August 1, 2008. The hypermarket model offers a large assortment of products under one roof and the products offered include staples, food, perishables, beverages, cleaning aids, health and beauty products, houseware, consumer durables and apparel. Star Bazaar also retails a large range of fashionable in-house garments for men, women and children, exclusively available at the store.
THL has entered into a franchise arrangement with Tesco Plc for the Star Bazaar business. It allows THL access Tesco’s retail expertise and technical capabilities.
Board of Directors:
Mr. Noel N. Tata Mr. Aspy D. Cooper Mr. Venkatesalu Palaniswamy
Shareholding pattern of THL as of date :
Shareholder No of Shares of Rs. 10/- each % of shareholding Trent Limited 5,10,50,000 100%
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For the financial statements of THL for the 2009-10 financial year, please refer to the section titled “Financial Information” on page 105.
(B) Redemption of Debentures Our Company has issued debentures as part of prior rights issuance and private placements. These debentures include secured and unsecured instruments. For details of the outstanding debentures, see the section titled “Financial Indebtedness” on page 128 of this Letter of Offer.
The Company intends to utilize the Net Proceeds towards repayment of a sum of up to Rs. 12,283 lakh out of the amount repayable on redemption of the outstanding debentures.
The details of the debentures proposed to be redeemed out of the Net Proceeds are provided in the table below:
(Rs. in lakh) Particular Total Repayable on Repayment 2010-11 Repayment 2011-12
NCD-Oct.'08-II 6,315 2-Sep-10 6,315 -
NCD-Oct.'09 5,968 21-Oct-11 - 5,968
Total 12,283 6,315 5,968
The details of the debentures that are to be redeemed out of the Issue Proceeds are as provided below: NCD-Oct.'08-II NCD-Oct.'09 Redemption date September 2, 2010 October 21, 2011 Face value Rs.10,00,000/- Rs.10,00,000/- Coupon Nil Nil Purpose for debenture issue For meeting the general corporate For meeting the general requirements and for utilising for corporate requirements and for normal business activities of the utilising for normal business Company. activities of the Company. Amount on redemption Rs.12,63,058/- (Rs.10,00,000/- Rs.11,93,556/- (Rs.10,00,000/- towards face value and towards face value and Rs.2,63,058/- towards premium Rs.1,93,556/- towards premium on redemption). on redemption).
The details of the debenture holders as on July 9, 2010, intended to be repaid out of the Issue Proceeds, are as provided below:
I. NCD-Oct.'08-II :
Name No. of debentures held HDFC Trustee Company Ltd. A/c HDFC Cash 396 Management Fund Treasury Advantage Plan HDFC Trustee Company Ltd. A/c HDFC Short 104 Term Opportunities Fund
II. NCD-Oct.'09 :
Name No. of debentures held Templeton India Income Opportunities Fund 400 (TIIOF) Templeton India Short – Term Income Plan 100
No proceeds of the Issue shall directly or indirectly go to either the Promoters, the Directors, or the promoter group entities except as disclosed in this chapter.
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(C) General Corporate Purposes The Net Proceeds will be utilised towards the aforesaid items and for general corporate purposes. General corporate purposes may include strategic initiatives and acquisitions, brand building exercises, opening new stores, further investments and strengthening of our marketing capabilities, subject to compliance with the necessary provisions of the Companies Act.
Our management, in response to the competitive and dynamic nature of the industry, will have the discretion to revise its business plan from time to time and consequently our funding requirements and deployment of funds may also change. This may also include rescheduling the proposed utilization of Net Proceeds and increasing or decreasing the proposed expenditure for a particular object. In case of a shortfall in the Net Proceeds, our management may also explore a range of options including utilizing our internal accruals or seeking debt from future lenders. Our management expects that such alternate arrangements would be available to fund any such shortfall. Our management, in accordance with the policies of our Board, will have flexibility in utilizing the Net Proceeds for the purposes mentioned above and earmarked for general corporate purposes.
Issue Related Expenses
The expenses of this Issue include, among others, management fees, selling commission, printing and distribution expenses, legal fees, statutory advertisement expenses and listing fees. The estimated expenses of the Issue are as follows:
Expense Expense Expense (% of total (% of Activity (Rs. in lakh ) expenses) Issue size)
Fees of the Lead Managers 99.27 36.77 0.20
Brokerage and selling commission (including commission to - - - SCSBs for ASBA applications)
Fees of the Registrar to the Issue 5.00 1.85 0.01
Advisors 44.12 16.34 0.09
Advertising and marketing 4.00 1.48 0.01
Printing and distribution 31.00 11.48 0.06
Bankers to the Issue - - -
Others 86.61 32.08 0.18
Total estimated Issue expenses 270.00 100.00 0.55
Bridge Loan We have not entered into any bridge loan facility that will be repaid from the Net Proceeds.
Interim Use of Proceeds Pending any use as described above, we intend to invest the proceeds of this Issue in high quality, interest/dividend bearing liquid instruments, including deposits with banks or financial institutions and other money market instruments. We may also deploy the proceeds of the Issue to temporarily reduce our exposure to working capital borrowings from banks and financial institutions, which amounts will be redrawn as and when necessary to meet expenditure towards the objects of the Issue.
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STATEMENT OF TAX BENEFITS
To The Board of Directors Trent Limited, Bombay House, 24, Homi Mody Street, Mumbai 400 001
Dear Sirs,
We hereby report that the enclosed annexure states the Direct Tax benefits available to TRENT LIMITED (the “Company”) and its shareholders under the current tax laws presently in force in India. Several of these benefits are dependent on the Company or its shareholders fulfilling the conditions prescribed under the relevant tax laws. Hence, the ability of the Company or its shareholders to derive the tax benefits is dependent upon fulfilling such conditions, which is based on business imperatives the Company faces in the future, the Company may or may not choose to fulfill.
The benefits discussed in the enclosed are not exhaustive. This statement is only intended to provide general information to the investors and is neither designed nor intended to be a substitute for professional tax advice. In view of the individual nature of the tax consequences and the changing tax laws, each investor is advised to consult their own tax consultant with respect to the specific tax implications arising out of their participation in the issue.
We do not express any opinion or provide any assurance as to whether: • The Company or its shareholders will continue to obtain these benefits in future; or • The conditions prescribed for availing the benefits have been/would be met with. The contents of this annexure are based on information, explanations and representations obtained from the Company and on the basis of our understanding of the business activities and operations of the Company
This certificate is provided solely for the purpose of assisting the addressee Company in discharging its responsibilities under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009.
For N.M Raiji & Co., Chartered Accountants
Y.N. Thakkar Partner Membership No. 33329 Place: Mumbai Date: 1 st July, 2010
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BENEFITS UNDER THE INCOME TAX ACT, 1961 (Hereinafter referred to as the IT Act) A. TO THE COMPANY
1 The Company is eligible to exemption under section 10(34) in respect of income by way of dividend received from other Domestic Companies.
2 The Company is eligible to exemption under section 10(35) in respect of income by way of dividend received from mutual fund specified under section 10(23D) and other specified undertakings/companies.
3 In accordance with the provisions of section 10(38) of the IT Act, the long-term capital gains arising on the transfer of securities being equity shares in Companies or units of equity oriented funds and where such transaction is chargeable to Securities Transaction Tax (STT), shall be exempt from income tax. However, income by way of long term capital gain of a company shall be taken into account while computing book profit and income tax payable under Section 115JB of the IT Act .
4 In respect of rental income of the company chargeable under the head Income from House Property, a standard deduction of 30% of the annual value is available under section 24(a) of the IT Act. Consequently depreciation, repairs and maintenance and other related expenditure (except municipal taxes) in respect of such property will not be allowable as a deduction.
5 The Company will be entitled to claim depreciation allowance at the prescribed rates on tangible and intangible assets under section 32 of the IT Act. The unabsorbed depreciation, if any, can be adjusted against any other income and can be carried forward indefinitely for set-off against the income of future years under Section 32(2) of IT Act.
6 Under section 35 of the IT Act and subject to the provisions specified therein, the Company would be entitled to a weighted deduction of
• one and three fourth times of the payments made to a scientific research association or • one and one fourth times of the payments to a Company to be used by it for scientific research or to a research association which has as its object the undertaking of research in social science or statistical research or to a university, college or other institution for research in social science or statistical research.
7 The Company is eligible under section 35D of the IT Act to a deduction equal to one-fifth of certain specified expenditure, including specified expenditure incurred in connection with the issue for the extension of undertaking, for period of five successive years subject to the limits provided and the conditions specified under the said section.
8 The Company will be entitled to claim expenditure incurred in respect of amalgamation or demerger of an undertaking under section 35DD of the IT Act in five equal annual installments.
9 The Company will be entitled to claim expenditure incurred in respect of voluntary retirement under Section 35DDA of the IT Act in five equal annual installments.
10 The Company is eligible to claim exemption in respect of tax on long term capital gains under section 54EC of the IT Act if the amounts of capital gains are invested in certain specified bonds / securities subject to the fulfillment of the conditions specified in the section. As per the proviso to section 54EC (1), the investment in the specified bonds / securities should not exceed Rs.50 lakhs during any financial year. 11 In case of loss under the head “Income from House Property”, it can be set-off against other income under Section 71 and the excess loss after set-off can be carried forward for set-off against income from house property of the next eight Assessment Years under Section 71B.
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12 In case of loss under the head “Profit and Gains from Business or Profession”, it can be set-off against other income under Section 71 and the excess loss after set-off can be carried forward for set-off against business income of the next eight Assessment Years under Section 72. 13 As per the provision of Section 71, if there is a loss under the head “Capital Gains”, it cannot be set-off with the income under any other head. Section 74 provides that the short term capital loss can be set-off against both Short term and Long term capital gain. But Long term capital loss cannot be set-off against short term capital gain. The unabsorbed short term and long term capital loss can be carried forward for next eight assessment years and can be set off against the respective capital gains in subsequent years.
14 The short-term capital gains accruing to the company, from the transfer of a short-term capital asset, being securities equity shares in Companies or units of equity oriented funds and such transaction is chargeable to STT shall be chargeable to tax as per the provisions of section 111A of the IT Act @ 15% [plus applicable surcharge and education cess] . If the provisions of Section 111A are not applicable to the short term capital gains then the tax will be charged on such short term capital gains at the applicable normal rates [plus applicable surcharge and education cess].
15 The long-term capital gains accruing to the company otherwise than as mentioned in 3 above, shall be chargeable to tax in accordance with and subject to the provisions of section 112 of the IT Act as follows : • if long term capital gain is computed with indexation, @ 20% (plus applicable surcharge and education cess) • in the case of certain listed shares, securities and units, in a transaction not entered into in a recognized stock exchange, if long term capital gain is computed without indexation, @ 10% (plus applicable surcharge and education cess)
16 In terms of the provisions of Section 115JAA of the IT Act, the difference between the amount of tax paid under Section 115JB by the company for any assessment year beginning on or after 1st April 2006 and the amount of tax payable as computed in accordance with other provisions of the IT Act, will be available as credit for ten years succeeding the assessment year in which such credit becomes allowable in accordance with the provisions of Section 115JAA. 17 As per Section 115-O, the Company has to pay Dividend Distribution Tax (DDT) @ 15% (plus applicable surcharge and education cess) on the dividend declared to the members. Subject to the conditions specified in Section 115-O (1A), the company will be allowed to set-off the dividend received from its subsidiary companies during the financial year against the dividend distributed by it while computing the DDT.
B. TO THE MEMBERS OF THE COMPANY
I) RESIDENTS 1 Members will be entitled to exemption, under section 10(34) of the IT Act in respect of the income by way of dividend received from the Company. 2 The long-term Capital gains accruing to the members of the Company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India and on which STT is paid, would be exempt from tax as per the provisions of Section 10(38). 3 The members are entitled to claim exemption in respect of tax on long term capital gains under sections 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds/securities subject to the fulfillment of the conditions specified in those sections. As per the proviso to section 54EC (1), the investment in the specified bonds / securities should not exceed Rs. 50 lakhs during any financial year.
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4 Individuals or HUF members can avail exemption under in respect of tax on long term capital gains section 54F by utilization of the sales consideration for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein. 5 As per the provision of Section 71, if there is a loss under the head “Capital Gains”, it cannot be set-off with the income under any other head. Section 74 provides that the short term capital loss can be set-off against both Short term and Long term capital gain. But Long term capital loss cannot be set-off against short term capital gain. The unabsorbed short term and long term capital loss can be carried forward for next eight assessment years and can be set off against the respective capital gains in subsequent years. 6 The short-term Capital gains accruing to the members of the company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India and on which STT is paid would be chargeable to tax @ 15% [plus applicable surcharge and education cess] as per the provisions of section 111A. If the provisions of Section 111A are not applicable to the short term capital gains then the tax will be charged on such short term capital gains at the applicable normal rates [plus applicable surcharge and education cess]. 7 As per the provisions of section 112 of the IT Act, the long-term capital gains accruing to the members of the company from the transfer of the shares of the company, otherwise than as mentioned in point 2 above, shall be charged to tax - @ 20% (plus applicable surcharge and education cess) after deducting from the sale proceeds the indexed cost of acquisition or - @ 10% (plus applicable surcharge and education cess) after deducting from the sale proceeds the cost of acquisition without indexation.
II) NON-RESIDENTS 1 Non resident members will be entitled to exemption, under section 10(34) of the Income Tax Act, 1961, in respect of the income by way of dividend received from the Company. 2 In accordance with Section 48, capital gains arising out of transfer of capital assets being shares in the company shall be computed by converting the cost of acquisition, expenditure in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer into the same foreign currency as was initially utilised in the purchase of the shares and the capital gains computed in such foreign currency shall be reconverted into Indian currency, such that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing/arising from every reinvestment thereafter in, and sale of shares and debentures of, an Indian company including the Company. 3 The long-term Capital gains accruing to the members of the Company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India and on which STT is paid, would be exempt from tax as per the provisions of Section 10(38). 4 In accordance with section 112, the tax on capital gains on transfer of listed shares, where the transaction is not chargeable to STT, held as long term capital assets will be at the rate of 20% (plus applicable surcharge and education cess). However, based on the proviso to section 112, in case of listed securities or units, such gains could be taxed at 10% (plus applicable surcharge and education cess), without indexation benefit, since, as per the provisions of Section 48, a non-resident will not be eligible for adopting the indexed cost of acquisition and the indexed cost of improvement for the purpose of computation of long-term capital gain on sale of shares and debentures.
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5 The short-term Capital gains accruing to the members of the company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India and on which STT is paid would be chargeable to tax @ 15% [plus applicable surcharge and education cess] as per the provisions of section 111A. If the provisions of Section 111A are not applicable to the short term capital gains then the tax will be charged on such short term capital gains at the applicable normal rates [plus applicable surcharge and education cess] . 6 The members are entitled to claim exemption in respect of tax on long term capital gains under sections 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds/securities subject to the fulfillment of the conditions specified in those sections. As per the proviso to section 54EC (1), the investment in the specified bonds / securities should not exceed Rs. 50 lakhs during any financial year. 7 Individuals or HUF members can avail exemption under in respect of tax on long term capital gains section 54F by utilization of the sales consideration for purchase / construction of a residential house within the specified time period and subject to the fulfillment of the conditions specified therein. 8 As per the provision of Section 71, if there is a loss under the head “Capital Gains”, it cannot be set-off with the income under any other head. Section 74 provides that the short term capital loss can be set-off against both Short term and Long term capital gain. But Long term capital loss cannot be set-off against short term capital gain. The unabsorbed short term and long term capital loss can be carried forward for next eight assessment years and can be set off against the respective capital gains in subsequent years. 9 Under the provisions of section 90(2) of the IT Act, if the provisions of the Double Taxation Avoidance Agreement [DTAA] between India and the country of residence of the non-resident are more beneficial, then the provisions of the DTAA shall be applicable. 10 Non-Resident Indians (as defined in section 115C(e) of the IT Act), being shareholders of an Indian Company, have the option of being governed by the provisions of Chapter XII-A of the IT Act, which interalia entitles them to the following benefits in respect of income from shares of an Indian Company acquired, purchased or subscribed to in convertible foreign exchange :
i) As per the provisions of section 115E of the IT Act, and subject to the conditions specified therein, long-term capital gains arising on the transfer of Company’s shares, being a specified asset as defined in Section 115C(f) of the IT Act, will be charged @ 10% (plus applicable surcharge and education cess ). ii) In accordance with section 115F, subject to the conditions and to the extent specified therein, long-term capital gains arising from transfer of shares of the company acquired out of convertible foreign exchange, and on which STT is not payable, shall be exempt from capital gains tax, if the net consideration is invested within six months of the date of transfer in any specified new asset as defined in section 115C (f) or any savings certificates referred to in section 10(4B) of the IT Act. iii) As per the provisions of section 115G of the IT Act, Non-resident Indians are not obliged to file a return of income under section 139(1) of the IT Act, 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 IT Act.
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iv) Under section 115H of the IT Act, where a Non-Resident Indian, in relation to any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year, he/she may furnish to the Assessing Officer a declaration in writing, along with his/her return of income under section 139 of the IT Act for the assessment year for which he/she is so assessable, to the effect that the provisions of the Chapter XII-A shall continue to apply to him/her in relation to investment income derived from any foreign exchange asset, being an asset of the nature referred to in sub-clauses (ii) to (v) of clause (f ) of section 115C, in which case, the provisions of Chapter XII-A shall continue to apply to him/her in relation to such income for that assessment year until the transfer or conversion (otherwise than by transfer) into money of such assets. v) As per the provision of Section 115-I of the IT Act, when a Non Resident Indian, elects not to be governed by the provision of Chapter XII-A of the IT Act, then his/her total income shall be computed and charged in accordance with other provisions of the IT Act.
III) FOREIGN INSTITUTIONAL INVESTORS (FIIs) 1 Income by way of dividend received on shares of the Company is exempt under section 10(34) of the IT Act.
2 The long-term Capital gains accruing to the members of the Company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India and on which STT is paid, would be exempt from tax as per the provisions of Section 10(38).
3 Under section 115AD(1)(b)(iii) of the IT Act, Income by way of Long Term Capital Gain arising from the transfer of securities (otherwise than as mentioned in 2 above) held in the Company will be taxable @ 10% (plus applicable surcharge and education cess).
4 The short-term Capital gains accruing to the members of the company on sale of the Company’s shares in a transaction entered into in a recognized stock exchange in India and on which STT is paid would be chargeable to tax @ 15% [plus applicable surcharge and education cess] as per the provisions of section 111A.
5 Under section 115AD(1)(b)(ii) of the IT Act, Income by way of Short Term Capital Gain arising from the transfer of securities (otherwise than as mentioned in 4 above) held in the Company for a period of less than 12 months will be taxable @ 30% (plus applicable surcharge and education cess).
6 The foreign currency fluctuation protection and the benefits of indexation as provided in the first and second provisos to section 48 of the IT Act are not available to Foreign Institutional Investors.
7 The FIIs are entitled to claim exemption in respect of tax on long term capital gains under sections 54EC of the IT Act, if the amount of capital gains is invested in certain specified bonds/securities subject to the fulfillment of the conditions specified in those sections. As per the proviso to section 54EC (1), the investment in the specified bonds / securities should not exceed Rs. 50 lakhs during any financial year.
8 Under the provisions of section 90(2) of the IT Act, if the provisions of the Double Taxation Avoidance Agreement [DTAA] between India and the country of residence of the FII are more beneficial, then the provisions of the DTAA shall be applicable.
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IV) PERSONS CARRYING ON BUSINESS OR PROFESSION IN SHARES AND SECURITIES In accordance with Section 36(1)(xv), STT paid in respect of taxable securities transaction entered during the course of business will be available as deduction while computing the taxable business income. The income arising on transfer of shares of the company will be treated as business income and subjected to normal rate of tax as per the provisions of the IT Act. V) MUTUAL FUNDS In accordance with section 10(23D), any income of: (i) a Mutual Fund registered under the Securities and Exchange Board of India Act 1992 or regulations made there under; (ii) such other Mutual Fund set up by a public sector bank or a public financial institution or authorised by the Reserve Bank of India subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf, will be exempt from income-tax.
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.
BENEFITS UNDER THE GIFT-TAX ACT, 1958 Gift tax is not leviable in respect of any gifts made on or after October 1, 1998. Therefore, any gift of shares of the Company will not attract gift tax. However, in the hands of the Donee the same will be treated as income unless the gift is from a relative as defined under Explanation to Section 56 (2) (vii) on or after October 1, 2009 of Income Tax Act, 1961.
SPECIFIC TAX BENEFITS
There are no specific tax benefits applicable to retail industry in general and Trent Limited in particular.
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HISTORY AND CORPORATE STRUCTURE
Our Company made a rights issue on April 30, 2007. The letter of offer for such issue is a material document which is available for inspection. Please refer to the section titled “Statutory and Other Information” on page 173 of this Letter of Offer.
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MANAGEMENT
Under our Company’s Articles of Association, the number of directors of our Company cannot be less than three or more than 12. At present the Company has six Directors.
Our Company’s Articles of Association provide that the board of directors of Tata Sons Limited (TSL), our Promoter, has the right to nominate one Director (“ Special Director ”) to the Board. Mr. Farrokh K. Kavarana, TSL’s nominee, is the current Special Director. A Director appointed as a Special Director shall not be liable to retire by rotation or, subject to the provision of the Act, be removed from the office except by Tata Sons Limited or its nominees or its successors. In addition, our Company’s Articles of Association provide that its debenture holders have the right to nominate a Director (the “Debenture Director”) if the trust deeds relating to debentures require the holders to nominate a Director. Currently there is no Debenture Director on our Board.
Sr. Name, Director’s identification number Age Other directorships no. (“DIN”), designation, term, qualification, occupation and address
1. Mr. Farrokh K. Kavarana 66 1. Tata Sons Limited. 2. Tata Industries Limited DIN : 00027689 3. Tata Tea Limited Designation : Non-executive chairman and 4. Tata Projects Limited. non-independent director 5. Tata AIG Life Insurance Company Limited Term: Appointed with effect from 6. Tata AIG General Insurance November 1, 2004. Company Limited Qualification : Bachelors Degree in 7. Tata Asset Management Limited Commerce, MBA (Wharton School, 8. Akzo Nobel Coating India Private University of Pennsylvania), F.C.A. Limited (England and Wales). 9. Sika Properties Private Limited 10. Tata Capital Limited Occupation : Company Director 11. Centre for Entrepreneurship Address : ( Company incorporated under CCI Chambers, Section 25 of the Act) Flat no. 9, 5th Floor, Foreign companies Dinshaw Wacha Road, Mumbai - 400 020 1. Tata Enterprises Overseas Limited 2. Tata Tea Inc. 3. Tatatech Inc. 4. Tata Overseas Development Company Limited 5. Tata International (U. K.) Limited 6. Tate Precision Industries (Pte) Limited 7. Tata Technologies Pte Limited 8. Titan International Marketing Limited 9. Titan International Holdings B.V. 10. Titan International Investments B.V. 11. ELXSI Corporation 12. St. James Court Hotel Limited 13. Tetley Group / Tata Tea (GB) Limited 14. Tata Indian Opportunities Fund, Mauritius 15. Consilience Technologies 16. Tata Asset Management (Mauritius) Private Limited
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Sr. Name, Director’s identification number Age Other directorships no. (“DIN”), designation, term, qualification, occupation and address 17. Consolidated Coffee Inc., USA 18. Eight O’Clock Coffee Company, USA 19. Tata Tea (GB) Investments Limited 20. Tata Indian Infrastructure Fund, Mauritius 21. Tata Indian Debt Securities Fund, Mauritius 22. New Star Indian Equity (Mauritius) 23. Tata Realty Initiatives Fund 1, Mauritius 24. Tata Capital Pte Limited, Singapore 25. Tata Capital Advisors Pte Limited, Singapore 26. Tata Capital Markets Pte Limited, Singapore 27. Tata Capital PLC, UK 28. Tata India Sharia Fund, Mauritius 29. New Star Fund SICAV, Luxemburg
2. Mr. Bakhtiar S. Bhesania 76 1. Jamyad Investments Private Limited DIN : 00026222 2. Bhansali Engineering & Polymers Designation : Independent non-executive Limited director 3. Bombay Rayon Fashions Limited Term: Appointed with effect from May 17, 1983 on rotational basis. Qualification : Doctor of Philosophy (Law) Occupation : Advocate Address: Nazir House, 139, A. K. Marg, Cumballa Hill, Mumbai - 400 036
3. Mr. Aspy D. Cooper 69 1. Trent Brands Limited
DIN : 00026134 2. Trent Hypermarket Limited 3. Landmark Limited Designation : Independent non-executive 4. Tata Asset Management Limited director Term: Appointed with effect from May 29, 1984 on rotational basis. Qualification : Bachelors Degree in Commerce, A.C.A. Occupation : Chartered Accountant Address: 47, Cuffe Parade, Mumbai - 400 005
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Sr. Name, Director’s identification number Age Other directorships no. (“DIN”), designation, term, qualification, occupation and address
4. Mr. Khushroo N. Suntook 74 1. Tata Investment Corporation Limited DIN : 00025818 2. National Peroxide Limited Designation : Independent non-executive 3. The Associated Building Company director Limited Term: Appointed with effect from August 24, 1995 on rotational basis. Qualification : Bachelors Degree in Arts, LL.B., FCS Occupation : Company Director Address: 25, Lands End, Doongersi Road, Mumbai - 400 006
5. Mr. Zubin Dubash 50 1. Tata Investment Corporation Limited. DIN : 00026206 Designation : Independent non-executive director Term: Appointed with effect from April 26, 2010 on a rotational basis. Qualification : Bachelors Degree in Commerce, MBA (Wharton School, University of Pennsylvania), A.C.A. (England and Wales). Occupation : Company Director Address: 301/ 302, Anand Bhavan, Babulnath, 2nd Cross Lane, Chowpathy, Mumbai - 400 001 1. Voltas Limited 6. Mr. Noel N. Tata 53 2. Titan Industries Limited DIN : 00024713 3. DKI Travel Services Private Designation: Managing Director Limited 4. Tata Investment Corporation Term: 5 years with effect from June 15, Limited 2009. 5. Landmark Limited Qualification : Graduate of Sussex 6. Lorimar Properties Private Limited University, U.K. and IEP (INSEAD) 7. Trent Hypermarket Limited 8. Kansai Nerolac Paints Limited Occupation : Company Executive 9. Milestone Capital Advisors Private Address: Limited Windmere 10. IL&FS Milestone Realty Advisors 55, Cuffe Parade Private Limited Mumbai – 400 005 11. Trexa ADMC Private Limited 12. Inditex Trent Retail India Private Limited
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Sr. Name, Director’s identification number Age Other directorships no. (“DIN”), designation, term, qualification, occupation and address 13. Tata International Limited
Brief Biographies of the Directors Mr. Farrokh K. Kavarana is Non-Executive Chairman and Non-Independent Director of the Company. He is a B.Com (Hons.) from the University of Bombay, an M.B.A., Wharton School, University of Pennsylvania and an F.C.A., (England and Wales). He is a Director of Tata Sons Ltd., and Tata Industries Ltd., and also the Chairman and Director of several other Tata Companies in India and overseas. He has around 40 years of valuable experience in the field of Finance and Management.
Mr. Bakhtiar S. Bhesania is an independent non-executive director in the Company. He has a degree of Doctor of Philosophy (Law) besides being an Advocate/Solicitor by profession and is a senior partner of Messrs Mulla & Mulla and Craigie Blunt & Caroe, a renowned law firm in India. He has around 50 years of varied experience in the field of law.
Mr. Aspy D. Cooper is an independent non-executive director of the Company. He has a Bachelors’ Degree in Commerce, and is a member of the Institute of Chartered Accountants of India by profession. He has around 45 years of varied experience in field of financial and management consultancy.
Mr. Khushroo N. Suntook is an independent non-executive director in the Company. He has a Bachelor's degree in Arts, an LL.B., and Advocate, and an FCS. He is a company director by profession. He has around 50 years of vast experience in the administration of sports and art management. At present he is the Chairman of the National Centre for the Performing Arts.
Mr. Zubin Dubash is an independent non-executive director of the Company. He is a Bachelor of Commerce, an M.B.A (Wharton) and an A.C.A. (England and Wales). He has over 28 years of varied experience in the field of finance and business development.
Mr. Noel N. Tata is the Company’s Managing Director. He is a Graduate of Sussex University, U.K. and IEP (INSEAD). He has worked for two years with Nestle, U.K., as a product manager. He has also worked as a Senior General Manager with Tata Exports Limited (now Tata International Limited) for 13 years. Mr. Noel N. Tata possesses the necessary experience and expertise in the retail business.
Related Directors None of the Directors are related to each other.
Nomination of Special Director Tata Sons Limited (TSL) has the right to nominate one Director (“ Special Director ”) to the Board. Mr. Farrokh K. Kavarana, TSL’s nominee, is the current Special Director. Apart from this, there are no arrangements or understandings with any major shareholder, customer, supplier or other pursuant to which any of the Directors was selected as a director or member of senior management.
Terms of Employment of our Managing Director Mr. Noel N. Tata was appointed as a Managing Director with effect from June 15, 2009 to June 14, 2014. The basic salary to be paid to Mr. Noel N. Tata is up to a maximum of Rs. 6,00,000 per month during the term of his appointment. Various perquisites, benefits, allowances, commission and incentive remuneration as may be determined by the Board from time to time.
The remuneration paid/ payable to the Managing Director for the year 2009-10 is Rs.195.11 lakhs. The remuneration payable in excess of maximum remuneration prescribed under section 198 of the Companies Act, 1956 amounting to Rs.44.27 lakhs is subject to the approval of the Shareholders and the
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Central Government. For details, please refer to section titled “Financial Information” on page 52 of this Letter of Offer. This appointment may be terminated by either party by giving the other party one month’s notice of termination or the Company paying one month’s remuneration in lieu thereof.
Contract Providing Termination Benefits None of the Directors have entered into any contract with the Company which provides for benefits to the Directors upon termination.
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FINANCIAL INFORMATION
Sr. no. Particular Page nos. 1 Standalone audited financials for the fiscal 2010 53 2 Consolidated audited financials for the fiscal 2010 83 3 Financials of Trent Hypermarket Limited 105
52 AUDITORS’ REPORT
TO THE MEMBERS OF TRENT LIMITED
1. We have audited the attached Balance Sheet of TRENT LIMITED, as at 31st March 2010, the Profit and Loss Account and also the 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.
2. 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 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.
3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.
4. Further to our comments in the Annexure referred to above, we report that:
(i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;
(ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books;
(iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable;
(v) 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 is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
(vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with notes thereon, 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:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010;
(b) in the case of the Profit and Loss Account, of the profit for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For N. M. RAIJI & CO. Chartered Accountants (Registration No. 108296W)
Y.N. THAKKAR Place: Mumbai Partner Date : June 7, 2010 Membership No. 33329
53 TRENT LIMITED
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) As explained to us, physical verification of major items of fixed assets was conducted by the management during the year. In our opinion, the frequency of physical verification is reasonable having regard to the size and operations of the Company and the nature of its assets. On the basis of explanations received, in our opinion, the discrepancies found on physical verification were not significant. (c) The Company has not disposed off substantial part of fixed assets during the year.
(ii) (a) The inventories have been physically verified by the management at reasonable intervals during the year.
(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
(iii) (a) The Company has not granted any loans, secured or unsecured, during the year to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, sub- clause (b), (c) and (d) are not applicable.
(b) The Company has not taken any loans, secured or unsecured, during the year from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, sub- clause (f) and (g) are not applicable.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system. (v) Based on the audit procedures applied by us and according to the information and explanations given to us, there are no transactions that need to entered into the register in pursuance of section 301 of the Companies Act, 1956. (vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposits from the public during the year. In respect of unclaimed deposits matured in earlier years that are outstanding during the year, the Company has complied with the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975. As informed to us, no order has been passed by Company Law Board or National Company Law Tribunal or Reserve Bank of India or any Court or any other tribunal.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business. (viii) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the products of the Company.
(ix) (a) According to the records of the Company, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth-tax, Service Tax, Custom Duty, Excise Duty, cess and any other statutory dues applicable to it. Based on our audit procedures and according to the information and explanations given to us, there are no arrears of undisputed statutory dues which remained outstanding as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the records made available to us and the information and explanations given by the management, the details of the dues of sales tax / income tax / custom duty / wealth tax/ Service Tax / excise duty / cess, which have not been deposited on account of any dispute, are given below :
54 Particulars Financial year to which Forum where the Amount the matter pertains dispute is pending (Rs. In lakhs) Sales Tax 2000-01, 2002-03, 2003- Deputy Commissioner 17.98 04, 2006-07 (Appeals)
Luxury Tax 2002-03 Deputy Commissioner 0.86 (Appeals)
(x) The Company does not have any accumulated losses at the end of the financial year and has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. (xi) The Company has not defaulted in repayment of any dues to financial institutions, banks or debenture holders during the year. (xii) Based on our examination of the records and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. (xiii) The Company is not a chit / nidhi / mutual benefit fund / society. (xiv) Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that in respect of the investment activity of the Company, proper records have been maintained of the transactions and contracts and timely entries have been made in those records. All the investments of the Company are held in its own name except as permissible under section 49 of the Companies Act, 1956. (xv) On the basis of the information and explanations given to us, the Company has given guarantee for various facilities availed by its wholly owned subsidiary from bank. The terms and conditions of the guarantee are not prejudicial to the interest of the Company. (xvi) The term loans have been applied for purposes for which the loans were obtained by the Company. (xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment. (xviii) As per the information and explanations given to us, the Company has not made during the year any preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, 1956. (xix) As per the information and explanations given to us, the Company has created security or charge in respect of debentures issued. (xx) We have verified that the end use of the money raised by public issues is as disclosed in the notes to the financial statements. (xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.
For N. M. RAIJI & CO. Chartered Accountants (Registration No. 108296W)
Y.N. THAKKAR Place: Mumbai Partner Date : June 7, 2010 Membership No. 33329
55 TRENT LIMITED
Balance Sheet as at 31st March 2010
Schedule Page Rupees Rupees As at in lakhs in lakhs 31.03.2009 Rupees in lakhs SOURCES OF FUNDS : 1. SHAREHOLDERS’ FUNDS : (a) Capital A 60 2,703.51 1,953.29 (b) Reserves and Surplus B 61 61,347.00 58,723.44 64,050.51 60,676.73
2. LOAN FUNDS: C 62 (a) Secured Loans 11,550.24 16,550.24 (b) Unsecured Loans 13,501.82 5.24 25,052.06 16,555.48
3. Deferred Tax Liability (Net) 191.82 21.92 (Note 4, Page 72)
4. TOTAL FUNDS EMPLOYED 89,294.39 77,254.13
APPLICATION OF FUNDS: 5. FIXED ASSETS: D 63 (a) Gross Block 26,013.65 13,730.84 (b) Less: Depreciation 5,359.42 4,244.77 (c )Net Block 20,654.23 9,486.07 (d) Capital Work-in-Progress 1,690.29 1,382.62 22,344.52 10,868.69
6. INVESTMENTS E 64 to 67 39,517.59 39,585.16
7. CURRENT ASSETS, LOANS AND ADVANCES:
(a) Inventories F 67 9,648.33 8,597.50 (b) Sundry Debtors G 67 308.62 376.28 (c )Cash and Bank Balances H 68 911.69 1,288.27 (d) Loans and Advances I 68 34,235.39 30,959.22 45,104.03 41,221.27
8. Less: CURRENT LIABILIITES AND PROVISIONS: (a) Liabilities J 69 11,672.61 9,139.66 (b) Provisions K 69 5,999.14 5,281.33 17,671.75 14,420.99 9. NET CURRENT ASSETS 27,432.28 26,800.28
10. TOTAL ASSETS (NET) 89,294.39 77,254.13
(For Schedule ‘L’ and notes see Page 69 to 79)
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
56 TRENT LIMITED
Profit And Loss Account for the year ended 31st March 2010
Schedule Page Rupees Rupees Previous in lakhs in lakhs Year Rupees in lakhs INCOME : 1. INCOME FROM OPERATIONS 2 59 58,748.10 51,460.91 2. OTHER INCOME 3 59 2,251.73 3,198.88 3. TOTAL INCOME 60,999.83 54,659.79
EXPENDITURE:
4. OPERATING AND OTHER EXPENSES 1 58 55,362.51 50,777.55 5. DEPRECIATION 1,185.09 923.34 56,547.60 51,700.89
6. INTEREST 4 59 604.82 131.30
7. TOTAL EXPENDITURE 57,152.42 51,832.19
PROFIT BEFORE TAXES AND EXCEPTIONAL ITEM 3,847.41 2,827.60
8. EXCEPTIONAL ITEM (Note 27, Page 79) 1,137.59 -
PROFIT BEFORE TAXES 4,985.00 2,827.60
9. PROVISION FOR TAXATION CURRENT TAX 814.69 196.39 MAT CREDIT ENTITLEMENT (302.95) (126.30) FRINGE BENEFIT TAX - 65.00 DEFERRED TAX 545.27 171.85 1,057.01 306.94
PROFIT FOR THE YEAR AFTER TAXES 3,927.99 2,520.66
10. EXCESS TAX PROVISION FOR PRIOR YEARS (NET) 94.04 154.89
NET PROFIT 4,022.03 2,675.55
11. BALANCE BROUGTH FORWARD FROM PREVIOUS YEARS 2,053.67 2,402.63
12. BALANCE TRANSFERRED ON AMALGAMATION 72.67 - (refer note 26, page 79)
PROFIT AVAILABLE FOR APPROPRIATION 6,148.37 5,078.18
13. APPROPRIATIONS: (i) GENERAL RESERVE 403.00 268.00 (ii) DEBENTURE REDEMPTION RESERVE 500.00 1,500.00 (iii) PROPOSED DIVIDEND – EQUITY SHARES 1,302.28 1,074.31 (iv) PROPOSED DIVIDEND – PREFERENCE SHARES 0.01 - (v) TAX ON DIVIDEND 216.29 182.20 (vi) BALANCE CARRIED TO BALANCE SHEET 3,726.79 2,053.67 6,148.37 5,078.18
14. Earning Per share (Rs.) (Note 24, page 78) Basic 20.53 13.70 Diluted 20.41 13.70
(For Schedule ‘L’ and notes see Pages 69 to 79)
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
57 TRENT LIMITED
Schedule forming part of the Profit and Loss Account
Schedule ‘1’ (Item No.4, page 57) OPERATING AND OTHER EXPENSES
As at 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs (1) RAW MATERIALS CONSUMED 177.26 209.36 (2) PURCHASE OF FINISHED PRODUCTS 28,581.93 28,099.70 (3) PAYMENTS TO AND PROVISIONS FOR EMPLOYEES (a) Salaries, Wages, Bonus, etc (Refer note Schedule 3,679.80 3,435.74 “B” Page 61) (b) Contribution to Provident, Superannuation and 209.93 240.93 Gratuity Funds (c ) Workmen and Staff Welfare Expenses 233.06 248.75 4,122.79 3,925.42 (4) OTHER EXPENSES (a) Processing Charges 169.23 145.50 (b) Packing Materials Consumed 207.57 212.34 (c) Power and Fuel 2,190.47 2,008.75 (d ) Repairs to Building 1,476.55 1,069.94 (e) Repairs to Machinery 214.95 189.03 (f) Repairs others 457.36 303.75 (g) Rent 3,349.73 2,860.25 (h) Rates and Taxes 588.06 410.84 (i) Insurance 69.78 53.47 (j) Advertisement and Sales Promotion 4,474.41 4,539.20 (k) Travelling Expenses 294.24 238.41 (l) Professional and Legal Charges 539.22 457.75 (m) Printing and Stationery 106.81 75.71 (n) Bank Charges 345.71 301.32 (o) Postage, Telegrams and Telephones 286.59 271.96 (o) General Expenses (Refer Note 5 page 72) 2,289.98 1,904.87 (q) Retail Business Fees 3,393.36 2,970.05 (r) Sales tax paid 2,841.90 2,557.97 (s) Directors’ Fees 11.98 9.70 (t) Commission to Non Whole Time Directors 30.00 21.88 (u) Excess of Cost over Fair Value of Current 0.02 - Investments (v) Loss on Sale of Fixed Assets Sold/Discarded 82.91 179.41 (Net) (w) Loss on Sale of Long Term Investments (Net) 142.72 - 23,563.55 20,782.10 (5) FREIGHT AND FORWARDING CHARGES 655.68 623.27 (6) CHANGES IN FINISHED PRODUCTS Accretion to stocks deducted 1,738.70 2,862.30 55,362.51 50,777.55
58 TRENT LIMITED
Schedule forming part of the Profit and Loss Account
Schedule ‘2’ (Item No. 1, page 57) INCOME FROM OPERATIONS
Rupees Rupees Previous Year in lakhs in lakhs Rupees in lakhs
(1) Sales 54,260.40 49,636.57
(2) Other Operating Income (a) Display and Sponsorship Income 19.64 176.42 (b) Commission on sales 365.69 458.02 (c ) Discounts and Fees 822.36 227.25 (d) Rent received 1,592.64 60.90 (e) Others 1,687.37 901.75 4,487.70 1,824.34
58,748.10 51,460.91
Schedule ‘3’ (Item No. 2, page 57) OTHER INCOME
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Interest on Loans and Advances- Gross 1,340.75 945.20 [Tax deducted at source: Rs.153.39 Lakhs (2008-2009: Rs.211.49 Lakhs) (2) Interest on Deposits with Banks- Gross 46.18 30.89 [Tax deducted at source: Rs.5.18 Lakhs (2008-09: Rs.4.00 Lakhs)] (3) Income from Current Investments – Non trade (a) Dividend on Current Investments 344.43 1,058.10 (b) Profit on sale of current investment (net) 308.53 431.59 652.96 1,489.70
(4) Interest on Long Term Investments – Gross - 0.50
(5) Dividend on Long Term Investments – Gross (a) Trade 1.50 3.00 (b) Subsidiaries - 2.23 (c) Others 159.41 268.81 160.91 274.04 (6) Profit on Sale of Long Term Investments (Net) - 408.60 (7) Excess provision no longer required written back 50.93 49.95
2,251.73 3,198.88
Schedule ‘4’ (Item No.6, page 57) INTEREST EXPENSE
Rupees Rupees Previous Year in lakhs in lakhs Rupees in lakhs
(a) Debentures 131.00 131.00 (b) Fixed Loans 473.81 - (c) Others 0.01 0.30 604.82 131.30
59 TRENT LIMITED
Schedule forming part of the Balance Sheet
Schedule ‘A’ (Item No.1 (a), Page 56) CAPITAL
As at As at Rupees 31.03.2010 31.03.2009 in lakhs Rupees Rupees in lakhs in lakhs AUTHORISED: 2,40,00,000 Equity Shares of Rs.10/- each 2,400.00 2,000.00 (2008-2009: 2,00,00,000 Equity Shares of Rs.10/- each) 50,00,000 Unclassified Shares of Rs.10/- each 500.00 500.00 (2008-2009: 50,00,000 Unclassified Shares of Rs.10/- each) 70,000 Preference Shares of Rs.1000/- each 700.00 - (2008-2009: Nil) 3,600.00 2,500.00
ISSUED, SUBSCRIBED AND PAID UP:
2,00,35,052 Equity Shares of Rs.10/- each fully 2,003.51 1,953.29 paid-up (2008-2009: 1,95,32,896 Equity Shares of Rs.10/- each fully paid-up)
70,000 0.1% Cumulative Redeemable 700.00 - Preference Shares of Rs.1000/- each, fully paid- up (2008-2009: Nil)
(Refer Note 26, Page 79) 2,703.51 1,953.29
Notes: 1. Of the above – (a) 1,08,81,021 Equity Shares were allotted as fully paid Bonus Shares by capitalisation of Share Premium and Reserves. (b) 1,12,616 Equity Shares were allotted as fully paid pursuant to Schemes of Amalgamation without payment being received in cash. (c) 70,000 Cumulative Redeemable Preference Shares were allotted as fully paid pursuant to Scheme of Amalgamation without payment being received in cash. 2. During the year 2005-2006, the Company had issued 13,10,047 warrants to the shareholders along with partly Convertible Debentures of which 5,62,121 warrants are outstanding as on 31st March 2009. Each Warrant holder is entitled to apply for one Equity Share of Rs.10/- each at a premium of Rs. 640/- each within 30 days after the expiry of 54 months from 7th July 2005 being the date of allotment. During the current year, the Company has issued 5,02,156 Equity Shares of Rs.10/- each at a premium of Rs. 640/- per share on the conversion of warrants. There are no warrants outstanding as at 31st March 2010. 3. The term of the 0.1% Cumulative Redeemable Preference Shares is of 20 years from 26th March 2010, being the date of allotment, with an option to the Company to redeem the Preference Shares at any time after 36 months from the date of allotment. The Board of Directors at their meeting held on 26th April 2010 have fixed 1st June 2013 as the date of redemption of the Preference Shares. 4. During the year, the Company has granted 21,825 stock options under the Employee Stock Option Scheme. 21,825 stock Options are outstanding as on 31st March 2010.
60 TRENT LIMITED
Schedule forming part of the Balance Sheet
Schedule ‘B’ (Item No.1(b), Page 56) RESERVES AND SURPLUS
As at As at Rupees 31.03.2010 31.03.2009 in lakhs Rupees Rupees in lakhs in lakhs
(1) SECURITIES PREMIUM ACCOUNT: Balance as per last account 31,995.25 33,321.32 Add: Premium on issue of Equity Shares on conversion of 3,213.80 - warrants Less: Premium on redemption of debentures (refer note 'b' 638.83 1,306.10 and 'c' of Schedule 'C') Less: Write off of securities / warrant issue expenses (net 12.82 19.97 of deferred tax) 34,557.40 31,995.25 (2) DEBENTURE REDEMPTION RESERVE (a) Balance as per last account 4,800.00 3,300.00 (b) Add : Transferred from Profit and Loss Account 500.00 1,500.00 5,300.00 4,800.00
(3) EMPLOYEE STOCK OPTIONS a) Employee Stock Options Outstanding Balance as per last account - - Additions 107.44 - Lapsed - - Outstanding 107.44 -
b) Less: Deferred Employee Compensation Balance as per last account - - Additions 22.68 - Amortised/Lapsed - - Balance 22.68 - Net Employee Stock Options 84.76 -
(4) GENERAL RESERVE : (a) Balance as per last account 18,381.57 18,113.57 (b) Add : Transferred from Profit and Loss Account 403.00 268.00 (c) Less : Expenses on Amalgamation (Note 26, Page 79 ) 80.15 - (d) Less : Deficit on Amalgamation (Note 26, Page 79 ) 1,026.37 - 17,678.05 18,381.57
(5) AMALGAMATION RESERVE : Arising out of Amalgamation Opening Balance 1,492.95 1,492.95 Less : Deficit on Amalgamation (Note 26, Page 79 ) 1,492.95 - - 1,492.95
(6) PROFIT AND LOSS ACCOUNT 3,726.79 2,053.67
61,347.00 58,723.44
Note: In respect of Options granted under the Company's Employee Stock Options Scheme 2009 (ESOS), in accordance with guidelines issued by SEBI, the accounting value of options is accounted as deferred employee compensation, which is amortised on a straight line basis over the vesting period. Consequently, salaries, wages, bonus etc. include Rs.84.76 lakhs being the amortisation of deferred employee compensation.
61 TRENT LIMITED
Schedule forming part of the Balance Sheet
Schedule ‘C’ (Item No.2, Page 56) LOAN FUNDS As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) SECURED LOANS : Non Convertible Debentures (Note a) 6,550.24 6,550.24 Non Convertible Debentures-Series-I (Note b) - 5,000.00 Non Convertible Debentures-Series-II (Note b) 5,000.00 5,000.00
11,550.24 16,550.24
(2) UNSECURED LOANS: Sales Tax loan from Government of Maharashtra 1.82 5.24 Non Convertible Debentures-Oct-09-Series I (Note c) 5,000.00 - Commercial Paper 5,000.00 - Inter Corporate Deposits 3,500.00 -
13,501.82 5.24
25,052.06 16,555.48
(a) During the year 2005-2006 the Company issued 13,10,047 Partly Convertible Debentures of Rs. 900/- each. Of the above, Convertible Debenture of the face value of Rs. 400/- has been converted into one Equity Share of Rs. 10/- each at a premium of Rs. 390/- per share on the date of allotment. The Non Convertible Debenture of face value of Rs. 500/- are redeemable at a premium of Rs. 98/- each on 7th July 2010.The Premium payable on redemption of Debentures amounting to Rs.1283.85 lakhs been fully provided and debited to Securities Premium Account during 2005-06.These Debentures are secured by way of charge on assets of the Company costing at least 1.33 times of the value of the Debentures in favour of the Debenture Trustees.
(b) During the year 2008-2009, the Company issued 500 Redeemable Non Convertible Debentures - Series I of Rs. 10.00 lakhs each and 500 Redeemable Non Convertible Debentures - Series II of Rs. 10.00 lakhs each on private placement basis. These Debentures are free of interest and the Series I Debentures were redeemed at a premium of Rs 1.33 lakh each on 1st October 2009 and the Series II Debentures are redeemable at a premium of Rs 2.63 lakh each on 2nd September 2010. The Premium payable on redemption of these Debentures has been fully provided and is debited to Securities Premium Account net of deferred tax. These Debentures are secured by way of charge on immovable property of the Company in favour of the Debenture Trustees as stipulated in the Debenture Trust deed.
(c) During the current year, the Company issued 500 Redeemable Non Convertible Debentures of Rs. 10.00 lakhs each on private placement basis. These Debentures are free of interest and are redeemable at a premium of Rs.1.94 lakhs each on 21st October 2011.The Premium payable on redemption of these Debentures has been fully provided and is debited to Securities Premium Account net of deferred tax.
(d) Of the above secured loans amount payable within one year Rs. 11550.24 lakhs (2008-09: Rs.5000 lakhs).
(e) Of the above unsecured loans, amount repayable within a year Rs. 8501.82 lakhs (2008-2009: Rs.3.42 lakhs).
62
TRENT LIMITED
Schedule forming part of the Balance Sheet Schedule ‘D’ (Item No.5, Page 56)
FIXED ASSETS
ASSETS GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK As at Additions/ Deductions/ As at As at Deductions/ For the As at As at 1.4.2009 Adjustments Adjustments 31.03.2010 1.4.2009 Adjustments year 31.03.2010 31.03.2010 Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees in lakhs in lakhs in lakhs in lakhs in lakhs in lakhs in lakhs in lakhs in lakhs
Freehold 405.47 - - 405.47 - - - - 405.47 Land (400.08) (5.39) (-) (405.47) (-) (-) (-) (-) (405.47)
Leasehold - 5,449.53 - 5,449.53 - - 66.17 66.17 5,383.36 Land (-) (-) (-) (-) (-) (-) (-) (-) (-)
Buildings 3,283.75 4,173.22 20.49 7,436.48 904.09 4.32 254.34 1,154.11 6,282.37 (3,309.39) (613.38) (639.02) (3,283.75) (759.96) (29.49) (173.62) (904.09) (2,379.66)
Plant and 3,373.10 1,283.08 39.44 4,616.75 1,046.01 13.62 193.33 1,225.72 3,391.02 Machinery (4,261.32) (1,601.38) (2,489.60) (3,373.10) (1,043.88) (167.43) (169.56) (1,046.01) (2,327.09)
Furniture, 6,561.49 1,528.15 87.40 8,002.24 2,235.93 43.80 661.42 2,853.55 5,148.69 Fixtures, (6,274.31) (2,257.63) (1,970.45) (6,561.49) (2,245.59) (574.21) (564.55) (2,235.93) (4,325.56) Office and other equipment
Vehicles 59.74 18.86 23.48 55.12 17.12 8.70 5.05 13.47 41.65 (65.97) (-) (6.23) (59.74) (13.89) (2.93) (6.16) (17.12) (42.62)
Intangible 47.29 0.78 - 48.07 41.62 - 4.78 46.40 1.67 assets (41.84) (5.45) (-) (47.29) (32.17) (-) (9.45) (41.62) (5.67)
Total 13,730.84 12,453.62 170.81 26,013.65 4,244.77 70.44 1,185.09 5,359.42 20,654.23 (14,352.91) (4,483.23) (5,105.30) (13,730.84) (4,095.49)) (774.06) (923.34) (4,244.77) (9,486.07)
Capital Work-in-Progress 1,690.29 (1,382.62) Total 22,344.52 (10,868.69)
Notes: 1) Figures in bracket are in respect of previous year. 2) Buildings include improvements to leasehold premises and an amount of Rs.1,050 (2008-2009: Rs.1,050) representing value of Shares in Co-operative Housing Societies/Condominium. 3) Current year additions include Rs.9,089.78 lakhs of capital work-in-progress acquired consequent to the scheme of amalgamation which has been capitalised during the year (includes borrowing cost Rs.2,408.51 lakhs). (Refer note 26, Page 79).
63
TRENT LIMITED
Schedule ‘E’ (Item No.6, Page 56) INVESTMENTS Balance as on Purchase during the year Sold during the Year Balance as on 01.04.09 31.03.2010 No. of Rs. in No. of Rs. in No. of Rs. in No. of Rs. in shares/units lakhs shares/units lakhs shares/units lakhs shares/units lakhs Long Term Investment (at Cost less provision for diminution in value)
Face Value of Rs.10/- each,Unquoted and fully paid-up unless otherwise stated
Trade Investments at Cost (unquoted and fully paid unless otherwise stated)
The Associated Building Company 50 0.45 - - - - 50 0.45 Limited (Equity shares of Rs.900/- each )
Tata International Limited 1,000 2.00 - - - - 1,000 2.00 (Equity shares of Rs.1000/- each )
Tata Services Limited 45 0.45 - - - - 45 0.45 (Equity shares of Rs.1000/- each )
Retailers Association of India 10,000 1.00 - - - - 10,000 1.00
Total Trade Investment 3.90 3.90
Other Investments at Cost (unquoted and fully paid unless otherwise stated) (a) In Subsidiary Companies
Nahar Theatres Pvt. Ltd. 1,996 2,832.13 - - - - 1,996 2,832.13 (Equity shares of Rs.1000/- each )
Nahar Theatres Pvt Ltd.- Pref Shares 100 1.00 - - - - 100 1.00 (9.5% Cumulative Redeemable Preference Shares of Rs.1000/- each)
Satnam Developers & Finance Pvt. Ltd. 50,000 906.25 - - 50,000 906.25 - - (refer note 26, Page 79)
Trent Brands Limited 32,50,000 325.00 - - - - 32,50,000 325.00
Fiora Link Road Properties Pvt Ltd. 50,000 5.00 - - - - 50,000 5.00
Landmark Limited 44,45,047 12,229.20 11,56,226 4,113.10 14,03,903 3,862.41 41,97,370 12,479.89
Fiora Services Limited 39,000 76.58 - - - - 39,000 76.58 (Equity shares of Rs.100/- each )
Trent Global Holdings Ltd.(USD 750,000 327.30 - - - - 750,000 327.30 7,50,000)
Trent Hypermarket Ltd. 5,10,50,000 5,105.00 - - - - 5,10,50,000 5,105.00
Westland Ltd - - 27,39,800 300.75 - - 27,39,800 300.75
Total Investment in Subsidiary 21,807.46 21,452.65 Companies
(b) In Joint Ventures
Inditex Trent Retail India Private - - 317,520 3,175.20 - - 317,520 3,175.20 Limited (Equity shares of Rs.1000/- each )
Trexa ADMC Pvt. Ltd. 20,32,500 203.25 1,75,000 17.50 - - 22,07,500 220.75
Virtuous Trustee Pvt. Ltd. 4,900 0.49 - - 4,900 0.49 - -
Total Investment in Joint Ventures 203.74 3,395.95
(c) In Other Companies
ACC Ltd. (Quoted) 9,000 75.81 - - 9,000 75.81 - -
Bharat Electronics Ltd. (Quoted) 3,102 43.54 - - 3,102 43.54 - -
Bharat Heavy Electricals Ltd. ( Quoted) 4,000 99.97 - - 4,000 99.97 - -
64
TRENT LIMITED Schedule ‘E’ (Item No.6, Page 56) INVESTMENTS Balance as on Purchase during the year Sold during the Year Balance as on 01.04.09 31.03.2010 No. of Rupees No. of Rupees No. of Rupees No. of Rupees shares/units in lakhs shares/units in lakhs shares/units in lakhs shares/units in lakhs
ICICI Bank Ltd. (Quoted) ------
IDBI Ltd. (Quoted) 30,000 50.68 - - 11,133 18.81 18,867 31.87
Larsen & Toubro Ltd(Quoted) 3,000 59.79 - - 3,000 59.79 - - (Equity shares of Rs. 2/- each ) -1500 bonus ratio 1:1
Maruti Suzuki India Ltd. (Quoted) 10,000 102.19 - - 10,000 102.19 - - (Equity shares of Rs. 5/- each )
Oil & Natural Gas Corporation 8,000 91.41 - - 8,000 91.41 - - Ltd.(Quoted)
Reliance Communication Ltd. (Quoted) 9,000 58.57 - - 9,000 58.57 - - (Equity shares of Rs. 5/- each )
Reliance Industries Ltd. (Quoted) 3,200 86.42 5,624 92.53 3,200 86.42 5,624 92.53
Reliance Petroleum Ltd. (Quoted) 45,000 92.55 - - 45,000 92.55 - -
State Bank of India Ltd. (Quoted) 4,000 94.01 - - 4,000 94.01 - -
Sterlite Industries (India) Ltd. (Quoted) 3,500 36.33 - - 3,500 36.33 - - (Equity shares of Rs. 2/- each )
Tata Investment Corporation Limited - - 25,700 83.53 - - 25,700 83.53 (Quoted)
Optim Estates Pvt Ltd -10% - - 10,00,000 100.00 - - 10,00,000 100.00 Redeemable pref. shares
Tata Sons Limited 20,000 200.00 - - - - 20,000 200.00 7% Cumulative Redeemable Preference Shares of Rs. 1,000/- each
Tata Investment Corpn.ZCCB-Part A 12,850 38.55 - - 12,850 38.55 - - (warrants of Rs.300/- each)
Tata Investment Corpn.ZCCB-Part B 12,850 44.98 - - 12,850 44.98 - - (warrants of Rs.350/- each)
Tata Investment Corpn.ZCCB-Warrants 12,850 - - - - - 12,850 -
(warrants of Rs.0/- each)
Total Investment in Other 1,174.80 507.93 Companies
(d) In Mutual Funds
OptiMix Dynamic Multi-Manager FoF 20,00,000 200.00 - - 2,000,000 200.00 - - Scheme-Series 3-Dividend
Birla Sunlife Income Plus -Quarterly 41,80,377 508.70 1,63,473 18.35 43,43,850 527.04 - - Dividend. Reinvst.
Birla Sunlife Income Plus - Growth - - 11,70,245 486.87 - - 11,70,245 486.87
ICICI Pru Instt Income Plan- Quarterly 40,77,300 517.75 85,415 10.19 41,62,715 527.94 - - Dividend
ICICI Pru Instt Income Plan- Dividend - - 46,16,759 500.60 - - 46,16,759 500.60
HDFC Short Term Plan Dividend. 48,93,975 509.00 3,03,048 31.27 - - 51,97,022 540.27 Reinvst.
ICICI Pru. Inst. Short Term plan 41,36,251 506.43 2,16,161 26.04 - - 43,52,412 532.47 Fortnightly Dividend Reinvst.
Birla Sunlife Dynamic Bond Fund - - 45,32,312 505.43 - - 45,32,312 505.43 Retail Qtrly divid.
JM Emerging Leaders Fund-Dividend 14,58,440 300.75 - - - - 14,58,440 300.76
Tata Pure Equity Fund-Dividend 16,57,155 564.08 1,57,845 33.14 18,14,999 597.22 - -
Tata Infrastructure Fund-Dividend 15,51,170 340.08 73,669 15.51 16,24,839 355.60 - -
Total investment in Mutual Fund 3,446.79 2,866.40
Total Investment in Long Term 26,636.69 28,226.83
65
TRENT LIMITED
Schedule ‘E’ (Item No.6, Page 56) INVESTMENTS Balance as on Purchase during the year Sold during the Year Balance as on 01.04.09 31.03.2010 No. of Rupees No. of Rupees No. of Rupees No. of Rupees shares/units in lakhs shares/units in lakhs shares/units in lakhs shares/units in lakhs
Current Investments Other Investments at Cost (unquoted and fully paid unless otherwise stated)
UTI Fixed Income Interval Fund Srs II - - 1,00,57,148 1,005.71 - - 1,00,57,148 1,005.71 Qrtly intvl plan V Inst. Divid
ICICI Pru Banking & PSU Debt Fund - - 1,00,41,308 1,005.51 - - 1,00,41,308 1,005.51 wkly Divid. rivst
Kotak Quarterly interval plan series 3 Div - - 1,00,40,777 1,004.08 - - 1,00,40,777 1,004.08
Kotak Quarterly interval plan series 7 - - 50,20,540 502.06 - - 50,20,540 502.06 Div.
Birla Sunlife interval income Fund-instl- - - 1,00,00,000 1,000.00 - - 1,00,00,000 1,000.00 qrtrly-Srs 2 Divid.
Birla Sunlife interval income Fund-instl- - - 1,00,00,000 1,000.00 - - 1,00,00,000 1,000.00 qrtrly-Srs 1 Divid.
Tata Fixed Income Portfolio Fund Scheme - - 50,00,000 500.00 - - 50,00,000 500.00 B3 Inst. Qtrly.
Birla Sunlife Savings Fund -Instt-prm. 1,50,83,877 2,505.28 1,68,64,340 2,842.91 3,19,48,217 5,348.19 - - Growth
Birla Sunlife Savings Fund -Instt-. DWR - - 5,86,23,875 5,865.81 5,86,23,875 5,865.81 - -
Birla Sunlife Cash Plus-Instt- - - 4,75,46,272 6,842.51 4,75,46,272 6,842.51 - - premiumGrowth
Birla Sunlife Floating rate Fund Long term - - 11,173,130 1,119.90 - - 1,11,73,130 1,119.90 INST. WDR.
DSP Blackrock Money Manager Fund 84,552 1,041.70 24,268 303.04 1,08,820 1,344.74 - - Inst.. Growth (Units of Rs 1000/- each)
DSP Blackrock Liquidity Fund Inst. - - 23,647 303.01 23,647 303.01 - - Growth (Units of Rs 1000/- each)
HDFC Liquid Fund-Premium Plan- - - 33,65,870 600.00 33,65,870 600.00 - - Growth
HDFC Cash Management Fund- Treasury 88,60,535 1,700.00 1,50,32,759 2,926.21 2,38,93,294 4,626.21 - - Advantage Plan - Growth
HDFC Cash Management Fund- Treasury - - 6,84,47,301 6,857.66 5,93,63,234 5,947.40 90,84,067 910.26 Advantage Plan - WDR
HDFC Cash Management Fund- Savings - - 4,50,86,355 8,475.84 4,50,86,355 8,475.84 - - Plan - Growth
Kotak Flexi Debt Scheme - Inst.Growth 98,88,490 1,062.90 98,88,465 1,079.43 1,97,76,955 2,142.34 - -
Kotak Liquid Institutional Premium- - - 2,33,77,525 4,279.28 2,33,77,525 4,279.28 - - Growth
Kotak Floater Long term wkly divid - - 3,94,30,344 3,973.61 3,74,00,621 3,769.05 20,29,722 204.54
ICICI prudential Inst. Liquid Plan Super 26,94,422 350.00 5,41,71,656 9,061.56 5,68,66,078 9,411.56 - - inst. Growth (Units of Rs 100/- each)
ICICI prudential Inst. Liquid Plan Super - - 3,00,011 300.08 3,00,011 300.08 - - inst. DDR
ICICI Pru. Flexible Income Plan Growth 94,29,799 1,534.64 2,06,97,804 3,413.35 3,01,27,603 4,947.99 - -
ICICI Pru. Flexible Income Plan WDR - - 4,79,35,732 5,053.02 4,79,35,732 5,053.02 - -
ICICI Pru. Flexible Income Plan WDR - - 45,45,867 4,792.16 35,08,565 3,698.66 10,37,302 1,093.50 (Units of Rs 100/- each)
Tata Liquid Super High Inv.Fund- 30,985 503.66 5,90,465 9,803.53 6,00,842 9,957.19 20,608 350.00 Appreciation (Units of Rs.1000/- each)
Tata Floater Fund- Growth 1,72,37,619 2,250.29 3,96,49,491 5,250.00 5,68,87,110 7,500.29 - -
Tata Floater Fund- WDR - - 6,86,77,192 6,923.92 6,09,80,042 6,147.86 76,97,150 776.06
UTI Liquid Cash Plan-Instt-Growth - - 5,92,732 8,757.90 5,92,732 8,757.90 - - (Units of Rs.1000/- each)
UTI Treasury Advantage Fund -Instt- 1,70,173 2,000.00 2,41,901 2,883.31 4,12,074 4,883.31 - - Growth (Units of Rs 1000/- each)
66
TRENT LIMITED
Schedule ‘E’ (Item No.6, Page 56) INVESTMENTS Balance as on Purchase during the year Sold during the Year Balance as on 01.04.09 31.03.2010 No. of Rupees No. of Rupees No. of Rupees No. of Rupees shares/units in lakhs shares/units in lakhs shares/units in lakhs shares/units in lakhs
UTI Treasury Advantage Fund -Instt- - - 5,50,003 5,504.71 4,49,565 4,499.47 1,00,438 1,005.24 DWR (Units of Rs 1000/- each)
Total Current Investment 12,948.47 11,476.85
Total Investment 39,585.16 39,703.68
Less: Provision for diminution in value of - 186.09 Long Term Investments refer note 26, page 79) 39,585.16 39,517.59 Aggregate book value of Investments
Unquoted 38,610.36 39,495.75
Quoted [ Market value Rs.232.15 (2008- 974.80 207.93 2009: 476.24)]
Total 39,585.16 39,703.68
Note: 1. The Company has given an undertaking to the lenders of Landmark Limited restricting its rights of sale of shares of Landmark Limited. 2. The Company has given 29,00,000 (2008-2009 : 39,00,000) shares of Landmark Limited as security for the Non Convertible Debentures issued by the company aggregating to Rs.6550.24 lakhs.
Schedule ‘F’ (Item No.7 (a), Page 56) INVENTORIES
As at 31.03.2010 As at 31.03.2009 Rupees Rupees in lakhs in lakhs
Stocks (1) Raw Materials 165.35 80.48 (2) Packing Materials 63.43 37.28 (3) Finished Products (Note 26, page 79) 9,240.37 8,420.44 (4) Stocks-in-transit 152.57 39.72 (5) Stores & spares 26.61 19.58 9,648.33 8,597.50
Schedule ‘G’ (Item No.7(b), Page 56) SUNDRY DEBTORS
As at 31.03.2010 As at 31.03.2009 Rupees Rupees in lakhs In lakhs
(1) Debts outstanding for a period exceeding six 123.27 109.81 months
(2) Other Debts 222.31 326.98 345.58 436.79
(3) Less: Provision for Doubtful Debts 36.96 60.51 308.62 376.28
Considered Good – Unsecured 308.62 376.28 Considered Doubtful – Unsecured 36.96 60.51 345.58 436.79
67
TRENT LIMITED Schedule forming part of the Balance Sheet
Schedule ‘H’ (Item No.7 (c), Page56) CASH AND BANK BALANCES
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Cash on hand (including Cheques on hand 188.86 165.51 Rs.Nil) (2008-2009 : Rs. 10.50 lakhs)
(2) Balances with Scheduled Banks (a) Current Accounts 407.68 715.83 (b) Fixed Deposit Accounts 249.90 332.59 (c) Unpaid Dividend/Interest Accounts 65.25 74.34 722.83 1,122.76
911.69 1,288.27
Schedule ‘I’ (Item No.7(d), Page 56) LOANS AND ADVANCES
As at As at 31.03.2010 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Security Deposits Deposits for premises - subsidiaries 412.50 412.50 Deposits for premises - others 5,087.13 5,138.48 Other Deposits 170.76 119.21 5670.39 5,670.19
(2) Loans Loan to subsidiaries 14,060.00 15,396.47 Other loans 5,464.88 6,553.24 19,524.88 21,949.71
(3) Other Loans and Advances recoverable in cash or in 6,229.61 776.68 kind or for value to be received (4) Balances with Customs/Port Trust etc. 95.84 90.49 (5) Receivables from subsidiary 278.09 277.95 (6) Other Receivables 443.08 648.18 (7) Bills of Exchange 114.20 114.20 (8) Advances on Capital Account 258.70 398.80 (9) Advance payment of taxes-net of provision 1,090.97 1,084.63 (10) MAT Credit Entitlement 741.54 126.30 34,447.30 31,136.71
(11) Less: Provision for Doubtful Advances 211.91 177.49 34,235.39 30,959.22
Considered Good – Secured - - Considered Good – Unsecured 34,235.39 30,959.22 Considered Doubtful – Unsecured 211.91 177.49
34,447.30 31,136.71
68
TRENT LIMITED Schedule forming part of the Balance Sheet
Schedule ‘J’ (Item No.8 (a), Page 56) LIABILITIES
As at As at 31.03.2010 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Sundry Creditors- (Note 7 page 72) 10,073.24 8,776.41 (2) Subsidiaries 7.28 64.48 (3) Security Deposits Received 1,522.03 218.72 (4) Investor Education and Protection Fund (Appropriate amount shall be transferred to "Investor Education and Protection Fund" if and when due (a) Unclaimed Dividend 63.29 72.91 (b) Unclaimed application money received by the 4.82 5.71 Company for allotment of Rights Issue and due for refund (c) Unclaimed Debenture Interest 1.95 1.43 70.06 80.05
11,672.61 9,139.66
Schedule ‘K’ (Item No.8(b), Page 56) PROVISIONS As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Proposed Dividend 1,302.29 1,074.31 (2) Tax on Dividend 216.29 182.20 (3) Contingencies (Note 2(e), Page 71) 205.00 205.00 (4) Retirement Benefits 632.17 521.17 (5) Redemption Premium of Debentures 3,566.92 3,262.49 (6) Rent Equilisation Reserve 76.47 36.16
5,999.14 5,281.33
Schedule ‘L’ SIGNIFICANT ACCOUNTING POLICIES
1.0 Basis of preparation of accounts The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
2.0 Fixed Assets and Depreciation 2.1 Fixed Assets are stated at cost less depreciation. Costs comprise of cost of acquisition, Borrowing Cost, Cost of Improvement and any attributable cost of bringing the asset to condition for its intended use.
2.2 Depreciation on tangible assets is provided in accordance with the provisions of Schedule XIV to the Companies Act, 1956 as under: - (a) In respect of the assets of the Retail Business on “Straight Line" method. (b) In respect of all other assets on "Written Down Value" method.
2.3 Leasehold land is amortised over the period of lease remaining as at the date of their capitalisation.
2.4 Improvement to leasehold premises are depreciated over the period of lease remaining as at the date of their capitalisation.
2.5 Intangible Assets are amortised over their useful life not exceeding ten years.
69
TRENT LIMITED Schedule forming part of the Balance Sheet and Profit and Loss Account
3.0 Investments Long Term Investments are stated at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of Long Term Investments. Current Investments are stated at lower of cost or fair value.
4.0 Inventories Inventories are valued as under : Raw materials, packing materials and stores and spares: at cost. Finished Products: at lower of cost or net realisable value.
5.0 Income 5.1 Sale of goods is recognised on delivery to customers and include amounts recovered towards sales tax. 5.2 Interest income is accounted on accrual basis. 5.3 Dividend income is accounted when right to receive payment is established.
6.0 Retirement Benefits Defined Contribution Plans 6.1 a) Company’s contributions during the year towards Government administered Provident Fund, Family Pension Fund, ESIC and Labour Welfare Fund are charged to the Profit and Loss Account as incurred.
b) Company’s contributions during the year towards Superannuation to the Superannuation Trust administered by the Life Insurance Company are recognized in the Profit and Loss Account as incurred. (Refer Note No 21 (d), Page No. 76)
6.2 Defined Benefit Plans a) Company’s Contribution towards Gratuity made under the Group Gratuity Schemes with Life Insurance Companies are determined based on the amounts recommended by Life Insurance Companies as per actuarial valuation. (Refer Note 21(a), Page No. 75)
b) In the case of certain employees, contribution towards Provident Fund is made to an approved trust administered by the Company. The interest rate payable to the members of the trust shall not be lower than the statutory rate of interest declared by the Central Government under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and shortfall, if any, shall be made good by the Company.
c) Provision for other retirement / post retirement benefits in the forms of pensions, medical benefits and long term compensated absences (leave encashment) has been made on the basis of actuarial valuation.
7.0 Foreign Currency Transactions Foreign Currency transactions are accounted at the rates prevailing on the date of transaction. Year end current assets and liabilities are translated at the exchange rate ruling on the date of the Balance Sheet. Exchange differences on settlement/conversion are adjusted to Profit and Loss Account.
8.0 Employee Stock Option Scheme (ESOS) In respect of Options granted under the Company's Employee Stock Options Scheme (ESOS), in accordance with guidelines issued by SEBI, the accounting value of options is accounted as Deferred Employee Compensation, which is amortised on a straight line basis over the vesting period.
9.0 Provisions and Contingent Liabilities The Company recognises a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
10.0 Taxation 10.1 Current Tax comprises of Provision for Income Tax, Fringe Benefits Tax and Wealth Tax is determined in accordance with the provisions of Income Tax Act, 1961 and the Wealth Tax Act, 1957.
10.2 Deferred tax is recognised on timing difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
11.0 Leases Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rents under operating leases are recognised in the Profit and Loss Account on straight line basis.
12.0 Borrowing Cost Borrowing cost include interest, fees and other charges incurred in connection with the borrowing of funds and is considered as revenue expenditure for the year in which it is incurred. Borrowing cost attributed to the acquisition/improvement of qualifying capital assets and incurred till the commencement of commercial use of the assets is capitalised as cost of the assets.
70
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account
1. Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 2402.78 lakhs (2008-2009: Rs.513.80 lakhs).
2. Contingent Liabilities : (a) Sales tax, Excise and Customs demands against which the Company has filed appeals Rs.61.81 lakhs (2008-2009: Rs.56.20 lakhs) - net of tax Rs.41.28 lakhs (2008-2009: Rs.37.10 lakhs).
(b) Claims made against the Company not acknowledged as debts : Rs.784.29 lakhs (2008-2009 : Rs.657.59 lakhs)
(c) Income-tax demands against which the Company has filed appeals: Rs.362.23 lakhs (2008-2009:Rs. 219.98 lakhs).
(d) Corporate Guarantee given on behalf of Subsidiary: Rs.1500.00 lakhs (2008-2009 :Rs. Nil )
(e) As a matter of abundant caution, a general provision for contingencies of Rs. 205.00 lakhs (2008-2009: Rs.205.00 lakhs) has been made against items (a), (b) and (c) above, which are disputed by the Company.
3. Managerial Remuneration : Managerial remuneration for Managing Director and Non- Whole time Directors
2009-10 2008-09 Rupees Rupees in lakhs in lakhs
(a) Salaries (including Company's Contribution to Provident Fund and Superannuation Fund) 74.88 70.30 (b) Commission 105.00 21.88 (c) Perquisites 45.23 39.12 (d) Directors' sitting fees 11.98 9.70
237.09 141.00
Note: (a)The above figures do not include contribution to Gratuity Fund as separate figure is not available for the Managing Director, the amortised cost of 10000 Employee Stock Options granted to Managing Director and retirement benefits of Rs.14.40 lakhs (2008-2009: Rs.14.40 lakhs) paid to a former Managing Director.
(b) The remuneration to the Managing Director in excess of the maximum remuneration prescribed under Section 198 of the Companies Act 1956 amounting to Rs.44.57 lakhs is subject to the approval of the Shareholders and the Central Government.
Computation of Net Profit in accordance with Section 309 (5) of the Companies Act, 1956 :
2009-10 2008-09 Rupees Rupees Rupees in lakhs in lakhs in lakhs
Profit before taxes as per Profit and Loss Account 4,985.00 2,827.60 Add: (i) Depreciation as per accounts 1,185.09 923.34 (ii) Managerial Remuneration 237.09 141.00 (iii) Provision for doubtful debts/advances 10.86 60.59 1,433.04 1,124.93
6,418.04 3,952.53
Less: (i) Depreciation as per Section 350 1,185.09 923.34
(ii) Capital Profit 1,303.39 840.19 (iii) Diminution in Value of Finished Goods Stock (Refer Note 26- Page No 79) 918.77 - 3,407.25 1,763.53 Net Profit as per Section 309(5) 3,010.79 2,189.00 Commission: (a) Managing Director 75.00 - (b) Non-Wholetime Directors- 1% of Net Profit Rs.3010.79 lakhs (2008-09: Rs.2,189.00 lakhs) restricted to Rs. 30.00 lakhs (2008- 2009 Rs.21.88 lakhs) 30.00 21.88 105.00 21.88
71
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
4. Major components of deferred tax assets and liabilities are:
2009-10 2008-09 Rupees Rupees in lakhs in lakhs
Deferred Tax Liability Depreciation 840.93 659.44
Less: Deferred Tax Assets Retirement Benefits 209.99 177.15 Premium on Redemption of Debentures 342.17 421.87 Other Provisions 96.95 38.50
649.11 637.52
Net Deferred Tax Liability 191.82 21.92
2009-10 2008-09 Rupees Rupees in lakhs in lakhs 5. (i) Schedule 1 Item 4 (p) General Expenses include: (a) Auditors' Remuneration - Audit Fees 8.27 6.07 Fees for Taxation matters 1.10 1.12 Other Services 11.88 6.51 Reimbursement of out-of-pocket expenses 0.68 1.19
(b) Provision/ Write Off for doubtful debts/advances (net) 45.82 60.59
(ii) Expenses on Amalgamation /Warrant Issue include auditors 0.88 - remuneration -other services
6. Gain on foreign exchange fluctuation (net) credited to the profit and loss account amounted to Rs. 10.68 lakhs (2008-2009 : Loss Rs. 11.11 lakhs).
7. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.
8. There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31st March, 2010 except Rs. 3.99 lakhs (2008-2009 : Rs.3.63 lakhs) which is held in abeyance due to legal cases pending.
9. Right Issue (July 2007) proceeds of Rs. 157.41 crores have been fully utilised towards object of the issue.
10. Provision for taxation is inclusive of the tax impact on account of the securities / warrant issue expenses and premium on redemption of debentures debited to the Securities Premium Account. The Company has taken credit for MAT which it is entitled on future taxable profits.
11. (a) The company has entered into lease agreements for assets taken on operating lease which range between three years & six years. These are renewable by mutually agreeable terms. The future minimum lease payments under non-cancellable operating leases are as under :
2009-10 2008-09 Rupees Rupees in lakhs in lakhs
(i) Not later than one year 2,548.16 1,739.06 (ii) Later than one year and not later than five years 3,866.09 3,580.22 (iii) Later than five years Nil Nil
(b) The company has entered into lease agreements for assets given on operating lease which range between three years & five years. These are renewable by mutually agreeable terms. The future minimum lease payments under non- cancellable operating leases are as under :
2009-10 2008-09 Rupees Rupees in lakhs in lakhs
(i) Not later than one year 1,657.99 Nil (ii) Later than one year and not later than five years 1,848.69 Nil (iii) Later than five years Nil Nil
72
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
12. (a) In Accordance with the amendments to Clause 32 of Listing Agreement, advances in the nature of loan to subsidiaries are as under
Name of Company Balance as Maximum Amount at 31.3.2010 Outstanding during the year Rs. in lakhs Rs. in lakhs Fiora Services Limited Subsidiary 100.00 100.00 Fiora Link Road Properties Subsidiary 3,202.50 3,202.50 Limited Nahar Theatres Private Subsidiary 757.50 757.50 Limited Landmark Limited Subsidiary - 4239.97 Trent Hypermarket Limited Subsidiary 10,000.00 10,000.00
(b) Details of Investments made by the loanees in the shares of the Company & subsidiaries are as under
Investor company Invested in Rs. lakhs Fiora Link Road Properties Limited Landmark Limited 3,206.23 Fiora Services Limited Landmark Limited 6.55 Fiora Services Limited Trent Limited 131.85
Notes: 1) Loan to Fiora Link Road Properties Limited (to the extent of Rs. 3202.50 lakhs) are free of interest. 2) All above loans are repayable on demand. 3) Investment by Fiora Services Limited in shares of Trent Limited are prior to it becoming the subsidiary of Trent Limited and prior to grant of loan. 4) Investment by Fiora Services Limited in shares of Landmark Limited are prior to grant of loan.
13. LICENSED/INSTALLED ANNUAL CAPACITIES AND PRODUCTION :
Class of Goods Unit of Licensed Capacity Installed Capacity Actual Production Measure As at As at As at As at As at As at 31.3.2010 31.3.2009 31.3.2010 31.3.2009 31.3.2010 31.3.2009
Apparels Nos. in N.A N.A Nil Nil 1.30 1.03 lakhs Others * *
* Production represents goods manufactured by third parties. ** Refer note 14 (i) below.
14. SALES, PURCHASES, OPENING AND CLOSING STOCKS (1.4.2009 to 31.3.2010)
SALES PURCHASES OPENING STOCK CLOSING STOCK Class of Goods Rupees in Rupees in Rupees Rupees lakhs lakhs in lakhs in lakhs
Apparels/Household items etc. 54,176.46 28,527.38 8,420.44 9,240.37 (49,548.49) (28,042.32) (7,711.02) (8,420.44)
Others 83.94 54.55 (88.08) (57.38)
Total 54,260.40 28,581.93 8,420.44 9,240.37 (49,636.57) (28,099.70) (7,711.02) (8,420.44)
Notes:
(i) Given the nature of the retailing operations of the Company and having dealt with a large variety of products it is not practical to ascertain the quantitative information in respect of each products and hence the same is not furnished.
(ii) Closing stock is after adjusting samples, free gifts, damaged goods and shortages.
(iii) Figures in brackets are in respect of previous year.
73
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
15. RAW MATERIALS CONSUMED :
Unit of 2009-2010 2008-2009 measure Quantity Rupees in Quantity Rupees in lakhs lakhs
(a) Fabrics lakh Metres 1.38 177.26 1.32 155.80 (b) Others (refer note 14 (i), Page 73.) - - 53.56
TOTAL 177.26 209.36
16. VALUE OF IMPORTED AND INDIGENOUS MATERIALS CONSUMED :
2009-2010 2008-2009 Rupees in % of Total Rupees in % of Total lakhs Consumption lakhs Consumption
(a) RAW MATERIALS : (i) Imported 11.40 6 15.35 7 (ii) Indigenous 165.86 94 194.01 93
TOTAL 177.26 100 209.36 100
(b) PACKING MATERIALS (i) Imported - - - - (ii) Indigenous 207.57 100 212.34 100
TOTAL 207.57 100 212.34 100
17. VALUE OF IMPORTS ON C.I.F. BASIS :
2009-2010 2008-2009 Rupees Rupees in lakhs in lakhs
(a) Finished Products (including in -transit) 468.35 250.25 (b) Capital Goods 8.13 154.74 (c) Raw Material ( Fabrics) 1.26 Nil
TOTAL 477.74 404.99
18. EXPENDITURE IN FOREIGN CURRENCY :
2009-2010 2008-2009 Rupees Rupees in lakhs in lakhs
(a) Travelling Expenses 25.22 31.68 (b) Consultancy Fees (Net of Tax deducted at source) 47.15 130.43 (c) Payments on other accounts 22.91 2.88
TOTAL 95.28 164.99
19. EARNINGS IN FOREIGN CURRENCY :
2009-2010 2008-2009 Rupees Rupees in lakhs in lakhs
Sales of goods* 1,237.17 1,144.10 Fees 1,026.44 Nil
TOTAL 2,263.61 1,144.10
* Represents sale of goods which are collected in Foreign Currency through International Credit Cards, as certified by the collecting bankers.
20. SEGMENT REPORTING The main business of the Company is retailing. All other activities of the Company are incidental to the main business. Accordingly, there are no separate reportable segments in terms of the Accounting Standard 17 on “Segment Reporting” issued by ICAI.
74
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
21 EMPLOYEE BENEFITS (a) Defined benefit plans- Gratuity Defined Benefit Plans - Gratuity, Pension and Medical Benefits (As per actuarial valuations as on 31st March 2010) Rupees in Lakhs GRATUITY (Fully funded) Pension and medical LIC Administered Trust Company administered benefits (non funded) As on 31st As on 31st As on 31st As on 31st As on 31st As on 31st March 2010 March March March March March 2009 2010 2009 2010 2009 I Change in Obligation during the year ended 31st March 2010 1 Present value of obligations as at 79.98 72.44 92.43 72.13 193.96 181.62 beginning of year 2 Present value of obligations transferred - (19.34) - - - - 3 Liability taken over from other trust - 2.78 - - - - 4 Liability extinguished - (4.81) - - - - 5 Interest cost 8.26 5.80 7.02 6.24 14.05 14.09 6 Current Service Cost 23.25 23.25 6.45 5.12 - - 7 Actuarial (gain)/ Loss on obligations (2.93) 8.72 (14.61) 8.94 (6.34) 14.52 8 Benefits Paid (11.93) (8.84) - - (16.71) (16.27) 9 Present value of Defined Benefit 96.63 79.99 91.29 92.43 184.97 193.96 Obligation at the end of the year
II Change in Assets during the Year ended 31st March 2010 1 Plan assets at the beginning of the year 95.47 72.79 97.27 73.03 - - 2 Expected return on plan assets 7.16 8.27 7.30 5.79 - - 3 Contributions by Employer 5.55 23.25 - 17.00 16.71 16.27 4 Actual benefits paid (11.93) (8.84) - - (16.71) (16.27) 5 Actuarial Gains/ (Losses) 1.55 - (5.27) 1.45 - - 6 Plan Assets at the end of the year 97.80 95.47 99.29 97.27 - -
III Net Asset/(Liability) recognized in the Balance Sheet as at 31st March 2010 1 Present Value of Defined Benefit 96.63 79.98 91.29 92.43 184.97 193.96 Obligation as at 31st March 2010 2 Fair value of plan assets as at 31st March 97.80 95.47 99.29 97.27 - NA 2010 3 Fund status (Surplus/(Deficit)) 1.17 15.49 8.00 4.84 (184.97) (193.96) 4 Net Assets / (Liability) as at 31st March 1.17 15.49 8.00 4.84 (184.97) (193.96) 2010
IV Expenses recognized in the statement of Profit and Loss for the year 1 Current Service cost 23.25 23.25 6.45 5.12 - NA 2 Interest Cost 8.26 5.80 7.02 6.24 14.05 14.09 3 Expected return on plan assets (7.16) (8.27) (7.30) (5.79) - NA 4 Net Actuarial (Gains)/Losses (Net of (4.48) 8.72 (9.34) 7.49 (6.34) 14.52 opening Actuarial gain/(loss) adjustment) 5 Expenses recognized in statement of 19.87 29.50 (3.16) 13.06 7.71 28.61 Profit and Loss
V The major categories of plan assets as a percentage of total plan 1 Government of India Securities N.A. N.A. N.A. 29% N.A. N.A. 2 Corporate Bonds N.A. N.A. N.A. 12% N.A. N.A. 3 Special Deposit Scheme N.A. N.A. N.A. 32% N.A. N.A. 4 Equity Shares of Listed Companies N.A. N.A. N.A. 0% N.A. N.A. 5 Property N.A. N.A. N.A. 0% N.A. N.A. 6 Insurer Managed Funds 100% 100% 100% N.A. N.A. N.A. 7 Others N.A. N.A. N.A. 27% N.A. N.A. Total 100% 100% 100% 100% N.A. N.A.
VI Method of valuation Projected Unit Credit Method
VII Actuarial Assumptions 1 Discount Rate 7.70% 8.00% 7.70% 7.60% 7.70% 7.60% 2 Expected rate of return on plan assets 7.50% 9.15% 7.50% 7.50% N.A. N.A. 3 Mortality Table LIC (1994-96) ultimate N.A. N.A. 58 years/ 58 years/ 4 Retirement Age 60 years 60 years 60 years 60 years N.A. N. A.
75
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
Notes: 1. During the year the Company has approved an arrangement with TATA AIG Life Insurance Company Limited, for transferring the existing Self Managed Gratuity Trust w.e.f. 1st February 2010. Accordingly, all the funds of the Trust have been transferred to the said insurance Company.
2. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
(b) Defined Benefit Plans - Provident Fund Contribution to Trust administered by the Company The Guidance issued by the Accounting Standard Board (ASB) on implementing AS-15, Employee benefits (revised 2005) states that provident fund set up by employers which requires interest short fall to be met by the employer, needs to be treated as defined benefit plan. The Company's provident fund contribution to the Company administered trust during the year is Rs.11.99 lacs. The fund does not have any existing deficit or interest shortfall. In regard to any future obligation arising due to interest shortfall (i.e. government interest to be paid on provident fund scheme exceeds rate of interest earned on investment) and pending the issuance of the Guidance Note from the Actuarial Society of India, the Company’s actuary has expressed his inability to reliably measure the same.
(c) Leave Encashment (Long term compensated absences ) recognised as expense for the year is Rs 145.68 lacs (2008-09 : Rs. 133.77 lakhs)
(d) Defined Contribution Plans 2009-2010 2008-2009 Company's Contributions to defined Contribution Plans recognised as expense for the year as under: 1 Towards Superannuation Fund 14.99 16.12 2 Towards Government Administered Provident Fund / Family Pension Fund 120.51 116.27 3 Towards Employees State Insurance / Labour Welfare Fund 48.76 50.31
Note: During the year the Company has approved an arrangement with TATA AIG Life Insurance Company Limited, for transferring the existing Self Managed Superannuation Trust w.e.f. 1st February 2010. Accordingly, all the funds of the Trust have been transferred to the said insurance Company.
22. RELATED PARTY TRANSACTIONS :
Related parties are as certified by the management
22.01 Parties where control exists Trent Brands Limited - Subsidiary Company. (100% Equity Share Capital is held by Trent Limited as at 31st March, 2010) Fiora Services Limited - Subsidiary Company. ( 25.67% Equity Share Capital is held by Trent Limited as at 31st March, 2010) ( 64.20% Equity Share Capital is held by Trent Brands Limited as at 31st March, 2010) Nahar Theatres Private Limited - Subsidiary Company ( 100% Equity Share Capital is held by Trent Limited as at 31st March, 2010) Fiora Link Road Properties Limited - Subsidiary Company ( 100% Equity Share Capital is held by Trent Limited as at 31st March, 2010) Landmark Limited - Subsidiary Company ( 57.39% Equity Share Capital is held by Trent Limited as at 31st March, 2010) ( 17.66% Equity Share Capital is held by wholly owned subsidiary companies as at 31st March, 2010) Westland Limited - Subsidiary Company ( 96.64% Equity Share Capital is held by Trent Limited as at 31st March, 2010) Regent Management Private Limited - Subsidiary Company ( 100% Equity Share Capital is held by Landmark Limited as at 31st March, 2010) Landmark E-Tail Private Limited - Subsidiary Company ( 100% Equity Share Capital is held by Landmark Limited as at 31st March, 2010) Trent Hypermarket Limited - Subsidiary Company. ( 100% Equity Share Capital is held by Trent Limited as at 31st March, 2010) Trent Global Holdings Limited-Subsidiary Company ( 100% Equity Share Capital is held by Trent Limited as at 31st March, 2010)
22.02 Other Related Parties with whom transactions have taken place during the year: Associates: Tata Sons Ltd. (Holds more than 20% of the Share Capital of the Company) Joint Ventures Trexa ADMC Private Limited ( 50% Equity Share Capital is held by Trent Limited as at 31st March, 2010) Inditex Trent Retail India Private Limited ( 49% Equity Share Capital is held by Trent Limited as at 31st March, 2010)
76
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
22.03 Directors of the Company
Managing Director Mr. N. N. Tata
Mr. F. K. Kavarana Mr. B. S. Bhesania Non Executive Directors Mr. A. D. Cooper Mr. K. N. Suntook Mr. N. A. Soonawala (retired on 31.03.2010)
Details of remuneration to Directors is disclosed in Note no. 3 Page 71
2009-2010 2008-2009 Rupees Rupees in lakhs in lakhs
22.04 Sales to and Other recoveries from related parties a) Subsidiaries 550.74 432.11 b) Associates 5.63 1.75 c) Joint Venture 45.66 -
22.05 Purchase/other services from related parties a) Subsidiaries 1,230.87 1,146.43 b) Associates 429.69 421.32
22.06 Purchases of Fixed Assets from related parties a) Subsidiaries 36.61 -
22.07 Sale of Fixed Assets to related parties a) Subsidiaries 11.55 -
22.08 Interest/Dividend received from related parties a) Subsidiaries 770.40 359.56 b) Associates 14.00 497.29
22.09 Interest/Dividend paid to related parties a) Subsidiaries 8.80 11.20 b) Associates 278.35 354.27 c) Directors 2.40 3.06
22.10 Purchase of Equity Shares of Subsidiaries 300.00 -
22.11 Subscription to Share Capital a) Subsidiaries 4,100.00 5,117.80 b) Joint Venture 3,192.70 -
22.12 Loan Given to a) Subsidiaries 11.385.00 11,788.00 b) Associates - 6,400.00
22.13 Loan Repaid by a) Subsidiaries 4,293.97 1,100.00
22.14 Security deposit given during the year a) Associates - 77.00
22.15 Security deposit receivable as on 31.03.2010 a) Subsidiaries 412.50 412.50 b) Associates 45.00 545.00
22.16 Security deposit payable as on 31.03.2010 a) Subsidiaries 115.10 115.10
22.17 Guarantee given during the year a) Subsidiaries 1,500.00 -
22.18 Guarantee given as on 31.3.2010 a) Subsidiaries 1,500.00 -
22.19 Loan outstanding as on 31.3.2010 a) Subsidiaries 14,060.00 15,396.47 b) Associates - 6,400.00
1 22.20 Outstanding Receivables as on 31.3.2010 a) Subsidiaries 279.97 510.44 b) Associates - 376.44 c) Joint Venture 0.02 0.01
22.21 Outstanding Payables as on 31.3.2010 a) Subsidiaries 7.28 64.48 b) Associates 103.34 95.94
22.22 Issue of Equity Shares a) Directors 38.95 -
22.23 Transfer of Business To Subsidiaries - 4,991.46
77
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
23. Interests in Joint Venture:
The Company's interests, as a venture, in jointly controlled entities are:
% of ownership Country of interest as at % of ownership interest Name Incorporation 31st March as at 31st March 2009 2010 Trexa ADMC Private Limited India 50% 50% Virtuous Trustees Private Limited India - 49% Inditex Trent Retail India Private Limited India 49% -
For the year For the year ended 31st ended 31st March, 2010 March, 2009 Rupees Rupees in lakhs in lakhs
I Income 24.01 - 1.Income From Operations 30.54 11.88 2.Other Income
II Expenditure 1.Expenses 230.55 146.91 2.Depreciation 4.00 0.96
III Assets: 1.Fixed Assets 866.33 3.75 2.Investments 0.41 115.38 3.Deferred tax Asset/(Liabilities) (0.03) 0.17 4.Current Assets Loans & Advances - Cash and bank balances 2,548.17 4.67 - Loans and Advances 332.24 10.61 - Debtors 1.86 - - Inventories 38.03 - - Miscellaneous Expenditure 0.00 0.51 (to the extent not written off or adjusted)
IV Liabilities: Current Liabilities 669.65 30.55 Provisions 4.83 4.01
Note: The previous year ended 31.03.2009 includes the figures incorporated from the Unaudited financial statements of Virtuous Trustees Private Limited for the year ended 31st March 09.
24. EARNINGS PER SHARE (EPS) :
2009-2010 2008-2009
(a) Weighted Average Number of shares outstanding during the year.
i) For Basic Earnings Per Share 1,95,89,303 1,95,32,896
ii) For Diluted Earnings Per Share 1,95,89,303 1,95,32,896 No of shares for Basic EPS as per a(i)
Add: Dilutive Potential Equity Shares in respect of outstanding 1,12,753 - warrants/options
No of shares for Diluted Earnings Per Share 1,97,02,056 1,95,32,896
(b) Net Profit/(Loss) after Tax available for Equity Shareholders (Rupees 4,022.03 2,675.55 in lakhs)
(c) Less : Dividend to Preference Shareholders and applicable dividend 0.01 - distribution tax there on
(d) Net Profit/(Loss) after Tax available for 4,022.02 2,675.55 Equity Share Holders (Rupees in lakhs)
(e) Earnings Per Share (Rs.) Face value of Rs.10/- Basic 20.53 13.70 Diluted 20.41 13.70
25. Previous years figures have been regrouped wherever necessary
78
TRENT LIMITED Notes on the Balance Sheet and Profit and Loss Account (Contd.)
26. The scheme of Amalgamation of Satnam Developers and Finance Private Limited (SDPL) and Satnam Realtors Private Limited (SRPL) with the company as approved by the Hon’ble High Court of Judicature at Bombay has become effective on 12th March 2010 upon obtaining all sanctions and approvals as required under the scheme and upon filing of certified true copies of the order with the Registrar of Companies, Maharashtra. The appointed date of the scheme is 1st April 2009. SDPL was a 100% subsidiary of the Company engaged in the business of real estate investment and development activities and SRPL was engaged in the business of construction and development activities. SDPL held 50% of the shares in SRPL.
In terms of the scheme, (a) All the assets and liabilities of SDPL and SRPL stand transferred to and vested in the company with effect from the appointed date.
(b) Inter corporate loans, deposits and balances as between SDPL, SRPL and the Company stands cancelled.
(c) The book value of the shares held by the Company in SDPL, as appearing in the books of the Company, the book value of shares held by SDPL in SRPL and the advance paid by SDPL towards acquisition of shares in SRPL, as appearing in the books of SDPL, stands cancelled.
(d) The company on 26th March 2010 has issued 70,000 fully paid 0.1% Redeemable Preference Shares of Rs.1,000 each to the equity shareholders of the erstwhile SRPL (except for shares held by SDPL) in the ratio of 14 Preference Shares for every 1 Equity Share held.
(e) The scheme of amalgamation with SDPL is being accounted for under the pooling of interest method and with SRPL is being accounted for under the Purchase Method as contained in AS14 “Accounting for amalgamation” issued by the ICAI. The vested assets and liabilities of SDPL and SRPL have been recognized at their book values in the books of the Company.
(f) The costs and expenses amounting to Rs. 120.02 lakhs (net of tax Rs.80.15 lakhs) incurred for implementation of the scheme have been adjusted against the general reserve of the company.
(g) The deficit of Rs.2,519.32 lakhs arising due to the difference between the value of assets over the value of liabilities of SDPL and SRPL and the face value of the preference shares issued by the company and after adjusting the diminution in the value of Long term investments to the extent of Rs.186.09 lakhs and Finished goods inventory Rs. 918.77 lakhs (net of tax - Rs.606.48 lakhs) as approved by the board has been adjusted first against the amalgamation reserve to the extent of Rs.1,492.95 lakhs and the balance Rs.1,026.37 lakhs against the general reserve.
27. Exceptional item's represents profit on sale of minority stake of its subsidiary Landmark Limited to a Private Equity Fund.
28. On 30th April 2010 the company has acquired 100% equity shares of Optim Estate Private Limited making it wholly owned subsidiary of the Company.
29. As approved by the shareholders, the Company had transferred its Star Bazaar business, as a going concern, to its 100% subsidiary Trent Hypermarket limited, with effect from 1st August 2008.
30. Balance Sheet Abstract and Company's General Business Profile as required in terms of Part IV of Schedule VI of the Companies Act, 1956 is attached herewith.
Signatures to Schedules '1' to '4' and 'A' to 'L' and Notes.
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
79
TRENT LIMITED
Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details: :
CIN No. : L24240MH1952PLC008951
State Code : 11
Balance Sheet Date : 31.3.2010
II. Capital raised during the year (Amount in Rupees Thousands):
Public Issue : Nil
Rights Issue : Nil
Bonus Issue : Nil
Private Placement : Nil
III. Position of mobilisation and deployment of funds (Amount in Rupees Thousands):
Total Liabilities : 89,29,439
Total Assets : 89,29,439
Sources of Funds:
Paid-up Capital : 2,70,351
Warrant Application Money
Reserves and Surplus : 61,34,700
Secured Loans : 11,55,024
Unsecured Loans : 13,50,182
Application of Funds: :
Net Fixed Assets : 22,34,452
Investments : 39,51,759
Net Current Assets : 27,43,228
Net Deferred Tax : (-)19,182
Miscellaneous Expenditure : -
Accumulated Losses : Nil
IV. Performance of Company (Amount in Rupees Thousands):
Turnover* : 60,99,983
Total Expenditure : 57,15,242
Profit before Tax : 3,84,741
Profit after Tax : 3,92,799
Earnings per share (in Rs.) : Basic 20.53 Diluted 20.41
Dividend Rate (%) : 65
V. Generic Names of three principal products/services of the Company:
Item Code No. (ITC CODE) Product Description
1. 62 07 : Menswear
2. 62 08 : Ladieswear
3. 62 09 : Childrenswear
*Represents Income from Operations and other income
80
TRENT LIMITED CASH FLOW FOR THE YEAR ENDED 31st March 2010
1.4.2009 to 1.4.2008 to 31.03.2010 31.03.2009 Rupees in lakhs Rupees in Rupees lakhs in lakhs
A CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Taxes and Exceptional Items 3847.42 2827.60 Adjustments for : Depreciation 1,185.09 923.34 Provision for doubtful debts & bad debts written off 45.82 60.59 Interest (net) (782.10) (845.30) Employee Stock Option 84.76 - (Profit)/Loss on Fixed Assets sold/discarded (Net) 82.91 179.41 Profit on sale of current investment (165.81) (840.19) Excess of Cost over Fair Value of Investments 0.02 - Dividend from Investments (505.35) (1,332.14) Rent Equilisation Reserve 40.31 36.16 Discount on Commercial Paper 225.45 - Preliminary Expenses written off 0.13 - Excess provisions / Liabilities no longer required written back (275.93) (49.95) (64.70) (1,868.08)
Operating Profit Before Working Capital Changes 3782.71 959.52 Adjustments for : (Increase)/Decrease in Inventories (1,969.61) (2,738.90) (Increase)/Decrease in Trade & Other Receivables (131.13) (2,019.17) Increase/(Decrease) in Trade & Other Payables 1,573.77 660.95 (526.97) (4,097.12)
Cash generated from operations 3,255.74 (3,137.60) Direct Taxes Paid (726.99) (394.91) Net Cash from Operating Activities 2,528.75 (3,532.51)
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (3,386.59) (3,501.11) Sale of Fixed Assets 17.46 113.96 Purchase of Investments (118,864.58) (167,399.93) Sale of investments 119,156.30 175,588.12 Sale of Business - 4991.46 Loans given (15,385.00) (18,188.00) Repayment of Loans given 4,793.97 1,125.00 Interest received 1,177.13 421.74 Merger Expenses (120.02) - Dividend From Investments 505.35 1,772.16
Net cash used in Investing Activities (12,105.98) (5,076.00)
C CASH FLOW FROM FINANCING ACTIVITIES Issue of securities 8,264.01 10,000.00 Redemption of Securities (Including Premium) (5,663.35) - Issue expenses on securities (19.38) (30.25) Unclaimed Securities application money (0.89) (5.08) Long Term & Other borrowings 8,165.04 - Repayment of Long Term & Other borrowings (3.42) (5.15) Interest Paid (380.78) (130.21) Dividend Paid (1,266.13) (1,523.08) Net cash from Financing Activities 9,095.10 8,306.23
NET INCREASE IN CASH AND CASH EQUIVALENTS (A+B+C) (482.13) (302.28)
81
CASH AND CASH EQUIVALENTS AS AT 01.04.2009 1,288.27 1,335.10 Add : Cash and Cash Equivalents taken over on Merger (Refer Note 26 on Page 79) 105.54 - Less : Cash and cash equivalents transferred on sale of business - (255.46) CASH AND CASH EQUIVALENTS AS AT 31.03.2010 911.68 1288.27
Note: i) All figures in brackets are outflows. ii) Cash and Cash equivalents consist of cash on hand and balance with Banks. iii) Of the above cash and cash equivalent balance the amount of Rs. Nil. (2008-2009: Rs.85.63 lakhs) is not available for use by the company as it is under dispute. iv) Previous year's figures have been regrouped wherever necessary.
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
82
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF TRENT LIMITED
1. We have audited the attached Consolidated Balance Sheet of TRENT LIMITED (“the Company”) and its subsidiaries, collectively referred to as “the Group”, as at 31st March 2010, and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These Consolidated 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.
2. 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 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 management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
3. a) We did not audit the financial statements of the subsidiary Landmark Limited and its subsidiaries namely Landmark E-Tail Private Limited and Regent Management Private Limited. The consolidated financial statements of Landmark Limited and its subsidiaries reflect total net assets of Rs. 8186.19 lakhs as at 31st March 2010 and total revenue of Rs. 22809.45 lakhs and the net cash inflow amounting to Rs. 31.38 lakhs for the year ended on that date, as considered in the consolidated financial statements. These financial statements and other information of the subsidiaries have been audited by other firms of Chartered Accountants, and our opinion, in so far as it relates to the amounts included in respect of the subsidiaries is based solely on their audit reports.
b) We did not audit the financial statements of the subsidiary Westland Limited, whose financial statements reflect total net assets of Rs.1059.94 lakhs as at 31st March 2010 and total revenue of Rs. 3600.3 lakhs and the net cash inflow amounting to Rs.24.05 lakhs for the period ended on that date, as considered in the consolidated financial statements. These financial statements and other information of the subsidiary have been audited by other firm of Chartered Accountants, and our opinion, in so far as it relates to the amounts included in respect of the subsidiary is based solely on their audit report.
c) We did not audit the financial statements of the foreign subsidiary Trent Global Holdings Limited, whose financial statements reflect total net assets of Rs. 16.01 lakhs as at 31st March 2010 and total revenue of Rs. Nil lakhs and the net cash outflow amounting to Rs.44.59 lakhs for the period ended on that date, as considered in the consolidated financial statements. These financial statements and other information of the subsidiary have been audited by other auditor, duly qualified to act as auditor in the country of incorporation of such subsidiary, and our opinion, in so far as it relates to the amounts included in respect of the subsidiary is based solely on their audit report.
4. a) We did not audit the financial statements of the joint venture Trexa ADMC Private Limited, whose financial statements reflect total net assets of Rs.41.03 lakhs as at 31st March 2010 and total revenue of Rs.53.12 lakhs and the net cash inflow amounting to Rs.27.81 lakhs for the year ended on that date, as considered in the consolidated financial statements. These financial statements and other information of the joint venture have been audited by other firm of Chartered Accountants, and our opinion, in so far as it relates to the amounts included in respect of the joint ventures are based solely on their audit reports.
b) We did not audit the financial statements of the joint venture Inditex Trent Retail India Private Limited, whose financial statements reflect total net assets of Rs.6310.32 lakhs as at 31st March 2010 and total revenue of Rs.57.13 lakhs and the net cash inflow amounting to Rs.5163.33 lakhs for the year ended on that date, as considered in the consolidated financial statements. These financial statements and other information of the joint venture have been audited by other firm of Chartered Accountants, and our opinion, in so far as it relates to the amounts included in respect of the joint ventures are based solely on their audit reports. 83
5. We report that the Consolidated Financial Statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard (AS) 21 - Consolidated Financial Statements and Accounting Standard (AS) 27 - Financial Reporting of Interest in Joint Ventures issued by The Institute of Chartered Accountants of India and on the basis of the separate audited / certified financial statements of the Company and its subsidiaries included in the Consolidated Financial Statements.
6. Based on the audit and on consideration of the reports of the other auditors on the separate financial statements and on the other financial information of the components and the accounts as explained in paragraph 5 above; in our opinion and to the best of our information and according to the explanations given to us, the attached Consolidated Financial Statements read together with Notes thereon, give 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 state of affairs of the Group as at 31st March 2010;
(b) in the case of the Consolidated Profit and Loss Account, of the profit of the Group for the year ended on that date; and
(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.
For N. M. RAIJI & CO., Chartered Accountants (Registration No. 108296W)
Y. N. THAKKAR Place: Mumbai Partner Date: 7th June 2010 Membership No. 33329
84
TRENT LIMITED
Consolidated Balance Sheet as at 31st March 2010
Schedule Page Rupees Rupees As at in lakhs in lakhs 31.03.2009 Rupees in lakhs SOURCES OF FUNDS : 1. SHAREHOLDERS’ FUNDS: (a) Capital A 89 2,703.51 1,953.29 (b) Reserves and Surplus B 90 56,631.08 57,950.02 59,334.59 59,903.31
2. MINORITY INTEREST 1,952.25 80.08
3. LOAN FUNDS: C 91 (a) Secured Loans 12,855.33 20,556.31 (b) Unsecured Loans 13,520.17 5.24 26,375.50 20,561.55
4. TOTAL FUNS EMPLOYED 87,662.34 80,544.94
APPLICATION OF FUNDS: 5. FIXED ASSETS: D 92 (a) Gross Block 53,074.62 42,528.25 (b) Less: Depreciation 8,289.53 6,197.13 (c )Net Block 44,785.09 36,331.12 (d) Capital Work-in-Progress 3,297.45 1,386.92 48,082.54 37,718.04
6. INVESTMENTS E 93 18,104.71 24,208.80
7. DEFERRED TAX ASSET (NET) 157.95 98.28
8. CURRENT ASSETS, LOANS AND ADVANCES:
(a) Inventories F 93 20,928.58 17,512.09 (b) Sundry Debtors G 93 1,552.24 1,333.07 (c )Cash and Bank Balances H 94 4,373.11 1,938.85 (d) Loans and Advances I 94 24,524.17 21,553.62 51,378.10 42,337.63
9. Less: CURRENT LIABILITIES AND PROVISIONS : (a) Liabilities J 95 23,900.66 18,395.71 (b) Provisions K 95 6,160.30 5,422.66 30,060.96 23,818.37 10. NET CURRENT ASSETS 21,317.14 18,519.26
11. MISCELLANEOUS EXPENDITURE L 95 - 0.56 (to the extent not written off or adjusted)
12. TOTAL ASSETS (NET) 87,662.34 80,544.94
(For Schedule ‘M’ and notes see Pages 96 to 102)
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
85 TRENT LIMITED
Consolidated Profit And Loss Account for the year ended 31st March 2010
Schedule Page Rupees Rupees Previous Year in lakhs in lakhs Rupees in lakhs INCOME : 1. INCOME FROM OPERATIONS 2 88 1,12,046.07 85,088.59 2. OTHER INCOME 3 88 1,714.44 3,432.89 3. TOTAL INCOME 1,13,760.51 88,521.48
EXPENDITURE:
4. OPERATING AND OTHER 1 87 1,10,687.64 85,913.64 EXPENSES 5. DEPRECIATION 2,208.49 1,593.77 1,12,896.13 87,507.41
6. INTEREST 4 88 788.25 958.74
7. TOTAL EXPENDITURE 1,13,684.38 88,466.15 PROFIT BEFORE TAXES AND EXCEPTIONAL ITEMS 76.13 55.33
8. EXCEPTIONAL ITEM (Note 14, Page 101 ) 836.71 -
PROFIT BEFORE TAXES 912.84 55.33
9. PROVISION FOR TAXATION CURRENT TAX 832.20 213.42 MAT CREDIT ENTITLEMENT (302.95) (126.30) FRINGE BENEFIT TAX - 97.60 DEFERRED TAX 315.70 0.32 844.95 185.04
PROFIT /(LOSS) FOR THE YEAR AFTER TAXES 67.89 (129.71) 10. (SHORT) EXCESS TAX PROVISION FOR PRIOR YEARS 78.15 151.63 (NET)
NET PROFIT BEFORE MINORITY INTEREST 146.04 21.92
11. LESS: MINORITY SHARE OF PROFIT/ (LOSS) (15.00) (6.48)
12. LESS: PRE ACQUISTION PROFIT / (LOSS) 5.54 (75.56)
NET PROFIT AFTER MINORITY INTEREST 155.50 103.96
BALANCE BROUGHT FORWARD FROM PREVIOUS 607.64 3,528.57 YEARS
PROFIT AVAILABLE FOR APPROPRIATION 763.14 3,632.53
13. APPROPRIATIONS: (i) GENERAL RESEVE 403.00 268.00 (ii)DEBENTURE REDEMPTION RESERVE 500.00 1,500.00 (iii)PROPOSED DIVIDEND- EQUITY SHARES 1,302.28 1,074.31 (iv)PROPOSED DIVIDEND- PREFERENCE SHARES 0.01 - (v) TAX ON DIVIDEND 216.29 182.58 (vi) BALANCE CARRIED TO BALANCE SHEET (1,658..44) 607.64 763.14 3,632.53
14. Earning Per share (Rs.) (Note 12. Page 101) Basic 0.79 0.53 Diluted 0.79 0.53
(For Schedule ‘M’ and notes see Pages 96 to 102)
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
86 TRENT LIMITED
Schedule forming part of the Consolidated Profit and Loss Account
Schedule ‘1’ (Item No.4, Page 86) OPERATING AND OTHER EXPENSES
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) RAW MATERIALS CONSUMED 548.62 419.62 (2) PURCHASE OF FINISHED PRODUCTS 69,140.32 52,014.31 (3) PAYMENTS TO AND PROVISIONS FOR EMPLOYEES (a) Salaries, Wages, Bonus, etc (Refer note 7,765.28 6,172.42 Schedule “B” Page 90) (b) Contribution to Provident, Superannuation 472.82 399.27 and Gratuity Funds (c ) Workmen and Staff Welfare Expenses 488.44 493.22 8,726.54 7,064.91 (4) OTHER EXPENSES (a) Processing Charges 169.23 145.50 (b) Packing Materials Consumed 613.26 592.28 (c ) Power and Fuel 3,603.23 2,999.68 (d) Repairs to Building 2,259.32 1,651.38 (e) Repairs to Machinery 580.92 323.11 (f) Repairs others 685.95 499.43 (g) Rent 4,962.10 3,866.81 (h) Rates and Taxes 729.21 500.30 (i) Insurance 136.51 82.85 (j) Advertisement and Sales Promotion 5,847.76 5,430.00 (k) Travelling Expenses 646.43 499.92 (l) Professional and Legal Charges 858.03 910.62 (m) Printing and Stationery 206.28 150.60 (n) Bank Charges 694.55 535.47 (o) Postage, Telegrams and Telephones 589.00 509.61 (p) General Expenses (Note 5 (i) Page 97 ) 2,519.30 1,964.20 (q) Retail Business Fees 4,601.39 3,585.66 (r) Sales tax paid 5,339.14 4,016.29 (s) Directors’ Fees 14.01 11.48 (t) Commission to Non Whole time Directors 30.00 21.88 (u) Excess of cost over fair value of Current 0.63 - Investments (v) Loss on Sale of Fixed Assets Sold/ Discarded 173.10 225.61 (Net) (w) Loss on Sale of Long Term Investments 164.90 - (Net) 35,424.25 28,522.68
(5) FREIGHT AND FORWARDING CHARGES 675.86 642.37 (6) CHANGES IN FINISHED PRODUCTS Accretion to stocks deducted 4,058.50 2,897.16 1,10,457.09 85,766.73
(7) Share of Joint Ventures- [Note 11 (b), Page, 100] 230.55 146.91
1,10,687.64 85,913.64
87 TRENT LIMITED
Schedule forming part of the Consolidated Profit and Loss Account
Schedule ‘2’ (Item No.1, page 86) INCOME FROM OPERATIONS
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Sales 106,224.46 82,469.04 Less: Excise Duty 2.86 - 106,221.60 82,469.04
(2) Other Operating Income (a) Display and Sponsorship Income 356.86 316.07 (b) Commission on sales 562.59 575.17 (c ) Discounts and Fees 1,267.09 464.72 (d) Rent received 1,510.37 115.61 (e) Others 2,124.25 1,147.98 5,821.16 2, 619.55
1,12,042.76 85,088.59
(3) Share of Joint ventures- [Note 11(b), Page 100] 3.31 -
1,12,046.07 85,088.59
Schedule ‘3’ (Item No.2, Page 86) OTHER INCOME
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Miscellanous Income 18.63 15.25 (2) Interest on Loans and Advance – Gross 621.07 1,100.88 [Tax deducted at source : Rs.63.37 lakhs (2008- 2009: Rs.133.68 lakhs] (3) Interest on Deposits with Banks- Gross 60.11 37.17 [Tax deducted at source : Rs.6.88 lakhs (2008- 2009: Rs.5.38 lakhs]
(4) Income from Current Investments – Non trade (a) Dividend on Current Investments 351.77 1,058.46 (b) Profit on sale of Current Investments (Net) 311.51 478.60 663.28 1,537.06
(5) Interest on Long Term Investments – Gross - 0.50
(6) Dividend on Long Term Investments – Gross (a) Trade 1.50 3.00 (b) Others- Gross 184.96 374.64 186.46 377.64
(7) Profit on Sale of Long Term Investments (Net) - 302.56
(8) Excess provision no longer required written back 134.35 49.95 1,683.90 3,421.00
(9) Share of Joint Ventures –[Note 11(b), Page 100] 30.54 11.88
1,714.44 3,432.89
Schedule ‘4’ (Item No.6, Page 86) INTEREST EXPENSE
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs
(a) Debentures 131.00 131.00 (b) Fixed Loans 519.22 196.12 (c ) Others 138.03 631.62 788.25 958.74
88
TRENT LIMITED
Schedule forming part of the Consolidated Balance Sheet
Schedule ‘A’ (Item No.1 (a), Page 85) CAPITAL
As at As at 31.03.2010 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs AUTHORISED: 2,40,00,000Equity Shares of Rs.10/- each (2008-2009: 2,00,00,000 Equity Shares of Rs.10/- each) 2,400.00 2,000.00 50,00,000 Unclassified Shares of Rs.10/- each (2008-2009: 50,00,000 Unclassified Shares of Rs.10/- each) 500.00 500.00 70,000 Preference Shares of Rs.1000/- each 700.00 - (2008-2009: Nil) 3,600.00 2,500.00
ISSUED, SUBSCRIBED AND PAID-UP 2,00,35,052 Equity Shares of Rs.10/- each fully 2,003.51 1,953.29 paid –up [2008-2009: 1,95,32,896 Equity Shares of Rs.10/- each fully paid up]
70,000 0.1% Cumulative Redeemable Preference 700.00 - Shares of Rs.1000/- each, fully paid up (2008-2009: Nil) (Note ‘1c’) 2,703.51 1,953.29
Notes: 1. Of the above- (a) 1,08,81,021 Equity Shares were allotted as fully paid Bonus Shares by capitalization of Share Premium and Reserves. (b) 1,12,616 Equity Shares were allotted as fully paid pursuant to Schemes of Amalgamation without payment being received in cash. (c ) 70,000 Cumulative Redeemable Preference Shares were allotted as fully paid pursuant to Scheme of Amalgamation without payment being received in cash.
2 During the year 2005-2006, the Company had issued 13,10,047 warrants to the shareholders along with partly Convertible Debentures of which 5,62,121 warrants are outstanding as on 31st March 2009. Each Warrant holder is entitled to apply for one Equity Share of Rs.10/- each at a premium of Rs. 640/- each within 30 days after the expiry of 54 months from 7th July 2005 being the date of allotment. During the current year, the Company has issued 5,02,156 Equity Shares of Rs.10/- each at a premium of Rs. 640/- per share on the conversion of warrants. There are no warrants outstanding as at 31st March 2010.
3 The term of the 0.1% Cumulative Redeemable Preference Shares is of twenty years from 26th March 2010, being the date of allotment, with an option to the Company to redeem the Preference Shares at any time after 36 months from the date of allotment. The Board of Directors at their meeting held on 26th April 2010 have fixed 1st June 2013 as the date of redemption of the Preference Shares.
4 During the year, the Company has granted 21,825 stock options under the Employee Stock Option Scheme. 21,825 Stock Options are outstanding as on 31st March 2010.
89
TRENT LIMITED Schedule forming part of the Consolidated Balance Sheet
Schedule ‘B’ (Item No.1 (b), Page 85) RESERVES AND SURPLUS
As at As at 31.03.2010 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) SECURITIES PREMIUM ACCOUNT Balance as per last account 31,995.25 33,321.32 Add: Premium on issue of Equity shares on 3,213.80 - conversion of Warrants Less: Premium on redemption of Debentures 638.83 1,306.10 (Note ‘b’ and ‘c’ Schedule ‘C’) Less: Write off of securities / warrant issue 12.82 19.97 expenses (net of deferred tax) 34,557.40 31,995.25 (2) DEBENTURE REDEMPTION RESERVE (a) Balance as per last account 4,800.00 3,300.00 (b) Add: Transferred from Profit and Loss 500.00 1,500.00 Account 5,300.00 4,800.00
(3) EMPLOYEE STOCK OPTIONS (a) Employee Stock Options Outstanding Balance as per last account - - Additions 107.44 -
(b) Less: Deferred Employee Compensation Additions 22.68 - NET EMPLOYEE STOCK OPTIONS 84.76 -
(4) GENERAL RESERVE: (a) Balance as per last account 18,572.47 18,304.47 (b) Add: Transferred from Profit and Loss 403.00 268.00 Account (c )Less: Deficit in Profit and Loss Account 1,658.44 - (d) Less: Expenses on Amalgamation (Note 13, 80.15 - Page 101 ) (e) Less: Deficit on Amalgamation (Note 13, Page 1,026.37 - 101) 16,210.51 18,572.47
(5) AMALGMATION RESERVE: Arising out of Amalgamation Opening Balance 1,492.95 1,492.95 Less: Deficit on Amalgamation (Note 13, Page 1,492.95 - 101) - 1,492.95 (6) CAPITAL RESERVE ON ACQUISTION OF 448.84 449.58 SUBSIDIARY
(7) FOREIGN EXCHANGE RESERVE ON 29.57 32.13 CONSOLIDATION
(8) PROFIT AND LOSS ACCOUNT - 607.64 56,631.08 57,950.02
Notes:
In respect of Options granted under the Company's Employee Stock Options Scheme 2009 (ESOS), in accordance with guidelines issued by SEBI, the accounting value of options is accounted as deferred employee compensation, which is amortised on a straight line basis over the vesting period. Consequently, salaries, wages, bonus etc. include Rs.84.76 lakhs being the amortisation of deferred employee compensation.
90
TRENT LIMITED Schedule forming part of the Balance Sheet
Schedule ‘C’ (Item No.3, Page 85) LOAN FUNDS
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) SECURED LOANS: a) Debentures Non convertible Debentures (Note ‘a’) 6,550.24 6,550.24 Non Convertible Debentures- Series-I (Note ‘b’) - 5,000.00 Non Convertible Debentures- Series-II (Note ‘b’) 5,000.00 5,000.00
(b) From Banks Term Loan (Note ‘d’) - 1,718.54 Cash Credit (Note ‘e’) 1,305.09 2,287.28
(c ) From Others Loan under Hire Purchase Scheme - 0.25
12,855.33 20,556.31 (2) UNSECURED LOANS: Sales tax loan from Government of Maharashtra 1.82 5.24 Non Convertible Debenturs-Oct-09-Series I (Note 5,000.00 - ‘c’) Commercial Paper 5,000.00 - Inter Corporate deposits 3,500.00 - Others 18.35 -
13,520.17 5.24
26,375.50 20,561.55
Notes:
(a) During the year 2005-2006, the Company issued 13,10,047 Partly Convertible Debentures of Rs. 900/- each. Of the above, Convertible Debenture of the face value of Rs. 400/- has been converted into one Equity Share of Rs. 10/- each at a premium of Rs. 390/- per share on the date of allotment. The Non Convertible Debenture of face value of Rs. 500/- are redeemable at a premium of Rs. 98/- each on 7th July 2010. The Premium payable on redemption of Debentures amounting to Rs.1,283.85 lakhs has been fully provided and debited to Securities Premium Account during 2005-06.These Debentures are secured by way of charge on assets of the Company costing at least 1.33 times of the value of the Debentures in favour of the Debenture Trustees.
(b) During the year 2008-2009, the Company issued 500 Redeemable Non Convertible Debentures - Series I of Rs. 10.00 lakh each and 500 Redeemable Non Convertible Debentures - Series II of Rs. 10.00 lakh each on private placement basis. These Debentures are free of interest and the Series I Debentures were redeemed at a premium of Rs 1.33 lakhs each on 1st October 2009 and the Series II Debentures are redeemable at a premium of Rs 2.63 lakhs each on 2nd September 2010. The Premium payable on redemption of these Debentures has been fully provided and is debited to Securities Premium Account net of deferred tax. These Debentures are secured by way of charge on immovable property of the Company in favour of the Debenture Trustees as stipulated in the Debenture Trust deed.
(c ) During the current year, the Company issued 500 Redeemable Non Convertible Debentures of Rs. 10.00 lakhs each on private placement basis. These Debentures are free of interest and are redeemable at a premium of Rs.1.94 lakhs each on 21st October 2011.The Premium payable on redemption of these Debentures has been fully provided and is debited to Securities Premium Account net of deferred tax.
(d) Term Loans from Banks are secured by first exclusive charge on the current assets and equitable mortgage on the immovable property of Landmark Limited (Subsidiary).
(e) Cash credit from Banks is secured by first exclusive charge on the current assets of and equitable mortgage on the immovable property of Landmark Limited (Subsidiary).
(f) Of the above secured loans, amount repayable within a year Rs. 11,550.24 lakhs (2008-2009 :5440.07 Lakhs) (g) Of the above unsecured loans, amount repayable within a year Rs.8501.82 lakhs (2008-2009 : Rs.3.42 lakhs)
91
TRENT LIMITED
Schedule forming part of the Consolidated Balance Sheet Schedule ‘D’ (Item No.5, Page 85) FIXED ASSETS
NET ASSETS GROSS BLOCK (AT COST) DEPRECIATION BLOCK As at Additions/ Deductions/ As at As at Deductions/ For the As at As at 1.4.2009 Adjustments Adjustments 31.03.2010 1.4.2009 Adjustments year 31.03.2010 31.03.2010 Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees in lakhs in lakhs in lakhs In lakhs in lakhs in lakhs in lakhs in lakhs in lakhs
Goodwill 6.00 - - 6.00 6.00 - - 6.00 - (6.00) (-) (-) (6.00) (6.00) (-) (-) (6.00) (-)
Goodwill on 17,609.82 3,087.15 7,786.28 12,910.69 - - - - 12,910.69 Consolidation (13,448.84) (4,160.98) (-) (17,609.82) (-) (-) (-) (-) (17,609.82)
Freehold land 533.12 - - 533.12 - - - - 533.12 (527.73) (5.39) (-) (533.12) (-) (-) (-) (-) (533.12)
Leasehold Land 8.13 5,449.53 - 5,457.66 4.39 - 66.26 70.65 5,387.01 (8.13) (-) (-) (8.13) (4.31) (-) (0.08) (4.39) (3.74)
Buildings 6,587.32 4,639.31 61.81 11,164.82 1,316.42 12.70 434.11 1,737.83 9,426.99 (5,911.63) (785.55) (109.86) (6,587.32) (1,027.17) (19.15) (308.41) (1,316.43) (5,270.89)
Plant and 6,769.84 2,606.51 118.65 9,257.70 1,455.43 27.63 423.32 1,851.12 7,406.58 Machinery (5,132.57) (1,832.90) (195.63) (6,769.84) (1,184.28) (59.15) (330.31) (1,455.44) (5314.40)
Furniture, Fixtures, Office and Other Equipments 10,733.83 2,909.48 191.61 13,451.70 3,317.24 59.20 1,240.73 4,498.77 8,952.93 (8,188.74) (2,843.25) (298.16) (10,733.83) (2,585.35) (186.81) (918.71) (3,317.25) (7,416.58)
Vehicles 154.08 44.40 69.34 129.13 43.97 16.05 14.97 42.89 86.25 (130.40) (34.85) (11.17) (154.08) (33.52) (4.90) (15.35) (43.97) (110.11)
Intangible Assets 121.31 14.09 1.46 133.94 52.59 0.47 25.10 77.22 56.72 (76.35) (44.96) (-) (121.31) (32.64) (-) (19.95) (52.59) (68.72)
Total 42,523.45 18,750.47 8,229.15 53,044.77 6,196.04 116.05 2,204.49 8,284.48 44,760.29 (33,430.38) (9,707.88) (614.82) (42,523.45) (4,873.26) (270.01) (1,592.80) (6,196.07) (36,327.38)
Share of Joint Ventures – [Note 11 (b), Page 100] 4.80 25.05 - 29.85 1.05 - 4.00 5.05 24.80 (1.26) (3.54) (-) (4.80) (0.10) (-) (0.96) (1.06) (3.75) 42,528.25 18,775.52 8,229.15 53,074.62 6,197.09 116.05 2,208.49 8,289.53 44,785.09 (33,431.65) (9,711.42) (614.82) (42,528.25) (4,873.37) (270.01) (1,593.77) (6,197.13) (36,331.12)
Capital Work-in-Progress 3,297.45 (1,386.92) Total 48,082.54 (37,718.04)
Notes: 1) Figures in bracket are in respect of previous year. 2) Included in Buildings is an amount of Rs. 1,050 (2008-2009: Rs.1,050) representing value of Shares in Co-operative Housing Societies/Condominium. 3) Current year additions include Rs. 9,089.78 Lakhs of capital work-in-progress acquired consequent to the scheme of amalgamation which has been capitalised during the year (includes borrowing cost Rs.2,408.51 Lakhs).(Note13 , Page 101)
92
TRENT LIMITED Schedule forming part of the Consolidated Balance Sheet
Schedule ‘E’ (Item No.6, Page 85) INVESTMENTS
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Investments 18,104.30 19,545.25
(2) Share of Joint ventures- [Note 11(b), Page 100] 0.41 4,663.55
18,104.71 24,208.80
Schedule ‘F’ (Item No.8 (a), Page 85] INVENTORIES
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
Stocks
(1) Raw Materials 212.08 106.29 (2) Packing Materials 125.42 110.34 (3) Finished Products (Note 13, Page 101) 20,373.87 17,234.15 (4) Stocks-in-Transit 152.57 39.72 (5) Stores & Spares 26.61 21.59
20,890.55 17,512.09
(6) Share of Joint Venture- [Note 11 (b), Page 100] 38.03 -
20,928.58 17,512.09
Schedule ‘G’ (Item No.8(b), Page 1) SUNDRY DEBTORS
As at 31.03.2010 As at Rupees 31.03.2009 in lakhs Rupees In lakhs
(1) Debts outstanding for a period exceeding six months 227.69 265.16
(2) Other Debts 1,415.97 1,177.23 1,643.66 1,442.39
Less: Provision for Doubtful Debts 93.28 109.32 1,550.38 1,333.07
Considered Good – Unsecured 1,550.38 1,333.07 Considered Doubtful - Unsecured 93.28 109.32 1,643.66 1,442.39
(4) Share of Joint Ventures –[Note 11(b), Page 100] 1.86 -
1,552.24 1,333.07
93
TRENT LIMITED Schedule forming part of the Consolidated Balance Sheet
Schedule ‘H’ (Item No.8(C), Page 85) CASH AND BANK BALANCES
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Cash on hand (including cheques on hand Rs.Nil) 323.54 251.30 (2008-2009 : Rs.11.63 Lakhs)
(2) Balances with Scheduled Banks (a) Current Accounts 1,083.53 1,200.53 (b) Fixed Deposit Accounts 352.62 366.01 (c )Unpaid Dividend / Interest Accounts 65.25 74.34 1,501.40 1,640.88
1,824.94 1,892.18
(3) Share of Joint Ventures-[Note 11(b), Page 100] 2,548.17 46.67
4,373.11 1,938.85
Schedule ‘I’ (Item No.8 (d), Page 85) LOANS AND ADVANCES
As at As at 31.03.2010 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Security Deposits Deposits for Premises-Others 8,760.76 7,589.04 Other Deposits 749.39 134.52 9,510.15 7,723.56
(2) Loans 5,464.89 5,107.54
(3) Other Loans and Advances recoverable in cash or in kind or for value to be received 6,925.58 6,732.24 (4) Balances with Customs/ Port Trust etc. 95.84 91.41 (5) Other Receivables 470.23 1,075.44 (6) Bills of Exchange 114.20 114.20 (7) Advances on Capital Account 765.62 433.88 (8) Advance payment of taxes- net of Advance Tax 315.79 257.03 (9) MAT Credit Entitlement 741.54 126.30 24,403.84 21,661.60 (10) Less: provision for Doubtful Advances 211.91 177.49 24,191.93 21,484.11
Considered Good – Unsecured 24,191.93 21,484.11 Considered Doubtful-Unsecured 211.91 177.49
24,403.84 21,661.60
(11) Share of Joint Ventures – [Note 11(b), Page 100] 332.24 69.51
24,524.17 21,553.62
94
TRENT LIMITED Schedule forming part of the Consolidated Balance Sheet
Schedule ‘J’ (Item No.9 (a), Page 85) LIABILITIES
As at As at 31.03.2010 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Sundry Creditors (Note 7, Page 97) 21,726.12 17,512.29 (2) Security Deposits Received 1,434.84 106.52 (3) Investor Education and Protection Fund (Appropriate amount shall be transferred to “Investor Education and Protection Fund” if and when due (a) Unclaimed dividend 63.29 72.91 (b) Unclaimed application money received by the company for allotment of Rights Issue and due for refund 4.82 5.72 (c ) Unclaimed Debenture Interest 1.95 1.43 70.06 80.06
23,231.02 17,698.87
(4) Share of Joint Ventures-[Note 11(b), Page 100] 669.64 696.84
23,900.66 18,395.71
Schedule ‘K’ (Item No. 9(b), Page 85) PROVISIONS
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Proposed Dividend 1,302.29 1,074.31 (2) Tax on Dividend 216.29 182.20 (3) Contingencies (Note 2(d), Page 96) 205.00 205.00 (4) Retirement Benefits 788.50 658.49 (5) Redemption Premium of Debentures 3,566.92 3,262.49 (6) Rent Equilisation Reserve 76.47 36.16
6,155.47 5,418.65
(7) Share of Joint Ventures – [Note 11(b), Page 100] 4.83 4.01
6,160.30 5,422.66
Schedule ‘L’ (Item No. 11 Page 85) MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted)
As at As at 31.03.2010 31.03.2009 Rupees Rupees
Share of Joint Ventures- [Note 11 (b), Page 100] - 0.56
- 0.56
95
TRENT LIMITED Schedule forming part of the Consolidated Balance Sheet and Profit and Loss Account
Schedule ‘M’ CONSOLIDATED SIGNIFICANT ACCOUNTING POLICIES
1 Basis of preparation of accounts 1.1 The consolidated financial statement have been prepared in accordance with the accounting standard 21 ( AS -21) "Consolidated Financial Statements" and Accounting Standard-27 (AS- 27) "Financial Reporting of Interest in Joint Ventures" issued by the Institute of Chartered Accountants of India. The consolidated financial statements are prepared by consolidating the accounts of Trent Limited with its subsidiaries, Trent Brands Limited, Fiora Services Limited, Nahar Theatres Private Limited, Fiora Link Road Properties Limited, Trent Hypermarket Limited, Trent Global Holdings Limited, Landmark Limited, Westland Limited , Regent Management Private Limited (Subsidiary of Landmark Limited), Landmark E-Tail Private Limited (Subsidiary of Landmark Limited) and Joint Venture -Trexa ADMC Private Limited, Inditex Trent Retail Private Limited.
(a) Depreciation in respect of Landmark Limited: Depreciation is provided on Straight Line Method at the rates specified in Schedule XIV of the Companies Act, 1956 except for the following assets, which are depreciated at rate higher than that specified in Schedule XIV based on useful life of the assets as estimated by the Management.
Asset Useful Life (Years)
(a) Motor Cars and Other Vehicles 5 (b) Office Equipment 5 (c ) Furniture and Fixture 10 (d) Plant and Machinery 10 Leasehold improvements are depreciated over its economic useful life, not exceeding a maximum period of 10 years.
Cost of Software is amortised over a period of six years
(b) Depreciation in respect of Westland Limited: Depreciation is provided on Written Down Value Method at the rates specified in Schedule XIV of the Companies Act, 1956. Leasehold improvements are depreciated over the lease period not exceeding 5 years. Computer application software is fully depreciated in the year of addition.
(c ) Depreciation in respect of Trent Brands Limited: Depreciation has been provided in accordance with Schedule XIV of the Companies Act, 1956 on "Written Down Value" method.
(d) Other significant accounting policies are set out in the Notes to Accounts under the schedule "Significant Accounting Policies" of Trent Limited, Trent Brands Limited, Fiora Services Limited, Nahar Theatres Private Limited, Fiora Link Road Properties Limited , Trent Hypermarket Limited, Trent Global Holdings Limited, Landmark Limited, Westland Limited, Regent Management Private Limited and Landmark E-Tail Private Limited.
Notes on the Consolidated Balance Sheet and Profit and Loss Account
1 (a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs.2,966 lakhs (2008-2009: Rs.626.62 lakhs).
Share of Joint Venture Rs.225.15 lakhs ( 2008-2009: Rs. 29.82 lakhs)
2 Contingent Liabilities : (a) Sales tax, Excise and Customs demands against which the Company has filed appeals: Rs.61.81 lakhs (2008-2009: Rs. 56.20 lakhs) - net of tax Rs. 41.28 lakhs (2008-2009: Rs. 37.10 lakhs).
(b) Claims made against the Company not acknowledged as debts: Rs. 984.29 lakhs (2008-2009: Rs.857.59 lakhs)
(c ) Income-tax demands against which the Company has filed appeals: Rs.377.09 lakhs (2008-2009: Rs.414.70 lakhs).
(d) As a matter of abundant caution, a general provision for contingencies of Rs.205.00 lakhs (2008-2009: Rs. 205.00 lakhs) has been made against items (a), (b) and (c) above, which are disputed by the company
96
TRENT LIMITED Notes on the Consolidated Balance Sheet and Profit and Loss Account Contd..
3 Managerial Remuneration (Holding Company) : Managerial remuneration for Managing Director and Non- Whole time Directors 2009-10 2008-09 Rupees Rupees in lakhs in lakhs
(a) Salaries ( including Company's Contribution to Provident Fund and Superannuation Fund) 74.88 70.30 (b) Commission 105.00 21.88 (c ) Perquisites 45.23 39.12 (d) Directors’ sitting fees 11.98 9.70
237.09 141.00
Note: (a)The above figures do not include contribution to Gratuity Fund as separate figure is not available for the Managing Director, the amortised cost of 10000 Employee Stock Options granted to Managing Director and retirement benefits of Rs.14.40 lakhs (2008-2009: Rs.14.40 lakhs) paid to a former Managing Director.
(b) The remuneration to the Managing Director in excess of the maximum remuneration prescribed under Section 198 of the Companies Act 1956 amounting to Rs.44.57 lakhs is subject to the approval of the Shareholders and the Central Government.
4 Major components of Deferred Tax Assets and Liabilities are: 2009-10 2008-09 Rupees Rupees in lakhs in lakhs
Deferred Tax Liability Depreciation 1,149.35 778.00
Deferred Tax Assets Retirement Benefits 251.77 200.65 Premium on redemption of Debentures 342.17 421.87 Carried forward losses and unabsorbed depreciation 594.41 194.72 Other Provisions 118.97 58.87
1,307.33 876.11
Share of Joint Ventures [Note 11(b) Page 100] 0.03 (0.17)
Net Deferred Tax (Asset)/ Liability (157.95) (98.28)
2009-10 2008-09 Rupees Rupees 5(i) Schedule 1 Item 4 (p) General Expenses include : in lakhs in lakhs (a) Auditors' Remuneration - Audit Fees 23.05 20.02 Fees for Taxation matters 4.02 3.32 Other Services 16.97 12.54 Reimbursement of out-of-pocket expenses 1.31 1.19
(b) Provision for doubtful debts/ advances (net) 45.82 90.93
(ii) Debenture/Share issue expenses include : Auditors' Remuneration - Other Services 0.88 -
6 Gain on foreign exchange fluctuation (net) credited to the profit and loss account amounted to Rs.84.88 lakhs (2008-2009: Loss Rs. 26.69 lakhs) including share of Joint Ventures Rs. 17.23 lakhs (2008-09: Rs. Nil lakhs)
7 There is no Micro and Small Enterprises to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March 2010. This information as 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 the information available with the Company.
8 There are no amounts due and outstanding to be credited to Investor Education and Protection Fund as at 31st March 2010 except Rs.3.99 lakhs (2008-2009: Rs.3.63 lakhs) which is held in abeyance due to legal cases pending.
97
TRENT LIMITED
Notes on the Consolidated Balance Sheet and Profit and Loss Account(Contd.) 9. SEGMENT REPORTING: 2009-2010 Retailing Others Unallocated Total Company Rs. in lakhs Rs. in lakhs Rs. in lakhs Rs. in lakhs
A SEGMENT REVENUE 1. External Revenue 110,033.63 2,244.35 1,482.54 113,760.52 (83,155.93) (2,047.73) (3,317.82) (88,521.48)
2. Intersegment Revenue - 1,403.48 - 1,403.48 - (1,530.02) (-) (1,530.02) 3. Total Revenue 110,033.63 3,647.83 1,482.54 115,164.00 (83,155.93) (3,577.75) (3,317.82) (90,051.50)
4. Less: Intersegment Revenue - 1,403.48 - 1,403.48 - (1,530.02) (-) (1,530.02) NET SEGMENT REVENUE 110,033.63 2,244.35 1,482.54 113,760.52 (83,155.93) (2,047.73) (3,317.82) (88,521.48)
B RESULTS 1. Segment Results (253.28) (109.95) 1,227.61 864.38 (1,799.23) (322.84) (3,136.14) (1,014.07)
2. Interest Expense - - 788.25 788.25 (-) (-) (958.74) (958.74)
3. Exceptional Items (Income)/ Expense - - (836.71) (836.71) (-) (-) (-) -
4. Provision for Taxation - - 844.95 844.95 (-) (-) (185.04) (185.04)
5. Excess tax provision for prior years (Net) - - (78.15) (78.15) (-) (-) (151.63) (151.63) 6. Net Profit (253.28) (109.95) 509.27 146.04
(1,799.23) (322.84) (2,143.99) (21.92)
C SEGMENT ASSETS 71,307.29 2,165.44 44,092.60 117,565.33 (60,269.07) (2,829.44) (41,264.80) (104,363.31)
D SEGMENT LIABILITIES 22,520.69 1,375.32 32,816.15 56,712.17 (15,927.62) (1,797.58) (26,734.80) (44,460.00)
E CAPITAL EXPENDITURE 17,561.75 37.20 3,087.15 20,686.10 (8,426.08) (175.47) (124.45) (8,726.00)
F DEPRECIATION 2,183.25 21.93 3.31 2,208.49 (1,566.32) (23.55) (3.90) (1,593.77)
G NON CASH EXPENSES
Employee Stock Options Scheme 84.76 - - 84.76 (-) (-) (-) (-)
Notes: (1) In respect of standalone accounts of the Company, disclosure of segment - wise information is not applicable as retailing is the main business of the Company. The Company, its subsidiaries and its jointly controlled entities are primarily engaged in the business of retailing and services related to retailing except one subsidiary which is engaged in the business of distribution and one jointly controlled entity engaged in the business of consultancy services. Segment “Others” primarily includes distribution business and consultancy services.
(2) Segment-wise Revenue, Results and Capital Employed figures include the respective amounts identifiable to each of the Segments. Other unallocable income, expenses and unallocated assets mainly relate to investments of surplus funds.
(3) Figures in brackets are in respect of previous year.
(4) Previous year's figures have been regrouped wherever necessary.
98
TRENT LIMITED Notes On the Consolidated Balance Sheet And Profit And Loss Account (Contd)
10 RELATED PARTY TRANSACTIONS: Related parties are as certified by the management
10.1 Related Parties with whom transactions have taken place during the year: Associates: Tata Sons Ltd. (Holds more than 20% of the Share Capital of the Company) Joint Venture Trexa ADMC Private Limited Inditex Trent Retail India Private Limited
10.2 Directors of the Company Managing Director Mr. N. N. Tata
Non Executive Directors Mr. F. K. Kavarana Mr. B. S. Bhesania Mr. A. D. Cooper Mr. K. N. Suntook Mr. N. A. Soonawala (retired on 31.03.2010)
Details of remuneration to directors is disclosed in Note No.3 on Balance Sheet and Profit and Loss account. 2009-2010 2008-2009 Rupees Rupees In lakhs In lakhs 10.3 Sales to and Other recoveries from related parties
a) Associates 5.63 1.75 b) Joint Venture 45.66 -
10.4 Purchase/other services from related parties
Associates 429.69 421.32
10.5 Interest/Dividend received from related parties a) Associates 14.00 10.55 b) Joint Venture - 820.75
10.6 Interest/Dividend paid to related parties a) Associates 278.35 354.27 b) Directors 2.40 3.06
10.7 Loan Given Joint Venture - 6,400.00
10.8 Loan Repaid Joint Venture - 5,945.99
10.9 Subscription to Share Capital a) Joint Venture 3,192.70 -
10.10 Security deposit given during the year Joint Venture - 62.00
10.11 Security deposit receivable as on 31.03.2010 a) Associates 45.00 45.00 b) Joint Venture - 500.00
10.12 Outstanding Balance of Loan as on 31.03.2010 receivable by company Joint venture - 6400.00
10.13 Outstanding Balance as on as 31.03.2010 receivables by Company Joint Venture 0.02 1,564.66
10.14 Outstanding Payables as on 31.3.2010 Associates 103.34 95.93
10.15 Issue of Equity Shares Directors 38.95 -
10.16 Sitting fees Directors 13.51 11.48
99
TRENT LIMITED Notes On the Consolidated Balance Sheet And Profit And Loss Account (Contd) 11. The Subsidiaries and interest in Joint Ventures considered in Consolidated Financial Statements are: (a) Particulars of Subsidiaries Country of Proportionate Origin Ownership interest as on 31-3-2010 as on 31-3-2009
1 Trent Brands Limited India 100.00% 100.00% 2 Fiora Sevices Limited India Held by Trent Limited 25.67% 25.67% Held by Trent Brands Limited (Subsidiary) 64.20% 64.20% 3 Satnam Developers & Finance Private Limited (Refer Note no 13 Page No. 101) India - 100.00% 4 Nahar Theatres Private Limited India 100.00% 100.00% 5 Fiora Link Road Properties Limited India 100.00% 100.00% 6 Landmark Limited Held by Trent Limited India 57.39% 77.41% Held by Subsidiaries of Trent Limited India 17.66% 22.54% 7 Westland Limited Held by Trent Limited (previous year Landmark Limited) India 96.64% 96.64% 8 Regent Management Private Limited Held by Landmark Limited (Subsidiary) India 100.00% 100.00% 9 Landmark E-Tail Private Limited Held by Landmark Limited (Subsidiary) India 100.00% 100.00% 10 Trent Hypermarket Limited Held by Trent Limited India 100.00% 100.00% 11 Trent Global Holdings Limited Held by Trent Limited Mauritius 100.00% 100.00%
(b) Interest in Joint Venture 1 Satnam Realtors Private Limited (Refer note no India - 50.00% 13 Page no 101 ) 2 Trexa ADMC Private Limited India 50.00% 50.00% 3 Virtuous Trustees Private Limited India - 49.00% 4 Inditex Trent Retail Pvt Limited India 49.00% - As at As at 31.03.2010 31.03.2009 (Rupees (Rupees In lakhs) In lakhs)
I Income 1 Income from operations 24.01 - 2 Other income 30.54 11.88
II Expenditure 1 Expenses 230.55 146.91 2 Depreciation 4.00 0.96
III Assets 1 Fixed Assets 866.33 3.75 2 Investments 0.41 4,663.55 3 Deferred tax Asset / (Liabilities) (0.03) 0.17 4 Current Assts, Loans & Advances - Cash and bank balances 2,548.17 46.67 - Loans and Advances 332.24 69.51 - Debtors 1.86 - - Inventories 38.03 - - Miscellaneous Expenditure - 0.56
IV Liabilities 1 Unsecured Loans - 4,012.43 2 Current Liabilities 669.65 670.76 3 Provisions 4.83
V Capital Commitments 225.15 29.83
100
TRENT LIMITED Notes On the Consolidated Balance Sheet And Profit And Loss Account (Contd)
12 EARNINGS PER SHARE (EPS) : 2009-2010 2008-2009
(a) Weighted Average Number of shares outstanding during the year.
i) For Basic Earnings Per Share 1,95,89,303 1,95,32,896
ii) For Diluted Earnings Per Share No. of Shares for Basic EPS as per a(i) 1,95,89,303 1,95,32,896
Add: Dilutive Potential Equity Shares in respect of outstanding warrants/ options 1,12,753 -
No of shares for Diluted Earnings per Share 1,97,02,056 1,95,32,896
(b) Net Profit/ (Loss) after Tax available for Equity Shareholders (Rupees in lakhs) 155.70 103.96
(c) Less: Dividend to Preference Shareholders and applicable dividend distribution tax there on 0.01 -
(d) Net Profit/ (Loss) after Tax available for Equity Shareholders (Rupees in lakhs) 155.69 103.96
(e) Earnings Per Share (Rs.) (Face value of Rs.10/-) Basic 0.79 0.53 Diluted 0.79 0.53
13. The scheme of Amalgamation of Satnam Developers and Finance Private Limited (SDPL) and Satnam Realtors Private Limited (SRPL) with the company as approved by the Hon’ble High Court of Judicature at Bombay has become effective on 12th March 2010 upon obtaining all sanctions and approvals as required under the scheme and upon filing of certified true copies of the order with the Registrar Of Companies, Maharashtra. The appointed date of the scheme is 1st April 2009. SDPL was a 100% subsidiary of the Company engaged in the business of real estate investment and development activities and SRPL was engaged in the business of construction and development activities. SDPL held 50% of the shares in SRPL.
In terms of the scheme,
(a) All the assets and liabilities of SDPL and SRPL stand transferred to and vested in the company with effect from the appointed date.
(b) Inter corporate loans, deposits and balances as between SDPL, SRPL and the Company stands cancelled.
(c) The book value of the shares held by the Company in SDPL, as appearing in the books of the Company, the book value of shares held by SDPL in SRPL and the advance paid by SDPL towards acquisition of shares in SRPL, as appearing in the books of SDPL, stands cancelled.
(d) The company on 26th March 2010 has issued 70,000 fully paid 0.1% Redeemable Preference Shares of Rs.1,000 each to the equity shareholders of the erstwhile SRPL (except for shares held by SDPL) in the ratio of 14 Preference Shares for every 1 Equity Share held.
(e) The scheme of amalgamation with SDPL is being accounted for under the pooling of interest method and with SRPL is being accounted for under the Purchase Method as contained in AS14 “Accounting for amalgamation” issued by the ICAI. The vested assets and liabilities of SDPL and SRPL have been recognized at their book values in the books of the Company.
(f) The costs and expenses amounting to Rs. 120.02 lakhs (net of tax Rs.80.15 lakhs) incurred for implementation of the scheme have been adjusted against the general reserve of the company.
(g) The deficit of Rs.2,519.32 lakhs arising due to the difference between the value of assets over the value of liabilities of SDPL and SRPL and the face value of the preference shares issued by the company and after adjusting the diminution in the value of Long term investments to the extent of Rs.186.09 lakhs and finished goods inventory Rs. 918.77 lakhs (net of tax - Rs.606.48 lakhs) as approved by the board has been adjusted first against the amalgamation reserve to the extent of Rs.1,492.95 lakhs and the balance Rs.1,026.37 lakhs against the general reserve.
14 Exceptional item's represents profit on sale of minority stake of its subsidiary Landmark Limited to a Private Equity Fund.
15 On 30th April 2010 the company has acquired 100% equity shares of Optim Estate Private Limited making it wholly owned subsidiary of the company.
101
TRENT LIMITED Notes On the Consolidated Balance Sheet And Profit And Loss Account (Contd)
16 As approved by the shareholders, the Company had transferred its Star Bazaar business, as a going concern, to its 100% subsidiary Trent Hypermarket limited, with effect from 1st August 2008.
17 Previous year's figures have been regrouped wherever necessary.
Signatures to Schedules '1' to '4' and 'A' to 'M' and Notes.
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
102
TRENT LIMITED CONSOLIDATED CASH FLOW FOR THE YEAR ENDED 31ST MARCH 2010 1.4.2009 to 1.4.2008 to 31.3.2010 31.3.2009
Rupees Rupees Rupees in lakhs in lakhs in lakhs
A CASH FLOW FROM OEPRATING ACTIVITIES Net Profit before Taxes and Exceptional Items 76.14 55.33 Adjustments for: Depreciation 2,208.49 1,593.77 Stock Reserve 13.46 - Provision for doubtful debts written off 54.96 90.93 Unrealised foreign exchange gains - - Share issue expenses - 43.72 Interest (net) 89.82 (179.81) Interest on Financing Activity 6.34 - Employee Stock Option 84.76 - (Profit)/Loss on Fixed Assets sold/discarded (Net) 173.10 225.61 (Profit)/Loss on sale of Investments (154.86) (781.16) Dimunition in the value of Long Term investment 0.63 - Income From Investments (532.52) (1,447.98) Rent Equalization Reserve 40.31 36.16 Goodwill & Preliminary expenses written off - - Discount on Commercial Paper 225.45 - Preliminary Exp w/off 0.13 - Unrealised foreign exchange loss/ (gain) (17.19) - Excess provision no longer required written back (352.26) (49.95) 1,840.62 (468.71)
Operating Profit Before Working Capital Changes 1,916.76 (413.38)
Adjustments for : (Increase)/Decrease in Current Investments (Increase)/Decrease in Inventories (4,348.72) (2,409.33) (Increase)/Decrease in Trade & Other Receivables (1,275.94) (2,287.03) Increase/(Decrease) in Trade & Other Payables 3,806.68 126.95 (1,817.98) (4,569.41)
Cash generated from operations 98.78 (4,982.79)
Direct Taxes Paid (864.69) (690.64) NET CASH FROM OPERATING (765.91) (5,673.43) ACTIVITIES
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (8,073.44) (4,993.33) Sale of Fixed Assets 99.85 117.86 Purchase of Investments (1,33,561.53) (181,089.64) Purchase of Business - - Sale of Investments 1,25,499.94 192,414.48 sale in subsidiaries - - Sale of Business - - Loans given (8,285.00) (3,200.00) Repayment of Loans given 4,285.00 5,970.99 Interest received 2,022.04 243.22 Merger Expenses (120.02) Profit on Disposal of a subsidiary - Income from Investments 523.73 1,462.09
NET CASH USED FROM INVESTING (17,609.43) 10,925.67 ACTIVITIES
103
C CASH FLOW FROM FINANCING ACTIVITIES Issue of securities 24,349.41 10,000.00 Redemption of Securities (Including Premium) (5,663.35) Issue expenses on securities (19.38) (73.98) Unclaimed Securities application money (0.89) (5.08) Long Term & Other borrowings 8,198.55 904.49 Repayment of Long Term & Other borrowings (2,719.57) (13,113.47) Interest Paid (2,116.85) (1,304.48) Dividend Paid (1,257.33) (1,638.76) Net Cash from Financing Activities 20,770.59 (5,231.28)
D EFFECT OF EXCHANGE FLUCTATION ON TRANSLATION RESERVE 2.56 32.13
NET INCREASE IN CASH AND CASH EQUIVALENT (A+B+C) 2,392.69 53.09 CASH AND CASH EQUIVALENTS AS AT 01.04.2009 1,938.85 1,885.76 Add: Cash and Cash Equivalents taken over on Merger 42.00 - Less: Cash balance eliminated on sale of subsidiary (0.43) - CASH AND CASH EQUIVALENTS AS AT 31.03.2010 4,373.11 1,938.85
Notes: (i) All figures in brackets are outflows. (ii) Cash and Cash equivalents consist of cash on hand and balance with banks. (iii) Of the above cash and cash equivalent balance the amount of Rs. Nil. (2008-09: Rs.85.63 lakhs ) is not available for use by the company as it is under dispute. (iv) Previous year's figures have been regrouped wherever necessary.
As per our report attached. For and on behalf of the Board
For N. M. RAIJI & CO., F. K. KAVARANA Chairman Chartered Accountants B. S. BHESANIA A. D. COOPER Director ZUBIN DUBASH
Y.N. THAKKAR M. M. SURTI N. N. TATA Managing Director Partner Company Secretary Mumbai, 7th June 2010 Mumbai, 28th May 2010
104 AUDITORS’ REPORT
TO THE MEMBERS OF TRENT HYPERMARKET LIMITED
1. We have audited the attached Balance Sheet of TRENT HYPERMARKET LIMITED as at 31st March 2010 and the Profit and Loss Account and also the 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.
2. 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 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.
3. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the said Order, to the extent applicable.
4. Further to our comments in the Annexure referred to above, we report that:
(i) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit; (ii) in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; (iii) the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account;
(iv) in our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable; (v) 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 is disqualified as on 31st March 2010 from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956; (vi) in our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with notes thereon, 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:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2010;
(b) in the case of the Profit and Loss Account, of the loss for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For N. M. RAIJI & CO., Chartered Accountants (Registration No. 108296W)
Y.N. THAKKAR Place: Mumbai Partner Date: 7th June 2010 Membership No. 33329
105 TRENT HYPERMARKET LIMITED
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets
(b) As explained to us, physical verification of major items of fixed assets was conducted by the management during the year. In our opinion, the frequency of physical verification is reasonable having regard to the size and operations of the Company and the nature of its assets. On the basis of explanations received, in our opinion, the discrepancies found on physical verification were not significant.
(c) The Company has not disposed off substantial part of fixed assets during the year.
(ii) (a) The inventories have been physically verified by the management at reasonable intervals during the year.
(b) In our opinion, the procedures of physical verification of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.
(c) In our opinion and according to the information and explanations given to us, the Company is maintaining proper records of inventory. The discrepancies noticed on physical verification were not material in relation to the operations of the Company and the same have been properly dealt with in the books of account.
(iii) (a) The Company has not granted any loans, secured or unsecured, during the year to companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, sub-clause (b), (c) and (d) are not applicable (b) The Company has not taken any loans, secured or unsecured, during the year from companies, firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly, sub-clause (f) and (g) are not applicable.
(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any major weaknesses in internal control system.
(v) Based on the audit procedures applied by us and according to the information and explanations given to us, there are no transactions that need to entered into the register in pursuance of section 301 of the Companies Act, 1956.
(vi) The Company has not accepted any deposits from the public to which the provisions of sections 58A, 58AA or any other relevant provisions of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 apply.
(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business
(viii) According to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 209(1)(d) of the Companies Act, 1956 for the products of the Company
(ix) (a) According to the records of the Company, the Company is generally regular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Investor Education and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth- tax, Service Tax, Custom Duty, Excise Duty, cess and any other statutory dues applicable to it. Based on our audit procedures and according to the information and explanations given to us, there are no arrears of undisputed statutory dues which remained outstanding as at 31st March 2010 for a period of more than six months from the date they became payable.
(b) According to the records made available to us and the information and explanations given by the management, there are no dues of sales tax / income tax / custom duty / wealth tax/ service tax / excise duty / cess, which have not been deposited on account of any dispute.
(x) The Company has not completed five years from the date of its registration. Hence clause 4(x) of CARO is not applicable.
(xi) The Company has not taken any loans from any banks or financial institutions and has not issued any debentures.
106 (xii) Based on our examination of the records and according to the information and explanations given to us, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities
(xiii) The Company is not a chit / nidhi / mutual benefit fund / society
(xiv) Based on our examination of the records and evaluation of the related internal controls, we are of the opinion that in respect of investments of the Company, proper records have been maintained of the transactions and contracts and timely entries have been made in those records. All the investments of the Company are held in its own name except as permissible under section 49 of the Companies Act, 1956
(xv) On the basis of the information and explanations given to us, the Company has not given any guarantee for loans taken by others from banks or financial institutions
(xvi) The Company has applied term loans for the purposes for which they were obtained
(xvii) According to the information and explanations given to us and on an overall examination of the Balance Sheet of the Company, we report that no funds raised on short-term basis have been used for long-term investment
(xviii) 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.
(xix) During the year the Company has not issued any debentures.
(xx) The Company has not raised any money by public issue during the year
(xxi) During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to us, we have neither come across any instance of material fraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.
For N. M. RAIJI & CO., Chartered Accountants (Registration No. 108296W)
Y.N. THAKKAR Place: Mumbai Partner Date: 7th June 2010 Membership No. 33329
107 TRENT HYPER MARKET LIMITED
Balance Sheet as at 31st March 2010
As at 31.03.2009 Rupees Rupees Rupees Schedule Page in lakhs in lakhs in lakhs SOURCES OF FUNDS : 1. SHAREHOLDERS’ FUNDS: (a) Share Capital A 112 5,105.00 5,105.00 (b) Reserves and Surplus - - 5,105.00 5,105.00
2. LOAN FUNDS: Unsecured Loans B 112 10,000.00 10,000.00 2,500.00
3. TOTAL FUNDS EMPLOYED 15,105.00 7,605.00
APPLICATION OF FUNDS: 4. FIXED ASSETS: (a) Gross Block C 113 6,229.43 4,176.47 (b) Less: Depreciation 681.01 216.17 (c )Net Block 5,548.42 3,960.30 (d) Capital Work-in-Progress 455.29 1.31 6,003.71 3,961.61
5. INVESTMENTS D 114 1,500.00 -
6. DEFERRED TAX ASSET (NET) 237.24 - (Refer Note 3 Page 117)
7. CURRENT ASSETS, LOANS AND ADVANCES:
(a) Inventories E 114 3,259.70 1,977.99 (b) Sundry Debtors F 115 304.77 206.99 (c )Cash and Bank Balances G 115 494.18 280.12 (d) Loans and Advances H 115 2,243.22 1,061.18 6,301.87 3,526.28
8. Less: CURRENT LIABILIITES AND PROVISIONS: (a) Liabilities I 116 3,534.65 1,582.34 (b) Provisions J 116 85.71 69.37 3,620.36 1,651.71 9. NET CURRENT ASSETS 2,681.51 1,874.57
10. MISCELLANEOUS EXPENDITURE K 116 - - (to the extent not written off or adjusted)
11. PROFIT AND LOSS ACCOUNT 4,682.54 1,768.82
12. TOTAL ASSETS (NET) 15,105.00 7,605.00
(For Schedule ‘L’ and notes see Pages to 116 to 122 ) As per our report attached For and on behalf of the Board
For N. M. RAIJI & CO., Mr. N. N. Tata- Managing Director Chartered Accountants
Mr. A. D. Cooper- Director
Y.N. THAKKAR H. R. Wadia Mr. P. Venkatesalu- Director Partner COMPANY SECRETARY Mumbai, 7th June, 2010 Mumbai, 27th May 2010
108 TRENT HYPER MARKET LIMITED
Profit And Loss Account for the year ended 31st March 2010
Previous Year Rupees Rupees Rupees Schedule Page in lakhs in lakhs in lakhs INCOME : 1. INCOME FROM OPERATIONS 2 111 28,951.66 12,398.11
2. OTHER INCOME 3 111 18.18 6.37 TOTAL INCOME 28,969.84 12,404.48
EXPENDITURE:
3. OPERATING AND OTHER 1 110 31,096.90 13,848.50 EXPENSES 4. DEPRECIATION 479.84 216.17 31,576.74 14,064.66 5. INTEREST 544.06 100.76 544.06 100.76
6. TOTAL EXPENDITURE 32,120.80 14,165.42 PROFIT/(LOSS) BEFORE EXTRA-ORDINARY ITEMS (3,150.96) (1,760.94)
7. EXTRA-ORDINARY ITEMS - -
PROFIT/ (LOSS) BEFORE TAXES (3,150.96) (1,760.94)
8. PROVISION FOR TAXATION CURRENT TAX - 0.17 FRINGE BENEFIT TAX - 7.71 DEFERRED TAX (237.24) - (237.24) 7.88 PROFIT /(LOSS) FOR THE YEAR AFTER TAXES (2,913.72) (1,768.82)
9. BALANCE BROUGHT FORWARD FROM PREVIOUS (1,768.82) - YEARS
PROFIT/(LOSS) AVAILABLE FOR APPROPRIATION (4,682.54) (1,768.82)
10 APPROPRIATIONS:
(1) BALANCE CARRIED TO BALANCE SHEET (4,682.54) (1,768.82) (4,682.54) (1,768.82)
11. Earning Per share Basic & diluted (Refer note 17, page 122 ) (5.71) (3.46)
(For Schedule ‘L’ and notes see Pages 116 to 122)
As per our report attached For and on behalf of the Board
For N. M. RAIJI & CO., Mr. N. N. Tata- Managing Director Chartered Accountants
Mr. A. D. Cooper- Director
Y.N. THAKKAR H. R. Wadia Mr. P. Venkatesalu- Director Partner COMPANY SECRETARY Mumbai, 7th June, 2010 Mumbai, 27th May 2010
109 TRENT HYPER MARKET LIMITED
Schedule forming part of the Profit and Loss Account
Schedule ‘1’ (Item No.3, page 109) OPERATING AND OTHER EXPENSES
As at 31.03.2009 Rupees Rupees Rupees in lakhs in lakhs in lakhs (1) RAW MATERIALS CONSUMED 371.37 210.26 (2) PURCHASE OF FINISHED PRODUCTS 22,865.98 9,595.72 (3) PAYMENTS TO AND PROVISIONS FOR EMPLOYEES (a) Salaries, Wages, Bonus, etc 1,887.06 704.55 (b) Contribution to Provident, Superannuation and Gratuity Funds 121.17 36.44 (c ) Workmen and Staff Welfare Expenses 78.49 68.50 2,086.72 809.50 (4) OPERATION AND OTHER EXPENSES (a) Packing Materials Consumed 252.27 170.86 (b) Power and Fuel 886.02 438.82 (c ) Repairs to Building 368.82 165.08 (d) Repairs to Machinery 339.09 91.78 (e) Repairs others 64.32 16.71 (f) Rent 735.24 378.70 (g) Rates and Taxes 95.76 56.39 (h) Insurance 23.38 7.89 (i) Advertisement and Sales Promotion 890.49 447.80 (j) Travelling Expenses 91.26 36.52 (k) Professional and Legal Charges 98.86 34.59 (l) Printing and Stationery 33.82 14.55 (m) Bank Charges 162.05 69.71 (n) Postage, Telegrams and Telephones 118.91 50.18 (o) General Expenses (Refer Note 4 page 117) 814.38 314.55 (p) Retail Business Fees 294.29 84.39 (q) Sales tax paid 1,579.14 665.70 (r) Directors’ Fees 1.20 0.40 (s) Provision for Doubtful Debts - 18.62 (t) Loss on Sale of Fixed Assets Sold/ Discarded (Net) 3.76 0.34 (u) Share issue Expenses Written off - 42.99 (v) Preliminary Expenses Written off - 0.74 6,853.06 3,107.31 (5) FREIGHT AND FORWARDING CHARGES 193.65 160.57 (6) CHANGES IN FINISHED PRODUCTS Decretion/ (Accretion) to stocks (1,273.88) (34.86) 31,096.90 13,848.49
110 TRENT HYPER MARKET LIMITED
Schedule forming part of the Profit and Loss Account
Schedule ‘2’ (Item No.1, page 109) INCOME FROM OPERATIONS
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs
(1) Sales 27,523.41 11,885.83 Less: Excise Duty 2.86 - 27,520.55 11,885.83
(2) Other Operating Income (a) Display and Sponsorship Income 227.92 86.01 (b) Commission on sales 79.88 27.89 (c ) Discounts and Fees 444.73 237.47 (d) Rent received 190.45 128.81 (e) Others 488.13 32.10 1431.11 512.28
28,951.66 12,398.11
Schedule ‘3’ (Item No.2, page 109) OTHER INCOME
Previous Year Rupees Rupees Rupees in lakhs in lakhs in lakhs (1) Interest on Loans and Advances- Gross 0.97 0.65 [Tax deducted at source: NIL (2008-2009-NIL)] (2) Interest on Deposits with Banks- Gross 9.88 5.72 [Tax deducted at source: Rs. 1.32 Lakhs, (2008-09: Rs 1.29 Lakhs)] (3) Profit on sale of current investment (net) 7.33 -
18.18 6.37
111 TRENT HYPER MARKET LIMITED
Schedule forming part of the Balance Sheet
Schedule ‘A’ (Item No.1 (a), Page 108) CAPITAL
As at As at Rupees 31.03.2010 31.03.2009 in lakhs Rupees Rupees in lakhs in lakhs AUTHORISED: 600,00,000 Equity Shares of Rs.10/- each 6,000.00 6,000.00 6000.00
ISSUED, SUBSCRIBED AND PAID UP:
510,50,000 Equity Shares of Rs.10/- each fully 5,105.00 5105.00 paid-up {The above shares are held by Trent Limited, the holding Company}
5,105.00 5105.00
Schedule ‘B’ (Item No.2, Page 108) LOAN FUNDS As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs In lakhs
(1) UNSECURED LOANS: Loan from Holding Company- repayable on 10,000. 00 2500.00 demand
10,000. 00 2500.00
112
TRENT HYPERMARKET LIMITED
Schedule forming part of the Balance Sheet Schedule ‘C’ (Item No.4, Page 108) FIXED ASSETS
ASSETS GROSS BLOCK (AT COST) DEPRECIATION NET BLOCK As at Additions/ Deductions/ As at As at Deductions/ For As at As at 1.4.2009 Adjustments Adjustments 31.03.2010 1.4.2009 Adjustments the 31.03.2010 31.03.2010 year Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees Rupees in lakhs in lakhs in lakhs in lakhs in lakhs in lakhs in in lakhs in lakhs lakhs
Buildings 560.41 258.17 6.09 812.49 40.42 0.24 73.87 114.05 698.44 (560.41) - (560.41) - - (40.42) (40.42) (519.99)
Plant and Machinery 2,222.27 1,116.60 20.76 3,318.11 73.31 1.24 128.28 200.35 3,117.76 (2,222.61) (0.34) (2,222.27) - - (73.31) (73.31) (2,148.96)
Furniture, Fixtures, Office and other Equipment 1,358.94 819.38 79.48 2,098.84 101.19 10.88 276.31 366.62 1,732.22 (1,358.94) - (1,358.94) - - (101.19) (101.19) (1,257.75)
Vehicles 34.85 - 34.85 0.00 1.25 2.64 1.39 - 0.00 (34.85) - (34.85) - - (1.25) (1.25) (33.60)
Total 4,176.47 2,194.15 141.18 6,229.44 216.17 15.00 479.85 681.02 5,548.42 (4,176.81) (0.34) (4,176.47) - - (216.17) (216.17) (3,960.30) Capital Work-in-Progress 455.29 (1.31) Total 6,003.71 (3,961.61)
Notes:- 1) Figures in bracket are in respect of previous year 2) Buildings include improvements to leasehold premises
113
TRENT HYPERMARKET LIMITED
Schedule ‘D’ (Item No.5, Page 108) INVESTMENTS Non Trade
Particulars Balance as on Purchase during the Sold during the Year Balance as on 01.04.09 year 31.03.2010 Units Amount Units Rs in lakhs Units Rs in lakhs Units Rs in lakhs Scheme CURRENT INVESTMENTS (Unquoted and fully paid unless otherwise states)
Birla sunlife cash - - 6,988,493 1,003.82 6,988,493 1,003.82 - - plus Inst. Prm. Growth
BSL Saving Fund - - 2,952,033 500.42 2,952,033 500.42 - - Inst Growth
HDFC Cash - - 2,673,725 500.00 2,673,725 500.00 - - Management Fund Saving Plan Growth
HDFC Cash - - 5,032,909 1,000.39 2,555,515 500.39 2,477,394 500.00 Management Treasury advantage wholesale Growth
Tata Floater Fund - - 7,282,897 1,000.00 - - 7,282,897 1,000.00 Growth Total Current 1,500.00 Investment
Aggregate Value of Investments Quoted - Unquoted 1,500.00 Total - - 24,930,056 4,004.63 15,169,766 2,504.63 9,760,291 1,500.00
Schedule ‘E’ (Item No.7 (a), Page 108) INVENTORIES
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
Stocks (1) Raw Materials 46.73 25.81 (2) Packing Materials 61.99 75.08 (3) Finished Products 3,150.98 1,877.10
3,259.70 1,977.99
114 TRENT HYPERMARKET LIMITED
Schedule forming part of the Balance Sheet
Schedule ‘F’ (Item No.7(b), Page 108) SUNDRY DEBTORS As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs In lakhs
(1) Debts outstanding for a period exceeding six 20.26 18.82 months
(2) Other Debts 303.13 206.79 323.39 225.61
(3) Less: Provision for Doubtful Debts 18.62 18.62 304.77 206.99
Considered Good – Unsecured 304.77 206.99 Considered Doubtful – Unsecured 18.62 18.62 323.39 225.61
Schedule ‘G’ (Item No.7 (c), Page 108) CASH AND BANK BALANCES
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Cash on hand 81.20 45.84
(2) Balances with Scheduled Banks (a) Current Accounts 390.85 224.28 (b) Fixed Deposit Accounts 22.13 10.00
412.98 234.28
494.18 280.12
Schedule ‘H’ (Item No.7(d), Page 108) LOANS AND ADVANCES
Rupees As at As at In lakhs 31.03.2010 31.03.2009 Rupees Rupees in lakhs In lakhs
(1) Security Deposits Deposits for premises 1,726.90 862.46 Other Deposits 28.00 12.29 1,754.90 874.75
(2) Other Loans and Advances recoverable in cash 252.39 116.85 or in kind or for value to be received (3) Balance with Customs/Port Trust/ Govt 1.15 0.92 Authorities etc (4) Other Receivables 0.34 0.28 (5) Advances on Capital Account 144.75 32.70 (6) Advance payment of taxes-net of provision 89.69 35.68 2,243.22 1,061.18 - 2,243.22 1,061.18
Considered Good – Secured - - Considered Good – Unsecured 2,243.22 1,061.18
2,243.22 1,061.18
115 TRENT HYPERMARKET LIMITED
Schedule forming part of the Balance Sheet
Schedule ‘I’ (Item No.8 (a), Page 108) LIABILITIES
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs in lakhs
(1) Sundry Creditors- Note 5 (page 117) 3,449.02 1,483.34 (2) Holding Company 57.72 96.10 (3) Security Deposits Received 27.91 2.90 3,534.65 1,582.34
Schedule ‘J’ (Item No.8(b), Page 108) As at As at PROVISIONS 31.03.2010 31.03.2009 Rupees Rupees in lakhs In lakhs
Retirement Benefits 85.71 69.37
85.71 69.37
Schedule ‘K’ (Item No. 10 Page 108) MISCELLANEOUS EXPENDITURE (to the extent not written off or adjusted)
As at As at 31.03.2010 31.03.2009 Rupees Rupees in lakhs In lakhs (1) Preliminary Expenses Preliminary Expenses incurred During the Year - 0.74 Less: Written Off - 0.74 - - (2) Share Issue Expenses - Share Issue Expenses Incurred During the Year - 42.99 Less: Written Off - 42.99
- -
- -
Schedule forming part of the Balance Sheet and Profit and Loss Account
Schedule ‘L’ SIGNIFICANT ACCOUNTING POLICIES
1.0 Basis of preparation of accounts The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.
2.0 Fixed Assets and Depreciation 2.1 Fixed Assets are stated at cost less depreciation. Costs comprise of cost of acquisition and any attributable cost of bringing the asset to condition for its intended use.
2.2 Depreciation on tangible assets is provided on Straight Line Method in accordance with the provisions of Schedule XIV to the Companies Act, 1956.
2.3 Improvements to leasehold premises are depreciated over the period of lease remaining as at the date of their capitalisation.
3.0 Inventories Inventories are valued as under : Raw materials and packing materials: at cost. Finished Products: at lower of cost or net realisable value.
4.0 Income 4.1 Sale of goods is recognised on delivery to customers and include amounts recovered towards VAT and Excise Duty if any. 4.2 Interest income is accounted on accrual basis.
5.0 Retirement Benefits Defined Contribution Plans (a) Company’s contributions during the year towards government administered Provident Fund, Family Pension Fund, ESIC and Labour Welfare Fund are charged to the Profit and Loss Account as incurred. 116
(b) Company's contribution during the year towards Superannuation to the Superannuation Trust administered by the Holding Company are recognised in the Profit and Loss Account as incurred.
5.2 Defined Benefit Plans a) Company’s Contribution towards Gratuity made under the Group Gratuity Scheme with Life Insurance Corporation (LIC) is determined based on the amount recommended by LIC as per actuarial valuation.
b) Provision for long term compensated absences (Leave encashment) has been made on the basis of actuarial valuation.
6.0 Foreign Currency Transactions Foreign Currency transactions are accounted at the rates prevailing on the date of transaction. Year end current assets and liabilities are translated at the exchange rate ruling on the date of the Balance Sheet. Exchange differences on settlement/conversion are adjusted to Profit and Loss Account 7.0 Provisions and Contingent Liabilities The Company recognises a provision when there is a present obligation as a result of past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.
8.0 Taxation 8.1 Current Tax comprises of Provision for Income Tax is determined in accordance with the provisions of Income Tax Act, 1961.
8.2 Deferred tax is recognised on timing difference between the taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
9.0 Leases Lease arrangements where the risks and rewards incident to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rents under operating leases are recognised in the Profit and Loss account on straight line basis.
10.0 Investments Current Investments are stated at lower of cost or fair value.
Notes on the Balance Sheet and Profit and Loss Account
1 Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 215.69 lakhs (2008-09- Rs.112.43 lakhs). 2 Contingent Liabilities and Claims made against the Company not acknowledged as debts: NIL (2008- 09:- NIL). 3 Major components of deferred tax assets & liabilities are: 2009-10 2008-09 Rupees Rupees In lakhs In lakhs
Deferred Tax Assets Unabsorbed depreciation 427.04 126.95 Retirement Benefits 10.07 - Less:- Deferred Tax Liability Depreciation 199.87 126.95
Net Deferred Tax Asset 237.24 -
4 Schedule 1 Item 4 (o) General Expenses 2009-10 2008-09 Include: Rupees Rupees In lakhs In lakhs Auditors’ Remuneration- Audit fees 2.76 1.50 Fee for Taxation Matter 0.83 - Other service fee 1.04 0.72
5 There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprise Development Act
117
TRENT HYPERMARKET LIMITED Notes on the Balance Sheet and Profit and Loss Account (contd)
6 The company has entered into lease agreements for assets taken on operating lease which range between three years & six years. This are renewable by mutually agreed terms The future minimum lease payments under non-cancellable operating leases are as under : 2009-10 2008-09 Rupees Rupees In lakhs In lakhs
(i) Not later than one year 647.58 438.88
(ii) Later than one year and not later than five years 997.40 224.90
(iii) Later than five years Nil Nil
7 SALES, PURCHASES, OPENING AND CLOSING STOCKS (1.4.2009 to 31.3.2010) Sales Inventory Purchases Opening Stock Closing Stock Acquired on Purchase Of Business Quantity Rupees Rupees Quantity Rupees in Quantity Rupees Quantity Rupees Unit in in lakhs In lakhs Unit in lakhs Unit in In lakhs Unit In In lakhs Class of Goods lakhs lakhs lakhs lakhs
Staple& Vegetables 210.31 8,313.35 - 220.38 7,657.91 6.54 304.24 6.59 359.18 Apparels/ 19,210.06 - 15,208.07 1,572.86 2,791.80 Household items/ etc
Total 27,523.41 - 22,865.98 1,877.10 3,150.98
(11,885.83) (1,842.24) (9,595.72) - - (1,877.10) Notes: (i) Given the nature of the retailing operations of the Company and having dealt with a large variety of products it is not practical to ascertain the quantitative information in respect of all products and hence the same is furnished to the extent practical. (ii) Closing stock is after adjusting samples, free gifts, damaged goods and shortages. (iii) Sales includes sale of manufactured goods comprising of sale of Bakery products - Rs 633.44 lakhs
8 RAW MATERIALS CONSUMED 2009-10 2008-09 Rupees Rupees In lakhs In lakhs
Bakery Product Material (Ref note 7(1) above) 371.37 210.26
TOTAL 371.37 210.26
9 VALUE OF IMPORTED AND INDIGENOUS MATERIALS CONSUMED: 2009-2010 2008-2009 Rupees % of Total Rupees % of Total In lakhs Consumption In lakhs Consumption (a) RAW MATERIALS: (i) Imported (ii) Indigenous 371.37 100.00 210.26 100.00
TOTAL 371.37 100.00 210.26 100.00
(b) PACKING MATERIALS, CONSUMABLE STORES AND SPARES: (i) Imported - - - - (ii) Indigenous 252.27 100.00 170.86 100.00
252.27 100.00 170.86 100.00
10 VALUE OF IMPORTS ON C.I.F BASIS: 2009-2010 2008-2009 Rupees Rupees In lakhs In lakhs (a) Finished Products 1.01 1.09 (b) Capital Goods 395.33 0.00
TOTAL 396.34 1.09
118
TRENT HYPERMARKET LIMITED Notes on the Balance Sheet and Profit and Loss Account (contd)
11 EXPENDITURE IN FOREIGN CURRENCY: 2009-10 2008-09
Rupees Rupees In lakhs In lakhs
Travelling Expenses 2.93 1.09
TOTAL 2.93 1.09
12 Earnings in Foreign Currency 2009-10 2008-09 Rupees Rupees In lakhs In lakhs
Sale of Goods * 212.96 Not Available TOTAL 212.96 -
* Represent Sale of goods which are collected in foreign currency through international credit card as certified by collecting bankers 13 SEGMENT REPORTING The main business of the Company is Retailing. All other activities of the Company are incidental to the main business. Accordingly there are no separate reportable segments in terms of the Accounting Standard 17 on Segment Reporting issued by ICAI.
14 The company has acquired the Star Bazaar Business of Trent Limited as a going concern with effect from 1st August,2008 for a consideration of Rs.4991.46 lakhs.
119
TRENT HYPERMARKET LIMITED NOTES ON THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (CONTD)
15 EMPLOYEE BENEFITS (a) Defined benefit plans- Gratuity GRATUITY (Fully funded) LIC Administered Trust 2009-10 2008-09 Rs in lakhs Rs in lakhs I Change in Obligation during the year 1 Present value of obligations as at beginning of year 18.51 0.00 2 Present value of obligations taken over 0.00 19.34 3 Present Value of transferred to other trust (4.50) 0.00 4 Liability taken over from other trust 0.00 0.82 5 Interest cost 2.89 0.00 6 Current Service Cost 22.05 9.86 7 Actuarial (gain)/ Loss on obligations (9.80) (11.51) 8 Benefits Paid 0.00 0.00 Present value of Defined Benefit Obligation at the end of the year 29.15 18.51
II Change in Assets during the Year ended 1 Plan assets at the beginning of the year 20.50 0.00 2 Assets taken over 0.00 19.34 3 Expected return on plan assets 1.54 0.85 4 Contributions by Employer 4.15 0.00 5 Contributions by Employer (Reversal of premium) 0.00 0.31 6 Actual benefits paid 0.00 0.00 7 Actuarial Gains/ (Losses) 0.38 0.00 8 Plan Assets at the end of the year 26.57 20.50
III Net Asset/(Liability) recognized in the Balance Sheet 1 Present Value of Defined Benefit Obligation 29.15 18.51 2 Fair value of plan assets 26.57 20.50 3 Fund status Surplus/(Deficit) (2.59) 1.99 4 Net Assets / (Liability) (2.59) 1.99
IV Expenses recognized in the statement of Profit & Loss for the year ended 1 Current Service cost 22.05 9.86 2 Interest Cost 2.89 0.00 3 Expected return on plan assets (1.54) (0.85) 4 Net Actuarial (Gains)/Losses (10.18) (11.51) 5 Expenses recognized in statement of Profit & Loss 13.23 (2.50)
V The major categories of plan assets as a percentage of total plan Insurer Managed Funds 100% 100%
VI Method of valuation Projected Unit Credit Method
VII Actuarial Assumptions 1 Discount Rate 7.70% 8.00% 2 Expected rate of return on plan assets 7.50% 9.15% 3 Mortality Table LIC (1994-96) 4 Retirement Age 58 Years / 60 Years
The above disclosure is based on the actuarial valuation report. The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
(b) Defined Contribution plans 2009-10 2008-09 Company Contributions during the year under Contribution Plans recognised in the Profit and Loss Account : 1 Superannuation Fund 1.13 - 2 Government administered Provident Fund / Family Pension Fund 72.54 25.32 3 Employees State Insurance / Labour Welfare Fund 33.10 13.63 Total 106.77 38.95
(c ) Leave Encashment (Long Term Compensated Absences) recognised as expense for the year is Rs. 32.05 lakhs (2008-09 Rs 18.73 Lakhs)
120
TRENT HYPERMARKET LIMITED NOTES ON THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT (CONTD)
16 RELATED PARTY TRANSACTIONS:
Related parties are as certified by the management 16.1 Related Parties with whom transactions have taken place during the year: Trent Ltd (Holding company) Fiora Services Limited - Fellow Subsidiary Company. Landmark Limited - Fellow Subsidiary Company.
16.2 Directors of the Company Managing Director Mr. N. N. Tata
Directors Mr. A. D. Cooper
Mr. P. Venkatesalu
2009-2010 2008-2009 Rupees Rupees in lakhs in lakhs 16.3 Sales to and Other recoveries from related parties
Fellow Subsidiaries 29.49 18.38
16.4 Purchase/other services from related parties
Fellow Subsidiaries 343.04 143.43 Holding Company 30.15 -
16.5 Sale of Fixed Assets to related parties
Holding company 7.05 0.23
16.6 Interest/Dividend paid to related parties
Holding company 543.90 100.61
16.7 Sitting fees paid to Directors
Director 1.20 0.40
16.8 Loan taken from
Holding company 7,500.00 2,500.00
16.9 Purchase of Business
Holding company - 4,991.46
16.10 Issue of Equity Shares
Holding company - 5,105.00
16.11 Guarantee availed during the year
Holding company 1,500.00 -
16.12 Loan outstanding as on 31.3.2010
Holding company 10,000.00 2,500.00
16.13 Outstanding balance as on 31.3.2010 due to company
Fellow subsidiary 7.77 21.02
16.14 Outstanding balance as on 31.3.2010 payable by Company
Fellow subsidiary 10.69 8.93 Holding company 57.72 96.10
16.15 Guarantee availed as on 31.3.2010
Holding company 1,500.00 -
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TRENT HYPERMARKET LIMITED Notes On The Balance Sheet And Profit And Loss Account (Contd)
17 EARNING PER SHARE (EPS): 2009-2010 2008-2009
(a) Weighted Average Number of shares outstanding during the year 51,050,000 51,050,000
(b) Net Profit/ (Loss) after Tax available for Equity Share Holders (Rupees in (2,913.72) (1,768.82) lakhs)
(c ) Earnings Per Share (Rs.) Face value of Rs.10/- ( Not Annualised) Basic & (5.71) (3.46) Diluted
18 Loan repayable to Trent Limited -Holding Company – Rs.10,000 Lakhs Maximum outstanding during the year Rs. 10,000 Lakhs
19 There are no amounts due & outstanding to be credited to investor education & protection fund.
20 The company was incorporated on 1st July 2008 and the previous year was for the period from 1st July 2008 till 31st March 2009.Hence,the figures of previous year are not comparable. Previous year figures have been regrouped wherever necessary
21 Balance Sheet Abstract and Company's General Business Profile as required in terms of Part IV of Schedule VI Companies Act, 1956 is attached herewith.
Signatures to Schedules '1' to '3' and 'A' to 'L' and Notes.
As per our report attached For and on behalf of the Board
For N. M. RAIJI & CO., Mr. N. N. Tata- Managing Director Chartered Accountants
Mr. A. D. Cooper Director
Y.N. THAKKAR H. R. Wadia Mr. P. Venkatesalu Director Partner COMPANY SECRETARY Mumbai, 7th June, 2010 Mumbai, 27th May 2010
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Balance Sheet Abstract and Company’s General Business Profile
I. Registration Details: :
CIN No. : U51900MH2008PLC184184
State Code : 11
Balance Sheet Date : 31.3.2010
II. Capital raised during the year (Amount in Rupees Thousands):
Public Issue : Nil
Rights Issue : Nil
Bonus Issue : Nil
Private Placement : Nil
III. Position of mobilisation and deployment of funds (Amount in Rupees Thousands):
Total Liabilities : 1510500
Total Assets : 1510500
Sources of Funds:
Paid-up Capital : 510500
Reserves and Surplus : Nil
Secured Loans : Nil
Unsecured Loans : 1000000
Application of Funds: :
Net Fixed Assets : 600371
Investments : 150000
Net Current Assets : 268151
Net Deferred Tax : 23724
Miscellaneous Expenditure : -
Accumulated Losses : 468254
IV. Performance of Company (Amount in Rupees Thousands):
Turnover* : 2896984
Total Expenditure : 3212080
Profit before Tax : (315096)
Profit after Tax : (291372)
Earnings per share (in Rs.) : Basic (5.71) Diluted (5.71)
Dividend Rate (%) : -
V. Generic Names of three principal products/services of the Company:
Item Code No. (ITC CODE) Product Description
1. 0401 : Dairy Products
2. 1902 : Food Products
3. 62 08 : Ladies wear
*Represents Income from Operations and other income
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TRENT HYPERMARKET LIMITED CASH FLOW FOR THE YEAR ENDED 31ST March 2010
1st April 2009 to 31st March 2010 1st July 2008 to 31st March 2009 Rupees in lakhs Rupees in lakhs Rupees in SL.NO PARTICULARS lakhs
A CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before Taxes and Exceptional Items (3,150.98) (1,760.94) Adjustments for : Depreciation 479.84 216.17 Interest paid 543.93 100.76 Interest Received (10.85) (6.37) Profit on sale of current investment (7.33) - Provision for doubtful debts - 18.62 (Profit)/Loss on Fixed Assets sold/discarded (Net) 3.76 0.34 Share issue expenses - 43.73 1,009.35 373.25
Operating Profit Before Working Capital Changes (2,141.63) (1,387.69) Adjustments for : (Increase)/Decrease in Inventories (1,281.71) 25.55 (Increase)/Decrease in Trade & Other Receivables (1,113.75) (309.31) Increase/(Decrease) in Trade & Other Payables 1,763.56 (84.59) (631.90) (368.35) Cash generated from operations (2,773.53) (1,756.04)
Direct Taxes Paid (54.02) (43.57) (54.02)
Net Cash from Operating Activities (2,827.55) (1,799.61)
B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (2,549.03) (140.46) Sale of Fixed Assets 116.38 0.22 Purchase of Investment (4,004.63) - Sale of investment 2,511.97 - Purchase of Business - (4,991.46) Interest Received 10.85 6.37
Net cash used in Investing Activities (3,914.46) 5,125.33
C CASH FLOW FROM FINANCING ACTIVITIES Issue of securities (Net of issue expenses) - 5,061.28 Loan from Holding Company 7,500.00 2,500.00 Interest Paid (543.93) (100.76)
Net cash from Financing Activities 6,956.07 7,460.52
NET INCREASE IN CASH AND CASH 214.06 535.58 EQUIVALENTS (A+B+C)
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CASH AND CASH EQUIVALENTS AS AT 280.12 - 01.04.2009 CASH & CASH EQUIVALENT ACQUIRED ON - (255.46) PURCHASE OF BUSINESS
CASH AND CASH EQUIVALENTS AS AT 494.18 280.12 31.03.2010
Note: 1) All figures in brackets are outflows 2)Previous Year figures have been regrouped wherever necessary 3)Cash and Cash equivalents includes Cash on Hand and Balances with Banks
As per our report attached For and on behalf of the Board
For N. M. RAIJI & CO., Mr. N. N. Tata- Managing Director Chartered Accountants
Mr. A. D. Cooper Director
Y.N. THAKKAR H. R. Wadia Mr. P. Venkatesalu Director Partner COMPANY SECRETARY Mumbai, 7th June, 2010 Mumbai, 27th May 2010
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ACCOUNTING RATIOS AND CAPITALIZATION STATEMENT
The following table presents certain accounting and other ratios derived from Company’s audited standalone financial statements as at March 31, 2010 included in the chapter titled “Financial Information” on page 52 of this Letter of Offer.
Particular As of March 31, 2010 As of March 31, 2009
Weighted average number of equity shares 195.89 195.33 outstanding during the period for basic EPS
Weighted average number of equity shares 197.02 195.33 outstanding during the period for diluted EPS
Basic EPS (Rs.) 20.53 13.70
Diluted EPS (Rs.) 20.41 13.70
Return on net worth (%) 6.35% 4.41%
NAV per share 316.20 310.64
The ratios have been computed as below:
EPS (basic)(Rs.): Net profit attributable to Equity Shareholders (excluding extraordinary items, if any) Weighted Average Number of Equity Shares outstanding during the period
EPS (diluted) (Rs.): Net profit attributable to Equity Shareholders (excluding extraordinary items, if any) Weighted Average Number of Equity Shares outstanding during the period for diluted EPS
Return on net worth (%) Net profit attributable to Equity Shareholders (excluding extraordinary items, if any) Net Worth applicable to equity share holders at the end of the year (excluding revaluation reserves)
NAV per Equity Share Net worth attributable to equity shareholders at the end of the year (excluding (Rs.) revaluation reserves) Number of Equity Shares outstanding at the end of the year
The EPS calculation as above is in accordance with AS-20 issued by Institute of Chartered Accountants Of India.
Standalone Capitalization Statement (Rs. in lakh) As at March 31, 2010
As adjusted after Actual conversion of CCPS**
Loan funds:
Secured 11,550.24 11,550.24
Unsecured 13,501.82 13,501.82
Total debt 25,052.06 25,052.06
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As at March 31, 2010
As adjusted after Actual conversion of CCPS**
Shareholders’ funds:
Equity share capital 2,003.51 2,894.93
Preference share capital 700.00 700.00
Securities premium 34,557.40 82,693.89
Other reserves and surplus 26,789.60 26,789.60
Total funds (excluding loan funds) 64,050.51 113,078.42
Total Debt / equity ratio 0.39 0.22 ** Adjusted assuming conversion of all CCPS part of the Issue
1. Subsequent to March 31, 2010, the Company has issued 21,825 Equity Shares of the face value of Rs. 10/- each at par upon exercise of employee stock options. The same has not been taken into consideration for the above calculation.
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FINANCIAL INDEBTEDNESS
Details of Secured Borrowings
Our Company’s secured and unsecured borrowings on a standalone basis as on March 31, 2010 were as follows:
A. Non-Convertible Debentures (Amounts are shown in Rs. in lakh) Instrument and issue Loan amount as Sr. Rate of date on March 31, Redemption terms no. Interest 2010
1. Non-convertible 6,550.24 2% Redeemable on July 7, 2010 at a debenture (July 2005) premium of Rs. 98 per debenture
2. Non-convertible 5,000.00 Nil Redeemable on September 2, debenture Series II 2010 at a premium of Rs. 2,63,058 (September 2008) per debenture
3. Unsecured non- 5,000.00 Nil Redeemable on October 21, 2011 convertible debenture at a premium of Rs. 1,93,556 per (October 2009) debenture
B. Others (Amounts are shown in Rs. in lakh) Amount Sr. outstanding as Rate of Instrument Lender Repayment terms no. on March 31, interest 2010
1. Commercial Various 5,000.00 N.A. Repayable on July 29, paper allottees from 2010 time to time
2. Inter-corporate Tata 3,500.00 8.75 Repayable on June 9, 2010 deposit Consultancy Service
3. Sales tax loan Government of 1.82 N.A. Repayable in May 2010 Maharashtra Some of the principle terms of the security, inter alia , are as follows:
1. The non-convertible debentures were secured by the creation of a mortgage on a piece of land in the State of Gujarat;
2. The Company has created a mortgage and/or charge over charged assets in favour of Central Bank of India, in respect of NCDs issued in 2005.
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OUTSTANDING LITIGATION
Except as described below, there are no outstanding litigations including, suits, criminal or civil prosecutions and taxation related proceedings against the Company and its Subsidiaries that would have a material adverse effect on our business. Further, there are no defaults, non-payment of statutory dues including, institutional/ bank dues and dues payable to holders of any debentures, bonds and fixed deposits that would have a material adverse effect on our business other than unclaimed liabilities against the Company and its Subsidiaries as of the date of this Letter of Offer.
Further, except as disclosed below the Company and its Subsidiaries is not involved in any criminal litigation or litigation involving moral turpitude.
Set forth below are details of the outstanding or pending litigations against the Company and its Subsidiaries and details of proceedings filed by the Company.
I. Litigation against the Company
Miaami Pharma and Chemicals Private Limited. v. Plethico Pharmaceutical Limited. Miscellaneous Appeal No. 2009 of 2004 & Miscellaneous Appeal No. 2284 of 2009
Our Company (erstwhile Lakme Limited) acquired Miaami Pharma and Chemicals Pvt. Ltd. (“ Miaami ”) in 1990. However, prior to the acquisition of Miaami, there was a dispute pending between Miaami and Plethico Pharmaceuticals Ltd. (“ Plethico ”) regarding commissions receivable by Plethico for the sale and marketing of intravenous fluids manufactured by Miaami. Two arbitration proceedings were held at Indore. In the first, an award was passed in favour of Plethico for Rs. 58 lakh. In January 1997, Plethico claimed an additional amount of Rs. 302.30 lakh as sales commission together with interest for the period from 1988 to December 1992. In the second arbitration, the arbitrators by majority passed an award in favour of Plethico for the entire claim for commission of Rs. 302 lakh with interest. The Company filed applications under the Old Arbitration Act and the Arbitration & Conciliation Act, 1996 before the Additional District Judge, Indore.
The first award under the Arbitration Act was upheld by IVth Add. District Judge, Indore in Arbitration Case No.1/1999 by order dated December 24, 2005. Against this an appeal was filed under Section 37 of The Indian Arbitration Act, 1940 before the High Court of Madhya Pradesh, Indore Bench being M.A. No. 1540/2006. This appeal is currently pending.
The second award was subject matter of Arbitration Case No.7-B/1999 in which the award was upheld with a modification relating to the grant of interest. This order has been challenged by both the parties to the matter. M.A. No. 2009/2004 was filed by Lakme Limited while M.A. No. 2284/2005 was filed by the other party.
There is a conditional order of stay on payment of Rs. 50 lakh and furnishing of security. The conditions of the order have been complied with. These appeals are currently pending in High Court of Madhya Pradesh, Indore Bench.
II. Litigation against the Subsidiaries a) Trent Brands Limited
Trent Brands Limited v. Income Tax Department, High Court, Delhi
In the 1999-00 assessment year, Trent Brands Limited (“ TBL ”) sold certain trademarks and considered the profit on the sale as a capital gain exempt from tax. In the assessment order, the assessing officer considered the profit from sale of trademarks as business income and raised a demand of Rs. 3,815 lakh. In appeals ITA no. 2147/DL/2003 and ITA no. 3185/DL/2008, filed by the Company with Delhi Income Tax Tribunal, the Income Tax Appellate Tribunal (“ ITAT ”) upheld the Company’s contention that the profit on the sale of trademarks was a capital gain and is exempt from tax. Against this decision of ITAT, the department has filed appeals ITA no. 417, 437 and 459 of 2010 before the Hon’ble Delhi High Court and such appeals are currently pending, admission.
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b) Optim Estates Private Limited
Mr. Satish Jayantilal Patel v. Pratapbhai H. Talsania and Others Suit No. 3192 of 2007
The Company completed the acquisition of a 100% shareholding in Optim Estates Private Limited (“ OEPL ”) on April 30, 2010 pursuant to definitive agreements executed between the parties.
OEPL holds 5/13 th undivided interest in a plot of land situated in Andheri, Mumbai. The balance 8/13 th share is held by Harsh Kaushal Corporation. In October 2007, a third party has filed a suit (no. 3192 of 2007) against Harsh Kaushal Corporation and others claiming to have entered into an agreement for sale with the erstwhile owners for purchasing plots of land, which also included OEPL’s said undivided share, and alleging to have remitted Rs.125 lakh and agreed to pay the balance amount of Rs.70 lakh upon conveyance. A Notice of Motion (no. 4373 of 2007) was also filed by the third party. The Bombay High Court did not grant any interim/ ad interim reliefs sought by the third party in the Notice of Motion. The Bombay High Court disposed off the Notice of Motion and the suit is currently pending.
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GOVERNMENT APPROVALS
We have received the necessary consents, licenses, permissions and approvals from GoI and various governmental agencies required for our present business.
The Company has applied for certain regulatory and government approvals. The details of the same have been provided below:
1. Registration under Bombay Shops and Establishments Act, 1948 for the Fashion Yatra store situated at 22-28, Treasure Bazaar, 1 ST Floor, Nanded-Latur Road, Vasami, Nanded – 431 606, Maharashtra;
2. Registration under Karnataka Shops and Commercial Establishments Act, 1961 for the Westside store situated at City Centre, K.S Rao Road, Hampankatta, Mangalore 575001, Karnataka; and
3. Registration under Uttar Pradesh Shops and Establishments Act, 1962 for the Westside store situated at 16/113, M. G. Road, Corner Plot of Bada Chauraha, Kanpur – 208 001.
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MATERIAL DEVELOPMENTS Recent Developments
In accordance with circular no.F.2/5/SE/76 dated February 5, 1977 issued by the Ministry of Finance, Government of India, as amended through its circular dated March 8, 1977 and in accordance with sub-item (B) of item X of Part E of the SEBI Regulations, the information required to be disclosed for the period between the last date of the financial statements provided to the shareholders of the Company and the date preceding one month from the date of this Letter of Offer is provided below:
1. Working results of the Company on a stand-alone basis for the period from April 1, 2010 to May 31, 2010: (Rs. in lakh) Sr. no. Particular Amount
1. Total sales/ turnover 10,525.34
2. Other operating income 873.12
3. Total income 11,398.45
4. PBDIT 1,336.91
5. Interest/ finance charges (net) 162.74
6. Provision for depreciation 215.96
7. Provision for tax 292.66
8. Profit after tax 665.55
2. Material changes and commitments, if any, affecting the financial position of the Company
a. The authorized share capital of the Company was increased from Rs. 3,600 lakh to Rs. 5,600 lakh on April 16, 2010 as approved by the shareholders through a postal ballot.
b. On June 22, 2010, 21,825 Equity Shares of Rs. 10 each were issued up on exercise of Employee Stock options at par.
c. Private placement of 1,000 listed secured non-convertible debentures of Rs. 10,00,000 each on April 15, 2010.
d. Private placement of 500 listed unsecured non-convertible debentures of Rs.10,00,000 each on April 27, 2010.
e. Private placement of 450 listed unsecured non-convertible debentures of Rs.10,00,000 each on June 30, 2010.
f. Private placement of 300 listed unsecured non-convertible debentures of Rs.10,00,000 each on June 30, 2010.
g. The non-convertible debentures amounting to Rs. 6550.24 lakhs, issued under the rights issue of the Company in 2005, were redeemed on July 7, 2010.
3. Stock market data
a. The week end prices of the Equity Shares of the Company for last four weeks on the BSE and
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NSE are provided in the table below:
(Amounts in Rs.) Week ended on Closing price (in Rs.)
BSE * NSE **
July 16, 2010 930.75 932.65
July 9, 2010 968.70 969.75
July 2, 2010 950.50 953.75
June 25, 2010 882.15 885.3 *Source: www.bseindia.com ** Source: www.nseindia.com
b. The highest and lowest prices of the Equity Shares of the Company on the BSE and NSE for last four weeks are provided in the table below: (Amounts in Rs.) Stock Exchange High Date of high Low Date of low
BSE 1,135.0 July 7, 2010 835.0 June 25, 2010
NSE 1135.0 July 7, 2010 875.0 June 25, 2010 *Source: www.bseindia.com ** Source: www.nseindia.com
c. The highest and lowest prices of the Equity Shares of the Company on the BSE and NSE for the last three years are provided in the table below:
Last three (3) BSE NSE year price data High Low High Low
July 17, 2007- July 16, 2008 829 420 828 421.15
July 17, 2008- July 16, 2009 587 250 585 236.65
July 17, 2009- July 16, 2010 1135 456 1135 420 *Source: www.bseindia.com ** Source: www.nseindia.com
d. The highest and lowest prices of the Equity Shares of the Company on the BSE and NSE for the last six months are provided in the table below:
Last six (6) BSE NSE months price High Low High Low data
January 17, 2010- February 16, 2010 855 745 855 740
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February 17, 2010- March 16, 2010 903 756 904.7 759
March 17, 2010- April 16, 2010 991 800 874.9 801.15
April 17, 2010- May 16, 2010 839.8 751.1 838.8 780
May 17, 2010- June 16, 2010 948.9 781 948 770.65
June 17, 2010- July 16, 2010 1135 835 1135 875 *Source: www.bseindia.com ** Source: www.nseindia.com
4. The Company has filed its audited financial results for the year ended March 31, 2010 with the Stock Exchanges in accordance with the requirements under the Listing Agreement.
5. Optim Estates Private Limited became a wholly-owned subsidiary of the Company on April 30, 2010.
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OTHER REGULATORY AND STATUTORY DISCLOSURES
Authority for the Issue
Pursuant to the resolution passed by the Board of Directors of the Company at its meeting held on April 26, 2010, it has been decided to make the rights offer of the securities to the Equity Shareholders of the Company with a right to renounce. The Committee of the Board has on May 10, 2010 decided that the Issue would be of CCPS to the equity shareholders on a Rights basis.
Prohibition by SEBI
Neither the Company, the Directors, the Promoter, the promoter group nor the persons in control of the Company has been prohibited from accessing or operating in the capital markets or have been restrained from buying, selling or dealing in securities under any order or direction passed by SEBI. Further, neither the Promoters, Directors or persons in control of the Issuer was or also is a promoter, director or person in control of any other company which is debarred from accessing the capital market under any order or directions made by SEBI.
Further, neither the Promoter, the Company, the promoter group nor the group companies has been declared as willful defaulters by RBI / Government authorities.
Certain Directors of the Company are associated as directors in other companies which are in securities market. The details of the same are give below:
1. Mr. Farrokh K. Kavarana
a) Tata Capital Limited (“ TCL ”)
TCL is registered as a portfolio manager with SEBI and Mr. Farrokh K. Kavarana is a director on the board of Tata Capital Limited.
1. Registration number (if applicable) INP000002924
2. If registration has expired, reasons for non-renewal N.A.
3. Details of any enquiry/investigation conducted by SEBI at any time N.A.
4. Penalty imposed by SEBI (penalty includes deficiency/warning letter, N.A. adjudication proceedings, suspension/cancellation / prohibitory orders)
5. Outstanding fees payable to SEBI by the entity, if any Nil
b) Tata Capital Markets Limited (“TCML”)
TCML is a wholly-owned subsidiary of TCL, and is registered as a category I merchant banker. Mr. Farrokh K. Kavarana is a director on the board of TCL.
1. Registration number (if applicable) INM000011302
2. If registration has expired, reasons for non-renewal N.A.
3. Details of any enquiry/investigation conducted by SEBI at any time N.A.
4. Penalty imposed by SEBI (penalty includes deficiency/warning letter, N.A. adjudication proceedings, suspension/cancellation / prohibitory orders)
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5. Outstanding fees payable to SEBI by the entity, if any Nil
c) Tata Securities Limited (“TSL”) TSL is a wholly-owned subsidiary of TCL, and is registered under various segments in the securities market. Mr. Farrokh K. Kavarana is a director on the board of TCL.
1. Registration number (if applicable) Please see below the list of registration numbers for various segments.
2. If registration has expired, reasons for non-renewal N.A.
3. Details of any enquiry/investigation conducted by SEBI at any time N.A.
4. Penalty imposed by SEBI (penalty includes deficiency/warning letter, N.A. adjudication proceedings, suspension / cancellation / prohibitory orders)
5. Outstanding fees payable to SEBI by the entity, if any Nil
The registrations obtained by the TSL on various segments in the securities market are listed below:
(i) Trading Member of National Stock Exchange of India Limited on Currency Derivates Segment-INE231288730;
(ii) Trading Member of National Stock Exchange of India Limited on Futures and Options Segment-INF231288730;
(iii) Clearing Member of National Stock Exchange of India Limited on Futures and Options- INF231288730;
(iv) Trading and Clearing Member of National Stock Exchange of India Limited on Capital Market Segment- INB231288730;
(v) Registration as a Depository Participant on NSDL- IN-DP-NSDL-298-2008;
(vi) Registration as a Depository Participant on CDSL- IN-DP-CDSL-450-2008;
(vii) Trading and Clearing Member of Bombay Stock Exchange Limited on Capital Market Segment- INB010664150;
(viii) Trading Member of Bombay Stock Exchange Limited on Futures and Options- INF011207954; and
(ix) Clearing Member of Bombay Stock Exchange Limited on Futures and Options- INF011207954.
d) Tata Asset Management Limited (“ TAML ”)
TAML is registered as a portfolio manager and Mr. Farrokh K. Kavarana is a director on the board of TAML.
1. Registration number (if applicable) INP000001058
2. If registration has expired, reasons for non- N.A.
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renewal
3. Details of any enquiry/investigation conducted N.A. by SEBI at any time
4. Penalty imposed by SEBI (penalty includes A fine of Rs. 2 lakh has been paid to SEBI for deficiency/warning letter, adjudication disclosure of portfolio statement to unitholders not proceedings, suspension/cancellation / being in the exact format as prescribed by SEBI prohibitory orders) (in 2001)
5. Outstanding fees payable to SEBI by the Nil entity, if any
2. Mr. A. D. Cooper
a) Tata Asset Management Limited (“ TAML ”)
TAML is registered as a portfolio manager and Mr. A. D. Cooper is a director on the board of TAML.
1. Registration number (if applicable) INP000001058
2. If registration has expired, reasons for non- N.A. renewal
3. Details of any enquiry/investigation conducted N.A. by SEBI at any time
4. Penalty imposed by SEBI (penalty includes A fine of Rs 2 lakh has been paid to SEBI for deficiency/warning letter, adjudication disclosure of portfolio statement to unitholders proceedings, suspension/cancellation / not being in the exact format as prescribed by prohibitory orders) SEBI (in 2001)
5. Outstanding fees payable to SEBI by the entity, Nil if any
Our Promoter, the members of the Group Companies and relatives of the Promoter have confirmed that they have not been identified as willful defaulters by the RBI or any other governmental authority.
Declaration for various statutory compliances
The Company confirms that it has complied with the following during the financial year immediately preceding the date of the Letter of Offer:
(i) provisions of the Listing Agreement with respect to reporting and compliance under Clauses 35, 40A, 41 and 49;
(ii) 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 changes in shareholding and Regulation 8A pertaining to disclosure of pledged shares; and
(iii) provisions of the SEBI (Prohibition of Insider Trading) Regulations, 1992, with respect to reporting in terms of Regulation 13.
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Declaration for filing the shareholding pattern with the Stock Exchanges
The Company confirms that it shall make an additional disclosure along with the shareholding pattern to be filed with the stock exchanges, disclosing the number and percentage of Series A Cumulative Compulsorily Convertible Preference Shares and Series B Cumulative Compulsorily Convertible Preference Shares (CCPS –Series A and B) held by the Promoter and Promoter Group, (separately indicating CCPS –Series A and B allotted over and above their entitlement) and the number and percentage of enhanced share capital which Promoter and Promoter Group would be entitled to upon conversion of the CCPS –Series A and B into shares and the aggregate shareholding as a result of such conversion.
Eligibility for the Issue
The Company is an existing company registered under the Companies Act and its Equity Shares are listed on the BSE and the NSE. The Company is eligible to make this rights issue in terms of Chapter IV of the SEBI Regulations.
Compliance with Part E of Schedule VIII of the SEBI Regulations
The Company is in compliance with the provisions specified in Clause 1 of Part E of Schedule VIII of the SEBI Regulations.
(a) The Company has been filing periodic reports, statements and information in compliance with the listing agreement for the last three years.
(b) The reports, statements and information referred to in sub-clause (a) above are available on the website of NSE and BSE.
(c) The Company has an investor grievance-handling mechanism which includes meeting of the Shareholders Grievance Committee at frequent intervals, appropriate delegation of power by the board of directors of the issuer as regards share transfer and clearly laid down systems and procedures for timely and satisfactory redressal of investor grievances.
Disclaimer clause of SEBI AS REQUIRED, A COPY OF THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI. IT IS TO BE DISTINCTLY UNDERSTOOD THAT THE SUBMISSION OF THE DRAFT LETTER OF OFFER TO SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED OR APPROVED BY SEBI. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR THE FINANCIAL SOUNDNESS OF ANY SCHEME OR THE PROJECT FOR WHICH THE ISSUE IS PROPOSED TO BE MADE OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE DRAFT LETTER OF OFFER. THE LEAD MANAGERS, JM FINANCIAL AND TCML HAVE, CERTIFIED THAT THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 IN FORCE FOR THE TIME BEING. THIS REQUIREMENT IS TO FACILITATE INVESTORS TO TAKE AN INFORMED DECISION FOR MAKING INVESTMENT IN THE PROPOSED ISSUE.
IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE COMPANY IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THE DRAFT LETTER OF OFFER, THE LEAD MANAGERS ARE EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE COMPANY DISCHARGES ITS RESPONSIBILITY ADEQUATELY IN THIS BEHALF AND TOWARDS THIS PURPOSE THE LEAD MANAGERS HAVE FURNISHED TO SEBI A DUE DILIGENCE CERTIFICATE DATED MAY 10, 2010 WHICH WILL READ AS FOLLOWS:
1. WE HAVE EXAMINED VARIOUS DOCUMENTS INCLUDING THOSE RELATING TO LITIGATION SUCH AS COMMERCIAL DISPUTES, PATENT DISPUTES, DISPUTES WITH COLLABORATORS, ETC. AND OTHER MATERIALS IN CONNECTION WITH THE FINALISATION OF THE DRAFT LETTER OF OFFER PERTAINING TO THE SAID
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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:
A. THE DRAFT LETTER OF OFFER FILED WITH SEBI IS IN CONFORMITY WITH THE DOCUMENTS, MATERIALS AND PAPERS RELEVANT TO THE ISSUE;
B. ALL THE LEGAL REQUIREMENTS CONNECTED WITH THE ISSUE AS ALSO THE REGULATIONS, GUIDELINES, INSTRUCTIONS ETC., ISSUED BY SEBI, THE GOVERNMENT AND ANY OTHER COMPETENT AUTHORITY IN THIS BEHALF HAVE BEEN DULY COMPLIED WITH;
C. THE DISCLOSURES MADE IN THE DRAFT LETTER OF OFFER ARE TRUE, FAIR AND ADEQUATE TO ENABLE THE INVESTORS TO MAKE A WELL-INFORMED DECISION AS TO INVESTMENT IN THE PROPOSED ISSUE AND SUCH DISCLOSURES ARE IN ACCORDANCE WITH THE REQUIREMENTS OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, COMPANIES ACT, 1956 AND OTHER APPLICABLE LEGAL REQUIREMENTS.
3. WE CONFIRM THAT BESIDES OURSELVES, ALL THE INTERMEDIARIES NAMED IN THE DRAFT LETTER OF OFFER ARE REGISTERED WITH SEBI AND TILL DATE SUCH REGISTRATION IS VALID;
4. WE HAVE SATISFIED OURSELVES ABOUT THE WORTH OF THE UNDERWRITERS TO FULFIL THEIR UNDERWRITING COMMITMENTS; NOT APPLICABLE
5. WE CERTIFY THAT WRITTEN CONSENT FROM THE PROMOTER HAS BEEN OBTAINED FOR INCLUSION OF THEIR SECURITIES AS PART OF THE PROMOTER’S CONTRIBUTION SUBJECT TO LOCK-IN AND THE SECURITIES PROPOSED TO FORM PART OF THE PROMOTER’S CONTRIBUTION SUBJECT TO LOCK-IN, WILL NOT BE DISPOSED/ SOLD/ TRANSFERRED BY THE PROMOTER DURING THE PERIOD STARTING FROM THE DATE OF FILING THE DRAFT LETTER OF OFFER WITH SEBI TILL THE DATE OF COMMENCEMENT OF LOCK-IN PERIOD AS STATED IN THE DRAFT LETTER OF OFFER- NOT APPLICABLE;
6. WE CERTIFY THAT REGULATION 33 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, WHICH RELATES TO SECURITIES INELIGIBLE FOR COMPUTATION OF PROMOTER CONTRIBUTION, HAS BEEN DULY COMPLIED WITH AND APPROPRIATE DISCLOSURES AS TO COMPLIANCE WITH THE CLAUSE HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER - NOT APPLICABLE;
7. WE UNDERTAKE SUB-REGULATION (4) OF REGULATION 32 AND CLAUSE (C) AND (D) OF SUB-REGULATION (2) OF REGULATION 8 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 SHALL BE COMPLIED WITH. WE CONFIRM THAT ARRANGEMENTS HAVE BEEN MADE TO ENSURE THAT PROMOTER’S CONTRIBUTION AND SUBSCRIPTION FROM ALL FIRM ALLOTTEES WOULD 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 PROMOTER’S CONTRIBUTION SHALL BE KEPT IN AN ESCROW ACCOUNT WITH A SCHEDULED COMMERCIAL BANK AND SHALL BE RELEASED TO THE COMPANY ALONG WITH THE PROCEEDS OF THE PUBLIC ISSUE - NOT APPLICABLE;
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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 MONEYS RECEIVED PURSUANT TO THE ISSUE ARE KEPT IN A SEPARATE BANK ACCOUNT AS PER THE PROVISIONS OF SECTION 73(3) OF THE COMPANIES ACT, 1956 AND THAT SUCH MONEYS SHALL BE RELEASED BY THE SAID BANK ONLY AFTER PERMISSION IS OBTAINED FROM ALL THE STOCK EXCHANGES MENTIONED IN THE LETTER OF OFFER. WE FURTHER CONFIRM THAT THE AGREEMENT ENTERED INTO BETWEEN THE BANKERS TO THE ISSUE AND THE ISSUER SPECIFICALLY CONTAINS THIS CONDITION – IN ACCORDANCE WITH CLAUSE 56 THE ISSUER SHALL UTILISE FUNDS COLLECTED IN RIGHTS ISSUE AFTER FINALISATION OF BASIS OF ALLOTMENT IN ACCORDANCE WITH SEBI REGULATION AND APPLICABLE LAWS;
10. WE CERTIFY THAT A DISCLOSURE HAS BEEN MADE IN THE DRAFT LETTER OF OFFER THAT THE INVESTORS SHALL BE GIVEN AN OPTION TO GET THE SHARES IN DEMAT OR PHYSICAL MODE;
11. WE CERTIFY THAT ALL APPLICABLE DISCLOSURES MANDATED IN THE SECURITIES AND EXCHANGE BAORD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009 HAVE BEEN MADE IN ADDITION TO DISCLOSURES WHICH, IN OUR VIEW, ARE FAIR AND ADEQUATE TO ENABLE THE INVESTOR TO MAKE A WELL INFORMED DECISION;
12. WE CERTIFY THAT THE FOLLOWING DISCLOSURES HAVE BEEN MADE IN THE DRAFT LETTER OF OFFER:
a. AN UNDERTAKING FROM THE COMPANY THAT AT ANY GIVEN TIME THERE SHALL BE ONLY ONE DENOMINATION FOR THE SHARES OF THE COMPANY; AND
b. AN UNDERTAKING FROM THE COMPANY THAT IT SHALL COMPLY WITH SUCH DISCLOSURE AND ACCOUNTING NORMS SPECIFIED BY SEBI FROM TIME TO TIME.
13. WE UNDERTAKE TO COMPLY WITH THE REGULATIONS PERTAINING TO ADVERTISEMENT IN TERMS OF THE SECURITIES AND EXCHANGE BAORD 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 OR THE ISSUER, SITUATION AT WHICH THE PROPOSED BUSINESS STANDS, THE RISK FACTORS, PROMOTER EXPERIENCE, ETC.
15. WE ENCLOSE A CHECKLIST CONFIRMING REGULATION-WISE COMPLIANCE WITH THE APPLICABLE PROVISIONS OF THE SEBI (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, CONTAINING DETAILS SUCH AS THE REGULATION NUMBER, ITS TEXT, THE STATUS OF COMPLIANCE, PAGE NUMBER OF THE DRAFT LETTER OF OFFER WHERE THE REGULATION HAS BEEN COMPLIED WITH AND OUR COMMENTS, IF ANY.
THE FILING OF THIS DRAFT LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE COMPANY FROM ANY LIABILITIES UNDER SECTION 63 OR SECTION 68 OF THE
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COMPANIES ACT 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 MANAGERS ANY IRREGULARITIES OR LAPSES IN THIS DRAFT LETTER OF OFFER.
TCML is an indirect subsidiary of Tata Sons Limited, which is our Promoter. TCML has signed the due diligence certificate and accordingly has been disclosed as a Lead Manager. Further, in compliance with the proviso to regulation 21A(1) and explanation (iii) to regulation 21A(1) of SEBI (Merchant Bankers) Regulations, 1992, read with Regulation 110 and Schedule XX of the SEBI ICDR Regulations, TCML would be involved only in the marketing of the Issue.
Caution
The Company and the Lead Managers accept no responsibility for statements made otherwise than in this Letter of Offer or in any advertisement or other material issued by the Company or at the instance of the Company and that anyone placing reliance on any other source of information would be doing so at his own risk.
Investors who invest in the issue will be deemed to have been represented by the company and Lead Managers and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the CCPS of the Company, and are relying on independent advice / evaluation as to their ability and quantum of investment in this Issue.
The Lead Managers 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 Draft Letter of Offer with SEBI.
Disclaimer with respect to jurisdiction
This Letter of Offer has been prepared under the provisions of Indian laws and the applicable rules and regulations thereunder. Any disputes arising out of this Issue will be subject to the jurisdiction of the appropriate court(s) in Mumbai, India only.
Selling restrictions The distribution of this Letter of Offer and the issue of CCPS on a rights basis to persons in certain jurisdictions outside India may be restricted by legal requirements prevailing in those jurisdictions. Persons into whose possession this Letter of Offer may come are required to inform themselves about and observe such restrictions. The Company is making this Issue of CCPS on a rights basis to the Shareholders of the Company and will dispatch the Letter of Offer and CAFs to Shareholders who have provided an Indian address.
No action has been or will be taken to permit this Issue in any jurisdiction where action would be required for that purpose, except that the Draft Letter of Offer has been filed with SEBI. Accordingly, the CCPS may not be offered or sold, directly or indirectly, and this Letter of Offer may not be distributed in any jurisdiction, except in accordance with legal requirements applicable in such jurisdiction. Receipt of this Letter of Offer will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and, those circumstances, this Letter of Offer must be treated as sent for information only and should not be copied or redistributed. Accordingly, persons receiving a copy of this Letter of Offer should not, in connection with the issue of the CCPS or the rights entitlements, distribute or send the same in or into the United States or any other jurisdiction where to do so would or might contravene local securities laws or regulations. If this Letter of Offer is received by any person in any such territory, or by their agent or nominee, they must not seek to subscribe to the CCPS or the rights entitlements referred to in this Letter of Offer.
Neither the delivery of this Letter of Offer nor any sale hereunder, shall under any circumstances create any implication that there has been no change in the Company’s affairs from the date hereof or that the information contained herein is correct as of any time subsequent to this date.
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United States restrictions
NEITHER THE RIGHTS ENTITLEMENTS NOR THE SECURITIES THAT MAY BE PURCHASED PURSUANT HERETO HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY U.S. STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OF AMERICA OR THE TERRITORIES OR POSSESSIONS THEREOF (THE “UNITED STATES” OR THE “U.S.”) OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, “US PERSONS” (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”)), EXCEPT IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE RIGHTS REFERRED TO IN THIS LETTER OF OFFER ARE BEING OFFERED IN INDIA, BUT NOT IN THE UNITED STATES. THE OFFERING TO WHICH THIS LETTER OF OFFER RELATES IS NOT, AND UNDER NO CIRCUMSTANCES IS TO BE CONSTRUED AS, AN OFFERING OF ANY SHARES OR RIGHTS FOR SALE IN THE UNITED STATES OR AS A SOLICITATION THEREIN OF AN OFFER TO BUY ANY OF THE SAID SHARES OR RIGHTS. ACCORDINGLY, THIS LETTER OF OFFER SHOULD NOT BE FORWARDED TO OR TRANSMITTED IN OR INTO THE UNITED STATES AT ANY TIME. NEITHER THE COMPANY NOR ANY PERSON ACTING ON BEHALF OF THE COMPANY WILL ACCEPT SUBSCRIPTIONS OR RENUNCIATIONS FROM ANY PERSON, OR THE AGENT OF ANY PERSON, WHO APPEARS TO BE, OR WHO THE COMPANY OR ANY PERSON ACTING ON BEHALF OF THE COMPANY HAS REASON TO BELIEVE IS, EITHER A “U.S. PERSON” (AS DEFINED IN REGULATION S) OR OTHERWISE IN THE UNITED STATES. ANY PERSON SUBSCRIBING TO THE CCPS OFFERED HEREBY WILL BE DEEMED TO REPRESENT THAT SUCH PERSON IS NOT A U.S. PERSON (AS DEFINED IN REGULATION S) OR OTHERWISE IN THE UNITED STATES AND HAS NOT VIOLATED ANY U.S. SECURITIES LAWS IN CONNECTION WITH THE EXERCISE.
Designated Stock Exchange
The designated stock exchange for the purposes of this Issue will be the BSE.
Disclaimer clause of the BSE BSE has given vide its letter dated May 24, 2010, permission to this 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; 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 NSE As required, a copy of this letter of offer has been submitted to NSE. NSE has given vide its letter Ref. No. NSE/LIST/138410-X dated May 24, 2010 permission to the Issuer to use the Exchange's name in this letter of offer as one of the stock exchanges on which this Issuer's securities are proposed to be
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listed. The Exchange has scrutinised this letter of offer for its limited internal purpose of deciding on the matter of granting the aforesaid permission to this Issuer. It is to be distinctly understood that the aforesaid permission given by NSE should not in any way be deemed or construed that the letter of offer has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this letter of offer; nor does it warrant that this Issuer's securities will be listed or will continue to be listed on the Exchange; nor does it take any responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of this Issuer.
Every person who desires to apply for or otherwise acquire any securities of this Issuer 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 any other reason whatsoever.
Filing
The Draft Letter of Offer was filed with SEBI, Plot No. C 4-A, ‘G’ Block, Bandra Kurla Complex, Bandra (East), Mumbai 400 051, India for its observations. This Letter of Offer has been filed with the Designated Stock Exchange as per the provisions of the Companies Act.
Issue related expenses
The expenses of the Issue payable by the Company include selling commission, reimbursement and fees payable to the Lead Managers, Auditors, legal advisor, Registrar to the Issue, printing and distribution expenses, publicity, listing fees, stamp duty and other expenses and will be met out of the Issue Proceeds.
Activity Expense Expense Expense (% of (% of (Rs. in lakh ) total Issue expenses) Size)
Fees of the Lead Managers 99.27 36.77 0.20
Brokerage and selling commission (including commission to - - - SCSBs for ASBA applications)
Fees of the Registrar to the Issue 5.00 1.85 0.01
Advisors 44.12 16.34 0.09
Advertising and marketing 4.00 1.48 0.01
Printing and distribution 31.00 11.48 0.06
Bankers to the Issue 0.00 0.00 0.00
Others 86.61 32.08 0.18
Total estimated Issue expenses 270.00 100.00 0.55
Investor grievances and redressal system
The Company has made adequate arrangements for the redressal of investor complaints. Well-arranged correspondence systems have been developed for letters of a routine nature. The share transfer and dematerialisation for the Company is being handled by the Company and the registrar. The Company estimates that the average time required for the redressal of routine investor complaints, including from
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its shareholders, is 15 days from the date of receipt of the complaint.
The contact details of the registrar of the Company are: TSR Darashaw Limited, 6/10, Haji Moosa Patrawala Industrial Estate, 20, Dr. E. Moses Road, Mahalaxmi, Mumbai 400 011, India.
Status of complaints
(a) Total number of complaints received during the last financial year (fiscal 2010): 19. (b) Status of complaints as on March 31, 2010: Out of 19 complaints received during fiscal 2009, 18 complaints were resolved and 1 complaint was outstanding. (c) Number of complaints received between April 1, 2010 and the date of filing of this Letter of Offer: 7. (d) Status of complaints received between April 1, 2010 and the date of filing of this Letter of Offer: Out of 7 complaints received, 6 complaints were resolved and 1 complaint is outstanding. (e) Time normally taken for disposal of various types of investor grievances: 15 days.
Investor grievances arising out of this Issue
The Company’s Investor grievances arising out of the Issue will be handled by Link Intime India Private Limited who is the Registrar to the Issue. The Registrar will have a separate team of personnel handling only post-Issue correspondence.
The agreement between the Company and the Registrar will provide for retention of records with the Registrar for a period of one year from the last date of dispatch of Allotment Advice/ share certificate / refund orders to enable the investors to approach the Registrar for redressal of their grievances.
All grievances relating to the Issue may be addressed to the Registrar to the Issue giving full details such as folio number, name and address, contact telephone/cell numbers, email id of the first Investor, number and type of shares applied for, CAF serial number, amount paid on application and the name of the bank and the branch where the application was deposited, along with a photocopy of the acknowledgement slip. In case of renunciation, the same details of the Renouncee should be furnished.
The average time taken by the Registrar for attending to routine grievances will be seven days from the date of receipt. In case of non-routine grievances where verification at other agencies is involved, it would be the endeavour of the Registrar to attend to them as expeditiously as possible. The Company undertakes to resolve the Investor grievances in a time bound manner.
The contact details of the Registrar to the Issue are:
Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup West, Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Email: [email protected] Website: www.linkintime.co.in Contact Person : Mr. Pravin Kasare SEBI Registration No.: INR 000004058
Investors may contact the Compliance Officer in case of any pre-Issue / post-Issue related problems such as non-receipt of allotment advice / share certificates / demat credit / refund orders etc. His address is as follows:
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Mr. M. M. Surti Company Secretary Trent House, G Block, Plot No. C-60, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051
Tel: +91 22 6700 9000 Fax: +91 22 6700 8100 Email: [email protected]
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TERMS OF THE ISSUE
The CCPS proposed to be issued on a rights basis are subject to the terms and conditions contained in this Letter of Offer, Abridged Letter of Offer, the enclosed Composite Application Form (“CAFs”), the Memorandum and Articles of Association of the Company, the provisions of the Act, regulations issued by SEBI, guidelines, notifications and regulations for issue of capital and for listing of securities issued by Government of India, the Reserve Bank of India and/or other statutory authorities and bodies from time to time, terms and conditions as stipulated in the allotment advice or security certificate and rules as may be applicable and introduced from time to time.
Authority for the Issue
This Issue is being made pursuant to a resolution passed by the Board of Directors of the Company under Section 81(1) of the Companies Act at its meeting held on April 26, 2010 and the meeting of the Committee of Directors held on May 10, 2010. The terms of the Issue have been authorized by the Board of Directors of the Company at its meeting held on June 14, 2010. Further, the Letter of Offer has been adopted by the Committee of Directors of the Company on July 20, 2010.
Basis for the Issue
The CCPS are being offered for subscription for cash to those existing Equity Shareholders of the Company whose names appear as beneficial owners as per the list to be furnished by the depositories in respect of the Equity Shares held in dematerialised form and on the register of members of the Company in respect of the Equity Shares held in physical form at the close of business hours on the Record Date, i.e., July 10, 2010.
Rights Entitlement
As your name appears as beneficial owner in respect of Equity Shares held in the electronic form or appears in the register of members as an Equity Shareholder of the Company as on the Record Date, you are entitled to the number CCPS as set out in Part A of the enclosed CAFs.
The eligible Equity Shareholders are entitled to 4 CCPS (comprising 2 CCPS Series A and 2 CCPS Series B) for every 9 Equity Shares held on the Record Date.
Principal Terms of Cumulative Compulsorily Convertible Preference Shares
Face Value
Each CCPS shall have a face value of Rs. 10.
Issue Price
Each CCPS Series A shall be offered at a face value of Rs. 10 each for cash at a price of Rs. 550 each (including a premium of Rs. 540 each) and each CCPS Series B shall be offered at a face value of Rs. 10 each for cash at a price of Rs. 550 each (including a premium of Rs. 540 each). The Issue Price has been arrived in consultation between the Company and the Lead Managers. An equity shareholder should apply for such Equity Shareholder’s entitlement of both the CCPS Series A and Series B together.
Entitlement Ratio
The CCPS are being offered on a rights basis to the existing Equity Shareholders of the Company in the ratio of 4 CCPS (comprising 2 CCPS Series A and 2 CCPS Series B) for every 9 Equity Shares held on the record date, July 10, 2010. It is clarified that in order to subscribe to the Issue, an Equity Shareholder should apply for such Equity Shareholder’s entitlement of both the CCPS Series A and the CCPS Series B.
Fractional Entitlement
For the CCPS being offered on a rights basis under this Issue, if the shareholding of any of the Equity
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Shareholders is less than 9 Equity Shares or not in the multiple of 9, the fractional entitlement of such holders shall be ignored. Shareholders whose fractional entitlements are being ignored would be given preference in allotment of one additional CCPS Series A and one additional CCPS Series B each if they apply for additional CCPS.
Those Equity Shareholders holding less than 9 Equity Shares and therefore entitled to zero CCPS under this Issue shall be dispatched a CAF with zero entitlement. Such Equity Shareholders are entitled to apply for additional CCPS (consisting of an equal number of CCPS Series A and CCPS Series B). However, they cannot renounce the same in favour of third parties. CAF with zero entitlement will be non-negotiable/non-renounceable.
For e.g., if an Equity Shareholder holds 6 Equity Shares, he will be entitled to nil CCPS comprising of nil CCPS Series A and nil CCPS Series B on a rights basis. He will be given a preference for allotment of 2 additional CCPS consisting of 1 CCPS Series A and 1 CCPS Series B if he applies for the same.
Ranking
The CCPS being issued shall be subject to the provisions of our Memorandum of Association and Articles of Association. The Equity Shares arising out of the conversion of the CCPS shall rank pari passu, in all respects including voting and dividend, with our existing Equity Shares.
Terms of Payment
All Equity Shareholders applying for the CCPS shall be required to pay an amount of Rs. 550 for CCPS Series A and Rs. 550 for CCPS Series B upon application.
Conversion
One CCPS Series A of face value of Rs. 10 each issued at a premium of Rs. 540 each will be compulsorily and automatically converted into one fully paid-up Equity Share of Rs. 10 each on September 1, 2011 without any application or any further act on the part of the holder of the CCPS Series A.
One CCPS Series B of face value of Rs. 10 each issued at a premium of Rs. 540 each will be compulsorily and automatically converted into one fully paid-up Equity Share of Rs. 10 each on September 1, 2012 without any application or any further act on the part of the holder of the CCPS Series B.
If the Company (a) makes an issue of its Equity Shares by way of a bonus issue (by capitalisation of its profits or reserves), (b) makes a rights issue of Equity Shares, (c) sub-divides the outstanding Equity Shares or (d) consolidate its outstanding Equity Shares, then the number of Equity Shares to be issued upon conversion shall be appropriately adjusted so that the holder of CCPS, shall be entitled to receive the number of Equity Shares and/or other securities of the Company which such holder would have held or have been entitled to receive after the happening of any of the events described above had such CCPS been converted immediately prior to the happening of such event (or if the Company has fixed a record date for the determination of shareholders entitled to receive such Equity Shares or other securities by way of a bonus or a rights issue or Equity Shares to be issued upon any such sub-division or consolidation, then immediately prior to such record date).
The Company shall not issue any fractional certificates to CCPS holders on conversion of CCPS to equity shares of the Company and instead all such fractional entitlements to which the CCPS holders would be entitled to on allotment of the equity shares of the Company will be consolidated and the Company will issue and allot Equity Shares in lieu thereof to a person authorized by the Company with the express understanding that such person will hold such Ordinary Shares in trust for those entitled to the fractional entitlements and sell the same in the market within 15 days from date of allotment at the best available price and pay to the Company, the sale proceeds thereof, which the Company will distribute proportionately to those persons who are entitled to their fractional entitlements.
There shall be no redemption of the CCPS.
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Dividend
The CCPS Series A and CCPS Series B shall each carry a dividend of 0.1% and 0.1% per annum. The payment of dividends on CCPS will be paid after the same has been approved in the General Meeting of the Company. The period for which a dividend will be payable on CCPS will be calculated from the date of allotment of CCPS up to the date on which the CCPS are converted into fully paid-up Equity Shares. The dividend shall be paid within 30 days.
The payment of dividend at the coupon rate on CCPS shall be made to those holders of CCPS whose names appear as beneficial owners in accordance with the list to be furnished by the depositories in respect of the shares held in the electronic form and on the Register of Members of the Company in respect of the CCPS held in physical form, at the close of business hours on the Record Date. The Record Date for this purpose will be fixed in consultation with the Designated Stock Exchanges. The payment of dividend at the coupon rate will be made by cheque payable at par at such places where the applications are initially accepted. In other places, the Company has reserved the right to adopt any other suitable mode of payment.
As per the current provisions of the Income Tax Act, 1961, the CCPS holder is not liable to pay tax on the dividend received from the Company, however the Company is liable to pay a dividend distribution tax in accordance with the current provisions of Income Tax Act.
Taxation Upon conversion of CCPS into Equity Shares, the difference between the conversion price and the closing market price of equity shares on the date of conversion of the CCPS would be treated as long term capital gain / loss as the case may be.
Subsequently, if and when equity shares allotted on conversion of CCPS are sold / transferred, the cost of acquisition for such equity shares will be closing market price on the date of conversion of the CCPS, based on which capital gain/loss would be computed on sale / transfer as the case may be.
National Electronic Clearing Service for Payment of dividend The Company offers National Electronic Clearing Service facility for payment of dividend to its shareholders. The RBI has introduced the concept of National Electronic Clearing Service through the clearing house to obviate the need for issuing and handling paper instruments and thereby facilitates improved customer service. This facility will be available in cities where RBI provides such a facility. The Company will provide this facility to CCPS holders. The Company will then be able to credit the dividend amount to the CCPS holder’s account with the concerned bank. The CCPS holders will additionally have the convenience of direct credit to their bank account without the need to receive dividend warrants by post and deposit the same in their bank accounts. The bank at which the CCPS holder has his account will credit the same and indicate the credit entry in the passbook/account statement of the CCPS holder. Bank account details available in the records of the demat account will be used for credit of such amounts. Company may, at its sole option, do the same by physical mode where NECS facilities are not available or when NECS details are not proper.
Rights of the CCPS holder Subject to applicable laws and the AoA, the CCPS holders shall have the following rights, privileges and conditions:
The CCPS shall confer on the holders thereof, the right to a fixed preferential dividend at a rate as may be determined by the Board at the time of the issue, on the capital for the time being paid up or credited as and from time to time paid up thereon. The CCPS shall rank for capital and dividend (including all dividends undeclared upto the commencement of winding up) and for repayment of capital in a winding up, pari passu inter se and in priority to the Equity Shares of the Company but shall not confer any further or other right to participate either in profits or assets and that preferential rights shall automatically cease on conversion of these shares into Equity Shares. The rights and terms attached to the CCPS, including conversion into Equity Shares thereof, shall be
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determined by the Board at the time of the issue and as and when converted, such Equity Shares shall rank pari passu with the then existing Equity Shares of the Company in all respects. The holders of CCPS shall have the right to receive all notices of general meetings of the Company but shall not confer on the holders thereof the right to vote at any meetings of the Company save to the extent and in the manner provided in the Companies Act, 1956, or any re-enactment thereof.
The rights and terms attached to the CCPS may be modified or dealt with by the Directors in accordance with the provisions of the AoA of the Company.
General Terms of the Issue Market lot The CCPS are tradable only in dematerialised form. The market lot for CCPS in dematerialised mode is one. In case of CCPS allotted in physical form, the Company would issue to the allottee one certificate for the CCPS allotted to each folio (“Consolidated Certificate”).
Joint Holders
Where two or more persons are registered as the holders of any CCPS, they shall be deemed to hold the same as joint tenants with the benefit of survivorship subject to the provisions contained in the Articles.
Nomination
In terms of Section 109A of the Act, nomination facility is available for the CCPS.
The Investor can nominate any person by filing the relevant details in CAF in the space provided for this purpose.
In case of CCPS holders who are individuals, a sole CCPS holder or the first named CCPS holder, along with other joint CCPS holders, if any, may nominate any person(s) who, in the event of the death of the sole holder or all the joint-holders, as the case may be, shall become entitled to the CCPS. A person, being a nominee, becoming entitled to the CCPS by reason of the death of the original CCPS holder(s), shall be entitled to the same advantages to which he would be entitled if he were the registered holder of the CCPS. Where the nominee is a minor, the CCPS holder(s) may also make a nomination to appoint, in the prescribed manner, any person to become entitled to the CCPS, in the event of death of the said holder, during the minority of the nominee. A nomination shall stand rescinded upon the sale of the CCPS by the person nominating. A transferee will be entitled to make a fresh nomination in the manner prescribed. When the CCPS is held by two or more persons, the nominee shall become entitled to receive the amount only on the demise of all the holders. Fresh nominations can be made only in the prescribed form available on request with the registrar of the Company, TSR Darashaw Limited.
Only one nomination would be applicable for one folio. Hence, in case the Equity Shareholder(s) has already registered the nomination with the Company, no further nomination needs to be made for CCPS that may be allotted in this Issue under the same folio.
In case the allotment of CCPS is in dematerialised form, there is no need to make a separate nomination for the CCPS to be allotted in this Issue. Nominations registered with respective Depositary Participant (“DP”) of the applicant would prevail. Any applicant desirous of changing the existing nomination is requested to inform its respective DP.
Notices
All notices to the CCPS holders 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 one regional language daily newspaper with wide circulation and/or, will be sent by ordinary post / registered post / speed post to the registered holders of the CCPS from time to time.
Listing and Trading of CCPS Proposed to Be Issued and the Equity Shares Arising Upon Conversion of the CCPS
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The Company’s existing Equity Shares are currently traded on the BSE and the NSE under the ISIN INE849A01012.
The CCPS proposed to be issued on a rights basis shall be listed and admitted for trading on the BSE and the NSE for which the Company will make an application to NSDL and CDSL for allotment of ISIN. The CCPS allotted pursuant to this Issue will be listed as soon as practicable in accordance with the SEBI Regulations. The Company has received in-principal approval from the BSE through letter no. DCS/PREF/JA/IP-RT/88/10-11 dated May 24, 2010 and from NSE through letter no. NSE/LIST/138410- X, dated May 24, 2010.
The Equity Shares which will be allotted upon conversion of CCPS shall be listed for trading on the BSE and the NSE under the existing ISIN for fully paid Equity Shares of the Company. The Equity Shares allotted pursuant to the conversion will be listed as soon as practicable in accordance with the SEBI Regulations.
The distribution of the Letter of Offer and the issue of CCPS 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 CCPS on a rights basis only to the Equity Shareholders of the Company who have an address in India.
Minimum Subscription
If the Company does not receive the minimum subscription of 90% of the Issue, the Company shall forthwith refund the entire subscription amount received within 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, (i.e. 15 days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier) the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under sub-section (2) and (2A) of Section 73 of the Companies Act.
Additional Subscription by the Promoter
Tata Sons Limited (“ TSL ”) has confirmed that it intends to subscribe to the full extent of its Rights Entitlement in the Issue. TSL reserves the right to apply for any or all of the Rights Entitlement renounced by any of the Promoter Group companies. TSL (either through itself and/or through its subsidiaries) also intends to subscribe to any unsubscribed portion of the Issue such that 100% of the Issue is subscribed. As a result of this subscription and consequent allotment, TSL and its subsidiaries may acquire CCPS over and above their Rights Entitlement, which may result in an increase of TSL’s shareholding above its current shareholding and including their Rights Entitlement of CCPS under the Issue and allotment of Equity Shares upon conversion of the CCPS. This subscription and acquisition of additional CCPS by TSL through this Issue, if any, and allotment of Equity Shares upon conversion of the CCPS will not result in a change of control of the management of the Company and shall be exempt in terms of the proviso to Regulation 3(1)(b)(ii) of the Takeover Code. As such, there is no intention other than meeting the requirements indicated in the section on “Objects of the Issue” on page 34 of this Letter of Offer, there is no other intention/purpose for this Issue, including no intention to de-list the Company, even if, as a result of allotments to the Promoter in this Issue (including conversion of the CCPS), TSL’s shareholding in the Company exceeds its current shareholding. The Promoter shall subscribe to the above mentioned unsubscribed portion as per the relevant provisions of law. Pursuant to this allotment to the Promoter of any unsubscribed portion, over and above its Rights Entitlement, the Company and the Promoter undertake to comply with the Listing Agreement and other applicable laws.
For further details please refer to section titled “Terms of the Issue - Basis of Allotment” beginning on page 146 of this Letter of Offer.
Procedure for Application
The CAF for the CCPS will be printed in black ink for all Equity Shareholders. In case the original CAF is not received by the applicant or is misplaced by the applicant/investor, the applicant may request the
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Registrar to the Issue, for issue of a duplicate CAF, by furnishing the registered folio number, DP ID Number, Client ID Number and their full name and address. In case the signature of the Equity Shareholder(s) does not match with the specimen registered with the Company, the application is liable to be rejected.
Acceptance of the Issue You may accept the Issue and apply for the CCPS offered, either in full or in part, consisting of an equal number of CCPS Series A and CCPS Series B, by filling Part A of the respective CAFs enclosed and submit the same along with the application money payable to the Bankers to the Issue or any of the collection 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 of Directors of the Company in this regard. Applicants at centers not covered by the branches of collecting banks can send their CAF together with the cheque drawn at par on a local bank at Mumbai/demand draft payable at Mumbai to the Registrar to the Issue by registered post so as to reach them before the close of the banking hours on or before Issue Closing Date. Such applications sent to anyone other than the Registrar to the Issue are liable to be rejected. For more details, please refer to the section titled “Terms of the Issue-Mode of Payment” on page 146.
Option available to the Equity Shareholders to apply for the CCPS
The CAF clearly indicates the number of CCPS that the Equity Shareholder is entitled to.
If the Equity Shareholder applies for an investment in the CCPS, then he/she can:
• Apply for his entitlement of CCPS in part, consisting of an equal number of CCPS Series A and CCPS Series B;
• Apply for his entitlement of CCPS in part consisting of an equal number of CCPS Series A and CCPS Series B and renounce the remainder of the CCPS to the same person, i.e., renouncing of CCPS Series A to ‘X’ and CCPS Series B to ‘Y’ would not be permissible;
• Apply for his entitlement of CCPS in full;
• Apply for his entitlement in full and apply for additional CCPS consisting of an equal number of CCPS Series A and CCPS Series B;
• Renounce his/her rights in full.
Additional CCPS
You are eligible to apply for additional CCPS (consisting of an equal number of CCPS Series A and CCPS Series B) over and above the number of CCPS (as the case may be) you are entitled to, provided that you have applied for all the CCPS offered without renouncing them in full or in part in favour of any other person(s). Applications for additional CCPS shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under the section titled “Terms of the Issue - Basis of Allotment” on page 146 of this Letter of Offer.
Application for additional CCPS of only one particular series, i.e., ‘A’ or ‘B’ or in non-equal number is not permissible.
If you desire to apply for additional CCPS, please indicate your requirement in the place provided for additional shares in Part A of the CAF. The renouncees applying for all CCPS renounced in their favour may also apply for additional CCPS consisting of an equal number of CCPS Series A and CCPS Series B.
Where the number of additional CCPS applied for exceeds the number available for allotment, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.
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Non-residents including FIIs cannot apply for additional CCPS unless accompanied by applicable regulatory approvals from FIPB and/or RBI.
Renunciation
This Issue includes a right exercisable by you to renounce the CCPS offered to you either in full or in part in favour of any other person or persons. Your attention is drawn to the fact that the Company shall not make an allotment of and/or register CCPS in favour of more than three persons (including joint holders); partnership firm(s) or their nominee(s); minors; HUFs; or any society or trust (unless it is registered under the Societies Registration Act, 1860 or the Indian Trust Act, 1882 or any other applicable law relating to societies or trusts and is authorized under its constitution or by-laws to hold CCPS, as the case may be).
Any renunciation from non-resident Equity Shareholder(s) (other than FIIs) to resident Indian(s) and from resident Indians to non-residents (other than FIIs) is subject to the renouncer(s)/ renouncee(s) obtaining the approval of the RBI under the FEMA and such permissions should be attached to the CAF. Applications not accompanied by the aforesaid approvals are liable to be rejected.
By virtue of the Circular No. 14 dated September 16, 2003 issued by the RBI, Overseas Corporate Bodies (“OCBs”) have been derecognized as an eligible class of investors and the RBI has subsequently issued the Foreign Exchange Management (Withdrawal of General Permission to Overseas Corporate Bodies (OCBs)) Regulations, 2003. Accordingly, the existing Equity Shareholders of the Company who do not wish to subscribe to the CCPS being offered but wish to renounce the same in favour of Renouncee shall not renounce the same (whether for consideration or otherwise) in favour of OCB(s).
Part ‘A’ of the CAF must not be used by any person(s) other than those in whose favour this offer has been made. If used, this will render the application invalid. Submission of the enclosed CAF to the Banker to the Issue at its collecting branches specified on the reverse of the CAF with the form of renunciation (Part ‘B’ of the CAF) duly filled in shall be conclusive evidence for the Company of the person(s) applying for CCPS in Part ‘C’ of the CAF to receive allotment of such CCPS. The Renouncees applying for all the CCPS renounced in their favour may also apply for additional CCPS. Part ‘A’ of the CAF must not be used by the Renouncee(s) as this will render the application invalid. Renouncee(s) will have no further right to renounce any CCPS in favour of any other person.
Please note that any renunciation of CCPS shall include the renunciation of the CCPS Series A and CCPS Series B collectively and that investors are not allowed to renounce one series without renouncing the other series.
Procedure for Renunciation
To renounce all the CCPS offered to an Equity Shareholder in favour of one renouncee
If you wish to renounce the offer indicated in Part ‘A’, in whole, please complete Part ‘B’ of the CAF. In case of joint holding, all joint holders must sign Part ‘B’ of the CAF. The person in whose favour renunciation has been made should complete and sign Part ‘C’ of the CAF. In case of joint renouncees, all joint renouncees must sign this part of the CAF.
To renounce in part or in full in favour of more than one person
If you wish to either accept this offer in part and renounce the balance or renounce the entire offer under this Issue in favour of two or more renouncees, the CAF must be first split into requisite number of forms.
Please indicate your requirement of split 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 at the latest by the close of business hours on the last date of receiving requests for split forms. On receipt of the required number of split forms from the Registrar, the procedure as mentioned above shall have to be followed.
In case the signature of the Equity Shareholder(s), who has renounced the CCPS, does not agree with the
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specimen registered with the Company, the application is liable to be rejected.
Renouncee(s)
The person(s) in whose favour the CCPS are renounced should fill in and sign Part ‘C’ of the Application Form and submit the entire Application Form to the Bankers to the Issue on or before the Issue Closing Date along with the application money in full.
Change and/or introduction of additional holders
If you wish to apply for CCPS jointly with any other person(s), not more than three, who is/are not already a joint holder with you, it shall amount to renunciation and the procedure as stated above for renunciation shall have to be followed. Even a change in the sequence of the name of joint holders shall amount to renunciation and the procedure, as stated above shall have to be followed.
However, this right of renunciation is subject to the express condition that the Board of Directors of the Company shall be entitled in its absolute discretion to reject the request for allotment from the renouncee(s) without assigning any reason thereof.
Options available to the Equity Shareholders
Please note that:
• Part ‘A’ of the CAF must not be used by any person(s) other than the Equity Shareholder to whom this Letter of Offer has been addressed. If used, this will render the application invalid.
• Request for split form should be made for a minimum of 2 CCPS. Split form would be in such manner that same number of CCPS Series A and Series B are there in the split form.
• Request by the applicant for the split application form should reach the Company on or before August 13, 2010.
• Only the Equity Shareholder to whom the Letter of Offer has been addressed shall be entitled to renounce and to apply for split application forms. Forms once split cannot be split further.
• Split form(s) will be sent to the applicant(s) by post at the applicant’s risk.
The summary of options available to the Equity Shareholder is presented below. You may exercise any of the following options with regard to the CCPS offered, using the enclosed CAFs:
Sr. Option available Action required no.
1. Accept whole or part of your Fill in and sign Part A (all joint holders must sign) Rights Entitlement without renouncing the balance.
2. Accept your Rights Entitlement Fill in and sign Part A including Block III relating to in full and apply for additional the acceptance of entitlement and Block IV relating CCPS to additional CCPS (all joint holders must sign)
3. Renounce your Rights Fill in and sign Part B (all joint holders must sign) Entitlement in full to one indicating the number of CCPS renounced and hand person (joint Renouncees are it over to the Renouncee. The Renouncee must fill in considered as one person). and sign Part C (all joint Renouncees must sign)
4. Accept a part of your Rights Fill in and sign Part D (all joint holders must sign) Entitlement and renounce the requesting for Split Application Form (“ SAF s”). balance to one or more Send the CAF to the Registrar to the Issue so as to
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Sr. Option available Action required no. Renouncee(s) reach them on or before the last date for receiving requests for SAFs. Splitting will be permitted only OR once. Renounce your Rights On receipt of the SAF take action as indicated Entitlement to all the CCPS below. offered to you to more than one Renouncee For the CCPS you wish to accept, if any, fill in and sign Part A. For the CCPS you wish to renounce, fill in and sign Part B indicating the number of CCPS renounced and hand it over to the Renouncee. Each of the Renouncee should fill in and sign Part C for the CCPS accepted by them.
5. Introduce a joint holder or This will be treated as a renunciation. Fill in and sign change the sequence of joint Part B and the Renouncee must fill in and sign Part holders C.
Availability of Duplicate CAF
In case the original CAF is not received, or is misplaced by the applicant, the Registrar to the Issue will issue a duplicate CAF on the request of the applicant who should furnish the registered folio number/DP and Client ID number and his/ her full name and address to the Registrar to the Issue. Please note that the request for duplicate CAF should reach the Registrar to the Issue within 11 days, i.e., August 17, 2010 from the Issue Opening Date. 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.
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 Issue on plain paper, along with Demand Draft, net of bank and postal charges payable at Mumbai which should be drawn on ‘Trent Limited- Rights Issue-2010 ’ for residents and ‘Trent Limited-Rights Issue-2010-NR’ for non-residents and send the same by registered post directly to the Registrar to the Issue.
The envelope should be superscribed “Trent Limited Rights Issue-2010” and should be postmarked in India. The application on plain paper, duly signed by the applicants including joint holders, in the same order as per specimen recorded with the Company, must reach the office of the Registrar to the Issue before the Issue Closing Date and should contain the following particulars:
• Name of Issuer, being Trent Limited
• Name and address of the Equity Shareholder including joint holders
• Registered Folio Number/DP and Client ID no.
• Number of Equity Shares held as on Record Date
• Number of CCPS entitled to
• Number of CCPS applied for
• Number of additional CCPS applied for (comprising of an equal number of CCPS Series A and
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CCPS Series B), if any
• Total number of CCPS applied for
• Total amount paid at the rate of Rs. 550 per CCPS Series A and Rs. 550 per CCPS Series B
• 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
• Except for applications on behalf of the Central or State Government and the officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the CCPS applied for pursuant to the Issue
• Representation that the Equity Shareholder is not resident in the United States at the time of making the application.
• Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company
Please note that those who are making the application otherwise than on 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 applicant violates any of these requirements, he/she shall face the risk of rejection of both the applications. The Company shall refund such application amount to the applicant without any interest thereon.
Last Date of Application
The last date for submission of the duly filled in CAF is August 20, 2010. The Issue will be kept open for a minimum of 15 (fifteen) 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 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 the Letter of Offer shall be deemed to have been declined and the Board/Committee of Directors shall be at liberty to dispose off the CCPS hereby offered, as provided under the section titled “Terms of the Issue - Basis of Allotment” on page 146 of this Letter of Offer.
INVESTORS MAY PLEASE NOTE THAT THE CCPS OF THE COMPANY CAN BE TRADED ON THE STOCK EXCHANGES ONLY IN DEMATERIALISED FORM.
Basis of Allotment
Subject to the provisions contained in this Letter of Offer, the Articles of Association of the Company and the approval of the Designated Stock Exchange, the Board will proceed to allot the CCPS in the following order of priority:
(a) Full allotment to those Equity Shareholders who have applied for their rights entitlement either in full or in part and also to the renouncee(s) who has/have applied for CCPS renounced in their favour, in full or in part.
(b) For CCPS being offered on a rights basis under this Issue, if the shareholding of any of the Equity Shareholders is less than 9 Equity Shares or is not in the multiple of 9, the fractional entitlement of such holders shall be ignored. Shareholders whose fractional entitlements are being ignored would be considered for allotment of one additional CCPS Series A and one additional CCPS Series B each if they apply for additional CCPS. Allotment under this head shall be considered if there are any unsubscribed CCPS after allotment under (a) above. If number of CCPS required for allotment under
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this head are more than number of shares available after allotment under (a) above, the allotment would be made on a fair and equitable basis in consultation with the Designated Stock Exchange.
(c) Allotment to the Equity Shareholders who having applied for all the CCPS offered to them as part of the Issue and have also applied for additional CCPS (consisting of an equal number of CCPS Series A and CCPS Series B). The allotment of such additional CCPS will be made as far as possible on an equitable basis having due regard to the number of Equity Shares held by them on the Record Date, provided there is an under-subscribed portion after making full allotment in (a) and (b) above. The allotment of such CCPS will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and will not be preferential allotment.
(d) Allotment to renouncees who having applied for all the CCPS renounced in their favour, have applied for additional CCPS provided there is surplus available after making full allotment under (a), (b) and (c) above. The allotment of such CCPS will be at the sole discretion of the Board/Committee of Directors in consultation with the Designated Stock Exchange, as a part of the Issue and not preferential allotment.
(e) Allotment to any other person as the Board may in its absolute discretion deem fit provided there is surplus available after making full allotment under (a), (b), (c) and (d) above.
(f) After taking into account allotment to be made under (a) and (b) above, if there is any unsubscribed portion, the same shall be deemed to be ‘unsubscribed’ for the purpose of regulation 3(1)(b) of the Takeover Code which would be available for allocation under (c), (d) and (e) above.
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs:
The issue of Equity Shares upon conversion of CCPS to a single FII should not exceed 10% of the post- issue paid-up capital of the Company. In respect of an FII acquiring 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. In accordance with foreign investment limits applicable to the Company, the total FII investment cannot exceed 24% of the total paid-up capital of the Company.
Allotment Advice / Refund Orders
The Company will issue and dispatch allotment advice / share certificates / demat credit and/or letters of regret along with refund orders or credit the allotted securities to the respective beneficiary accounts, if any, within a period of 15 (fifteen) days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it (i.e. fifteen days after the Issue Closing Date or the date of the refusal by the Stock Exchange(s), whichever is earlier), the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable pay the money with interest as prescribed under Sub Sections (2) and (2A) of Section 73 of the Companies Act, 1956.
Applicants residing at those centers where clearing houses are managed by the RBI, will get refunds through the NECS (National Electronic Clearing Service) only, except where applicants are otherwise disclosed as applicable/eligible to get refunds through direct credit and real time gross settlement (“RTGS”) provided the MICR details are recorded with the Depositories or our Company.
In case of those applicants who have opted to receive their Rights Entitlement in dematerialised form using electronic credit under the depository system, an advice regarding their credit of the CCPS shall be given separately. Applicants to whom refunds are made through electronic transfer of funds will be sent a letter through ordinary post intimating them about the mode of credit of refund within a period of 15(fifteen) days from the Issue Closing Date.
In case of those applicants who have opted to receive their Rights Entitlement in physical form, the Company will issue the corresponding share certificates under Section 113 of the Companies Act or other applicable provisions, if any.
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Any letter of allotment/refund order exceeding Rs. 1,500 would be sent by registered post/speed post to the sole/first applicant’s registered address. Refund orders for a value of up to Rs. 1,500 would be sent under certificate of posting. Such refund orders would be payable at par at all places where the applications were originally accepted. The same would be marked ‘Account Payee only’ and would be drawn in favour of the sole/first applicant. Adequate funds would be made available to the Registrar to the Issue for this purpose.
Payment of Refund Mode of Making Refunds The payment of refund, if any, would be done through various modes in the following order of preference:
1. NECS - Payment of refund would be done through NECS for applicants having an account at any of the 68 centre where such facility has been made available. 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. The payment of refunds is mandatory for applicants having a bank account at any centre where NECS facility has been made available by the RBI (subject to availability of all information for crediting the refund through NECS), except where the Investor, being eligible, opts to receive refund through National Electronic Fund Transfer (“NEFT”), direct credit or RTGS.NEFT (National Electronic Fund Transfer) - Payment of refund shall be undertaken through NEFT wherever the applicant’s bank has been assigned the Indian Financial System Code (IFSC), which can be linked to a 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 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. The Company in consultation with Lead Managers may decide to use NEFT as a mode of making refunds.
2. Direct Credit - Applicants having bank accounts with the existing bankers of the Company shall be eligible to receive refunds through direct credit. Charges, if any, levied by the relevant bank(s) for the same would be borne by the Company.
3. RTGS - Applicants having a bank account at any of the 68 centres and whose refund amount exceeds Rs. 1 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 Refund Bank(s) for the same would be borne by the Company. Charges, if any, levied by the applicant’s bank receiving the credit would be borne by the applicant.
4. For all other applicants, including those who have not updated their bank particulars with the MICR code, the refund orders will be dispatched under certificate of posting for value up to Rs. 1,500 and through Speed Post/ Registered Post for refund orders of Rs. 1,500 and above. Such refunds will be made by cheques, pay orders or demand drafts drawn in favour of the sole/first applicant and payable at par.
5. 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.
Printing of Bank Particulars on Refund Orders As a matter of precaution against possible fraudulent encashment of refund orders due to loss or misplacement, the particulars of the applicant’s bank account are required to be given for printing on the refund orders. Bank account particulars will be printed on the refund orders/refund warrants (subject to availability of these particulars) which can then be deposited only in the account specified. The Company will in no way be responsible if any loss occurs through these instruments falling into improper hands either through forgery or fraud.
Allotment Advice / Share Certificates / Demat Credit
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Allotment advice/share certificates / demat credit or letters of regret will be dispatched to the registered address of the first named applicant or respective beneficiary accounts will be credited within 15 days,, from the Issue Closing Date. In case the Company issues allotment advice, the relative share certificates will be dispatched within one month from the date of allotment. Allottees are requested to preserve such allotment advice (if any) to be exchanged later for share certificates.
Option to Receive CCPS in Dematerialised Form
Applicants to the CCPS of the Company issued through this Issue shall be allotted the securities in dematerialised (electronic) form at the option of the applicant. The Company has an agreement with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) which enables the Investors to hold and trade in securities in a dematerialised form, instead of holding the securities in the form of physical certificates.
In this Issue, the allottees who have opted for CCPS in dematerialised form will receive their CCPS in the form of an electronic credit to their beneficiary account as given in the CAF, after verification with a depository participant. Investor will have to give the relevant particulars for this purpose in the appropriate place in the CAF. Allotment advice, refund order (if any) would be sent directly to the Investor by the Registrar to the Issue but the Investor’s depository participant will provide to him the confirmation of the credit of such CCPS to the Investor’s depository account. Applications, which do not accurately contain this information, will be given the securities in physical form. No separate applications for securities in physical and/or dematerialised form should be made. If such applications are made, the application for physical securities will be treated as multiple applications and is liable to be rejected. In case of partial allotment, allotment will be done in demat option for the CCPS sought in demat and balance, if any, will be allotted in physical CCPS.
The CCPS of the Company will be listed on the BSE and the NSE and can be traded on the stock exchanges only in dematerialised form .
Procedure for availing the facility for allotment of CCPS in this Issue in the electronic form is as under:
• Open a beneficiary account with any depository participant (care should be taken that the beneficiary account should carry the name of the holder in the same manner as is exhibited in the records of the Company. In the case of joint holding, the beneficiary account should be opened carrying the names of the holders in the same order as with the Company). In case of Investors having various folios in the Company with different joint holders, the Investors will have to open separate accounts for such holdings. Those Equity Shareholders who have already opened such Beneficiary Account (s) need not adhere to this step.
• For equity shareholders already holding Equity Shares of the Company in dematerialised form as on the Record Date, the beneficial account number shall be printed on the CAF. For those who open accounts later or those who change their accounts and wish to receive their Equity Shares pursuant to this Offer by way of credit to such account, the necessary details of their beneficiary account should be filled in the space provided in the CAF. It may be noted that the allotment of securities arising out of this Issue may be made in dematerialised form even if the original Equity Shares of the Company are not dematerialised. Nonetheless, it should be ensured that the Depository Account is in the name(s) of the Equity Shareholders and the names are in the same order as in the records of the Company.
Responsibility for correctness of information (including applicant’s age and other details) filled in the CAF vis-à-vis such information with the applicant’s depository participant, would rest with the applicant. Applicants should ensure that the names of the applicants and the order in which they appear in CAF should be the same as registered with the applicant’s depository participant.
If incomplete/incorrect beneficiary account details are given in the CAF the applicant will receive CCPS in physical form.
The CCPS pursuant to this Offer allotted to Investors opting for dematerialised form, would be directly credited to the beneficiary account as given in the CAF after verification. Allotment advice, refund order (if any) would be sent directly to the applicant by the Registrar to the Issue but the applicant’s depository
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participant will provide to him the confirmation of the credit of such CCPS to the applicant’s depository account.
Renouncees will also have to provide the necessary details about their beneficiary account for allotment of the CCPS in this Issue. In case these details are incomplete or incorrect, the application is liable to be rejected.
Utilisation of Proceeds
Subscription received against this Issue will be kept in separate bank account(s) and the Company would not have access to such funds unless it has received minimum subscription of 90%, of the Issue and the necessary approvals of the Stock Exchanges, to use the amount of subscription.
Procedure for Application through the Applications Supported by Blocked Amount (“ASBA”) Process
This section is for the information of the ASBA Investors proposing to subscribe to the Issue through the ASBA process. The Company and the Lead Managers are not liable for any amendments or modifications or changes in applicable laws or regulations, which may occur after the date of this Letter of Offer. Equity Shareholders who are eligible to apply under the ASBA process are advised to make their independent investigations and to ensure that the CAF is correctly filled up.
The list of banks that have been notified by SEBI to act as SCSB for the ASBA process is provided on http://www.sebi.gov.in . For details on designated branches of SCSBs collecting the CAF, please refer to such link.
Equity Shareholders who are eligible to apply under the ASBA process
The option of applying for CCPS in the Issue through the ASBA process is only available to Equity Shareholders of the Company on the Record Date who:
• hold the Equity Shares in dematerialised form as on the Record Date and have applied towards his/her Rights Entitlements or additional CCPS in the Issue in dematerialised form;
• have not renounced his/her Rights Entitlements in full or in part;
• are not a Renouncee;
• are applying through blocking of funds in a bank account with one of the SCSBs.
CAF
The Registrar will dispatch the CAF to all Equity Shareholders as per their Rights Entitlement on the Record Date for the Issue. Those Equity Shareholders who wish to apply through the ASBA payment mechanism are required to select such mechanism in Part A of the CAF and to provide necessary details. Application in electronic mode will only be available with such SCSB who provides such facility. The Equity Shareholder shall submit the CAF to the SCSB for authorising such SCSB to block an amount equivalent to the amount payable on the application in the said bank account maintained with the same SCSB.
Acceptance of the Issue
You may accept the Issue and apply for the CCPS either in full or in part, by filling Part A of the respective CAFs sent by the Registrar, selecting the ASBA process option in Part A of 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
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An Equity Shareholder applying under the ASBA process agrees to block the entire amount payable on application with the submission of the CAF, by authorizing the SCSB to block an amount, equivalent to the amount payable on application, in a bank account maintained with the SCSB.
After verifying that sufficient funds are available in the bank account provided in the CAF, the SCSB shall block an amount equivalent to the amount payable on application mentioned in the CAF until it receives instructions from the Registrar. Upon receipt of intimation from the Registrar, the SCSBs shall transfer such amount as per Registrar’s instruction allocable to the Equity Shareholders applying under the ASBA process from bank account with the SCSB mentioned by the Equity Shareholder in the CAF. This amount will be transferred in terms of the SEBI Regulations, into the separate bank account maintained by the Company. The balance amount remaining after the finalisation of the basis of allotment shall be either unblocked by the SCSBs or refunded to the investors by the Registrar on the basis of the instructions issued in this regard by the Registrar to the Issue and the Lead Managers to the respective SCSB.
The Equity Shareholders applying under the ASBA process would be required to block the entire amount payable on their application at the time of the submission of the CAF.
The SCSB may reject the application at the time of acceptance of CAF if the bank account with the SCSB details of which have been provided by the Equity Shareholder in the CAF does not have sufficient funds equivalent to the amount payable on application mentioned in the CAF. 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 Equity Shareholders Applying under the ASBA process
The summary of options available to the Equity Shareholders are presented below. You may exercise any of the following options with regard to the CCPS, using the respective CAFs received from Registrar:
Option available Action required
1. Accept whole or part of your Rights Fill in and sign Part A of the CAF (all joint Entitlement without renouncing the balance. holders must sign)
2 Accept your Rights Entitlement in full and Fill in and sign Part A of the CAF including apply for additional CCPS Block III relating to the acceptance of entitlement and Block IV relating to additional CCPS (all joint holders must sign)
An Equity Shareholder applying under the ASBA process will need to select the ASBA option process in the CAF and provide required necessary details. However, in cases where this option is not selected, but the CAF is tendered to the SCSB with the relevant details required under the ASBA process option and SCSB blocks the requisite amount, then that CAF would be treated as if the Equity Shareholder has selected to apply through the ASBA process option.
Additional CCPS
You are eligible to apply for additional CCPS (consisting of an equal number of CCPS Series A and CCPS Series B) over and above the number of CCPS that you are entitled too, provided that (i) you have applied for all the CCPS (as the case may be) offered without renouncing them in full or in part in favour of any other person(s). Applications for additional CCPS shall be considered and allotment shall be made at the sole discretion of the Board, in consultation with the Designated Stock Exchange and in the manner prescribed under “Terms of the Issue - Basis of Allotment” on page 146 of this Letter of Offer.
If you desire to apply for additional CCPS please indicate your requirement in the place provided for additional CCPS in Part A of the CAF.
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Non-residents including FIIs cannot apply for additional CCPS unless accompanied by applicable regulatory approvals from FIPB and/or RBI.
Renunciation under the ASBA process
Renouncees cannot participate in the ASBA process.
Application on Plain Paper
An Equity Shareholder who has neither received the original CAF nor is in a position to obtain the duplicate CAF and who is applying under the ASBA process may make an application to subscribe to the Issue on plain paper, and the Equity Shareholders should send the same by registered post directly to SCSB.
The envelope should be superscribed “Trent Right Issue-2010” and should be postmarked in India. The application on plain paper, duly signed by the Investors 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 and should contain the following particulars:
• Name of Issuer, being Trent Limited;
• Name and address of the Equity Shareholder including joint holders;
• Registered Folio Number/ DP and Client ID no.;
• Number of Equity Shares held as on Record Date;
• Number of CCPS entitled to;
• Number of CCPS applied for;
• Number of additional CCPS applied for, if any;
• Total number of CCPS applied for;
• Total amount to be blocked at the rate of Rs. 550 per CCPS Series A and Rs. 550 per CCPS Series B;
• Particulars of the Account from which the total amount is to be blocked;
• Except for applications on behalf of the Central or State Government and the officials appointed by the courts, PAN number of the Investor and for each Investor in case of joint names, irrespective of the total value of the CCPS applied for pursuant to the Issue; and
• Signature of Equity Shareholders to appear in the same sequence and order as they appear in the records of the Company.
Option to receive CCPS in Dematerialised Form
EQUITY SHAREHOLDERS UNDER THE ASBA PROCESS MAY PLEASE NOTE THAT THE CCPS OF THE COMPANY UNDER THE ASBA PROCESS CAN BE ALLOTTED ONLY IN DEMATERIALISED FORM AND TO THE SAME DEPOSITORY ACCOUNT IN WHICH THE EQUITY SHARES ARE BEING HELD ON RECORD DATE.
General instructions for Equity Shareholders applying under the ASBA process
(a) Please read the instructions printed on the respective CAF carefully.
(b) Application should be made on the printed CAF/Plain Paper Application only and should be
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completed in all respects. The CAF/Plain Paper Application 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/Plain Paper Application 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/Plain Paper Application 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 Managers 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. Except for applications on behalf of the Central or State Government and the officials appointed by the courts, CAFs/Plain Paper Application without PAN will be considered incomplete and are liable to be rejected.
(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/Plain Paper Application 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 CCPS, 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 the CCPS have been offered and not renouncee(s) shall be eligible to participate under the ASBA process.
Do’s: a. Ensure that the ASBA process option is selected in part A of 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 CCPS will be allotted in the dematerialised form only. d. Ensure that the CAFs are submitted at the SCSBs and details of the correct bank account have been provided in the CAF. e. Ensure that there are sufficient funds (equal to {number of CCPS as the case may be applied for} X {Issue Price of CCPS, as the case may be}) available in the bank account maintained with the SCSB mentioned in the CAF before submitting the CAF to the respective Designated Branch of the SCSB. f. Ensure that you have authorised the SCSB for blocking funds equivalent to the total amount payable on application mentioned in the CAF, in the bank account maintained with the respective SCSB, of
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which details are provided in the CAF and have signed the same. g. Ensure that you receive an acknowledgement from the SCSB for your submission of the CAF in physical form. h. Except for applications on behalf of the Central or State Government and the officials appointed by the courts, each applicant should mention their PAN allotted under the I. T. Act. i. 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. j. 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 Managers to Issue / Registrar / Collecting Banks (assuming that such Collecting Bank is not a SCSB) / to a branch of the SCSB which is not a Designated Branch of the SCSB / Company; instead submit the same to a Designated Branch of the SCSB only. d. Do not submit the GIR number instead of the PAN as the application is liable to be rejected on this ground. e. Do not instruct your respective banks to release the funds blocked under the ASBA process.
Grounds for Technical Rejection under the ASBA process
In addition to the grounds listed under “Grounds for Technical Rejection” on page 165, applications under the ABSA Process are liable to be rejected on the following grounds: a) If the Applicant does not apply for his Rights Entitlement of the CCPS Series A as well as the CCPS Series B; b) Application for Rights Entitlements or additional CCPS in physical form. c) Applications by Non-residents and FIIs for additional CCPS without applicable regulatory approvals from FIPB and/or RBI, if any. d) DP ID and Client ID mentioned in CAF not matching with the DP ID and Client ID records available with the Registrar. e) Sending CAF to a Lead Managers / Registrar / Collecting Bank (assuming that such Collecting Bank is not a SCSB) / to a branch of a SCSB which is not a Designated Branch of the SCSB / Company. f) Renouncee applying under the ASBA process. g) Insufficient funds are available with the SCSB for blocking the amount. h) Funds in the bank account with the SCSB whose details are mentioned in the CAF having been frozen pursuant to regulatory orders. i) Account holder not signing the CAF or declaration mentioned therein.
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Depository account and bank details for Equity Shareholders applying under the ASBA process
IT IS MANDATORY FOR ALL THE EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS TO RECEIVE THEIR CCPS IN DEMATERIALISED FORM. ALL EQUITY SHAREHOLDERS APPLYING UNDER THE ASBA PROCESS SHOULD MENTION THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE CAF. EQUITY 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.
Equity Shareholders applying under the ASBA process should note that on the basis of name of these Equity Shareholders, 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 Equity Shareholders such as address, bank account details for printing on refund orders and occupation (“Demographic Details”). Hence, Equity 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 Equity Shareholders including mailing of the letters intimating unblock of bank account of the respective Equity Shareholder. The Demographic Details given by Equity Shareholders in the CAF would not be used for any other purposes by the Registrar. Hence, Equity Shareholders are advised to update their Demographic Details as provided to their Depository Participants.
By signing the CAFs, the Equity Shareholders applying under the ASBA process would be deemed to have authorised the Depositories to provide, upon request, to the Registrar to the Issue, the required Demographic Details as available on its records.
Letters intimating allotment and unblocking or refund (if any) would be mailed at the address of the Equity Shareholder applying under the ASBA process as per the Demographic Details received from the Depositories. Refunds, if any, will be made directly to the bank account in the SCSB and which details are provided in the CAF and not the bank account linked to the DP ID. Equity Shareholders applying under the ASBA process may note that delivery of letters intimating unblocking of bank account may get delayed if the same once sent to the address obtained from the Depositories are returned undelivered. In such an event, the address and other details given by the Equity Shareholder in the CAF 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 Equity Shareholders applying under the ASBA process and none of the Company, the SCSBs or the Lead Managers shall be liable to compensate the Equity Shareholder applying under the ASBA process for any losses caused due to any such delay or liable to pay any interest for such delay.
In case no corresponding record is available with the Depositories that matches three parameters, namely, names of the Equity Shareholders (including the order of names of joint holders), the DP ID and the beneficiary account number, then such applications are liable to be rejected.
General instructions for applicants a) Please read the instructions printed on the enclosed CAF carefully. b) Application should be made on the printed CAF, provided by the Company except as mentioned under the head Application on plain paper and should be completed in all respects. The CAF found incomplete with regard to any of the particulars required to be given therein, and/or which are not completed in conformity with the terms of this Letter of Offer are liable to be rejected and the
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money paid, if any, in respect thereof will be refunded without interest and after deduction of bank commission and other charges, if any. The CAF must be filled in English and the names of all the applicants, details of occupation, address, father’s/ husband’s name must be filled in block letters. c) The CAF together with cheque/demand draft should be sent to the Bankers to the Issue/Collecting Banks or to the Registrar to the Issue and not to the Company or Lead Manager to the Issue. Applicants 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 Mumbai of an amount net of bank and postal charges and send their application forms 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. 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. Except for applications on behalf of the Central or State Government and the officials appointed by the courts, CAFs/Plain Paper Application without PAN will be considered incomplete and are liable to be rejected. e) Applicants are advised that it is mandatory to provide information as to their savings/current account number and the name of the Bank with whom such account is held in the CAF to enable the Registrar to the Issue to print the said details in the refund orders, if any, after the names of the payees. Application not containing such details is liable to be rejected. f) All payment should be made by cheque/DD only. Application through the ASBA process as mentioned above is acceptable. Cash payment is not acceptable. In case payment is effected in contravention of this, the application may be deemed invalid and the application money will be refunded and no interest will be paid thereon. g) Signatures should be either in English or Hindi or in any other language specified in the Eighth Schedule to the Constitution of India. Signatures other than in English or Hindi and thumb impression must be attested by a Notary Public or a Special Executive Magistrate under his/her official seal. The Equity Shareholders must sign the CAF as per the specimen signature recorded with the Company/or Depositories. h) In case of an application under power of attorney or by a body corporate or by a society, a certified true copy of the relevant power of attorney or relevant resolution or authority to the signatory to make the relevant investment under this Offer and to sign the application and a copy of the Memorandum and Articles of Association and/or bye laws of such body corporate or society must be lodged with the Registrar to the Issue giving reference of the serial number of the CAF. In case the above referred documents are already registered with the Company, the same need not be furnished again. In case these papers are sent to any other entity besides the Registrar to the Issue or are sent after the Issue Closing Date, then the application is liable to be rejected. In no case should these papers be attached to the application submitted to the Bankers to the Issue. i) 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. Further, in case of joint applicants who are renouncees, the number of applicants should not exceed three. In case of joint applicants, reference, if any, will be made in the first applicant’s name and all communication will be addressed to the first applicant. j) All communication in connection with application for the CCPS, 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. Please note that any intimation for change of address of Equity Shareholders, after the date of allotment, should be sent to the Registrar and Transfer Agents of the Company, in the case of CCPS held in physical form and to the respective depository participant, in case of CCPS held in dematerialised form. k) Split forms cannot be re-split.
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l) Only the person or persons to whom CCPS have been offered and not renouncee(s) shall be entitled to obtain split forms. m) Applicants must write their CAF number at the back of the cheque/demand draft. n) Only one mode of payment per application should be used. The payment must be by cheque/demand draft drawn on any of the banks, including a co-operative bank, which is situated at and is a member or a sub member of the Bankers Clearing House located at the centre indicated on the reverse of the CAF where the application is to be submitted. o) A separate cheque/draft must accompany each CAF. Outstation cheques/demand drafts or post-dated cheques and postal/money orders will not be accepted and applications accompanied by such cheques/ demand drafts/money orders or postal orders will be rejected. The Registrar will not accept payment against application if made in cash. (For payment against application in cash please refer point (f) above) p) No receipt will be issued for application money received. The Bankers to the Issue/Collecting Bank/ Registrar will acknowledge receipt of the same by stamping and returning the acknowledgment slip at the bottom of the CAF.
Grounds for Technical Rejections
Applicants are advised to note that applications are liable to be rejected on technical grounds, including the following:
If the Applicant does not apply for his Rights Entitlement of the CCPS Series A as well as the CCPS Series B, together in equal proportion or applies for particular series or applies in disproportionate ratio;
Amount paid does not tally with the amount payable for;
Bank account details (for refund) are not given;
Age of First Applicant not given;
Except for CAFs on behalf of the Central or State Government and the officials appointed by the courts, PAN number not given for application of any value;
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 on the Application Form does not match with the records available with the Company and/or the Depositories and in case of 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 Application Form does not have the Applicant’s depository account details;
Application Forms are not submitted by the Applicants within the time prescribed as per the Application Form and the Letter of Offer;
Applications not duly signed by the sole/joint Applicants;
Applications by OCBs unless accompanied by specific approval from RBI permitting the OCBs to participate in the Issue.
Applications accompanied by Stockinvest;
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
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Participant’s identity (DP ID) and the beneficiary’s identity;
Applications by persons in the United States;
Applications which have evidence of being executed in/dispatched from the US;
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;
Applications by Non-residents or FIIs for additional CCPS without applicable regulatory approvals from FIPB and/or RBI, if any.
CAFs where the Company believes that CAF is incomplete or acceptance of such CAF may infringe applicable legal or regulatory requirements;
In case the GIR number is submitted instead of the PAN;
Applications by renouncees who are persons not competent to contract under the Indian Contract Act, 1872, including minors;
Multiple Applications including cases where an Investor submits CAFs along with a plain paper application;
Duplicate Applications;
Application by renounces without appropriate regulatory approvals (if applicable);
Mode of payment for Resident Equity Shareholders/Applicants
All cheques/drafts accompanying the CAFs should be crossed ‘A/c Payee only’ and drawn in favour of ‘Trent Limited – Rights Issue - 2010’.
Applicants residing at places other than places where the bank collection centres have been opened by the Company for collecting applications, are requested to send their applications together with Demand Draft for the full application amount, net of bank and postal charges crossed ‘A/c Payee only’ and drawn in favour of ‘Trent Limited – Rights Issue - 2010’ payable at Mumbai directly to the Registrar to the Issue by registered post so as to reach them on or before the Issue Closing Date. The Company or the Registrar to the Issue will not be responsible for postal delays or loss of applications in transit, if any.
Mode of payment for Non-Resident Equity Shareholders / Applicants As regards applications by non-residents, the following conditions shall apply:
Payment by non-residents must be made by demand draft payable at Mumbai / cheque payable drawn on a bank account maintained at Mumbai or funds remitted from abroad in any of the following ways:
Application with repatriation benefits
By Rupee drafts purchased from abroad and payable at Mumbai 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 Mumbai; or
By Rupee draft purchased by debit to NRE/ FCNR Account maintained elsewhere in India and payable in Mumbai; or FIIs registered with SEBI must remit funds from special non-resident rupee deposit account.
Non-resident investors applying with repatriation benefits should draw cheques/drafts in favour of ‘Trent Limited – Rights Issue – 2010 - NR’ payable at Mumbai and must be crossed ‘account payee
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only’ for the full application amount
Application without repatriation benefit 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 Mumbai or Rupee Draft purchased out of NRO Account maintained elsewhere in India but payable at Mumbai. In such cases, the allotment of CCPS will be on non-repatriation basis.
All cheques/drafts submitted by non-residents applying on a non-repatriation basis should be drawn in favour of ‘Trent Limited – Rights Issue – 2010 - NR’ payable at Mumbai and must be crossed ‘account payee only’ for the full application amount. The CAFs duly completed together with the amount payable on application must be deposited with the Collecting Bank indicated on the reverse of the CAFs before the close of banking hours on or before the Issue Closing Date. A separate cheque or bank draft must accompany each CAF.
Applicants may note that where payment is made by drafts purchased from NRE/ FCNR/ NRO 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/ NRO account should be enclosed with the CAF. Otherwise 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.
Notes:
In case where repatriation benefit is available, interest, dividend, sales proceeds derived from the investment in CCPS can be remitted outside India, subject to tax, as applicable according to IT Act.
In case CCPS are allotted on non-repatriation basis, the dividend and sale proceeds of the CCPS 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 CAFs 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.
Impersonation
As a matter of abundant caution, attention of the Investors is specifically drawn to the provisions of sub-section (1) of section 68A of the Companies Act which is reproduced below:
“Any person who makes in a fictitious name an application to a Company for acquiring, or subscribing for, any shares therein, or otherwise induces a Company to allot, or register any transfer of shares therein to him, or any other person in a fictitious name, shall be punishable with imprisonment for a term which may extend to five years”.
Dematerialised dealing
The Company has entered into agreements dated November 2, 1999 with NSDL and CDSL, and its CCPS will bear the ISIN which will be separate from its ISIN of its Equity Shares.
Investment by FIIs
In accordance with the current regulations, the following restrictions are applicable for investment by FIIs under the portfolio investment scheme:
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The allotment of Equity Shares upon conversion of CCPS to a single FII should not exceed 10% of the post-issue paid-up capital of the Company. In respect of an FII acquiring 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. In accordance with foreign investment limits applicable to the Company, the total FII investment cannot exceed 24% 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) of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000.
Procedure for Applications by Mutual Funds
A separate application can be made in respect of 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.
Payment by Stockinvest In terms of RBI Circular DBOD No. FSC BC 42/24.47.00/2003-04 dated November 5, 2003, the Stockinvest Scheme has been withdrawn. Hence, payment through Stockinvest would not be accepted in this Issue
Disposal of application and application money
No acknowledgment will be issued for the application moneys received by the Company. However, the Bankers to the Issue/Registrar to the Issue receiving the CAF will acknowledge its receipt by stamping and returning the acknowledgment slip at the bottom of each CAF.
The Board reserves its full, unqualified and absolute right to accept or reject any application, in full or in part, and in either case without assigning any reason thereto.
In case an application is rejected in full, the whole of the application money received will be refunded. Wherever an application is rejected in part, the balance of application money, if any, after adjusting any money due on CCPS allotted, will be refunded to the applicant within a period of 15 days from the Issue Closing Date. If such money is not repaid within eight days from the day the Company becomes liable to repay it, the Company and every Director of the Company who is an officer in default shall, on and from expiry of eight days, be jointly and severally liable to repay the money with interest as prescribed under Section 73 of the Companies Act.
For further instruction, please read the Composite Application Form (CAF) carefully.
Utilisation of Issue Proceeds
The Board of Directors declares that:
(i) The funds received against this Issue will be transferred to a separate bank account.
(ii) Details of all moneys utilised out of the Issue shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the purpose for which such moneys has been utilised;
(iii) Details of all such unutilised moneys out of the Issue, if any, shall be disclosed under an appropriate separate head in the balance sheet of the Company indicating the form in which such unutilised moneys have been invested; and
(iv) The funds received against this Issue will be kept in a separate bank account and the Company will not have any access to such funds unless it satisfies the Designated Stock Exchange with suitable documentary evidence that the minimum subscription of 90% of the Issue has been received by the Company.
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Underwriting
The present Issue is not underwritten.
Issue Schedule Issue Opening Date: August 6, 2010 Last date for receiving requests for SAFs: August 13, 2010 Issue Closing Date: August 20, 2010
The Board may however decide to extend the issue period as it may determine from time to time but not exceeding 30 days from the Issue Opening Date.
Undertakings by the Company
1. The complaints received in respect of the Issue shall be attended to by the Company expeditiously and satisfactorily.
2. 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 will be taken within seven working days of finalization of basis of allotment.
3. The funds required for dispatch of refund orders/allotment letters/certificates by registered post shall be made available to the Registrar to the Issue.
4. The certificates of the securities/refund orders to the non-resident Indians shall be dispatched within the specified time.
5. Save as otherwise disclosed in this Letter of Offer, no further issue of securities affecting equity capital of the Company shall be made till the securities issued/offered through the Issue are listed or till the application moneys are refunded on account of non-listing, under-subscription etc.
6. The Company undertakes that where refunds are made through electronic transfer of funds, a suitable communication shall be sent to the Investor within 15 days of the Issue Closing Date, giving details of the banks where refunds shall be credited along with amount and expected date of electronic credit of refund.
7. Adequate arrangements shall be made to collect all ASBA applications and to consider them similar to non-ASBA applications while finalising the basis of allotment.
8. The Company accepts full responsibility for the accuracy of information given in this Letter of Offer and confirms that to best of its knowledge and belief, there are no other facts the omission of which makes any statement made in this Letter of Offer misleading and further confirms that it has made all reasonable enquiries to ascertain such facts.
9. All information shall be made available by the Lead Manager and the Issuer to the investors at large and no selective or additional information would be available for a section of the investors in any manner whatsoever including at road shows, presentations, in research or sales reports etc.
10. We shall comply with such disclosure and accounting norms specified by SEBI from time to time.
Important
Please read this Letter of Offer carefully before taking any action. The instructions contained in the accompanying Composite Application Form (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 Split Application Forms 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
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superscribed ‘Trent Limited Rights Issue-2010’ on the envelope and postmarked in India) to the Registrar to the Issue at the following address:
Link Intime India Private Limited C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup West, Mumbai - 400 078, Maharashtra, India Tel: +91 22 2596 0320 Fax: +91 22 2596 0329 Email: [email protected] Website: www.linkintime.co.in Contact Person : Mr. Pravin Kasare SEBI Registration No.: INR 000004058
It is to be specifically noted that this Issue of CCPS is subject to the section entitled ‘Risk Factors’ beginning on page 10 of this Letter of Offer.
It is to be specifically noted that this Issue of Equity Shares is subject to the risks as detailed in the section titled “Risk Factors” on page 10 of this Letter of Offer.
The Issue will remain open for a minimum 15 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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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES
Currently, foreign direct investment (“ FDI ”) in the retail trading sector (except single brand product retailing) is prohibited. However, a registered FII is permitted to purchase the shares of an Indian company under the portfolio investment scheme under FEMA so long as the total holding by each FII or sub account of an FII does not exceed 10% of the total paid up equity capital of an Indian company and the aggregate holding of all FIIs and sub accounts of FIIs does not exceed 24% of the paid up equity capital of the Company. In respect of an FII acquiring 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.
As per the provisions of Foreign Exchange Management Act (Transfer or Issue of a Security by a Person Resident Outside India) Regulations, 2000, Indian companies which are listed on recognised stock exchanges are allowed to issue shares on a rights basis to non-resident shareholders at a price as determined by the Company. For more details please refer to the sections titled “Terms of the Issue- Investments by FII” and “Terms of the Issue-Investments by NRIs” on page 146 of this Letter of Offer.
For details of restrictions on renunciation of a right to and from a non-resident please refer to the section titled “Terms of the Issue - Renunciation” on page 146 of this Letter of Offer.
As per the existing policy of the Government of India, OCBs cannot participate in this Issue.
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STATUTORY AND OTHER INFORMATION
Option to subscribe
Other than the present Issue, and except as disclosed in the section “Terms of the Issue” on page 146 of this Letter of Offer, the Company has not given any person any option to subscribe to the CCPS of the Company.
The Investors shall have an option either to receive the security certificates or to hold the securities in dematerialised form with a depository.
Material contracts and documents for inspection
The following contracts (not being contracts entered in to in the ordinary course of business carried on by the Company or entered into more than two years before the date of this Letter of Offer) which are or may be deemed material have been entered or are to be entered into by the Company. These contracts, as well as the other documents for inspection referred to hereunder, may be inspected at the Registered Office of the Company situated at Bombay House, 24 Homi Mody Street, Mumbai 400 001, Maharashtra, India from 9.30 a.m. to 6.30 p.m., on working days, from the date of this Letter of Offer until the Issue Closing Date.
1. Memorandum and Articles of Association of the Company. 2. Certificate of Incorporation of the Company dated December 5, 1952. 3. Fresh Certificate of Incorporation consequent upon change of name dated June 15, 1999. 4. Consents of the Directors, the Auditors, the Lead Managers, the legal advisor to the Issue, the Registrar to the Issue and the Company Secretary, as referred to in their respective capacities. 5. Copy of the resolution of the Board of Directors dated April 26, 2010 approving this Issue. 6. Agreement dated May 10, 2010 between the Company and the Lead Managers. 7. Memorandum of Understanding dated May 6, 2010 between the Company and the Registrar to the Issue. 8. Copies of the annual reports of the Company for fiscal 2005, 2006, 2007, 2008 and 2009. 9. Letter of Offer dated April 30, 2007 in the issue of 31,52,147 Equity Shares of face value Rs.10 each at a premium Rs. 490 in the ratio of 1 (one) Equity Share for every 5 (five) Equity Shares. 10. In-principle listing approvals dated May 24, 2010 from the BSE and NSE.
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DECLARATION
No statement made in this Letter of Offer contravenes any of the provisions of the Companies Act 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. We further certify that all the disclosures in this Letter of Offer are true and correct.
SIGNED BY ALL THE DIRECTORS OF THE COMPANY
______Mr. Farrokh K. Kavarana (Non-independent non-executive director)
______Mr. Bakhtiar S. Bhesania (Independent non-executive director)
______Mr. Aspy D. Cooper (Independent non-executive director)
______Mr. Khushroo N. Suntook (Independent non-executive director)
______Mr. Zubin Dubash (Independent non-executive director)
______Mr. Noel N. Tata (Managing director)
______Mr. P. Venkatesalu (Chief financial officer)
Place: Mumbai Date: July 20, 2010
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